Codexis Reports Second Quarter 2013 Results

  Codexis Reports Second Quarter 2013 Results

             -- Conference call on August 15^th at 4:30 pm ET --

Business Wire

REDWOOD CITY, Calif. -- August 9, 2013

Codexis, Inc. (NASDAQ: CDXS), a developer of engineered enzymes for
pharmaceutical, biofuel and chemical production, today announced financial
results for the second quarter ended June 30, 2013.

“We continued to make significant progress with all of our value-driving
business platforms in recent months,” said John Nicols, President and CEO of
Codexis. “We continued to build on our core pharmaceutical business, expanding
our pipeline opportunities through a collaboration with Purolite around
immobilized enzymes and with the addition of a new head of sales and
marketing. We also delivered on our commitment to expand into other complex
chemistry markets beyond pharmaceuticals by signing a joint development
agreement with a market-leading food ingredients company and delivering the
first commercial shipment to a separate company of an enzyme used for
producing a food additive.”

Nicols continued, “Additionally, we recently achieved scale-up in the
production of CodeXol^® detergent alcohols with our partner Chemtex, which we
believe is the first successful effort to produce large-scale
commercially-relevant detergent alcohols from cellulosic biomass feedstock.
Regarding our CodeXyme^® program, we recently received a letter from Dyadic
alleging that we breached our obligations under the license agreement that we
entered into with Dyadic in 2008. We strongly believe that we are not in
breach of the Dyadic license agreement and that Dyadic’s allegation is
unjustified and without legal or factual basis, and we are considering all
available remedies to protect our interests under the Dyadic license
agreement.”

Recent Business Highlights:

  *Entered into a joint development agreement with a large, global
    manufacturer of food and beverage ingredients;
  *Delivered our first commercial enzyme shipment for production of a food
    additive;
  *Established a joint collaboration with Purolite Corporation to develop and
    market immobilized enzymes and immobilized enzyme kits for the
    pharmaceutical industry;
  *Achieved successful scale-up with Chemtex in the production of CodeXol^®
    detergent alcohols using cellulosic sugars from non-food biomass; and
  *Appointed industry veteran Scott Watson as Vice President of Sales and
    Marketing.

Second Quarter Financial Highlights:

Revenues for the second quarter of 2013 were $7.0 million, a 39% decrease from
$11.5 million in the first quarter of 2013. Revenues for the six months ended
June 30, 2013 were $18.5 million. Product revenue in the second quarter of
2013 was $5.0 million, a 45% decrease from $9.1 million in the first quarter
of 2013. The decrease in product revenue was primarily due to weakness in our
atorvastatin business. Product revenue for the six months ended June 30, 2013
was $14.1 million. Product gross margin in the second quarter was 27%,
compared to 38% in the first quarter of 2013. Product gross margin for the six
months ended June 30, 2013 was 34%. Collaborative research and development
revenue for the second quarter of 2013 was $2.0 million, a decrease of 13%
from $2.3 million in the first quarter of 2013.

Research and development expenses in the second quarter of 2013 were $8.6
million, an increase of 18% from $7.3 million for the first quarter of 2013.
Selling, general and administrative expenses in the second quarter of 2013
were $7.2 million, a decrease of 11% compared to $8.1 million in the first
quarter of 2013.

Changes in both research and development and selling, general and
administrative expenses compared to the prior quarter were related to further
re-alignment among departments following the significant organizational
changes begun late last year. When combined, operating expenses (research and
development plus selling, general and administrative) increased slightly to
$15.8 million in the second quarter, up 2% from $15.5 million in the first
quarter of 2013. The increase was primarily due to a charge of $0.4 million to
write-down supplier advances for which recovery was determined to be
uncertain.

Net loss was $12.6 million, or a loss of $0.33 per share, based on 38.1
million weighted average common shares outstanding in the second quarter of
2013. This compares to a net loss of $9.6 million, or a loss of $0.25 per
share, during the first quarter of 2013. Net loss for the six months ended
June 30, 2013 was $22.2 million, or a loss of $0.59 per share, based on 38.0
million weighted average common shares outstanding during the period.

