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Codexis Reports Fourth Quarter and Full Year 2010 Results

REDWOOD CITY, Calif., Feb. 3, 2011 /PRNewswire/ -- Codexis, Inc. (Nasdaq: CDXS) today announced financial results for the fourth quarter and year ended December 31, 2010.  

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

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

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

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

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

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

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

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

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

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

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.

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

Conference CallCodexis will hold a conference call for investors on February 3, 2011 at 1:30 p.m. PT (4:30 p.m. ET). The conference call dial-in numbers are US: 866-788-0541 or International: 857-350-1679, access code 54501345. A live webcast of the call will also be available from the Investor Relations section of A recording of the call will be available by calling US: 888-286-8010 or International: 617-801-6888, access code 91197822 beginning approximately two hours after the call, and will be available for up to thirty days. A webcast replay from today's call will also be available from the Investor Relations section of approximately two hours after the call and will be available for up to thirty days.

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

Forward-Looking StatementsThis press release contains forward-looking statements relating to the company's forecast for 2011 revenue and Adjusted EBITDA, which is defined elsewhere in this press release.  You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect actual results.  Factors that could materially affect actual results can be found in Codexis' Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 4, 2010, included under the caption "Risk Factors."  Codexis expressly disclaims any intent or obligation to update these forward-looking statements, except as required by law. Codexis, Inc.Condensed Consolidated Statements of Operations(Unaudited)(In Thousands, Except Per Share Amounts)Three Months EndedTwelve Months EndedDecember 31,December 31,20102009% change20102009% changeRevenues:Product$ 8,586$  5,15267%$ 32,835$  18,55477%Related party collaborative research and development19,27518,6933%66,14862,6566%Collaborative research and development1,471358311%4,0481,652145%Government grants47935nm4,07346nmTotal revenues 29,81124,23823%107,10482,90829%Costs and operating expenses: Cost of product revenues8,1264,79270%27,98216,67868%Gross margin $4603604,8531,876Gross margin %5%7%15%10%Research and development13,34915,240-12%52,40554,725-4%Selling, general and administrative8,6498,932-3%33,84129,87113%Total costs and operating expenses30,12428,9644%114,228101,27413%Loss from operations (313)(4,726)-93%(7,124)(18,366)-61%Interest income3139-21%166180-8%Interest expense and other, net(153)(507)-70%(1,199)(2,037)-41%Loss before provision (benefit) for income taxes (435)(5,194)-92%(8,157)(20,223)-60%Provision (benefit) for income taxes 60(13)nm38466482%Net loss$  (495)$ (5,181)-90%$ (8,541)$ (20,289)-58%Net loss per share of common stock,basic and diluted$ (0.01)$   (1.95)$   (0.35)$
(7.74)Weighted average common shares used in computing net loss per share of common stock, basic and diluted34,4522,65324,5942,622Codexis, Inc.Condensed Consolidated Balance Sheets(Unaudited)(In Thousands)December 31,December 31,20102009AssetsCurrent assets:   Cash and cash equivalents $
31,785   Marketable securities-23,778   Accounts receivable, net 10,6207,246   Related party accounts receivable4,713-   Inventories 2,8172,915   Prepaid expenses and other current assets1,6461,658Total current assets 92,19267,382Restricted cash1,466731Property and equipment, net 21,45221,581Intangible assets, net 20,158928Goodwill3,2413,241Other non-current assets 2,7915,173Total assets $
99,036Liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)Current liabilities:   Accounts payable $
