Q3 2023 Codexis Inc Earnings Call
Welcome to Codexis third quarter 2023 earnings conference call. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Note. This event is being recorded.
And now I'll turn the call over to Cary Mckim director of Investor Relations. Please go ahead.
You operator with me today are doctors, even though he is president and Chief Executive Officer, Kevin nor it Chief operating officer, and she really 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 2023 revenue product revenues and gross margin on product revenues.
As well as our strategies and prospects for revenue growth and successful execution of current and future programs and partnerships, including our it goes into the platform and pharmaceutical manufacturing business.
The extent that statements contained in this call are not descriptions of historical facts regarding codexis. They are forward looking statements, reflecting the beliefs and expectations of management as of the.
The statement date November 2nd 2023.
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 young codexis control and that could materially affect actual results.
Additional information about factors that could materially affect actual results can be found in codexis filings with the securities and Exchange Commission.
Codexis expressly disclaims any intent or obligation to update these forward looking statements, except as required by law.
And now I'll turn the call over to Steven.
Thank you Gary and thanks to everyone for joining.
We approached the end of 2023 and a position of strength.
We have a core pharmaceutical manufacturing business that generates cash.
Essentially game changing technology and he goes into this platform and importantly financial resources to execute on that plan.
Since announcing our enhanced strategic focus in July we've worked very hard to put ourselves in a position of financial security. So that we now have a call potential positive cash flow around the end of 2026 with current financial resources.
Let me briefly recap how we get.
It starts with a strong balance sheet.
As you'll recall over the last two years, we received a windfall of roughly $135 million in product revenue from the sale of C. D X 616 as far as that for the manufacturer X loves it.
This was the result of a quake and meticulous execution supply metric tons of product in support of the global pandemic.
P D X six once they still represent the largest single commercial.
State.
And the extraordinary revenues it generates and culture of a strong balance sheet, we have today with approximately $75 million in cash as of September 30.
On top of that strong foundation, we've taken steps to dramatically reduce our cash burn by over 50% year on yet.
We did this by focusing our efforts on programs that will generate the greatest value.
Streamlining our organization to the right side thrive go forward plan.
Consolidating operations to a single facility.
We've also been working hard to return our core pharmaceutical manufacturing business.
And we're very pleased with progress and excited for the future growth potential.
The cash generated by our pharma manufacturing business combined with reduced cash burn and a strong balance sheet creates the opportunity to invest in our technology.
Technology to bring it to commercialization within our existing resources.
The first element of vehicles.
The double stranded RNA ligase should start to generate revenue next year.
Those by anticipated early commercial life.
Slide 25, and the rollout or the complete eco synthesis platform in 2026.
Putting all these pieces together cash balance that you spun growth in pharmaceutical manufacturing and exciting commercial potential of <unk>.
Paul gives us a path to potential positive cash flow around the end of 2026.
She is within reach of our existing cash runway.
We are rapidly advancing this.
This technology many of our team members Jesper Ted from presenting on our technical progress at the Titan Europe.
Our confidence in the revenue potential of this opportunity is increasing as we continue our conversations with potential partners and experts.
As an adjunct to those conversations we're in the process of forming a strategic advisory board to make sure that we have the best possible understanding of the existing and future landscape.
The ecosystem. This platform is tailored to meet the real needs of the market.
Yeah.
We are truly delighted and honored to welcome John Merkin Norry, our inaugural extra I don't remember.
As founder and Chief Executive Officer about Mylan Pharmaceuticals, John pioneered the translation of our NII from a bar to chew into an entirely new market.
Alongside his participation in our strategic Advisory Board. We also look forward to hearing John effective on the RNA therapeutics landscape during our upcoming eco focus.
Okay O L event in December.
Before I hand, it over to Kevin to outline now let me briefly recap the reasons for our enthusiasm.
It's possible.
Moving to slide three.
Rugs developers are continuing towards Bob pipelines with innovative RNA therapeutics large disease indications like Alzheimer's and high potential.
And there is a projected ways of coming demand.
The current manufacturing standards.
Chemistry is dependable well established and will no doubt continue to play an important role in the landscape. However.
Commercial scale. It also requires enormous capital investment extensive lead time at high volumes with top toxic solvents.
