Q1 2025 Codexis Inc Earnings Call
Operator: Greetings and welcome to the Codexis First Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad.
Greetings and welcome to the Codexis first quarter 2025 earnings conference call and webcast.
At this time all participants are in a listen only mode.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
Operator: Our question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. And in the interest of time, we ask you please limit yourselves to one question. As a reminder, this conference is being recorded.
A question and answer session will follow the formal presentation.
And if he places of questions queue at any time by pressing star one on your telephone keypad and if there's time, we ask you. Please limit yourself to one question as a reminder, this conference is being recorded.
Carrie McKim: It's now my pleasure to turn the call over to your host, Carrie McKim, director of investor relations. Carrie, please go ahead. Thank you, Operator.
Carrie: Now my pleasure to turn the call over to your host Carrie make him director of Investor Relations.
Please go ahead.
Speaker Change: Thank you operator with me today are Dr. Stephen Dilly, Codexis, Chairman and Chief Executive Officer, Georgia, Airbus, Chief Financial Officer, and doctors to find let senior Vice President of research.
Carrie McKim: With me today are Dr. Stephen Dilly, Codexis Chairman and Chief Executive Officer, Georgia Erbez, Chief Financial Officer, and Dr. Stefan Lutz, Senior Vice President of Research.
Speaker Change: During this call management wealth management, making a number of forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including our guidance for 'twenty 'twenty five revenue anticipated milestones, including product launches pilot scale manufacturing and patched to scale up technical milestones and public announcements related there too as well.
Speaker Change: With our strategies and prospects for revenue growth path to profitability and successful execution of current and future programs and partnerships.
Unknown Executive: To 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 statement date, May 14, 2025. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond Codexis control and that could materially affect actual results.
Speaker Change: To 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 statement. They may 14th 2025.
Speaker Change: You should not place undue reliance on these forward looking statements because they involve known and unknown risks uncertainties and other factors that are in some cases beyond codexis control and that could materially affect actual results.
Unknown Executive: Additional information about factors that can 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.
Speaker Change: Additional information about factors that could materially affect actual results can be found in codexis filings with the securities and Exchange Commission.
Speaker Change: Codexis expressly disclaims any intent or obligation to update these forward looking statements, except as required by law.
Stephen Dilly: And now, I'll turn the call over to Stephen. Thank you, Carrie, and thanks everyone for joining.
Steven: And now I'll turn the call over to Steven.
Steven: Thank you Carrie and thanks to everyone for joining.
Stephen Dilly: Before we begin our comments today, you'll notice that our Chief Operating Officer, Kevin Norrett, isn't on this call. That's because he's busy at an on-site visit with an important Codexis customer, but he will be available for follow-up questions later this week, and will also present during our TidesUSA Investor Recap call next Thursday. Starting on slide two. We've delivered a first quarter largely in line with our expectations. Crucially, we've preserved a strong financial position maintaining our runway to cash flow positivity by the end of 2026. The Q1 revenue guidance we outlined in February included a $2.5 million one-time payment from a pharma biocatalysis customer, which then shifted into April.
Steven: Before we begin our comments today, you'll notice that chief operating officer, Kevin No. It isn't all this coal that's because he's busy at an on site visit with an important to Texas customer, but he will be available for follow up questions. Later this week and we will also present during that ties USA invest to recap cold next Thursday.
Steven: Yeah.
Steven: Starting on slide two.
Steven: We delivered a first quarter largely in line with our expectations Crucially, we preserved our strong financial position, maintaining our runway to cash flow positive by the end of 'twenty 'twenty six.
Steven: The Q1 revenue guidance, we outlined in February included a $2 $5 million, one time payment from our pharma bio catalysis customer, which then shifted into April.
Stephen Dilly: Had we received payment on the timeline originally communicated by our customer, we would have come in at the top of our Q1 range. That said, we've since received the order and we're confident in reiterating our 2025 guidance and the current range of published analyst estimates. That confidence is underscored by the meaningful progress we've made across both core businesses so far in 2025, which sets us up for a substantial revenue ramp in the second half of the year.
Steven: How do we receive payment on the timeline originally communicated by our customer we would've come in at the top of our Q1 range that said we have since received the order and we're confident in reiterating our 2025 guidance on the current range of published analyst estimates.
Steven: That confidence is underscored by the meaningful progress we've made across both core businesses. So far in 2025.
Steven: Which sets us up for substantial revenue ramp in the second half of the year.
Stephen Dilly: On slide three, in follow by catalysis, our product mix is changing. And we're driving margin improvement. We also have a nice bench of new customers, particularly within the mid-tier pharma segment. While drugs in Phase 1 and 2 clinical trials aren't significant revenue generators today, we're positioning this business for a steady growth trajectory as some of those assets enter later stage trials and commercialization in the years to come. Already this year, we've also executed on several key commercial milestones with our Ecosynthesis platform. In March, we signed our first revenue generating eco contract representing the inaugural project to enter our innovation.
Steven: On slide three.
Steven: And followed by catalysis, our product mix is changing.
Steven: Driving margin improvement.
Steven: We also have a nice bench of new customers, particularly within the mid tier pharma segment.
Steven: All drugs in phase, one and two clinical trials, our significant revenue generators today, we're positioning this business for a steady growth trajectory of some of those assets into later stage trials and commercialization in the years to come.
Steven: Already this year, we've also executed on several key commercial milestones without ecosystem platform.
Steven: In March we signed our first revenue generating eco contract representing the inaugural project to enter our innovation lab.
Stephen Dilly: Furthermore, our double-stranded RNA ligase business is growing.
Steven: Furthermore, a double stranded RNA ligase business is growing well.
Stephen Dilly: We delivered our first order to a large pharma customer in Q1 with additional orders expected, and we've secured an initial ligase order from a second drug innovator.
Steven: We delivered our first order to a large pharma customer in Q1 with additional oldest expected and we've secured an initial ligase order from a second drug innovation.
Steven: Yeah.
Stephen Dilly: We're also very much looking forward to the TIDES meeting in San Diego next week. There'll be at least six presentations showcasing the ECO platform, including three by Codexis and three by our collaborators. The presentations will cover a wide range of topics, including the intrinsic scalability and sustainability of the core eco-process, and our emerging capability to fully control chirality, which can influence the biological activity, specificity, and potency of each molecule. We'll also be presenting on our groundbreaking machine learning capabilities for improved ligase selection and fragment design.
