Q2 2021 Codexis Inc Earnings Call
[music].
Greetings and welcome to Codexis Q2, 2021 earnings conference call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
And now I'll turn the call over to Stephanie marks 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, Inc. 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.
To the extent that statements made by management are not descriptions of historical facts regarding codexis. They are forward looking statements, reflecting beliefs and expectations of management as of the statements date August 6.2021.
You should not place undue reliance on the forward looking statements because they involve known and unknown risks uncertainties and other factors that are in some cases beyond the company's control and could materially affect actual results. In particular, there is significant uncertainty about the duration and impact of COVID-19 pandemic.
This means that results could change at any time in the currently contemplated impact of the virus on the company's operations financial results and outlook is the best estimate based on available information.
For details about these risks please see the quarterly news release that accompanies this call as well as the company's SEC filings, including Codexis Annual report on form 10-K filed with the SEC on March for 'twenty, 'twenty, 1 and Codexis, Inc. Quarterly report on form 10-Q filed with the SEC on May 7.2.
'twenty, 1 as well as Codexis as other periodic reports filed with the SEC codec.
Codexis expressly disclaims any intent or obligation to update forward looking statements, except as required by law and now I'll turn the call over to John.
Thank you Stephanie.
Good afternoon, everyone I'm very pleased to report exceptionally strong second quarter 2021 results for Codexis.
Total revenue for the quarter grew by an impressive 70% year over year.
<unk> revenue more than tripled over a year ago and product gross margin reached a new high of 71%.
We are demonstrating our ability to capitalize on codexis is rapidly accelerating business model translating years of groundwork and R&D efforts into impressive top line growth.
We had 22 customers who contributed over $100000 in revenue in the quarter 9 of whom contributed over $1 million in revenue.
We are firing on all cylinders and our sustainable manufacturing business.
In June we received a significant new commercial scale quantity order from an unnamed global pharmaceutical company for 1 of Codexis is proprietary enzymes. This.
Enzyme is designed for use in the manufacturing process of a therapeutic drug that is in late stage clinical trials with an accelerated development and regulatory process.
This business will deliver the largest annual sales for our product in the company's history.
We raised our guidance in June upon receipt of the $13.9 million order today.
Today, we are raising our revenue guidance again, as we have solidified that orders deliveries scheduled to be executed within 2021.
And have solid indications from the customer that they have significant additional 2021 product needs as well.
Ross will provide more details later in the call.
On top of that exceptional strength in pharma manufacturing, we recently executed a commercialization agreement in the food sector working with our innovative partner Cal sick to help them introduce new hop extracts to beverage applications.
We also had very good sales to Tate and Lyle for their commercial stevia and alula sweeteners and we have a solid outlook for revenues related to both of these products over the balance of the year.
We're building strong momentum in the food and nutrition vertical.
In the life science tools market, our newly launched engineered enzymes continued to gain traction with market interest in our partnered programs continued to drive significant 2021 R&D revenue growth.
And in our biotherapeutics business, our partner Takeda exercised its option to expand our collaboration to add a fourth program to the pipeline.
In addition to all of our customer driven programs, we are applying our R&D resources to an increasing number of self funded programs across all lines of the business.
We are advancing programs further into development as part of our strategy to capture even greater value in the future.
Every year at the end of June we provided an update to our pipeline of programs and products across the company breaking them down in a number of ways to provide insight on how we're expanding our future future growth opportunities today.
Today, we published its annual pipeline snapshot as of June 32021, which you can see here and find on our IR website.
Let me highlight a few metrics that I think are particularly salient.
First our total number of commercial products and pipeline programs has grown by 20% since last year, increasing to 78 from 65.
We have dramatically increased our number of shots on goal.
We now sell enzymes to sustainably manufacturer 17 commercial products up more than 50% from 11, just 2 years ago.
The ultimate goal of our pipeline is to drive programs to commercial recurring revenue stage. So it's great to see momentum building for us here clear.
