Codexis Reports Third Quarter 2022 Financial Results

Reiterates 2022 Total Revenue Guidance of $135M-$141M, Including Product Revenues of $112M-$118MREDWOOD CITY, Calif., Nov. 03, 2022 (GLOBE NEWSWIRE) — Codexis, Inc. (NASDAQ: CDXS), a leading enzyme engineering company enabling the promise of synthetic biology, today announced financial results for the third quarter ended September 30, 2022 and provided a business update. “In the last few months, the leadership team and I have been working to refine Codexis’ strategy by assessing the markets where Codexis and our proprietary CodeEvolver® platform have a clear competitive advantage,” said Dr. Stephen Dilly, President and CEO of Codexis. “We believe our evolved strategy will position the Company nicely to drive long-term success and increased market penetration by focusing our resources and concentrating our spend on programs where we are positioned to win. I look forward to sharing additional detail on the go-forward plan in the coming months as we solidify our strategy to deliver value for Codexis customers and shareholders.” Key Business Highlights Product revenues decreased 2% to $28.0 million in the third quarter of 2022. Excluding revenue from sales of CDX-616 used in the manufacture of Pfizer’s COVID-19 therapeutic (PAXLOVID™) in both periods, product revenues increased 53% to $15.1 million in the third quarter of 2022, up from $9.9 million in the third quarter of 2021. Revenues attributable to enzymes sales to Pfizer for the manufacture of PAXLOVID™ were $12.9 million in the third quarter of 2022 compared to $18.9 million last year.Executive Leadership Updates Dr. Stephen Dilly was appointed as the President and CEO of Codexis. Dr. Dilly has more than three decades of executive management experience in the biopharmaceutical industry, most recently having served as President and CEO of Sierra Oncology through its recent sale to GlaxoSmithKline for $1.9 billion.Kevin Norrett was appointed as the Chief Operating Officer of Codexis. Mr. Norrett brings more than 20 years of experience across commercial, business and corporate development, operations and finance. He is responsible for driving the Company’s corporate growth strategy, business development and operational activities.Margaret Fitzgerald was appointed as General Counsel of Codexis. Ms. Fitzgerald has almost two decades of legal experience in the biotechnology field, with a background spanning complex transactions, intellectual property and portfolio management, and commercializing therapeutics. The Company announced the appointment of Rahul Singhvi, Sc.D. to its Board of Directors. Currently the CEO of National Resilience, a technology-focused biomanufacturing company, Dr. Singhvi is a biotechnology industry veteran with more than 30 years of research and development, operations and commercialization expertise across several modalities including cell and gene therapies, nucleic acids, vaccines and biologics.Codexis hosted its 2022 Protein Engineering Forum, bringing over 100 top scientists and innovators together for two days of presentations and networking events to facilitate the sharing of insights and recent technological advancements throughout genomics, nucleic acid synthesis and synthetic biology. Third Quarter 2022 Financial Highlights Total revenues for the third quarter 2022 were $34.5 million, a decrease of 6% from $36.8 million in the third quarter 2021. On a segment basis, $31.1 million in revenue was from the Performance Enzymes segment and $3.3 million was from Biotherapeutics. Product revenues for the third quarter 2022 were $28.0 million compared to $28.7 million in the third quarter 2021; the decrease was primarily driven by lower enzyme sales related to PAXLOVID™. R&D revenues for the third quarter 2022 were $6.4 million compared to $8.0 million in the third quarter 2021; the decrease was driven by lower revenues from several of our large, existing customers. Product gross margin for the third quarter 2022 was 65% compared to 76% in the third quarter 2021. The decrease was largely driven by changes in product mix, particularly the decline in sales related to PAXLOVID, variations in prices for volume sold and higher shipping costs. R&D expenses for the third quarter 2022 were $21.8 million compared to $15.2 million in the third quarter 2021. The increase was primarily driven by higher costs associated with increased headcount and salaries as well as higher expenses for facilities and outside services. Selling, General & Administrative expenses for the third quarter 2022 were $13.5 million, compared to $13.4 million in the third quarter 2021. SG&A expenses were flat, primarily, because higher compensation-related expenses were offset by decreases in legal costs.The net loss for the third quarter 2022 was $10.0 million, or $0.15 per share, compared to a net income of $2.2 million, or $0.03 per share, for the third quarter 2021. As of September 30, 2022, the Company had $108.7 million in cash and cash equivalents. 2022 Guidance Codexis reiterated its financial guidance for 2022 issued on July 14, 2022, as follows: Total revenues are expected to be in the range of $135 million to $141 million.Product revenues are expected to be in the range of $112 million to $118 million, including approximately $75 million from Pfizer.Gross margin on product revenue is expected to be in the range of 65% to 70%. In addition, Codexis expects that its existing cash and cash equivalents, combined with the Company’s future expectations for product revenues, R&D revenues and expense management, will be sufficient to fund its planned operations through at least the end of 2024. 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 Investors section of the Company’s 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 13732962. 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 13726635 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 leveraging its proprietary CodeEvolver® platform to discover and develop novel, high performance enzymes and biotherapeutics. Codexis enzymes have applications in the sustainable manufacturing of pharmaceuticals, food and industrial products; in the creation of the next generation of life science tools; and as gene therapy and oral enzyme therapies. The Company’s unique performance enzymes drive improvements such as: reduced energy usage, waste generation and capital requirements; higher yields; higher fidelity diagnostics; and more efficacious therapeutics. Codexis enzymes enable the promise of synthetic biology to improve the health of people and the planet. For more information, visit www.codexis.com.  