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

Good morning, and thank you for coming to the 2021 Virtual Global Healthcare Conference at UBS. My name is Kapil Gupta, and I'm happy to be your host for this session. Our next presenters will be John Nicols, who's the CEO; and Ross Taylor, the CFO, from Codexis. A Q&A session will follow immediately after the presentation. [Operator Instructions] Let me now turn it over to John to take it from here. Thank you.

Thank you, Kapil. Just a quick note that Ross and I will be making forward-looking statements today. And we encourage you to review the company's risk factors detailed in our most recent SEC filings. So hi, I'm John Nicols. I'm President and CEO of Codexis. We, at Codexis, are focused on enzymes, their nearly unlimited potential to have a growing impact in our world, how Codexis is uniquely tapping into that potential, enabling better, healthier living and the enhanced sustainability of our planet. Please advance to Slide 3. Britannica defines an enzyme as a molecule that acts as a catalyst, regulating the rate at which chemical reactions proceed. Succinctly, enzymes enable chemistry within a cell throughout the human body all over the planet to be performed more efficiently. The lunch you just ate or are about to eat is being digested with naturally occurring enzymes. The beer you might have had last night was brewed with them. All cellular-level biochemistry is powered by enzymes. Cool. But the pallet from which we can design enzymes is effectively infinite, hundreds-long chains of 20 different amino acids to choose at each link, 20 to the x 100 power of possibilities. Mother nature has barely scratched the surface of tapping into this limitless enzyme optionality. The McKinsey Global Institute quotes, "The bio revolution could transform what we eat and wear, the medicines we take, the fuels we use and how we construct our physical world." Imagine all the products that could be created to improve our world if we could solve for the power of enzymes. While that limitless enzyme design pallet ignites enthusiasm, all that optionality is also a huge problem. How do we correlate the universe of unique enzyme structures to each of their relevant performance attributes? How do we best determine what real-world issues can be solved by new enzyme product innovations? For each of those, how does the enzyme need to perform? Under what conditions? At what scale? A successfully commercialized enzyme must solve for all of these questions, in tandem, quickly, efficiently. That is exactly what Codexis has focused its entire year -- 20-year history on. Indeed, as the McKinsey study states, synthetic biology holds great promise to disrupt much of the global economy. But how does synthetic biology interact with the physical world after all? Through enzymes. Codexis enzymes. At the heart of everything we do at Codexis is CodeEvolver, our enzyme engineering platform. Please advance to Slide 4. Refined over our entire 2-decade history, multiple factors compound improvements simultaneously, making CodeEvolver the most powerful, largest scale enzyme discovery engine in the world today. An enzyme engineering project 15 years ago took 20 Codexis scientists 2 years to discover. That same type of enzyme discovery project now takes a team of 3 to 4 scientists less than 3 months. Ever-improving machine learning algorithms acting on the rapidly growing proprietary enzyme data we generate ensures that CodeEvolver continues to shrink the time needed to engineer tomorrow's value-creating enzymes. And where others can reach maybe five- or tenfold in enzyme improvement -- performance improvements, CodeEvolver can often achieve thousand- or even hundred thousand-fold improvement in the same period of time. It's no wonder that when GSK, Merck and Novartis sought to bring an enzyme engineering technology in-house with every possible option at their disposal, they each chose to license CodeEvolver from Codexis. Today, we are running over 16 simultaneous CodeEvolver enzyme discovery projects, creating 16 new high-performing, patentable new enzymes, the lifeblood for tomorrow's commercialized sustaining revenue products. We've amassed over 1,600 patents worldwide, up from 1,100 just 3 years ago. So where can the world most benefit from new enzymes? Slide 5. The Codexis business development teams have been exploring that question for nearly 2 decades as well, with our efforts compounding and rapidly expanding the list of high-value applications for our engineered enzymes. Today, we are pointing CodeEvolver at 3 large high-value growing markets, both in partnership with some of the world's greatest, most innovative companies as well as a growing number of projects self-funded and championed by internal Codexis experts: enzyme that -- the enzymes that enable more efficient and sustainable manufacturing solutions built over decades, working with the world's greatest pharmaceutical companies, extending into food and other industrial verticals with larger product opportunities that can commercialize faster; Life Science Tools enzymes that improve the reliability of genomic diagnostics and enable the extension of countless new applications in molecular biology; and finally, harnessing engineered enzymes as a source of new differentiated drug candidates, enabling the next generation of gene therapies and the oral administration of large molecule drugs. Sustainable manufacturing is where we built Codexis' enzyme engineering leadership over the past 2 decades. Next slide, Slide #6. And given that history, this market represents the large majority of the company's revenues currently. Our novel high-performing enzymes enable our partners to dramatically reduce the cost and increase the sustainability of manufacturing their products. Compared to using traditional nonenzymatic