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Welcome to the Codexis Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that 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, Codexis’ President and Chief Executive Officer; Kevin Norrett, Chief Operating Officer; and Georgia Erbez, 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 2025 revenue, anticipated milestones, including product launches, pilot scale manufacturing, and paths to scale-up, technical milestones and public announcements related thereto, as well as our strategies and prospects for revenue growth, path to profitability, and 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, February 27, 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 could 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. And now, I’ll turn the call over to Stephen.

Thank you, Carrie, and thanks everyone for joining. I’m very pleased with the progress we’ve made over the last year. Firstly, we’ve worked hard to return our heritage pharma manufacturing business to a healthy growth trajectory. Secondly, we’ve made significant progress in reducing costs, strengthening our balance sheet and defining a path to profitability. This really sets the stage for us to realize the intrinsic value in our enzymatic oligonucleotide synthesis capability, beginning with the ECO Synthesis platform. Moving to Slide 3, it’s remarkable that in just 2 short years, we’ve moved enzymatic siRNA synthesis from an exciting idea to a near-term reality. As you may recall, we presented some important data at the TIDES Europe meeting last November. First, we showcased the remarkable capabilities of our engineered RNA ligase enzymes that can increase the efficiency of conventional chemical siRNA synthesis. Second, we demonstrated the broad potential utility of our ECO Synthesis platform by successfully synthesizing inclisiran, a commercially approved siRNA drug, by four different methods ranging from enzymatic ligation of chemical fragments to the first ever end-to-end enzymatic synthesis of the entire molecule. We’ve essentially built a toolbox that allows us to partner with innovative companies to determine the best option to build their particular siRNA molecule. Our presentations at TIDES were very well received by our industry colleagues, and we saw a noticeable increase in customer engagement, both for the RNA ligase and for ECO Synthesis platforms. We’ve successfully completed feasibility studies with multiple leading siRNA innovator companies, and with the recent completion of our ECO Innovation Lab, we’re now ready to move forward into signing and executing revenue-generating contracts with development work expected to start in early Q2. 2025 is slated to be the year we achieve commercial liftoff for the ECO Synthesis platform. To walk you through how we get there, let me turn it over to Kevin.

