Aug 7, 2021
Operator
Greetings and welcome to Codexis' Q2 2021 Earnings Conference Call. [Operator Instructions].
And now I'll turn the call over to Stephanie Marks from Argot Partners. Please go ahead.
Stephanie Marks
Thank you, operator. With me today are John Nicols, Codexis' President and Chief Executive Officer; and Ross Taylor, Codexis' 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 that statements made by management are not descriptions of historical facts regarding Codexis, they are forward-looking statements reflecting beliefs and expectations of management as of the statement date, August 5, 2021.
You should not place undue reliance on the 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. In particular, there is significant uncertainty about the duration and impact of the COVID-19 pandemic.
This means that results could change at any time, and the currently contemplated impact of the virus on the company's operations, financial results, and outlook is the best estimate, based on available information. For details about these risks, please see the quarterly news release that accompanies this call, as well as the company's SEC filings, including Codexis' annual report on Form 10-K filed with the SEC on March 1, 2021, and Codexis' quarterly report on Form 10-Q filed with the SEC on May 7, 2021, as well as Codexis' other periodic reports filed with the SEC.
Codexis expressly disclaims any intent or obligation to update forward-looking statements, except as required by law. And now I'll turn the call over to John.
John Nicols
Thank you, Stephanie. Good afternoon, everyone.
I am very pleased to report exceptionally strong second quarter 2021 results for Codexis. Total revenue for the quarter grew by an impressive 70% year-over-year.
Product revenue more than tripled over a year ago, and product gross margin reached a new high of 71%. We are demonstrating our ability to capitalize on Codexis' rapidly accelerating business model, translating years of groundwork and R&D efforts into impressive top line growth.
We had 22 customers who contributed over $100,000 in revenue in the quarter, 9 of whom contributed over $1 million in revenue. We are firing on all cylinders in our sustainable manufacturing business.
In June, we received a significant new commercial-scale quantity order from an unnamed global pharmaceutical company for one of Codexis' proprietary enzymes. This enzyme is designed for use in the manufacturing process of a therapeutic drug that is in late-stage clinical trials with an accelerated development and regulatory process.
This business will deliver the largest annual sales for a product in the company's history. We raised our guidance in June, upon receipt of the $13.9 million order.
Today, we are raising our revenue guidance again, as we have solidified that order's delivery schedule to be executed within 2021 and have solid indications from the customer that they have significant additional 2021 product needs as well. Ross will provide more details later in the call.
On top of that exceptional strength in pharma manufacturing, we recently executed a commercialization agreement in the food sector, working with our innovative partner, Kalsec, to help them introduce new hop extracts to beverage applications. We also had very good sales to Tate & Lyle for their commercial stevia and allulose sweeteners, and we have a solid outlook for revenues related to both of these products over the balance of the year.
We're building strong momentum in the food and nutrition vertical. In the life science tools market, our newly launched engineered enzymes continued to gain traction with market interest, and our partnered programs continue to drive significant 2021 R&D revenue growth.
And in our Biotherapeutics business, our partner, Takeda, exercised its option to expand our collaboration to add a fourth program to the pipeline. In addition to all of our customer-driven programs, we are applying our R&D resources to an increasing number of self-funded programs across all lines of the business.
We are advancing programs further into development as part of our strategy to capture even greater value in the future. Every year, at the end of June, we provide an update to our pipeline of programs and products across the company, breaking them down in a number of ways to provide insight on how we're expanding our future growth opportunities.
Today, we published this annual pipeline snapshot as of June 30, 2021, which you can see here and find on our IR website. Let me highlight a few metrics that I think are particularly salient.
First, our total number of commercial products and pipeline programs has grown by 20% since last year, increasing to 78 from 65. We have dramatically increased our number of shots on goal.
We now sell enzymes to sustainably manufacture 17 commercial products, up more than 50% from 11 just 2 years ago. The ultimate goal of our pipeline is to drive programs to commercial recurring revenue stage, so it's great to see momentum building for us here.
Clearly, this is connected to the dramatic product revenue growth we're delivering in 2021 versus the past. Pharma manufacturing continues to be the largest application area in our pipeline, but we are also putting stakes in the ground more broadly.
Note the 50% growth in performance enzyme programs outside pharma manufacturing in the last year, led by the life science tools sector, but also nice growth in the food and other industrial markets as well. Our biotherapeutics pipeline continues to expand as well, highlighted by our investments in three new self-funded programs over the last year and by Takeda's exercise of its option to license the fourth program from Codexis during the quarter.
