Codexis Reports Second Quarter 2022 Financial Results


Total Revenue up 51% and Product Revenue up 135% YOY

2022 Total Revenue Guidance of $135M-$141M,
Including Product Revenues of $112M-$118M

REDWOOD CITY, Calif., Aug. 04, 2022 (GLOBE NEWSWIRE) -- Codexis, Inc. (NASDAQ: CDXS), a leading enzyme engineering company enabling the promise of synthetic biology, today announced financial results for the second quarter ended June 30, 2022 and provided a business update.

“We continue to make solid progress across Codexis’ many exciting growth drivers, and we are particularly pleased with the strength of our product revenue during the first half of 2022,” said John Nicols, President and CEO of Codexis. “We are encouraged by the robust product sales momentum seen in Codexis’ base of key customers in the sustainable manufacturing market, not only among our large pharmaceutical customers, but also within the food sector. In Life Science Tools, our collaborations with innovative partners like Molecular Assemblies, Inc. (MAI) and seqWell Inc. (seqWell) remain on track to leverage our CodeEvolver® platform in generating value for cutting-edge life science applications. We are also making steady advancements with our self-funded and customer-driven programs in the Biotherapeutics segment, where we are focused on harnessing the power of our platform as a drug discovery engine to build a high-value pipeline of oral biologic and gene therapy candidates.”

Mr. Nicols continued, “I am incredibly proud of what we have accomplished together over the past decade and believe our future is in excellent hands. We have built a highly responsive and strengthened organization, one that can quickly and reliably deliver enzymes to help our customers achieve their business objectives while also deftly adapting to meet new demands in an ever-changing business environment. As I take a step back to provide much needed support to my family, I am grateful to reflect on an incredibly fulfilling period leading this special company to new heights. I look forward to supporting Codexis as a Strategic Advisor and member of the Board, and I have no doubt that the business will continue to flourish under Stephen’s capable leadership.”

Key Performance Indicators and Recent Business Highlights

  • Product revenues increased 135% to $34.6 million in the second quarter, primarily driven by revenue from sales of CDX-616 used in the manufacture of PAXLOVID™, Pfizer’s COVID-19 therapeutic. Codexis previously announced the Company has entered into a multi-year agreement with Pfizer for the supply of a proprietary high-performance enzyme used to manufacture a critical intermediate for nirmatrelvir, an active pharmaceutical ingredient (API) in PAXLOVID™.

  • In the second quarter, Codexis had 18 customers who contributed over $100,000 in revenue, six of which contributed over $1 million in revenue.

  • MAI and Codexis announced the execution of a Commercial License and Enzyme Supply Agreement, enabling MAI to utilize Codexis’ evolved terminal deoxynucleotidyl transferase (TdT) enzyme in MAI’s Fully Enzymatic Synthesis™ (or FES™) technology. The companies previously announced the successful development of this proprietary, high performing enzyme to deliver unparalleled coupling efficiency and the ability to more rapidly synthesize longer DNA sequences with fewer errors. MAI plans to provide select companies and institutions with access to a Key Customer Program slated to begin later this year with a full commercial launch planned in 2023.

  • seqWell, a developer of transformative library preparation products for next generation sequencing applications, and Codexis announced a partnership and strategic investment. Codexis led seqWell’s Series C financing with a $5.0 million investment, and the companies plan to collaborate using Codexis’ CodeEvolver® platform for enzyme optimization in seqWell’s growing portfolio of genomics workflow and library preparation products.

  • The Company presented posters detailing three of its gene therapy programs at the American Society of Gene and Cell Therapy (ASGCT) 25th Annual Meeting in May. The pre-clinical data highlighted enzyme variants engineered with Codexis’ CodeEvolver® platform to offer potentially improved efficacy as compared to current enzymes when administered as transgenes in gene therapies for Hemophilia A, Fabry Disease, and Pompe Disease.

  • Merck and Codexis published a paper in the peer-reviewed journal Science, detailing the development of a suite of enzymes and their application for site-selective synthesis of insulin bioconjugates. The publication describes the development and optimization of enzymes using Codexis’ proprietary CodeEvolver® technology platform.

Recent Corporate News

  • The Board of Directors appointed Dr. Stephen Dilly, current Codexis Board member and biotechnology veteran, as the next President and CEO of Codexis, effective August 9, 2022. Dr. Dilly will succeed John Nicols, who will retire as President and CEO for family reasons after leading the Company’s transformation and subsequent growth for the last decade. Mr. Nicols will remain on Codexis’ Board through the annual meeting in June 2023 and will assume a new multi-year role as Strategic Advisor to provide ongoing support to the Company.

