Codexis, Inc. (CDXS) Earnings Call Transcript & Summary

Good morning, and thank you for coming to the 2020 Virtual UBS Global Healthcare Conference. My name is Kapil Gupta, and I'm happy to be your host for the session. Our next presenter will be John Nicols, CEO; and Ross Taylor, CFO of Codexis. A Q&A session will follow immediately after the presentation. To submit a question anonymously to be answered at the end of the session, please type your question in the Q&A prompt on the presentation screen. We now turn it over to John. Thank you.

Good morning. This is John Nicols, President and CEO of Codexis. Pleasure, and thank you for joining us this morning. Next slide, please. So during this morning's presentation, we will be making some forward-looking statements. So I encourage everyone to take a look at the risk factors that we detail in our SEC filings, Form 10-Q and Form 10-K. Next slide, please. So today, I'm going to give you a wide overview of Codexis and our developments. I'm going to highlight our platform technology, which is a leading-edge protein engineering technology that wields artificial intelligence capabilities, synthetic biology leadership to enable us to discover and commercialize a growing list of unique, high-performing proteins that are adding value to many of the world's leading companies. In the process, we're solving meaningful challenges. We're bringing more sustainable solutions for health care, for a growing list of industries. And it's enabled us to build a very robust financial capability to build shareholder value. It starts with proteins. Proteins are really an infinite, nearly infinite untapped source of value-creating materials. And it's very difficult to sift through the infinite optionality for designing a protein and actually find proteins that deliver real-world value. Next slide, please. I'm not seeing the slides move forward on my screen, but maybe I'm missing it. I'm going to assume you're seeing a slide called CodeEvolver protein engineering platform. This is the heart and soul of Codexis. This is a platform technology that we've been refining our entire history as a company, nearly 20 years at this point. It starts with the identification of a target, what do you want that protein to do? And we back up from that desired list of properties, whether Codexis defines those properties or we have our collaborative partners define those properties. And then we go through an iterative process to first rapidly create protein libraries, thousands of them, in just a short period of time, weeks. We use our artificial intelligence computational power to tell us, based on our history, what changes to protein structures are most likely to liberate the kind of performance values that we have targeted from a protein that doesn't exist. And then we rapidly create those proteins. We isolate them. We test them for the desired performance parameters. We sequence them to ensure that we know what their protein structures are. And then we look at all this mountain of data about changes to protein structures and how they've translated into changes in real-world physical properties to learn from what kind of physical changes to the structure have liberated the right directional changes for real-world performance. And then we learn from that data, and we feed that data into our machine learning algorithms to then say, okay, those changes were either unexpected or expected. Let's work to upgrade performance with the next 10,000 machine learning directed structural changes. And through that iterative process, we can make order of magnitude leaps in performance for proteins. And that's really the heart and soul of CodeEvolver. If you can click on the slide, you can see that there's more information available online if you'd like to see in a deeper way how the CodeEvolver platform works. Next slide, please. CodeEvolver productivity improvements acceleration. Here, over our 20-year history, we've made dramatic improvements in our ability to discover new proteins. When we first started as a company in the early 2000s, we worked on discovering and commercializing a protein that would enable low-cost manufacture of Lipitor active ingredient as it was going off patent. And we succeeded with that target. It was one of the breakthroughs in the early history of our company. At that time, we needed 20 scientists, roughly 2 years to create that 1 protein. A lot of R&D time, intensity. But please click, through expanding our libraries today, so that we have better starting knowledge, through rapidly creating more and more protein molecules over a same period of time, and through the enhancements and improvements in artificial intelligence, now Codexis -- a similar target as the Lipitor target, Codexis can discover that protein molecule, order of magnitudes larger than any starting point and with a team of 3 or 4 scientists in less than half of a year. And all of the sources of increased speed continue going into the future so that we're increasingly capable to discover protein molecules with new-to-the-world performance in faster and faster times. Please click forward to the slide, CodeEvolver delivering value. Through our history now, we have focused on a growing list of different markets where we brought value with our proteins that we've engineered with