Verenium Reports Financial Results For The Fourth Quarter And Year Ended December 31, 2012

   Verenium Reports Financial Results For The Fourth Quarter And Year Ended
                              December 31, 2012

-- Company outperforms 2012 revenue, gross profit and operating loss guidance
--

PR Newswire

SAN DIEGO, Calif., March 27, 2013

SAN DIEGO, Calif., March 27, 2013 /PRNewswire/ --Verenium Corporation
(Nasdaq: VRNM), a leading industrial biotechnology company focused on the
development and commercialization of high-performance enzymes, today reported
operating highlights and financial results for the fourth quarter and year
ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120924/MM79973LOGO)

Company Highlights

Since the beginning of 2012, the Company has made important progress on both
operational and financial fronts. Recent accomplishments include:

  oSelected lead enzyme candidates for the development of a next-generation
    phytase enzyme and a suite of non-starch polysaccharide enzymes for animal
    health and nutrition with partner Novus International Inc.;
  oAnnounced the commercial launch of Pyrolase^® HT, a next-generation
    cellulase enzyme for use in hydraulic fracturing;
  oCompleted the start-up of the Company's new bioprocess development pilot
    plant facility;
  oAnnounced a $22.5 million, five-year secured financing with Athyrium
    Opportunities Fund providing the capital required to grow the business;
    and
  oEnded the year with unrestricted cash of $34.9 million.

"2012 was a productive year for us as we continued to make progress
operationally while at the same time creating a more solid financial structure
from which to grow the business and create shareholder value," said James
Levine, President & Chief Executive Officer at Verenium. "I look forward to
the many opportunities that lie ahead in 2013, including the growth of our
existing commercial products, the execution of new product launches from our
Product Pipeline, and the potential for new partnerships that will allow us to
drive the long term growth and success of our business."

Financial Results

Revenues
Revenues for the periods ended December 31, 2012 and 2011 were as follows (in
thousands):

                                ThreeMonthsEnded       YearEnded

                                December 31,              December 31,
                                2012         2011         2012       2011
Revenues:
Animal health and          $       $       $      $    
nutrition                       8,328        9,116        30,849    33,850
Grain processing           2,970        3,713        10,865     15,953
Oilseed processing         --           811          579        5,352
All other products              90           103          1,062      840
Total product                   11,388       13,743       43,355     55,995
Contract manufacturing (1)      1,500        --           5,547      --
Collaborative and license       1,095        578          8,269      5,272
Total revenue                   $        $        $      $    
                                13,983      14,321       57,171    61,267

 (1) Revenue from the DSM supply agreement is reported as contract
 manufacturing following the sale of assets to DSM in March 2012. Revenue for
 Purifine and Veretase prior to the DSM transaction is reflected in oilseed
 processing and grain processing revenue, respectively.

Total revenues for the year ended December 31, 2012 decreased 7% to $57.2
million from $61.3 million in the prior year. Product and contract
manufacturing revenues represented approximately 86% of total revenues for the
year ended December 31, 2012 compared to 91% in the prior year.

Product revenue for the year ended December 31, 2012 decreased 23% to $43.4
million from $56.0 million in the prior year, primarily due to the following:

  oA decrease in grain processing revenue compared to 2011 attributed to
    adverse business conditions in the corn ethanol industry, resulting in
    plant closures and reduced operating rates, increased competitive
    pressure, and delays or extensions of product trials which affected new
    customer adoption rates.
  oThe sale and license of the Company's Purifine product for oilseed
    processing and Veretase product for grain processing to DSM in March of
    2012, now reported as contract manufacturing revenue at lower selling
    prices; and
  oA decrease in animal health and nutrition due to toll manufacturing
    revenue included in 2011.

Product and contract manufacturing revenue from non-Phyzyme^® XP products as a
percentage of total product and contract manufacturing revenues decreased to
37% for the year ended December 31, 2012 compared to 46% in the prior year.
Contract manufacturing revenue increased as a result of the supply agreement
entered into in conjunction with the DSM sale, under which the Company
produces and sells Purifine and Veretase to DSM at lower sales prices than
when the Company sold directly to end customers.

