CDXS - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the Codexis Fourth Quarter and Full Year 2020 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Stephanie Marks from Argot Partners. Please go ahead.

Stephanie Marks

will meaning a Litigation of of management statements of Reform call, XXXX. the within the this be number making forward-looking Act During Private Securities of by extent statements forward-looking date, and as are statements February the management beliefs regarding made of the To not they that reflecting descriptions of historical expectations are XX, facts Codexis, management statement XXXX.

unknown cases, the about that results operations, outlook undue and statements, and affect the impact could because the known significant of and You are, the control forward-looking financial they and factors uncertainty best the other any is some on the should available estimate at COVID-XX risks, reliance on not time and duration of could pandemic. and on actual information. beyond particular, company's that place change impact currently company's results. in uncertainties there involve results materially In This means contemplated based the virus the is

these or the the company's please about statements, as Codexis disclaims expressly law. For see filings. by to well release intent update required any quarterly that this except forward-looking as SEC details John? risks, obligation accompanies call as news

John Nicols

everyone. afternoon, Good

on products, top-line. With as we revenue higher-margin highest-ever highest-ever the in year-over-year In We Xth product for continued challenges, growth. I'm strong we our proud to year pleased third margin. product year last gross report for the quarter quarter our mix delivered shifting and Codexis. our second that delivered fiscal consecutive year, the And extremely are impacted of year annual results the our spite very XXXX our COVID-related finished the operations we of QX, strong also quarterly which R&D part of sales toward on revenue

well the of secondary successful we growth invest the for cash offering company. which opportunities we historical the a for Codexis, with balance million, our another see high in positions to closed $XXX.X in us Following year many December,

year-over-year. poised between growth with over we're Reinforcing XX% us best to between XXXX, finish for XX% But showcasing provide growing enabling excellent our growth X across to overall revenue an Enzymes to with that, are XXXX our quite I'll will results With of XXXX, XX% drive on XX% lead more and the Ross details growth and will reporting years, shortly. segment, on first, the markets. strong business. XXXX focusing top-line update in revenues guidance the the Starting in product provide different Performance business XXXX. we guidance

And over platform, this the revenues ideal manufacturing. and of is scale we X enzymes unrivaled. past sustainable and decades. that Codexis' of speed being vast to the engineering ability our first CodeEvolver This given market where history, the Thanks to leadership discover is the The Codexis' accelerating represents currently. design company's built enzyme constantly majority large

high-performing a XX% with capital our lower reduce inefficient, Compared using novel Our by higher-yielding increase This business chemistry, cost and product and manufacturing X-year enzymes capital-intensive traditional can the robustly, growing the dramatically partners compound revenue. sustainability end growth and of which products. enzymes is annual to reduced generation. in to waste processes energy be enable complex, and rate can reduce requirements enable demonstrated Codexis' usage non-enzymatic their

quarterly continue molecule pharmaceutical had contribute to sustainably estimate if made Small have than XXXX. manufacturing from XX lower greater of and market both $XXX,XXX XXXX, the and target average we XXXX, core sustainable be During up We growing sustainable APIs were enzymes in a customers more in cost in out XX molecule Codexis. processes revenue been least for that would utilized. for at X small manufacturing Codexis X at be

APIs. in XX largest for and adopt install them enzymes with of the We XX world their novel Codexis' help the have pharmaceutical manufacturing partnered companies to

for enzymes increasingly enzyme engineering. they manufacturing can in-house to companies these own processes, of move their to their wide applicability platform our recognize benefits perform license As validate CodeEvolver value the and its and

Merck our in-licensed GSK, Novartis So far, CodeEvolver and have platform.

that of these revenues and XXX% expect XXXX back-end list in We we deals, will growth forecasting we sustained expand beyond. margin And over that time. are

sustainable maturing. is products deep, Our pipeline growing manufacturing of increasingly and

strong sold half overactive As our of quite XX by largest largest for currently for annual second of customers performance Urovant diabetes as also approved for are: our patented recurring demand XXXX, The of X revenue and enzymes we manufactured our which showed in Japan These its APIs. in in now XXXX; Codexis are and and used X Kyorin FDA-approved treatment type Merck pipeline Allergan, are enzymes commercial enzymes June which all Januvia. in their snapshot exhibited generation. newly product bladder, the the is commercially of are drug, source

In has the addition X on another already the to in in market, X and XX development, Phase tripled that enzymes number almost have in APIs or and depth Phase years ago. installed products This growth we engine. pipeline clinical a X with timelines, regulatory the past years, generating manufacturing outside to enabling verticals development sustainable expanding into hurdles, CodeEvolver's enzymes In our faster. been pharma commercialize power as product of demonstrates product pharma we've fewer shorter few from

