Verenium Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2013
SAN DIEGO, Aug. 7, 2013 /PRNewswire/ — Verenium Corporation (Nasdaq: VRNM), a leading industrial biotechnology company focused on the development and commercialization of high-performance enzymes, today reported operating highlights and financial results for the second quarter and six months ended June 30, 2013.
Since the beginning of 2013, the Company has made important progress on both operational and financial fronts. Recent accomplishments include:
Animal Health and Nutrition
-- Introduced next-generation phytase enzyme product, CIBENZA(®) PHYTAVERSE(TM), with partner Novus, International, Inc. (Novus). Novus and Verenium expect to launch this product in certain geographic regions in 2013. -- Selected the first lead enzyme candidate for a suite of non-starch polysaccharide (NSP) enzymes, also with partner Novus.
-- Launched Deltazym(®) APS protease for use in corn ethanol operations to reduce cost and chemical usage. -- Continued to demonstrate the operational and economic advantages of Fuelzyme(®) alpha-amylase in several new field trials.
-- Launched Pyrolase(®) HT, a next-generation cellulase enzyme for use in hydraulic fracturing. -- Reestablished commercial sales to a Pyrolase(® )cellulase customer in China.
-- Entered into a short term, preliminary research collaboration with Colgate-Palmolive Company to research an innovative enzyme-based manufacturing process to potentially replace traditional chemical processes that are standard in the manufacturing of certain consumer products.
Revenues for the periods ended June 30, 2013 and 2012 were as follows (in thousands):
Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012 ---- ---- ---- ---- Revenues: Animal health and nutrition $8,061 $9,256 $15,987 $16,672 Grain processing 2,880 2,256 5,046 5,841 Oilseed processing -- -- -- 579 All other products 90 730 214 871 --- --- --- --- Total product 11,031 12,242 21,247 23,963 Contract manufacturing 2,512 2,486 4,730 2,486 Collaborative and license 1,844 969 3,196 6,477 ----- --- ----- ----- Total revenue $15,387 $15,697 $29,173 $32,926
Total revenues for the six months ended June 30, 2013 decreased 11% to $29.2 million from $32.9 million in the prior year, due in large part to license revenue recorded in 2012 from DSM and Novus. Combined product and contract manufacturing revenue for the six months ended June 30, 2013 decreased 2% to $26.0 million from $26.4 million in the prior year.
Product revenue for the six months ended June 30, 2013 decreased 11% to $21.2 million from $24.0 million in the prior year, primarily attributed to a decline in Phyzyme(® )XP phytase manufacturing revenue due to an increase in manufacturing volumes by DuPont, the Company’s marketing and distribution partner for Phyzyme(®) XP phytase. Revenue associated with product manufactured at DuPont sites is recognized on a net basis equal to the royalty on operating profits received from DuPont, and excludes gross manufacturing revenue.
In addition, grain processing revenue declined during the first quarter of 2013 and was offset in part by an increase in grain processing revenue during the second quarter of 2013, indicative of improvements in corn ethanol market conditions and increased customer adoption of the Company’s Fuelzyme(® )alpha-amylase enzyme.
The Company also reported lower revenue from its grain processing and oilseed processing product lines as a result of the sale of its Veretase(® )alpha-amylase and Purifine(®) PLC enzymes to DSM in March 2012. In conjunction with the sale to DSM, the Company entered into a supply agreement to continue to produce and sell Purifine(®) PLC and Veretase(®) alpha-amylase products to DSM at lower sales prices than prior periods when sold directly to end customers. Revenue from the DSM supply agreement is reported as contract manufacturing revenue.
Gross Profit and Gross Margin
Product and contract manufacturing gross profit for the six months ended June 30, 2013 increased to $9.6 million from $9.2 million for the same period in 2012. Gross margin increased to 37% for the six months ended June 30, 2013, as compared to 35% for the same period in 2012, attributed primarily to improved manufacturing yields.
Excluding cost of product and contract manufacturing revenues, total operating expenses for the six months ended June 30, 2013 increased to $20.3 million from $17.2 in the prior year. This increase is primarily due to increased research and development costs reflecting continued investment in pipeline products, including the launch of two new products during the first half of 2013, and the expected launch of one more product by the end of the year.