Our business model is consistently delivering acceleration of assets in our pipeline, as you can see in the 4-year trends shown in Slide 5, more than doubling over the 4 years in almost all categories, an explosion of programs in our new high-growth verticals of Life Science Tools and Novel Biotherapeutics. We look forward to continuing to -- these trends going forward, adding to our shots on goal, advancing those towards commercial, increasing the average program speed to market and peak revenue potential, all in tandem.
Let's dive more deeply into our recent progress across our 3 businesses, starting with sustainable manufacturing. Sustainable manufacturing is where we built Codexis' enzyme engineering leadership over the past 2 decades, and this market currently represents the large majority of the company's revenues.
Codexis' novel high-performance enzymes continue to enable our customers to dramatically reduce the cost and increase sustainability of manufacturing their end products. Compared to using traditional nonenzymatic chemistry, which is capital-intensive and inefficient, our engineered enzymes decrease capital needs meaningfully, while also enabling higher yields, reduced energy usage, and lower waste generation.
And our CodeEvolver platform is constantly accelerating the speed of our ability to discover and design these value-creating enzymes. Small molecule pharmaceutical processes have been and continue to be a core target for growing the sustainable manufacturing market for Codexis.
We have partnered with 21 of the 25 largest pharmaceutical companies in the world to help them adopt and install novel Codexis enzymes for manufacturing their APIs. The $13.9 million order that we announced in June from an undisclosed global pharmaceutical company is a historic one for Codexis, and it came to fruition with unprecedented speed.
In a matter of months, we scaled up production of the enzyme to manufacture hundreds of kilograms, and now we are fully ramped up and in position to produce at the metric ton scale to fulfill this order during the second half of 2021. And as I mentioned earlier, we already have strong indications from this customer that they will need additional supply in 2021, on top of the June order, and we've already established sufficient supply chain capacity to be able to fulfill the incremental demand.
Another aspect of our sustainable manufacturing business is our ability to license our CodeEvolver protein and engineering platform technology to partners. In the second quarter, we earned the largest back-end licensing milestone payment from our partner, GlaxoSmithKline.
It was related to the commercialization of an enzyme designed by GSK using CodeEvolver that is engineered to improve a key step in the manufacturing process for an undisclosed, patented, on-the-market drug. CodeEvolver back-end licensed milestone payments such as this one are 100% profit margin, highlighting another [Technical Difficulty] asset by our business model.
We also announced the completion of a CodeEvolver platform license technology transfer to Novartis. This was our third licensing collaboration to enable a customer to bring [Technical Difficulty] technology in-house, but the first one where we had to implement a considerable portion of the tech transfer virtually.
I'm incredibly proud of our team's efforts to operate in lockstep with Novartis to ensure a smooth tech transfer. In addition to pharma manufacturing, in the past few years, we've been expanding to other industries, designing enzymes for sustainably manufacturing a range of applications, including food and beverage ingredients, recycling, consumer care, and animal feed, et cetera.
These products have shorter development timelines and lower regulatory hurdles, enabling our enzymes to reach the market more quickly. Recently, we announced the expansion of our research collaboration with Kalsec, a leading producer of food and beverage industry products.
Through the partnership, we have entered into an exclusive supply agreement for a novel enzyme to produce Kalsec's newest natural hop extract. This enzyme was engineered using our CodeEvolver technology to improve functionality, stability, and efficiency, enabling Kalsec to deliver consistent hot characteristics and taste, while also furthering Codexis' mission to support the development of sustainable and clean-label products.
We're really excited about our growing opportunities in the food and nutrition vertical. In addition to the new development with Kalsec, we also had strong quarterly product sales from Tate & Lyle.
They are growing the downstream adoption and sales of their newest sweeteners that use our enzymes for the manufacturing of Tasteva M Sevia and DOLCIA PRIMA Allulose sweeteners. This is a very encouraging progress for these enzymes, and we believe they could grow to be one of the largest enzyme products over time.
With our deep and growing pipeline of other late-stage development industrial enzyme candidates, we expect this shift towards high-margin, faster-to-market products to continue to accelerate Codexis' growth in sustainable manufacturing. Another area of expansion for Codexis is the life science tools market, which is a significant growth opportunity for the company.
Codexis' engineered enzymes can enable improvements in next-generation sequencing and molecular diagnostics, biosensor applications, DNA and RNA synthesis, and more. This market is very attractive, given its high growth, rapid commercialization cycles, and above-average margin prospects.
