Shell grants enzyme licensing rights to Codexis

By Luke Geiver | September 04, 2012

The research agreement between Royal Dutch Shell and Codexis Inc. may be over, but the California-based enzyme producer now has the ability to commercialize cellulose enzymes developed during the research partnership that started in 2006. Earlier this month Codexis announced that Shell was terminating the research agreement between the two companies. The early termination has caused the company to project a financial loss for 2012, along with a workforce reduction plan. But, under the terms of the CodeXyme commercialization agreement, Codexis can sell the product to the global marketplace, excluding Brazil.

The company will be required to pay Shell a low, single-digit percentage royalty on net sales of any enzymes sold to companies other than Shell and its affiliates, according to Codexis. Shell will also receive preferential pricing on the enzyme if the two companies reunite in the future. Shell has agreed not to sell any Codexis-based enzymes to third-party customers for a ten-year period.

The early termination of the research agreement will net Codexis roughly $7.5 million with an additional $3 million possible for Codexis through a milestone payment that will occur upon the first commercial sale of the CodeXyme product.

“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.

In addition to the enzyme licensing rights announcement, the company has also put in place a short-term shareholders rights plan. The plan, according to the company, will guard against “inadequate or unsolicited takeover offers.” The plans, the company also said, “are not being distributed in response to any specific effort to acquire control of Codexis,” adding that, “the rights are designed to ensure that the Board of Directors has sufficient time to consider any proposal and make sure that all stockholders receive fair and equal treatment in the event of any proposed takeover of Codexis.”