cdxs-20200227
0001200375FALSE00012003752020-02-272020-02-27

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________
FORM 8-K
_________________________________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 27, 2020
_________________________________
 Codexis, Inc.
(Exact name of Registrant as Specified in its Charter)
_________________________________
 
 
Delaware 001-34705 71-0872999
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
200 Penobscot Drive
Redwood City, CA 94063
(Address of Principal Executive Offices) (Zip Code)
(650) 421-8100
(Registrant's telephone number, including area code)
_________________________________
 
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per shareCDXSThe Nasdaq Global Select Market


 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.






Item 2.02.Results of Operations and Financial Condition
On February 27, 2020, Codexis, Inc. (the “Company”) announced its financial results for the fourth quarter and year ended December 31, 2019. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 2.02 of this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

Item 7.01.Regulation FD Disclosure
The Company updated its corporate presentation (the “Corporate Presentation”) in connection with the Company’s quarterly earnings call and webcast to be held at 1:30 p.m. Pacific Time on February 27, 2020. A copy of the Corporate Presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K, and incorporated by reference herein.
The information in Item 7.01 of this Current Report on Form 8-K (including Exhibit 99.2) shall not be deemed to “filed” under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.



Item 9.01.Financial Statement and Exhibits
(d) Exhibits

Exhibit No.Description
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document).





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 27, 2020
CODEXIS, INC.
By:/s/ Ross Taylor
Name:Ross Taylor
Title:Senior Vice President and Chief Financial Officer


Document


Exhibit 99.1

https://cdn.kscope.io/1e11c328946c2fff9b5a00f924a995ef-codexislogofinala021.jpg


Codexis Reports 2019 Fourth Quarter and Full Year Financial Results

2019 total revenues increased 13% to $68.5 million with product revenue up 15% and R&D revenue up 11%

Ten customers contributed more than $1 million each to 2019 revenues

Introduces 2020 financial guidance

Conference call with slides begins at 4:30 pm Eastern time today

REDWOOD CITY, Calif. (February 27, 2020) – Codexis, Inc. (Nasdaq: CDXS), a leading protein engineering company, announces financial results for the three and 12 months ended December 31, 2019, provides a business update and introduces 2020 financial guidance.

“Strong fourth quarter revenues of $18.7 million increased 16% over the prior-year quarter, and closed off a solid year in 2019 with total year-over-year revenue growth of 13%. The Performance Enzymes segment led the way in 2019 with a 24% increase in revenues. Importantly, revenues were derived from a diversified base of business with 10 customers contributing more than $1 million each during the year,” said Codexis President and CEO John Nicols. “Among 2019 highlights, we signed our third CodeEvolver® licensing agreement, adding Novartis to the list of global pharma leaders incorporating our technology into their in-house R&D. We entered into a license agreement with Roche for our first internally developed high-performance molecular diagnostic enzyme, further validating our entry into this high growth market. We also announced Nestlé Health Science's exercise of their option for CDX-6114 for the treatment of phenylketonuria, plus expanded our partnership to include development of CDX-7108, the lead candidate, currently in preclinical development, for the potential treatment of a GI disorder.

“Our outlook for 2020 is for another year of double-digit revenue growth, up 14% to 20% over 2019,” he added. “We believe revenue growth will be led this year by strength in our R&D business, with strong performance expected from the Novel Biotherapeutics segment. We're well positioned to continue to build momentum for penetrating a growing list of value-creating applications and partnerships across both our Novel Biotherapeutics and Performance Enzyme business segments in 2020 and beyond.”

Fourth Quarter Financial Highlights
Codexis is reporting two business segments: the Performance Enzymes segment, which consists of its protein catalyst and enzyme product and service offerings with a focus on pharmaceutical, food, molecular diagnostics and other industrial markets; and the Novel Biotherapeutics discovery and development segment.

