Codexis Reports Fourth Quarter and Full Year 2012 Results

  Codexis Reports Fourth Quarter and Full Year 2012 Results

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

Business Wire

REDWOOD CITY, Calif. -- February 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            1,078         17,296           50,127        71,368
development
Government awards      -           705            2,247       3,476   
                                                                   
Total revenues         7,912       33,494         88,298      123,865 
                                                                   
Costs and operating
expenses:
Cost of product         5,779         13,067           30,647        41,781
revenues
Research and            10,594        15,548           56,785        61,049
development
Selling, general       7,286       9,782          31,379      36,942  
and administrative
                                                       
Total costs and        23,659      38,397         118,811     139,772 
operating expenses
                                                                   
Loss from               (15,747 )     (4,903 )         (30,513 )     (15,907 )
operations
                                                                   
Interest income         42            77               252           273
Other expenses         (6      )    (297   )        (326    )    (675    )
                                                                   
Loss before
provision (benefit)     (15,711 )     (5,123 )         (30,587 )     (16,309 )
for income taxes
                                                                   
Provision for          (173    )    174            270         241     
income taxes
Net loss              $ (15,538 )   $ (5,297 )       $ (30,857 )   $ (16,550 )
                                                                   
Net loss per share
of common stock,      $ (0.41   )   $ (0.15  )       $ (0.84   )   $ (0.46   )
basic and diluted
                                                                   
Weighted average
common shares used
in computing net       37,581      35,965         36,768      35,674  
loss per share of
common stock, basic
and diluted
                                                                             

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  

Contact:

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