The market also affords us the opportunity to develop products that can be marketed to multiple customers, in addition to the highly engineered enzymes we customize for partners. In the past year, we've developed three new life science tools enzymes for broad-based customer marketing, Codex HiCap RNA polymerase, Codex HiFi DNA polymerase, and Codex Reverse Transcriptase.
Our RNA and DNA polymerases have led the way as we rapidly advance these enzymes towards commercialization last year and began marketing at the end of 2020. In the first half of 2021, we've already been demonstrating success.
We engineered Codex HiCap RNA polymerase to provide dramatically higher capping efficiency, enabling customers to significantly reduce the amount of capping reagent that is critical to stabilizing the product for pharmaceutical use. In addition, our proprietary enzyme decreases the production of unwanted double-stranded impurities, which increases yield and simplifies downstream purification of the messenger RNA product.
We made our first commercial sales of Codex HiCap RNA polymerase to several customers earlier this year, and now this product is in various stages of customer trials with multiple other messenger RNA manufacturers. Although the adoption cycle is a bit longer than we had hoped, this is an excellent start, and we are confident that we're well positioned for potential installations in a range of processes for development-stage mRNA-based vaccines and therapeutic candidates.
We expect product sales to begin to grow more meaningfully in the coming quarters. We're also making solid progress with the launch of Codex HiFi DNA polymerase.
Our analysis demonstrates that Codex HiFi DNA polymerase enables the highest fidelity next-gen sequencing results of all the competitive DNA polymerases tested. The enzyme is being sampled by dozens of high-profile customers for potential use in their current and future NGS kits, and progress in their trials is encouraging.
Codex Reverse Transcriptase has been developed to further improve performance versus incumbent enzymes in both diagnostic and sequencing applications. It is currently being tested by our early access users, and we are preparing for a broader launch later this year.
In addition to these broadly marketed products, we are also developing customer-partnered enzyme products for life science tools applications. In the second quarter, we earned an option milestone on a new enzyme with an unnamed life science tools leader and have multiple revenue-generating partnered programs advancing in parallel as well.
As an update on our groundbreaking collaboration with Molecular Assemblies for the commercialization of enzymatic DNA synthesis, we continue to make strong technical progress on this project. This disruptive approach to synthesizing DNA has the potential to significantly impact a wide range of high-value markets, from drug discovery and manufacturing through synthetic biology, and longer term, to compete with silicon for data storage.
Leveraging the power of CodeEvolver to deliver dramatic performance improvements, we are engineering enzymes that should make Molecular Assemblies' process a commercially viable, cost-effective, and differentiated solution to manufacturing long-chain DNA. We remain on track to complete the enzyme engineering work for this program in the second half of 2021.
With an increasing number of differentiated products and strong partnerships in the life science tools market, Codexis continues momentum to capitalize on this high-growth opportunity. In wrapping up the business review, we remain highly enthusiastic about the value-creating potential for Codexis in the discovery and development of novel biotherapeutics.
Here, we are rapidly building and advancing a high-value pipeline of oral biologics and gene therapy candidates discovered using our CodeEvolver platform. Just a few years ago, we had only two very early-stage programs in our pipeline.
Fast forward to today, and we have over a dozen programs in the pipeline, including one in clinical stage and another in IND enablement development. We have an impressive multiprogram partnership with Takeda Pharmaceuticals focused on improving gene therapy candidates for rare diseases.
Here, we are leveraging CodeEvolver to engineer transgenes with improved attributes, such as enhanced expression, improved half-life, greater stability, and better uptake in difficult-to-access cells. During the second quarter, Takeda exercised its option to expand our strategic collaboration for the research and development of an additional gene therapy for a lysosomal storage disorder, bringing the total number of programs under the agreement to four.
We are extremely proud of the success we have generated in gene therapies for the potential treatment of Fabry disease, Pompe disease, and an undisclosed blood factor deficiency after just 1 year in collaboration with Takeda. Especially given that we are just a year into the partnership, this expansion to four is a gratifying indication of Takeda's enthusiasm for our technology and its ability to discover differentiated gene therapies for patients with rare genetic diseases.
Modifying transgenes using CodeEvolver to enable a gene therapy's expression of a better-performing enzyme is a novel and differentiated approach to design-improved next-generation gene therapy candidates. Accordingly, in addition to the partnered programs with Takeda, we have embarked on self-funded discovery programs targeting improved transgenes for other rare disorders.
Leveraging CodeEvolver to discover novel oral biologics that are more safe, stable, and efficacious for gastrointestinal indications is another high-value growth strategy for Codexis. We have 4 oral biologics in partnership with Nestle Health Science and 3 early-stage, self-funded programs.
