May 10, 2018
Executives
Jody Cain – LHA John Nicols – President and Chief Executive Officer Gordon Sangster – Chief Financial Officer
Analysts
Brandon Couillard – Jefferies Matt Hewitt – Craig-Hallum Capital Swayampakula Ramakanth – H.C. Wainwright
Operator
Good day, ladies and gentlemen, and welcome to the Codexis First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Later, there will be a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to turn the conference over to Jody Cain. Ma’am, you may begin.
Jody Cain
This is Jody Cain with LHA. Thank you for participating in today’s call to discuss Codexis’ first quarter financial results and the company’s business progress.
Joining me from Codexis are John Nicols, President and Chief Executive Officer; and Gordon Sangster, the company’s Chief Financial Officer. During this call, management will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 to the extent the statements made by management are not descriptions of historical facts regarding Codexis.
They are forward-looking statements reflecting the current beliefs and expectations of management as of May 10, 2018. 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 the company’s control and could materially affect actual results.
For details about these risks, please see the earnings news release that accompanies this call and the company’s SEC filings. Codexis expressly disclaims any intent or obligation to update forward-looking statements, except as required by law.
Now I’d like to turn the call over to John Nicols. John?
John Nicols
Thanks, Jody. Good afternoon, everyone, and thank you for joining us.
I’m proud to report another quarter of exceptional execution by the Codexis team and to provide an update on our progress and plans. But before that, I want to give a special thanks to the investors who participated in our recent follow-on equity offering and to extend a warm welcome to our new shareholders.
We very much appreciate your confidence in Codexis. In reviewing Q1 highlights, we’re off to a strong start in 2018 with consolidated revenues reaching $14 million, up 76% from the prior year.
R&D revenues led the way, increasing 230% versus the prior year quarter. Product revenues were up double-digit year-over-year as well.
Investors will note that we are sharing segmented financial results for the first time starting this quarter. While our CodeEvolver platform technology is used throughout to discover novel proteins, commercializing those proteins will drive a very different long-term P&L, whether as a performance enzyme or as a novel biotherapeutic.
Now you’ll be able to cleanly track those independently. Additionally, segment reporting will allow for visibility into the businesses’ underlying profitability by stripping out the corporate overhead expenses.
For example, it is great to see that in Q1, the combined segments were profitable, excluding corporate expenses. Let me go through each of the business segments now in turn.
For the Performance Enzymes business, we aspire to become one of the world’s leading catalyst and specialty enzyme companies long-term. We plan to deliver this by continuing growth in our strongest historical arena, enzymatic catalysts or biocatalysts, for pharmaceutical manufacturing.
On top of that solid growing foundation in pharma, we will engineer and commercialize a portfolio of high-performance enzymes for use in other industrial segments that can benefit from our protein engineering prowess. Our aim is to make Performance Enzymes a high-growth, high-margin, fully profitable business, and we have been making great strides in this regard.
Detailing our Performance Enzymes results, I’ll start by sharing the multiple ways we’ve expanded the penetration of our biocatalysts within the world of pharmaceutical manufacturing. Led by sales to Merck, five pharmaceutical customers contributed revenues of greater than $200,000 each in the first quarter.
Three commercial installations contributed most of our product revenues, but additionally, over $500,000 of revenue came from two late-stage pre-commercial product deliveries in the quarter as well. Pharmaceutical customers were also key contributors to our strong R&D revenues in the quarter.
These were generated by Merck and another top 10 pharmaceutical customer, who utilized multiple dedicated protein engineering project teams inside our R&D operations throughout the quarter. In addition, three early-stage biocatalyst screens were the first ever delivered to each of three large customers, two of whom are in the global top 25.
One of these has translated into a six-digit protein engineering project that we have already started in the second quarter, our first with a leading Japanese customer. We also recently signed and rolled out a significant new partnership with Porton Pharma Solutions, a globally leading custom development and manufacturing organization, or CDMO, serving the pharmaceutical industry.
The partnership is designed to extend our reach into the many small and virtual pharmaceutical companies who mostly rely on CDMOs to design their processes. In our opinion, biocatalysts have not been properly considered in these customers’ processes, and our partnership with Porton aims to change that.
Porton agrees as well and has put their money where their mouth is, committing to a low seven-digit dollar per year minimum use of Codexis’ protein engineering services to design new biocatalysts to lower the cost of their customers’ processes. Operationally, the unique partnership will increase the speed to screen and install Codexis’ biocatalysts inside Porton’s customers’ processes.
