Solazyme, Inc.
Nov 5, 2013

Solazyme Reports Third Quarter 2013 Results

US Manufacturing Facility (Clinton) Operating; Brazil Facility (Moema) Commissioning;

Commercial Product from Both Facilities Expected in 1Q14;

Initial Production of Food Ingredients at Peoria;

Announced Commercial Supply Agreements and Launched Second Skin-Care Brand

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)-- Solazyme, Inc. (NASDAQ: SZYM), a renewable oil and bioproducts company, announced results today for the third quarter ended September 30, 2013.

"We continue to make significant progress toward commercializing our breakthrough technology platform with two commercial production facilities coming online in 1Q14," said Jonathan Wolfson, CEO of Solazyme. "The facility in Iowa is already supplying market development samples to customers. Construction at the Brazil facility is in its final phases at over 90% complete and commissioning is underway. While our timeline for oil production at Moema has been moved into 1Q14, in part to accommodate additional enhancements we are making at the facility, we are excited to be nearing commercial production of our oils.

Our commercial progress has accelerated with the recent announcement of two supply agreements and the extension of Joint Development Agreements with key strategic partners. This underscores our ability to partner both for development and commercialization of our Solazyme Tailored™ oils. We also continue to advance the commercialization of our food ingredients, and we are already manufacturing and actively supplying samples of the ingredients to customers out of our Peoria facility. Finally, this week we launched a completely new skin-care brand and product line, EverDeep™, our second brand along with Algenist®. This launch significantly expands our Solazyme Health Sciences portfolio."

Financial Results

Total revenue for the third quarter ended September 30, 2013 was $10.6 million compared with $8.6 million in the third quarter of 2012, an increase of 24%. Revenues in the third quarter of 2013 included $4.8 million of product sales compared to $3.8 million in the same period of 2012, an increase of 27%. In the third quarter of 2013, development revenues with commercial partners came in at $5.8 million versus $2.2 million, an increase of 160% over the same period in the prior year. The increases in product and development revenues with commercial partners were offset by much lower government funded revenues, in line with our expectations.

Third quarter GAAP net loss attributable to Solazyme, Inc. common stockholders was $30.7 million, which compares with net loss of $22.5 million in the prior year period. On a non-GAAP basis, the net loss was $22.3 million for the third quarter of 2013, compared with net loss of $19.4 million in the prior year quarter. A reconciliation of GAAP to non-GAAP results is included below.

"We continue to closely manage our expenses and are well-capitalized to broadly commercialize our technology in 2014," said Tyler Painter, CFO of Solazyme.

Recent Business Highlights

Conference Call

Solazyme will hold a conference call for investors on November 5, 2013 at 1:30 p.m. PT (4:30 p.m. EDT). Investors may access the call by dialing (877) 291-1287. A live webcast of the call will be available from the Investor Relations section of www.solazyme.com. A recording of the call will also be available by calling (404) 537-3406; access code 86890037 beginning approximately two hours after the call, and will be available for one week. A webcast replay of the call will also be available from the Investor Relations section of www.solazyme.com approximately two hours after the call and will be available for up to thirty days.

About Solazyme, Inc.

Solazyme, Inc. (SZYM) is a renewable oil and bioproducts company that transforms a range of low-cost plant-based sugars into high-value oils and food ingredients. Headquartered in South San Francisco, Solazyme's renewable products can replace or enhance oils derived from the world's three existing sources — petroleum, plants and animal fats. Initially, Solazyme is focused on commercializing its products into three target markets: (1) chemicals and fuels, (2) nutrition and (3) skin and personal care.

Solazyme®, the Solazyme logo and other trademarks or service names are trademarks of Solazyme, Inc.

Non-GAAP Financial Measures

This press release includes the following financial measure defined as a "non-GAAP financial measure" by the Securities and Exchange Commission: non-GAAP net loss. This measure may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of this non-GAAP financial measure to the nearest comparable GAAP measure, see "Reconciliation of GAAP to Non-GAAP Basic Net Loss Per Share" included in the tables to this press release.

This non-GAAP measure is provided to enhance investors' overall understanding of Solazyme's current financial performance and Solazyme's prospects for the future. Specifically, Solazyme believes the non-GAAP measure provides useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results and business outlook.

For its internal budgeting process, Solazyme's management uses financial measures that do not include stock-based compensation expense or special expenses such as non-cash gains or losses due to warrant and/or derivative revaluations, amortization of debt discounts and issuance costs and dissolution of Joint Ventures. In addition to the corresponding GAAP measures, Solazyme's management also uses the foregoing non-GAAP measure in reviewing the financial results of Solazyme. Solazyme excludes stock-based compensation expenses and special non-cash charges from its non-GAAP measures primarily because they are non-cash expenses that management does not believe are reflective of ongoing operating results.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Solazyme, including statements that involve risks and uncertainties concerning: its commercialization plans and commercialization timetable for products; market opportunities; application development; agreement on definitive supply terms for products, including selling prices for products; expansion into a broad collaboration and entry into definitive agreements; the attributes of the collaboration; the timetable for completion and capacity of facilities; the timetable for bringing facilities online and manufacturing products; the ability to bring manufacturing facilities online with partners; the ability to have access and/or continue to have access to manufacturing facilities constructed and/or owned by partners; development of additional products; meeting commercialization and technology targets and other objectives; its capital structure; and Solazyme's ability to maintain its relationships with its partners and customers. When used in this press release, the words "will", "expects", "intends" and other similar expressions and any other statements that are not historical facts are intended to identify those assertions as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statement may be influenced by a variety of factors, many of which are beyond the control of Solazyme, that could cause actual outcomes and results to be materially different from those projected, described, expressed or implied in this press release due to a number of risks and uncertainties. Potential risks and uncertainties include, among others: Solazyme's limited operating history; its limited history in commercializing products; implementation risk in deploying new technologies; its limited experience in constructing and operating commercial manufacturing facilities; market acceptance of its products; its ability to sell its products at a profit; delays related to construction, start-up, ramp-up, or funding of production facilities; its access to adequate supply of feedstock on favorable terms; its ability to manage operational costs at production facilities; its ability to enter into and maintain strategic collaborations, including the funding thereof; its ability to obtain requisite regulatory approvals; and its access, on favorable terms, to any required financing. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of Solazyme.

