Shell Research Agreement Ends; Codexis Board Approves Short-Term
Shareholder Rights Plan; Company Announces Workforce Reduction
REDWOOD CITY, Calif.--(BUSINESS WIRE)--Sep. 4, 2012--
Codexis, Inc. (NASDAQ:CDXS), a developer of cost-advantaged processes
for the production of biofuels, bio-based chemicals and pharmaceuticals,
today announced that the company has signed an agreement (the “New
Agreement”) with Shell to expand Codexis’ ability to commercialize its
CodeXymeTM cellulase enzymes.
Under the New Agreement, which is effective August 31, 2012, Shell has
granted Codexis a royalty-bearing, non-exclusive license to develop,
manufacture, use and sell cellulase enzymes developed under the
companies’ Amended and Restated Collaborative Research Agreement,
effective November 1, 2006 (the “Shell Research Agreement”). The scope
of the New Agreement is worldwide, except Brazil, for enzymes used in
the biofuels field. Codexis already has exclusive rights to
commercialize its cellulase enzymes in other fields.
“Codexis has developed some of the most cost effective and competitively
advantaged cellulase enzymes in the world. Securing the rights to market
these enzymes to advanced biofuel companies outside of Shell is a major
milestone for the company,” said John Nicols, President and CEO of
Codexis. “We also remain focused on the Brazil market, where our
discussions with Raízen continue regarding commercialization of our
cellulase enzymes for second generation ethanol production.”
In exchange for these new rights, Codexis will be obligated to pay Shell
a low single-digit percentage royalty on net sales of CodeXymeTM
cellulase enzymes to customers other than Shell and its affiliates.
Codexis will also be obligated to pay Shell a low single-digit
percentage royalty on Codexis’ own use of cellulase enzymes in the
biofuels field. Shell is also entitled to preferential pricing on
purchases of cellulase enzymes from Codexis should the companies
mutually agree to enter into a future supply arrangement.
Under the New Agreement, Codexis and Shell have agreed to an early
termination of the Shell Research Agreement, effective as of August 31,
2012, except for certain provisions related to intellectual property
rights, confidentiality and indemnification that survive termination.
Shell will pay Codexis approximately $7.5 million in satisfaction of the
remaining full-time employee equivalents (FTEs) and milestone payments
that would have been due under the Shell Research Agreement and Codexis
will have no further research and development obligations under that
Agreement. The Shell Research Agreement would have expired on November
1, 2012 if not for the early termination effected by the New Agreement.
Shell has also agreed under the New Agreement not to sell any cellulase
enzymes to third party biofuel customers using technology developed by
Codexis after the end of the Shell Research Agreement. Shell retains its
right to use and manufacture such enzymes, including those enzymes that
result from Codexis improvements during the ten-year period beginning on
August 31, 2012, for Shell’s own use and use by Shell affiliates, as
well as to sub-license the right to manufacture such enzymes to third
parties for Shell’s own use.
Shell remains subject to existing royalty obligations to Codexis for use
of technology developed under the Shell Research Agreement that remains
exclusively licensed to Shell. Codexis also remains eligible to receive
a one-time $3.0 million milestone payment upon the first sale or use by
Shell of such enzymes in the biofuels field in Brazil, or in other
fields of use previously specified in the Amended and Restated License
Agreement between Codexis and Shell.
The New Agreement may be assigned by Codexis to a third party as part of
an asset sale or sale of the company. However, as a condition of
maintaining the license grant provided to Codexis in the New Agreement,
any such assignee is required to undertake a certain level of effort to
further develop CodeXymeTM cellulase enzymes, make certain
payments to Shell, or otherwise elect to give up its cellulase enzyme
license grant from Shell. Any such assignee will not be required to make
any payments or commitments to Shell if the company or any third party
continues to fund the development of the microbes or biocatalysts for
use in the Field of Use at specified levels prior to the assignment.
Board of Directors Approves Short-Term Shareholder Rights Plan
The Board of Directors of Codexis announced today that it has adopted a
short-term shareholder rights plan, which is scheduled to expire on
September 2, 2013.
The rights plan is intended to enable all of Codexis’ stockholders to
realize the underlying value of their investment in Codexis by guarding
against inadequate or unsolicited takeover offers. The rights are not
being distributed in response to any specific effort to acquire control
of Codexis. The rights are designed to ensure that the Board of
Directors has sufficient time to consider any proposal and make sure
that all stockholders receive fair and equal treatment in the event of
any proposed takeover of Codexis. In addition, the rights plan will
guard against partial tender offers, open market accumulations and other
coercive tactics aimed at gaining control of Codexis without paying all
stockholders a full control premium for their shares.
