Codexis reiterates $64M–$68M 2025 revenue guidance while exploring ECO Synthesis expansion

Earnings Call Insights: Codexis (CDXS) Q2 2025

MANAGEMENT VIEW

* Stephen George Dilly, President, CEO & Chairman, stated the second quarter results were strong, highlighting that "our revenue is above consensus and our operating loss is half compared to Q2 2024." He indicated that the goal of cash flow breakeven by the end of 2026 is achievable, but emphasized "given the strong interest in the ECO Synthesis platform with more than 30 ongoing customer engagements, we're considering that this may not necessarily be the best way to create stockholder value."
* Dilly explained that demand for the ECO platform will "rapidly exceed our ability to supply," prompting Codexis to evaluate options for expanding capacity to support early projects and maximize long-term returns from the platform.
* Kevin Norrett, Chief Operating Officer, reported "strong Q2 revenue, which was driven by increasing orders for enzymes supporting late-phase and commercialized APIs within the Pharma Biocatalysis business." He noted, "our commercial focus has been on generating these new programs, but they take time to grow into meaningful revenue streams."
* Norrett added that "customer engagement is progressing nicely" for the ECO Synthesis platform and that "ligation, otherwise known as the chemo-enzymatic route, is rapidly becoming the new standard in siRNA manufacturing."
* Norrett said, "we expect to add several new ligase customers before the end of the year" and discussed the strategy of building Codexis-owned GMP capabilities to improve scale-up and serve smaller drug innovators.
* Georgia L. Erbez, Chief Financial Officer, stated, "Total revenue for the second quarter ended June 30, 2025, was $15.3 million compared to $8 million in the second quarter of 2024." She highlighted that "product gross margin was 72% for the second quarter of 2025. This was up from 45% in Q2 2024, largely due to shifts in sales to more profitable products and declines in less profitable legacy products."
* Erbez also reported a net loss of $13.3 million for the quarter and reiterated, "we guided to a range of $64 million to $68 million for 2025. We ended the quarter in a strong cash position with $66.3 million in cash, cash equivalents and investments, which we expect will be sufficient to fund our planned operations through the first quarter of 2027."

OUTLOOK

* Management reiterated the 2025 guidance of $64 million to $68 million in revenue, with expectations that the "bulk of the growth to come from our ligase and our ECO Synthesis business for the second half." Erbez indicated, "the average guidance on the Street, it's within the range of reasonableness."
* Management stated that revenue will remain somewhat variable due to the Pharma Biocatalysis business but expects this to be offset over time as ECO revenues increase.

FINANCIAL RESULTS

* Total revenue for Q2 2025 was $15.3 million, compared to $8 million in Q2 2024, with the increase attributed to customer manufacturing schedules and clinical trial progression.
* Product gross margin was 72%, an increase from 45% in the prior-year quarter, primarily due to a shift to more profitable products and a decline in less profitable legacy products.
* Research and development expenses were $13.8 million, up from $11.4 million, driven by higher headcount and reclassification of employees.
* Selling, general and administrative expenses were $12.39 million, down from $15.7 million, due to lower stock-based compensation, legal expenses, and reduced use of outside services.
* Net loss for Q2 2025 was $13.3 million, compared to $23.8 million in Q2 2024.

