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

Oct 28, 2010, 16:05 ET from Codexis, Inc.

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

Financial Highlights

Revenue:  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.

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.

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 Call

Codexis 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 www.codexis.com. 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 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. Other potential markets for the company's biocatalyst-enabled solutions include carbon capture, water treatment and chemicals. 

Forward-Looking Statements

This 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 Ended

Nine Months Ended

September 30,

%

September 30,

%

2010

2009

change

2010

2009

change

Revenues:

    Product

$  9,491

$  4,636

105%

$ 24,250

$  13,401

81%

    Related party collaborative research and development

16,178

15,000

8%

46,873

43,963

7%

    Collaborative research and development

1,065

426

150%

2,577

1,295

99%

    Government grants

379

-

nm

3,593

11

nm

Total revenues

27,113

20,062

35%

77,293

58,670

32%

Costs and operating expenses:

    Cost of product revenues

8,563

4,618

85%

19,856

11,886

67%

         Gross margin $

928

18

4,394

1,515

         Gross margin %

10%

0%

18%

11%

    Research and development

13,070

12,239

7%

39,056

39,486

-1%

    Selling, general and administrative

7,940

8,699

-9%

25,192

20,939

20%

.

.

Total costs and operating expenses

29,573

25,556

16%

84,104

72,311

16%

Loss from operations

(2,460)

(5,494)

-55%

(6,811)

(13,641)

-50%

    Interest income

61

64

-5%

135

141

-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)

nm

324

79

310%

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 diluted

34,200

2,624

21,272

2,609

Codexis, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In Thousands)

September 30,

December 31,

2010

2009

Assets

Current assets:

  Cash and cash equivalents

$                 99,274

$               31,785

  Marketable securities

-

23,778

  Accounts receivable, net

13,841

7,246

  Related party accounts receivable

1,537

-

  Inventories

3,245

2,915

  Prepaid expenses and other current assets

1,871

1,658

     Total current assets

119,768

67,382

Restricted cash

666

731

Property and equipment, net

21,018

21,581

Intangible assets, net

562

928

Goodwill

3,241

3,241

Other non-current assets

2,821

5,173

Total assets

$               148,076

$               99,036

Liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)

Current liabilities:

  Accounts payable

$                   8,639

$                 9,999

  Accrued compensation

                     6,046

                   6,518

  Related party payable

487

1,314

  Other accrued liabilities

                     7,856

                 10,376

  Redeemable convertible preferred stock warrant liability

                            -

2,009

  Deferred revenues

                        704

                   2,240

  Related party deferred revenues

                     8,622

                 13,161

  Financing obligations

                     4,032

                   5,368

     Total current liabilities

36,386

50,985

Deferred revenues, net of current portion

                     1,718

                   1,856

Related party deferred revenues, net of current portion

                     4,424

                   7,487

Financing obligations, net of current portion

                          -  

                   2,574

Other long-term liabilities

                     1,415

                   1,307

     Total  liabilities

                   43,943

                 64,209

Redeemable convertible preferred stock issuable in series A to F

                            -

179,672

Stockholders' equity (deficit):

Common stock

                            4

                           -

Additional paid-in capital

271,832

15,015

Accumulated other comprehensive loss

(47)

(252)

Accumulated deficit

               (167,656)

              (159,608)

     Total  stockholders' equity (deficit)

                 104,133

              (144,845)

Total liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)

$               148,076

$               99,036

Codexis, Inc.

Condensed Consolidated Statements of Cash Flow

(Unaudited)

(In Thousands)

Nine Months Ended

September 30,

2010

2009

Operating activities:

Net loss

$          (8,047)

$        (15,109)

Adjustments to reconcile net loss to cash used in

  operating activities:

   Amortization of intangible assets

402

707

   Depreciation and amortization of property and equipment

5,298

3,727

   Revaluation of redeemable convertible preferred stock warrant liability

677

349

   Gain on disposal of property and equipment

-

(50)

   Stock-based compensation

6,466

3,179

   Amortization of debt discount

70

283

   Accretion (amortization) of premium/discount on marketable securities

511

368

Changes in operating assets and liabilities:

Accounts receivable

(8,132)

(842)

Inventories

(331)

511

Prepaid expenses and other current assets

(213)

(499)

Other assets

2,602

(629)

Accounts payable

(1,360)

(929)

Accrued compensation

(472)

1,128

Accrued 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 cash

65

194

Purchase of property and equipment

(4,740)

(6,491)

Purchase of of marketable securities

(49,051)

(35,619)

Proceeds from sales of marketable securities

1,605

-

Proceeds from maturities of marketable securities

70,696

17,175

         Net cash provided by (used in) investing activities

18,575

(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

-

45,000

Proceeds from issuance of common stock on IPO, net of underwriting discounts

72,551

-

Proceeds from exercises of stock options

279

72

        Net cash provided by financing activities

64,981

41,068

   Effect of exchange rate changes on cash and cash equivalents

(15)

(57)

Net increase in cash and cash equivalents

67,489

741

Cash and cash equivalents:

  Beginning of the period

31,785

21,903

  End of the period

99,274

22,644

  Marketable securities at the end of period

-

33,318

Cash, cash equivalents and marketable securities

$          99,274

$          55,962

Reconciliation of GAAP to Non-GAAP Financial Information

Adjusted 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 ended

September 30,

Nine months ended

September 30,

2010

2009

2010

2009

Net income (loss)

$        (2,732)

$      (6,158)

$     (8,047)

$      (15,109)

Adjustments:

Minus: Interest income

(61)

(64)

(135)

(141)

Plus: Interest expense

130

317

524

1,078

Plus: Income taxes

298

(16)

324

79

Plus: Depreciation and amortization

1,960

1,626

5,700

4,434

Plus: Stock-based compensation

2,549

1,286

6,433

3,148

Plus: Preferred stock warrant fair market valuation adjustment

-

344

677

349

  Adjusted EBITDA

$         2,144

$      (2,665)

$       5,476

$        (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, robert.lawson@codexis.com, 650-421-8137

Media: Lyn Christenson, lyn.christenson@codexis.com, 650-421-8144 or Saskia Sidenfaden, ssidenfaden@mww.com, 212-827-3771.      

SOURCE Codexis, Inc.



RELATED LINKS

http://www.codexis.com