Codexis Reports Third Quarter 2011 Results

Revenue grows 23% year-over-year to $33 million

News provided by

Codexis, Inc.

Nov 01, 2011, 04:05 ET

REDWOOD CITY, Calif., Nov. 1, 2011 /PRNewswire/ -- Codexis, Inc. (NASDAQ: CDXS) today announced financial results for the third quarter ended September 30, 2011.  

Third Quarter Financial Highlights:

Revenue: For the third quarter of 2011, the company reported revenues of $33.3 million, an increase of 23% from $27.1 million in the third quarter of 2010.  Product revenue of $12.2 million increased 29% over the prior year quarter driven primarily by an increase in product sales to both generic and innovator pharmaceutical customers.  Collaborative R&D revenue of $19.2 million increased from $17.2 million in the third quarter of 2010, driven mainly by milestones earned in the company’s Shell collaboration and by funded research for Codexis’ carbon capture program.

Operating Expenses:  Research and development expenses in the third quarter of 2011 were $16.8 million, compared to $13.1 million for the third quarter of 2010.  The increase was primarily due to additional headcount, an increase in amortization related to intellectual property purchased from Maxygen, Inc. and stock compensation expenses. Selling, general and administrative expenses in the third quarter of 2011 increased to $8.9 million compared to $7.9 million over the same period of 2010, driven by higher stock compensation expense and higher compensation expense due to headcount increases.

Net Loss:  Net loss was ($2.7) million, or ($0.08) per share, based on 35.9 million weighted average common shares outstanding in the third quarter of 2011.  This compares to a net loss of ($2.7) million or ($0.08) per share during the third quarter of 2010.  

Adjusted EBITDA:  On a non-GAAP basis, Adjusted EBITDA increased from $2.1 million in the third quarter of 2010 to $2.6 million in 2011. Adjusted EBITDA is calculated by adjusting net loss for net interest, 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 September 30, 2011, decreased to $70.6 million compared to $72.4 million at June 30, 2011.  The company generated $2.7 million in cash from operations in the third 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 2011, Codexis forecasts revenues of $120 million or greater, which would represent growth of 12% or greater compared to 2010. Codexis expects 2011 Adjusted EBITDA will be $5 million or greater.

Recent Events

On October 24, 2011, Codexis announced that one year after launch, its Codex® Screening Kits are in use or in evaluation in manufacturing process development at 50 pharmaceutical companies worldwide. Codex® Screening Kits were introduced in October 2010. Pharmaceutical and fine chemical companies including Merck, Roche, DSM and Dainippon Sumitomo are among the global customers using Codex® Screening Kits and Codex® Panels to reduce pharmaceutical manufacturing process development time and cost. In addition, more than 10,000 kilograms of various enzymes used in commercial pharmaceutical intermediates production processes have been manufactured by the company’s enzyme production partners.

On October 11, 2011, Codexis announced that Achilles Antonio Clement has been named Director, Latin America.  Mr. Clement joined Codexis from DuPont in Latin America.  He will head the newly-formed Codexis do Brasil Participacoes Ltda., Codexis’ Brazilian subsidiary, and will manage Codexis' expanding role in Latin America.

On September 27, 2011, Codexis and Raizen Energia S.A. announced the signing of a joint development agreement to develop an improved first generation ethanol process with enhanced performance economics. Under the terms of the agreement, Raizen and Codexis will deploy the Codexis CodeEvolver™ directed evolution technology platform to improve Raizen's current process for producing ethanol made from sugar.

Conference Call

Codexis will hold a conference call for investors on November 1, 2011 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 producing high value sustainable chemicals, clean fuels, cost effective pharmaceutical processes and  renewable bioindustrial ingredients to make industry more efficient, productive and profitable.  Partners 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 2011 revenue and Adjusted EBITDA, and Codexis’ ability to improve Raízen’s ethanol process.  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 August 3, 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


Nine Months Ended




September 30,


September 30,




2011

2010

% change

2011

2010

% change

Revenues:












    Product

$ 12,199

$  9,491

29%

$  33,528

$ 24,250

38%

    Collaborative research and development

19,201

17,243

11%

54,073

49,450

9%

    Government grants

1,882

379

397%

2,771

3,593

-23%















Total revenues


33,282

27,113

23%

90,372

77,293

17%















Costs and operating expenses:














    Cost of product revenues

9,958

8,563

16%

28,713

19,856

45%

         Gross margin $

2,241

928

141%

4,815

4,394

10%

         Gross margin %

18%

10%


14%

18%






























    Research and development

16,786

13,070

28%

45,502

39,056

17%

    Selling, general and administrative

8,871

7,940

12%

27,160

25,192

8%









.


.




