Codexis, Inc. — FY2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021; comparisons are primarily with FY2020. This filing does not provide standalone Q4 results. Codexis develops and sells enzymes and proteins using its CodeEvolver platform, across Performance Enzymes and Novel Biotherapeutics.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total revenue | $104.8 million | $69.1 million |
| Product revenue | $70.7 million | $30.2 million |
| Research and development revenue | $34.1 million | $38.8 million |
| Product gross margin | 69% | 55% |
| Operating loss | $22.7 million | $23.9 million |
| Net loss | $21.3 million; $0.33 per share | $24.0 million; $0.40 per share |
| Cash used in operating activities | $14.3 million | $16.5 million |
| Cash and cash equivalents at year-end | $116.8 million | $149.1 million |
| Working capital at year-end | $128.5 million | $159.4 million |
Revenue rose 52%, led by $34.5 million of CDX-616 sales to Pfizer for use in manufacturing the active ingredient in PAXLOVID, and stronger demand for enzymes used in branded pharmaceuticals. Product gross margin improved with a more favorable product mix. R&D revenue declined 12%, principally reflecting lower revenue recognized from Takeda and Novartis. R&D expense increased 26% to $55.9 million and selling, general and administrative expense increased 41% to $49.3 million.
Cash, cash equivalents and restricted cash decreased $31.9 million during the year. Investing activities used $21.4 million, including $13.8 million of property and equipment purchases and $7.6 million of investments in MAI. The company had no borrowings under its credit facility at year-end and reported covenant compliance. Total liabilities were $82.0 million, including operating lease obligations. No off-balance-sheet arrangements were reported.
Material changes versus FY2020
- Total revenue increased $35.7 million; product revenue increased $40.4 million, while R&D revenue fell $4.7 million.
- Performance Enzymes revenue increased to $90.5 million from $48.1 million; Novel Biotherapeutics revenue decreased to $14.2 million from $21.0 million.
- Despite higher operating expenses, net loss narrowed by $2.7 million, reflecting increased product revenue and higher product margins.
- Cash and cash equivalents declined $32.3 million, while year-end property and equipment rose to $21.3 million from $9.7 million, partly reflecting expansion and facility investment.
Outlook, commentary and risks
- Management said existing cash and cash equivalents should fund operations, planned capital expenditures and working capital for at least the next 12 months, based on current operations. No specific revenue, earnings or margin guidance was provided.
- Codexis had received significant Pfizer orders for 2022 delivery and expected further orders during 2022 for delivery in 2022 and 2023. There was no long-term purchase agreement or minimum purchase commitment; future orders depend on Pfizer’s requirements.
- Pfizer accounted for approximately 33% of FY2021 revenue; customers individually contributing at least 10% accounted for 44% in total. One customer represented 62% of accounts receivable at year-end.
- Results remain exposed to demand for PAXLOVID, COVID-19 developments, regulatory and market factors, manufacturing capacity and supply-chain execution. Large-scale enzyme production relies on a limited number of contract manufacturers.
- The company has a history of net losses and accumulated deficit of $387.7 million. Future profitability depends on product sales, partnerships, new products and control of expenses.
- Biotherapeutics are early-stage and subject to clinical, regulatory, funding and partner-execution risks. CDX-7108 entered Phase 1 dosing in November 2021 with Nestlé Health Science; Takeda added a fourth research program in 2021.
- The company held $14.0 million of non-marketable equity securities at year-end, primarily investments in MAI and Arzeda. These illiquid investments are subject to valuation uncertainty and potential impairment.
- BDO issued unqualified opinions on the financial statements and internal control over financial reporting. The audit identified revenue recognition as a critical audit matter because it involves significant estimates and judgments.
Important facts for investors to verify
- Whether Pfizer continues to place CDX-616 orders, the order volume and timing, and whether any long-term supply agreement is executed.
- How much of future revenue and gross margin depends on Pfizer and other concentrated customers, including Merck’s sitagliptin enzyme supply agreement, extended through December 2026.
- Cash burn, capital spending, lease commitments and the assumptions supporting management’s stated 12-month liquidity outlook.
- Progress and funding arrangements for partnered and proprietary programs, especially CDX-7108, Takeda programs and the MAI collaboration.
- Valuation and liquidity of non-marketable investments, and the potential effect of impairment charges or related-party transactions involving MAI.