Codexis at TD Cowen Conference: Enzymatic Innovation in siRNA Manufacturing

On Tuesday, 04 March 2025, Codexis Inc. (NASDAQ: CDXS) participated in the TD Cowen 45th Annual Healthcare Conference, unveiling strategic initiatives in siRNA manufacturing. The company, under CEO Steven Dilley, highlighted its shift from enzyme engineering to oligonucleotide therapeutics, addressing both opportunities and challenges in the evolving market.

Key Takeaways

• Codexis is pioneering an enzymatic platform, ECO Synthesis, for efficient siRNA production.
• The company aims to reach cash flow positive by the end of 2026 through strategic partnerships and business growth.
• Codexis is focusing on specific siRNA therapeutics for chronic diseases, leveraging its ability to attach targeting moieties to molecules.
• The company is actively seeking long-term contracts with mid-sized pharmaceutical companies lacking biocatalysis capabilities.
• Codexis anticipates significant demand growth for siRNA, predicting a shift to 30 metric tons by the early 2030s.

Operational Updates

Codexis is committed to converting discussions into contracts around its ligase technology. The company plans to demonstrate superior process parameters at upcoming Tides conferences, showcasing improvements over traditional phosphoramidite chemistry. Additionally, Codexis is incorporating modified nucleotides into its platform to address future therapeutic modalities. By leveraging its pharma manufacturing heritage business, Codexis aims to achieve cash flow positivity by the end of 2026.

Future Outlook

The company foresees a significant revenue increase as it transitions to a full enzymatic platform, offering multiple revenue streams from reagents, enzymes, raw materials, and direct siRNA supply. Codexis is also exploring partnerships to bring raw material supply onshore and secure long-term contracts with pharmaceutical companies. Upcoming development deals related to the ECO Synthesis platform are expected to further bolster Codexis’s market position.

Q&A Highlights

During the Q&A session, CEO Steven Dilley addressed the opportunistic nature of a past Pfizer deal and the company’s openness to building enzymes for other businesses, ensuring fair compensation. Key catalysts for the next 12 months include continued revenue growth, new market entries, and the conversion of customer discussions into contracts. Dilley emphasized siRNA’s potential as a preferred modality for chronic disease management, citing its twice-yearly dosing advantage.

For a detailed understanding of Codexis’s strategic initiatives, readers are encouraged to refer to the full conference transcript.

Full transcript - TD Cowen 45th Annual Healthcare Conference:

Chad Wytravsky, Tools and DX Team, TD Cowan: All right. I think we could get started here. Hey, everyone. I’m Chad Wytravsky. I’m part of the Tools and DX team here at TD Cowan, and I’m excited to welcome Steven Dilley, CEO of Codexis.

You know, Codexis has gone through a lot of evolutions, and now today is kind of pioneering a novel approach to SI RNA manufacturing. So there’s a lot to talk about. It’s an interesting market. There’s a lot of things that are, I think, underappreciated about SI RNA manufacturing, so it’d be interesting to dive in and and see what you guys are up to now. I guess for people that are newer to the story, since there’s been some evolution, can you kind of walk through where you’ve been, where you’re at today and where you’re going and sort of the why behind some of the pivots you made?

Steven Dilley, CEO, Codexis: Sure. And thanks for having us here. So Codexis has a long history in enzyme engineering and optimizing biocatalysts. So that’s using enzymes to drive chemical reactions. And that started in in the field of small molecule API production.

During the history, Codexis has branched off into a lot of different areas like biofuels and food and feed and other things. But really, after a good long look at the potential of everything in our pipeline, we said we are the best in the world at engineering enzymes and directed evolution. We need to be competing where that matters the most. And what we saw was the emerging field of oligonucleotide therapeutics led by the coming wave of siRNA therapeutics. And that was a very happy coming together of circumstances because these are a very important modality that will address some very prevalent diseases, where there is a challenge with the conventional route of manufacture, which is the chemical manufacture using phosphoramide chemistry, particularly when you get to scaling to supply the large markets.