Clearly this is connected to the dramatic product revenue growth, we're delivering in 2021 versus the past.
Pharma manufacturing continues to be the largest application area in our pipeline, but we are also putting stakes in the ground more broadly.
Note, the 50% growth in performance enzyme programs outside pharma manufacturing in the last year led by the life science tool sector, but also a nice growth in the food and other industrial markets as well.
Our biotherapeutics pipeline continues to expand as well highlighted by our investments in 3 new self funded programs over the last year and by Takeda is exercise of its option to license a fourth program from Codexis during the quarter.
Our business model is consistently delivering acceleration of assets in our pipeline as you can see in the 4 year trends shown in slide 5.
More than doubling over the for years in almost all categories.
An explosion of programs and our new high growth verticals of life science tools and novel Biotherapeutics.
We look forward to continuing to these trends going forward.
Adding to our shots on goal advancing those towards commercial increasing the average program speed to market and peak revenue potential all in tandem.
Let's dive more deeply into our recent progress across our 3 businesses starting with sustainable manufacturing.
Sustainable manufacturing is where we built codexis enzyme engineering leadership over the past 2 decades and this market currently represents the large majority of the company's revenues.
But ex this is novel high performance enzymes continue to enable our customers to dramatically reduce the cost and increase sustainability sustainability of manufacturing there in products.
Compared to using traditional non enzymatic chemistry, which is capital intensive and inefficient our engineered enzymes decreased capital needs meaningfully while also enabling higher yields reduced energy usage and lower waste generation.
And our <unk> platform is constantly accelerating the speed of our ability to discover and designing 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.
We have partnered with 21 of the 25 largest pharmaceutical companies in the world to help them adopt and install novel Codexis enzymes for manufacturing their API.
The $13.9 million of order that we announced in June from an undisclosed global pharmaceutical company is a historic 1 for Codexis and it came to fruition with unprecedented speed.
In a matter of months, we scaled up production of the enzyme to manufacture hundreds of kilograms and now we are fully.
Ramped up and in position to produce at the metric ton scale to fulfill this order during the second half of 2021.
And as I mentioned earlier, we already have strong indications from this customer that they will need additional supply in 2021 on top of the June order and we've already established sufficient supply chain capacity to be able to fulfill the incremental demand.
Another aspect of our sustainable manufacturing business is our ability to license our Cody bulb for protein engineering platform technology to partners.
In the second quarter, we earned the largest backend licensing milestone payment from our partner Glaxosmithkline.
It was related to the advancement of the commercialization of an enzyme designed by GSK using Cody Bolivar that is engineered to improve a key step in the manual manufacturing process for an undisclosed patented on the market drug.
Cody valve or backend license milestone payments such as this 1 are 100% profit margin highlighting another important and emerging facet of our business model.
We also announced the completion of a could evolve our platform license technology transfer to Novartis.
This was our third license and collaboration to enable a customer to bring Coty Barbara technology in house, but the first 1 where we had to implement a considerable portion of the tech transfer virtually.
I'm incredibly proud of our team's efforts to operate in lock step with Novartis to ensure a smooth tech transfer.
In addition to pharma manufacturing in the past few years, we've been expanding to other industries designing enzymes for sustainably manufacturing a range of applications, including food and beverage ingredients recycling consumer care and animal feed et cetera.
These products have shorter development timelines and lower regulatory hurdles enabler and enabling our enzymes to reach the market more quickly.
Recently, we announced the expansion of our research collaboration with Calcic, a leading producer of food and beverage industry products.
Through the partnership we have entered into an exclusive supply agreement for a novel enzyme to produce Cal sex newest natural hop extract.
This enzyme was engineered using our <unk> technology to improve functionality stability and efficient efficiency, enabling <unk> to deliver consistent top characteristics and taste. While also further inc. Codexis as mission to support the development of sustainable and clean label.
<unk>.