Success will be measured by the number of Porton’s installations of our biocatalysts near term. Longer term, we have also granted rights to Porton to make those biocatalysts, enabling costs to be reduced even further, adding to the prospects of accelerated adoption of Codexis’ proprietary biocatalysts in pharma manufacturing.
On top of this excellent, widening progress in pharma, we have also delivered remarkable results for our Performance Enzymes targeting other industries in the quarter as well. Once again, our revenue to the food industry exceeded 10% of our total Performance Enzymes revenues, led by the R&D revenues from our second major project started in March of last year with Tate & Lyle.
We have now successfully completed the protein engineering R&D for the enzymes that are key to enabling the low-cost route to the targeted food ingredient. The enzymes engineered met or exceeded all of the predetermined performance metrics envisioned upfront by Codexis and Tate & Lyle.
Accordingly, we have recently shifted the program and have begun the scale-up and commercialization activities together. This entails validating the manufacturing of our enzymes at commercial scale, trialing them in Tate & Lyle’s operations, plus achieving the key regulatory milestone, the FDA’s Generally Recognized as Safe, otherwise known as GRAS, self-affirmation, which we expect before 2018 year-end.
We will then hope to see Tate & Lyle succeed in selling the food ingredient into their market thereafter. Exciting progress so far this year for one of the largest target product opportunities in our Performance Enzymes pipeline.
Rounding out our Performance Enzymes segment, we continue to make progress introducing a stream of new high-value enzymes that are targeting today’s $600 million and growing enzyme market for molecular diagnostics and molecular biology applications. For our first product, a DNA ligase, our internal testing showed a breakthrough trace DNA conversion of more than 90% in less than 3 minutes.
Customer beta test results are now coming in from multiple accounts corroborating our enzyme’s advantages for use in next-gen sequencing. Our market development team, fresh from promotion at the AMP Europe conference, is working to secure commercial position with those firms, and our R&D teams are working to engineer our second high-performance enzyme to be offered for beta testing with similar customers before year end.
And finally, we are pleased to announce a third novel enzyme that we have recently made available for customer beta testing. This enzyme is a messenger RNA polymerase that targets a unique set of customers.
Critical to the efficient manufacturing of a growing class of early-stage mRNA therapeutics, our enzyme enables targeted manipulation of designer RNA strands in a unique cost-effective manner. Preliminary customer beta test results to date for this new enzyme have also been very positive.
Let me now shift to our Novel Biotherapeutics discovery and development business. Here we aspire to validate and monetize CodeEvolver as an efficient, widely applicable biotherapeutics discovery engine.
Both through partnerships and by our self-funded programs, we aim to advance a pipeline of biotherapeutic candidates of significant long-term value to patients and our shareholders. We currently have six biotherapeutic programs in early-stage development, four self-funded and two in partnership with Nestlé Health Science.
For our lead biotherapeutics program, we continue to successfully advance on schedule the development of our oral enzyme therapeutic candidate, CDX-6114, for patients with phenylketonuria, or PKU disease. I am pleased to inform that this week we have filed our submission to the Australian Ethics Committee requesting approval to conduct a Phase 1 single-ascending dose study of CDX-6114 in healthy volunteers.
We expect to secure regulatory approval to commence the Phase 1 trial by the end of the second quarter of 2018. Assuming the trial is approved, we will immediately commence volunteer enrollment and shortly thereafter effect our first in-human dose.
That milestone will earn us a $4 million payment from Nestlé Health Science. We expect the top line report from the Phase 1study to be finalized in the fourth quarter this year.
We look forward to keeping you posted on our progress on CDX-6114 and our other biotherapeutic candidates as we progress through this year. And finally, before handing off to Gordon, it is terrific to note that the cash on our balance sheet has been bolstered by the $37 million net proceeds from our follow-on offering in April.
With that cash, we are well positioned to advance our internal biotherapeutics programs as well as to capitalize on a wealth of additional opportunities for our proprietary CodeEvolver technology to further penetrate current markets and enable expanding into additional industrial verticals. Let me now turn the call over to Gordon to provide more details on our financial results.
Gordon?
Gordon Sangster
Thanks, John. As John mentioned, total revenues for the first quarter of 2018 were $14 million, up 76% versus Q1 of 2017 and consisted of $10.7 million from the Performance Enzymes segment and $3.5 million from the Novel Biotherapeutics segment.