Total collaborative revenue for the year ended December 31, 2012 increased to
$8.3 million from $5.3 million in the prior year, primarily due to recognition
of license fee revenue from Novus International, Inc. and license fees
associated with the DSM transaction. This increase was offset in part by a
non-recurring license fee received in 2011 for a commercial enzyme candidate
previously licensed to a third party.

Product and Contract Manufacturing Gross Profit and Gross Margin

Product and contract manufacturing gross profit for the year ended December
31, 2012 decreased 22% to $16.8 million from $21.5 million in the prior year.
Gross margin decreased to 34% of total product and contract manufacturing
revenue for the year ended December 31, 2012, compared to 38% for the year
ended December 31, 2011. Gross margin decreased primarily due to a shift in
sales mix from higher margin grain processing revenue to the Company's lower
margin supply agreement with DSM, implementation of upgrade projects at the
Company's manufacturing facility which resulted in idle capacity charges and
incremental inventory reserves and write-offs associated with certain lots
ofinventorywhich did not meet defined product specifications.

Operating Expenses (excluding cost of product and contract manufacturing
revenue and restructuring expense)

Excluding cost of product and contract manufacturing revenues and
restructuring charges, total operating expenses related to continuing
operations for the year ended December 31, 2012 increased to $34.6 million
(including share-based compensation of $1.0 million) from $30 million
(including share-based compensation of $0.8 million) in the prior year. For
the year ended December 31, 2011, total operating expenses includes
reimbursement of $1.1 million of legal fees during the first quarter of 2011
associated with the settlement of a noteholder lawsuit, which was recorded as
an offset to operating expenses. Excluding this reimbursement, total operating
expenses increased $3.5 million primarily due to increased research and
development costs reflecting continued investment in pipeline products,
additional depreciation and facility related costs associated with the
Company's new headquarters beginning in June 2012 and transaction costs
associated with various financing and strategic alternatives the Company was
pursuing during the first quarter of 2012.

Gain on Sale of Oilseed Processing Business

On March 23, 2012, the Company entered into an asset purchase agreement with
DSM for the purchase of the Company's oilseed processing business and
concurrently entered into a license agreement, a supply agreement and a
transition services agreement with DSM. The aggregate consideration received
by the Company was $37 million. The $31.3 million gain on sale for the year
ended December 31, 2012 was calculated as the difference between the allocated
consideration amount for the oilseed processing business, and the net carrying
amount of the purchased assets and liabilities, net of transaction-related
costs.

Income (Loss) from Operations

Income from operations for the year ended December 31, 2012 was $21.7 million
compared to loss from operations of $6.2 million for the prior year, on a GAAP
accounting basis. Adjusted for the impact of restructuring expenses and the
gain on saleto DSMof $31.3 million, the Company's non-GAAP pro-forma loss
from operations was $9.6 million for the year ended December 31, 2012 compared
to $3.2 million for the prior year. The Company believes that excluding the
impact of these items provides a more consistent measure of operating results.

Net Income (Loss) from Continuing Operations

Net income from continuing operations for the year ended December 31, 2012 was
$18.3 million compared to $5.6 million for the prior year, on a GAAP
accounting basis. Adjusted for the impact of restructuring expenses, non-cash
items related to the change in fair value of derivative assets and liabilities
and gain on the sale to DSM, the Company's non-GAAP pro-forma net loss from
continuing operations for the year ended December 31, 2012 increased to $12.2
million compared to $6.3 million for the prior year primarily due to a
decrease in product and contract manufacturing gross profit and continued
research and development investment in pipeline products. The Company believes
that excluding the impact of these items provides a more consistent measure of
operating results.

Balance Sheet

The Company ended the quarter with $34.9 million in cash and cash equivalents
and $2.5 million in total restricted cash. On December 7, 2012 the Company
entered into a $22.5 million secured debt financing with Athyrium
Opportunities Fund ("Athyrium"). Net proceeds after estimated expenses were
approximately $21.3 million. The debt bears interest at 11.5% per annum, with
interest payments due quarterly over a five-year term and the principal
balance due as a lump-sum payment at maturity in December 2017.

"We had a strong fourth quarter, and overall, we are pleased with our
financial results for 2012," said Jeff Black, Chief Financial Officer at
Verenium. "Importantly, we secured the necessary financing that should enable
us to execute on our business. At the same time, we prudently managed our
operating burn during challenging market conditions."

