Good day ladies and gentlemen and welcome to Third Quarter 2014 Codexis Earnings Conference Call. My name is Kim and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Ina McGuinness, Managing Director of LifeSci Advisors. Please proceed.

Thank you, Kim. Earlier this afternoon, Codexis released its financial results for the quarter ended September 30, 2014. The press release is available on the IR page of codexis.com. If you’ve not received the press release or if you’d like to be added to the company’s distribution list, please call LifeSci Advisors in New York at 646-597-6979 and speak with Veronica Melina. This call is being webcast and a replay will be available on the Company’s website for 30 days. All information provided on today’s call is as of the date of the live broadcast, Tuesday, November 4th, and except as required by law, Codexis disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Participating on today’s call from the company are President and Chief Executive Officer, John Nicols; EVP, Chief Administrative Officer, General Counsel and Secretary, Doug Sheehy; and Chief Financial Officer Gordon Sangster. And with that, I’d like to turn the call over to Doug Sheehy. Doug?

Thank you. During today’s call, management will make a number of forward-looking statements. These forward-looking statements include our forecast for a number of full-year 2014 financial metrics, including total revenue, total gross profit, and cash flow. Our expectation is that, under our agreement with GSK, we will collect the milestone payment in 2014. We will remain on track for completing Wave Two Tech Transfer activities in 2015 and expect to receive a Wave Two milestone payment in 2015. Our expectation that we will see year-on-year sales growth with two food industry customers, our expectation that we may see a potential decline in argatroban revenues and the benefits that CodeEvolver license can bring to a potential licensee. These forward-looking statements are based on assumptions and are subject to risks and uncertainties that can cause actual results to differ significant from those projected during the call. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Please refer to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2014 and our subsequent SEC filings for some of the important risk factors that can cause actual results to differ materially from the forward-looking statements made on this call. Now, I’d like to turn the call over to John Nicols.

Good afternoon and thank you for joining us. As we look towards closing out the year in less than two months, we can say already that 2014 will turn out to be a year of significant progress on many key fronts for Codexis. This quarter, we have shown excellent momentum in our core business. We’ve continued to take on new pharma clinical trial orders and have also been successful in expanding outside of the pharmaceutical market. Through our landmark agreement with GlaxoSmithKline announced in July, we have opened up a new pathway for more widely applied biocatalysts across the world’s drug manufacturing. On the financial side, we reported total revenues in Q3 of $7.5 million, driven in part by the highest R&D service revenue we have achieved in any quarter in the last two years. Today, we are reiterating our guidance for the year, which we raised following the announcement of our agreement with GSK. Gordon Sangster will go into more detail on the financials in a few minutes. The growing recognition of our value proposition for designating novel biocatalysts for our clients has led to a steadily growing stream of funded R&D projects. In parallel, we become increasingly efficient at minimizing the cost and time to deliver these projects. In addition to helping to drive solid short-term financial results, these projects also broaden our active customer base and bode well for future commercialization successes that can come from the se earlier stage biocatalysts R&D projects. We are pleased to report that we have secured three new material biocatalysts orders for clinical trials with two major pharma accounts during the third quarter. We expect to deliver all of those new orders in the next few quarters. Two of the others involve follow-on biocatalyst shipments where we previously supplied smaller quantities…

Thanks, John. I am very pleased to be here. Now let me review the quarter’s financial results. Revenues for the quarter ended September 30, 2014 were $7.5 million, a 90% increase from $3.9 million reported in the third quarter of 2013. Breaking our revenues by category, biocatalysts product revenues which consists primarily the sales of biocatalysts intermediates, APIs and Codexis Biocatalyst Panels and Kits, were $2.6 million, an increase of 138% compared with $1.1 million a year ago. This was primarily attributable to an increase in sales of enzymes for food-related products. Biocatalyst research and development revenues rose 66%, year-over-year to $3.4 million compared $2.0 million reported in the third quarter of 2013 due mainly to an increase in the number and scale of projects in our pipeline. Revenue sharing arrangement sales were $1.5 million, an increase of 84%, year-over-year and relate to the license to Exela Pharma Sciences for the anticoagulant drug argatroban. The decrease we saw from the $2.1 million reported in the second quarter was the result of the generic competition that John referred to. Turning to expenses, research and development expenses in the third quarter of 2014 declined 26% year-over-year to $5.0 million. The decrease was primarily due to lower depreciation expense resulting from the disposal or write-off of equipment related to discontinued products and projects and lower expenses resulting from headcount reductions associated with company-wide restructuring implemented in late 2013. Selling, general and administrative expenses declined 12% to $5.2 million, due primarily to reductions in headcount and other expense reductions related to the late 2013 restructuring as well. Net loss for the third quarter of 2014 was $4.6 million, or $0.12 per share, compared with a net loss of $9.3 million or $0.24 per share, for the third quarter of 2013. We included a section…

We are ready to start the question and answer session operator.