R&D revenues were up 230% to $7.9 million and included significant contributions from Nestlé Health Science related to the development of CDX-6114 as well as other projects, and from Tate & Lyle and another top 10 pharma company, and recognition of the license fee from Merck. Product revenues for the first quarter of 2018 were $6.2 million, up 10%, primarily due to strength in protein catalyst revenues to Merck for Januvia.
Gross margin on product revenues for the first quarter of 2018 was 38% compared with 46% for the first quarter of 2017, with the decrease due to product mix. Turning to operating expenses, R&D expenses were $7.2 million for the quarter, including $5.1 million for the Performance Enzymes segment and $1.9 million for the Novel Biotherapeutics segment.
The increase from $5.8 million a year ago was primarily due to higher outside services related to CDX-6114 and to costs associated with an increase in headcount and lab supplies. Lab supplies expense increased as a result of the increasing number of projects flowing through our R&D facility due to increased efficiencies.
SG&A expenses for the first quarter of 2018 were $7.7 million, which includes $2.1 million from the Performance Enzymes segment and $0.1 million from the Novel Biotherapeutics segment and $5.4 million in corporate costs. The increase from $6.6 million last year was due primarily to higher outside services, accounting fees, legal fees and employee compensation, partially offset by lower depreciation expense.
The net loss for the first quarter of 2018 was $4.7 million or $0.10 per share, which compares with a net loss for the first quarter of 2017 of $7.5 million or $0.18 per share. On a non-GAAP basis, the net loss for the first quarter of 2018 was $2.5 million or $0.05 per share versus a non-GAAP net loss a year ago of $5.5 million or $0.13 per share.
Cash and cash equivalents as of March 31, 2018 were $24.3 million versus $31.2 million as of December 31, 2017. As John mentioned, subsequent to the close of the quarter, we completed a public offering for net proceeds of $37.2 million.
Today we are reaffirming the 2018 financial guidance we introduced on our last conference call in March. Our revenue guidance is based on the modified retrospective adoption of ASC 606, and a reconciliation will be available in our Form 10-Q, which we plan to file today.
We expect total revenues for 2018 to be between $60 million and $63 million, and this represents a 20% to 26% increase over 2017. We expect approximately 40% of revenues to be reported in the first half of the year and 60% in the second half.
Our revenue guidance does not assume another major transaction. We expect product revenues to be between $25 million and $28 million.
We expect gross margin on product revenues to be between 45% and 48%, and we expect operating expenses to be relatively unchanged from 2017 at around $60 million, with expenses spread evenly throughout the year. With that, I’d like to turn the call back to John.
John Nicols
Thanks, Gordon. We’re off to a great start in 2018 to hit our core financial and strategic objectives.
We are highly optimistic about our long-term growth prospects. Our strategy begins with our relentless focus on our CodeEvolver protein engineering platform technology.
Proprietary artificial intelligence competencies are at the center of our ability to discover proteins that meet our customers’ need at an ever-increasing pace. Merged with our cutting – with other cutting-edge synthetic biology practiced by the dynamic scientific teams at Codexis, CodeEvolver is a unique product-creating, revenue-generating machine.
CodeEvolver is at the core of all of our recent successes and will continue to be the competitively advantaged scientific heart of the company going forward. In our Performance Enzymes business, we will continue to accelerate our penetration of pharmaceutical manufacturing with our growing portfolio of protein catalyst products.
We will broaden our reach across more customers and processes and through innovative partnerships, such as the one just struck with Porton Pharma Solutions. We will deepen our impact within more of the world’s largest pharmaceutical companies like we have done with three clients, who are each using Codexis’ dedicated protein engineering teams and/or operating under CodeEvolver platform licenses.
We will generate 100% margin on revenues from the back ends of our platform licensees, with these revenues expected to begin ramping in the second half of this year and to be in the low million dollar range in 2018. We will amplify our growth in the Performance Enzymes segment by extending CodeEvolver to serve a growing list of industrial verticals beyond pharmaceuticals.
Expanding the partnership in the food industry with Tate & Lyle and successfully penetrating the molecular diagnostics and molecular biology markets with unique high-performing enzymes are only the beginning of Codexis’ reach into the growing $6 billion industrial enzyme marketplace. And finally, we are further establishing the significance of our Novel Biotherapeutics discovery and development business.
