x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 71-0872999 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
200 Penobscot Drive, Redwood City | 94063 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | |
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
PAGE NUMBER | ||
PART I. FINANCIAL INFORMATION | ||
ITEM 1: | Financial Statements (Unaudited) | |
ITEM 2: | ||
ITEM 3: | ||
ITEM 4: | ||
ITEM 1: | ||
ITEM 1A: | ||
ITEM 2: | ||
ITEM 3: | ||
ITEM 4: | ||
ITEM 5: | ||
ITEM 6: | ||
June 30, 2013 | December 31, 2012 | ||||||
(Unaudited) | * | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 32,392 | $ | 32,003 | |||
Marketable securities | 5,512 | 13,524 | |||||
Accounts receivable, net of allowances of $150 and $150 at June 30, 2013 and December 31, 2012, respectively | 1,591 | 7,545 | |||||
Inventories | 1,332 | 1,302 | |||||
Prepaid expenses and other current assets | 2,280 | 5,395 | |||||
Total current assets | 43,107 | 59,769 | |||||
Restricted cash | 1,111 | 1,511 | |||||
Non-current marketable securities | 1,017 | 3,623 | |||||
Property and equipment, net | 15,520 | 16,650 | |||||
Intangible assets, net | 11,247 | 12,934 | |||||
Goodwill | 3,241 | 3,241 | |||||
Other non-current assets | 363 | 2,237 | |||||
Total assets | $ | 75,606 | $ | 99,965 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,545 | $ | 3,654 | |||
Accrued compensation | 3,335 | 3,495 | |||||
Other accrued liabilities | 3,900 | 6,948 | |||||
Deferred revenues | 2,365 | 2,186 | |||||
Total current liabilities | 11,145 | 16,283 | |||||
Deferred revenues, net of current portion | 1,207 | 1,299 | |||||
Other long-term liabilities | 3,783 | 3,943 | |||||
Commitments and contingencies (note 8) | |||||||
Stockholders’ equity: | |||||||
Common stock | 4 | 4 | |||||
Additional paid-in capital | 297,144 | 294,128 | |||||
Accumulated other comprehensive income (loss) | 106 | (136 | ) | ||||
Accumulated deficit | (237,783 | ) | (215,556 | ) | |||
Total stockholders’ equity | 59,471 | 78,440 | |||||
Total liabilities and stockholders’ equity | $ | 75,606 | $ | 99,965 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues: | |||||||||||||||
Product | $ | 4,948 | $ | 6,782 | $ | 14,085 | $ | 21,949 | |||||||
Collaborative research and development | 2,026 | 15,868 | 4,370 | 30,480 | |||||||||||
Government awards | — | 259 | — | 1,616 | |||||||||||
Total revenues | 6,974 | 22,909 | 18,455 | 54,045 | |||||||||||
Costs and operating expenses: | |||||||||||||||
Cost of product revenues | 3,631 | 5,829 | 9,296 | 18,471 | |||||||||||
Research and development | 8,624 | 15,650 | 15,946 | 31,999 | |||||||||||
Selling, general and administrative | 7,169 | 6,789 | 15,293 | 16,184 | |||||||||||
Total costs and operating expenses | 19,424 | 28,268 | 40,535 | 66,654 | |||||||||||
Loss from operations | (12,450 | ) | (5,359 | ) | (22,080 | ) | (12,609 | ) | |||||||
Interest income | 16 | 74 | 43 | 149 | |||||||||||
Other expenses | (183 | ) | (157 | ) | (268 | ) | (275 | ) | |||||||
Loss before (benefit) provision for income taxes | (12,617 | ) | (5,442 | ) | (22,305 | ) | (12,735 | ) | |||||||
(Benefit) provision for income taxes | (12 | ) | 77 | (77 | ) | 274 | |||||||||
Net loss | $ | (12,605 | ) | $ | (5,519 | ) | $ | (22,228 | ) | $ | (13,009 | ) | |||
Net loss per share, basic and diluted | (0.33 | ) | (0.15 | ) | (0.59 | ) | (0.36 | ) | |||||||
Weighted average common shares used in computing net loss per share, basic and diluted | 38,060 | 36,296 | 37,951 | 36,177 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net loss | $ | (12,605 | ) | $ | (5,519 | ) | $ | (22,228 | ) | $ | (13,009 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments | — | — | — | 165 | |||||||||||
Unrealized gain (loss) on marketable securities, net of tax of $32 and $155 for the three and six months ended June 30, 2013, and $0 and $0 for the three and six months ended June 30, 2012 | 50 | (337 | ) | 242 | (636 | ) | |||||||||
Other comprehensive income (loss) | 50 | (337 | ) | 242 | (471 | ) | |||||||||
Total comprehensive loss | $ | (12,555 | ) | $ | (5,856 | ) | $ | (21,986 | ) | $ | (13,480 | ) |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Operating activities: | |||||||
Net loss | $ | (22,228 | ) | $ | (13,009 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Amortization of intangible assets | 1,687 | 1,806 | |||||
Depreciation and amortization of property and equipment | 3,541 | 4,544 | |||||
Loss on disposal of property and equipment | 141 | 109 | |||||
Stock-based compensation | 2,735 | 3,077 | |||||
Accretion of asset retirement obligation | — | 15 | |||||
(Accretion of discount) amortization of premium on marketable securities | (48 | ) | 377 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 5,954 | 10,793 | |||||
Inventories | (30 | ) | 287 | ||||
Prepaid expenses and other current assets | 3,116 | (2,799 | ) | ||||
Other assets | (38 | ) | (409 | ) | |||
Accounts payable | (2,108 | ) | (6,051 | ) | |||
Accrued compensation | (160 | ) | (2,596 | ) | |||
Other accrued liabilities | (3,209 | ) | 798 | ||||
Deferred revenues | 87 | (234 | ) | ||||
Net cash used in operating activities | (10,560 | ) | (3,292 | ) | |||
Investing activities: | |||||||
Decrease in restricted cash | 400 | — | |||||
Purchase of property and equipment | (641 | ) | (2,551 | ) | |||
Purchase of marketable securities | — | (19,141 | ) | ||||
Proceeds from sale of marketable securities | — | 10,500 | |||||
Proceeds from maturities of marketable securities | 10,909 | 4,964 | |||||
Net cash provided by (used in) investing activities | 10,668 | (6,228 | ) | ||||
Financing activities: | |||||||
Proceeds from exercises of stock options | 281 | 287 | |||||
Net cash provided by financing activities | 281 | 287 | |||||
Effect of exchange rate changes on cash and cash equivalents | — | 164 | |||||
Net increase (decrease) in cash and cash equivalents | 389 | (9,069 | ) | ||||
Cash and cash equivalents at the beginning of the period | 32,003 | 25,762 | |||||
Cash and cash equivalents at the end of the period | $ | 32,392 | $ | 16,693 | |||
Long term deposit in other assets transferred to property and equipment | $ | 1,912 | $ | — |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2013 | 2012 | 2013 | 2012 | ||||
Options to purchase common stock | 4,996 | 8,092 | 4,996 | 8,092 | |||
Restricted stock units | 1,827 | 1,007 | 1,827 | 1,007 | |||
Warrants to purchase common stock | 75 | 266 | 75 | 266 | |||
Total | 6,898 | 9,365 | 6,898 | 9,365 |
June 30, 2013 | December 31, 2012 | ||||||
Raw materials | $ | 458 | $ | 588 | |||
Work in process | 155 | 52 | |||||
Finished goods | 719 | 662 | |||||
Inventory, net | $ | 1,332 | $ | 1,302 |
June 30, 2013 | December 31, 2012 | ||||||
Laboratory equipment | $ | 35,505 | $ | 33,776 | |||
Leasehold improvements | 11,108 | 11,099 | |||||
Computer equipment | 4,408 | 4,388 | |||||
Office furniture and equipment | 1,538 | 1,531 | |||||
52,559 | 50,794 | ||||||
Less: accumulated depreciation | (37,084 | ) | (34,172 | ) | |||
15,475 | 16,622 | ||||||
Construction in progress | 45 | 28 | |||||
Property and equipment, net | $ | 15,520 | $ | 16,650 |
Balance as of December 31, 2012 | $ | (136 | ) |
Unrealized gains (losses) on available-for-sale securities | 397 | ||
Tax effects | (155 | ) | |
Balance as of June 30, 2013 | $ | 106 |
June 30, 2013 | |||||||||||||||||
Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Average Contractual Maturities | |||||||||||||
(in days) | |||||||||||||||||
Money market funds | $ | 24,021 | $ | — | $ | — | $ | 24,021 | n/a | ||||||||
Corporate bonds (unamortized cost) | 1,005 | 3 | — | 1,008 | 324 | ||||||||||||
U.S. Treasury obligations (unamortized cost) | 4,501 | 3 | — | 4,504 | 145 | ||||||||||||
Common shares of CO2 Solutions | $ | 563 | $ | 454 | $ | — | $ | 1,017 | n/a | ||||||||
Total | $ | 30,090 | $ | 460 | $ | — | $ | 30,550 |
December 31, 2012 | |||||||||||||||||
Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Average Contractual Maturities | |||||||||||||
(in days) | |||||||||||||||||
Money market funds | $ | 24,789 | $ | — | $ | — | $ | 24,789 | n/a | ||||||||
Commercial paper | 1,499 | 1 | — | 1,500 | 70 | ||||||||||||
Corporate bonds (unamortized cost) | 9,512 | 10 | — | 9,522 | 156 | ||||||||||||
U.S. Treasury obligations (unamortized cost) | 5,510 | 5 | — | 5,515 | 262 | ||||||||||||
Common shares of CO2 Solutions | 563 | 47 | — | 610 | n/a | ||||||||||||
Total | $ | 41,873 | $ | 63 | $ | — | $ | 41,936 |
June 30, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Money market funds | $ | 24,021 | $ | — | $ | — | $ | 24,021 | |||||||
Corporate bonds | — | 1,008 | — | 1,008 | |||||||||||
U.S. Treasury obligations | — | 4,504 | — | 4,504 | |||||||||||
Common shares of CO2 Solutions | — | 1,017 | — | 1,017 | |||||||||||
Total | $ | 24,021 | $ | 6,529 | $ | — | $ | 30,550 |
December 31, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Money market funds | $ | 24,789 | $ | — | $ | — | $ | 24,789 | |||||||
Commercial paper | — | 1,500 | — | 1,500 | |||||||||||
Corporate bonds | — | 9,522 | — | 9,522 | |||||||||||
U.S. Treasury obligations | — | 5,515 | — | 5,515 | |||||||||||
Common shares of CO2 Solutions | 610 | — | — | 610 | |||||||||||
Total | $ | 25,399 | $ | 16,537 | $ | — | $ | 41,936 |
Lease payments | |||
6 months ending December 31, | |||
2013 | $ | 1,438 | |
Years ending December 31, | |||
2014 | 2,947 | ||
2015 | 3,031 | ||
2016 | 3,047 | ||
2017 | 2,677 | ||
2018 and beyond | 5,790 | ||
Total | $ | 18,930 |
June 30, 2013 | |||||||
Issue Date | Shares Subject to warrants | Exercise Price per Share | Expiration | ||||
July 17, 2007 | 2,384 | $ | 12.45 | February 9, 2016 | |||
September 28, 2007 | 72,727 | $ | 8.25 | September 28, 2017 |
Shares available for grant | ||
December 31, 2012 | 3,767 | |
Annual increase in shares available for grant | 1,507 | |
Option grants | (813 | ) |
Award grants | (1,357 | ) |
Award shares withheld for taxes | 132 | |
Options forfeited | 1,675 | |
Awards forfeited | 166 | |
June 30, 2013 | 5,077 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Research and development | $ | 502 | $ | 847 | $ | 1,706 | $ | 1,501 | |||||||
Selling, general and administrative | 760 | 1,060 | 1,029 | 1,576 | |||||||||||
Total | $ | 1,262 | $ | 1,907 | $ | 2,735 | $ | 3,077 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Stock options | $ | 531 | $ | 1,497 | $ | 1,141 | $ | 2,355 | |||||||
Restricted stock units | 604 | 410 | 1,296 | 722 | |||||||||||
Performance stock units | 127 | — | 298 | — | |||||||||||
Total | $ | 1,262 | $ | 1,907 | $ | 2,735 | $ | 3,077 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Americas (1) | $ | 2,181 | $ | 16,914 | $ | 4,301 | $ | 32,543 | |||||||
Europe | 1,177 | 2,445 | 4,382 | 7,930 | |||||||||||
Asia | |||||||||||||||
India | 289 | 3,443 | 2,508 | 9,961 | |||||||||||
Singapore | 3,073 | — | 6,721 | 3,253 | |||||||||||
Others | 254 | 107 | 543 | 358 | |||||||||||
$ | 6,974 | $ | 22,909 | $ | 18,455 | $ | 54,045 |
(1) | Primarily United States |
June 30, 2013 | December 31, 2012 | ||||||
Long-lived assets | |||||||
Americas (1) | $ | 21,813 | $ | 25,953 | |||
Europe (2) | 4,999 | 5,157 | |||||
Asia | 319 | 711 | |||||
$ | 27,131 | $ | 31,821 |
(1) | Primarily United States |
(2) | Primarily Hungary |
Severance, benefits and related personnel costs | Facility closing costs | Total | |||||||||
Balance at December 31, 2012 | $ | 100 | $ | 320 | $ | 420 | |||||
Cash payments | (74 | ) | (272 | ) | (346 | ) | |||||
Adjustments to restructuring charges | (26 | ) | — | (26 | ) | ||||||
Balance at June 30, 2013 | $ | — | $ | 48 | $ | 48 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Product revenues consist of sales of biocatalysts, intermediates, APIs and Codex Biocatalyst Panels and Kits. |
• | Collaborative research and development revenues include license, technology access and exclusivity fees, FTE payments, milestones, royalties, and optimization and screening fees. |
• | Government awards consist of payments from government entities. The terms of these awards generally provide us with cost reimbursement for certain types of expenditures in return for research and development activities over a contractually defined period. Historically, we have received government awards from Germany, Singapore and the United States. |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
(In Thousands) | 2013 | 2012 | $ | % | 2013 | 2012 | $ | % | |||||||||||||||||||||
Product | $ | 4,948 | $ | 6,782 | $ | (1,834 | ) | (27 | )% | $ | 14,085 | $ | 21,949 | $ | (7,864 | ) | (36 | )% | |||||||||||
Collaborative research and development | 2,026 | 15,868 | (13,842 | ) | (87 | )% | 4,370 | 30,480 | (26,110 | ) | (86 | )% | |||||||||||||||||
Government awards | — | 259 | (259 | ) | (100 | )% | — | 1,616 | (1,616 | ) | (100 | )% | |||||||||||||||||
Total revenues | $ | 6,974 | $ | 22,909 | $ | (15,935 | ) | (70 | )% | $ | 18,455 | $ | 54,045 | $ | (35,590 | ) | (66 | )% |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
(In Thousands) | 2013 | 2012 | $ | % | 2013 | 2012 | $ | % | |||||||||||||||||||||
Product revenues | $ | 4,948 | $ | 6,782 | $ | (1,834 | ) | (27 | )% | $ | 14,085 | $ | 21,949 | $ | (7,864 | ) | (36 | )% | |||||||||||
Cost of product revenues | 3,631 | 5,829 | (2,198 | ) | (38 | )% | 9,296 | 18,471 | (9,175 | ) | (50 | )% | |||||||||||||||||