Thanks, Stephen. Broadly speaking, 2025 is the year of moving our ECO Synthesis technology platform and toolbox from development stage to commercial execution. It is also the year where it moves from being technologically feasible to being relevant for clinical stage manufacturing. As we execute that transition, I want to share more details on our revenue drivers, followed by a recap of our 2025 milestones. However, starting on Slide 4, and before I go into more detail on our siRNA manufacturing capabilities, I want to reiterate our strong commercial traction across both our foundational business in Pharma Biocatalysis and our ECO Synthesis platform. For Pharma Biocatalysis, our strategy remains the same. We are focused on expanding our reach to customers in the mid-tier pharma and large biotech segment, building on our success in 2024, where we completed multiple screenings with some leading to the production of small quantities of enzyme manufactured for several customers in this category. We also identified some new biocatalysis opportunities within our existing large pharma customers. Importantly, this allowed us to also open a new dialogue with our research and innovation groups on our emerging siRNA capabilities. On that front, more and more prospective customers are approaching us to tap into our full suite of siRNA manufacturing services. These customers span both large pharma and small drug innovators. It is important to note that each customer’s needs are unique, and we can’t take a cookie-cutter approach, which means translating these needs into revenue-generating proposals takes some time. For example, we are in late-stage discussions with one large pharma and one medium pharma for broader development agreements that include synthesis of siRNA fragments with ECO combined with ligation. Just last week, a new large drug innovator emerged, one with whom we do biocatalysis for, requesting a proposal for sequential synthesis of their unique siRNA asset. Finally, we continue to expand our ligation services, competing and winning in this existing market with four new companies engaged at different stages of development. I also want to highlight that our success isn’t binary or years away. Even as we continue to evolve and expand our siRNA offerings, we generate revenue from each of our services as part of a development and manufacturing contract. This sets us up for a powerful compound effect as the various revenue streams mature in parallel. Moving to Slide 5, let me briefly describe the key components of our ECO manufacturing and development services offerings, many of which you can see in our RNA manufacturing white paper on our website. Most of these are already in motion today. Customers approach us with their siRNA assets and ask us to optimize process development for manufacturing their GLP material. They also need us to develop and qualify analytical methods, so they can perform preclinical testing that is required to complete their IND filings. These capabilities are key differentiators for us versus other enzymatic tools providers. Depending on customer needs, we can apply our ECO Synthesis toolbox to use the four different enzymatic methods. We showed you at TIDES Europe, including ligation of both sequentially synthesized ECO fragments and fragments produced through chemical methods. We also focus on providing process development parameters, delivering additional custom services, and optimize the process for tech transfer into a GMP facility. Once these steps have been completed, customers want to route to GMP-grade siRNA production and scale-up. In 2025, we plan to secure a CDMO scale-up partner, where we can tech transfer a customer’s siRNA for larger scale manufacturing to support clinical trials and eventual commercial production. We also believe there is significant value in building our own kilogram scale GMP facility. Establishing a full service development and manufacturing offering will allow us to control the customer experience and unlock increased revenue potential associated with supplying larger quantities of higher-priced GMP material. Even more important is this allows a seamless transfer from our ECO Innovation Lab into a GMP facility, which is extremely valuable to smaller drug innovators where speed to the clinic is critical. Those same small drug innovators are also typically in need of ongoing support across analytical development, regulatory, and CMC documentation. Our full suite of services addresses those needs, enabling us to capture this important segment of the emerging drug innovator market. Ultimately, having both a GMP scale-up partner and our own GMP facility will provide customers with multiple routes to clinical and commercial siRNA production, and we look forward to sharing our progress on both fronts throughout 2025. Shifting to our upcoming milestones on Slide 6, we’ve already spoken about building scale through GLP-grade siRNA production in the ECO Innovation Lab, which is critical for hooking customers onto our platform before they enter the clinic. Also, signing our first GMP scale-up partnership this year is crucial. Customers require visibility into GMP-grade siRNA production before fully committing to a manufacturing route for their asset. Finally, we must establish our raw material supply chain across multiple inputs. One of the most important is easy access to our core raw material input, NQPs. Each of these milestones removes a key barrier to customer adoption and will help us achieve liftoff of our ECO business. With regards to technical and commercial progress, we will use the TIDES U.S. and EU meetings to demonstrate purity and yield equivalent or better than phosphoramidite chemistry. We also plan to demonstrate an expansion of our ECO platform capabilities to include additional modified nucleotides. This is where Codexis is unique. Our ability to version our enzymes to address not only the late-stage siRNA structures and nucleotide modifications we see today, but also those that are emerging in earlier-stage siRNA assets targeting new tissues is a competitive differentiator and we need to stay ahead of the curve. We also expect more joint presentations with major siRNA drug innovators and CDMOs at these meetings. We have established ourselves as an innovator to watch and these presentations drive new business development and demonstrate customer validation to the investment community. These presentations combined with an increasing number of ECO Innovation development projects, and consistent revenue growth, will demonstrate we have liftoff for this business. With that, I will now turn the call over to Georgia for a discussion of our financial results for the fourth quarter and the full year 2024.