Steven: We're also very much looking forward to the tides meeting in San Diego next week there'll be at least six presentation showcasing the eco platform, including three by Codexis and three by our collaborators.
Steven: The presentations will cover a wide range of topics, including the intrinsic scalability and sustainability at the core eco process under our emerging capability to fully control chirality, which can influence the biological activity specificity and potency of each molecule.
Steven: We'll also be presenting on a groundbreaking machine learning capabilities for improved like a selection and fragment design.
Stephen Dilly: Possibly the most validating event will be presentations from three of our CDMO collaborators describing the superior performance of our ligases in their hands. Stefan will share more on each of those presentations shortly, and we plan to host a tight recap call for investors to dive into detail following them.
Steven: Possibly the most a validating event would be presentations from three of our C. M. A C. D. M O collaborators describing the superior performance of our like Aces in their hands.
Steven: Finally, we will share more on each of those presentation shortly and we plan to host tied to recap coal for investors to dive into details following the meeting.
Steven: Okay.
Stephen Dilly: Moving to slide four. Many companies are finding the current macro environment to be a challenge. However, it's becoming increasingly clear that several of these external factors could play in our favor and actually create a positive environment for our ecosystem platform.
Steven: Moving to slide four.
Steven: Many companies are finding the current macro environment to be a challenge. However, it's becoming increasingly clear that several of these external factors could play in our favor and actually create a positive environment for our ecosystem platform let.
Stephen Dilly: Let me tell you how. First, the siRNA field is evolving exactly as we'd hoped and planned. In March alone, there was a label expansion of alnylam's drug butrezeran to address ATTR amyloidosis with cardiomyopathy. And Sanofi and alnylam's fituzeran became the seventh siRNA therapeutic to gain FDA approval. Eli Lilly also shared promising Phase II data on Mepedizuran, showing that the asset significantly reduced levels of a genetically inherited cardiovascular risk factor that impacts nearly a quarter of the world's population. This momentum clearly points to the coming demand for these RNA-based therapeutics, particularly given the potential impact across both rare, often, and widespread disease indications.
Steven: Let me tell you how.
First the SA RNA field is evolving exactly as we hoped and planned for.
Steven: In March alone there was a light label expansion of our nylons drugs. They are.
Steven: Iran to address a T T al amyloidosis, with cardiomyopathy, and Sanofi in L. Nine labs P. Tusa, Ryan became the seventh and eighth therapeutic to gain FDA approval.
Steven: Eli Lilly also shared promising phase two data on that but is there and showing that the asset significantly reduced levels of a genetically inherited cardiovascular risk factor that impacts nearly a quarter of the world's population.
Steven: This momentum clearly points to the coming demand for these RNA based therapeutics, particularly given the potential impact across both rare orphan and widespread disease indications.
Steven: Yeah.
Stephen Dilly: You've also probably seen recent pressure on companies to onshore their production.
Steven: You've also probably seen recent pressure on companies to onshore that production.
Stephen Dilly: That's good news for Codexis. Not only can our ecosynthesis technology offer the scalability and flexibility that customers need, but it also enables onshoring with greatly reduced capital expenditure and can be built out on an expedited timeline. Taking things one step further, we've previously shared that we're working to develop an enzymatic supply of raw materials for our eco process. This would help customers diversify their source of input materials and it would reduce their dependence on uncertain foreign supply chains, particularly China. The big picture is coming together nicely for our eco-synthesis platform.
Speaker Change: That's good news for Codexis, not only can our eco synthesis technology offer the scalability and flexibility of the customers' need but it also enables onshoring with greatly reduced capital expenditure and could be built out on an expedited timeline.
Steven: Yeah.
Steven: Taking things one step further we previously shared that we're working to develop an enzymatic supply of raw materials for our eco process.
Steven: This would help customers diversify their source of input materials and it would reduce their dependence on uncertain foreign supply chains, particularly China.
Steven: The Big picture is coming together nicely for eco synthesis platform.
Steven: Yeah.
Stephen Dilly: Shifting to slide five.
Steven: Shifting to slide five.
Stephen Dilly: Let me recap the commercial landscape for ECO. Here you can see our three core customer segments. small siRNA drug innovators, large siRNA drug innovators, and oligo CDMOs. While we have momentum across all three categories, particularly with our ligase offering, we're currently gaining the most traction with CDMOs. That's because small drug innovators are interested in our technology, but tend to be cash strapped, especially today. Larger drug innovators are the opposite. They're interested but are largely focused on addressing a demand problem that's two to three years away, meaning they can watch where the industry goes before making any decisions.
Steven: Let me recap the commercial landscape for eco.
Steven: Here you can see at three core customer segments.
Steven: Small SA RNA drug innovators.
Steven: Large SA RNA drug innovators and all it go see demos.
Steven: Well, we have momentum across all three categories, particularly without ligase I'll frame. We currently gaining the most traction with C. D M O's.
Steven: That's because small drug innovators are interested in our technology, but tend to be cash strapped, especially today.
Steven: Largest drug innovators of the opposite they're interested but are largely focused on addressing a demand problem. That's two to three years away, meaning they can watch where the industry goes before making any decisions.
Stephen Dilly: CDMOs, on the other hand, are an ideal first mover for ecosynthesis. They know exactly how long it takes to ramp up capacity, and they want to build that infrastructure today, so they're ready when customers come looking for sRNA manufacturing slots. They also generally have an existing network of customers that we can tap into to build new relationships. In fact, we've already been in situations where a CDMO collaborator has introduced us to their drug innovator clients who are looking for innovative siRNA manufacturing solutions. Importantly, that dynamic benefits both Codexis and the CDMO, as we'll funnel our drug innovator customers to the CDMO as part of the commercial scale-up process.
Steven: On the other hand are ideal for move up the east coast emphasis there.
Steven: They know exactly how long it takes to ramp up capacity and they want to build out infrastructure stay so they're ready when customers come looking for S. RNA manufacturing slots.
Steven: They also generally have an existing network of customers that we can tap into to build new relationships. In fact, we've already been in situations, where a C. D. M. O collaborator has introduced us to that drug innovative clients are looking for innovative SA RNA manufacturing solutions.
