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CI

CODEXIS, INC. (CDXS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 total revenue was $21.5M, up 17% year over year excluding PAXLOVID-related enzyme sales; mix shifted to higher R&D revenue given Pfizer applied the remaining retainer toward a new longer-term agreement, while product revenue was flat versus Q4 2023 excluding PAXLOVID .
  • Net loss was $10.4M ($0.13 per share) versus $7.2M ($0.10) in Q4 2023, with product gross margin at 63% (down from 71% ex-PAXLOVID in Q4 2023) due primarily to product mix .
  • 2025 guidance introduced: total revenue $64–$68M; Q1 2025 revenue expected $8–$10M with a back-half ramp as ligase/ECO contracts signed in H1 begin execution in H2; company reiterates path to cash-flow positive by end of 2026 and sufficient liquidity to fund operations to that point .
  • Strategic catalysts: expected first development contract in H1 2025, pilot-scale GLP-grade siRNA material in 2025, and a GMP scale-up partner by YE 2025; ongoing technical validation via TIDES meetings and expanding feasibility work with major siRNA innovators and CDMOs .
  • Management tone confident: “commercial lift-off” for ECO Synthesis in 2025, prioritizing multi-asset partners, and balancing disclosure with partner confidentiality to protect competitive advantage .

What Went Well and What Went Wrong

What Went Well

  • R&D revenue increased to $11.6M (vs. $8.5M in Q4 2023) on recognition of the remaining Pfizer retainer tied to a new longer-term agreement, creating future revenue opportunities; total revenue rose 17% YoY excluding PAXLOVID .
  • ECO Synthesis platform advanced materially: first-ever end-to-end enzymatic synthesis of an approved siRNA (inclisiran) and four synthesis routes demonstrated; increased partner interest and successful feasibility studies, positioning for revenue-generating contracts in 2025 .
  • Liquidity and outlook: $73.5M in cash, cash equivalents and short-term investments at YE 2024; 2025 revenue guidance $64–$68M and reiterated path to cash-flow positive by end of 2026 .

Management quotes

  • “We are ready to convert ongoing collaborations into formal revenue-generating contracts” – Stephen Dilly, CEO .
  • “2025 is slated to be the year we achieve commercial lift off for the ECO Synthesis platform” – Stephen Dilly, CEO .
  • “We continue to expand our ligation services… competing and winning… with 4 new companies engaged at different stages” – Kevin Norrett, COO .

What Went Wrong

  • Product gross margin compressed to 63% (Q4 2024) from 71% in Q4 2023 ex-PAXLOVID, driven largely by product mix; management plans to retire/divest lower-margin products to improve margins in 2025 .
  • Net loss widened versus prior year ($10.4M vs. $7.2M in Q4 2023), with SG&A up (to $13.0M) due to costs associated with executive departures and R&D expenses up to $12.1M from lab supplies and manufacturing services .
  • Ongoing revenue concentration/lumpiness: Q1 historically weakest, with explicit Q1 2025 guidance of $8–$10M and a back-half ramp dependent on execution of new ligase/ECO contracts and GMP scale-up partner timing .

Financial Results

Quarterly Trend (sequential comparison)

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Millions)$8.0 $12.8 $21.5
Product Revenue ($USD Millions)$6.3 $11.2 $9.8
R&D Revenue ($USD Millions)$1.7 $1.7 $11.6
Net Loss ($USD Millions)$(22.8) $(20.6) $(10.4)
Diluted EPS ($USD)$(0.32) $(0.29) $(0.13)
Product Gross Margin %45% 61% 63%

Year-over-Year Comparison (Q4 2023 vs. Q4 2024)

MetricQ4 2023Q4 2024
Total Revenues ($USD Millions)$26.6 $21.5
Total Revenues excl. 2023 PAXLOVID ($USD Millions)$18.4 $21.5
Product Revenue ($USD Millions)$18.1 $9.8
Product Revenue excl. 2023 PAXLOVID ($USD Millions)$9.9 $9.8
R&D Revenue ($USD Millions)$8.5 $11.6
Product Gross Margin % (excl. 2023 PAXLOVID)71% 63%
Net Loss ($USD Millions)$(7.2) $(10.4)
Diluted EPS ($USD)$(0.10) $(0.13)

Segment Breakdown (Revenue)

SegmentQ2 2024Q3 2024Q4 2024
Product Revenue ($USD Millions)$6.3 $11.2 $9.8
R&D Revenue ($USD Millions)$1.7 $1.7 $11.6

KPIs and Balance Sheet Highlights

KPIQ2 2024Q3 2024Q4 2024
Cash, Cash Equivalents & Short-term Investments ($USD Millions)$73.2 $90.3 $73.5
Long-term Debt ($USD Millions)$28.4 $28.6 $28.9
Deferred Revenue – Current ($USD Millions)$9.8 $10.0 $0.35
Deferred Revenue – Noncurrent ($USD Millions)$0.20 $0.61 $0.10

