Codexis Reports Fourth Quarter and Fiscal Year 2022 Financial Results

23 Feb 2023
www.biospace.com
Phase 1License out/inFinancial StatementGene TherapyPhase 2
Biotherapeutics Application of CodeEvolver® Validated by Recent Data Supporting the Potential for Three Upcoming Investigational New Drug Applications Cash Runway Through End of 2024 Funds Important Upcoming Milestones Company Provides 2023 Revenue Guidance REDWOOD CITY, Calif., Feb. 23, 2023 (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, 2022 and provided a business update. “2022 was an important year for Codexis as we prioritized programs in our life sciences, biotherapeutics, and pharmaceutical manufacturing businesses that align with our focused strategy and best position the Company for long-term success,” said Stephen Dilly, MBBS, PhD, President and CEO of Codexis. “In addition to our strong financial performance last year, I am especially pleased with the first patient data set from our study of CDX-7108 for exocrine pancreatic insufficiency in partnership with Nestlé Health Science and with the pre-clinical data recently presented by Takeda in Fabry disease, which validates the potential of our CodeEvolver® platform in gene therapy. We also continue to make great progress in our life sciences business and recently launched our newly engineered DNA ligase which is designed to improve sensitivity of next generation sequencing testing and easily fit into existing workflows. With two years of cash runway and numerous catalysts ahead, we are well positioned to demonstrate the commercial potential and strategic optionality that exists within Codexis.” 2022 Business Highlights Corporate Highlights In November 2022, Codexis announced a plan to prioritize time and resources on areas where the Company believes it has the strongest commercial opportunity and greatest probability of success. As part of this plan, the Company decided to discontinue investment in certain internal development programs, expand investment in high potential development programs, and realign its workforce. Throughout 2022 and early 2023, the Company strengthened its management team and Board of Directors with individuals who possess the strategic acumen, operational experience, and commercial mindset to deliver on its prioritized corporate goals. These changes include the addition of Dr. Stephen Dilly as President and CEO, Kevin Norrett as Chief Operating Officer, Sri Ryali as Chief Financial Officer, Meg Fitzgerald, JD, as Chief Legal Officer and General Counsel, and the additions of both H. Stewart Parker and Rahul Singhvi, ScD, to the Board of Directors. Life Sciences In February 2023, at the Advances in Genome Biology and Technology (AGBT) General Meeting, Codexis launched a newly engineered DNA ligase for next-generation sequencing, or NGS. Subsequently, Roche exercised its right of first negotiation (ROFN) on the newly engineered DNA ligase. For additional details, please see the white paper available at . In August 2022, Codexis and Molecular Assemblies, Inc. (MAI) announced the execution of a Commercial License and Enzyme Supply Agreement, enabling MAI to utilize an evolved terminal deoxynucleotidyl transferase (TdT) enzyme in MAI’s Fully Enzymatic Synthesis™ (or FES™) technology. The companies collaborated to develop this TdT enzyme to advance fully enzymatic DNA synthesis for the production of long, pure, accurate oligonucleotides to accelerate innovation in many fields. In April 2022, Codexis announced a partnership and strategic investment with seqWell, Inc., a developer of transformative library preparation products for next generation sequencing applications. Biotherapeutics In February 2023, Codexis announced interim results from the Phase 1 clinical trial of CDX-7108, which is being co-developed with Nestlé Health Science S.A., for the treatment of exocrine pancreatic insufficiency (EPI). Data from five subjects with EPI in the proof-of-concept arm indicated improved lipid absorption when patients are administered CDX-7108 versus placebo. Importantly, no safety issues were noted in the 48 healthy subjects that participated in the single ascending dose and multiple ascending dose portion of the study. In February 2023, Takeda Pharmaceutical Company Limited (Takeda) presented pre-clinical data from the Fabry disease transgene program, part of its Strategic Collaboration and License Agreement with Codexis, at the 19th Annual WORLDSymposium™. The gene therapy candidate is being developed to encode the codon optimized, CodeEvolver® engineered a-GAL enzyme, which is designed to have improved serum and lysosomal stability