•~~our ability to successfully achieve domestic and foreign regulatory approval for product candidates;~~

•~~our ability to successfully design and execute clinical testing at a reasonable cost and on an acceptable time-frame;~~

•our dependence on our collaborators or customers’ product candidates which could unexpectedly fail at any stage of preclinical or clinical development;

•our dependence on our collaborators or customers’ product candidates which may lack the ability to work as intended or cause undesirable side effects;

•~~our dependency on third parties to conduct clinical trials, research, and preclinical studies;~~

•our ability to successfully prosecute and protect our intellectual property;

•our ability to compete if we do not adequately protect our proprietary technologies or if we lose some of our intellectual property rights;

•our ability to avoid infringing the intellectual property rights of third parties;

•our involvement in lawsuits to protect or enforce our patents or other intellectual property rights;

•our ability to enforce our intellectual property rights throughout the world;

•our dependence on, and the need to attract and retain, key management and other personnel;

•our ability to prevent the theft or misappropriation of our biocatalysts, the genes that code for our biocatalysts, know-how or technologies;

•our ability to protect our trade secrets and other proprietary information from disclosure by employees and others;

•our ability to obtain substantial additional capital that may be necessary to expand our business;

•our ability to comply with the terms of our ~~credit facility;~~Loan Agreement;

•our ability to timely pay debt service obligations;

•our customers’ ability to pay amounts owed to us in a timely manner;

•our ability to avoid charges to earnings as a result of any impairment of goodwill, intangible assets or other long-lived assets;

•changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations;

•our ability to maintain effective internal control over financial reporting;

•our dependency on information technology systems, infrastructure and data;

•our ability to control and to improve product gross margins;

•our ability to protect against risks associated with the international aspects of our business;

•the cost of compliance with ~~European Union~~EU chemical regulations;

•potential advantages that our competitors and potential competitors may have in securing funding or developing products;

•our ability to accurately report our financial results in a timely manner;

•results of regulatory tax examinations;

•market and economic conditions may negatively impact our business, financial condition, and share price;

•business interruptions due to natural disasters, disease outbreaks or other events beyond our control;

•public concerns about the ethical, legal and social ramifications of genetically engineered products and processes;

•our ability to integrate our current business with any businesses that we may acquire in the future;

•our ability to properly handle and dispose of hazardous materials in our business;

•potential product liability claims;

•changes to tax law and related regulations could materially affect our tax obligations and effective tax rate; and

•our ability to use our ~~net operating loss carryforwards~~NOLs to offset future taxable income.

Due to the various factors mentioned above, and others, the results of any prior quarterly or annual periods should not be relied upon as indications of our future operating performance.

We do not intend to pay cash dividends for the foreseeable future.

We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our board of directors deems relevant.

General Risk Factors

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our stock or change their opinion of our stock in a negative manner, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

We face risks associated with our international business.

While we have a limited number of employees located outside of the United States, we are and will continue to be dependent upon contract manufacturers located outside of the United States. In addition, we have customers and partners located outside of the United States. Conducting business internationally exposes us to a variety of risks, including:

•changes in or interpretations of U.S. or foreign laws or regulations that may adversely affect our ability to sell our products, repatriate profits to the United States or operate our foreign-located facilities;

•the imposition of tariffs;

•the imposition of limitations on, or increase of, withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures;

•the imposition of limitations on genetically-engineered or other products or processes and the production or sale of those products or processes in foreign countries;

•currency exchange rate fluctuations;

•uncertainties relating to foreign laws, regulations and legal proceedings including pharmaceutical, tax, import/export, anti-corruption and exchange control laws;

•the availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us;

•increased demands on our limited resources created by our operations may constrain the capabilities of our administrative and operational resources and restrict our ability to attract, train, manage and retain qualified management, technicians, scientists and other personnel;

•economic or political instability in foreign countries;

•difficulties associated with staffing and managing foreign operations; and

•the need to comply with a variety of United States and foreign laws applicable to the conduct of international business, including import and export control laws and anti-corruption laws.

Market and economic conditions may negatively impact our business, financial condition, and share price.

Concerns about inflation, energy costs, geopolitical issues, the United States mortgage market and a declining real estate market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, increased unemployment rates, and increased credit defaults in recent years. Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions.

Recently, the closures of Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”) and their placement into receivership with the Federal Deposit Insurance Corporation, and the government-brokered sale of the deposits and majority of assets of First Republic Bank to JPMorgan Chase, created bank-specific and broader financial institution liquidity risk and concerns. Although government intervention ensured that depositors at these banks have access to their funds, future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term working capital needs, and create additional market and economic uncertainty. There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur, and we cannot predict the impact or follow-on effects of these insolvencies more broadly or on our business in particular. Further, we cannot guarantee that the government will intervene to provide depositors with access to funds if similar events occur in the future. If other banks and financial institutions enter receivership or become insolvent in the future, our ability to access our existing cash, cash equivalents, and investments may be threatened, which could have a material adverse effect on our business and financial condition.

In addition, if the market and economic conditions described above continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and stock price. Additionally, rising rates of inflation have increased the costs associated with conducting our business, including by causing substantial increases in the costs of materials, including raw materials and consumables, equipment, services, and labor. Moreover, given the unpredictable nature of the current economic climate, including future changes in rates of inflation, it may be increasingly difficult for us to predict and control our future expenses, which may harm our ability to conduct our business.

Business interruptions resulting from disasters or other disturbances could delay us in the process of developing our products and could disrupt our sales. Our business continuity and disaster recovery plans may not adequately protect us from a serious disaster or other disturbance.

Our headquarters and other facilities are located in the San Francisco Bay Area, which in the past has experienced both severe earthquakes and wildfires. Earthquakes, wildfires or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects. We are also vulnerable to other types of disasters and other events that could disrupt our operations, such as riot, civil disturbances, war, terrorist acts, public health emergencies, domestic or foreign conflicts, infections in our laboratory or production facilities or those of our customers or contract manufacturers and other events beyond our control. If a natural disaster or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our enterprise financial systems or manufacturing resource planning and enterprise quality systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar ~~event. We~~event, and we may incur substantial expenses as a result of the limited nature of ~~our disaster recovery and business continuity~~such plans. We do not carry insurance for earthquakes and we may not carry sufficient business interruption insurance to compensate us for losses that may occur. Any losses or damages we incur could have a material adverse effect on our cash flows and success as an overall business.

~~Confidentiality agreements with employees and others may not adequately prevent disclosures of trade secrets and other proprietary information.~~

We rely in part on trade secret and confidentiality protection to protect our confidential and proprietary information and processes. However, trade secrets and confidential information are difficult to protect. We have taken measures to protect our trade secrets and confidential and proprietary information, but these measures may not be effective. We require employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting arrangement with us. These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. These agreements also generally provide that inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. Nevertheless, our confidential and proprietary information may be disclosed, third parties could reverse engineer our biocatalysts and others may independently develop substantially equivalent confidential and proprietary information and techniques or otherwise gain access to our trade secrets. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our confidential and proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

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We are dependent on information technology systems, infrastructure and data, and any failure of these systems could harm our business. Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business, results of operations and financial condition.

Information technology helps us operate efficiently, interface with customers, maintain financial accuracy and efficiency and accurately produce our financial statements. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions or the loss of or damage to intellectual property through security breach. If our ~~data management~~information technology systems do not effectively collect, store, process and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, or human error, our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Our information technology systems and those of our external vendors, strategic partners and other contractors or consultants are vulnerable to attack and damage or interruption from computer viruses and malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization. Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results.

Our business may require us to use and store personal information of our customers, employees, and business partners. This may include names, addresses, phone numbers, email addresses, contact preferences, tax identification numbers and payment account information. We require usernames and passwords in order to access our information technology systems. We also use encryption and authentication technologies to secure the transmission and storage of data. However, these security measures may be compromised as a result of security breaches by unauthorized persons, employee error, malfeasance, faulty password management or other irregularity, and result in persons obtaining unauthorized access to our data or accounts. Third parties may attempt to fraudulently induce employees or customers into disclosing usernames, passwords or other sensitive information, which may in turn be used to access our information technology systems. For example, our employees have received “phishing” emails and phone calls attempting to induce them to divulge passwords and other sensitive information.

In addition, unauthorized persons may attempt to hack into our products or systems to obtain personal data relating to employees and other individuals, our confidential or proprietary information or confidential information we hold on behalf of third parties. We also rely on external vendors to supply and/or support certain aspects of our information technology systems. The systems of these external vendors may contain defects in design or manufacture or other problems that could unexpectedly compromise information security of our own systems, and we are dependent on these third parties to deploy appropriate security programs to protect their systems. If we or our third-party vendors were to experience a significant cybersecurity breach of our or their information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to ~~counter-parties~~counterparties and data subjects could be material. Our remediation efforts may not be successful. Further, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions. Attacks upon information technology systems are also increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. As a result of the remote work policies we initiated in response to the COVID-19 pandemic, and our continued hybrid working environment, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. We have programs in place to detect, contain and respond to data security incidents, and we make ongoing improvements to our information-sharing products in order to minimize vulnerabilities, in accordance with industry and regulatory standards. However, because the techniques used to obtain unauthorized access to or sabotage systems change frequently and may be difficult to detect, we may not be able to anticipate and prevent these intrusions or mitigate them when and if they occur. Even if identified, we may be unable to adequately and timely investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection and to remove or obfuscate forensic evidence.

~~If a~~We and certain of our external vendors are from time to time subject to cyberattacks and security incidents. While we do not believe that we have experienced any significant system failure, accident, or security breach ~~or other incident~~to date, if such an event were to occur, it could result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws. Any security compromise affecting us, our service providers, vendors, strategic partners, other contractors, consultants or our industry, whether real or perceived, could harm our reputation, erode confidence in the effectiveness of our security measures and lead to regulatory scrutiny. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential or proprietary or personal information, we could incur liability, including litigation exposure, penalties and fines, which may not be covered by insurance or may be in excess of our insurance coverage. Additionally, we could become the subject of regulatory action or investigation, our competitive position could be harmed and the further development of our products could be delayed. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our ~~business. Furthermore, federal, state~~business and international laws and regulations can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties, fines and significant legal liability, if our information technology security efforts

~~fail. We may also be exposed to a risk of loss or litigation and potential liability, which~~ could materially and adversely affect our business, results of operations and financial condition.

Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations and financial condition.

The global data protection landscape is rapidly evolving, and we are or may become subject to state, federal and foreign laws, regulations, decisions and directives governing the privacy, security, collection, storage, transmission, use, processing, retention and disclosure of personal information. Any failure or perceived failure by us to comply with applicable laws or regulations, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.

In the United States, HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of certain individually identifiable health information. Certain states have also adopted ~~comparable~~and continue to adopt new privacy and security laws and regulations, ~~some~~which govern the privacy, processing and protection of ~~which may be more stringent than HIPAA.~~health-related and other personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. For example, the ~~CCPA~~California Consumer Privacy Act (“CCPA”) went into effect on January 1, ~~2020 , and introduces new compliance burdens on organizations doing business in California that collect personal information about California residents. It~~2020. The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal information. The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches ~~that is expected to increase~~(which has increased the likelihood of, and risks associated with, data breach ~~litigation.~~litigation). Further, the ~~CPRA recently passed~~California Privacy Rights Act (“CPRA”) significantly amended the CCPA, which went into effect in ~~California. The CPRA will impose~~January 2023. It imposes additional data ~~protection~~privacy obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data and opt outs for certain uses of sensitive data. It ~~will~~ also ~~create~~created a new California ~~data~~privacy protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. ~~The majority of the provisions will go into effect on January 1, 2023, and additional~~Additional compliance investment and potential business process changes may also be required. Similar laws regulating personal information generally or health information in particular have passed in ~~Virginia and Colorado,~~more than a dozen states and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.These developments increase our compliance burden and our risk, including risks of regulatory fines, litigation and associated reputational harm. Any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

Furthermore, the Federal Trade Commission (“FTC”) and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for ~~online~~the collection, use, ~~dissemination~~sharing and security ~~practices~~of personal information that appear to be unfair or deceptive. For example, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure can constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

In ~~Europe,~~ the ~~GDPR went into effect in May 2018 and imposes strict requirements for processing~~European Union (“EU”), the personal data of individuals within the EEA. The GDPR imposes stringent requirements for controllers and processors of personal data and increases our obligations, for example, by imposing higher standards when obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, increasing requirements pertaining to health data as well as pseudonymized (i.e., key-coded) data, and imposing additional obligations when we contract with third-party processors in connection withEU General Data Protection Regulation (“EU GDPR”) governs the processing of personal data. The UK has implemented the EU GDPR as the UK GDPR which sits alongside the UK Data Protection Act 2018 (the “UK GDPR”, and together with the EU GDPR, the “GDPR”). The GDPR imposes requirements for controllers, including (among others) specific requirements for obtaining valid consent where consent is the legal basis for processing, requirements around accountability and transparency, the obligation to consider data protection when any new products or services are developed, the obligation to comply with individuals’ data protection rights, and the obligation to notify relevant data supervisory authorities of notifiable personal data breaches without undue delay (and no later than 72 hours) after becoming aware of the personal data breach (and affected data subjects where the personal data breach is likely to result in a high risk to their rights and freedoms). The EU GDPR provides that ~~EEA~~EU member states may ~~make~~enact their own additional national laws and regulations ~~limiting~~regarding the processing of genetic, biometric or health data, which could ~~limit~~affect our ability to use and share personal data or could cause our costs to increase and potentially harm our business and financial condition. Failure to comply with the requirements of the GDPR can result in (among other things) fines of up to the greater of €20 million ~~and~~(under the EU GDPR) or £17.5 million (under the UK GDPR) or 4% of ~~the~~an organization’s total worldwide annual turnover of the preceding financial year and other administrative penalties. IfTo the extent that we are ~~required~~subject to ~~comply~~the GDPR, compliance with the GDPR may require substantial amendments to our procedures and policies and these changes could adversely impact our business by increasing operational and compliance costs or impact business practices. Further, there is a risk that the amended policies and procedures will not be implemented correctly or that individuals within the business will not be fully compliant with the new procedures. There is a risk that we could be impacted by a cybersecurity incident that results in loss or unauthorized disclosure of personal data, ~~protection rules imposed by GDPR, such compliance may be onerous and adversely affect our business, financial condition, and results of operations.~~ potentially resulting in us facing harms similar to those described above.

Among other requirements, the EU GDPR ~~regulates transfers~~prohibits the international transfer of personal data subject to the GDPR from the European Economic Area (“EEA”) to third countries that ~~have~~the European Commission does not recognize as having an ‘adequate’ level of data protection, unless a data transfer mechanism has been ~~found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between~~put in place or a derogation under the EU ~~and the United States remains uncertain. For example, in~~GDPR can be relied on. In July 2020, the Court of Justice of the EU ~~(“CJEU”)~~in its Schrems II judgement limited how organizations could lawfully transfer personal data from the ~~EU/~~EEA to the United States by

invalidating the EU-U.S. Privacy Shield for purposes of international transfers and imposing further restrictions on the use of standard contractual clauses (“EU SCCs”), including a requirement for companies to carry out a transfer privacy impact assessment (“TIA”). ~~The~~A TIA, among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under the EU SCCs will need to be implemented to ensure an ‘essentially equivalent’ level of data protection to that afforded in the EEA.

On October 7, 2022, U.S. President Biden introduced an Executive Order to facilitate a new Trans-Atlantic Data Privacy Framework (“DPF”) and in July 2023, the European Commission ~~issued revised SCCs on June 4, 2021 to account~~adopted its Final Implementing Decision granting the United States adequacy (“Adequacy Decision”) for ~~the decision of the CJEU and recommendations made by the European Data Protection Board. The revised SCCs must be used for relevant new data~~EU-U.S. transfers ~~from September 27, 2021; existing standard contractual clauses arrangements must be migrated to the revised clauses by December 27, 2022. The new SCCs apply only to the transfer~~ of personal data ~~outside~~for entities self-certified to the DPF. Entities relying on EU SCCs for transfers to the United States are also able to rely on the analysis in the Adequacy Decision as support for their TIA regarding the equivalence of U.S. national security safeguards and redress.

The UK GDPR also imposes similar restrictions on transfers of personal data from the UK to jurisdictions that the UK Government does not consider adequate, including the United States. The UK Government has published its own form of the ~~EEA~~EU SCCs, known as the International Data Transfer Agreement and ~~not~~an International Data Transfer Addendum to the ~~United Kingdom; the United Kingdom’s~~new EU SCCs. The UK Information Commissioner’s Office ~~launched~~has also published its own version of the TIA and guidance on international transfers, although entities may choose to adopt either the EU or UK-style TIA. Further, on September 21, 2023, the UK Secretary of State for Science, Innovation and Technology established a ~~public consultation on its draft revised~~UK-U.S. data ~~transfers mechanisms in August 2021. There is some uncertainty around whether~~bridge (i.e., a UK equivalent of the ~~revised clauses can~~Adequacy Decision) and adopted UK regulations to implement the UK-U.S. data bridge (“UK Adequacy Regulations”). Personal data may now be ~~used for all types of~~transferred from the UK under the UK-U.S. data ~~transfers, particularly whether they can~~bridge through the UK extension to the DPF to organizations self-certified under the UK extension to DPF.

As we continue to expand into other foreign countries and jurisdictions, we may be ~~relied on for data transfers to non-EEA entities~~ subject to the GDPR. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.

Further, from January 1, 2021, companies have had to comply with the GDPR and also the United Kingdom GDPR (“UK GDPR”), which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (or up to £17.5 million for UK) or 4% of global turnover. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term. The European Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards. However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews or extends that ~~decision.~~may affect how we conduct business.

Although we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply. Various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data-retention and data-protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our business or our reputation with customers. For example, some countries have adopted laws mandating that certain personal information regarding customers in their country be maintained solely in their country. Having to maintain local data centers and redesign product, service and business operations to limit ~~Personal Information~~ processing of personal information to within individual countries could increase our operating costs significantly. Any failure, or perceived failure, by us to comply with federal, state or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of customer confidence, damage to our brand and reputation and a loss of customers, any of which could have an adverse effect on our business.

Evolving expectations around corporate responsibility practices, specifically related to environmental, social and governance (“ESG”) matters, may expose us to reputational and other risks.

Investors, stockholders, customers, suppliers and other third parties are increasingly focusing on ESG and corporate social responsibility endeavors and reporting. Companies that do not adapt to or comply with the evolving investor or stakeholder expectations and standards, or ~~which~~that are perceived to have not responded appropriately, may suffer from reputational damage, ~~and~~which could result in the business, financial condition and/or stock price of a company being materially and adversely affected. For example, certain customers have inquired about our ESG practices and may impose ESG guidelines, procurement policies, sustainability standards, mandates or reporting requirements for, and may scrutinize relationships more closely with, their suppliers, including us, which may lengthen sales cycles, increase our costs or impair our ability to attract and retain customers. Further, this increased focus on ESG issues may result in new regulations, international accords and/or third-party requirements that could adversely impact our business, or certain shareholders reducing or eliminating their holdings of our stock. ~~Additionally, an~~An allegation or perception that we have not taken sufficient action in these areas could negatively harm our reputation. Additionally, the subjective nature and wide variety of methods and processes used by various stakeholders, including investors, to assess environmental, social, and governance criteria could result in a negative perception or misrepresentation of the company's sustainability policies and practices.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 1C. CYBERSECURITY

Risk Management and Strategy

In the normal course of business, we may collect and store personal information and other sensitive information, including proprietary and confidential business information, trade secrets, intellectual property, sensitive third-party information and employee information.We assess and identify cybersecurity risk to such information by maintaining cybersecurity policies that require continuous monitoring and detection programs and network security precautions. Our program incorporates industry-standard frameworks, policies and practices designed to protect the privacy and security of our sensitive information.

We manage cybersecurity risks by maintaining various protections designed to safeguard against cyberattacks, including firewalls and virus detection software, and periodic end user training on common cybersecurity threats (e.g. phishing exercises and interactive trainings). We have established our disaster recovery plan and we protect against business interruption by backing up our major systems. In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing and engage third parties to assess effectiveness of our data security practices. A third party security consultant conducts regular network security reviews, scans and audits, and we may consult with other external experts as warranted by a particular cybersecurity incident or threat. In addition, we maintain insurance that includes cybersecurity coverage.

Areas of cybersecurity risk are assessed bi-annually, and updates are reported by our Vice President of Information Technology (“VP IT”) to the Board’s Audit Committee and senior management annually. Where our bi-annual cybersecurity risk assessment identifies areas for improvement, we document and track our remediation activities, which are also reported to the Audit Committee and senior management annually. In this way, our program to manage cybersecurity risk integrates with our overall risk management processes.

With respect to third parties who provide services affecting critical business management systems, we collect and maintain SOC2 type II reports (attestation of controls at a service organization over a minimum six-month period). For other third-party service providers, cybersecurity risk is addressed as appropriate.

As of the date of this report, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations and financial condition. Despite the implementation of our cybersecurity program, our security measures cannot guarantee that a significant cyberattack will not occur. A successful attack on our information technology systems could have significant consequences to the business. While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security. See “Risk Factors – General Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our information technology systems.

Governance

The Company’s Board of Directors has visibility into cybersecurity risks through its Audit Committee and through the process described below. The Audit Committee has oversight of the Company’s cybersecurity risk management programs and the design and operating effectiveness thereof, and reviews reports from Company management on cybersecurity, data privacy and other risks relevant to the Company’s computerized information system controls and security.

Areas of cybersecurity risk are assessed bi-annually, and updates are reported by the VP IT to the Audit Committee and senior management annually. Where our bi-annual cybersecurity risk assessment identifies areas for improvement, we document and track our remediation activities, which are also reported to the Audit Committee and senior management annually.

Senior management has appointed a Cybersecurity Council that is responsible for identifying, escalating, and facilitating the assessment and determination of the materiality of cybersecurity incidents and threats. The Cybersecurity Council is made up of representatives of IT, Legal and Finance, as well as ad hoc additional members depending on the circumstances of the incident or threat. The members of the Cybersecurity Council do not have specific expertise in cybersecurity risk other than the VP IT who has more than 20 years of experience, and engages with trusted third-party experts for support and guidance when additional expertise is required. Prior to joining Codexis, our VP IT has managed cybersecurity functions, where he was responsible for overseeing cybersecurity strategy and operations, including incident response, threat intelligence, security awareness training programs, risk assessments and remediation, and regulatory and compliance matters.

An actual or suspected cybersecurity incident that jeopardizes the confidentiality, integrity, or availability of Codexis' information systems or any information residing therein (or threat that presents significant risk to our information systems as identified by IT) is reported to the Cybersecurity Council by our IT Department. The focus of the Cybersecurity Council is on the investigation and facilitation of senior management’s assessment and determination of materiality of an incident or threat, and such investigation is separate but contemporaneous with the investigation(s) done under other applicable programs, policies, and plans regarding cybersecurity. The Cybersecurity Council will liaise directly with other investigation(s) and share information and assessments. Along with assistance from the Cybersecurity Council as necessary, senior management reports its materiality determination and analysis, including necessary facts to support its determination, to the Audit Committee of the Board of Directors. Pursuant to its charter, the Audit Committee may, along with senior management, report such determination to the Board of Directors.

ITEM 2. PROPERTIES

~~Facilities~~FACILITIES

Our headquarters are located in Redwood City, California, where we lease approximately 77,300 square feet of office and laboratory space.

Our lease (“RWC Lease”) with Metropolitan Life Insurance Company (“MetLife”) includes approximately 28,200 square feet of space located at 200 and 220 Penobscot Drive, Redwood City, California (the “200/220 Penobscot Space”), approximately 37,900 square feet of space located at 400 Penobscot Drive, Redwood City, California (the “400 Penobscot Space”) (the 200/220 Penobscot Space and the 400 Penobscot Space are collectively referred to as the “Penobscot Space”), and approximately 11,200 square feet of space located at 501 Chesapeake Drive, Redwood City, California (the “Chesapeake Space”).

We entered into the initial lease with MetLife for our facilities in Redwood City in 2004 and the RWC lease has been amended multiple times since then to adjust the leased space and terms of the RWC Lease. In February 2019, we entered into an Eighth Amendment to the RWC Lease (the “Eighth Amendment”) with MetLife with respect to the Penobscot Space and the 501 Chesapeake Space to extend the term of the RWC Lease for additional periods. Pursuant to the Eighth Amendment, the term of the lease of the Penobscot Space has been extended through May 2027. The lease term for the 501 Chesapeake Space has been extended to May 2029. We have one (1) option to extend the term of the lease for the Penobscot Space for five (5) years, and one (1) separate option to extend the term of the lease for the 501 Chesapeake Space for five (5) years.

In January 2021, we entered into a lease agreement with ARE-San Francisco No. 63, LLC ~~(“ARE”~~(“ARE”) to lease a portion of a facility comprising approximately 36,593 rentable square feet at 825 Industrial Road, San Carlos, California to serve as additional office and research and development laboratory space (the ~~“San~~“San Carlos ~~Space”~~Space”). In December 2021, we commenced occupancy of the San Carlos Space. The lease term for the San Carlos Space iswas through the end of November ~~2031. We have~~2031, with one (1) option to extend the term of the lease for the San Carlos Space for five (5) years.