And we saw an opportunity to build an enzymatic platform that has much more efficient scalability, can actually perform better. And by that, I mean, produce purer material faster and cheaper. And the other beautiful thing was it was really hard and we didn’t think others could get there nearly as fast as we can. And that’s really played out over the last couple of years.

Chad Wytravsky, Tools and DX Team, TD Cowan: And with sRNA as a new modality, it seems like the existing infrastructure with phosphoramic chemistry is, you know, it’s there and it’s appropriate an amount. But as they expand into these larger indications as you’re talking about, I guess, what’s the problem there? What’s the bottleneck? And how does Ecosynthesis address that scaling?

Steven Dilley, CEO, Codexis: There’s a lot of fun numbers on on this, some of which I will I will give you. But if you look at the worldwide supply or demand of siRNA right now, it’s maybe five to 700 kilos annually. Now there are drugs in the pipeline that could be more than that on their own. And one of the challenges of the chemical approach to making siRNA is it’s incredibly inefficient in terms of the use of raw materials. So it takes about 7,000 liters of solvent to make one kilo of siRNA, and that solvent is acetonitrile, some of it’s toluene.

So these are some nice organic solvents. That means, you have petrochemical derivatives that need to be burned off. The environmental impact of that is huge. The economic impact of that is huge. And it’s not scalable.

There’s not enough acetonitrile in the world to supply the market size that’s likely to happen in five to ten years’ time. So there’s an actual availability argument. There’s also a cost and effectiveness argument. And the beautiful thing about the enzymatic platform is it’s aqueous based and infinitely scalable.

Chad Wytravsky, Tools and DX Team, TD Cowan: And I guess the eco synthesis platform, you’ve released a lot of data, like last year at Tides USA and Tides Europe. So if we zoom out and kind of look at what did you guys demonstrate to prospective customers last year at those scientific conferences? And then looking at this year, what are you planning on, you know, unveiling and how is that influencing those discussions?

Steven Dilley, CEO, Codexis: Right. Absolutely. So so we we need to address this market in a stepwise fashion. We need to to grow into the opportunity. One of the ways that we’re gonna do that is using something that we call the ligase technology.

This is a single family of enzymes, which are used to stitch together fragments of siRNA molecules to make the complete entity. And what we’ve discovered is there is a significant market opportunity in doing that because it enables the chemical manufacturers to make shorter strands of RNA out of the gate, stitch them together to make their final drug. And that can dramatically improve their efficiency and to some extent their scalability. So that’s been a first step in the market. We had a first commercial order of a double stranded RNA ligase last year.

We’re fulfilling that right now. We have others in the pipeline. We have multiple customers on the hook where, yeah, we will be building them a ligation solution for their particular problem. And, you know, the the beautiful thing about these enzymes is their value add is orders of magnitude higher than the old biocatalysis enzyme. So that’s a real economic opportunity.

We could build a business around that. But that buys us the time to move further in in our toolkit. And I say toolkit because we’ve moved from an idea that we would make siRNA end to end sequentially with enzymes to saying, well, sometimes that might be a good idea, but sometimes it’s better to make it in fragments. There are some pieces that right now are better made chemically, some that are better made enzymatically. And we can tailor the solution to the exact molecule that we’re making over time and evolve it over time to optimize as we scale.

And what we’re hearing from the customers that we’re engaged with is they really don’t have that much of a problem right now for the smaller molecules that they’re making. But when we get to a hundred kilo demand for a specific molecule, they absolutely need ligation. When they get to three or 400, they need a full enzymatic solution. And so we’re growing with the customers into that solution.

Chad Wytravsky, Tools and DX Team, TD Cowan: And just speaking to that, like, you’ve recently announced there’s seven plus, you know, ongoing discussions, including a lot of large therapeutic developers, but there’s sort of a multi pronged approach to kind of the go to market. So how is that commercial strategy evolving and just how are you addressing kind of specific needs from one customer to another and what does this look like commercially as a product in the next few years?

Steven Dilley, CEO, Codexis: So there are as many solutions as there are customers right now pretty much with particularly with the big innovative players because they have different capabilities in house. There are some that have started with ligation and say, look, we just want to improve right now our chemical footprint. They start with ligation. They use one of our ligases. They like what they see.

