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TheStreet Open House

Shell Grants Codexis Rights To Commercialize Cellulase Enzymes For Biofuels

Stocks in this article: CDXS

Codexis, Inc. (NASDAQ:CDXS), a developer of cost-advantaged processes for the production of biofuels, bio-based chemicals and pharmaceuticals, today announced that the company has signed an agreement (the “New Agreement”) with Shell to expand Codexis’ ability to commercialize its CodeXyme TM cellulase enzymes.

Under the New Agreement, which is effective August 31, 2012, Shell has granted Codexis a royalty-bearing, non-exclusive license to develop, manufacture, use and sell cellulase enzymes developed under the companies’ Amended and Restated Collaborative Research Agreement, effective November 1, 2006 (the “Shell Research Agreement”). The scope of the New Agreement is worldwide, except Brazil, for enzymes used in the biofuels field. Codexis already has exclusive rights to commercialize its cellulase enzymes in other fields.

“Codexis has developed some of the most cost effective and competitively advantaged cellulase enzymes in the world. Securing the rights to market these enzymes to advanced biofuel companies outside of Shell is a major milestone for the company,” said John Nicols, President and CEO of Codexis. “We also remain focused on the Brazil market, where our discussions with Raízen continue regarding commercialization of our cellulase enzymes for second generation ethanol production.”

In exchange for these new rights, Codexis will be obligated to pay Shell a low single-digit percentage royalty on net sales of CodeXyme TM cellulase enzymes to customers other than Shell and its affiliates. Codexis will also be obligated to pay Shell a low single-digit percentage royalty on Codexis’ own use of cellulase enzymes in the biofuels field. Shell is also entitled to preferential pricing on purchases of cellulase enzymes from Codexis should the companies mutually agree to enter into a future supply arrangement.

Under the New Agreement, Codexis and Shell have agreed to an early termination of the Shell Research Agreement, effective as of August 31, 2012, except for certain provisions related to intellectual property rights, confidentiality and indemnification that survive termination. Shell will pay Codexis approximately $7.5 million in satisfaction of the remaining full-time employee equivalents (FTEs) and milestone payments that would have been due under the Shell Research Agreement and Codexis will have no further research and development obligations under that Agreement. The Shell Research Agreement would have expired on November 1, 2012 if not for the early termination effected by the New Agreement.

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