Successfully validating CDX-6114 this year in the company’s first clinical trial will be a pivotal start, and we expect and plan for more biotherapeutic discovery and development successes to be spawned by CodeEvolver and the Novel Biotherapeutics team over the medium and long term as well. With these comments, I would like to open up the call for questions.
Operator?
Operator
Thank you. [Operator Instructions]
John Nicols
While we’re waiting for our first question, I’d like to mention that we’ll be attending three upcoming investor conferences. We’ll be attending the 15th Annual Craig-Hallum Institutional Investor Conference being held May 30 in Minneapolis.
We’ll also be at the KeyBanc Industrials and Basic Materials Conference in Boston being held May 31 in Boston. And we’ll be presenting at the Jefferies Healthcare Conference in New York with our presentation scheduled for June 8.
A webcast of our presentation at the Jefferies conference will be posted to the Investors section of codexis.com. Okay, operator, we’re ready for the first question.
Operator
Our first question comes from Brandon Couillard with Jefferies. You may begin.
Brandon Couillard
Thanks. Good afternoon.
John, with respect to the Tate program, the number 2, I guess, Tate number 2, the R&D project, it sounds like that’s moving forward and will shift into product revenues next year. Can you remind us of the size of that opportunity relative to the first program that’s already in product revenues?
John Nicols
Yes. Thanks, Brandon.
So the second program with Tate & Lyle, we estimate, is addressing an even larger product opportunity for Codexis than the first one, and we could see that the revenues ultimately potentially generated at peak for the second program could be close to a $10 million per year kind of product opportunity. So this is definitely one of the largest product opportunities we’re addressing, and the progress that we’ve made with Tate & Lyle is remarkable so far.
And we’re really encouraged that the program will succeed and that Tate & Lyle will be successful in their markets, leading to those kinds of revenue opportunities for the company.
Brandon Couillard
And then on – with respect to the Porton deal, will you be getting data back from them? And could you describe in what way that will be valuable to you?
And then what’s the timeline that you sort of have in mind for when they might be ready to install from your enzymes in commercial campaigns?
John Nicols
Great, yes, the first question is a really good one. So we’ve set up a very real-time, seamless partnership with Porton.
They’re going to be ready soon to do high throughput screening using Codexis enzymes in several of their R&D facilities – several of their process development facilities both in the U.S. and China.
And they’ve committed to do the screening against essentially all of the processes where biocatalysis is theoretically viable. They’ve also – and through a steering committee approach, they also will provide us with the data from the screening results on our catalysts.
They will also provide us with a comparison of the cost of alternative chemistry approaches to design the same intermediate or API. So with that data, Codexis and Porton will have basically a gap analysis how is the relative cost of a biotransformation using today’s enzymes as it compares to best-in-class alternative chemistry routes.
And that kind of data is going to be very valuable to assess, first of all, are the existing enzymes that are available commercially today, are they sufficiently economic to install long term? Or how close are we to beating the alternative economic?
And if we’re close enough, that would drive the protein engineering R&D that’s core to CodeEvolver to make the improvements to the existing enzymes to outcompete alternative chemistry. So it’s a really exciting, very seamless partnership, and we’ll be getting a ton of data that’s very objective and, frankly, better data than we usually get from our traditional large pharma customers.
On the timing, your second question, the timing for when we would expect installations is hard to project. I’m hopeful that we’ll have real material penetrations through the Porton partnership as we end this year or begin next year, and we’ll be keeping you posted on how that progresses as we move forward.
Brandon Couillard
That’s helpful. A couple for you, Gordon.
In R&D revenues, could you quantify the Merck license payment? And what was that related to exactly?
And then secondly, on the product gross margin, it looks like you’ll have to average close to 50% over the balance of the year to hit at least the low end of guidance. What would be – what’s your outlook in terms of the – excuse me, the progression of gross margins through the year?
And what would be the drivers of that improvement?
Gordon Sangster
Yes, Okay. So the first piece is the license to Merck was granted at the beginning of the first quarter and relates to giving them permission to manufacture some product at one of the CMOs that we use.
And so for that, we were granted a license – we granted them a license for about just over $1 million, okay? In terms of margins, we had a heavy quarter in Q1 for sitagliptin, which drew our margins down a bit, but we’ve got some high-margin opportunities for shipments in the second half of this year.
So we were able to keep our product margin guidance as we originally had at 45% to 48%.