and a predicted reduced immunogenicity. Pharmaceutical Manufacturing In September 2022, Codexis hosted its 2022 Protein Engineering Forum, bringing more than 100 top scientists and innovators together for presentations and networking events to facilitate the sharing of insights and recent technological advancements throughout genomics, nucleic acid synthesis and synthetic biology. In June 2022, 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 the CodeEvolver® technology platform. Upcoming Milestones Phenylketonuria (PKU): The Company anticipates that its partner Nestlé Health Science will Investigational New Drug (IND) application for CDX-6114 for PKU, one of the most common inborn errors of metabolism (IEM) in the second half of 2023. Exocrine Pancreatic Insufficiency (EPI): The Company anticipates that Nestlé Health Science will IND application for the Phase 2 study of CDX-7108 for the treatment of EPI by the end of 2023. The Phase 2 study is expected to be conducted over approximately 12 months, with topline data anticipated in 2025. Fabry disease: The Company anticipates that its partner Takeda will IND application for a Phase 1 study in Fabry disease as soon as late 2023. Fiscal Year 2022 Financial Highlights Total revenues for fiscal year 2022 were $138.6 million, an increase of 32% from $104.8 million the prior year. Excluding enzyme sales related to PAXLOVID™, which were $75.4 million and $34.5 million for 2022 and 2021, respectively, total revenues for fiscal year 2022 were $63.2 million, a decrease of 10% from $70.3 million in the prior year. Product revenues for fiscal year 2022 were $116.7 million, an increase of 65% from $70.7 million the prior year, primarily driven by enzyme sales related to PAXLOVID™. Excluding these sales, total product sales for fiscal year 2022 were $41.3 million, an increase of 14% from $36.1 million in the prior year. R&D revenues were $21.9 million for fiscal year 2022, compared to $34.1 million the prior year. The decrease was driven by lower license fees, decreased revenue from milestone payments, and lower R&D fees from existing collaborating agreements. Product gross margin for fiscal year 2022 was 67%, compared to 69% the prior year. The decrease was primarily driven by sales mix and higher shipping costs. R&D expenses for fiscal year 2022 increased to $80.1 million, compared to $55.9 million the prior year. The increase in R&D expenses was driven by higher costs associated with increased headcount, facilities, lab supplies, depreciation, and outside services. Selling, General & Administrative expenses for fiscal year 2022 were $52.2 million, compared to $49.3 million the prior year. The increase in SG&A expense was the result of higher costs associated with headcount, and outside services, partially offset by lower legal fees. Fiscal year 2022 includes $3.2 million in restructuring charges related to the workforce reduction plan that occurred in the fourth quarter. The net loss for fiscal year 2022 was $33.6 million, or $0.51 per share, compared to $21.3 million, or $0.33 per share, for fiscal year 2021. As of December 31, 2022, Codexis had $114.0 million in cash and cash equivalents. Fourth Quarter 2022 Financial Highlights Total revenues for the fourth quarter 2022 were $30.4 million, an increase of 24% from $24.5 million in the fourth quarter 2021. Excluding fourth quarter enzyme sales related to PAXLOVID™, which were $17.4 million and $11.3 million for 2022 and 2021, respectively, total revenues for the fourth quarter 2022 were $13.0 million, a decrease of 2% from $13.2 million in the prior year. Product revenues for the fourth quarter 2022 were $23.3 million compared to $17.0 million in the fourth quarter 2021, driven by enzyme sales related to PAXLOVID™. R&D revenues for the fourth quarter 2022 were $7.1 million compared to $7.5 million in the fourth quarter 2021. The decrease was driven by lower license fees, decreased revenue from milestone payments, and lower R&D fees from collaboration agreements. Product gross margin for the fourth quarter 2022 was 64% compared to 60% in the fourth quarter 2021, driven by changes in sales mix. R&D expenses for the fourth quarter 2022 were $19.7 million compared to $16.4 million in the fourth quarter 2021, driven by higher costs associated with increased headcount, facilities, outside services, lab supplies, and depreciation. Selling, General & Administrative expenses for the fourth quarter 2022 were $12.3 million, compared to $11.7 million in the fourth quarter 2021. The increase was primarily the result of higher costs associated with increased headcount, freight, and outside services. Fourth quarter 2022 includes $3.2 million in restructuring charges related to the workforce reduction plan. The net loss for the fourth quarter 2022 was $12.6 million, or $0.19 per share, compared to $10.2 million, or $0.16 per share, for the fourth quarter 2021. 