Steven: Importantly that dynamic benefits, both codexis and the C. D M O as will funnel drug innovator customers to the C. D M O as part of the commercial scale up process.
Stephen Dilly: The beauty of this model is it sets us up for a consistent flow of customers and we can provide them with a clear route to GMP grade material in the near term. It also gives us time to thoughtfully determine the best path forward for a potential Codexis GMP manufacturing facility.
Steven: The beauty of this model is it sets us up for a consistent flow of customers and we can provide them with a clear route to GMP grade material in the near term.
Steven: It also gives us time to thoughtfully determine the best path forward for a potential codexis GMP manufacturing facility.
Steven: Yeah.
Stephen Dilly: As we said in the past, executing on a market penetration strategy takes time. Fortunately, we know that from here on out, driving adoption of ecosynthesis is a matter of execution, not invention. We've already shown that we have the tools and the technical know-how. Now it's about taking a few finite steps to demonstrate to customers that we can develop a reproducible, scalable process for their assets.
Steven: As we said in the past executing on our market penetration strategy takes time, Fortunately, we know that from here on out driving adoption of eco. Since this is a matter of execution not invention. We've already shown that we have the tools and the technical Knowhow now it's a bet about taking a few.
Steven: Cyanide steps to demonstrate to customers that we can develop a reproducible scalable process for their assets.
Stefan Lutz: As it happens, that's what our TidesUSA presentations next week are all about, so let me pass it over to Stefan for a preview of what's to come. Thanks, Stephen. Moving to slide six. As Stephen mentioned, Codexis has an exciting lineup of presentations at the Tides U.S. meeting next week. Last fall at Tides Europe, we showcased technical validation, demonstrating that we can use enzymes to successfully synthesize complete siRNA therapeutic assets, including the attachment of a tissue targeting moiety. Our upcoming presentations represent the next critical step, showing customers that our ecosynthesis processes can repeatedly create high-quality sRNA products and reliably manufacture their assets at larger scale.
Steven: As it happens that's what I've tied to USA presentations next week are all about so let me pass it over to Stephane for a preview of what's to come.
Steven: Thanks, Steven moving to slide six as Stephen mentioned Codexis has an exciting lineup of presentations at the tights U S meeting next week.
Steven: Last fall at Titan Europe, we showcased technical validation demonstrating that we can use enzymes to successfully synthesize complete eschar RNA therapeutic assets, including the attachment of a tissue targeting moiety.
Steven: Our upcoming presentations represent the next critical step showing customers that our eco synthesis processes can repeatedly create high quality MSR on a product and reliably manufacture their assets at larger scale.
Stefan Lutz: Codexis's oral presentation on the main stage will demonstrate the consistency and reproducibility of our enzymatic sRNA manufacturing process using inglycerin as an example. Our data also showcases the quality of RNA fragments synthesized by the EcoPlatform and with it the possibility to simplify manufacturing processes. Finally, the talk will highlight impurity profiles and enzyme control, two crucial aspects of an effective GMP scale-up process.
Steven: Codexis as oral presentation of the main stage well demonstrate the consistency and reproducibility of our in genetic S. Our RNA manufacturing process using in closer and as an example.
Steven: Our data also showcases the quality of RNA fragments synthesized by the eco platform.
Steven: With its the possibility to simplify manufacturing processes.
Steven: Finally, the talk will highlight impurity profiles and enzyme control two crucial aspects of an effective GMP scale up process.
Stefan Lutz: We will also present a poster focusing on how we are improving the success rate of assembly of sRNA drug substance by ligation. Two months ago, we launched a proprietary machine learning tool for the optimized pairing of our highly engineered ligases and RNA fragment designs. Already successfully deployed on multiple assets, the new tool shortens process development time and lowers the cost for our customers. As a bonus, three of our CDMO collaborators are presenting on the use of our ligases to combine short RNA fragments. This includes a joint presentation between Codexis and Barchem. At TIDES-EU last November, we shared a ligase case study featuring work that we had done on behalf of Bacchem.
Steven: We will also present a poster focusing on how we are improving the success rate of assembly of S. R RNA drug substance by ligation.
Steven: Two months ago, we launched a proprietary machine learning tool for the optimized pairing of our highly engineered like Aces and RNA fragment designs.
Steven: Already successfully deployed on multiple assets, the new tool shortens process development time and lowest cost for our customers.
Steven: As a bonus three of our C. D. M. O collaborators are presenting on their use of our like Asus to combine short RNA fragments.
Steven: This includes a joint presentation between Codexis in Buckhead.
Steven: It ties you last November we shared a like a case study featuring works that we had done on behalf of backup. This time the allegations were performed by their team in house.
Stefan Lutz: This time, the ligations were performed by their team in-house. Similarly, the other two CDMOs successfully tested our proprietary enzymes in their own facility. This demonstrates that our process can easily be transferred and the benefits across yield purification and impurity control can be replicated in our customers' hands.
Steven: Similarly, the other two C D M O successfully tested our proprietary enzymes in their own facilities.
Steven: This demonstrates that our process can easily be transferred and the benefits across yield purification and impurity control can be replicated in our customers' hands.
Stefan Lutz: Finally, our second oral presentation showcases continuous improvements and innovation around RNAi manufacturing by introducing a new feature currently under development for the ecosynthesis technology. the ability to stereo control during oligonucleotide synthesis. RNAi therapeutic acids contain sulfur modifications in the phosphate backbone, which helps to modulate the assets safety, stability and efficacy. However, the sulfur also adds extra complexity as it introduces chirality, creating mirror images of the oligonucleotide strands. In sharp contrast to existing chemical manufacturing solutions that have little control over this process and produce a mixture of mirror images, our enzymatic approach gives us a high degree of control over chirality.
Steven: Finally, our second oral presentation showcases continuous improvements and innovation around RNA manufacturing by introducing a new feature currently under development for the eco synthesis technology.
Steven: The ability to stereo control during oligonucleotides synthesis.
Steven: RNA therapeutic assets contained sulfo modifications into phosphate backbone, which helps to modulate the assets safety stability and efficacy.
Steven: However, the sulfur also adds extra complexity as it introduces chirality, creating mirror images of the oligonucleotides trends.
