Codexis Inc (CDXS) 2022 Q1 法說會逐字稿

Welcome to the Codexis First Quarter 2022 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

And now I'll turn the call over to Brendan Strong from Argot Partners. Please go ahead.

Thank you, operator. With me today are John Nicols, Codexis' President and Chief Executive Officer; and Ross Taylor, Codexis' 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 2022 revenues, product revenues and gross margin on product revenues, prospects for our Life Sciences Tools, food sector and Biotherapeutics product businesses and our expectations regarding the sales of one of our proprietary enzymes to Pfizer for the manufacture of their COVID-19 antiviral therapeutic, PAXLOVID.

To the extent that statements contained in this press release 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, May 5, 2022. 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 could materially affect actual results can be found in Codexis' annual report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2022, including under the caption Risk Factors and in Codexis' other periodic reports filed with the SEC. Codexis expressly disclaims any intent or obligation to update these forward-looking statements, except as required by law.

And I'll now turn the call over to John.

Thank you, Brendan. Good afternoon, everyone. I'm pleased to report that Codexis has delivered another very strong quarter of top line growth as we kick off 2022. Total revenue of $35.3 million for the first quarter of 2022 nearly doubled year-over-year. A tripling of product revenues versus last year led the way and those were delivered at an expanded gross margin, reaching 72%.

Our sales continued to be spread across a wide range of customers in the quarter as well, with 16 who contributed over $100,000 in revenue, 8 of whom contributed over $1 million. We'll provide an in-depth overview of each of our business segments shortly, but I am proud to highlight that we are building on the strength of last year's defining success in the sustainable manufacturing market by consistently showcasing our value to a broadening range of customers through the quick and efficient scaling of our product supply capacities.

Notably, we continue to steadily execute against the large enzyme orders we received from Pfizer to support PAXLOVID, its COVID-19 antiviral therapeutic. In parallel, we continued to build momentum in our other exciting target growth areas, including driving our successful step-out strategies in the life science tools market by collaborating with innovative early-stage companies, molecular assemblies and seqWell. And we continue making great strides advancing programs across our Biotherapeutics pipeline.

Our first quarter results nicely highlight Codexis' ability to continue driving robust progress across all of our core end markets, while also pursuing opportunities to push the application boundaries of our enzymes. We are thrilled to reiterate our 2022 guidance to grow our annual total company revenue by nearly 50% for the second year in a row.

Before I hand off to Ross to share details on the first quarter financial results, let me first provide updates across each of our businesses. Sustainable manufacturing is where we've established Codexis as a preeminent leader in enzyme engineering, and this market continues to represent a large majority of the company's revenues. Codexis' novel high-performance enzymes reliably enable our customers to dramatically reduce the cost and increase the sustainability of their manufacturing of their end products. And our CodeEvolver enzyme engineering platform is constantly accelerating the speed of our ability to discover and commercialize these value-creating enzymes.

Small molecule pharmaceutical processes have been and continue to be a core target for growing the sustainable manufacturing market for Codexis. Here, we are doing business with 21 of the 25 largest pharmaceutical companies in the world, helping them adopt and install novel Codexis enzymes for manufacturing their APIs. We continue to deepen our relationships with these great companies as well as extend our technology reach into smaller biotech and generic companies.

After decades pioneering the use of enzymes to improve pharmaceutical manufacturing, our technology is now becoming more mainstream. As this market witnesses the substantial inroads we are making into blockbuster drugs like Merck's JANUVIA diabetes drug and Pfizer's PAXLOVID COVID antiviral. Codexis is increasingly proving double-digit percent cost savings, enhanced sustainability at full commercial scale, and in the case of PAXLOVID, in record time. At least one out of 3 small molecule drug manufacturing processes can benefit similarly.

And we have only just begun to deliver against this long-term $1 billion-plus addressable market opportunity. 22 additional drugs in Phase II or Phase III have a Codexis-proprietary enzyme installed in their processes, more than double from just a few years ago, which bodes well for continued medium- and long-term product revenue growth in this core market segment for Codexis.

Extending these benefits outside pharma manufacturing, we've been growing in other industries and exciting new verticals like food and nutrition as well. These industries have shorter development time lines and lower regulatory hurdles than pharma manufacturing, enabling our enzymes to reach the market more quickly. Our historical food customers, Tate & Lyle and Kalsec continue to grow the downstream customer adoption of their new food ingredients enabled by our proprietary enzymes.

