Codexis Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 15:39
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
| MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following management's discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025 (the "Annual Report"). This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements include, but are not limited to, expectations regarding our strategy, business plans, financial performance and developments relating to our industry. These statements are often identified by the use of words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "should," "estimate," or "continue," and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part II, Item 1A: "Risk Factors" of this Quarterly Report on Form 10-Q and Part I, Item 1A: "Risk Factors" of our Annual Report, and elsewhere in this report. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
Business Overview
We are a leading provider of enzymatic solutions for efficient and scalable therapeutics manufacturing, and we leverage our proprietary CodeEvolver directed evolution technology platform to discover, develop, enhance, and commercialize novel, high-performance enzymes and other classes of proteins. Enzymes are naturally occurring biological molecules critical to almost all biochemical reactions that sustain life. They can be precisely engineered and optimized for specific functions, and to have particular characteristics, such as an ability to survive environments in which natural enzymes cannot, or to perform (bio)chemical transformations different than those for which they naturally evolved. We focus on leveraging our technology and capacity to enhance the properties and performance of enzymes to drive pivotal improvements in manufacturing of complex therapeutics across two key focus areas: our foundational, revenue-generating pharma biocatalysis business and our Enzyme-Catalyzed Oligonucleotide (ECO) Synthesis ("ECO Synthesis") manufacturing platform, which is comprised of enzymatic tools, and processes, designed to enable large-scale manufacture of RNA interference ("RNAi") therapeutics.
In our revenue-generating pharma biocatalysis business (formerly our pharmaceuticals manufacturing business), we utilize our CodeEvolver technology platform to develop optimized enzymes that are used by some of the world's largest pharmaceutical companies to improve the efficiency and productivity of their manufacturing processes for small molecule therapeutics. Our unique enzymes drive improvements such as higher yields, increased purity, reduced energy usage and waste generation, all of which lead to improved efficiency and reduced costs in small-molecule manufacturing.
We also use the CodeEvolver platform technology to develop enzymes for the synthesis of RNAi therapeutics through our ECO Synthesis manufacturing platform, where our enzymes are poised to deliver many of the same benefits we offer in pharma biocatalysis across purity, yield, and improved manufacturing efficiency. In November 2024, we presented data at the TIDES EU conference demonstrating the successful end-to-end enzymatic synthesis of an entire commercially approved small interfering ribonucleic acid ("siRNA") therapeutic asset with the ECO Synthesis manufacturing platform. In addition to using full enzymatic sequential synthesis, adding one nucleotide at a time to synthesize the two strands from beginning to end, we demonstrated synthesis of the same siRNA asset using three other routes utilizing enzymatic ligation with our double-stranded RNA ("dsRNA") ligase, which can stitch together fragments of chemically and/or enzymatically synthesized RNA to form the full siRNA drug structure. For the three other routes, our data highlighted that full-length oligos of equal quality and yields were obtained whether the fragments were made with enzymes or by traditional phosphoramidite chemistry. At the end of 2024, we completed the build out of our ECO Synthesis Innovation Lab, a facility that uses our ECO Synthesis manufacturing platform to synthesize gram-scale quantities of a customer's desired siRNA construct suitable for pre-clinical testing. In May 2025, we presented data at the TIDES U.S. conference demonstrating our proprietary ECO Synthesis platform's ability to support siRNA manufacturing by reducing purification costs, improving process performance, and demonstrating the potential to control stereochemistry. In addition, three presentations from contract development and manufacturing organizations ("CDMO") validated the transferability of our ligation processes to their in-house facilities. In 2025, we expect to manufacture good laboratory practice ("GLP")-grade siRNA for customers in our Innovation Lab under development services contracts model, and in the near term we anticipate entering a partnership with a large-scale CDMO to use our ECO Synthesis platform of enzymatic tools and processes to synthesize good manufacturing practices ("GMP")-grade siRNA drug substance for our customers. We expect to expand our enzymatic tools and process offerings as we further enhance the ECO Synthesis platform to address the overall market needs for scalable and sustainable RNAi manufacturing.
