Welcome to the conference call being hosted today by Codexis Management. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this event is being recorded. I will now turn the call over to Carrie McKim, Director of Investor Relations. Please go ahead.
Thank you, Operator. With me today are Dr. Stephen Dilly, Codexis Chairman and Chief Executive Officer, Kevin Norrett, Chief Operating Officer, Dr. Alison Moore, Chief Technical Officer, and Dr. Stefan Lutz, our Senior Vice President of Research. Georgia Erbez, our Chief Financial Officer, is also here and will be available for any questions during the Q&A. During this call, management will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including anticipated technical and commercial milestones, our understanding of customer needs, and our position in target markets, as well as our strategies and prospects for successful execution of current and future programs and partnerships. To the extent that statements contained in this call are not descriptions of historical facts regarding Codexis, they are forward-looking statements reflecting the beliefs and expectations of management as of the statement date, May 22nd, 2025.
You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond Codexis' control and that can materially affect actual results. Additional information about factors that can materially affect actual results can be found in Codexis' filings with the Securities and Exchange Commission. Codexis expressly disclaims any intent or obligation to update these forward-looking statements except as required by law. Now I'll turn the call over to Stephen.
Thanks, Carrie, and good morning, everyone. Having been on the ground at TIDES this week, it's safe to say that siRNA technology has officially arrived. It's widely accepted that there'll be a surge in demand for these therapeutics, and customers are acutely aware of the need to find innovative manufacturing solutions. As a result, the TIDES meetings have become a bustling hub of innovation for the field. Since two years ago, TIDES attendance is up threefold to more than 2,000 delegates, and sessions on oligonucleotide manufacturing are packed. While presentations on enzymatic methods have been peppered throughout the meeting, there was an entire half-day session dedicated to enzymatic RNA medicine manufacturing. It's clear that the broader environment is very much shifting in favor of enzymatic synthesis in parallel with the initiative to onshore manufacturing, which both make the rollout of our ECO Synthesis platform quite timely.
With six presentations featuring our enzymatic solutions at the meeting, Codexis was front and center. As you'll hear shortly, our data provided powerful evidence that our approach can reliably manufacture customers' siRNA products at a larger scale, and the industry is taking note. On top of the Codexis presentations, Bachem, Nitto Avecia, and ST Pharm, three leading oligonucleotide manufacturers, also highlighted the superior performance of our double-stranded RNA ligase in their hands. We are very pleased with this external validation of our technology, particularly from collaborators who have such broad reach across the siRNA landscape. As you can tell, we're seeing clear enthusiasm from customers on the ground, and I want to spend most of today's call letting you hear directly from Alison, Stefan, and Kevin.
They're still in San Diego and can share details on the reactions they've seen from meeting attendees, as well as an update on how our customer conversations are playing out. Before I pass it over, let me just say that our ECO Synthesis platform is exactly where you'd expect from maturing technology. Since the TIDES Europe meeting last fall, we've gone from providing proof of concept that our enzymatic approach can succeed to now tackling questions around practical application such as reproducibility and impurity profile. We no longer need to help CDMOs and drug innovators make a conceptual leap to understand the role of our solutions. They know that chemical methods simply won't be able to scale as needed, and an enzymatic approach is the only viable option to meet their batch size, cost, and purity expectations.
With that, I'll hand the call over to Alison to recap our main stage oral presentation. Alison?
Thanks, Stephen, and good morning from the TIDES USA meeting. I've been fortunate enough to have been part of the development and licensure of several advanced medicines, some of which are billion-dollar drugs and, more importantly, are available to hundreds of thousands or even, in some cases, millions of patients. In the last seven or eight years, I've been working in the genomics medicine space. These are a broad range of modalities, but many of these modalities have significant challenges in production at scale. siRNA is a powerful genomic medicine because it has been proven now to be safe and effective, and it has the potential to be used in a large number of indications. We're really excited about the timing and relevance of our ECO Synthesis platform at this time to move past the constraints of solid-phase synthesis.
At previous TIDES meetings, we've been presenting data that shows the build of the platform, and this time we described the characterization and performance improvements of the process. We also talked for the first time about our understanding of how ECO Synthesis can scale and alleviate some of the scale barriers and costs involved in solid-phase synthesis. We've transitioned from proof of concept to characterizing the platform and teasing out critical performance criteria that relate to robustness and scale. This begins to demonstrate to therapeutic process developers that this is a manufacturing solution capable of being the production vehicle of a billion-dollar product. In addition, my colleague Derek Gauntlett described the detailed ligation work. This demonstrated performance reproducibility and the relationship of fragment quality to final product quality.
What was exciting was the conclusion that we can remove costly and time-consuming purification steps since the ligated product is very high purity. Now let me pass it over to Stefan.
