Codexis, Inc.

welcome to codex's third quarter 2023 earnings conference call if anyone should require operator assistance during the conference please press star zero on your telephone keypad please note this event is being recorded and now i'll turn the call over to carrie mckim director of investor relations please go ahead thank you operator with me today are dr stephen dilly codex's president and chief executive officer

Kevin Norritt, Chief Operating Officer, and Sri Riali, Chief Financial Officer. 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 our guidance for 2023 revenue, product revenues, and gross margin on product revenues, as well as our strategies and prospects for revenue growth and successful execution of current and future programs and partnerships, including our eco-sensitive platform and pharmaceutical manufacturing business. To the extent that statements contained in this call are not descriptions of historical facts regarding Codexys, they are forward-looking statements reflecting the beliefs and expectations of management as of the statement date, November 2nd, 2023. 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 Codexys control and that could materially affect actual results. Additional information about factors that could materially affect actual results can be found in Codexys filings with the Securities and Exchange Commission. Codexys expressly disclaims any intent or obligation to update these forward-looking statements, except as required by law. And now, I'll turn the call over to Stephen.

Thank you, Carrie, and thanks, everyone, for joining. We approach the end of 2023 in a position of strength. We have a core pharmaceutical manufacturing business that generates cash, a potentially game-changing technology and eco-synthesis platform and importantly, for financial resources to execute on our plans. Since announcing our enhanced strategic focus in July, we've worked very hard to put ourselves in a position of financial security so that we now have a path to potential positive cash flow around the end of 2026 with current financial resources. Let me briefly recap how we get there. It starts with a strong balance sheet. As you'll recall, over the last two years, we received a windfall of roughly $135 million in product revenue from the sale of CDX616 to Pfizer for the manufacturer of Paxlovid. This was the result of our quick and meticulous execution to supply metric tons of product in support of the global pandemic. CDX616 still represents the largest single commercial success for Codex as to date and the extraordinary revenues it generated are central to the strong balance sheet we have today with approximately $75 million in cash as of September 30th. On top of that strong foundation, we've taken steps to dramatically reduce our cash burn by over 50% year on year. We did this by focusing our efforts on programs that will generate the greatest value, streamlining our organization to the right side for our go-forward plan, and consolidating operations to a single facility. We've also been working hard to return our core pharmaceutical manufacturing business to a growth trajectory, and we're very pleased with progress and excited for the future growth potential. The cash generated by our pharma manufacturing business, combined with reduced cash burn and our strong balance sheet, creates the opportunity to invest in our ecosynthesis technology to bring it to commercialization within our existing resources. The first element of the ecosynthesis platform, the double-stranded RNA ligase, should start to generate revenue next year, followed by anticipated early commercial licenses in 2025 and the rollout of the complete ecosynthesis platform in 2026. Putting all these pieces together, Cash balance, reduced burn, growth in pharmaceutical manufacturing, and the exciting commercial potential of the Ecosynthesis platform gives us a path to potential positive cash flow around the end of 2026, which is within reach of our existing cash runway. We are rapidly advancing the Ecosynthesis technology, and many of our team members just returned from presenting on our technical progress at the Tides Europe meetings. Our confidence in the revenue potential of this opportunity is increasing as we continue our conversations with potential partners and experts. As an adjunct to those conversations, we're in the process of forming a strategic advisory board to make sure that we have the best possible understanding of the existing and future landscape so that the Ecosynthesis platform is tailored to meet the real needs of the market. We are truly delighted and honored to welcome John Maragonori as our inaugural external SAB member. As founder and chief executive officer of Alnylam Pharmaceuticals, John pioneered the translation of RNAi from a laboratory tool into an entirely new class of medicines. Alongside his participation in our strategic advisory board, We also look forward to hearing John's perspective on the RNAi therapeutics landscape during our upcoming Ecosynthesis-focused virtual KOL event in December. Before I hand it over to Kevin to outline that event, let me briefly recap the reasons for our enthusiasm about the Ecosynthesis platform. Moving to slide three. Drug developers are continuing to advance pipelines of innovative RNAI therapeutics for large disease indications like Alzheimer's and hypertension, and there is a projected wave of coming demand. The current manufacturing standard, phosphoramide chemistry, is dependable, well-established, and will no doubt continue to play an important role in the landscape. However, at commercial scale, it also requires enormous capital investment, extensive lead time, high volumes of toxic solvent like acetonitrile. For reference, a leading contract manufacturing organization recently invested $725 million to build a phosphoramide chemistry plant with a capacity to manufacture about 1,000 kilos of RNAi annually. Our market research indicates that demand is expected to grow to approximately 30,000 kilos annually by around the end of the decade. It would take billions of dollars and many more of these plants to meet that capacity. Most companies don't have the resources necessary to make that kind of manufacturing investment, particularly given the realities of today's broader capital markets. That's where an elegant enzymatic solution like the Ecosynthesis platform comes in. Today, we're closing in on an aqueous-based working process designed to complement post-traumatic chemistry and vastly reduce the level of capital investment required for large-scale production. As with any disruptive technology, it would be naive to think that Cadexus will command the entire market with our platform. So we're thinking critically about where exactly our technology fits within the existing manufacturing landscape. In many cases, that might look like augmenting the chemical approach with our double-stranded RNA ligase, which can stitch together short strands of RNA that have been chemically synthesized. This enables much more efficient use of existing facilities, and we currently have collaborations with a few key RNAi players in this space. In other cases, the EcoSynthesis platform could be used to synthesize the complete siRNA. And sometimes the best approach will be a combination of the eco-sensitive platform, ligation, and even chemistry. That strategic optionality and flexibility is one of the beauties of our platform and underscores why eco-sensitive has such promising potential to play a critical role in meeting future demand for siRNA. Now, while continuing to refine and perfect the technical pieces important, We also need to pay full attention to real-life barriers to adoption of our platform. Put bluntly, why will innovators trust our technology to deliver their valuable siRNA assets when they have a seemingly reliable alternative in phosphoramide chemistry? For those already developing RNAi therapeutics, it's about demonstrating the levels of purity we can produce and the ease of adoption we can facilitate. For those who aren't, we need to emphasize how the ecosynthesis platform opens the door for smaller companies to develop RNAi therapeutics for large indications they couldn't otherwise pursue. We're well aware that these questions will be top of mind for drug developers and manufacturers as key decision makers weigh their options. So it's incumbent on us to help our customers in the investment community understand the need for an enzymatic solution. We think our December virtual KOL event will play a critical role in this ongoing market education process. To cover additional detail on that and our recent business development efforts, I'll pass it over to Kevin, who has just returned from the Tides Europe meeting. Kevin? Thanks, Stephen.