Then they start talking to us about when can we eventually introduce enzymatic fragments and the full enzymatic process over time. So that starts off as a, you know, as a deal around supply of ligase and then move to supply of enzymes and reagents and scaling for the full eco process. Others come to us and say, we think we have ligation taped in house. We’re gonna give you fragments to make enzymatically. Let’s scale around that.

Let’s look at reproducibility. Let’s look at the path to market. There are others that are coming to us, particularly smaller early phase companies wanting a complete solution, wanting support for their preclinical work, for their scale up, for their GLP then GMP production. So we really have this is why I keep calling it a toolbox that we can tailor to not just the specific molecule people have, but the but the capabilities of the of the company that we’re working with.

Chad Wytravsky, Tools and DX Team, TD Cowan: And outside of, like, the technical expertise and the really, you know, innovative things that you’re doing, there are also a lot of times in these new modalities, there’s a lot of value in the CMC and regulatory components. So could you just give some granularity as to, you know, what capabilities you’re building out and how that would be of of use to potential customers?

Steven Dilley, CEO, Codexis: Yeah. Absolutely. And all of this takes time and has to be done in a in a logical stepwise fashion. But we see much of the the value add in what we do in building the complete analytical package to support the initial introduction and then scaling of the molecule and passage through the the FDA. We also see the ability to write the CMC documents on behalf of some of our partners being crucial or to be able to support the bigger partners in their writing.

And our vision for the future is that small companies may be small VC backed companies that are getting serious about developing a molecule would come to us as their development partner, and we would actually build their molecule for them. We’d build their analytics for them. We’d write their registry dossiers for them, and we’d stay with them all the way through development. And the reason we want to do that is we want to get paid on the way, but we also want a piece of the value of the asset itself. And I mean, a share in the value in terms of sales.

And that’s crucial because, you know, there are some of the 500 odd siRNA molecules that are gonna become very big in terms of quantity, but there are equally important, a whole bunch of them that are pointed at what I would call boutique indications in a few thousand patients where the price point is gonna be compelling. The revenue from the drug is gonna be enormous, but they’re only gonna need a few hundred grams to supply the market. And the only way we can capture value there is by being partners in the value of the asset. Now why are people gonna sign up for us? They’re gonna sign up with us when they know that we derisk their way forward.

We derisk their way forward by making it cheaper, by making it more affordable in terms of the capital investment and all that kind of stuff, but also they’re less likely to make mistakes. And the kicker on this is because we are working right now with the big guys, what happens in biotech is the big guys tend to acquire the small guys. And one of the important steps in that is the due diligence and CMC is a huge part of that. And so being able to say Codexis does our manufacturing, Codexis does our CMC support will be a major positive factor for the small company wanting to get acquired.

Chad Wytravsky, Tools and DX Team, TD Cowan: Is there anything like being included in, like, having a master file or being included or specced into these processes? Is that something that Codexis would be a part of?

Steven Dilley, CEO, Codexis: We absolutely need to do that. We we need to we we’re currently going through the, conversations with with the agency around how we precedent our process, how we bring it in on stream with existing modalities. But having a DMF that can be cross referred to having precedent for what people want to do derisks it. Now one of the nice things is our one of our first, double stranded ligase relationships was a drug moving from Phase two to Phase three. And so having that in the clinic and being able to point to that is quite important in saying, you know, this is this is a real thing that that actually gets to people.

But having the regulatory framework, having precedent, we can point to it’s all super important.

Chad Wytravsky, Tools and DX Team, TD Cowan: And obviously, your your prospective customers are therapeutic companies, so you’re largely insulated from a lot of the headwinds just impacting the broader tool sector. But I’d be remiss to ask, like, what are you doing to ensure your raw material supply just given tariffs and all all the noise?

