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Codexis Reports Fourth Quarter and Full Year 2010 Results
Grows Annual Revenue 29% to $107 million; 77% Increase in Pharmaceutical Product Sales

REDWOOD CITY, Calif., Feb. 3, 2011 /PRNewswire via COMTEX/ --

Codexis, Inc. (Nasdaq: CDXS) today announced financial results for the fourth quarter and year ended December 31, 2010.

Full Year 2010 Financial Highlights:

Revenue: Revenue increased 29% to $107.1 million, driven by a 77% increase in sales of pharmaceutical products, from $18.6 million in 2009 to $32.8 million in 2010, and increases in collaborative R&D and government grants.

Operating Expenses: Full year operating expenses increased 2% to $86.2 million. R&D expenses decreased 4% to $52.4 million, primarily from the elimination of royalty payments to Maxygen, Inc. as a result of our acquisition of Maxygen's gene shuffling IP portfolio in October, 2010. SG&A expenses increased 13% to $33.8 million driven by increases in compensation and benefits and outside services costs associated with becoming a public company.

Net Loss: Net loss was ($8.5) million, or ($0.35) per share, based on 24.6 million weighted average common shares outstanding for the full year 2010. This compares to a net loss of ($20.3) million in 2009.

Adjusted EBITDA: On a non-GAAP basis, Adjusted EBITDAwas $9.9 million compared to a loss of ($7.3) million in 2009. Adjusted EBITDA is calculated by adjusting net loss for net interest expense, income taxes, depreciation, amortization, stock-based compensation and preferred stock warrant fair market valuation. A reconciliation of net loss to Adjusted EBITDA is presented below.

Fourth Quarter Financial Highlights:

Revenue: For the fourth quarter of 2010, the company reported revenues of $29.8 million, an increase of 23% from $24.2 million in the fourth quarter of 2009, primarily due to an increase of $3.4 million in product revenue, representing an increase of 67% over the same time period of 2009.

Operating Expenses: Research and development expenses in the fourth quarter of 2010 were $13.3 million, compared to $15.2 million for the fourth quarter of 2009. The decrease was primarily due to the reduction of royalty cost related to our acquisition of Maxygen's gene shuffling IP portfolio and a reduction of costs related to our joint development agreement with CO2 Solution. Selling, general and administrative expenses in the fourth quarter of 2010 declined to $8.6 million compared to $8.9 million over the same time period of 2009 primarily due to a reduction in discretionary expenses.

Net Loss: Net loss was ($0.5) million, or ($0.01) per share, based on 34.5 million weighted average common shares outstanding in the fourth quarter of 2010. This compares to a net loss of ($5.2) million or ($1.95) per share during the fourth quarter of 2009.

Adjusted EBITDA: On a non-GAAP basis, Adjusted EBITDAincreased from ($1.1) million in the fourth quarter of 2009 to $4.4 million in the fourth quarter of 2010. Adjusted EBITDA is calculated by adjusting net loss for net interest expense, income taxes, depreciation, amortization, stock-based compensation and preferred stock warrant fair market valuation. A reconciliation of net loss to Adjusted EBITDA is presented below.

Cash: Cash, and cash equivalents at December 31, 2010, decreased to $72.4 million compared to $99.3 million at September 30, 2010 primarily due to our $20.0 million purchase of the Maxygen, Inc. gene shuffling IP portfolio in October 2010 and our $3.7 million debt repayment.

"In addition to our solid financial results, we continued to exceed our goals in our targeted commercial opportunities," said Alan Shaw, president and CEO of Codexis. "We achieved our technical milestones with Shell, we made our first shipments of two important enzymes to Merck and we saw substantial progress in our efforts in carbon capture and chemicals."

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 2011, Codexis forecasts revenues of $120 million or greater, which would represent growth of 12% or greater compared to 2010. Codexis expects 2011 Adjusted EBITDA will be $5 million or greater.

Conference Call

Codexis will hold a conference call for investors on February 3, 2011 at 1:30 p.m. PT (4:30 p.m. ET). 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 Investor Relations 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 91197822 beginning approximately two hours after the call, and will be available for up to thirty days. A webcast replay from today's call will also be available from the Investor Relations section of www.codexis.com approximately two hours after the call and will be available for up to thirty days.