We're really excited about our growing opportunities in the food and nutrition vertical in addition to the new the new development of a couch that we also had strong quarterly product sales from Tate and Lyle, they're growing the downstream adoption and sales of their newest sweeteners that use our enzymes for the manufacturing of tasty M stevia.
And Dole Cheol Prima allele low sweeteners.
This is a very encouraging progress for these enzymes and we believe they could grow to be 1 of the largest enzyme products overtime.
With our deep and growing pipeline of other late stage development industrial enzyme candidates. We expect this shift towards high margin faster to market products to continue to accelerate codexis as growth in sustainable manufacturing.
Another area of expansion for Codexis is the life science tools market, which is a significant growth opportunity for the company.
Codexis engineered enzymes can enable improvements in next generation sequencing and molecular diagnostics biosensor applications, DNA and RNA synthesis and more this market is very attractive given its high growth rapid commercialization cycles and above average margin prospects.
The market also affords us the opportunity to develop products that can be marketed to multiple customers. In addition to the highly engineered enzymes, we customized for partners.
In the past year, we've developed 3 new life science tools enzymes for broad based customer marketing.
Kodak's high cap RNA polymerase, Kodak's, Hi, Fi DNA polymerase and codex reverse transcriptase.
Our RNA and DNA preliminaries is have led the way as we rapidly advance these enzymes towards commercialization last year and began marketing at the end of 2020.
In the first half of 'twenty, 1.2021 we've already been demonstrating success, we engineered codex high cap RNA polymerase to provide dramatically higher capex efficiency, enabling customers to significantly reduce the amount of capping reagent that as critical to stabilizing the product for fall.
Masuda call us.
In addition, our proprietary enzyme decreases the production of unwanted double stranded impurities, which increases yield and simplifies downstream purification of the messenger RNA product.
We made our first commercial sales of codecs high cap RNA polymerase to several customers earliest earlier this year and now this product is in various stages of customer trials with multiple other messenger RNA manufacturers.
Although the adoption cycle is a bit longer than we had hoped. This is an excellent start and we are confident that we're well positioned for potential installations in a range of processes for development stage mrna based vaccines and therapeutic candidates, we expect product sales to begin to grow more meaningfully in the <unk>.
Coming quarters.
We're also making solid progress with the launch of codecs Hifi DNA polymerase.
Our analysis demonstrates that Codexis, Hi, Fi DNA polymerase enables the highest fidelity nextgen sequencing results of all the competitive DNA polymerase is tested.
The enzyme is being sampled by dozens of high profile customers for potential use in their current and future N. G. S kits and progress in their trials is encouraging.
Codex reverse transcriptase has been developed to further improve performance versus incumbent enzymes and both diagnostic and sequencing applications.
It is currently being tested by our early access users and we are preparing for a broader launch later this year.
In addition to these broadly marketed products. We are also developing customer partnered enzyme products for life science tools applications.
In the second quarter, we earned an option milestone on a new enzyme with an unnamed life science tools leader.
And have multiple revenue generating partnered programs advancing in parallel as well.
As an update on our groundbreaking collaboration with molecular assemblies for the commercialization of enzymatic DNA synthesis, we continued to make strong technical progress on this project.
This disruptive approach to synthesizing DNA has the potential to significantly impact a wide range of high value markets from drug discovery and manufacturing through synthetic biology and longer term to compete with silicon for data storage.
Leveraging the power of <unk> to deliver dramatic performance improvements, we are engineering enzymes that should make molecular assemblies process, a commercially viable cost effective and differentiated solution to manufacturing long chain DNA.
We remain on track to complete the enzyme engineering work for this program in the second half of 2021.
With an increasing number of differentiated products and strong partnerships in the life science tools market Codexis continues to build momentum momentum to capitalize on this high growth opportunity.
And wrapping up the business review, we remain highly enthusiastic about the value creating potential for codexis in the discovery and development of novel Biotherapeutics.
Here, we are rapidly building and advancing a high via value pipeline of oral biologics and gene therapy candidates discovered using our Cody ball for platform.
