Reports financial results for second quarter and the six months to 30 June 2015
Codexis has entered into a research and development agreement with an unnamed global biopharmaceutical company. This is the first significant agreement in which the company will apply its proprietary CodeEvolver protein engineering platform technology with a player in the biopharmaceutical industry.
Under the terms of the agreement, Codexis will employ CodeEvolver to develop a novel enzyme for use in its partner’s preclinical therapeutic development programme.
Development of the new enzyme will occur in two stages: the first is a proof-of-concept study that is expected to be completed in approximately six months; pending the partner’s decision to proceed, the second stage is an enzyme evolution programme that is expected to take six to 12 months. Under terms of the agreement, Codexis has received a US$1m upfront payment. The company also expects to generate research and development service revenues and could also receive additional payments following completion of the two development stages.
'We are excited to add this leading biopharmaceutical company to our growing list of customers and to have the opportunity to further demonstrate CodeEvolver’s utility in therapeutics development, even at the preclinical stage,' said Codexis' President and CEO John Nicols. 'We see multiple significant ways that our CodeEvolver protein engineering technology could enable or accelerate the advancement of novel biotherapeutics. We hope the collaboration will lead to additional protein engineering projects with this new partner, as well as other companies focused in the biopharmaceuticals industry.'
We are excited to add this leading biopharmaceutical company to our growing list of customers
The announcement comes as Codexis reported financial results for the second quarter and six months ended 30 June 2015.
Total revenue for the second quarter was $6m, slightly lower than $6.6m for the second quarter of 2014. Biocatalyst research and development revenue increased 52% to $2.5m compared with $1.7m in the same period last year, largely due to higher licence fee revenues from GSK. Biocatalyst product sales were $2m compared with $2.8m, with the decline due mainly to the timing of a large shipment to a pharmaceutical customer in 2014.
Revenue from the revenue-sharing arrangement with Exela Pharma Sciences for sales of argatroban injectable drug decreased by $0.7m 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 second quarter of 2015 increased to 79% from 68% in 2014, due primarily to a sales mix favouring higher-margin products.
The net loss for the second quarter of 2015 was $5.4m, narrowed from a net loss of $8.5m for the second quarter of 2014.
Total revenue for the six months ended 30 June 2015 was $12.8m and included $5.1m in biocatalyst product sales; $4.7m in biocatalyst research and development revenue; and $3m from the revenue-sharing agreement with Exela.
The net loss for the first six months of 2015 of $10.9m compared favourably with a net loss of $14.9m for the first six months of 2014..
'Solid year-to-date progress executing our plans encourages us to raise both of our annual financial guidance measures at this stage,' said Nicols.
Solid year-to-date progress executing our plans encourages us to raise both of our annual financial guidance measures
'Total revenues and gross margin in the second quarter reflected notable strength in biocatalyst research and development revenue which recorded its seventh consecutive quarter of growth. In addition, year-over-year in the second quarter we delivered gross margin expansion and operating cost reductions, which contributed to a reduction in our loss from operations and brought us closer to profitability.'
He added: 'We recently entered into two agreements that validate the strength of our business strategy. Last week we announced our second non-exclusive CodeEvolver protein engineering platform technology licensing agreement with a major pharmaceutical company, this time with current customer Merck. This licensing agreement allows Merck to use our CodeEvolver platform technology to develop novel enzymes for the manufacture of its pharmaceutical products. It is compelling evidence of the value of our CodeEvolver technology that Codexis and our licensing partners GSK and Merck are making long-term investments in our platform.'
Codexis now expects total revenues for 2015 to be between $41m and $44m, representing growth of 16% to 25% over 2014. Gross margin as a percentage of total revenues is expected to be 75% to 80%, an increase from previous guidance of 70% to 75%, reflecting an improved sales mix and the impact of expected upfront and milestone payments under the company's non-exclusive licensing agreements in the second half of 2015.