In ~~May 2021,~~July 2023, we announced our plan to consolidate operations from our San Carlos facility to our headquarters in Redwood City. On September 1, 2023, the Company entered into an Assignment and Assumption of Lease (the “Assignment Agreement”) with Vaxcyte, Inc. (“Vaxcyte”) to assign to Vaxcyte all of the Company’s right, title and interest in, under and to the San Carlos Space and the Lease Agreement, dated as of January 29, 2021. On September 6, 2023, the Company, Vaxcyte and ARE entered into a ~~short-term office~~Consent to Assignment and First Amendment (the “Consent”) pursuant to which ARE consented to the Assignment Agreement and the assignment by the Company and the assumption by Vaxcyte of the Company’s interest as tenant in the lease ~~with~~and agreed to release the Company from all of its obligations under the lease that accrue from and after the assignment. The ~~Inside Source, Inc., to sublease approximately 3,313 square feet~~effective date of ~~office space in a building located at 985 Industrial Blvd.. San Carlos, California. This lease will expire in April 2022.~~the assignment was October 1, 2023.

We believe that the ~~facilities~~facility that we currently lease in Redwood City, ~~and San Carlos,~~ California ~~are~~is adequate for our needs for the immediate future and that, should it be needed, additional space can be leased to accommodate any future growth.

ITEM 3. LEGAL PROCEEDINGS

We are currently not a party to any material pending litigation or other material legal proceedings.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

5645

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~Market Information~~MARKET INFORMATION

Our common stock is quoted on the Nasdaq Global Select Market (“~~Nasdaq”~~Nasdaq”), under the symbol “CDXS.”

As of February ~~24, 2022,~~23, 2024, there were approximately ~~129~~125 stockholders of record. A substantially greater number of stockholders may be ~~“street name”~~"street name" or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

Dividend Policy

We have never declared or paid cash dividends on our common stock, and we currently do not plan to declare dividends on shares of our common stock in the foreseeable future. We expect to retain our future earnings, if any, for use in the operation and expansion of our business. In addition, unless waived, the terms of our ~~Credit Facility~~Loan Agreement prohibit us from paying any cash dividends or making other distributions. The payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon such factors as earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by our board of directors.

Securities Authorized for Issuance under Equity Compensation Plans

The information required by this item concerning securities authorized for issuance under equity compensation plans is incorporated by reference from the information that will be set forth in the Definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual Meeting of Stockholders to be held in ~~2022~~2024 (the ~~“2022~~“2024 Proxy ~~Statement”~~Statement”) under the heading “Executive Compensation—Equity Compensation Plan Information.”

Stock Price Performance Graph

The following tabular information and graph compare our total common stock return with the total return for (i) the Nasdaq Composite Index and (ii) the Nasdaq Biotechnology Total Return Index for the period December 31, ~~2016~~2018 through December 31, ~~2021.~~2023. The figures represented below assume an investment of $100 in our common stock at the closing price on December 31, ~~2016~~2018 and in the Nasdaq Composite Index and the Nasdaq Biotechnology Total Return Index on December 31, ~~2016~~2018 and the reinvestment of dividends into shares of common stock. The comparisons in the table and graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. The tabular information and graph shall not be deemed “soliciting ~~material”~~material” or to be ~~“filed”~~“filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act.


			December 31,
				December 31,																				December 31,
$100 investment in stock or index	$100 investment in stock or index	Ticker			2016		2017		2018		2019		2020		2021		$100 investment in stock or index	Ticker	2018	2019	2020	2021	2022		2023
Codexis, Inc.	Codexis, Inc.	CDXS			$	100.00	$	181.52	$	363.04	$	347.61	$	474.57	$	679.78
Nasdaq Composite Total Return	Nasdaq Composite Total Return	XCMP			$	100.00	$	129.63	$	125.95	$	172.17	$	249.51	$	304.84
Nasdaq Biotechnology (Total Return) Index	Nasdaq Biotechnology (Total Return) Index	XNBI			$	100.00	$	121.64	$	110.86	$	138.69	$	175.33	$	175.37

5746

Unregistered Sales of Equity Securities and Use of Proceeds

~~Unregistered Sales of Equity Securities~~

During the year ended December 31, ~~2021,~~2023, we did not issue or sell any unregistered securities not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.

Issuer Purchases of Equity Securities

None.

ITEM 6. [RESERVED]

5847

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited ~~Consolidated Financial Statements~~consolidated financial statements and the related ~~Notes that appear~~notes thereto included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains ~~“forward-looking statements”~~forward-looking statements within the meaning of Section 21E of the Securities Exchange ~~Act.~~Act of 1934, as amended (the "Exchange Act"). These statements include, but are not limited to, expectations regarding our strategy, business plans, financial performance and developments relating to our industry. These statements are often identified by the use of words such as ~~“may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,”~~"may," "will," "expect," "believe," "anticipate," "intend," "could," "should," "estimate," or ~~“continue,”~~"continue," and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in ~~the section titled “Risk Factors,” set forth in~~ Part I, Item 1AIA: "Risk Factors," of this Annual Report on Form 10-K and elsewhere in this report. The forward-looking statements in this Annual Report on Form 10-K represent our views as of the date of this Annual Report on Form 10-K. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report on Form 10-K.

Business Overview

We discover, develop and sell enzymes and other proteins that deliver value to our clients in a growing set of industries. We view proteins as a vast, largely untapped source of value-creating products, and we are using our proven technologies, which we have been continuously improving since our inception in 2002, to commercialize an increasing number of novel enzymes, both as proprietary Codexis products and in partnership with our customers.

We are a ~~pioneer in harnessing computational technologies to drive biology advancements. Since 2002, we have made substantial investments in the development of our CodeEvolver~~® ~~protein~~leading enzyme engineering technology platform, the primary source of our competitive advantage. Our technology platform is powered by proprietary, artificial intelligence-based, computational algorithms that rapidly mine the structural and performance attributes of our large and continuously growing library of protein variants. These computational outputs enable increasingly reliable predictions for next generation protein variants to be engineered, enabling time- and cost-efficient delivery of the targeted performance enhancements. In addition to its computational prowess, our CodeEvolver® protein engineering technology platform integrates additional modular competencies, including robotic high-throughput screening and genomic sequencing, organic chemistry and bioprocess development which are all coordinated to rapidly innovate novel, fit-for-purpose products.

The core historical application of the technology has been in developing commercially viable biocatalytic manufacturing processes for more sustainable production of complex chemicals. It begins by conceptually designing the most cost-effective and practical process for a targeted product. We then develop optimized biocatalysts to enable the designed process, using our CodeEvolver® platform. Engineered biocatalyst candidates, numbering many thousands for each project, are then rapidly screened and validated using high throughput methods under process-relevant operating conditions. This approach results in an optimized biocatalyst that enables cost-efficient processes that are relatively simple to run in conventional manufacturing equipment. This also allows for efficient technical transfer of our processes to our manufacturing partners.

~~We initially commercialized our CodeEvolver~~® protein engineering technology platform and products in the manufacture of small molecule pharmaceuticals, which remains a primary business focus. Our customers, which include many large, global pharmaceutical companies, use our technology, products and services in their process development and in manufacturing. Additionally, we have licensedcompany leveraging our proprietary CodeEvolver® ~~protein engineering~~ technology platform to ~~global~~discover, develop, enhance, and commercialize novel, high performance enzymes and other classes of proteins. Enzymes are naturally occurring biological molecules critical to almost all biochemical reactions that sustain life. They can be precisely engineered and optimized for specific functions, and to have particular characteristics, such as an ability to survive environments in which natural enzymes cannot, or to perform (bio)chemical transformations different than those for which they naturally evolved. We focus on leveraging our capacity to enhance the properties and performance of enzymes to drive pivotal improvements across two key focus areas: our foundational, revenue-generating pharmaceutical manufacturing business and our Enzyme-Catalyzed Oligonucleotide (ECO) Synthesis™ (“ECO Synthesis™”) manufacturing platform, which is currently in development to enable the commercial scale manufacture of RNA interference (RNAi) therapeutics. Our unique enzymes drive improvements such as higher yields, increased purity, reduced energy usage and waste generation, and improved efficiency in manufacturing. In July 2023, we announced that we discontinued investment in certain development programs, primarily in our novel biotherapeutics business segment and that we are actively exploring options to drive value by potentially monetizing other non-core assets within our Life Sciences portfolio.

Within the pharmaceutical manufacturing business, we utilize our CodeEvolver® technology platform to develop optimized enzymes that are used by some of the world’s largest pharmaceutical companies ~~enabling them~~ to reduce their costs and improve the efficiency and productivity of their manufacturing processes for small molecule therapeutics. We also use ~~this~~the CodeEvolver® technology ~~in house,~~platform to ~~engineer~~develop enzymes for ~~their own businesses.~~the synthesis of nucleic acids such as DNA/RNA, including ~~In May 2019,~~our ECO Synthesis™ manufacturing platform. We demonstrated gram-scale synthesis with the ECO Synthesis™ manufacturing platform in December 2023 and expect to begin pre-commercial customer testing in 2024. We anticipate that this will be followed by early commercial licenses to the ECO Synthesis™ manufacturing platform in 2025 and a full commercial launch in 2026.

Recent Developments

On February 13, 2024, we entered into a ~~Platform Technology Transfer~~five-year loan and ~~License Agreement (the “Novartis CodeEvolver~~® ~~Agreement”) with Novartis.~~ ~~The Novartis CodeEvolver~~® ~~Agreement (Codexis’ third such~~security agreement with ~~large pharma companies) allows Novartis~~Innovatus Life Sciences Lending Fund I, LP, an affiliate of Innovatus Capital Partners, LLC (“Innovatus”), for an aggregate principal amount of up to ~~use our proprietary CodeEvolver~~® ~~protein engineering platform technology in the field~~$40.0 million (the “Loan Agreement”) consisting of ~~human healthcare.~~

~~As evidence~~two tranches, of our strategy to extend our technology beyond pharmaceutical manufacturing, we have also used the technology to develop biocatalysts and enzyme products for use in a broader set of industrial markets, including several large verticals, such as food, feed, consumer care and fine chemicals. In addition, we are using our technology to develop enzymes for various life science related applications, such as next generation sequencing (“NGS”) and polymerase chain reaction (“PCR/qPCR”) for in vitro molecular diagnostic and genomic research applications. In December 2019, we entered into a license agreement to provide Roche Sequencing Solutions, Inc. with our first enzyme for this target market: the Company’s EvoT4™ DNA ligase. In June 2020, we also entered into a Master Collaboration and Research Agreement with MAI (the “MAI Agreement”) pursuant to which we are leveraging our CodeEvolver® ~~platform technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis.~~

~~Approximately six years ago, we began using the CodeEvolver~~® protein engineering technology platform to develop early stage, novel biotherapeutic product candidates, both in partnership with customers and for our own proprietary Codexis drug candidates. Our first program was for the potential treatment of phenylketonuria ("PKU") in humans. PKU is an inherited metabolic disorder in which the ~~enzyme that converts~~first tranche of $30.0 million was completed on execution of the essential amino acid phenylalanine into tyrosine is deficient. In October 2017, we entered into a Global Development, Option and License Agreement (the “Nestlé License Agreement”) with Societé des Produits Nestlé S.A., formerly known as Nestec Ltd. (“Nestlé Health Science")Loan Agreement. We will be eligible to advance CDX-6114, our enzyme biotherapeutic product candidate for the potential treatment of PKU. In February 2019, Nestlé Health Science exercised its option to obtain an exclusive license to develop and commercialize CDX-6114. Also in October 2017, we entered into the Nestlé SCA pursuant to which we and Nestlé Health Science are collaborating to leverage the CodeEvolver® ~~platform technology to develop other novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas.~~ In March 2020, we entered into a Strategic Collaboration and License Agreement (“Takeda Agreement”) with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Company Limited (“Takeda”), for the research and development of novel gene therapies for certain disease indications, including the treatment of lysosomal storage disorders and a blood factor deficiency.

~~See Note 5, "Collaborative Arrangements" in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for further information.~~

~~Recent Development - Pfizer (PAXLOVID~~™)

In the first and second quarters of 2021, we began to receive purchase orders from Pfizer, Inc. (“Pfizer”) for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir. Pfizer markets, sells and distributes nirmatrelvir, in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets; ritonavir tablets) product, which received emergency use authorization by the U.S. Food and Drug Administration (“FDA”) in late 2021 for the treatment of COVID-19 in humans.

~~In 2021, we recognized approximately~~ ~~$34.5 million~~ in revenue from the sale of quantities of CDX-616 to Pfizer. In addition, as of December 31, 2021, we have received additional purchase orders from Pfizer for delivery of a significant quantity of CDX-616 in 2022. We have received and currently expect to receive additional purchase orders from Pfizer for significant quantities of CDX-616 during the course of 2022 for delivery in 2022 and 2023. As of December 31, 2021, we have not yet executed a long-term purchase and sale agreement with Pfizer for CDX-616; with or without a long-term purchase and sale agreement, we currently expect that future orders for quantities of CDX-616 by Pfizer will continue to be baseddraw on the ~~needs~~second tranche of ~~Pfizer for quantities~~$10.0 million upon achievement of ~~CDX-616 and there will be no minimum purchase obligation on the part of Pfizer.~~

~~Business Segments~~

~~We manage our business as~~certain milestones including certain pre-specified revenue thresholds. The two ~~business segments: Performance Enzymes and Novel Biotherapeutics. See Note 15, “Segment, Geographical and Other Revenue Information” in the Notes~~tranches collectively are referred to ~~the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.~~

~~Performance Enzymes~~

~~We initially commercialized our CodeEvolver~~® protein engineering technology platform and products in the manufacture of small molecule pharmaceuticals and, to date, this continues to be our largest market served. Our customers, which include many large global pharmaceutical companies, use our technology, products and services in their manufacturing processes and process development. We have also used the technology to develop customized enzymes for use in other industrial markets. These markets consist of several large industrial verticals, including food, feed, consumer care, and fine chemicals. We also use our technology in the life sciences markets to develop enzymes for customers using NGS and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications, as well DNA/RNA synthesis and health monitoring applications.

~~Novel Biotherapeutics~~

~~We are also targeting new opportunities in the pharmaceutical industry to discover, improve, and/or develop biotherapeutic drug candidates. We believe that our CodeEvolver~~® protein engineering platform technology can be used to discover novel biotherapeutic drug candidates that will target human diseases that are in need of improved therapeutic interventions. Similarly, we believe that we can deploy our platform technology to improve specific characteristics of a customer’s pre-existing biotherapeutic drug candidate, such as its activity, stability or immunogenicity.

~~Business Update Regarding COVID-19~~

We are subject to risks and uncertainties as a result of the current COVID-19 pandemic. The COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the U.S. economy and other economies worldwide. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and may not be accurately predicted, including the duration and severity of the pandemic, the prevalence of more contagious and or virulent variants such as the Delta and Omicron variants, and the extent and severity of the impact on our customers, new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.“Term Loans.”

In the United States, the impact of COVID-19, including governmental orders (“Orders”) governing the operation of businesses during the pandemic, caused the temporary closure of our Redwood City, California facilities and has disrupted our R&D operations. R&D operations for several projects were temporarily suspended from mid-March 2020 through the end of April 2020 in accordance with these Orders. In May 2020, we re-initiated limited R&D operations and have ramped up operations such that we are currently utilizing our normal R&D capacity while following county, state and federal COVID-19 guidance for the protection of our employees. Additionally, we resumed manufacturing at our Redwood City pilot plant in May 2020.

As a result of the COVID-19 pandemic we have received purchase orders from Pfizer for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir, used by Pfizer in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets; ritonavir tablets) product for the treatment of COVID-19 infections in humans. These purchase orders have had substantial impact on our revenue in 2021.

~~For additional information on the various risks posed by the COVID-19 pandemic, please read Item 1A. Risk Factors included in this Annual Report on Form 10-K.~~

~~Recent~~ Investing and Financing Activities

In ~~June 2020,~~March 2022, we entered into a Stock Purchase Agreement with ~~MAI~~seqWell Inc. (“seqWell”), a privately held biotechnology company, pursuant to which we purchased ~~1,587,050~~1,000,000 shares of ~~MAI's~~seqWell's Series AC preferred stock for ~~$1.0~~$5.0 million. In connection with the transaction, John Nicols, our President and Chief Executive Officer, also joined MAI’s board of directors. Concurrently with our initial equity investment, we entered into the MAI Agreement pursuant to which we are performing services utilizing our CodeEvolver® ~~protein engineering platform technology to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A preferred stock. In April 2021,~~September 2023, we purchased an additional ~~1,000,000~~88,256 shares of ~~MAI's~~seqWell's Series AC-1 preferred stock and 44,128 common stock warrants for ~~$0.6 million. In September 2021, we purchased 9,198,423 shares of MAI's Series B preferred stock for $7.0~~$0.4 million. As of December 31, ~~2021,~~2023, we have ~~16,705,320~~1,293,535 shares of ~~MAI's~~seqWell's Series AC and BC-1 preferred stock that we have earned or purchased since executing the Stock Purchase Agreement with ~~MAI.~~seqWell.

In November 2020, we announced the SynBio Innovation Accelerator (“Accelerator”) collaboration with Casdin Capital, LLC ("Casdin"). The goal of the Accelerator is to fund the early-stage companies with disruptive technology platforms or unique product development capabilities in the field of synthetic and industrial biotechnology. The first investment by Codexis associated with the Accelerator collaboration was made in Arzeda Corp., a privately-held computational protein design company that focuses on computational approaches to designing novel enzyme functionality. We invested $1.0 million in Arzeda and received a convertible subordinated note issued by Arzeda Corp. In July 2021, we converted the non-marketable debt security with a carrying value of $1.3 million into 207,070 shares of Series B-2 preferred stock of Arzeda Corp.

In December 2020, we completed an underwritten public offering of 4,928,572 shares of our common stock, par value $0.0001 per share, at a public offering price of $17.50 per share. The net proceeds to us were approximately $80.8 million after deducting offering costs, underwriting discounts and commissions and other offering expenses of $5.5 million.

6148

In May 2021, we filed a Registration Statement on Form S-3 with the SEC, that automatically became effective upon its filing, under which we may sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings. On February 27, 2023, we filed a post-effective amendment to that Registration Statement on Form S-3. Pursuant to that post-effective amendment, we registered an aggregate $200.0 million of securities.In May 2021, we entered into an Equity Distribution Agreement ~~("EDA"~~(“EDA”) with Piper Sandler & Co ~~("PSC"~~(“PSC”), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of $50.0 million of shares of our common stock. Under the terms of the EDA, PSC may sell the shares at market prices by any method that is deemed to be an ~~"at~~“at the market ~~offering"~~offering” as defined in Rule 415 under the Securities Act of 1933, as amended. During the year ended December 31, ~~2021,~~2023, 3,079,421 shares of our common stock were issued and sold pursuant to the EDA for gross proceeds of $8.7 million, or $7.9 million in net proceeds after PSC's commissions and direct offering expenses of $0.7 million. As of December 31, 2023, $41.3 million of shares remained available for sale under the EDA. During the year ended December 31, 2022, no shares of our common stock were ~~issued~~sold pursuant to the EDA.

~~Results of Operations Overview~~

~~Revenues~~In June 2020, we~~re $104.8 million~~ entered into a Stock Purchase Agreement with MAI, a privately held life sciences company, pursuant to which we purchased 1,587,050 shares of MAI's Series A preferred stock for $1.0 million. Mr. Nicols, our former President and CEO until August 2022, also joined MAI’s board of directors in ~~2021,~~June 2020 and remained on MAI's board until September 2023. Concurrently with our initial equity investment, we entered into a ~~52% increase from $69.1 million in 2020. Product revenue,~~Master Collaboration and Research Agreement with MAI (the “MAI Agreement”), pursuant to which ~~consists primarily of sales of biocatalysts, pharmaceutical intermediates, and Codex~~we performed services utilizing our CodeEvolver® ~~biocatalyst panels~~directed evolution technology platform to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A and ~~kits, was $70.7 million~~B preferred stock. In April 2021, we purchased an additional 1,000,000 shares of MAI's Series A preferred stock for $0.6 million. In September 2021, we purchased 9,198,423 shares of MAI's Series B preferred stock for $7.0 million. As of December 31, 2023, we held 19,277,914 shares of MAI's Series A and B preferred stock that we have earned or purchased since executing the Stock Purchase Agreement with MAI.

Business Impact of COVID-19 and Sales of CDX-616 to Pfizer for PAXLOVID™

In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The impact of COVID-19 affected segments of the global economy and its continuing impacts may affect our operations, including the potential interruption of our supply chain. On May 11, 2023, the COVID-19 Public Health Emergency (“PHE”) declared under the Public Health Service Act expired. While COVID-19 is no longer considered a PHE, future surges or actions taken in response to COVID-19 or other PHEs may materially affect our products, supply chain or operations.

As a result of the COVID-19 pandemic, in 2021 ~~an increase of 134% compared with $30.2 million in 2020. The increase in product revenue was primarily due to $34.5 million in revenue~~and 2022 we received purchase orders from Pfizer ~~related to the purchase~~Inc. (“Pfizer”) for large quantities of our ~~performance~~proprietary enzyme ~~products and an increase in demand~~product, CDX-616, for ~~enzymes used~~use by Pfizer in the manufacture of ~~branded pharmaceutical products.~~a critical intermediate for its proprietary API, nirmatrelvir, used by Pfizer in combination with the API ritonavir, as its PAXLOVID™ (nirmatrelvir tablets; ritonavir tablets) product for the treatment of COVID-19 infections in humans. We are a party

~~Research~~ to an Enzyme Supply Agreement with Pfizer Ireland Pharmaceuticals, a subsidiary of Pfizer, Inc. (the “Pfizer Supply Agreement”), covering the manufacture, sale and ~~development revenues, which include license, technology access and exclusivity fees, research service fees, milestone payments, royalties, and optimization and screening fees, totaled $34.1~~purchase of CDX-616 for use by Pfizer in the manufacture of nirmatrelvir. Under the terms of the Pfizer Supply Agreement, Pfizer paid us a fee of $25.9 million in ~~2021, a 12% decrease compared with $38.8 million in 2020. The decrease in research and development revenue~~August 2022 which was ~~primarily due to lower license fees from Takeda under the Takeda Agreement and lower revenues from Novartis under the Novartis CodeEvolver~~® ~~Agreement recognized this year compared~~recorded as deferred revenue. Pursuant to the ~~prior year, partially offset by higher license fees from other existing collaboration agreements.~~

~~Our products’ profitability~~agreement, 90% of the fee ($23.3 million) is ~~affected by many factors including the mix~~creditable against (i) future orders of products we sell. Our profit margins are affected by many factors including the costs of internal and third-party fixed and variable costs, including materials and supplies, labor, facilities and other overhead costs. Profit margin data isCDX-616 used ~~as a management performance measure~~ to manufacture provide additional information regarding our results of operations on a consolidated basis. Product gross margins increased to 69% in 2021, compared to 55% in 2020 due to improved product mix resulting from sales to Pfizer and an increase in customer demand for branded pharmaceutical products.

~~Research and development expenses were $55.9 million in 2021, an increase of 26% from $44.2 million in 2020. The increase was primarily due to an increase in costs associated~~its PAXLOVID™ with higher headcount, higher lab supplies, higher depreciation and other outside services, partially offset by a decrease in costs associated with outside services relating to Chemistry, Manufacturing and Controls ("CMC") and regulatory expenses.

Selling, general and administrative expenses were $49.3 million in 2021, an increase of 41% compared to $35.0 million in 2020. The increase was primarily due to an increase in costs associated with a higher headcount, increase in legal fees, higher stock-based compensation costs, higher outside and temporary services, partially offset by lower allocable expenses.

Net loss was $21.3 million, or a net loss of $0.33 per share, in 2021 compared to a net loss of $24.0 million, or a net loss of $0.40 per share, in 2020. The decrease in net loss was primarily related to an increase in product revenue with higher margins, partially offset by higher operating expenses and lower research and development revenues.

Cash and cash equivalents decreased to $116.8 million as of December 31, 2021 compared to $149.1 million as of December 31, 2020. In addition, net cash used in operations was $14.3 million in 2021, as compared to net cash used in operations of $16.5 million in 2020. We believe that based on our current level of operations, our existing cash and cash equivalents will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements for at least the next 12 months.