In the first quarter, we booked nearly $1 million in revenues in this category, continuing our solid growth momentum in the food sector. Encouragingly, as we've kicked off 2022, we are also building early product development successes across multiple other customers in industrial verticals as well.

Shifting to the Life Science Tools market. It was only a few short years ago that we identified this area as a target market for Codexis. And since then, this market has taken off as a significant growth opportunity for the company. Codexis-engineered enzymes can enable improvement in next-generation sequencing and molecular diagnostics, DNA and RNA synthesis and more. The market is very attractive given its high-growth commercialization cycles and above-average margin prospects.

Furthermore, enzymes developed for Life Science Tools applications can often be marketed to multiple customers. While much of our work in this space still centers around engineering highly specialized enzymes for specific partners, we are also focused on opportunities where we can open up multiple customer markets for broad penetration of unique Codexis-engineered enzymes.

In 2021, we launched 3 such products: Codex HiFi DNA polymerase for use in next-generation sequencing; Codex HiCap RNA polymerase for use in messenger RNA manufacturing; and Codex HiTemp Reverse Transcriptase for use in qPCR viral diagnostics. Each of these enzymes is engineered to offer differentiated and highly beneficial performance attributes in their respective applications such as enhanced diagnostic fidelity, thermal stability, robustness, cycle time, reduced waste generation, et cetera. We continue to make strides in our sales ramp for all 3 products and we look forward to providing further updates on commercial progress here through the rest of 2022.

In addition to our commercial presence in the Life Science Tool space, we are making exciting advancements on the partnership front, aimed at leveraging the power of our CodeEvolver platform to deliver dramatic performance improvements in life sciences.

In April, Codexis and Molecular Assemblies announced the successful completion of one of the most intensive enzyme engineering campaigns in Codexis' history. The resulting highly evolved version of TDT polymerase, which had over 90 amino acid modifications affected by CodeEvolver, delivers unparalleled coupling efficiency and speed at elevated temperatures. This enzyme both enables and significantly differentiates molecular assemblies fully enzymatic synthesis technology from other emerging players as well as versus today's industry standard nonenzymatic DNA synthesis methods.

In parallel, Molecular Assemblies is working to scale their manufacturing platform and commercially offer custom long-length oligonucleotides and gene link DNA to customers in 2023. They are kicking off a key customer program later this year, targeting select companies in gene editing, including CRISPR technologies' next-generation sequencing, synthetic biology and other high-growth applications.

Our enthusiasm over the recent progress with Molecular Assemblies is underscored by our position as their second largest shareholder and we remain deeply motivated by the opportunity to realize value from both our enzyme revenues as well as to capture downstream value through our equity investment. Through this innovative partnership, Codexis is poised to access the $1 billion-plus and fast-growing field of DNA synthesis.

We also recently announced another strategic investment in partnership in the life science arena, this time with seqWell, a developer of transformative library preparation products for various genomics and NGS applications. Like with Molecular Assemblies, CodeEvolver enzyme engineering can enhance seqWell's technology and product offerings. Their differentiated approach to simplify next-gen sequencing workflows, utilizing their plexWell technology has been gaining early market adoption since its launch over the last few years.

plexWell's NGS workflow efficiency is enabled by a unique enzyme called a transposase. Effectively, this enzyme enables 2 traditional NGS workflow steps to be collapsed into one. Both Codexis and seqWell see benefits from CodeEvolver to engineer the transposase to liberate even more NGS workflow efficiencies. We are thrilled to have led seqWell's Series C financing with a $5 million investment. This establishes Codexis as the only strategic investor in seqWell and again, allows us to enjoy the downstream value creation as an equity holder in this innovative, revenue stage private company.

Rounding out the Life Science Tool sector, we continue to experience strong demand for a range of partnered enzyme engineering program for Life Science Applications in which a bespoke engineered enzyme product can unlock value. These programs add low-risk sources of potential future commercialization opportunities and we will continue providing timely updates as these engagements mature.

We remain steadfast in our belief that enzymes are core to unlocking exceptional value and opportunity across Life Science Tools. Due to CodeEvolver's unique performance attributes and ability to design highly customized products, Codexis is poised to be a critical partner in value creation for a range of customers. Between penetration potential for our recently launched products, new product launches with broad customer applicability and new high synergy partnerships, we anticipate this sector will continue to be a leading source of future top line growth.