Total revenues for the fourth quarter of 2019 were $18.7 million, up 16% from $16.1 million for the fourth quarter of 2018. Product revenue was $4.9 million, compared with $7.3 million for the fourth quarter of 2018, with the decrease due to timing in the demand for various enzymes. Research and development (R&D) revenue for the fourth quarter of 2019 was $13.8 million, up 57% from $8.8 million for the prior-year period, primarily due to revenues under the Novartis CodeEvolver® licensing agreement, partially offset by lower development fees from Nestlé Health Science and from prior-year revenue related to a licensing agreement with Porton Pharma Solutions. R&D revenue for the fourth quarter of 2019 included $12.2 million from the Performance Enzymes segment and $1.6



million from the Novel Biotherapeutics segment. R&D revenue for the fourth quarter of 2018 included $5.8 million from the Performance Enzymes segment and $3.0 million from the Novel Biotherapeutics segment.

Gross margin on product revenue for the fourth quarter of 2019 was 30%, compared with 67% for the fourth quarter of 2018, due to product mix.

R&D expenses were $8.9 million for the fourth quarter of 2019, compared with $7.5 million for the fourth quarter of 2018, with the increase primarily due to higher outside services fees, higher salaries and personnel costs associated with higher headcount, higher allocation of occupancy-related costs and increases in lab supplies, partially offset by lower stock-based compensation expenses and lower consultant fees. R&D expenses for the fourth quarter of 2019 included $4.5 million from the Performance Enzymes segment and $4.0 million from the Novel Biotherapeutics segment. R&D expenses for the fourth quarter of 2018 included $4.4 million from the Performance Enzymes segment and $2.9 million from the Novel Biotherapeutics segment.

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2019 were $7.3 million, compared with $6.8 million for the fourth quarter of 2018, with the increase primarily due to higher facilities costs and higher headcount, partially offset by reductions in allocable occupancy-related costs and outside services fees. SG&A expenses for the fourth quarter of 2019 included $2.0 million from the Performance Enzymes segment, $0.5 million from the Novel Biotherapeutics segment and the remaining portion is included in $4.9 million in corporate overhead, depreciation, amortization and other expenses, net. SG&A expenses for the fourth quarter of 2018 included $1.8 million from the Performance Enzymes segment, $0.2 million from Novel Biotherapeutics and the remaining portion is included in $4.9 million in corporate overhead, depreciation, amortization and other expenses, net.

The net loss for the fourth quarter of 2019 was $0.6 million, or $0.01 per share, compared with a net loss for the fourth quarter of 2018 of $0.5 million, or $0.01 per share. Non-GAAP net income for the fourth quarter of 2019 was $1.0 million, or $0.02 per diluted share, compared with non-GAAP net income for the fourth quarter of 2018 of $1.6 million, or $0.03 per diluted share. A reconciliation of GAAP to non-GAAP measures is provided below.

2019 Financial Highlights
Total revenues for 2019 were $68.5 million, up 13% from $60.6 million for 2018. Product revenue was $29.5 million, up 15% from $25.6 million for 2018, and R&D revenue was $39.0 million, up 11% from $35.0 million for 2018. R&D revenue for 2019 included $28.7 million from the Performance Enzymes segment and $10.3 million from the Novel Biotherapeutics segment. R&D revenue for 2018 included $21.5 million from the Performance Enzymes segment and $13.5 million from the Novel Biotherapeutics segment.

Gross margin on product revenue for 2019 was 47%, compared with 51% for 2018, with the decrease due to product mix.

R&D expenses for 2019 were $33.9 million, compared with $30.0 million for 2018, with the increase primarily due to higher personnel costs associated with higher headcount, higher allocation of occupancy-related costs and supplies and increases in lab supplies, partially offset by lower outside services and stock-based compensation expense. R&D expenses for 2019 included $19.4 million from the Performance Enzymes segment and $13.3 million from the Novel Biotherapeutics segment. R&D expenses for 2018 included $18.9 million from the Performance Enzymes segment and $10.2 million from the Novel Biotherapeutics segment.