Steven: In sharp contrast to existing chemical manufacturing solutions that have little control over this process and produce a mixture of mirror images all.
Steven: Our enzymatic approach gives us a high degree of control of our Colorado tea.
Stefan Lutz: In turn, that ability gives our customers a choice to define the composition of their oligo products, potentially boosting their assets therapeutic potency and its market position.
Steven: In turn that ability gives our customers a choice to define the composition of the oracle products potentially boosting their assets therapeutic potency and its market position.
Stefan Lutz: We plan to host a public investor conference call next Thursday, May 22, at 8am Eastern to review these landmark presentations in more detail and share insights from the ground at TITES. Access details are already available on our investor website, so be sure to tune in.
Steven: We plan to host a public Investor Conference call next Thursday may 22nd at eight a M. Eastern to review these landmark presentations in more detail and share insights from the ground at times.
Steven: Access details already available on our Investor website, so be sure to tune in.
Georgia Erbez: With that, I will now turn the call over to Georgia for discussion of our financial results for the first quarter of 2025. Thanks, Stefan. Good afternoon, everyone. Starting on slide 7, I will provide a brief overview of our financial results here on the call and will invite you to review our 10-Q file today for a more detailed discussion. Total revenue for the first quarter ended March 31, 2025 with 7.5 million compared to 17.1 million in the first quarter of 2024.
Georgia: With that I will now turn the call over to Georgia for a discussion of our financial results for the first quarter of 2025.
Georgia: Thanks, Stefan and good afternoon, everyone.
Georgia: Starting on slide seven I will provide a brief overview of our financial results here on the call and well invite you to review our 10-Q filed today for a more detailed discussion.
Georgia: Total revenue for the first quarter ended March 31, 2025 was $7 5 million compared to $17 1 million in the first quarter of 2024.
Georgia Erbez: As you may recall, our Q1 revenue last year was higher than normal, largely due to two factors. First, we recognize 6 million in revenue related to a one time agreement with Roche for an exclusive global license to our double stranded DNA baggage. Second, we received two sizable customer orders that came in during Q1.
Georgia: As you May recall, our Q1 revenue last year was higher than normal largely due to two factors first we recognized $6 million in revenue related to a one time agreement with Roche for an exclusive global license to our double stranded DNA ligase.
Georgia: Second we received two sizable customer orders that came in during Q1.
Georgia Erbez: Our strong first quarter last year was then followed by a lower revenue in Q2, again underscoring the variability of our client's ordering pattern. Clearly, our revenue can be impacted by the unpredictability of large orders, as was the case with the $2.5 million pharma biocatalysis order that Stephen mentioned earlier. Here, a delay of a few weeks caused an unexpected change in our Q1 results.
Georgia: Our strong first quarter last year was then followed by a look for revenue in Q2 again underscoring the variability of our clients ordering patterns.
Georgia: Clearly our revenue can be impacted by the unpredictability of large orders as was the case with the two and a half million dollar are pharma and bio catalysis order at that Steven mentioned earlier.
Georgia: Here a delay of a few weeks caused an unexpected change in our Q1 results. However, despite this lumpiness.
Georgia Erbez: However, despite this lumpiness, the significant commercial interest we are seeing across our businesses and reinforce our confidence that 2025 guidance range that we've set. Product gross margin was 55% for the first quarter of 2025. This was up from 49% in Q1 2024, largely due to the shifts in sales to more profitable products and declines in less profitable legacy products. Turning to operating expenses, research and development expenses for the first quarter of 2025 were $12.9 million compared to $11.2 million last year, largely driven by an increase in costs associated with salaries and employee costs and higher lab expenses.
Georgia: The significant commercial interest we are seeing across our businesses.
Georgia: Reinforce our confidence that 2025 guidance range that we set.
Georgia: Product gross margin was 55% for the first quarter of 2025.
Georgia: This was up from 49% in Q1, 'twenty 'twenty four largely due to the shifts in sales to more profitable products and declines in less profitable legacy products.
Georgia: Turning to operating expenses.
Georgia: Search and development expenses for the first quarter of 2025 were $12 9 million compared to $11 2 million last year, largely driven by an increase in costs associated with salaries and employee costs and higher lab expenses.
Georgia Erbez: Selling general and administrative expenses were $12.4 million compared to $12.9 million in the first quarter of 2024.
Georgia: Selling general and administrative expenses were $12 4 million compared to $12 9 million in the first quarter of 'twenty 'twenty four the decrease was primarily due to lower legal fees and lower stock based compensation expense.
Georgia Erbez: The decrease was primarily due to lower legal fees and lower stock based compensation expense. The net loss for the first quarter of 2025 was $20.7 million compared to $11.5 million for the first quarter of 2024.
Georgia: The net loss for the first quarter of 2025 was $20 7 million compared to $11 5 million for the first quarter 2024.
Georgia Erbez: Finally, we are reiterating our 2025 guidance. As a reminder, we guided to a range of $64 million to $68 million for 2025, with revenue more heavily weighted towards the back half of this year. We are comfortable with the current consensus estimates for the second quarter.
Georgia: Finally, we are reiterating our 2025 guidance as a reminder, we guided to a range of 64 million to 68 million for 2025 with revenue more heavily weighted towards the back half of this year.
Georgia: We are comfortable with the current consensus consensus estimates for the second quarter.
Georgia Erbez: We ended the quarter in a strong cash position with 59.8 million in cash, cash equivalents, and investments, which we expect will be sufficient to fund our planned operations through achieving cash flow positivity by the end of 2026.
Georgia: We ended the quarter in a strong cash position with $59 8 million in cash cash equivalents and investments, which we expect will be sufficient to fund our planned operations through achieving cash flow positivity by the end of 2026 with that I will now turn the call back over to Steven.
Stephen Dilly: With that, I will now turn the call back over to Stephen. Thank you, Georgia. Before I hand it over to Q&A, I want to briefly comment on why this all matters to customers. Looking at slide eight, you can see the enormous impact of ecosynthesis. Our modelling indicates that this technology enables 5 times bigger batches, is 50% faster and costs 70% less to stand up than Phosphoramide-like chemistry. As more and more siRNA pipeline assets progress through clinical trials and require significant volumes of material, particularly for larger disease indications, these impacts become incredibly meaningful to customers. And in many cases, without a technology like ecosynthesis, the scale and capex limitations will prohibit drug innovators from going after certain disease areas at all.
