REDWOOD CITY, Calif., Nov. 4, 2014 (GLOBE NEWSWIRE) -- Codexis, Inc. (Nasdaq:CDXS), a leading developer of biocatalysts for the pharmaceutical and fine chemical industries, today announced financial results for the third quarter and nine months ended September 30, 2014.
“I am pleased with the solid progress we are making towards our goals for 2014. All of our revenue categories showed significant year-over-year growth this quarter, and our operating expenses have decreased substantially,” said John Nicols, President and CEO of Codexis. “We are on schedule with our execution of the recently announced CodeEvolver® protein engineering license with GSK and have completed the first Wave milestone deliverables. We expect to collect the associated $5 million technology transfer payment before year end.”
Mr. Nicols continued, “We are excited to have crossed the million dollar sales line so far this year with the major food ingredients customer we announced as a new partner in 2013. The step-up in those sales marked the successful delivery of our optimized biocatalyst, as well as demonstration in commercial scale manufacture. The food ingredients success added to solid pipeline momentum built in our pharmaceuticals market in the quarter as well. We landed three new clinical orders for delivery before the end of 2014 and posted the largest biocatalyst R&D revenues result in the last two years.”
Third Quarter Business Highlights:
- In July, Codexis granted GlaxoSmithKline (GSK) a license to use its proprietary CodeEvolver® protein engineering platform technology in the field of human healthcare, as summarized in the Form 8-K filed by Codexis on July 14, 2014. Codexis received $6 million in upfront fees and anticipates receiving an additional $5 million by the end of 2014, subject to milestone completion. There is also the potential for Codexis to receive approximately $14 million in further milestone payments over the next two years.
- The Company received three significant biocatalyst orders from major pharmaceutical accounts, two of which are follow-on orders from an existing customer. The third is for a new biocatalyst aimed at supplanting the customer’s traditional, non-biocatalytic method.
- The Company added another major food ingredient client and completed the delivery of the first substantial shipment of enzymes to an existing major food ingredients customer.
Third Quarter Financial Results
Revenues for the quarter ended September 30, 2014 were $7.5 million, a 90% increase from $3.9 million in the third quarter of 2013 and were comprised of the following:
- Biocatalyst product revenues, which consist primarily of sales of biocatalyst intermediates, APIs and Codex® Biocatalyst Panels and Kits, were $2.6 million, an increase of 138% compared with $1.1 million a year ago. This was primarily attributable to an increase in sales of enzymes for food-related products.
- Biocatalyst research and development revenues, which include license, technology access and exclusivity fees, FTE payments, milestones, royalties, and optimization and screening fees, totaled $3.4 million, an increase of 66%, compared with $2.0 million in the third quarter of 2013.
- Revenue sharing arrangement sales were $1.5 million, an increase of 84%, compared to the third quarter of 2013 and relate to the license to Exela PharmSci, Inc. for the anticoagulant drug argatroban.
Research and development (R&D) expenses in the third quarter of 2014 declined 26% to $5.0 million, compared with $6.8 million in the third quarter of 2013. The decrease was primarily due to lower depreciation expense resulting from the disposal or impairment of certain equipment previously used in discontinued R&D activities, as well as lower employee-related expenses associated with the company-wide restructurings implemented in late 2013.
Selling, general and administrative (SG&A) expenses in the third quarter of 2014 declined 12% to $5.2 million, compared with $5.8 million in the third quarter of 2013. The decrease was primarily due to reductions in headcount and other discretionary expense reductions implemented as part of those same company-wide restructurings begun in late 2013.
Net loss for the third quarter of 2014 was $4.6 million, or $0.12 per share, compared with a net loss of $9.3 million, or $0.24 per share, for the third quarter of 2013.
Codexis reported certain consolidated financial information in accordance with GAAP and additionally on a non-GAAP basis. A discussion regarding the use of these non-GAAP financial measures is included below in the section entitled “Non-GAAP Financial Measures” as well as in the accompanying table entitled “Reconciliation of GAAP to Non-GAAP Financial Measures.” Non-GAAP net loss for the third quarter of 2014 was $1.9 million, or $0.05 per share, compared with a non-GAAP net loss of $6.0 million, or $0.16 per share, for the third quarter of 2013.
Cash, cash equivalents, and marketable securities at September 30, 2014 totaled $22.6 million. This compared to $25.9 million at December 31, 2013.
Nine-Month Financial Results
Codexis reported total revenue of $21.1 million for the nine months ended September 30, 2014. Biocatalyst research and development revenues of $7.2 million increased by 45% and revenues from the revenue sharing arrangement with Exela of $5.6 million increased by 144%, each compared to the corresponding period of the prior year. These increases were offset by a decrease in product revenues of 45% due to the previously announced decrease of sales into the Hepatitis C marketplace. Codexis reported a net loss of $19.4 million, or $0.51 per basic and diluted share, for the nine months ended September 30, 2014. The non-GAAP net loss reported was $8.6 million, or $0.23 per basic and diluted share, for the nine months ended September 30, 2014.
Financial Outlook
Codexis’ statements with regard to its financial 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 below and under “Forward-Looking Statements” below.
Codexis is maintaining its previously stated 2014 financial guidance, which includes revenues of between $35 million and $38 million, representing growth of 10% to 19% compared to the prior year. Gross margins (defined as Total Revenue less Cost of Product Revenues) are expected in the range of 70% to 75% as a percentage of total revenues, which would reflect a significant increase from the 54% gross margin delivered in 2013. Codexis continues to expect to achieve positive cash flow from operations for fiscal year 2014.
Codexis has recently experienced manufacturing delays at its enzyme manufacturing subcontractor. The 2014 financial guidance provided here is contingent on a timely resolution of this manufacturing issue. If this manufacturing issue is not resolved in a timely manner, approximately $2 million of revenues that Codexis expected to recognize in the quarter ending December 31, 2014 will be delayed until 2015. This potential delay in revenue recognition could cause Codexis to report less annual revenue that the revenue guidance range presented above. Codexis does not expect that this manufacturing issue will result in the loss of any customer orders.
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