We DOLCIA yields for in XXXX sweeteners. relationship X food of success market better and enzyme Tate sales which our Stevia. replace & our tasting Lyle providing come and of These at gain & lead these adoption of enzymes food extracts to as partnership Lyle to Tate the new much and PRIMA beverage Our improved with to increase Lyle from and already downstream enzymes, we extended Lyle, set enzymes Tate deepened & sweeteners, in their enable & Codexis that X improved with industrials recently enzymes production efficiency lower We're for allow that to they in continue M dramatically include sweeteners markets. to was their newest develop where costs. the significantly up Tate Allulose stories TASTEVA their processes higher produce for

to additional applications In are food we addition, and revenue feed. potential faster identify industrial beverage as few larger range began we're than pharma generally A with well. working care applications market, to of which in commercialize These This consumer we from recycling, next-generation growth the other on ingredients, manufacturing cycles commercialization DNA Enzymes above-average years opportunities prospects. the and in enzymes developing to and company. animal highly a is ago, and RNA improvements margin high more. science for Codexis life synthesis as a molecular Performance given and opportunity significant fast sequencing growth, diagnostics, can view enable market tools biosensors, attractive, its and for

science here. the applications follow We've over In zero the in made few a life we sustainable an ago, advanced in developed manufacturing. commercial From of just in marketed for launches product life X customized XXXX, inroads into addition, several multiple enzymes can tools to tools rapid business be to advantage customers, science most highly generated million years and $X.X are market focusing readiness behind. to since we soon more revenue began enzymes the

beginning our polymerase partnership for in quarter this We XXXX Tools DNA Life and HiFi year. for DNA Alphazyme scaling market HiCap stages with DNA a Codex offending Roche's customers. We're also and is expect kits. gene. the has Sequencing transcriptase. to commercialization half to recently a pleased of polymerase these ligase the broadly all for currently made to DNA enzyme marketing diagnostics, optimizing the reverse at polymerase, second year, XXXX. last I'm final Our first Solutions biological sale this Codex of Codex of RNA improved they year. at installation first-generation samples, the DNA benefits cancer exciting polymerase and ligase as the announced accurate our enzymes in library past of was first end and Science of Roche October, co-marketing prep market available of manufacturing in performance customers RNA an partnership with Codex report space to X next-generation that began This significant high-performance which and to identify transcriptase to in the we from our of in commercial technology accurately with prepare the enzymes, advantages advanced for TX critical HiCap The reverse toward rapidly their over sequencing polymerase X is In for first this completed where transfer and enables the RNA more enzymes sequencing the of it's additional we the

processes, approved against RNA sensitivities the for don't COVID currently the COVID vaccines RNA-based approved vaccine with expect our polymerase for we of the adoption manufacturing Given change foreseeable messenger future.

Validation However, potential for has customers RNA the encouraging. medium- yield mRNA-based very efficiency for and stage development a of of mRNA and for processes and benefits range product this our is therapeutic candidates. vaccines up longer-term outlook well installations in multiple polymerase with set trials and us

the early Accelerator improvement like on range disruptive formed a so This take high performance in from efforts the year value the manufacturing for the product of SynBio DNA engineering our dynamic DNA. We of the the with process for improvements work. partnership to cycles expect the half private about Assemblies is for that Molecular enzyme for Leveraging viable synthetic approach track into of this potential of We cost-effective half a commercialization with meaningful I working would of to November, also and biology customers collaboration DNA a big to We make enzymatic Casdin compete through storage. of from complete endeavor. synthesizing and in extremely very It in Accordingly, Capital. a translate seeing soon with significantly silicon June, estimated Molecular undertaking with their wide commercially begin to positive polymerase Last with to program second XXXX, has we're of synthesis. manufacturing drug dramatic remain XXXX. that Molecular we chain and are enzymes commercialization thereby longer-term CodeEvolver, R&D second adoption model sales excited DNA should of companies. this in feedback will a us am Innovation long we data Assemblies solution or thereafter. discovery and markets we to Assemblies groundbreaking enabling impact launched us this early-stage HiFi power

are for our long-term goal and that expertise SynBio business to to enzyme to is of and the Our whose capital is companies selectively technology Codexis. interest engineering with Accelerator synergistic strategic provide

Arzeda, to design impactful investment on tools. collaborate Arzeda or learning and expanding benefit functional machine enzymes computational intelligence protein developing new in plan a of first The company. and and the We products and is scope in artificial

grow into we see, extremely We're market, optimistic seeds planting are can in the space. an of impressive and the starting new in they lots to you As collaborations. Science business opportunities Life Tools crop about been this products and of have

the entry tremendous in Codexis proprietary market potential recent of for where growth Another see is discovery and development we biotherapeutics.

assets Here, need CodeEvolver we of platform. our discovered indications therapeutic high for using advancing and building with pipeline a high are value unmet rapidly medical

