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February 27, 2013

Codexis Reports Fourth Quarter and Full Year 2012 Results

— Conference call today at 4:30 pm ET

REDWOOD CITY, Calif.–(BUSINESS WIRE)–Feb. 27, 2013–
Codexis, Inc. (NASDAQ: CDXS), a developer of engineered enzymes for
pharmaceutical, biofuel and chemical production, today announced
financial results for the fourth quarter and year ended December 31,
2012
.

“After a period of transition in 2012, we are very encouraged by the
company’s progress and our better than projected cash balance at the end
of the year,” said John Nicols, President and CEO of Codexis. “While
making necessary strategic reductions of our operational expenses and
cash burn associated with the ongoing repositioning of CodeXyme®
cellulase enzymes and CodeXol™ detergent alcohols following the loss of
Shell funding, we have continued to build the long-term strength of our
pharmaceutical business. Specifically, in addition to finalizing the
previously announced agreement with Arch Pharmalabs Ltd, we have also
added new collaboration with Albany Molecular Research, Inc. and Strem
Chemicals, Inc.
designed to help our core biocatalysis enzyme business
more widely penetrate the world’s complex chemistry markets,” Nicols
added.

Fourth Quarter Financial Highlights:

Revenues for the fourth quarter of 2012 were $7.9 million, a 76%
decrease from $33.5 million in the fourth quarter of 2011. The revenue
decrease was primarily due to the termination of Codexis’ Collaborative
Research Agreement with Shell as of August 31, 2012. Product revenue in
the fourth quarter of 2012 was $6.8 million, a 56% decrease from $15.5
million
in the prior year quarter, primarily due to the timing of
generic and innovator pharmaceutical product orders. Product gross
margin in the fourth quarter was 15%, a decrease compared to 16% in the
prior year quarter and an increase compared to 10% in the third quarter
of 2012. Collaborative research and development revenue of $1.1 million
decreased 94% from $17.3 million in the fourth quarter of 2011 due to
the termination of Codexis’ Collaborative Research Agreement with Shell.

Research and development expenses in the fourth quarter of 2012 were
$10.6 million, a decrease of 32% from $15.5 million for the fourth
quarter of 2011. The decrease was primarily due to headcount reductions
implemented as part of a company-wide restructuring undertaken by
Codexis after the termination of its Collaborative Research Agreement
with Shell.

Selling, general and administrative expenses in the fourth quarter of
2012 were $7.3 million, a decrease of 26% compared to $9.8 million in
the same period of 2011. The decrease was primarily due to reductions in
headcount and other discretionary expenses implemented as part of the
company-wide restructuring.

Net loss for the fourth quarter was $15.5 million, or a loss of $0.41
per share, based on 37.6 million weighted average common shares
outstanding in the fourth quarter of 2012. This compares to a net loss
of $5.3 million, or a loss of $0.15 per share, during the fourth quarter
of 2011.

Full Year 2012 Financial Highlights:

Revenues for fiscal 2012 were $88.3 million, a 29% decrease from $123.9
million
in fiscal 2011. The revenue decrease was primarily due to the
termination of our Collaborative Research Agreement with Shell as of
August 31, 2012. Product revenue in 2012 was $35.9 million, a 27%
decrease from $49.0 million in 2011. The product revenue decrease was
primarily due to the timing of orders from our innovator pharmaceutical
customers. Product gross margin in 2012 was 15%, the same as for 2011.
Collaborative research and development revenue of $50.1 million
decreased 30% from $71.4 million in 2011 due primarily to the
termination of the Collaborative Research Agreement with Shell.

Research and development expenses for fiscal 2012 were $56.8 million, a
decrease of 7% from $61.0 million in fiscal 2011. The decrease was
primarily due to headcount reductions implemented as part of the
company-wide restructuring undertaken by Codexis after the termination
of the Collaborative Research Agreement with Shell.

Selling, general and administrative expenses for fiscal 2012 were $31.4
million
, a decrease of 15% compared to $36.9 million in fiscal 2011. The
decrease was primarily due to reductions in headcount and other
discretionary expenses implemented as part of the company-wide
restructuring.

Net loss for fiscal 2012 was $30.9 million, or a loss of $0.84 per
share, based on 36.8 million weighted average common shares outstanding.
This compares to a net loss of $16.6 million, or a loss of $0.46 per
share, during fiscal 2011.

Cash, cash equivalents, and marketable securities at December 31, 2012
were $49.2 million compared to $63.8 million at December 31, 2011.

2013 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.

For the full year 2013, Codexis expects total pharmaceutical related
revenue in the range of $35 million to $40 million. Of this amount, we
expect product revenue to be approximately $30 million. Codexis expects
that its product gross margin will be in the range of 30% to 35% and
total gross margin for pharmaceutical revenue will be approximately 50%.
Regarding cash burn, the company is adjusting its previously disclosed
outlook for 2013, which was based on having a funding partner in place
at the end of 2012, to a cash burn range of $12 million to $16 million
for the year.

“As part of the projections for 2013, we are encouraged that our
previous financial support of the specialty pharmaceutical company,
Exela Pharma Sciences, LLC, in its partnership with Hikma
Pharmaceuticals PLC
for the development of argatroban injection will
begin to generate royalty revenue in 2013. We expect to receive a
milestone payment triggered by Hikma’s commercial launch of argatroban
injection and are expecting further royalty payments starting in the
first quarter of 2013,” said David O’Toole, Senior Vice President and
Chief Financial Officer.

