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

Thank you, operator. With me today are our President and Chief Executive Officer, Alison Moore; Stefan Lutz, our Chief Scientific Officer; and Britton Jimenez, Senior Vice President, Sales and Marketing. During this call, management will make several forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These include guidance for 2026 revenue, expected milestones and product launches, facility expansions, technical milestones, and related public announcements, along with our strategies and prospects for revenue growth and for successfully executing current and future programs and partnerships. Anything discussed on this call that isn't a recounting of past events concerning Codexis constitutes a forward-looking statement — one that mirrors what management believes and anticipates as of November 12, 2026, the date of these remarks. Don't lean too heavily on such statements, since they carry both known and unknown risks, uncertainties, and other elements, some of which lie outside Codexis' ability to control and which might significantly change what actually happens. You can find further details on the elements that might significantly change actual outcomes in the documents Codexis files with the Securities and Exchange Commission. Aside from situations where the law demands it, Codexis makes clear it has no intention and takes on no duty to refresh these forward-looking statements. With that, I'll hand the call to Alison.

Appreciate that, Georgia, and thank you everyone for joining us. Codexis develops manufacturing solutions that rely on highly engineered enzymes. The way the pharmaceutical industry makes complex small molecule therapeutics has been transformed dramatically by biocatalysis, and our present emphasis is on providing a substantially better enzymatic production system for oligonucleotide medicine. As we move into the last quarter of 2026, I take real pride in our achievements to date. We posted solid third-quarter results today, with revenues of $19.3 million, which represents our fourth consecutive quarter of on-target performance. At the start of this quarter, we wrapped up a stock sale that brought in $25 million in net proceeds. Also, this week we announced a $60 million term loan agreement, and we drew down $42.5 million initially to pay off an existing loan. Solid operating results, a stronger cash position, and pushing back debt repayment have all improved our financial standing as we close out the year. Georgia will share more on our financial accomplishments later in the call. In 2026, those working on RNAi medicines have gained a good deal of acknowledgment—acknowledgment of the enormous therapeutic potential in indications covering large populations, and acknowledgment as well that conventional production techniques cannot keep up with the commercial ambitions behind these significant new therapies. Interest in enzymatic routes keeps expanding markedly, and Codexis' ECO Synthesis platform stands at the forefront in shaping alternative strategies. The conversation across the industry has moved away from proving the concept and toward embedding innovative technologies within development pipelines; during October, we entered into a feasibility study with a leader in this area to evaluate ECO Synthesis fragments featuring stereochemical control. Beyond that, an agreement has been reached with a sizable biopharmaceutical firm to investigate ligation of a clinical asset, and efforts are underway on how a pilot-scale technology transfer of ECO Synthesis technology could be started into their pilot plant, so they can evaluate production capability in-house. One key piece of adoption readiness is the headway we have made in industrializing our platform. That covers scaling ECO Synthesis, enhancing operating parameters like cycle time, and making certain we can satisfy product quality expectations. In Q3, we generated several batches of material via ECO Synthesis at 100 g scale, all with high quality. As part of process optimization, we have additionally cut our cycle times by 40%. Our focus remains on refining scale and process performance as we move toward kilo-scale readiness. A portion of these results was presented only last week at the TIDES Europe conference, where we additionally offered an initial look at the improved biological activity obtained through stereo control of the siRNA. At this point I'll hand the call to Stefan, who will share further detail on our latest TIDES data and the supplementary findings we intend to present going forward. Stefan?