chemistry, which can be complex, capital-intensive and inefficient, Codexis' enzymes enable reduced capital requirements and higher-yielding processes with reduced energy usage and lower waste generation. These benefits apply across a wide range of manufacturing industries from pharmaceuticals and food products where we've already made significant inroads to multiple other additional industrial verticals where we are just now beginning to gain traction. Slide 7. This business is growing robustly, as demonstrated by a 22% 5-year compounded annual growth rate in product revenue. We had 15 sustainable manufacturing customers contribute more than $100,000 in average quarterly revenue in 2020, up from 13 in 2019. Small molecule pharmaceutical processes have been and continue to be a core target for growing the sustainable manufacturing market for Codexis. We estimate that at least 1 out of every 3 small molecule APIs could be made both more sustainably and at lower cost if Codexis' enzymes were utilized. We partnered with 21 of the 25 largest pharmaceutical companies in the world to help them install novel Codexis enzymes for manufacturing their APIs. Slide 8. As pharmaceutical companies increasingly validate the benefits and wide applicability of enzymes for their manufacturing processes, they recognize its value and move to license our CodeEvolver platform to perform their own enzyme engineering in-house. So far, GSK, Merck and Novartis have in-licensed our CodeEvolver platform, and we expect to grow this elite list in the future. These deals have 100% margin back-end revenues. Our pipeline of sustainable manufacturing products is deep, growing and increasingly maturing. As we showed in our most recent annual pipeline snapshot, Codexis' enzymes are now used in 11 commercially approved APIs. These enzymes are all patented and are currently the largest source of our recurring product revenue. In addition to products already on the market, we have another 19 enzymes installed in APIs in Phase II or Phase III clinical development, and that number has almost tripled in the past 4 years. Also in the past 4 years, we've been expanding outside of pharma into verticals with shorter product development time lines and fewer regulatory hurdles, enabling our enzymes to commercialize faster. Our lead success stories in the food and industrials market come from our partnership with Tate & Lyle, where we developed enzymes that enable dramatically higher yields of extracts to produce better-tasting sweeteners at much lower costs. We're developing a range of enzymes for other industrial applications from additional food and beverage ingredients to recycling, consumer care and animal feed. These are generally faster to commercialize with larger, longer-term revenue potential than pharmaceutical manufacturing opportunities. Slide 9. Our collaboration with Merck to engineer -- to use engineer enzymes to enable low-cost sustainable API manufacturing now extends for well over a decade. Islatravir is a late-stage clinical antiviral drug candidate that, according to Science magazine, "Sets a new standard for the synthesis of complex molecules." Again, directly referencing the Science article, 5 engineered enzymes, 16 steps reduced to just 3, enabling conversion from simple, inexpensive building blocks with overall yield "far exceeding that of previous synthesis of this target molecule." The entire process takes place under mild operating conditions in a single aqueous solution without the isolation of intermediates. This extraordinary efficiency was made possible by the ability "to identify and engineer enzymes." It's great to see our product deliveries in excess of $1 million in the first quarter as islatravir moved its way through its clinical development. Next slide. A few years ago, we began to identify applications in the Life Science Tools market, which we view as a very significant growth opportunity for the company. This market is diverse and growing fast as technology advances have enabled new Life Science Tools applications to take root. Many of these applications require enzymes to perform their microbiology and have been developed using naturally occurring enzymes. With CodeEvolver, we can engineer these enzymes to enable these applications to perform much better, faster and in novel ways. In just a few years since we entered this space, our enzymes are already enabling improvements in next-generation sequencing, nucleic acid synthesis and editing, biosensor applications and more. This market is highly attractive for Codexis given its high-end market growth, rapid commercialization cycles and above-average margin prospects. We've made inroads into this Life Science Tool -- rapid inroads into this tools market. Next slide. From 0 just a few years ago, we generated $3.6 million in revenue in 2020, advanced 3 enzymes to commercial readiness, and several more launches are soon to follow behind. The Life Science Tools segment will continue to be a key driver for the overall company's growth, and it is only the beginning for us to show what is possible for our engineered enzymes in this market. Slide 12. Our first partnership in this space is with Roche's Sequencing Solutions division for an improved T4 DNA ligase for their next-generation sequencing library prep kits. This high-performance enzyme enables better conversion of trace DNA from biological samples, which has significant benefits in cancer diagnostics. In the second quarter of last year, we announced the launch of 3 additional Life Science Tools enzymes: Codex HiCap RNA polymerase, for which we have received first orders with several customers this year-to-date; Codex HiFi DNA polymerase, which is being trialed by dozens of customers currently; and a reverse transcriptase that is soon to launch later this year. Last June, we formed a