Deal with GSK will provide welcome boost to revenue for Codexis

Published: 7-Aug-2014

US developer of biocatalysts revises financial guidance for 2014

Codexis, a US developer of biocatalysts for the pharmaceutical and fine chemical industries, based in Redwood City, CA, is revising its financial guidance for 2014 following the boost to its revenue that is expected to be provided by its agreement with GlaxoSmithKline (GSK), signed in July.

Before this agreement, the company's revenue for the second quarter, ending 30 June, was down by 6% to US$6.6m, compared with $7m in the same quarter in 2013. Biocatalyst product revenue also fell, by 44% to $2.8m, 'primarily due to the expected loss of the company's biocatalyst and intermediate sales to customers in the hepatitis C drug marketplace', the company said. Biocatalyst product gross margins in Q2 were 24%, compared with 27% in the prior year quarter.

Biocatalysis research and development revenues in the second quarter of 2014 rose by 6% to $1.7m, compared with $1.6m in Q2 2013. Revenue from the company's agreement with Exela Pharma Sciences related to the anticoagulant drug argatroban was $2.1m in Q2, a rise of $1.7m, or 410% over Exela revenues in the second quarter of 2013.

Net loss for the second quarter of 2014 was $8.5m, reduced from a net loss of $12.6m in 2013.

For the six months ended 30 June, 2014 net loss was $14.9m, narrowed from a net loss of $22.2m in the first half of 2013.

Codexis has entered a new and improved financial chapter

The agreement with GSK granted the UK drugmaker a licence to use Codexis' proprietary CodeEvolver protein engineering platform technology to develop new enzymes for use in the manufacture of pharmaceutical and healthcare products. It also gave Codexis an upfront payment of $6m and the company says it is 'confident of collecting the next $5m in the second half of 2014'.

GSK may also use the technology to develop new therapeutic, diagnostic and prophylactic products in the field of human health. Upon completion of technology transfer, GSK will install CodeEvolver at its Upper Merion, PA research and development site in the US.

Codexis will receive an additional $19m from GSK subject to satisfactory completion of technology transfer milestones.

This is the first time that Codexis has licensed its protein engineering platform technology to any company in the healthcare field, and reinforces its opinion that biocatalysts, engineered by CodeEvolver technology, may increasingly be deployed to reduce the cost and increase the efficiency of pharmaceutical manufacturing.

Codexis' President and CEO John Nicols said with this deal, the company 'has entered a new and improved financial chapter'.

'We look forward to executing on the new agreement with GSK, continuing to deliver growth from our biocatalyst opportunity pipeline, as well as working to bring in additional CodeEvolver protein engineering licence deals with other innovative blue chip customers in the future,' he said.

Nicols said the company had also signed a new 'multi-year contract to supply enzymes to a major generic drug manufacturer in the second quarter', but did not name the company or the value of the contract.

Codexis now expects revenue for the full year to be from $35–$38m, representing growth of 10–19% compared with 2013.

Gross margin is now expected to fall within the range of 70–75% as a percentage of total revenues, a significant increase over the 54% gross margin delivered in 2013.

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