SAN DIEGO, March 5, 2012 /PRNewswire/ -- Verenium Corporation (Nasdaq: VRNM), a leading industrial biotechnology company focused on the development and commercialization of high-performance enzymes, today reported financial results for the fourth quarter and year ended December 31, 2011.
2011 was an important year for Verenium. The growth in our product and collaborative revenues further validates the strength of our technology platform and our ability to create superior products and gain market share in the large and growing $3 billion industrial enzymes market, said James Levine, President and Chief Executive Officer at Verenium.
Financial Results
In the commentary below, the historical results of the Companys ligno-cellulosic biofuels business for current and prior periods have been reclassified into discontinued operations as a result of the sale of the ligno-cellulosic biofuels business on September 2, 2010 to BP Biofuels North America LLC.
Three Months Ended December 31, | Year Ended December 31, | |||||||
2011 | 2010 | 2011 | 2010 | |||||
Revenues: | ||||||||
Animal Health and Nutrition | $ 9,116 | $ 8,051 | $ 33,850 | $ 32,588 | ||||
Grain Processing | 3,582 | 3,834 | 15,953 | 13,439 | ||||
Oilseed Processing | 811 | 1,064 | 5,352 | 3,322 | ||||
All other products | 234 | 317 | 840 | 1,002 | ||||
Total product | 13,743 | 13,266 | 55,995 | 50,351 | ||||
Collaborative | 578 | 331 | 5,272 | 1,722 | ||||
Total revenues | $ 14,321 | $ 13,597 | $ 61,267 | $ 52,073 | ||||
Revenues
Revenues for the periods ended December 31, 2011 and 2010 were as follows (in thousands):
Total revenues for the year ended December 31, 2011 increased 18% to $61.3 million from $52.1 million in the prior year, with product revenues representing 90% or greater of total revenues in both periods. Product revenues for the year ended December 31, 2011 increased 11% to $56.0 million from $50.4 million in the prior year, primarily due to an increase in revenues from grain processing enzymes, notably Fuelzyme® alpha-amylase. These products continued to gain traction in the grain ethanol market and together with Purifine® PLC for soybean oil processing, achieved significant revenue growth over 2010. Product revenue from non-Phyzyme products as a percentage of total product revenue increased to 46% for the year ended December 31, 2011 compared to 35% in the prior year.
Total collaborative revenue for the year ended December 31, 2011 increased significantly to $5.3 million from $1.7 million in the prior year due to a license fee of $3.3 million received by the Company as part of the separation agreement with Syngenta Participations AG in 2009 for a commercial enzyme candidate that Syngenta had previously licensed to a third party.
Product Gross Profit and Gross Margin
Product gross profit for the year ended December 31, 2011 increased 15% to $21.5 million from $18.6 million in prior year. Gross margin increased to 38% of product revenue for the year ended December 31, 2011, compared to 37% for the year ended December 31, 2010. Gross margin increased primarily due to the overall growth and improvement in the Company’s grain and oilseed processing products.
Operating Expenses (excluding cost of product revenue and restructuring charges)
Excluding cost of product revenues and restructuring, total operating expenses related to continuing operations for the year ended December 31, 2011 decreased to $30.4 million (including share-based compensation of $0.8 million) from $33.9 million (including share-based compensation of $1.1 million) in the prior year; primarily due to a reimbursement of legal fees of $1.1 million for expenses incurred during 2010, reduction of facilities related costs as a result of BP assuming the Companys San Diego building leases, and to initiatives to decrease general and administrative expenses. Additionally, during the third quarter of 2010, the Company paid and expensed bonus payments of $1.4 million. As a partial offset, research and development costs for continued investment in pipeline products showed an increase.
Restructuring Charges
On March 31, 2011 the Company closed its office in Cambridge, Massachusetts, resulting in charges of $2.9 million, consisting of employee termination costs, facilities closure costs, and relocation costs for several employees who were relocated to San Diego.