Brandon Couillard
Very good. I’ll hop back in the queue.
Thank you.
John Nicols
Thanks
Gordon Sangster
Thanks.
Operator
Thank you. Our next question comes from Matt Hewitt with Craig-Hallum Capital.
You may begin.
Matt Hewitt
Good afternoon, gentlemen. Congratulations to the start of the year.
John Nicols
Thanks, Matt.
Matt Hewitt
A couple of questions. So it sounds like you’re seeing progress with other large pharma companies just based upon some of the comments you made about little bits here and there within the businesses.
But I’m curious, are you – are these programs where they’re coming in and almost – you could almost argue kind of trialing you before they go full on with the CodeEvolver structure deal? Or how are those relationships – how do you see them playing out?
John Nicols
Yes, a really good question, Matt. I would just say that we’re deepening across a wide set of large pharmaceutical customers.
And the typical progression is to screen what we have, and that’s pretty straightforward. And almost every top 25 company – 21 actually out of the top 25, are at least screening and using our commercially available enzymes to some extent.
But that’s pretty modest revenue for Codexis. Really today the goal is to get more improved enzymes with break-out cost-reduction opportunities, like we’ve done with Januvia and many other products, to be installed in more of the other top pharmaceutical companies.
And that drives R&D service, that drives us to improve enzymes. And I noted several examples of moving towards those kinds of improvement projects in my prepared remarks.
Beyond Merck and GSK, we now have another top 10 pharmaceutical company that has secured a dedicated protein engineering team that we’re operating here within our Codexis Redwood City headquarter R&D operations. Actually, that third company, which we are not naming at this point, actually drove more than one dedicated team.
So this top 10 pharmaceutical company is really using CodeEvolver to go after a set of their intermediates and APIs for cost reduction. So it’s extremely encouraging to see that particular company widen the applicability.
And clearly, that sets a good stage. Although we’ve yet to affect a platform license with this firm, it sets a good stage for talking more deeply and more validated about the benefits of a CodeEvolver license which, of course, we’re discussing with that firm.
Matt Hewitt
Great. Thank you very much for the color.
With Tate & Lyle, obviously, you’ve had success with them. It sounds like you’re on the brink of launching another product with them.
At what point do you think some of the other players in that market may be perked up, start to pay attention a little bit more? Or is it still requiring a little bit more heavy lifting on your side as far as introducing the opportunities to some of these other large players on the food – some food side in particular?
John Nicols
Yes, the other major food players are aware of Codexis, but they, unlike Tate & Lyle, just haven’t really quite grasped what we can do for them. So I mean, all hands on deck for making these programs with Tate & Lyle a success.
As I detailed for Brandon’s question, this is a fantastic target opportunity for the company, and the program is working really well. It’s been significantly funded by Tate & Lyle.
So we’re really heavily focused on that. And quite frankly, if we commercialize that product, those enzymes, and Tate & Lyle commercializes their food ingredient like we hope, I think that could be a wake-up call beyond what we’ve been able to generate with other food companies.
But again, I don’t want to get ahead of ourselves. We’ve got a great program in the food industry mostly focused on Tate & Lyle, and I think our continuing success there will serve us well to broaden our position in the food industry both with Tate & Lyle and with our clients.
Matt Hewitt
Okay. Okay.
Maybe one for Gordon. You mentioned that you’re now complying with ASC 606.
Was there any impact or do you envision any impact to numbers this year from that conversion?
Gordon Sangster
Overall, no. That’s why we’re able to keep our guidance at $60 million to $63 million for the year.
I think there was certainly some impact in Q1, but that’s being detailed in our 10-Q that’s being filed today. Overall, I think part of it comes down to recognizing revenue per product that has been made under a binding deal for a specific customer with no alternative use.
That product revenue is recognized as soon as it’s ready to be shipped even without actually being shipped. So there’s some intricacies associated with 606 that we’ve come to grips with over the last several months.
But overall, no impact to guidance for 2018.
Matt Hewitt
That’s good to hear. Its about time.
Thank you. Thank you very much.
John Nicols
Thanks, Matt
Gordon Sangster
Thanks, Matt.
Operator
[Operator Instructions] Our next question comes from R.K. with H.C.
Wainwright. You may begin.
Swayampakula Ramakanth
Thank you. Good afternoon, John and Gordon.
Congratulations on the first quarter. A couple of quick questions.