Thanks, Kevin. Good afternoon, everyone. Starting on Slide 7, I will provide a brief overview of our financial results here on the call and invite you to review our 10-K filed today for more detailed discussion. Total revenue for the fourth quarter ended December 31, 2024, with $21.5 million, including product revenue of $9.8 million and R&D revenue of $11.6 million. As many of you know, we have completed our partnership with Pfizer for PAXLOVID. We recognized the last portion of the upfront payment in the fourth quarter in connection with signing a new longer-term agreement with Pfizer that will provide us with future revenue opportunities. We valued our past collaboration with Pfizer and are excited to continue working with them. We already have enzymes that are used in the manufacturing processes of several drugs in their pipeline, and this new agreement furthers our connection with Pfizer for years to come. Looking at revenue without PAXLOVID, for the year ended December 31, 2024, revenue was $59.3 million compared to $62 million for the prior year. Both Kevin and Stephen have mentioned the progress that we’ve made over the last 2 years in repositioning our company for growth. 2023 was the last year that reflected certain of our historical revenue streams and business activities, and 2024 is the transition year between the two business models. You should expect to see improved revenue growth in 2025 and beyond, when our ligase and ECO services platform begins to mature, but also starting with our base Pharma Biocatalysis business. We have turned what was a declining business into one that is growing, as well as producing stable gross margins. This business provides a solid foundation for our company and allows us to invest in other high growth potential new technologies like our ligase and ECO Synthesis platforms. We will continue to improve this area of our business both by growing our revenues through our commercial efforts in Kevin’s group, as well as closely examining our product mix to improve overall gross margins. Product gross margin was 63% in the fourth quarter of 2024. Excluding PAXLOVID, this was down from 71% in Q4 2023. Product gross margin in the year ended December 31, 2024 was 56%, compared to 63% the prior year, excluding PAXLOVID. During both the 3-month period and the full year period, the decrease was primarily driven by product mix. As I mentioned, gross margins have been a focus of ours over the last year, and we are working to improve this by retiring or divesting lower margin products. We will continue these activities in 2025 and expect ongoing improvement in overall gross margins for the year. Turning to operating expenses, R&D expenses for the fourth quarter of 2024 were $12.1 million compared to $11.2 million last year, largely driven by an increase in lab supplies and outside services related to manufacturing. R&D expenses for the year ended December 31, 2024 were $46.3 million compared to $58.9 million for the prior year. The year-over-year decrease was primarily due to a decrease in costs associated with lower headcount, lower use of outside services related to CMC procedures, and lower lease and facilities costs due to the assignment of our San Carlos facility lease in 2023. SG&A expenses were $13 million compared to $12.2 million for the fourth quarter of 2023, largely due to costs associated with executive departures. SG&A expenses for the year ended December 31, 2024 were $55.1 million compared to $53.3 million for the prior year. The increase was primarily due to higher stock-based compensation expense and higher fees for outside services related to recruiting and consultants. The net loss for fourth quarter of 2024 was $10.4 million compared to $15.3 million for the fourth quarter of 2023. Net loss for the year ended December 31, 2024 was $65.3 million compared to $84.4 million for the prior year. Moving to Slide 8, we are guiding to total 2025 revenue in the range of $64 million to $68 million. Previously, we had guided to double-digit growth in our Pharma Biocatalysis business. For 2025, we expected to deliver double-digit revenue growth on our entire revenue base. Moving forward, we plan to share a single annual revenue guidance range, encompassing the full scope of our business. This strategy is in line with our efforts to simplify how we communicate our business by focusing on metrics that are both material and useful, particularly as the ECO Synthesis platform becomes a more meaningful value driver for the company, and we diversify our product offerings into multiple types of services in our toolbox, as Kevin described earlier. Historically, the first quarter has always been our slowest quarter. For the first quarter of 2025, we expect revenue to fall in the range of $8 million to $10 million, but expect to see growth in the first half. The ramp for growth is expected to pick up substantially in the second half as we sign customers to the ligase and ECO Synthesis business in the first half and begin to execute on those contracts. Codexis ended 2024 with $73.5 million in cash, cash equivalents, and short-term investments, which we expect to be sufficient to fund our planned operations through achieving cash flow positive basis by the end of 2026. With that, I will now turn the call back over to Stephen.