Trial.
For reference.
A leading contract manufacturing organization recently invested $725 billion to build a close.
Our family chemistry, part, but the basket the manufacturer about a thousand kilos of R&D annually.
Our market research indicates that demand is expected to grow to approximately 30000 kilos annually by around the end of the decade.
It would take billions of dollars and many more of these plants to meet that capacity.
Most companies don't have the resources necessary to make that kind of manufacturing investment, particularly given the reality they go to capital markets.
That's where an elegant enzymatic solution like the ecosystem platform comes in.
Today, we're closing in on an aqueous space working process designed to complement what's kind of the chemistry.
The reduced level of capital investment required a large scale production.
As with any disruptive technology it would be naive to think that codexis will come off the entire market without platform. So we're thinking critically about where exactly our technology fit.
Within the existing manufacturing landscape.
In many cases that might look like or maintain the chemical approach without double stranded RNA ligase, which can stitch together short strands of RNA that had been chemically synthesized.
This enables much more efficiently.
Hilton and we currently have collaborations with a few key RNA I players in this space.
In other cases, the ecosystem platform could be used to synthesize the complete ethyol Renee.
Sometimes the best approach would be a combination of the iOS platform ligation chemistry.
That strategic Optionality and flexibility one of the beauties of our platform and underscores why ethos.
I'm missing potential ethical.
Critical role in meeting future demand.
Right.
Oh now while continuing to refine the technical piece is important we also need to pay full attention of real life barriers to adoption of our platform.
Bluntly why it will innovate to try our technology to deliver that value blessed by RNA asset when they have a seemingly reliable alternative and bus wrap that chemistry.
But those are already developing RNA therapeutics, it's about demonstrating our levels of purity, we can produce and the ease of adoption we can facilitate.
That is what we need to emphasize how the ecosystem is platform.
Slide four opens the door for smaller companies to develop RNA therapeutics are large indications they couldn't otherwise to see it.
We are well aware that these questions will be top of mind for drug developers and manufacturers with key decision makers weighed their options. So it's incumbent on us to help our customers and the investment community understand the need for an enzymatic solution.
We think our December virtue, okay, well event will play a critical role in the ongoing market education process.
They cover additional detail on that in a recent business development effort I'll pass it over to Kevin.
Just returned from the Titan Europe.
Yeah.
Thanks Steven.
As mentioned I was just in Amsterdam at the Titan Europe meeting, where I was energized by the high levels of interest we're seeing from potential customers and collaborators continued engagement with key players and decision makers has only reinforced my conviction that there is a very real need for our enzymatic solution and with that a significant revenue opportunity.
Sure.
Shifting to slide four we look forward to sharing more detail on our recent technical progress in the coming months ended December virtual care. All event, even mentioned will be a terrific opportunity to hear directly from those in the army I space, who would benefit from this technology.
In addition to welcoming John American Ori Tomorrow, we look forward to his participation in this event, where he will share his perspective on the growing importance of Arnie <unk> therapeutics as a class today's manufacturing landscape and the need for innovation as Arnie I demand.
The agenda will also feature discussions around the eagle since its commercial opportunity and a status update on our anticipated milestones as well as a technical overview of the platform from Stefan Lutz, Our senior Vice President of research.
We believe this event will be a highly valuable resource for education around what we see as the major growth driver for Codexis and we hope you'll plan to join us virtually in December.
On slide five I'd like to quickly recap our anticipated key milestones as.
As we approached the end of 2023, you're nearing the demonstration of Grand scale since since with our ecosystem technology we.
We will take a deeper dive into the Mexicans are the key technological milestone during our December event, but at a high level. It means we plan to demonstrate the prepared to scale manufacturer of an oligonucleotide composed of the modified nucleotide building blocks typically used in RNA therapeutics and.
And we plan to do this all under process site conditions.
This proof point represents the first step from an R&D project, it's something with potential commercial application and it will enable us to enter pre commercial testing with select customers next year, followed by early commercial licenses of the technology anticipated in 2025.
During those phases, we will collect valuable feedback to inform any necessary tweaks or modifications before the plant full commercial launch in 2026.
In parallel to that progress. We also plan to make our engineering double stranded RNA lagging as widely available for customers in the second half of 2024.