About Verenium
Verenium, an industrial biotechnology company, is a global leader in
developing high-performance enzymes. Verenium's tailored enzymes are
environmentally friendly, making products and processes greener and more
cost-effective for industries, including the global food and fuel markets.
Read more at www.verenium.com.

Forward-Looking Statements
Statements in this press release that are not strictly historical are
"forward-looking" and involve a high degree of risk and uncertainty. These
include, but are not limited to, statements related to Verenium's technology,
products and product candidates and product pipeline, lines of business,
operations (including Verenium's ability to successfully negotiate and enter
into future collaborations and partnerships), capabilities, commercialization
activities, customer adoption rates, industry conditions, future financial
performance, and near-term and longer-term growth and prospects. Such
statements are only predictions, and actual events or results may differ
materially from those projected in such forward-looking statements. Factors
that could cause or contribute to the differences include, but are not limited
to, risks associated with Verenium's strategic focus, technologies, products
and product candidates and product pipeline (including Verenium's ability to
identify, develop and commercialize new products and product candidates,
either independently or with collaborators or partners, and market demand for
those products and product candidates), dependence on patents and proprietary
rights, protection and enforcement of its patents and proprietary rights, the
commercial prospects of the industries in which Verenium operates and sells
products, Verenium's dependence on manufacturing and/or license agreements,
its ability to achieve milestones under existing and future collaboration
agreements, the ability of Verenium and its partners to commercialize its
technologies and products (including by obtaining any required regulatory
approvals) using Verenium's technologies, the timing for launching any
commercial products and projects, the ability of Verenium and its
collaborators to market and sell any products that it or they commercialize,
the development or availability of competitive products or technologies, the
future ability of Verenium to enter into and/or maintain collaboration and
joint venture or partnership agreements and licenses on a timely basis or at
all, and risks and other uncertainties more fully described in Verenium's
filings with the Securities and Exchange Commission, including, but not
limited to, Verenium's annual report on Form 10-K for the year ended December
31, 2011 and any updates contained in its subsequently filed quarterly reports
on Form 10-Q . These forward-looking statements speak only as of the date
hereof, and Verenium expressly disclaims any intent or obligation to update
these forward-looking statements.

Contacts:

Sarah Carmody
Sr. Manager, Corporate Communications
858-431-8581
sarah.carmody@verenium.com



Verenium Corporation
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
                         Three Months Ended          Year Ended

                         December 31,                December 31,
                                                    
                                       2011                       2011
                         2012                        2012
                                       As Restated*               As Restated*
Revenues:
 Product               $   11,388  $  13,743   $          $  55,995
                                                     43,355
 Contract              1,500         --            5,547        --
manufacturing
 Collaborative and     1,095         578           8,269        5,272
license
Total revenue            13,983        14,321        57,171       61,267
Operating expenses:
 Cost of product and
contract manufacturing   8,134         8,307         32,096       34,481
revenue
Product and contract
manufacturing gross      4,754         5,436         16,806       21,514
profit
Product and contract
manufacturing gross      37%           40%           34%          38%
margin
 Research and          4,260         3,393         15,060       11,038
development
 Selling, general and  4,832         5,208         19,567       18,991
administrative
 Restructuring charges 3             3             30           2,943
Total operating expenses 17,229        16,911        66,753       67,453
Gain on sale of oilseed  --            --            31,278       --
processing business
Income (loss) from       (3,246)       (2,590)       21,696       (6,186)
operations
Other income and
expense:
 Interest and other    (768)         (661)         (2,653)      (3,032)
expense, net
Gain on debt
extinguishment upon      --            --            --           15,349
repurchase of
convertible notes
Gain (loss) on net
change in fair value of  19            136           (548)        (869)
derivative assets and
liabilities
Total other income       (749)         (525)         (3,201)      11,448
(expense), net
Net income (loss) from
continuing operations    (3,995)       (3,115)       18,495       5,262
before income taxes
Income tax benefit       380           368           (226)        368
(provision)
Net income (loss) from   (3,615)       (2,747)       18,269       5,630
continuing operations
 Net loss from          (7)           (149)         (56)         (112)
discontinued operations
Net income (loss)        $           $  (2,896)   $          $   5,518
attributed to Verenium   (3,622)                     18,213
Net income (loss) per
share, basic:            $          $   (0.22)  $        $    0.45
                         (0.28)                      1.44
Continuing operations
Discontinued operations  $        $   (0.01)  $       $   (0.01)
                          --                       --
Attributed to Verenium   $          $   (0.23)  $        $    0.44
Corporation              (0.28)                      1.43
Shares used in computing
net income (loss) per    12,780        12,608        12,693       12,608
share, basic