Income (Loss) from Operations
Loss from operations for the six months ended June 30, 2013 was $7.5 million compared to income from operations of $29.7 million for the prior year, on a GAAP accounting basis, including the impact of the $31.3 million gain on sale of the oilseed processing business to DSM in 2012.
As detailed in the attached financial tables, the operating results for the first half of the current and prior year were impacted by significant non-recurring and non-cash items. The Company believes that reporting Adjusted EBITDA on a non-GAAP basis, which excludes the impact of these items, provides a more consistent measure of operating results. It should not be considered, however, in isolation or as a substitute for, or superior to, the financial information presented in the Company’s consolidated financial statements. Further, the Adjusted EBITDA measure shown for the Company may not be comparable to similarly titled measures used by other companies.
The Company reported Adjusted EBITDA loss of $5.1 million for the six months ended June 30, 2013 compared to $0.5 million for the same period in 2012. The change in Adjusted EBITDA is primarily attributed to license revenue recorded in 2012 from DSM and Novus International, and increased research and development expenses.
The Company ended the quarter with $21.7 million in cash and cash equivalents and $2.5 million in total restricted cash.
“In 2013, we’ve gained substantial traction with prospective customers for our grain processing products and expanded our presence in our core markets with the introduction of three new products,” said James Levine, President & Chief Executive Officer at Verenium. “Looking forward we are excited to launch our new phytase enzyme product, CIBENZA(®) PHYTAVERSE(TM), with partner Novus later this year.”
Verenium, an industrial biotechnology company, is a global leader in developing high-performance enzymes. Verenium’s tailored enzymes are environmentally friendly, making products and processes greener and more cost-effective for industries, including the global food and fuel markets. Read more at www.verenium.com.
Statements in this press release that are not strictly historical are “forward-looking” and involve a high degree of risk and uncertainty. These include, but are not limited to, statements related to Verenium’s technology, products and product candidates (including, in each case, their value, potential for revenue growth and expected near-term and longer term revenue) and product pipeline (including the timing for commercial launch of any product candidates), lines of business, operations (including Verenium’s ability to successfully negotiate and enter into future collaborations and partnerships), capabilities, commercialization activities, customer adoption rates, industry conditions, future financial performance (including all financial guidance), and near-term and longer-term growth and prospects. Such statements are only predictions, and actual events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to the differences include, but are not limited to, risks associated with Verenium’s strategic focus, technologies, products and product candidates and product pipeline (including Verenium’s ability to identify, develop and commercialize new products and product candidates, either independently or with collaborators or partners, and market demand for those products and product candidates), dependence on patents and proprietary rights, protection and enforcement of its patents and proprietary rights, the commercial prospects of the industries in which Verenium operates and sells products, Verenium’s dependence on manufacturing and/or license agreements, its ability to achieve milestones under existing and future collaboration agreements, the ability of Verenium and its partners to commercialize its technologies and products (including by obtaining any required regulatory approvals) using Verenium’s technologies, the timing for launching any commercial products and projects, the ability of Verenium and its collaborators to market and sell any products that it or they commercialize, the development or availability of competitive products or technologies, the future ability of Verenium to enter into and/or maintain collaboration and joint venture or partnership agreements and licenses on a timely basis or at all, and risks and other uncertainties more fully described in Verenium’s filings with the Securities and Exchange Commission, including, but not limited to, Verenium’s annual report on Form 10-K for the year ended December 31, 2012 and any updates contained in its subsequently filed quarterly reports on Form 10-Q. These forward-looking statements speak only as of the date hereof, and Verenium expressly disclaims any intent or obligation to update these forward-looking statements.