In addition to providing a nearer term arnie synthesis market entry point for US This product gets our foot in the door with many of the customers currently using phosphor emanate chemistry, but requiring ligation based approaches for longer sequences.
This is a meaningful first step in educating customers on the benefits of incorporating informatics solutions as a complement to their existing manufacturing processes.
Before I turn the call over to Shreves discuss our financial results for the quarter, Let me provide an update on our business development activities. Following our strategic pivot in July.
We are in active discussions with nestle to restructure our collaboration whereby they continues to develop C D, except one way and Codexis pertains, an economic interest in this program, but it's no longer sharing in the clinical development and commercialization costs.
We expect a potential deal would follow a traditional path for phase one molecule with an upfront payment clinical milestones and sales pace forever.
We are also in active negotiations with other potential partners to monetize assets within the segments of our life Sciences portfolio, we will no longer be focus such as genomics and PCR based diagnostic.
This is consistent with our previously announced strategy to leverage partners with broader channel reach.
And accelerate value to codexis.
We anticipate that we will be able to execute one or more of these deals by the end of this year.
Next year, and we look forward to keeping you updated on that progress with that I'll turn the call over to Sri.
Thanks, Kevin and good afternoon, everyone moving to slide six we reached our full third quarter financial results in a press release earlier this afternoon.
Billable on our Investor Relations website.
Before I call out a few highlights from the quarter.
First share some thoughts on our financial position.
As Stephen noted our strong balance sheet today reflects the benefit of a roughly $135 million windfall.
The weighted towards <unk> 616 sales to Pfizer for tax smoking between 2020, one and 2022.
This injection of cash significantly bolstered our financial position and is reflected in our current cash balance of $74 $6 million as of September 30th.
As part of the restructuring announced in July we focused our money and our people on the priority programs with the highest potential to create value.
And we took decisive action to reduce head count and consolidate facilities.
These decisions lowered lowered our projected cash burn by more than half. We now expect annual burn of roughly $20 million to $30 million over the next few years.
This along with the anticipated return to growth of our pharmaceutical manufacturing business in 2024 and expected commercial launch of synthesis platform is projected to fund our planned operations to positive cash flow, which we expect around the end of 2026. This is a good position to be in.
Now let me provide some brief comments on our Q3 results.
During our July 20th call, we guided that Q3 product revenue be our lowest quarter given the inherent lumpiness of the pharmaceutical manufacturing business, just driven by timing of customer orders and is exactly in line with what we saw this quarter.
Total revenues, excluding enzyme sales related to pack slogan were $9 $3 million for the third quarter of 2023 compared to $21 $5 million from the prior year.
Product revenues, excluding sales related to tax law, which were $5 $4 million from third quarter compared to $15 $1 million for the prior year.
The decline is largely due to timing of customer orders, including specific customer building prelaunch inventory in the third quarter of 2022 ahead of the anticipated approval of a pharmaceutical product.
We expect Q4 product revenues to be more in line with Q1 and Q2 of this year.
Confident in reiterating our full year 2023 product revenue guidance of $30 million to $35 million.
With the Pacs woven windfall now behind US 2023 has been a reset year for the pharmaceutical manufacturing business.
As we approach the end of this year, we are increasingly confident that this business is on a path to return to sustained growth beginning in 2024 and.
And we plan to provide additional detail during our full year 2023 financial results call.
Now turning to R&D revenues, we reported $3 $9 million in Q3 compared to $6 $4 million last year.
This decrease was driven by the completion of work on the Takeda partnered programs and the winding down of our biotherapeutics programs following our decision to exit the space.
As a reminder, our bio therapeutics R&D revenues reflect the reimbursement of.
Approximately 50% of our costs.
While the decision to exit Biotherapeutics will result in lower R&D revenues using these costs actually improves their bottom line by reducing overall cash burn.
We continue to expect 2023, R&D revenues be in the range of 21 million to $24 million.
Product gross margin, excluding enzyme sales related to tax slogan was 58% this quarter compared to 55%.
Third quarter of 2022.
Continue to expect 2023 project gross product gross margin to be in the range of 55% 65%.
Briefly turning to expenses R&D expenses for the third quarter of 2023 were $13 $7 million compared to $21 $8 million last year.