Product gross profit | $ | 1,317 | $ | 953 | $ | 364 | 38 | % | $ | 4,789 | $ | 3,478 | $ | 1,311 | 38 | % | |||||||||||||
Product gross margin % | 27 | % | 14 | % | 34 | % | 16 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
(In Thousands) | 2013 | 2012 | $ | % | 2013 | 2012 | $ | % | |||||||||||||||||||||
Research and development | $ | 8,624 | $ | 15,650 | $ | (7,026 | ) | (45 | )% | 15,946 | 31,999 | $ | (16,053 | ) | (50 | )% | |||||||||||||
Selling, general and administrative | 7,169 | 6,789 | 380 | 6 | % | 15,293 | 16,184 | (891 | ) | (6 | )% | ||||||||||||||||||
Total operating expenses | $ | 15,793 | $ | 22,439 | $ | (6,646 | ) | (30 | )% | $ | 31,239 | $ | 48,183 | $ | (16,944 | ) | (35 | )% |
Severance, benefits and related personnel costs | |||
Balance at December 31, 2011 | $ | — | |
Restructuring charges | 563 | ||
Cash payments | (446 | ) | |
Adjustments to restructuring charges | (49 | ) | |
Balance at June 30, 2012 | $ | 68 |
Severance, benefits and related personnel costs | Facility costs | Total | |||||||||
Balance at December 31, 2012 | $ | 100 | $ | 320 | $ | 420 | |||||
Cash payments | (74 | ) | (272 | ) | (346 | ) | |||||
Adjustments to restructuring charges | (26 | ) | — | (26 | ) | ||||||
Balance at June 30, 2013 | $ | — | $ | 48 | $ | 48 |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||
(In Thousands) | 2013 | 2012 | $ | % | 2013 | 2012 | $ | % | |||||||||||||||||||||
Interest income | $ | 16 | $ | 74 | $ | (58 | ) | (78 | )% | $ | 43 | $ | 149 | $ | (106 | ) | (71 | )% | |||||||||||
Other expenses | (183 | ) | (157 | ) | (26 | ) | 17 | % | (268 | ) | (275 | ) | 7 | (3 | )% | ||||||||||||||
Total other income (expense) | $ | (167 | ) | $ | (83 | ) | $ | (84 | ) | 101 | % | $ | (225 | ) | $ | (126 | ) | $ | (99 | ) | 79 | % |
(In Thousands) | June 30, 2013 | December 31, 2012 | |||||
Cash and cash equivalents | $ | 32,392 | $ | 32,003 | |||
Marketable securities (1) | 5,512 | 13,524 | |||||
Accounts receivable, net | 1,591 | 7,545 | |||||
Accounts payable, accrued compensation and accrued liabilities | 8,780 | 14,097 | |||||
Working capital | $ | 31,962 | $ | 43,486 |
(1) | Includes only the current portion of our marketable securities |
Six months ended June 30, | |||||||
(In Thousands) | 2013 | 2012 | |||||
Net cash used in operating activities | $ | (10,560 | ) | $ | (3,292 | ) | |
Net cash provided by (used in) investing activities | 10,668 | (6,228 | ) | ||||
Net cash provided by financing activities | 281 | 287 | |||||
Effect of foreign exchange rates on cash and cash equivalents | — | 164 | |||||
Net increase (decrease) in cash and cash equivalents | $ | 389 | $ | (9,069 | ) |
Total | Remainder of 2013 | 2014 | 2015 | 2016 | 2017 | 2018 and beyond | |||||||||||||||||||||
Operating leases | $ | 18,930 | $ | 1,438 | $ | 2,947 | $ | 3,031 | $ | 3,047 | $ | 2,677 | $ | 5,790 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | our ability to achieve or maintain profitability; |
• | our ability to secure third-party funding, or other strategic options, for our CodeXyme® cellulase enzymes and CodeXol® detergent alcohols programs; |
• | our ability to maintain license rights for commercial scale expression systems for cellulases; |
• | our ability to obtain substantial additional capital that may be necessary to expand our business; |
• | our ability to maintain internal control over financial reporting; |
• | charges to earnings as a result of any impairment of goodwill, intangible assets or other long-lived assets; |
• | our ability to realize the expected benefits from the reduction in force we undertook at the end of August 2012; |
• | our dependence on a limited number of customers; |
• | our customers' ability to timely pay amounts owed to us; |
• | our dependence on a limited number of products in our pharmaceutical business; |
• | our reliance on one contract manufacturer for commercial scale production of substantially all of our enzymes; |
• | our ability to develop and successfully commercialize new products for the pharmaceuticals market; |
• | our relationships with, and dependence on, collaborators in our principal markets; |
• | our ability to deploy our technology platform in new adjacent market spaces; |
• | our dependence on, and the need to attract and retain key management and other personnel; |
• | any adverse effects our recent restructuring plan may have on our ability to react to business developments and manage our business; |
• | the success of our customers' pharmaceutical products in the market and the ability of such customers to obtain regulatory approvals for products and processes; |
• | our ability to control and to improve pharmaceutical product gross margins; |
• | the ability of Arch to effectively market pharmaceutical products manufactured using our enzymes; |
• | the feasibility of commercializing biofuels and bio-based chemicals derived from cellulose; |
• | fluctuations in the price of and demand for commodities that our enzymes and fermentation organisms can be employed to produce or for substitute commodities; |
• | the availability, cost and location of cellulosic biomass sources; |
• | changes to existing biofuel regulations and policies; |
• | our potential bio-based chemical products might not be approved or accepted by our customers; |
• | our ability to independently develop, manufacture, market, sell and distribute commercial cellulase enzymes; |
• | risks associated with the international aspects of our business; |
• | our ability to integrate any businesses we may acquire with our business; |
• | our ability to accurately report our financial results in a timely manner; |
• | our ability to obtain, protect and enforce our intellectual property rights; |
• | our ability to prevent the theft or misappropriation of our biocatalysts, the genes that code for our biocatalysts, know-how or technologies; |
• | potential advantages that our competitors and potential competitors may have in securing funding or developing products; |
• | business interruptions, such as earthquakes and other natural disasters; |
• | public concerns about the ethical, legal and social ramifications of genetically engineered products and processes; |
• | our ability to comply with laws and regulations; |
• | our ability to properly handle and dispose of hazardous materials used in our business; |
• | our ability to obtain and maintain governmental awards; |
• | potential product liability claims; |
• | the existence of government subsidies or regulation with respect to carbon dioxide emissions; and |
• | our ability to use our net operating loss carryforwards to offset future taxable income. |
• | pharmaceutical companies may be reluctant to adopt new manufacturing processes that use our enzymes; |
• | we may be unable to successfully develop the enzymes or manufacturing processes for our products in a timely and cost-effective manner, if at all; |
• | we may face difficulties in transferring the developed technologies to our customers and the contract manufacturers that we may use for commercial scale production of intermediates and enzymes; |
• | the contract manufacturers that we may use may be unable to scale their manufacturing operations to meet the demand for these products and we may be unable to secure additional manufacturing capacity; |
• | customers may not be willing to purchase these products for the pharmaceutical market from us on favorable terms, if at all; |
• | we may face product liability litigation, unexpected safety or efficacy concerns and pharmaceutical product recalls or withdrawals; |
• | changes in laws or regulations relating to the pharmaceutical industry could cause us to incur increased costs of compliance or otherwise harm our business; |
• | our customers' pharmaceutical products may experience adverse events or face competition from new products, which would reduce demand for our products; |
• | we may face pressure from existing or new competitive products; and |
• | we may face pricing pressures from existing or new competitors, some of which may benefit from government subsidies or other incentives. |
• | we do not achieve our research and development objectives under our collaboration agreements in a timely manner or at all; |
• | we develop products and processes or enter into additional collaborations that conflict with the business objectives of our other collaborators; |
• | we disagree with our collaborators as to rights to intellectual property that are developed during the collaboration, or their research programs or commercialization activities; |
• | we are unable to manage multiple simultaneous collaborations; |
• | our collaborators become competitors of ours or enter into agreements with our competitors; |
• | our collaborators become unable or less willing to expend their resources on research and development or commercialization efforts due to general market conditions, their financial condition or other circumstances beyond our control; or |
• | our collaborators experience business difficulties, which could eliminate or impair their ability to effectively perform under our agreements. |
• | changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products, repatriate profits to the United States or operate our foreign-located facilities; |
• | the imposition of tariffs; |
• | the imposition of limitations on, or increase of, withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures; |
• | the imposition of limitations on genetically-engineered products or processes and the production or sale of those products or processes in foreign countries; |
• | currency exchange rate fluctuations; |
• | uncertainties relating to foreign laws, regulations and legal proceedings including tax, import/export, anti-corruption and exchange control laws; |
• | the availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us; |
• | increased demands on our limited resources created by our diversified, global operations may require us to expand the capabilities of our administrative and operational resources and to attract, train, manage and retain qualified management, technicians, scientists and other personnel which we may be unable to do effectively; |
• | economic or political instability in foreign countries; |
• | difficulties associated with staffing and managing foreign operations; and |
• | the need to comply with a variety of United States and foreign laws applicable to the conduct of international business, including import and export control laws and anti-corruption laws. |
• | issue additional equity securities, which would dilute our current stockholders; |
• | incur substantial debt to fund the acquisitions; |
• | use our cash to fund the acquisitions; or |
• | assume significant liabilities including litigation risk. |
• | stop selling or using our products or technologies that use the subject intellectual property; |
• | pay monetary damages or substantial royalties; |
• | grant cross-licenses to third parties relating to our patents or proprietary rights; |
• | obtain from the third party asserting its intellectual property rights a license to sell or use the relevant technology, which license may not be available on reasonable terms, or at all; or |
• | redesign those products or processes that use any allegedly infringing technology, or relocate the operations relating to the allegedly infringing technology to another jurisdiction, which may result in significant cost or delay to us, |
• | public attitudes about the safety and environmental hazards of, and ethical concerns over, genetic research and genetically engineered products and processes, which could influence public acceptance of our technologies, products and processes; |
• | public attitudes regarding, and potential changes to laws governing ownership of genetic material, which could harm our intellectual property rights with respect to our genetic material and discourage collaborators from supporting, developing, or commercializing our products, processes and technologies; and |
• | governmental reaction to negative publicity concerning genetically modified organisms, which could result in greater government regulation of genetic research and derivative products. The subject of genetically modified organisms has received negative publicity, which has aroused public debate. This adverse publicity could lead to greater regulation and trade restrictions on imports of genetically altered products. The biocatalysts that we develop have significantly enhanced characteristics compared to those found in naturally occurring enzymes or microbes. While we produce our biocatalysts only for use in a controlled industrial environment, the release of such biocatalysts into uncontrolled environments could have unintended consequences. Any adverse effect resulting from such a release could have a material adverse effect on our business and financial condition, and we may have exposure to liability for any resulting harm. |
• | actual or anticipated fluctuations in our financial condition and operating results; |
• | the position of our cash, cash equivalents and marketable securities; |
• | actual or anticipated changes in our growth rate relative to our competitors; |
