Product sales increase 49%
Codexis, Inc. (NASDAQ:CDXS), a leading protein engineering company,
announces financial results for the three months ended March 31,
2017, and provides a business update.
“Codexis delivered a solid start to 2017 with product sales
increasing 49%, reaching the top of our range for full-year product
sales growth. I am especially pleased that those sales were
recorded at gross margins that exceed our guidance range for the
year,” said Codexis President and CEO John Nicols. “These
results show our continued execution toward a third consecutive
year of translating our protein catalyst and enzyme pipeline into
sustained product sales growth. Product sales were again led by
deliveries to Merck, as well as significant aggregate sales to
several generic pharmaceutical customers. Additionally, we shipped
a large order that advanced the timeline for switching the
manufacturing process of another major pharmaceutical company’s
patented, commercially available drug to use our proprietary
protein catalyst.
“We have delivered a number of strategic successes
year-to-date,” he added. “First on the list is the signing of
our second multiyear agreement with Tate & Lyle. We have
already staffed the research project for improving their target
food ingredient process and received a payment in the low
single-digit million dollar range, which we will start to recognize
in the second quarter. Second, we filed our first patent
application and began beta testing the first Codexis-developed
enzyme for the molecular diagnostics industry. We also welcomed new
shareholders to Codexis, who along with participation by several
existing shareholders, strengthened our balance sheet with a
successful follow-on equity offering in early April. We are
well-positioned to accelerate execution of multiple growth
initiatives and further capitalize on the versatility of our
CodeEvolver® protein engineering technology,” Mr. Nicols
concluded.
First Quarter Financial HighlightsTotal
revenues for the first quarter of 2017 were $8.0 million, unchanged
from the first quarter of 2016. Product sales for the first quarter
of 2017 increased 49% to $5.6 million from $3.7 million for the
prior-year period due to increased demand for enzymes for both
generic and branded products. Research and development revenues for
the first quarter of 2017 were $2.0 million compared with $3.5
million for the first quarter of 2016, which included the
recognition of a milestone payment from a collaboration agreement
with a major biopharmaceutical company, as well as $1.1 million
from the combined pro-rata revenue recognition of previously
received upfront payments from GlaxoSmithKline and Merck. These
prior-year events were partly offset in the first quarter of
2017 by a significant increase in service revenues from Merck and
another major pharmaceutical customer for development of an enzyme
being used to manufacture the customer’s already commercialized
drug. Revenue from the revenue-sharing arrangement with Exela
PharmSci for sales of the argatroban injectable drug was $0.4
million for the first quarter of 2017 compared with $0.7 million
for the first quarter of 2016.
Gross margin on product sales for the first quarter of 2017
increased to 46% from 33% for the first quarter of 2016, mainly due
to an increase in sales of higher-margin products.
Research and development (R&D) expenses were $5.8 million
for the first quarter of 2017 compared with $5.7 million for the
first quarter of 2016, with the increase due to higher outside
services expense and increased costs associated with higher
headcount, which was partially offset by lower amortization of
intangibles. Selling, general and administrative (SG&A)
expenses for the first quarter of 2017 decreased to $6.6 million
from $6.8 million for the first quarter of 2016, due primarily to
lower legal fees and outside services expense, offset in part by
increased costs associated with higher headcount.
The net loss for the first quarter of 2017 was $7.5 million, or
$0.18 per share, compared with a net loss for the first quarter of
2016 of $7.0 million, or $0.17 per share. Non-GAAP net loss for the
first quarter of 2017 was $5.5 million, or $0.13 per share,
compared with a non-GAAP net loss for the first quarter of 2016 of
$4.3 million, or $0.11 per share. A reconciliation of GAAP to
non-GAAP measures is provided below.
Cash and cash equivalents as of March 31, 2017 were $13.9
million, compared with $19.2 million as of December 31, 2016.
Cash and cash equivalents as of March 31, 2017 did not include the
payment received from Tate & Lyle in May 2017 relating to the
agreement signed on March 31, 2017. On April 12, 2017, Codexis
completed a public offering of common stock raising net proceeds of
$23.3 million.
Financial OutlookCodexis is affirming its
financial guidance for 2017 as follows:
- Total revenues of $50 million to $53 million, which assumes
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% over 2016.