As of September 30, 2025, we manage our business as one business segment. For additional information, see Note 12, "Segment, Geographical and Other Revenue Information" in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.
Results of Operations
The following table shows the amounts from our unaudited condensed consolidated statements of operations for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Product revenue | $ | 6,807 | $ | 11,158 | $ | (4,351) | (39) | % | $ | 20,246 | $ | 26,968 | $ | (6,722) | (25) | % | |||||||||||||||||||||||||||||||
| Research and development revenue | 1,794 | 1,675 | 119 | 7 | % | 11,226 | 10,917 | 309 | 3 | % | |||||||||||||||||||||||||||||||||||||
| Total revenues | 8,601 | 12,833 | (4,232) | (33) | % | 31,472 | 37,885 | (6,413) | (17) | % | |||||||||||||||||||||||||||||||||||||
| Costs and operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of product revenue | 2,465 | 4,317 | (1,852) | (43) | % | 7,295 | 12,634 | (5,339) | (42) | % | |||||||||||||||||||||||||||||||||||||
| Research and development | 13,868 | 11,505 | 2,363 | 21 | % | 40,586 | 34,164 | 6,422 | 19 | % | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 11,217 | 13,568 | (2,351) | (17) | % | 35,889 | 42,100 | (6,211) | (15) | % | |||||||||||||||||||||||||||||||||||||
| Asset impairment and other charges | - | - | - | - | % | - | 165 | (165) | (100) | % | |||||||||||||||||||||||||||||||||||||
| Total costs and operating expenses | 27,550 | 29,390 | (1,840) | (6) | % | 83,770 | 89,063 | (5,293) | (6) | % | |||||||||||||||||||||||||||||||||||||
| Loss from operations | (18,949) | (16,557) | (2,392) | 14 | % | (52,298) | (51,178) | (1,120) | 2 | % | |||||||||||||||||||||||||||||||||||||
| Interest income | 634 | 849 | (215) | (25) | % | 1,969 | 2,730 | (761) | (28) | % | |||||||||||||||||||||||||||||||||||||
|
Interest and other expense, net
|
(1,292) | (4,922) | 3,630 | (74) | % | (3,217) | (6,421) | 3,204 | (50) | % | |||||||||||||||||||||||||||||||||||||
| Loss before income taxes | (19,607) | (20,630) | 1,023 | (5) | % | (53,546) | (54,869) | 1,323 | (2) | % | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 8 | 10 | (2) | (20) | % | 29 | 31 | (2) | (6) | % | |||||||||||||||||||||||||||||||||||||
| Net loss | $ | (19,615) | $ | (20,640) | $ | 1,025 | (5) | % | $ | (53,575) | $ | (54,900) | $ | 1,325 | (2) | % | |||||||||||||||||||||||||||||||
Revenues
Our revenues consisted of product revenue and research and development revenue as follows:
•Product revenue consists of sales of biocatalysts used in the manufacture of small molecule active pharmaceutical intermediaries, enzymes such as dsRNA ligase used in the manufacture of siRNA molecules, enzymes for the molecular biology and diagnostic markets, and Codex™biocatalyst panels and kits.
•Research and development revenue includes license, technology access and exclusivity fees, research services fees, milestone payments, royalties, optimization and screening fees.
Revenues are as follows (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Product revenue | $ | 6,807 | $ | 11,158 | $ | (4,351) | (39) | % | $ | 20,246 | $ | 26,968 | $ | (6,722) | (25) | % | |||||||||||||||||||||||||||||||
| Research and development revenue | 1,794 | 1,675 | 119 | 7 | % | 11,226 | 10,917 | 309 | 3 | % | |||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 8,601 | $ | 12,833 | $ | (4,232) | (33) | % | $ | 31,472 | $ | 37,885 | $ | (6,413) | (17) | % | |||||||||||||||||||||||||||||||
Revenues typically fluctuate on a quarterly basis due to the variability in our customers' manufacturing schedules and the timing of our customers' clinical trials. In addition, we have limited internal capacity to manufacture enzymes. As a result, we are dependent upon the performance and capacity of third-party manufacturers for the commercial scale manufacturing of the enzymes used in our pharma biocatalysis, ECO and molecular biology and diagnostics enzymes businesses.