Three of the partnered programs with Nestle are co-owned between the parties, the most advanced of those being CDX-7108, which is targeting an undisclosed GI disorder. Our IND-enabling activities for CDX-7108, including GMP manufacturing and preclinical toxicology, have now been successfully completed.
In addition, CDX-7108 has been filed for approvals with the ex-United States regulatory authorities for its first clinical trial, which we expect to initiate around the turn of the year. Now let me hand the call over to Ross to take you through our financial results in more detail.
Ross Taylor
Thanks, John, and good afternoon, everyone. We delivered strong second quarter 2021 results.
Total revenues for the second quarter of 2021 were $25.5 million, up 70% compared to the prior-year period. On a segment basis, $21.6 million in revenue was from our Performance Enzymes segment, and $3.9 million in revenue was from our Novel Biotherapeutics segment.
This compares with $7.5 million and $7.5 million for Performance Enzymes and Novel Biotherapeutics, respectively, for the prior-year period. Product revenue for the second quarter of 2021 was $14.7 million, above the high end of our expected range for the quarter and up 227%, compared to $4.5 million for the prior-year period.
The major contributors were increased sales in the Sustainable Manufacturing segment to partners, including Allergan, Tate & Lyle, contribution from generic manufacturers, [indiscernible], and significant product revenues from our undisclosed global pharmaceutical partner. R&D revenues were $10.7 million in Q2, up slightly from $10.5 million last year.
Gross margin on product revenue for the second quarter of 2021 also came in above the high end of our expected range at 71%, compared with 62% in the second quarter of 2020. The increase was due to a favorable shift in product mix, as higher-margin products drove the growth in the quarter, and our sales of sitagliptin, which is a lower-margin product, were flat.
Turning to operating expenses, our R&D expenses for the second quarter of 2021 were $12.8 million, up from $10.9 million in the prior-year period. The R&D expense increases were primarily due to increased compensation resulting from higher headcount, higher expense from outside services, and higher costs for lab supplies and depreciation.
These items were partially offset by lower biotherapeutics preclinical development and regulatory expenses. SG&A expenses in Q2 of 2021 were $12.8 million, compared to $8.5 million for the prior-year period.
The increase in SG&A expenses was primarily due to higher payroll expenses, higher share-based compensation, and higher legal fees, partially offset by lower allocable expenses. Net loss for the second quarter of 2021 was $4.3 million, or $0.07 per share, compared with a net loss of $6.3 million, or $0.11 per share, for the second quarter of 2020.
Turning to the balance sheet, cash and cash equivalents as of June 30, 2021, were $129 million, which puts us in a strong position as we look to seize the company's growth opportunities. Also, I will note that to date, we have not drawn any funds from our $50 million ATM equity facility that we put in place in early May of this year.
As John described earlier, we are increasing our 2021 financial guidance, issued on June 17, 2021. The increase is primarily the result of our expectation for more business from the large unidentified global pharmaceutical customer that we referenced previously for an enzyme that is used to manufacture a therapeutic drug.
However, I should also point out that sales of many other products in our portfolio are also trending very well. We now expect full year 2021 total revenues to be in a range of $98 million to $103 million, up from prior guidance of $89 million to $92 million, driven by an increase in our product sales forecast.
We expect full-year 2021 product revenues to be in a range of $59 million to $63 million, up from our prior guidance of a range of $45 million to $48 million. We expect our full-year gross margin on product revenue to be in a range of 65% to 68%, up from our prior guidance of a range of 60% to 64%.
The increase is driven by a shift in the sales mix to higher-margin products for the full year. However, we do expect the product gross margin to decline from Q2's levels during the second half of 2021, as revenue from sitagliptin will increase as a percentage of the sales mix during the back half.
For R&D revenue, we are updating our outlook for the remainder of 2021. We now forecast that 2021 R&D revenue will be lower than we anticipated at the beginning of the year.
The change is partially due to the prioritization of the strategic build-out of our self-funded projects and is also due to some new partnering opportunities likely occurring later than we originally expected. Also, I will note that our underlying R&D business is strong, as we expect to deliver a similar level of total R&D revenue this year as last year, despite facing combined headwinds of over $10 million from the initial three Takeda projects and the Novartis CodeEvolver tech transfer.
Our outlook for R&D and SG&A expenses for the full year 2021 has not changed materially since our call last quarter. We expect R&D and SG&A expenses combined should be in a range of $27 million to $28 million in Q3 and in a range of $32 million to $34 million in Q4.