Science Health early we in a X have Takeda, We've Just we we had years multiple multi-program and self-funded today, partnerships to in with our programs ago, Nestlé struck parallel. other dozen forward programs only X pipeline. Fast and in X programs pipeline. our and advanced have impressive

with formulation Our amino treating licensed products in multiple the errors or along enzymes initiating for fully partnered readout Nestlé PKU, They which acid are to ascending program phenylketonuria The dose and is diseases caused disorders. therapeutic metabolism of Health farthest year. for is study CDX-XXXX to are GI development that is for expected to prepare advancing CDX-XXXX development congenital next Xb Science solid Nestlé. dose by Phase

We first quarter targeted have the into clinical to an partnered Science. third of its programs year. CDX-XXXX other disorder for Nestlé is with this GI in on undisclosed disease Health track treatment trial of X advance

co-owned and well. X are Science by are also in and stages progressing these are programs other earlier assets Health Nestlé All discovery Codexis. X of The

partnership and with a Pompe improving Fabry rare focused therapy disease, Our gene factor for disease disorder. blood is candidates Takeda on

are the The better improved stability, cetera. greater Fabry in as transgenes expression, Takeda critical uptake et engineer is programs. with most attributes enhanced such leveraging to advanced CodeEvolver the amongst half-life, We program improved tissue,

Here, generation better patient's we've the gene enzyme research. At a a as we programs therapy using Codexis lead parallel needs and this exciting program. the WORLDSymposia a Takeda-led candidates. therapy's design developed and enable engineer to to address through to transgenes differentiated is is approach Pompe blood continue advancing data to delivery CodeEvolver month, performing for transgene earlier The a Pompe presented next advance some from novel in factor preclinical improvement transgene Modifying of a gene well.

other progress with new have encouraging Takeda, programs the Beyond for self-funded we begun disorders. transgenes improved discovery rare targeting

projects on also we based for validation oral Science, disorders. self-funding biologics GI addition, advancing other with Health the In growing are Nestlé for we're

the our strategy While of order we control the Biotherapeutics licensing further component in long-term segment, into selective a remains retaining partnering value. for to in anticipate key capture over before greater our future assets clinic

Let over hand me call take to results more detail. our in to now you the Ross through financial

Ross Taylor

afternoon, everyone. good and John, Thanks,

a Total to Product sales margin our $XX.X and increased product pandemic. On mix. XXXX. of spite segment fourth in was compared and results the was revenue the revenue with for $X.X of XXXX for revenues major highest XXXX up quarter million, This by for Novel fourth XXXX Enzymes product period. was of XX.X% Biotherapeutics, presented year million the up to and Performance Merck, revenue period. XXXX prior Enzymes with Allergan compared compares $XX.X $XX.X to and million Gross The for the strong $XX.X prior the from Novel compared due from year Performance delivered million quarter have contributors was challenges of product was fourth prior million the increase for Urovant. for the basis, million were favorable the the Biotherapeutics. We COVID-XX quarter $X.X was with fourth million, to of respectively, on $X.X This XX.X% year XX.X% quarterly in being period. the quarter ever XXX%

operating Turning expenses. to

R&D expenses were XXXX SG&A in for by up consultants, recruiting which fees, R&D were period. from fourth The quarter for fees. and due primarily net corporate the million of the primarily increases corporate for compared increased prior cost $X.X to million, compensation, prior allocations $XX.X year million offset XXXX of the QX of were for fourth lower loss legal compensation, due loss offset preclinical $X.X $X.XX Net intellectual XXXX. in were Our was year the share partially $X.XX $X.X was with or to The million quarter and increase reductions or services, were expenses the regulatory expenses. of partially to and per SG&A compared period. higher outside development $X.X in for by allocations in and legal XXXX million per property, quarter fourth $X.X of million a share which expenses

$XX.X revenues up million, respectively, full Revenues XXXX. Turning was million, from Enzymes $XX.X for Total $XX.X R&D Enzymes payment the impacted services with from fiscal service Performance as the year up million, about compared million Takeda from results. Product with Nestlé X% and $XX.X this Novel the On pandemic, as were from were for segment. for upfront were revenues X% Novel a Science's services associated in million it XXXX the and for revenues benefited Biotherapeutics Health extension R&D $XX.X hindered from by $XX.X to and collaboration. as in well basis, Biotherapeutics revenues of R&D the fiscal on was XXXX. contributors Performance margin and COVID-XX from XXXX the major segment to up million Merck, XXXX in from due being was Allergan, for year product XXXX, with to Urovant XXXX XX.X% XX.X%, Gross sales fiscal Kyorin. mix. our product revenue favorable

year primarily by allocated fiscal for expenses to increases fiscal compensation, These in higher outside for in legal per year and XXXX. fiscal indicated, annual million partially SG&A expenses million for million costs XXXX John our $XX.X expenses SG&A XXXX. up Net lab was allocations, services. and in to to corporate XXXX XXXX R&D or fiscal increase $XX.X loss and million, compared from due property, XXXX. this to were supplies $XX.X due reductions gross primarily share $X.XX intellectual ever was for in R&D offset was compensation consultants, The share million expenses The per costs product million and were facilities, $X.XX As highest for compared and or partially were consultants. were margin. expenses $XX.X development offset travel. by preclinical fiscal fiscal $XX.X for $XX.X higher regulatory,

puts we net proceeds of and of of over of With to were cash $XX.XX and which price $XX XXXX, as the to us cash opportunities. X.X December, expenses, exercise the seize stock balance The look XXXX. $XXX.X XX, completed to After million. per $XX deducting XXXX, the the a million, with greenshoe. XX% million, revenues In for sheet. offering guidance the expect shares we growth $XX December follow-on XX% Codexis Cash million which to between in strong year its were total growth offering represents position for be respect equivalents the company's to share. was as Turning offering a of common million