In June 2017, we entered into a loan and security agreement with Western Alliance Bank that allowed us to borrow up to $10.0 million under a term loan, and allow us to borrow up to $5.0 million under a revolving credit facility with 80% of certain eligible accounts receivable as a borrowing base (the “Credit Facility”). Obligations under the Credit Facility are secured by a lien on substantially all of our personal property other than our intellectual property. In September 2021, we entered into the Ninth Amendment to the Credit Facility whereby we may draw on the term debt and the Revolving Line of Credit at any timeshipment dates prior to December 31, ~~2021~~ 2023, and ~~October 1, 2024, respectively. Draws on~~(ii) fees associated with any new development and licensing agreements with Pfizer entered into prior to April 4, 2023. On March 31, 2023, we entered into a license agreement whereby Pfizer utilized a portion of the ~~term debt are subject~~$23.3 million credit towards a license to ~~customary conditions~~develop future product candidates, for ~~funding. Our~~which we recognized $5.0 million as non-cash research and development revenue during the second quarter of 2023. Pfizer's ability to ~~take draws on~~utilize the ~~term debt~~credit under item (i) above expired on December 31, ~~2021. As~~2023, and under item (ii) above expired on April 4, 2023. Up to 50% of ~~December 31,~~any portion of the $25.9 million which has not been credited under items (i) and (ii) is creditable against future orders of CDX-616 used to manufacture PAXLOVID™ with shipment dates in 2024. The sale of CDX-616 to Pfizer had a substantial impact on our revenues in 2021 ~~no amounts were borrowed under the Credit Facility~~ and ~~we were~~2022, and to a lesser extent in ~~compliance with the covenants for the Credit Facility. See~~ ~~Note 13, “Commitments~~2023. Potential revenues in future years from our sales of CDX-616 to Pfizer and ~~Contingencies”~~ ~~in the Notes~~other potential customers (including sublicensees of Pfizer technology from The Medicine Patent Pool) are subject to ~~the Consolidated Financial Statements set forth in Item 8~~a number of ~~this Annual Report on Form 10-K.~~factors which are outside of our control and could reduce or eliminate our sales of CDX-616.

6249

~~Recent Accounting Pronouncements~~RESULTS OF OPERATIONS

For information on recent accounting pronouncements, see Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

~~Results of Operations~~

The following table shows the amounts from our consolidated statements of operations for the periods presented (in thousands, except percentages):

Year Ended December 31, % of Total Revenues
2021 2020 2019 2021 2020 2019
Revenues:
Product revenue $ 70,657 $ 30,220 $ 29,465 67 % 44 % 43 %
Research and development revenue 34,097 38,836 38,993 33 % 56 % 57 %
Total revenues 104,754 69,056 68,458 100 % 100 % 100 %
Costs and operating expenses:
Cost of product revenue 22,209 13,742 15,632 21 % 20 % 23 %
Research and development 55,919 44,185 33,873 53 % 64 % 49 %
Selling, general and administrative 49,323 35,049 31,502 47 % 51 % 46 %
Total costs and operating expenses 127,451 92,976 81,007 121 % 135 % 118 %
Loss from operations (22,697) (23,920) (12,549) (21) % (35) % (18) %
Interest income 459 405 1,287 — % 1 % 2 %
Other income (expense), net 1,148 (156) (656) 1 % — % (1) %
Loss before income taxes (21,090) (23,671) (11,918) (20) % (34) % (17) %
Provision for income taxes 189 339 17 — % — % — %
Net loss $ (21,279) $ (24,010) $ (11,935) (20) % (34) % (17) %


	Year Ended December 31,						% of Total Revenues
	2023		2022		2021		2023		2022		2021
Revenues:
Product revenue	$	42,906	$	116,676	$	70,657	61	%	84	%	67	%
Research and development revenue	27,237		21,914		34,097		39	%	16	%	33	%
Total revenues	70,143		138,590		104,754		100	%	100	%	100	%
Costs and operating expenses:
Cost of product revenue	12,809		38,033		22,209		18	%	27	%	21	%
Research and development	58,885		80,099		55,919		84	%	58	%	53	%
Selling, general and administrative	53,250		52,172		49,323		76	%	38	%	47	%
Restructuring charges	3,284		3,167		—		5	%	2	%	—	%
Asset impairment and other charges	9,984		—		—		14	%	—	%	—	%
Total costs and operating expenses	138,212		173,471		127,451		197	%	125	%	121	%
Loss from operations	(68,069)		(34,881)		(22,697)		(97)	%	(25)	%	(21)	%
Interest income	4,172		1,441		459		6	%	1	%	—	%
Other income (expense), net	(12,274)		124		1,148		(17)	%	—	%	1	%
Loss before income taxes	(76,171)		(33,316)		(21,090)		(108)	%	(24)	%	(20)	%
Provision for income taxes	69		276		189		—	%	—	%	—	%
Net loss	$	(76,240)	$	(33,592)	$	(21,279)	(108)	%	(24)	%	(20)	%

Revenues

Our revenues consist of product revenue and research and development revenue as follows:

•Product revenue consist of sales of biocatalysts, pharmaceutical intermediates, and Codex® biocatalyst panels and kits.

•Research and development revenue include license, technology access and exclusivity fees, research services fees, milestone payments, royalties, optimization and screening fees.

Revenues are as follows (in thousands, except percentages):


								Change																																														Change
									Change									Year Ended December 31,											2023										2022
		Year Ended December 31,							2021				2020
		2021		2020		2019			$		%		$		%
	2023																				2023				2022						2021						$						%					$				%
Product revenue	Product revenue	$	70,657	$	30,220	$	29,465		$	40,437	134	%	$	755	3	%	Product revenue	$	42,906	$		$	116,676	$		$	70,657			$			$	(73,770)		(63)				(63)	%				$	46,019		65		65	%
Research and development revenue	Research and development revenue	34,097		38,836		38,993			(4,739)		(12)	%	(157)		—	%	Research and development revenue	27,237		21,914			21,914		34,097			34,097				5,323			5,323			24				24		%			(12,183)		(36)			(36)	%
Total revenues	Total revenues	$	104,754	$	69,056	$	68,458		$	35,698	52	%	$	598	1	%	Total revenues	$	70,143	$		$	138,590	$		$	104,754			$			$	(68,447)		(49)				(49)	%				$	33,836		32		32	%

Revenues typically fluctuate on a quarterly basis due to the variability in our customers' manufacturing schedules and the timing of our customers' clinical trials. In addition, we have limited internal capacity to manufacture enzymes. As a result, we are dependent upon the performance and capacity of third party manufacturers for the commercial scale manufacturing of the enzymes used in our pharmaceutical and fine chemicals business.

We accept purchase orders for deliveries covering periods from one day up to 14 months from the date on which the order is placed. However, some of our purchase orders can be revised or cancelled by the customer without penalty. Considering

these industry practices and our experience, we do not believe the total of customer purchase orders outstanding (backlog) provides meaningful information that can be relied on to predict actual sales for future periods.

~~2021~~2023 compared to ~~2020~~2022

Total revenues ~~increased~~decreased by ~~$35.7~~$68.4 million in ~~2021~~2023 to ~~$104.8~~$70.1 million, as compared to ~~2020.~~2022. The decrease was driven by lower product revenue as compared to the prior year.

Product revenue was $42.9 million in 2023, a decrease of 63% compared with $116.7 million in 2022. The decrease in product revenue was primarily due to decreased sales of CDX-616 to Pfizer. This decrease was partially offset by $8.2 million release of prior year's deferrals related to Pfizer's fee, $3.2 million release of prior periods' product revenue deferrals due to early termination of the enzyme supply obligations to a customer and $1.3 million of product revenue recognized as settlement fee pursuant to the enzyme supply agreement with the same customer.

Research and development revenue increased by $5.3 million in 2023 to $27.2 million, or 24% compared with $21.9 million in 2022, primarily due to higher revenue from the Pfizer license agreement and from Nestlé Health Science under the Nestlé SCA and development agreement and the Acquisition Agreement, which was partially offset by lower research and development fees from existing collaboration agreements being recognized in 2023 as compared to the prior year.

2022 compared to 2021

Total revenues increased by $33.8 million in 2022 to $138.6 million, as compared to 2021. The increase was driven by growth in product revenue of ~~$40.4~~$46.0 million, or ~~134%~~65%, ~~but~~ partially offset by a decrease in research and development revenue of ~~$4.7~~$12.2 million, or ~~12%~~36%.

Product ~~revenues, which consist primarily~~revenue was $116.7 million in 2022, an increase of ~~sales of biocatalysts, pharmaceutical intermediates, and Codex~~® ~~biocatalyst panels and kits, were~~65% compared with $70.7 million in ~~2021, an increase of 134% compared with $30.2 million in 2020.~~ 2021. The increase in product revenue was primarily due to ~~$34.5~~$40.9 million inhigher revenue from Pfizer ~~and an increase in demand for enzymes used in~~sales related to the ~~manufacture~~purchase of ~~branded pharmaceutical products.~~CDX-616.

Research and development revenue ~~decrea~~decreased by $12.2 million in 2022 to $21.9 million~~sed by $4.7~~, or 36% compared with $34.1 million in 2021, ~~to $34.1 million, or 12% compared with $38.8 million in 2020,~~ primarily due to lower license fees from Takeda, decreased revenue from milestone payments received from GSK in 2021 and lower research and development fees from ~~Takeda under the Takeda Agreement and lower revenues from the Novartis CodeEvolver~~® ~~Agreement~~other existing collaboration agreements being recognized ~~this year~~in 2022 as compared to the prior ~~year, partially offset by higher license fees from other existing collaboration agreements.~~

~~2020 compared to 2019~~

~~Total revenues increased by $0.6 million in 2020 to $69.1 million, as compared to 2019. The increase was driven by growth in product revenue~~year. A portion of ~~$0.8 million, or 3%, offset by a decrease in~~our research and development revenue ~~of $0.2 million or nominal percent.~~

~~Product revenues were $30.2 million~~ in ~~2020, an increase of 3% compared with $29.5 million in 2019. The increase in product revenue is primarily due~~2022 and 2021 was paid to ~~higher customer demand for enzymes used~~us by MAI in the ~~manufacture~~form of ~~branded pharmaceutical products.~~

~~Research~~additional shares of MAI Series A and ~~development revenues decreased by $0.2 million in 2020 to $38.8 million compared with 39.0 million in 2019, primarily due to lower revenues from~~Series B preferred stock. We received an aggregate of 1,587,049 and 3,491,505 shares of MAI's Series A and B preferred stock for the ~~Novartis CodeEvolver® Agreement, a prior year functional license fee revenue from Nestlé Health Science,~~years ended December 31, 2022 and a prior year milestone payment from GSK under the GSK CodeEvolver® Agreement, partially offset by the recognition of license fees from Takeda under the Takeda Agreement, and recognition of functional license fees revenue from Porton.2021, respectively.

~~Cost~~Costs and Operating Expenses (in thousands, except percentages):


								Change																																																	Change
									Change									Year Ended December 31,											2023										2022
		Year Ended December 31,							2021				2020
		2021		2020		2019			$		%		$		%
	2023																				2023				2022						2021						$							%						$					%
Cost of product revenue	Cost of product revenue	$	22,209	$	13,742	$	15,632		$	8,467	62	%	$	(1,890)	(12)	%	Cost of product revenue	$	12,809	$		$	38,033	$		$	22,209			$			$	(25,224)		(66)				(66)		%					$	15,824		71			71	%
Research and development	Research and development	55,919		44,185		33,873			11,734		26	%	10,312		30	%	Research and development	58,885		80,099			80,099		55,919			55,919				(21,214)			(21,214)			(26)					(26)		%				24,180		43				43	%
Selling, general and administrative	Selling, general and administrative	49,323		35,049		31,502			14,274		41	%	3,547		11	%	Selling, general and administrative	53,250		52,172			52,172		49,323			49,323				1,078			1,078			2					2		%				2,849		6				6	%
Restructuring charges																	Restructuring charges	3,284				3,167				—							117						4		%					3,167						100	%
Asset impairment and other charges																	Asset impairment and other charges	9,984				—				—							9,984						100		%					—						—	%
Total costs and operating expenses	Total costs and operating expenses	$	127,451	$	92,976	$	81,007		$	34,475	37	%	$	11,969	15	%	Total costs and operating expenses	$	138,212	$		$	173,471	$		$	127,451			$			$	(35,259)		(20)				(20)		%					$	46,020		36			36	%

~~Cost~~Costs of Product Revenue and Product Gross Margin

~~Our product revenues are derived entirely from our Performance Enzymes segment. Revenues from the Novel Biotherapeutics segment are only from collaborative research and development activities.~~

The following table shows the amounts of our product revenue, cost of product revenue, product gross profit and product gross margin from our consolidated statements of operations ~~for the years ended~~ (in thousands, except percentages):


		Year Ended December 31,						Change				Year Ended December 31,						Change
		2021			2020			$		%		2020			2019			$		%
	Year Ended December 31,																												Year Ended December 31,									Change							Year Ended December 31,								Change
	2023																									2023					2022					$					%				2022					2021				$				%
Product revenue	Product revenue	$	70,657		$	30,220		$	40,437	134	%	$	30,220		$	29,465		$	755	3	%	Product revenue	$	42,906	$		$	116,676		$		$	(73,770)		(63)				(63)	%		$	116,676		$		$	70,657		$		$	46,019	65		65	%
Cost of product revenue (1)	Cost of product revenue (1)	22,209			13,742			8,467		62	%	13,742			15,632			(1,890)		(12)	%	Cost of product revenue(1)	12,809		38,033			38,033			(25,224)			(25,224)			(66)			(66)	%			38,033		22,209			22,209		15,824			15,824	71				71	%
Product gross profit	Product gross profit	$	48,448		$	16,478		$	31,970	194	%	$	16,478		$	13,833		$	2,645	19	%	Product gross profit	$	30,097	$		$	78,643		$		$	(48,546)		(62)				(62)	%		$	78,643		$		$	48,448		$		$	30,195	62		62	%
Product gross margin (%) (2)	Product gross margin (%) (2)	69		%	55		%					55		%	47		%

(1) Cost of product revenue comprises both internal and third-party fixed and variable costs, including materials and supplies, labor, facilities and other overhead costs associated with our product revenue.

(2)Product gross margin is used as a performance measure to provide additional information regarding our results of operations on a consolidated basis.

~~2021~~

2023 compared to ~~2020~~2022

Cost of product revenue decreased by $25.2 million in 2023 to $12.8 million, as compared to 2022. The decrease was primarily due to lower volume of product sales as compared to prior year. Product gross margins increased to 70% in 2023 as compared to 67% in 2022, primarily due to product revenue recognized with no related costs in 2023 related to the utilization of Pfizer's fee and early termination of an enzyme supply agreement with a customer, and was partially offset by variability in the product mix.

2022 compared to 2021

Cost of product revenue increased by ~~$8.5~~$15.8 million in ~~2021~~2022 to ~~$22.2~~ $38.0 million, as compared to ~~2020.~~2021. The increase was primarily due to a higher volume of product sales and variations in product mix. ~~The product~~Product gross ~~margin increased~~margins decreased to 67% in 2022 as compared to 69% in 2021, ~~as compared to 55% in 2020,~~ primarily due to variations in product mix, variation in prices per volume sold and higher shipping costs. Some of these cost increases are a result of the ~~sale~~impact of ~~higher margin branded products.~~

~~2020 compared to 2019~~

~~Cost of product revenue decreased by $1.9 million~~inflation and supply chain pressures seen in 2020 to $13.7 million, as compared to 2019. The decrease was primarily due to lower costs compared to costs associated with prior year product revenue. The product gross margin increased to 55% in 2020 as compared to 47% in 2019 due to improved product mix.2022.

Research and Development Expenses

Research and development expenses consist of costs incurred for internal projects as well as collaborative research and development activities. These costs primarily consist of (i) employee-related costs, which include salaries and other personnel-related expenses (including stock-based compensation), (ii) various allocable expenses, which include occupancy-related costs, supplies, depreciation of facilities and laboratory equipment, and (iii) external costs. Research and development expenses are expensed when incurred.

~~2021~~2023 compared to ~~2020~~2022

Research and development expenses were $58.9 million in 2023 compared to $80.1 million in 2022, a decrease of $21.2 million, or 26%. This decrease was primarily due $10.0 million decrease in costs associated with lower headcount, $6.4 million decrease in outside services and Chemistry, Manufacturing and Controls (“CMC”) and regulatory expense, $4.1 million in lower lab supplies expense, $1.3 million in lower stock comp expense, and $1.0 million decrease in lease costs due to the assignment of our San Carlos facility lease. These were partially offset by $1.7 million in higher allocable costs.

2022 compared to 2021

Research and development expenses were $80.1 million in 2022 compared to $55.9 million in 2021, ~~compared to $44.2 million in 2020,~~ an increase of ~~$11.7~~$24.2 million, or ~~26%~~43%. The increase was primarily due to ~~$7.6~~an increase of $7.4 million in costs associated with higher headcount, ~~$0.8~~ $4.8 million in higher facilities and repair and maintenance expenses, $5.3 million increase in outside services and CMC and regulatory expenses, $2.6 million in higher lab supplies, $2.1 million in higher depreciation expenses, $1.1 million in higher stock-based compensation expenses ~~$2.6 million in higher lab supplies, $2.2~~ and $0.7 million in higher allocable ~~expenses, $1.1 million increase~~expenses. Some of these cost increases are a result of the impact of inflation seen in ~~outside services, and $1.0 million in higher depreciation expenses, partially offset by a $3.7 million decrease in costs associated with outside services related to CMC and regulatory expenses.~~

~~2020 compared to 2019~~

Research and development expenses were $44.2 million in 2020 compared to $33.9 million in 2019, an increase of $10.3 million, or 30%. The increase was primarily due to $5.0 million in costs associated with outside services relating to CMC and regulatory expenses, $3.4 million in costs associated with higher headcount, $1.5 million in higher allocable expenses which include occupancy-related costs and supplies, $0.4 million in higher outside services, and $0.3 million in higher depreciation expense and were partially offset by a decrease of $0.4 million in lab supply expenses.2022.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of employee-related costs, which include salaries and other personnel-related expenses (including stock-based compensation), hiring and training costs, consulting and outside services expenses (including audit and legal counsel related costs), marketing costs, building lease costs, and depreciation expenses and amortization expenses.

~~2021~~2023 compared to ~~2020~~2022

Selling, general and administrative expenses were $53.3 million in 2023 compared to $52.2 million in 2022, an increase of $1.1 million, or 2%. This increase was primarily due to $3.6 million higher in payroll-based expenses, $0.6 million in higher legal expense, $0.4 million in higher repairs and maintenance expense, and $0.3 million in higher consulting and outside services. This was partially offset by $3.2 million lower stock based compensation expense and $0.4 million in lower allocable expenses.

2022 compared to 2021

Selling, general and administrative expenses were $52.2 million in 2022 compared to $49.3 million in 2021, ~~compared to $35.0 million in 2020,~~ an increase of ~~$14.3~~$2.8 million, or ~~41%~~6%. The increase was primarily due to an increase of ~~$6.6~~$6.0 million in costs associated with higher headcount, ~~to support our growth, $3.1~~$1.8 million in higher stock-based compensation costs, ~~$5.1 million increase in legal fees, $1.1~~$0.8 million in higher outside and temporary services, ~~$1.0 million in higher facilities cost, and $0.4 million increase in allowance for credit losses,~~which was partially offset by a decrease of ~~$3.0 million in allocable expenses.~~

~~2020 compared to 2019~~

~~Selling, general and administrative expenses were $35.0 million in 2020 compared to $31.5 million in 2019, an increase of~~ $3.5 million or 11%. The increase was primarily due to increases of $1.7 million in salaries and personnel costs associated with higher headcount, $0.6 million in stock-based compensation expense, $0.8 million in consultants costs, $0.8 million in legal and accounting fees, $0.7 million in facilities costs, $0.7 million in outside and temporary services, and $0.4 million in licensed technology, which were partially offset by decreases of $1.6 million in allocable expenses due to higher expenses allocated to research and development activities in 2022 and $3.3 million in lower legal fees. Some of these cost increases are a result of the impact of inflation seen in 2022.

Restructuring Charges

Restructuring charges consist of employee severance and other termination benefits due to workforce reduction plans that were initiated during the third quarter of 2023 and in the fourth quarter of 2022. Restructuring charges were $3.3 million and $3.2 million for the years ended December 31, 2023 and 2022, respectively.

Asset Impairment and Other Charges

Asset impairment and other charges for the year ended December 31, 2023 were $10.0 million, consisting of a $9.2 million long-lived asset impairment charge and a $0.8 million ~~in travel expenses.~~goodwill impairment charge, all of which are non-cash charges. No asset impairment charges were recorded for the years ended December 31, 2022 or 2021.

Interest Income and Other Income (Expense), net (in thousands, except percentages):


								Change																																														Change
									Change									Year Ended December 31,											2023										2022
		Year Ended December 31,							2021				2020
		2021		2020		2019			$		%		$		%
	2023																				2023				2022						2021						$						%					$				%
Interest income	Interest income	$	459	$	405	$	1,287		$	54	13	%	$	(882)	(69)	%	Interest income	$	4,172	$		$	1,441	$		$	459			$			$	2,731		190				190	%				$	982		214		214	%
Other income (expense), net	Other income (expense), net	1,148		(156)		(656)			1,304		836	%	500		76	%	Other income (expense), net	(12,274)		124			124		1,148			1,148				(12,398)			(12,398)			(9,998)				(9,998)		%			(1,024)		(89)			(89)	%
Total other income (expense), net	Total other income (expense), net	$	1,607	$	249	$	631		$	1,358	545	%	$	(382)	(61)	%	Total other income (expense), net	$	(8,102)	$		$	1,565	$		$	1,607			$			$	(9,667)		(618)				(618)	%				$	(42)		(3)		(3)	%

Interest Income

Interest income increased by ~~$0.1~~ $2.7 million in ~~2021~~2023 compared to ~~2020,~~2022, primarily due to higher average interest rates on cash balances. Interest income increased by $1.0 million in 2022 compared to 2021, primarily due to higher average interest rates on cash balances, and was partially offset by earned interest income on a non-marketable debt security ~~partially offset by a reduction~~ in ~~interest income from lower average interest rates on lower average cash balances. Interest income decreased by $0.9 million in 2020 compared to 2019, primarily due to lower average interest rates on declining average cash balances.~~the prior year.

Other Income (Expense), net

Other income (expense), net, ~~increased~~decreased by ~~$1.3~~$12.4 million in ~~2021~~ 2023 compared to ~~2020,~~2022, primarily due to impairment of our investments in MAI, seqWell and Arzeda. Other income (expense), net, decreased by $1.0 million in 2022 compared to 2021, primarily due to a ~~$1.0 million~~lower gain from remeasurement on the carrying value of our investment in MAI~~. Other expense decreased by $0.5 million~~ recognized in ~~2020~~2022 as compared to ~~2019, primarily due to a $0.5 million write-down in the fair value of our investment in CO~~20212 ~~Solutions and fluctuations in foreign currency in 2019.~~.

Provision for Income Taxes (in thousands, except percentages):
Change
Year Ended December 31, 2021 2020
2021 2020 2019 $ % $ %
Provision for income taxes $ 189 $ 339 $ 17 $ (150) (44) % 322 1,894 %


							Change
	Year Ended December 31,						2023				2022
	2023		2022		2021		$		%		$		%
Provision for income taxes	$	69	$	276	$	189	$	(207)	(75)	%	$	87	46	%

The provision for income taxes in 2023 was primarily for ~~2021~~current year state income taxes and the accrual of interest and penalties on historic uncertain tax positions.

The provision for income taxes in 2022 was primarily due to the income tax withholding imposed by foreign taxing authorities on income earned in certain countries outside of the Unites ~~States~~Stated and remitted to the ~~Unites~~United States and the accrual of interest and penalties on historic uncertain tax ~~positions.~~positions, as well as current year state income taxes.

Starting in 2022, changes to Internal Revenue Code Section 174 made by the Tax Cuts and Jobs Act of 2017 no longer permit an immediate deduction for research and development expenditures in the tax year that such costs are incurred. As a result, the Company capitalized such costs in its 2022 income tax provision resulting in an increase in deferred tax assets and state income taxes. However, as we have recorded a full valuation allowance on our deferred tax assets, this did not have an impact on our net deferred tax assets.

The provision for income taxes in ~~2020~~2021 was primarily due to the income tax withholding imposed by foreign ~~withholding taxes~~taxing authorities on income earned in certain ~~sales~~countries outside of the Unites Stated and remitted to ~~non-U.S. customers. The provision for income taxes in 2019 was primarily due to~~the United States and the accrual of interest and penalties on historic uncertain tax positions.

Net Loss

Net loss for ~~2021 was $21.3~~2023 was $76.2 million, or a net loss per basic and diluted share of ~~$0.33. T~~his compared to a net loss of $24.0 million, or $0.40 per basic and diluted share for 2020. The decrease in net loss was primarily related to an increase in product revenue with higher margins, partially offset by higher operating expenses and lower research and development revenues.

