Achieves 2016 total revenues and gross margin
guidance, introduces 2017 financial guidance
Codexis, Inc. (NASDAQ:CDXS), a leading protein engineering company,
announces financial results for the three and 12 months ended
December 31, 2016, and provides a business update.
“Our solid fourth quarter performance completes a year of
consistently strong results for Codexis. Full year 2016
revenues closed at $48.8 million, a growth of 17% versus 2015 and
at the top end of our annual guidance,” said Codexis President and
CEO John Nicols. “This is our third consecutive year to meet or
exceed our annual guidance targets and to deliver double-digit
revenue growth. In addition to tight execution on the early
completion of CodeEvolver® platform technology transfers for both
GSK and Merck in 2016, we are most proud of stepping up our product
sales by 35% in 2016.
“We expect these product sales to continue to accelerate with
between 37% and 50% growth for the year, underpinning our new total
revenue guidance of $50 million to $53 million for 2017. In
addition, our confidence for securing a third CodeEvolver® platform
technology license deal in the second half of 2017 enables us to
build those revenues into our annual guidance. We have set
strategic initiatives for the company aimed at enhancing
shareholder value in 2017, most notably through the continued
advancement of our orally dosable preclinical enzyme therapy
CDX-6114 for phenylketonuria (PKU) disease toward an
Investigational New Drug application (IND) filing with the U.S.
Food and Drug Administration (FDA) in 2018,” added Mr. Nicols.
Fourth Quarter Financial HighlightsTotal
revenues for the fourth quarter of 2016 were $10.0 million compared
with $11.6 million for the fourth quarter of 2015, which included a
$3.1 million royalty-related settlement payment from a legacy
customer. Product sales for the fourth quarter of 2016 were
$4.2 million compared with $4.5 million for the prior-year period,
reflecting fluctuations in the timing of customer demand. Research
and development revenues for the fourth quarter of 2016 were $5.3
million compared with $6.4 million a year ago. The decrease
was due mainly to the $3.1 million royalty-related settlement
payment in the 2015 quarter, partially offset by the recognition of
upfront fees from Merck related to the early completion of the
CodeEvolver® technology transfer and higher R&D fees from
Merck. Revenue from the revenue-sharing arrangement with Exela
PharmSci (Exela) for sales of the argatroban injectable drug was
$0.4 million for the fourth quarter of 2016 compared with $0.8
million for the fourth quarter of 2015.
Non-GAAP gross margin as a percentage of total revenues for the
fourth quarter of 2016 was 77% compared with 78% for the fourth
quarter of 2015, with the decrease reflecting recognition of a
royalty settlement payment in the prior-year period. Total revenues
include product sales, research and development revenues and
revenue from the revenue-sharing arrangement.
Research and development (R&D) expenses were $6.0 million
for the fourth quarter of 2016 compared with $5.2 million for the
fourth quarter of 2015, with the increase due to higher payroll
expenses from increased headcount and higher outside services
related to enzyme therapeutic product development. Selling, general
and administrative (SG&A) expenses for the fourth quarter of
2016 were $7.0 million compared with $6.0 million for the fourth
quarter of 2015, with the increase mainly due to a foreign tax
receivable write-off and increased costs associated with higher
headcount.
The net loss for the fourth quarter of 2016 was $5.3 million, or
$0.13 per share, compared with a net loss for the fourth quarter of
2015 of $2.1 million, or $0.05 per share. Non-GAAP net loss for the
fourth of 2016 was $2.8 million, or $0.07 per share, compared with
non-GAAP net income for the fourth quarter of 2015 of $0.6 million,
or $0.02 per diluted share. A reconciliation of GAAP to non-GAAP
results is provided below.
Full-Year 2016 Financial HighlightsTotal
revenues for 2016 increased 17% to $48.8 million from $41.8 million
for 2015, due to a 35% increase in product sales and a 22% increase
in research and development fees, offset by lower revenues from the
revenue-sharing arrangement with Exela. Total revenues for 2016
included $31.3 million in research and development revenue, $15.3
million in product sales and $2.2 million from the revenue-sharing
arrangement.
