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Codexis Reports Third Quarter 2012 Results

  Codexis Reports Third Quarter 2012 Results

                  -- Conference call today at 4:30 pm ET --

Business Wire

REDWOOD CITY, Calif. -- November 07, 2012

Codexis, Inc. (NASDAQ: CDXS), a developer of world-leading enzymes and
processes for the production of pharmaceuticals, biofuels and bio-based
chemicals, today announced financial results for the third quarter ended
September 30, 2012.

“As promised, Codexis went about the hard, but crucial work this quarter of
strategically realigning the company for its forward growth strategy following
the loss of Shell funding,” said John Nicols, President and CEO of Codexis.
“In parallel, we are encouraged by solid developments in our pharma business
having recently finalized a new, more profitable business arrangement with our
manufacturing partner, Arch Pharmalabs. We are also developing early prospects
for commercialization partners for our CodeXyme™ cellulase enzymes, which
produce cellulosic sugars,” Nicols added.

Third Quarter Financial Highlights:

Revenues for the third quarter of 2012 were $26.3 million, a 21% decrease from
$33.3 million in the third quarter of 2011. Product revenue in the third
quarter of 2012 was $7.1 million, a 41% decrease from $12.2 million in the
prior year quarter and a 5% sequential increase from $6.8 million in the
second quarter of 2012. Product gross margin in the third quarter was 10%,
compared to 18% in the prior year quarter due to a higher percentage of
generic products sales and lower on patent sales in the third quarter of 2012.
Collaborative research and development revenue of $18.6 million decreased 3%
from $19.2 million in the third quarter of 2011.

Research and development expenses in the third quarter of 2012 were $14.2
million, a decrease of 15% from $16.8 million for the third quarter of 2011.
The decrease was primarily due to headcount reductions for the development of
CodeXol™ detergent alcohol.

Selling, general and administrative expenses in the third quarter of 2012 were
$7.9 million, a decrease of 11% compared to $8.9 million in the same period of
2011. The decrease was primarily due to reductions in headcount and other
discretionary expenses during the third quarter of 2012.

Net loss was $2.3 million, or a loss of $0.06 per share, based on 37.1 million
weighted average common shares outstanding in the third quarter of 2012. This
compares to a net loss of $2.7 million, or a loss of $0.08 per share during
the third quarter of 2011.

On a non-GAAP basis, Adjusted EBITDA was income of $3.2 million in the third
quarter of 2012 compared to income of $2.6 million for the third quarter of
2011. Adjusted EBITDA is calculated by adjusting net loss for net interest
income, income taxes, depreciation, amortization, impairment of marketable
securities and stock-based compensation. A reconciliation of net loss to
Adjusted EBITDA is presented below.

Cash, cash equivalents, and marketable securities at September 30, 2012 were
$53.9 million.

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 expects a decline in total revenues relative
to its full year 2011 total revenues of $124 million and adjusted EBITDA to be
negative. The Company anticipates its year-end cash, cash equivalents, and
marketable securities to be approximately $45 million.

Conference Call

Codexis will hold a conference call on Wednesday, November 7, 2012, at 4:30
p.m. Eastern Time. 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 Investors 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 65902545 beginning approximately two
hours after the call, and will be available for up to seven days. 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. is a developer of world-leading enzymes and processes for the
production of pharmaceuticals, biofuels and bio-based chemicals. Codexis'
product lines include CodeXyme™ cellulase enzymes and CodeXol™ detergent
alcohol. Partners and customers include global leaders such as Merck, Pfizer
and Arch Pharmalabs. For more information, see www.codexis.com.

Forward-Looking Statements

This press release contains forward-looking statements relating to Codexis’
forecast for 2012 revenue, Adjusted EBITDA, total cash burn and total
pharmaceutical product sales; Codexis’ ability to advance its position in
pharmaceuticals and to deliver against opportunities in fuels and chemicals;
Codexis’ ability to monetize its technology; and Codexis’ ability to develop
its enzyme package for second generation ethanol. 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; Codexis’ ability to
secure third-party funding for its advanced biofuels program; the success of
Codexis’ recent cost saving measures, including its recent reduction in force;
and various challenges to the feasibility of the production and
commercialization of biofuels and bio-based chemicals derived from cellulose
and Codexis’ limited experience manufacturing and selling cellulase enzymes.
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 Statement of Operations
(Unaudited)
(In Thousands)