• | actual or anticipated fluctuations in our competitors' operating results or changes in their growth rate; |
• | announcements of technological innovations by us, our collaborators or our competitors; |
• | announcements by us, our collaborators or our competitors of significant acquisitions or dispositions, strategic partnerships, joint ventures or capital commitments; |
• | announcements or developments regarding technical progress of CodeXyme® cellulase enzymes or CodeXol® detergent alcohols; |
• | additions or losses of one or more significant pharmaceutical products; |
• | announcements or developments regarding pharmaceutical products manufactured using our biocatalysts, intermediates and APIs; |
• | the entry into, modification or termination of collaborative arrangements; |
• | additions or losses of customers; |
• | additions or departures of key management or scientific personnel; |
• | competition from existing products or new products that may emerge; |
• | issuance of new or updated research reports by securities or industry analysts; |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
• | disputes or other developments related to proprietary rights, including patent litigation and our ability to obtain patent protection for our technologies; |
• | changes in existing laws, regulations and policies applicable to our business and products, including the National Renewable Fuel Standard program; |
• | contractual disputes or litigation with our partners, customers or suppliers; |
• | announcement or expectation of additional financing efforts; |
• | sales of our common stock by us, our insiders or our other stockholders; |
• | share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; |
• | general market conditions in our industry; and |
• | general economic and market conditions, including the recent financial crisis. |
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
ITEM 3. | Defaults Upon Senior Securities |
ITEM 4. | Mine Safety Disclosures |
ITEM 5. | Other Information |
ITEM 6. | Exhibits |
3.1 | Amended and Restated Certificate of Incorporation of Codexis, Inc. filed with the Secretary of the State of the State of Delaware on April 27, 2010 and effective as of April 27, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010). | ||
3.2 | Certificate of Designations of Series A Junior Participating Preferred Stock of Codexis, Inc., filed with the Secretary of State of the State of Delaware on September 4, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on September 4, 2012). | ||
3.3 | Amended and Restated Bylaws of Codexis, Inc. effective as of April 27, 2010 (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010). | ||
4.1 | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report for the quarter ended June 30, 2012, filed on August 9, 2012). | ||
4.2 | Rights Agreement by and between the Company and Wells Fargo Bank, N.A., which includes the Form of Certificate of Designations of Series A Junior Participating Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C, dated as of September 3, 2012 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September 4, 2012). | ||
10.1 | Transition and Separation Agreement by and between the Company and David L. Anton dated as of July 24, 2013. | ||
31.1 | Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. | ||
31.2 | Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. | ||
32.1 | Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350. | ||
101* | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets at June 30, 2013 and December 31, 2012, (ii) Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2013 and 2012, (iii) Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2013 and 2012, (iv) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012, and iv) Notes to Condensed Consolidated Financial Statements. |
* | XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
Codexis, Inc. | |||
Date: | August 9, 2013 | By: | /s/ John Nicols |
John Nicols President and Chief Executive Officer (principal executive officer) | |||
Date: | August 9, 2013 | By: | /s/ David O'Toole |
David O’Toole Senior Vice President and Chief Financial Officer (principal financial and accounting officer) |
ITEM 6. | Exhibits |
3.1 | Amended and Restated Certificate of Incorporation of Codexis, Inc. filed with the Secretary of the State of the State of Delaware on April 27, 2010 and effective as of April 27, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010). | ||
3.2 | Certificate of Designations of Series A Junior Participating Preferred Stock of Codexis, Inc., filed with the Secretary of State of the State of Delaware on September 4, 2012 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on September 4, 2012). | ||
3.3 | Amended and Restated Bylaws of Codexis, Inc. effective as of April 27, 2010 (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010). | ||
4.1 | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report for the quarter ended June 30, 2012, filed on August 9, 2012). | ||
4.2 | Rights Agreement by and between the Company and Wells Fargo Bank, N.A., which includes the Form of Certificate of Designations of Series A Junior Participating Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C, dated as of September 3, 2012 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September 4, 2012). | ||
10.1 | Transition and Separation Agreement by and between the Company and David L. Anton dated as of July 24, 2013. | ||
31.1 | Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. | ||
31.2 | Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. | ||
32.1 | Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350. | ||
101* | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets at June 30, 2013 and December 31, 2012, (ii) Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2013 and 2012, (iii) Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2013 and 2012, (iv) Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012, and iv) Notes to Condensed Consolidated Financial Statements. |
* | XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
1. | Termination Date. Executive acknowledges and agrees that his status as an employee of the Company shall end effective as of August 31, 2013 or such earlier date as Executive resigns from the Company or as may be mutually agreed between the Company and Executive (such date, the “Termination Date”). |
2. | Transition Period. During the period from June 1, 2013 through the Termination Date (the “Transition Period”), Executive will be employed by the Company in the position of “Advisor to CEO” and shall perform tasks that may be assigned to him by the Company's Chief Executive Officer; provided, the Company, in its sole discretion, may require that Executive not come into the office at any time during the Transition Period; provided, further, that during such times that Executive is not working in the office he agrees to make himself reasonably available to answer any work-related questions the Company might ask him during normal business hours. During the Transition Period, Executive hereby agrees to execute such further document(s) as shall be reasonably determined by the Company as necessary to give effect to the termination of Executive's status as an officer and/or director of the Company's subsidiaries (the “Resignation Letters”). The Executive acknowledges and agrees that he will not perform services for any third party during the Transition Period that has not been pre-approved in writing by the Company's Chief Executive Officer. In consideration for executing this Agreement and for the services provided by Executive during the Transition Period, Executive shall receive a salary and benefits from the Company at the level in effect on the date Executive signs this Agreement and shall be eligible for the separation benefits set forth in Section 4. |
3. | Final Pay and Expenses. On the Termination Date, the Company shall pay to Executive all accrued but unpaid wages (including, but not limited to, base salary) and the value of all accrued and unused paid-time off earned through the Termination Date, subject to standard payroll deductions and withholdings. In addition, the Company shall reimburse Executive for all outstanding expenses incurred prior to the Termination Date which were consistent with the Company's policies then in effect with respect to travel, entertainment and other business expenses, subject to the Company's requirements with respect to reporting and documenting such expenses. Executive is entitled to the payments set forth in this Section 3 regardless of whether Executive executes this Agreement. |
4. | Separation Payments and Benefits. Subject to Executive signing and delivering to the Company this Agreement prior to July 24, 2013, Executive signing and delivering to the Company the Resignation Letters prior to the Termination Date, Executive signing and delivering to the Company the General Release of Claims attached as Exhibit A (the “General Release”) hereto within the thirty (30) day period immediately following the Termination Date, the General Release becoming no longer subject to its revocation as provided in Section 1(c)(iii) thereof and Executive's performance of his continuing obligations pursuant to this Agreement and that certain Confidential Information, Secrecy and Invention Agreement entered into between Executive and the Company as of March 24, 2008 (the “Confidentiality Agreement”), the Company hereby agrees, without admission of any liability, fact or claim, to provide Executive the severance pay and benefits set forth below. Specifically, the Company and Executive agree as follows: |
(a) | Severance Pay. For the period commencing on the Termination Date and ending three (3) months after the Termination Date (the “Severance Period”), Executive shall be entitled to receive six (6) bi-monthly (i.e., twice a month) severance payments of $13,948 per payment (subject to appropriate tax withholding and other deductions), subject to |
(b) | Bonus. The Company shall pay Executive an amount equal to $61,800, which represents Executive's pro rata bonus for fiscal year 2013, less required withholding taxes, such payment to be made in a single lump sum no later than thirty (30) days following the Termination Date. |
(c) | Healthcare Continuation Coverage. If Executive elects to receive continued healthcare coverage pursuant to COBRA, the Company shall pay for the premiums for Executive and Executive's covered dependents during the period commencing on the first day of the first month following the Termination Date through November 30, 2013 (the “COBRA Payment Period”). The Executive shall notify the Company in writing within five days of becoming eligible for healthcare coverage through other employment, or if he or any of his covered dependents become ineligible for COBRA, during the COBRA Payment Period. Notwithstanding the previous sentence, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue Executive's and his covered dependents' group insurance coverages in effect on the Termination Date (which amount shall be based on the premiums for the first month of COBRA coverage). After the Company ceases to pay the premiums pursuant to this Section 4(c), Executive may, if eligible, elect to continue healthcare coverage at Executive's expense in accordance with the provisions of COBRA. |
(d) | Taxes. Executive understands and agrees that all payments and benefits under this Section 4 will be subject to appropriate tax withholding and other deductions. To the extent any taxes may be payable by Executive for the payments and benefits provided to him by this Agreement beyond those withheld by the Company, Executive agrees to pay them himself and to indemnify and hold the Company and the other entities released herein harmless for any tax claims or penalties, and associated attorneys' fees and costs, resulting from any failure by him to make required payments. |
(e) | Sole Separation Benefit. Executive agrees that the payment and benefits provided by this Section 4 are not required under the Company's normal policies and procedures and are provided as a severance payment and benefits solely in connection with this Agreement. Executive acknowledges and agrees that the payments and benefits referenced in this Section 4 constitute adequate and valuable consideration, in and of themselves, for the promises contained in this Agreement. |
(f) | SEC Reporting. Executive acknowledges that to the extent required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), he will have continuing obligations under Section 16(a) and 16(b) of the Exchange Act to report his transactions in Company common stock for the six (6) month period following June 1, 2013. Executive hereby agrees not to undertake, directly or indirectly, any reportable transactions until the end of such six (6)-month period. |