XXXX and half of approximately expect the We in first in of XX% year. reported be second of XX% half year the to the the revenue

approximately Within XX% QX. of in half, XX% QX to expect be and first we revenues the in

the total We the our segment. revenues expect strong Enzymes Performance due growth to year do be XXXX in We segment anticipate for XXXX. by revenues results in growth Biotherapeutics the in its driven not for in to

million in to to growth which sales be million expect represents $XX of XXXX, $XX of over We to product range XX% XX% in XXXX. a

to between margin margin gross be gross expect strength cementing We XXXX. the product of and in XX% XX%, sales on

and expense anticipate combined approximately by We in and and the $XX increase R&D QX which in from signed the side, recently we XX% quarter a roughly research the a QX, XXXX. to by be sequentially QX. On facility million of first that for increase we laboratories SG&A expect will for both space, quarter combined office additional anticipate XX% expenses to sequentially to expenses SG&A second development and We and provide and lease another in occupy space R&D new will approximately for in QX.

total margin well to had continued In turn product that, gross call John. With strong excellent compared in the I'll we're revenues, and expenditures, to Our product XXXX, upgrade positioned $X for next plant in out opportunities our us of is expansion a to strong fiscal about into growth bringing we years. a XXXX XXXX. million project of bolus CapEx in growth XXXX. expansion million pilot in approximately back in strong in summary, for $XX will growth a this this the facility facility over indicator onetime Building our result the plus several a in total store capital to and revenues

John Nicols

for poised is XXXX. Codexis strong a Ross. Thanks,

to markets accelerate and all markets. X on we're of at while investing acceleration, In that deliver we're to teams of to work generation penetrating we're steam. our machine our enzyme, the for to these excited list exciting to is the growing at ambitions on motion the faster to upticks With recurring closing, investments, product versus the both consider with visibility revenue therapeutics sheet, larger accelerators up CodeEvolver's Codexis and team against across address step same deck, simultaneously baseball growth their R&D We're enzymes it's flywheel more generation, product well. today balance extra of our and Codexis. parallel launches, We to learning enzyme poised yesterday projects base times with bat, the each on base with picking From business a more product revenue more hitters team how to many possibilities at in have are truly the multiple up commercialize discovery next like company's getting move project on capacity. average time. team discover clear more Coupled XXXX. in enzyme parallel, the and targeting growth recently on all commercialized frequently commercialization. will can developments In as getting new catalysts inorganic our enzyme data enhanced

the limitless We possibilities excited enzymes are nearly for incredibly by product as a class.

growth We and planet, begun make deliver enzymes our a in difference a have of in surface to future. we step-out the people as confidence the reinforcing our scratch health the of can how Codexis expect company to the only for

Operator? we're happy your Now, take to questions.

Operator

Thank you.

Instructions] with Doug proceed question. with first Cowen. question-and-answer Schenkel Our from [Operator now will begin Please your We comes question the session.

Kyle Boucher

the Thanks Hi, good about questions. I in had a revenue taking just XXXX. here for on first Kyle Doug question today. afternoon. for product This is

for down Would components product of kind to growth of $XX you Thank the in to break here? million year. it So possible range be $XX guided you. the of the million revenue

John Nicols

for of on across this the start. product Yeah, side John, dimensions. question. revenue I'll is growing the couple different we're a Thanks Hey, Kyle.

generators the manufacturer see First, kick we the recent the so some so diabetes Januvia, as headwinds enzyme in of product revenue year-on-year, our their a we any us to particular, don't drug, very XXXX. largest off of there good stable sales past, giving base, for Merck that's

from setup demand more and revenue strength recently continue have are Urovant We product approvals: all for Kyorin our to customers solid their in gotten Allergan, recent have year-on-year. demand who

strong base to a pharmaceutical particular the Lyle companies. of as see some polymerase. for in enzymes new food in upticks product upticks, in polymerase We're the in for revenues industry. launched, and recorded expecting we top other RNA Tate generate the us science We there, & on the that meaningful So remarks, DNA revenues prepared the life sales we see in recently

growth versus the so, XXXX major XX% solid And that confidence of to deliver are sales those I'd lead our to components say really to year-on-year XXXX. XX% product in

Kyle Boucher

great. and thinking XXXX? how I maybe one proportion revenue mean, more Thank in ask here? Januvia I just thinking we about what That's overall May as you're of a here. revenue, are product you

John Nicols

XXXX XXXX. be So our said sale. very XXXX like product versus as previous largest fairly stable actually, that I it revenue year-on-year versus And response, the to was continues well. And it's in stable in

So is Merck's quite doing business well.