As we have noted before, our investments in R&D and in our SG&A infrastructure are important drivers of our future growth. In summary, we are beginning to reap the benefits of the foundations we have established in each of our business segments, and we are well positioned for excellent growth in total revenues, strong growth in product revenues and expansion of product gross margin in 2021.
With that, I'll turn the call back to John.
John Nicols
Thanks, Ross. Let me close out our prepared remarks in the context of our goals for the year.
As both Ross and I have highlighted, Codexis has made excellent progress throughout the second quarter of 2021. In particular, we have executed on standout opportunities within the sustainable manufacturing sector.
resulting in significantly increased product revenues and a defining period of growth for this business line. Add to that the continued progress within our proprietary Life Science Tools portfolio and the advancement of our second biotherapeutic product toward clinical trials, we are making great strides towards achieving the goals outlined on this slide.
We are deeply energized by the endless possibilities that lie before Codexis, and we are proud of our role in harnessing the power of enzymes and synthetic biology to improve the health of people and the planet. Now we'd be happy to take your questions.
Operator?
Operator
[Operator Instructions]. The first question today is from Brandon Couillard of Jefferies.
Brandon Couillard
John, in terms of the pipeline update, clearly, great progress across a number of fronts. Can you just talk about your -- how you feel about your -- the capacity of your R&D teams right now and kind of expansion plans as you look out the next 12 months?
John Nicols
Yes, we've been staffing up the research capacity in the company consistently, actually at a higher rate since the middle of last year, once we got the company reestablished. After the second quarter COVID shutdown last year, we could sense significant growth in demand for our research, our engineered enzymes, both for customer-partnered projects, as well as for a growing list of self-funded projects.
So, from that point forward, we've been growing the capacity of research at a much faster clip than any time since I joined the company. And that's progressing really well.
We've been adding in the range of 5 people into research every month now for the last 6 or 7 months, and that's enabling us to do more enzyme engineering projects in parallel. It's enabling us to take on more of these self-funded and customer-funded projects.
So really, really great progress, great execution. It's actually a very dynamic market to hire these kinds of talent, so been a big effort and success story so far, and more to come as we continue to ramp up the research and development capacity of the company for the rest of this year, and likely into the beginning of next year.
Brandon Couillard
Okay. And then, related to the large, $14 million undisclosed pharma order, you kind of alluded to having some visibility at this point around the customer needs in '22.
Can you just touch on what you expect there? Should we sort of model this order to be recurring, maybe it steps up even next year?
Any indications you could share with us right now?
Ross Taylor
Brandon, it's Ross.
John Nicols
Yes...
Ross Taylor
Go ahead, John.
John Nicols
You're in.
Ross Taylor
Okay. Yes, I'll try to take a stab at that, Brandon.
I think in terms of thinking about 2022, our practice really is to update guidance early in each calendar year after we report our Q4 results, as you know. But stepping back, though, our base business right now is firing on all cylinders.
At the same time, we are working very hard, and we're committing a lot of resources to fulfill this large new piece of business that we first described back in June. But until this product gets through the FDA process, it's out into the market, we're really basing our guidance and our outlook on our customer's enthusiasm and their indications of demand, and this suggests us that 2022 and beyond could be similar to what we're seeing now.
And certainly, our customer's confidence and the fact that we are talking about supply chain in 2022 and beyond certainly would suggest confidence and good demand going forward. But at the same time, I think we have to keep in mind that this is a drug that has to work through the FDA process, and much is going to be dependent on that, obviously.
Brandon Couillard
Great. Last for you, Ross.
Could you quantify the size of the GSK milestone payment that you booked in the second quarter? And then, any color you can share with us in terms of the phasing for the back half between 3Q and 4Q?
Ross Taylor
Sure. In terms of the GSK milestone, we're really not permitted to disclose what it is specifically.
I will note that the last GSK milestone we got back in the Q3 of 2019 -- and we did disclose then -- that was about $2 million. And this one is probably somewhere in that neighborhood, but we can't be more specific than that.
I think your second question related to cadence of revenues in the back half, and I think it's going to be about evenly split between Q3 and Q4. I think as far as products go, it might be a little bit more weighted to Q3 versus Q4, and probably the opposite for R&D.
So maybe just slightly more products in Q3 versus Q4 and a little bit less R&D in Q3, a little bit more R&D revenue in Q4. But overall, total revenue is probably split about equally between the 2 quarters.
Operator
The next question is from Doug Schenkel of Cowen and Company.
Kyle Boucher
This is Kyle on for Doug. Just one today.
Going back to your prepared remarks and the collaboration agreement with Kalsec that you spoke about, I just wanted to kind of get a feel for, how would you characterize the revenue opportunity that that presents?