Cash, cash equivalents, and marketable securities at June 30, 2013 were $38.9
million compared to $46.1 million at March 31, 2013.

As we have previously disclosed for our first quarter of 2013 results, we will
not be presenting year-over-year comparisons for the first three quarters of
2013. Codexis does not believe that these comparisons are an appropriate
measure of the company’s financial performance due to the termination of the
Collaborative Research Agreement with Shell, effective August 31, 2012, and
the resulting loss of associated collaborative research & development revenue.

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.

Codexis is adjusting its prior outlook for the full year 2013. Codexis
continues to expect total pharmaceutical revenues in the range of $35 million
to $40 million. However, the company now expects product revenue to be
approximately $25 million of that total. Codexis continues to expect product
gross margin in the range of 30% to 35% and total gross margin for
pharmaceutical revenue of approximately 50%. Codexis is adjusting its prior
guidance for cash burn to now be in the range of $16 million to $19 million
for the year. Codexis had previously disclosed its plan to secure a funding
partner for its CodeXyme^® cellulase enzyme program by mid-2013. This process
is ongoing, but has taken longer than expected and now has been complicated by
the recent letter received from Dyadic. The actual cash burn for 2013 will be
dependent on if and when Codexis secures a funding partner for this program.

Conference Call and Webcast

Codexis will hold a live conference call and audio webcast on Thursday, August
15, 2013, at 4:30 p.m. Eastern Time. The conference call dial-in numbers are
877-415-3177 for domestic and 857-244-7320 for international. Please use the
pass code 60099547 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 45333989 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. engineers enzymes for pharmaceutical, biofuel and chemical
production. Codexis’ proven technology enables scale-up and implementation of
biocatalytic solutions to meet customer needs for rapid, cost-effective and
sustainable 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 revenue, total product revenue, product
gross margin, total gross margin for pharmaceutical revenue and total cash
burn; Codexis’ ability to expand its pharmaceutical development pipeline, our
consideration of possible actions in response to allegations made by Dyadic
International, Inc. (“Dyadic”) that we breached our 2008 license agreement
with Dyadic and our need to secure third-party funding for our CodeXyme®
cellulase enzyme program. 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’ dependence on obtaining
third-party funding, or identifying and effecting some other strategic option
for, its CodeXyme® cellulase enzymes and CodeXol® detergent alcohols programs;
Codexis’ need for substantial additional capital in the future in order to
expand its business; Codexis’ ability to maintain license rights granted from
Dyadic to the commercial expressions system for enzymes that Codexis uses in
its CodeXyme® cellulase enzyme program; uncertainty around Codexis’ ability to
resolve the dispute with Dyadic on commercially reasonable terms; uncertainty
around Codexis’ ability to dispute with success, through legal action or
otherwise, Dyadic’s allegation that Codexis has materially breached the Dyadic
license agreement; uncertainty around Codexis’ ability to buy or license an
expression system from another party or develop the expression system itself;
uncertainty about whether Codexis would be able to secure third-party
collaboration funding, or effect other strategic options, for its CodeXyme®
cellulase enzyme program in the context of a dispute with Dyadic or in the
absence of a license from Dyadic; Codexis’ ability to maintain internal
control over financial reporting; any impairments Codexis may be required to
record in the future with respect to its goodwill, intangible assets or other
long-lived assets; the success of cost saving measures Codexis undertook
following the termination of the Shell collaboration, including Codexis’ 2012
reduction in force, Codexis’ dependence on a limited number of products and
customers in its pharmaceutical business; Codexis’ primary reliance on one
contract manufacturer for commercial scale production of substantially all of
its enzymes; Codexis’ ability to develop and commercialize new products for
the pharmaceutical markets; Codexis’ relationships with, and dependence on,
its collaborators in its principal markets; Codexis’ ability to deploy its
technology platform in new adjacent market spaces; the success of customers'
pharmaceutical products in the market and the ability of such customers to
obtain regulatory approvals for products and processes; Codexis’
pharmaceutical product gross margins are variable and may decline from quarter
to quarter; Arch Pharmalabs Ltd’s ability to effectively market and sell
certain pharmaceuticals products containing Codexis’ technology; various
challenges to the feasibility of the production and commercialization of
biofuels and bio-based chemicals derived from cellulosic biomass; 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 filed with the Securities and Exchange Commission on
August 9, 2013, 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                      Six Months Ended
                 June 30,      March 31,    June 30,     June 30,      June 30,
                 2013          2013         2012         2013          2012
Revenues:
Product          $ 4,948       $ 9,137      $ 6,782      $ 14,085      $ 21,949
Collaborative
research and       2,026         2,344        15,868       4,370         30,480
development
Government        -           -          259        -           1,616   
awards
                                                                       