Steven Dilley, CEO, Codexis: So that’s a really interesting situation in that we’ve been looking at, you know, how do we bring onshore our raw material supply. Typically, the raw materials for making siRNA, enzymatically, things called nucleotide quadrophosphates or NQPs, which are derivatives of nucleotide triphosphates, which people often use for making mRNA constructs. Now those have been synthesized chemically often from China or India. And so we’ve been looking at, you know, how to bring that onshore. We have an enzymatic method now of how you can manufacture those.

We’re really looking for the appropriate partner, but there is a sort of tangential benefit of tariffs and and all the rest of it, which is some of those those companies are coming to us right now trying to maintain their business by giving us very sweet deals in the short term. So we’re actually getting a bit of a tailwind there in terms of our raw material supply. But over the long term, we absolutely need to bring that onshore and have a full enzymatic platform for the raw materials as well as the final product.

Chad Wytravsky, Tools and DX Team, TD Cowan: And just staying on the theme of kind of, like, more high level secular themes, how is AI impacting your business today? How do you, view the future of eco synthesis in light of just AI continuing to permeate kind of all aspects of everything?

Steven Dilley, CEO, Codexis: So we’re kind of the OGs when it comes to that in that we’ve been doing AI, and it wasn’t called that since about 02/2007. And what we’ve learned is AI is only as good as the way you apply it. And, you know, I I had a fantastic conversation with one of my lead scientists last week where I said, you know, are we gonna get scooped by, you know, some of these larger, learning models and AI in terms of protein design? Will it just all be done in silico? And and he took me through some of the math around, the average enzyme maybe is a a 400 amino acid long protein.

Each of those has, you know, 20 possible amino acids even if you don’t include some of the non native ones and you do 300 or 400 to the power of 20, that’s more molecules than there are in the entire universe. That’s an incredibly complex system, and AI just isn’t there yet in terms of being able to model it from, ground zero. The way that AI really works is if you can reduce the problem to a bite sized chunk that it can cope with with experimental data. And so our advantage is that we have a really good machine learning AI platform applied to vast databases generated over several decades of existing proteins and knowing what happens when you make modifications in specific places. Because the problem with iterative AI on its own is it hallucinates.

If it if AI is drawing conclusions based on previous AI conclusions, it goes off at a tangent that can often be completely wrong. And so we actually find real utility in having these large databases and the interaction of artificial intelligence and machine learning with real experimental data.

Chad Wytravsky, Tools and DX Team, TD Cowan: And it’s not a perfect analogy, but there’s been a number of companies in the DNA synthesis space pursuing it pursuing an enzymatic approach, and it has sort of similar advantages, like being a clean solution, things like that. But what’s different about siRNA doing it through an enzymatic approach? And how does, like, pricing and lab space versus traditional steel infrastructure play along in making the value proposition worth it in siRNA manufacturing?

Steven Dilley, CEO, Codexis: So we built an enzyme that is exquisitely good for making DNA oligos, which we licensed to MAI that has now been acquired by our friends at Maravai. And, you know, we looked at that space long and hard, and we really didn’t see a compelling market opportunity because of the quantities are so small. You know, you can think of you had to ask the question, can I when does it matter that I can make you an exquisitely accurate long DNA oligonucleotide? You know? And it might matter in full gene sort of synthesis and all the rest of it, but then you’re talking about solutions that require vanishingly small quantities.

Otherwise, it’s a pretty much it’s a commoditized market and it’s a, you know, a race to the bottom competing against, you know, bigger technologies, in terms of DNA. With RNA, it’s completely different in that we have a an end market where people need large quantities. They need many hundreds of kilos of sRNA, which they can’t make by other means. And that’s the that’s the real difference here. And, you know, Agilent, who probably the biggest kahuna in the current siRNA production space, told the world they’d spent $728,000,000 in building a plant in Colorado using conventional phosphoramidite chemistry.

That will have an output potentially of around, you know, a metric ton annually. Now we see the demand at the end of this decade moving into the early 2030s being somewhere around 30 metric tons. That is an enormous capital investment even if you get away from the run rate and the solvent use and all the stuff I talked about earlier. So that’s why we say, you know, it could happen, but it’s not likely. Right?