Steven: Thank you Joe here.
Speaker Change: Before I hand, it over to Q&A I want to briefly comment on why this all matters to customers.
Georgia: Looking at slide eight you can see the enormous impact of eco synthesis.
Georgia: Our modeling indicates that this technology enables five times bigger batches is 50% faster than cost, 70% less to stand up and false rabbit like chemistry.
Georgia: There's more and more SA RNA pipeline assets progress through clinical trials and require significant volumes of material, particularly for larger disease indications these impacts become incredibly meaningful to customers and in many cases without a technology like eco synthesis, the scale and capex limitations will.
Georgia: Mohit drug innovators from going after certain disease areas of tool.
Stephen Dilly: The cherry on the top is that we can do certain things that aren't feasible with phosphoramidite chemistry, such as controlling chirality at scale. Between three CDMOs asking to use our logo in their Tides presentations next week, external tailwinds towards onshoring production, and supply chain dynamics playing in our favor, we're in a very different place than we were at this time last year. We believe the market is realizing how our technology will act as an essential enabler of this emerging therapeutic class and it's why the future for Codexis is very bright.
Georgia: The Cherry on the top is that we can do certain things that aren't feasible with false Ramadan chemistry, such as controlling chirality at scale.
Between three city M O's asking to use our logo in the tides presentations next week external tailwind towards onshoring production and supply chain dynamics, playing in our favor we're in a very different place than we were this time last year.
Georgia: We believe the market is realizing how technology will act as an essential enabler of this emerging therapeutic class and it's why the future forget Exodus is very bright and now we'd be happy to take your questions operator.
Stephen Dilly: Now, we'd be happy to take your questions.
Operator: Thank you and I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. And as a reminder, in the interest of time, we ask you please limit yourselves to one question, then return to the queue. If you'd like to remove yourself from the queue, that's star two. Once again, that's star one to be placed in the question queue. And please limit yourselves to one question, then return to the queue.
Speaker Change: Thank you and I'll be conducting a question answer session, if you'd like to be placed in the question queue. Please press star one on your telephone keypad as a reminder, the interest of time, we ask you. Please limit yourselves to one question and then return to the queue, if you'd like to remove yourself from the queue that start to once you get that star wants to be.
Speaker Change: Since the question queue and please limit yourselves to one question and return to the queue. Our first question today is coming from Kristen cluster from catch up of soldiers lives their life.
Kristen Kluska: Our first question today is coming from Kristen Kluska from Cantho, Pastoral. Your line is now live. Hi, good afternoon everyone. Thanks for taking the questions and it was very nice to see a pretty sizable deal in the SIRNA development candidates earlier this morning as well.
Speaker Change: Hi, good afternoon, everyone. Thanks for taking the questions and it was very nice to see a pretty sizable deal and I say RNA development.
Speaker Change: Candidates earlier this morning as well just wanted to ask a question about how you think about the three core customer segments understand C. D. M o's might be the ones that are willing to take the lead a little bit earlier, but what do you think it's really going to take to get the small and large S. I RNA drug innovator.
Stephen Dilly: Just wanted to ask a question about how you think about the three core customer segments. Understand CDMOs might be the ones that are willing to take the leaps a little bit earlier, but what do you think it's really going to take to get the small and large SIRNA drug innovators to want to be interested more on the earlier side of preparation? Well, thanks for the question. And yeah, we noticed the big deal this morning as well. And that was in our constellation of conversations as well. So the beautiful thing about the CDMOs is their reach, right?
Speaker Change: Here's to Wanna be interested more on the earlier science preparation.
Speaker Change: Well thanks for the question Yeah, we noticed they are the big deal. This morning, as well and that was in a constellation of conversations as well.
Speaker Change: So the beautiful thing about the C. D. M. OS is their reach right that they're having to think forward. They are having to plan they've got multiple customers and one of the things that we've noticed is it's a very much easier conversation for C. D. M O to talk to an existing customer the supplying of molecule to and say Hey, we've got this better.
Stephen Dilly: They're having to think forward, they're having to plan, they've got multiple customers. And one of the things that we've noticed is, it's a very much easier conversation for a CDMO to talk to an existing customer they're supplying a molecule to and say, hey, we've got this better process. And you know, they're a trusted partner. And there's just a lower barrier to acceptance to that.
Speaker Change: Yes.
Speaker Change: And you know their trusted partner and there's just a lower barrier to two acceptance to that however, all of this is what we keep now saying is blocking tackling once we've done the first and the second and the third of these molecules successfully then the barrier to entry will be that much lower there'll be the validation what do we have to.
Stephen Dilly: However, all of this is what we keep now saying is block and tag. Once we've done the first and the second and the third of these molecules successfully, then the barrier to entry will be that much lower, there'll be the validation. What do we have to show? We have to show that we've moved from mathematical modeling to really demonstrating the performance of scale. We have to show that our production time is shorter because that is incredibly important to people, and that's all related to the efficiency of the cycling of the enzyme. We have to actually demonstrate that you can stand up a GMP facility quicker and way cheaper than you could with an alternative technology.
Speaker Change: Show, we have to show that we moved from mathematical modeling to really demonstrating the performance and scale. We have to show that our production time is shorter because that is incredibly important to people and that's all related to the efficiency of the cycling of the enzyme we have to actually demonstrate that you can.
Speaker Change: Stand up a G M P facility quicker than way cheaper than you could with an alternative technology, it's that kind of stuff and then it's the right thing around the reproducibility of the impurity profile demonstrating that our stuff exit in biological systems.
Stephen Dilly: It's that kind of stuff. And then it's the rate-treating around the reproducibility of the impurity profile, demonstrating that our stuff acts in biological systems just the same as the chemically synthesized version. It's all of that kind of thing that we're doing this year.
Speaker Change: The same as the as the chemically synthesize version, it's all of that kind of thing that we're doing this year, but as I said in my prepared comments.
Stephen Dilly: As I said in my sort of pre-prepared comments, it's great that it's execution now. We're not having to invent anything to get people over the hump. It's just show me, show me, show me. Thank you.