groundbreaking partnership with Molecular Assemblies for the commercialization of enzymatic DNA synthesis. This disruptive approach to synthesizing DNA has the potential to significantly impact a wide range of high-value markets from drug discovery and manufacturing through synthetic biology and longer term, to compete with silicon for data storage. Leveraging the power of CodeEvolver, we are on track to complete this enzyme engineering project in the second half of 2021, enabling Molecular Assemblies to begin early commercialization efforts soon thereafter. We like this model of working with dynamic early-stage private companies. In November, we launched the Synbio Innovation Accelerator in partnership with Casdin Capital. Our goal is to selectively provide expertise and capital to companies that are synergistic with our enzyme engineering technology and whose business is of long-term strategic interest to Codexis. The first investment is in Arzeda, a computational protein design company. As you can see, we have been planting lots of seeds in the Life Science Tool market, and they are starting to grow into an impressive crop of new products and business collaborations. We're extremely optimistic about opportunities in this space. Slide 13 shows one of the most exciting new enzymes that we've launched in Life Science Tools, an RNA polymerase that has been engineered for improved messenger RNA capping efficiency. In order to survive delivery and to be properly translated, mRNA must be capped at its 5 prime end, typically with a nucleotide or, now more commonly, a modified trinucleotide. This cap is surprisingly expensive and is a significant cost driver in the manufacture of messenger RNAs. Under standard production conditions of 1 micromolar cap agent, competitive RNA polymerase generates only about 15% fully capped mRNA. To overcome this insufficient capping using incumbent RNA polymerase, mRNA producers are driven to overcharge the cap agent fivefold to reach 80-plus percent capping. But as you can see on the graph, with 1/5 the amount of cap agent, nearly 90% cap efficiency is achieved using our Codex HiCap RNA polymerase. In addition to our improved capping efficiency, we have also shown that Codex HiCap generates significant less double-stranded MRNA, a byproduct of messenger RNA synthesis that cannot be easily removed from the final product and may result in detrimental side effects. This enzyme has now been purchased by several mRNA manufacturers and is being tested by several more, and we've had nothing but positive results back from these tests to date. Slide #14. Another recent market entry where we see tremendous growth potential for Codexis is in the discovery and development of proprietary Biotherapeutics. We are rapidly building and advancing a high-value pipeline of therapeutic assets for treating indications with high unmet medical need. Here, our CodeEvolver platform is increasingly being validated as a drug discovery engine, uniquely enabling biologic drug substances to be orally administered and expanding the safe and efficacious boundaries for next-generation gene therapies. Slide 15. Just 4 years ago, we had only 2 early-stage programs in our pipeline. Fast forward to today and we have a dozen programs in our pipeline. We've struck 2 impressive multi program partnerships with Nestlé Health Science and Takeda, and we are also advancing multiple self-funded programs in parallel. Slide 16. Our products partnered with Nestlé Health Science are therapeutic enzymes for the treatment of diseases within the gastrointestinal tract, including disorders that are caused by congenital errors of amino acid metabolism. The program that is farthest along in development is CDX-6114 for phenylketonuria, or PKU, which is fully licensed to Nestlé Health Science. We also have 3 other programs partnered with Nestlé Health Science, which are co-owned with Codexis. CDX-7108 for the treatment of an undisclosed GI disorder is on track to advance into its first clinical trial in the second half of this year. The other 2 programs are in the discovery stage and progressing well. In addition, based on growing validation from these 4 programs with Nestlé Health Science, we are also self-funding selective oral biologics for other GI disorders. Our partnership with Takeda is focused on improving gene therapy candidates for Fabry disease, Pompe disease and a blood factor disorder. We are leveraging CodeEvolver to engineer transgenes with improved attributes such as enhanced expression, improved half life, greater stability, better uptake in critical tissues and reduced immunogenicity. The Fabry program is the most advanced among the Takeda programs. Here, an engineered transgene from Codexis is advancing through Takeda-led preclinical studies. Beyond the encouraging progress with Takeda, we have begun self-funded discovery programs targeting improved transgenes for other rare disorders. Slide 17. Modifying transgenes using CodeEvolver to enable delivery of a better-performing enzyme is a differentiated approach to develop next-generation gene therapy candidates. We recently presented exciting preclinical data on both our partner gene therapy programs with Takeda. On the left, we showcase data for CodeEvolver-engineered enzymes for Pompe disease that improve half life, cellular uptake and reduce immune response, all in parallel. On the right, proof-of-concept data, demonstrating statistically significant reductions of glyco phospholipids in hard-to-access heart tissues. These are just a few examples of how Codexis is working to expand the safety and efficacy boundaries of tomorrow's gene therapy for rare disorders, both in a growing partnership with Takeda and increasingly on our own. Let me now shift over to Ross, and he'll present some of the company's momentum from a financial perspective. Ross?

