Codexis (CDXS) Q2 2026 Earnings Call Transcript

DATE

Tuesday, Aug. 11, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer - Alison Moore
• Chief Financial Officer and Chief Business Officer - Georgia L. Erbez
• Chief Scientific Officer - Stefan Lutz
• Senior Vice President, Sales and Marketing - Britton Jimenez

TAKEAWAYS

• Revenue -- $14.9 million, compared to $15.3 million in the second quarter of 2025.
• Product Revenue -- $13.2 million, increasing from $7.4 million in the prior-year period due to the launch of new products with higher margins.
• Research and Development Revenue -- $1.7 million, decreasing from $7.9 million versus the second quarter of 2025.
• Net Loss -- $12.0 million, or $0.13 per share, compared to a net loss of $13.3 million, or $0.16 per share, in the prior-year period.
• Product Gross Margin -- 73%, an improvement over the 72% reported in the second quarter of 2025 driven by higher sales of more profitable products.
• Full-Year Revenue Guidance -- $72 million to $76 million, with management expecting performance to be more heavily weighted toward the second half of the year.
• Full-Year Gross Margin Guidance -- High 60% range, reflecting sustained improvement in the first half of 2026.
• Pro-forma Cash Balance -- approximately $80 million, including $25 million in net proceeds from an equity financing completed in July 2026.
• Cash Runway -- Sufficient through 2028, which includes the anticipated capital expenditures for the new GMP facility build-out.
• Research and Development Expenses -- $11.7 million, a 15.2% decrease year over year reflecting lower employee costs and reduced spending on outside services.
• Selling, General and Administrative Expenses -- $10.9 million, compared to $12.3 million in the prior year due to reduced headcount and lower stock-based compensation.
• GMP Facility Capital Expenditure -- approximately $25 million, representing the investment required for a facility to support clinical trials and IND filings.
• siRNA Market Demand -- 30-fold increase expected by 2035, with a projected manufacturing bottleneck anticipated within the next three years.
• Commercial Product Portfolio -- 14 products, including four that received regulatory approval in 2026 and one that received a label expansion.
• Clinical Pipeline -- 15 programs in Phase II or Phase III development, with data readouts expected from seven trials over the next two years.
• Production Scale Milestone -- 500 grams, the target for pilot-scale siRNA production in the Eco Innovation Lab by the end of 2026.
• CDMO Partnerships -- three contracts, with one partner currently in negotiations for a long-term commercial contract after completing technology transfer.
• Capital Efficiency -- 70%, the expected improvement in capital efficiency for the ECOsynthesis platform compared to traditional solid-phase organic synthesis.
• Oligonucleotide Development Growth -- 10% per year, supported by more than 100 product candidates in clinical trials and over 400 in preclinical development.
• Oligonucleotide Manufacturing Scale -- 1 kilo, the targeted production level management aims to reach before operationalizing the new GMP facility.

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RISKS

• Erbez stated, "it is you know, still as we have experienced in the past, it can still be lumpy, it can still be unpredictable," referring to the potential variability in customer ordering patterns for commercial launches.

SUMMARY

Management reported that the second half of 2026 is expected to see a greater concentration of revenue and progress toward industrializing the ECOsynthesis platform. The company is transitioning from small-molecule biocatalysis toward large-scale siRNA manufacturing solutions to address a projected industry bottleneck in production capacity. Strategic priorities include the construction of a dedicated GMP facility and the expansion of CDMO partnerships to create additional channels for technology adoption. The company also intends to leverage its expertise in protein engineering to validate stereochemical control and initiate more efficient RNA synthesis methods to reduce costs for therapeutic developers.