SG&A expenses for 2019 were $31.5 million, compared with $29.3 million for 2018, with the increase primarily due to higher facilities expense and higher personnel costs associated with higher headcount, partially offset by lower allocation of occupancy-related expenses and outside services. SG&A expenses for 2019 included $8.5 million from the Performance Enzymes segment, $2.2 million from the Novel Biotherapeutics segment and the remaining portion is included in the $21.4 million in corporate overhead, depreciation, amortization and other expenses, net. SG&A expenses for 2018 included $7.5 million from Performance Enzymes, $0.8 million from the
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Novel Biotherapeutics segment and the remaining portion is included in the $21.5 million in corporate overhead, depreciation, amortization and other expenses, net.

The net loss for 2019 was $11.9 million, or $0.21 per share, compared with a net loss for 2018 of $10.9 million, or $0.21 per share. Non-GAAP net loss for 2019 was $3.4 million, or $0.06 per share, compared with a non-GAAP net loss for 2018 of $1.8 million, or $0.04 per share.

Cash and cash equivalents as of December 31, 2019 were $90.5 million, compared with $53.0 million as of December 31, 2018.

2020 Financial Outlook
Codexis is introducing financial guidance for 2020, as follows:
Total revenues are expected to be $78 million to $82 million
Product revenues are expected to be $25 million to $27 million
Gross margin on product revenue is expected to be 43% to 47%

Non-GAAP Financial Measures
Consolidated financial information has been presented in accordance with GAAP as well as on a non-GAAP basis. On a non-GAAP basis, financial measures exclude the non-cash items depreciation expense and stock-based compensation expense. Non-GAAP financial measures presented are non-GAAP net income or loss, non-GAAP net income or loss per share (basic and diluted), non-GAAP R&D expense and non-GAAP SG&A expense. Non-GAAP operating expenses exclude stock-based compensation expense and depreciation of fixed assets.

Codexis management uses these non-GAAP financial measures to monitor and evaluate the Company’s operating results and trends on an ongoing basis, and internally for operating, budgeting and financial planning purposes. Codexis management believes the non-GAAP information is useful for investors by offering them the ability to identify trends in what management considers to be Codexis’ core operating results and to better understand how management evaluates the business. These non-GAAP measures have limitations, however, because they do not include all expenses that affect Codexis. These non-GAAP financial measures are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP, and therefore these non-GAAP results should only be used for evaluation in conjunction with the corresponding GAAP measures. A description of the non-GAAP calculations and reconciliation to comparable GAAP financial measures is provided in the accompanying table entitled “Reconciliation of GAAP to Non-GAAP Financial Measures.”

Conference Call and Webcast
Codexis will hold a conference call and audio webcast today beginning at 4:30 p.m. Eastern time. A slide presentation to accompany the conference call will be available on the Investor section of company website. The conference call dial-in numbers are 855-890-8665 for domestic callers and 720-634-2938 for international callers, and the passcode is 8768898. A live webcast of the call will be available on the Investors section of www.codexis.com.

A recording of the call will be available for 48 hours beginning approximately two hours after the completion of the call by dialing 855-859-2056 for domestic callers or 404-537-3406 for international callers. Please use the passcode 8768898 to access the recording. A webcast replay will be available on the Investors section of www.codexis.com for 30 days, beginning approximately two hours after the completion of the call.

About Codexis, Inc.
Codexis is a leading protein engineering company that applies its proprietary CodeEvolver® technology to develop proteins for a variety of applications, including as biocatalysts for the commercial manufacture of pharmaceuticals, fine chemicals and industrial enzymes, and enzymes as biotherapeutics and for use in molecular diagnostics. Codexis’ proven technology enables improvements in protein performance, meeting customer needs for rapid, cost-effective and sustainable manufacturing in multiple commercial-scale implementations of biocatalytic processes. For more information, see www.codexis.com.