Thanks, Alison. Last week was busy and exciting for us at TIDES Europe in Amsterdam. Over the course of two presentations, the Codexis team delivered important updates that spoke to three central customer questions: scale, platform capability, and stereochemistry. Let me go through those briefly. As Alison noted, during our main stage presentation we made a formal announcement that the ECO Synthesis manufacturing platform has been successfully scaled to 100 g. Equally significant, we were able to report the outstanding quality of the oligonucleotide made at that scale — quality that surpasses what the industry expects at this point in development. In addition, the 100 g synthesis demonstrated a robust predictive link between process performance and product performance across different scales. We saw consistent quality in the oligonucleotides ECO Synthesis produced at 100 mg and at 100 g, and that consistency confirms how well we understand the process—which is essential if development is to become quicker and more predictable. It also strengthens our confidence that we can foresee and fine-tune performance as we scale up further. Gaining that depth of process understanding takes time, and there is no way around it. Across the last three years—beginning when we first synthesized 1 g of an oligonucleotide in the fall of 2023—we have methodically built, scaled, and improved the ECO Synthesis manufacturing platform. As of today, we believe we have laid a solid foundation for manufacturing at large scale. Then we described a major broadening of the ECO Synthesis platform: attaching tissue-targeting molecules directly onto the ends of therapeutic oligonucleotides. Within the usual workflow, ECO Synthesis is now able to link these targeting molecules efficiently and quantitatively. Because targeted delivery matters so much for today's siRNA therapeutics, this ability meets a significant customer need and makes the platform's value proposition even stronger. This capability is already running in our ECO Innovation Lab, and it brings us nearer to a genuinely end-to-end oligonucleotide synthesis solution—starting with the first nucleotide and finishing with the tissue-targeting molecule. Lastly, we offered an exciting update on our continuing efforts to learn the possible biological value of phosphorothioate stereochemistry. We used ECO Synthesis to make two antisense strands that were fully stereo-controlled, then turned them into therapeutic siRNA duplexes and tested those in primary human hepatocytes. When we compared them with a chemically synthesized stereo-random control, the stereo-defined siRNAs came out three to four times more potent, and they reached similar maximum gene knockdown. If you get more potency, that can mean real therapeutic and economic gains — possibly lower doses, fewer manufacturing requirements and lower costs, less frequent dosing, and potentially more routes of administration. Those early results were encouraging evidence that stereochemical control might become a meaningful source of therapeutic differentiation and value. The innovations we presented at TIDES are drawing considerable industry interest and have brought us additional engagement with prospective customers and strategic partners. What matters here is that the conversation has moved past technical feasibility questions and now centers on deployment, regulatory strategy, and process economics; in our view, that signals rising confidence in ECO Synthesis technology and a more mature emphasis on how it gets adopted into the pipeline. With that said, I’ll hand the call to Britton, who will update us on our wider commercial activities. Britton.

Appreciate that, Stefan. As we continue collaborating with leading innovators, we're seeing rising curiosity about what our ECO Synthesis platform can offer customers. In October, we shared news of a feasibility study alongside a pioneer in the field, through which Codexis will use our ECO Synthesis technology to synthesize stereo-defined fragments; this innovator depends on a strategy of fragment synthesis and ligation, but it wants to push fragment purity beyond what standard solid-phase chemistry techniques permit. They will be evaluating our platform as a way to reach their manufacturing purity targets. A further example of innovator engagement is an evaluation agreement signed this week with a top biopharmaceutical company that holds a pipeline of siRNA assets. For this customer, our plan is to evaluate ligation strategies for a late-stage asset and also see how ECO Synthesis production performs at pilot scale. This is the first time Codexis has transferred ECO Synthesis technology into an innovator's pilot-scale manufacturing environment, and it's a key milestone demonstrating how the platform's small footprint and aqueous process can help with integration into existing manufacturing infrastructure. All together, these engagements allow us to demonstrate ECO Synthesis's potential for addressing what our customers and the industry need. In addition to these, more conversations are moving forward with other large pharma and biotechnology innovators, and this is becoming an exciting pipeline of opportunities. We are establishing ties with CDMOs, which right now serve as the industry's main suppliers of oligonucleotide production; three evaluations are underway after small-scale technology transfers, and we have just brought two additional CDMOs on board. One of these newcomers is a large manufacturer seeking a capital-efficient route back into oligonucleotide manufacturing. Our small molecule biocatalysis operation remains profitable and has resumed growing during this year, supported by several recent new product approvals. Product sales across the first nine months of 2026 climbed 78.5% compared with the same period a year earlier, driven by CDX-049, a proprietary enzyme that is used in making two branded pharmaceuticals, one of which obtained label expansions from the European Commission earlier this year. Biocatalysis product development is still in strong shape. Twelve programs are in phase II or III, and we expect data readouts from seven clinical trials over the coming two years. Three drugs approved this year are made using our enzymes, and two of them could be blockbuster products. Since all of these are only now launching, they may add substantially to revenue later and give our top line meaningful diversification. We see good prospects for steady expansion and continued profitability in this part of the business, and we're enthusiastic about them. I'll turn the call over to Georgia now, who will discuss third-quarter financial results.