About Codexis, Inc.

Codexis is a clean technology company. Codexis develops optimized biocatalysts that make industrial processes faster, cleaner and more efficient. Codexis' technology is commercialized with leading global pharmaceutical companies and in development for advanced biofuels with Shell and carbon capture with Alstom. Other potential markets for the company's biocatalyst-enabled solutions include chemicals and water treatment.

Forward-Looking Statements

This press release contains forward-looking statements relating to the company's forecast for 2011 revenue and Adjusted EBITDA, which is defined elsewhere in this press release. 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 that could materially affect actual results. 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 November 4, 2010, included 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)


















ThreeMonthsEnded




Twelve Months Ended






December 31,




December 31,






2010


2009


%change


2010


2009


%change


Revenues:














Product


$ 8,586


$ 5,152


67%


$ 32,835


$ 18,554


77%


Related party collaborative research and development


19,275


18,693


3%


66,148


62,656


6%


Collaborative research and development


1,471


358


311%


4,048


1,652


145%


Government grants


479


35


nm


4,073


46


nm
















Total revenues


29,811


24,238


23%


107,104


82,908


29%
















Costs and operating expenses:














Cost of product revenues


8,126


4,792


70%


27,982


16,678


68%


Gross margin $


460


360




4,853


1,876




Gross margin %


5%


7%




15%


10%




Research and development


13,349


15,240


-12%


52,405


54,725


-4%


Selling, general and administrative


8,649


8,932


-3%


33,841


29,871


13%
















Total costs and operating expenses


30,124


28,964


4%


114,228


101,274


13%
















Loss from operations


(313)


(4,726)


-93%


(7,124)


(18,366)


-61%
















Interest income


31


39


-21%


166


180


-8%


Interest expense and other, net


(153)


(507)


-70%


(1,199)


(2,037)


-41%


Loss before provision (benefit) for income taxes


(435)


(5,194)


-92%


(8,157)


(20,223)


-60%


Provision (benefit) for income taxes


60


(13)


nm


384


66


482%


Net loss


$ (495)


$ (5,181)


-90%


$ (8,541)


$ (20,289)


-58%
















Net loss per share of common stock,














basic and diluted


$ (0.01)


$ (1.95)




$ (0.35)


$ (7.74)


















Weighted average common shares used in computing net loss per share of common stock, basic and diluted


34,452


2,653




24,594


2,622




Codexis, Inc.


Condensed Consolidated Balance Sheets


(Unaudited)


(In Thousands)











December 31,



December 31,




2010



2009


Assets







Current assets:







Cash and cash equivalents


$ 72,396



$ 31,785


Marketable securities


-



23,778


Accounts receivable, net


10,620



7,246


Related party accounts receivable


4,713



-


Inventories


2,817



2,915


Prepaid expenses and other current assets


1,646



1,658


Total current assets


92,192



67,382









Restricted cash


1,466



731


Property and equipment, net


21,452



21,581


Intangible assets, net


20,158



928


Goodwill


3,241



3,241


Other non-current assets


2,791



5,173


Total assets


$ 141,300



$ 99,036









Liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)







Current liabilities:







Accounts payable


$ 9,208



$ 9,999


Accrued compensation


8,107



6,518


Related party payable


-



1,314


Other accrued liabilities


5,630



10,376


Redeemable convertible preferred stock warrant liability


-



2,009


Deferred revenues


455



2,240


Related party deferred revenues


4,084



13,161


Financing obligations


-



5,368


Total current liabilities


27,484



50,985









Deferred revenues, net of current portion


1,671



1,856


Related party deferred revenues, net of current portion


3,403



7,487


Financing obligations, net of current portion


-



2,574


Other long-term liabilities


1,381



1,307


Total liabilities


33,939



64,209









Redeemable convertible preferred stock issuable in series A to F


-



179,672









Stockholders' equity (deficit):







Common stock


4



-


Additional paid-in capital


275,540



15,015


Accumulated other comprehensive loss


(34)



(252)


Accumulated deficit


(168,149)



(159,608)


Total stockholders' equity (deficit)


107,361



(144,845)


Total liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)


$ 141,300



$ 99,036
















Codexis, Inc.