Thanks, Alison. It was super exciting to look at the audience's reaction to your presentation, including the question and then some of the follow-up dialogue with customers. I couldn't help but reflect on how different this was from a year ago. Let me take a moment to call out some key points on the other Codexis presentations, as well as our CDMO collaborator talks. With ligation being the topic of almost every other talk on oligonucleotide manufacturing this week, our poster presentation on our newly developed machine learning tool was perfectly timed. In helping customers to optimize RNA fragment designs and matching it with the right Codexis ligase, it is one thing to offer a tool that guides them towards finding a quicker solution.
It is a whole different story if that tool quickly identifies solutions that otherwise would have not or would have been counterintuitive, and they turned out to be more effective. Now, this machine learning tool not only works in our hands but has been successfully deployed for developing customer assets. One of those was highlighted in our joint oral presentation with Bachem. Being standing room only, with an estimated attendance of over 200, the Bachem talk showed how our ligase solution works seamlessly and efficiently in combination with their innovative chemical synthesis platform, demonstrating the approach's increased productivity and improved economics in manufacturing a therapeutically relevant siRNA asset. Similarly, our two other CDMO collaborators, ST Pharm and Nitto Avecia, presented on their recent in-house siRNA synthesis via enzymatic ligation, again successfully achieving significant process improvements with our engineered double-stranded RNA ligases.
As Stephen mentioned earlier, a common thread and important takeaway here is the consistently high performance of our ligase on different assets, under different process conditions, and for different operators. A bit more technical, but no less important, was our third and final oral presentation by one of our senior scientists, Stephanie Forget, on controlling the stereochemistry of sulfur modifications in the phosphate backbone of siRNA therapeutics with our ECO Synthesis technology. This matters because it can impact the efficacy, stability, and safety of these assets. Though this feature is still in the early stages of development, Stephanie's talk elicited some serious interest from delegates at the conference and shows all the signs of becoming a disruptive technology in this field, introducing an elegantly simple and scalable manufacturing solution to siRNA assets with defined stereochemistry. This is something that chemical oligonucleotide synthesis has struggled to deliver for over 40 years.
We will share additional details on this capability down the line, so stay tuned. With that, Kevin, let me pass things over to you.
Thanks, Stefan. This has been an incredibly engaging meeting. As you have heard, we have shown such tremendous progress. My challenge as COO of Codexis is to translate this momentum into genuine customer traction. Fortunately, the topics we are now able to cover allow us to bring our naturally skeptical customers fully on board with the specifics of what we can do for them. As a result, it is super pleasing to see the change in both the people we are talking to and the questions they are asking. What is noticeable is that our points of contact have shifted from discovery scientists to decision-makers in process development and manufacturing. Because of the importance of this technology to their pipelines and their upcoming challenges, they are often exploring enzymatic methods in parallel with their current technology before the next logical step of adopting this as their exclusive platform.
Customers need to make stepwise advancements before exclusively committing to an innovative platform like an ECO Synthesis platform. What's important is that we have moved from customers asking whether an enzymatic solution can work to now asking how and when they can incorporate it into their drug development. Amidst all the exciting developments happening broadly in the siRNA field, a few things have become clear at this meeting. Let me emphasize there is no longer a debate that enzymatic solutions are required to meet the coming wave of demand for genomic medicines, specifically siRNA. As a first step, CDMOs and drug innovators see the use of ligation as the new standard for manufacturing, and we are hearing about major infrastructure investments in this approach. In addition, Codexis is no longer in accidental stealth mode and is now seen as the enzymatic technology leader for manufacturing siRNA.
We are on track with the trajectory and timeline that we laid out two years ago. Customers are actively testing us with various constructs, and an increasing proportion of our customer proposals going out today are for ECO Synthesis of fragments plus ligation. To provide some perspective, here are a few numbers. A year ago, we had no joint presentations. Now we have three with leading CDMOs. A year ago, we had one client purchasing small amounts of ligase from us. By the end of this year, we could have up to four. A year ago, we were in single digits in terms of customer prospects. Now we are in substantive discussions with well over 20. As we look beyond this meeting, customer engagement and awareness of the ECO platform continues to increase, and we remain on track to sign a GMP scale-up partnership this year.
Based upon our current customer conversations, we expect to fill our ECO-innovation lab's capacity before the end of the year. I also want to briefly comment on the competitive landscape. It is clear from this meeting that we are well ahead of the competition in terms of scalability and reproducibility, and we expect to show continued progress on that at TIDES EU later this year. One of the other reasons I believe we are really going to succeed here is that we are already established in the RNA medicines field. During a half-day session on RNA medicines, Aldevron showed how they are using our enzyme to achieve meaningful improvements in mRNA manufacturing with reduced cost, streamlined production, and improved quality product.
