Codexis, Inc.

Good day and welcome to the Codexys fourth quarter and full year 2020 results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Stephanie Marks from Argo Partners. Please go ahead.

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. To the extent that statements made by management are not descriptions of historical facts regarding Codexys, they are forward-looking statements reflecting beliefs and expectations of management as of the statement date, February 25th, You should not place undue reliance on the forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond the company's control and could materially affect actual results. In particular, there is significant uncertainty about the duration and impact of the COVID-19 pandemic. This means that results could change at any time and the currently contemplated impact of the virus on the company's operations Financial Results and Outlook is the best estimate based on available information. For details about these risks, please see the quarterly news release that accompanies this call as well as the company's SEC filings. Codexys expressly disclaims any intent or obligation to update forward-looking statements except as required by law. John?

Good afternoon, everyone. We are very pleased to report on strong fiscal year 2020 results for Codexis. In spite of the COVID-related challenges, which impacted our R&D operations for the second quarter and part of the third quarter last year, I'm extremely proud that we delivered our seventh consecutive year of year-over-year revenue growth. With our highest ever quarterly product revenue in Q4, we finished the year strong on the top line. and as our sales mix continued shifting toward higher margin products, we also delivered our highest ever annual product gross margin. Following our successful secondary offering in December, we closed the year with a cash balance of $149.1 million, another historical high for Conexus, which positions us well to invest in the many growth opportunities we see for the company. With this strong finish to 2020, we're poised for excellent growth in 2021, enabling us to drive our best top line revenue guidance in years, showcasing growth of between 19 to 23% over 2020. Reinforcing that, product revenues will lead overall with growth between 20 and 30% year over year. Ross will provide more details on the 2020 results and 2021 guidance shortly. But first, I'll provide an update across the business. Starting with our performance enzyme reporting segment, we are growing the business, focusing on two quite different markets, the first being sustainable manufacturing. This is where we built Codexys' enzyme engineering leadership over the past two decades. And given that history, this market represents the large majority of the company's revenues currently. Thanks to the vast scale and constantly accelerating speed of our Ecodevolver platform, Codexis's ability to discover and design ideal enzymes is unrivaled. Our novel high-performing enzymes enable our partners to dramatically reduce the cost and increase the sustainability of manufacturing their end products. Compared to using traditional non-enzymatic chemistry, which can be complex, capital intensive, and inefficient, Codexys enzymes can reduce capital requirements and enable higher yielding processes with reduced energy usage and lower waste generation. This business is growing robustly, demonstrated by a 22% five-year compound annual growth rate in product revenue. During 2020, we had 15 sustainable manufacturing customers contribute greater 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 Cadexis. We estimate that at least one out of three small molecule APIs would be made both more sustainably and at lower cost if Codexys enzymes were utilized. We have partnered with 21 of the 25 largest pharmaceutical companies in the world to help them adopt and install novel Codexys enzymes for manufacturing their APIs. As these companies increasingly validate the benefits and wide applicability of enzymes for their manufacturing processes, they recognize its value and can move to license our Codeevolver platform to perform their own in-house enzyme engineering. So far, GSK, Merck, and Novartis have in-licensed our CodeEvolver platform. We expect that we will expand that elite list over time, and we are forecasting sustained growth of these deals 100% margin back-end revenues in 2021 and beyond. Our pipeline of sustainable manufacturing products is deep, growing and increasingly maturing. As we showed in our annual pipeline snapshot as of June 2020, Codexys 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 generation. The three largest customers of our commercial performance enzymes are Allergan, which exhibited quite strong demand in the second half of 2020, Eurovant for their newly FDA-approved treatment for overactive bladder, which is also manufactured and sold by Kyurin in Japan, and Merck for its type two diabetes drug, Genuvia. In addition to products already on the market, we have another 19 enzymes installed in APIs in phase two or phase three clinical development and that number has almost tripled from four years ago. This depth and growth in the pharma sustainable manufacturing pipeline demonstrates CodeEvolver's power as a product generating engine. In the past few years, we've been expanding outside of pharma into verticals with shorter product development timelines, 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 recently extended and deepened our relationship with Tate & Lyle to include improved enzymes for two of their newest sweeteners, Dolchia Prima Allulose and Tasteva M Stevia. These new enzymes, which replace enzymes that Codexis was already providing, allow Tate & Lyle to significantly increase the efficiency of their production processes for these two sweeteners. We're set up for improved enzyme sales to Tate & Lyle in 2021 as they continue to gain adoption in their downstream food and beverage markets. In addition, we're working on 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 revenue potential than pharma manufacturing opportunities as well. A few years ago, we began to identify applications in the life science tools market, which we view as a significant growth opportunity for the company. Codexis performance enzymes can enable improvements in next generation sequencing and molecular diagnostics, biosensors, RNA and DNA synthesis, and more. This market is highly attractive given its high growth, fast commercialization cycles, and above average margin prospects. In addition, enzymes developed from most of the life science tools applications can be marketed to multiple customers