In addition, please refer to the documents that Solazyme, Inc. files with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, for a discussion of these and other risks. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. Solazyme is not under any duty to update any of the information in this press release.

SOLAZYME, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share amounts
(UNAUDITED)
       
Three Months Ended
September 30,
Nine Months Ended
September 30,
2013 2012 2013 2012

Revenues

Research and development programs $ 5,824 $ 4,810 $ 14,764 $ 23,838
Product revenues   4,797     3,773     13,712     11,846  
Total revenues 10,621 8,583 28,476 35,684
 

Costs and operating expenses (1)

Cost of product revenue 1,450 1,331 4,400 3,907
Research and development 17,556 16,534 46,191 50,276
Sales, general and administrative   15,708     13,849     46,010     41,628  
Total costs and operating expenses 34,714 31,714 96,601 95,811
       
Loss from operations (24,093 ) (23,131 ) (68,125 ) (60,127 )
 

Other income (expense) (2)

Interest and other income (expense), net (1,614 ) 626 (4,576 ) 1,262
Loss from equity method investment (2,360 ) (683 ) (5,541 ) (1,193 )
Gain (loss) from change in fair value of warrant liability 200 685 (425 ) 1,536
Loss from change in fair value of derivative liability   (2,836 )   -     (4,386 )   -  
Total other income (expense) (6,610 ) 628 (14,928 ) 1,605
       
Net loss $ (30,703 ) $ (22,503 ) $ (83,053 ) $ (58,522 )
Net loss per share, basic and diluted $ (0.47 ) $ (0.37 ) $ (1.32 ) $ (0.97 )
 
Weighted average number of common shares used in loss per share computation, basic and diluted 64,812 60,678 62,783 60,387
 
SOLAZYME, INC.
RECONCILIATION OF GAAP TO NON-GAAP BASIC NET LOSS PER SHARE
In thousands, except per share amounts
(UNAUDITED)
       
Three Months Ended
September 30,
Nine Months Ended
September 30,
  2013   2012 2013 2012
Net loss $ (30,703 ) $ (22,503 ) $ (83,053 ) $ (58,522 )
(Gain) loss from change in fair value of warrant liability (200 ) (685 ) 425 (1,536 )
Loss from change in fair value of derivative liability 2,836 - 4,386 -
(1) Operating expenses include stock-based compensation expense as follows:
Research and development 1,544 1,001 4,111 2,939
Sales, general and administrative   3,687     2,742     10,341     8,619  
Total stock-based compensation expense 5,231 3,743 14,452 11,558
(2) Other income (expense) includes costs as follows:
Amortization of debt discount and issuance costs 503 - 1,248 -
Dissolution of the Solazyme Roquette JV   59     -     1,406     -  
Net loss (non-GAAP) $ (22,274 ) $ (19,445 ) $ (61,136 ) $ (48,500 )
 
Basic and diluted loss per share (GAAP) $ (0.47 ) $ (0.37 ) $ (1.32 ) $ (0.97 )
 
(Gain) loss from change in fair value of warrant liability - (0.01 ) 0.01 (0.02 )
Loss from change in fair value of derivative liability 0.04 - 0.07 -
Stock-based compensation expense 0.08 0.06 0.23 0.19
Amortization of debt discount and issuance costs 0.01 - 0.02 -
Dissolution of the Solazyme Roquette JV   -     -     0.02     -  
Net loss per share (non-GAAP) $ (0.34 ) $ (0.32 ) $ (0.97 ) $ (0.80 )
 
SOLAZYME, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
(UNAUDITED)
  September 30,   December 31,
2013 2012

Assets

 

Current assets

Cash, cash equivalents and marketable securities $ 194,355 $ 149,005
Other current assets 25,554 16,274
   
Total current assets 219,909 165,279
 
Property, plant and equipment - net 35,682 32,225
Other assets 23,209 19,520
   
Total assets $ 278,800 $ 217,024
 

Liabilities and stockholders' equity

 

Current liabilities

Current portion of long-term debt $ 63 $ 7,331
Other current liabilities 20,331 17,607
   
Total current liabilities 20,394 24,938
 
Other liabilities 1,899 1,138
Long-term debt   91,231   7,637
Total liabilities   113,524   33,713
Total stockholders' equity 165,276 183,311
   
Total liabilities and stockholders' equity $ 278,800 $ 217,024

Solazyme, Inc.
Corporate Communications:
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press@solazyme.com
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Source: Solazyme, Inc.

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