Codexis, a leading developer of biocatalysts for the pharmaceutical and fine chemical industries, today announced its financial results for the first quarter ended March 31, 2014.

"Codexis is off to a solid start in 2014, now fully focused on our core strategy of growing our biocatalyst business serving pharmaceutical drug development and manufacturing," said John Nicols, President and CEO of Codexis.

"Revenues and gross profits for the first quarter were in line with our plan, and we drove operating costs down markedly, aided by the sale of our Hungarian subsidiary, leading to a very modest $300,000 cash burn for the first quarter. Looking forward, we are encouraged by the growing prospects of installing Codexis biocatalysts in our customers' drug development pipelines, and that is translating into a growing, exciting research and development project portfolio for our world leading scientists to deliver upon." 

First Quarter Financial Highlights

Revenues for the first quarter of 2014 were $7.1 million, a 38% decrease from $11.5 million in the first quarter of 2013. Biocatalyst product revenue in the first quarter of 2014 was $3.0 million, a 67% decrease from $9.1 million in the prior year quarter. The decrease was primarily due to an expected loss of biocatalyst and intermediate sales in the hepatitis C drug marketplace, as a result of both unfavorable market pricing and newer products entering the market, along with a one-time enzyme inventory sale of $2.1 million to Arch PharmaLabs Ltd recorded in the first quarter of 2013.

 Biocatalyst product gross margins in the first quarter were 15%, a decrease compared to 38% in the prior year quarter. This decrease was primarily due to higher margin revenue in the first quarter of 2013, which was lifted by the one-time inventory sale of $2.1 million.

Biocatalysis research and development revenue in the first quarter of 2014 was $2.1 million, an increase of 65%, compared with $1.3 million for the first quarter of 2013. Revenue from the Company's product share arrangement with Exela Pharma Sciences with respect to its argatroban injectable drug was $1.9 million in the first quarter of 2014, an 86% increase from $1.0 million in the first quarter of 2013.

Research and development expenses in the first quarter of 2014 were $4.8 million, a decrease of 34% from $7.3 million for the first quarter of 2013. The decrease was primarily due to headcount reductions implemented as part of the company-wide restructurings undertaken by Codexis. In addition, $0.8 million of the decrease was attributable to the gain realized on the sale of the Hungarian subsidiary in the first quarter of 2014.

Selling, general and administrative expenses in the first quarter of 2014 were $6.1 million, a decrease of 25% compared to $8.1 million in the same period of 2013. The decrease was primarily due to reductions in headcount and other discretionary expenses implemented as part of those same company-wide restructurings.  

Net loss for the first quarter of 2014 was $6.4 million or a loss of $0.17 per share, based on 38.5 million weighted average common shares outstanding in the first quarter of 2014. This compares favorably to a net loss of $9.6 million, or a loss of $0.25 per share, during the first quarter of 2013.

Cash, cash equivalents, and marketable securities at March 31, 2014 were $25.6 million. This compared to $25.9 million at December 31, 2013. 

Financial Outlook

For the full year 2014, Codexis reaffirms guidance previously given of total revenue in the range of $33 million to $35 million, or a year-on-year sales growth of 3% to 10%. Codexis also reaffirms total gross profit (defined as Total Revenue less Cost of Product Revenue) of approximately $19 million to $20 million in 2014, which would be an increase of 9% to 15% compared to 2013

As Codexis previously guided in March 2014, the company continues to expect a cash burn of less than $8 million in 2014.