CodeEvolver. From pharmaceutical manufacturing, our most historically grounded business where we have significant growth and competitive advantage, through a newer set of targets in food, life science, molecular diagnostics, other industrial applications, which have enabled us to really accelerate our growth into a growing list of markets for enzymes. And then finally, on the far right, over the last 5 years, we've used our platform to increasingly discover large molecule drug substances with our platform. So I'm going to describe all of these in the next set of slides. Next slide. And I'm going to ask to click through. So here, we show our history, the core for the company over our entire 18-plus-year history is designing proteins that act as catalysts for pharmaceutical manufacturing. And here, we've been making this market for our entire history. We've built a lot of success stories, a lot of growing awareness. We're increasingly being used across the world's drug manufacturing processes. We see this as a market that has an addressable -- total addressable market potential of over $1 billion. And we think that our technology can enhance -- reduce the cost, improve the sustainability of at least 1/3 of the world's small molecule drug manufacturing processes. Please click forward. In addition, now we've added a whole new set of industrial sectors for our performance enzymes. This only started about 5 or 6 years ago. We've been consistently adding new market. Our first successes were in the food industry. I'll describe some success stories in the food industry. Then, we designed enzymes for next-generation sequencing. Now we're involved in other diagnostic applications, other life science applications. And here, we're addressing what are already established markets for enzymes with incumbent competitors like Novozymes and BASF and DSM. And they are commanding what is already a $6 billion, nicely growing marketplace, where Codexis' general approach is use CodeEvolver to bring to those markets and customers, a better performing protein than maybe they're getting from their incumbent supplier. And generally, this enables the company to commercialize much quicker in these markets given that they're already established markets and because of the much quicker time to commercialization that are possible to participate outside of pharmaceuticals. And generally, these are larger target -- protein targets for Codexis to go after. So this has really helped us to accelerate our growth for our enzymes business. We separate our profit and loss statement into performance enzymes, those cover the first 2 segments from our biotherapeutics, our Novel Biotherapeutics. So if you click to the last arrow, here, once again, a very large addressable market of over $6 billion, just focused on enzyme therapeutics. We started this work also about 6 years ago. We -- our first target was phenylketonuria. I'll describe that success story. That's now a drug substance that is in the clinic. We ran a safety trial and our partners are now running deeper clinical trials in patients. Around 3 years ago, girded by the success in PKU disease, we expanded dramatically our pipeline, and we've had some material successes going forward in our biotherapeutics since then. So really building shareholder value with the same platform against a large set of markets. If I can ask you to advance to the next slide. Just real quick, just reinforcing the history, the great partnerships that Codexis has collaborated with, great companies, innovative companies. We started in 2002. We went public in 2010. Click forward, please. We've notched off some great successes with Merck, GlaxoSmithKline. We've -- our largest product sale to date is an enzyme that we use -- that we made for Merck's manufacture of sitagliptin. Click forward, in 2016, we had our first success in the food industry with Tate & Lyle for a sweetener with Tate & Lyle. We had our first partnering deal in therapeutics with Nestlé. We had in 2018 our second significant penetration into the food industry. I'll describe that in a deeper slide where our technology enabled a low-cost process for a better-tasting Stevia sweetener. Click forward again. In 2019, we ran our first clinical trial as a company on CDX-6114 for PKU. We struck another deep partnering platform license with Novartis last year. At the end of last year, we licensed our first successful product into NexGen sequencing to Roche. And then finally, click forward, the beginning of this year, we expanded and extended our partnership with Nestlé in therapeutics, and we announced our second major partnering deal in the biotherapeutics area with Takeda. There may be another click. So this is some of the key high spots history accelerating, especially into new markets, significant investments have flown into the company, well over $500 million. Today, we have 160 great employees in Codexis. About 100 of them are in research and development. We have used our platform to discover many hundreds of molecules. We have over 1,450 patents and patent applications that we wield as a company. I'll take a couple of minutes, if you can click forward to the next slide, to describe each of the core markets in some detail and some -- give you a flavor of the success that we've generated with our platform, starting with