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Forward-Looking Statements
To the extent that statements contained in this press release are not descriptions of historical facts regarding Codexis, they are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including Codexis’ expectations regarding 2020 total revenues, including revenue distribution between businesses, product revenues and gross margin on product revenues, the performance of its Novel Biotherapeutics segment, and its future prospects for penetrating a growing list of value-creating applications and partnerships across both its Novel Biotherapeutics and Performance Enzyme business segments. 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, among others: Codexis’ dependence on its licensees and collaborators; Codexis’ dependence on a limited number of products and customers; potential adverse effects to Codexis’ business if its customers’ products are not received well in the markets; Codexis’ ability to deploy its technology platform in new market spaces; Codexis’ dependence on key personnel; Codexis’ ability to compete may decline if it loses some of its intellectual property rights; third party claims that Codexis infringes third-party intellectual property rights; Codexis could face increased competition if third parties misappropriate Codexis biocatalysts; the uncertainties inherent in research and the clinical development process, including risks, uncertainties and costs associated with the successful development of biotherapeutic candidates, including obtaining development partners for Codexis’ unpartnered biotherapeutic programs and progressing such programs to clinical trials and regulatory approvals; Codexis’ dependence on its biotherapeutic licensees and collaborators, including Codexis’ dependence on Nestlé Health Science for the successful development and commercialization of CDX-6114; Codexis’ biotherapeutic programs are early stage, highly regulated and expensive; the regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and the results inherently unpredictable; results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials; unintended or undesirable side effects of our product candidates could hinder or prevent receipt of regulatory approval; even if regulatory approval is obtained for any products that we develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements and expenses; our biotherapeutic products may face competition in the market; Codexis’ dependence on a limited number of products and customers in its biocatalysis business; potential adverse effects to Codexis’ business if its customers’ pharmaceutical or food products are not received well in the markets; risks, uncertainties and costs associated with the successful development of biotherapeutic candidates, including obtaining development partners for its biotherapeutic programs and progressing such programs to clinical trials and regulatory approvals; and risks associated with epidemic diseases or the perception of their effects. Additional information about factors that could materially affect actual results can be found in Codexis’ Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 1, 2019 and Form 10-Q filed with the SEC on November 6, 2019, including under the caption “Risk Factors” and in Codexis’ other periodic reports filed with the SEC. Codexis expressly disclaims any intent or obligation to update these forward-looking statements, except as required by law.

Investor Contact:
LHA Investor Relations
Jody Cain, 310-691-7100
jcain@lhai.com
Financial Tables to Follow

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Codexis, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(In Thousands, Except Per Share Amounts)
 
 Three months ended December 31,Twelve months ended December 31,
 2019201820192018
Revenues:
Product revenue$4,877  $7,299  $29,465  $25,590  
Research and development revenue13,773  8,769  38,993  35,004  
Total revenues18,650  16,068  68,458  60,594  
Costs and operating expenses:
Cost of product revenue3,402  2,393  15,632  12,620  
Research and development8,872  7,513  33,873  29,978  
Selling, general and administrative7,322  6,806  31,502  29,291  
Total costs and operating expenses19,596  16,712  81,007  71,889  
Loss from operations(946) (644) (12,549) (11,295) 
Interest income356  227  1,287  671  
Other expenses, net(40) (69) (656) (291) 
Loss before income taxes(630) (486) (11,918) (10,915) 
Provision for (benefit from) income taxes (25) 17  (37) 
Net loss$(635) $(461) $(11,935) $(10,878) 
Net loss per share, basic and diluted$(0.01) $(0.01) $(0.21) $(0.21) 
Weighted average common stock shares used in computing net loss per share, basic and diluted58,620  53,973  56,525  52,205  


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Codexis, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(In Thousands)
 
 December 31,
 20192018
Assets
Current assets:
Cash and cash equivalents$90,498  $53,039  
Restricted cash, current661  —  
Accounts receivable, net 9,029  11,551  
Unbilled receivables, current10,099  1,916  
Inventories371  589  
Prepaid expenses and other current assets2,520  1,068  
Contract assets1,027  35  
Total current assets114,205  68,198  
Restricted cash1,062  1,446  
Equity securities—  588  
Right-of-use assets - Operating leases, net23,837  —  
Right-of-use assets - Finance leases, net268  —  
Property and equipment, net6,282  4,759  
Goodwill3,241  3,241  
Other non-current assets178  1,051  
Total assets$149,073  $79,283  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$2,621  $3,050  
Accrued compensation5,003  5,272  
Other accrued liabilities6,540  4,855  
Current portion of lease obligations - Operating leases1,107  —  
Current portion of lease obligations - Finance leases60  —  
Deferred revenue57  4,936  
Total current liabilities15,388  18,113  
Deferred revenue, net of current portion1,987  3,352  
Long-term lease obligations, Operating leases24,951  —  
Long-term lease obligations, Finance leases—  61  
Lease incentive obligation, net of current portion—  35  
Other long-term liabilities1,230  1,416  
Total liabilities43,556  22,977  
Stockholders’ equity:
Common stock
  