Discovering and developing novel biotherapeutic drug candidates is another exciting growth strategy at Codexis. Just a few years ago, we had only 2 very early-stage programs. Today, we have over a dozen programs in the pipeline, including 2 assets in clinical stages. At this point, it is clear that our CodeEvolver platform is a differentiated drug discovery engine capable of uniquely addressing a widening range of human health challenges.

Guided by machine learning and our unparalleled enzymology expertise, the Codexis Biotherapeutic teams wheeled the CodeEvolver platform to efficiently elevate unique, increasingly on-target large molecule candidates. Translational teams validate those in relevant preclinical models. Then development teams tap into our decades experience in bioprocessing to scale and manufacture these candidates to meet the FDA's rigorous GMP quality standards to enable clinical trial initiations. No other synthetic biology company has built such an extensive biotherapeutic discovery and development capability. We are highly confident in the pipeline's accelerating value creation.

And so are our lead biotherapeutics partners, Nestlé Health Science and Takeda, who continue to tap into Codexis Biotherapeutics programs, helping us derisk, learn, cover costs and generate revenues. Like our Performance Enzymes business unit, 2022 is shaping up to be an excellent year for Codexis Biotherapeutics.

Later this year, we expect to be able to share data from our Phase I trial of CDX-7108, our oral enzyme therapy co-owned with Nestlé for the treatment of exocrine pancreatic insufficiency, or EPI. CDX-7108 is an orally administered GI active lipase that was precisely engineered to be highly stable to the acidic conditions in the stomach which is a key challenge for today's industry-standard billion-dollar-plus pancreatic enzyme replacement therapies, or PERTs.

A 10-day course of CDX-7108 in an EPI mini pig model showed equivalent coefficient of fat absorption recovery at a tenfold lower dose than the current standard of care PERT. Additionally, we are on track to advance 3 development candidates into IND-enabling stage in 2022. One of those 3 programs, co-owned with Nestlé Health Science, should initiate preclinical development stage activity later in 2022.

CDX-6512, wholly owned by Codexis, is already moving towards the clinic. It has been granted orphan drug designation and rare pediatric disease designation by the FDA for the treatment of homocystinuria, a rare inborn error of amino acid metabolism disorder estimated to affect 1 in 150,000 people worldwide. And finally, CDX-6210, our wholly owned candidate for the treatment of Maple Syrup Urine Disease, or MSUD, is expected to begin IND-enabling work later this year.

Rounding out our positive biotherapeutic pipeline update is our newer equally exciting work to leverage CodeEvolver to enable safe, more effective, next-generation gene therapy candidates. Here, we are pleased to report solid progress across each of the 4 programs in partnership with Takeda.

At this point, we have handed off our lead CodeEvolver engineered transgene candidates for 3 of the 4 programs to Takeda, and they are advancing each of those through their gene therapy preclinical evaluations. We look forward to upcoming presentations in May at the American Society of Gene and Cell Therapy 25th Annual Meeting, where 2 of Codexis' impressive scientists will present posters highlighting differentiated performance data for all 3 of these engineered transgene programs.

Building upon all of these accelerating and widening validations, we anticipate new biotherapeutic partnering activity to be announced before the end of the year as well. Let me now hand the call over to Ross to take you through our financial results in more detail.

Thanks, John, and good afternoon, everyone. We delivered strong first quarter 2022 results. Total revenues for the first quarter of 2022 were $35.3 million, up 96% compared to the prior year period. On a segment basis, $33.1 million in revenue was from the Performance Enzymes segment and $2.2 million was from Novel Biotherapeutics. This compares with $14.2 million and $3.8 million for Performance Enzymes and Novel Biotherapeutics, respectively, for the prior year period.

Product revenues for the first quarter of 2022 were $30.7 million compared to $10.2 million in the first quarter of 2021. The increase was due to additional sales of enzyme to Pfizer for PAXLOVID, which represented $21.3 million in product revenues in the first quarter of 2022 compared to $0.4 million in the first quarter of last year.

R&D revenues were $4.7 million compared to $7.8 million last year. The decrease was driven by lower revenues in both the Performance Enzymes and Biotherapeutics segments. Product gross margin for the first quarter of 2022 was 72.2% compared to 58.8% in the first quarter of 2021. The increase was driven by increased sales of higher-margin products.

Turning to operating expenses. Our R&D expenses for the first quarter of 2022 were $19.5 million compared to $11.6 million in the first quarter of 2021. The increase was primarily driven by higher headcount and salaries as well as higher expenses for facilities and lab supplies.

