Codexis Reports Fourth Quarter and Full Year 2011 Results

49% Annual Increase in Pharmaceutical Product Sales

CodeXyme™ Cellulase Enzymes and CodeXol™ Detergent Alcohol Product Lines Launched

News provided by

Codexis, Inc.

Feb 07, 2012, 04:05 ET

REDWOOD CITY, Calif., Feb. 7, 2012 /PRNewswire/ -- Codexis, Inc. (NASDAQ: CDXS), a developer of industrial enzymes to enable the production of biofuels, bio-based chemicals, and pharmaceutical intermediates, today announced financial results for the fourth quarter and year ended December 31, 2011.  

“In 2011, we launched our CodeXyme™ cellulase enzymes and CodeXol™ detergent alcohol product lines,” said Alan Shaw, Ph.D., President and CEO of Codexis, Inc. “In 2012 we are focused on delivering world-class CodeXyme™ cellulase enzymes to our development partners, piloting production of CodeXol™, and delivering continued sales growth in our pharmaceuticals products and services”.

Full Year 2011 Financial Highlights:

Revenue: For fiscal 2011, the company reported revenues of $123.9 million, an increase of $16.8 million or 16% over fiscal 2010 revenue of $107.1 million. Product revenue of $49.0 million increased $16.2 million or 49% over the prior year, driven by increased sales to both generic and innovator pharmaceutical customers. Collaborative R&D revenue of $71.4 million increased $1.2 million from $70.2 million over the prior year.

Operating Expenses: Research and development expenses for fiscal 2011 were $61.0 million, compared to $52.4 million for fiscal 2010. The increase was primarily due to additional headcount and amortization related to intellectual property purchased from Maxygen, Inc. Selling, general and administrative expenses for fiscal 2011 increased to $36.9 million compared to $33.8 million for fiscal 2010, driven by higher stock compensation expense and higher compensation expense due to headcount increases.

Net Loss: Net loss was ($16.6) million, or ($0.46) per share, based on 35.7 million weighted average common shares outstanding for fiscal year 2011. This compares to a net loss of ($8.5) million or ($0.35) per share for fiscal 2010.

Adjusted EBITDA: On a non-GAAP basis, Adjusted EBITDA was $4.3 million for fiscal 2011 compared to $9.9 million for fiscal 2010. Adjusted EBITDA is calculated by adjusting net loss for net interest expense, income taxes, depreciation, amortization, stock-based compensation and preferred stock warrant fair market valuation. A reconciliation of net loss to Adjusted EBITDA is presented below.

Cash: Cash, cash equivalents and marketable securities at December 31, 2011, was $63.8 million compared to $74.1 million at December 31, 2010. The company used ($0.5) million in cash from operations in fiscal 2011.

Fourth Quarter 2011 Financial Highlights:

Revenue: For the fourth quarter of 2011, the company reported revenues of $33.5 million, an increase of $3.7 million or 12% over $29.8 million in the fourth quarter of 2010. Product revenue increased $6.9 million or 80% over the same time period of 2010.

Operating Expenses: Research and development expenses in the fourth quarter of 2011 were $15.5 million, compared to $13.3 million for the fourth quarter of 2010. The increase was primarily due to additional headcount for the development of CodeXol™ Detergent Alcohol. Selling, general and administrative expenses in the fourth quarter of 2011 increased to $9.8 million, compared to $8.6 million over the same time period of 2010, related to use of consultants, legal costs associated with intellectual property patent filing and increased costs related to SOX compliance.

Net Loss: Net loss was ($5.3) million, or ($0.15) per share, based on 36.0 million weighted average common shares outstanding in the fourth quarter of 2011. This compares to a net loss of ($0.5) million or ($0.01) per share during the fourth quarter of 2010.

Adjusted EBITDA: On a non-GAAP basis, Adjusted EBITDA decreased from $4.4 million in the fourth quarter of 2010 to ($0.2) million in the fourth quarter of 2011. Adjusted EBITDA is calculated by adjusting net loss for net interest expense, income taxes, depreciation, amortization, stock-based compensation and preferred stock warrant fair market valuation. A reconciliation of net loss to Adjusted EBITDA is presented below.

Cash: Cash, cash equivalents and marketable securities at December 31, 2011 was $63.8 million compared to $70.6 million at September 30, 2011. The company used ($2.9) million in cash from operations in the fourth quarter.