We accept purchase orders for deliveries covering periods from one day up to 14 months from the date on which the order is placed. However, some of our purchase orders can be revised or cancelled by the customer without penalty. Considering these industry practices and our experience, we do not believe the total of customer purchase orders outstanding (backlog) provides meaningful information that can be relied on to predict actual sales for future periods.
Total revenues decreased by $4.2 million to $8.6 million in the three months ended September 30, 2025 compared to the same period in 2024. Total revenues decreased by $6.4 million to $31.5 million in the nine months ended September 30, 2025 compared to the same period in 2024.
Product revenue decreased by $4.4 million to $6.8 million in the three months ended September 30, 2025 compared to the same period in 2024, and decreased by $6.7 million to $20.2 million in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to variability in manufacturing schedules and timing in clinical trial progression of our customers, which impacted order volumes for our enzyme products.
Research and development revenue increased by $0.1 million to $1.8 million in the three months ended September 30, 2025 compared to the same period in 2024 primarily due to higher revenue from existing collaboration agreements. Research and development revenue increased by $0.3 million to $11.2 million in the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to higher license and milestone revenue being recognized in 2025 as compared to the same period in 2024, partially offset by $6.0 million in lower revenue from our licensing agreement with Roche Sequencing Solutions, Inc. in the first quarter of 2024 that did not reoccur in the current year.
Cost and Operating Expenses
The following table shows the amounts of our cost of product revenue, research and development expense, selling, general and administrative expense, and asset impairment and other charges from our unaudited condensed consolidated statements of operations for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Cost of product revenue | $ | 2,465 | $ | 4,317 | $ | (1,852) | (43) | % | $ | 7,295 | $ | 12,634 | $ | (5,339) | (42) | % | |||||||||||||||||||||||||||||||
| Research and development | 13,868 | 11,505 | 2,363 | 21 | % | 40,586 | 34,164 | 6,422 | 19 | % | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 11,217 | 13,568 | (2,351) | (17) | % | 35,889 | 42,100 | (6,211) | (15) | % | |||||||||||||||||||||||||||||||||||||
| Asset impairment and other charges | - | - | - | - | % | - | 165 | (165) | (100) | % | |||||||||||||||||||||||||||||||||||||
| Total costs and operating expenses | $ | 27,550 | $ | 29,390 | $ | (1,840) | (6) | % | $ | 83,770 | $ | 89,063 | $ | (5,293) | (6) | % | |||||||||||||||||||||||||||||||
Cost of Product Revenue and Product Gross Margin
The following table shows the amounts of our product revenue, cost of product revenue, product gross profit and product gross margin from our unaudited condensed consolidated statements of operations for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Product revenue | $ | 6,807 | $ | 11,158 | $ | (4,351) | (39) | % | $ | 20,246 | $ | 26,968 | $ | (6,722) | (25) | % | |||||||||||||||||||||||||||||||
|
Cost of product revenue(1)
|
2,465 | 4,317 | (1,852) | (43) | % | 7,295 | 12,634 | (5,339) | (42) | % | |||||||||||||||||||||||||||||||||||||
| Product gross profit | $ | 4,342 | $ | 6,841 | $ | (2,499) | (37) | % | $ | 12,951 | $ | 14,334 | $ | (1,383) | (10) | % | |||||||||||||||||||||||||||||||
|
Product gross margin (%)(2)
|
64 | % | 61 | % | 64 | % | 53 | % | |||||||||||||||||||||||||||||||||||||||
(1)Cost of product revenue consists of both internal and third-party fixed and variable costs, including materials and supplies, labor, facilities and other overhead costs associated with our product revenue.
(2) Product gross margin is used as a performance measure to provide additional information regarding our results of operations on a consolidated basis.
Cost of product revenue decreased by $1.9 million and $5.3 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. Product gross margins were 64% in both the three and nine months ended September 30, 2025, compared to 61% and 53%, respectively, in the corresponding periods in 2024. The changes in cost of product revenue and product gross margins are primarily due to a shift in sales toward more profitable products, and declines in less profitable legacy products.