Thanks, Britton, and good afternoon, everyone. On today's call I'll give a quick summary of our financial results, and I'd encourage you to look over the 10-Q we filed today for a fuller discussion. Revenue for the third quarter of 2026 came in at $19.3 million, versus $8.6 million during the third quarter of 2025. We're especially happy with how revenue performed in this year's third quarter, since our pharma biocatalysis business did strongly, which, as Britton noted, we view as a sign that we're returning to growth. This part of our business has not only beaten last year, but it's also on track to surpass the revenues we delivered in each of the last three years. Biocatalysis revenue is also increasing and turning more profitable. In the third quarter of 2026, product gross margin hit 74.5%, extending the upward trend from what we reported in the first half of 2026 and from full-year 2025. Because gross margin has kept improving through the first nine months of 2026, we now anticipate gross margins in the low 70%s for all of 2026. R&D expenses totaled $12.6 million in the third quarter of 2026, versus $13.9 million in the third quarter of 2025. That decline stemmed mainly from lower employee-related costs along with decreased spending on outside services and lab supplies. SG&A came in at $10.1 million for Q3 2026, versus $11.2 million a year earlier. That drop was driven primarily by reduced personnel costs from a smaller workforce, along with decreased stock-based compensation and lower allocated costs. Codexis remains focused on keeping expenses in check. Our goal is to deploy capital efficiently, directing it toward areas that generate the greatest benefit for the business overall. The net loss for Q3 2026 totaled $8.1 million, compared with a $19.6 million loss in Q3 2025. We're reaffirming our 2026 revenue guidance, with expected revenue between $72 million and $76 million. At the close of Q3 2026, Codexis held $72.7 million in cash equivalents plus short-term investments, versus $78.2 million as of the end of 2025. In Q3, we completed an equity financing that brought in roughly $25 million net of expenses. Following the quarter's close, we entered a $60 million senior secured term loan agreement, drawing $42.5 million at closing. Those proceeds retired our prior $42 million debt. The loan carries 48 months of interest-only payments, then a 12-month amortization period. Our projection is that existing cash reserves will cover the funding needs of our planned operations and capital expenditures through 2028, consistent with the cash runway guidance we gave earlier. Having said that, I'll hand the call back to Alison now.

Thanks, Georgia, Stefan, and Britton. There's real potential in our ECO Synthesis technology to shake up how oligonucleotides are manufactured and to help siRNA therapeutics reach indications serving large patient populations. We're still dedicated to industrializing this technology so it can be deployed into customer pipelines. We're sharply focused on boosting scale, process performance, and product quality, and at the same time we're listening to customers and adding capabilities to our platform that matter greatly to the success of their products. This year we've made progress on several fronts: we found a way to accomplish enzymatic synthesis without a starter oligo, we advanced our stereochemistry approach, and we developed methods for incorporating tissue-targeting capabilities into our technology. A top-priority objective is to finish the year with momentum; over the last two months we signed two significant evaluation agreements, and there are more in the funnel. That opens excellent opportunities for us to sign higher-value contracts and innovative licensing deals in 2027. Several commercial initiatives are approaching the final stages of negotiation, and we look forward to updating you on our progress. We'll also concentrate on financial performance, working hard to hit our revenue targets while keeping expenses in check. For investors, reaching these goals will demonstrate proof of success; we'll draw on our know-how and more than 20 years of experience in engineered enzymes to sustain and drive innovation in RNA medicines. Over the coming months we'll move toward 500 g production scale, advance the ECO Synthesis raw material supply chain, and start construction on our GMP production facility. We're truly excited about our prospects and proud of the dedication and achievements of the whole Codexis team, whose work has been instrumental in making the ECO Synthesis technology a reality. At this point we'd be glad to take your questions. Operator?

