8-K: Codexis Reports Fiscal Year 2024 Financial Results and Expects Double Digit Revenue Growth in 2025

Codexis announces its financial results for the fourth quarter and fiscal year 2024, highlighting a 4% decrease in total revenue for the year but anticipating double-digit growth in 2025.

Summary

• Codexis reported a total revenue of $59.3 million for fiscal year 2024, a decrease of 4% compared to $62.0 million in 2023, excluding enzyme sales related to PAXLOVID.
• Including PAXLOVID-related sales, 2023 revenue was $70.1 million.
• Product revenues increased by 6% to $36.8 million, excluding PAXLOVID sales.
• R&D revenues decreased to $22.6 million due to lower non-recurring items and R&D fees.
• The company's product gross margin was 56% for the year.
• R&D expenses decreased to $46.3 million due to lower headcount and outside service costs.
• Selling, General & Administrative expenses increased to $55.1 million due to higher stock-based compensation.
• The net loss for fiscal year 2024 was $65.3 million, or $0.89 per share.
• As of December 31, 2024, Codexis had $73.5 million in cash, cash equivalents, and short-term investments.
• For the fourth quarter of 2024, total revenues increased by 17% to $21.5 million, excluding PAXLOVID sales.
• Codexis expects double-digit revenue growth in 2025, with total revenues projected to be between $64 million and $68 million.
• The company anticipates achieving positive cash flow by the end of 2026.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While revenue decreased year-over-year, the company is projecting double-digit growth in 2025 and expects to achieve positive cash flow by the end of 2026. The commissioning of the ECO Synthesis Innovation Lab and strategic appointments also contribute to a positive outlook.

Positives

• Product revenues increased by 6% to $36.8 million for fiscal year 2024, excluding enzyme sales related to PAXLOVID.
• Total revenues increased by 17% to $21.5 million for fourth quarter 2024, excluding enzyme sales related to PAXLOVID.
• Codexis expects double-digit revenue growth in 2025, with total revenues projected to be in the range of $64 million to $68 million.
• The company anticipates achieving positive cash flow by the end of 2026.
• Codexis successfully completed the end-to-end enzymatic synthesis of inclisiran and demonstrated similar outcomes utilizing three routes of enzymatic ligation to produce the same therapeutic asset.

Negatives

• Total revenues decreased by 4% to $59.3 million for fiscal year 2024 compared to $62.0 million for fiscal year 2023, excluding enzyme sales related to PAXLOVID.
• Product gross margin was 56% for fiscal year 2024 compared to 63% for fiscal year 2023, excluding enzyme sales related to PAXLOVID.
• The net loss for fiscal year 2024 was $65.3 million, or $0.89 per share, compared to a net loss of $76.2 million, or $1.12 per share, for fiscal year 2023.

Risks

• Codexis depends on licensees and collaborators, and termination of these relationships could adversely affect results.
• The company may need additional capital in the future to expand its business.
• Failure to successfully develop new technology, such as the ECO Synthesis manufacturing platform and dsRNA ligase, could impact future growth.
• Dependence on a limited number of products and customers poses a risk if customer products are not well-received.
• Competitors with greater resources could develop products that make Codexis' technologies obsolete.
• Inability to accurately forecast financial and operational performance could lead to negative impacts.
• Market, political, and economic conditions may negatively impact Codexis' business, financial condition, and share price.

Future Outlook

Codexis anticipates double-digit revenue growth in 2025, projecting revenues between $64 million and $68 million, and expects to achieve positive cash flow by the end of 2026.

Management Comments

• Stephen Dilly, MBBS, PhD, Chairman and Chief Executive Officer at Codexis, stated that the company continued to execute its strategy to advance the ECO Synthesis platform and has proven the technical viability of its new approach through collaborations with multiple partners.
• Stephen Dilly also mentioned that the company is ready to convert ongoing collaborations into formal revenue-generating contracts with the commissioning of the ECO Synthesis Innovation Lab.
• Codexis will be focused on delivering a wide array of services to siRNA innovators, which includes fulfilling additional double-stranded RNA ligase orders, providing analytical services and GLP-grade siRNA material through the ECO Innovation Lab and securing a GMP scale-up partner.

Industry Context

Codexis is positioning itself as a key player in the enzymatic synthesis of RNAi therapeutics, a rapidly growing field. The company's ECO Synthesis platform aims to provide a more efficient and scalable manufacturing route compared to traditional phosphoramidite chemistry. The collaborations with Bachem and other siRNA drug innovators highlight the industry's interest in enzymatic synthesis.

Comparison to Industry Standards

• Codexis is competing with established players in oligonucleotide synthesis, such as Bachem and other major manufacturers of siRNA therapeutics.
• The company's claim of demonstrating four routes of synthesis for an approved siRNA therapeutic asset (inclisiran) positions them as a leader in enzymatic oligonucleotide synthesis.
• The company aims to demonstrate that the ECO Synthesis platform performs equivalent to or better than phosphoramidite chemistry, which is the current industry standard.
• Codexis's focus on GLP-grade siRNA material and securing a GMP scale-up partner indicates their intention to meet the stringent quality and regulatory requirements of the pharmaceutical industry.

Management Changes

Stakeholder Impact

• Shareholders can expect potential growth in revenue and profitability in the coming years.
• Employees may see opportunities for growth and development with the expansion of the ECO Synthesis platform.
• Customers will benefit from the development of more efficient and scalable manufacturing solutions for therapeutics.
• Suppliers may see increased demand for materials and services as Codexis expands its operations.
• Creditors should be reassured by the company's expectation of achieving positive cash flow by the end of 2026.

Next Steps

• Codexis intends to sign its first development contract for its ECO Synthesis manufacturing services in the first half of 2025.
• Codexis expects to achieve pilot scale production of GLP-grade siRNA material using the ECO Synthesis Innovation Lab in 2025.
• The Company anticipates hosting presentations at the 2025 TIDES USA and TIDES Europe annual meetings, where it plans to present purity and yield data demonstrating that the ECO Synthesis platform performs equivalent to or better than phosphoramidite chemistry.
• Codexis expects to sign a GMP scale-up partner by the end of 2025 to enable larger scale clinical and commercial siRNA production.

Key Dates