5. | Full Payment. Executive acknowledges that the payments and arrangements herein shall constitute full and complete satisfaction of any and all amounts properly due and owing to Executive as a result of his employment with the Company and the termination thereof. Executive further acknowledges that, other than the Confidentiality Agreement, the General Release, that certain Indemnification Agreement between Executive and the Company effective April 27, 2010 (the “Indemnification Agreement”) and each equity award agreement, this Agreement shall supersede each agreement entered into between Executive and the Company regarding Executive's employment, including, without limitation, Executive's offer letter agreement with the Company (the “Offer Letter”) and the Change of Control Severance Agreement between Executive and the Company effective November 7, 2012 (the “Change of Control Agreement”), and each such agreement shall be deemed terminated and of no further effect as of the Signature Date. |
6. | Equity Awards. |
(a) | Each option to purchase shares of the Company's common stock held by Executive as of the Termination Date that is vested and exercisable on the Termination Date (collectively, the “Vested Stock Options”) shall be exercisable through Executive's E*Trade account or by following the procedures set forth in Executive's option agreements, provided that if Executive has not exercised his Vested Stock Options on or before the date occurring three months following the Termination Date (the “Option Termination Date”), Executive's Vested Stock Options shall automatically terminate and be of no further effect. Executive acknowledges that if he elects to exercise his Vested Stock Options by following the procedures set forth in his option agreements, the Company must receive a duly executed notice of exercise and remuneration in accordance with Executive's option agreements on or before the Option Termination Date. |
(b) | Effective on the Termination Date, (i) all of Executive's options to purchase shares of Company common stock that are not then fully vested shall automatically terminate and (ii) all of Executive's restricted stock units and performance stock units shall automatically terminate. |
7. | Executive's Release of the Company. Executive understands that by agreeing to the release provided by this Section 7, Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of the other Releasees (as defined below) for any reason whatsoever based on anything that has occurred as of the date Executive signs this Agreement. |
(a) | Full Release. In consideration of the mutual covenants and agreements set forth herein, on behalf of Executive and Executive's heirs, assigns, executors, administrators, trusts, spouse (current of former), domestic partner, and estate, Executive hereby releases and forever discharges the “Releasees” hereunder, consisting of the Company, and each of its stockholders, affiliates, subsidiaries, predecessors, successors, assigns, agents, directors, officers, partners, employees, and insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which Executive now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date Executive signs this Agreement, including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to Executive's hire, employment, remuneration or separation by the Releasees, or any of them, including any Claims arising under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000, et seq.; Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; Civil Rights Act of 1866, and Civil Rights Act of 1991; 42 U.S.C. § 1981, et seq.; Equal Pay Act, as amended, 29 U.S.C. § 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; The Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq.; the California Fair Employment and Housing Act, as amended, Cal. Lab. Code § 12940 et seq.; the California Equal Pay Law, as amended, Cal. Lab. Code §§ 1197.5(a),199.5; the Moore-Brown-Roberti Family Rights Act of 1991, as amended, Cal. Gov't Code §§12945.2, 19702.3; California Labor Code §§ 1101, 1102; the California WARN Act, California Labor Code §§ 1400 et. seq; California Labor Code §§ 1102.5(a),(b); claims for wages under the California Labor Code and any other federal, state or local laws of similar effect; the employment and civil rights laws of California; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney's fees. |
(b) | Exceptions. Notwithstanding the generality of the foregoing, Executive does not release the following claims: |
(c) | California Civil Code Section 1542. EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: |
8. | Non-Disparagement, Transition and Transfer of Company Property. |
(a) | Non-Disparagement. Executive agrees that he shall not disparage, criticize or defame the Company, its affiliates and their respective affiliates, directors, officers, agents, partners, stockholders, employees, products, services, technology or businesses, either publicly or privately. The Company agrees that it shall not, and it shall instruct its officers and members of its Board of Directors to not, disparage, criticize or defame Executive, either publicly or privately. Nothing in this Section 8(a) shall have application to any evidence or testimony required by any court, arbitrator or government agency. |
(b) | Transition. Each of the Company and Executive shall use their respective reasonable efforts to cooperate with each other in good faith to facilitate a smooth transition of Executive's duties to other executive(s) or employees of the Company. |
(c) | Transfer of Company Property. Executive agrees that he shall turn over to the Company no later than the Termination Date all files, memoranda, records, and other documents, and any other physical or personal property which are the property of the Company and which he has in his possession, custody or control. Should Executive discover after the Termination Date that he inadvertently failed to return Company property to the Company, Executive agrees to return promptly all such Company property to Company. Any Company property returned in accordance with the previous sentence will not be deemed to be a breach of this Agreement. |
9. | Executive Representations. Executive warrants and represents that (a) he has not filed or authorized the filing, and has no intention or plan (as of the date of this Agreement) to file or authorize the filing, of any complaints, charges or lawsuits against the Company or any affiliate of the Company with any governmental agency or court, and that if, unbeknownst to Executive, such a complaint, charge or lawsuit has been filed on his behalf, he will immediately cause it to be withdrawn and dismissed, (b) he has reported all hours worked as of the date Executive signs this Agreement and has been paid all compensation, wages, bonuses, commissions, and/or benefits to which he may be entitled and no other compensation, wages, bonuses, commissions and/or benefits are due to him, except as provided in this Agreement, (c) he has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act or any similar state law, (d) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject, and (e) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a valid and binding obligation of Executive, enforceable in accordance with its terms. |
10. | No Assignment. Executive warrants and represents that no portion of any of the matters released herein, and no portion of any recovery or settlement to which Executive might be entitled, has been assigned or transferred to any other person, firm or corporation not a party to this Agreement, in any manner, including by way of subrogation or operation of law or otherwise. If any claim, action, demand or suit should be made or instituted against the Company or any other Releasee because of any actual assignment, subrogation or transfer by Executive, Executive agrees to indemnify and hold harmless the Company and all other Releasees against such claim, action, suit or demand, including necessary expenses of investigation, attorneys' fees and costs. |
11. | Non-Solicitation. Without limiting the Confidentiality Agreement, Executive hereby agrees that Executive shall not, at any time during the one (1) year period immediately following the Termination Date, directly or indirectly, either for himself or on behalf of any other person, recruit or otherwise solicit or induce any employee or consultant of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company. Notwithstanding the foregoing, nothing herein shall prevent Executive from directly or indirectly hiring any individual who submits a resume or otherwise applies for a position in response to a publicly posted job announcement or otherwise |
12. | Governing Law; Attorney's Fees. This Agreement shall be construed and enforced in accordance with, and the rights of the Parties shall be governed by, the laws of the State of California, without regard to any conflicts of laws provisions thereof. In the event that any provision of this Agreement is ever determined by a court or other applicable tribunal to be void or unenforceable, the remaining provisions of the Agreement shall not be affected and shall remain in full force and effect, to the fullest extent permitted by applicable law. The prevailing Party in any action to enforce any provisions of this Agreement shall be entitled to an award of costs and reasonable attorneys' fees in addition to any other relief awarded. |
13. | In the Event of a Claimed Breach. All controversies, claims and disputes arising out of or relating to Executive's employment or this Agreement, including without limitation any alleged violation of any contractual terms, shall be resolved (after reasonable informal resolution efforts have failed) by final and binding arbitration before a single neutral arbitrator in San Mateo County, California, in accordance with the applicable dispute resolution rules of the Judicial Arbitration and Mediation Service (“JAMS”). The arbitration shall be commenced by filing a demand for arbitration with JAMS within 14 days after the filing Party has given written notice of such breach to the other Party. The arbitrator shall be mutually agreed upon by the Parties or, if the Parties are unable to agree, appointed by JAMS in accordance with its procedures. The Company shall pay all costs of arbitration, including all administrative and arbitrator fees, that exceed the amount Executive would have incurred had the dispute been filed in California state court in San Mateo County. Except as provided for in the preceding sentence and as otherwise provided by law, each Party shall bear its own fees, costs and expenses associated with the arbitration, including without limitation attorneys' fees and expert fees. Notwithstanding the foregoing, it is acknowledged that it will be impossible to measure in money the damages that would be suffered as a result of any non-compliance with the obligations of Sections 8(a), 8(b), 11, and 15 hereof, and that in the event of a breach of any such provision, an aggrieved Party will be irreparably damaged and will not have an adequate remedy at law. Any such Party shall, therefore, be entitled to seek injunctive relief in any court of competent jurisdiction, including specific performance, to enforce such obligations, and if any action shall be brought in equity to enforce any of the provisions of Sections 8(a), 8(b), 11 and 15 hereof, neither of the Parties hereto shall raise the defense that there is an adequate remedy at law. |
14. | Miscellaneous. This Agreement, together with the Confidentiality Agreement, the Indemnification Agreement, each equity award agreement and the General Release, comprise the entire agreement between the Parties with regard to the subject matter hereof and supersedes, in their entirety, any other agreements between Executive and the Company with regard to the subject matter hereof, including, without limitation, the Offer Letter and the Change of Control Agreement. Executive acknowledges that there are no other agreements, written, oral or implied, and that he may not rely on any prior negotiations, discussions, representations or agreements. This Agreement may be modified only in writing, and such writing must be signed by both Parties and recited that it is intended to modify this Agreement. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. |
15. | Confidentiality Agreement Obligations. Executive reaffirms his obligations under the Confidentiality Agreement and agrees to continue to abide by the terms set forth in his Confidentiality Agreement. Executive further reaffirms that he will deliver a signed copy of the termination certificate, which is attached as Exhibit A to the Confidentiality Agreement (the “Termination Certificate”), to Human Resources on or before the Termination Date. Executive confirms that he understands that the Company will not pay Executive any benefits under this Agreement unless the Company has received such signed Termination Certificate. |
16. | Failure to Comply. In the event that Executive breaches any of his obligations set forth in this Agreement (including, without limitation, the obligations set forth in Sections 8(a), 8(b), 11 and 15) or as otherwise imposed by law, the Company shall be entitled to stop any payments and/or recover the full benefit paid to Executive under this Agreement and to obtain all other relief provided by law or equity. |