Total revenues    6,974       11,481     22,909     18,455      54,045  
                                                                       
Costs and
operating
expenses:
Cost of
product            3,631         5,665        5,829        9,296         18,471
revenues
Research and       8,624         7,322        15,650       15,946        31,999
development
Selling,
general and       7,169       8,124      6,789      15,293      16,184  
administrative
                                                                       
Total costs
and operating     19,424      21,111     28,268     40,535      66,654  
expenses
                                                                       
Loss from          (12,450 )     (9,630 )     (5,359 )     (22,080 )     (12,609 )
operations
                                                                       
Interest           16            27           74           43            149
income
Other expenses    (183    )    (85    )    (157   )    (268    )    (275    )
                                                                       
Loss before
provision          (12,617 )     (9,688 )     (5,442 )     (22,305 )     (12,735 )
(benefit) for
income taxes
                                                                       
Provision
(benefit) for     (12     )    (65    )    77         (77     )    274     
income taxes
                                                                       
Net loss         $ (12,605 )   $ (9,623 )   $ (5,519 )   $ (22,228 )   $ (13,009 )
                                                                       
Net loss per
share, basic     $ (0.33   )   $ (0.25  )   $ (0.15  )   $ (0.59   )   $ (0.36   )
and diluted
                                                                       
Weighted
average common
shares used in
computing net      38,060        37,842       36,296       37,951        36,177
loss per
share, basic
and diluted
                                                                                 

Codexis, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands)
                                                         
                                             June 30,       December 31,
                                             2013           2012
Assets
Current assets:
Cash and cash equivalents                    $ 32,392       $ 32,003
Marketable securities                          5,512          13,524
Accounts receivable, net                       1,591          7,545
Inventories                                    1,332          1,302
Prepaid expenses and other current assets     2,280        5,395    
Total current assets                           43,107         59,769
                                                            
Restricted cash                                1,111          1,511
Non-current marketable securities              1,017          3,623
Property and equipment, net                    15,520         16,650
Intangible assets, net                         11,247         12,934
Goodwill                                       3,241          3,241
Other non-current assets                      363          2,237    
Total assets                                 $ 75,606      $ 99,965   
                                                            
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                             $ 1,545        $ 3,654
Accrued compensation                           3,335          3,495
Other accrued liabilities                      3,900          6,948
Deferred revenues                             2,365        2,186    
Total current liabilities                      11,145         16,283
                                                            
Deferred revenues, net of current portion      1,207          1,299
Other long-term liabilities                   3,783        3,943    
Total liabilities                              16,135         21,525
                                                            
Stockholders' equity:
Common stock                                   4              4
Additional paid-in capital                     297,144        294,128
Accumulated other comprehensive loss           106            (136     )
Accumulated deficit                           (237,783 )    (215,556 )
Total stockholders' equity                    59,471       78,440   
Total liabilities and stockholders' equity   $ 75,606      $ 99,965   

Contact:

Codexis, Inc.
Investors
Paul Cox, 212-362-1200
ir@codexis.com
or
Media
Jemma Connor, +44 161 359 3255
jemma.connor@notchcommunications.co.uk