Thank you, Georgia, and thank you, Kevin. On Slide 9, I’d like to build on what you just heard and provide some thoughts on where we are as a business. ECO Synthesis is a disruptive technology that can radically alter the landscape of oligonucleotide manufacturing. As with any potentially disruptive technology, the first step is to show that it can actually work. We showed that at TIDES last year when we unveiled the enzymatic synthesis of a real siRNA drug, including the targeting moiety. The next step is to show that the technology is actually useful. Remember, we’re not launching ECO into a vacuum. It’s an alternative to a mature technology, phosphoramidite chemistry, that’s been around for 40 years or more. We need to show that ECO addresses real-world problems that make the adoption of a new technology worthwhile. This is why the double-stranded RNA ligase platform is so important. A single enzymatic step introduced into a conventional chemical synthesis process can significantly improve both purity and yield, two of the biggest challenges facing manufacturers of siRNA molecules today. However, in order to drive adoption of our ligase, we also need to demonstrate the ability to reliably manufacture and supply the enzyme to the specifications and timelines required by the customer. This is where we can leverage the expertise, experience, and infrastructure from doing exactly that with our Pharma Biocatalysis business for a decade or more. Moving to Slide 10, we’re learning all the time from our conversation with innovate companies. One consistent message we’re hearing is that the case for ECO is most compelling for big drugs that will need hundreds of kilos of supply annually. Of course, we’re delighted to be discussing ECO in the context of such important assets in the pipelines of our partners, but we’re under no illusion about their need to be absolutely sure of the path forward before fully committing to ECO as the root of manufacture. Let me tell you how this tends to play out. As large innovator companies have pipeline successes with their siRNA drugs, they start to project very significant future material demand and they get increasingly concerned about their ability to scale manufacturing in a cost-effective way. They engage with Codexis to see if we’re a viable option. First, they send us a test fragment, maybe an 8 or 9 mers containing some tricky nucleotide modifications to see if we can replicate it enzymatically. We make the fragment and send it back to them. They test it, they like it, and send us a couple of fragments for a real pipeline asset. We make those successfully, send them back, they test them, they like them and ask if we can locate them to make the full strand. We make the full strand, then we make the whole siRNA molecule and then we add the targeting moieties to make the drug, all in a stepwise iterative process. Once they’re comfortable that we can really make their drug with the ECO platform, the conversation shifts to reproducibility and scalability. That’s when we’re ready to sign the development partnership to build the full-scale optimized process for the asset. Obviously, all this takes time, but the good news is that the second and third asset can move considerably faster once they’re confident in our abilities as a partner. This explains why the partnerships we intend to consummate over the coming months are often multifaceted. There’s a shorter-term element where we use our ligation technology to improve the current manufacturing parameters and the longer-term element where we build a full ECO process. It’s also why we set such high importance on our 2025 objectives to achieve pilot scale GLP production in the ECO Lab, to sign a scale-up partnership to accelerate our past GLP production and secure our raw material supply. Each of these is an important step to demonstrating a secure path forward for our partners. Getting these in place allows us to move from a development partnership in 2025 to full supply agreements in 2026 and beyond. However, if that was all we were doing, we’d be missing a very important trick. Many of the 400 or so siRNA drugs currently in development are targeted at rare indications affecting perhaps a few thousand patients in accessible markets. These drugs, probably, the majority of the value in the siRNA market will only require small quantities of material to supply their patients. In order to capture value from this segment, Codexis needs to be a full development partner from the outset, providing not just reliable cost-effective drug supply, but also full analytical and regulatory support. This market will take a little longer to capture than the more conventional siRNA supply opportunity, but it’s potentially extremely valuable as we shift from a total addressable market defined by the cost of production to a market opportunity based on the value of the asset. The beautiful thing is that the same next steps to supply the parts of GLP and GMP production and secure our raw material supply support both our near-term and long-term aspirations. Now, we’d be happy to take your questions. Operator?

Thank you. [Operator Instructions] And the first question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed.

Hello, this is Rick Miller on for Kristen. Thanks for taking our questions. Just to kind of take your lead on that last point you made there, kind of about these rare disease markets. What do you think the driving force is going to be there? Do you think it’s going to be these drug developers’ kind of seeing the success that other drug developers are seeing with the platform and some of these larger indications? Or what do you think is going to ultimately drive the value proposition there?

Thanks for the question. We see it as a bit of both actually. The kind of table stakes are to have a validated platform with regulatory precedent where those small companies can bet their incredibly valuable asset on this platform. But, it’s also the way that we engage with them and increasingly we’re learning that there are things that we can do enzymatically that are really tricky or even impossible to do chemically. So, the further upstream we can go even into lead optimization, they more likely we are to capture significant value from these assets. But, this requires us to sort of change our shape a little bit from something that looks a little bit like a CDMO to more a true partner in enabling innovative therapeutics.