(Operator Instructions) Your first question comes from the line of James Liberman from Wells Fargo Advisors. Please proceed. James Liberman – Wells Fargo Advisors: Greetings. It sounds like there is an awful lot of activity going on there. And I appreciate the overview. Are you able for the layperson to give some color on the – on any of these items, the biocatalysts overhaul of an existing biopharma, how that differs from anything else you are doing or this new class of biocatalysts that you talked about?

Hey, Jim, thanks for the question. This is John. Yes, when we develop new biocatalysts, we are basically designing a protein from our CodeEvolver technology. We are targeting a catalyst that is based on that protein that targets a specific chemical transformation. When you build a drug molecule and API and add the pharmaceutical ingredient, it usually takes multiple steps for the manufacturing process to get to the ultimate API. Our biocatalysts are designed to make some or multiple of those steps, more efficient for the production of that ultimate API. When we target a non-pharmaceutical application like these food industry applications that we referenced on the call today, it’s a very, very similar approach. Those customers are also doing multi-step complex chemistry transformations and our biocatalysts are equally potentially well designed to help their manufacturing processes and inside our shop, we are doing exactly the same activity to design a novel protein using our CodeEvolver technology. So, it’s a generic process that can target many different kinds of chemistries in multiple industries. So hopefully that gives you some of the color you are looking for, but if not, please if you have a follow-one question… James Liberman – Wells Fargo Advisors: Well, I can step back into the queue for now. Thank you.

Okay, okay, thanks, Jim.

Your next question comes from the line of Mark (inaudible) from (inaudible) Investment Advisors. Please proceed.

Hi, John. Thanks for taking my questions. So, I am kind of new to the story and I have been focusing on the biocatalysts. So you kind of enlighten me about the food ingredient customer as far as what are they looking for like how can you help them and then how big could this market be?

Sure, thanks, Mark. A pleasure. Like I said to Jim earlier, we are – the customers are performing traditional chemistry to affect the process for the specific product. What we do is, we walk in and we introduce a different way to build their particular chemical using a novel biocatalyst that we develop and design for them. By doing that, we can reduce the amount of waste that they generate from their process, at times we can improve the yield of the raw material to make their product, we can reduce the – make the operating conditions easier for their manufacture and sometimes, we can even do multiple steps with one biocatalytic step. Any of these successes will liberate a lot of cost savings for our customer and if we are able to do so, we are able to share in that and make some money by the sale of our biocatalyst for them. That’s generally what we do. And it’s no different in the food ingredient or the food industry opportunities that we referenced here. The specific food ingredient opportunities we see these as larger potential long-term commercialization revenue opportunities for our company than a typical API and those – and they are also closer – they have shorter development times for us, because unlike in the pharmaceutical industry, we won’t be health captive to the very long development clinical trial cycles of development of the drug. So, they are generally larger revenue opportunities should they commercialize successfully and they are quicker to market for us. So this encourages us about the prospects of applying our biocatalysts outside of pharmaceutical and we are really excited that we’ve announced a second industry partnership with a second major client outside of pharmaceuticals.

Another pleasant surprise. So, in the world of like corporate cost saving, there is no doubt what type of asset that you bring to the table as far as drug developments? It makes us an exciting story. So I guess, as an anecdotal, so after your GSK announcement, have you received increased interest and can you kind of fill us in regards to what people are asking you now, now that this really put you on the map?

We’ve been developing and strengthening our pipeline for years now for the pharmaceutical space and now we are doing similar work outside of pharmaceuticals. The GSK deal has enhanced the buildup of an attractive pipeline of projects that we are working on. One of the items we have referenced in the call today was the growth in our funded R&D projects which you can see directly in the biocatalysts R&D revenue category. It’s the strongest biocatalyst R&D revenue that we generated in any quarter over the last couple of years. That’s a reflection of Codexis taking on new biocatalyst projects for our clients. So that number goes up, the general all things equal means we are working on more projects and/or we are charging getting paid for those at increasing rates. And so, the prospects, the enhancement the improvement of project flow has been very solid and has been buffeted by the GSK announcement. In addition, as I referenced in my remarks, we see broad applicability of the possibility of doing a deal like we did with GSK with other major clientele. We’ve started those discussions with other companies. We are encouraged; we have no specific news to highlight at this point. But we are optimistic that we will generate successes of a GSK like CodeEvolver license deal in the coming future to share with our investors at some point.

Okay, got you there. The addition of Pam to the board, does that open doors see that mark or could that be considered a conflict of interest?

