Codexis Reports Fourth Quarter and Fiscal Year 2020 Financial Results

Codexis Reports Fourth Quarter and Fiscal Year 2020 Financial Results




Codexis Reports Fourth Quarter and Fiscal Year 2020 Financial Results

Strong Product Revenue Momentum in Second Half of 2020 Drives Company’s Seventh Consecutive Year of YOY Revenue Growth

Full Year Product Gross Margin Exceeds 50% for the First Time in Company’s History

Company Guides to 2021 Total Revenues of $82-85M, Product Revenues of $36-39M

REDWOOD CITY Calif., Feb. 25, 2021 (GLOBE NEWSWIRE) — Codexis, Inc. (Nasdaq:CDXS), a leading enzyme engineering company, today announced financial results for the fourth quarter and fiscal year ended December 31, 2020 and provided a business update.

“Codexis delivered strong results in 2020, despite the Company’s R&D operations being impacted by the pandemic for more than a quarter of the year. Our momentum in the second half of 2020 sets us up for robust revenue growth and product margins in 2021,” said John Nicols, Codexis President and CEO.

“CodeEvolver®, our enzyme engineering platform, is constantly accelerating in its ability to design and commercialize novel, high performance enzymes that enable the promise of synthetic biology into the real world. As we continue expanding into new markets such as life science tools, biotherapeutics, and food and industrial applications, Codexis is poised for strong growth across multiple dimensions: we are expanding R&D to increase our new product discovery capacity and to pursue more self-funded programs; we are advancing our pipeline of projects, with a growing number of processes designed with Codexis enzymes nearing commercialization; and we are expanding the applications for our enzymes in opportunities that are faster to launch and have higher potential peak revenue. I am excited by the nearly limitless possibilities for enzymes as a product class; we have only scratched the surface of how Codexis enzymes can make a difference for the health of people and the planet.”

Key Performance Indicators

  • Full year product gross margin climbed to 54.5% for the fiscal year 2020, the highest in the Company’s history, due to a growing proportion of higher margin products.
  • In the Sustainable Manufacturing market, Codexis had 15 customers who contributed a quarterly average of $100,000 or more in revenue in 2020, compared with 13 in 2019, advancing the Company’s strategy to diversify its customer base. Codexis’ pipeline of customer programs continued to progress, with 19 programs in Phase 2 or Phase 3 development, nearly tripled from four years ago.
  • In the Life Science Tools market, Codexis advanced three enzymes to commercial-readiness in 2020: EvoT4™ DNA ligase, Codex® HiFi DNA polymerase, and Codex® HiCap RNA polymerase. In 2020, Codexis established several significant strategic collaborations in its Life Science Tools business, including with Alphazyme for the production and co-marketing of enzymes for life science applications, and with Molecular Assemblies to enable the disruptive commercial potential of enzymatic DNA synthesis.
  • In the Biotherapeutics market, the Company’s pipeline expanded to 12 programs in 2020. Pre-clinical development for CDX-7108, partnered with Nestlé Health Sciences for an undisclosed GI disorder, advanced toward its first clinical trial, which we expect to initiate in 2021. Codexis added its second key partnership agreement in its Biotherapeutics business, a multi-program strategic collaboration and license agreement with Takeda Pharmaceutical for the research and development of novel gene therapies for rare genetic disorders.