Our are sales enzymes very and stable of strong. very

sales Merck growing Januvia total our Merck. Januvia stable sales growth product and So for that's with elsewhere sales be will of to but because stable be sales to of ratio percentage down, The with will down. the for overall, Merck's

Kyle Boucher

Thank you.

Operator

Thank you.

Our line Please of coming from question. is Jefferies. with next with the your proceed Couillard Brandon question

Brandon Couillard

Hi, thanks. Good afternoon.

John Nicols

Brandon. Hey,

Brandon Couillard

do figure base? do speak then, into we magnitude earlier given I partners John, have there kind how many market, sort helpful. And, revenue if with those look to Roche? you would life think with? in of have, some shared Is degree XXXX, visibility $X.X of million of maybe appreciate as you of you the of evolution be stages the that you customer programs you're some kind about the XXX% that that starting newer these of we XXXX. And working for could of the sciences, Just of the are factors ramp,

John Nicols

sure. Sure,

question of part Actually, first Roche is number of is, that So not your Roche. that minority answer a the is XXXX. to no, your to in

with are the science not generation to the from that other had some to new life across we're working R&D growth just arena. whom some arena doing Molecular science able in next-generation had yet, what space sequencing, pre-commercial. but revenue They in in Assemblies partnerships So in biosensor the synthesis. then life not monitoring we DNA with - opportunities enzyme then partnership. we're finally, speak opportunities for undisclosed It's cases, we exciting. We are are and opportunities And RNA associated the and excited. tools qPCR, see we're They

revenue that XXXX. question was across or state that's there, space, have you partnerships great. there So covered, If other in another apologize, in it generated we detail then have I several if that that maybe can after

Brandon Couillard

Yeah.

is The second the the part the forward of XXXX. about question in more of outlook kind

as do of you to as many the commercialized? ramp as share customer revenue Just these that enzymes with how far think about base of sort evolution new of the magnitude of are and

John Nicols

RNA for in polymerase. we the year, We're and also year, certainly, at DNA Yeah. already of growth to in DNA expect of recently commercial sales looking sales first our sale and previous to beginning the happy significant product polymerase uptick that products We alluded I've last the the we launched to the We're ramp. the polymerase. RNA a see, made polymerase this forward in that end of question, for in the nice

those On the in the us. excited feedback transcriptase. We're early performance science launching half product But me, in life side, for be of on or year, that then, year will about the of in our the first lead reverse X we'll the the very middle excuse tool and product. area

wider the that get we'll out So market. into

we'll synthesis DNA half of second by for partnership should well. reverse program at with potentially, the third uptick. be year, we Molecular Molecular may least and move X Assemblies year-on-year quarters' XXXX activities with Revenue the have the worth in We And quarter of generating be that Assemblies. the a in the then, sales transcriptase product So generation commercialization. we'll as of towards started

year-on-year up set that's for So growth.

strength disclose there referred opportunities also year-on-year. but that The set are that. top are new other to on then, of companies up couldn't And for I

of science all adds area. a in tools up the tailwinds to that So, of lot life

over upticking million least going dollars growth of last we're to certainly year, be at that $X.X stronger $X.X that millions by than potentially low-single-digit million base, certainly year-on-year even that. So

Brandon Couillard

helpful. That's Okay.

assumption Can you outlook for the something have embedded as of goes, pretty As I outlook you're kind areas first the CodeEvolver step-up. implies main deal? which platform far occurring. another big of planning? about on kind to on year-over-year a is as Thanks. You like any And that XX% top-line, OpEx growth, investments goes, the far that it as likelihood the speak elaborate think of you of

John Nicols

certainly Sure, on question. the I sure. taking take second from OpEx where and the answer can leave the a I'll question off. first question fill in Ross at I'll start

So just that, widen our engineer really getting quicker to to for cheaper and and less API the And pharmaceutical customer is barrier and CodeEvolver, we do to strengthen quicker processes. installed in costs bear. the we getting continued in positions can needs ability enzymes cheaper primary The manufacturing. enzymes to our at the upfront that

continue growing that's reduce of our expanding smaller world's CodeEvolver's fundamentally, the and well. companies, so, to improvements as position largest And list we companies, happening across barrier to reputation as pharmaceutical grow And strengthen as are enabling just critical us to companies a that adoption. our continues to in in marketplace, this

and a already Glaxo And towards largest for drive pharmaceutical great companies the continue so CodeEvolver that world just really to Novartis. we've Merck just and long-term platform stage deals, like us moved sets the to in