SG&A expenses for the first quarter of 2022 were $15.7 million compared to $11.4 million in the first quarter of 2021. The increase was primarily the result of increased expenses for legal fees, higher headcounts and salaries as well as higher stock compensation expense. The net loss for the first quarter of 2022 was $8.4 million or $0.13 per share compared to a loss of $9.1 million or $0.14 per share for the first quarter of 2021. As of March 31, 2022, the company had $94 million in cash and equivalents.

I would like to spend a moment to break down our financial results by segment. Revenue in our Performance Enzymes business increased 134% to $33.1 million in the first quarter of 2021. Before the allocation of corporate overhead expense, operating income for this segment was $14.9 million in Q1 for an operating profit margin of 45%. This is up significantly from last year as a result of the large increase in product sales.

In our Novel Biotherapeutics business, revenue was $2.2 million, and it generated an operating loss of $10.8 million, again before the allocation of corporate overhead expenses. The operating loss of our Biotherapeutics business is typical of most pre-commercial biotechnology companies, and we plan to continue to invest in advancing our Biotherapeutics pipeline.

Turning to guidance. We are reiterating our financial guidance for 2022 previously issued on February 24 of this year. Total revenues are expected to be in the range of $152 million to $158 million, an increase of nearly 50% at the midpoint compared to 2021. We anticipate our non-Pfizer revenue should grow 10% or more in 2022 compared to 2021. Product revenues are expected to be in a range of $112 million to $118 million, including approximately $75 million to $80 million related to Codexis' proprietary high-performance enzyme used by Pfizer to manufacture PAXLOVID. Gross margin on product revenue is expected to be in a range of 65% to 70%.

In summary, we are starting off 2022 from a strong position with excellent top line growth, remarkable growth in product revenues and strong product gross margins similar to the last 2 quarters of 2021.

And now I'll turn the call back to John.

Thanks, Ross. Let me close out our prepared remarks in the context of our 2022 corporate goals and catalysts. As we have described, Codexis has maintained strong momentum throughout early 2022. In particular, in our sustainable manufacturing market, we continue to pursue widened adoption and product commercialization in pharma manufacturing and accelerated uptake in food and industrial verticals, all while executing on our exceptionally high volume sales to Pfizer for the manufacture of PAXLOVID.

In Life Science Tools, where we are growing the use of our 3 recently launched enzymes and driving innovative partnerships with molecular assemblies in seqWell, we are energized by unlocking the power of our engineered enzymes when applied to nucleic acid synthesis and next-generation sequencing.

As we continue building momentum in this market, we look forward to capitalizing on additional opportunities to expand both our customer and application base going forward. We also continue to expand and advance our pipeline of high-value assets and partnerships in the Biotherapeutics segment, a key clinical milestone for CDX-7108 and the continued focus on advancing IND-enabling work for 3 additional assets set this segment up for another step-out year of value creation.

I'm extremely proud of the Codexis team's tremendous accomplishments. We've had a defining start to the year and heading into the rest of 2022, we have clear visibility into the multiple catalysts that will accelerate our growth ambitions. We remain focused on driving growth across all of Codexis' markets and we look forward to providing further updates in the quarters to come.

Now we'd be happy to take your questions. Operator?

(Operator Instructions) Our first question comes from the line of Steven Mah with Cowen.

Congrats on the quarter. Yes. So first one on PAXLOVID. Can you give us a sense of the PAXLOVID revenue cadence for the rest of 2022 given you're maintaining the PAXLOVID revenue guide? And I guess if I'm doing my math right, the $21.3 million in Q1 suggest that potentially, on a sequential quarterly-over-quarterly basis, the revenues should be going down, am I thinking about that right?

It's Ross, Steve. Yes. I think I don't want to get into too much detail about the cadence of each quarter. Honestly, I think Q2 could prove to be a little bit stronger than Q1 for PAXLOVID and that it probably evens out over the back half of the year in terms of Q3, Q4 being more equal, but I'd expect Q2 has a good chance of being a little stronger than Q1 for PAXLOVID.

Okay. And is there any sort of like element of front-loading here where Pfizer is maybe like stockpiling the enzyme? Is that what's causing the -- for it to skew forward?

I don't think so. I think we -- the supply chain buildup that we're observing for Pfizer is exceptional. And so they've lined up enzyme. The enzyme obviously is needed in advance of manufacturing the key intermediate for PAXLOVID, and we're delivering our enzyme to multiple locations for Pfizer. So I don't think there is a stockpiling of our product that's happening. I think, really, Pfizer seems to be driven to manufacture -- to expand the manufacture of their PAXLOVID as quickly as possible to be as responsive to the pandemic as is possible. So I don't see that happening at all.