pharmaceutical manufacturing, which we've been active in for over 18 years. Click to the next slide, protein catalysts for sustainable pharmaceutical manufacturing. Here, Codexis' reputation has grown, has deepened. We've expanded. We're doing business with over 20 of the top 25 pharmaceutical companies, plus many other smaller companies. We have 15 Phase II, Phase III installations, that's more than doubled over the last 3 years. We're involved in 14 on-the-market drug processes, 9 of those have fully commercialized and make up the majority of Codexis' product sales on our P&L statement and 5 additional under development. Three of the world's top 10 drug companies have licensed in our technology. I'll describe that in a later slide. Fundamentally, why are we growing? Protein-based catalysis can liberate substantial efficiencies in manufacturing complex drug substances. We can reduce the waste. We can increase the yield of expensing starting materials. We can take processes, which normally had to run in much more expensive equipment and enable that process to be run in low-cost, simple, low-pressure facilities. You see a quote here from Merck. We can also reduce the number of processing steps. We could design catalysts, protein-based catalysts that can do the chemistry, which normally took multiple steps, do it in 1 step. And that's what we did for the manufacture of the active ingredient in Januvia, an active ingredient called sitagliptin. We reduced the number of process steps, increased the yield, reduced the energy, reduced the waste, significant cost efficiencies, plus it's this much more elegant and sustainable processing route. And these are the reasons we're growing, and we'll continue to significantly grow in the world of pharmaceutical manufacturing. Next slide, please. So that has enabled us to create some really deep partnering -- partnerships with some of the world's greatest drug companies, with Glaxo, Merck and Novartis. They all have entered into platform licensing arrangements. These earned Codexis' significant upfront economics as we transfer our technology and train the partner on how to run CodeEvolver in a nonexclusive license on their own. You can see in the range of $20 million of upfront payments, usually over 1.5 years or maybe up to 2 years for us to earn those economics. And then that also, not only do we earn these early economics, every time that our partner creates a protein catalyst using the platform, they're obligated to pay us a back-end biometric royalty or milestone depending on the deal structure, that can become quite material, part of our forward and current profit and loss statements. Last year, we generated a significant low single-digit million dollar milestone from the back-end of the Glaxo deal, and we see this as a significant growing stream of economics. As our partners create proteins on their own, we generate back-end economics. In addition, most of our activity historically has been focused on large -- huge pharmaceutical companies, but we're increasingly expanding into the world of smaller process development. We formed a strategic partnership with the leading CMO -- CDMO company, named Porton in China, and they're extending our reach for our technology in a very attractive and creative partnership that gets us more swings at the plate for our technology. If we move to the next slide. So I'll just, at a high level, describe how we built the majority of our revenues as a company in pharma manufacturing. But a lot of excitement for applying our technology into other faster-to-market performance enzymes targeting food and life science and other industrial applications. Switch -- flip to the next slide. This describes a blockbuster success story for Codexis with Tate & Lyle, where we forged an innovative partnership to create a process for them for a better-tasting Stevia molecule. And fundamentally, the Stevia sweetener market is driven today by extraction of the fundamental sweet juice out of the Stevia plant. However, that Stevia juice directly extracted from the plant has a bitter aftertaste, which has held up its use as a sweetener in most of the world's sweetener applications. So the world had identified a trace component in the Stevia leaf juice extract, less than 1%, was basically a derivative of this predominant extract. It's called a rebaudioside form A. The rebaudioside form M basically adds 2 glucose molecules to that. And it eliminates this bitter aftertaste. It is still, of course, natural, noncaloric. So it's an ideal sweetener that eliminates this bitter aftertaste from the predominant Stevia leaf extract. The problem to commercialize this rebaudioside M is it's not prominent in the juice. You can't squeeze the juice and isolate it economically. So what Codexis did was to design a series of enzymes that would convert the juice that squeezed out of the leaf and we would -- by introducing the series of 3 enzymes from Codexis, you would be able to, in a very simple reaction scheme, in a very simple process, introduce the Stevia leaf extract, introduce our enzymes less than 24 hours later in a simple atmospheric temperature reactor -- atmospheric pressure and temperature reaction. You would be generating a product that's over 95% of the rebaudioside M. An elegant process, very simple process that's enabled Tate & Lyle to commercialize this better-tasting Stevia using Codexis' enzymes. We also commercialize our enzymes. So that's on the market, Tate & Lyle is promoting this as a better sweetener. They're very encouraged by the market's reception to their sweetener, and we expect this to become a very significant product sale for the company going forward. Let me flip to the next slide, this is in the molecular diagnostics area. Here, our first foray was to create a DNA ligase. A ligase is an enzyme that's required in the preparation presentation of biological samples to a NexGen sequencing machine. The goal, of course, of the NexGen sequencing is to identify a genomic marker, a DNA marker, that would be indicative of, for example, a cancerous DNA in a biological sample. The ligase is the primary conversion enzyme that's used in the library preparation workflow. And on the right, we share a couple of slides of our performance, the conversion performance of our DNA ligase, we call it Evo T4 DNA ligase compared to incumbent DNA ligases. The incumbent ligase in a 15-minute reaction time would convert anywhere from 30% to 50% of the target DNA in -- at trace concentrations that would be indicative of the amount of DNA that would be in a liquid biopsy sample. In comparison, Codexis' Evo T4 DNA ligase converted over 90%. And on the bottom, you can see our conversion time was very rapid, in less than 5 minutes that conversion took place, where it took over 10, 15 minutes for the conversion to reach its peak in competitive -- versus competitive materials. So really significant improvement enhancement to diagnostics for NexGen sequencing in high demand, low trace concentration type of samples, like would be indicative of liquid biopsy. We made a partnering deal with Roche, a leader in NexGen sequencing. We granted them an exclusive. It's a royalty-bearing exclusive for Codexis. We made that deal at the end of last year. We're currently finishing with the technology transfer to Roche, and we're hopeful that Roche installs it and penetrates their markets with library preparation kits that are improved by our Evo T4 DNA ligase. And we're really excited about this general market. There are multiple other enzymes that are used in other diagnostic applications. We've been working on a larger enzyme called the DNA polymerase, which is used in the amplification step just before introduction to the next-generation machine. That's nearly ready for launch, stay tuned. We should have some news on that product's rollout in the very near future. And we're already working in R&D on other enzymes to follow the success of the DNA ligase and the hope for success in DNA polymerase. Next slide, please. So really, those are 2 great examples of how we've extended our platform technology and discovered and commercialized enzymes in a very large industrial enzyme sector. There are other target applications. Some of them are listed here, flavor and fragrance, detergency, chemicals, animal feed. We're talking to many of the world's great companies in all of these sectors, and we're hoping and we're expecting that we're going to showcase additional extensions of our technology beyond pharma manufacturing, and food and diagnostics, of course, continuing to grow in those sectors in parallel. So bringing all of our performance enzymes together. Next, let me have you fast forward to Slide 17. Just there's a lot of moving parts. We have a very diverse portfolio of projects that we've been working on. So at the bottom of this chart, we've kind of highlighted some of the core metrics that show the momentum that we're building to bring enzymes into more and more commercial installations in the world. So the -- tomorrow's commercial installations come from today's pre-commercial installations. And in -- outside of -- in the pre-commercial world, outside of therapeutics, we have now 41 different projects that we're at late-stage clinical stage with our partners in the pharma world. And in other verticals, life sciences and food, where just 3 years prior, we only had 11. So nearly tripling the number of projects that are early stage that are in predevelopment stage. And we see those increasingly rolling off as commercial successes. Last year and the beginning of this year, we had commercial installations flow out of these pre-commercial projects with Urovant and KYORIN in urinary incontinence drug that they both have recently gotten their approvals for, plus with Allergan for another undisclosed molecule. So we're moving forward. We're doing our work to get enzymes involved in development and pre-commercial, and they're moving increasingly to commercial status. Over the last few years, we have increased the number of commercial status weeks -- projects from 9 to 11. We expect that to start to really accelerate. It takes time for these to grow, but they are moving forward and growing. And that leads to, at the top, the big component in our Performance Enzyme revenues are product revenues, and sustaining revenues within our R&D revenues. And you can see that our sustaining revenues more than doubled in the last 3 years from just over $15 million in 2016 to just over $31 million in 2019. Okay. We'll go to the next slide, Slide #18. And here, I'm going to switch over to describing our successes and our efforts to use our