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 2012, Codexis forecasts revenues in line with or exceeding 2011 results. Codexis expects 2012 Adjusted EBITDA will be positive.

Conference Call

Codexis will hold a conference call for investors on February 7, 2012 at 1:30 p.m. PT (4:30 p.m. ET). The conference call dial-in numbers are US: 866-788-0541 or International: 857-350-1679, access code 54501345. A live webcast of the call will also be available from the Investor Relations section of www.codexis.com. A recording of the call will be available by calling US: 888-286-8010 or International: 617-801-6888, access code 84268524 beginning approximately two hours after the call, and will be available for up to thirty days. A webcast replay from today's call will also be available from the Investor Relations section of www.codexis.com approximately two hours after the call and will be available for up to thirty days.

About Codexis, Inc.

Codexis is an industrial biotechnology company developing enzymes for the production of high value sustainable chemicals, clean fuels, cost effective pharmaceutical processes and renewable bioindustrial ingredients to make industry more efficient, productive and profitable.  Partners and customers include global leaders such as Shell, Merck and Pfizer.  For more information, see www.codexis.com.

Forward-Looking Statements

This press release contains forward-looking statements relating to Codexis' forecast for 2012 revenue and Adjusted EBITDA, and Codexis’ ability to deliver CodeXyme™ cellulase enzymes to its development partners in 2012, pilot production of CodeXol™ in 2012, and deliver sales growth in its pharmaceuticals products and services in 2012.  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 our control and that could materially affect actual results.  Factors that could materially affect actual results include the risks that our operating results may fluctuate in the future, that we have a history of net losses and that we may be unable to successfully commercialize our technology in biofuels.  Additional factors that could materially affect actual results can be found in Codexis' Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2011, 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


Year Ended




December 31,


December 31,




2011

2010

% change

2011

2010

% change

Revenues:












    Product

$ 15,493

$ 8,586

80%

$  49,021

$ 32,835

49%

    Collaborative research and development

17,296

20,746

-17%

71,368

70,196

2%

    Government grants

705

479

47%

3,476

4,073

-15%















Total revenues


33,494

29,811

12%

123,865

107,104

16%















Costs and operating expenses:














    Cost of product revenues

13,067

8,126

61%

41,781

27,982

49%

         Gross margin $

2,426

460

427%

7,240

4,853

49%

         Gross margin %

16%

5%


15%

15%
















    Research and development

15,548

13,349

16%

61,049

52,405

16%

    Selling, general and administrative

9,782

8,649

13%

36,942

33,841

9%









.


.




Total costs and operating expenses

38,397

30,124

27%

139,772

114,228

22%















Loss from operations


(4,903)

(313)

1466%

(15,907)

(7,124)

123%















    Interest income

77

31

148%

273

166

64%

    Interest expense and other, net

(297)

(153)

94%

(675)

(1,199)

-44%















Loss before provision for income taxes


(5,123)

(435)

1078%

(16,309)

(8,157)

100%















    Provision for income taxes


174

60

190%

241

384

-37%

Net loss

$ (5,297)

$  (495)

970%

$ (16,550)

$ (8,541)

94%















Net loss per share of common stock,












basic and diluted

$   (0.15)

$ (0.01)


$     (0.46)

$   (0.35)
















Weighted average common shares used in computing net loss per share of common stock, basic and diluted

35,965

34,452


35,674

24,594


Codexis, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In Thousands)










December 31,

December 31,



2011

2010

Assets





Current assets:





  Cash and cash equivalents


$           25,762

$           72,396

  Marketable securities

27,720

-

  Accounts receivable, net


18,917

15,333

  Inventories


4,488

2,817

  Prepaid expenses and other current assets

2,345

1,646

     Total current assets


79,232

92,192








Restricted cash

1,511

1,466

Non-current marketable securities

10,348

1,650

Property and equipment, net


24,176

21,452

Intangible assets, net


16,442

20,158

Goodwill

3,241

3,241

Other non-current assets


972

1,141

Total assets


$         135,922

$         141,300








Liabilities and stockholders' equity





Current liabilities:





  Accounts payable


$           10,364

$             9,208

  Accrued compensation

6,785

8,107

  Other accrued liabilities


7,354

5,630

  Deferred revenues


3,789

4,539

     Total current liabilities


28,292

27,484








Deferred revenues, net of current portion

1,485

5,074

Other long-term liabilities


3,455

1,381

     Total  liabilities


33,232

33,939








Stockholders' equity:





Common stock

4

4

Additional paid-in capital

287,792

275,540

Accumulated other comprehensive income (loss)

(407)

(34)

Accumulated deficit

(184,699)

(168,149)

     Total  stockholders' equity

102,690

107,361

Total liabilities, and stockholders' equity

$         135,922

$         141,300

Codexis, Inc.