• CEO Moore stated that the "impact of the ECOsynthesis platform is becoming increasingly clear as more organizations embrace enzymatic approaches."
• CSO Lutz noted that "engineered enzymes that power ECOsynthesis deliver products with defined stereochemical configurations offering users unprecedented control within a scalable oligonucleotide manufacturing process."
• Jimenez stated that some of the company's "most motivated customers are CDMOs" due to the technical hurdles and billion-dollar capital costs associated with building traditional solid-phase synthesis facilities.
• Construction of the ECO GMP Manufacturing Center is scheduled to begin in the second half of 2026, with full production capability planned by the end of 2027.
• The company is engaging with the FDA Emerging Technologies team regarding siRNA product quality and stereoisomer control, with a formal meeting anticipated in the fourth quarter of 2026.
• Lutz introduced "Starterless ECOsynthesis" as a novel R&D capability that allows RNA synthesis to initiate from a single nucleotide, potentially eliminating the need for chemically synthesized starter oligonucleotides.
• Jimenez indicated that the company has technology-transferred the ECOsynthesis process into the facilities of all three current CDMO partners to allow for in-house assessment.

INDUSTRY GLOSSARY

• siRNA: Small interfering RNA, a class of double-stranded RNA molecules used in therapeutics to interfere with the expression of specific genes.
• ECOsynthesis: A proprietary enzymatic manufacturing platform designed for the scalable production of oligonucleotides.
• Biocatalysis: The use of natural catalysts, such as enzymes, to perform chemical transformations on organic compounds.
• GMP: Good Manufacturing Practice, a system ensuring products are consistently produced and controlled according to quality standards.
• IND: Investigatory New Drug application, a request for authorization from the FDA to administer an investigational drug to humans.
• CDMO: Contract Development and Manufacturing Organization, a company providing comprehensive drug development and manufacturing services.
• Stereochemistry: The study of the spatial arrangement of atoms in molecules and how this affects their chemical and biological properties.

Full Conference Call Transcript

Operator: Greetings and welcome to the Codexis Second Quarter 2026 Financial Results Conference At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Is now my pleasure to introduce Georgia L. Erbez, Chief Financial Officer and Chief Business Officer.

Georgia L. Erbez: Thank you.

Operator: You may begin.

Georgia L. Erbez: Thank you, operator. With me today are Alison Moore, President and Chief Executive Officer Stefan Lutz, Chief Scientific Officer and Britton Jimenez, Senior Vice President, Sales and Marketing. During this call, management will be making a number of forward looking statements within the meaning of the Private Securities Litigation Reform Act of 2000, including our guidance for 2026 revenue, anticipated milestones and product launches, facility expansions technical milestones, and public announcements related thereto as well as our strategies and prospects for revenue growth path to profitability and successful execution of current and future programs and partnerships.

To the extent that statements contained in this call are not descriptions of historical facts regarding Codexis, They are forward looking statements reflecting the beliefs and expectations of management as of the statement date 08/11/2026. You should not place undue reliance on these forward looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond Codexis' control and that could materially affect actual results. Additional information about factors that could materially affect actual results can be found in Codex's filings with the Securities and Exchange Commission. Codexis expressly disclaims any intent or obligation to update these forward looking statements except as required by law.

And now I will turn the call over to Alison.

Alison Moore: Thank you, Georgia, and thanks, everyone, for joining. Codexis generates manufacturing solutions using high performance engineered enzymes The investment of over 20 years of our expertise is playing out in our pharma biocatalysis pipeline which supports 14 commercial products and a pipeline of programs in Phase II and III clinical developments. This expertise has also enabled the creation of the ECOsynthesis manufacturing platform a scalable aqueous process for the production of oligonucleotides I am pleased to share our progress through the first half of 2026, and I am excited for the rest of the year and beyond.

Today, we reported solid financial results for the second quarter of 2026, with revenue of $14.9 million Our recent successful financing, which closed 2 weeks ago, resulted in a capital raise of $25 million of net proceeds, This provides us with greater stability and flexibility as we pursue our strategic goals. Georgia will give us more details on our financial achievements later in the call. An important highlight of the quarter was the TIDES U.S. Conference in May, where we shared important new data on our ECOsynthesis technology. Codexis presented data demonstrating full length siRNA synthesis with precise control of phosphorothioate chemistry using our technology platform. Stereochemistry plays an important role in how oligonucleotides perform.