Additional paid-in capital447,920  386,775  
Accumulated deficit(342,409) (330,474) 
Total stockholders’ equity105,517  56,306  
Total liabilities and stockholders’ equity$149,073  $79,283  


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Codexis, Inc.
Segmented Information
(unaudited)
(In Thousands)
 
Three months ended December 31, 2019Three months ended December 31, 2018
Performance EnzymesNovel BiotherapeuticsTotalPerformance EnzymesNovel BiotherapeuticsTotal
Revenues:
Product revenue$4,877  $—  $4,877  $7,299  $—  $7,299  
Research and development revenue12,179  1,594  13,773  5,755  3,014  8,769  
Total revenues17,056  1,594  18,650  13,054  3,014  16,068  
Costs and operating expenses:
Cost of product revenue3,402  —  3,402  2,392  —  2,392  
Research and development(1)
4,491  4,026  8,517  4,376  2,891  7,267  
Selling, general and administrative(1)
1,963  454  2,417  1,843  156  1,999  
Total segment costs and operating expenses9,856  4,480  14,336  8,611  3,047  11,658  
Income (loss) from operations$7,200  $(2,886) 4,314  $4,443  $(33) 4,410  
Corporate costs (2)
(4,439) (4,561) 
Depreciation and amortization(505) (335) 
Loss before income taxes$(630) $(486) 

(1) Research and development expenses and Selling, general and administrative expenses exclude depreciation and amortization of finance leases.
(2) Corporate costs include unallocated selling, general and administrative expense, interest income, and other income and expenses.



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Codexis, Inc.
Segmented Information
(unaudited)
(In Thousands)
 
Year Ended December 31, 2019Year Ended December 31, 2018
Performance EnzymesNovel BiotherapeuticsTotalPerformance EnzymesNovel BiotherapeuticsTotal
Revenues:
Product revenue$29,465  $—  $29,465  $25,590  $—  $25,590  
Research and development revenue28,691  10,302  38,993  21,483  13,521  35,004  
Total revenues58,156  10,302  68,458  47,073  13,521  60,594  
Costs and operating expenses:
Cost of product revenue15,632  —  15,632  12,620  —  12,620  
Research and development(1)
19,380  13,278  32,658  18,924  10,185  29,109  
Selling, general and administrative(1)
8,462  2,222  10,684  7,538  771  8,309  
Total segment costs and operating expenses43,474  15,500  58,974  39,082  10,956  50,038  
Income (loss) from operations$14,682  $(5,198) 9,484  $7,991  $2,565  10,556  
Corporate costs (2)
(19,624) (20,324) 
Depreciation and amortization(1,778) (1,147) 
Loss before income taxes$(11,918) $(10,915) 

(1) Research and development expenses and Selling, general and administrative expenses exclude depreciation and amortization of finance leases.
(2) Corporate costs include unallocated selling, general and administrative expense, interest income, and other income and expenses.


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Codexis, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
(In Thousands)
 