Speaker Change: It's great that it's execution now, we're not having to invent anything to get people over the hump as just show Me show Me show me.
Tycho Peterson: Thank you. Our next question is coming from Tycho Peterson from Jefferies. Your line is my life.
Tycho Peterson: Our next question is coming from Tycho Peterson from Jeffrey's, your line is now live. Hey, thanks. Just wondering if you could talk a little more on the second half ramp, and maybe, you know, how much of that is, you know, coming from new products, order activity, and maybe a little bit more color on the pharma pipeline for the RNA lag as orders would be helpful to Sure. You know, we do expect that the ramp is going to be because of these new contracts with Ecosynthesis. So that's why we've always said more towards the back half and just looking at the timelines that it takes to negotiate these deals.
Tycho Peterson: Hey, Thanks, just wondering if you could talk a little more on the second half ramp and maybe how much of that is.
Tycho Peterson: Coming from new products order activity, and and maybe even a little bit more color on the pharma pipeline for warranty language owners will be helpful too.
Tycho Peterson: Sure.
Tycho Peterson: The we do expect that the ramp is going to be because of these new contracts with eco synthesize. So that's why we've always said more towards the back half and just looking at the timelines that it takes to negotiate these deals.
Stephen Dilly: So yeah, the growth will be coming from that segment. Thank you.
Tycho Peterson: So yeah, the growth will be coming from that segment.
Tycho Peterson: Yeah.
Allison Bradshaw: Next question is coming from Allison Bradshaw from Piper Sandler. Your line is now live. Hey, team. Good afternoon, and thanks for taking the question. Could you just walk us through the assumptions on that year-end 26 cash flow positivity guidance and just, you know, if there's any scenarios, development partnerships, things like that, that could pull it forward? Or conversely, if investment in an internal GMP facility could push that out? And just, you know, related to that, when is the right time to make the investment in a Codexis GMP facility?
Your next question is coming from Allison Bradshaw from Piper Sandler Your line is now live.
Tycho Peterson: Hey.
Allison Bradshaw: Good afternoon, and thanks for taking my question could you just walk us through the assumptions on that your own cost repository I'm just now for various scenarios development partnerships and things like that I can pull it forward or Conversely, if investment and an internal GMP facility could push that out and just you know related to that when is the right time to make.
Allison Bradshaw: Investments in our snacks with them, Jim Pisani, well just be great to get your current thinking.
Stephen Dilly: It would just be great to get your current thinking on that. So let's lay out the guardrails really clearly. So we are projecting flipping to cash flow positive end of 2026. And that's based on the organic evolution of the pipeline that we've got and the revenue ramp that we're projecting. It does not include the GMP. The GMP facility is seen as an accelerator of really getting to major revenues, but that would be funded outwith our current means, so that one way or another, we need to finance that. It's not a massive spend, and I'll let Georgia go into as much detail as she wants to on that.
Allison Bradshaw: So, let's say Atlanta.
Speaker Change: Guardrails really clearly so we we are projecting flipping to cash flow positive end of 2026, and that's based on organic evolution of the pipeline that we've got and the revenue ramp that we're projecting it does not include the GMP facility. The GMP facility is seen as an accelerator.
Allison Bradshaw: Really getting to a major revenues.
Allison Bradshaw: But that would be funded out with a card means so that one way or another we need to finance that it's not a massive spend and then I'll, let George you go into as much detail as she wants to on that sure. It's when we're looking at the spend on that it's broken both into the capital side and the operating side, but both of those the capital side is really more.
Georgia Erbez: Sure. When we're looking at the spend on that, it's broken both into the capital side and the operating side, but both of those, the capital side is really more weighted much more heavily towards 2026, so we're spending a little bit this year on that, but not a whole lot, and then the operating side of that will even come a little bit later than that, so more towards the end of 2026 and end of 2027, so we're looking at more like 18 months to two years to have this be a fully operational type of facility once you get the equipment in and then you get it validated, so when we're looking at financing a project like that, we're looking at doing it in stages and in small increments along the way, so we're not looking to fund it all at once.
Allison Bradshaw: Our weighted much more heavily towards 2026.
Allison Bradshaw: So we're spending a little bit this year around that but not a whole lot and then the operating side of that will even come a little bit later than that somewhere towards the end of 2026 and enter 2027.
Allison Bradshaw: So we're looking at more like 18 months to two years to have this be a.
Allison Bradshaw: Fully operational type of facility once you get you the equipment and then you get it validated.
Allison Bradshaw: So so when we're looking at financing a project like that we're looking at doing it in stages and in small increments along the way so we're not looking too.
Allison Bradshaw: To fund it all upfront right and it's we want to be if and when with with funding. It we wont be doing that based on the flow of orders. The weekend show people. So you know that when we build it they will come.
Stephen Dilly: Right, and it's, we want to be, if and when we're funding it, we want to be doing that based on a flow of orders that we can show people so you know that when we build it, they will come. And, you know, one of the obvious sort of things is, now we've got three CDMOs, as well as us talking about our ligase platform. That's really important in terms of the ramp there. Now we've started to get orders in, in terms of programs in the innovation lab, that gives us a line of sight to when people are going to be needing GMP material, and allows us to plan accordingly.
Allison Bradshaw: You know one of the obvious sort of things is now we've got three C. D M OS as well as us talking about a ligase platform. That's really important in terms of the ramp there now we've started to get orders in in terms of programs in the innovation lab that gives us a line.
Allison Bradshaw: The site to when people are going to be needing GMP material.
Operator: So we're, we're trying to build just in time here, and not too far ahead of the curve. Got it. Thank you. As a reminder, that's star one to be placed in the question queue.
Allison Bradshaw: As to plan accordingly.
Allison Bradshaw: We're trying to build just in time here not too far ahead of the curve.
Allison Bradshaw: Got it thank you.
Speaker Change: Thank you as a reminder, that star one to be placed in the question queue. Our next question is coming from Dan <unk> from Stifel. Your line is that life.
Dan Arias: Our next question is coming from Dan Arias from Steeple, your line is now live. We absolutely expect each of those to become repeat customers and steady orders. One of the important things is the phase of the medicines that they're supporting. They tend to be moving into significant bulk now from sort of phase two to phase three is the time of adoption, because that's really when people need to optimize their process. The beautiful thing about that is it's a shorter timeline than we've traditionally seen with pharma manufacturing, where people have been adopting our enzymes even pre-clinic.
