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Codexis Grows Revenue 35 Percent in Third Quarter; Raises 2010 Outlook

REDWOOD CITY, Cailf., Oct. 28 /PRNewswire-FirstCall/ -- Codexis, Inc. (Nasdaq: CDXS) today announced financial results for the third quarter ended September 30, 2010.  

Financial HighlightsRevenue:  For the third quarter of 2010, the company reported revenues of $27.1 million, an increase of 35% from $20.1 million in the third quarter of 2009, primarily due to an increase of $4.9 million in product revenue, representing an increase of 105% over the same time period.

Operating Expenses:  Research and development expenses in the third quarter of 2010 were $13.1 million, compared to $12.2 million for the third quarter of 2009. The increase was primarily due to higher depreciation and stock-based compensation expenses. Selling, general and administrative expenses in the third quarter of 2010 declined to $7.9 million compared to $8.7 million same period of 2009 primarily due to a reduction in discretionary expenses.

Net Income/(Loss):  Net loss was ($2.7) million, or ($0.08) per share, based on 34.2 million weighted average common shares outstanding in the third quarter of 2010.  This compares to a net loss of ($6.2) million during the third quarter of 2009.  

Adjusted EBITDA:  On a non-GAAP basis, Adjusted EBITDA increased from ($2.7) million in the third quarter of 2009 to $2.1 million in 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, cash equivalents and marketable securities at September 30, 2010 decreased to $99.3 million compared to $100.3 million at June 30, 2010.

OutlookCodexis' 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.

Codexis increases its full year revenue guidance for 2010. For full year 2010, Codexis forecasts revenues of greater than $100 million, which would represent growth of 21% or greater compared to 2009. Codexis affirms its expectation that Adjusted EBITDA will be positive for the full year 2010; and expects Adjusted EBITDA will be greater than $7 million for the year.

Conference CallCodexis will hold a conference call for investors on October 28, 2010 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 A recording of the call will be available by calling US: 888-286-8010 or International: 617-801-6888, access code 43072209 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 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. Other potential markets for the company's biocatalyst-enabled solutions include carbon capture, water treatment and chemicals. 