Stefan Lutz, our Chief Scientific Officer, will provide additional details on the growing capabilities of our platform later in the call. I am also pleased to report that the construction of our GMP manufacturing facility is proceeding according to plan. This facility is a core component of our strategy to enable the adoption of ECOsynthesis into the pipelines and supply chains of our customers. This facility will deliver GMP material to support IND filings and supply clinical trials. And deepen Codexis production scale platform expertise. Our building permit application will be submitted momentarily and our manufacturing equipment has been ordered. We will begin construction following approval of the permit.

The cost of the construction for this project approximately $25 million This investment underscores our long term commitment to supporting product development, scale up and manufacturing for our customers. Years ago, the pioneering science of Codexis transformed the opportunities available to process chemists, enabling the manufacture of complex small molecules chemistries. This innovation has now become standard practice in the production of small molecule medicines. Today, we believe that the ECOsynthesis platform will similarly revolutionize the ability to generate large scale quantities of siRNA medicines making this advanced modality accessible to patients across all therapeutic areas. ECOsynthesis, leverages enzymatic solutions, offers a scalable alternative to the current solid phase organic synthesis technology.

The latter is not sufficiently scalable and requires enormous amounts of solvent, posing significant challenges. As demand for siRNA is expected to increase 30-fold by 2035. This manufacturing bottleneck is anticipated to emerge within the next 3 years. Particularly as large phase 3 cardiovascular trials reach their conclusions. As communicated at TIDES, the industry recognizes the limitations of current production methods. And acknowledges the need for radical new technologies. The impact of the ECOsynthesis platform is becoming increasingly clear as more organizations embrace enzymatic approaches. Codexis is in the leading position to industrialize this important new method. I will now turn the call over to Stefan for more details on our TIDES data.

Stefan Lutz: Thank you, Alison. TIDES U.S. in May we presented new data demonstrating on how our ECOsynthesis manufacturing technology is not only advancing existing, but also unlocking new capabilities for production of siRNA therapeutics Drug developers currently have limited control over phosphorothioate stereochemistry as existing chemical manufacturing methods produce complex mixtures that vary in therapeutic potency and require time and labor intensive downstream processing. In contrast, the engineered enzymes that power ECOsynthesis deliver products with defined stereochemical configurations offering users unprecedented control within a scalable oligonucleotide manufacturing process. These stereo pure molecules can confer overall improved product quality enhanced therapeutic potency and streamline manufacturing by reducing process complexity.

We continue to explore the biological impact of stereo control and believe that this capability promises a significant advantage for customers seeking to optimize for performance manufacturability and differentiation of their siRNA assets. In addition, we introduced Starterless ECOsynthesis, a novel capability to launch RNA synthesis from a single nucleotide rather than a chemically synthesized starter oligonucleotide. Although still in the R&D stage, the starterless approach is a technically simpler solution initiating oligonucleotide synthesis and lowers cost for siRNA manufacturing. This innovation is particularly relevant as the industry increasingly explores fragment based assembly strategies in which shorter oligonucleotides are ligated to produce full length siRNA therapeutics.

In this context, eliminating the need for starter oligonucleotides offers even greater economic and operational advantages. Feedback from business and CMC representatives at the conference has reinforced our view that Starterless ECOsynthesis marks a material advancement in enzymatic siRNA manufacturing. We will provide updates on this technology as additional data become available. More broadly, our innovations presented at TIDES have generated significant interest across the industry and have resulted in additional engagement with prospective customers and strategic partners. But I will let Britton speak to that in a minute.

1 message that came through clearly at this year's Tides Conference, as companies envision the future of RNA medicines, they recognize the need for manufacturing technologies that can overcome the limitations of traditional solid phase synthesis. Enzymatic approaches including ligation and sequential synthesis are integral to these future strategies. Our focus remains on executing against our development objectives and demonstrating that ECOsynthesis can be industrialized at the scale required to support broader adoption of siRNA therapeutics across larger patient populations. We believe our unique combination of product quality, stereochemical precision and scalable enzymatic production represents a compelling competitive advantage in the emerging oligonucleotide manufacturing landscape.