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($USD Millions)FY 2025N/A$64–$68 New
Revenue ($USD Millions)Q1 2025N/A$8–$10 New
Product Revenues ($USD Millions, excl. PAXLOVID)FY 2024$38–$42 Maintained Maintained
R&D Revenues ($USD Millions)FY 2024$18–$22 Maintained Maintained
Gross Margin on Product Revenue (%)FY 202458–63 Maintained Maintained
Cash Flow Positive TimingCorporate~End of 2026 By end of 2026; sufficient liquidity to fund operations until then Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Previous Q-2)Q3 2024 (Previous Q-1)Q4 2024 (Current Period)Trend
ECO Synthesis commercializationDemonstrated full-length strand, launched dsRNA ligase services; laid out GLP in 2025 and GMP facility plan TIDES Europe multi-route data planned; Innovation Lab completion by year-end “Commercial lift-off” in 2025; signing revenue-generating contracts; focus on GLP material Accelerating execution
dsRNA ligase adoptionFirst large pharma order; screening/optimization service launched External validation with Bachem; expanding orders/pipeline 4 new companies engaged; multi-asset discussions; expected back-half revenue contribution Building momentum
GMP scale-up partnerScoped GMP facility; near-term partnering path Expect to sign GMP scale-up partner in 2025 Target to secure GMP partner by YE 2025; negotiations in late stages On track
Liquidity & profitability$73.2M cash/investments; path to cash-flow positive ~end 2026 $90.3M cash/investments; reiterate path to profitability $73.5M at YE; sufficient to fund to positive cash flow by end 2026 Sufficiently funded
Raw materials (NQPs/NTPs)Developing enzymatic routes; cost and sustainability benefits Emphasized NQPs/NTPs as key supply-chain milestone Establish raw material supply chain; customer preference for fully enzymatic inputs Strategic priority
Pharma biocatalysis tractionBase business growth; pipeline supports near-term revenues Double-digit growth target; broaden mid-tier/biotech customers Healthy growth trajectory; new screenings and production with mid-tier pharma Improving
Partner communicationN/APlan joint scientific presentations; disclosure depends on partner Strict confidentiality to protect advantage; communicate wins sans names Consistent approach

Management Commentary

  • Strategic focus: “We are ready to convert ongoing collaborations into formal revenue-generating contracts” (CEO) .
  • 2025 inflection: “2025 is slated to be the year we achieve commercial lift off for the ECO Synthesis platform” (CEO) .
  • Commercial execution: “We continue to expand our ligation services… competing and winning… with 4 new companies engaged” (COO) .
  • Margin and mix: “Gross margins have been a focus… retiring or divesting lower-margin products… expect ongoing improvement” (CFO) .
  • Liquidity outlook: “Ended 2024 with $73.5M… sufficient to fund planned operations through achieving cash flow positive by end of 2026” (CFO) .

Q&A Highlights

  • Partner confidentiality and disclosure: Management will disclose progress (capacity filled, number of partners) but not names/assets due to competitive sensitivities; joint scientific presentations used for validation .
  • Pipeline of engagements: ~7 customers engaged across ligation and ECO synthesis; multifaceted agreements expected; toolbox approach rather than cookie-cutter .
  • Gross margin trajectory: Aim to improve in 2025 via product mix optimization and retiring lower-margin SKUs; 2023 margins “artificially inflated” by one-offs .
  • GMP scale-up partner: Multiple candidates in late-stage discussions; partnership expected to minimize Codexis’ near-term spend and accelerate GMP pathway, buying time to build own facility .
  • Small innovator model: Will consider economic rights (milestones/royalties) with modest upfronts in exchange for comprehensive CMC/analytical support .
  • Pfizer relationship: Recognition of remaining PAXLOVID retainer tied to new longer-term agreement for non-COVID programs, creating future revenue opportunities .

Estimates Context

  • We attempted to retrieve Q4 2024 and FY 2025 S&P Global consensus estimates for revenue and EPS, but the request was unsuccessful due to a data provider daily limit; therefore, comparisons to Wall Street consensus are not available in this report [GetEstimates error].
  • Management indicated FY 2024 revenues would fall within the current range of analyst estimates during the Q3 call, but did not specify values; we do not impute or estimate consensus .

Key Takeaways for Investors

  • Sequential momentum and mix shift: Q4 revenue accelerated to $21.5M with R&D revenue strength tied to Pfizer; 2025 revenue guide ($64–$68M) and Q1 guide ($8–$10M) suggest H2 weighting as ligase/ECO contracts convert into execution – monitor H1 contract signings and H2 delivery .
  • Margin work-in-progress: Product gross margin at 63% (vs. 71% ex-PAXLOVID YoY) reflects mix; management targets margin improvement via SKU optimization – watch product mix and incremental ligase orders for margin uplift .
  • ECO/ligase commercialization: Technical leadership validated (inclisiran end-to-end enzymatic synthesis, Bachem poster); “commercial lift-off” in 2025 with first development contracts, GLP-grade production, and a GMP scale-up partner by YE 2025 – key catalysts for stock narrative .
  • Liquidity runway and profitability: $73.5M cash/investments at YE; company expects to be cash-flow positive by end of 2026 without relying on own GMP facility near term – reduces financing risk .
  • Partner breadth and confidentiality: Expect announcements focused on capacity and project wins rather than named partners; investor updates may be through scientific meetings and joint posters – set expectations accordingly .
  • Strategic portfolio actions: Non-core asset licensing (e.g., Alphazyme royalties) and ATM raise extended runway; continued focus on pharma biocatalysis growth and siRNA manufacturing capabilities .
  • Trading implications: Near-term stock moves likely tied to H1 contract announcements and YE 2025 GMP partner disclosure; medium-term thesis hinges on ECO/ligase adoption, margin improvement, and delivery against the 2025 revenue guide .