Just a few years ago, we had only 2 very early stage programs in our pipeline fast forward to today and we have over a dozen programs in the pipeline, including 1 in clinical stage and another in I N D enablement development.
We have an impressive multi program partnership with Takeda pharmaceuticals focused on improving gene therapy candidates for rare diseases.
Here, we are leveraging Coty bolivar to engineer train trans genes with improved attributes such as enhanced expression improved half life, greater stability and better uptake and difficult to access cells.
During the second quarter Takeda exercised its option to expand our strategic collaboration for the research and development of an additional gene therapy for a lysosomal storage disorder, bringing the total number of programs under the agreement to for we are extremely proud of the success, we have generated in gene therapy.
<unk> for the potential treatment of fabry.
Disease, Pompe disease, and an undisclosed blood factor deficiency. After just 1 year in collaboration with Takeda, especially.
Especially given that we are just a year into the partnership this expansion to for is a gratifying indication of the caters enthusiasm for our technology and its ability to discover differentiated gene therapies for patients with rare genetic diseases.
Modifying trans genes using Cody Bolivar to enable a gene therapies expression of the better performing enzyme is a novel and differentiated approach to design improved next generation gene therapy candidates.
Accordingly in addition to the partnered programs with Takeda, we have embarked on self funded discovery programs targeting improved trans genes for other rare disorders.
Leveraging could evolve or to discover novel oral biologics that are more safe stable and efficacious for gastrointestinal indications is another high value growth strategy for Codexis, we have for oral biologics in partnership with Nestle Health Science and 3 early stage self funded program.
Yes.
3 of the partnered programs with Nestle are co owned between the parties. The most advanced of those being C. D. Ex 7108, which is targeting an undisclosed Gi disorder.
Our IND, enabling activities for <unk> 7108, including GMP manufacturing and preclinical toxicology have now been successfully completed in addition C. D. Ex 7108 has been filed for approvals with the ex United States regulatory authorities for its.
First clinical trial, which we expect to initiate around the turn of the year.
Now, let me 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 second quarter 2021 results total revenues for the second quarter of 2021 for $25.5 million up 70% compared to the prior year period.
On a segment basis $21.6 million in revenue was from our performance enzymes segment and.
$3.9 million in revenue from our novel Biotherapeutics segment.
This compares with $7.5 million and $7.5 million for performance enzymes novel Bioterror Therapeutics, respectively for the prior year period.
Product revenue for the second quarter of 2021 was $14.7 million.
The high end of our expected range for the quarter.
227% compared to $4.5 million for the prior year period.
The major contributors were increased sales in the sustainable manufacturing segment and partners, including Talc Allergan taking line.
Phil.
Contribution from generic manufacturers Huron and significant product revenues from our undisclosed global pharmaceutical partner.
R&D revenues were $10.7 million in Q2 up slightly from $10.5 million last year.
Gross margin on product revenue for the second quarter of 2021 also came in above the high end of our expected range at 71% compared with 62% in the second quarter of 2020.
The increase was due to a favorable shift in product mix as higher margin products drove the growth drove the growth in the quarter.
And our sales of Citic, lifting which has a lower margin product were flat.
Turning to operating expenses, our R&D expenses for the second quarter of 2021 for $12.8 million up from $10.110 $9 million in the prior year period.
The R&D expense increases were primarily due to increased compensation, resulting from higher headcount higher expense from outside services and higher costs for lab supplies and depreciation.
These items were partially offset by lower biotherapeutics preclinical development and regulatory expenses.
SG&A expenses in Q2 of 2021 for $12.8 million compared to $8.5 million for the prior year period.
The increase in SG&A expenses was primarily due to higher payroll expenses higher share based compensation and higher legal fees, partially offset by lower allocable expenses.
Net loss for the second quarter of 2021 was $4.3 million or <unk> <unk> per share compared with a net loss of $6.3 million for 11 per share for the second quarter of 2020.