Our customers are an invaluable source for new ideas and we listen to what matters to them. I will now turn the call over to Britton for an update on our commercial activities.

Britton Jimenez: Thanks, Stefan. The number of RNA medicines in development is expanding at an estimated rate of at least 10% per year with over 100 product candidates in clinical trials and more than 400 in preclinical development. It is broadly recognized that current production technologies will not be able to keep up with future demand. The rapidly changing landscape for siRNA is felt most keenly by CDMOs who supply the vast majority of oligonucleotide medicines today using solid phase organic chemistry. The ability to scale production is complicated by technical challenges associated with solid phase synthesis and further burdened by the capital cost of building new facilities. It should be no surprise that some of our most motivated customers are CDMOs.

For each of the 3 CDMOs we have contracts with, we have completed small scale technology transfers into their facilities so that they can assess ECOsynthesis in house. The most advanced of those assessments has been completed and we are in negotiations for a long term commercial contract. We are very excited about this prospect as these relationships will be revenue generating and will create additional channels for adoption and scaling of the ECO synthesis technology. Our engagement with biopharmaceutical companies continues to flourish. Our specific objectives are to promote adoption of our technology into therapeutic asset pipelines, in which we supply preclinical and clinical material and support IND filings.

In addition, our technology can be integrated into an innovator's company's production environment. In the last quarter, we have been engaged with the pioneer siRNA companies in addition to other large biopharma companies to progress partnerships with these objectives. Our small molecule biocatalysis business remains stable and profitable and it benefits from some recent new product approvals that have higher margins than the old legacy products. We continue to support 14 commercially approved products that are dependent on our enzymes, including 4 products that receive regulatory approval in 2026. Another product received a label expansion significantly increasing the market potential of that drug. After years without a new product approval, this activity has resulted in a renewed growth trend.

The product pipeline also remains robust with 15 programs in Phase II or III clinical development and data readouts expected on 7 clinical trials in the next 2 years. We are excited for our prospects to demonstrate sustained steady growth in this side of the business. With that, I will now turn the call over to Georgia for a discussion of our financial results for the second quarter.

Georgia L. Erbez: Thanks, Britton. Good afternoon, everyone. Today, I will provide a brief overview of our financial results here on the call and invite you to review our 10 Q filed today for a more detailed discussion. Total revenues were 14.9 million for the second quarter of 2026 compared to $15.3 million in the second quarter of 2025. We are particularly pleased with the revenue performance in this year's second quarter as we experienced significant improvement in our biocatalytic enzyme business. Which we see as a return to growth.

Product gross margin was 73% for the second quarter of 2026, was an improvement over the gross margin in the first quarter of 26, and over the gross margin for the entire year for 2025. The strong result for the second quarter was primarily driven by higher sales of more profitable products. Due to this sustained improvement in the first half, we now expect gross margins to improve into the high 60s for the full year 2026. Research and development expenses for the second quarter of 2026 were $11.7 million compared to $13.8 million in the second quarter of 2025. The decline was largely driven by lower employee related costs and reduced spending on outside services and lab supplies.

Selling, general and administrative expenses were $10.9 million for the second quarter of 2026, compared to $12.3 million in the prior year period. The decline was primarily due to lower employee related costs associated with reduced headcount, lower stock based compensation expenses, and lower allocable costs. Controlling expenses remains a focus of ours, to ensure we are using our capital efficiently and in functions that bring the highest and largest positive impact to the success of our business. Net loss for the second quarter of 2026 was $12 million compared to a loss of $13.3 million for the second quarter of 2025.