John Nicols
That's a good question. We're really excited about the new food ingredient success story for the company, this time with a new partner, Kalsec, who's a really cool company, a very innovative company.
And they're working in the area -- amongst others -- but the area that we've been working with them in is in improving -- bringing forward improved hop derivatives and extracts. And we've been working on the research chapter of that program for a while.
It's one of our -- one of the programs that showed up without a lot of detail in our pipeline snapshot now for the last year or two. And if this program continues to commercialize as they and we expect, it should be a nice sized product, I would say in the low to mid-single million dollars of enzyme sales per year, as it penetrates the market.
Could be more if their new hop extract is more successful than they expect in their markets in the next few years, but that's probably a good feel. Nice-sized product, a little larger than a typical pharmaceutical API project, so low to mid-single-digit million dollars at peak.
Operator
The next question is from Steven Mah of Piper Sandler.
Steven Mah
Congrats on the quarter, guys. Maybe let's just step back a little bit, just more of a kind of a high-level question for you, John.
So, given recent events in the space, and given your broad pipeline and lots of shots on goals, how do you de-risk developing products that are going to meet your customer specifications? Can you just give us a sense on how you guys manage that risk?
John Nicols
Yes. It really comes down to, I'd say, Steve, early definition of what the market needs the enzyme's performance attributes to be.
And the more we get that right, the more we point CodeEvolver's enzyme engineering at the right targets to improve upon. How much thermal stability, reactivity?
How important is it? Are there other critical features?
So the more we get that early design of the enzyme's performance better up front, right up front, the more we de-risk. And we can take calculated moves.
We can bring the enzyme 75% away along, get it out in the market, and we can, together with our partner if it's a self-funded, broadly marketed enzyme like we're doing in the Life Science Tools area, we can go out, and we can bring a largely finished enzyme into the marketplace and calibrate from real-world customer feedback, and finish the R&D. We can, very quickly these days, improve enzyme performance, given how increasingly efficient CodeEvolver is.
So that's kind of the way we go about it. We do our best to design up front.
We bring the enzyme engineering along a very substantial amount of the way. Sometimes, that's sufficient and the market rapidly uptakes it.
Sometimes we need to learn from the customer trialing and the downstream performance that the customers are having, to come back and just make some modifications to get it just right. And that's the way we go about de-risking the discovery and development part for new enzymes that we're bringing forward.
Steven Mah
Okay. Got it.
Yes, that's helpful color. Okay.
So yes, with regards to kind of these trial studies or pilot studies, do you do those typically for all your partnered programs, or is it just for a portion of them?
John Nicols
Partnered programs we can do a lot quicker, right? It's just one to one, where we just have one customer like we just spoke about Kalsec.
I mean, there, we've been making improvements to the enzyme. We've been shooting samples across to Kalsec in very real-time fashion, and they can do their assessment of taste and profile from the hops that use the enzyme.
So we can do that very real time, very quickly. We can almost do it round-by-round with a custom partnership.
As we bring forward our own enzymes into wider markets, enzymes like our Life Science Tools enzymes, where there are many different potential customers, it can take a little more effort. And we're experiencing that to some extent with the DNA polymerase for next-gen sequencing, for example.
But that iterative process really helps to refine the product for more broader uptake, and that's how it works.
Steven Mah
Okay. Got it.
Yes, that's helpful. Yes, okay.
So it looks like it's an iterative process with partners, ample time to course correct the program. Okay.
John Nicols
Yes. And not too time consuming, and not too costly to make improvements based on market feedback.
It doesn't take a lot of time and cost and effort.
Steven Mah
Okay. Got it.
And then maybe moving on to the large API enzyme order we've been talking about, how do you de-risk the manufacturing? I know you guys are -- for this one, you're outsourcing to partners.
Can you just give us a sense on the ability to scale up to -- I think you mentioned it was tens of tons of product?
John Nicols
Yes, this enzyme is actually an established enzyme that we've manufactured commercially in our historical past, so we already have experience manufacturing this particular enzyme at full commercial scale at our CMO partners, so that helps. So, when the opportunity with this customer came along, we were able to rapidly move to line up the capacity to produce this enzyme very, very rapidly at the scale that this new customer requires for their rapid development efforts, so that helped.
That history helped in this case. But more broadly, in other enzyme opportunities, we have a very, very seamless relationship with our growing list of CMO partners.
We have a very substantial in-house process development team that has essentially scaled up every enzyme in the company's history, and we're rapidly approaching 100 enzymes that we have fully scaled and transitioned over to CMO partners. So this is a core capability of our company to be able to develop robust commercial-scale processes up to a significant scale in-house, and then seamlessly move it out to our CMO partners.