We don’t – she wouldn’t have been able to join if there was any remarkable conflict of interest and she is a seasoned veteran of Merck for almost two decades. So I would suspect she could theoretically open doors. We have an excellent relationship with Merck and she can only enhance that I think.

So you definitely – you guys are definitely going to follow, do you have a fantastic story, I mean, even in an environment where major companies have trouble increasing top-line growth and looking for savings, there is no doubt what you bring to the table can save people lot of money, so, are you thinking of – how are you thinking promoting the story going forward?

Yes, we are – the company has had a lot of transition over the last few years. When I first joined two years ago, we were talking more about biofuels than we were – than we are today. Today we are not talking about that at all. We have also been – but our investor base has shifted to – have shifted more slowly to the pharmaceutical-oriented or the life science oriented investor base. So, with our new CFO, Gordon is a veteran of decades in the life science industry. He has got a great role of relationships with investors and with the help of LifeSci Advisor as our IR firm we are making progress and we think we can continue to accelerate it going forward. And then if you had anything else, you might want to say Gordon?

No, I think that’s fine. I think Mark tried it’s – well it’s under full of stories. So I am looking forward to being able to talk about it.

And my last question, as I ask this I am a long-term investor, so, but why wouldn’t buy a pharma company just buy you out, meaning, listen, I am taking you off the table, so you can’t do that for anybody else, they have to develop their drugs, it will take longer, they got to spend more money. It’s not a no brainer?

I don’t know, Glaxo had multiple choices before they chose to do a license with us and they could have considered that thought or they could have worked with somebody else. The reality is Codexis is sharply focused on continuing to bring forward the world’s best protein engineering capability that’s our life blood. That’s where we live and die to do. We are applying it for multiple drugs, we’ve been working on this technology for a decade plus and we are doing it for a wide variety of customers now across our industries. It’s a big drug company where it take us over, you could argue that that focus and that sharpness to make sure that we maintain the world’s leading protein engineering capability could easily get lost inside of a big company and I think that there is some consideration by – in your words a big biopharma company taking us over to see if that makes sense or not. So, I think this is what we do, this is what we focus on and we expect through that focus and sharpness that we’ll be able to maintain in a very fast-moving technological world of protein engineering.

I think there is more upside to let your story play out. No doubt about that. So, I appreciate taking my questions and good luck going forward. .

Thank you, very much Mark. Appreciate it too.

Your next question comes from the line of Greg (inaudible). Please proceed.

Hi, John.

Hi, Greg. How are you doing?

Great, Thanks for taking the call. So I had a couple questions in the food area for these enzymes. Does this require any sort of GRAS approval before the manufacturer can utilize this in their production process?

Yes, it does.

So, so far, is it safe to assume that the first million dollars of product that you sent, has that received GRAS approval or this is the beginning of the process to get GRAS approval?

We – our enzyme has received GRAS approval already.

IT has, okay, so, it was a million in sales during the third quarter for them to test market to bring this product down, is that the way, is that what I heard?

When we announced this partnership back in – I believe the second quarter of last year, we started with a project to improve the activity of the enzyme. Since that point of time, into the beginning of this year, starting somewhere in the first half of this year. The emphasis shifted from identifying the most active enzyme for the application to actually scaling up and getting registration approvals for that enzyme. We scaled up the enzyme during the last few quarters. We produced in our commercial scale facilities, we received GRAS approval. We delivered a substantial amount of that enzyme to our clients. They have run it through their comme3rcial facilities in the third quarter. And we collected significant revenue accordingly. So, hopefully, that gives you a real clear feel for a recent history of that food ingredient business.

Well, a follow-on to that is, is this something that could be a $1 million a quarter revenue producer for you or sales producer for you if they were to continue to roll this out?

It could be, we are really now dependent on our customer success with their customers. So, they have made their new food ingredient using our enzyme in their commercial facilities and I understand that they have samples to their customers the product that they make. But it’s a new product for them and so, the ultimate success for them and therefore for us will how well does our customers’ customers like that new product from them and that’s the main developmental question for us. But if that goes well, it could be in the order of $1 million a like you asked..

Okay, or greater, I guess, depending upon the demand.

Sure.

So the second food ingredients customers are you – where are in the approval process for that enzyme?

We are designing an enzyme for them at this point. So much earlier stage. Much more like what we were doing for the first food industry client back in the middle of last year and we are trying to identify a more effective enzyme for their applications. And then ultimately it will lead to the need for scale up and registration and trials of commercial quantities which we haven’t begun those activities yet, because we are in the search for the ideal enzyme. It’s an R&D project for some period of time.

Is this is a different food ingredient company, not the same one, correct?

It’s a different client in the food industry, correct.