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 provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, Codexis’ expectations regarding 2022 total revenues, product revenues and gross margin on product revenue, its ability to fund planned operations through the end of 2024, and the ability of its evolved strategy to drive long-term success and increased market penetration to deliver value for Codexis customers and shareholders. 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 Codexis’ control and that could materially affect actual results. Factors that could materially affect actual results include, among others: Codexis’ dependence on its licensees and collaborators; Codexis’ dependence on a limited number of products and customers, and potential adverse effects to Codexis’ business if its customers’ products are not received well in the markets. Additional information about factors that could materially affect actual results can be found in Codexis’ Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2022 and in Codexis’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2022, including under the caption “Risk Factors,” and in Codexis’ other periodic reports filed with the SEC. Codexis expressly disclaims any intent or obligation to update these forward-looking statements, except as required by law. Investor Relations Contact: Argot PartnersBrendan Strong/Carrie McKim(212) [email protected]  Codexis, Inc.Condensed Consolidated Statements of Operations(Unaudited)(In Thousands, Except Per Share Amounts)  Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Revenues:       Product revenue$28,042  $28,731 $93,376  $53,674 Research and development revenue 6,428   8,038  14,839   26,579 Total revenues 34,470   36,769  108,215   80,253 Costs and operating expenses:       Cost of product revenue 9,786   6,867  29,577   15,403 Research and development 21,821   15,165  60,410   39,562 Selling, general and administrative 13,499   13,407  39,859   37,600 Total costs and operating expenses 45,106   35,439  129,846   92,565 Income (loss) from operations (10,636)  1,330  (21,631)  (12,312)Interest income 436   41  618   424 Other income, net 216   983  150   920 Income (loss) before income taxes (9,984)  2,354  (20,863)  (10,968)Provision for income taxes 8   110  125   121 Net income (loss)$(9,992) $2,244 $(20,988) $(11,089)        Net income (loss) per share, basic$(0.15) $0.03 $(0.32) $(0.17)Net income (loss) per share, diluted$(0.15) $0.03 $(0.32) $(0.17)        Weighted average common stock shares used in computing net income (loss) per share, basic 65,426   64,628  65,271   64,452 Weighted average common stock shares used in computing net income (loss) per share, diluted 65,426   67,741  65,271   64,452          Codexis, Inc.Condensed Consolidated Balance Sheets(Unaudited)(In Thousands)  September 30, 2022 December 31, 2021Assets   Current assets:   Cash and cash equivalents$108,689  $116,797 Restricted cash, current 528   579 Financial assets:   Accounts receivable 16,527   24,953 Contract assets 5,867   4,557 Unbilled receivables 7,490   8,558 Total financial assets 29,884   38,068 Less: allowances (109)  (416)Total financial assets, net 29,775   37,652 Inventories 1,623   1,160 Prepaid expenses and other current assets 5,382   5,700 Total current assets 145,997   161,888 Restricted cash 1,520   1,519 Investment in non-marketable equity securities 20,510   14,002 Right-of-use assets – Operating leases, net 40,493   44,095 Right-of-use assets – Finance leases, net —   17 Property and equipment, net 23,319   21,345 Goodwill 3,241   3,241 Other non-current assets 208   276 Total assets$235,288  $246,383     Liabilities and Stockholders’ Equity   Current liabilities:   Accounts payable$2,621  $2,995 Accrued compensation 9,463   11,119 Other accrued liabilities 12,992   12,578 Current portion of lease obligations – Operating leases 5,230   4,093 Deferred revenue 1,602   2,586 Total current liabilities 31,908   33,371 Deferred revenue, net of current portion 8,238   3,749 Long-term lease obligations – Operating leases 39,655   43,561 Other long-term liabilities 1,356   1,311 Total liabilities 81,157   81,992     Stockholders’ equity:   Common stock 6   6 Additional paid-in capital 562,811   552,083 Accumulated deficit (408,686)  (387,698)Total stockholders’ equity 154,131   164,391 Total liabilities and stockholders’ equity$235,288  $246,383  Codexis, Inc.Segmented Information(Unaudited)(In Thousands)  Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics TotalRevenues:           Product revenue$28,042 $—  $28,042  $28,731 $—  $28,731 Research and development revenue 3,104  3,324   6,428   3,853  4,185   8,038 Total revenues 31,146  3,324   34,470   32,584  4,185   36,769 Costs and operating expenses:           Cost of product revenue 9,786  —   9,786   6,867  —   6,867 Research and development(1) 6,782  13,855   20,637   5,670  8,850   14,520 Selling, general and administrative(1) 3,791  888   4,679   3,306  831   4,137 Total segment costs and operating expenses 20,359  14,743   35,102   15,843  9,681   25,524 Income (loss) from operations$10,787 $(11,419)  (632) $16,741 $(5,496)  11,245 Corporate costs(2)     (7,947)      (8,097)Unallocated depreciation and amortization     (1,405)      (794)Income (loss) before income taxes    $(9,984)     $2,354              (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, net.  Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics TotalRevenues:           Product revenue$93,376 $—  $93,376  $53,674 $—  $53,674 Research and development revenue 7,398  7,441   14,839   14,723  11,856   26,579 Total revenues 100,774  7,441   108,215   68,397  11,856   80,253 Costs and operating expenses:           Cost of product revenue 29,577  —   29,577   15,403  —   15,403 Research and development(1) 19,833  37,279   57,112   17,172  20,649   37,821 Selling, general and administrative(1) 11,208  2,288   13,496   9,294  2,052   11,346 Total segment costs and operating expenses 60,618  39,567   100,185   41,869  22,701   64,570 Income (loss) from operations$40,156 $(32,126)  8,030  $26,528 $(10,845)  15,683 Corporate costs(2)     (24,940)      (24,431)Unallocated depreciation and amortization     (3,953)      (2,220)Loss before income taxes    $(20,863)     $(10,968)             (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, net.