Turning to the balance sheet cash and cash equivalents as of June 32021 for $129 million, which puts us in a strong position as we look to seize the companys growth opportunities.
Also I would note that to date, we have not drawn any funds from our $50 million ATM equity facility that we put in place in early may of this year.
As John described earlier, we are increasing our 2021financial guidance issued on June 17.2021.
The increase is primarily the result of our expectation for more business from the large unidentified global pharmaceutical pharmaceutical customer that we referenced previously for an enzyme that he used to manufacture of therapeutic drug.
However, I should also point out debt sales and many other products in our portfolio are also trending very well.
We now expect full year 2021 total revenues to be in a range of 98 million to $103 million up from prior guidance of 89 million to $92 million driven by a decrease in our product sales forecast.
We expect full year 2021 product revenues to be in a range of 59 million to $63 million up from our prior guidance of a range of 45 million to $48 million.
We expect our full year gross margin on product revenue to be in a range of $65 to 68% up from our prior guidance of a range of 60% to 64%.
The increase is driven by a shift in our sales mix to higher margin products for the full year.
However, we do expect the product gross margin to decline from Q2's level. During the second half of 2021 as revenue from Citigroup and will increase as a percentage of the sales mix during the back half.
For R&D revenue, we are updating our outlook for the remainder of 2021.
We now forecast for 2021, R&D revenue will be lower than we anticipated at the beginning of the year.
Change is partially due to the prioritization of the strategic build out of our self funded projects and is also due to some new partnering opportunities likely occurring later than we originally expected.
Also I will note that our underlying R&D business is strong.
We expect to deliver a similar level of total R&D revenue this year as last year, despite facing combined headwinds of over $10 million from the initial 3 Takeda projects and the Novartis coda bomber Tech transfer.
Our outlook for R&D and SG&A expenses for the full year 2021 has not changed materially since our call last quarter we.
We expect R&D and SG&A expenses combined should be in a range of 27 million for $28 million in Q3 <unk>.
And in a range of 32 million to $34 million in Q4.
As we have noted before our investments in R&D and in our SG&A infrastructure are important drivers of our future growth.
In summary, we are beginning to reap the benefits of the foundations, we have established at each of our business segments, and we are well positioned for excellent growth in total revenues strong growth in product revenues and expansion of product gross margin in 2021.
With that I'll turn the call back to John.
Thanks, Ross, let me close out our prepared remarks in the context of our goals for the year.
As both Ross and I have highlighted Codexis has made excellent progress throughout the second quarter of 2021.
In particular, we have executed on standout opportunities within the sustainable manufacturing sector.
Resulting in significantly increased product revenues and a defining period of growth for this business line.
Add to that the continued progress within our proprietary life science tools portfolio and the advancement of our second biotherapeutic products toward clinical trials, we are making great strides towards achieving the goals outlined on this slide.
We are deeply energized by the endless possibilities that line before Codexis and we are proud of our role in harnessing the power of enzymes and synthetic biology to improve the health of people and the planet.
Now we'd be happy to take your questions operator.
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1 moment, please while we poll for questions.
The first question today is from Brandon <unk> of Jefferies. Please proceed with your question.
Hey, Thanks, good afternoon.
John triggered the pipeline update clearly great progress.
Across a number of funds can you just talk about your.
The other company through the rest of this year and likely into the beginning of next year.
Okay, and then related to the the large 14 million dollar undisclosed farm a quarter.
Kind of alluded to having some visit villages just went around she customer's needs. In 22, you just touch on what you expect there should be for the model. This.
This disorder to be recurring maybe steps up even next year.
If you could share with us right now.
[noise] [noise], Yeah brand that's for yeah.
Oh go ahead for us.
Oh you're in.
Okay.
I try to stay and stay out of debt Grand and I think in terms of thinking about 2022, our practice really is to update guidance.
Early in each calendar year. After we report our queue for results as you know.
But stepping back though are based business right now it is firing on all cylinders at the same time, we are working very hard and were committing a lot of resources to fulfill this large new piece of business that we.