17. | Executive's Cooperation. Executive shall reasonably cooperate with the Company and its affiliates, upon the Company's reasonable request, with respect to any internal investigation or administrative, regulatory or judicial proceeding involving matters within the scope of Executive's duties and responsibilities to the Company during his employment with the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company's reasonable request to give testimony without requiring service of a subpoena or other legal process, and turning over to the Company all relevant Company documents which are or may have come into Executive's possession during his employment); provided, however, that within 30 days of a request by |
18. | Unemployment. It is understood that if Executive files for unemployment benefits with the California Employment Development Department, the Company will not dispute Executive's claim to such benefits. |
Dated: July 24, 2013 | By: /s/David L. Anton David L. Anton |
CODEXIS, INC. | |
Dated: July 24, 2013 | By: /s/Douglas Sheehy Douglas Sheehy Senior Vice President, General Counsel and Secretary |
1. | General Release of the Company. Executive understands that by agreeing to this Release, Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of the other Releasees (as defined below) for any reason whatsoever based on anything that has occurred as of the date Executive signs this Release. |
2. | Executive's Representations. Executive represents and warrants that: |
(a) | Executive has not filed or authorized the filing, and has no intention or plan (as of the date of this Release) to file or authorize the filing, of any complaints, charges or lawsuits against the Company or any affiliate of the Company with any governmental agency or court; |
(b) | Executive has reported all hours worked as of the date Executive signs this Release and has been paid all compensation, wages, bonuses, commissions, and/or benefits to which he may be entitled and no other compensation, wages, bonuses, commissions and/or benefits are due to him other than those described in Section 4 of the Separation Agreement that will be due to Executive upon satisfaction of the conditions described in Section 4 of the Separation Agreement; |
(c) | Executive has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act or any similar state law; |
(f) | the execution, delivery and performance of this Release by Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject; and |
(g) | upon the execution and delivery of this Release by the Company and Executive and expiration of Executive's revocation rights described in Section 1(c)(iii) of this Release, this Release will be a valid and binding obligation of Executive, enforceable in accordance with its terms |
3. | Severability. The provisions of this Release are severable. If any provision is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision. |
4. | Governing Law. This Release shall be construed and enforced in accordance with, and the rights of the Parties shall be governed by, the laws of the State of California or, where applicable, United States federal law, in each case, without regard to any conflicts of laws provisions or those of any State other than California. |
5. | Miscellaneous. This Release, together with the Separation Agreement, the Confidentiality Agreement, the Indemnification Agreement (as each such term is defined in the Separation Agreement) and the equity award agreements, comprise the entire agreement between the Parties with regard to the subject matter hereof and thereof and supersedes, in their entirety, any other agreements between Executive and the Company with regard to the subject matter hereof and thereof, including, without limitation, the Offer Letter and the Change of Control Agreement (as each such term is defined in the Separation Agreement). This Release may be modified only in writing, and such writing must be signed by both Parties and recited that it is intended to modify this Release. This Release may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. |
Dated: ____________, 2013 | By: /s/David L. Anton David L. Anton |
CODEXIS, INC. | |
Dated: ____________, 2013 | By: /s/Douglas Sheehy Douglas Sheehy Senior Vice President, General Counsel and Secretary |
1. | I have reviewed this Quarterly Report on Form 10-Q of Codexis, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ John Nicols |
John Nicols |
President and Chief Executive Officer (principal executive officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Codexis, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ David O'Toole |
David O’Toole Senior Vice President and Chief Financial Officer |
(principal financial and accounting officer) |
• | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ John Nicols |
John Nicols |
President and Chief Executive Officer (principal executive officer) |
/s/ David O'Toole |
David O’Toole Senior Vice President and Chief Financial Officer |
(principal financial and accounting officer) |
Stock-Based Compensation
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Jun. 30, 2013
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stock-Based Compensation In 2002, the Company adopted the 2002 Stock Plan (the “2002 Plan”), pursuant to which the Company's board of directors issued incentive stock options, non-statutory stock options (options that do not qualify as incentive stock options) and restricted stock to our employees, officers, directors or consultants. In March 2010, the board of directors and stockholders approved the 2010 Equity Incentive Award Plan (the “2010 Plan”), which became effective upon the completion of the Company's IPO in April 2010. A total of 1,100,000 shares of common stock were initially reserved for future issuance under the 2010 Plan and any shares of common stock reserved for future grant or issuance under the Company's 2002 Plan that remained unissued at the time of completion of the IPO became available for future grant or issuance under the 2010 Plan. In addition, the shares reserved for issuance pursuant to the exercise of any outstanding awards under the 2002 Plan that expire unexercised will also become available for future issuance under the 2010 Plan. The 2010 Plan also provides for automatic annual increases in the number of shares reserved for future issuance. The following table presents the shares available for grant as of June 30, 2013 (in thousands):
Stock-Based Compensation Expense The Company recognizes compensation expense related to share-based transactions, including the awarding of employee stock options, based on the estimated fair value of the awards granted. All awards granted, modified or settled after January 1, 2006 have been accounted for based on the fair value of the awards granted. The Company generally uses the straight-line method to allocate stock-based compensation expense to the appropriate reporting periods. Some awards are accounted for using the accelerated method as appropriate for the terms of the awards. The following table presents total stock-based compensation expense by functional areas included in the condensed consolidated statements of operations for the three and six months ended June 30, 2013 and 2012 (in thousands):
The following table presents total stock-based compensation expense by security types included in the condensed consolidated statements of operations for the three and six months ended June 30, 2013 and 2012 (in thousands):
Stock Options The fair value of the options granted is estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of the options granted to non-employees is remeasured as they vest, and the resulting change in value, if any, is recognized as an increase or decrease in stock based compensation expense during the period the related services are rendered. The stock options are generally scheduled to vest over four years and all options expire no later than ten years from the date of grant. Restricted Stock Units The Company awarded 833,698 restricted stock units (“RSU”) under the 2010 Plan during the six months ended June 30, 2013. The fair value of the RSU awards was calculated based on the NASDAQ quoted stock price on the date of the grant with the expense recognized over the vesting period. The RSUs are generally scheduled to vest over four years. Performance Stock Units The number of shares of common stock to be issued for each vested performance stock unit ("PSU") will range between zero and two, depending on the level of performance as compared to the criteria set by the Company's board of directors with respect to the Company's annual cash burn for the year ended December 31, 2013. The Company currently estimates 100% of the performance goal will be achieved which will result in one common share issued for each vested PSU. The PSU awards vest in equal installments on March 5, 2014 and March 5, 2015. The fair value of the PSU awards was calculated based on the NASDAQ quoted stock price on the date of the grant with the expense recognized on a straight-line basis over the vesting period. Stockholder Rights Plan In August 2012, the Company's board of directors adopted a stockholder rights plan and declared a dividend of one preferred share purchase right for each share of the Company's common stock held by stockholders of record as of September 18, 2012. Each right entitles stockholders, after the rights become exercisable, to purchase one one-thousandth of a share of the Company's Series A Junior Participating Preferred Stock, par value $0.0001, at a purchase price of $11.35 per one thousandth of a share of Series A Junior Participating Preferred Stock. In general, the rights become exercisable when a person or group acquires 15% or more of the Company's common stock or a tender offer for 15% or more of the Company's common stock is announced or commenced. The rights may discourage a third-party from making an unsolicited proposal to acquire us as exercise of the rights would cause substantial dilution to a person or group that attempts to acquire us on terms not approved by the Company's board of directors. The rights should not interfere with any merger or other business combination approved by the Company's board of directors since the rights may be redeemed by the Company at $0.0001 per right at any time before any person or group acquires 15% or more of the outstanding common stock. These rights expire in September 2013. |
Subsequent Event (Details) (Dyadic [Member], Subsequent Event [Member])
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0 Months Ended |
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Jul. 30, 2013
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Dyadic [Member] | Subsequent Event [Member]
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Subsequent Event [Line Items] | |
Contract termination period (days) | 60 days |
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Revenues: | ||||
Product | $ 4,948 | $ 6,782 | $ 14,085 | $ 21,949 |
Collaborative research and development | 2,026 | 15,868 | 4,370 | 30,480 |
Government awards | 0 | 259 | 0 | 1,616 |
Total revenues | 6,974 | 22,909 | 18,455 | 54,045 |
Costs and operating expenses: | ||||
Cost of product revenues | 3,631 | 5,829 | 9,296 | 18,471 |
Research and development | 8,624 | 15,650 | 15,946 | 31,999 |
Selling, general and administrative | 7,169 | 6,789 | 15,293 | 16,184 |
Total costs and operating expenses | 19,424 | 28,268 | 40,535 | 66,654 |
Loss from operations | (12,450) | (5,359) | (22,080) | (12,609) |
Interest income | 16 | 74 | 43 | 149 |
Other expenses | (183) | (157) | (268) | (275) |
Loss before (benefit) provision for income taxes | (12,617) | (5,442) | (22,305) | (12,735) |
(Benefit) provision for income taxes | (12) | 77 | (77) | 274 |
Net loss | $ (12,605) | $ (5,519) | $ (22,228) | $ (13,009) |
Net loss per share, basic and diluted (dollars per share) | $ (0.33) | $ (0.15) | $ (0.59) | $ (0.36) |
Weighted average common shares used in computing net loss per share, basic and diluted (shares) | 38,060 | 36,296 | 37,951 | 36,177 |
Collaborative Research and Development Agreements
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6 Months Ended |
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Jun. 30, 2013
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Collaborative Research and Development Agreements [Abstract] | |