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 net
income or loss, non-GAAP net income or loss per share (basic and
diluted), and non-GAAP operating expenses, including 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. The conference call dial-in numbers are 855-890-8665
for domestic callers and 720-634-2938 for international callers,
and the passcode is 14067412. 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 14067412 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, as well as the development of
enzymes as biotherapeutics and for molecular diagnostics. 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 StatementsTo 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 2017 total revenues, product
sales, gross margin on product sales and operating expenses, its
ability to enter into, and the timing of, future CodeEvolver®
protein engineering platform technology license agreements, and the
timing and amount of revenue recognition and future growth. 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 in vitro
molecular diagnostics markets; 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; Codexis’
dependence on key personnel; risks associated with the patent
litigation that Codexis initiated in February 2016; Codexis’
ability to establish and maintain adequate protection for
intellectual property, trade secrets and other proprietary rights
covering its technologies; and any claims by third parties that
Codexis is infringing their intellectual property rights or other
proprietary rights. 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 9, 2017, 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 March 31, |
|
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
Product
sales |
|
$ |
5,586 |
|
|
$ |
3,740 |
|
Research
and development revenues |
|
2,001 |
|
|
3,534 |
|
Revenue
sharing arrangement |
|
384 |
|
|
722 |
|
Total revenues |
|
7,971 |
|
|
7,996 |
|
Costs and operating
expenses: |
|
|
|
|
Cost of
product sales |
|
3,002 |
|
|
2,489 |
|
Research
and development |
|
5,839 |
|
|
5,686 |
|
Selling,
general and administrative |
|
6,606 |
|
|
6,802 |
|
Total costs and
operating expenses |
|
15,447 |
|
|
14,977 |
|
Loss from
operations |
|
(7,476 |
) |
|
(6,981 |
) |
Interest income |
|
18 |
|
|
15 |
|
Other income, net |
|
22 |
|
|
3 |
|
Loss before income
taxes |
|
(7,436 |
) |
|
(6,963 |
) |
Provision for income
taxes |
|
24 |
|
|
11 |
|
Net loss |
|
$ |
(7,460 |
) |
|
$ |
(6,974 |
) |
|
|
|
|
|
Net loss per share,
basic and diluted |
|
$ |
(0.18 |
) |
|
$ |
(0.17 |
) |
Weighted average common
shares used in computing net loss per share, basic and diluted |
|
41,250 |
|
|
40,072 |
|
|
|
|
|
|
|
|
Codexis, Inc. |
Condensed Consolidated Balance Sheets |
(Unaudited) |
(In Thousands) |
|
|
|
March 31, 2017 |
|
December 31, 2016 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
13,923 |
|
|
$ |
19,240 |
|
Accounts
receivable, net |
|
5,381 |
|
|
5,924 |
|
Inventories |
|
1,124 |
|
|
825 |
|
Prepaid
expenses and other current assets |
|
1,314 |
|
|
1,238 |
|
Total
current assets |
|
21,742 |
|
|
27,227 |
|
Restricted cash |
|
1,592 |
|
|
1,624 |
|
Marketable
securities |
|
1,051 |
|
|
1,142 |
|
Property and equipment,
net |
|
2,752 |
|
|
2,155 |
|
Goodwill |
|
3,241 |
|
|
3,241 |
|
Other non-current
assets |
|
253 |
|
|
259 |
|
Total
assets |
|
$ |
30,631 |
|
|
$ |
35,648 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
3,493 |
|
|
$ |
4,232 |
|
Accrued
compensation |
|
5,334 |
|
|
4,314 |
|
Other
accrued liabilities |
|
3,055 |
|
|
2,111 |
|
Deferred
revenue |
|
1,644 |
|
|
1,710 |
|
Total
current liabilities |
|
13,526 |
|
|
12,367 |
|
Deferred revenue, net
of current portion |
|
2,180 |
|
|
1,066 |
|
Lease incentive
obligation, net of current portion |
|
779 |
|
|
885 |
|
Financing obligation,
net of current portion |
|
255 |
|
|
— |
|
Other long-term
liabilities |
|
2,211 |
|
|
2,231 |
|
Total
liabilities |
|
18,951 |
|
|
16,549 |
|
Stockholders'
equity: |
|
|
|
|
Common stock |
|
4 |
|
|
4 |
|
Additional paid-in
capital |
|
311,296 |
|
|
311,164 |
|
Accumulated other
comprehensive loss |
|
(91 |
) |
|
— |
|
Accumulated
deficit |
|
(299,529 |
) |
|
(292,069 |
) |
Total
stockholders' equity |
|
11,680 |
|
|
19,099 |
|
Total liabilities and
stockholders' equity |
|
$ |
30,631 |
|
|
$ |
35,648 |
|
|
|
|
|
|
|
|
|
|
Codexis, Inc. |
Reconciliation of GAAP to Non-GAAP Financial
Measures |
(Unaudited) |
(In Thousands, Except Per Share Amounts) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
2017 |
|
2016 |
(i) Research
and development expenses |
|
|
|
|
Research and
development expenses - GAAP |
|
$ |
5,839 |
|
|
$ |
5,686 |
|
Non-GAAP
adjustments: |
|
|
|
|
Depreciation expense(a) |
|
(178 |
) |
|
(200 |
) |
Intangible asset amortization(b) |
|
— |
|
|
(844 |
) |
Stock-based compensation(c) |
|
(323 |
) |
|
(220 |
) |
Research and
development expenses - Non-GAAP |
|
$ |
5,338 |
|
|
$ |
4,422 |
|
|
|
|
|
|
(ii) Selling,
general and administrative expenses |
|
|
|
|
Selling, general and
administrative expenses - GAAP |
|
$ |
6,606 |
|
|
$ |
6,802 |
|
Non-GAAP
adjustments: |
|
|
|
|
Depreciation expense(a) |
|
(148 |
) |
|
(265 |
) |
Stock-based compensation(c) |
|
(1,346 |
) |
|
(1,169 |
) |
Selling, general and
administrative expenses - Non-GAAP |
|
$ |
5,112 |
|
|
$ |
5,368 |
|
|
|
|
|
|
(iii) Net
loss |
|
|
|
|
Net loss - GAAP |
|
$ |
(7,460 |
) |
|
$ |
(6,974 |
) |
Non-GAAP
adjustments: |
|
|
|
|
Depreciation expense(a) |
|
326 |
|
|
465 |
|
Intangible asset amortization(b) |
|
— |
|
|
844 |
|
Stock-based compensation(c) |
|
1,669 |
|
|
1,389 |
|
Net loss -
Non-GAAP |
|
$ |
(5,465 |
) |
|
$ |
(4,276 |
) |
|
|
|
|
|
(iv) Net loss
per share |
|
|
|
|
Net loss per share -
GAAP, basic and diluted |
|
$ |
(0.18 |
) |
|
$ |
(0.17 |
) |
Adjustments to GAAP net
loss per share (as detailed above) |
|
0.05 |
|
|
0.06 |
|
Net loss per share -
Non-GAAP, basic and diluted |
|
$ |
(0.13 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
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) 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.
(c) 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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