Pipeline Update

Codexis published its annual pipeline snapshot as of June 30, 2022, which is available on the Presentations page of the Company’s investor relations website. Highlights include:

  • Total Number of Programs: The total number of commercial products and pipeline programs as of June 30, 2022 increased by over 20% to 94 from 78 a year ago.

  • Commercial Products by Market: Codexis had 22 commercial products as of June 30, 2022 (up from 17 a year ago), with 14 in Pharma Manufacturing (up from 12), and 8 in Food and Life Science Tools (up from 5).

  • Pre-Commercial Products by Market: The Company had 72 pre-commercial programs as of June 30, 2022 (up from 61 a year ago), with 23 in late-stage Pharma Manufacturing (down from 24 a year ago); 25 in Life Science Tools, Food & Industrials (up from 19); and 24 in Biotherapeutics (up from 18).

  • Partnered Versus Self-Funded Programs: As of June 30, 2022, 46 of Codexis’ pre-commercial programs were partnered (up from 45 a year ago) and 26 were self-funded (up from 16).

Second Quarter 2022 Financial Highlights

  • Total revenues for the second quarter 2022 were $38.4 million, an increase of 51% from $25.5 million in the second quarter 2021. On a segment basis, $36.5 million in revenue was from the Performance Enzymes segment and $1.9 million was from Biotherapeutics.

  • Product revenues for the second quarter 2022 were $34.6 million compared to $14.7 million in the second quarter 2021; the increase was largely due to higher enzyme sales to Pfizer for PAXLOVID™ as well as strong sales to other key pharma manufacturing customers including Urovant Sciences.

  • R&D revenues for the second quarter 2022 were $3.8 million compared to $10.7 million in the second quarter 2021; the decrease was driven by a mix of fewer new deals being signed in 2022 and lower-than-anticipated revenue from existing customers.

  • Product gross margin for the second quarter 2022 was 67% compared to 71% in the second quarter 2021. The decrease was driven by changes in product mix, variations in prices per volume sold, and higher shipping costs.

  • R&D expenses for the second quarter 2022 were $19.1 million compared to $12.8 million in the second quarter 2021. The increase was primarily driven by increases in costs associated with higher headcount and salaries, as well as higher expenses for facilities, outside services, and lab supplies.

  • Selling, General & Administrative expenses for the second quarter 2022 were $10.7 million, compared to $12.8 million in the second quarter 2021. The decrease was primarily driven by a decrease in legal fees due to the settlement of a trademark dispute and lower allocable expenses, partially offset by an increase in costs associated with a higher headcount and higher outside services.

  • The net loss for the second quarter 2022 was $2.6 million, or $0.04 per share, compared to a net loss of $4.3 million, or $0.07 per share, for the second quarter 2021.

  • As of June 30, 2022, the Company had $90.1 million in cash and cash equivalents, not including the $25.9 million retainer fee payment from Pfizer.

2022 Guidance

Codexis reiterates 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 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 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 13730777.

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 sales of its proprietary enzymes to key customers in the sustainable manufacturing market, its collaborations with innovative partners like MAI and seqWell in life science applications, advancements and developments in our biotherapeutics segment, our updated financial guidance on 2022 total revenues, product revenues and gross margin on product revenues, and our expected availability of funds to support planned future operations. 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: we are dependent on a limited number of customers, including Pfizer; we are dependent on our collaborators, and our failure to successfully manage these relationships could prevent us from developing and commercializing many of our products, we or our customers may not be able to obtain regulatory approval for the use of our products in food and food ingredients, if required; our biotherapeutic programs are early stage, highly regulated and expensive; our ability to obtain additional development partners for the programs, to advance our product candidates to clinical trials and to ultimately receive regulatory approvals is highly uncertain; the regulatory approval processes of the U.S. Food and Drug Administration and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we are unable to obtain or maintain regulatory approval for our products and product candidates, our business will be substantially harmed; results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials; our product candidates may not have favorable results in later clinical trials, if any, or receive regulatory approval; if any of our product candidates do not work as intended or cause undesirable side effects, it could hinder or prevent receipt of regulatory approval or realization of commercial potential for them or our other product candidates and could substantially harm our business; and even if we obtain regulatory approval for any products that we develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements, which may result in significant additional expense. 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 May 9, 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 Partners
Brendan Strong/Carrie McKim
(212) 600-1902
Codexis@argotpartners.com 

 
Codexis, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In Thousands, Except Per Share Amounts)
    