Thank you, John. Yes, here on Slide 19. Codexis has an excellent growth history. We have firmly established our Performance Enzymes segment in sustainable manufacturing as evidenced by the 22% compound annual growth in our product revenue over the last 5 years and our sales to 21 of the top 25 pharmaceutical companies. We had extended our Performance Enzymes segment into other high-growth areas, with Life Science Tools being one of the most important. Our R&D investment in Life Science Tools began just 3 years ago, yet we now have 3 commercial-ready enzymes as well as other exciting projects like our collaboration with NAI for DNA synthesis. Our Biotherapeutics segment started as an idea 5 years ago. We currently have 1 asset in Phase I clinical trials in a pipeline of 11 disclosed projects in gene therapy and oral-up biologics. Now I'll turn to the financial numbers. If we can move to Slide 20, please. We began 2021 with very strong results. In Q1, we reported $18 million in total revenue, an increase of 23% from last year. In addition, we reported $10 million in product revenue, up 100% from last year. And our product gross margin came in at 59% compared with 50% in Q1 last year. We're very excited about our outlook for 2021. We are guiding to total revenues of $82 million to $85 million, reflecting growth of 19% to 23% from last year. For product revenue, a key metric, we are guiding to a range of $36 million to $39 million, up 20% to 30% from 2020. Our product gross margin for the full year should be in a range of 54% to 58%, as our sales mix continues to shift to higher-margin products. Lastly, we ended Q1 with $140 million and 0 debt, providing us with a strong foundation to support our growth. John will now speak about our 2021 goals, beginning on Slide 21, please.