Hey there, everyone. Good afternoon, and I appreciate you taking my question. I have just one, regarding TIDES Europe. Right on the heels of that event, might you elaborate on the kinds of new customer discussions that are coming out of it, and precisely where those are concentrated—stereochemistry control, scale, or something different? Then, second, as I understand it, you planned to sit down with the FDA's Emerging Technology Team at some point later this year. Where does that stand, and which particular feedback are you hoping to receive from that interaction with the FDA? Thank you.

Hello, Allie. Many thanks for that question. Alison here—Britton will handle your first question, while I take the one about the FDA interaction. In mid-September we had a highly productive exchange with them. Our discussions covered expectations and specifications for the enzymes in the ECO Synthesis platform, along with specs for siRNA produced through that platform; we wanted to make sure nothing had been overlooked and that the agency's expectations were being met. It was a very helpful conversation, and we believe we're closely aligned with the agency. We also had a key discussion with the FDA about comparability, and started getting their perspective on how someone would build a comparability case—particularly when that case involves stereochemical control versus an originator product made through stereorandom solid-phase chemistry. That conversation was quite constructive. Again, the FDA was highly engaged. They follow this platform closely. I believe the potential for product purity resonates strongly with them, and we look forward to the next one. Now I'll have Britton address your first question.

Yeah. Hi, Allie. This is Britton. What we shared in terms of information and data gave further validation to the message we've been delivering for the past year: this technology is growing and expanding. Our focus is heavily on scaling this technology and achieving high quality with it, and that is something we could demonstrate and show with actual data at TIDES EU. Demonstrating the actual 100 g at crude purity above 90% is an incredible milestone for us, since when you look at the industry, many of their standards and expectations require you to be above 90% with crude material, and we are showing we can achieve that. There was a lot of excitement around that. There were also a lot of conversations regarding our scaling factors. Now that we've taken it to hundreds of grams, can we reach the kilos, 10 kg, hundreds of kilos? Everything we have, all the data, shows we can meet all those objectives. The conversations were great, with a lot of excitement around it, because this is something never done before within our industry using an enzymatic process.

Hello, everyone. Thank you very much for taking my question, and congratulations on those recent presentations. Just to follow up a bit on that last question, I'd like to ask about phosphoramidite chemistry — how the product is likely to be compromised, or how quality could differ, as production scales up in terms of grams. And then, when you think about the next step toward potentially showing successful production of 500 g, how will you characterize what counts as a win for you in that scenario? Thank you.

Hi, Kristen. This is Alison. I'll begin and then ask Stefan to weigh in. I believe your first question concerns product quality with the current chemistry and how that ties to scale, if I'm understanding you correctly. I'd say there are 40 years of investment in solid-phase organic synthesis, and those producing high-quality GMP material today devote an enormous amount of effort to manufacturing and releasing very high-quality material; that requires very, very substantial effort. The purification burden is fairly onerous. I don't think anyone would dispute that. As the chemistry scales, I think there are certain physical constraints. Those aren't necessarily quality constraints; they're physical constraints of the current technology and of the solid phase portion of that synthesis, which can only scale to between seven and 10 kg per batch — which certainly sounds like a decent quantity of material, but not if you must supply a market demanding metric tons annually. To recap, the ECO Synthesis manufacturing platform won't face those kinds of scale barriers. Second, what we're working hard to demonstrate, and have begun to demonstrate at TIDES Europe, is that our material, even crude and without purification, shows high purity. We will keep demonstrating that the chromatography and purification needs for material produced through ECO Synthesis will be far more efficient than those of solid-phase chemistry. Stefan, is there anything else you'd like to add?

Yeah, perhaps I could add one thing regarding what leads to impurities in chemical synthesis. The process itself, that chemical synthesis, involves really harsh conditions. While the oligonucleotide is being made, this repeated contact with those harsh conditions does actually harm a small portion of the product. By contrast, ECO Synthesis, which works in an aqueous environment, in a buffered environment, is far, far milder, and we think that plays a major part in the better quality we're seeing.

Then, I think the second part of the question —

500 g.