Codexis, Inc. Q4 FY2025 earnings call

Codexys' mission is to generate manufacturing solutions using biocatalytic enzymes, focusing on RNA medicine with Ecosynthesis Manufacturing Platform. 2025 achieved milestones like synthesizing 10 grams siRNA, ISO 9001 certification, GMP plant project, introduced stereochemical control in ecosynthesis platform. Signed three CDMO agreements in 2025. Small molecule biocatalysis business returned to healthy profit margin. Workforce realigned in Q4 2025 to offset GMP facility cost.

Fourth quarter of 2025 total revenues were $38.9 million vs $21.5 million in Q4 2024, primarily due to Merck Technology Transfer Agreement. Full year 2025 revenue was $70.4 million vs $59.3 million prior year. Product gross margin was 64% in Q4 2025 and full year 2025, driven by product mix. Legacy small molecule biocatalysis business is stable and profitable; Ecosynthesis platform is in development with milestones achieved.

Expect 2026 revenue in range of $72 million to $76 million. Q1 comfortable with consensus estimates. 2026 revenue more weighted to second half. Cash balance sufficient to fund operations and CapEx through end of 2027.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors beyond Codexys' control that could materially affect actual results, as detailed in SEC filings.

Q: Hey, thanks, guys, and thanks for taking the question. I know of late you've been highlighting the potential value for stereoisomer control and the potential to yield a superior drug profile. Could you just talk to, you know, when might we see that validated, either preclinically or clinically, and are any of your existing 55 opportunities actively exploring this? Thank you.

A: Thanks so much for the question. We're working very hard on this this year because we think that the opportunity may be very important. We are already examining the biological activity of some of the stereo configurations that we can generate using the Ecosynthesis platform. We are going to show more substantive data around those stereo configurations at the TIDES-US meeting. And over the whole course of this year, we will be doing further work to associate those stereo configurations with the possibility of improved potency. This is based on a published precedent. In addition, we have had several conversations with customers who have pipelines that include siRNA assets, and they are also interested to collaborate with us to elucidate the opportunity for their particular assets. So we have a lot of activity in this area for 2026, and we expect beyond.

Q: Hi. This is Rick Miller on for Kristin. Just a quick question. Could you help us kind of understand the general process of how you got to the recent announced deal? Thank you.

A: The recent announced deal? Um, the one that we issued the, can I just ask a clarification? Are you referring to the deal in the recent press release? Yeah, that is correct. I think I will, um, ask Britain to speak about the history of that relationship and how we, um, how we think about that deal and the potential for, uh, the future progress in that relationship. Yeah, Alton, thanks. Yeah, this deal in particular is very, very exciting. This is a, as we mentioned in the press release, a small organization that has a cardiovascular asset that are looking and understand that what they're trying to achieve, the current industry cannot meet their needs. And so from their, you know, very early on in their development of this asset, they've been in discussions with us because they know they have a challenge and they need to figure out a way to address that challenge and be able to bring their product to market. So these discussions have been going on for many, many months with this organization. And they're very, very excited working with us. We're very excited working with them because We both believe that the Ecosynthesis manufacturing platform can meet their needs and deliver the materials that they need for their clinical asset that eventually will get into commercial production as they work their way through the different clinical trials they need to go through.

Q: Good afternoon and congratulations on your progress. Maybe just to dig in a little bit more on the 50 gram contract. Could you walk us through? So this initial agreement is for low seven figures. Walk us through the process. So this is preclinical work. What happens next? Assuming the data comes back positive, Where do they go? What phase do they move into? What does that contract look like? I'm assuming it's much larger than 50 grams. So help us extrapolate what this could ultimately become as this moves from a preclinical study into maybe at some point a commercial product.

A: Yeah, I'll start with that, Matt. Thank you. So we like this prototype, and we hope that we would fill our book of business with a pipeline of these. So the example is that we commit to feasibility studies. We've been talking about that over the last year, where we determine if our technology and the particular sequence and construct that a company is interested in progressing if there's a good match. We've seen that across numerous molecules now and are really starting to build a database and also build credibility across our current customers about the capability and power of the platform. contract that you're referencing was also initiated as a feasibility study, so a service-type contract. And as we continue sharing data with this particular client in this contract, we will be completing this component of this contract with the delivery of 50 grams of material that this customer will then use to do preclinical studies with. and they will start to create their early stage comparability assessment of our product. Beyond this preclinical work, one would expect that if the data continues to look successful, that the company will be interested in progressing product generated using the Ecosynthesis platform into an IND submission, and they would be generating toxicology material and GMP material suitable to start a clinical trial. If our production platform continues to be their designated manufacturing process, then our aspiration is that we will become their manufacturing partner and provide ultimately commercial material to them, assuming that their asset proceeds through development.