Okay. And, also, as you go through this year and look to start getting some of these agreements signed, how would you look to message to The Street? Would you share anything sort of on the general profile of any partners that you bring on board, if not actually sharing actual details of what you’re working on or who these partners are?

Right. So, this is a really important point and, as I said, we’re launching a disruptive technology. And when you’re launching a disruptive technology, your partners often see that they are getting competitive advantage from working with you. And that can make them somewhat reasoned [ph] to communicate that fact. And so, we are having to tread extremely carefully between communicating our progress and the contracts that we’re landing versus maintaining the confidentiality and the confidence with the big innovator companies that we’re working with. And as an example of that, we went up to within 48 hours of the TIDES Europe meeting last year with another company’s logos on our presentation. They asked us to take them off, and we did that in a heartbeat, because we prioritized confidentiality in the relationship over the communication of who we were working with on what. So, I’d love to be able to open the kimono and tell you everything, but that’s not the world we live in launching a disruptive technology.

All right. Perfectly understandable, and thank you. We’ll jump back in the queue.

And the next question comes from the line with Tycho Peterson with Jefferies. Please proceed.

Hi, thanks. This is Matt on for Tycho. Maybe first one. On the seven plus customers in the pipeline you talked about, I think it was two for the ligation of enzymatic fragments, one on the full synthesis, and then I think four on ligation services. Could you just kind of help add a little more color on how we think of each of those three and maybe the difference in terms of those conversations and maybe timing and converting that over to revenue? And then just one clarification as it relates to the 2025 guide. Is there anything baked into the guide from ECO? It sounds like there could be something in the back half of some of these contracts kind of come through in the first half, but can you just confirm that? Thank you.

Yeah. I’m happy to answer the last question first, and then we’ll turn it over to Kevin and Stephen. Yes, we do expect the back half of the year to be the growth in revenue to be catalyzed by our contracts that we signed in the first half.

Right. I’m going to let Kevin go into more detail, but just to say that the relationships change over time and are often multifaceted in that a conversation that starts around ligation often morphs into ligation and ECO Synthesis. And also the other way, ones that start with sequential synthesis, they then get interested in our ligation capability, particularly companies that might be using another ligase platform, we’re very happy to do a comparison for free to show them the potential superiority of our enzyme. And so you can’t quite categorize those seven or so as neatly as you did. Anything to add, Kevin?

The only thing I’d add is that is a snapshot in time. So, depending on how those conversations involve, it could be go down to five, but those could be high quality agreements where we’re doing five different things. It could be going up to eight where we’re doing one each. So, I guess, it’s important for you guys to see the traction, but I wouldn’t start to categorize into each one, ligation versus ECO, because this gets back to the concept of the toolbox, where people are looking at us more of a full service development provider that we can also do things around conjugation moieties, and so sometimes those emerge as well. So, it’s important not to get too wound up in the categorization and more about the traction.

And also the cadence and what I tried to lay out in my little commentary at the end was last year 2024, we tended to be doing work, if not for free, then much of it for free where we were showing feasibility. This year we’re doing work for pay, right? But often that’s around the next stage of building the development capability, also demonstrating ligation, optimizing that kind of stuff. And then next year is the one where we really consummate the let’s take this drug to market at this scale kind of contract. So, we’re exactly where we expect it to be, if not a little bit better, because if you remember when we launched the sort of ECO strategy, we were expecting it to have commercial liftoff in 2026. We’re now talking about that in 2025. So, we are actually super pleased with progress.

Okay. It makes sense. That’s helpful. And then, obviously, remains kind of a dynamic situation. I guess maybe shifting gears a bit, you talked about completing feasibility studies with I think multiple leading siRNA innovators. Can you just talk a little bit more about kind of what those studies were, maybe what they showed you or the innovators and what are the next steps here. So the feasibility studies are over, I assume you’re kind of in active negotiations for next step, but just any more color on the study themselves and kind of where you are in the process post completing those feasibility studies? Thank you.

Well, the one we publicly talked about, which was with Bachem as a collaborator on our experience in working with them on ligation that was at the TIDES EU meeting. The other ones that we’ve completed actually gets back to Stephen’s concept about launching a disruptive technology. So they vary from doing fragments with using ECO-sequential synthesis to doing ligation, specifically of PAC-based short fragments, or to doing a combination of ligation plus ECO-sequential synthesis. So it’s really flavors across the board and not any single one in one category.

