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May 7, 2013

Codexis Reports First Quarter 2013 Results

— Product gross margin increases to 38%; Product revenue up 34% from
fourth quarter 2012 —

— Conference call today at 4:30 pm ET

REDWOOD CITY, Calif.–(BUSINESS WIRE)–May. 7, 2013–
Codexis, Inc. (NASDAQ: CDXS), a developer of engineered enzymes for
pharmaceutical, biofuel and chemical production, today announced
financial results for the first quarter ended March 31, 2013.

“We are very encouraged by the continued growth of our pharmaceutical
business during the first quarter, which demonstrated strong sales and
profit expansion,” said John Nicols, President and CEO of Codexis.
“These improvements were driven in particular by long-term partnerships
coming to commercial fruition, most notably significant sales of enzymes
to Merck and stepped up collaborative revenue for argatroban injection
through our partnership with Exela Pharma Sciences, LLC. We also
continue to expand our pharmaceutical business through new partnerships,
which we expect to increase our development pipeline into the future.”

First Quarter Financial Highlights:

As a result of the termination, effective August 31, 2012, of Codexis’
Collaborative Research Agreement with Shell and the resulting loss of
associated collaborative research and development revenue, Codexis
believes that year-over-year comparisons for its first three quarters of
2013 are not an appropriate measure of the company’s financial
performance. All comparisons used below are on a quarter-over-quarter
basis, comparing the first quarter of 2013 sequentially with the
company’s fourth quarter of 2012 financial results.

Revenues for the first quarter of 2013 were $11.5 million, a 45%
increase from $7.9 million in the fourth quarter of 2012. Product
revenue in the first quarter of 2013 was $9.1 million, a 34% increase
from $6.8 million in the fourth quarter of 2012. Product gross margin in
the first quarter was 38%, an increase compared to 15% in the fourth
quarter of 2012. Collaborative research and development revenue for the
first quarter of 2013 was $2.3 million, consisting of services of $0.6
million
, an increase of 20% from $0.5 million in the fourth quarter of
2012 and royalties and license fees of $1.7 million, a 240% increase,
compared to $0.5 million in the fourth quarter of 2012. The increase in
royalty and license fees was primarily due to $1 million in revenue
recognized from the launch of argatroban.

Research and development expenses in the first quarter of 2013 were $7.3
million
, a decrease of 31% from $10.6 million for the fourth quarter of
2012. Selling, general and administrative expenses in the first quarter
of 2013 were $8.1 million, an increase of 12% compared to $7.3 million
in the fourth quarter of 2012. The decrease in research and development
expenses and increase in selling, general and administrative expenses
was primarily caused by the realignment of certain departments,
including supply chain, engineering, quality control and quality
assurance, into a newly created commercial operations department
resulting in $1.6 million of expenses that were reclassified from
research and development to selling, general and administrative
beginning January 1, 2013. When combined, research and development
expense and selling, general and administrative expense decreased by
$2.4 million, or 14%, compared to the fourth quarter of 2012. The
overall decrease was due to reductions in headcount and other
discretionary expenses.

Net loss was $9.6 million, or a loss of $0.25 per share, based on 37.8
million weighted average common shares outstanding in the first quarter
of 2013. This compares to a net loss of $15.5 million, or a loss of
$0.41 per share, during the fourth quarter of 2012.

Cash, cash equivalents, and marketable securities at March 31, 2013 were
$46.1 million compared to $49.2 million at December 31, 2012.

Financial Outlook

Codexis’ statements with regard to its outlook are based on current
expectations. The following statements are forward looking, and actual
results could differ materially depending on market conditions and the
factors set forth under “Forward-Looking Statements” below.

Codexis reaffirms its prior outlook for the full year 2013. Total
pharmaceutical revenues are expected in the range of $35 million to $40
million
, with approximately $30 million of that total in product
revenue. Product gross margin is expected to be in the range of 30% to
35%, and total gross margin for pharmaceutical revenue of approximately
50%. Regarding cash burn, Codexis continues to expect cash burn in the
range of $12 million to $16 million for the year.

Conference Call and Webcast

Codexis will hold a live conference call and audio webcast on Tuesday,
May 7, 2013
, at 4:30 p.m. Eastern Time. The conference call dial-in
numbers are 800-798-2864 for domestic and 617-614-6206 for
international. Please use the pass code 54501345 and call approximately
10 minutes prior to start time. A live webcast of the call will also be
available from the Investors section of www.codexis.com.
A recording of the call will be available by calling 888-286-8010 for
domestic or 617-801-6888 for international, beginning approximately two
hours after the call, and will be available for up to seven days. Please
use the pass code 19359615 to access the replay. A webcast replay will
also be available from the Investors section of www.codexis.com
approximately two hours after the call, and will be available for up to
30 days.

About Codexis, Inc.

Codexis, Inc. engineers enzymes for pharmaceutical, biofuel and chemical
production. Codexis’ proven technology enables scale-up and
implementation of biocatalytic solutions to meet customer needs for
rapid, cost-effective and sustainable process development – from
research to manufacturing. For more information, see www.codexis.com.