In terms of what you said about Tate & Lyle getting ready to sell a GRAS-certified enzyme from your collaboration. At that point, how would the revenues get impacted, in the sense, what kind – should we expect a certain royalty from that sales?
If that is so, have you said anything to the royalty rate per se?
John Nicols
So let me just speak to short-term revenue outlook. So the R&D services’ use of the protein engineering teams shifts, but for the remainder of this year, most of our revenue with this program will also be showing up in the R&D revenue because we’re set up– if we advanced through GRAS affirmations, we’re set up to earn milestone payments.
So that’s built into our guidance. So the continued near-term success will stay in the R&D services line through this year.
And as we move toward the end of this year and beginning of next year, we’ll start to generate product revenues. And we haven’t detailed the nature of the commercial relationship between Codexis and Tate & Lyle given commercialization of this program.
Naturally, we’re set up to be the supplier of the enzymes to Tate & Lyle. And so I think we’ll disclose more about how Codexis will generate revenues and profits from a successful launch by Tate & Lyle as we get to that chapter towards the end of this year or early next year, but hopefully that helps you in the meantime.
Swayampakula Ramakanth
Yes. And then, actually, it’s exciting that you’re going to get started on a Phase 1 study from the 6114 molecule pretty soon.
Two questions on that front. One, why Australia?
And two, what – is there any color that you can give on the length of time or data expectations? Anything on that front will be helpful.
John Nicols
Sure. Australia was chosen.
We assessed multiple different locations to run the Phase 1 healthy volunteer trial. And Australia, we deemed to be efficient and quick, quicker than most, and maybe somewhat more cost-effective, but mostly it was about efficient filings and speed of approval.
And so that’s why we chose Australia. And to your second question, I mentioned in my prepared remarks that we expect top line report, which is the data from the Phase 1 trial, to be available and ready in the fourth quarter.
Swayampakula Ramakanth
Okay, perfect. And then on the industrial enzymes front, can you give us any additional color as to how the commercialization front is going?
Because I know you had a few folks trialing your enzymes, at least that’s what from the last commentary that I heard of. Where are those trials at this point?
And then the additional enzymes that you referred to in your opening remarks, when would they be ready for evaluation?
John Nicols
Okay. So I’m just going to look back at my prepared remarks.
So we have already received results from beta trial customers’ tests, and multiple beta trial results corroborate our enthusiasm, corroborate the superior performance results from our enzyme, the DNA ligase, versus alternative ligases. So that’s an extremely important and encouraging milestone for the company as to get validation of our internal data, which is the only thing I’ve shared up till this call, by customers’ validation in their workflows.
So that’s very encouraging and it’s more – it’s multiple accounts that we’re getting positive responses in their beta testing. So that’s really good.
On the other two programs, one is the second enzyme for molecular diagnostic. That’s still in the R&D team’s hands to design and engineer that enzyme, and they’re hard at work and are making great progress such that we should be putting that product into the hands of customers, the same customers that we sent our DNA ligase, roughly the same customer set, before the end of the year.
Today I also gave some detail about a third enzyme, and this is – we’re also – this is a very high-performing enzyme. It’s an mRNA polymerase that we’ve designed.
It’s been engineered. We’ve made a material.
We put it in the hands of a number of different customers. These are not next-gen sequencing customers.
These are companies that are involved in discovering and developing mRNA therapeutics. This is an enzyme that’s required for manufacturing the mRNA therapeutic.
And we’ve gotten very positive, encouraging feedback from at least several of those customers since we’ve made the material available. So just another, what we think will be a high-margin, high-value performance enzyme that we expect to start generating revenue in the not-too-distant future front.
Swayampakula Ramakanth
Thank you. Congratulations again and look forward to talking to you soon.
John Nicols
Thanks a lot.
Operator
[Operator Instructions] And I’m currently showing no further questions at this time. I’d like to turn the call back over to John Nicols for closing remarks.
John Nicols
Okay. Thank you very much for your questions.
I’m proud of our strong start to 2018, in particular our revenue performance, and I’m excited about our outlook for a highly productive year, with growth in our core business and entry into additional high-value industries. We look forward to providing ongoing progress updates to you and to speaking with you again when we report second quarter results in August.
We hope to see you at our investor conferences. And in the meantime, we hope you have a great day.
Thank you.
Operator
Ladies and gentlemen, this concludes today’s conference. Thanks for your participation, and have a wonderful day.