If there’s a better solution where you can use conventional infrastructure, you can just have, you know, storage tanks and columns. You don’t need all that stuff around, you know, handling explosive solvents and, you know, explosion proof walls. You don’t need any of that because our system is based in water. And we have a fun thing, which is we call it the Eco Innovation Lab in, our facility in Redwood City, and we take people on tours of it. And these are people that are used to looking at pack chemistry.

They’re used to looking at siRNA production. And we take them past it. And I say, is that it? And we say, yep. That’s it.

Because it is so damn simple. The enzymes do all the work. Right? We they don’t have all those big stainless steel tanks.

Chad Wytravsky, Tools and DX Team, TD Cowan: And just diving deeper into that eco innovation lab, like, what have you proven so far? What’s the next catalyst? Is it pilot scale with GOP material? And when can we expect to see that? And then what’s kind of the roadmap to scaling all the way up to, like, GMP?

Steven Dilley, CEO, Codexis: Right. So what we’re saying this year, and we we use the the tides meetings as sort of our next sort of technical rollout. Those they they happen in in The US in sort of May and then Europe in sort of late fall, sort of October, November time, is first of all, we’re going to be showing process parameters as good or better than phosphoramide chemistry. So we’re saying, even though the competitive technology has been out there in terms of purity and yield and all the rest of it for forty years, we’re going to be better. We’re going to be better now after two years of trajectory versus forty years.

That’s that’s really, really important. What we’ve also been showing is increasingly tricky sequences that we can actually make using our platform. And remember, our platform is a tethered enzyme that is the polymerase plus a blocking, deblocking system where you rotate iteratively past it, and it’s the same enzyme that adds all the different nucleotide building blocks sequentially. So it’s the sequence you introduce them. That’s why we call it the universal enzyme.

And what we will be showing later this year is inclusion of additional modified nucleotides. So we really can show it’s not just that we can address the current things that are in the market with this platform, we can also address the next wave of modalities. So this is something people can get excited about. We’ve also got, believe it or not, tomorrow in Geneva at a thing called the, RNA Leaders Conference, we’re doing the next rollout of our ligase platform, which is coupled to machine learning as you you were asking about earlier, where we’ve built a capability where we can look at an RNA molecule and we can actually, using machine learning, artificial intelligence, and our libraries, work out where the optimal place in that molecule is to make what we call the nick, which is where you separate the components and to pull a an existing ligase out of our library that will be optimized to doing that reaction. And this changes the cycle time from someone coming to us and saying, can you build us a ligase for our reaction that’s going off and scratching our heads and taking, you know, a few weeks or months to do it to say, you know, do you want it Tuesday?

Yeah. Here it is. We can we can do this. And often, you know, that we could do the modeling in within the same working day. It’s it’s very cool stuff, and it’s really, you know, addressing one of the customer requirements, which is responsiveness and cycle time.

Chad Wytravsky, Tools and DX Team, TD Cowan: And then just from an operational standpoint, like, you are positioned to reach, you know, cash flow breakeven positivity with cash on hand. Does that include any type of corporate development, M and A strategy? Or is this just all hands on deck on developing and commercializing eco synthesis?

Steven Dilley, CEO, Codexis: This is all hands on deck on several things. So we’ve said we get to cash flow positive within our current means at the end of twenty twenty six. That’s next year. We do that by continuing to grow the pharma manufacturing heritage business, which is spinning off cash into the broader organization. Plus, we have to convert some of our current discussions into contracts around the ligase and that gets us to lift off.

And then the longer term, the real sort of hockey stick in terms of our revenue potential happens around the full eco platform when we move from stitching together people’s fragments they’ve made elsewhere to actually making the entire molecule. And that has many different potential revenue streams from reagents and enzymes and raw material supplies to the big players that want to do it themselves all the way to supplying directly siRNA from Made at Codexis to the customer.

Chad Wytravsky, Tools and DX Team, TD Cowan: And then just on the past quarter, you had, you know, the remainder of a retainer with Pfizer that was supposed to be delivered. And you did receive that, but it was actually converted in kind of an upfront of a new deal. So could you just give kind of the details to that deal? And is that type of deal something we can expect to see going forward? Or this is this a one off that was opportunistic?