~~The net loss for 2020 was $24.0 million, or $0.40 per basic and diluted share.~~$1.12. This compared to a net loss of ~~$11.9~~$33.6 million, or ~~$0.21~~$0.51 per basic and diluted share for ~~2019.~~2022. The increase in net loss was primarily related to ~~an increase~~lower product revenues from CDX-616 and one-time charges recognized during 2023 related to asset impairment, including impairment in ~~costs associated with outside services relating to CMC~~our investments in non-marketable equity securities, and ~~regulatory expenses, higher headcount, higher consultants, higher stock compensation expenses and higher facility expense.~~

~~Results of Operations by Segment~~ ~~(in thousands, except percentages)~~

~~Revenues by segment~~
Year Ended December 31, 2021 Year Ended December 31, 2020 Change
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics
$ % $ %
Revenues:
Product revenue $ 70,657 $ — $ 70,657 $ 30,220 $ — $ 30,220 $ 40,437 134 % $ — — %
Research and development revenue 19,858 14,239 34,097 17,886 20,950 38,836 1,972 11 % (6,711) (32) %
Total revenues $ 90,515 $ 14,239 $ 104,754 $ 48,106 $ 20,950 $ 69,056 $ 42,409 88 % $ (6,711) (32) %

~~2021 compared to 2020~~

~~Revenues from the Performance Enzymes segment increased by~~ ~~$42.4 million, or 88%, to $90.5 million in 2021, compared to $48.1 million in 2020. The increase in product revenue of $40.4 million, or 134%, to $70.7 million in 2021,~~ ~~compared to $30.2 million in 2020~~restructuring charges, which was~~primarily due to $34.5 million in revenue from Pfizer and higher customer demand for enzymes used in the manufacture of branded pharmaceutical~~ ~~pro~~ducts. The increase in research and development revenue of $2.0 million, or 11%, to $19.9 million in 2021, compared to $17.9 million in 2020 was primarily due to higher licenses fees from existing collaboration arrangements, partially offset by lower ~~revenues from Novartis under the Novartis CodeEvolver~~® ~~Agreement.~~operating expenses in 2023.

~~Revenues from the Novel Biotherapeutics segment decreased by $6.7~~Net loss for 2022 was $33.6 million, or ~~32%, to $14.2 million in 2021,~~a net loss per basic and diluted share of $0.51. This compared to ~~$21.0~~a net loss of $21.3 million, or $0.33 per basic and diluted share for 2021. The increase in ~~2020. The decrease in revenue~~net loss was primarily ~~due~~related to lower ~~license and~~ research and development ~~fees from Takeda under the Takeda Agreement recognized this year compared to the prior year~~revenues and ~~a decrease in research and development revenue from Nestlé Health Science compared to last year.~~

~~2020 compared to 2019~~

Revenues from the Performance Enzymes segment decreased by $10.1 million, or 17%, to $48.1 million in 2020, compared to $58.2 million in 2019. The increase in product revenue of $0.8 million, or 3%, to $30.2 million in 2020, compared to $29.5 million in 2019, was primarily due to higher customer demand for enzymes used in the manufacture of branded pharmaceutical products. The decrease in research and development revenue of $10.8 million, or 38%, to $17.9 million in 2020, compared to $28.7 million in 2019 was primarily due to lower revenues from Novartis under the Novartis CodeEvolver® ~~Agreement, a prior year milestone payment from GSK under the GSK CodeEvolver~~® ~~Agreement, and lower license fees and revenue from Merck, partially offset by the recognition of functional license fees revenue from Porton in 2020.~~

Revenues from the Novel Biotherapeutics segment increased by $10.6 million, or 103%, to $21.0 million in 2020, compared to $10.3 million in 2019. The increase in revenue was primarily due to recognition of license fees from Takeda under the Takeda Agreement, partially offset by a decrease in prior year functional license fee revenue from Nestlé Health Science.

~~Costs and~~ operating ~~expenses by segment~~

Year Ended December 31, 2021 Year Ended December 31, 2020 Change
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics
$ % $ %
Cost of product revenue $ 22,209 $ — $ 22,209 $ 13,742 $ — $ 13,742 $ 8,467 62% $ — —%
Research and development(1)
23,140 30,219 53,359 20,923 21,705 42,628 2,217 11% 8,514 39%
Selling, general and administrative(1)
12,105 2,755 14,860 9,597 2,355 11,952 2,508 26% 400 17%
Total segment costs and operating expenses $ 57,454 $ 32,974 90,428 $ 44,262 $ 24,060 68,322 $ 13,192 30% $ 8,914 37%
Corporate costs(2)
33,808 22,555
Unallocated depreciation and amortization 3,215 2,099
Total costs and operating expenses $ 127,451 $ 92,976

~~(1)~~ ~~Research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases.~~
~~(2)~~ ~~Corporate costs include unallocated selling, general and administrative~~ expenses.

Year Ended December 31, 2020 Year Ended December 31, 2019 Change
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics
$ % $ %
Cost of product revenue $ 13,742 $ — $ 13,742 $ 15,632 $ — $ 15,632 $ (1,890) (12)% $ — —%
Research and development(1)
20,923 21,705 42,628 19,380 13,278 32,658 1,543 8% 8,427 63%
Selling, general and administrative(1)
9,597 2,355 11,952 8,462 2,222 10,684 1,135 13% 133 6%
Total segment costs and operating expenses $ 44,262 $ 24,060 68,322 $ 43,474 $ 15,500 58,974 $ 788 2% $ 8,560 55%
Corporate costs(2)
22,555 20,255
Unallocated depreciation and amortization 2,099 1,778
Total costs and operating expenses $ 92,976 $ 81,007

~~(1)~~ ~~Research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases.~~
~~(2)~~ ~~Corporate costs include unallocated selling, general and administrative expenses.~~

~~For a discussion of product cost of revenue, see~~ ~~“Results of Operations”.~~

~~2021 compared to 2020~~

~~Research and development expense in the Performance Enzymes segment~~ increased by $2.2 million, or 11%, to $23.1 million in 2021, compared to $20.9 million in 2020. The increase was primarily due to an increase in costs associated with higher headcount, higher outside services expenses, and higher lab supplies, partially offset by lower allocable expenses.

~~Selling, general and administrative expense in the Performance Enzymes segment increased~~ by $2.5 million, or 26%, to $12.1 million in 2021, compared to $9.6 million in 2020. The increase was primarily due to an increase in costs associated with higher headcount and allocable expenses, partially offset by lower outside services expenses.

Research and development expense in the Novel Biotherapeutics segment increased by $8.5 million, or 39%, to $30.2 million in 2021, compared to $21.7 million in 2020. The increase was primarily due to higher costs associated with higher headcount and allocable expenses but partially offset by reduction in costs associated with outside services relating to CMC and regulatory expenses.

~~Selling, general and administrative expense in the Novel Biotherapeutics segment increase~~d by $0.4 million, or 17%, to $2.8 million in 2021, compared to $2.4 million in 2020. The increase was primarily due to increase in costs associated with higher headcount and higher allocable expenses, partially offset by lower outside services expenses.

~~2020 compared to 2019~~

Research and development expense in the Performance Enzymes segment increased by $1.5 million, or 8%, to $20.9 million in 2020, compared to $19.4 million in 2019. The increase was primarily due to an increase in costs associated with higher headcount, higher stock-based compensation expense, higher repairs and maintenance expense, and were partially offset by lower lab supply expenses and lower allocable expenses.

Selling, general and administrative expense in the Performance Enzymes segment increased by $1.1 million, or 13%, to $9.6 million in 2020, compared to $8.5 million in 2019. The increase was primarily due to an increase in costs associated with licensed technology, outside services, stock-based compensation expense, and higher allocable expenses which were partially offset by lower travel expenses.

Research and development expense in the Novel Biotherapeutics segment increased by $8.4 million, or 63%, to $21.7 million in 2020, compared to $13.3 million in 2019. The increase was primarily due to an increase in costs associated with outside services relating to CMC and regulatory expenses for CDX-7108 which we are developing pursuant to our development agreement with Nestlé Health Science, higher headcount, higher outside services, and higher allocable expenses and were partially offset by lower lab supply expenses and consultant expense.

Selling, general and administrative expense in the Novel Biotherapeutics segment increased by $0.1 million, or 6%, to $2.4 million in 2020, compared to $2.2 million in 2019. The increase was primarily due to an increase in costs associated with headcount, licensed technology, consultants and stock-based compensation expense which were partially offset by lower allocable expenses, outside services, and travel expenses.

~~Income (loss) from operations by segment~~

Year Ended December 31, 2021 Year Ended December 31, 2020 Change
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics
$ % $ %
Income (loss) from operations $ 33,061 $ (18,735) $ 14,326 $ 3,844 $ (3,110) $ 734 $ 29,217 760% $ (15,625) (502)%
Year Ended December 31, 2020 Year Ended December 31, 2019 Change
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics
$ % $ %
Income (loss) from operations $ 3,844 $ (3,110) $ 734 $ 14,682 $ (5,198) $ 9,484 $ (10,838) (74)% $ 2,088 40%

~~2021 compared to 2020~~

Income from operations in the Performance Enzymes segment increased by $29.2 million, or 760%, to $33.1 million, in 2021, compared to $3.8 million in 2020. The increase in income from operations was primarily due to higher product revenue and research and development revenue, partially offset by higher costs and operating expenses.

Loss from operations in the Novel Biotherapeutics segment increased by $15.6 million, or 502%, to $18.7 million in 2021 compared to a loss from operations of $3.1 million in 2020. The increase in loss from operations was primarily due to lower

research and development revenue from Takeda under the Takeda Agreement and decrease in research and development revenue from Nestlé Health Science, and higher research and development expenses associated with higher headcount and allocable expenses.

~~2020 compared to 2019~~

Income from operations in the Performance Enzymes segment decreased by $10.8 million, or 74%, to $3.8 million, in 2020, compared to $14.7 million in 2019. The decrease in income from operations was primarily due to decrease in research and development revenue and increases in research and development costs and selling, general and administrative expenses.

Loss from operations in the Novel Biotherapeutics segment decreased by $2.1 million, or 40%, to $3.1 million in 2020 compared to a loss from operations of $5.2 million in 2019. The decrease in loss from operation was primarily due to the recognition of license fees from Takeda under the Takeda Agreement, partially offset by a decrease in prior year functional license fee revenue from Nestlé Health Science, an increase in costs associated with outside services relating to CMC and regulatory expenses, higher headcount, higher outside services, and higher allocable expenses.

~~Liquidity and Capital Resources~~LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the measurement of our ability to meet working capital needs and to fund capital expenditures. We have historically funded our operations primarily through cash generated from operations, stock option exercises and public and private offerings of our common stock. ~~We also have~~In addition, pursuant to the ~~ability~~Loan Agreement, we received $30.0 million from Innovatus, as Lender, on February 13, 2024 and may become eligible to borrow up to ~~$5.0~~an additional $10.0 million ~~under our Credit Facility.~~upon the achievement of certain financial milestones. We actively manage our cash usage and investment of liquid cash to ensure the maintenance of sufficient funds to meet our working capital needs. Our cash and cash equivalents are held in ~~U.S~~U.S. banks.

Our primary uses of capital for the foreseeable future, including the next 12 months, are for compensation and related expenses, research and development expenses including manufacturing costs, laboratory and related supplies, legal and other regulatory expenses, and general overhead costs.

The following summarizes our cash and cash equivalents balance and working capital as of December 31, ~~2021, 2020~~2023, 2022 and ~~2019~~2021 (in thousands):


		December 31,						December 31,
		2021		2020		2019
	2023								2023	2022	2021
Cash and cash equivalents	Cash and cash equivalents	$	116,797	$	149,117	$	90,498
Working capital	Working capital	$	128,517	$	159,442	$	98,817

Sources of Capital

In addition to our existing cash and cash equivalents and revenue generated through our existing operations, we are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives and certain royalty payments under our collaboration ~~agreements.~~agreements with Merck, Nestlé, and Novartis of up to $59.0 million in aggregate. In addition, under the GSK CodeEvolver® Agreement, we have the potential to receive additional contingent payments that range from $5.8 million to $38.5 million per project. Our ability to earn these milestone and contingent payments and the timing of achieving these milestones is primarily dependent upon the outcome of our collaborators’ research and development activities and is uncertain at this time. ~~Under the Merck CodeEvolver~~® ~~Agreement, we are eligible to receive payments of up to $15.0 million for each commercial API that is manufactured by Merck using one or more novel enzymes developed by Merck using the CodeEvolver~~® ~~technology. In addition, under the GSK CodeEvolver~~® Agreement, depending upon GSK's successful application of the licensed technology, we have the potential to receive additional contingent payments that range from $5.75 million to $38.5 million per project.

~~In May 2019, we entered into a Platform Technology Transfer and License Agreement with Novartis. The Novartis CodeEvolver~~® ~~Agreement allows Novartis to use Codexis’ proprietary CodeEvolver~~® protein engineering platform technology in the field of human healthcare. Pursuant to the agreement, we received an upfront payment of $5.0 million shortly after the effective date. We completed the second technology milestone transfer under the agreement and received a milestone payment of $4.0 million in 2020. We have also received aggregate of ~~$5.0 million~~ ~~for the completion of the third technology milestone in 2021. In consideration~~ for the continued disclosure and license of improvements to the technology and materials during a multi-year period that began on the conclusion of the Technology Transfer Period (“Improvements Term”), Novartis will pay Codexis an additional $8.0 million in aggregate over four years.

In October 2017, we entered into the Nestlé License Agreement with Nestlé Health Science. Pursuant to the Nestlé License Agreement, Nestlé Health Science paid us an upfront cash payment and milestone payments after dosing the first subjects in a first-in-human Phase 1a dose-escalation trail with CDX-6114 and achievement of a formulation relating to CDX-6114. We are also eligible to receive payments from Nestlé Health Science under the Nestlé License Agreement that include (i) development and approval milestones of up to $85.0 million, (ii) sales-based milestones of up to $250.0 million in the aggregate, which aggregate amount is achievable if net sales exceed $1.0 billion in a single year, and (iii) tiered royalties, at percentages ranging from the mid-single digits to low double-digits, of net sales of product.

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~~We are actively collaborating~~In addition, pursuant to the terms of the Pfizer Supply Agreement, Pfizer paid us a fee of $25.9 million in August 2022 which was recorded as deferred revenue. Pursuant to the agreement, 90% of the fee ($23.3 million) is creditable against (i) future orders of CDX-616 used to manufacture its PAXLOVID™ with shipment dates prior to December 31, 2023, and (ii) fees associated with any new development and ~~existing customers~~licensing agreements with Pfizer entered into prior to April 4, 2023. Subsequent to the end of the first quarter of 2023, we entered into a license agreement whereby Pfizer utilized a portion of the $23.3 million credit towards a license to develop future product candidates, for which we recognized $5.0 million as non-cash research and development revenue during the second quarter of 2023. Pfizer's ability to utilize the credit under item (i) above expired on December 31, 2023, and under item (ii) above expired on April 4, 2023. Up to 50% of any portion of the $25.9 million which has not been credited under items (i) and (ii) is creditable against future orders of CDX-616 used to manufacture PAXLOVID™ with shipment dates in 2024, and any portion of the ~~pharmaceutical~~fee that is not utilized within the specific period will be forfeited and ~~food industries. We believe that we can utilize our current products and services, and develop new products and services, to increase our revenues and gross margins in future periods.~~recognized as revenue.

We have historically experienced negative cash flows from operations as we continue to invest in key technology development projects and improvements to our CodeEvolver®~~protein engineering~~ technology platform, develop and commercialize new and existing products including our ECO Synthesis™ manufacturing platform and expand our business development and collaboration with new customers. Our cash flows from operations will continue to be affected principally by product sales and product gross margins, sales from licensing our technology to major pharmaceutical companies, and collaborative research and development services provided to customers, as well as our headcount costs, primarily in research and development. Our primary source of cash flows from operating activities is cash receipts from our customers for purchases of products, collaborative research and development services, and licensing our technology to major pharmaceutical companies. Our largest uses of cash from operating activities are for employee-related expenditures, rent payments, inventory purchases to support our product sales and non-payroll research and development costs.

Loan Agreement and Term Loans

On February 13, 2024, we entered into the Loan Agreement with Innovatus consisting of two tranches, of which the first tranche of $30.0 million was completed upon execution of the Loan Agreement. We will be eligible to draw on the second tranche of $10.0 million upon achievement of certain milestones including certain pre-specified revenue thresholds. The Term Loan carries an interest-only period of 36 months and will bear an interest at a floating rate of the sum of (a) the greater of (i) prime rate and (ii) 7.50%, plus (b) 3.25%.

Equity Distribution Agreement

In May 2021, we entered into an Equity Distribution Agreement ~~("EDA"~~(“EDA”) with Piper Sandler & Co ~~("PSC"~~(“PSC”), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of $50.0 million of shares of our common stock. During the year ended December 31, ~~2021, no~~2023, 3,079,421 shares of our common stock were issued and sold pursuant to the ~~EDA.~~EDA, all during the first half of 2023, and we received net proceeds of $7.9 million. As of December 31, ~~2021, $50.0~~2023, $41.3 million of shares remained available for sale under the EDA. Sales of our common stock under this arrangement could be subject to business, economic or competitive ~~uncertainties~~uncertainties and contingencies, many of which may be beyond our control, and which could cause actual results from the sale of our common stock to differ materially from expectations.

~~Credit Facility~~Liquidity

In June 2017, we entered into the Credit Facility with Western Alliance Bank which consists of term debt for loans that allowed us to borrow up to $10.0 million and a revolving credit facility that allows us to borrow up to $5.0 million with a certain eligible accounts receivable borrowing base of 80% of eligible accounts receivable. In September 2021, we entered into the Ninth Amendment to the Credit Facility whereby we may draw on the Term Debt and the Revolving Line of Credit at any time prior to ~~December 31, 2021 and October 1,~~ 2024, respectively, subject to customary conditions for funding including, among others, that no event of default exists. Draws on the Credit Facility are secured by a lien on substantially all of our personal property other than our intellectual property. On October 1, 2024, loans drawn under the Term Debt mature and the Revolving Line of Credit terminate. Our right to take draws on the term debt expired on December 31, 2021 and no amounts were drawn under the Credit Facility as of December 31, 2021. The Credit Facility requires us to maintain compliance with certain financial covenants including attainment of certain lender-approved projections or maintenance of certain minimum cash levels. Restrictive covenants in the Credit Facility restrict the payment of dividends or other distributions. At December 31, 2021, we were in compliance with the covenants for the Credit Facility. For additional information about our contractual obligations, see Note 13, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

We believe that ~~based on our current level of operations,~~ our existing cash and cash equivalents, combined with our future expectations for product revenues, research and development revenue, and expense management will provide adequate funds for ongoing operations, planned capital expenditures and working capital ~~requirements~~requirements for at least the next 12 months.We have based this estimate on assumptions that may prove to be wrong, and we could utilize our capital resources sooner than we expect.

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However, we may need additional capital if our current plans and assumptions change. In addition, we may choose to seek other sources of capital even if we believe we have generated sufficient cash flows to support our operating needs. Our need for additional capital will depend on many factors, including the financial success of our business, the spending required to develop and commercialize new and existing products including our ECO Synthesis™ manufacturing platform, the effect of any acquisitions of other businesses, technologies or facilities that we may make or develop in the future, our spending on new market opportunities, and the potential costs for the filing, prosecution, enforcement and defense of patent claims, if necessary. If our capital resources are insufficient to meet our capital requirements, and we are unable to enter into or maintain collaborations with partners that are able or willing to fund our development efforts or commercialize any products that we develop or enable, we will have to raise additional funds to continue the development of our technology and products and complete the commercialization of products, if any, resulting from our technologies. If future financings involve the issuance of equity securities, our existing stockholders would suffer dilution. IfIn addition, under our Loan Agreement, we ~~raise debt financing or enter into credit facilities, we may be~~are subject to restrictive covenants that limit our ability to conduct our ~~business.~~business and could be subject to additional covenants to the extent we seek other debt financing in the future. We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. If we fail to raise sufficient funds and fail to generate sufficient revenues to achieve planned gross margins and to control operating costs, our ability to fund our operations, take advantage of strategic opportunities, develop products or technologies, or otherwise respond to competitive pressures could be significantly limited. If this happens, we may be forced to delay or terminate ~~research~~development of new products or ~~development programs~~services, such as our ECO Synthesis™ manufacturing platform, or the commercialization of products resulting from our technologies, curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights, or grant licenses on terms that are not favorable to us. If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.

Cash Flows

The following is a summary of cash flows for the years ended December 31, ~~2021, 2020~~2023, 2022 and ~~2019~~2021 (in thousands):
Year Ended December 31,
2021 2020 2019
Net cash used in operating activities $ (14,267) $ (16,464) $ (12,560)
Net cash used in investing activities (21,422) (5,748) (3,665)
Net cash provided by financing activities 3,767 80,808 53,961
Net increase (decrease) in cash, cash equivalents and restricted cash $ (31,922) $ 58,596 $ 37,736


	Year Ended December 31,
	2023		2022		2021
Net cash provided by (used in) operating activities	$	(52,638)	$	11,284	$	(14,267)
Net cash used in investing activities	(4,858)		(13,578)		(21,422)
Net cash provided by (used in) financing activities	8,167		(575)		3,767
Net decrease in cash, cash equivalents and restricted cash	$	(49,329)	$	(2,869)	$	(31,922)

Cash Flows from Operating Activities

~~Cash used~~The $63.9 million decrease in ~~operating~~net cash provided by operating activities in 2023 as compared to 2022 was ~~$14.3~~primarily due to the net effect of decreases in cash received from our customers due to lower revenue in 2023 and with 2022 benefiting from the receipt of a $25.9 million ~~in 2021, which resulted~~fee from a net loss of $21.3 million adjusted for non-cash charges for depreciation of $3.1 million, right-of-use ("ROU") lease asset amortization expense of $2.8 million, stock-based compensation of $11.6 million, $0.3 million allowance for credit losses,Pfizer that is creditable against future orders, partially offset by ~~equity securities earned from research~~decreases in cash paid for cost of revenues and ~~development activities of $2.0 million and unrealized gain on non-marketable securities of $1.3 million. Additionally, changes in~~ operating ~~assets and liabilities were $7.6 million.~~ expenses.

The ~~net change in operating assets and liabilities included a decrease in other long-term liabilities of $4.1~~$25.6 million increase in ~~financial assets~~net cash provided by operating activities in 2022 as compared to 2021 was primarily due to the receipt of ~~$9.2~~a $25.9 million ~~increase~~fee from Pfizer in ~~prepaid expenses~~August 2022 creditable against future orders and ~~other assets of $2.3 million, increase~~increases in ~~inventories of $0.2 million,~~cash received from revenue, which was partially offset by ~~increase in accrued compensation and other accrued liabilities of $6.6 million, increase in deferred revenue of $1.3 million and increase of $0.3 million in accounts payable.~~

~~Cash used in~~increased payments associated with higher operating activities was $16.5 million in 2020, which resulted from a net loss of $24.0 million adjusted for non-cash charges for depreciation of $2.0 million, ROU lease asset amortization expense of $2.6 million and stock-based compensation of $7.7 million, as well as changes in operating assets and liabilities. The net change in operating assets and liabilities included decreases in other long-term liabilities of $2.6 million and combined increases in financial assets of $8.7 million, prepaid expenses and other assets of $1.0 million, as well as accrued compensation and other accrued liabilities of $6.2 million and deferred revenue of $2.7 million.

Cash used in operating activities was $12.6 million in 2019, which resulted from a net loss of $11.9 million adjusted for non-cash charges for depreciation of $1.6 million, ROU lease asset amortization expense of $3.0 million and stock-based compensation of $6.9 million, as well as changes in operating assets and liabilities. The net change in operating assets and liabilities included decreases in deferred revenue of $6.2 million and in other long-term liabilities of $1.2 million, and combined increases in financial assets of $5.9 million, prepaid expenses and other assets of $1.3 million, as well as accrued compensation and other accrued liabilities of $2.2 million.

costs.

Cash Flows from Investing Activities

~~Cash~~The $8.7 million decrease in net cash used in investing activities ~~was $21.4 million~~ in ~~2021~~2023 as compared to 2022 was primarily due to ~~the purchase~~higher cash utilized for additional investments in equity securities and purchases of property and equipment ~~of $13.8~~in the prior year.

The $7.8 million ~~and for the purchase of 1,000,000 shares of MAI's Series A preferred stock~~decrease in ~~April 2021 and 9,198,423 shares of MAI's Series B preferred stock in September 2021 for $7.6 million.~~

~~Cash~~net cash used in investing activities ~~was $5.7 million~~ in ~~2020~~2022 as compared to 2021 was primarily due to ~~the purchase~~higher cash utilized for additional investments in equity securities and purchases of property and equipment ~~of $3.7 million, and investments~~ in ~~non-marketable equity securities of $1.0 million and non-marketable debt securities of $1.0 million.~~

~~Cash used in investing activities was $3.7 million in 2019 primarily due to the purchase of property and equipment of $3.7 million and partially offset by proceeds from sale of CO~~2 ~~investment securities of $0.1 million.~~2021.

Cash Flows from Financing Activities

~~Cash~~The $8.7 million increase in net cash provided by financing activities ~~was $3.8 million~~ in ~~2021,~~2023 as compared to 2022 was primarily due to ~~$5.2 million of~~ proceeds from ~~exercises~~issuance of common stock ~~options, partially offset~~under the EDA and lower cash paid on taxes related to net share settlement of equity awards.

