Codexis, Inc. Q2 FY2026 earnings call

• Financial Overview

  • Q2 2026 product gross margin reached 73%, an improvement over Q1 2026 and full-year 2025, driven by higher sales of more profitable biocatalysis products
  • R&D expenses were $11.7 million (down from $13.8 million in Q2 2025) driven by lower employee costs, outside services and lab supplies
  • SG&A expenses were $10.9 million (down from $12.3 million in Q2 2025) driven by lower headcount-related costs, lower stock-based compensation, and reduced allocable costs
  • Net loss for Q2 2026 was $12 million, an improvement from a $13.3 million loss in the year-ago quarter
  • A recent post-quarter equity financing raised $25 million in net proceeds, bringing pro forma cash balance to $79.8 million as of mid-Q3 2026

• Ecosynthesis Platform Technical Progress

  • Presented new data at the May 2026 Tides U.S. conference demonstrating full-length siRNA synthesis with precise control of phosphorothioate stereochemistry, which improves product quality, therapeutic potency, and reduces downstream processing complexity compared to traditional solid-phase synthesis
  • Introduced starterless ecosynthesis, an R&D-stage innovation that initiates RNA synthesis from a single nucleotide instead of a pre-synthesized starter oligonucleotide, reducing manufacturing cost and complexity, especially for fragment-based assembly strategies
  • The new data generated significant industry interest and increased engagement with prospective customers and partners

• GMP Manufacturing Facility Development

  • The new GMP facility for Ecosynthesis is progressing per plan; building permit applications are imminent, manufacturing equipment has been ordered, and construction will start after permit approval
  • Total construction cost is projected at approximately $25 million, and the facility will provide GMP material for IND filings and clinical trials, supporting Ecosynthesis adoption by customers

• Commercial Activities

  • Three contract development and manufacturing organizations (CDMOs) have completed small-scale technology transfer of Ecosynthesis for in-house assessment; the most advanced CDMO has completed assessment, and Codexis is in negotiations for a long-term commercial contract
  • Engagement with leading siRNA biopharmaceutical and large biopharma companies is advancing, with goals to integrate Ecosynthesis into customer pipelines, supply preclinical/clinical material, and support IND filings

For Q2 2026, Codexis reported total revenue of $14.9 million, a slight decrease from $15.3 million in Q2 2025. The pharma biocatalysis (small molecule enzyme solutions) segment is stable, profitable, and returned to growth in the quarter, contributing the majority of total revenue. This segment supports 14 commercially approved products (4 approved in 2026, plus 1 label expansion that increased its market potential) and has a robust pipeline of 15 programs in Phase 2/3 clinical development, with 7 data readouts expected over the next two years. Newer approved products in this segment have higher margins than legacy products, driving overall margin improvement. The Ecosynthesis oligonucleotide manufacturing platform segment is still in pre-commercial/early partnership stage, with no material revenue contribution in the quarter, though partnership discussions are advancing.

• Full-year 2026 revenue guidance is maintained at $72 million to $76 million, with revenue expected to be heavily weighted to the second half of 2026
• Full-year 2026 gross margin is now expected to improve to the high 60% range, up from prior expectations
• Current cash balance is sufficient to fund all planned operations and capital expenditures (including GMP facility construction) through 2028, extending the prior cash runway guidance
• 2026 key milestones target: begin GMP facility construction, reach 500 gram pilot scale siRNA production in the EcoInnovation Lab, expand a CDMO Ecosynthesis scale-up partnership, secure the Ecosynthesis raw material supply chain, and maintain healthy growth margins for the pharma biocatalysis business
• The pharma biocatalysis segment is expected to deliver high single-digit annual growth over the next 5 to 7 years once recent pipeline approvals translate to consistent commercial demand

• Forward-looking statements (including revenue guidance, milestone achievement, partnership outcomes, and market adoption of Ecosynthesis) involve known and unknown risks and uncertainties that could cause actual results to differ materially from projections, as detailed in Codexis' SEC filings
• siRNA manufacturing demand is projected to grow 30-fold by 2035, with a manufacturing capacity bottleneck expected within three years, but adoption of new enzymatic manufacturing technologies like Ecosynthesis may be slower than expected, as customers may continue to rely on established solid-phase synthesis capacity
• Biocatalysis product revenue from newly approved drugs can be lumpy and unpredictable, as customer ordering patterns vary based on stockpiling and manufacturing planning strategies, creating near-term revenue uncertainty
• Scaling Ecosynthesis from hundreds of grams to commercial-scale production requires continued optimization of process parameters, enzyme performance, and robust product design space, and unforeseen technical hurdles could delay scale-up timelines

Q: What customer reaction followed the Tides U.S. Ecosynthesis data presentation, and what will be shared at Tides Europe later this year? / A: The new stereochemistry control and starterless synthesis capabilities generated significant positive customer engagement. Multiple prospective customers have advanced conversations about integrating these capabilities into their development pipelines. At Tides Europe, Codexis plans to continue the platform update and share new data on the biological impact of stereochemical control, which is expected to foster additional customer discussions.

Q: When will one of the CDMO partnerships result in a long-term commercial contract, and where do the other CDMO partnerships stand? / A: All three CDMO partners have completed small-scale technology transfer of Ecosynthesis to their facilities for internal assessment. One CDMO has finished its full assessment, and Codexis is currently in active negotiations for a long-term commercial partnership, which the team hopes to finalize fairly quickly. The other two CDMOs are one step behind, still conducting their technology assessments.

Q: What is Codexis' scaling roadmap for Ecosynthesis over the next 18-24 months, and how does it align with projected industry demand? / A: Codexis plans to reach 500 gram production scale by the end of 2026, and kilo scale before launching the new GMP facility. After that, the company expects 10x scale expansion via CDMO and biopharma partnerships. Industry demand for siRNA is projected to grow 30x by 2035, with a capacity bottleneck expected within three years as large cardiovascular phase 3 trials read out. Ecosynthesis is ~70% more capital-efficient than traditional solid-phase synthesis, positioning it to meet unmet demand.

Q: What technical hurdles have been overcome to reach current Ecosynthesis scale, and what challenges remain for further scaling? / A: The primary hurdle has been engineering high-performance enzymes that meet multiple strict requirements: tolerance for different nucleotide building blocks, operational robustness, and stereochemical recognition, a feat enabled by 20 years of enzyme engineering experience. For further scaling, the team is optimizing classic process parameters including flow rates, immobilized enzyme configuration, and temperature control, while building a robust design space to support high-quality production for any customer siRNA sequence.