Okay, and is it for a totally different application for food ingredient?

Yes, it’s completely different.

So there is no, - there won’t be any overlap?

That’s correct.

Okay. If I can ask a couple more questions, you announced it in the biocatalysts for pharmaceutical companies that two of them were following orders and the third is a biocatalyst and it’s planning a customer’s traditional norm biocatalyst. Does that require FDA approval in the process for them to approve this or not?

In all three cases, of course, these are clinical stage projects for our customer. So it’s before FDA approvals for our customer and these all three of these orders are at a stage in our customer’s clinical development process before they have to file their manufacturing process for the targeted API. So, that’s the nice part about working with our client in the development stage is that it’s before all the regulatory – major regulatory issues started off that could impact Codexis’ biocatalyst. If we start working with the customer after FDA approval, like we just indicated our first project with GSK is, those will require some measure of re-registration approval by our customer versus their traditional process.

Do you have any idea how long that will take to get that approval through?

It varies and it – sometimes they don’t even need to do anything for the FDA to switch their process to biocatalytic process.

Okay.

It varies very much depending on the project.

So, big drug companies, pharmaceutical companies have done this before they’ve changed their process to create the API and it doesn’t?

Yes, yes, it’s extremely common in the clinic for them to go from one process to another before they do the FDA registration filing. And then after if we work with them, after FDA approval to switch to a biocatalytic process, then we’ve got multiple experiences helping our clients to get approvals for that. Most notably, we went through that process with the Merck as we introduced a substantially lower cost biocatalyst for their Genuvia diabetes drug a couple of years back.

Okay. You mentioned in a previous call about, you all talking about possibly working with a fine chemicals company or fine chemicals business or did I not hear that correctly?

Yes, we used a very wide definition for fine chemicals. We reached out to multiple different industries and continue to do so looking for ideal complex chemistries that are practiced in those industries to see if we could bring cost savings through our biocatalyst approach. So far, the best successes that we’ve had outside of the pharmaceutical in that took out fine chemical space, has been in the food ingredients in the food industry. And those have led to the successes that we spoke to quite a bit in today’s call. But the biocatalyst approach to building chemicals can apply in a wide set of other potential industries including fiber fragrances and agricultural and we’ve spoken to efforts to try to break into those industries. We haven’t had any material news in industries besides the food space over the last year or two.

If I get, do you have time for a couple others or you want me to get back in queue?

I think, take two more for Greg.

Okay. So, is the new director with Merck, her whole concentration is working in China looks like, is there the potential, do the Chinese utilize any or have you – it seems like there is a potential for Codexis to license its technology in China. Their pharmaceutical industry or fine chemicals business is probably be totally different.

They have a very different complexion. The pharmaceutical industry in China is much more focused on the generic drugs and manufacturing for big pharmaceutical companies. But we are excited to bring Pam’s Chinese expertise, frankly Asian expertise to the company. We look forward to leveraging her expertise and knowledge to potentially open up significant opportunities for us in Asia-Pacific.

Okay. And then the second question, at the very end of the call, you all mentioned about having a potential supply issue with the supplier of – when most of your clients or your customers want more than one supplier or one that you can demonstrate more than one supplier and how much confidence you have this one supplier is not going to source you before the year end?

Yes, we mentioned this issue because we’ve been working with this supplier to us over about the last month to deal with this manufacturing issue. They haven’t solved the problem yet. We are confident that they will. It’s very hard to know when they will solve their manufacturing issues. And so, we chose to identify the worst case potential revenue impact, if the manufacturer can’t solve it for the remaining eight weeks of the quarter. So, that’s one. Number two, we manufacture in-house, we manufacture through this contract manufacturer, we have manufactured products for ourselves through other manufacturers as well. And it’s a careful balance with our clients whether we go through the time and expense of qualifying multiple sources. Sometimes that makes sense for our customer, sometimes they are comfortable. We think we are striking a good balance in terms of the supply chain risk, but we have entered into this situation which we talk was notable enough to highlight. But nonetheless we start – maintained our guidance for the year, because we think that that we will be able to hit our guidance as we work through this issue, but it’s possibility that we might not.

If you don’t work through the issue by the end of the year, do you think you will notify us your investors or do you think we will have to wait until March for your next conference call?

We’ll just have to see how this plays out. We don’t know yet.

Okay, thank you very much. I appreciate you’ve taking my questions.

Those were good questions. We appreciate your interest. Thanks.

And ladies and gentlemen, that’s the all the time do we have for the rest of today’s call. I will now hand the call back over to John Nicols for closing remarks. .

Okay, thank you. Thank you very much for participating on today’s call and we look forward to providing you – update on our progress in the next quarter. Thank you very much for your interest in Codexis.