Okay. Okay. Got it. And I guess you -- I don't know if you can give us any color to 2023 with PAXLOVID, but do you expect there to -- I don't know if you can give us any color on the...

Yes, it's super hard. We're obviously executing it substantially well against 2022 orders. And this has been a priority for our company, as you can see from the financials. In previous -- earlier in the year, we shared with the investor community that we had significant noncancelable POs for 2023 as well. And that those purchase orders represented a majority of our 2022 guidance expectations, but really roughly a majority. So the outlook beyond this year is extremely difficult to predict. So it's good that we have these noncancelable POs to carry us in. But it's really opaque to make any real clear views of what to expect in 2023 for PAXLOVID and our enzymes to support that.

Okay. No, that makes sense on that. So last one for me, on the Life Science Tools enzyme, can you give us any color on the expected demand from Molecular Assemblies? And can you remind us on the margin profiles of this enzymatic DNA synthesis enzyme? Is that going to be in line with the other Life Science Tools enzyme margins that you guys have?

Yes. Great question. Thanks. As you heard on the prepared remarks, we're super excited about how well our partnership with Molecular Assemblies is working out. We have shifted from a very intensive enzyme engineering chapter, which generates R&D revenues for Codexis to starting to supply enzymes for Molecular Assemblies' enzymatic DNA synthesis. In 2022, those product revenues will be very modest, not very large. But of course, with success, we expect that to ramp next year. Next year, as the prepared remarks shared, is when we expect Molecular Assemblies to commercialize their business. And that's when enzyme needs will grow, start to grow, will ramp and start to grow.

And on the margin question, yes, very much in line with the standard gross margins for our products that you're seeing across our portfolio.

Our next question comes from the line of Brandon Couillard with Jefferies.

Any chance you could break out the revenue contribution from Life Sciences in the first quarter? And any color on which of the 3 products you're seeing the most traction or customer interest in? Would be interesting.

We didn't break out the revenues for Life Sciences. We certainly uphold our previous outlook for that sector to generate $12-plus million of sales for the company. And that's a mix of both product revenues, but frankly, a majority of R&D revenues as we move through this year. And we're doing well through the first quarter.

The -- on the 3 launched products, of course, we only launched the HiTemp Reverse Transcriptase late last year, so we're encouraged by customer response to that, but it's too early to be generating product sales from the HiTemp Reverse Transcriptase.

So on the HiFi DNA Polymerase for next-gen sequencing and the HiFi RNA Polymerase for messenger RNA, they're both doing well. We continue to get traction. Honestly, the messenger RNA enzyme is doing a little bit better, but they're both doing well for us. So we continue to be quite encouraged by the early days of the launch of all 3 of these enzymes.

Okay. And then just a question on just the R&D revenue line, coming under $5 million for the quarter, both performance and biotherapeutics were down. Can you just help us understand what's driving that and your level of confidence in the implied $40 million guide for the year?

Yes. Thanks, Brandon. We're off to a good start. Effectively, all of the revenues ex Pfizer are in a good place. We delivered against the first quarter largely as expected. Of course, the highlight for the P&L for this quarter is all the sales to Pfizer.

But we're in a good place on the rest of the ex Pfizer revenue. We continue to see growth throughout the year from the start for 1Q in R&D revenues. And just that's pretty typical for us to have a growing cadence of R&D revenues through the year, and we see that happening in 2022 as well, which obviously implies strength in the back half of the year.

We've seen nice growth in the food area. We highlighted that some early R&D work in the other industrial verticals is starting to unfold for us, a nice early R&D revenue generation there, and we hope to see that continue to grow. And we also shared that we expect to unfold a new biotherapeutics partnering deal before the end of this year, so that clearly would add to our expectations for being able to deliver the expected R&D revenues for the company over the full year.

Our next question comes from the line of Matt Hewitt with Craig-Hallum Capital Group.

I'm going to maybe tackle the cadence a little bit differently. I'm just wondering, Ross, if you could maybe parse out first half versus second half revenues for -- on the product side or if you want to talk about maybe total revenues again just first half versus second half?

Yes. Maybe just talk about total revenues, I think, Matt. My expectation is your Q2 revenues probably will grow in a range of 10% to 20% sequentially from where we were in Q1. And then obviously, the balance will be back in the second half of this year. I think best estimates now will be probably equally weighted between Q3 and Q4.