Condensed Consolidated Statements of Cash Flow

(Unaudited)

(In Thousands)









Year Ended



December 31,



2011

2010

Operating activities:




Net loss

$ (16,550)

$   (8,541)

Adjustments to reconcile net loss to net cash used in operating activities:




   Amortization of intangible assets

3,716

1,063

   Depreciation and amortization of property and equipment

7,755

7,246

   Revaluation of redeemable convertible preferred stock warrant liability

-

0

677

   Loss (gain) on disposal of property and equipment

49

148

   Gain from extinguishment of asset retirement obligation

(124)

-

   Extinguishment of royalty payable

-

461

   Stock-based compensation

9,431

8,737

   Accretion of asset retirement obligation

39

146

   Amortization of debt discount

-

26

   Accretion (amortization) of premium/discount on marketable securities

771

511

      Changes in operating assets and liabilities:




    Accounts receivable

(3,583)

(8,087)

    Inventories

(1,671)

98

    Prepaid expenses and other current assets

(682)

13

    Other assets

513

2,814

    Accounts payable

1,156

(2,105)

    Accrued compensation

(1,322)

1,589

    Other accrued liabilities

4,351

(6,048)

    Deferred revenues

(4,339)

(15,131)

            Net cash used in operating activities

(490)

(16,383)







Investing activities:




   Increase in restricted cash

(45)

(735)

   Purchase of property and equipment

(10,736)

(6,990)

   Purchase of marketable securities

(52,564)

(49,051)

   Purchase of Maxygen patent portfolio


(20,705)

   Proceeds from sale of marketable securities

6,037

1,605

   Proceeds from maturities of marketable securities

8,500

70,695

   Proceeds from disposal of property and equipment


15

         Net cash used in investing activities

(48,808)

(5,166)







Financing activities:




   Principal payments on financing obligations

-

(8,026)

   Payments in preparation for initial public offering

-

(3,870)

   Proceeds from issuance of common stock on IPO, net of underwriting discounts

-

-

72,541

   Proceeds from exercises of stock options

2,579

1,594

         Net cash provided by financing activities

2,579

62,239







   Effect of exchange rate changes on cash and cash equivalents

85

(79)







Net increase (decrease) in cash and cash equivalents

(46,634)

40,611

Cash and cash equivalents:




  Beginning of the period

72,396

31,785

  End of the period

25,762

72,396







  Marketable securities at the end of period

38,068

1,650







Cash, cash equivalents and marketable securities

$  63,830

$   74,046













Reclassification of preferred stock warrant from liability to additional paid-in capital


$     2,686

Conversion of preferred stock to common stock and additional paid-in capital


$ 179,672

Reconciliation of GAAP to Non-GAAP Financial Information

In this press release, in addition to GAAP financial results, we present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA to evaluate the effectiveness of our business strategies.  

A reconciliation of GAAP net loss to Adjusted EBITDA is included in the table below.

Codexis, Inc.



Reconciliation of GAAP Net Loss to Adjusted EBITDA



(Unaudited)



(In Thousands)








Three Months Ended

Year Ended




December 31,

December 31,



Calculation of Adjusted EBITDA

2011

2010

2011

2010



Net loss

$(5,297)

$  (495)

$(16,550)

$(8,541)



Adjustments:









Minus: Interest income

(77)

(31)

(273)

(166)



Plus: Interest expense

-

5

-

529



Plus: Income taxes

174

60

241

384



Plus: Depreciation and amortization

3,006

2,609

11,471

8,309



Plus: Stock-based compensation

2,038

2,271

9,431

8,737



Plus: Preferred stock warrant fair market valuation adjustment

-

-

-

677














  Adjusted EBITDA

$   (156)

$4,419

$    4,320

$  9,929

Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:

  • Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
  • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
  • Non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period.

Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally.

Contacts: 
Investors: Jay Sarwar, [email protected], 650-421-8331
Media: Lyn Christenson, [email protected], 650-421-8144 or Saskia Sidenfaden, [email protected], 212-827-3771.      

SOURCE Codexis, Inc.

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