First described back in June.
But until this product gets through the FDA process, it's out into the market were really.
Facing our guidance and our outlook on our customers and enthusiasm and there are indications of demand and this suggests to us that.
22, and beyond could be similar to what we're seeing now and certainly our customers confidence in the fact that we are talking about your supply chain of 2022 and beyond.
Certainly would suggest confidence in your good demand.
Wait for the company this time with a new partner Cal sector. It was a really cool company, a very innovative company and they're working in the area of amongst others, but the area that we've been working with them in is an improving bringing forward improve hop derivatives and extracts.
And we've been working on the research chapter.
That program for a while it's 1 of our you know or you know 1 of the programs that showed up without a lot of detail in our pipeline snapshot now for the last year or 2 and if this if this program continues to commercialize as they and we expect it should be a nice sized product I would say in the low.
To mid single million dollars of enzyme sales per year as it as it penetrates the market could be more if if their their new hop extract is more successful than they expect Ah in their markets.
The next few years, but that's probably a good feel nice sized product a little larger than a typical pharmaceutical API projects a low to mid single.
Mid single digit million dollars at peak.
That's great. Thank you.
You're welcome thank you.
Okay.
The next question is from Steven Mah of Piper Sandler. Please proceed with your question.
Great Thanks, and congrats on the quarter guys.
Hey, Thanks, Steve.
Hum.
Maybe let's just step back a little bit just more of a kind of a high level question for for you. John So given recent events you know in this space and given your broad pipeline and lots of shots on goals.
How do you de risk.
Developing products that are going to meet your customer specifications can you can you just give us a sense on how you guys manage that risk.
Yeah, you know it really comes down to I'd say, Steve early definition of what the market needs the enzymes performance attributes to be.
And the more we get that right are the more we we we point Cody volvos enzyme engineering.
At the right targets to improve upon how much thermal stability reactivity. How important is it are there. Other critical features so the more we get that early design of the enzymes performance better upfront right upfront.
The more we de risk and we can take calculated moves we can bring the enzyme you know 75% of way along get it out in the market and we can together with our partner if it's a self funded.
Hardly marketed enzyme like we're doing in the life science tools area. We can go out and we can bring a largely finished enzyme into the marketplace and calibrate from real world customer feedback and finished the R&D, but we can we can you know very quickly these days improved enzyme performance.
Given how increasingly efficient Cody Bolivar is so that that's kind of the way. We go about it we will do our best to design upfront, we bring the enzyme engineering, along a very substantial amount of the way sometimes that sufficient in the market rapidly up takes it sometimes we need to learn from.
Customer trialing.
In the downstream performance that the customers are having to come back and just make some modifications to get it just right.
And that's that's the way we go about Derisking the disc.
Discovery and development in part for for new enzymes that we're bringing for it.
Okay got it yeah. That's helpful color, Okay. So yeah with regard.
So kind of these trials studies or pilot studies, you know do you do those typically for all for all your partnered programs or is it just for.
A portion of them.
Yep partnered programs, we can we can do a lot quicker right. It's just wanted to 1.
Where you know we just have 1 customer like are we just spoke about Cal Sac I mean, there we've been making improvements to the enzyme we've been shooting samples across the Cal sick and very real time fashion and they can do their you know their their assessment of of taste and profile front from the the hops that use the enzymes. So.
We can do that very real time very quickly we can almost do it round by round with accustom partnership.
As we bring forward our own enzymes into wider markets, you know enzymes like our life science tools enzymes, where there are many different potential customers. It can take a little more effort and and.
And we're experiencing that to some extent with the.
The DNA polymerase for next Gen sequencing for example, but that that iterative process really helps to refine the product.
For more broader uptake and and that's that's that's how it works.
Okay got it yeah. That's helpful. Yeah. So yeah, okay. So it looks like a it's an iterative process for the partners ample time to course, correct. The program, Okay, Yeah, yeah, and not to not too time consuming and not too costly to.