Thanks, Ross. In parallel with delivering our financial results, we have clear visibility to the multiple catalysts across each of the 3 markets that will show we are on track for our accelerating medium- and longer-term growth ambitions as well. From upticks in recently commercialized enzyme product revenues,to new product developments and launches, the therapeutics data generation to inorganic investments, we're excited to deliver against all of these and more in 2021. And we're off to a great start as where we sit here in May of the year. Slide #22. We're at a very exciting time in the company's history with our product generation flywheel truly picking up steam. CodeEvolver continues to accelerate its discovery power. We're expanding our R&D team capacity, and we're targeting a growing number of projects that can both commercialize faster and address larger recurring revenue possibilities. We're like a baseball team getting more times at bat, getting on base more frequently and with more extra base hitters on deck, all at the same time. Slide 23 and closing out, we're incredibly excited by the nearly limitless possibilities for enzymes in a product class. We have only begun to scratch the surface of how Codexis enzymes can make a difference for the health of people and the planet, reinforcing our confidence in the step-out growth we expect to deliver as a company in our future. Thanks for taking the time to listening to our prepared remarks. At this point, I think the UBS team and Ross and I can shift to Q&A.

Great. Thank you, John and Ross. With that, let's shift to the Q&A part of the presentation. [Operator Instructions] Great. So I guess, the first question that we have is, great progress in terms of getting into 3 big markets. Looks like Life Sciences Tools market is growing pretty nicely, obviously, very attractive market overall. I guess the question is more around how do you figure out what is -- what kind of projects would you work on? And is there a selection criteria or selection bias that you have that our focus would be on this one versus b? Because it looks like there are a lot of applications to the CodeEvolver platform and a lot of opportunities in front of you.

Yes. Great question, Kapil. So really, I think we start with fully understanding what a new enzyme can deliver in terms of performance and value. And honestly, these days, the higher the value versus existing materials, the more exciting we get. The more the difference in performance attributes that we engineer in versus materials today, that gap is the value creation gap. And that's one of the primary inputs for the company. The next would be where -- how do we go-to-market. In our sustainability manufacturing segment, there, almost entirely, we bring our products to market through a custom partnership. One customer will work with us to engineer the enzyme for their specific, usually very unique application. And in this case -- these cases, we will almost universally get the customer to fund the early research and development, effectively mitigating an investment risk of Codexis in the creation of that particular enzyme. And the -- for that program, we look at what is the potential revenue for a successful enzyme, how quickly can it commercialize with the recognition that much of the early research is funded by our partners. This is a very low risk, but a very attractive way to grow. So most of our projects today are in the sustainable manufacturing arena. However, a growing percentage of our products are being self-funded by Codexis. Here, we study a given market. We look at the enzymes that are used in those markets. Today, there are many enzymes that are required in Life Science Tools applications. But the world generally pulls from naturally available enzymes and has only limited capabilities to engineer those enzymes for improved performance. So in these cases, the Codexis team, which is commercial team, is growing and getting smarter to define what -- how to specify an engineered enzyme that could make that performance -- the application be significantly better. The DNA ligase for the library prep for next-gen sequencing, RNA polymerase with capping efficiency for messenger arm and a manufacturer, these are some of our best example points. And here, Codexis is investing in the development of these enzymes on our own upfront, which opens up more economic possibility for Codexis. And generally, these enzymes can be used by multiple customers. So we are lining up the sales and marketing team and capability to go-to-market broadly. Finally, in Biotherapeutics, we're all familiar with the time and cost and expense of fully bringing a drug substance to market takes many, many years and a lot of money. So here, Codexis invests in preclinical validation. We use CodeEvolver to look at thousands of different molecular variations to identify a drug substance product that looks good in vitro. And then we will do the preclinical research ourselves to validate with relevant preclinical animal models, the efficacy of the drug or the safety of the drug candidate. At this point, Codexis historically has partnered our most advanced assets out in Nestlé Health Science and Takeda, mitigating the risk of these programs going forward. Increasingly, now that we're more and more validated to enable better gene therapies or to enable oral administration of large molecules, which is a very unique target that we think very few companies can do and CodeEvolver is uniquely capable of doing, we're going to take more of our wholly owned assets a little bit farther along, especially when we generate really meaningful preclinical data. So the prioritization is very much a function of these different segments, as you just heard. But the beauty of Codexis is, in the beginning of every single project, it's 1 team of 3 or 4 scientists to run CodeEvolver to find a molecule that delivers performance and no other enzyme or no other molecule has been able to deliver before. And so it's this focus on CodeEvolver enzyme and engineering that truly is the core of the company. And then how to commercialize thereafter is very much a function of the end market.