That's really helpful. And then I guess one of the topics we haven't discussed is on the food and nutritional side. Maybe if there's any type of an update on the Tate & Lyle and the progress that they're seeing with the sweeteners?

Yes. Thanks, Matt. We highlighted that we generated roughly $1 million in the quarter in the food sector, spread between our 2 lead customers, Tate & Lyle and Kalsec, and both of them actually are showing downstream success with their new products that they've launched, which have been enabled by our enzymes.

So really just nice momentum and steady momentum as we moved through last year and got off to a start in 2022, both for the Tate & Lyle sweeteners, which they continue to encourage us that their marketing of the new products, the better-tasting Stevia, they call it, TASTEVA M and they're bulkier but similarly low caloric DOLCIA PRIMA Allulose sweetener, both of them are doing well in new formulation work and promotion to their downstream food and ingredients customers. So it feels really good, really solid.

(Operator Instructions) Our next question comes from the line of Do Kim with Piper Sandler.

This is Ike on for Do. Congrats on the solid quarter. So I had a quick question -- I have a question your wholly-owned pipeline. If you can kind of provide some more of your broader thoughts around time lines in terms of development. So you talked about how some of those assets are in pre-IND development.

How are you thinking about prioritization of some of these programs? And lastly, some of the inflection points that you're thinking about in terms of when to partner them out?

Yes, really, really good. Thank you. So we're super excited about the continued progress in our Biotherapeutics pipeline. As you know, we have 2 programs that are in clinical stage, the PKU program has been out-licensed to Nestlé now for years, and they are lining up for a multiple ascending dose study. And we shared in February that we don't expect that to be completed until next year at this point.

So we're most excited in the clinical stage with the impending readout from the Phase I trials for CDX-7108, the lipase that I highlighted on the call for exocrine pancreatic insufficiency. So this is really a critical priority for Codexis, and we're quite excited to ultimately show the data that continues -- that reinforces the continued development of CDX-7108.

As a reminder, CDX-7108 is co-owned between Codexis and Nestlé Health Science. Behind that, we've got 3 programs that are advancing towards IND-enabling stage. One of them is CDX-6512 for homocystinuria. This is the one where we have the orphan drug designation, and we have the rare pediatric disease designation as well. And that one is already moving towards through the IND-enabling step, we've lined up for GMP manufacturing of CDX-6512. So we're on track to bring that one towards the clinic as we move to the end of next year. We should be starting to line up our first clinical trials for 6512.

The other 2 programs aren't quite yet at the IND-enabling stage. They're being lined up for that. One of those is another self wholly-owned asset, CDX-6210 for Maple Syrup Urine Disease. So stay tuned and we'll let you know when we start the IND-enabling work for CDX-6210 for MSUD.

And the third nearly IND asset -- nearly IND-enabling asset is a partnered program with Nestlé. So this would be the third partnered program with Nestlé beyond PKU and CDX-7108. On partnering, I mean, this is a really important balance. We've been very careful as a company not to get too overextended with the significant expenses of developing Codexis-discovered biotherapeutic candidates.

The CodeEvolver platform just continues to showcase its ability to discover unique differentiated molecules for a widening range of disease states which is super exciting. And we're doing that very efficiently, and we're increasingly hitting targets quicker in the discovery stage, but the cost to carry these assets through IND-enabling is significant for our company and ultimately, clinical development even more so.

So we've used partnering as a critical strategy to derisk our pipeline, to learn from great partners like Nestlé Health Science and Takeda to cover costs, to generate revenues. So we continue to balance partnering versus self-funding. And I think we're being even more judicious on that balance as we consider the reality of today's capital markets.

Probably all things equal, a little bit more priority towards partnering just to make sure that we're managing our runway carefully as a company. So that's kind of how we're thinking about partnering versus self-funding today. We'll continue to do self-funding, but partnering is -- continues to be a very crucial strategy for the company.

I'm showing there are no further questions. I would like to turn the call back over to John Nicols for closing remarks.

Okay. Thank you, everybody, again, for joining us. As a reminder, we will be presenting 2 posters at the American Society of Gene and Cell Therapies 25th Annual Meeting on May 16. Additionally, we will be attending several investor conferences in May and June this year, and we hope to see you there as well in person for many of those events.

We look forward to continuing to update you on Codexis' progress. And to all the mothers out there have a great Happy Mother's Day, and for all those guys out there, don't forget to say thanks to your mothers and your partners who are mothers. Everyone, have a great rest of your afternoon.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.