Non-GAAP gross margin as a percentage of total revenues for 2016
was 80% compared with 84% for 2015, reflecting revenue mix.
R&D expenses for 2016 were $22.2 million compared with $20.7
million for 2015, with the increase due primarily to higher
consulting services related to the evaluation of potential new drug
development targets, higher outside services related to enzyme
biotherapeutic product development projects, and increased costs
associated with higher headcount, which were partially offset by
lower amortization of intangibles. SG&A expenses for 2016 were
$25.4 million compared with $22.3 million in the prior year, with
the increase due mainly to higher legal expenses related to
intellectual property, higher consulting fees relating for
exploration of new business development opportunities and increased
costs due to higher headcount partially offset by lower facilities
costs due to sublease income received in 2016.
The net loss for 2016 was $8.6 million, or $0.21 per share,
compared with a net loss for 2015 of $7.6 million, or $0.19 per
share. Non-GAAP net income for 2016 was $1.7 million, or $0.04 per
diluted share, compared with non-GAAP net income for 2015 of $3.0
million, or $0.07 per diluted share. A reconciliation of GAAP to
non-GAAP results is provided below.
Cash and cash equivalents as of December 31, 2016 were $19.2
million compared with $23.3 million as of December 31, 2015.
Financial OutlookCodexis is introducing
financial guidance for 2017 as follows:
- Total revenues of $50 million to $53 million, which assumes the
revenues related to the company’s third non-exclusive CodeEvolver®
license agreement, which is expected in the second half of
2017.
- Product sales of $21 million to $23 million, an increase of 37%
to 50% over 2016.
- Gross margin on product sales between 37% and 39%.
- Total operating expenses for R&D and SG&A to increase
by 6% to 8%.
Non-GAAP Financial MeasuresConsolidated
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 non-cash items such as depreciation expense,
intangible asset amortization expense and stock-based compensation
expense. Non-GAAP financial measures presented are: non-GAAP gross
margin as a percentage of total revenues, non- GAAP net income or
loss, non-GAAP net income or loss per share (basic and diluted),
non-GAAP research and development expense and non-GAAP selling,
general and administrative expense. Non-GAAP operating expenses
exclude stock-based compensation expense, amortization of
intangible assets and depreciation of fixed assets.
Codexis management uses these non-GAAP financial measures to
monitor and evaluate its 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 items of expense 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 WebcastCodexis will hold a
conference call and audio webcast today beginning at 4:30 p.m.
Eastern time. A slide presentation to accompany today’s call is
available on the Investors section of the Company’s website at
www.codexis.com. The conference call dial-in numbers are
855-890-8665 for domestic callers and 720-634-2938 for
international callers, and the passcode is 77904180. 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 77904180 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, Inc. is a leading
protein engineering company that applies its technology to the
development of biocatalysts for commercial manufacture of
pharmaceuticals and fine chemicals. Codexis’ proven technology
enables implementation of biocatalytic solutions to meet customer
needs for rapid, cost-effective and sustainable manufacturing. For
more information, see www.codexis.com.