Recent Corporate Highlights

  • Earlier this month, Codexis announced the expansion of its operations into a new 36,000 square foot facility in San Carlos, CA. This facility will provide space for additional research and development laboratories, as well as office space and is expected to be ready for occupancy in the fourth quarter of 2021, accommodating approximately 90 employees.
  • In February, Codexis announced the appointment of Esther Martinborough, Ph.D. to its board of directors. Dr. Martinborough brings over two decades of drug discovery, research and development expertise to support the Company’s growth.
  • In January, Codexis announced an expansion of its partnership with Tate and Lyle, a leading global provider of food ingredients and solutions, to enhance the production of two of Tate and Lyle’s newest sweeteners, DOLCIA PRIMA® Allulose and TASTEVA® M Stevia Sweetener.
  • In December 2020, Codexis completed a public follow-on offering of 4,928,572 shares of its common stock, at a public offering price of $17.50 per share, resulting in aggregate net cash proceeds from the sale of the shares, after deducting underwriting discounts and offering expenses, of $80.8 million.
  • In November 2020, Codexis and Casdin Capital announced the launch of SynBio Innovation Accelerator collaboration, which is intended to fund and nurture early-stage synthetic and industrial biotechnology companies. The first investment was in Arzeda Corp., a computational protein design company.

Fiscal Year 2020 Financial Highlights

  • Total revenues for fiscal 2020 were $69.1 million, an increase of 1% from $68.5 million in fiscal 2019. Product revenues for fiscal 2020 were $30.2 million compared to $29.5 million in fiscal 2019; the increase was driven by higher sales of branded pharmaceutical products. R&D revenues were $38.8 million in fiscal 2020 compared to $39.0 million in fiscal 2019. Takeda contributed significant R&D revenues during the year; however, this was offset by lower revenues from Novartis, Nestlé Health Science, GlaxoSmithKline, and Merck.
  • Product gross margin for fiscal 2020 was 54.5%, compared to 46.9% in fiscal 2019. The increase was driven by an increase of higher margin products in the sales mix.
  • R&D expenses for fiscal 2020 were $44.2 million, compared to $33.9 million in fiscal 2019. The increase in R&D expenses was driven by higher preclinical and regulatory costs, compensation, and allocable expenses, partially offset by lower costs for lab supplies and consultants.
  • Selling, General & Administrative expenses for fiscal 2020 were $35.0 million, compared to $31.5 million in fiscal 2019. The increase in SG&A expense was the result of higher expenses for compensation, consultants, facilities, and legal, partially offset by lower costs for allocable expenses and travel.
  • The net loss for fiscal 2020 was $24.0 million, or $0.40 per share, compared to $11.9 million, or $0.21 per share, for fiscal 2019. As of December 31, 2020, Codexis had $149.1 million in cash and cash equivalents, the highest cash balance in the Company’s history.

Fourth Quarter 2020 Financial Highlights

  • Total revenues for the fourth quarter 2020 were $21.0 million, an increase of 12.8% from $18.7 million in the fourth quarter 2019. Product revenues for the fourth quarter 2020 were $12.2 million compared to $4.9 million in fourth quarter 2019; the increase was the result of higher sales of branded pharmaceutical products. R&D revenues were $8.8 million compared to $13.8 million last year; the decrease was primarily driven by lower revenue from Novartis, partially offset by the contribution from Takeda.
  • Product gross margin for the fourth quarter 2020 was 52.0% compared to 30.2% in the fourth quarter 2019. The increase was driven by increased sales of higher margin products.
  • R&D expenses for the fourth quarter 2020 were $10.4 million compared to $8.9 million in the fourth quarter 2019. The increase was driven by higher compensation expenses and higher costs for outside services, partially offset by lower preclinical and regulatory expenses.
  • Selling, General & Administrative expenses for the fourth quarter 2020 were $8.7 million, compared to $7.3 million in the fourth quarter 2019. The increase was the result of higher expenses for compensation, recruiting, consultants, and facilities, partially offset by lower allocable expenses.
  • The net loss for the fourth quarter 2020 was $3.9 million, or $0.06 per share, compared to $0.6 million, or $0.01 per share, for the fourth quarter 2019.

2021 Guidance

Codexis is introducing financial guidance for 2021, as follows:

  • Total revenues are expected to be in the range of $82 million to $85 million
  • Product revenues are expected to be in the range of $36 million to $39 million
  • Gross margin on product revenue is expected to be 54% to 58%.