expect licensing we any build where happen we did for XXXX. new into deals to guidance So CodeEvolver platform not that our

platform really happen, to probability, as But we move possibility. XX% this be wouldn't to an were would that build through we continue confident a upside. if like several of ultimately we're in platform a beyond have. other already for case with peers expense a in worked putting place business of companies it's very year license So licensing the justify we've those give that these X that I it the arrangement to X the largest

guidance deals. to and into time, we'll CodeEvolver we over continue revenue to the licensing not for continue into year, encouraged built be more So that that's our companies very bring platform

recurring a as sustaining then Codexis enzymes tomorrow's and and is streams. be company. up capacity to the more to commercialize is, lifeblood going spending for staff up to the second indeed, are our to our I'm move OpEx development capacity question, we is engineer company engineer, This the we'll the we revenue of more research And creating So primarily. stepping your The which enzymes and them.

so, the stepping place. we're continue strength we sheet of in up investors to discovery the parallel in the And with who putting are from support the us, teams that number and confidence balance enzyme

parallel, in saw Ross as bring nearby in hiring it us will bring announcement, headquarters capacity. more on recent footprint - we're to enable our the That his well, And highlighted discovery team to talent in comments City. taking up on capacity. Redwood You where to in expand some our we're additional we're

on more first. We're that's headcount a taking company. more taking So as on we're footprint,

grow our to work. the continue fund discovery we Now, to of number are willing companies who

will R&D that Life create good. our that's our our own something and the revenue, bring And we selectively we're If partner, in to we're generate take Science as to a downstream. larger partnered for that have preserve we it we enzymes addition, really so other do in P&L. this we doing on both investing revenue That in the is own for economics. this see value We've Tool of able own, year operation to discovery not back-end engineering as generally been self-funded money investments of we're share that own on the the that more to about. generation. enzyme continue we going successful on can are But piece And our doing well enzymes, us opportunities. other a And growing by partner-funded. we Biotherapeutics earlier, to If downstream excited our

And out Biotherapeutics clinical more then we preclinical assets ultimately, as on expense also Also, we're through and IND-enabling, pipeline. core. the from research into line, trials, continue are those bear OpEx there. to discovery the So we advance building

XXXX develop So in continue in the expense growth therapeutics pipeline is versus our to to XXXX. growing

that disorder which expecting in other And XXXX, with GI into second we bring earlier-stage clinical Health we're add to co-own co-owned You IND-enabling heard in candidates to our as the Nestlé initiate trials to for hope expenses our Science. well. we enzyme that product will work, XXXX

So the the primary those company. are in upticks for operating year-on-year expenses

Brandon Couillard

drag product normal? margin helpful. the north of revs? been think as those of this XX% as Is very long the as for changed certainly something has driver new far your one goes product kind of capture which Ross. you. to of a as And in I That's Thank that step-up with step-up? Last you from of Is there see. The specific - is far encouraging Januvia, the has gross mix a economics sustainable kind

Ross Taylor

No, the in that part address margin you're products. the But think Brandon. the with shift nothing's question I latter same. mix towards in product changed margin Januvia. it's step-up That's seeing, really just the higher still driven our economics that I'll first, of on the gross Yeah, by

products in response of new driving a John Merck's stable be roughly will much the think expect much in higher-margin will see the Sitagliptins the as But be I we mix. how sales outlook you going in percentage earlier an our growth of outlined XXXX. down to other question, for

So the improvement shift. see we a mix is purely

XX% we In the of of gross a of to have XXXX. chance seeing sustainability, good guidance terms little bit XX% our margin improvement in in suggests think, a of I

So certainly for some the the we're longer with should next term. XX that pretty months, of continue encouraged and think trend, trend I

Brandon Couillard

Very good. you. Thank

John Nicols

Thanks, Brandon.

Operator

Thank you.

your with question. Our next Please question Craig-Hallum. from Matt proceed with comes Hewitt

Lucas Baranowski

here at revenue product? off, to for more we the particular was going Hewitt should Lucas the there Is be is back half great thinking how signed for polymerase. on RNA about contract first it that that Matt the hear Craig-Hallum. guess, This I ramp your weighted? Yeah. for to Or you first be

John Nicols

Yeah, multiple a benefit of RNA who and a product we the to DNA customers I of improved can universe enzymes. are both designed promoting without it polymerase and the these the mean, polymerase performance customers, think doubt, from for we're

RNA of great the our is that's for just So the the news. but customer. for first polymerase one for beginning your it making encouragement Thanks sale at commercial year,

So customers start products. selling we both more of these to for to expect

given this product stronger first for these expect of half both than to half the sales back early sales expected of we of customers, an the set adoption products. clearly, be in so, And

Lucas Baranowski

alluded you some you guess, earlier year-end? as then adding that grow I do teams And currently to on, how could many R&D to And by been you've what have? teams. R&D

John Nicols

Sure.

new discovery footprint We on us enable fourth We're year. XX, to have teams this taking the in will of in And are operation. X-X, inhabit we space footprint. That parallel about enzyme a the staffing currently new quarter up.

able be into we we'll need specialized, about to bring critical that expect ramp is up. the talent our scientists that in we company. and we we're so The to And slowly very very that bring

to we continue hire the we teams number those self-funded teams, that capacity magnitude. of that discovery to of up taking into increase that teams enzyme XX next It's on but I'd capacity up us that to funded teams. over of grow looking Brandon, said to XX we'll So to to number like growing XX the upwards to And going of the bring are to order of in take take we're say as XXXX, I months, something the chunk XX teams.