Ultimately, between the technical capabilities of our ECO Synthesis platform, which Alison and Stefan just outlined, our demonstrated ability to scale production, and our long-standing history of working directly with CDMOs and drug innovators, we are as confident as ever in our leading market position. With that, we look forward to your questions. Operator?
Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question at this time, please press star one from your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, for our first question. Thank you. Our first question comes from the line of Kristen Kluska with Cantor. Please proceed with your questions.
Good morning, everybody. Congrats on the update. Glad to hear that the TIDES meeting is taking off very nicely. We have talked at great length before about cost, yield, scalability, environmental impact, but today's update, from my recollection at least, seems to be one of the ones that is also focusing more on the time aspect of it in terms of the production time. Can you help us understand how this could ultimately translate for some of these larger siRNA products and essentially help us to understand how this part of the focus will play into customer engagements? Thank you.
Thanks, Kristen. Yeah, this is a perfect question for Alison, who's lived this before. Remember, what we pointed out is a significant reduction in the need for CapEx. We've also talked about batch size, and we've talked about faster times to produce each batch, each of which is super important. Kevin and others are working hard on things like the raw material supply, which will affect our run rate when we're actually making siRNA, so our cost of goods manufactured, where we're on the same ballpark right now as the comparator. Alison, take it away.
Hello. In terms of the specific cycle times that we are calling out, I think that is the genesis of your question. Just stressing the comment that I made about transitioning from showing proof of concept into a real working production platform, this is a key parameter for us. I would say that you might expect to see continued work in this space from us and from time to time reporting on cycle time. This is us. We're using enzymes, and when we're at the proof of concept stage, we're carefully looking at enzyme reactions running to completion. Sometimes those can take very long times.
When you're trying to industrialize a platform, we need to coordinate a lot of component part cycle times into shorter practical production cycle times because in order to make a batch at the end of the day, it needs to be practical. In a manufacturing plant, if that plant is operating at capacity, then production time translates into cost of goods manufactured. What we reported on this time is really an important feature of making sure that our production cycle times of our enzyme reactions are manufacturable.
Kristen, I hope you get the feel that we're right in the throes of translating this from science and discovery and research into the practicalities of what it means in someone's plant. Having people like Alison and Derek in the fold is super helpful and actually essential to doing this.
Okay. Thank you. Admittedly, it's been a while since I pulled open an organic chemistry book. On the stereochemistry side of things, how do you think about using this to your advantage to work with partners to maybe make next-generation candidates as the space is just frankly becoming more competitive? Are there certain spaces where the activity and stability might be more critical than others? Thanks so much again.
Yeah. I think that this is of cosmic significance, being able to control stereochemistry because if you start at the discovery stage, you can make something enzymatically that you simply can't make at scale chemically. That allows you to define unique profiles. It's highly likely that most of the siRNA being given to patients at the moment is inactive or suboptimal in its activity. Being able to address that is super important. It also addresses part of the scale issue by being able to make the pure substance which carries the activity. There will be different strategies. When we are getting into the supply chain of an existing product, it'll be about matching what's already being done out of the gate. When we're talking about new products, that gives us the opportunity to invent and create something actually new.
We are playing both of those games. What's really sort of super cool about this is we can dial up the stereochemistry that we want, whether it's the mixture or the pure substance. As I say, watch this space.
Thank you.
Thanks. As a reminder, if you'd like to ask a question today, please press star one from your telephone keypad. The next question is from the line of Matt Hewitt with Craig-Hallum. Please proceed with your questions.
Good morning and congratulations on the successful event this week. Maybe first up, I think you mentioned that you expect to fill the innovation lab's capacity this year. Could you remind us, is your preference to have multiple customers utilizing that lab, or would you take a single customer if it came down to that?
Preference, Matt, thanks for the question, Matt. The preference is definitely to have multiple customers because the innovation lab is a bridge to scale with multiple products, and we want to go as broad as we can. We have limited capacity, so it will be a single-digit number that we can fit in in any eventuality. Kevin, you should talk about the trade-offs you're going in in terms of thinking about who we fit in this year.
Sure. Thanks, Stephen. Yeah, I agree with Stephen entirely. Multiple customers would be great because we want to build a pipeline of products going into larger scale. The variety of customers coming into the eco-innovation lab also is important in terms of both large drug innovators as well as smaller drug innovators. The other piece I would say to that is the work associated that Alison and Derek showed around ligation for maybe later assets as part of ECO Synthesis, as well as maybe full ECO Synthesis for full eco-sequential synthesis for earlier stage or preclinical products. The mix is important. The other piece I would say that we're telling customers now is this isn't an inexhaustible resource, which is we need to be selective in what we can do between now and the end of the year because we are resource-constrained.