Forward-Looking Statements

This press release contains forward-looking statements relating to
Codexis’ forecast for 2013 total pharmaceutical revenue, product
revenue, product margin, total gross margin for pharmaceutical revenue
and total cash burn; and Codexis’ ability to secure new pharmaceutical
partnerships that will build Codexis’ pharmaceutical development
pipeline. You should not place undue reliance on these forward-looking
statements because they involve known and unknown risks, uncertainties
and other factors that are, in some cases, beyond Codexis’ control and
that could materially affect actual results. Factors that could
materially affect actual results include Codexis’ dependence on
obtaining third-party funding, or identifying and effecting some other
strategic option for, its CodeXyme® cellulase enzymes and CodeXol®
detergent alcohols programs; Codexis’ need for substantial additional
capital in the future in order to expand its business; Codexis’ ability
to maintain internal control over financial reporting; any impairments
Codexis may be required to record in the future with respect to its
goodwill, intangible assets or other long-lived assets; the success of
cost saving measures Codexis undertook following the termination of the
Shell collaboration, including Codexis’ reduction in force; Codexis’
dependence on a limited number of products and customers in its
pharmaceutical business; customers’ ability to timely pay amounts owed
to Codexis; Codexis’ primary reliance on one contract manufacturer for
commercial scale production of substantially all of its enzymes;
Codexis’ ability to develop and commercialize new products for the
pharmaceutical markets; Codexis’ relationships with, and dependence on,
its collaborators in its principal markets; Codexis’ ability to deploy
its technology platform in new adjacent market spaces; Codexis’
dependence on, and need to attract and retain, key management and other
personnel; the success of customers’ pharmaceutical products in the
market and the ability of such customers to obtain regulatory approvals
for products and processes; Codexis’ pharmaceutical product gross
margins are variable and may decline from quarter to quarter; Codexis’
dependence, in part, on Arch Pharmalabs Ltd’s ability to effectively
market and sell certain pharmaceuticals products; Codexis’ ability to
maintain license rights to a commercial scale expression system for
enzymes that convert cellulosic biomass to sugars; various challenges to
the feasibility of the production and commercialization of biofuels and
bio-based chemicals derived from cellulose; potential reduction in
demand for commercial products using Codexis’ technology as a result of
fluctuations in the price of and demand for certain commodities; and
Codexis’ biofuel and bio-based chemicals business opportunities may be
limited by the availability, cost or location of feedstocks. Additional
factors that could materially affect actual results can be found in
Codexis’ Annual Report on Form 10-K filed with the Securities and
Exchange Commission
on April 2, 2013, including under the caption “Risk
Factors.” Codexis expressly disclaims any intent or obligation to update
these forward-looking statements, except as required by law.

     
Codexis, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In Thousands, Except Per Share Amounts)
 

Three Months
Ended

Three Months
Ended

Three Months
Ended

March 31,   December 31   March 31,
2013 2012 2012
Revenues:
Product $ 9,137 $ 6,834 $ 15,167
Collaborative research and development 2,344 1,078 14,612
Government awards           1,357  
 
Total revenues   11,481     7,912     31,136  
 
Costs and operating expenses:
Cost of product revenues 5,665 5,779 12,642
Research and development 7,322 10,594 16,349
Selling, general and administrative   8,124     7,286     9,395  
 
Total costs and operating expenses   21,111     23,659     38,386  
 
Loss from operations (9,630 ) (15,747 ) (7,250 )
 
Interest income 27 41 75
Other expenses   (85 )   (6 )   (118 )
 
Loss before provision (benefit) for income taxes (9,688 ) (15,712 ) (7,293 )
 
Provision (benefit) for income taxes   (65 )   (173 )   197  
Net loss $ (9,623 ) $ (15,539 ) $ (7,490 )
 

Net loss per share of common stock, basic and diluted

$ (0.25 ) $ (0.41 ) $ (0.21 )
 
Weighted average common shares used in computing net loss per share
of common stock, basic and diluted
  37,842     37,581     36,057  
     
Codexis, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands)
 
March 31, December 31,
2013 2012
Assets
Current assets:
Cash and cash equivalents $ 31,231 $ 32,003
Marketable securities 12,943 13,524
Accounts receivable, net 7,412 7,545
Inventories 1,687 1,302
Prepaid expenses and other current assets   4,095     5,395  
Total current assets 57,368 59,769
 
Restricted cash 1,511 1,511
Non-current marketable securities 1,939 3,623
Property and equipment, net 14,792 16,650
Intangible assets, net 12,090 12,934
Goodwill 3,241 3,241
Other non-current assets   2,701     2,237  
Total assets $ 93,642   $ 99,965  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 4,445 $ 3,654
Accrued compensation 4,152 3,495
Other accrued liabilities 4,826 6,948
Deferred revenues   4,352     2,186  
Total current liabilities 17,775 16,283
 
Deferred revenues, net of current portion 1,254 1,299
Other long-term liabilities   3,868     3,943  
Total liabilities 22,897 21,525
 
Stockholders’ equity:
Common stock 4 4
Additional paid-in capital 295,863 294,128
Accumulated other comprehensive loss 56 (136 )
Accumulated deficit   (225,178 )   (215,556 )
Total stockholders’ equity   70,745     78,440  
Total liabilities and stockholders’ equity $ 93,642   $ 99,965  

Source: Codexis, Inc.

Codexis, Inc.
Investors
Paul Cox, 212-362-1200
ir@codexis.com
or
Media
Jemma
Connor, +44 161 359 3255
jemma.connor@notchcommunications.co.uk

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