platform to use CodeEvolver to discover novel biotherapeutic substances. So next slide, 19. There is a very significant list of potential targets for our technology. Just looking at enzymes that are the issues associated with rare diseases, there's over 150 different diseases -- rare diseases that are fundamentally due to enzyme deficiency. So this creates certainly 1 universe of targets for our CodeEvolver to discover new novel therapeutics. And what can we do with CodeEvolver? We can increase the efficacy. We can increase the half-life for molecules delivered into the body. We can make -- in principle, we can make them more directed to the target organ at issue. We can use our technology to improve the safety parameters of the large molecule, reducing immune response. We can make it a more conveniently delivered molecule. Most of the world -- the vast majority of the world's large molecules are delivered either through IV or injection. We've shown in our -- in several of our programs that we can make a large molecule be effective in oral dosage form, dramatically increasing the convenience of the therapeutic for -- potentially for patients. So many different things that we can -- attributes that we can improve with CodeEvolver in a therapeutic drug substance. Next slide, please, 20. Here, we describe our pipeline. Again, we just started this work around 2014. We started the work on CDX-6114 for phenylketonuria disease. We have now advanced that through a successful safety trial. I'll describe the results of that in a moment. We've out-licensed that to Nestlé in a very attractive partnering deal with Nestlé. And now Nestlé is taking that forward into patient trials. And we're hopeful that they continue to have success in patient trials. That success story showed Codexis and its Board and its investors that we could indeed use CodeEvolver as a drug discovery engine. And we ramped up and started to work on a much wider pipeline of target opportunities. All of the below, none of them had really had any material development until 2017. So over 3 -- the ensuing 3 years, we've now brought forward -- we've got 2, 4, 6. We're about to start the seventh program, all in a very short period of time with a healthy minority of our R&D capacity today at Codexis. We have another program we partnered with Nestlé that we're co-funding called CDX-7108. It's another GI-targeted oral enzyme for a GI disorder. And now that's in preclinical development, moving towards clinical trials sometime next year. We worked on 2 other inborn amino acid metabolism disorders, like PKU here, following the success of PKU to deliver the enzyme orally and provide a solution to those patients' inability to metabolize other amino acids in other disorders. And one of those is approaching an IND-enabling studies that we hope to advance into the clinic sometime at the end of next year as well. And then finally, we started working on some programs for lysosomal storage disorders. And we're here -- we're super excited in March of this year to have announced the partnership in that area with one of the world's top 10 drug companies, Takeda. And we had done significant work to show that our -- we could create a product that could address Fabry disease. Now Takeda is taking the enzyme that we -- the gene that codes for the enzyme for CDX-6311 and they're combining it with their gene therapy vector to bring it into advanced preclinical research. We had done a little less work on Pompe disease. So we're now also working with Takeda to create better transgenes for that disorder. And we're going to start working on a brand-new area identified by Takeda, where they see the value of CodeEvolver to help them improve their gene therapies targeting that particular blood disorder. That work should start sometime soon as well. And finally, similar to the successes we've had for Nestlé in PKU and CDX-7108, the partnership with Nestlé continues to see new targets for applying CodeEvolver. And at the beginning of this year, we started working on a brand-new target for Nestlé, and they extended collaboration agreement to advance with -- where we discover new molecules that both Codexis and Nestlé see benefit for CodeEvolver to bring new drug molecules to market. So really significant progress for Codexis with our therapeutics pipeline. I'll go quickly through the partners -- partnerships with Nestlé and Takeda, starting with Slide 21. Here, what -- with the success we had for PKU, our most advanced program, you can see great preclinical proof-of-concept in a multi-dose study. The basic mechanism for CDX-6114 is to create an orally stable enzyme that could be efficacious to metabolize phenylalanine, the amino acid of issue for these patients, right in the upper small intestine. And that sounds like a pretty straightforward idea, but actually to make an enzyme to be stable to the very aggressive natural tendency of our bodies to break down proteins in the small intestine is easier said than done, and it's a great testament to the power of CodeEvolver that we were able to design an enzyme that would withstand the body's attack on proteins would be stable to it. So that when other proteins break down and liberate phenylalanine, our protein molecule, CDX-6114, would be stable, and would metabolized that phenylalanine. We're super