Total costs and operating expenses

35,615

29,573

20%

101,375

84,104

21%















Loss from operations


(2,333)

(2,460)

-5%

(11,003)

(6,811)

62%















    Interest income

76

61

25%

195

135

44%

    Interest expense and other, net

(411)

(35)

1074%

(378)

(1,047)

-64%

Loss before provision for income taxes


(2,668)

(2,434)

10%

(11,186)

(7,723)

45%

    Provision for income taxes


74

298

-75%

68

324

-79%

Net loss

$ (2,742)

$ (2,732)

0%

$ (11,254)

$ (8,047)

40%















Net loss per share of common stock,












basic and diluted

$   (0.08)

$   (0.08)


$     (0.32)

$   (0.38)
















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

35,919

34,200


35,576

21,272


Codexis, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In Thousands)










September 30,

December 31,



2011

2010

Assets





Current assets:





  Cash and cash equivalents


$            30,132

$           72,396

  Marketable securities

19,503

-

  Accounts receivable, net


19,325

15,333

  Inventories


5,240

2,817

  Prepaid expenses and other current assets

2,837

1,646

     Total current assets


77,037

92,192








Restricted cash

1,511

1,466

Non-current marketable securities

21,020

1,650

Property and equipment, net


23,321

21,452

Intangible assets, net


17,372

20,158

Goodwill

3,241

3,241

Other non-current assets


1,120

1,141

Total assets


$          144,622

$         141,300








Liabilities and shareholders' equity





Current liabilities:





  Accounts payable


$              7,509

$             9,208

  Accrued compensation

6,165

8,107

  Other accrued liabilities


12,100

5,630

  Deferred revenues


8,632

4,539

     Total current liabilities


34,406

27,484








Deferred revenues, net of current portion

1,871

5,074

Other long-term liabilities


1,870

1,381

     Total  liabilities


38,147

33,939








Stockholders' equity:





Common stock

4

4

Additional paid-in capital

285,650

275,540

Accumulated other comprehensive income (loss)

223

(34)

Accumulated deficit

(179,402)

(168,149)

     Total  stockholders' equity

106,475

107,361

     Total liabilities, and shareholders' equity

$          144,622

$         141,300

Codexis, Inc.

Condensed Consolidated Statements of Cash Flow

(Unaudited)

(In Thousands)









Nine Months Ended



September 30,



2011

2010

Operating activities:




Net loss

$ (11,254)

$   (8,047)

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




   Amortization of intangible assets

2,787

402

   Depreciation and amortization of property and equipment

5,678

5,298

   Revaluation of redeemable convertible preferred stock warrant liability

-

677

   Loss (gain) on disposal of property and equipment

31

-

   Gain from extinguishment of asset retirement obligation

(124)

-

   Stock-based compensation

7,393

6,466

   Accretion of asset retirement obligation

27

-

   Amortization of debt discount

-

70

   Accretion (amortization) of premium/discount on marketable securities

501

511

      Changes in operating assets and liabilities:




    Accounts receivable

(3,991)

(8,132)

    Inventories

(2,423)

(331)

    Prepaid expenses and other current assets

(844)

(213)

    Other assets

20

2,602

    Accounts payable

(1,699)

(1,360)

    Accrued compensation

(1,942)

(472)

    Other accrued liabilities

7,355

(4,247)

    Deferred revenues

891

(9,276)

            Net cash provided by (used in) operating activities

2,406

(16,052)







Investing activities:




   (Increase) decrease  in restricted cash

(46)

65

   Purchase of property and equipment

(7,813)

(4,740)

   Purchase of marketable securities

(50,900)

(49,051)

   Proceeds from sale of marketable securities

5,008

1,605

   Proceeds from maturities of marketable securities

6,500

70,696

         Net cash provided by (used in) investing activities

(47,251)

18,575







Financing activities:




   Principal payments on financing obligations

-

(3,979)

   Payments in preparation for initial public offering

-

(3,870)

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

-

72,551

   Proceeds from exercises of stock options

2,476

279

         Net cash provided by (used in) financing activities

2,476

64,981







   Effect of exchange rate changes on cash and cash equivalents

105

(15)







Net increase in cash and cash equivalents

(42,264)

67,489

Cash and cash equivalents:




  Beginning of the period

72,396

31,785

  End of the period

30,132

99,274







  Marketable securities at the end of period

40,523

47,306







Cash, cash equivalents and marketable securities

$  70,655

$ 146,580













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

Nine Months Ended




September 30,

September 30,



Calculation of Adjusted EBITDA

2011

2010

2011

2010



Net loss

$(2,742)

$(2,732)

$(11,254)

$(8,047)



Adjustments:









Minus: Interest income

(76)

(61)

(195)

(135)



Plus: Interest expense

-

130

-

524



Plus: Income taxes

74

298

68

324



Plus: Depreciation and amortization

2,846

1,948

8,465

5,700



Plus: Stock-based compensation

2,536

2,548

7,393

6,466



Plus: Preferred stock warrant fair market valuation adjustment

-

-

-

677














  Adjusted EBITDA

$  2,638

$  2,131

$    4,477

$  5,509

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:   Henk Adriaenssens, [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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