Research and Development Expenses
Research and development expenses consist of costs incurred for internal projects as well as collaborative research and development activities. These costs primarily consist of (i) employee-related costs, which include salaries and other personnel-related expenses (including stock-based compensation), (ii) various allocable expenses, which include occupancy-related costs, supplies, depreciation of facilities and laboratory equipment, and (iii) external costs. Research and development expenses are expensed when incurred.
Research and development expenses increased by $2.4 million in the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a $0.7 million increase in employee-related costs, $1.3 million in higher lab supplies and $0.8 million in higher allocable costs, partially offset by a $0.4 million decrease from lower use of outside services. The increase in research and development expenses of $6.4 million in the nine months ended September 30, 2025, compared to the same period in 2024, was primarily due to a $2.8 million increase in employee-related costs, $2.9 million increase in allocable costs, and $1.9 million in higher lab supplies. These were partially offset by a $1.2 million decrease from lower use of outside services.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of employee-related costs, which include salaries and other personnel-related expenses (including stock-based compensation), hiring and training costs, consulting and outside services expenses (including audit and legal counsel related costs), marketing costs, building lease costs, and depreciation expenses and amortization expenses.
Selling, general and administrative expenses decreased by $2.4 million during the three months ended September 30, 2025, compared to the same period in 2024 primarily due to $1.1 million in lower consulting and outside services, $0.3 million decrease in employee-related costs, $0.6 million in lower legal costs, and $0.4 million in lower allocable costs. The decrease in selling, general and administrative expenses of $6.2 million during the nine months ended September 30, 2025 as compared to the same period in 2024, was primarily due to $2.9 million in lower stock-based compensation expenses, $2.3 million in lower legal costs, $1.2 million in lower consulting and outside services, and $1.2 million in lower allocable costs. These were partially offset by a $0.6 million increase in employee-related costs and a $0.8 million increase in facilities associated costs.
Asset Impairment and Other Charges
Asset impairment and other charges for the nine months ended September 30, 2024 was due to a $0.2 millionwrite-down on assets held for sale during the second quarter of 2024.
Interest Income and Interest and Other Expense, net (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 634 | $ | 849 | $ | (215) | (25) | % | $ | 1,969 | $ | 2,730 | $ | (761) | (28) | % | |||||||||||||||||||||||||||||||
|
Interest and other expense, net
|
(1,292) | (4,922) | 3,630 | (74) | % | (3,217) | (6,421) | 3,204 | (50) | % | |||||||||||||||||||||||||||||||||||||
|
Total other income (expense), net
|
$ | (658) | $ | (4,073) | $ | 3,415 | (84) | % | $ | (1,248) | $ | (3,691) | $ | 2,443 | (66) | % | |||||||||||||||||||||||||||||||
Interest Income
Interest income decreased by $0.2 million and $0.8 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024, primarily due to lower average cash, cash equivalents and short-term investments balances.
Interest and Other Expense, net
Interest and other expense, net decreased by $3.6 million and $3.2 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024, primarily due to the $3.9 million impairment of our investment in MAI during the third quarter of 2024 that did not reoccur in the current year.
Provision for Income Taxes (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | $ | 8 | $ | 10 | $ | (2) | (20) | % | $ | 29 | $ | 31 | $ | (2) | (6) | % | |||||||||||||||||||||||||||||||
The provision for income taxes for the three and nine months ended September 30, 2025 and 2024, was primarily due to the accrual of interest and penalties on historic uncertain tax positions.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, extending several key provisions of the 2017 Tax Cuts and Jobs Act. Among its updates are provisions that allow for the immediate expensing of qualifying research and development expenses and certain capital expenditures. The Company continues to evaluate the impact of the OBBBA, however it is not expected to have a material impact on the Company's consolidated financial statements.
Net Loss
Net loss for the three months ended September 30, 2025 was $19.6 million, or a net loss per basic and diluted share of $0.22. This compared to a net loss of $20.6 million, or a net loss per basic and diluted share of $0.29, for the three months ended September 30, 2024. The decrease in net loss was primarily related to lower costs and operating expenses.