SG&A expenses were $12 $3 million compared to $13 $5 million in the third quarter of 2022.
Compared to both the prior year and last quarter, you can see reductions across R&D and SG&A expenditures, resulting from our financial discipline.
You can expect to see the continued benefit of the decisive actions we've taken in the fourth quarter continued lower expenses.
Well noticed this quarter that our Q3 GAAP expenses included large onetime charges.
These primarily relate to the restructuring we announced in July.
We booked a $3 $1 million charge related to the reduction in force.
And a $10 million noncash impairment charge, reflecting our decision to exit biotherapeutics and consolidate our facilities.
Finally, as you can see in the other income and expense line in the table on this slide we recorded onetime noncash impairments related to certain investments we previously made.
Pivot wipe science companies.
Shifting to slide seven to recap we are in strong financial position, we're confident in reiterating our 2023 guidance and.
And we have laid the foundation for our pharmaceutical manufacturing business to return to sustained growth in 2024.
Looking ahead, we have positioned ourselves well with a path to potential positive cash flow expected around the end of 2026.
We look forward to providing further guidance during our full year 2020 financial results call.
I'll now turn the call back to Steven.
Thank you Sri.
In closing I'm incredibly optimistic the difficult decisions, we made a few months ago, a position codexis for long term success.
We've streamlined the company and zeroed in on the killer App that could evolve our platform and we have the resources, we need to realize the potentially massive value of about <unk>.
Technology.
Now we're in execution mode with a cascade of upcoming milestones, we look forward to keeping you up to date on our progress with that we'd be happy to take your questions operator.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Thank you. Our first question comes from the line of Brandon Couillard with Jefferies. Please proceed with your question.
Hey, Thanks, good afternoon guys.
Kevin or Stephen.
Could you elaborate a little bit more on the tides EU conference and some of the engagement. We saw there how did it go relative to expectations and what were some of the reactions from some potential.
Potential customers are indeed show up there.
Yeah, Thanks, Brian I'm going to get Kevin to answer that because he's literally just backup the airplane looking suitably jet lag.
Thanks, Steven Hi, Brandon Yeah actually it was it was quite exciting for multiple reasons. One if you remember in the may tight meaning we really is the first time, we can come above the radar in terms of rolling out what we were working on behind the scenes in the last year or so which was the <unk> platform.
What we demonstrated that ties in really generated a lot of excitement was that we have made significant progress. Since then in terms of showing increased coupling efficiency longer strands.
S Iron a fragment as well as improvements in some of the other pieces that are important to our cross an enzymatic platform, which is also an important piece of having a fully in somatic solution. So I think custom.
Customers and potential collaborators that we're not.
I was interested in talking to us in May are now really excited about talking to us and we were quite popular at the conference.
Well I think it's the nature of the customers.
Yeah, I think the nature of the customers really I mean, <unk> is a manufacturing focused conference. So C. D. M O's and whatnot are really kind of the bulk of the clients there and theyre focused in terms of looking at a new alternative versus simply trying to improve Pos for M&A chemistry was completely shifted from that.
I think that that really really summarizes why I came back Super energized from this conference and look forward to sharing more information.
In may of next year.
Okay.
Steve and some of the experts talk too about in somatic approaches. Your question a few things like flexibility volumetric productivity. How do you address those concerns are what are some of I guess the timeline to be able to do that and how do you think I guess, how do you respond to I guess some of those.
There's about three approaches.
Well the first one will be the volumetric productivity, which is actually the central premise of the enzymatic approach as it should have vastly improved and that comes from the tethering of the enzyme and having the oligo and solution.
And so we actually expect our volumetric productivity.
Significantly superior to the.
Traditional chemical approach, but we need to show you the guys that we start to do that at.
The December event, but you know some of the tight slide started to hint that that also will continually show more starting with tides Asia in March next year and then.
May back to tide U S. Again, so it's just going to be we want to show you what we've actually done rather than what we're hoping to do.
But.
Progress is good and the volumetric part of it is really nailed down the other thing that we think is super important and actually we have heard from even yet your.
Your colds Brandon was the need to address the building blocks as well and so one of the things I think that really surprised people tied just how far we've got on the enzymatic synthesis of <unk> as well as just putting them together into the oligos.