Yeah, and Kevin’s talked before about prioritizing partners that have multiple siRNA assets in their pipeline so that we’re not sort of tying all this work to a single asset that could go away, right? And so quite often when I talk about they send us a tricky test sequence, it’s because they send us a tricky test sequence that if we can do it, it will show that we have capability across many assets in their pipeline. And that’s really we’ve been what we’re doing. And now, we’re at the stage where we’re being sent construct of real molecules that are in development to put together. And this is where we’re building towards the process that will support development and commercialization. So it’s exactly as I laid it out in terms of iterative progress.

All right. Thanks. If I could just sneak one more in on gross margins. Did I hear you right that gross margins will be up year-over-year in 2025? And then I think you talked about always looking to retire, divest, lower margin projects. Is there any more color on kind of where you are in that process and if we could see maybe some of those shake out this year? Thank you.

Yeah, 2023 was a year with a lot of different kinds of assets in it that maybe including some revenue that we recognized that had 100% gross margin. So, the margins that we recognized in 2023 were, if you will, artificially inflated. We do have assets in our product mix right now that we are looking to improve the gross margins on in a variety of different ways and we have our eye on that. We did in the year with a gross margin range of about 56% and we do hope to increase that, we are working to increase that for the entire year and every quarter.

Super. I’ll leave it there. Thank you.

The next question comes from the line of Allison Bratzel with Piper Sandler. Please proceed.

Hey, good afternoon, guys. Thanks for all the color today and thanks for taking my question. Just wanted to drill into the guidance on cash flow positivity by the end of 2026. Could you maybe just talk to or help us understand what’s baked into that in terms of commercial contribution from the ECO platform? Any scenarios where that could actually be pulled forward as you sign partnership contracts? And then, can you also talk about the pushes and pulls on the expense side? Specifically, how should we be thinking about investment in your own GMP facility and how that may play into the cash flow guidance? Thank you.

So, we’ll start with the back and go forward. The GMP facility, we are still in the planning phases of that. And we are looking at both capital costs, lease costs, operating costs, and we’ll have more visibility on that model towards this summer. So, all I can say on that is sit tight and stay tuned. We’ll communicate that when we have more visibility on it. And then looking towards profitability or cash flow breakeven, we are as most of our quarters go, they’re a little bit, they have back-end performance is a little higher as we sign contracts, but also as our customers look to sign contracts at the end of their fiscal year. And so, our profitability, our net loss will decrease throughout the year as our revenue base grows.

Got it. Thanks, guys.

And the next question comes from the line of Dan Arias with Stifel. Please proceed.

Good afternoon, guys. Thanks for the questions. Stephen, I completely hear you on the need for discretion when it comes to these pharma relationships. I mean, that’s just sort of the nature of the beast in drug discovery. Unfortunately, you’re kind of at the stage where you’re moving from proof-of-concept on the technology to proof-of-concept on commercial, if you will. So is your statement meant to say that you won’t be able to tell us about when your booking wins or we won’t necessarily know about specific company names, because obviously folks on our side are keen to know about the progress. So, I guess, the essence of the question is how do you go about successfully communicating that stuff?

So, I think the answer to your question is carefully, and with the buy-in of our partners, and I’m not being facetious. It’s saying that you’re notching up the wins and saying, we have two big partners in the ECO lab, we’ve sold capacity, that kind of thing we’re likely to be able to say. It’s just really not being able to name names and saying which assets we’re working on. Yeah, Kevin?

Okay.

The only thing I was going to add to that, Dan, is as we’ve said before, and I said in the script, we always are looking for our partners to do joint scientific collaborations and presentations, as well as an opportunity to kind of highlight not only the technology progressing, but areas or partners that we’re engaged with. So that’s another option that we’re always talking to them about as well.

Kevin, was your comment on it taking time to establish new things and you can’t take a cookie-cutter approach? Was that meant to sort of say that it’s taking a bit longer than you expected, or is it really just more color on why one size doesn’t necessarily fit all?