Q: And if I could sneak one more in, and this one might be a little more geared towards Georgia, but what type of visibility do you have into the $72 to $76 million revenue guidance that you have this year? I guess, how much of that do you feel like you've got line-of-sight or contracts in hand versus how much of that is still something that you expect to receive over the remainder of the year? Thank you.

A: I mean, that's a good question. And, you know, we're sitting in the early part of 2026. So the way that we build our projections is to look at historical buying practices of our clients and make estimates moving forward. We, as you said at the beginning of the year, you always have a certain amount of your projections that are speculative, that are unknown, and this year is not any different. But the base of our business is from what we look forward to from our past buying practices of our customers. So we do have line of sight on quite a large percentage of this business, but it's still early in the year.

Q: Yeah, hi, guys. Thanks for the questions. Allison, maybe a high-level one here. You guys are entering a new phase with what you can do, so I guess I'm just curious where you think the industry finished 2025 when it comes to total siRNA demand. I mean, I remember when you first talked about this pivot towards ecosynthesis, back in 23, I believe, you had a slide that said that it was like 1000 kilos a year, and that by the next decade, it could be 30,000 kilos. So I know these big picture questions are sort of tough to answer. But for those that are kind of trying to keep tabs on this scale up journey, where does it feel like we are at the industry level right now?

A: Yeah, so great question. I think that the siRNA therapeutic pipelines seem very vibrant at the moment. Of course, we can look right at the end of that, we can look at commercial assets. There are it commercial assets, so that total number is growing. You can see that the commercial asset revenue line is growing. We also know that there are a couple of very large indication size BIS III assets sitting in some large pharma pipelines. And then through those types of customers and our interactions with them, we also understand that there's an extremely large number of siRNA assets in preclinical and early stage clinical trials. So, I myself look at the clinical trial numbers in FDA.gov and I count them from time to time and those are growing very nicely. To your point about demand, you're correct that the estimates on demand you know, they vary significantly, but we are, I think, confidently looking at something like 10, I'll give you a broad range, 10 to 30 metric tons of oligonucleotide material required by 2030. So I think that there is a very significant addressable market there, and we intend to have a significant piece of that.

Q: Maybe just to follow up, Georgia, how much gross margin variability do you see when you think about that mix of outsourced business versus partners that are taking ECO in-house directly over, say, the next 12, 24 months? Is that something that represents a mixed question and so therefore a profitability question, or do you not see it that way?

A: No, we don't really see it that way. The eco business right now has been primarily services. So there's not a lot of gross margin you can calculate off of eco, that side of our business right now. So the gross margin is really, it's calculated on product sales only. And so that right now, the majority of that is our historical biocatalysis business. And the gross margins are pretty stable there. we were able to sustain a 64% gross margin for the entire year. I mean, there's some quarterly variability, but we got 64% gross margin in the fourth quarter plus for the whole year. So you feel pretty good about having that margin or close to it with some error of margin around that through 2026. We see that as being pretty stable now.

Q: Great. Thanks for taking the questions, guys. I wanted to actually ask about the revenue mix from here and maybe just gut-tech a few modeling assumptions. I understand your color around the legacy biocatalysis business, but is it fair to assume at least kind of incremental or modest growth of that segment over the next few years? Or should we interpret kind of this broader strategic pivot to mean ultimately a winding down of biocatalysis revenues as some of these newer partnerships take, you know, more and more share of revenue growth? Just kind of checking in on how we should think about the split of your growth over the next few years. Thanks.

A: Yeah, please, Georgia. The bulk of our growth is we really do expect that to come from the eco side of the business. Our base business of the small molecule biocatalysis business, has stabilized, and we mentioned that we had a pipeline of products that are in late-stage clinical testing. We've had data readouts on three of those. Two were successful. We do expect that that pipeline of opportunities will continue to fuel growth for the next few years. But it's more... the higher growth rate we expect to come from the eco side of the business. I hope that answers your question.