Steven Dilley, CEO, Codexis: The the the specific around Pfizer was one off and opportunistic. And, you know, we were super pleased with that because it converted something that was a, you know, an accounting sort of glitch into, into actually a future source of revenue. And this was the ability to, yeah, deepen the relationship there. There will be milestones and downstream payments associated with that. It was we saw that as a significant win because it was something that was going to finish that now has become a revenue stream in the future.

We are looking at being as creative as we can about deriving value from our platform. So while I’ve talked a lot about our focus in oligonucleotide manufacture and evolving enzymes so that we’re perfectly willing to build enzymes for other people to to enhance their business. I mean, I’d point towards the transposase we made for SQL. You know, we’re not in next generation sequencing and we’re not into building kits, but they could tell they could express to us what they needed. It looked like a tractable enzyme engineering challenge, so we did.

And, you know, now we will be deriving downstream economics from that even though it’s not part of our focus business. But what we have to be super careful of is we get paid along the way.

Chad Wytravsky, Tools and DX Team, TD Cowan: And obviously, EcoSynthesis is kind of, you know, the main focus here and what’s really exciting, but you just referenced, like, an AGBT update. There’s some other stuff going on. Just in the next twelve months, what are the catalyst to really focus on, and are there things like that that present some upside?

Steven Dilley, CEO, Codexis: So really, the things that that I’m looking for is the, the continued growth in the overall revenue. I start at a very macro level in terms of how I think about the company that the revenues are going up significantly faster than the expenses are. And that we have a line of sight into new markets. Now some of the things that we’re trying to do this year is converting even in the pharma manufacturing some of the mid sized pharmaceutical companies into long term contracts as people that don’t tend to have their own in house biocatalysis capability, converting those seven, you know, customers that we’ve got hovering into real contracts around the eco platform, being able to announce development deals there, the stuff that I talked about at at at the different scientific meetings. So we’ve we’ve got quite a lot on this year.

Chad Wytravsky, Tools and DX Team, TD Cowan: And for someone looking to, you know, invest in Codexis and gain conviction around SRNA, just really expanding into these large indications, What are some of those specific indications that you look at, maybe even specific programs or updates to kind of look ahead the next twelve, twenty four months and gain that conviction around the space?

Steven Dilley, CEO, Codexis: Right. So let’s go right back to what does SRNA actually do. Once it gets delivered to the target cell, it will knock down a specific protein in that cell for six months with a single dose. That’s what makes it a beautiful modality if you can get it to the target cell. The building of the siRNA itself, that’s that’s one problem.

Just as big a problem is the targeting, and there is a lot of noise around that right now because getting siRNA into the central nervous system, skeletal muscle, cardiac muscle, lung, and other places opens up a whole vista of opportunity. Alnylam was talking about this at their R and D Day last week. Super excited. They intend to be in every major tissue by the end of the decade. Novo just signed a $350,000,000 deal looking at targeting moieties.

This is the coming wave. One of the beautiful things for for us is we have an ability to attach those targeting moieties in a very elegant way to siRNA molecules, but this opens up the world of, you know, Alzheimer’s, cardiovascular disease, diabetes, all these places where you can actually move away from the liver into systemic diseases. And so we actually see a lot of validation and reinforcement that, you know, siRNA is gonna be the modality of choice for managing a lot of chronic diseases because you only had to give it twice a year. And that is really compelling as, you know, I’m speaking now as a physician. When you’re trying to manage patient compliance and you can bring them into the office, dose them twice a year, forget about it.

They don’t have to worry about their lipids or their hypertension or whatever. That’s groundbreaking. That’s why this is gonna be a super important class of medicines if the supply is available and that’s the thing that we’re working on.

Chad Wytravsky, Tools and DX Team, TD Cowan: Well, that’s awesome. Yeah, we’re at time. So thank you for the time, Steven. It’s exciting space and looking forward to all these updates the next coming year.

Steven Dilley, CEO, Codexis: Thanks, Jen. Thanks very much.

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