I think it’s more the latter, one size not fitting all. I mean, we have been in discussions with several of these partners doing these feasibility studies for some time, as you know, since the back half of last year. And, really, we now have had an influx of people coming in to post the TIDES EU presentation. So, it’s really opened up the variety of types of discussions that we’re having around what they want to do with our toolbox. And it gets back to why having the toolbox is so important. So it’s really more of one size doesn’t fit all than just taking longer than we thought.

Okay. Sorry, if I could just sneak one more in for you guys, Stephen, I mean, obviously the idea over time is for these companies that are developing these oligo-based drugs to need more material than they needed before. I’m curious whether based on the conversations that you’re having with like companies like Alnylam, who you’ve been working pretty close with on inclisiran, is that the case for 2025? I mean, what do they say when it comes to how much more material they need this year versus last year? Because I know like the 5- to 10-year view is very good. I’m curious how demand changes in the next 12 months if that’s a knowable number.

I’m not sure that’s a knowable number right now. All of the companies or many of the big companies have forthcoming milestones. And remember, manufacturing takes time, setting up new processes take time. So, the 12-month horizon is really not what we’re looking at. We’re looking at the demand in the sort of 3- to 5-year timescale, where they have to move now to meet that. And remember also that we’re moving away from a model of bulk enzyme supply and reagent supply to increasingly up the value chain to drugs, supply, and partnership and services.

Okay. Thank you, guys.

And the next question comes from the line of Jacob Johnson with Stephens. Please proceed.

Hey, thanks. Good afternoon, everybody. Maybe, Kevin, one for you on the catalysis business. You guys had talked about going after mid-sized pharma. It sounds like you’ve had some traction there. Could you just elaborate on kind of how business development trends in that business are going generally?

I’d say very well. We’ve been focused on that strategy for probably the last 12 to 18 months, and that really was because we needed to expand that customer base to those categories where biocatalysis wasn’t quite as commoditized, right? A lot of the large pharma partners have invested in their own biocatalysis capabilities. The great news is they keep coming back to us with new cases, but the bad news is they’re more and more complex. So, with the mid-tier and large biotechs, we’ve had some really good traction where they’ve almost been introduced to the idea of biocatalysis, haven’t built their teams up yet, and are excited to work with us as a partner, and that’s why we’re starting to see some wins in that category.

Got it. That’s helpful. And then maybe related as a follow-up, just the Pfizer kind of rolling the PAXLOVID fee into development for other programs. It sounds like you’ve been working with them on non-COVID applications. Is this kind of new agreement? Is this for PAXLOVID in some fashion, or is this for non-COVID programs, if you can elaborate on that?

No, it definitely not for a COVID-based program. In fact, it’s something that we’ve been working with them on for some time that they have wanted to take in-house and license from us. So, we’re super excited because it’s another demonstration of how the collaboration with Pfizer is expanding in different ways outside of PAXLOVID. Anything want to add, Georgia?

No.

Got it. Thanks for taking the questions.

The next question comes from the line of Matt Hewitt with Craig-Hallum. Please proceed.

Good afternoon. Thanks for taking the questions. Maybe the first one, as you’re having these discussions with both CDMO partners and pharma partners, do you feel like you have to have one locked in in order to secure the other side, or could a pharma customer come in and say, we’re willing to sign the contract, we know that you’re working on either internal capabilities or signing a larger CDMO-type contract, and we trust that you’ll pick the right party. Just walk me through, is it chicken and the egg-type situation almost?

I’d say, it depends on the pharma company or the stage where they’re at. A lot of large pharma come to us and say, we’ve got our identified list of CDMOs we want you to be working with, and then what has happened is we say, well, we just happen to be working with them, and, oh, by the way, we’ll set up a three-way CDA, and then we’ll continue down the path of a development conversation with them on what it is they need. In the other case, when you’re talking to the smaller drug innovator, they’re looking for a path to GMP, which gets back to why we want to sign a GMP scale-up partnership this year, and that’s the fastest way to make sure we have that credibility. But the assets they’re bringing to us are preclinical assets, so they don’t need to see that today. They just need to know we have a plan, we have an approach, and, oh, by the way, they’ve experienced with some of the key leading players in that space, and that’s enough for them at this point. And then the fact that we’re then also talking to them and letting them in under the hood around our plans for our own potential GMP facility and then they see what we’ve done from an ECO Innovation Lab, it builds strong confidence that they could sign with us today and still be able to move forward in their timeline.