And finally.
When we announced our grand scale milestone towards the end of this year, what we're gonna be showing in that is flexibility and the inclusion of modified blocks in there. So yes.
This is why I keep saying, we're listening to what the state of the art is what we need to do how we need to be competitive.
And also the other thing that we have heard is the intrinsic ability of the enzymatic route to go long is a competitive advantage that the <unk> chemistry approach will find very hard to compete with so and again, that's one of the intrinsic advantages of our approach but yes.
They've been doing this for 40 years, we've been doing this for a year and a half.
But we're very much on the same playing field that.
Great I'll hop back in queue. Thanks.
And yes, you can tell from our general body language is Super Super excited Yeah Yep.
Okay.
Thank you. Our next question comes from Dan Arias with Stifel. Please proceed with your question.
Hey, guys. This is actually Evan on for Dan.
Thanks for the questions.
First one I was actually just as simple modeling question I mean, you're giving a guidance in terms of.
<unk> product revenues ex <unk> can you just remind me.
What your <unk> enzyme or product revenue is.
For this year and kind of which quarters.
All have or are going to fall into.
Sure Yeah first of all I can answer that we happened to shriek, you havent booked any.
Revenue related to the sales of <unk>. This year, we are expecting to book $8 million in the fourth quarter and that is <unk>.
Part of the accounting for the retainer fee that's already been collected so noncash revenue $48 million in Q4, there's another $9 million that were booked in Q4 of 2024, and then we'll be done accounting for all of the textbook retainer fees.
Okay, and that's all that's R&D or that's enzyme sales.
That'll show up in product revenue.
Revenue, Okay, and then is there an R&D piece, there as well that I.
I guess kind of snapback solar, but pfizer related.
Yes, so in the second quarter, we booked $5 million. This is where Pfizer acquired a portion of their credit to a new enzyme not related to tax Bobby.
<unk> been booked as R&D revenue and that was incurred last quarter.
Gotcha, Okay, so $8 million before in <unk> and then another.
9 million next year, Unfortunately, and those are those are product revenues, okay Super helpful.
<unk> got that out of the way.
The next question is.
What I wanted to ask I wanted to ask about right. So your write down of its really just kind of a.
Double question related.
If you took a write down of some of your investments in the quarter I think it was a three point something million dollars charge.
So I guess.
Which specific and restaurants were those and then just kind of related.
I know you guys have.
Relationships with Alpha's I'm.
And well that garage temporarily saying Oh, my gosh, I mean do you have an investment and that's why isn't related what was kind of a status or there are those relationships.
So I can start with the write down question first we did book roughly $4 million in impairments on investments in private life science companies that we hold we have investment both in our Q and mai's equal in our data.
Write downs related to sequel, and our data and really it's just a function of the fact that these are companies that have been active on the financing front anytime they do that we have to reassess the value that they raise money at and appropriately reflect that on our financials.
Okay.
I'll cover the MAA I and Alpha XI two very different situations, but strangely enough we've talked to both of them within the last couple of days.
M. AI, we have a fairly significant equity stake in and Youll remember they using a TVT.
Enzyme version that does DNA RNA DNA.
Is that making super good progress technically in terms of coming up with some very long very pure.
DNA strands with Super happy with that and that relationship.
And really we're looking how we collaborate going forward. So that's that's very.
Positive also with Alfa designed they've now become part of the broader marrow volume boiler with.
We're talking to them they have existing contracts in place with us and we're also talking about going forward, how we can leverage that relationship so yeah.
That obviously being a small company trying to cover a broad landscape, there's a lot of collaborations and our future.
Got you thanks, a lot for the questions.
Thank you.
Our next question comes from the line of Matt Hewitt with Craig Hallum. Please proceed with your question.
Good afternoon, and thank you for the progress update maybe two from me. The first one what is the as you look at it what is the biggest challenge to achieving grand scale synthesis for eco and then separately.
You're talking about getting maybe your some of your first orders.
Later in the second half of next year, how should we be thinking about the size of those orders are they six figures or the seven figures just help us calibrate how big those initial orders could be obviously, we would expect those to scale and ramp higher over time, but where where do we start out. Thank you.