The $4.3 million decrease in net cash provided by ~~$1.2 million for~~financing activities in 2022 as compared to 2021 was primarily due to higher cash paid on taxes ~~paid~~ related to net share settlement of equity awards and ~~$0.2 million of costs incurred in connection with the EDA.~~

~~Cash provided by financing activities was $80.8 million in 2020, primarily due to $80.8 million net~~lower proceeds from ~~our offering of common stock after deducting underwriting discounts and commission and related costs and proceeds from the~~ exercises of ~~employee~~ stock ~~options which were partially offset by the payment of taxes related to the net share settlement of equity awards~~options.

Cash provided by financing activities was $54.0 million in 2019, primarily due to net proceeds from our private offering of common stock after deducting underwriting discounts and commission and related costs and proceeds from the exercises of employee stock options which were partially offset by the payment of taxes related to the net share settlement of equity awards.

~~Off-Balance Sheet Arrangements~~

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, ~~2021,~~2023, we had no off-balance sheet arrangements as defined in Item ~~303(a)(4)~~303 of Regulation S-K as promulgated by the SEC.

~~Critical Accounting Policies and Estimates~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States and include our accounts and the accounts of our wholly owned subsidiaries. The preparation of our consolidated financial statements requires our management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the applicable periods. Management bases its estimates, assumptions and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our consolidated financial statements, which, in turn, could change the results from those reported. Our management evaluates its estimates, assumptions and judgments on an ongoing basis.

The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.

Revenue Recognition

Our revenues are derived primarily from product revenue and collaborative research and development agreements. The majority of our contracts with customers typically contain multiple products and services. We account for individual products and services separately if they are distinct-that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation.

The majority of our collaborative contracts contain multiple revenue streams such as upfront and/or annual license fees, research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage, among others. We determine the stand-alone selling price (“SSP”) and allocate consideration to distinct performance obligations. Typically, we base our SSPs on our historical sales. If an SSP is not directly observable, then we estimate the SSP taking into consideration market conditions, forecasted sales, entity-specific factors and available information about the customer. We estimate the SSP for license rights by using a discounted cash flow method which includes the following key assumptions: the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success. For licenses that have been previously sold to other customers, we use historical information to determine SSP.

We account for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Non-cancellable purchase orders received from customers to deliver a specific quantity of product, when combined with our order confirmation, in exchange for future consideration, create enforceable rights and obligations on both parties and constitute a contract with a customer.

We measure revenue based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected on behalf of government authorities. We recognize revenue in a manner that best depicts the transfer of promised goods or services to the customer, when control of the product or service is transferred to a customer. We make significant judgments when determining the appropriate timing of revenue recognition.

~~The following is a description of principal activities from which we generate revenue:~~

Product Revenue

~~Product revenue consist of sales of biocatalysts, pharmaceutical intermediates and Codex~~® biocatalyst panels and kits. A majority of our product revenue is made pursuant to purchase orders or supply agreements and is recognized either at a point in time when the control of the product has been transferred to the customer typically upon shipment or over time as the product is manufactured because we have a right to payment from the customer under a binding, non-cancellable purchase order, and there is no alternate use of the product for us as it is specifically made for the customer’s use.

Certain of our agreements provide options to customers which they can exercise at a future date, such as the option to purchase our product during the contract duration at discounted prices and an option to extend their contract, among others. In accounting for customer options, we determine whether an option is a material right and this requires us to exercise significant judgment. If a contract provides the customer an option to acquire additional goods or services at a discount that exceeds the range of discounts that we typically give for that product or service, or if the option provides the customer certain additional goods or services for free, the option may be considered a material right. If the contract gives the customer the option to acquire additional goods or services at their normal SSPs, we would likely determine that the option is not a material right and, therefore, account for it as a separate performance obligation when the customer exercises the option. We primarily account for options which provide material rights using the alternative approach available under ~~ASC~~the Accounting Standards Codification (“ASC”) 606, as we concluded we meet the criteria for using the alternative approach. Therefore, the transaction price is calculated as the expected consideration to be received for all the goods and services we expect to provide. We update the transaction price for expected consideration, subject to constraint, each reporting period if our estimate of future goods to be ordered by customers change. Estimating expected consideration to be received under the alternative approach involves significant judgment.

Research and Development ~~Revenues~~

We perform research and development activities as specified in each respective customer agreement. We identify each performance obligation in our research and development agreements at contract inception. We allocate the consideration to each distinct performance obligation based on the estimated SSP of each performance obligation. Performance obligations included in our research and services agreements typically include research and development services for a specified term, periodic reports and small samples of enzyme produced.Revenue

The majority of our research and development agreements are based on a contractual rate per dedicated project team working on the project. The underlying product that we develop for customers does not create an asset with an alternative use to us and the customer receives benefits as we perform the work towards completion. Thus, our performance obligations are generally satisfied over time as the service is performed. We utilize an appropriate method of measuring progress towards the completion of our performance obligations to determine the timing of revenue recognition. For each performance obligation that is satisfied over time, we recognize revenue using a single measure of progress ~~typically~~either based on hours ~~incurred.~~incurred or output of services provided.

7457

Our contracts frequently provide customers with rights to use or access our products or technology, along with other promises or performance obligations. ~~Under ASC 606, we must first determine whether the license is distinct from other promises, such as our promise to perform research and development services.~~ If we determine that the customer cannot benefit from the license without our services, the license will be accounted for as combined with the other performance obligations. If we determine that a license is distinct, we would recognize an allocable portion of the transaction price when the license is transferred to the customer, and the customer can use and benefit from it. We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers and for new licenses, we consider multiple methods, a discounted cash flow method which includes the following key assumptions: the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success.

At the inception of each arrangement that includes variable consideration such as development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

Our CodeEvolver® platform technology transfer collaboration agreements typically include license fees, upfront fees, and variable consideration in the form of milestone payments, and sales or usage-based royalties. We have recognized revenues from our platform technology transfer agreements over time.

We also have an agreement under which we have granted a functional license to some elements of our biocatalyst technology. We will recognize revenues for the functional license at a point in time when the control of the license transfers to the customer.

For license agreements that include sales or usage-based royalty payments to us for which the license is the predominant item to which the royalty relates, we do not recognize revenue until the underlying sales of the product or usage has occurred. At the end of each reporting period, we estimate the royalty amount. We recognize revenue at the later of (i) when the related sale of the product occurs, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied.

~~Stock-Based Compensation~~

We use the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under our equity incentive plans. The Black-Scholes-Merton option pricing model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. The expected term is based on historical exercise behavior on similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. We use historical volatility to estimate expected stock price volatility. The risk-free rate assumption is based on United States Treasury instruments whose terms are consistent with the expected term of the stock options. The expected dividend assumption is based on our history and expectation of dividend payouts.

Restricted Stock Units (“RSUs”), Restricted Stock Awards (“RSAs”) and performance-contingent restricted stock units (“PSUs”) are measured based on the fair market values of the underlying stock on the dates of grant. Performance based options (“PBOs”) are measured using Black-Scholes-Merton option pricing model. The vesting of PBOs and PSUs awarded is conditioned upon the attainment of one or more performance objectives over a specified period and upon continued employment through the applicable vesting date. At the end of the performance period, shares of stock subject to the PBOs and PSUs vest based upon both the level of achievement of performance objectives within the performance period and continued employment through the applicable vesting date.

Stock-based compensation expense is calculated based on awards ultimately expected to vest and is reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated annual forfeiture rates for stock options, RSUs, PSUs, PBOs, and RSAs are based on historical forfeiture experience.

The estimated fair value of stock options, RSUs and RSAs are expensed on a straight-line basis over the vesting term of the grant and the estimated fair value of PSUs and PBOs are expensed using an accelerated method over the term of the award once management has determined that it is probable that the performance objective will be achieved. Compensation expense is

recorded over the requisite service period based on management's best estimate as to whether it is probable that the shares awarded are expected to vest. Management assesses the probability of the performance milestones being met on a continuous basis.

~~Lease Accounting~~

We determine if an arrangement is a lease at inception. Where an arrangement is a lease we determine if it is an operating lease or a finance lease. At lease commencement, we record a lease liability and corresponding ROU asset. Lease liabilities represent the present value of our future lease payments over the expected lease term which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of our lease liability is determined using our incremental collateralized borrowing rate at lease inception. ROU assets represent our right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than 12 months. Over the lease term we use the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to consolidated statement of operations in a manner that results in straight-line expense recognition.

We elected to apply the practical expedient for short-term leases and accordingly do not apply lease recognition requirements for short-term leases. Instead, we recognize payments related to these arrangements in the consolidated statement of operations as lease costs on a straight-line basis over the lease term.

Investment in Non-Marketable Securities

Investment in Non-Marketable Equity Securities

We measure investments in non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis. Gains and losses on these securities are recognized in other income (expense), net.

~~Investment in Non-Marketable Debt Securities~~

We measure available for sale investments in non-marketable debt at fair value. Unrealized gains and losses on these securities are recognized in other comprehensive income until realized. Non-marketable debt securities are classified as available-for-sale securities.

We classify non-marketable debt securities as Level 3 in the fair value hierarchy because we estimate the fair value based on a qualitative analysis using the most recent observable transaction price and other significant unobservable inputs including volatility, rights, and obligations of the securities we hold. Significant changes to the unobservable inputs may result in a significantly higher or lower fair value estimate. We may value these securities based on significant recent arms-length transactions with sophisticated non-strategic unrelated new investors.

We evaluate ~~both~~ equity ~~and debt~~ securities for impairment when circumstances indicate that we may not be able to recover the carrying value. We may impair these securities and establish an allowance for a credit loss when we determine that there has been an “other-than-temporary” decline in estimated fair value of the debt or equity security compared to its carrying value. We calculate the estimated fair value of these securities using information from the investee, which may include:

•Audited and unaudited financial statements;

•Projected technological developments of the company;

•Projected ability of the company to service its debt obligations;

•If a deemed liquidation event were to occur;

•Current fundraising transactions;

•Current ability of the company to raise additional financing if needed;

•Changes in the economic environment which may have a material impact on the operating results of the company;

•Contractual rights, obligations or restrictions associated with the investment; and

•Other factors deemed relevant by our management to assess valuation.

•The valuation may be reduced if the company's potential has deteriorated significantly. If the factors that led to a reduction in valuation are overcome, the valuation may be readjusted.

Impairment of Long-Lived Assets

We evaluate the carrying values of long-lived assets, which include property and equipment and right-of-use assets, whenever events, changes in business circumstances or our planned use of long-lived assets indicate that their carrying amounts may not be fully recoverable or that their useful lives are no longer appropriate. If these facts and circumstances exist, we assess for recovery by comparing the carrying values of long-lived assets with the future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measure by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Recent Accounting Pronouncements

See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for a full description of recent accounting standards, including the respective dates of adoption and effects on our consolidated financial position, results of operations and cash flows.

7759

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

Our unrestricted cash and cash equivalents total ~~$116.8~~$65.1 million at December 31, ~~2021.~~2023. We primarily invest these amounts in money market funds which are held for working capital purposes. We do not enter into investments for trading or speculative purposes. As of December 31, ~~2021,~~2023, the effect of a hypothetical 10% decrease in market interest rates would have an ~~immaterial~~$0.3 million impact on a potential loss in future interest income and cash flows.

In June 2017, we entered into a Credit Facility with Western Alliance Bank consisting of term loans up to $10.0 million, and advances under a revolving line of credit up to $5.0 million. Term loans made under the Term Debt bear interest at variable rate through maturity at the greater of (i) 3.75% or (ii) the sum of (A) Index Rate (prime rate published in the Money Rates section of the Western Edition of The Wall Street Journal plus (B) 0.50%. Advances made under the Revolving Line of Credit bear interest at a variable annual rate equal to the greater of (i) 4.25% or (ii) the sum of (A) the prime rate plus (B) 1.00%. Increases in these variable interest rates will increase our future interest expense and decrease our results of operations and cash flows. Our right to take draws on the long term debt expired on December 31, 2021 and no amounts were drawn under the Credit Facility as of December 31, 2021. Our exposure to interest rates risk relates to our 2017 Credit Facility with variable interest rates, where an increase in interest rates may result in higher borrowing costs. Since we have no outstanding borrowings under our 2017 Credit Facility as of December 31, 2021, the effect of a hypothetical 10% change in interest rates would not have any impact on our interest expense.

Foreign Currency Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. In periods when the ~~USD~~United States dollar (“USD”) declines in value as compared to the foreign currencies in which we incur expenses, our foreign-currency based expenses increase when translated into ~~United States dollars.~~USD. Although substantially all of our sales are denominated in ~~United States dollars,~~USD, future fluctuations in the value of the USD may affect the price competitiveness of our products outside the United States. Our most significant foreign currency exposure is due to non-functional currency denominated monetary assets, primarily currencies denominated in other than their functional currency. These non-functional currency denominated monetary assets are subject to re-measurement which may create fluctuations in other expense, net, a component in our consolidated statement of operations and in the fair value of the assets in the consolidated balance sheets. As of December 31, ~~2021,~~2023, the effect of a hypothetical 10% unfavorable change in exchange rates on currencies denominated in other than their functional currency would result in a potential loss in future earnings in our consolidated statement of operations and a reduction in the fair value of the assets of approximately ~~$46~~$41 thousand. ~~We did not engage in hedging transactions in 2021, 2020 and 2019.~~

Investment in Non-Marketable Equity Securities

We own investments in non-marketable equity securities without readily determinable fair values. We may value these equity securities based on significant recent arms-length equity transactions with sophisticated non-strategic unrelated investors, providing the terms of these security transactions are substantially similar to the security transactions terms between the investors and us. The impact of the difference in transaction terms on the market value of the portfolio company may be difficult or impossible to quantify.

7860

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Codexis, Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Reports of Independent Registered Public Accounting Firm (~~BDO~~(BDO USA, ~~LLP~~P.C.; San ~~Jose, CA~~;Francisco, CA; PCAOB ID: 243)			8062
Consolidated Balance Sheets			8365
Consolidated Statements of Operations			8466
Consolidated Statements of Stockholders' Equity			8567
Consolidated Statements of Cash Flows			8668
Notes to Consolidated Financial Statements			8769

7961

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Codexis, Inc.

Redwood City, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Codexis, Inc. (the ~~“Company”~~"Company") as of December 31, ~~2021~~2023 and ~~2020,~~2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, ~~2021,~~2023, and the related notes (collectively referred to as the ~~“Consolidated Financial Statements”~~“consolidated financial statements”). In our opinion, the ~~Consolidated Financial Statements~~consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, ~~2021~~2023 and ~~2020,~~2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2021,~~2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, ~~2021,~~2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report ~~dated~~dated February 28, ~~2022~~2024 expressed an unqualified opinion thereon.

Basis for Opinion

These ~~Consolidated Financial Statements~~consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s ~~Consolidated Financial Statements~~consolidated financial statements based on our audits. We are a public accounting firm registered with the ~~Public Company Accounting Oversight Board (United States) (“PCAOB”)~~PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ~~Consolidated Financial Statements~~consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the ~~Consolidated Financial Statements,~~consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the ~~Consolidated Financial Statements.~~consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the ~~Consolidated Financial Statements.~~consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the ~~Consolidated Financial Statements~~consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the ~~Consolidated Financial Statements~~consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit ~~matters~~matter does not alter in any way our opinion on the ~~Consolidated Financial Statements,~~consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

As described in Notes 2, 3 and 35 to the ~~Consolidated Financial Statements,~~consolidated financial statements, the Company enters into contracts with customers that include enzyme supply, licensing, and collaborative research and development agreements. Certain contracts with customers may contain multiple performance obligations, options, up-front and/or annual license fees, fees for research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage. The Company recognizes revenue in a manner that best depicts the transfer of promised goods or services to the customer when control of the product or service is transferred to a customer. The Company's contracts with customers include enzyme supply, licensing, and collaborative research and development agreements. Contracts with customers may contain multiple performance obligations and may contain up-front or annual license fees, fees for full time employee research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage. The Company makes significant judgments in determining revenue recognition for certain customer contracts.

We identified the evaluation of management’s ~~significant judgments~~accounting for revenue from certain new and ~~estimates related to revenue recognition for~~amended contracts with customers as a critical audit ~~matter. Auditing~~matter due to significant judgments and estimates involved in the ~~evaluation~~identification of distinct performance obligations, allocation of transaction price to distinct performance obligations, determination and estimation of material

rights, ~~determination of standalone selling prices,~~ determination of the pattern of transfer of control for each distinct performance obligation and estimation of variable ~~consideration required significant~~consideration. Auditing these elements involved especially subjective and complex auditor judgments due to the nature and extent of audit effort ~~and subjective judgments in evaluating management's estimates.~~required.

The primary procedures we performed to address this critical audit matter included:

•Testing the design, implementation and operating effectiveness of internal controls relating to the Company's accounting for certain new and amended revenue contracts, including controls over identification of distinct performance obligations and material rights, the determination of the timing of revenue recognition, ~~the estimation~~allocation of ~~standalone selling prices,~~transaction price to distinct performance obligations, and the estimation of variable consideration.

•Examining a sample of ~~revenue~~these contracts ~~and other source documents~~ to test management's identification of significant terms for completeness, including the identification of distinct performance obligations, material rights and variable ~~consideration including sending confirmations to a sample of customers to confirm our understanding of the parties’ rights and obligations.~~

•Assessing the reasonableness of management's estimates and assumptions used in determining stand-alone selling prices for new products and services and those products and services that are not sold separately.

•Evaluating the reasonableness of management’s judgments and estimates used to assess the stand-alone selling prices for new functional licenses when granted to customers as part of contracts containing multiple performance obligations.

consideration.

•Evaluating the reasonableness and accuracy of management’s judgments and estimates used in identification and accounting for ~~identified~~ material rights, including transactions accounted for under the alternative approach to estimating the standalone selling price of a material right. This includes testing management’s estimates of the expected consideration from the customer’s exercise of options.

rights.

•Assessing the reasonableness of management’s judgments and estimates to calculate variable consideration, and the timing of recognizing the related revenue subject to any constraints.

•Evaluating the appropriateness of management’s allocation of the transaction price to the distinct performance obligations and determination of whether identified performance obligations meet the criteria for over-time revenue ~~recognition, including whether certain products and services have alternative use.~~recognition.

/s/ BDO USA, ~~LLP~~P.C.

We have served as the Company's auditor since 2013.

San ~~Jose,~~Francisco, California

February 28, ~~2022~~2024

8163

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Codexis, Inc.

Redwood City, California

Opinion on Internal Control over Financial Reporting

We have audited Codexis, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, ~~2021,~~2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2021,~~2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, ~~2021~~2023 and ~~2020,~~2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, ~~2021,~~2023, and the related notes and our report dated February 28, ~~2022~~2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, ~~Management’s Report on Internal Control over Financial Reporting”~~Controls and Procedures”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, ~~LLP~~P.C.

San ~~Jose,~~Francisco, California

February 28, ~~2022~~2024

8264

Codexis, Inc.

Consolidated Balance Sheets

(In Thousands, Except Per Share Amounts)
December 31,
2021 2020
Assets
Current assets:
Cash and cash equivalents $ 116,797 $ 149,117
Restricted cash, current 579 638
Investment in non-marketable debt security — 1,000
Financial assets:
Accounts receivable 24,953 13,894
Contract assets ($0 and $450 from a related party) 4,557 4,526
Unbilled receivables 8,558 10,942
Total financial assets 38,068 29,362
Less: allowances (416) (74)
Total financial assets, net 37,652 29,288
Inventories 1,160 964
Prepaid expenses and other current assets 5,700 3,416
Total current assets 161,888 184,423
Restricted cash 1,519 1,062
Investment in non-marketable equity securities ($12,713 and $1,450 with a related party) 14,002 1,450
Right-of-use assets - Operating leases, net 44,095 21,382
Right-of-use assets - Finance leases, net 17 119
Property and equipment, net 21,345 9,675
Goodwill 3,241 3,241
Other non-current assets 276 294
Total assets $ 246,383 $ 221,646
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 2,995 $ 2,970
Accrued compensation 11,119 7,288
Other accrued liabilities 12,578 10,272
Current portion of lease obligations - Operating leases 4,093 2,627
Deferred revenue ($245 and $0 to a related party) 2,586 1,824
Total current liabilities 33,371 24,981
Deferred revenue, net of current portion 3,749 2,967
Long-term lease obligations, Operating leases 43,561 22,324
Other long-term liabilities 1,311 1,271
Total liabilities 81,992 51,543
Commitments and contingencies (Note 13) 0 0
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 5,000 shares authorized, none issued and outstanding — —
Common stock, $0.0001 par value per share; 100,000 shares authorized; 65,109 and 64,283 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively 6 6
Additional paid-in capital 552,083 536,516
Accumulated deficit (387,698) (366,419)
Total stockholders’ equity 164,391 170,103
Total liabilities and stockholders’ equity $ 246,383 $ 221,646


	December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	65,116	$	113,984
Restricted cash, current	519		521
Financial assets:
Accounts receivable	10,036		31,904
Contract assets	815		2,116
Unbilled receivables	9,142		7,016
Total financial assets	19,993		41,036
Less: allowances	(65)		(163)
Total financial assets, net	19,928		40,873
Inventories	2,685		2,029
Prepaid expenses and other current assets	5,218		5,487
Total current assets	93,466		162,894
Restricted cash	1,062		1,521
Investment in non-marketable equity securities ($0 and $13,921 with a related party)	9,700		20,510
Right-of-use assets - Operating leases, net	13,137		39,263
Property and equipment, net	15,487		22,614
Goodwill	2,463		3,241
Other non-current assets	1,246		350
Total assets	$	136,561	$	250,393
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,947	$	3,246
Accrued compensation	11,246		11,453
Other accrued liabilities	4,735		15,279
Current portion of lease obligations - Operating leases	3,781		5,360
Deferred revenue	10,121		13,728
Total current liabilities	35,830		49,066
Deferred revenue, net of current portion	640		16,881
Long-term lease obligations - Operating leases	12,243		38,278
Other long-term liabilities	1,233		1,371
Total liabilities	49,946		105,596
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 5,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.0001 par value per share; 200,000 shares authorized; 69,905 and 65,811 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively	7		6
Additional paid-in capital	584,138		566,081
Accumulated deficit	(497,530)		(421,290)
Total stockholders’ equity	86,615		144,797
Total liabilities and stockholders’ equity	$	136,561	$	250,393

See accompanying notes to consolidated financial statements

8365

Codexis, Inc.

Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

Year Ended December 31,
2021 2020 2019
Revenues:
Product revenue $ 70,657 $ 30,220 $ 29,465
Research and development revenue ($1,955, $900 and $0 from a related party) 34,097 38,836 38,993
Total revenues 104,754 69,056 68,458
Costs and operating expenses:
Cost of product revenue 22,209 13,742 15,632
Research and development 55,919 44,185 33,873
Selling, general and administrative 49,323 35,049 31,502
Total costs and operating expenses 127,451 92,976 81,007
Loss from operations (22,697) (23,920) (12,549)
Interest income 459 405 1,287
Other income (expense), net ($983, $0 and $0 from a related party) 1,148 (156) (656)
Loss before income taxes (21,090) (23,671) (11,918)
Provision for income taxes 189 339 17
Net loss $ (21,279) $ (24,010) $ (11,935)
Net loss per share, basic and diluted $ (0.33) $ (0.40) $ (0.21)
Weighted average common stock shares used in computing net loss per share, basic and diluted 64,568 59,360 56,525


	Year Ended December 31,
	2023		2022		2021
Revenues:
Product revenue ($0, $514 and $0 from a related party)	$	42,906	$	116,676	$	70,657
Research and development revenue ($0, $1,245 and $1,955 from a related party)	27,237		21,914		34,097
Total revenues	70,143		138,590		104,754
Costs and operating expenses:
Cost of product revenue	12,809		38,033		22,209
Research and development	58,885		80,099		55,919
Selling, general and administrative	53,250		52,172		49,323
Restructuring charges	3,284		3,167		—
Asset impairment and other charges	9,984		—		—
Total costs and operating expenses	138,212		173,471		127,451
Loss from operations	(68,069)		(34,881)		(22,697)
Interest income	4,172		1,441		459
Other income (expense), net ($0, $208 and $983 from a related party)	(12,274)		124		1,148
Loss before income taxes	(76,171)		(33,316)		(21,090)
Provision for income taxes	69		276		189
Net loss	$	(76,240)	$	(33,592)	$	(21,279)

Net loss per share, basic and diluted	$	(1.12)	$	(0.51)	$	(0.33)
Weighted average common stock shares used in computing net loss per share, basic and diluted	68,131		65,344		64,568

See accompanying notes to consolidated financial statements

Codexis, Inc.