Under the plan, one preferred stock purchase right will be distributed
for each share of common stock held by stockholders of record on
September 18, 2012. Subject to certain exceptions, the rights will be
exercisable if a person or group acquires 15% or more of the Company’s
common stock or announces a tender offer for 15% or more of the common
stock.
Further details about the rights plan will be contained in a Form 8-K to
be filed by Codexis with the U.S. Securities and Exchange Commission on
September 4, 2012.
Codexis Announces Workforce Reduction
Codexis today announced a workforce reduction as part of its effort to
control expenses and conserve cash for its ongoing and future programs
following the termination of the Shell Research Agreement and the
corresponding loss of ongoing funding for FTEs under the Shell Research
Agreement. This action will reduce Codexis’ workforce by approximately
133 employees effective October 30, 2012. All affected employees will
receive advance notice of their employment loss in accordance with
applicable law.
“It is difficult to make business decisions that affect the lives of
your colleagues and their families and none is more difficult than
terminating the employment of people who have served Codexis so well
over the years,” said John Nicols. “These unwelcome measures were
necessary in order for us to maintain a healthy balance sheet in light
of our recent loss of funding from Shell. We remain focused on operating
our business efficiently and are confident that our remaining employees
will help the company take advantage of its opportunities in the
biofuels, bio-based chemicals and pharmaceutical markets.”
Codexis estimates that it will incur total charges of up to $3.6 million
in the second half of 2012 as a result of this workforce reduction,
including $2.9 million in continuation of salary and benefits of the
affected employees until their work is completed and their positions are
eliminated and $0.7 million of one-time termination and miscellaneous
costs, all of which will result in future cash expenditures.
About Codexis, Inc.
Codexis, Inc. is a developer of cost-advantaged processes for the
production of biofuels, bio-based chemicals, and pharmaceutical
intermediates. Codexis' product lines include CodeXyme™ cellulase
enzymes and CodeXol™ detergent alcohol. Partners and customers include
global leaders such as Merck, Pfizer and Teva. For more information, see www.codexis.com.
Codexis Forward-Looking Statements
This press release contains forward-looking statements relating to
Codexis’ ability to commercialize its CodeXymeTM cellulase
enzymes; Codexis’ discussions with Raízen regarding commercialization of
Codexis’ cellulase enzymes for second generation ethanol production; the
effects and benefits of the shareholder rights plan; the completion date
of Codexis’ workforce reduction; Codexis’ ability to control expenses
and conserve cash for its ongoing future programs and to maintain a
healthy balance sheet; Codexis’ ability to operate its business
efficiently and to take advantage of its opportunities in the biofuels,
bio-based chemicals and pharmaceutical markets; and the nature and
amount of charges to be incurred in connection with the workforce
reduction. 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 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 execute its strategy; Codexis' ability to
maintain license rights to a commercial scale expression system for
enzymes that convert cellulosic biomass to sugars; the availability,
cost or location of renewable feedstocks used by Codexis’ potential
customers; fluctuations in the price of and demand for certain
commodities using Codexis’ technology; Codexis' limited experience in
developing, manufacturing, marketing, selling and distributing
commercial cellulase enzymes; various challenges to the feasibility of
the production and commercialization of biofuels and bio-based chemicals
derived from cellulose; the effectiveness of the rights plan in
providing for fair and equal treatment of all stockholders in the event
that an unsolicited or unfair attempt is made to acquire Codexis; the
effectiveness of the shareholder rights plan in protecting stockholders
against abusive or unfair takeover tactics; the impact of Codexis’
workforce reduction and restructuring efforts on the operation of the
Company’s business; the possibility that Codexis may need more cash
and/or may need to incur greater charges than anticipated for its
workforce reduction; the need for Codexis to undertake additional
restructuring efforts as a result of the loss of ongoing funding from
Shell; Codexis’ need to retain key employees; the market's reception to
Codexis’ and its customers' pharmaceutical products; the need for
regulatory approval of Codexis’ customers' manufacturing processes and
products; and Codexis' ability to develop and commercialize new products
for the pharmaceutical market; and. Additional factors that could
materially affect actual results can be found in Codexis’ Quarterly
Report on Form 10-Q for the period ended June 30, 2012 filed with the
Securities and Exchange Commission on August 9, 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.
Source: Codexis, Inc.
Codexis, Inc.
Investors:
Paul Cox, 212-362-1200
ir@codexis.com
Media:
Patrick
Hillmann, 312-854-7520
media@codexis.com