Great.
I'll cover the Grand scale. Since this question and Kevin you spoke about that was spending like eight next year.
So we.
With the with the Grand scale synthesis. It sounds like a very simple statement until you pull it apart and say what does it actually mean.
What we're talking about here is making an appropriate quantity of a suitable length all ago that has the appropriate modifications in it.
Under process conditions with a reasonable purity and so on.
And you know we've been making very strong progress on that we've reiterated our confidence in hitting that yeah. I think the most interesting question will be how long we actually go with the Ali go by the end of this year.
Okay.
We were already up what we showed at tides was a very nice six month that we made.
Which is sort of comparable to what some other companies, we're showing with bus rabbit eye chemistry in terms of its purity.
Specification to all the rest of it.
But no one's ever run a TVT RNA only go out to you know 15, 16, 17, yet and we.
We're hoping to do that relatively soon so we can really understand the physical chemistry better. So that's the thing that I'm most excited about but I've been super happy with things like the conversion efficiency of the enzyme and its present state.
The productivity the reliability the ability to include.
The modifications.
So we're feeling like we're very much on track.
Intrigued by how it performs it's Kevin Yeah, and then you layer on top of that it's important to note even mentioned the demonstrated army leggett already ligation approaches are becoming more and more.
Comment with in the past for M&A chemistry will because cost for M&A chemistry tends to fall down and be longer oligos range in terms of requirement of <unk>.
More input materials that becomes a little less efficient.
Get a higher impurity profile the longer the strands so.
A lot of companies have approached us around testing our RNA like east in the first half of next year. So that they can look at making shorter oligos trans with POS Ruminant chemistry works really well and stitching, together 10, burners or fibers and be able to get to SA RNA strands in the 20 to 30 range in May.
Even though but a longer with the litigation so when it comes to orders itself. So we're talking about testing with customers in the first half of 'twenty four and looking at actual customer orders in the second half of 'twenty four and based upon that experience.
And then the other thing I should mention we also have two other customized.
Double stranded RNA leg lagging it's programs that are wrapping up from an evolution standpoint, where we could see.
Some additional orders for those customized programs, but we haven't put those supply agreements in place.
Order of magnitude in terms of the size of those orders that you'd be happy with I mean, well I mean, I mean, I think from an individual enzymes standpoint demonstrated RNA ligase is one piece of it still in the range of a total peak opportunity leased today without huge growth towards the end of the decade decade, if we're successful with <unk>.
Since it's somewhere in the range of.
$15 million to $25 million enzyme opportunity. So by the end of this year with early launched you know maybe you can see.
Some single digit millions in terms of ordering but where we'll put out more information around that as we get to our financial guidance for 2024.
I think the other very helping here really soon.
It's just going to say one more thing that sorry, just to highlight this highlights how important it is that we have the cash runway, we have now to be able to set the market correctly with not only the demonstrated army like <unk>, but also the ecosystem platform and getting that in the hands of customers for testing is coming in.
That's really helpful. Thank you.
Thank you. Our next question comes from the line of Chad, We're Trotsky with TD Cowen. Please proceed with your question.
Hey, this is Chad on for Steven Ma.
Just to follow up on Brandon's question on the eco synthesis flexibility did you guys present any data that the enzyme based approach allows the utilization of all the various modified nucleoside analogs, which can be used by chemical synthesis messages.
And what about future modified basis, how easy would they be to <unk>.
The integrated using the existing enzyme or with new enzymes has to be engineered.
Okay.
Thanks for the question Chad, Yeah, I mean.
This is part of the sort of central driver of how we're evolving the TVT.
What we showed at tides was some very sort of relevant examples of current modification with but furthering that in terms of a grand scale synthesis.
The aim is that bush and 1.0 of eco covers the modifications currently in years now we've always said that this is going to be.
Your analogy like the iPhone or whatever else as new a more sort of strange unnatural modifications come through we may well have additional enzyme.
But we need to evolve to include that or further evolve the current DDG to add that to itself in metairie.
Probably a lower diminishing returns with any single enzyme such that we will get it.
Perfect around what currently exist with TD T. One Plano and then move on to some of the more than one and this is where Kevin and his team are really doing a lot of hard work to.