Conference Call and Webcast

Codexis will hold a live conference call and audio webcast on Wednesday,
February 27, 2013
, at 4:30 p.m. Eastern Time. The conference call
dial-in numbers are 866-804-6924 for domestic and 857-350-1670 for
international. Please use the pass code 10379003 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 11023504 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. develops engineered enzymes for pharmaceutical, biofuel
and chemical production. Codexis’ proven technologies enable scale-up
and implementation of biocatalytic solutions to meet customer needs for
rapid, cost-effective and green 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 related revenue, product
revenue, product margin, total margin for pharmaceutical revenue and
total cash burn; Codexis’ expectations of receiving argatroban milestone
and royalty payments in the first quarter of 2013; Codexis’ ability to
decrease its operational expenses and cash burn; Codexis’ ability to
reposition Codexyme® and CodeXol™ following the loss of Shell funding;
Codexis’ ability to build the long-term strength of its pharmaceuticals
business; and Codexis’ ability to penetrate its core enzyme business
more widely into the world’s complex chemistry market. 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’ need for substantial additional capital in the
future in order to expand its business; Codexis’ dependence on its
collaborators; Codexis’ dependence on a limited number of products and
customers in its pharmaceutical business; potential adverse effects to
Codexis’ business if its customers’ pharmaceutical products are not
received well in the markets; Codexis’ ability to develop and
commercialize new products for the pharmaceutical markets; Codexis’
dependence on obtaining third-party funding, or identifying the
effecting some other strategic option for, its CodeXyme® cellulase
enzymes and CodeXol™ detergent alcohols programs; the success of
Codexis’ recent cost saving measures, including its recent reduction in
force; Codexis’ ability to deploy its technology platform in new
adjacent market spaces; any impairments Codexis may be required to
record in the future with respect to its goodwill, intangible assets or
other long-lived assets; various challenges to the feasibility of the
production and commercialization of biofuels and bio-based chemicals
derived from cellulose; Codexis’ limited experience manufacturing and
selling cellulase enzymes; Codexis’ pharmaceutical product gross margins
are variable and may decline from quarter to quarter; Codexis’
dependence, in part, on Arch Pharmalab Ltd’s ability to effectively
market and sell certain pharmaceuticals products; 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’ Quarterly Report on Form 10-Q for the period ended September
30, 2012
filed with the Securities and Exchange Commission on November
7, 2012
, 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 Twelve Months Ended
December 31, December 31,
  2012     2011     2012     2011  
Revenues:
Product $ 6,834 $ 15,493 $ 35,924 $ 49,021
Collaborative research and development 1,078 17,296 50,127 71,368
Government awards       705     2,247     3,476  
 
Total revenues   7,912     33,494     88,298     123,865  
 
Costs and operating expenses:
Cost of product revenues 5,779 13,067 30,647 41,781
Research and development 10,594 15,548 56,785 61,049
Selling, general and administrative   7,286     9,782     31,379     36,942  

 

Total costs and operating expenses   23,659     38,397     118,811     139,772  
 
Loss from operations (15,747 ) (4,903 ) (30,513 ) (15,907 )
 
Interest income 42 77 252 273
Other expenses   (6 )   (297 )   (326 )   (675 )
 
Loss before provision (benefit) for income taxes (15,711 ) (5,123 ) (30,587 ) (16,309 )
 
Provision for income taxes   (173 )   174     270     241  
Net loss $ (15,538 ) $ (5,297 ) $ (30,857 ) $ (16,550 )
 

Net loss per share of common stock, basic and diluted

$ (0.41 ) $ (0.15 ) $ (0.84 ) $ (0.46 )
 
Weighted average common shares used in computing net loss per share
of common stock, basic and diluted
  37,581     35,965     36,768     35,674  
 
Codexis, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands)
     
December 31, December 31,
  2012     2011  
Assets
Current assets:
Cash and cash equivalents $ 32,003 $ 25,762
Marketable securities 13,524 27,720
Accounts receivable, net 7,545 18,917
Inventories 1,302 4,488
Prepaid expenses and other current assets   5,395     2,345  
Total current assets 59,769 79,232
 
Restricted cash 1,511 1,511
Non-current marketable securities 3,623 10,348
Property and equipment, net 16,650 24,176
Intangible assets, net 12,934 16,442
Goodwill 3,241 3,241
Other non-current assets   2,237     972  
Total assets $ 99,965   $ 135,922  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 3,654 $ 10,364
Accrued compensation 3,495 6,785
Other accrued liabilities 6,948 7,354
Deferred revenues   2,186     3,789  
Total current liabilities 16,283 28,292
 
Deferred revenues, net of current portion 1,299 1,485
Other long-term liabilities   3,943     3,455  
Total liabilities 21,525 33,232
 
Stockholders’ equity:
Common stock 4 4
Additional paid-in capital 294,128 287,792
Accumulated other comprehensive loss (136 ) (407 )
Accumulated deficit   (215,556 )   (184,699 )
Total stockholders’ equity   78,440     102,690  
Total liabilities and stockholders’ equity $ 99,965   $ 135,922  

Source: Codexis, Inc.

Stern Investor Relations, Inc.
Paul Cox, 212-362-1200
ir@codexis.com

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