Codexis(CDXS) - 2023 Q4 - Annual Results

CEO Statement & Strategic Outlook Codexis focuses on ECO Synthesis™ for double-digit Pharmaceutical Manufacturing growth, monetizing non-core assets, and securing non-dilutive financing - The company's core strategy for 2024 is to focus on the ECO Synthesis™ manufacturing platform and return the Pharmaceutical Manufacturing business to double-digit growth[1] - Codexis is monetizing non-core assets through strategic partnerships, including asset purchases with Nestlé Health Science (CDX-7108) and Roche (dsDNA ligase), and an out-licensing deal with Aldevron (Codex® HiCap RNA Polymerase)[1] - A non-dilutive financing agreement with Innovatus has been secured to strengthen the company's financial position, extend its cash runway, and fund the development of the ECO Synthesis™ platform[1] Fourth Quarter and Recent Business Highlights Codexis advanced its ECO Synthesis™ platform to gram-scale, formed a Strategic Advisory Board, and secured significant financing and licensing deals - Achieved a key technical milestone in December 2023 by demonstrating gram-scale synthesis with the ECO Synthesis™ platform, enabling purity profile assessments and discussions with early access customers[10] - Formed a Strategic Advisory Board including Dr. John Maraganore (former Alnylam CEO), Dr. Masad Damha, and Dr. Jim Lalonde to guide the development of the ECO Synthesis™ platform[6][8] - Entered into a purchase agreement with Nestlé Health Science for CDX-7108, receiving a $5 million upfront payment and potential for up to $45 million in total milestones plus royalties[12] - Secured up to $40 million in a non-dilutive loan facility from Innovatus Capital Partners to reinforce its cash position and accelerate ECO Synthesis™ platform development[13] - Signed an exclusive global license agreement with Roche for a newly engineered dsDNA ligase and an exclusive license with Aldevron for the Codex® HiCap RNA Polymerase[11][14] Upcoming Milestones Codexis plans a technical update on ECO Synthesis™ at TIDES USA, initiates early access customer testing in H2 2024, and expects ecoRNA™ ligase availability - A technical update on the ECO Synthesis™ platform is planned for the TIDES USA annual meeting in May 2024, showcasing the linear synthesis of a full-length oligonucleotide strand[15] - Early access customer testing for the ECO Synthesis™ platform is on track to begin in H2 2024, with potential for initial commercial licensing in 2025 and a full launch in 2026[16][17] - The newly engineered ecoRNA™ ligase program is expected to be widely available to customers in H2 2024, aiming to improve traditional phosphoramidite chemistry[18] Financial Performance This section details Codexis's financial results for fiscal year 2023 and Q4 2023, along with its financial guidance for 2024 Fiscal Year 2023 Financial Highlights FY2023 saw total revenues decline to $70.1 million due to PAXLOVID™ sales, a net loss of $76.2 million, and improved product gross margin to 70% Fiscal Year 2023 Financial Highlights | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $70.1M | $138.6M | -49.4% | | Total Revenues (ex-PAXLOVID™) | $62.0M | $63.2M | -2% | | Product Revenues | $42.9M | $116.7M | -63.2% | | Product Revenues (ex-PAXLOVID™) | $34.8M | $41.3M | -16% | | R&D Revenues | $27.2M | $21.9M | +24.2% | | Product Gross Margin | 70% | 67% | +3 p.p. | | Product Gross Margin (ex-PAXLOVID™) | 63% | 52% | +11 p.p. | | R&D Expenses | $58.9M | $80.1M | -26.5% | | SG&A Expenses | $53.3M | $52.2M | +2.1% | | Net Loss | ($76.2M) | ($33.6M) | +126.8% | | Net Loss per Share | ($1.12) | ($0.51) | +119.6% | - As of December 31, 2023, the company had pro forma cash and cash equivalents of $70.1 million, which includes a $5.0 million upfront payment from Nestlé received in January 2024[26] Fourth Quarter 2023 Financial Highlights Q4 2023 total revenues were $26.6 million, with 42% growth excluding PAXLOVID™, product gross margin improved to 84%, and net loss narrowed to $7.2 million