Codexis(CDXS) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter and six months ended June 30, 2021, along with detailed notes on accounting policies and financial position Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $129,506 | $149,117 | | Total current assets | $172,395 | $184,423 | | Total assets | $212,310 | $221,646 | | Liabilities & Equity | | | | Total current liabilities | $24,090 | $24,981 | | Total liabilities | $49,537 | $51,543 | | Total stockholders' equity | $162,773 | $170,103 | Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $25,453 | $14,967 | $43,485 | $29,637 | | Loss from Operations | $(4,486) | $(6,107) | $(13,641) | $(13,935) | | Net Loss | $(4,265) | $(6,344) | $(13,333) | $(13,996) | | Net Loss Per Share | $(0.07) | $(0.11) | $(0.21) | $(0.24) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,735) | $(11,498) | | Net cash used in investing activities | $(4,945) | $(2,490) | | Net cash provided by (used in) financing activities | $473 | $(903) | | Net decrease in cash, cash equivalents and restricted cash | $(19,207) | $(14,891) | Notes to Condensed Consolidated Financial Statements - The company operates in two segments: Performance Enzymes (small molecule pharma manufacturing, food, feed, life sciences) and Novel Biotherapeutics (drug candidate discovery and development)[31][32] Revenue by Segment - Six Months Ended June 30 (in thousands) | Segment | 2021 | 2020 | | :--- | :--- | :--- | | Performance Enzymes | $35,815 | $18,379 | | Novel Biotherapeutics | $7,670 | $11,258 | | Total Revenues | $43,485 | $29,637 | - As of June 30, 2021, total unrecognized stock-based compensation expense was $14.7 million, expected to be recognized through 2025, including $4.8M for stock options, $4.7M for RSUs/RSAs, $1.9M for PSUs, and $3.3M for PBOs[97] - The company has a credit facility with Western Alliance Bank for up to $10.0 million in term loans and a $5.0 million revolving line of credit, with no amounts drawn as of June 30, 2021, and compliance with all covenants[119][120] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management provides a narrative analysis of the company's financial performance, highlighting a 70% increase in Q2 2021 revenue, driven by product revenue, and discusses liquidity, capital resources, and material cash requirements Results of Operations Q2 2021 vs Q2 2020 Performance (in thousands) | Metric | Q2 2021 | Q2 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $25,453 | $14,967 | $10,486 | 70% | | Product Revenue | $14,717 | $4,504 | $10,213 | 227% | | R&D Revenue | $10,736 | $10,463 | $273 | 3% | | R&D Expenses | $12,826 | $10,853 | $1,973 | 18% | | SG&A Expenses | $12,795 | $8,522 | $4,273 | 50% | | Net Loss | $(4,265) | $(6,344) | $2,079 | 33% | - Product gross margin increased to 71% in Q2 2021 from 62% in Q2 2020, primarily due to an improved product mix with higher sales of higher-margin branded products[162][204] - Performance Enzymes segment revenue grew 188% in Q2 2021 year-over-year, driven by strong product demand, while Novel Biotherapeutics segment revenue decreased 48% due to higher license fees recognized in the prior-year period[215][217] Liquidity and Capital Resources Liquidity Position (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $129,506 | $149,117 | | Working capital | $148,305 | $159,442 | - The company believes existing cash and cash equivalents are sufficient to fund operations, capital expenditures, and working capital needs for at least the next 12 months[233] - In May 2021, the company entered into an Equity Distribution Agreement (EDA) to sell up to $50.0 million of common stock, with no shares sold under the EDA as of June 30, 2021[99][229] - The company has significant future lease commitments totaling $60.9 million, including a new ten-year lease for a facility in San Carlos, CA, expected to commence in November 2021[113][245] Quantitative and Qualitative Disclosures about Market Risk The company outlines its exposure to market risks, primarily interest rate and foreign currency risk, with interest rate changes considered immaterial and foreign currency fluctuations potentially impacting international product competitiveness - The company's exposure to interest rate risk is primarily from its cash equivalents and variable-rate credit facility, with a hypothetical 10% change in interest rates expected to have an immaterial impact on interest income and expense[251][252] - Foreign currency risk exists as future fluctuations in the U.S. dollar may affect the price competitiveness of products sold outside the United States, though substantially all sales are denominated in USD[253] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal controls over financial reporting during the second quarter - Based on an evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[258] - There were no changes in internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[259] PART II. OTHER INFORMATION Legal Proceedings The company reports no involvement in any material pending litigation or other material legal proceedings - As of the filing date, Codexis is not involved in any material legal proceedings[263] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - There were no material changes from the risk factors disclosed in the Form 10-K for the year ended December 31, 2020[264] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - None reported[265] Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including the Equity Distribution Agreement and required CEO/CFO certifications - A list of filed exhibits is provided, including an Equity Distribution Agreement dated May 7, 2021, and required CEO/CFO certifications[270]