excited. We had a great safety trial, 32 healthy volunteers. No safety or tolerability issues demonstrated. No GI symptoms. Just a really clean positive safety trial, but -- and it also generated evidence of the efficacy of the drug as well. So next slide, that was the underpinning for a deal we made with Nestlé. So with Nestlé, we granted an exclusive to CDX-6114. We've already collected $22 million to date through upfront payments and an opt-in fee at the beginning of last year. We're set up to potentially earn significant milestones through approvals, $85 million. If it gets on the market, $250 million potential commercial milestones, plus tiered royalties up to low double-digit percent. We gave them some opportunity to take a look at our other amino acid metabolism pipeline assets, and they have -- through the strategic collaboration agreement, they fund some new work on new targets. And again, that part of our partnership has been extended through the end of next year, and we're hopeful that, that creates some new clinically relevant targets over the coming years. Slide 23 pivots to the anchor asset that made the deal with Takeda at the beginning of this year, CDX-6311, a next-generation potential therapy for Fabry disease. Fabry disease is an orphan genetic disorder, affects lysosomal metabolism. So for this disease, you need to get the protein, the enzyme into the lysosome inside the cell in order for it to deliver its efficacy to these patients. So it's designed -- the work that we did was designed as an injectable ERT, enzyme replacement therapy. Instead of moving forward as an ERT, Codexis and Takeda are convinced that it would be better to actually deliver the protein via coding of a transgene onto a gene therapy vector. So take a gene therapy vector, a viral vector, have that virus, have the code in its DNA that would express the CDX-6311 protein. Takeda is a leader in the world of gene therapy. We looked at many thousands of variants before identifying CDX-6311. We created that enzyme, fivefold increased lysosomal half-life; enhanced pH, temperature, lysosomal stability, core attributes for a successful protein molecule that would be delivered. We worked preclinically to validate de-immunization of the CDX-6311 molecule versus on-the-market Fabry enzymes that we believe will reduce the immune response ultimately in human trials. And the chart at the bottom, really critical, showed that we designed -- successfully designed CDX-6311 to target the heart organ tissue cells preferentially over the natural enzyme and preferentially better than the on-the-market Fabry enzymes. So material success, which really led to the Takeda deal. If I can move to Slide 24. And I think we're starting to move towards the end of our presentation. So the nature of the deal with Takeda is for Codexis to discover novel transgenes that would then be combined with Takeda's gene therapy vector. We struck a deal where we get $30 million -- $30.8 million in upfront R&D fees and preclinical milestones for 3 initial programs. For those programs, we would be able to earn development and commercial milestones of up to $100 million per target gene that we affect and royalties on sales, that range up to mid digit -- mid-single-digit percentage royalties. The first 3 programs are Fabry, Pompe and a blood factor disorder, and Takeda has an option to license in a fourth program from a short list of target indications. And if you click, we see this is a fabulous foothold validation of CodeEvolver being involved increasingly in gene therapies to design transgenes, we believe, like no other company can, to spawn other partnerships in the gene therapy universe, which we'll be hoping to showcase in the near future. Okay. Let me shift to financials on Slide 25. We had a terrific year in 2019. We generated double-digit growth in revenue. Total revenues accelerating, especially in the Performance Enzymes segment, doing really well on products. We strengthened our balance sheet. We have a great team of 160 employees that continue to earn accolades as being a great place to work, and they've just reinforced themselves through this COVID-19 crisis. Milestones across every sector, we struck our third platform license with Novartis in the pharma manufacturing area. We started to generate meaningful back-ends from historical platform licensees. We advanced the number of clients we're doing material business in pharma manufacturing. In addition, in the Performance Enzyme segment, we had material milestones expanding into new verticals with Tate & Lyle, Roche just described those, just about ready to launch the DNA polymerase, and we had 2 other non -- we can't disclose the names of the companies yet, but material new segments that those programs are targeting in the food world, outside of sweeteners and another biomarker diagnostic. In novel biotherapeutics, we, through the Nestlé partnership 6114, began patient trials. We brought positive preclinical data for 7108 and 6512, and the lysosomal storage disorder led to the Takeda deal. Next slide, 26. Our financials, we've had a very steady, solid growth in financial and revenues. Over the recent past, double-digit CAGR on sales. In the beginning of the year in late February, we put out guidance for the company, revenues between $78 million to $82 million, which