Forward-Looking StatementsThis press release
contains forward-looking statements relating to Codexis’
expectations regarding 2017 total revenues, product sales, gross
margin on product sales and operating expenses, Codexis’
expectation that it will sign a third CodeEvolver® protein
engineering platform technology license agreement in 2017, Codexis’
expectations regarding preclinical and clinical development of its
enzyme therapeutic product candidate for PKU, including the timing
of filing an IND with the FDA, and Codexis' beliefs regarding its
ability to enhance shareholder value in 2017. 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 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 therapeutic candidates; Codexis’
ability to develop and commercialize new products for the
biocatalysis markets; Codexis’ dependence on a limited number of
contract manufacturers for large-scale production of its enzymes;
Codexis’ ability to deploy its technology platform in new market
spaces, including the fine chemicals, therapeutics and molecular
diagnostics markets; any impairments Codexis may be required to
record in the future with respect to its goodwill, intangible
assets or other long-lived assets; Codexis’ dependence on
information technology systems, infrastructure and data; Codexis’
need for additional capital in the future in order to expand its
business or to adjust for market conditions or strategic
considerations, which may involve Codexis entering into equity
offerings, debt financings, credit facilities and/or strategic
collaborations; variability of and potential decline in Codexis’
pharmaceutical product gross margins from quarter to quarter;
Codexis’ dependence on key personnel; risks associated with
Codexis’ international business; risks, uncertainties and costs
associated with compliance with European Union chemical
regulations, adverse effects of regulatory tax examinations;
risk, uncertainties and costs associated with regulatory approval
for the use of our products in food and food ingredients; risks
associated with the patent litigation that Codexis initiated in
February 2016, including the risk that EnzymeWorks and Junhua
“Alex” Tao may file counterclaims against Codexis; Codexis’
potential involvement in additional lawsuits to protect or enforce
its patents or other rights, which could be expensive,
time-consuming and unsuccessful; Codexis’ ability to adequately
protect and maintain its proprietary technologies; Codexis’ ability
to enforce its intellectual property rights throughout the world;
the risk that Codexis’ biocatalysts, or the genes that code for its
biocatalysts, may be stolen, misappropriated or reverse engineered,
which would allow others to use these biocatalysts or genes to
produce competing products; any claims by third parties that
Codexis is infringing their intellectual property rights or other
proprietary rights, which may subject Codexis to costly and
time-consuming litigation and prevent Codexis from developing or
commercializing its products; and any unauthorized disclosures of
Codexis’ trade secrets and other proprietary information.
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
8, 2016, Quarterly Reports on Form 10-Q filed with the SEC on May
9, 2016, August 9, 2016 and November 8, 2016, 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.
Codexis Contacts:
InvestorsLHAJody Cain,
310-691-7100 jcain@lhai.com
Financial Tables to Follow
|
Codexis, Inc. |
Condensed Consolidated Statements of
Operations |
(unaudited) |
(In Thousands, Except Per Share
Amounts) |
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
|
|
Product
sales |
$ |
4,249 |
|
|
$ |
4,462 |
|
|
$ |
15,321 |
|
|
$ |
11,376 |
|
Research
and development revenues |
5,345 |
|
|
6,352 |
|
|
31,316 |
|
|
25,599 |
|
Revenue
sharing arrangement |
375 |
|
|
773 |
|
|
2,200 |
|
|
4,829 |
|
Total revenues |
9,969 |
|
|
11,587 |
|
|
48,837 |
|
|
41,804 |
|