Lucas Baranowski

very Thank I Okay. That's all had. you much.

John Nicols

Lucas. you, Thank Pleasure.

Operator

is you. Thank question. your Johnson from proceed Stephens. coming with question Jacob The Please with next

Jacob Johnson

on we of above? Tools taking the about or R&D for questions. and or should there, thanks the uptick all Biotherapeutics Hey, Novel that Life the activity self-funded Science maybe in of the John, think more

John Nicols

Yeah. to concentrated bringing accelerate biology products new areas, types those Novel will expansion Biotherapeutics. see plus X in for be us of pipeline enzymes really Life applications. you're the new The starting in Science self-funding Tools, there, molecular you're of heavily our And

As addition you programs Nestlé program PKU X Health control, to with programs have full know, funded Takeda. with we over in Science Nestlé's Biotherapeutics, in today the we with and have already funded X taken

a number. that's significant So pretty

So we're disorders GI in and way. building go transgenes self-funded a discovery earlier to for therapies after other gene other up stage

the are We'll the selectively going those So get our manufacturing that compared proof-of-concept, sectors, to sometimes we'll partner programs self-funded there. own to Biotherapeutics. a of company industrial sustainable area majority. to minority in of But fund some we be selectively really the if or the - the to and work enzyme, the of for deliver do areas But that other self-funded do Generally, to do and some self-funding. we'll want and and work enzyme. very discovery as we're food Science a programs the development or of model is in some X manufacturing would a unique work our pharmaceutical manufacturing. of Tools whole minority sustainable confident If the be business like the Life

Jacob Johnson

sale. success vaccines the mRNA vaccine? the And polymerase? polymerase a if Got first one the RNA there these just to longer diseases, be RNA more other mRNA COVID-XX could of for guess, opportunities it. on that around follow-up tail activity maybe I lead for vaccines And then, Was longer that term, of for then a

John Nicols

Jacob. Yeah, Yeah.

vaccine So in a first, Actually, manufacturing to to that working with first We've was RNA the their involved intensively of versus those pretty they've polymerase are performance polymerase improved sale validated manufacturing. operations. of get polymerase. very the It RNA companies our not our the benefits COVID-XX been in much them was the installed polymerases not. company to assess

in stage. anything to attentions up not these management of are Their this this change not ramping change at a However, they're priority and just is position point. at the supply on focused the materials, getting

COVID-XX remarks penetrate So in to approved don't we expect in prepared that our certainly we put to manufacturing processes. be expect don't today's XXXX, able we vaccine

have But RNA-based who all diseases, However, discovery RNA-based is sure. companies COVID-XX lot that we're It's of really just therapeutics life validating our of the vaccines really companies, the a customer validated the but the these encouraging. are I all multiple COVID trialed messenger our making that us. and vaccines, of The performance product. next mean in not polymerase vaccines really incumbent. has reduction categories, of the to being RNA-based not the our success them long-tail [cap for amount alongside is These for are development for the remarkable. messenger messenger enthusiasm by pipelines for companies, created messenger other generation for of base. COVID-XX, RNA-based polymerase in compared put the efforts agent] [ph] the a for are efficiency multiple others into this benefits, maybe the that's investing They're of in multiple vaccines needed huge

that of And development so installed stages the pipelines we're RNA we're of kinds to confident get companies. our going increasingly very in polymerase for these

like not to the could up big, steady, very quite the ramp a uptick it'll be and It's over in going coming be bullish. manufacturing huge company COVID-XX getting exciting installed but a maybe I think vaccine a years. been, we're have very So for

Jacob Johnson

Thanks for the it. taking John. question, Got

John Nicols

Jacob. you, Thank Yeah.

Operator

Thank you.

next with with from Our is Lee Please coming proceed Sean question. your question Wainwright. H.C.