and Advantage over the highly customized product business in sustainable manufacturing. We've made rapid inroads into the life science tools market since we began focusing here. From zero just a few years ago, we generated $3.6 million in revenue in 2020, advanced three enzymes to commercial readiness and several more launches are soon to follow behind. Our first partnership in the space is with Roche Sequencing Solutions for an improved T4 DNA ligase for their next-generation sequencing library prep kits. This high-performance enzyme enables more accurate sequencing of DNA from biological samples, which has significant benefits in cancer diagnostics where it's critical to accurately identify the offending gene. The technology transfer for the DNA ligase was completed this past October, and Roche's installation is scaling as they prepare to market to customers. In the second quarter of last year, we announced a partnership with AlphaZyme for the manufacturing and co-marketing of three additional life science tools enzymes, Codex HiFi DNA polymerase, Codex HiCap RNA polymerase, and a first generation Codex reverse transcriptase. We rapidly advanced all three of these enzymes toward commercialization in 2020 and began marketing our DNA polymerase and RNA polymerase at the end of the year. We're in the final stages of optimizing the reverse transcriptase with exciting performance advantages over currently available enzymes and expect to broadly market to customers in the first half of 2021. I'm also pleased to report that we recently made our first commercial sale for our Codex High Cap RNA polymerase at the beginning of this year. Given sensitivities against change with the currently approved messenger RNA-based COVID vaccine manufacturing processes, we don't expect adoption of our RNA polymerase for the approved COVID vaccines for the foreseeable future. However, the medium and longer term outlook for this product is very encouraging. Validation of our RNA polymerase yield and efficiency benefits in trials with multiple mRNA customers has set us up well for potential installations in a range of processes for development stage mRNA based vaccines and therapeutic candidates. We are also seeing very positive feedback from customers for our HiFi DNA polymerase and expect their adoption cycles will translate into meaningful sales of this product for us in the second half of 2021. 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. I am extremely excited about this endeavor. Leveraging the power of co-devolver, we are engineering enzymes with dramatic performance improvements that should make molecular assemblies process a commercially viable and cost-effective solution to manufacturing long chain DNA. It is a big undertaking that we estimated would take us a year or so of R&D work. We remain on track to complete the enzyme improvement program in the second half of 2021, thereby enabling molecular assemblies to begin early commercialization efforts soon thereafter. We like this model of working with dynamic early stage private companies. Accordingly, in November, we launched the SynBio Innovation Accelerator in collaboration with Kasdan Capital. Our goal for the SynBio Accelerator 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 Conexus. The first investment is in Arzita, a computational protein design company. We and Arzita plan to collaborate on expanding the scope and benefit of machine learning and Artificial Intelligence in developing new impactful enzymes and functional products or tools. As you can see, we have been planting lots of seeds in the life science tools market, and they are starting to grow into an impressive crop of new products and business collaborations. We're extremely optimistic about the opportunities in this space. Another recent market entry where we see tremendous growth potential for Cadexis is in the discovery and development of proprietary biotherapeutics. Here, we are rapidly building and advancing a high-value pipeline of therapeutic assets for indications with high unmet medical need discovered using our CodeEvolver platform. Just four years ago, we had only two early programs in our pipeline. Fast forward to today, and we have a dozen programs in our pipeline. We've struck two impressive multi-program partnerships with Nestle Health Science and Takeda, and we have advanced multiple other self-funded programs in parallel. Our products partnered with Nestle Health Science are therapeutic enzymes for treating diseases caused by congenital errors of amino acid metabolism and GI disorders. The program farthest along in development is CDX6114, for phenylketonuria or PKU, which is fully licensed to Nestle. They are advancing CDX 6114 solid dose formulation development to prepare for initiating the multiple ascending dose phase 1B study that is expected to read out next year. We have three other disease targeted programs partnered with Nestle Health Science. CDX 7108 for treatment of an undisclosed GI disorder is on track to advance into its first clinical trial in the third quarter of this year. The other two programs are in earlier discovery stages and are also progressing well. All three of these assets are co-owned by Nessa Health Science and Codexis. Our partnership with Takeda is focused on improving gene therapy candidates for Fabry disease, Pompe disease, and a rare 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 tissue, etc. The Fabry program is the most advanced amongst the Takeda programs. Here, a lead engineer transgene from Credexis is advancing through Takeda-led preclinical research. The Pompe and Blood Factor programs continue to advance in parallel as well. At the World Symposia earlier this month, we presented some exciting transgene improvement data we've developed for the Pompe program. Modifying transgenes using Codevolver to enable a gene therapy's delivery of a better performing enzyme to address a patient's needs is a novel and differentiated approach to design next-generation gene therapy candidates. Beyond the encouraging progress with Takeda, we have begun new self-funded discovery programs targeting improved transgenes for other rare disorders. In addition, based on growing validation for the oral biologics we're advancing with Nestle Health Science, we are also self-funding projects for other GI disorders. While licensing remains a key component of our long-term strategy for our biotherapeutics segment, we anticipate retaining control over selective assets further into the clinic before partnering in the future in order to capture greater value. Let me now hand the call over to Ross to take you through our financial results in more detail.