To make improvements.
Improvements are based on market feedback it doesn't take a lot of time and cost and effort.
Okay got it and then yeah, maybe moving on to the large API enzyme order we've been talking about how how do you derisk. The the manufacturing and I know you guys are for this 1 your outsourcing to partners can you just give us a sense on.
Find commercial capability of the company that we continue to make more efficient we continue to leverage into tomorrow's new products. So it's really a key part of our commercialization success and capabilities.
Okay, great Yeah that that's that's fantastic alright mate, maybe moving on to to molecular assemblies. You you mentioned that the enzyme engineering leboyer would mostly done by the back half of 2021 do you have any sense of the timing of it presented a launch of and dramatic synthesis product.
Uhm molecular assemblies unlucky at a synthesis yeah, yeah, Yeah, I mean, it's great question to ask them directly in as as our investors know I serve on the board of molecular Assembly since we made the investment in in there in equity in that company. So.
I mean, we're very very intimate with a molecular assemblies, we've made tremendous progress to design the enzymes that enable a low cost competitive manufacturing process you using our enzymes, we have a little more work to do because it's a pretty competitive market. So that's why why we continue to project it'll take.
Sent to the second half of the year to get the enzyme to be design, just just right for enabling this breakthrough in genetic D. N a synthesis our ability to scale that enzyme to the volume set molecular assemblies and market will need is is is being done in parallel so we're quite confident and that will be pretty <unk>.
Time efficient as well that will take us into maybe the middle of next year. So in parallel the real activity is the build out by molecular assemblies of a competitive manufacturing platform to manufacture you know long chain D N a to be able to.
Stitched together all the elegant nucleotide and nucleotide 2 designed you know to the specification of downstream custom customers and they're making great progress I I, probably can't speak too much as to how how they're doing and how well they're doing it but we're very impressed they have made significant invest.
When we put the guidance out the <unk> the updated guidance out in on June 17th at that point, we weren't 100 per cent sure of the timing of that 13.9 million dollar order. So we thought maybe some of that could've spread into 2022, we now know that all of that is in 2021.
And so that's a piece of our upgrade today also confidence that additional demand is is going to come to could access for for this particular customer for their neat and also executable and 2021. So we shared in the prepared remarks that we were ready you know.
<unk> assured ourselves with the capacity to serve the additional demand. So those are the 2 pieces that that beat us to the increase guidance today vs. The already increased guidance from June.
Okay that that's really helpful. Thank you in any kind of leads into my second question, which is.
Given the strength that you're seeing particularly on the farm aside what kind of visibility do you have into some of these programs. I mean, obviously you know when there's a phase 2 or a free 3 trial being conducted but are your customers coming to you, saying, we you know the phase free trial is ends on this date or around the state or Purdue for date.
As expected here and we think we're going to need this amount of product in fiscal 22, or physical twenty-three or what kind of visibility do have with those customers.
Yeah, we we actually get quite good visibility as as late clinical trials move towards their completion and the customer assuming their confident of being able to file in large starts to work with us to do what is known as regular registration batches.
So they they need to go through a process to convince the F D. A and parallel to the goodwill trial results they need to be able to come in to the F. D. A that they can produce to a tight quality specification range and they do that by doing what they call a series of actually a parallel set of.
Of qualification registration batches and these these require <unk> could ex <unk> to be able to make those registration batches. So the planning Uhm is is is often quite clear you know it. These these kinds of discussions are always guarded by.
And uncertain trial resolved and obviously an uncertain F. D. A response to the trial data, but the the need to line up supply chain prelaunch for these registration batches and then to be able to have material ready for launch is is well planned and we get good significant <unk>.
Ability line when our programs when our customers programs reached this kind of stage.
Okay. That's helpful as well. Thank you and then maybe 1 last 1 then we'll hop back in the queue regarding I guess kind of following on that you're pipeline update you know thank you for providing that you've got 22 customer parter partnered products that are in phase 2 are free space 3.