2023 Guidance Codexis is introducing financial guidance for 2023, as follows: Total revenues are expected to be in the range of $63 million to $68 million. This range excludes revenue from enzyme sales related to PAXLOVID™. Product revenues are expected to be in the range of $35 million to $40 million, excluding enzyme sales related to PAXLOVID™. Gross margin on product revenue is expected to be 68% to 73%, excluding enzyme sales related to PAXLOVID™. 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 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 13735352. 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 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 small molecule pharmaceuticals, in RNA and DNA synthesis and the creation of next generation life science tools, and as gene therapies and oral enzyme therapies. Codexis’ unique enzymes can drive improvements such as higher yields, reduced energy usage and waste generation, improved return on capital in manufacturing, improved sensitivity in genomic and diagnostic applications, and more efficacious therapeutics. For more information, visit . Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “suggest,” “target,” “on track,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. All statements other than statements of historical facts contained in this press release are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding anticipated milestones, including product launches; timing of data reports; progression of clinical studies; engagement with regulators, including such engagements made by Codexis’ partners; Codexis’ expectations regarding 2023 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, including, but not limited to, Codexis being dependent on its collaborators and any failure to successfully manage these relationships preventing it from developing and commercializing many of its products; Codexis’ biotherapeutic programs being early stage, highly regulated and expensive; if Nestlé Health Science, Takeda or any other collaborator terminate their development programs under their respective license agreements with Codexis, any potential revenue from those license agreements will be significantly reduced or non-existent; Codexis may need additional capital in the future in order to expand its business; Codexis’ dependency on a limited number of customers and its inability to extend or renew contracts with such customers; if Codexis is unable to develop and commercialize new products for its target markets; if competitors and potential competitors who have greater resources and experience than Codexis develop products and technologies that make Codexis’ products and technologies obsolete; Codexis may be unable to obtain regulatory approval for its product candidates given the lengthy, time consuming and inherently unpredictable nature of such approval processes; clinical trials are difficult to design and implement, expensive, time-consuming and involve an uncertain outcome; results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials; Codexis may not be able to maintain orphan drug designations for certain of our product candidates, and may be unable to maintain the benefits associated with orphan drug designation; even if Codexis obtains regulatory approval for any products that it develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements; and market and economic conditions may negatively impact Codexis’ business, financial condition, and share price. Additional information about factors that could materially affect actual results can be found in Codexis’ Annual Report on Form 10-K that will be filed with the Securities and Exchange Commission (SEC) on or about February 24, 2023, 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. Codexis’ results for the quarter and year ended December 31, 2022 are not necessarily indicative of our operating results for any future periods. Investor Relations Contact: Argot Partners Brendan Strong/Carrie McKim (212) 600-1902 Codexis@argotpartners.com Media Relations Contact: Lauren Musto (781) 572-1147 lauren.musto@codexis.com Financial Tables to Follow Codexis, Inc. Condensed Consolidated Statements of Operations (unaudited) (In Thousands, Except Per Share Amounts) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Revenues: Product revenue $ 23,300 $ 16,983 $ 116,676 $ 70,657 Research and development revenue 7,075 7,518 21,914 34,097 Total revenues 30,375 24,501 138,590 104,754 Costs and operating expenses: Cost of product revenue 8,456 6,806 38,033 22,209 Research and development 19,689 16,357 80,099 55,919 Selling, general and administrative 12,314 11,723 52,172 49,323 Restructuring charges 3,167 — 3,167 — Total costs and operating expenses 43,626 34,886 173,471 127,451 Loss from operations (13,251 ) (10,385 ) (34,881 ) (22,697 ) Interest income 823 36 1,441 459 Other income (expense), net (26 ) 227 124 1,148 Loss before income taxes (12,454 ) (10,122 ) (33,316 ) (21,090 ) Provision for income taxes 151 68 276 189 Net loss $ (12,605 ) $ (10,190 ) $ (33,592 ) $ (21,279 ) Net loss per share, basic and diluted $ (0.19 ) $ (0.16 ) $ (0.51 ) $ (0.33 ) Weighted average common stock shares used in computing net loss per share, basic and diluted 65,558 64,914 65,344 64,568 Codexis, Inc. Condensed Consolidated Balance Sheets (unaudited) (In Thousands) December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 113,984 $ 116,797 Restricted cash, current 521 579 Financial assets: Accounts receivable 31,904 24,953 Contract assets 2,116 4,557 Unbilled receivables 7,016 8,558 Total financial assets 41,036 38,068 Less: allowances (163 ) (416 ) Total financial assets, net 40,873 37,652 Inventories 2,029 1,160 Prepaid expenses and other current assets 5,487 5,700 Total current assets 162,894 161,888 Restricted cash 1,521 1,519 Investment in non-marketable equity securities 20,510 14,002 Right-of-use assets - Operating leases, net 39,263 44,095 Right-of-use assets - Finance leases, net — 17 Property and equipment, net 22,614 21,345 Goodwill 3,241 3,241 Other non-current assets 350 276 Total assets $ 250,393 $ 246,383 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 3,246 $ 2,995 Accrued compensation 11,453 11,119 Other accrued liabilities 15,279 12,578 Current portion of lease obligations - Operating leases 5,360 4,093 Deferred revenue 13,728 2,586 Total current liabilities 49,066 33,371 Deferred revenue, net of current portion 16,881 3,749 Long-term lease obligations - Operating leases 38,278 43,561 Other long-term liabilities 1,371 1,311 Total liabilities 105,596 81,992 Stockholders’ equity: Common stock 6 6 Additional paid-in capital 566,081 552,083 Accumulated deficit (421,290 ) (387,698 ) Total stockholders’ equity 144,797 164,391 Total liabilities and stockholders’ equity $ 250,393 $ 246,383 Codexis, Inc. Segmented Information (unaudited) (In Thousands) Three Months Ended December 31, 2022 Three Months Ended December 31, 2021 Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total Revenues: Product revenue $ 23,300 $ — $ 23,300 $ 16,983 $ — $ 16,983 Research and development revenue 2,538 4,537 7,075 5,136 2,382 7,518 Total revenues 25,838 4,537 30,375 22,119 2,382 24,501 Costs and operating expenses: Cost of product revenue 8,456 — 8,456 6,806 — 6,806 Research and development (1) 6,173 12,295 18,468 5,968 9,569 15,537 Selling, general and administrative (1) 3,513 143 3,656 2,811 703 3,514 Restructuring charges 1,708 966 2,674 Total segment costs and operating expenses 19,850 13,404 33,254 15,585 10,272 25,857 Income (loss) from operations $ 5,988 $ (8,867 ) (2,879 ) $ 6,534 $ (7,890 ) (1,356 ) Corporate costs (2) (8,134 ) (7,772 ) Depreciation and amortization (1,441 ) (994 ) Loss before income taxes $ (12,454 ) $ (10,122 ) (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 and restructuring charges, interest income, and other income (expense), net. Year Ended December 31, 2022 Year Ended December 31, 2021 Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total Revenues: Product revenue $ 116,676 $ — $ 116,676 $ 70,657 $ — $ 70,657 Research and development revenue 9,936 11,978 21,914 19,858 14,239 34,097 Total revenues 126,612 11,978 138,590 90,515 14,239 104,754 Costs and operating expenses: Cost of product revenue 38,033 — 38,033 22,209 — 22,209 Research and development (1) 25,786 49,770 75,556 23,140 30,219 53,359 Selling, general and administrative (1) 14,724 2,421 17,145 12,105 2,755 14,860 Restructuring charges 1,708 966 2,674 — — — Total segment costs and operating expenses 80,251 53,157 133,408 57,454 32,974 90,428 Income (loss) from operations $ 46,361 $ (41,179 ) 5,182 $ 33,061 $ (18,735 ) 14,326 Corporate costs (2) (33,080 ) (32,201 ) Depreciation and amortization (5,418 ) (3,215 ) Loss before income taxes $ (33,316 ) $ (21,090 ) (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 and restructuring charges, interest income, and other income (expense), net.
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