Q&A

* Matthew Jay Stanton, Jefferies: Asked about the ECO Synthesis platform's pipeline expansion from "over 20" in May to "well over 30" now, and requested details on the funnel and customer mix. Kevin Norrett responded that the number is "growing into the 40s as we speak today," with a mix of "CDMOs, drug or large drug innovators and small stealth biotech and medium-sized biotechs." Dilly added the breadth allows Codexis to "choose and select" the most promising opportunities.
* Stanton asked about process development and capacity expansion for the ECO innovation lab. Dilly described plans for "ECO Lab #2" and highlighted that scalability improvements allow Codexis to "do more with a smaller footprint."
* Stanton inquired about revenue cadence for the remainder of 2025. Erbez replied, "we do expect the bulk of the growth to come from our ligase and our ECO Synthesis business for the second half," and guidance remains unchanged.
* Allison Marie Bratzel, Piper Sandler: Asked for details on expanding ECO platform capacity and the path to GMP. Dilly said Codexis is "filling the capacity that we have and working out where we need to build," considering both CDMO partnerships and a Codexis-owned GMP facility.
* Bratzel requested clarification on IP protection. Dilly said Codexis has "an excellent IP portfolio around the enzymes, the process, all that good stuff" and emphasized the importance of trade secrets and know-how as part of their strategy.
* Kristen Brianne Kluska, Cantor Fitzgerald: Asked about revenue correlation to the early-stage strategy and the timeline for revenue realization. Dilly explained the approach is to "lock in a large number to get a slightly smaller number at the other end, hitting when the supply becomes important," with early-stage revenues less emphasized in favor of long-term value.
* Kluska also asked about partner preferences for in-house production. Dilly confirmed that "the fewer transitions during the development time line, the better," and Codexis' improved scalability strengthens its position.
* Kluska inquired about time and cost for scaling. Dilly referenced a "modest, very targeted top-up of our cash position" and said Codexis can "afford to do what we need to do."
* Matthew Gregory Hewitt, Craig-Hallum: Asked about variability in manufacturing schedules. Erbez attributed it to "the timing of big orders" and the lack of predictability in larger orders.
* Hewitt also asked about GMP scale-up partners. Dilly and Norrett confirmed discussions with more than the three CDMOs that presented at TIDES, with some accelerating in recent months.
* Brendan Mychal Smith, TD Cowen: Asked about revenue ramp through clinical development. Dilly described an initial phase of "collaborations that take a couple of months and are hundreds of thousands of dollars," with milestone-based revenues as projects progress.
* Smith asked about funding options for scaling to GMP. Dilly stated the Biocatalysis business "is very profitable" and helps reduce cash needs, and scale-up can be incremental as needed.

SENTIMENT ANALYSIS

* Analysts' tone was positive, with questions focusing on growth opportunities, funnel expansion, and capacity planning.
* Management maintained a confident tone during prepared remarks, with Dilly stating, "the clearest path to creating value over the longer term is to lock in as many early phase products as we can onto the ECO platform." During Q&A, management's responses were detailed, open, and optimistic about scalability and demand.
* Compared to the previous quarter, both analysts and management showed increased confidence, with more focus on execution and expansion.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for 2025 revenue remains unchanged at $64 million to $68 million, with both quarters emphasizing a back-half revenue ramp.
* Management's tone shifted from describing the ECO Synthesis platform as emerging to highlighting strong commercial momentum and a need to expand capacity.
* Analysts in both quarters focused on the ECO pipeline, revenue cadence, and the impact of large orders, but the current quarter included more questions about scaling and strategic options for expansion.
* There is a stronger emphasis on customer acquisition and capacity planning in the current quarter, reflecting increased market interest and the company's evolving strategy.

RISKS AND CONCERNS

* Management acknowledged continued "lumpiness" in revenue due to the variability of the Pharma Biocatalysis business.
* Codexis is actively considering capacity expansion, including a potential Codexis-owned GMP facility, to avoid supply constraints in the face of growing ECO Synthesis demand.
* Management remains focused on expense control and balancing resource allocation to maintain a strong cash position.
* Analyst concerns centered on the timing of large orders, scalability, and funding for expansion, to which management provided detailed explanations and strategies.

FINAL TAKEAWAY

Codexis leadership reported strong Q2 results, driven by higher revenues and improved margins, while reiterating its 2025 revenue guidance. Management underscored expanding demand for the ECO Synthesis platform, with over 30 customer engagements and a growing commercial pipeline. The company is weighing capacity expansion options, including a possible Codexis-owned GMP facility, to support long-term growth and capitalize on new opportunities, while maintaining a disciplined approach to cash management and strategic investment.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cdxs/earnings/transcripts]

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