Net loss for the nine months ended September 30, 2025 was $53.6 million, or a net loss per basic and diluted share of $0.62. This compared to a net loss of $54.9 million, or a net loss per basic and diluted share of $0.78, for the nine months ended September 30, 2024. The decrease in net loss was primarily related to lower costs and operating expenses in 2025.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the measurement of our ability to meet working capital needs and to fund capital expenditures. We have historically funded our operations primarily through cash generated from operations, stock option exercises and public and private offerings of our common stock. In addition, pursuant to our five-year term loan and security agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP ("Innovatus"), an affiliate of Innovatus Capital Partners, LLC, we borrowed $30.0 million from Innovatus, as Lender, on February 13, 2024 (the "Closing Date") and borrowed an additional $10.0 million on June 27, 2025 upon the achievement of certain financial milestones. The Loan Agreement, which provided for an aggregate principal amount of up to $40.0 million, has amaturity date of February 13, 2029 (the "Innovatus Loan"). We actively manage our cash usage and investment of liquid cash to ensure the maintenance of sufficient funds to meet our working capital needs. Our cash and cash equivalents are held in U.S. banks.
Our primary uses of capital for the foreseeable future, including the next 12 months, are for compensation and related expenses, research and development expenses including manufacturing costs, laboratory and related supplies, legal and other outside services, and general overhead costs.
The following summarizes our cash and cash equivalents and short-term investments balances and working capital as of September 30, 2025 and December 31, 2024 (in thousands):
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Cash and cash equivalents | $ | 25,351 | $ | 19,264 | ||||||||||
| Short-term investments | $ | 33,350 | $ | 54,194 | ||||||||||
| Working capital | $ | 57,717 | $ | 75,124 | ||||||||||
Sources of Capital
In addition to our existing cash and cash equivalents, short-term investments and revenue generated through our existing operations, we are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives under our collaboration agreements. Our ability to earn these milestone and contingent payments and the timing of achieving these milestones is primarily dependent upon the outcome of our collaborators' research and development activities and is uncertain at this time.
We have historically experienced negative cash flows from operations as we continue to invest in key technology development projects and improvements to our CodeEvolver technology platform, develop and commercialize new and existing products including our ECO Synthesis manufacturing platform and expand our business development and collaboration with new customers. Our cash flows from operations will continue to be affected principally by product sales and product gross margins, sales from licensing our technology to major pharmaceutical companies, and collaborative research and development services provided to customers, as well as our headcount costs. Our primary source of cash flows from operating activities is cash receipts from our customers for purchases of products, collaborative research and development services, and licensing our technology to major pharmaceutical companies. Our largest uses of cash from operating activities are for employee-related expenditures, rent payments, inventory purchases to support our product sales and non-payroll research and development costs.
Loan Agreement and Term Loans
On February 13, 2024, we entered into the Loan Agreement with Innovatus consisting of up to two tranches, of which the first tranche of $30.0 millionwas disbursed upon execution of the Loan Agreement and the second tranche of $10.0 millionwas funded in June 2025 upon achievement of certain milestones including certain pre-specified revenue thresholds. Both tranches were subject to payment of a facility fee equal to 1.00% of the amount of such term loan. The Term Loan carries an interest-only period of 36 months(with the possibility to extend up to 48 months upon achievement of certain pre-specified financial milestones) and will bear interest at a floating rate of the sum of (a) the greater of (i) prime rate and (ii) 7.50%, plus (b) 3.25%. As of September 30, 2025, we were in compliance with all covenants of the Loan Agreement.
Sales Agreements
On May 2, 2024, we entered into the Cantor Sales Agreement with Cantor, under which Cantor, at our discretion and at such times that we may determine from time to time, may sell up to a maximum of $75.0 million of shares of our common stock. Under the terms of the Cantor Sales Agreement, Cantor may sell the shares at market prices by any method that is deemed to be an "at the market offering" as defined in Rule 415 under the Securities Act. On May 2, 2024, we filed a registration statement on Form S-3 registering the offer and sale of these shares under the Securities Act which became effective on May 14, 2024. We will pay a commissionof up to 3.0% of gross sales proceeds of any common stock sold under the Cantor Sales Agreement. In 2024, 10,440,000 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement, all during the third quarter of 2024, and we received net proceeds of $29.7 million after Cantor's commissions and direct offering expenses. During the nine months ended September 30, 2025, 7,244,966 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement, all during the second quarter of 2025, and we received gross proceeds of $17.3 million, or $16.4 million in net proceeds after Cantor's commissions and direct offering expenses of $0.8 million.