Forward-Looking StatementsThis press release contains forward-looking statements relating to the company's forecast for 2010 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 August 6, 2010, including 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)Three Months EndedNine Months EndedSeptember 30,%September 30,%20102009change20102009changeRevenues:Product$  9,491$  4,636105%$ 24,250$  13,40181%Related party collaborative research and development16,17815,0008%46,87343,9637%Collaborative research and development1,065426150%2,5771,29599%Government grants379-nm3,59311nmTotal revenues 27,11320,06235%77,29358,67032%Costs and operating expenses: Cost of product revenues8,5634,61885%19,85611,88667%Gross margin $928184,3941,515Gross margin %10%0%18%11%Research and development13,07012,2397%39,05639,486-1%Selling, general and administrative7,9408,699-9%25,19220,93920% . . Total costs and operating expenses29,57325,55616%84,10472,31116%Loss from operations (2,460)(5,494)-55%(6,811)(13,641)-50%Interest income6164-5%135141-4%Interest expense and other, net(35)(744)-95%(1,047)(1,530)-32%Loss before provision (benefit) for income taxes (2,434)(6,174)-61%(7,723)(15,030)-49%Provision (benefit) for income taxes 298(16)nm32479310%Net loss$ (2,732)$ (6,158)-56%$ (8,047)$ (15,109)-47%Net loss per share of common stock,basic and diluted$   (0.08)$   (2.35)$   (0.38)$
(5.79)Weighted average common shares used in computing net loss per share of common stock, basic and diluted34,2002,62421,2722,609Codexis, Inc.Condensed Consolidated Balance Sheets(Unaudited)(In Thousands)September 30,December 31,20102009AssetsCurrent assets:   Cash and cash equivalents $
31,785   Marketable securities-23,778   Accounts receivable, net 13,8417,246   Related party accounts receivable1,537-   Inventories 3,2452,915   Prepaid expenses and other current assets1,8711,658Total current assets 119,76867,382Restricted cash666731Property and equipment, net 21,01821,581Intangible assets, net 562928Goodwill3,2413,241Other non-current assets 2,8215,173Total assets $
99,036Liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)Current liabilities:   Accounts payable $
8,639 $
9,999   Accrued compensation,046 ,518   Related party payable487 1,314   Other accrued liabilities 7,856 ,376   Redeemable convertible preferred stock warrant liability- 2,009   Deferred revenues 704 2,240   Related party deferred revenues8,622 3,161   Financing obligations4,032 5,368 Total current liabilities 36,386 50,985 Deferred revenues, net of current portion,718 ,856 Related party deferred revenues, net of current portion4,424 7,487 Financing obligations, net of current portion-   2,574 Other long-term liabilities ,415 ,307 Total  liabilities 43,943 4,209 Redeemable convertible preferred stock issuable in series A to F- 179,672 Stockholders' equity (deficit):Common stock4 - Additional paid-in capital271,832 15,015 Accumulated other comprehensive loss(47)(252)Accumulated deficit(167,656)(159,608)Total  stockholders' equity (deficit)4,133 (144,845)Total liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit) $
48,076 $
99,036 Codexis, Inc.Condensed Consolidated Statements of Cash Flow(Unaudited)(In Thousands)Nine Months EndedSeptember 30,20102009Operating activities:Net loss$
(15,109)Adjustments to reconcile net loss to cash used in   operating activities:Amortization of intangible assets402707Depreciation and amortization of property and equipment5,2983,727Revaluation of redeemable convertible preferred stock warrant liability677349Gain on disposal of property and equipment-(50)Stock-based compensation6,4663,179Amortization of debt discount70283Accretion (amortization) of premium/discount on marketable securities511368Changes in operating assets and liabilities:Accounts receivable(8,132)(842)Inventories(331)511Prepaid expenses and other current assets(213)(499)Other assets2,602(629)Accounts payable(1,360)(929)Accrued compensation(472)1,128Accrued related party payable(827)(91)Other accrued liabilities(3,420)(4,366)Deferred revenues(9,276)(3,266)Net cash (used in) operating activities(16,052)(15,529)Investing activities:Decrease  in restricted cash65194Purchase of property and equipment(4,740)(6,491)Purchase of of marketable securities(49,051)(35,619)Proceeds from sales of marketable securities1,605-Proceeds from maturities of marketable securities70,69617,175Net cash provided by (used in) investing activities18,575(24,741)Financing activities:Principal payments on financing obligations(3,979)(4,004)Payments in preparation for initial public offering(3,870)-Proceeds from issuance of preferred stock-45,000Proceeds from issuance of common stock on IPO, net of underwriting discounts72,551-Proceeds from exercises of stock options27972Net cash provided by financing activities64,98141,068Effect of exchange rate changes on cash and cash equivalents(15)(57)Net increase in cash and cash equivalents67,489741Cash and cash equivalents:   Beginning of the period31,78521,903   End of the period99,27422,644   Marketable securities at the end of period-33,318Cash, cash equivalents and marketable securities$
55,962Reconciliation of GAAP to Non-GAAP Financial InformationAdjusted EBITDA (calculated by adjusting net loss for net interest expense, income taxes, depreciation, amortization, stock-based compensation and preferred stock warrant fair market valuation ) for the third quarter of 2010 was $2.1 million compared to a loss of $2.7 million in the third quarter of 2009. For the nine months ended September 30, 2010, Adjusted EBITDA improved to $5.5 million from a loss of $6.2 million in the same period in 2009. The key driver of this improvement was a $7.1 million reduction in net loss.

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 income (loss) to Adjusted EBITDA is included in the table below.

Codexis, Inc.Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA(Unaudited)(In Thousands)Three months endedSeptember 30,Nine months ended September 30,2010200920102009Net income (loss)

(15,109)Adjustments:Minus: Interest income

(61)(64)(135)(141)Plus: Interest expense

1303175241,078Plus: Income taxes

298(16)32479Plus: Depreciation and amortization

1,9601,6265,7004,434Plus: Stock-based compensation

2,5491,2866,4333,148Plus: Preferred stock warrant fair market valuation adjustment

-344677349   Adjusted EBITDA$
(6,162)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;
  • Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
  • 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,, 650-421-8137Media: Lyn Christenson,, 650-421-8144 or Saskia Sidenfaden,, 212-827-3771.

    SOURCE Codexis, Inc.
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