The link up with innovator companies. They are often small companies that are looking at very new constructs.
You're learning about those and trying to stay current and one of the big concepts about the alpha testing we've been talking about early next year is to put our enzyme kit in their hands to see how it works under their conditions with their modification and getting the feedback right.
You can imagine with the flexibility to the system because the <unk>.
<unk> is tethered in the oligo moves is that you can pass it through more than one column for want of a better word.
You could have several PDT enzymes specified for the specific oligo that youre trying to make and so we're very aware that one of the performance characteristics that we need to deliver beyond volumetric efficiency is flexibility and speed.
I might add just one thing there in that you know our assessment of the current products and development Bras RNA.
Certainly great I mean, there's 400 products in development so bear in mind, there may be some.
Variation as we see greater than 80% of them, including the two or three most common modifications, which are the two prime on methanol and the two prime floors.
Florida, Florida as well as the Phosphorothioate that on so at the end of the day. That's why we wanted to demonstrate our ability to do that at times and that was the first step and we'll continue to build upon that as new modifications come out yes.
Yes.
We put the slide deck from tied up on our website I think the presentation is going to be up.
Within the next day, or so which is worth a look if you've got time.
Awesome, Yeah, looking forward to that and to the Kols Bang on in December.
Ahead of that event are there any details you can share on John <unk> opinion on the need for the eco synthesis was he involved in that strategy have theaters.
Added to the senior Advisory Board recently.
Thanks.
We've been talking to him for a little while I mean.
He's always told me that he would saying we need an enzymatic solution even before he left being CEO of Alan Ireland, a couple of years ago.
And he's he's very much onboard with what we're trying to do but but what we also need as rather than instead of just cheerleaders, we need people, who keep us honest in terms of what it would really take for someone to adopt this this methodology because.
Super serious about what I said in my comments prepared comments.
They're going to be people sitting there weighing the decision about do I go the old safe tried Rosa plus Ramadan chemistry, and eat up the cost or do I tried this new thing and we've got a show reliability and dependability and we've got a couple of hooks pure he is going to be one of them.
And.
The reduced capital investment is going to be another one but they will all has to be based on rigor and meeting the specification and doing it independently and doing it repetitively soaking up.
All of that is front of mind and having people that are really yet sat in that seat advising us and super useful.
Thanks again for the questions.
Okay.
Thank you. Our next question comes from the line of Brandon Couillard with Jefferies. Please proceed with your question.
Hey, Thanks for the follow up just wanted to ask about your source of confidence in the pharma manufacturing business returning to growth in 'twenty, four and whether that would be.
A function of.
Our business with existing customers or new customers.
Hey, Brandon as we look at the forecast that we've been developing internally specifically on 2024, you see growth coming from the pipeline, which we think is an important driver. We also see a normalization of ordering patterns from some of our big customers as well so they both are contributing as well.
Progress throughout this decade, you'll see a bigger contribution of growth coming in from the pipeline I think we said this year, it's been sort of a reset year with tax laws are going away with one of our big products weren't great recent product launch, which caused them to order prebuilt inventory and Theyre not order. This year those patterns start to normalize so we're confident of growth.
Our marketed products as well as on the pipeline.
One other thing to add there Brennan entry and Ive been working a lot on is getting better at predicting that element as well we've added a couple of resources in the past six months here to be able to do better account management follow up et cetera. So that we can have a better perspective on that going forward forecast.
We went out there just to add I think we saw that with our expectations.
On Q3 that we said in July that this would be the low quarter and that's exactly what it turned out to be and we're expecting Q4 to come in in line to meet our full year guidance. So I think as Kevin said, we so much better about understanding the dynamics of this business and we did say a year ago.
Yes.
Thank you there are no further questions at this time I would like to turn the call back over to Steven Daly for closing remarks.
Well.
Thanks, again for joining us today, and as you can tell Sri and Kevin and I looking forward to a very busy for.
We'll be meeting many of you in person during a slate of I think it's five upcoming investor conferences over the next month or so.
And of course, we also hope you'll be able to join us for the ecosystem focused virtual KOL event on December eight and.
Thinking it's going to be a fantastic conversation so.
That's all from us and thank you very much for joining today.
This concludes today's call you may now disconnect.
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