Consolidated Statements of Stockholders’ Equity

(In Thousands)


		Common Stock			Additional Paid-in Capital			Accumulated Deficit		Total Stockholders’ Equity
		Shares	Amount				Accumulated Deficit
December 31, 2018		54,065	$	5	$	386,775		$	(330,474)	$	56,306
Exercise of stock options		1,466	—		7,099			—		7,099
Release of stock awards		449	—		—			—		—
Employee stock-based compensation		—	—		6,943			—		6,943
Taxes paid related to net share settlement of equity awards		(152)	—		(2,850)			—		(2,850)
Issuance of common stock, net of issuance costs of $123		3,049	1		49,876			—		49,877
Short swing profit settlement		—	—		77			—		77
Net loss		—	—		—			(11,935)		(11,935)
December 31, 2019		58,877	6		447,920			(342,409)		105,517
Exercise of stock options		210	—		1,323			—		1,323
Release of stock awards		370	—		—			—		—
Employee stock-based compensation		—	—		7,622			—		7,622
Non-employee stock-based compensation		—	—		106			—		106
Taxes paid related to net share settlement of equity awards		(103)	—		(1,257)			—		(1,257)
Issuance of common stock, net of issuance costs of $5,448		4,929	—		80,802			—		80,802
Net loss		—	—		—			(24,010)		(24,010)
												Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity

December 31, 2020
December 31, 2020
December 31, 2020	December 31, 2020	64,283	6		536,516			(366,419)		170,103
Exercise of stock options	Exercise of stock options	699	—		5,180			—		5,180
Release of stock awards	Release of stock awards	181	—		—			—		—
Employee stock-based compensation	Employee stock-based compensation	—	—		11,346			—		11,346
Non-employee stock-based compensation	Non-employee stock-based compensation	—	—		247			—		247
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(54)	—		(1,206)			—		(1,206)

Net loss	Net loss	—	—		—			(21,279)		(21,279)
December 31, 2021	December 31, 2021	65,109	$	6	$	552,083		$	(387,698)	$	164,391
Exercise of stock options
Release of stock awards
Employee stock-based compensation
Non-employee stock-based compensation
Taxes paid related to net share settlement of equity awards
Net loss
December 31, 2022
Exercise of stock options
Release of stock awards
Employee stock-based compensation
Non-employee stock-based compensation
Issuance of common stock, net of issuance costs of $721
Taxes paid related to net share settlement of equity awards
Net loss
December 31, 2023

See accompanying notes to consolidated financial statements

8567

Codexis, Inc.

Consolidated Statements of Cash Flows

(In Thousands)
Year Ended December 31,
2021 2020 2019
Operating activities:
Net loss $ (21,279) $ (24,010) $ (11,935)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 3,113 1,950 1,570
Amortization expense - right-of-use assets - operating and finance leases 2,834 2,604 2,987
Stock-based compensation 11,593 7,728 6,943
Allowance for credit losses 342 40 —
Equity securities earned from research and development activities from a related party (1,955) (900) —
Unrealized gain on non-marketable securities (($983) from a related party) (1,272) — —
Other non-cash items (19) 15 525
Changes in operating assets and liabilities:
Financial assets ($0, ($450) and ($332) from a related party) (9,156) (8,723) (5,867)
Inventories (196) (593) 217
Prepaid expenses and other assets (2,268) (1,012) (1,324)
Accounts payable 268 101 (428)
Accrued compensation and other accrued liabilities 6,575 6,175 2,205
Other long-term liabilities (4,147) (2,586) (1,210)
Deferred revenue ($245, $0 and $0 to a related party) 1,300 2,747 (6,243)
Net cash used in operating activities (14,267) (16,464) (12,560)
Investing activities:
Purchase of property and equipment (13,828) (3,748) (3,730)
Proceeds from sale of property and equipment 36 — 3
Proceeds from sale of investment securities — — 62
Investment in non-marketable securities (($7,630) and ($1,000) in a related party) (7,630) (2,000) —
Net cash used in investing activities (21,422) (5,748) (3,665)
Financing activities:
Proceeds from exercises of stock options 5,180 1,323 7,099
Proceeds from issuance of common stock in connection with public offering — 86,250 —
Costs incurred in connection with equity financing (207) (5,448) (123)
Proceeds from issuance of common stock in connection with private offering — — 50,000
Payments of lease obligations - Finance leases — (60) (242)
Recovery of short swing profit — — 77
Taxes paid related to net share settlement of equity awards (1,206) (1,257) (2,850)
Net cash provided by financing activities 3,767 80,808 53,961
Net increase (decrease) in cash, cash equivalents and restricted cash (31,922) 58,596 37,736
Cash, cash equivalents and restricted cash at the beginning of the year 150,817 92,221 54,485
Cash, cash equivalents and restricted cash at the end of the year $ 118,895 $ 150,817 $ 92,221
Supplemental disclosure of cash flow information:
Interest paid $ 14 $ 52 $ 49
Income taxes $ 102 $ 312 $ 5
Supplemental non-cash investing and financing activities:
Capital expenditures incurred but not yet paid $ 2,533 $ 1,750 $ 140


	Year Ended December 31,
	2023		2022		2021
Operating activities:
Net loss	$	(76,240)	$	(33,592)	$	(21,279)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	5,518		5,402		3,113
Amortization expense - right-of-use assets - operating and finance leases	4,405		4,849		2,834
Stock-based compensation	9,971		14,531		11,593
Provision (recovery) for credit losses	(65)		4		342
Equity securities earned from research and development activities ($0, ($1,245), and ($1,955) from a related party)	(213)		(1,245)		(1,955)
Unrealized gain on non-marketable securities ($0, ($208), and ($983) from a related party)	—		(208)		(1,272)
Asset impairment and other charges	9,984		—		—
Impairment of investment in non-marketable securities	12,215		—		—
Other non-cash items	4		(29)		(19)
Changes in operating assets and liabilities:
Financial assets	20,247		(3,225)		(9,156)
Inventories	(656)		(869)		(196)
Prepaid expenses and other assets	(865)		181		(2,268)
Accounts payable	2,287		207		268
Accrued compensation and other accrued liabilities	(14,041)		5,983		6,575
Other long-term liabilities	(5,341)		(5,223)		(4,147)
Deferred revenue ($0, $0, $245 to a related party)	(19,848)		24,518		1,300
Net cash provided by (used in) operating activities	(52,638)		11,284		(14,267)
Investing activities:
Purchase of property and equipment	(4,418)		(8,307)		(13,828)
Proceeds from sale of property and equipment	751		29		36
Investment in non-marketable securities ($0, $0, and ($7,630) in a related party)	(1,191)		(5,300)		(7,630)
Net cash used in investing activities	(4,858)		(13,578)		(21,422)
Financing activities:
Proceeds from exercises of stock options	422		955		5,180
Proceeds from issuance of common stock in connection with public offering	8,652		—		—
Costs incurred in connection with issuance of common stock at public offering	(503)		(42)		(207)
Taxes paid related to net share settlement of equity awards	(404)		(1,488)		(1,206)
Net cash provided by (used in) financing activities	8,167		(575)		3,767
Net decrease in cash, cash equivalents and restricted cash	(49,329)		(2,869)		(31,922)
Cash, cash equivalents and restricted cash at the beginning of the year	116,026		118,895		150,817
Cash, cash equivalents and restricted cash at the end of the year	$	66,697	$	116,026	$	118,895

Supplemental disclosure of cash flow information:
Interest paid	$	44	$	34	$	14
Income taxes	$	194	$	100	$	102
Supplemental non-cash investing and financing activities:
Capital expenditures incurred but not yet paid	$	1,068	$	897	$	2,533

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown above (in thousands):
Year Ended December 31,
2021 2020 2019
Cash and cash equivalents $ 116,797 $ 149,117 $ 90,498
Restricted cash, current and non-current 2,098 1,700 1,723
Total cash, cash equivalents and restricted cash at the end of the period $ 118,895 $ 150,817 $ 92,221


	Year Ended December 31,
	2023		2022		2021
Cash and cash equivalents	$	65,116	$	113,984	$	116,797
Restricted cash, current and non-current	1,581		2,042		2,098
Total cash, cash equivalents and restricted cash at the end of the period	$	66,697	$	116,026	$	118,895

See accompanying notes to consolidated financial statements

8668

Codexis, Inc.

Notes to Consolidated Financial Statements

Note 1. Description of Business

In these notes to the ~~Consolidated Financial Statements,~~consolidated financial statements, the “Company,” “we,” “us,” and ~~“our”~~“our” refers to Codexis, Inc. and its subsidiaries on a consolidated basis.

We discover, develop, enhance, and ~~sell~~commercialize novel, high performance enzymes and other classes of proteins ~~that deliver value to~~leveraging our ~~clients in a growing set of industries to commercialize an increasing number of novel enzymes, both as~~ proprietary ~~Codexis products and in partnership with our customers.~~CodeEvolver® directed evolution technology platform.

We ~~report~~previously managed our ~~financial results based on 2 reportable segments:~~business as two business segments, Performance Enzymes and Novel Biotherapeutics. ~~The segment information aligns~~During the fourth quarter of 2023, we made changes to the structure of our organization in connection with the restructuring of our business that we announced in July 2023, including the discontinuation of investment in certain development programs, primarily in our biotherapeutics business, consolidation of operations to our Redwood City, California headquarters, and headcount reduction. In connection with these organizational structure changes, corresponding changes were made to how ~~the~~our business is managed, how results are reported internally and how our Chief Executive Officer (“CEO”), our chief operating decision maker, ~~(CODM), who is our Chief Executive Officer (CEO), reviews~~assesses performance and ~~manages the business.~~

~~Business Update Regarding COVID-19~~

~~We are subject to risks and uncertainties as~~allocates resources. As a result of these changes, our previous Performance Enzymes and Novel Biotherapeutics operating segments were combined into a single reportable segment. Effective October 1, 2023, the ~~current COVID-19 pandemic.~~Company's operations are managed and reported to the CEO on a consolidated basis. The ~~COVID-19 pandemic has presented a substantial public health~~CEO assesses performance and ~~economic challenge around~~allocates resources based on the world and is affecting our employees, communities and business operations, as well as the U.S. economy and other economies worldwide. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business,consolidated results of operations and financial condition will depend on future developments that are highly uncertain and may not be accurately predicted, including the duration and severity of the pandemic, the prevalence of more contagious and or virulent variants such as the Delta and Omicron variants, and the extent and severity of the impact on our customers, new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

In the United States, the impact of COVID-19, including Orders governing the operation of businesses during the pandemic, caused the temporary closure of our Redwood City, California facilities and disrupted our R&D operations in 2020~~. R&D operations for several projects were temporarily suspended from mid-March 2020 through the end of April 2020 in accordance with these Orders.~~ In May 2020, we initiated limited R&D operations and resumed manufacturing operations at our Redwood City pilot plant and have ramped up operations such that we are currently utilizing our normal R&D capacity while following county, state and federal COVID-19 guidance for the protection of our employees.

To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide, however, there can be no guarantee this will continue. Furthermore, our ability to provide future research and development ("R&D") services may continue to be impacted as a result of governmental orders ("Orders") and any disruptions in operations of our customers with whom we collaborate.operations. We believe that these ~~disruptions have had~~changes better align internal resources and external go to market activities in order to create a ~~minimal impact on revenue for the year ended~~more efficient and effective organizational structure. Under this new organizational and reporting structure, we managed our business as one reportable segment as of December 31, ~~2021.~~ ~~The extent~~2023. Comparative prior period disclosures that reflected the previous two segments' information have been revised to ~~which the pandemic may impact~~conform to this change in our ~~business operations and operating results will continue to remain highly dependent on future developments, which are uncertain and cannot be predicted with confidence.~~reportable segment.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ~~("GAAP"~~(“GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission ~~("SEC"~~(“SEC”) and include the accounts of Codexis, Inc. and its wholly-owned subsidiaries.

Certain prior year amounts have been reclassified in the Consolidated Statements of Cash Flows to conform to the 2021 presentation, however these reclassifications had no effect on the reported results of operations.

The consolidated financial statements include the accounts of Codexis, Inc. and its ~~wholly owned~~wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. We regularly assess these estimates which primarily affect revenue recognition,

deferred revenue, inventories, valuation of equity investments, goodwill arising out of business acquisitions, accrued liabilities, stock awards, and the valuation allowances associated with deferred tax assets. Actual results could differ from those estimates and such differences may be material to the consolidated financial statements.

~~Segment Reporting~~

We report 2 business segments, Performance Enzymes and Novel Biotherapeutics, which are based on our operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker or decision making group (“CODM”), in deciding how to allocate resources, and in assessing performance. Our CODM is our Chief Executive Officer. Our business segments are primarily based on our organizational structure and our operating results as used by our CODM in assessing performance and allocating resources for the Company~~. We do not allocate or evaluate assets by segment.~~

The Novel Biotherapeutics segment focuses on new opportunities in the pharmaceutical industry to discover or improve novel biotherapeutic drug candidates that will target human diseases that are in need of improved therapeutic interventions. Similarly, we believe that we can deploy our platform technology to improve specific characteristics of a customer’s pre-existing biotherapeutic drug candidate, such as its activity, stability, or immunogenicity. The Performance Enzymes segment consists of biocatalyst products and services with focus on pharmaceutical, food, molecular diagnostics, and other industrial markets.

Foreign Currency Translation

The USD is the functional currency for our operations outside the United States. Accordingly, non-monetary assets and liabilities originally acquired or assumed in other currencies are recorded in USD at the exchange rates in effect at the date they were acquired or assumed. Monetary assets and liabilities denominated in other currencies are translated into United States dollars at the exchange rates in effect at the balance sheet date. Translation adjustments are recorded in other expense in the consolidated statements of operations. Gains and losses realized from non-USD transactions, including intercompany balances not considered as permanent investments, ~~denominated in currencies other than an entity’s functional currency~~ are included in other expense in the accompanying consolidated statements of operations.

Revenue Recognition

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our product revenue and collaborative research and development agreements, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation.

The majority of our collaborative contracts contain multiple revenue streams such as upfront and/or annual license fees, fees for research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage, among others. We determine the stand-alone selling price (“SSP”) and allocate consideration to distinct performance obligations. Typically, we base our SSPs on our historical sales. If an SSP is not directly observable, then we estimate the SSP taking into consideration market conditions, forecasted sales, entity-specific factors and available information about the customer. We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers and for new licenses, we consider multiple methods, including a discounted cash flow method which includes the following key assumptions: the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success.

The following is a description of principal activities from which we generate revenue:

Product Revenue

Product revenue consist of sales of biocatalysts, pharmaceutical intermediates and Codex® biocatalyst panels and kits. A majority of our product revenue is made pursuant to purchase orders or supply agreements and is recognized either at a point in time when the control of the product has been transferred to the customer typically upon shipment or over time as the product is manufactured because we have a right to payment from the customer under a binding, non-cancellable purchase order, and there is no alternate use of the product for us as it is specifically made for the customer’s use.

Certain of our agreements provide options to customers which they can exercise at a future date, such as the option to purchase our product during the contract duration at discounted prices and an option to extend their contract, among others. In accounting for customer options, we determine whether an option is a material right and this requires us to exercise significant judgment. If a contract provides the customer an option to acquire additional goods or services at a discount that exceeds the range of discounts that we typically give for that product or service for the same class of customer, or if the option provides the customer certain additional goods or services for free, the option may be considered a material right. If the contract gives the customer the option to acquire additional goods or services at their normal SSPs, we would likely determine that the option is not a material right and, therefore, account for it as a separate performance obligation when the customer exercises the option. We primarily account for options which provide material rights using the alternative approach available pursuant to the applicable accounting guidance, as we concluded we meet the criteria for using the alternative approach. Therefore, the transaction price is calculated as the expected consideration to be received for all the goods and services we expect to provide under the contract. We update the transaction price for expected consideration, subject to constraint, each reporting period if our estimates of future goods to be ordered by customers change.

Research and Development ~~Revenues~~Revenue

We perform research and development activities as specified in each respective customer agreement. We identify each performance obligation in our research and development agreements at contract inception. We allocate the consideration to each distinct performance obligation based on the ~~estimated~~ SSP of each performance obligation. Performance obligations included in our research and services agreements typically include research and development services for a specified term, periodic reports and small samples of enzyme produced.

The majority of our research and development agreements are based on a contractual rate per dedicated project team working on the project. The underlying product that we develop for customers does not create an asset with an alternative use to us and the customer receives benefits as we perform the work towards completion. Thus, our performance obligations are generally satisfied over time as the service is performed. We utilize an appropriate method of measuring progress towards the completion of our performance obligations to determine the timing of revenue ~~recognition.~~recognition. For each performance obligation that is satisfied over time, we recognize revenue using a single measure of progress ~~typically~~either based on hours ~~incurred.~~incurred or output of services provided.

Our contracts frequently provide customers with rights to use or access our products or technology, along with other promises or performance obligations. We must first determine whether the license is distinct from other promises, such as our promise to manufacture a product. If we determine that the customer cannot benefit from the license without our manufacturing capability, the license will be accounted for as combined with the other performance obligations. If we determine that a license is distinct and has significant standalone functionality, we ~~would~~ recognize revenues from a functional license at a point in time when the license is transferred to the customer, and the customer can use and benefit from it. We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers and for new licenses, we consider multiple methods, including a discounted cash flow method which includes the following key assumptions: the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success. For licenses that have been previously sold to other customers, we use historical information to determine SSP.

recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

Our CodeEvolver® technology platform ~~technology~~ transfer collaboration agreements typically include license fees, upfront fees, and variable consideration in the form of milestone payments, and sales or usage-based royalties. We have recognized revenues from our platform technology transfer agreements over time as our customer ~~learns to use~~uses our technology.

For license agreements that include sales or usage-based royalty payments to us, we do not recognize revenue until the underlying sales of the product or usage has occurred. At the end of each reporting period, we estimate the royalty amount. We recognize revenue at the later of (i) when the related sale of the product occurs, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied.

Practical Expedients, Elections, and Exemptions

We apply certain practical expedients available which permit us not to adjust the amount of consideration for the effects of a significant financing component if, at contract inception, the expected period between the transfer of promised goods or services and customer payment is one year or less.

We perform monthly services under our research and development agreements, and we use a practical expedient permitting us to recognize revenue at the same time that we have the right to invoice our customer for monthly services completed to date.

We have elected to treat shipping and handling activities as fulfillment costs.

We have elected to record revenue net of sales and other similar taxes.

Contract Assets

Contract assets include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Contract assets are reclassified to receivables when the rights become unconditional.

Contract Liabilities

Contract liabilities are recorded as deferred revenues and include payments received in advance of performance under the contract. Contract liabilities are realized when the development services are provided to the customer or control of the products has been transferred to the customer. A portion of our contract liabilities relate to supply arrangements that contain material rights that are recognized using the alternative method, under which the aggregate amount invoiced to the customer for shipped products, including contractual fees, is higher than the amount of revenue recognized based on the transaction price allocated to the shipped products.

Contract Costs

We recognize a non-current asset for the incremental costs of obtaining a contract with a customer if the entity expects to recover such ~~costs. Incremental~~ costs ~~are~~and if those costs ~~that~~ would not have been incurred if the contract had not been ~~obtained. Examples of contract costs are~~obtained, such as commissions paid to sales personnel. We do not typically incur significant incremental costs because the compensation of our salespeople is not based on contracts closed but on a mixture of company goals, individual goals, and sales goals. If a commission paid is directly related to obtaining a specific contract, our policy is to capitalize and amortize such costs on a systematic basis, consistent with the pattern of transfer of the good or service to which the asset ~~relates.~~relates, and over a period beyond 12 months. Contract costs are reported in other non-current ~~assets.~~assets and were not significant in any of the periods presented.

Cost of Product Revenue

Cost of product revenue comprises both internal and third party fixed and variable costs including materials and supplies, labor, facilities, and other overhead costs associated with our product sales. Shipping costs are included in our cost of product revenue. ~~Such charges~~Shipping costs were ~~not significant in any of~~$1.0 million, $3.0 million, and $1.8 million for the ~~periods presented.~~years ended December 31, 2023, 2022, and 2021, respectively.

Fulfillment costs, such as shipping and handling, are recognized at a point in time and are included in cost of product ~~sales.~~revenue.

Cost of Research and Development Services

Cost of research and development services related to services under research and development agreements approximate the research funding over the term of the respective agreements and is included in research and development expense. Costs of

services provided under license and platform technology transfer agreements are included in research and development expenses and are expensed in the periods in which such costs are incurred.

Research and Development Expenses

Research and development expenses consist of costs incurred for internal projects and partner-funded collaborative research and development activities, as well as license and platform technology transfer agreements, as mentioned above. These costs include our direct and research-related overhead expenses, which include salaries and other personnel-related expenses (including stock-based compensation), occupancy-related costs, supplies, and depreciation of facilities and laboratory equipment, as well as external costs, and are expensed as incurred. Costs to acquire technologies that are utilized in research and development and that have no alternative future use are expensed when incurred.

Advertising

Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the consolidated statements of operations. Advertising costs were $0.3 million ~~$0.3 million and $0.5 million in~~for each of the years ended December 31, ~~2021, 2020~~2023, 2022 and ~~2019, respectively.~~2021.

Stock-Based Compensation

We use the Black-Scholes-Merton option pricing model to estimate the fair value of stock options granted under our equity incentive ~~plans.~~plans and for our employee stock purchase plan (“ESPP”). The Black-Scholes-Merton option pricing model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. The expected term is based on historical exercise behavior onfor similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. We use historical volatility to estimate expected stock price volatility. The risk-free rate assumption is based on United States Treasury instruments whose terms are consistent with the expected term of the stock options. The expected dividend assumption is based on our history and expectation of dividend payouts.

Restricted Stock Units ~~(“RSUs"~~(“RSUs”), Restricted Stock Awards (“(“RSAs”) and performance-contingent restricted stock units (“(“PSUs”) are measured based on the fair market values of the underlying stock on the dates of grant. Performance based options ~~(“PBOs”~~(“PBOs”) are measured using the Black-Scholes-Merton option pricing model. The vesting of PBOs and PSUs awarded is conditioned upon the attainment of one or more performance objectives over a specified period and upon continued employment through the applicable vesting date. At the end of the performance period, shares of stock subject to the PBOs and PSUs vest based upon both the level of achievement of performance objectives within the performance period and continued employment through the applicable vesting date.

The estimated fair value of stock options, RSUs, RSAs and ~~RSAs~~shares to be issued under the ESPP are expensed on a straight-line basis over the vesting term of the grant and the estimated fair value of PSUs and PBOs are expensed using an accelerated method over the term of the award once management has determined that it is probable that the performance objective will be achieved. Compensation expense is recorded over the requisite service period based on management's best estimate as to whether it is probable that the shares awarded are expected to vest. Management assesses the probability of the performance milestones being met on a continuous basis.

Cash and Cash Equivalents

We consider all highly liquid investments with maturity dates of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. The majority of cash and cash equivalents is maintained with major financial institutions in the United States. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits.

Restricted Cash

In 2016, we began the process of liquidating our Indian subsidiary. The local legal requirements for liquidation required us to maintain our subsidiary's cash balance in an account managed by a legal trustee to satisfy our financial obligations. This balance is recorded as current restricted cash on the consolidated balance sheets of ~~$0.6~~$0.5 million as of December 31, ~~2021~~2023 and ~~2020.~~

2022.

Pursuant to the terms of aour lease ~~agreement for our Redwood City, CA facilities,~~agreements, we obtained ~~a letter~~letters of credit collateralized by cash deposit balances of $1.1 million ~~as of December 31, 2021~~ and ~~2020. Pursuant to the terms of our new lease agreement for our San Carlos, CA facility, we also obtained a letter of credit collateralized by cash deposit balances of $0.5~~$1.5 million as of December 31, ~~2021.~~2023 and 2022, respectively. These cash deposits balances are recorded as non-current restricted cash on the consolidated balance sheets. For additional information, see Note 13, “Commitments and ~~Contingencies”.~~Contingencies.”

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and we consider counterparty credit risk in our assessment of fair value. Carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate their fair values as of the balance sheet dates because of their short maturities.

The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

•Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

•Level 2: Inputs that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and unbilled receivables, contract assets, non-marketable securities, and restricted cash. Cash that is not required for immediate operating needs is invested principally in money market funds. Cash and cash equivalents are invested through banks and other financial institutions in the United States ~~India,~~ and ~~the Netherlands.~~India. Such deposits in those countries may be in excess of insured limits. The Company has not experienced material losses on its deposits of cash and cash equivalents.

We perform ongoing credit evaluations of our customer's financial condition whenever deemed necessary. We maintain an allowance for doubtful accounts based on the expected collectability of all financial assets, which takes into consideration an analysis of historical bad debts, specific customer creditworthiness and current economic trends. As of December 31, ~~2021,~~2023, we ~~had one customer~~had four customers that accounted for ~~62%~~58% of our ~~accounts~~accounts receivable balance. As of December 31, ~~2020, three~~2022, two customers accounted for ~~70%~~63% of our accounts receivable balance. We believe the accounts receivable balances from our largest customers do not represent a significant credit risk, based on cash flow forecasts, balance sheet analysis, and past collection experience.