Operating Loss from Continuing Operations
Operating loss from continuing operations for the year ended December 31, 2011 was $6.5 million compared to $13.5 million for the same period in 2010. Excluding the impact of restructuring expenses of $2.9 million, operating loss from continuing operations decreased to $3.6 million, primarily due to the reimbursement of legal fees, the $1.4 million bonus paid and expensed during the third quarter of 2010, and further reductions in general and administrative expenses.
Net Income (loss) from Continuing Operations
Net income from continuing operations for the year ended December 31, 2011 was $5.2 million compared to a net loss of $14.2 million for the same period in 2010, on a GAAP accounting basis. Adjusted for the impact of non-cash items related to the Companys convertible debt and non-cash income tax benefits, the Companys non-GAAP pro-forma net loss from continuing operations for the year ended December 31, 2011 was $9.5 million compared to $21.0 million for the same period in the prior year. The Company believes that excluding the impact of these items provides a more consistent measure of operating results.
Balance Sheet
The Company ended the year with $28.8 million in cash and cash equivalents, $8.2 million in total restricted cash, and $34.9 million in debt at face value.
Financial Guidance for 2012
Verenium also provided financial guidance for 2012, as follows:
- Revenue: $63 - $68M
- Product Gross Profit: $23 - $25M
- Operating Loss: $(4) - $(8)M
- Capital Expenses: $10 - $12M
“We are pleased that through increased revenue and the effective management of expenses, we were able to exceed our 2011 revenue guidance and meet our other financial targets for the year,” said Jeff Black, Chief Financial Officer at Verenium. The financial guidance for 2012 we are providing today reflects expected continued growth in our grain and oilseed processing product lines, and increased investment in our pipeline of product candidates.
Update on the Convertible Notes and Financing Strategy
Today the Company filed a Tender Offer on Schedule TO with the SEC intended to satisfy the disclosure requirements of Rules 13e-4(c)(2) and 13e-4(d)(1) under the Securities Exchange Act of 1934, as amended, with respect to the right of each holder of the Companys 5.5% Convertible Senior Notes due 2027 to sell and the obligation of the Company to repurchase the notes. The Companys repurchase of the notes upon the exercise by any holder of the put option is subject to a financing condition and the Company having sufficient cash resources prior to 11:00 a.m. New York City time on April 2, 2012 to repurchase the notes. Based on current cash resources, the Company does not have sufficient funds to repurchase the notes in the event all holders of the notes exercise the put option.
The Company is considering two primary alternatives to address its capital requirements.
- Subject to compliance with applicable securities laws, the Company is exploring issuing new equity-linked or equity securities, and may, subject to compliance with applicable tender offer rules, explore converting the existing notes into equity along with a partial repayment thereof, and/or a combination of the foregoing.
- Verenium has received non-binding proposals from more than one prospective purchaser to acquire 100 percent of the stock of the Company, and is actively evaluating options for a potential sale.
There can be no assurance that Verenium will choose to, or be able to, effect any such transaction on reasonable terms or at all.
We have conducted and remain committed to a thorough and diligent process to develop the options to address our financial requirements and move forward quickly on a transaction that we think will maximize value for our stakeholders, added Levine.
Additional Information on Tender Offer
The tender offer described in this press release has commenced, but this press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell securities of the Company. The tender offer is being made pursuant to a Tender Offer Statement on Schedule TO and related materials. Investors and noteholders are urged to read both the Tender Offer Statement and related materials because they contain important information, including the terms and conditions of the put offer. The Tender Offer Statement and related materials, including a Company notice, have been filed by the Company with the SEC. Investors and noteholders may obtain a free copy of these statements and other documents filed by the Company with the SEC at the website maintained by the SEC at www.sec.gov.
About Verenium
Verenium, an industrial biotechnology company, is a global leader in developing high-performance enzymes. Vereniums tailored enzymes are environmentally friendly, making products and processes greener and more cost-effective for industries, including the global food and fuel markets. Read more at www.verenium.com.