 Three months ended December 31,Twelve months ended December 31,
 2019201820192018
(i) Research and development expenses
Research and development expenses - GAAP $8,872  $7,513  $33,873  $29,978  
Non-GAAP adjustments:
Depreciation expense (a)
(331) (246) (1,124) (870) 
Stock-based compensation (b)
(157) (500) (1,406) (2,055) 
Research and development expenses - Non-GAAP $8,384  $6,767  $31,343  $27,053  
 (ii) Selling, general and administrative expenses
Selling, general and administrative expenses - GAAP $7,322  $6,806  $31,502  $29,291  
Non-GAAP adjustments:
Depreciation expense (a)
(121) (89) (446) (277) 
Stock-based compensation (b)
(1,003) (1,182) (5,537) (5,834) 
Selling, general and administrative expenses - Non-GAAP $6,198  $5,535  $25,519  $23,180  
(iii) Net income (loss)
Net income (loss) - GAAP $(635) $(461) $(11,935) $(10,878) 
Non-GAAP adjustments:
Depreciation expense (a)
452  335  1,570  1,147  
Employee stock-based compensation (b)
1,160  1,682  6,943  7,889  
Net income (loss) - Non-GAAP $977  $1,556  $(3,422) $(1,842) 


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Codexis, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
(Shares in Thousands)

Three months ended December 31,Twelve months ended December 31,
2019201820192018
(iv) Net income (loss) per share
Net income (loss) per share - GAAP, basic$(0.01) $(0.01) $(0.21) $(0.21) 
Non-GAAP adjustments:
 Depreciation expense (a)
$0.01  $0.01  $0.03  $0.02  
Stock-based compensation (b)
$0.02  $0.03  $0.12  $0.15  
Net income (loss) per share - Non-GAAP, basic$0.02  $0.03  $(0.06) $(0.04) 
Net income (loss) per share - GAAP, diluted$(0.01) $(0.01) $(0.21) $(0.21) 
Non-GAAP adjustments:
Depreciation expense (a)
$0.01  $0.01  $0.03  $0.02  
Stock-based compensation (b)
$0.02  $0.03  $0.12  $0.15  
Net income (loss) per share - Non-GAAP, diluted$0.02  $0.03  $(0.06) $(0.04) 
Weighted average common shares used in computing GAAP and Non-GAAP net loss per share, basic58,620  53,973  56,525  52,205  
Effect of dilutive shares2,796  4,469  —  —  
Weighted average common shares used in computing non-GAAP net income (loss) per share, diluted61,416  58,442  56,525  52,205  


These non-GAAP financial measures exclude the following items:

(a) Depreciation expense: we provide non-GAAP information which excludes depreciation expense related to the depreciation of property and equipment. We believe that eliminating this expense from our non-GAAP measures is useful to investors, because the acquisition of property and equipment, and the corresponding depreciation expense, can be inconsistent in amount and can vary from period to period.

(b) Stock-based compensation: we provide non-GAAP information which excludes expenses for stock-based compensation. We believe the exclusion of this item allows for financial results that are more indicative of our operations. We also believe that the exclusion of stock-based compensation expense provides for a better comparison of Codexis' operating results to prior periods as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types.

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codexisinvestorcallfeb27
Unlock the power of proteins TM February 27, 2020 Investor Call 4Q’19 and FY’19 Results; 2020 Guidance and Outlook Nasdaq: CDXS


 
Forward-Looking Statements • These slides and the accompanying oral presentation contain forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward- looking statements. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” or the negative of these terms, and similar expressions and comparable terminology intended to identify forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date hereof, and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. • Other factors that could materially affect actual results, levels of activity, performance or achievement can be found in Codexis’ Form 10-K for the period ended December 31, 2018 filed with the SEC on March 1, 2019 and Form 10-Qs filed with the SEC on May 8, 2019, August 6, 2019 and November 6, 2019, including under the caption “Risk Factors.” If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results, levels of activity, performance or achievement may vary significantly from what we projected. • Our logo, “Codexis,” “CodeEvolver®,” and other trademarks or service marks of Codexis, Inc. appearing in this presentation are the property of Codexis, Inc. This presentation contains additional trade names, trademarks and service marks of other companies. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply relationships with, or endorsement or sponsorship of us by, these other companies. February 27, 2020 Investor Call 2