Condensed Consolidated Statements of Cash Flow


(Unaudited)


(In Thousands)










Twelve Months Ended




December 31,




2010


2009


Operating activities:






Net loss


$ (8,541)


$ (20,289)


Adjustments to reconcile net loss to net cash used in operating activities:






Amortization of intangible assets


1,063


957


Depreciation and amortization of property and equipment


7,246


5,172


Revaluation of redeemable convertible preferred stock warrant liability


677


627


Loss (gain) on disposal of property and equipment


148


(50)


Extinguishment of royalty payable


461


-


Stock-based compensation


8,737


4,822


Accretion of asset retirement obligation


146


43


Amortization of debt discount


26


311


Accretion (amortization) of premium/discount on marketable securities


511


594


Changes in operating assets and liabilities:






Accounts receivable


(8,087)


(1,054)


Inventories


98


58


Prepaid expenses and other current assets


13


11


Other assets


2,814


(228)


Accounts payable


(791)


189


Accrued compensation


1,589


2,434


Related party payable


(1,314)


879


Other accrued liabilities


(6,048)


(3,792)


Deferred revenues


(15,131)


530


Net cash used in operating activities


(16,383)


(8,786)


Investing activities:






(Increase) decrease in restricted cash


(735)


193


Purchase of property and equipment


(6,990)


(10,697)


Purchase of marketable securities


(49,051)


(37,118)


Purchase of Maxygen patent portfolio


(20,705)


-


Proceeds from sale of marketable securities


1,605


-


Proceeds from maturities of marketable securities


70,695


27,980


Proceeds from disposal of property and equipment


15


-


Purchase of CO2 Solution common shares


-


(1,316)


Net cash provided by (used in) investing activities


(5,166)


(20,958)


Financing activities:






Principal payments on financing obligations


(8,026)


(6,087)


Payments in preparation for initial public offering


(3,870)


(959)


Proceeds from issuance of preferred stock, net of issuance costs


-


46,926


Proceeds from issuance of common stock on IPO, net of underwriting discounts


72,541


-


Proceeds from exercises of stock options


1,594


117


Net cash provided by financing activities


62,239


39,997








Effect of exchange rate changes on cash and cash equivalents


(79)


(371)








Net increase in cash and cash equivalents


40,611


9,882


Cash and cash equivalents:






Beginning of the period


31,785


21,903


End of the period


72,396


31,785








Marketable securities at the end of period


-


23,778








Cash, cash equivalents and marketable securities


$ 72,396


$ 55,563

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 as a factor in evaluating management's performance when determining incentive compensation and to evaluate the effectiveness of our business strategies.

A reconciliation of GAAP net loss to Adjusted EBITDA is included in the table below.

Codexis, Inc.

Reconciliation of GAAP Net Loss to Adjusted EBITDA

(Unaudited)

(In Thousands)



Three months ended

December 31,


Twelve months ended

December 31,

Calculation of Adjusted EBITDA

2010


2009


2010


2009

Net loss

$ (495)


$(5,181)


$(8,541)


$(20,289)

Adjustments:








Minus: Interest income

(31)


(39)


(166)


(180)

Plus: Interest expense

5


336


529


1,413

Plus: Income taxes

60


(13)


384


66

Plus: Depreciation and amortization

2,593


1,713


8,266


6,119

Plus: Stock-based compensation

2,296


1,763


8,728


4,912

Plus: Preferred stock warrant fair market valuation adjustment

-


277


677


627









Adjusted EBITDA

$4,428


$(1,144)


$ 9,877


$ (7,332)

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.

Contacts:

Investors: Robert Lawson, robert.lawson@codexis.com, 650-421-8137

Media: Lyn Christenson, lyn.christenson@codexis.com, 650-421-8144 or Saskia Sidenfaden, ssidenfaden@mww.com, 212-827-3771.

SOURCE Codexis, Inc.

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