Fourth Quarter 2023 Financial Highlights | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $26.6M | $30.4M | -12.5% | | Total Revenues (ex-PAXLOVID™) | $18.4M | $13.0M | +42% | | Product Revenues | $18.1M | $23.3M | -22.3% | | Product Revenues (ex-PAXLOVID™) | $9.9M | $5.9M | +69% | | R&D Revenues | $8.5M | $7.1M | +19.7% | | Product Gross Margin | 84% | 64% | +20 p.p. | | Product Gross Margin (ex-PAXLOVID™) | 71% | 44% | +27 p.p. | | Net Loss | ($7.2M) | ($12.6M) | -42.9% | | Net Loss per Share | ($0.10) | ($0.19) | -47.4% | - R&D expenses decreased to $11.2 million from $19.7 million year-over-year, driven by lower headcount and reduced outside services costs[33] 2024 Financial Guidance Codexis projects 2024 product revenues (ex-PAXLOVID™) between $38M-$42M, R&D revenues $18M-$22M, and expects cash flow positivity by late 2026 2024 Financial Guidance | Guidance Metric | 2024 Range | | :--- | :--- | | Product Revenues (ex-PAXLOVID™) | $38M - $42M | | R&D Revenues | $18M - $22M | | Gross Margin on Product Revenue (ex-PAXLOVID™) | 58% - 63% | - The company anticipates product revenue growth of at least 10% versus 2023, excluding enzyme sales related to PAXLOVID™[4] - Codexis expects its existing cash and cash equivalents will fund planned operations through to expected positive cash flow around the end of 2026[44] Financial Statements This section presents Codexis's consolidated statements of operations and balance sheets for the reported periods Consolidated Statements of Operations The consolidated statements of operations show a net loss of $76.2 million for FY2023 and a narrowed net loss of $7.2 million for Q4 2023 Consolidated Statements of Operations | (In thousands, except per share data) | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $26,561 | $30,375 | $70,143 | $138,590 | | Total costs and operating expenses | $26,279 | $43,626 | $138,212 | $173,471 | | Loss from operations | $282 | ($13,251) | ($68,069) | ($34,881) | | Net loss | ($7,192) | ($12,605) | ($76,240) | ($33,592) | | Net loss per share, basic and diluted | ($0.10) | ($0.19) | ($1.12) | ($0.51) | Consolidated Balance Sheets The consolidated balance sheet shows total assets of $136.6 million and total liabilities of $49.9 million as of December 31, 2023 Consolidated Balance Sheets | (In thousands) | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $65,116 | $113,984 | | Total current assets | $93,466 | $162,894 | | Total assets | $136,561 | $250,393 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $35,830 | $49,066 | | Total liabilities | $49,946 | $105,596 | | Total stockholders' equity | $86,615 | $144,797 | | Total liabilities and stockholders' equity | $136,561 | $250,393 | Other Information This section provides details on the conference call, company overview, and forward-looking statement disclosures Conference Call and Webcast Codexis held a conference call and webcast on February 28, 2024, to discuss financial results, with replay available online - A conference call and webcast were held on February 28, 2024, at 4:30 p.m. ET. A replay is available on the investor section of the company's website for 90 days[45][46] About Codexis Codexis is an enzyme engineering company leveraging its CodeEvolver® platform for pharmaceutical manufacturing and nucleic acid synthesis, focusing on ECO Synthesis™ for RNAi therapeutics - Codexis is a leading enzyme engineering company using its CodeEvolver® platform to develop enzymes for pharmaceutical manufacturing and nucleic acid synthesis, with a current focus on its ECO Synthesis™ platform for RNAi therapeutics[47] Forward-Looking Statements This report includes forward-looking statements on milestones, ECO Synthesis™ timeline, 2024 guidance, and cash flow, subject to inherent risks and uncertainties - The report contains forward-looking statements concerning milestones, the ECO Synthesis™ platform timeline, 2024 financial guidance, and future cash flow. These are subject to risks and uncertainties detailed in SEC filings[48]