So this is truly a refined commercial capability of the company that we continue to make more efficient, we continue to leverage into tomorrow's new products, so it's really a key part of our commercialization success and capabilities.
Steven Mah
Okay. Great.
Yes, that's fantastic. All right.
Maybe moving on to Molecular Assemblies, you mentioned that the enzyme engineering [Technical Difficulty] mostly done by the back half of 2021. Do you have any sense of the timing of a presentable launch of an enzymatic synthesis product?
John Nicols
Molecular Assemblies DNA synthesis.
Steven Mah
Yes.
John Nicols
Yes. I mean, it's a great question to ask them directly.
And as our investors know, I serve on the board of Molecular Assemblies since we made the investment in their -- in equity in that company. So, I mean, we're very, very intimate with Molecular Assemblies.
We've made tremendous progress to design the enzymes that enable a low-cost, competitive manufacturing process using our enzymes. We have a little more work to do, because it's pretty competitive market, so that's why we continue to project it will take us into the second half of the year to get the enzyme to be designed just right for enabling this breakthrough enzymatic DNA synthesis.
Our ability to scale that enzyme into the volumes that Molecular Assemblies and the market will need is being done in parallel, so we're quite confident, and that will be pretty time-efficient as well. That will take us into maybe the middle of next year.
So, in parallel, the real activity is the build-out by Molecular Assemblies of a competitive manufacturing platform to manufacture long-chain DNA to be able to stitch together oligonucleotides and nucleotides to design to the specification of downstream customers. And they're making great progress.
I probably can't speak too much as to how they're doing it and how well they're doing it, but we're very impressed. They have made significant investments in building out their manufacturing platform capability.
They've done some tremendous hiring to really accelerate their ability to bring forward a competitive manufacturing platform to make DNA using our enzymes, so I feel it's coming together extremely well. And we'll see milestone events like Molecular Assemblies' manufacturing platform being in place likely being announced sometime towards the end of 2022 or thereabouts.
Steven Mah
Okay. Great.
That's a lot of color. I appreciate that.
It's a sensitive topic, but yes, just give it a shot and ask you anyway. All right, thank you.
I'll get to some modeling questions on the call back later tonight.
Operator
The next question is from Matt Hewitt of Craig-Hallum Capital Group.
Matthew Hewitt
I'll echo everyone else; congratulations on the strong quarter. Just a couple of questions for me.
First, just a point of clarification. The $13.9 million order, you increased guidance for -- in the second -- well, June, mid-June.
You're taking guidance up again today, but it seemed -- it sounded like there's a very likely potential for that order to grow. Did you include incremental revenues from that contract in the updated guidance?
John Nicols
Yes, we did, Matt. We've had significant discussions with this customer.
Part of taking up the guidance was, when we put the guidance out, the updated guidance out on June 17, at that point, we weren't 100% sure of the timing of that $13.9 million order, so we thought maybe some of that could have spread into 2022. We now know that all of that is in 2021.
And so, that's a piece of our upgrade today. Also, confidence that additional demand is going to come to Codexis for this particular customer for their needs, and also executable in 2021.
So we shared in the prepared remarks that we've already assured ourselves of the capacity to serve the additional demand. So those are the two pieces that lead us to the increased guidance today versus the already increased guidance from June.
Matthew Hewitt
Okay. That's really helpful, and it kind of leads into my second question, which is, given the strength that you're seeing, particularly on the pharma side, what kind of visibility do you have into some of these programs?
I mean, obviously, you know when there's a Phase II or a Phase III trial being conducted. But are your customers coming to you saying, the Phase III trial ends on this data around this date, a PDUFA data is expected here, and we think we're going to need this amount of product in fiscal '22 or fiscal '23?
Or what kind of visibility do you have with those customers?
John Nicols
Yes, we actually get quite good visibility as late clinical trials move towards their completion and the customer, assuming they're confident of being able to file and launch, starts to work with us to do what is known as registration batches. So they need to go through a process to convince the FDA.
In parallel to the good trial results, they need to be able to convince the FDA that they can produce to a tight quality specification range. And they do that by doing what they call a series of -- actually, a parallel set of qualification registration batches.
And these require Codexis enzymes, to be able to make those registration batches. So the planning is often quite clear.
These kinds of discussions are always guarded by an uncertain trial result, and obviously, an uncertain FDA response to the trial data. But the need to line up supply chain prelaunch for these registration batches, and then to be able to have material ready for launch, is well planned, and we get good, significant visibility when our programs -- when our customers' programs reach this kind of stage.