Got it. And then maybe separately, you spoke about the size of the market for the small innovator pharma companies and your desire to help them with the process. Some of them, as we’ve seen over the past year in particular, are more tight with their budgets and their balance sheets are thinner. Does that open the door and would you consider looking beyond just cash payment type situations and, hey, we will help you in this process, but we’re going to have some economic rights if and when your drug is ultimately approved. So you would maybe take an upfront payment, but then garner royalties and milestone payments as they move to the clinic or is that completely off the table? Thank you.

That is a perfect sort of explanation of what we’re trying to do, Matt. We know that they’re cash strapped. We also know their expertise strapped. We’re willing to take a sensible payment upfront in exchange for back-end economics. And think about it, if you’re the CMC lead of a startup company and we can come and offer to take your biggest problem off the table, which is the investment in infrastructure, the rate through CMC filing, all of that stuff, the analytical framework, that’s a very, very valuable asset for us to trade with them. And more than that, because we’re working with the big innovators, the small guys know that one of their exits is getting acquired by those big guys. And the fact that they will pass diligence if they’re working with us on their CMC chain when the big guys are looking at acquiring them is a very important sort of negotiation tool as well. So, yeah, it’s all of the above and that’s why we’re excited about it, but it takes a while because you have to have the big bits in place before you can play with the small guys all the way.

Makes sense and very interesting. All right. Thank you.

And the next question comes from the line of Brendan Smith with TD Cowen. Please proceed.

Great. Thanks for taking the questions, guys. Maybe just another quick one kind of expanding on some of the earlier questions here. You’re talking about the GMP scale-up partner securing that by the end of this year. I’m kind of just wondering if you could expand a little bit more on that especially given some of the enzymatic synthesis commentary at Alnylam’s R&D Day recently. Really just maybe what’s left to do between now and fully securing this one specifically and maybe looking forward what securing that partnership ultimately means for spending on your side like in 2026 and beyond?

Well, thanks, Brendan. If I understand your question correctly, I think what’s left to do with regards to a GMP scale-up partnership is selecting and finalizing negotiations. We have several players at the table right now that we’re in later stages with. But, the other piece is they are also looking at testing our technology as well and hence why we’ve been working with several players on that side. So it’s a combination of finalizing the negotiations as well as finalizing some of the sort of feasibility testing to get them over the hump in terms of confidence. And your other question looped in there was, I’m sorry, I forgot.

It just really what that partnership kind of getting that actually inked on paper ultimately is going to mean for spending on your side, like maybe starting next year and moving forward?

Well, we don’t expect it to be a lot of spending on our side, because the way this would work is assets come into our ECO Innovation Lab and we’re developing the process and parameters for their preclinical testing and their GLP material. We would then be tech transferring those assets into the GMP scale-up partner, providing them raw materials, reagents, et cetera. So not a lot of cost on our side at all. In fact, if anything, we would be receiving economics on the back end, but we’re still sort of in the process of structuring that and how that would look. So it’s a win-win for both parties.

But in the bigger picture, there is an impact on our spend, which is when we sign up this GMP partner, it buys us time to set up our own facility, right? Because one of the ways I framed it was it accelerates our path to GMP, because it’s quicker to go into an existing facility than to build one ourselves. And, we’re really looking hard at exactly what our own facility should look like in terms of scale, in terms of is it greenfield? Is it something that already exists? Is it all that good stuff? And having a reliable GMP partner that gives us time to do that properly is super helpful.

Excellent. It really provides time.

Got it. Yeah, very helpful, guys. Thank you. Appreciate it.

Thank you. There are no further questions at this time. I’d like to turn the call back to Stephen Dilly for closing remarks.

Well, thanks, everyone, for participating today, and we’re looking forward to seeing some of you at the meeting next week. So take care, and good afternoon.