We continue to expect 2026 revenue in the range of $70 million to $76 million Similar to the quarterly trends we saw last year, we expect 2026 revenue to be more heavily weighted towards the second half of 2026 versus the first half. Codexis ended the second quarter of 2026 with $54.9 million in cash, cash equivalents and short term investments, which compares to 78.2 million at the end of 2025. Subsequent to the closing of the second quarter, we successfully completed an equity financing that raised a total of $25 million net of expenses.

Resulting in a pro forma cash balance of approximately $79.8 million We expect that our current cash will be sufficient to fund our planned operations capital expenditures through 2028 extending our previous cash runway guidance. As a reminder, our financial guidance and cash runway projection includes the expenses associated with the build out of our GMP facility. With that, I will now turn the call back over to Alison.

Alison Moore: Thank you, Georgia, Stefan, and Britton. Codexis ECOsynthesis technology is already demonstrating its potential to alter the landscape of oligonucleotide manufacturing and enable siRNA to reach indications with large patient populations. Our next steps are to advance the industrialization that will support deployment of our technologies into customers' pipelines. For investors, we want to show proof of success. We are working hard to sign higher value contracts as well as innovative licensing deals. We will also be focused on financial performance by striving to meet our revenue targets while being mindful of our expenses. We will continue to use our many years of experience in engineered enzymes to sustain and drive innovation in the field of RNA medicine.

We are committed to achieving our goals and milestones for 2026. This includes beginning construction on our GMP production facility progressing toward 500-gram pilot scale production of siRNA in the Eco Innovation Lab, expanding a CDMO scale up partnership for ECOsynthesis, securing the ECOsynthesis raw materials supply chain, and maintaining the pharma biocatalysis business at healthy gross margins. I believe 2026 will be the year that ECOsynthesis achieves the scale and performance metrics that prove it to be the technology of choice for our customers' siRNA medicine. We are excited by our prospects and proud of the dedication and achievements of the entire Codexis team who have been instrumental in making the ECOsynthesis technology a reality.

We would be happy to take your questions. Operator. Thank you.

Operator: And ladies and gentlemen, at this time, we will conduct the question-and-answer session. And your first question comes from Allison Bratzel with Piper Sandler. Please state your question.

Allison Bratzel: Hey, guys. Good afternoon and thank you for taking the question. Just following up on the stereochemistry data and the single nucleotide initiation capabilities, you guys showed at TIDES U.S. Could you just talk more to what has customer reaction actually looked like since then? Has that translated into new engagements? And then separately, could you talk to what kind of updates you would expect to be able to show at TIDES Europe later this year? And just what kind of customer conversations that could foster? Thank you.

Alison Moore: Thank you very much, Ellie, for the question. I am going to have Stefan say a little bit more about the technology and what to expect next, and then we will have Britton speak to what is happening commercially as a result.

Stefan Lutz: Yes. Hi, Alison. On TIDES Europe, I think we really see an opportunity to continue the story from TIDES U.S. talking about the capabilities of the ECOsynthesis platform. But also maybe address some of the data on the biological impact of stereo control Yeah.

Britton Jimenez: And to build on Stefan's comments there, from a customer interaction, actually quite a bit of excitement came from TIDES U.S. Around both the stereochemistry control and the starterless initiator. From the stereochemistry control perspective, that is really allowed for us to engage with several customers that believe both in the value of stereochemistry control from a better therapy perspective, but also from a quality and a better product. Quality perspective. So those conversations just have advanced We are in several conversations with customers around that and how they want to deploy this type of technology within to their pipelines. So those conversations have been really, really positive.

From a starter list perspective, because this was a brand new technology and enhancement to our platform. A lot of those-- the conversations we are having have just started, but they are all significantly positive. We have actually had several past customers that were interested in our technology have now really changed their position where they want to advance and test our technology because of this new Starterless tech capability that we have. So overall, extremely positive. And it is really allowed us to advance our conversations further with these customers.

Alison Moore: Thank you.

Operator: And your next question comes from Kristen Kluska with Cantor Fitzgerald. Please state your question. Kristen Kluska, your line is open. Please state your question and unmute yourself.