9,999   Accrued compensation8,1076,518   Related party payable-1,314   Other accrued liabilities 5,63010,376   Redeemable convertible preferred stock warrant liability-2,009   Deferred revenues 4552,240   Related party deferred revenues4,08413,161   Financing obligations-5,368Total current liabilities 27,48450,985Deferred revenues, net of current portion1,6711,856Related party deferred revenues, net of current portion3,4037,487Financing obligations, net of current portion-2,574Other long-term liabilities 1,3811,307Total  liabilities 33,93964,209Redeemable convertible preferred stock issuable in series A to F-179,672Stockholders' equity (deficit):Common stock4-Additional paid-in capital275,54015,015Accumulated other comprehensive loss(34)(252)Accumulated deficit(168,149)(159,608)Total  stockholders' equity (deficit)107,361(144,845)Total liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)$
99,036Codexis, Inc.Condensed Consolidated Statements of Cash Flow(Unaudited)(In Thousands)Twelve Months EndedDecember 31,20102009Operating activities:Net loss$ (8,541)$ (20,289)Adjustments to reconcile net loss to net cash used in operating activities:Amortization of intangible assets1,063957Depreciation and amortization of property and equipment7,2465,172Revaluation of redeemable convertible preferred stock warrant liability677627Loss (gain) on disposal of property and equipment148(50)Extinguishment of royalty payable461-Stock-based compensation8,7374,822Accretion of asset retirement obligation14643Amortization of debt discount26311Accretion (amortization) of premium/discount on marketable securities511594Changes in operating assets and liabilities:Accounts receivable(8,087)(1,054)Inventories9858Prepaid expenses and other current assets1311Other assets2,814(228)Accounts payable(791)189Accrued compensation1,5892,434Related party payable(1,314)879Other accrued liabilities(6,048)(3,792)Deferred revenues(15,131)530Net cash used in operating activities(16,383)(8,786)Investing activities:(Increase) decrease  in restricted cash(735)193Purchase of property and equipment(6,990)(10,697)Purchase of marketable securities(49,051)(37,118)Purchase of Maxygen patent portfolio(20,705)-Proceeds from sale of marketable securities1,605-Proceeds from maturities of marketable securities70,69527,980Proceeds from disposal of property and equipment15-Purchase of CO2 Solution common shares-(1,316)Net cash provided by (used in) investing activities(5,166)(20,958)Financing activities:Principal payments on financing obligations(8,026)(6,087)Payments in preparation for initial public offering(3,870)(959)Proceeds from issuance of preferred stock, net of issuance costs-46,926Proceeds from issuance of common stock on IPO, net of underwriting discounts72,541-Proceeds from exercises of stock options1,594117Net cash provided by financing activities62,23939,997Effect of exchange rate changes on cash and cash equivalents(79)(371)Net increase in cash and cash equivalents40,6119,882Cash and cash equivalents:   Beginning of the period31,78521,903   End of the period72,39631,785   Marketable securities at the end of period-23,778Cash, cash equivalents and marketable securities$ 72,396$  55,563Reconciliation of GAAP to Non-GAAP Financial InformationIn this press release, in addition to GAAP financial results, we present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA as a factor in evaluating management's performance when determining incentive compensation and to evaluate the effectiveness of our business strategies.  

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

Codexis, Inc.Reconciliation of GAAP Net Loss to Adjusted EBITDA(Unaudited)(In Thousands)Three months endedDecember 31,Twelve months endedDecember 31,Calculation of Adjusted EBITDA2010200920102009Net loss

$  (495)$(5,181)$(8,541)$(20,289)Adjustments:Minus: Interest income

(31)(39)(166)(180)Plus: Interest expense

53365291,413Plus: Income taxes

60(13)38466Plus: Depreciation and amortization

2,5931,7138,2666,119Plus: Stock-based compensation

2,2961,7638,7284,912Plus: Preferred stock warrant fair market valuation adjustment

-277677627   Adjusted EBITDA$4,428$(1,144)$  9,877$  (7,332)Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:

  • Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
  • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
  • Non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period.

  • Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally.

    Contacts:  Investors:   Robert Lawson,, 650-421-8137Media: Lyn Christenson,, 650-421-8144 or Saskia Sidenfaden,, 212-827-3771.

    SOURCE Codexis, Inc.
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