Financial Assets and Allowances

We currently sell enzymes primarily to pharmaceutical and fine chemicals companies throughout the world by the extension of trade credit terms based on an assessment of each customer's financial condition. Trade credit terms are generally offered without collateral and may include an insignificant discount for prompt payment for specific customers. To manage our credit exposure, we perform ongoing evaluations of our customers' financial conditions. In addition, accounts receivable include amounts owed to us under our collaborative research and development agreements.

We recognize accounts receivable at invoiced amounts and we maintain a valuation allowance for credit losses using an impairment model (known as the “current expected credit loss model” or “CECL”) based on estimates and forecasts of future conditions requiring recognition of a lifetime of expected credit losses at inception on our financing receivables measured at amortized costs which consisted of accounts receivable, contract assets, and unbilled receivables. We have determined that our financing receivables share similar risk characteristics including: (i) customer origination in the pharmaceutical and fine chemicals industry, (ii) similar historical credit loss pattern of customers (iii) no meaningful trade receivable differences in terms, (iv) similar historical credit loss experience and (v) our belief that the composition of certain assets are comparable to our

historical portfolio used to develop loss history. As a result, we measured the allowance for credit loss (“ACL”) on a collective basis. Our ACL methodology considers how long the asset has been past due, the financial condition of the customers, which includes ongoing quarterly evaluations and assessments of changes in customer credit ratings, and other market data that we believe are relevant to the collectability of the assets. Nearly all financing receivables are due from customers that are highly rated by major rating agencies and have a long history of no credit loss. We derive our ACL by establishing an impairment rate attributable to assets not yet identified as impaired.

We derive our ACL by initially relying on our historical financing receivable loss rate which contemplates the full contractual life of the assets sharing similar risk characteristics, adjusted to reflect (i) the extent to which we have determined current conditions differ from the conditions that existed for the period over which historical loss information was evaluated and (ii) by taking into consideration the changes in certain macroeconomic historical and forecasted information. We apply the ACL to past due financing receivables and record charges to the ACL as a provision to credit loss expense in the Statement of Operations. Financing receivables we identify as uncollectible are also charged against the ACL. We adjust the impairment rate to reflect the extent to which we have determined current conditions differ from the conditions that existed for the period over which historical loss information was evaluated. Adjustments to historical loss information may be qualitative or quantitative in nature and reflect changes related to relevant data.

Unbilled Receivable

The timing of revenue recognition may differ from the timing of invoicing to our customers. When we satisfy (or partially satisfy) a performance obligation, prior to being able to invoice the customer, we recognize an unbilled receivable when the right to consideration is unconditional.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using a weighted-average approach, assuming full absorption of direct and indirect manufacturing costs, or based on cost of purchasing from our vendors. If inventory costs exceed expected net realizable value due to obsolescence or lack of demand, valuation adjustments are recorded for the difference between the cost and the expected net realizable value.

Concentrations of Supply Risk

We rely on a limited number of suppliers for our products. We believe that other vendors would be able to provide similar products; however, the qualification of such vendors may require substantial start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical single-sourced materials. For certain materials, our vendors maintain a supply for us. We outsource the large-scale manufacturing of our products to contract manufacturers with facilities in Austria and Italy.

Property and Equipment

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization calculated using the straight-line method over their estimated useful lives as follows:


			Asset classification			Estimated useful life
			Laboratory equipment			5 years
			Computer equipment and software			3 ~~to 5~~ years
			Office equipment and furniture			5 years
			Leasehold improvements			Lesser of useful life or lease term

Property and equipment classified as construction in process includes equipment that has been received but not yet placed in service. Normal repairs and maintenance costs are expensed as incurred.

Impairment of Long-Lived Assets

~~We have not identified property and equipment by segment since these assets are shared or commingled.~~ We evaluate the carrying values of long-lived assets, which include property and equipment and right-of-use assets, whenever events, changes in business circumstances or our planned use of long-lived assets indicate that their carrying amounts may not be fully recoverable or that their useful lives are no longer appropriate. If these facts and circumstances exist, we assess for recovery by comparing the carrying values of long-lived assets with their future net undiscounted cash ~~flows.~~flows expected to be generated by the asset. If ~~the comparison indicates that impairment exists, long-lived~~such assets are ~~written down~~considered to ~~their respective fair values based on discounted cash flows. Significant~~

~~management judgment~~be impaired, the impairment to be recognized is ~~required in~~measured by the ~~forecast of future operating results that are used in the preparation of unexpected undiscounted cash flows.~~

~~As of December 31, 2021 and 2020, there were no events or changes in circumstances~~amount by which ~~indicated that~~ the carrying amount of ~~our~~the asset ~~group might not be recoverable.~~exceeds the fair value of the asset. For additional information on the impairment charge recorded for the year ended December 31, 2023, see Note 8, “Balance Sheets Details” and Note 13, “Commitments and Contingencies.” No impairment charges for long-lived assets were recorded during the ~~years~~year ended December 31, ~~2021, 2020 and 2019.~~

~~Investment in Non-Marketable Securities~~2022.

Investment in Non-Marketable Equity Securities

~~Investment in Non-Marketable Debt Securities~~

We measure available-for-sale investments in non-marketable debt at fair value. Unrealized gains and losses on these securities are recognized in other comprehensive income until realized. Non-marketable debt securities are classified as available-for-sale securities.

We evaluate ~~both~~ equity ~~and debt~~ securities for impairment when circumstances indicate that we may not be able to recover the carrying value. We may impair these securities and establish an allowance for a credit loss when we determine that there has been an ~~“other-than-temporary”~~"other-than-temporary” decline in the estimated fair value of the ~~debt or~~ equity security compared to its carrying value. We calculate the estimated fair value of these securities using information from the investee, which may include:

•Audited and unaudited financial statements;

•Projected technological developments of the company;

•Projected ability of the company to service its debt obligations;

•If a deemed liquidation event were to occur;

•Current fundraising transactions;

•Current ability of the company to raise additional financing if needed;

•Changes in the economic environment which may have a material impact on the operating results of the company;

•Contractual rights, obligations or restrictions associated with the investment; and

•Other factors deemed relevant by our management to assess valuation.

•The valuation may be reduced if the company's potential has deteriorated significantly. If the factors that led to a reduction in valuation are overcome, the valuation may be readjusted. For additional information on the impairment charge recorded for the year ended December 31, 2023, see Note 6, “Investments in Non-Marketable Securities.”

Goodwill

Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired and is assigned to reporting units. We test goodwill for impairment considering amongst other things, whether there have been sustained declines in our share price. If we conclude it is more likely than not that the fair value ~~of a reporting unit~~ is less than its carrying amount, a quantitative fair value test is performed. ~~We manage our business~~Goodwill had a carrying value of $2.5 million and $3.2 million as ~~2 reporting units~~of December 31, 2023 and we test goodwill for impairment at the reporting unit level. We allocated goodwill to the 2 reporting units using a relative fair value allocation methodology that primarily relied on our estimates of revenue and future earnings for each reporting unit. Using the relative fair value allocation methodology, we have determined that approximatel~~y $2.4 million, or 76%, of the goodwill is allocated to the Performance Enzymes segment and $0.8 million, or 24%, is assigned to the Novel Biotherapeutics segment.~~2022, respectively.

We test goodwill for impairment annually, ~~on a reporting unit basis,~~ on the last day of the fourth fiscal quarter, and between annual tests if events and circumstances indicate it is more likely than not that the fair value ~~of a reporting unit~~ is less than its carrying amount. The annual impairment test is completed using either: a qualitative ~~“Step 0”~~"Step 0" assessment based on reviewing relevant events and circumstances; or a quantitative ~~“Step 1”~~"Step 1" assessment, which determines the fair ~~value of the reporting unit.~~value. To the extent the carrying amount ~~of a reporting unit~~ is less than its estimated fair value, an impairment charge is recorded. Using ~~the~~a relative fair value allocation methodology for assets and liabilities, ~~used in both of our reporting units,~~ we compare the ~~allocated~~ carrying amount of ~~each reporting unit’s~~ net assets and the ~~assigned~~ goodwill to its fair value. If the fair value ~~of the reporting unit~~ exceeds its carrying amount, goodwill ~~of the reporting unit~~ is considered not impaired. Any excess ~~of the reporting unit’s~~ carrying amount of goodwill over its fair value is recognized as an impairment. ~~During 2021, 2020 and 2019, we did not record~~We recorded impairment charges related to ~~goodwill.~~goodwill of $0.8 million, nil, and nil for the years ended December 31, 2023, 2022, and 2021, respectively. For additional information on the impairment charge recorded for the year ended December 31, 2023, see Note 8, “Balance Sheets Details.”

Lease Accounting

We determine if an arrangement is a lease at inception. Where an arrangement is a lease, we determine if it is an operating lease or a finance lease. At lease commencement, we record a lease liability and ROU asset. Lease liabilities represent the present value of our future lease payments over the expected lease term which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of our lease liability is determined using our incremental collateralized borrowing rate at lease inception. ROU assets represent our right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than 12 months. Over the lease term, we use the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to the consolidated statement of operations in a manner that results in straight-line expense recognition. We do not apply lease recognition requirements for short-term leases. Instead, we recognize payments related to these arrangements in the consolidated statement of operations as lease costs on a straight-line basis over the lease term.

Income Taxes

We use the liability method of accounting for income taxes, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount that will more likely than not be realized.

We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenues and expenses for tax and financial statement purposes. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized on a jurisdiction by jurisdiction basis. The ultimate realization of deferred tax assets is dependent upon the generation of taxable income in the future. We have recorded a valuation allowance against these deferred tax assets in jurisdictions where ultimate realization of deferred tax assets is more likely than not to occur. As of December 31, ~~2021,~~2023 and 2022, we maintain a full valuation allowance in all jurisdictions against the net deferred tax assets as we believe that it is more likely than not that the majority of deferred tax assets will not be realized.

We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance may be materially impacted. Any adjustment to the deferred tax asset valuation allowance would be recorded in the statements of operations for the periods in which the adjustment is determined to be required.

We account for uncertainty in income taxes as required by the provisions of Accounting Standards Update (“ASU”) 2009-06, Income Taxes (Topic 740) Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes.

The Tax Reform Act of 1986 and similar state provisions limit the use of net operating loss (“~~NOL”~~NOL”) carryforwards in

certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section 382. In the event we should experience such a change of ownership, utilization of our federal and state NOL carryforwards could be limited.

Accounting Pronouncements

Recently adopted accounting pronouncements

Aside from those recently issued accounting pronouncements not yet adopted and described below, there have not been any recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 2023 that are of significance or potential significance to us.

Recently issued accounting pronouncements not yet adopted

In December ~~2019,~~2023, the Financial Accounting Standards Board (“FASB”) issued ASU ~~2019-12,~~No. 2023-09, Income Taxes (Topic 740): ~~Simplifying~~Improvements to Income Tax Disclosures. The amendments in the ~~Accounting for Income Taxes which is~~ASU are intended to ~~simplify various aspects~~benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the effects of the standard on our consolidated financial statements and related disclosures.

In November 2023, FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to ~~accounting for income taxes~~Reportable Segment Disclosures. The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within ~~those~~fiscal years beginning after December 15, ~~2020,~~2024, with early adoption permitted. The standard ~~was adopted beginning January 1, 2021 on a retrospective basis. The adoption~~should be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the effects of ~~ASU 2019-12 did not have an impact~~the standard on our consolidated financial statements and related disclosures.

In October ~~2020, the~~2023, FASB issued ASU No. ~~2020-10,~~ 2023-06, Disclosure Improvements: Codification ~~Improvements~~Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in the ASU ~~2020-10 provides amendments~~are intended to amend certain disclosure and presentation requirements for a ~~wide~~ variety of topics inwithin the ~~FASB’s~~ Accounting Standards Codification (“ASC”). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, as announced by the SEC. The effective date for each amended topic in the ASC is either the date on which ~~applies to all reporting entities within~~ the ~~scope~~SEC’s removal of the ~~affected accounting guidance.~~related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. We ~~adopted~~are currently evaluating the effects of the standard ~~on January 1, 2021 and it had no impact~~ on our consolidated financial statements and related disclosures.

~~Recently issued accounting pronouncements not yet adopted~~

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

~~In May 2021, FASB issued ASU No. 2021-04,~~ Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, a consensus of the Emerging Issues Task Force. The standard establishes a principles-based framework in accounting for modifications of freestanding equity-classified written call options on the basis of the economic substance of the underlying transaction. The standard also requires incremental financial statement disclosures. The standard affects entities that present earnings per share in accordance with the guidance in Topic 260, Earnings Per Share. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years with early adoption is permitted by applying the standard as of the beginning of the fiscal year that includes that interim period. The standard may be adopted prospectively for modifications or exchanges occurring on or after the effective date. We have evaluated that the adoption of ASU 2021-04 will not have an impact on our consolidated financial statements and related disclosures.

~~In August 2020, FASB issued ASU No 2020-06~~ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) No. 2020-06 August 2020 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce the complexity and to simplify the accounting for convertible debt instruments and convertible preferred stock, and the derivatives scope exception for contracts in an entity's own equity. In addition, the guidance on calculating diluted earnings per share has been simplified and made more internally consistent. The standard is effective the for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted for fiscal periods beginning after December 15, 2020. The standard may be adopted on a modified retrospective or fully retrospective method of transition and on adoption, entities may irrevocably elect the fair value option in accordance with Subtopic 825-10, Financial Instruments—Overall, for any financial instrument that is a convertible security. We have evaluated that the adoption of ASU 2020-06 will not have an impact on our consolidated financial statements and related disclosures.

~~In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~. The standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions in which the reference LIBOR or another reference rate are expected to be discontinued as a result of the Reference Rate Reform. The standard is effective for all entities. The standard may be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022, on a prospective basis. We will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to elect the optional expedients for contract modification; however, we believe that the adoption of ASU 2020-04 will have no significant impact on our consolidated financial statements and related disclosures.

Note 3. Revenue Recognition

Disaggregation of Revenue

The following table provides information about disaggregated revenue from contracts with customers into the nature of the products and services, and geographic regions, and includes a reconciliation of the disaggregated ~~revenue for reportable segments.~~revenue. The geographic regions that are tracked are the Americas (United States, Canada, and Latin America), EMEA (Europe, Middle East, and Africa), and APAC (Australia, New Zealand, Southeast Asia, and China).

~~Segment~~

Disaggregated information ~~for each of the fiscal years are~~is as follows (in thousands):


		Year Ended December 31, 2021
		Performance Enzymes		Novel Biotherapeutics		Total
		Year Ended December 31,
		Year Ended December 31,
		Year Ended December 31,
		2023
		2023
		2023
Major products and service:
Major products and service:
Major products and service:	Major products and service:
Product revenue	Product revenue	$	70,657	$	—	$	70,657
Product revenue
Product revenue
Research and development revenue	Research and development revenue	19,858		14,239		34,097
Research and development revenue
Research and development revenue
Total revenues
Total revenues
Total revenues	Total revenues	$	90,515	$	14,239	$	104,754

Primary geographical markets:	Primary geographical markets:

Primary geographical markets:

Primary geographical markets:
Americas
Americas
Americas	Americas	$	16,114	$	7,367	$	23,481
EMEA	EMEA	13,315		6,872		20,187
EMEA
EMEA
APAC
APAC
APAC	APAC	61,086		—		61,086
Total revenues	Total revenues	$	90,515	$	14,239	$	104,754
Total revenues
Total revenues

Year Ended December 31, 2020
Performance Enzymes Novel Biotherapeutics Total
Major products and service:
Product revenue $ 30,220 $ — $ 30,220
Research and development revenue 17,886 20,950 38,836
Total revenues $ 48,106 $ 20,950 $ 69,056
Primary geographical markets:
Americas $ 11,111 $ 13,241 $ 24,352
EMEA 11,548 7,709 19,257
APAC 25,447 — 25,447
Total revenues $ 48,106 $ 20,950 $ 69,056

Year Ended December 31, 2019
Performance Enzymes Novel Biotherapeutics Total
Major products and service:
Product revenue $ 29,465 $ — $ 29,465
Research and development revenue 28,691 10,302 38,993
Total revenues $ 58,156 $ 10,302 $ 68,458
Primary geographical markets:
Americas $ 13,039 $ — $ 13,039
EMEA 26,831 10,302 37,133
APAC 18,286 — 18,286
Total revenues $ 58,156 $ 10,302 $ 68,458
For additional information regarding revenue disaggregated by geography, see Note 15, “Segment, Geographical and Other Revenue Information.”

Contract Balances

The following table presents balances of contract assets, unbilled receivables, contract costs, and contract liabilities (in thousands):


		December 31, 2021		December 31, 2020
	December 31, 2023					December 31, 2023	December 31, 2022
Contract assets	Contract assets	$	4,557	$	4,526
Unbilled receivables	Unbilled receivables	$	8,558	$	10,942
Contract costs	Contract costs	$	56	$	90
Contract liabilities: deferred revenue	Contract liabilities: deferred revenue	$	6,335	$	4,791

We recognize accounts receivable when we have an unconditional right to recognize revenue and have issued an invoice to the customer. Our payment terms are generally between 30 and 90 days. We recognize unbilled receivables when we have an unconditional right to recognize revenue and have not issued an invoice to our customer. Unbilled receivables are transferred to accounts receivable on issuance of an invoice. Unbilled receivables are classified separately on the consolidated balance sheets as ~~assets.~~an asset. We maintain a valuation allowance on accounts receivables and unbilled receivables. As of December 31, 2023, we have $9.1 million of short-term unbilled receivables presented as unbilled receivables within current assets and $0.8 million of long-term unbilled receivables that is included within the other non-current assets line item in the consolidated balance sheets. As of December 31, 2022, we had $7.0 million of short-term unbilled receivables presented as unbilled receivables within current asset.

Contract assets represent our right to recognize revenue for custom products with no alternate use and under binding non-cancellable contracts and are largely related to our procurement of product. We recognize contract assets when we have a conditional right to recognize revenue. The transfer of control of certain of products occurs in advance of the invoicing process, which generates contract assets. In addition, we recognize a contract asset related to milestones not eligible for royalty accounting when we assess it is probable of being achieved and there will be no significant reversal of cumulative revenues. Contract assets are classified separately on the consolidated balance sheets as an asset and transferred to accounts receivables when our rights to payment become unconditional.

Contract liabilities, or deferred revenue, represent our obligation to transfer a product or service to the customer, and for which we have received consideration from the customer. We recognize a contract liability when we receive advance customer payments under development agreements for research and development services, upfront license payments, and from upfront customer payments received under product supply agreements. Contract liabilities are classified as a liability on the consolidated balance ~~sheet.~~sheets.

Contract costs relate to incremental costs of obtaining a contract with a customer. Contract costs are amortized along with the associated revenue over the term of the contract.

During the years ended December 31, ~~2021, 2020~~2023, 2022 and ~~2019,~~2021, we had no asset impairment charges related to contract assets.

We recognized the following revenues (in thousands):


		Year Ended December 31,
	Year Ended December 31,								Year Ended December 31,
Revenue recognized in the period for:	Revenue recognized in the period for:	2021		2020		Revenue recognized in the period for:	2023	2022
Amounts included in contract liabilities at the beginning of the period:	Amounts included in contract liabilities at the beginning of the period:
Performance obligations satisfied	Performance obligations satisfied	$	1,858	$	57
Performance obligations satisfied
Performance obligations satisfied
Changes in the period:	Changes in the period:
Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods
Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods
Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods	Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods	7,645		774
Performance obligations satisfied from new activities in the period - contract revenue	Performance obligations satisfied from new activities in the period - contract revenue	95,251		68,225
Total revenues	Total revenues	$	104,754	$	69,056

Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting periods. The estimated revenue does not include contracts

with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that are unexercised as of December 31, ~~2021.~~2023.

The balances in the table below are partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts (in thousands):
2022 2023 2024 2025 and Thereafter Total
Product revenue $ 89 $ 87 $ 120 $ 2,985 $ 3,281
Research and development revenue 2,497 557 — — 3,054
Total revenues $ 2,586 $ 644 $ 120 $ 2,985 $ 6,335


	2024		2025		2026		2027 and Thereafter		Total
Product revenue	$	10,121	$	140	$	140	$	360	$	10,761

Note 4. Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding, less restricted stock awards ~~(“RSAs”~~(“RSAs”) subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock shares outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities. For all periods presented, diluted and basic net loss per share are identical since potential common stock shares are excluded from the calculation, as their effect was anti-dilutive.

Anti-Dilutive Securities

In periods of net loss, the weighted average number of shares outstanding, prior to the application of the treasury stock method, excludes potentially dilutive securities from the computation of diluted net loss per common share because including such shares would have an anti-dilutive effect.

The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands):
Year Ended December 31,
2021 2020 2019
Shares issuable under the Equity Incentive Plan 5,215 5,348 4,763


	Year Ended December 31,
	2023	2022	2021
Shares issuable under the Equity Incentive Plans and ESPP(1)	9,028	7,442	5,215

(1) Included 568,224 of anti-dilutive potential common shares from ESPP for the year ended December 31, 2023.

Note 5. Collaborative Arrangements

GSK Platform Technology Transfer, Collaboration and License Agreement

In July 2014, we entered into a CodeEvolver® ~~protein engineering platform technology transfer collaboration~~Platform Technology Transfer, Collaboration and ~~license~~License agreement (the “GSK CodeEvolver® Agreement”) with GSK. Pursuant to the terms of the agreement, we granted GSK a non-exclusive license to use the CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ to develop novel enzymes for use in the manufacture of GSK's pharmaceutical and health care products. We completed the transfer of the CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ to GSK in April 2016 and all revenues relating to the technology transfer have been recognized as of April 2016. Depending upon GSK's successful application of the licensed technology, we have the potential to receive additional contingent payments that range from ~~$5.75~~$5.8 million to $38.5 million per project.

In 2019, we received a $2.0 million milestone payment relating to the advancement of an enzyme developed by GSK using our CodeEvolver® ~~protein engineering platform technology.~~technology platform. In 2021, we received 2two additional milestone payments from GSK under the agreement. In 2023, we received an additional milestone payment from GSK under the agreement. We recognized research and development revenue of ~~$4.3~~$1.3 million, nil, and ~~$2.0~~$4.3 million in the years ended December 31, ~~2021, 2020,~~2023, 2022, and ~~2019,~~2021, respectively.

Merck Platform Technology Transfer and License Agreement

In August 2015, we entered into a CodeEvolver® technology platform ~~technology~~ transfer collaboration and license agreement (the “Merck CodeEvolver® Agreement”) with Merck, Sharp & Dohme (“Merck”) which allows Merck to use the CodeEvolver® ~~protein engineering~~ technology platform in the field of human and animal healthcare. In 2016, we completed the final phase in the transfer of the CodeEvolver® technology platform to Merck under the Merck CodeEvolver® Agreement.

We recognized research and development revenues ofof nil, $40 thousand, and $0.6 ~~million, $3.1 million, and $4.0~~ million in the years ended December 31, ~~2021, 2020~~2023, 2022 and ~~2019,~~2021, respectively, for various research projects under our collaborative arrangement.

We have the potential to receive payments of up to a maximum of $15.0 million for each commercial active pharmaceutical ingredient ~~(“API”~~("API") that is manufactured by Merck using one or more novel enzymes developed by Merck using the CodeEvolver® ~~protein engineering~~ technology platform. The API payments, which are currently not recognized in revenue, are based on the quantity of API developed and manufactured by Merck and will be recognized as usage-based royalties.

In October 2018, we entered into an amendment to the Merck CodeEvolver® Agreement which amended certain licensing provisions and one exhibit. In January 2019, we amended the Merck CodeEvolver® Agreement to install certain CodeEvolver® ~~protein engineering~~ technology platform upgrades into Merck’s platform license installation and maintain those upgrades for a multi-year term ~~expiring~~that expired in January 2022. The license installation was completed in ~~2019~~2019. No research and wedevelopment revenues were recognized ~~$0.9 million as license fee revenue accordingly under~~in the ~~amendment.~~years ended December 31, 2023 and 2022. We recognized ~~$0.1 million,~~$0.1 ~~million and $0.9~~ million in research and development revenues under the terms of the amendment in ~~2021, 2020 and 2019 respectively.~~the year ended December 31, 2021.

Merck Sitagliptin Catalyst Supply Agreement

In February 2012, we entered into a five-year Sitagliptin Catalyst Supply Agreement (“Sitagliptin Supply Agreement”) with Merck whereby Merck may obtain commercial scale enzyme for use in the manufacture of Januvia®, its product based on the active ingredient ~~Sitagliptin.~~sitagliptin. In December 2015, Merck exercised its options under the terms of the Sitagliptin ~~Catalyst~~ Supply Agreement to extend the agreement for an additional five years through February 2022. In September 2021, the Sitagliptin ~~Catalyst~~ Supply Agreement was amended to extend the agreement through December 2026.