Collaborative Research and Development Agreements | Collaborative Research and Development Agreements Shell and Raízen In November 2006, the Company entered into a collaborative research agreement and a license agreement with Shell to develop biocatalysts and associated processes that use such biocatalysts. In November 2007, the Company entered into a new and expanded five-year collaborative research agreement (“Shell Research Agreement”) and a license agreement (the “Shell License Agreement”) with Shell. In connection with the Shell Research Agreement, the Company agreed to use its proprietary technology platform to discover and develop enzymes and microorganisms for use in converting cellulosic biomass into biofuels and related products and Shell agreed to pay (i) research funding at specified rates per FTE working on the project during the research term, (ii) payments upon the achievement of milestones, and (iii) royalties on future product sales. The Shell Research Agreement also specified certain minimum levels of FTE services that the Company was required to allocate to the collaboration efforts that increased over the term of the agreement, which was originally set to expire on November 1, 2012. In September 2012, the Company entered into an agreement with Shell (the “New Shell Agreement”) which among other things, terminated the Shell Research Agreement effective as of August 31, 2012, except for certain provisions of the Shell Research Agreement which survived such termination, including provisions regarding intellectual property rights, patent prosecution and maintenance, confidentiality and indemnification. The New Shell Agreement required Shell to pay approximately $7.5 million as full, complete and final satisfaction of amounts that Shell may have owed the Company under the Shell Research Agreement with respect to (i) FTEs assigned to the Shell Research Agreement and (ii) milestones achieved or achievable by the Company under the Shell Research Agreement. The $7.5 million was recognized as revenue during the third quarter of 2012 when all of the Company's obligations were fulfilled under the New Shell Agreement and was collected during the fourth quarter of 2012. Under the New Shell Agreement, Shell granted the Company royalty-bearing, non-exclusive rights and licenses to develop, manufacture, use and sell biocatalysts and microbes in the field of converting cellulosic biomass into fermentable sugars on a worldwide basis, except for Brazil, where such sugars are converted into liquid fuels, fuel additives or lubricants (the “Field of Use”). Raízen Energia S.A. (“Raízen”) holds the exclusive rights to use the Company's enzymes and microbes for converting cellulosic biomass into fermentable sugars in Brazil, where such sugars are converted into ethanol. Under the New Shell Agreement, the Company also granted to Shell a non-exclusive, royalty-free license to manufacture, use and import, solely for the use of Shell and its affiliates, (i) enzymes developed by the Company during the ten year period following August 31, 2012 outside of the Shell Research Agreement for use in the Field of Use and (ii) improvements to any microbe developed by the Company during the ten year period following August 31, 2012 outside of the Shell Research Agreement that is derivative of an identified microbe for use in the Field of Use. Shell remained subject to existing royalty obligations to the Company for future sales of products covered by the intellectual property and technology that remained exclusively licensed to Shell under the License Agreement. The New Shell Agreement has a term that commences on August 31, 2012 and continues until the later of August 31, 2032 or the date of the last to expire patent rights included in the Company's collaboration that claim a biocatalyst or a microbe for use in the Field of Use. In accordance with the Company's revenue recognition policy, the $20.0 million up-front exclusivity fee and the research funding fees received for FTE services under the Shell Research Agreement were recognized in proportion to the actual research efforts incurred relative to the amount of total expected effort to be incurred by the Company over the five-year research period commencing November 2007. Milestones payments to be earned under this agreement were determined to be at risk at the inception of the arrangement and substantive and were recognized upon achievement of the applicable milestone and when collectability of such payment was reasonably assured. There are no further milestone payments expected under the Shell Research Agreement. The Company did not record any milestone and collaborative research and development revenues during the three and six months ended June 30, 2013, respectively. For the three and six months ended June 30, 2012, the Company's collaborative research and development revenue from Shell was $13.9 million and $27.8 million, respectively. Research and Development Collaboration On February 1, 2012, the Company entered into a five year Sitagliptin Catalyst Supply Agreement ("Sitagliptin Agreement") whereby Merck Sharp and Dohme Corp. ("Merck") may obtain commercial scale substance for their use in the manufacture of their products. Merck may extend the term of the Sitagliptin Agreement for an additional five years at its sole discretion. The Sitagliptin Agreement calls for Merck to pay an annual license fee for the rights to the Sitagliptin technology each year for the term of the Sitagliptin Agreement. As of June 30, 2013, the Company has a deferred revenue balance of $2.1 million from Merck primarily related to the license fee. The license fee is being recognized as collaborative research and development revenue ratably over the five year term of the Sitagliptin Agreement. During the six months ended June 30, 2013, the Company recognized $0.8 million of the license fee as collaborative research and development revenue. Pursuant to the Sitagliptin Agreement, Merck may purchase substance from the Company for a fee based on contractually stated prices. During the six months ended June 30, 2013, the Company recognized $0.5 million in revenue related to substance delivered under the Sitagliptin Agreement. Manufacturing Collaboration In November 2012, the Company entered into a commercial arrangement with Arch Pharmalabs Limited ("Arch") by simultaneously terminating all of the Company's existing supply agreements with Arch and entering into the New Arch Enzyme Supply Agreement pursuant to which Arch agreed to exclusively purchase enzymes from the Company for use in the manufacture of certain of Arch's products and the Company agreed to exclusively supply, with limited exceptions, certain of the Company's enzymes to Arch at an agreed upon price for use in such manufacture. Under the New Arch Enzyme Supply Agreement, Arch will no longer produce atorva-family active pharmaceutical ingredients (“APIs”) and intermediates for the Company. Arch will instead market these products directly to end customers, and as a result Arch will no longer pay the Company royalties on their sale of such APIs and intermediates to customers and the Company will no longer have exclusive rights to market such APIs and intermediates in certain markets. For the six months ended June 30, 2013, the Company recognized $2.1 million in product revenue for the one-time sale of enzyme inventory to Arch pursuant to the New Arch Enzyme Supply Agreement. |
Cash Equivalents and Marketable Securities (Tables)
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Jun. 30, 2013
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Cash Equivalents and Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash equivalents and marketable securities | At June 30, 2013, cash equivalents and marketable securities consisted of the following (in thousands):
At December 31, 2012, cash equivalents and marketable securities consisted of the following (in thousands):
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Segment Reporting
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Jun. 30, 2013
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Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision makers are its Chief Executive Officer and the board of directors. The Chief Executive Officer and board of directors review financial information presented on a consolidated basis, accompanied by information about revenues by geographic region, for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results beyond revenue goals or plans for levels or components below the consolidated unit level. As such, the Company has determined that it operates in one segment because operating results are reported only on an aggregate basis to the Company's chief operating decision makers. Operations outside of the United States consist principally of research and development and sales activities. The following table represents revenues that are identified in the corresponding geographic regions based on the customer's ship to locations (in thousands):
The following table represents identifiable long-lived assets in the corresponding regions (in thousands):
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Stock-Based Compensation (Stock-Based Compensation Expense) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Schedule of stock-based compensation expense | ||||
Stock-based compensation | $ 1,262 | $ 1,907 | $ 2,735 | $ 3,077 |
Research and development [Member]
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Schedule of stock-based compensation expense | ||||
Stock-based compensation | 502 | 847 | 1,706 | 1,501 |
Selling, general and administrative [Member]
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Schedule of stock-based compensation expense | ||||
Stock-based compensation | 760 | 1,060 | 1,029 | 1,576 |
Stock options [Member]
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Schedule of stock-based compensation expense | ||||
Stock-based compensation | 531 | 1,497 | 1,141 | 2,355 |
Restricted stock units [Member]
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Schedule of stock-based compensation expense | ||||
Stock-based compensation | 604 | 410 | 1,296 | 722 |
Performance stock units [Member]
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Schedule of stock-based compensation expense | ||||
Stock-based compensation | $ 127 | $ 0 | $ 298 | $ 0 |
Warrants (Tables)
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Jun. 30, 2013
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Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of common stock warrants issued and outstanding | As of June 30, 2013, the following warrants remain outstanding:
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Commitments and Contingencies (Tables)
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Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum payments under non-cancellable operating leases | Future minimum payments under noncancellable operating leases are as follows at June 30, 2013 (in thousands):
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(Revenues by Geographic Area) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Schedule of revenues by geographical area | ||||||||||
Revenues | $ 6,974 | $ 22,909 | $ 18,455 | $ 54,045 | ||||||
Americas [Member]
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Schedule of revenues by geographical area | ||||||||||
Revenues | 2,181 | [1] | 16,914 | [1] | 4,301 | [1] | 32,543 | [1] | ||
Europe [Member]
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Schedule of revenues by geographical area | ||||||||||
Revenues | 1,177 | 2,445 | 4,382 | 7,930 | ||||||
Asia [Member]
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Schedule of revenues by geographical area | ||||||||||
Revenues | ||||||||||
India [Member]
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Schedule of revenues by geographical area | ||||||||||
Revenues | 289 | 3,443 | 2,508 | 9,961 | ||||||
Singapore [Member]
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Schedule of revenues by geographical area | ||||||||||
Revenues | 3,073 | 0 | 6,721 | 3,253 | ||||||
Other [Member]
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Schedule of revenues by geographical area | ||||||||||
Revenues | $ 254 | $ 107 | $ 543 | $ 358 | ||||||
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Description of Business (Details)
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6 Months Ended | 0 Months Ended |
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Jun. 30, 2013
Entity
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Jul. 30, 2013
Subsequent Event [Member]
Dyadic [Member]
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Description of Business [Line Items] | ||
Number of pharmaceutical firms using technology (entities) | 50 | |
Contract termination period (days) | 60 days |
Commitments and Contingencies (Textual) (Details) (USD $)
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6 Months Ended | |||||||
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Jun. 30, 2013
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Jun. 30, 2013
Sixth Amendment [Member]
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Dec. 31, 2012
Sixth Amendment [Member]
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Jun. 30, 2013
Headquarters, Redwood City [Member]
Fifth Amendment [Member]
sqft
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Jun. 30, 2013
Saginaw Space [Member]
Fifth Amendment [Member]
sqft
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Jun. 30, 2013
Penobscot Space, Building 2 Space, and Saginaw Space [Member]
Fifth Amendment [Member]
extension
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Jun. 30, 2013
Penobscot Space, Building 2 Space, and Saginaw Space [Member]
Sixth Amendment [Member]
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Jun. 30, 2013
Chesapeake Space [Member]
Sixth Amendment [Member]
extensions
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Commitments and Contingencies [Line Items] | ||||||||
Lease area space occupancy (square feet) | 107,000 | 29,921 | ||||||
Expiration date of lease | Jan. 31, 2020 | Jan. 31, 2013 | ||||||
Number of extensions available on lease (extension) | 2 | 2 | ||||||
Extended term of lease (years) | 5 years | 5 years | ||||||
Extended expiration date of lease | Jan. 31, 2017 | |||||||