Sean Lee

This Good RK. Biotherapeutics first the for Sean segment. my question. My taking on for afternoon, on is one Thanks guys. is

any these highlight expect we can So year? conferences from provide And a the you such? at you do presenting and data of could on milestones and are us this preclinical with programs what also, clinical plan

John Nicols

So sure.

first, enable trial Nestlé initiate for advanced year. quarters. We've to Biotherapeutics co-owned So we first for an development remarks, the third the undisclosed Science. to our undisclosed CDX-XXXX trial milestone the Health trial disorder. GI this have the of be currently that and us start prepared the in That a initiation pipeline few molecule work to we indicated in preclinical the CDX-XXXX confidence - in clinical for clinical clinical will major should XXXX that a that quarter is event substantially for of Codexis in the is between just And

the encourage to and to of that indication development. more in forthcoming preclinical trial least milestone number few preclinical that line should more generated and we trial at So that clinical us clinical a we that that trial us initiation the be about in clinical And we've will as clinicaltrials.gov. for molecule, before That able data to research detail be one. the share invest the that development to expect the months enable be share up as share for will on - more data about

gene some perform on milestone. how XXXX. in Takeda, a to the preclinical full therapy primary based that allow development stage preclinical Takeda The is generate that completely the role preclinical them that with vectors gene to, They and/or and therapy But share be during by with on we in candidate. able Codexis' are as I'm their transgenes take inside will Takeda. I'd the transferred will the So highlight not some partnered Takeda. of to will the to share delivery That programs us run process transgenes. that's research install gene in their data transgenes data controlled therapy be their they may our confidentiality. that is hopeful

our things So gene we're in parallel, being beginning some work Codexis say on, Takeda-led early therapy. days. in gene hang about looking to It's good therapy. to programs own able forward is In do the to

can that share variants targets. So And therapy in We're And, with in we partnership, do there. at progress new the early some those pipeline we're yeah, to I I'm on CodeEvolver, developments able insights the the present hopeful of gene as work transgenes always hopeful lead also developments for of we early we generating, other some some GI us doing new like think consider thousands well. can share occasionally outside to so some those that conferences. data disorders meaningful as Nestlé we're to will into programs early be different

lysosomal our a one presented our big event of I at the presented great scientists, took February. was prepared share place our Dr. WORLDSymposia, disorder my we've that which virtually shared Pompe scientists that to program. on Botham, is in so, year. storage every happy had That And remarks And event data

anyone of research the that to So I out Pompe some look as dig that our was our much is who the generated. transgene the to disease. really, Takeda details share, to to best obviously, can we at do see of for exciting And we're successful time. results really of great Biotherapeutics pipeline data by really possible cleared results that. over preclinical our so to therapeutics put showed about us into to interested It encourage data for going for And we as the some

Sean Lee

details. is you expect the guys helpful. last was segment. In year. the very significant additional this My for question mentioned prepared food growth remarks, you Lyle John, the & that That the on from Thanks, Tate partnership

year. comes And a additional us as you proportion planning bit give to can current this why grow this your Thanks. product you color expected do products maybe from think wondering, to this it's what was of I revenues in on And segment you more make So segment? are well?

John Nicols

PowerPoint different very sector. X percentage can the Enzymes presentation that acceleration Enzymes. of Performance see revenue across submarkets actually earnings accompanied you Actually, a our by in in Sure. the Performance pie chart Yeah, the we're shows that encouraged our release, within today's food

of revenue the revenues largest largest. can now, by been which decades far is and many which first has in being the manufacturing, couple used pharmaceutical the Also, enzymes for business many, years, core of see a percentage The you our for XXXX. life of $X.X and other in actually a applications. about Performance sliver Enzymes And And in be see to million you And is can that X% then, our we sciences. total food XXXX. detailed for that industrial

Growth food in So information X sharp that on we're different sources giving the question. very largely is sector. coming from actually

in years, the those They downstream Stevia and versus this we've Tate expect couple the Both sweeteners, in sweeteners feedback in M us of their X outlook DOLCIA & last grew with markets. TASTEVA Tate to the their Tate Lyle PRIMA demand for their good will in grow for to sweeteners getting continue commercialized enzymes. those our year, partnership enzymes their these They're and are markets. of Lyle sweetener. pull sweetener & in Lyle & sales in First, and XXXX of Allulose informs XXXX. for well, doing a of that couple

we a we & sales that lot translating and that sales food there visibility continued ongoing the We're see has developments about a So spoken can to Also, programs Lyle accordingly we've been with talk that see growth quarters, success in applications lot in more to the & will in year-on-year to of have this enzyme success X we coming industry, Tate hopeful in in Lyle. other add XXXX Tate other food outside we the in in of food but about year. XXXX. those growth the

Sean Lee

Thanks. all have. I That's

John Nicols

Thank you, Sean.

Operator

concludes session. question-and-answer Thank This you. our

to conference closing for like would back any management I So turn or additional the remarks. over to

John Nicols

joining Okay. Thank today. you, for us everyone,

H.C. you the update progress. following be will next to Wainwright we reminder, much. Cowen We to the you and Conference forward the very on SVB a at Codexis' presenting As look Leerink Thank the tomorrow; continuing Conference week. week Conference

Operator

Thank concluded. conference Thank has presentation. The attending today's you you. now for

may You disconnect. now

Codexis (CDXS) 28 Feb 212020 Q4 Earnings call transcript