Jenny: Hi, sorry. This is Jenny on for Kristen's line. Thank you so much for taking my question. So my first question is sort of how might the advances in stereochemistry allow partners to lower dosage, maybe save money, and potentially improve upon safety measures.

Alison Moore: Thank you for the question, Jenny. I think maybe Stefan could at least at a high level, describe some of our own work that we are doing there. And then maybe just recap what the field understands about the potential.

Stefan Lutz: Yep. So when it comes to stereochemistry, you know, these drugs operate within the cell. The cellular environment is chiral, has stereo control. And so these drugs certainly have the potential to also play to that to that nature. it is also a good indication that it is small molecule API field, enanti cell or the stereo chemistry has shown to be an important factor in the therapeutic efficacy of assets. As far as playing to other strength of offering stereo control, I think it is important to highlight the manufacturing advantages that such a capability brings.

The reduction in process complexity as the products resulting from the synthesis are much more narrowly defined and therefore simplify downstream processing, which today involves a very elaborate purification chromatography process Those aspects certainly factor into advantages that we see of controlling stereochemistry. As well. And then, we have also ongoing work here at Codexis where we are evaluating ourselves in biological assays. The opportunity that is related specifically to activity. Or the potential of activity improvement?

Jenny: Great. Thank you so much. And I was wondering if you could maybe talk a little bit about how much you do you believe the desire to use precise control with stereochemistry is going to lead you to find potential partners, what are the key data or analysis that truly suggest its added benefits, and then why will this matter as siRNA therapeutic development becomes more competitive in the upcoming years?

Alison Moore: I think that what we know with our current customers is that some of them feel quite strongly about the opportunity of stereo control. And some of them, are less concerned about stereo control. Yeah. And we have we have created engagements with both kinds of customers, and we are happy to deploy the ecosystem technologies whether they are interested in stereochemistry or not. But that is not that is not it is not that we can only take 1 route there. However, we have 1 particular customer that is very interested in eking a any potential potency opportunity that we might have for their asset. As a result of stereochemical control.

And Stefan and his team generated some very beautiful material and beautiful analytical data that we did share at Tides that Stefan spoke to. And you asked, you know, what happens next? So we are making material with particular stereo configuration We are advancing studies to understand the activity opportunities of different configurations. And we also have other companies that we are currently in negotiations with who are interested in doing the same. Alright. Thank you very much.

Operator: Your next question comes from Matthew Hewitt with Craig Hallum. Please state your question.

Matthew Hewitt: Good afternoon. Thanks for taking the questions. Maybe first up, Georgia, regarding the guidance of 72 million to $76 million in revenues this year. Obviously back half weighted, but that still implies a pretty significant step up here in the second half. How should we be thinking about cadence and how much of that step up here in second half of the year are is from contracts that you already have in hand, whether it is for individual enzymes or some of the work that you are doing, with the ECOsynthesis and the newer products?

Georgia L. Erbez: Well, we are it comes from a variety of different sources as you know, our revenue base is quite diverse. The performance that we have in the base business has been improving. As you saw this quarter, we are continuing to see the same kind of trends moving forward, but we also have some strong leads and performance in the ecosystem as well. So, stay tuned. And we will hopefully have another good quarter in Q3 and we can show you a little bit more about how the split works out.

Matthew Hewitt: Understood. And then we are regarding the 4 approvals that your partners have already received this year, What does what do those orders look like? Are they fairly consistent? Like, are you anticipating And I am just going to throw out random numbers here. But do you expect, like, $5 million a quarter from customer a or b and it will just kinda ramp over time? Or will it be more lumpy, meaning you get an order in Q1, then you might not see that customer come back until the third quarter. I am just trying to think about how to model that out. Thank you.

Georgia L. Erbez: Well, I am happy to spend time with you offline and work through some of this. But, you know, it is as you know, every customer is different. In how they, prepare for commercial launch. Some stockpile drugs, some do not, some are a little bit more steady in their manufacturing plans. But so I would say that it is you know, still as we have experienced in the past, it can still be lumpy, it can still be unpredictable. But overall, we are seeing positive trends from these approvals, and we are pretty excited about that. Understood.

