Codexis ((CDXS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Codexis’s latest earnings call conveyed a sentiment of cautious optimism, as the company celebrated significant strategic achievements such as the Merck agreement and growth in the ECO Synthesis platform. However, these positives were tempered by challenges including a decline in revenue, net losses, and a strategic shift away from the small molecule biocatalysis business. The sentiment remains hopeful as Codexis transitions with new leadership and a refined strategic focus.
Merck Supply Assurance Agreement
Codexis announced a major supply assurance agreement with Merck, which is expected to provide a crucial infusion of nondilutive cash. This agreement is projected to bolster the company’s revenue projections for the year, marking a significant milestone in Codexis’s strategic partnerships.
ECO Synthesis Platform Growth
The ECO Synthesis platform has experienced substantial growth, expanding from 1 to 11 revenue-bearing contracts, with an additional 40 contracts in the pipeline. A notable achievement was a customer’s successful use of Codexis’s ligase to produce a 3-kilogram batch of siRNA, highlighting the platform’s commercial potential.
Leadership Transition
Alison Moore is set to succeed Stephen Dilly as CEO, bringing with her extensive experience from Amgen and Allogene. Her leadership is expected to guide Codexis into its next phase as a manufacturing solutions provider, focusing on innovation and strategic growth.
Financial Position and Revenue Guidance
Codexis anticipates meeting or slightly exceeding the top end of its revenue guidance for 2025, largely due to the Merck agreement. The company reported having sufficient cash resources to extend its operational runway through 2027, providing a stable financial outlook.
Improved Product Gross Margin
The company reported an increase in product gross margin to 64% for Q3 2025, up from 61% in Q3 2024. This improvement is attributed to a strategic shift towards more profitable products, enhancing overall financial performance.
Revenue Decline
Codexis faced a decline in total revenues for Q3 2025, reporting $8.6 million compared to $12.8 million in Q3 2024. This decrease was primarily due to variability in customers’ manufacturing schedules and clinical trial progression.
Small Molecule Biocatalysis Business Challenges
The company is transitioning away from its historical small molecule biocatalysis business due to pricing pressures and reduced returns. This strategic shift may lead to a drop in service revenue next year, as Codexis adapts to changing market dynamics.
Net Losses
Codexis reported a net loss of $19.6 million for Q3 2025, a slight improvement from the $20.6 million net loss in Q3 2024. This reflects ongoing challenges but also indicates a potential path towards financial recovery.
R&D Expense Increase
Research and development expenses rose to $13.9 million in Q3 2025 from $11.5 million in Q3 2024. This increase was driven by higher headcount and lab supply costs, underscoring Codexis’s commitment to innovation and development.
Forward-Looking Guidance
Codexis provided comprehensive guidance for its future trajectory, emphasizing its strategic transition from a traditional enzyme supplier to a full-service manufacturing innovator in oligonucleotide manufacturing. The company expects to achieve or slightly exceed the top end of its 2025 revenue guidance, supported by the Merck agreement, which will contribute significantly to revenue in Q4 2025 and Q1 2026. Codexis ended Q3 2025 with $58.7 million in cash, excluding funds from the Merck agreement, ensuring operational stability through 2027.
In conclusion, Codexis’s earnings call highlighted a cautiously optimistic outlook, driven by strategic partnerships and growth in the ECO Synthesis platform. Despite facing challenges such as revenue decline and net losses, the company is poised for future success with new leadership and a strategic focus on innovation and manufacturing solutions.