 
2019: Execution on Wide Range of Strategic Objectives Performance Enzymes: For Pharmaceutical Manufacturing $53.9m $68.5m $58.2m • Novartis – becomes our third CodeEvolver® platform licensee • Commercializations: drug approvals at Kyorin and Allergan; NDA filing at Urovant 2019 Total Revenues Performance Enzymes • CodeEvolver® platform licensee backends start to generate meaningful revenues +13% vs 2018 Revs +24% vs 2018 • 10 Pharma Customers > $0.5m each; of which Five Top 25 Pharma w/o platform deals Performance Enzymes: Expansion into New Verticals $4.3m $39.0m $29.5m • Tate & Lyle: Enzymes for Tasteva® M commercialized; supply contract executed • Roche: Evo T4 DNA Ligase agreement executed for next gen sequencing • Self-Funded: DNA Polymerase readied for launch into next gen sequencing 2019 R&D Revenue 2019 Product Revenue +11% vs 2018 +15% vs 2018 • 2 New $0.5m+ Partners: non-sweetener food, and biomarker diagnostics Novel Biotherapeutics: Stepped Up & Accelerating Pipeline Value $10.3m Strengthened Balance Sheet: $90m+ Cash; No Debt • PKU: Nestlé Health Science takes over CDX-6114, begins patient trials • GI Disorder: CDX-7108 positive preclinical efficacy data; new co-fund deal with Nestlé rd One of Nation’s Best & Brightest Firms – 3 Yr in Row • IEAAM: CDX-6512 positive preclinical efficacy data justifies IND enabling work • Lysosomal Disorders: positive preclinical data; expect early 2020 partnering deal February 27, 2020 Investor Call 3


 
Select FY 2019 P&L and Balance Sheet Info ($ millions) For the Year Ended P&L 2019 2018 % change Total revenues 68.5 60.6 13% Product revenues 29.5 25.6 15% R&D revenues 39.0 35.0 11% Gross margin % on product revenues 47% 51% -8% Total operating expenses (R&D + SG&A) 65.4 59.3 10% GAAP net income/(loss) (11.9) (10.9) -10% Non-GAAP net income/(loss)* (3.4) (1.8) -86% At the Year End Balance Sheet 2019 2018 $ change Cash and cash equivalents 90.5 53.0 71% * Refer to the reconciliation of GAAP to Non-GAAP financial measures in the earnings press release dated February 27, 2020 February 27, 2020 Investor Call 4


 
Selected Segment P&L Results - 2019 ($ millions) ($ millions) $68.5m $39.5mFor the Year Ended For the Year Ended Performance Enzymes Segment 2019 2018 % change Biotherapeutics Segment 2019 2018 % change Revenues: Revenues: Product revenues 29.5 25.6 15% Product revenues - - - R&D revenues 28.7 21.5 33% R&D revenues 10.3 13.5 -24% Total Revenues 58.2 47.1 24% Total Revenues 10.3 13.5 -24% Segment income/(loss) from operations 14.7 8.0 84% Segment income/(loss) from operations (5.2) 2.6 - $29.5m 47% Note: segment income/(loss) excludes corporate costs including unallocated SG&A expenses, interest income, and other income and expenses February 27, 2020 Investor Call 5


 
Codexis 2020 Financial Outlook – Continued Solid Growth Total Revenue ($ million) 2020 Annual Guidance Introduced $90.0 Total Revenues: $78 - 82m $82.0 $80.0 $78.0 Product Sales: $25 - 27m $70.0 $68.5 Product Gross Margin: 43% - 47% $60.6 $60.0 $50.0 $50.0 $48.8 $41.8 Additional Insights Into 2020 Financial Outlook $40.0 Anticipated Revenue Cadence: $30.0 FY’20: ~ 40% in 1H’20 / ~ 60% in 2H’20 $20.0 1H’20: ~ 40% in 1Q’20 / ~ 60% in 2Q’20 2015 2016 2017 2018 2019 2020F February 27, 2020 Investor Call 6