Contacts: Sarah Carmody Sr. Manager, Corporate Communications 858-431-8581 firstname.lastname@example.org
Verenium Corporation Condensed Consolidated Statements of Operations (unaudited, in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012 ---- ---- ---- ---- Revenues: Product $11,031 $12,242 $21,247 $23,963 Contract manufacturing 2,512 2,486 4,730 2,486 Collaborative and license 1,844 969 3,196 6,477 ----- --- ----- ----- Total revenue 15,387 15,697 29,173 32,926 Operating expenses: Cost of product and contract manufacturing revenue 8,667 9,921 16,371 17,236 Product and contract manufacturing gross profit 4,876 4,807 9,606 9,213 Product and contract manufacturing gross margin 36% 33% 37% 35% Research and development 5,201 3,833 10,279 6,994 Selling, general and administrative 5,288 4,313 10,051 10,228 Total operating expenses 19,156 18,067 36,701 34,458 Gain on sale of oilseed processing business -- -- -- (31,278) --- --- --- ------- Income (loss) from operations (3,769) (2,370) (7,528) 29,746 Other income and expense: Interest and other expense, net (1,410) (87) (2,781) (1,367) Gain (loss) on net change in fair value of derivative assets and liabilities 597 139 (330) (567) Total other income (expense), net (813) 52 (3,111) (1,934) Net income (loss) from continuing operations before income taxes (4,582) (2,318) (10,639) 27,812 Income tax benefit (provision) -- 76 -- (738) --- --- --- ---- Net income (loss) from continuing operations (4,582) (2,242) (10,639) 27,074 Net loss from discontinued operations -- (11) -- (26) Net income (loss) attributed to Verenium $(4,582) $(2,253) $(10,639) $27,048 ======= ======= ======== ======= Net income (loss) per share, basic $(0.36) $(0.18) $(0.83) $2.14 ------ ------ ------ ----- Net income (loss) per share, diluted $(0.36) $(0.18) $(0.83) $2.11 ------ ------ ------ ----- Shares used in computing net income (loss) per share, basic 12,784 12,618 12,784 12,614 ------ ------ ------ ------ Shares used in computing net income (loss) per share, diluted 12,784 12,618 12,784 13,073 ------ ------ ------ ------
Verenium Corporation Condensed Consolidated Balance Sheet Data (unaudited, in thousands) June 30, December 31, 2013 2012 (unaudited) ---------- Cash and cash equivalents $21,737 $34,875 Restricted cash, short term 2,500 2,500 Accounts receivable, net 14,330 10,577 Inventories, net 5,252 5,311 Other current assets 1,999 3,039 Property and equipment, net 35,375 36,798 Other noncurrent assets 552 676 Total assets $81,745 $93,776 ======= ======= Accounts payable and accrued expenses $11,444 $13,266 Deferred revenue, current 616 1,929 Other current liabilities 319 428 Long term of at debt, $25.0 December at million 31, carrying at 2012) value, June net of 30, current 2013 portion and (face $25.2 value 25,370 24,861 Long term lease financing obligation 22,846 22,020 Other long term liabilities 539 619 Stockholders' equity 20,611 30,653 ------ ------ Total liabilities and stockholders' equity $81,745 $93,776 ======= =======
Verenium Corporation Unaudited Supplemental and Non-GAAP Financial Information (in thousands) The following Adjusted EBITDA figures represent supplemental and non-GAAP financial information, and is derived from the Company's condensed consolidated financial statements for the three and six months ended June 30, 2013 and 2012, as reported under GAAP. The Company believes that such supplemental and non-GAAP financial information is helpful to understand the results of operations of the business. It should not be considered, however, in isolation or as a substitute for, or superior to, the financial information presented in the Company's consolidated financial statements. Further, the Adjusted EBITDA measure shown for the Company may not be comparable to similarly titled measures used by other companies. Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2013 2012 2013 2012 ---- ---- ---- ---- Income (loss) from operations $(3,769) $(2,370) $(7,528) $29,746 Adjustments: ------------ Depreciation and amortization 930 366 1,867 693 Non-cash share-based compensation 301 201 600 442 Gain on sale of oilseed processing business -- -- -- (31,278) Cash paid for rent on San Diego facility (1) -- (109) -- (109) --- ---- --- ---- Adjusted EBITDA $(2,538) $(1,912) $(5,061) $(506) ======= ======= ======= =====
(1) The Company is the deemed owner (for accounting purposes) of its San Diego facility, and as such carries an asset on its books representing the total cost of the buildings and improvements, with a corresponding lease financing obligation. The assets are depreciated over the term of the lease, and cash rental payments are allocated primarily to principal and interest payments on the lease financing obligation. The Company believes that including cash rental payments as part of Adjusted EBITDA provides a more accurate representation of operating cash burn. For the three and six months ended June 30, 2013, no cash rental payments were made, pursuant to the terms of the lease agreement.
SOURCE Verenium Corporation