Operator: Thank you. Your next question comes from Matthew Stanton with Jefferies. Please state your question.

Matthew Stanton: Hey, thanks. Maybe sticking with the biocatalysis business, Understanding the business can be lumpy. Just talk about the pipeline. I think you said 15 programs in Phase 2 and 3. 7 of those read out over the next 2 years. Is there an opportunity for this business to see a bit more of an elevated growth rate as we look out over the next couple of years as those read out and the 14 approved products continue to progress as well? Thanks.

Georgia L. Erbez: No, we are really excited about the prospects for the base business right now. With the approvals coming up. As a reminder, in the last 2 years, we had hardly any approvals and now we are starting to see some of our pipeline mature and that is very exciting. I will remind you that the products that we have and the drugs that are in clinical development really span quite a wide range of markets Some are very niche, some are orphan and some are pretty large.

So we do we have always said that we expect over the long term that this business, once we start seeing these approvals could really grow in the kind of high single digits for the next 5 to 7 years. Okay, great.

Matthew Stanton: Thanks. And then maybe on the 3 CDMO contracts, did you say that all of them had completed small scale tech transfers? And then, I guess, does that mean all of them are in kind of these more advanced negotiations? Or is there more kind of work to do across the 3? I guess my question is more, you talked about progressing towards longer term commercial contracts. Is that 1 of the 3 or are kind of all 3 in flight? And then any more color just in terms of line of sight visibility to hopefully getting 1 or several of those to the line here. Thank you.

Britton Jimenez: Yes, absolutely. So as I had mentioned, with those 3 CDMO partners, we have completed the first half of the project with within Codexis. and now we have tech-transferred at small scale the process into their facilities. Now understand each of those CDMOs are not on the exact same timeline. there is some are more advanced than others. But each of those CDMOs has our technology in their facilities 1 has pretty much completed their entire assessment. And that is by far the most advanced CDMO that we have, which were in long-term commercial partnership negotiations currently.

Now, the other 2 CDMOs are just a step behind that lead as they are in the process of doing the evaluation of our technology. So we do see this kind of phased out over the time, but we are very excited about it. And we do think that lead contract negotiation, we are hoping to get that wrapped up here fairly quickly.

Operator: Your next question comes from Dan Arias with Stifel. Please state your question.

Dan Arias: Hi, guys. Thanks for the questions. First 1 is just a bigger picture question. It sounds like industry activity continues to head in a good direction here in your own sales funnel is growing. You mentioned that this is the year from a scale perspective. So if things were to go well, what would be a reasonable ballpark? I am just how much siRNA could you be supplying to the industry in 18, 24 months? Relative to what you supply today? What could be the scale factor on your own supply overall in aggregate?

Alison Moore: Yes. So what we have been communicating is, this year is an important year we are, currently producing at hundreds of grams scale. When we ligate fragments together by the end of the year. We can be operating at about a half-kilo scale And then just before we operationalize our GMP facility, we aim to be at kilo scale production. So you will have heard us say a lot that our focus is really adoption. So we intend to have customers who would purchase their own preclinical and clinical material from us. We already do supply preclinical material.

And as Britton has just said, we are excited about the possibility of working with some of our CDMO partners, but that also creates an adopt channel and a scaling opportunity. So our focus is to we sometimes use the word industrialize the technology. That just means operating at a scale where our customers whether they are CDMOs or biopharmaceutical companies, can say, yes, that is at a scale that I can understand can start to generate material that can support my pipeline. So we think that we can go from 1 kilo and then step up, you know, 10x probably, via our partnership. Okay.

Dan Arias: I mean, I certainly understand you are talking about when you when you talk about your own capabilities. I think I am just trying to figure out the best way to understand what the industry might need 12 to 24 months down the line because naturally, there is a focus on what you guys can bring to the table, but the demand how that is going to change over time, I think, is maybe just a piece that is a little bit less understood.