Great, John. Very interesting entry into the mRNA market. As you probably know from COVID or otherwise, mRNA is a very much in need in the market. So congrats on that.

Thank you.

Could you maybe elaborate a little bit on how, I guess, the RNA polymerase that you -- that Codexis has developed, like how is it used? And then who are your typical customers? Would those be the manufacturers or the pharma companies or both, in your case?

Yes. Sure. So to manufacture a messenger RNA molecule, the drug substance or the vaccine substance itself requires an RNA polymerase in the manufacturing. And in fact, it enables the growth, the cloning of the RNA to expand its yield and production in the core reaction of making a target messenger RNA. And as I described in the case study earlier in the presentation, you also need this capping efficiency. You need to cap the 5 prime, which requires some additional different molecule, along with the messenger RNA. So we designed our -- along with the RNA polymerase, my apologies. So we designed our RNA polymerase to actually enable 5 prime capping efficiency. So you can minimize the amount of this cap agent, which is a fairly expensive variable component, along with the RNA polymerase, like what we're marketing now. So these are fundamental critical raw materials in the manufacturer of messenger RNAs. We've known and studied this market even before COVID. But with COVID, the market is just expanding dramatically. It's been remarkable to see how efficacious the COVID vaccines have been against COVID-19. And this has brought a growth of earlier-stage companies to partake in discovering new therapeutics or new vaccines using messenger RNA modality. So typically, Codexis is involved with the Discovery Group, the research company, and the well-known partnership of BioNTech and Pfizer. BioNTech discovered and -- the early development of the messenger RNA that became a COVID-19 vaccine. That's a typical entry point for Codexis, is to work in the early development stage or the later development stage, get our RNA polymerase specs into the manufacturing process versus Pfizer is more of a downstream partner. So we're working with companies like BioNTech and other great companies like that, plus a whole crop of new earlier-stage companies who are vetting on messenger RNA as a modality for tomorrow's vaccines and therapeutics.

Great. Congrats on that. I think that's a very exciting market. I guess one other question on your partnership with Molecular Assemblies. How did that came about? Is that a market you were looking at? Any insights on that? And then finally, can you maybe talk a little bit about your partnership with Casdin? What is the end closure? How do you work with them? And not very typical to see an investment player working with the corporate in this fashion, so would love to understand that as well.