Dan: Hi, guys. Thanks for the questions here, maybe just on the orders that you have in hand for the ligase to large pharma and then the other integrator can you can you share anything in terms of how much you are providing to them and then what is the way in which we should think about them, becoming steady customers. I guess first is your expectation that they would become a repeat customer and then what if.
Dan: Anything on sort of the stipulations that are tied to subsequent orders.
Dan: We absolutely expect each of those to become repeat customers and steady orders one of the important things is the phase of the medicines that their supporting they tend to be moving into significant bulk now from sort of phase II to phase III is the time of adoption because that's.
Dan: Really when people need to optimize their process.
The beautiful thing about that is it's a shorter timeline than we've traditionally seen with pharma manufacturing where people have been adopting our enzymes, even pre clinically and in the old days. It was taking a seven to 10 years to get to peak. This is more like three to five to get to peak.
Stephen Dilly: And yet, in the old days, it was taking us seven to 10 years to get to peak.
Stephen Dilly: This is more like three to five to get And I think the cadence of our first order is interesting, you know, we supply this year, we'll probably get the second order either at the end of this year or early next, and so on as they scale and they ramp and they increase batch size. And similarly, we're talking about, you know, starting off with, you know, grams or tens of grams, then moving to, you know, 50 or 100 grams, and then a steady state, you know, several hundred grams sort of annually to support a modest size siRNA product.
Graham: And I think the cadence about first order was interesting you know we supply this year, we'll probably get the second order either at the end of this year or early next and so on as they scale and they ramp and they increase batch size and similarly, we're talking about yet starting off with yeah Graham.
Oh tens of grams, then moving to you know 50 or 100 grams and then at steady state you know several hundred gram sort of annually to support a a modest size as I RNA product.
Matt Hewitt: These look very good in comparison to our traditional pharma manufacturers. Okay, thank you. Thank you.
Graham: So these look very good in comparison to our traditional pharma manufacturing enzymes.
Graham: Okay. Thank you.
Thank you. Your next question today is coming from Matt Hewitt from Craig Hallum. Your line is now live.
Stephen Dilly: Next question today is coming from Matt Hewitt from Craig Callum. Your line is now live. Good afternoon. Thanks for taking the questions. Maybe first up, with the three different CDMO collaborators that are presenting at TIDES, and I think you touched on this a little bit, but is the key there that they're each bringing different customers to the table with you? Or is there more to it that maybe one or the other have different skill sets or different areas of focus? I'm just curious what, you know, is there a key with the three different collaborators?
Graham: Good afternoon, and thanks for taking the questions maybe first step with the three different C. D. M. O collaborators that are presenting a tide since I think you've touched on this a little bit but is is the key there that they're each bringing different customers to the table with you or is there more to it that maybe you Warner.
Graham: The other have different skill sets or different areas of focus I'm just curious what we.
Graham: You know is there a key with the three different collaborators well might as kind of all of the above so first of all it's that there are three different C. D. M. O's all of whom have had success with our light gauge isn't that has one of them back.
Stephen Dilly: Well, Matt, it's kind of all of the above. So first of all, it's that there are three different CDMOs, all of whom have had success with our ligase in their hands. One of them, Backend, which we've been public about, we've been working with them, sort of, we've done the experiment in-house, we've shown them, we've kind of coached them, all the rest of it. The other two, we didn't have that kind of relationship. They picked it up, they did it themselves, and they were successful. And so that really said a lot about the transferability of our technology into other people's hands without massive sort of training and coaching.
Graham: Back in which we've been public about we'd be working with them sort of we've done the experiment in house, we've shown them, we've kind of coach them all the rest of it the other two.
Graham: We didn't have that kind of relationship they picked it up they did it themselves and they were successful and so that really says a lot about the transferability of our technology into other people's hands without massive.
Graham: Massive sort of training and coaching and each one of those is building a light gauge and platform to service multiple customers. So it is US currently one to three and then those three to many and so this is how we can actually make a scalable platform to the ligation technology.
Stephen Dilly: And each one of those is building a ligation platform to service multiple customers. So it's us currently one to three, and then those three to many. And so this is how we can actually make a scalable platform for the ligation technique. So we're, we're super excited about. Make sense.
Graham: So we're super excited about that.
Speaker Change: Makes sense and then one follow up here you've done a good job filling out your team here in the first quarter or are there any other you know rules that you would like to maybe add before the end of the year or do you feel like you've got the right team in place at this point. Thank you.
Stephen Dilly: And if one follow up here, you've done a good job filling out your team here in the first quarter. Are there any other, you know, roles that you would like to maybe add before the end of the year? Or do you feel like you've got the right team in place at this point?
Stephen Dilly: Thank you. Teams coming together really, really nicely. We've got the vast majority of folks in place for the next phase, both at the executive level and the VP level. We continue to evolve our focus. We've moved from being a research organization to becoming now a development organization and a development commercialization organization. A lot of the sort of increased effort is in process scale up process development, that kind of science where you know, we need to add a little bit more expertise, but we're in good shape. And we're, we're overall looking at keeping our head count about flat this year.
Speaker Change: Teams coming together really really nicely, we've got the vast majority of folks in place for the next phase both at the executive level and the V. P level, we continue to evolve our focus we've moved from being a research organization to becoming now a development organization.
Speaker Change: On the development and commercialization organization a lot of the sort of increased our effort is in process scale up process development that kind of science.
Speaker Change: We need to add a little bit more expertise, but we were in good shape with where overall looking at keeping our head count about flat this year.
Stephen Dilly: While we do more, you know, we're driving efficiency constantly. And yeah, we think that's the right thing. Got it. All right.
Speaker Change: While we do more you know we're driving efficiency constantly.
Speaker Change: We think that's the right thing to do.
Speaker Change: Got it alright, thank you.
Operator: Thank you.
Speaker Change: Thank you. Your next question today is coming from Brendan Smyth with TD Cowen. Your line is now live.
