Codexis Reports Fourth Quarter and Fiscal Year 2020 Financial Results

February 25, 2021 4:05 PM EST

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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 PartnersStephanie Marks/Natallia Clancy(212) 600-1902Codexis@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  $29,465 
Research and development revenue8,819  13,773  38,836  38,993 
Total revenues21,034  18,650  69,056  68,458 
Costs and operating expenses:       
Cost of product revenue5,860  3,402  13,742  15,632 
Research and development10,355  8,872  44,185  33,873 
Selling, general and administrative8,741  7,322  35,049  31,502 
Total costs and operating expenses24,956  19,596  92,976  81,007 
Loss from operations(3,922) (946) (23,920) (12,549)
Interest income43  356  405  1,287 
Other expenses, net(33) (40) (156) (656)
Loss before income taxes(3,912) (630) (23,671) (11,918)
Provision for income taxes8  5  339  17 
Net loss$(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 diluted60,483  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, current638  661 
Investment in non-marketable debt security1,000   
Financial assets:   
Accounts receivable13,894  9,063 
Contract assets4,526  1,027 
Unbilled receivables10,942  10,099 
Total financial assets29,362  20,189 
Less: allowances(74) (34)
Total financial assets, net29,288  20,155 
Inventories964  371 
Prepaid expenses and other current assets3,416  2,520 
Total current assets184,423  114,205 
Restricted cash1,062  1,062 
Investment in non-marketable equity securities1,450   
Right-of-use assets - Operating leases, net21,382  23,837 
Right-of-use assets - Finance leases, net119  268 
Property and equipment, net9,675  6,282 
Goodwill3,241  3,241 
Other non-current assets294  178 
Total assets$221,646  $149,073 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$2,970  $2,621 
Accrued compensation7,288  5,003 
Other accrued liabilities10,272  6,540 
Current portion of lease obligations - Operating leases2,627  1,107 
Current portion of lease obligations - Finance leases  60 
Deferred revenue1,824  57 
Total current liabilities24,981  15,388 
Deferred revenue, net of current portion2,967  1,987 
Long-term lease obligations, Operating leases22,324  24,951 
Other long-term liabilities1,271  1,230 
Total liabilities51,543  43,556 
Stockholders’ equity:   
Common stock6  6 
Additional paid-in capital536,516  447,920 
Accumulated deficit(366,419) (342,409)
Total stockholders’ equity170,103  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. 

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Source: Codexis, Inc.


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