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."

Outlook

Codexis' 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 Call

Codexis 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 www.codexis.com. 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 www.codexis.com 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 Statements

This 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.

Reconciliation of GAAP to Non-GAAP Financial Information

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 loss to Adjusted EBITDA is included in the table below.

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.

SOURCE Codexis, Inc.