Brendan Smith: Next question today is coming from Brendan Smith from TD Calendar. Your line is now live. Thanks for taking the questions, guys. And congrats on the progress. I actually wanted to ask if you could expound a bit more on the machine learning capabilities that you mentioned, maybe just without getting ahead of the time being too much. Just wondering how widely you're expecting to integrate some of these capabilities or which areas of the business you see is especially right for that kind of tech? And maybe what you think that could potentially mean for operating burn moving forward?
Speaker Change: Okay.
Brendan Smyth: Great. Thanks for taking the question guys and congrats on the progress.
I actually wanted to ask if you could expound a bit more on the machine learning capabilities that you've mentioned, maybe just without getting ahead of the tide meeting too much.
Brendan Smyth: Just wondering how widely are expecting to integrate some of these capabilities or which areas of the business you see is especially right for that kind of attack.
Brendan Smyth: And maybe what you think that could potentially mean for operating burn moving forward.
Stephen Dilly: Yeah, great, great question.
Yeah, Great Great question. So what are the things that we say at Codexis is you know we really are the Oh geez in terms of machine learning and artificial intelligence, we've been doing it since before it was cold that but what we've learned is it's really really good if it's applied to tractable problems on the ligase is a beautiful example of that what we learned.
Stephen Dilly: So, you know, one of the things that we say at Codexis is, you know, we really are the OGs in terms of machine learning and artificial intelligence. We've been doing it since before it was called that. But what we've learned is it's really, really good if it's applied to tractable problems. And the ligase is a beautiful example of that. What we learned with ligation is that there are a finite set of variables that define the performance of the enzyme, that were actually of a complexity scale, that you could address them with a machine learning algorithm.
Brendan Smyth: With ligation is that there are a finite set of variables that define the performance of the enzyme, but what actually of a can place. The scale that you could address them with a machine learning algorithm and the challenge here is to identify the ideal enzyme from ey.
Stefan Lutz: And, you know, the challenge here is to identify the ideal enzyme from a large library for a specific nick in a specific molecule to do the ligation, you know, as close to perfectly as we can. And what you will be seeing at TIDES next week is evidence that we're not just talking about it, it actually works. And that's, that's kind of cool. Because that that was from ideation to launch in a year. which is in this industry. That's pretty cool.
Brendan Smyth: Large library for a specific need in a specific molecule to due to the ligation close to perfectly as we can.
Brendan Smyth: What you will be seeing at tides next week is evidence that we're not just talking about it it actually works and that's it.
Brendan Smyth: That's that's kind of cool because that that was from ideation to launch in a year.
Brendan Smyth: Or less which is which as you know in this industry, that's pretty cool and then what we're looking at is the application of broadly data science and artificial intelligence to our core technology as well to making.
Stefan Lutz: Then what we're looking at is the application of broadly data science and artificial intelligence to our core technology as well, to making our core codevolver technology better. And Stefan, do you want to talk about that? Yeah. Machine learning is on everybody's mind these days. Codexis, as Stephen pointed out, has been leveraging these tools very effectively for, gosh, close to two decades now. And there's by no means we're not done.
Speaker Change: Kokoda Volvo technology, Bachelor and Stephane do you want to talk about that.
Brendan Smyth: Machine learning is on everybody's mind these days.
Brendan Smyth: Codexis as Stephen pointed out has been leveraging these tools very effectively for gosh close to two decades now and there is by no means we're not done.
Stefan Lutz: In fact, expanding this beyond just the enzyme engineering, thinking about opportunities on the manufacturing side of things is highly attractive and will help us to further build out a differentiated product offering for our customers. So let's just drill down for a couple of things there. One of them is in the enzyme engineering, it's predicting the impact of different mutations and then having the ability to check that experimentally and move faster and evolve faster. In the process stuff, the manufacturing, it's about looking for trends and things that are defining those trends and driving the efficiency of the process.
Brendan Smyth: In fact, expanding does beyond just the enzyme engineering thinking about opportunities on the manufacturing side of things is highly attractive and will help us to further build out a differentiated product offering for our customers.
Brendan Smyth: Let's just drill down for a couple of things one of them is in the.
Brendan Smyth: Enzyme engineering, it's predicting the impact of different mutations.
Brendan Smyth: And then having the ability to check that experimentally and move faster and evolved foster it.
Brendan Smyth: In the process stuff the manufacturing, it's about looking for trends and things that are defining those trends and driving the efficiency of the process and so we think that can accelerate our optimization all the process for each individual sorry RNA molecule.
Stefan Lutz: And so we think that can accelerate, you know, our optimization of the process for each individual siRNA molecule. So, yeah, very much an area of focus, but grounded in real experiments and real science.
Brendan Smyth: So yeah very much an area of focus but grounded in real experiments in real science.
Operator: And it might also be worth pointing out that, you know, this machine learning, like the one that we're deploying now for ligation reaction, it's not just working in our hands. We've actually started, as was mentioned in the recording. We've deployed this on customer assets and our partners, our collaborators have tested it in their hands and it consistently has performed exceptionally well, which causes reason for good, lots of enthusiasm. Got it. Sounds great. Thanks, guys. Thank you. We reached the end of our question and answer session.
Speaker Change: Might also be worth pointing out that you know if this machine learning like the one that we are deploying out for four ligation reaction. It's not just working in our hands. We've actually started is as was mentioned in the recording.
Speaker Change: We've employed deployed this too on customer assets and our partners our collaborators have tested it in their hands and consistently has performed exceptionally well which causes.
Speaker Change: Reason for good lots of enthusiasm.
Speaker Change: Got it sounds great. Thanks, guys.
Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.
Stephen Dilly: I'd like to turn the floor back over for any further closing comments. Well, well, thank you again for joining us today. As you heard, we're slated for an exciting Tides USA next week. So don't forget, if you can't go to the meeting to tune into our investor recap call at 8am. Eastern Time next Thursday, May the 22nd to hear all the updates coming out of that meeting.
Speaker Change: Well well. Thank you again for joining US today as you heard was slated for an exciting tides USA next week. So don't forget if you cant go to the meeting to tune into our Investor recap coal at eight a M. Eastern time next Thursday may 22nd to hear all the updates coming out of that.
Speaker Change: T.
Operator: Operator. Thank you. That does conclude today's teleconference and webcast.
Speaker Change: Operator.
Speaker Change: Thank you that does conclude today's teleconference and webcast with me disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Operator: You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.
Speaker Change: Yeah.