Alison Moore: Yeah. So, well, I think it is a really important dynamic to be watching over the next 3 years. So there are 4 very large cardiovascular trials ongoing, If only 1 of them achieved the kind of addressable patient population, that they are interested in, it is going to cause a real constraint in the current installed capacity. And that is why, you know, the CDMO space is spending money on you know, stainless facilities. And, you know, it is about it is approximately a billion dollars of stainless steel to generate 1 metric ton additional annually.

So that is an expensive route if we really think that demand is going to increase 30 or 30 plus fold in the next 10 years. And it takes, you know, a couple of years minimum to build 1 of those facilities. So I think where Codexis technology is important is really thinking beyond this constriction point. And it is about the adoption of this new technology that does not have the scale barriers nor the some of the economic considerations and solvent considerations associated with current state technology. And I think what we will see is the deployment of novel or what we are seeing is the deployment of novel technology synthesis alongside the existing solid phase organic.

We have previously communicated that we think the ECOsynthesis platform will be approximately 70% more capital efficient. So as the whole industry grows, to support the opportunity of siRNA medicines, these over these next few years, the introduction of these novel disruptive technologies will really pave the way to that production of the future. Okay. Thank you very much for that.

Operator: Your next question comes from Brendan Smith with TD Cowen. Please state your question.

Chad Wiatrowski: Hey, everyone. it is Chad Wiatrowski on for Brendan Smith. I guess, what were some of the technical risks or hurdles that you overcame as you have innovated this technology up to hundreds of grams And what do you see going forward as you scale to that kilogram as the main technical hurdles to overcome?

Alison Moore: Yeah. Thank you for that question. I think I would like Stefan just to say a few words about the uniqueness of our enzymes first in terms of technical barriers that need to be overcome and then I will speak a little bit more to the scale question.

Stefan Lutz: In order to really address the market needs for the composition of these siRNA assets. The enzymes do not simply need to be improved in 1 or the other capability. They need to be high performance engineered enzymes. Across a wide range of parameters They need to tolerate the different building blocks. They have to have the robustness to operate over the length of the operation time. They need to recognize stereochemistry. So all these aspects, to build this into the enzyme has been a formidable challenge that Codexis has mastered to a good degree relying on the 2 decades of experience that we bring to enzyme engineering.

I think that is quite a unique capability and it is the foundation really for process development to then achieve the scale and the quality manufacturing that Alison can comment on.

Alison Moore: Yeah. So the kind of convergent disciplines that we have at work here at Codexis are the real strengths and expertise in enzymology and then the application of that enzymology into this production process. And so even enzyme behavior as it is immobilized, for example. We have spent a lot of time optimizing that. In terms of scaling, so scale factors, you know, we have actually a very simple process flow, which is our nucleotides are in solution an essential tank, and then those nucleotides flow over an immobilized enzyme which polymerizes it, polymerizes the nucleotides, and then a phosphatase that stops the reaction. So it is a rather simple process flow.

But the scale parameters that we are optimizing are kind of what I would call classic scale parameters. So ensuring that the flow rates are correct, ensuring that the configuration of the immobilized enzymes is optimal, ensuring that temperature is well controlled, which sounds like a simple thing, but as you scale a process like this, there is a lot of nuance there. Also, as Stefan mentioned, these enzymes have been very uniquely engineered.

And every addition of a synthetic nucleotide has its own character, And so as we scale, we need to make sure that we have robust design space so that any sequence for any customer can be created at scale and that we generate high quality product at the end of the day. So that is what we are busy working on. And like I said, already at 100 grams end of the year, half a kilo is in sight. Thank you.

Operator: Ladies and gentlemen, there are no further questions at this time. So I will hand the floor back to Alison Moore for closing remarks.

Alison Moore: Well, thank you, for joining us today. We are looking forward to seeing you at the upcoming investor conferences that we have in the second half of the year. If at any time you have additional questions, please feel free to contact us and have a good evening. Thank you.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.

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