 
Performance Enzymes: Business Momentum Scorecard Performance Enzymes Momentum Metrics 2016 2019 CAGR % Performance Enzymes Total Revenues ($m) * $44.8 $58.2 9% Product Revenues ($m) $15.3 $29.5 24% Sustaining revenues more R&D Sustaining Revenues: Royalties & CE Deal Backends ($m) -- $4.0 + + than doubled in 3 yrs R&D Revenues: CodeEvolver® Deal Front-End Economics ($m) $22.6 $11.3 -21% R&D Revenues: Partner Funded Projects ($m) $6.9 $13.4 25% Gross Margin on Product Revenues (%) 36% 47% 9% Total Performance Enzymes Projects in Pipeline ** 20 42 28% Commercialized: Total Number of Installations 9 11 7% Pre-Commercial: # of Pharma Mfr Projects – Phase 2 or 3 7 15 29% Pre-Commercial: # of Pharma Mfr Projects – Patented & Generic 2 6 44% Substantial growth in leading indicators bodes Pre-Commercial: # of Projects in Food, Life Sciences, & Other Verticals 2 10 71% well for continued # of CodeEvolver® Platform Licensees (at year-end) 2 3 14% performance enzymes sustained revenue growth # of Customers > $0.5 million 6 14 33% * Excludes revenues from our first biopharma partnership deal in 2016 ** From our annually reported pipeline snapshot summaries, June 2016 and June 2019 February 27, 2020 Investor Call 7


 
Novel Biotherapeutics: Pipeline Progress Accelerates in 2019 CodeEvolver®-generated in vitro Preclinical Research IND Enabling Clinical Trials Candidate Discovery Took over asset; CDX--61146114: for Inborn PKU Error of Amino Acid Metabolism (IEAAM) - PKU Starts patient trials Co-funding Development Agreement CDX-7108 for GI Disorder Announced on 1/10/20 Inborn Error of Amino Acid Metabolism Codexis Self-funding IND Enabling Studies CDX-6512 for IEAAM # 2 Based on Positive Preclinical Data LysosomalDrug Target Storage 1 (DT1) Disorder Positive, Differentiated Preclinical Results Legend Expect Near-Term LSD Partnering Deal LSD #2 Progress in 2019 New Target Strategic Discovery Collaboration Extended to 12/31/21 February 27, 2020 Investor Call 8


 
2020 Strategic Objectives: Continued Acceleration on Multiple Fronts Drive Novel Biotherapeutics To Deliver Strongest Segment Revenue Growth in 2020 ✓ Advance CDX-7108 towards IND and early human trials in 1H’21 in partnership with Nestlé Health Science ✓ Discover new lead compounds and advance into preclinical trials for new targets under the SCA with Nestlé Health Science ✓ Execute expected new Lysosomal Storage Disorders deal, and deliver asset advancements to partner accordingly ✓ CDX-6114: revenue will be minimal, a ~$4-5m headwind; monitor Nestlé progress regards Phase 1b results, estimated in 1H’21 New Verticals Will Be The Primary Contributor to Deliver Performance Enzymes Revenue Growth in 2020 ✓ Pharma Mfr: Continue to widen client and expand project pipeline, though expect a down revenue year following the very strong 2019: o Novartis CodeEvolver® revenue will be down several $m as we complete tech transfer. Fourth CodeEvolver license deal not in guidance o Product sales to Kyorin, Urovant, and Allergan will be ~ $4-5m lower collectively as regulatory filing inventory builds work through o Partially offset by partner-funded R&D revenue growth, plus product sales to generics and Merck’s Islatravir cascade (phase 3 HIV) ✓ New Verticals: Deliver against significant growth opportunities as we continue successful penetration into new markets: o NGS: Support Roche with efficient DNA Ligase tech transfer and commercialization; Commercialize DNA Polymerase into sequencing markets o Food: Modest growth year for stevia as Tasteva® M breaks in; New food targets / clients lining up well o Other Life Science and Industrial Enzyme market opportunities set for significant partner-funded R&D revenue generation Smart Spending Investments Enable Growth Acceleration in 2020 & Beyond ✓ Continued smart ramp of operating expenses to support corporate growth strategies: ~$16m/qtr in 4Q’19 →~ $21m/qtr in 2020 ✓ Half of the increase due to third-party spending to drive the Novel Biotherapeutics pipeline towards IND; Other half mostly headcount-related February 27, 2020 Investor Call 9


 
Thank you February 27, 2020 Investor Call 10