would have been another significant double-digit growth year-on-year. We withdrew the guidance in our May call due to the COVID-19 pandemic. However, the company's revenue generation and balance sheet is well preserved. Our product sales have continued through the year despite the COVID-19 pandemic to basically be on track of our pre-pandemic expectations. We did -- because of local shelter-in-place ordinances being put in place in the Bay Area, San Francisco Bay Area, we have had to shut down a good portion of our R&D project work in the lab. However, that's been restarted in May, and it looks to be set to continue to expand our capacity back towards normal capacity as we speak today. And we've been able to minimize strategically our operating and capital expenditures to help us offset revenue, cash flow impacts. We haven't affected any layoffs. Actually, we brought in selectively a few new employees, especially new executives to help strengthen us through and beyond the pandemic. And we have a terrific balance sheet of over $87 million at the end of March, which gives us plenty of liquidity, in our opinion, to manage through the pandemic. And we have a history of pretty modest burn as a company as we grow. Last and final Slide 27, really just focused on continuing to build-out, expand and drive value creation in our therapeutics, get to work on the Takeda partnership and bring those programs into their preclinical research as gene therapy vectors; bring 7108 towards the clinic, hopefully, in mid-2021 timing; discover new lead projects, both with Nestlé and elsewhere, and monitor Nestlé's progress for their Phase Ib trial, which has been delayed a bit because of patient recruitment, but we still hope that, that will be accomplished by the end of next year. In Performance Enzymes, just continue to drive, especially new verticals. In the pharma manufacturing area, just to continue our success and press for expanding and deepening our project base and our customer base; finalize Novartis CodeEvolver tech transfer that continues to progress despite the COVID-19 as you saw with a press release in early May; and work others towards CodeEvolver license. We don't expect that this year. It's not in our guidance or our previous guidance, but we have good prospects to bring other large pharma companies to a similar deal to Merck and GSK and Novartis. And new verticals, support the new partnership with Roche, commercialize DNA polymerase, bring out other products over time. In food, we -- the TASTEVA M, that's the better-tasting Stevia from that is being commercially launched by Tate & Lyle is breaking into its markets, little modest growth year-on-year because of its early penetration into those markets. But let's bring some new projects in the food space to Codexis and then just continue to establish our presence in the life science market. So I think that covers the presentation. I hope that gave you an excellent overview of Codexis. We'd love to talk in more detail. I think we have a little bit of time for some Q&A. I'll let UBS kind of drive the Q&A discussion point.[

Sure. Thanks, John. We now move to the Q&A portion. And given the time, maybe we'll take 1 or 2 questions from the audience. I'll pause here for a second. And if you have any questions, please feel free to type it out in the Q&A prompt on the presentation screen. So our first question for John. John, you talked about the various enzyme-related therapeutics and how Codexis platform has enabled a number of molecules that are potential therapeutic candidates. Could you maybe talk a little bit about how Codexis plans to prioritize those molecules? And where you see the most potential within therapeutics, now that you're in gene therapy with the latest Takeda partnership?

Yes. First and foremost, we're going to support the continued growth of our 2 great partners at Nestlé and Takeda and advance the assets that we partnered with them. With Nestlé, the most advanced asset being CDX-7108 enzyme -- orally administrable enzyme therapy for a GI disorder, bring that towards the clinic. We're working all of the preclinical development efforts on that program. And in Takeda, we're handing over some genes right now for Fabry disease. And as soon as we get our teams installed, which should be forthcoming soon, get improved molecules for Pompe and this new blood factor disorder into their hands so that they can combine it with the gene therapy vector going to develop their preclinical research. The whole proof point of using CodeEvolver to develop better transgenes is something that Codexis has believed in for a long time, now Nestlé -- sorry, now Takeda believes in that. And as we found the partnership with Takeda, we talked to many companies about this idea, and we got generated a lot of interest. So I think there's going to be some new opportunities for Codexis in the not-too-distant future to get involved with other partners on other gene therapy disease targets. So I think those are the main things to highlight at this point. [

Great. I think we're right on time here. With that, I would like to thank John and Ross from Codexis for presenting today and for you all to -- for attending the 2020 Virtual UBS Health Care Conference. You are now free to disconnect the line. Thank you, John. Thank you, Ross.

Thanks, Kapil.