Costs and operating
expenses: |
|
|
|
|
|
|
|
Cost of
product sales |
2,287 |
|
|
2,578 |
|
|
9,753 |
|
|
6,586 |
|
Research
and development |
5,964 |
|
|
5,216 |
|
|
22,229 |
|
|
20,673 |
|
Selling,
general and administrative |
6,968 |
|
|
6,026 |
|
|
25,419 |
|
|
22,315 |
|
Total costs and
operating expenses |
15,219 |
|
|
13,820 |
|
|
57,401 |
|
|
49,574 |
|
Loss from
operations |
(5,250 |
) |
|
(2,233 |
) |
|
(8,564 |
) |
|
(7,770 |
) |
Interest income |
20 |
|
|
7 |
|
|
60 |
|
|
19 |
|
Other expense |
(55 |
) |
|
(21 |
) |
|
(94 |
) |
|
(168 |
) |
Loss before income
taxes |
(5,285 |
) |
|
(2,247 |
) |
|
(8,598 |
) |
|
(7,919 |
) |
Benefit from income
taxes |
(25 |
) |
|
(194 |
) |
|
(40 |
) |
|
(338 |
) |
Net loss |
$ |
(5,260 |
) |
|
$ |
(2,053 |
) |
|
$ |
(8,558 |
) |
|
$ |
(7,581 |
) |
Net loss per share,
basic and diluted |
$ |
(0.13 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.19 |
) |
Weighted average common
shares used in computing net loss per share, basic and diluted |
41,002 |
|
|
39,840 |
|
|
40,629 |
|
|
39,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Codexis, Inc. |
Condensed Consolidated Balance
Sheets |
(unaudited) |
(In Thousands) |
|
|
|
December 31, |
|
2016 |
|
2015 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
19,240 |
|
|
$ |
23,273 |
|
Accounts
receivable, net |
5,924 |
|
|
7,329 |
|
Inventories |
825 |
|
|
992 |
|
Prepaid
expenses and other current assets |
1,238 |
|
|
1,245 |
|
Total
current assets |
27,227 |
|
|
32,839 |
|
Restricted cash |
1,624 |
|
|
787 |
|
Marketable
securities |
1,142 |
|
|
1,549 |
|
Property and equipment,
net |
2,155 |
|
|
3,109 |
|
Intangible assets,
net |
— |
|
|
2,812 |
|
Goodwill |
3,241 |
|
|
3,241 |
|
Other non-current
assets |
259 |
|
|
310 |
|
Total
assets |
$ |
35,648 |
|
|
$ |
44,647 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
4,232 |
|
|
$ |
3,399 |
|
Accrued
compensation |
4,314 |
|
|
3,331 |
|
Other
accrued liabilities |
2,111 |
|
|
2,013 |
|
Deferred
revenues |
1,710 |
|
|
6,098 |
|
Total
current liabilities |
12,367 |
|
|
14,841 |
|
Deferred revenues, net
of current portion |
1,066 |
|
|
3,120 |
|
Lease incentive
obligation, net of current portion |
885 |
|
|
1,310 |
|
Other liabilities |
2,231 |
|
|
2,497 |
|
Total
liabilities |
16,549 |
|
|
21,768 |
|
Stockholders’
equity: |
|
|
|
Common stock |
4 |
|
|
4 |
|
Additional paid-in
capital |
311,164 |
|
|
305,981 |
|
Accumulated other
comprehensive income |
— |
|
|
405 |
|
Accumulated
deficit |
(292,069 |
) |
|
(283,511 |
) |
Total
stockholders’ equity |
19,099 |
|
|
22,879 |
|
Total liabilities and
stockholders’ equity |
$ |
35,648 |
|
|
$ |
44,647 |
|
|
|
|
|
|
|
|
|
Codexis, Inc. |
Reconciliation of GAAP to Non-GAAP Financial
Measures |
(unaudited) |
(In Thousands, Except Per Share
Amounts) |
|
|
|
|
|
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
(i) Gross
margin |
|
|
|
|
|
|
|
|
Product Sales |
|
$ |
4,249 |
|
|
$ |
4,462 |
|
|
$ |
15,321 |
|
|
$ |
11,376 |
|
Cost of Product
Sales |
|
2,287 |
|
|
2,578 |
|
|
9,753 |
|
|
6,586 |
|
Gross Margin ($) -
GAAP |
|
1,962 |
|
|
1,884 |
|
|
5,568 |
|
|
4,790 |
|
Gross Margin (%) -
GAAP |
|
46 |
% |
|
42 |
% |
|
36 |
% |
|
42 |
% |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Research
and development revenue |
|
$ |
5,345 |
|
|
$ |
6,352 |
|
|
$ |
31,316 |
|
|
$ |
25,599 |
|
Revenue
sharing arrangement |
|
375 |
|
|
773 |
|
|
2,200 |
|
|
4,829 |
|
Gross Margin ($) -
Non-GAAP |
|
$ |
7,682 |
|
|
$ |
9,009 |
|
|
$ |
39,084 |
|
|
$ |
35,218 |
|
Total
revenue for Non-GAAP gross margin |
|
$ |
9,969 |
|
|
$ |
11,587 |
|
|
$ |
48,837 |
|
|
$ |
41,804 |
|
Gross Margin (%) -
Non-GAAP |
|
77 |
% |
|
78 |
% |
|
80 |
% |
|
84 |
% |
|
|
|
|
|
|
|
|
|
(ii) Research
and development expenses |
|
|
|
|
|
|
|
|
Research and
development expenses - GAAP |
|
$ |
5,964 |
|
|
$ |
5,216 |
|
|
$ |
22,229 |
|
|
$ |
20,673 |
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Depreciation expense (b) |