Letters of credit | $ 700,000 | $ 707,000 | ||||||
Asset retirement obligations | 300,000 | |||||||
Estimated obligation payable | $ 600,000 |
Fair Value Measurements (Tables)
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Jun. 30, 2013
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Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of financial instruments measured at fair value on a recurring basis | The following table presents the financial instruments that were measured at fair value on a recurring basis at June 30, 2013 by level within the fair value hierarchy (in thousands):
The following table presents the financial instruments that were measured at fair value on a recurring basis at December 31, 2012 by level within the fair value hierarchy (in thousands):
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Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Statement of Other Comprehensive Income [Abstract] | ||||
Unrealized gain (loss) on marketable securities, tax | $ 32 | $ 0 | $ 155 | $ 0 |
Description of Business
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6 Months Ended |
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Jun. 30, 2013
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Description of Business [Abstract] | |
Description of Business | Description of Business Codexis, Inc. (the "Company") was incorporated in the state of Delaware in January 2002. The Company engineers enzymes for pharmaceutical, biofuel and chemical production. Its proven technologies enable scale-up and implementation of biocatalytic solutions to meet customer needs for rapid, cost-effective and sustainable process development, from research to manufacturing. The Company has commercialized its technology and products in the pharmaceuticals market, which is its primary business focus. There are currently over 50 pharmaceutical firms using its technology, products and services in their manufacturing process development, including in the production of some of the world's bestselling and fastest growing drugs. The Company also continues to develop its CodeXyme® cellulase enzymes to convert non-food plant material, which the Company calls cellulosic biomass, into affordable sugars, which can then be converted into renewable fuels and chemicals. The Company is also developing its own manufacturing process for CodeXol® detergent alcohols, which are bio-based chemicals. Detergent alcohols are used to manufacture surfactants, which are key, active cleaning ingredients in consumer products such as shampoos, liquid soaps and laundry detergents. The Company is seeking collaboration partners to assist it with the development and commercialization of CodeXyme® cellulase enzymes and CodeXol® detergent alcohols, and the Company is also exploring other strategic options with respect to these products and technologies. On July 30, 2013, the Company received a notice (the "Dyadic notice") from Dyadic International, Inc. (“Dyadic”) asserting that Dyadic believed the Company to be in breach of the parties' November 14, 2008 license agreement (the "Dyadic license agreement") and that Dyadic would terminate the Dyadic license agreement unless the Company cured such breach within 60 days of notice. The Company licenses Dyadic's C-1 based proprietary fungal expression technology from Dyadic under the Dyadic license agreement and uses the strain to engineer enzymes that are used in the Company's CodeXyme® cellulase enzymes. The Company's receipt of the Dyadic notice may interfere with its ability to find a collaboration partner for its CodeXyme® cellulase enzyme program and the Company's strategic options in respect of this program may be limited until the matter is resolved. For a further discussion of the Dyadic notice and the potential impact the Dyadic notice and the termination of the license agreement would have on Codexis and its businesses, please see the Note 13 for subsequent events. The Company assists customers in discovering or enhancing enzymes variants by applying its CodeEvolver® directed evolution technology platform, which introduces genetic mutations into microorganisms, giving rise to changes in the enzymes that they produce. Once the Company identifies potentially beneficial mutations, it tests combinations of these mutations until it has created variant enzymes that exhibit marketable performance characteristics superior to competitive products. This process allows the Company to make continuous, efficient improvements to the performance of its enzymes. In these Notes to condensed consolidated financial statements, the “Company” refers to Codexis, Inc. and its subsidiaries on a consolidated basis. |
Balance Sheets Details
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Jun. 30, 2013
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Balance Sheets Details [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheets Details | Balance Sheets Details Inventory, net Inventory, net consisted of the following (in thousands):
Property and Equipment, net Property and equipment, net consisted of the following (in thousands):
Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss) by component and related tax effects were as follows (in thousands):
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Basis of Presentation and Summary of Significant Accounting Policies
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. The condensed consolidated balance sheet at December 31, 2012 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures including notes required by GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly its financial position as of June 30, 2013 and results of its operations, comprehensive loss and cash flows for the three and six months ended June 30, 2013 and 2012. The interim results are not necessarily indicative of the results for any future interim period or for the entire year. Certain prior period amounts have been reclassified to conform to current period presentation. The unaudited interim condensed consolidated financial statements include the amounts of Codexis, Inc. and its wholly-owned subsidiaries in the United States, Brazil, Hungary, India, Mauritius, The Netherlands and Singapore. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company's management regularly assesses these estimates which primarily affect revenue recognition, the valuation of marketable securities and accounts receivable, intangible assets, goodwill arising out of business acquisitions, inventories, accrued liabilities, common stock, and stock options and the valuation allowances associated with deferred tax assets. Actual results could differ from those estimates and such differences may be material to the condensed consolidated financial statements. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, accounts receivable and restricted cash. Cash and cash equivalents, marketable securities and restricted cash are invested through banks and other financial institutions in the United States, as well as in other foreign countries. Such deposits may be in excess of insured limits. The Company's top five customers accounted for 73% and 85% of our total revenues for the three and six months ended June 30, 2013. Accounts receivable balances for the top five customers were 70% and 84% of total balances as of June 30, 2013 and December 31, 2012, respectively. Credit risk with respect to accounts receivable exists to the extent of amounts presented in the condensed consolidated financial statements. The Company estimates an allowance for doubtful accounts through specific identification of potentially uncollectible accounts receivable based on an analysis of its accounts receivable aging. Uncollectible accounts receivable are written off against the allowance for doubtful accounts when all efforts to collect them have been exhausted. Recoveries are recognized when they are received. Actual collection losses may differ from its estimates and could be material to its consolidated financial position, results of operations, and cash flows. Fair Value of Financial Instruments The carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, marketable securities, restricted cash, accounts receivable and accounts payable, approximate fair value due to their short maturities. Fair value is considered to be the price at which an asset could be exchanged or a liability transferred (an exit price) in an orderly transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on or derived from observable market prices or other observable inputs. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments and the instruments’ complexity. Cash, Cash Equivalents and Marketable Securities The Company considers all highly liquid investments with maturity dates of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. The majority of cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits. Marketable securities included in current assets are comprised of corporate bonds, commercial paper, and United States Treasury obligations. Marketable securities included in non-current assets are comprised of corporate bonds and United States Treasury obligations that have a maturity date greater than one year. The Company's investment in common shares of CO2 Solutions Inc. (“CO2 Solutions”) is included in non-current marketable securities. As of June 30, 2013, there were no unrealized losses related to the Company's equity securities. The Company performs separate evaluations of impaired debt and equity securities to determine if the unrealized losses as of the balance sheet date are other-than-temporary impairment. For the Company's investments in equity securities, its evaluation considers a number of factors including, but not limited to, the length of time and extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, and its management’s ability and intent to hold the securities until fair value recovers. The assessment of the ability and intent to hold these securities to recovery focuses on its current and forecasted liquidity requirements, capital requirements and securities portfolio objectives. Based on these evaluation criteria, the Company concluded during the third quarter of 2012 the unrealized losses related to its equity investment in the common shares of CO2 Solutions were other-than-temporary and as a result, the Company recorded $0.8 million as a selling, general and administrative expense in its condensed consolidated statement of operations (see Note 6). For the Company's investments in debt securities, management determines whether it intends to sell or if it is more-likely-than-not that the Company will be required to sell impaired securities. This determination considers current and forecasted liquidity requirements, capital requirements and securities portfolio objectives. For all impaired debt securities for which there was no intent or expected requirement to sell, the evaluation considers all available evidence to assess whether it is likely the amortized cost value will be recovered. The Company conducts a regular assessment of its debt securities with unrealized losses to determine whether the securities have other-than-temporary impairment considering, among other factors, the nature of the securities, credit rating or financial condition of the issuer, the extent and duration of the unrealized loss, expected cash flows of underlying collateral and market conditions. As of June 30, 2013, there were no unrealized losses related to the Company's debt securities. The Company's investments in debt and equity securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses are reported on the condensed consolidated statement of comprehensive loss unless considered other-than-temporary. Amortization of purchase premiums and accretion of purchase discounts, realized gains and losses of debt securities and declines in value deemed to be other than temporary, if any, are included in interest income or other expenses. The cost of securities sold is based on the specific-identification method. There were no significant realized gains or losses from sales of marketable securities during the three and six months ended June 30, 2013 and 2012. Impairment of Long-Lived Assets and Intangible Assets Long-lived and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. The Company's intangible assets with finite lives consist of customer relationships, developed core technology, trade names, and the intellectual property (“IP”) rights associated with the acquisition of Maxygen, Inc.'s ("Maxygen") directed evolution technology in 2010. Intangible assets were recorded at their fair values at the date the Company acquired the assets and, for those assets having finite useful lives, are amortized using the straight-line method over their estimated useful lives. The Company's long-lived assets include property, plant and equipment, and other non-current assets. The Company determined that it has a single entity wide asset group (“Asset Group”). The directed evolution technology patent portfolio acquired from Maxygen (“Core IP”) is the most significant component of the Asset Group since it is the base technology for all aspects of the Company's research and development, and represents the basis for all of