That's great. And then maybe, oops, go ahead.
Matt, just one thing. If we have our druthers, don't forget the comment Kevin made about early assets and big cuts. Getting something in right out of the gate where we can do things like controlling stereochemistry has a real appeal to us, right?
Makes sense. I guess maybe shifting gears a little bit, the machine learning tool obviously very timely for multiple reasons. I'm just curious, what did you hear from customers regarding that tool? How would that be integrated into your platform? Will you be selling that separately, or will that be part of a larger contract? Just any color regarding that tool would be helpful. Thank you.
That's great. Let's get Stefan to talk about the technical bits of the tool and then Kevin to talk about how we intend to commercialize it.
Yeah, Matt. The technical aspect is that this tool really goes hand in hand with the design and the product offering that Codexis provides for customers. The sequences, the disconnection when you design these fragments that you want to ligate with our enzymes, the disconnection point matters. What we have done is basically we have trained the algorithm to really look at all the performance parameters and identify the perfect spot. This is a perfect early design stage, process design stage tool that gets customers to a quick and successful implementation of that ligation step.
Yeah. Just to jump in there, the thing that got me really excited was we had a customer testing us that thought they'd done all the work on their ligation strategy. They were testing the tool to see whether it came up with the right answer. The tool came up with a different answer. This is what Stefan was referring to. It was better. That was really impactful. Kevin.
Yeah. Go ahead, Matt. Sorry.
No, I was just fascinated. Go on. Sorry.
I was just going to say your second part of your question was how are we commercializing this? It depends on every customer, depending whether it's ligation or ligation plus ECO. To be completely frank, this is really an engagement tool for us to demonstrate our capabilities and be able to show that we can move really rapidly to a solution for them. It's not necessarily something that we're trying to sell separately as part of a customer engagement. It's much more as part of the holistic process of getting people into the ECO-innovation lab.
Got it. Thank you.
The next questions are from the line of Brendan Smith with TD Cowen. Please proceed with your questions.
Great. Thanks for taking the questions, guys. I actually wanted to piggyback a bit on the earlier question and expand on the stereochemistry control that you called out. I know at least with ASOs in the past, there's been some debate about the impact of stereochemistry and chirality of the different structures itself. I guess my first question is really, I guess, whether this is coming up in your conversations with customers and maybe in what context it has thus far. Second, just so we can understand a little bit better, is this more a matter of making sure you're able to maintain consistency of the molecule itself within a given batch and maximize bioavailability of the active structure? Or are you actually seeing data to suggest that different stereochemical structures can produce biochemically distinct effects in Vivo? Thanks.
Thanks for the question, Brendan. This is obviously an emerging field for a very important reason, which is there was no way of scaling pure stereochemical molecules through phosphoramidite chemistry over the last few years. It has kind of been ignored. People know that they have been administering mixtures, but they have really not drilled into what that means at the level you would expect. You have to go back a few years in the literature to see some very clear evidence that the different stereochemistry actually matters. Usually, it is about activity or no activity rather than disparate activities on different parts of mRNA. It is being able to have the molecule that does exactly what you want it to do and nothing else, and it is all active. You made the point about existing assets that are in development, that they are in humans even.
That's all about being able to match it. That's a super important part of our platform is it can be dialed in exactly to match what's previously been done, also to control batch to batch. Stefan, do you want to add anything to that?
Yeah. No. Yeah. Brendan, stereochemistry matters in biology. As Stephen points out, I think it's not just that we can make stereo-defined products. It's this capability of literally matching an existing asset distribution, stereoisomeric distribution, but then also giving the customer the option to actually explore the enantiomerically pure, the stereochemically pure components. The platform really is an enabling tool. It's not forcing them to work with stereochemistry or with stereochemically pure compounds. It gives them options. It gives them choices.
Yeah. It also drives us towards getting involved at the discovery stage as well, right? If what we had was simply a platform that does big-scale synthesis better, more efficiently, all that kind of stuff, we'd be super focused exclusively on the 100-kilo product and upwards. This is a reason why we need to get in early with multiple assets and really get them off the ground using the sort of stereochemistry advantage and others to move through development with them. That is why we want to have a nice mixture of partners in the innovation lab and engaged across the platform.
Got it. Okay. Great. Makes sense. Thank you.
Thank you. I'm showing there are no further questions. I'll turn the call back to Stephen Dilly for closing remarks.
Thank you, everyone, for joining us today. As you can tell, we are in the midst of a very busy spring. We will be attending the Jefferies conference in New York soon, where we look forward to connecting with many of you in person to discuss our exciting progress. Thank you again for tuning in.
This concludes today's call. You may now disconnect.