Matthew Hewitt
Okay. That's helpful as well.
And then maybe one last one, then I'll hop back in the queue. Regarding -- I guess kind of following on that, your pipeline update, thank you for providing that.
You've got 22 customer-partnered products that are in Phase II or Phase III. Are there incremental programs that are through Phase III and are awaiting PDUFA dates?
And if so, are those later this year, are those next year? Any color as to maybe the number that we should be anticipating over the next year, acknowledging that you don't know what's going to happen with those actual meetings.
But if you follow normal analytics, you should be getting X number of small molecule and X number of large molecule approvals. Just any color on the PDUFA date pipeline, that would be helpful.
John Nicols
Yes, Matt, that's a hard one for us to answer, and we typically haven't given that kind of sharpness across these late-stage clinical programs. I will just highlight that we've had a really nice momentum of historical late-stage clinical programs moving to fully commercially approved drugs and leading to announceable multiyear supply contracts from Codexis.
And so, I can reference Allergan and Kyorin and Urovant as some of the more recent programs that moved from late clinical into fully commercial. And obviously, we're right on that edge with this large unnamed pharmaceutical customers as well.
So you should just expect to see more of these events unfold, and the timing of those are always very hard for us to be able to have strong visibility into. But from a trend perspective and momentum, this is -- we're really starting to build a head of steam from the now many years of building late-stage clinical installations and having them probabilistically increasingly move towards commercial.
And really, it's great to see all that translate into such a step up in our product revenues in 2021 versus the recent past. So, hopefully, that helped give you some feel.
Matthew Hewitt
That does.
Operator
[Operator Instructions]. Our next question is from Sean Lee of H.C.
Wainwright.
Sean Lee
So my first question is on the Life Sciences Tools sector, which you mentioned should be a high-growth area for the company. So, in the prepared remarks, you mentioned there's an increase in the customer-partnered R&D programs.
Could you provide a little more color on what these programs entail? And how do you see these translate into longer-term sustained revenue?
John Nicols
Yes. Great.
I mean this has been a really great growth area for the company over, I'd say, the last 12, 18 months, where in addition to -- actually, alongside Codexis bringing forward our own enzymes into sequencing markets and to nucleic acid synthesis, RNA synthesis, now DNA synthesis, we've had a growing list of clients come to us with very specialized needs for engineered enzymes. These are more one-to-one opportunities.
We engineer an enzyme that's very specific to a client's unique application, not widely applicable like a polymerase is for next-gen sequencing. And this has been great.
I mean our success stories and our growing visibility has brought a growing stream of partners to us. And that's dominoed into a really nice, attractive $1 million-plus-a-quarter kind of R&D revenue generation that we've had in the recent few quarters with a set of different partners.
And these programs are very unique, and they're all different from each other. But like we've suggested, the area of Life Science Tools generally has a little bit larger peak revenue enzyme opportunity, if we're successful and we can go commercial with those, so, I mean, just compared to our traditional API manufacturing enzymes.
So I'd say, on average, these could be mid-single-digit-million-dollar enzyme opportunities at peak, some of them higher, some of them lower. But that's a really nice number for us to be targeting, especially when we get the partner to fund the R&D early in these programs.
So, hopefully, that gives you a nice feel. You know, really attractive set of partnered R&D programs in Life Science Tools, and growing.
Sean Lee
My second question is on the biotherapeutics. So you mentioned the 7108 is expected to enter Phase I, probably towards the end of the year.
In addition to that, can we expect any release of clinical or preclinical results in your other programs before then?
John Nicols
Yes. We plan to share more data.
We have 12 programs and growing in the pipeline. We just added a fourth partnered program with Takeda.
And so, as a group, these are all really nicely advancing, and it's going to be great to get 7108 into the clinic as we finish this year, around the turn of this year. So that will be our second clinical drug that was discovered by Codexis and CodeEvolver.
Other areas, they're advancing. I'm not going to push out of where.
But hang on, we'll be providing some insight into the kind of differentiated performance that we are generating preclinically for at least a few of these programs in the not-too-distant future.
Sean Lee
Great. We'll be looking forward to it.
That's all I have.
Operator
I'm showing there are no further questions. I'll turn the call back to John Nicols for closing remarks.
John Nicols
Okay. Thank you again for joining us today.
We look forward to continuing to update you on Codexis' progress in the future. Thank you very much.
Operator
This concludes today's conference. You may disconnect your lines at this time.
Thank you for your participation.