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
Revenues:       
Product revenue$34,645  $14,717  $65,335  $24,943 
Research and development revenue 3,761   10,736   8,411   18,542 
Total revenues 38,406   25,453   73,746   43,485 
Costs and operating expenses:       
Cost of product revenue 11,270   4,318   19,791   8,536 
Research and development 19,089   12,826   38,590   24,397 
Selling, general and administrative 10,656   12,795   26,360   24,193 
Total costs and operating expenses 41,015   29,939   84,741   57,126 
Loss from operations (2,609)  (4,486)  (10,995)  (13,641)
Interest income 140   206   182   382 
Other income (expense), net (63)  23   (66)  (63)
Loss before income taxes (2,532)  (4,257)  (10,879)  (13,322)
Provision for income taxes 108   8   117   11 
Net loss$(2,640) $(4,265) $(10,996) $(13,333)
        
Net loss per share, basic and diluted$(0.04) $(0.07) $(0.17) $(0.21)
        
Weighted average common stock shares used in computing net loss per share, basic and diluted 65,288   64,434   65,193   64,363 
        


 
Codexis, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands)
    
 June 30, 2022 December 31, 2021
Assets   
Current assets:   
Cash and cash equivalents$90,113  $116,797 
Restricted cash, current 546   579 
Financial assets:   
Accounts receivable 29,200   24,953 
Contract assets 11,287   4,557 
Unbilled receivables 8,543   8,558 
Total financial assets 49,030   38,068 
Less: allowances (109)  (416)
Total financial assets, net 48,921   37,652 
Inventories 1,718   1,160 
Prepaid expenses and other current assets 3,985   5,700 
Total current assets 145,283   161,888 
Restricted cash 1,520   1,519 
Investment in non-marketable equity securities 19,302   14,002 
Right-of-use assets - Operating leases, net 41,706   44,095 
Right-of-use assets - Finance leases, net    17 
Property and equipment, net 23,694   21,345 
Goodwill 3,241   3,241 
Other non-current assets 224   276 
Total assets$234,970  $246,383 
    
Liabilities and Stockholders' Equity   
Current liabilities:   
Accounts payable$2,015  $2,995 
Accrued compensation 7,732   11,119 
Other accrued liabilities 12,934   12,578 
Current portion of lease obligations - Operating leases 5,103   4,093 
Deferred revenue 2,230   2,586 
Total current liabilities 30,014   33,371 
Deferred revenue, net of current portion 3,151   3,749 
Long-term lease obligations - Operating leases 41,006   43,561 
Other long-term liabilities 1,340   1,311 
Total liabilities 75,511   81,992 
    
Stockholders' equity:   
Common stock 6   6 
Additional paid-in capital 558,147   552,083 
Accumulated deficit (398,694)  (387,698)
Total stockholders' equity 159,459   164,391 
Total liabilities and stockholders' equity$234,970  $246,383 
    


 
Codexis, Inc.
Segmented Information
(Unaudited)
(In Thousands)
    
 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021
 Performance
Enzymes
 Novel
Biotherapeutics
 Total Performance
Enzymes
 Novel
Biotherapeutics
 Total
Revenues:           
Product revenue$34,645 $  $34,645  $14,717 $  $14,717 
Research and development revenue 1,885  1,876   3,761   6,868  3,868   10,736 
Total revenues 36,530  1,876   38,406   21,585  3,868   25,453 
Costs and operating expenses:           
Cost of product revenue 11,270     11,270   4,318     4,318 
Research and development(1) 6,929  11,078   18,007   5,057  7,194   12,251 
Selling, general and administrative(1) 3,876  680   4,556   3,170  620   3,790 
Total segment costs and operating expenses 22,075  11,758   33,833   12,545  7,814   20,359 
Income (loss) from operations$14,455 $(9,882)  4,573  $9,040 $(3,946)  5,094 
Corporate costs(2)     (5,789)      (8,610)
Unallocated depreciation and amortization     (1,316)      (741)
Loss before income taxes    $(2,532)     $(4,257)
            

(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 (expense), net.

 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021
 Performance
Enzymes
 Novel
Biotherapeutics
 Total Performance
Enzymes
 Novel
Biotherapeutics
 Total
Revenues:           
Product revenue$65,335 $  $65,335  $24,943 $  $24,943 
Research and development revenue 4,294  4,117   8,411   10,872  7,670   18,542 
Total revenues 69,629  4,117   73,746   35,815  7,670   43,485 
Costs and operating expenses:           
Cost of product revenue 19,791     19,791   8,536     8,536 
Research and development(1) 13,051  23,424   36,475   11,502  11,799   23,301 
Selling, general and administrative(1) 7,416  1,400   8,816   5,988  1,221   7,209 
Total segment costs and operating expenses 40,258  24,824   65,082   26,026  13,020   39,046 
Income (loss) from operations$29,371 $(20,707)  8,664  $9,789 $(5,350)  4,439 
Corporate costs(2)     (16,994)      (16,335)
Unallocated depreciation and amortization     (2,549)      (1,426)
Loss before income taxes    $(10,879)     $(13,322)
            

(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 (expense), net.