                        Three Months Ended        Nine Months Ended
                         September 30                September 30
                          2012      2011         2012       2011    
Revenues:
Product                    7,140        12,199         29,090        33,528
Collaborative research     18,569       19,201         49,049        54,073
and development
Government awards         632        1,882        2,247       2,771   
                                                                   
Total revenues           $ 26,341    $ 33,282      $ 80,386     $ 90,372  
                                                                   
Costs and operating
expenses:
Cost of product            6,397        9,958          24,868        28,713
revenues
Research and               14,191       16,786         46,190        45,502
development
Selling, general and      7,909      8,871        24,093      27,160  
administrative
                                                       .
Total costs and          $ 28,497    $ 35,615      $ 95,151     $ 101,375 
operating expenses
                                                                   
Loss from operations       (2,156 )     (2,333 )       (14,765 )     (11,003 )
Interest income            61           76             210           195
Other expenses            (45    )    (411   )      (320    )    (378    )
                                                                   
Loss before provision      (2,140 )     (2,668 )       (14,875 )     (11,186 )
for income taxes
Provision for income      169        74           443         68      
taxes
Net loss                 $ (2,309 )   $ (2,742 )     $ (15,318 )   $ (11,254 )
                                                                             
Net loss per share of
common stock, basic      $ (0.06  )   $ (0.08  )     $ (0.42   )   $ (0.32   )
and diluted
                                                                   
Weighted average
common shares used in
computing net loss per    37,116     35,919       36,494      35,576  
share of common stock,
basic and diluted


Codexis, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands)

                                            September 30,   December 31,
                                               2012           2011     
Assets
Current assets:
Cash and cash equivalents                    $  25,573         $ 25,762
Marketable securities                           24,780           27,720
Accounts receivable, net                        16,527           18,917
Inventories                                     2,760            4,488
Prepaid expenses and other current assets      5,169          2,345    
Total current assets                            74,809           79,232
                                                               
Restricted cash                                 1,511            1,511
Non-current marketable securities               3,578            10,348
Property and equipment, net                     19,892           24,176
Intangible assets, net                          13,777           16,442
Goodwill                                        3,241            3,241
Other non-current assets                       2,228          972      
Total assets                                 $  119,036       $ 135,922  
                                                               
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                             $  6,287          $ 10,364
Accrued compensation                            4,708            6,785
Other accrued liabilities                       7,419            7,354
Deferred revenues                              2,286          3,789    
Total current liabilities                       20,700           28,292
                                                               
Deferred revenues, net of current portion       1,346            1,485
Other long-term liabilities                    3,994          3,455    
Total liabilities                               26,040           33,232
                                                               
Stockholders' equity:
Common stock                                    4                4
Additional paid-in capital                      293,163          287,792
Accumulated other comprehensive loss            (154     )       (407     )
Accumulated deficit                            (200,017 )      (184,699 )
Total stockholders' equity                     92,996         102,690  
Total liabilities and stockholders' equity   $  119,036       $ 135,922  

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.


                           (Unaudited)
                           (In Thousands)
                           
                           Three Months Ended       Nine Months Ended
                           September 30,             September 30,
Calculation of Adjusted     2012      2011       2012       2011    
EBITDA
Net loss                   $ (2,309 )   $ (2,742 )   $ (15,318 )   $ (11,254 )
Adjustments:
Minus: Interest income       (61    )     (76    )     (210    )     (195    )
Plus: Income taxes           169          74           443           68
Plus: Depreciation and       3,137        2,846        9,487         8,465
amortization
Plus: Stock-based            1,466        2,536        4,475         7,393
compensation
Plus: Impairment of          753                       753
marketable securities
                                                                
Adjusted EBITDA            $ 3,155     $ 2,638     $ (370    )   $ 4,477   

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.

Codexis, Inc.
200 Penobscot Drive
Redwood City, CA 94063
Tel: 650-421-8100
www.codexis.com

Contact:

Codexis, Inc.
Investors: 212-362-1200
ir@codexis.com
Media:
Matthew Hargarten, 312-377-4136
media@codexis.com
 
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