Conference Call and Webcast

Codexis will hold a conference call and webcast today beginning at 4:30 p.m. ET. A live webcast and slide presentation to accompany the conference call will be available on the Investor section of Company website. The conference call dial-in numbers are 877-705-2976 for domestic callers and 201-689-8798 for international callers, and the passcode is 13716352.

A recording of the call will be available for 48 hours beginning approximately two hours after the completion of the call by dialing 877-660-6853 for domestic callers or 201-612-7415 for international callers. Please use the passcode 13716352 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

Codexis is a leading enzyme engineering company that applies its proprietary CodeEvolver® technology to develop proteins for a variety of applications, including as biocatalysts for the commercial manufacture of pharmaceuticals, fine chemicals and industrial enzymes, and enzymes as biotherapeutics and for use in molecular diagnostics. Codexis’ proven technology enables improvements in protein performance, meeting customer needs for rapid, cost-effective and sustainable manufacturing in multiple commercial-scale implementations of biocatalytic processes.

Forward-Looking Statements

To 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 of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve substantial risks and uncertainties that could cause Codexis’ future results, performance or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, its guidance on 2021 total revenue, product revenue and gross margin on product revenue; its expectations regarding strong growth across multiple dimensions, including its ability to increase new product discovery capacity, to pursue more self-funded programs, to advance its pipeline of projects, including processes that are nearing commercialization, and to expand applications for its enzymes in opportunities that are faster to launch and have higher potential peak revenue; and its expectations for the growth of enzymes as a product class. Codexis undertakes no obligation to update or revise any forward-looking statements. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Codexis’ business in general, please refer to Codexis’ prospectus supplement to be filed with the SEC, including the documents incorporated by reference therein, which include Codexis’ Annual Report on Form 10-K filed with the SEC on February 28, 2020, Codexis’ Quarterly Report on Form 10-Q filed with the SEC on November 6, 2020, and Codexis’ other periodic reports filed with the SEC.

Investor Relations Contact:
Argot Partners
Stephanie Marks/Natallia Clancy
(212) 600-1902
Codexis@argotpartners.com

Codexis, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(In Thousands, Except Per Share Amounts)

  Three months ended December 31,   Year ended December 31,
  2020   2019   2020   2019
Revenues:              
Product revenue $ 12,215     $ 4,877     $ 30,220     $ 29,465  
Research and development revenue 8,819     13,773     38,836     38,993  
Total revenues 21,034     18,650     69,056     68,458  
Costs and operating expenses:              
Cost of product revenue 5,860     3,402     13,742     15,632  
Research and development 10,355     8,872     44,185     33,873  
Selling, general and administrative 8,741     7,322     35,049     31,502  
Total costs and operating expenses 24,956     19,596     92,976     81,007  
Loss from operations (3,922 )   (946 )   (23,920 )   (12,549 )
Interest income 43     356     405     1,287  
Other expenses, net (33 )   (40 )   (156 )   (656 )
Loss before income taxes (3,912 )   (630 )   (23,671 )   (11,918 )
Provision for income taxes 8     5     339     17  
Net loss $ (3,920 )   $ (635 )   $ (24,010 )   $ (11,935 )
               
Net loss per share, basic and diluted $ (0.06 )   $ (0.01 )   $ (0.40 )   $ (0.21 )
Weighted average common stock shares used in computing net loss per share, basic and diluted 60,483     58,620     59,360     56,525  

Codexis, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(In Thousands)