|
(198 |
) |
|
(240 |
) |
|
(887 |
) |
|
(1,099 |
) |
Intangible asset amortization (c) |
|
(281 |
) |
|
(842 |
) |
|
(2,812 |
) |
|
(3,374 |
) |
Employee
stock-based compensation (d) |
|
(345 |
) |
|
(225 |
) |
|
(1,033 |
) |
|
(935 |
) |
Research and
development expenses - Non-GAAP |
|
$ |
5,140 |
|
|
$ |
3,909 |
|
|
$ |
17,497 |
|
|
$ |
15,265 |
|
|
|
|
|
|
|
|
|
|
(iii)
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses - GAAP |
|
$ |
6,968 |
|
|
$ |
6,026 |
|
|
$ |
25,419 |
|
|
$ |
22,315 |
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Depreciation expense (b) |
|
(171 |
) |
|
(226 |
) |
|
(847 |
) |
|
(936 |
) |
Employee
stock-based compensation (d) |
|
(1,467 |
) |
|
(1,142 |
) |
|
(4,640 |
) |
|
(4,191 |
) |
Selling, general and
administrative expenses - Non-GAAP |
|
$ |
5,330 |
|
|
$ |
4,658 |
|
|
$ |
19,932 |
|
|
$ |
17,188 |
|
|
|
|
|
|
|
|
|
|
(iv) Net income
(loss) |
|
|
|
|
|
|
|
|
Net income (loss) -
GAAP |
|
$ |
(5,260 |
) |
|
$ |
(2,053 |
) |
|
$ |
(8,558 |
) |
|
$ |
(7,581 |
) |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Depreciation expense (b) |
|
369 |
|
|
466 |
|
|
1,734 |
|
|
2,035 |
|
Intangible asset amortization (c) |
|
281 |
|
|
842 |
|
|
2,812 |
|
|
3,374 |
|
Employee
stock-based compensation (d) |
|
1,812 |
|
|
1,367 |
|
|
5,673 |
|
|
5,126 |
|
Net income (loss) -
Non-GAAP |
|
$ |
(2,798 |
) |
|
$ |
622 |
|
|
$ |
1,661 |
|
|
$ |
2,954 |
|
|
|
|
|
|
|
|
|
|
Codexis, Inc. |
Reconciliation of GAAP to Non-GAAP Financial
Measures |
(unaudited) |
(In Thousands, Except Per Share
Amounts) |
|
|
|
|
|
|
|
|
|
(v) Net income
(loss) per share |
|
|
|
|
|
|
|
|
Net income (loss) per
share - GAAP, basic |
|
$ |
(0.13 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.19 |
) |
Adjustments to GAAP net
income (loss) per share(as detailed above) |
|
0.06 |
|
|
0.07 |
|
|
0.25 |
|
|
0.27 |
|
Net income (loss) per
share - Non-GAAP, basic |
|
$ |
(0.07 |
) |
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - GAAP, diluted |
|
$ |
(0.13 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.19 |
) |
Adjustments to GAAP net
income (loss) per share(as detailed above) |
|
0.06 |
|
|
0.07 |
|
|
0.24 |
|
|
0.27 |
|
Net income (loss) per
share - Non-GAAP, diluted |
|
$ |
(0.07 |
) |
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Totals may not sum due to rounding.
These non-GAAP financial measures include or exclude the
following items:
(a) Non-product revenue: we provide non-GAAP
information which includes revenues other than product sales. We
believe that including this revenue from our non-GAAP measures is
useful to investors, because the product sales used in the cost of
goods sold calculation of gross margin can be inconsistent in
amount and can vary from period to period.
(b) 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.
(c) Intangible asset amortization: we provide
non-GAAP information which excludes expenses for the amortization
of intangible assets which primarily relate to purchased intangible
assets associated with our acquisitions. We believe that
eliminating this expense from our non-GAAP measures is useful to
investors, because this expense is non-cash. This financial measure
may be different from non-GAAP methods of accounting and reporting
used by the Company’s competitors to the extent their non-GAAP
measures include or exclude other items. The presentation of this
additional information should not be considered a substitute for
net income or net income per diluted share or other measures
prepared in accordance with GAAP.
(d) 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 continuing
operations. We also believe that the exclusion of stock-based
compensation expense provides for a better comparison of Codexis'
operating results to prior periods and to our peer companies 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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