its identifiable cash flow generating capacity. Consequently, the Company does not believe that identification of independent cash flows associated with its long-lived assets is currently possible at any lower level than the Asset Group. The Core IP is the only finite-lived intangible asset on the balance sheet as of June 30, 2013 and is considered the primary asset within the Asset Group. The remaining useful life of the Core IP extends through the fourth quarter of 2016. There has been no significant change in the utilization or estimated life of the Core IP since the Company acquired the technology patent portfolio from Maxygen. The estimated remaining useful life of the Core IP is not impacted by the termination of the Shell Research Agreement, which is described in Note 3 below. The carrying value of long-lived assets in the Asset Group may not be recoverable based upon the existence of one or more indicators of impairment which could include: a significant decrease in the market price of the Company's common stock; current period cash flow losses or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the assets; slower growth rates in the Company's industry; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the assets; loss of significant customers or partners; or the current expectation that the assets will more likely than not be sold or disposed of significantly before the end of their estimated useful life. The Company evaluates recoverability of its long-lived assets and intangible assets based on the sum of the undiscounted cash flows expected to result from the use, and the eventual disposal of, the Asset Group. The Company makes estimates and judgments about the future undiscounted cash flows over the remaining useful life of the Asset Group. The anticipated future cash flows include the Company's estimates of existing or in process product revenues, production and operating costs, future capital expenditures, working capital needs, and assumptions regarding the ultimate sale of the Asset Group at the end of the life of the primary asset. The useful life of the Asset Group was based on the remaining useful life of the Core IP, the primary asset. The result of the Company's impairment analysis as of December 31, 2012 indicated that the undiscounted cash flows for the Asset Group were greater than the carrying value of the Asset Group by approximately 14%. During the six months ended June 30, 2013, the Company made no changes to its underlying forecasts nor did the Company identify any indicators of potential impairment or other new information that would have a material impact on the forecast or the conclusion of the impairment analysis prepared as of December 31, 2012. Any inability to align future production costs, operating costs, capital expenditures and working capital needs with significant changes in the timing and/or level of estimated future revenue could adversely impact the Company's projected undiscounted cash flows. Future changes in the estimated useful life of the long-lived assets could also adversely impact the Company's projected undiscounted cash flows and result in future impairment charges. If it is determined that the Asset Group is not recoverable, an impairment loss would be calculated based on the excess of the carrying amount of the intangible and long-lived assets over the fair value. Any future impairment charges could have a material adverse effect on the Company's financial position and results of operations. Valuation of Goodwill The Company reviews goodwill impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company determined that it has only one operating segment and reporting unit under the criteria in ASC 280, Segment Reporting, and accordingly, all of the goodwill is associated with the Company. The Company's review of goodwill impairment indicators is performed at the Company level. The goodwill impairment test consists of a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not required. The Company uses its market capitalization as an indicator of fair value. The Company believes that since its reporting unit is publicly traded, the ability of a controlling shareholder to benefit from synergies and other intangible assets that arise from control might cause the fair value of our reporting unit as a whole to exceed its market capitalization. However, the Company believes that the fair value measurement need not be based solely on the quoted market price of an individual share of our common stock, but also can consider the impact of a control premium in measuring the fair value of its reporting unit. Should the Company's market capitalization be less than the total stockholder's equity as of the Company's annual test date or as of any interim impairment testing date, the Company would also consider market comparables, recent trends in the Company's stock price over a reasonable period and, if appropriate, use an income approach to determine whether the fair value of its reporting unit is greater than the carrying amount. The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. Implied fair value is the excess of the fair value of the reporting unit over the fair value of all identified assets and liabilities. The Company bases its fair value estimates on assumptions it believes to be reasonable. Actual future results may differ from those estimates. Goodwill was tested for impairment as of October 1, 2012, the date of the Company's annual impairment review. The Company concluded that the fair value of the reporting unit exceeded the carrying value and no impairment existed. No impairment charges were recorded through June 30, 2013. Restricted Cash Restricted cash consisted of amounts invested in money market accounts primarily for purposes of securing a standby letter of credit as collateral for the Company's Redwood City, California facility lease agreement and for the purpose of securing a working capital line of credit. Restricted cash decreased in the six months ended June 30, 2013 due to the reduction of the available credit under the Company's working capital line resulting in a reduction of required restricted cash. Revenue Recognition The Company has generally recognized revenue from multiple element arrangements under collaborative research agreements, including license payments, research and development services, milestones, and royalties. Revenue arrangements with multiple deliverables are divided into separate units of accounting if certain criteria are met. Revenues are recognized when the four basic revenue recognition criteria are met: (1) persuasive evidence of an arrangement exists; (2) products have been delivered, transfer of technology has been completed or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. The Company's primary sources of revenues consist of product revenues, collaborative research and development agreements and government awards. Collaborative research and development agreements typically provide the Company with multiple revenue streams, including up-front fees for licensing, exclusivity and technology access, fees for full-time employee equivalent (“FTE”) services and the potential to earn milestone payments upon achievement of contractual criteria and royalty fees based on future product sales or cost savings by the Company's customers. Up-front fees received in connection with collaborative research and development agreements, including license fees, technology access fees, and exclusivity fees, are deferred upon receipt, are not considered a separate unit of accounting and are recognized as revenues over the relevant performance periods. During 2011, the Company's provisional indirect billing rates for the award from the DOE under the ARPA-E Recovery Act were audited by the DOE resulting in a revision to the Company's provisional indirect billing rates. The revised indirect rates were subsequently approved by the DOE during the first quarter of 2012. As a result of this change in accounting estimate, the Company invoiced and recognized $0.5 million of additional award revenues during the first quarter of 2012 for reimbursable costs incurred by the Company in 2010 and 2011. The term of the award agreement ended in June 2012 and no further revenue has been recognized since that date. Income Taxes The Company uses the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for deductible temporary differences, along with net operating loss (“NOL”) carry forwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company recognizes the financial statement effects of an uncertain tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Net Loss per Share Basic net loss per share of common stock is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock is computed by giving effect to all potential common shares, consisting of stock options, warrants and redeemable convertible preferred stock, to the extent dilutive. Basic and diluted net loss per share of common stock was the same for each period presented as the inclusion of all potential common shares outstanding was anti-dilutive. The following options to purchase common stock, restricted stock units and warrants to purchase common stock were excluded from the computation of diluted net loss per share of common stock for the three and six months ended June 30, 2013 and 2012 (in thousands):
Recently Issued and Adopted Accounting Guidance In February 2013, the Financial Accounting Standard Board ("FASB") issued ASU 2013-02 related to the reporting of amounts reclassified out of accumulated other comprehensive income that requires entities to report, either on their income statement or in a footnote to their financial statements, the effects on earnings from items that are reclassified out of other comprehensive income. The Company adopted this accounting standard on January 1, 2013, and the adoption of this guidance did not have a material impact on the financial statements. |
Fair Value Measurements (Textual) (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
6 Months Ended | ||
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Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2013
CO2 Solutions [Member]
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Subsidiary or Equity Method Investee [Line Items] | |||
Cash | $ 8.4 | $ 7.2 | |
Number of common shares fair value | 10,000,000 |
Stock-Based Compensation (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock options available for grant | The following table presents the shares available for grant as of June 30, 2013 (in thousands):
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Schedule of stock-based compensation expense | The following table presents total stock-based compensation expense by functional areas included in the condensed consolidated statements of operations for the three and six months ended June 30, 2013 and 2012 (in thousands):
The following table presents total stock-based compensation expense by security types included in the condensed consolidated statements of operations for the three and six months ended June 30, 2013 and 2012 (in thousands):
|
Basis of Presentation and Summary of Significant Accounting Policies (Textual) (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Jun. 30, 2013
reporting_unit
operating_segment
Criteria
|
Jun. 30, 2012
|
Dec. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2012
Intellectual property [Member]
|
Jun. 30, 2013
Total revenues [Member]
Customer concentration risk [Member]
customer
|
Jun. 30, 2013
Total revenues [Member]
Customer concentration risk [Member]
customer
|
Jun. 30, 2013
Accounts Receivable [Member]
Customer concentration risk [Member]
customer
|
Dec. 31, 2012
Accounts Receivable [Member]
Customer concentration risk [Member]
customer
|
Jun. 30, 2013
Equity Securities [Member]
|
Jun. 30, 2013
Debt Securities [Member]
|
|
Schedule of Available-for-sale Securities [Line Items] | ||||||||||||||
Number of major customers (customer) | 5 | 5 | 5 | 5 | ||||||||||
Major customers, concentration risk percentage (percent) | 73.00% | 85.00% | 70.00% | 84.00% | ||||||||||
Maturity date of highly liquid investments (months) | 3 months | |||||||||||||
Maturity period of marketable securities included in non-current asset (years) | 1 year | |||||||||||||
OTTI recorded in selling, general and administrative expenses | $ 7,169,000 | $ 800,000 | $ 6,789,000 | $ 15,293,000 | $ 16,184,000 | |||||||||
Percentage of undiscounted cash flows greater than carrying value of asset group (percent) | 14.00% | |||||||||||||
Number of operating segments (operating segment) | 1 | |||||||||||||
Number of reportable units (reportable unit) | 1 | |||||||||||||
Gross unrealized losses | 0 | 0 | 0 | 0 | 0 | |||||||||
Number revenue recognition criteria (criteria) | 4 | |||||||||||||
Change in accounting estimate | $ 500,000 |
Balance Sheets Details (Accumulated Other Comprehensive Income (Loss)) (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
Unrealized gains (losses) on available-for-sale securities [Member]
|
|
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning balance | $ 106 | $ (136) | $ (136) |
Other comprehensive income before reclassifications | 397 | ||
Tax effects | (155) | ||
Ending balance | $ 106 | $ (136) | $ 106 |