Verenium Corporation
Condensed Consolidated Balance Sheet Data
(unaudited, in thousands)
                                                          

                                       December 31,        December 31,
                                       2012                2011
                                                           

                                                           As Restated*

                                       $     34,875   $      28,759
Cash and cash equivalents
Restricted cash, short term            2,500               5,000
Accounts receivable, net               10,577              11,371
Inventories, net                       5,311               6,323
Other current assets                  3,039               2,499
Restricted cash, long term             0                   3,200
Property and equipment, net           36,798              15,611
Other noncurrent assets               676                 509
Total assets                          $      93,776  $      73,272
Accounts payable and accrued expenses  $      13,266  $      15,170
Deferred revenue, current             1,929               4,137
Other current liabilities             428                 692
Convertible notes                      --                  34,851
Long term debt, at carrying value,
net of current portion (face value of  24,861              --
$25.2 million)
Long term lease financing obligation,  22,020              7,135
net of current portion
Other long term liabilities           619                 1,160
Stockholders' equity                  30,653              10,127
Total liabilities and
                                       $     93,776   $      73,272
 stockholders' equity



Verenium Corporation
Unaudited Supplemental and Non-GAAP Pro Forma Financial Information
(in thousands, except per share amounts)
The following unaudited supplemental and non-GAAP pro forma financial
information is derived from the Company's condensed consolidated financial
statements for the three and twelve months ended December 31, 2012 and 2011,
as reported under GAAP. The Company believes that such supplemental and
non-GAAP financial information is helpful to understand the results of
operations of the business.
Non-GAAP Pro Forma Income (Loss) From Operations
                      Three Months Ended              Year Ended

                      December 31,                    December 31,
                      2012            2011            2012        2011
                                      As Restated*                As Restated*
Income (loss) from   $            $           $       $    
operations            (3,246)         (2,590)         21,696      (6,186)
Adjustments:
Gain on sale of
oilseed processing    --              --              (31,278)    --
business
Restructuring charges 3               3               30          2,943
Non-GAAP pro forma    $  (3,243)    $           $        $    
loss from operations                  (2,587)         (9,552)    (3,243)



Non-GAAP Pro Forma Net Income (Loss) From Continuing Operations
                             Three Months Ended        Year Ended

                             December 31,              December 31,
                             2012       2011           2012       2011
                                        As Restated*              As Restated*
Net income (loss) from      $      $         $      $     
continuing operations ..     (3,615)    (2,747)       18,269    5,630
Adjustments:
Gain on sale of oilseed      --         --             (31,278)   --
processing business.
Restructuring charges        3          3              30         2,943
Income tax (benefit)
provision (attributed to     (380)      (368)          226        (368)
sale of oilseed processing
business)
Gain on debt extinguishment
upon repurchase of           --         --             --         (15,349)
convertible notes
(Gain) loss on net change in           
fair value of derivative                               548        869
assets and liabilities       (19)       (136)
Non-GAAP pro forma net loss  $       $         $      $   
from continuing operations  (4,011)   (3,248)        (12,205)   (6,275)
Non-GAAP pro forma net loss            
from continuing operations                             $      $    
per share, basic            $      $        (0.96)     (0.50)
                             (0.31)     (0.26)

*Financial statements for 2011 have been restated to reflect the impact of
revisions to the accounting for the Company's building lease in San Diego, CA,
as well as corrections for immaterial audit adjustments that were not recorded
in the previously reported numbers. The adjustments resulted in the recording
of a long-term building asset and related lease financing liability on the
Company's consolidated balance sheets. The impact of all adjustments on the
Company's operating results was insignificant. Refer to the Company's Current
Report on Form 8-K filed on March 14, 2013 and the Company's Annual Report on
Form 10-K to be filed on or before April 1, 2013 for more information.

SOURCE Verenium Corporation

Website: http://www.verenium.com
 
Press spacebar to pause and continue. Press esc to stop.