Codexis reports modest revenue growth in first quarter of 2015

On track to receive US$6.5m milestone payment from GSK under CodeEvolver agreement later this year

Codexis, a developer of biocatalysts for the pharmaceutical and fine chemical industries, saw revenue in its core biocatalyst product and biocatalyst R&D services businesses grow 'modestly' in the first quarter of 2015 to 31 March, while gross margin 'improved substantially'. Expenses declined as the company continued to manage costs.

Among recent operational highlights, the company delivered its second shipment of enzyme to a food ingredients customer for use in test marketing its product. The transfer of the CodeEvolver protein engineering technology under the GSK licensing agreement is 'proceeding well' with the CodeEvolver lab at the GSK facility in Pennsylvania, US now operational. The company has also recently started the second of two Wave 2 tech transfer projects and this progress puts it on track to recognise a US$6.5m milestone payment under the GSK agreement later this year.

Total revenues for the quarter of $6.8m compare with $7.1m for Q1 2014. Biocatalyst product sales increased 3% to $3.1m, including the second shipment of enzyme to the food ingredient customer, as well as higher sales to more pharmaceutical customers compared with the prior-year period.

Biocatalyst product sales for the first quarter of 2014 were $3m and included a shipment of $2m to a major pharmaceutical customer.

Going forward, Codexis confirmed its financial guidance for 2015

Biocatalyst research and development revenue for the Q1 2015 increased 2% to $2.2m. Revenue from the revenue-sharing arrangement with Exela Pharma Sciences for sales of argatroban injectable drug decreased $0.4m to $1.5m as a result of the expiration of the formulation patent for argatroban in June 2014, allowing for generic competition in the subsequent quarters.

Gross margin as a percentage of total revenues for the first quarter of 2015 increased to 79% compared with 64% for the first quarter of 2014, due primarily to a sales mix favouring higher-margin products.

Research and development (R&D) expenses for the first quarter of 2015 of $5.3m compare with R&D expenses of $4.8m for the first quarter of 2014, which included a $0.8m gain from the sale of the company's former Hungarian subsidiary. Excluding this non-recurring item, R&D expenses for Q1 2015 fell $0.3m compared with the same period in 2014.

Codexis also narrowed its net loss to $5.6m for the first quarter of 2015, from $6.4m in Q1 2014.

Going forward, Codexis confirmed its financial guidance for 2015, predicting total revenues between $39m to $42m, representing growth of 10–19% over 2014. This revenue guidance assumes recognising the $6.5m milestone payment from GSK, which is expected toward the end of 2015. Gross margins as a percentage of total revenue will be in the range of 70–75%.

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