Sure. Great. Two great questions. My pleasure. So first, Codexis had identified the enzymatic approach to DNA synthesis well before we announced the partnership with Molecular Assemblies last year. We saw -- we could see the promise of an enzymatic synthesis approach versus today's nonenzymatic approach to synthesizing DNA. And we've all been witnessing the substantial growth of DNA synthesis as an industry, so it's an attractive high-growth market. And the traditional approach to synthesizing DNA has fundamental limitations, often referred to as the phosphoramidite chemistry approach. This was pioneered 3 or 4 decades ago, so it's well-established chemistry. But it also has well-established fundamental limitations. In particular, the ability to stitch together longer chains of nucleic -- nucleotide building blocks is highly limited using phosphoramidite chemistry. So what the industry does is they make short-chain oligonucleotides, and then they post -- assemble them later with a lot of waste, a lot of time and a lot of post-processing following the nucleotide edition step. If you compare that to how enzymes design -- how enzymes synthesize DNA inside of biology, inside the nucleus of our cells, very long chain to DNA are synthesized routinely extremely efficiently high-quality using nucleotides inside the nucleus and enzymes. So we have this model of an aspirational enzyme performance state. However, if you took the -- you take those enzymes and the nucleotides out of the cell, and they don't work at all. They're not stable. The chemistry is inefficient, et cetera. So this is what Codexis loves to find, a model of how it could be, but it's unstable in industrial applications and a market that's limited by nonenzymatic chemistry. So we started the study -- use the opportunity to design enzymes, highly engineered enzymes, to enable this aspirational DNA synthesis approach. As we build confidence that Codexis and our CodeEvolver platform could, indeed, engineer the kind of enzyme performance that's required to compete with the phosphoramidite chemistry, this requires 99.5% yield. Sounds great, but it is way too inefficient to compete economically. We need 99.9s or 99.95% in order to have an efficient competitive cost position. The amount of enzyme engineering to reach those kinds of yields plus at higher temperature was an -- is an enormous enzyme engineering fee. So we're super excited, fast forward, that we're 2/3 or 3/4 of a way through with that engineering to design in performance on those kinds of attributes that's going to enable enzymatic DNA synthesis to be competitive. We built our confidence. And back to 2019, early 2020, we built our confidence that, indeed, we could engineer that kind of enzyme performance. And instead of Codexis designing those enzymes on their own, we took a novel approach for the company to go study all of the enzymatic DNA synthesis companies that are in early stage of development of a platform business of their own, but they need better enzymes. That led us to elevate Molecular Assemblies as, in our opinion, best-in-class. They have done more work on enzymes. They've done more work on the chemistry to -- than other enzymatic DNA synthesis companies. So we decided to build a partnership. Codexis engineer the enzymes using CodeEvolver, enabling those enzymes to flow through Molecular Assemblies on a preferred basis, and Codexis taking equity in Molecular Assemblies as we build this partnership. So that as the enzymes are -- hit their targets,and Molecular Assemblies lines up for commercial launch, we are going to benefit on the minority equity ownership that we have -- a growing minority equity ownership that we have in Molecular Assemblies. So we're super excited about this working with early-stage dynamic companies just like Molecular Assemblies but for a whole range of different target applications. But most of these today are in the Life Science Tool area, and that was the genesis of our partnership with Casdin Capital. I think many people are familiar with Casdin, very far-reaching, very proactive, wide mandate investment firm that invests very early all the way to -- through IPO to owning established public companies like Codexis. They've been a leading shareholder in Codexis for a very long time. So the partnership basically shares notes on different early-stage companies that could benefit from Codexis' technology, could benefit from Codexis' commercialization and capital experience and, of course, can benefit from Casdin's great capital access. And so this has created a very dynamic conversation to do additional early-stage company investments like we did with Molecular Assemblies, and we've already taken a position in 1 company, a computational protein design company in Seattle named Arzeda. So more to come and just another great sign of growth in the partnership between Codexis and Casdin.

Great. Exciting times at Codexis, surely.

Yes. Definitely. Thank you.

I'm not seeing any more questions. So -- and I think we are running close with time. So we would like to thank John and Ross for presenting today and you all for attending the 2021 Virtual Global Healthcare Conference. You are now free to disconnect from the conference line. Thank you, John and Ross.

Thank you, everybody. Thanks, Kapil. And look forward to the rest of the conference.

Thank you.