Sales of our common stock under the Cantor Sales Agreement could be subject to business, economic or competitive uncertainties and contingencies, many of which may be beyond our control, and which could cause actual results from the sale of our common stock to differ materially from expectations.
Liquidity
We believe that our existing cash and cash equivalents, combined with our future expectations for product revenues, research and development revenue, and expense management will provide adequate funds for planned ongoing operations, capital expenditures and working capital requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our capital resources sooner than we expect.
However, we may need additional capital if our current plans and assumptions change. In addition, we may choose to seek sources of capital, which may arise through a combination of equity offerings, debt financings, other third-party funding and other collaborations, strategic alliances and partnering arrangements, even if we believe we have generated sufficient cash flows to support our operating needs. Our need for additional capital will depend on many factors, including the financial success of our business, the spending required to develop and commercialize new and existing products including our ECO Synthesis manufacturing platform, the effect of any acquisitions of other businesses, technologies or facilities that we may make or develop in the future, our spending on new market opportunities, and the potential costs for the filing, prosecution, enforcement and defense of patent claims, if necessary. If our capital resources are insufficient to meet our capital requirements, and we are unable to enter into or maintain collaborations with partners that are able or willing to fund our development efforts or commercialize any products that we develop or enable, we will have to raise additional funds to continue the development of our technology and products and complete the commercialization of products, if any, resulting from our technologies. If future financings involve the issuance of equity securities, our existing stockholders would suffer dilution. In addition, under our Loan Agreement, we are subject to restrictive covenants that limit our ability to conduct our business and could be subject to additional covenants to the extent we seek other debt financing in the future. We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. If we fail to raise sufficient funds and fail to generate sufficient revenues to achieve planned gross margins and to control operating costs, our ability to fund our operations, take advantage of strategic opportunities, develop products or technologies, or otherwise respond to competitive pressures could be significantly limited. If this happens, we may be forced to delay or terminate development of new products or services, such as our ECO Synthesis manufacturing platform, or the commercialization of products resulting from our technologies, curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights, or grant licenses on terms that are not favorable to us. If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.
Cash Flows
The following is a summary of cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):
| Nine Months Ended September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Net cash used in operating activities | $ | (39,468) | $ | (32,942) | ||||||||||
| Net cash provided by (used in) investing activities | 17,789 | (54,117) | ||||||||||||
| Net cash provided by financing activities | 27,748 | 59,390 | ||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 6,069 | $ | (27,669) | ||||||||||
Cash Flows from Operating Activities
The $6.5 million increase in net cash used in operating activities for the nine months ended September 30, 2025 as compared to the same period in 2024, was primarily due to the net effect of decreases in cash received from revenue, increases in cash paid for operating expenses and unfavorable changes in working capital, including higher financial assets and lower accrued compensation.
Cash Flows from Investing Activities
The $71.9 million increase in net cash provided by investing activities for the nine months ended September 30, 2025 as compared to the same period in 2024, was primarily due to proceeds from maturity of short-term investments offset by cash utilized for purchase of short-term investments.
Cash Flows from Financing Activities
The $31.6 million decrease in net cash provided by financing activities for the nine months ended September 30, 2025 as compared to the same period in 2024, was primarily due to the $29.5 million in proceeds from the first tranche of the Innovatus Loan in February 2024, and higher proceeds from issuance of common stock under the Cantor Sales Agreement in 2024, partially offset by the proceeds from the funding of the second tranche of the Innovatus Loan in June 2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions in the preparation of our consolidated financial statements and accompanying notes. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies or estimates during the three and nine months ended September 30, 2025 from those discussed in our Annual Report.
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