Codexis shelves CodeXyme product for cellulosic fuels, chemicals
Biocatalyst producer Codexis Inc. recently released its financial results for the third quarter of 2013, reporting that it will immediately begin to wind down its CodeXyme cellulase enzyme program for the production of cellulosic sugars for biofuels and biobased chemicals.
In a press release announcing the results, John Nicols, president and CEO of Codexis, said the company continues to be very encouraged by the progress it’s been making with its core biocatalysis business, but indicated the company will focus on the pharmaceutical and chemical industries.
“Going forward, we will exclusively focus the company onto this biocatalysis business enterprise in which we develop and supply enzymes to reduce the costs and increase the efficiency of our customers’ pharmaceutical and chemical manufacturing processes. Given the market’s undervaluation of the prospects and continued slow build out of cellulosic ethanol facilities, we have not been able to secure a suitable partnership or transaction for our CodeXyme cellulase enzyme business,” he said. “Accordingly, we have begun today to immediately wind down our CodeXyme franchise, after having already stopped further development of our CodeXol detergent alcohols franchise earlier in the year. To mitigate future cash burn for the company, we have also undertaken actions to restructure and reduce the costs of our operations. We expect that the majority of these cost reduction measures will be in place by year end to give us an optimal financial start to 2014.”
During a call to discuss the quarterly results, Nicols elaborated, noted that while the company is very proud to have developed its CodeXyme cellulose enzymes and CodeXol detergent alcohol platform, it has fought an uphill battle against several forces. Specifically, he named the growth of cheap and abundant non-renewable fuel sources, the shifted fuel strategy of the company’s partnership with Shell, delayed economic validation timelines for cellulosic ethanol technologies and the rising political sentiment against ethanol’s growth in fuel pools.
According to Nicols, Codexis has spent the past nine months engaging a leading financial advisor to help the company secure a funding partner for its CodeXyme cellulase enzyme product. “Despite the strong efforts of our investment banker, in concert with our highest priority attentions from our team, it is now clear that we do not expect to be able to secure a partnership or transaction that will sufficiently let us recognize the value of our CodeXyme technology and business state,” he said, noting that the company found partner appetite to be muted by uncertainties in the cellulosic ethanol industry, extended views of investment runway and reduced perceived returns.
“While we may continue to explore possible strategic transactions for both our CodeXyme cellulase enzymes and CodeXol detergent alcohols programs, we now direct the full attention of the Codexis team onto its 11 year biocatalysis core,” Nicols continued.
Regarding its financial results, Codexis reported revenues of $3.9 million for the quarter, down from $7 million reported for the second quarter. Revenues for the first nine months of the year were $22.4 million.