  December 31,
  2020   2019
Assets      
Current assets:      
Cash and cash equivalents $ 149,117     $ 90,498  
Restricted cash, current 638     661  
Investment in non-marketable debt security 1,000      
Financial assets:      
Accounts receivable 13,894     9,063  
Contract assets 4,526     1,027  
Unbilled receivables 10,942     10,099  
Total financial assets 29,362     20,189  
Less: allowances (74 )   (34 )
Total financial assets, net 29,288     20,155  
Inventories 964     371  
Prepaid expenses and other current assets 3,416     2,520  
Total current assets 184,423     114,205  
Restricted cash 1,062     1,062  
Investment in non-marketable equity securities 1,450      
Right-of-use assets – Operating leases, net 21,382     23,837  
Right-of-use assets – Finance leases, net 119     268  
Property and equipment, net 9,675     6,282  
Goodwill 3,241     3,241  
Other non-current assets 294     178  
Total assets $ 221,646     $ 149,073  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 2,970     $ 2,621  
Accrued compensation 7,288     5,003  
Other accrued liabilities 10,272     6,540  
Current portion of lease obligations – Operating leases 2,627     1,107  
Current portion of lease obligations – Finance leases     60  
Deferred revenue 1,824     57  
Total current liabilities 24,981     15,388  
Deferred revenue, net of current portion 2,967     1,987  
Long-term lease obligations, Operating leases 22,324     24,951  
Other long-term liabilities 1,271     1,230  
Total liabilities 51,543     43,556  
Stockholders’ equity:      
Common stock 6     6  
Additional paid-in capital 536,516     447,920  
Accumulated deficit (366,419 )   (342,409 )
Total stockholders’ equity 170,103     105,517  
Total liabilities and stockholders’ equity $ 221,646     $ 149,073  
       

Codexis, Inc.
Segmented Information
(unaudited)
(In Thousands)

    Three months ended December 31, 2020   Three months ended December 31, 2019
    Performance Enzymes   Novel Biotherapeutics   Total   Performance Enzymes   Novel Biotherapeutics   Total
Revenues:                        
Product revenue   $ 12,215     $     $ 12,215     $ 4,877     $     $ 4,877  
Research and development revenue   4,507     4,312     8,819     12,179     1,594     13,773  
Total revenues   16,722     4,312     21,034     17,056     1,594     18,650  
Costs and operating expenses:                        
Cost of product revenue   5,860         5,860     3,402         3,402  
Research and development(1)   4,958     4,946     9,904     4,491     4,026     8,517  
Selling, general and administrative(1)   2,202     626     2,828     1,963     454     2,417  
Total segment costs and operating expenses   13,020     5,572     18,592     9,856     4,480     14,336  
Income (loss) from operations   $ 3,702     $ (1,260 )   2,442     $ 7,200     $ (2,886 )   4,314  
Corporate costs (2)           (5,781 )           (4,439 )
Depreciation and amortization           (573 )           (505 )
Loss before income taxes           $ (3,912 )           $ (630 )

(1) Research and development expenses and Selling, general and administrative expenses exclude depreciation and amortization of finance leases.
(2) Corporate costs include unallocated selling, general and administrative expense, interest income, and other income and expenses.

Codexis, Inc.
Segmented Information
(unaudited)
(In Thousands)

    Year ended December 31, 2020   Year ended December 31, 2019
    Performance Enzymes   Novel Biotherapeutics   Total   Performance Enzymes   Novel Biotherapeutics   Total
Revenues:                        
Product revenue   $ 30,220     $     $ 30,220     $ 29,465     $     $ 29,465  
Research and development revenue   17,886     20,950     38,836     28,691     10,302     38,993  
Total revenues   48,106     20,950     69,056     58,156     10,302     68,458  
Costs and operating expenses:                        
Cost of product revenue   13,742         13,742     15,632         15,632  
Research and development(1)   20,923     21,705     42,628     19,380     13,278     32,658  
Selling, general and administrative(1)   9,597     2,355     11,952     8,462     2,222     10,684  
Total segment costs and operating expenses   44,262     24,060     68,322     43,474     15,500     58,974  
Income (loss) from operations   $ 3,844     $ (3,110 )   734     $ 14,682     $ (5,198 )   9,484  
Corporate costs (2)           (22,306 )           (19,624 )
Depreciation and amortization           (2,099 )           (1,778 )
Loss before income taxes           $ (23,671 )           $ (11,918 )

(1) Research and development expenses and Selling, general and administrative expenses exclude depreciation and amortization of finance leases.
(2) Corporate costs include unallocated selling, general and administrative expense, interest income, and other income and expenses.