Or they're incremental programs that are through phase 3 and are awaiting Purdue for dates in and if so you know are those later this year or those next year any color is to maybe the the number that we should be anticipating over the next year acknowledging you know that you you don't know, what's gonna happen with those actual meetings, but.
But if you follow normal you know analytics you you should be getting X number of small molecule an X number of large molecule approvals just any color on the Purdue for date pipeline that'd be helpful. Thank you.
Yeah him at that's a hard 1 for us to answer and we typically haven't given that kind of sharpness uhm across these late stage clinical programs I will just highlight that we've had a really nice momentum of of historical late stage clinical programs moving.
To to fully commercially approved drugs and leading to announceable multiyear supply contracts from Codexis and so you know I can reference allergy <unk> and cure in and you're that as some of the more recent you know if <unk>.
Programs that moved from like clinical into fully commercial and obviously, we're right on that edge with this large on name pharmaceutical customer as well. So you you should just expect to see more of these events unfold and the timing of those are always very hard for us to to to.
Be able to have strong visibility into but in from a trend perspective perspective and momentum. You know. This is you know we're really starting to build a head of steam from that now many years building late stage clinical installations, and and having them probabilistic lean <unk> increasingly move towards.
Commercial and really it's you know it's great to see all of that translate into such a step up in our product revenues in 2021 vs. The recent past so uhm. So hopefully that helped give you some for Ya.
Yeah, no that does thank you very much.
Thanks, Matt.
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Our next question is from Sean Lee of H C. Wainwright. Please proceed with your question.
Good afternoon, guys and thanks for taking my questions.
So I mean July 1st question is on the Lifesciences total affected what you mentioned it to be a high growth area for the company. So you in the prepared remarks, you mentioned, there's an increase in the customer pondered R&D programs could you provide a little more color on what these programs and Kale and how do you see these translate into longer term sustained revenue.
Yeah, great. Thanks for noting this I mean this has been a really great growth area for the company over I'd say the last 12.18 months, where in addition to actually alongside Codexis, bringing forward our own enzymes into sequencing markets and 2 nucleic acid synthesis aren't.
They sent this is now DNA synthesis, we've had a growing list of clients come to us with very specialized needs for engineered enzymes. These are more you know 1 to 1 opportunities. We engineering enzyme that's very specific to a client's unique application not widely applicable like it polymerase.
As for next Gen sequencing and this has been great. I mean are success stories and a growing visibility has brought a growing stream of partners to us and and that's dominated into a really nice attractive you know a million dollars classic quarter.
I'm kind of R&D revenue generation that we've had in the recent a few quarters with a set of of different partners and these programs are very unique and they're all different from each other but you know like we've you know <unk> suggested and you know the area of life Science tools generally has a little.
Larger peak revenue enzyme opportunity if we're successful and we we can go commercial with those so I mean, just you know compared to you know our traditional API manufacturing enzyme. So I'd say on average. These these could be mid single digit million dollar enzyme opportunities at peak some of them.
Hi, or some of them lower but that's a really nice number for us to be targeting especially when we get you know the partner to find the R&D early in these programs. So hopefully that gives you a nice feel really attractive setup partnered R&D programs in life science tools and growing.
Yes, thanks for that.
My second question is on the Biotherapeutics. So you mentioned the 71 O 8 is expected to enter phase 1 probably towards the end of the year.
In addition to that can we expect any release of clinical or preclinical resulting in your other programs before then.
Yeah, we we plan to share more data you know we have we have 12 programs and growing in the pipeline. We just added a fourth partnered program with Takeda and so the the that as a group. These are these are all really nicely advancing and it's gonna be great to get 7108.
Into the clinic as we finish this year around the turn of the share so that'll be our second clinical pro clinical drug that was discovered by could access and Codeevolver uhm. Other areas you know, they're advancing I'm not gonna foreshadow aware, but hang on will be providing some inside.
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