Effective as of January 2016, we and Merck amended the Sitagliptin Supply Agreement to prospectively provide for variable pricing based on the cumulative volume of sitagliptin enzyme purchased by Merck. We have previously determined that the variable pricing, which provides a discount based on the cumulative volume of ~~Sitagliptin catalyst~~sitagliptin enzyme purchased by Merck, provides Merck material rights and we ~~are recognizing~~recognized product revenues ~~over time~~ using the alternative ~~method. Under the alternative approach,~~method wherein we ~~estimate~~estimated the total expected consideration and ~~allocate~~allocated it proportionately with the expected sales.

Pursuant to the ~~terms~~latest amendment of the Sitagliptin Supply Agreement, ~~Merck may purchase supply~~we have determined that the latest price per volume of sitagliptin enzyme ~~from us for a fee~~to be purchased by Merck no longer provides Merck material rights, and as such we are recognizing product revenue based on contractually stated ~~prices.~~ prices effective as of February 2022.

We recognized ~~$9.8~~ $4.4 million,~~, $13.4~~ $5.9 million and ~~$15.1~~$9.8 million in product revenue under this ~~contract for~~agreement in the years ended December 31, 2023, 2022 and 2021, ~~2020 and 2019,~~ respectively. ~~Revenues recognized by us under the Sitagliptin Supply Agreement comprised~~ 9%This represented 6%, ~~19%~~ 4%, and ~~22%~~9% of our total revenues ~~for~~in the years ended December 31, 2023, 2022 and 2021, ~~2020 and 2019,~~ respectively.

~~As of~~During the year ended December 31, ~~2021,~~2023, we recorded revenue of ~~$2.8~~$0.7 million from sitagliptin enzyme sales that were recognized over time based on the progress of the manufacturing process. These products will be shipped within the ~~six months~~three-month period following the end of ~~the quarter.~~2023.

Enzyme Supply Agreement

In November 2016, we entered into a supply agreement whereby our customer may purchase quantities of one of our proprietary enzymes for use in its commercial manufacture of a product. Pursuant to the supply agreement, we received an upfront payment in December 2016 which was recorded as deferred revenue. Such upfront payment will be recognized over the period of the supply agreement as the customer purchases our proprietary enzyme. We additionally have determined that the volume discounts under the supply agreement provide the customer material rights and we are recognizing revenues using the alternative method. In 2023, due to the early termination of the enzyme supply agreement with the customer, we recognized $3.2 million of product revenue from the release of prior periods' product revenue deferrals and also recognized $1.3 million of product revenue as settlement fee pursuant to the enzyme supply agreement with the same customer.

As of December 31, ~~2021~~2023 and ~~2020,~~2022, we had deferred revenue balances from the supply agreement of ~~$2.6 million~~nil and ~~$2.0~~$3.3 million.

~~Research and Development Agreement~~

In March 2017, we entered into a multi-year research and development services agreement with Tate & Lyle Ingredients Americas LLC (“Tate & Lyle”) to develop enzymes for use in the manufacture of Tate & Lyle’s zero-calorie TASTEVA® ~~M Stevia sweetener.~~ ~~Under the agreement, we received an upfront payment which was recognized ratably over the maximum term of the service period of 21 months.~~

Commercial Agreement

In April 2019, we entered into a multi-year commercial agreement with Tate & Lyle under which Tate & Lyle has received an exclusive license to use a suite of Codexis novel performance enzymes in the manufacture of Tate & Lyle’s zero-calorie stevia sweetener, TASTEVA® M, and other stevia products. Under the agreement, we will supply Tate & Lyle with its requirements for these enzymes over a multiple year period and receive royalties on stevia products. In November 2020, we

~~100~~

amended the commercial agreement based on Tate & Lyle's intent to use a specific Codexis novel performance enzyme in its production of TASTEVA® M Stevia Sweetener and became eligible to receive milestone payments of up to $1.1 million. In the fourth quarter of 2020, we became eligible to receive a milestone payment of $0.4 million which we subsequently received in February 2021. The commercial agreement with Tate & Lyle was terminated in 2023.

Global Development, Option and License Agreement and Strategic Collaboration Agreement

In October 2017, we entered into the Nestlé License Agreement with Nestlé Health Science and, solely for the purpose of the integration and the dispute resolution clauses of the Nestlé License Agreement, Nestlé Health Science S.A., to advance CDX-6114, our enzyme biotherapeutic product candidate for the potential treatment of PKU.

We received an upfront cash payment of $14.0 million in 2017 upon the execution of the Nestlé License Agreement, a $4.0 million milestone payment received in 2018 after dosing the first subjects in a first-in-human Phase 1a dose-escalation trial with CDX-6114, and a $1.0 million milestone payment received in 2019 upon achievement of a milestone relating to formulation of CDX-6114. The upfront payment and the variable consideration relating to the progress payment of $4.0 million and a milestone payment of $1.0 million were recognized over time as the development work was performed. Revenue was recognized using a single measure of progress that depicted our performance in transferring control of the services, which was based on the ratio of level of effort incurred to date compared to the total estimated level of effort required to complete all performance obligations under the agreement. We recognized nil, $13 thousand and $1.9 million in research and development revenue in 2021, 2020 and 2019, respectively.

In January 2019, we received notice from the ~~FDA~~U.S. Food and Drug Administration (“FDA”) that it had completed its review of our IND for CDX-6114 and concluded that we may proceed with the proposed Phase 1b multiple ascending dose study in healthy volunteers in the United States. In February 2019, Nestlé Health Science exercised its option to obtain an exclusive, worldwide, royalty-bearing, sub-licensable license for the global development and commercialization of CDX-6114 for the management of ~~PKU and made an option payment of $3.0 million which we recognized as research and development revenue in 2019.~~PKU. Upon exercising its option, Nestlé Health Science made an option payment and assumed all responsibilities for future clinical development and commercialization of ~~CDX-6114. We are also eligible~~CDX-6114. In October 2023, we provided notice pursuant to ~~receive payments from~~Nestlé License Agreement of our intent to abandon or transfer to Nestlé Health Science ~~under~~(at their option) the patents and patent applications related to CDX-6114 as of December 5, 2023, and Nestlé ~~License Agreement~~Health Science notified us that ~~include (i) development~~they did not exercise their right to assume responsibility of such patents and approval milestones of up to $85.0 million, (ii) sales-based milestones of up to $250.0 million in the aggregate, which aggregate amount is achievable if net sales exceed $1.0 billion in a single year, and (iii) tiered royalties, at percentages ranging from the mid-single digits to low double-digits of net sales of product.patent applications.

In October 2017, we entered into the Nestlé SCA pursuant to which we and Nestlé Health Science are collaborating to leverage the CodeEvolver® ~~protein engineering~~ technology platform to develop novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas. The term of the Nestlé SCA has ~~been extended throug~~hexpired in December ~~2022.~~2023, as we opted out of a renewal period through December 2024.

In January 2020, we entered into a development agreement with Nestlé Health Science pursuant to which we and Nestlé Health Science are collaborating to advance a lead candidate ~~CDX-7108, targeting a gastrointestinal disorder~~ discovered through our Nestlé SCA, CDX-7108, targeting exocrine pancreatic insufficiency, into preclinical and early clinical studies. ~~During 2021, we,~~We, together with Nestlé Health Science, ~~continued to advance CDX-7108 towards initiation of~~initiated a Phase 1 clinical trial ~~with~~of CDX-7108 in the ~~first subject being dosed in November 2021.~~fourth quarter of 2021, and on February 23, 2023, we and Nestlé Health Science announced interim results. In July 2023, we announced plans to discontinue our development support of CDX-7108.

Under the Nestlé SCA and the development agreement, we recognized ~~$6.9~~$4.1 million ~~$7.9~~, $7.1 million and ~~$5.4~~$6.9 million in research and development revenue ~~for~~ in the years ended December 31, 2023, 2022 and 2021, ~~2020~~respectively. Both the Nestlé SCA and the development agreement were terminated in January 2024~~2019~~.

Acquisition Agreement

In December 2023, ~~respectively.~~we entered into an acquisition agreement (the “Acquisition Agreement”) with Nestlé Health Science, pursuant to which we agreed to assign our interests in CDX-7108 (including associated agreements and intellectual property rights) to Nestlé Health Science. Under the terms of the Acquisition Agreement, Nestlé Health Science will be solely responsible for the continued development and commercialization of CDX-7108, including all associated costs, and Codexis will receive upfront payment, future potential milestone payments and net-sales based royalties. We recognized research and development revenue of $5.0 million for the year ended December 31, 2023 related to the Acquisition Agreement. We received the $5.0 million upfront fee in January 2024.

Strategic Collaboration Agreement

In April 2018, we entered into the Porton Agreement with Porton to license key elements of our biocatalyst technology for use in Porton’s global custom intermediate and API development and manufacturing bu~~siness.~~business. Under the Porton Agreement, we are eligible to receive annual collaboration fees and research and development revenues. We received the initial collaboration payments of $0.5 million and $0.5 million within 30 days of the effective date and on the first anniversary of the effective date of the Porton Agreement, respectively. We also received annual collaboration payments of $1.0 million each during the first through ~~third~~fourth anniversaries ~~of the effective date of the Porton Agreement and are eligible to receive $1.0 million on the fourth anniversary~~ of the effective date of the Porton Agreement. We completed the technical transfer in the fourth quarter of 2018 and recognized the related revenue in 2018. We recognized revenue related to the functional license provided to Porton at a point in time when control of the license was transferred to the customer. The initial term of the Porton Agreement expired in April 2023 and was not renewed for an extended term. We recognized research and development revenue related to the Porton Agreement of ~~$1.1 million, $1.1~~nil, $0.1 million and ~~nil~~$1.1 million in the years ended December 31, 2023, 2022 and 2021, ~~2020 and 2019,~~ respectively.

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Platform Technology Transfer and License Agreement

In May 2019, we entered into ~~a Platform Technology Transfer and License~~the Novartis CodeEvolver® Agreement ~~(the “Novartis~~with Novartis. The Novartis CodeEvolver® ~~Agreement”) with Novartis. The~~ Agreement allows Novartis to use our proprietary CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ in the field of human healthcare. In July 2021, we announced the completion of the technology transfer period during which we transferred our proprietary CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ to Novartis (the “Technology Transfer Period”). As a part of this technology transfer, ~~the Company~~we provided to Novartis our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms. In addition, our teams and Novartis scientists participated in technology training sessions and collaborative research projects at our laboratories in Redwood City, California and at a designated Novartis laboratory in Basel, Switzerland. Novartis has now installed the CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ at its designated laboratory.

Pursuant to the agreement, we received an upfront payment of $5.0 million shortly after the effective date of the Novartis CodeEvolver® Agreement. We completed the second technology milestone transfer under the agreement in 2020 and received a milestone payment of $4.0 million. We have also received an aggregate of $5.0 million for the completion of the third technology milestone in ~~2021~~2021. In consideration for the continued disclosure and license of improvements to the technology and materials during a multi-year period that began on the conclusion of the Technology Transfer Period ~~(“Improvements~~(the “Improvements Term”), Novartis will pay Codexis annual payments over four years which amount to an additional $8.0 million in aggregate. We received an aggregate of $4.0 million for the first two annual payments in 2022 and 2023. The Company also has the potential to receive quantity-dependent, usage payments for each API that is manufactured by Novartis using one or more enzymes that have been developed or are in development using the CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ during the period ~~that began~~beginning on the conclusion of the Technology Transfer Period and ~~ends~~ending on the expiration date of the last to expire licensed patent. Revenue for the combined initial license and technology transfer performance obligation was recognized ~~using a single measure of progress that depicted our performance in transferring control of the services.~~overtime based on hours incurred. Revenue allocated to improvements made during the Improvements Term ~~are~~is being recognized during the ~~Improvement~~Improvements Term.

We ~~recognized $1.6~~recognized $1.1 million ~~$6.2~~, $1.0 million and ~~$11.3~~$1.6 million in research and development revenue in the ~~year~~years ended December 31, 2023, 2022 and 2021, ~~2020 and 2019,~~ respectively.

License Agreement

In December 2019, we entered a license agreement with Roche Sequencing Solutions, Inc. (“Roche”) to provide Roche with our ~~EvoT4 DNA™~~evolved T4 DNA ligase high-performance molecular diagnostic enzyme. The royalty bearing license grants Roche worldwide rights to include the ~~EvoT4 DNA™~~evolved T4 DNA ligase in its nucleic acid sequencing products and workflows. Under the license agreement, we received an initial collaboration fee payment of $0.8 million within 45 days of the effective date of the agreement, and we received an additional $0.9 million milestone payment after the completion of technology transfer in October ~~2020. The~~2020. In February 2024, we entered into a new license agreement ~~also contemplates milestone payments~~with Roche granting them rights to ~~Codexis upon~~our newly engineered DNA ligase, superseding our prior agreement in December 2019 for our evolved T4 DNA ligase. We are eligible to receive an aggregate of mid-single digit millions in upfront and technical milestones payments. No research and development revenues were recognized in the ~~achievement of various development~~years ended December 31, 2023 and ~~commercialization events and royalty payments from commercial sales of the enzyme.~~2022. We recognized research and development fees of $0.9 million ~~and $0.9 million for~~in the ~~years~~year ended December 31, ~~2021 and 2020, respectively.~~ 2021.

Strategic Collaboration and License Agreement

In March 2020, we entered into a Strategic Collaboration and License Agreement (the “Takeda Agreement”) with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Co. Ltd. (“Takeda”) ~~under~~, pursuant to which we ~~are collaborating~~have collaborated with Takeda to research and develop protein sequences for use in gene therapy products for certain diseases ~~(each, a “Field”)~~ in accordance with each applicable program ~~plan (each, a “Program Plan”).~~plan.

On execution of the Takeda Agreement, ~~in March 2020,~~ we received an upfront ~~nonrefundable~~non-refundable cash payment of $8.5 million and we initiated activities under three ~~Program Plans~~program plans for Fabry Disease, Pompe Disease, and an undisclosed blood factor deficiency, respectively (the “Initial Programs”). In May 2021, Takeda elected to exercise its option to initiate an additional program for a certain undisclosed rare genetic disorder; as a result we received the option exercise fee during the third quarter of 2021. We completed the research and development services relating to the fourth program with Takeda during the second quarter of 2023.

Pursuant to the Takeda Agreement, we are eligible to receive other payments that include ~~(i) reimbursement of research and development fees and preclinical development milestones for the three initial programs of~~( ~~$10.5 million, in aggregate, and $8.3 million for the fourth program, (ii)~~i) clinical development and commercialization-based milestones, per target gene, of up to ~~$100.0~~$104.0 million and ~~(iii)~~(ii) tiered royalty payments based on net sales of applicable products at percentages ranging from the mid-single digits to low single-digits. Takeda announced in April 2023 the discontinuation of these development programs.

Revenue ~~recognized~~ relating to the functional licenses provided to Takeda was recognized at a point in time when the control of the license transferred to the customer. We recognized research and development revenue related to the Takeda Agreement of ~~$7.4~~$2.0 million, $4.9 million and ~~$13.2~~$7.4 million in the years ended December 31, ~~2021~~2023, 2022, and ~~2020,~~2021, respectively. As of December 31, ~~2021~~2023 and ~~2020,~~2022, we had deferred revenue balances of ~~$2.2~~nil and $0.9 million, ~~and $1.5 million,~~ respectively.

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Master Collaboration and Research Agreement, ~~and~~ Stock Purchase Agreement and Enzyme Supply Agreement

In June 2020, we entered into a Stock Purchase Agreement with ~~MAI~~Molecular Assemblies, Inc. (“MAI”) in which we purchased 1,587,050 shares of MAI's Series A preferred stock for $1.0 million. In connection with the June 2020, transaction, John Nicols, our former President and Chief Executive Officer, joined MAI’s board of directors. ~~For~~See Note 14, “Related Party Transactions” for additional information ~~see Note 14, "Related Party Transactions".~~on our investment in MAI.

~~Concurrent~~Concurrently with our initial equity investment, we entered into ~~a Master Collaboration and Research~~the MAI Agreement, ~~with MAI (the “MAI Agreement”) in June 2020,~~ pursuant to which we ~~are performing~~performed services utilizing our CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A and B preferred ~~stock. Based~~stock which are valued based on ~~these services,~~ the ~~Company is eligible~~observed transaction price of similar securities of MAI issued to earn additional shares of MAI's preferred stock. MAI will combine its advanced chemistries with our enzymes to drive the process to commercialization. We are eligible to earn such non-monetary payments over 14 months, and any such shares would be issued thirty days in arrears after each calendar quarter-end. We are also eligible to receive amounts for bonuses, targets and milestones on achievement of timeline and project goals specified in the statement of work ("SOW"). Payments for bonuses, targets and milestones on achievement of timeline and project goals are to be issued thirty days after the Company provides notification of completion. third parties. Under the MAI Agreement, we will have the right to use and sell the engineered enzymes to third parties for any purpose other than for the synthesis of native DNA. Under the MAI Agreement, we would make a $0.5 million payment to MAI upon our achievement of a milestone of $5.0 million in aggregate commercial sales to third parties of the engineered enzymes or any product incorporating or derived from the engineered enzymes for any purpose other than the synthesis of native DNA. ~~The~~As contemplated in the MAI Agreement, ~~contemplates that~~ we ~~and MAI will enter into a Commercialization~~executed the Commercial License and Enzyme Supply Agreement ~~(the “CESA”~~with MAI (“MAI Supply Agreement”) ~~within six months~~in July 2022 following the completion of certain timelines specified in the SOW. ~~In addition, we and~~

We completed the R&D service with MAI ~~have agreed~~pursuant to certain terms to be contained within the CESA in the event that the CESA becomes executed in the future. Those include: (a) that MAI would receive an exclusive license to use the DNA polymerase enzymes engineering by us under the MAI Agreement during the first quarter of 2022. In December 2021, we received the primary milestone payment pursuant to the MAI Agreement of $1.0 million in the ~~synthesis~~form of ~~native DNA~~an additional 1,587,049 shares of MAI Series B preferred stock. Upon execution of the MAI Supply Agreement in July 2022, we received the commercialization and ~~a non-exclusive license~~enzyme supply agreement milestone payment pursuant to ~~use these enzymes for~~the MAI Agreement of $1.0 million in the form of an additional 1,587,049shares of MAI Series B preferred stock. Pursuant to the MAI Agreement, we recognized $1.2 million and $2.0 million in research and development ~~on the synthesis of non-native DNA, and (b) we would become the exclusive manufacturer of these enzymes for~~revenue from transactions with MAI ~~its affiliates and licensees.~~

~~We received 3,491,505 and 714,171 shares of MAI's Series A and B preferred stock and recognized $2.0 million and $0.9 million from these services~~ in the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Payment for the services rendered was received in the form of additional MAI Series A and Series B preferred stock.

~~Pfizer purchase orders~~

We received an aggregate of 1,587,049 and 3,491,505 shares of MAI's Series A and B preferred stock in the years ended December 31, 2022 and 2021, respectively.

In April 2022, we received a purchase order from MAI for the ~~first~~delivery of certain enzyme products to MAI in 2022. In July 2022, we and ~~second quarters of~~MAI executed the MAI Supply Agreement that will enable MAI to utilize an evolved terminal deoxynucleotidyl transferase (“TdT”) enzyme in MAI’s Fully Enzymatic Synthesis™ (“FES™”) technology. We recognized $0.2 million and $0.5 million in product revenue in the years ended December 31, 2023 and 2022, respectively.

Pfizer Enzyme Supply Agreement

During 2021 and 2022, we ~~began to receive~~received purchase orders from Pfizer, Inc. (“Pfizer”) for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, ~~nirmatrelvir.~~nirmatrelvir, used by Pfizer ~~markets, sells and distributes nirmatrelvir,~~ in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets; ritonavir tablets) product ~~which received emergency use authorization by the U.S. Food and Drug Administration (“FDA”) in late 2021~~ for the treatment of COVID-19 infections in humans.

We are a party to an Enzyme Supply Agreement with Pfizer Ireland Pharmaceuticals, a subsidiary of Pfizer, Inc. (the “Pfizer Supply Agreement”), covering the manufacture, sale and purchase of CDX-616 for use by Pfizer in the manufacture of nirmatrelvir. Under the terms of the Pfizer Supply Agreement, Pfizer paid us a fee of $25.9 million in August 2022 which was recorded as deferred revenue. Pursuant to the agreement, 90% of the fee ($23.3 million) is creditable against (i) future orders of CDX-616 used to manufacture its PAXLOVID™ with shipment dates prior to December 31, 2023, and (ii) fees associated with

any new development and licensing agreements with Pfizer entered into prior to April 4, 2023. On March 31, 2023, we entered into a license agreement whereby Pfizer utilized a portion of the $23.3 million credit towards a license to develop future product candidates, for which we recognized $5.0 million as non-cash research and development revenue in the second quarter of 2023. Pfizer's ability to utilize the credit under item (i) above expired on December 31, 2023, and under item (ii) above expired on April 4, 2023. We also recognized $2.0 million of non-cash research and development revenue, and credited against the $25.9 million fee, for other services provided to Pfizer during the year ended December 31, 2023. Up to 50% of any portion of the $25.9 million which has not been credited under items (i) and (ii) is creditable against future orders of CDX-616 used to manufacture PAXLOVID™ with shipment dates in 2024.

During the fourth quarter of 2023, and pursuant to the Pfizer Supply Agreement, we released the prior year deferrals for the unused portion of the retainer fee that is not creditable beyond 2023 and we recognized product revenue of $8.2 million in the year ended December 31, 2023. We recognized product revenue of $75.4 million and $34.5 million in the years ended December 31, 2022 and 2021, respectively, from the sale of quantities of CDX-616 ~~enzyme products~~ to ~~Pfizer in 2021. Revenues~~Pfizer. Product revenues recognized by us from the ~~sale to~~ Pfizer ~~comprised~~Supply Agreement represented 12%, 54%, and 33% of our total revenues for the ~~year~~years ended December 31, ~~2021.~~ 2023, 2022, and 2021 respectively.

As of December 31, ~~2021,~~2023 and 2022, we ~~recorded~~had $9.5 million and $24.4 million, respectively, in deferred revenue ~~and contract assets of $1.7~~related to the $25.9 million fee received from ~~the sale of this enzyme product that were recognized over time based on the progress of the manufacturing process.~~Pfizer.

Note 6. Investments in Non-Marketable Securities

Non-Marketable Debt Securities

We classify non-marketable debt securities, which are accounted for as available-for-sale, within Level 3 in the fair value hierarchy because we estimate the fair value based on a qualitative analysis using the most recent observable transaction price and other significant unobservable inputs including volatility, rights, and obligations of the securities we hold.

We determine gains or losses on the sale or extinguishment of non-marketable debt securities using a specific identification method. Unrealized gains and losses from bifurcated embedded derivatives, which represent share-settled redemption features, are recorded as other expense, net, in the consolidated statements of operations.Unrealized gains and losses on non-marketable debt securities are recorded as a component of other comprehensive loss until realized. Realized gains or losses are recorded as a component of other income (expense), net.

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In November 2020, we purchased convertible subordinated notes issued by Arzeda Corp. (“Arzeda”), an early-stage computational protein design company, for $1.0 ~~million. The~~million and the investment was classified as available-for-sale non-marketable interest-bearing debt ~~securities with a carrying value of $1.0 million as of December 31, 2020.~~securities. In July 2021, we converted the non-marketable debt security with a carrying value of $1.3 million into 207,070 shares of Series B-2 preferred stock of ~~Arzeda Corp.~~Arzeda. During the year ended December 31, 2021,~~, w~~e we recognized $0.3 million in interest income from interest earned on our investment in this debt security.

There were no investments in non-marketable debt securities ~~at December 31, 2021.~~Asas of December 31, ~~2020, the adjusted cost, carrying value~~2023 and ~~fair value of the non-marketable debt security is the following (in thousands):~~2022.
December 31, 2020
Adjusted Cost and Carrying Value Fair Value
Non-marketable debt securities due in 1 year or less $ 1,000 $ 1,000

Non-Marketable Equity Securities

Our non-marketable equity securities are investments in privately held companies without readily determinable market value and primarily relate to our investments in MAI, seqWell and ~~Arzeda Corp.~~Arzeda. These investments are accounted for under the measurement alternative and are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar ~~security~~securities of the same issuer. Non-marketable equity securities are measured at fair value on a non-recurring basis and classified within Level 2 in the fair value hierarchy ~~because~~when we estimate the fair value of these investments using the observable transaction price paid by third party investors for the same or similar security of the same issuers. The fair value of non-marketable equity securities are classified within Level 3 when we estimate fair value using unobservable inputs such as when we remeasure due to impairment and we use discount rates, market data of comparable companies, and rights and obligations of the securities the Company holds, among others. We adjust the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other income (expense), net in the consolidated statements of operations.

In November 2023, the 207,070 shares of Arzeda’s Series B preferred stock were converted into 41,414 common stock pursuant to the Stock Purchase Agreement.

In March 2023, we purchased an additional 985,545 shares of Series B preferred stock for $0.8 million in MAI, a privately held life sciences company. As of December 31, 2023, we held an aggregate of 19,277,914 shares of MAI's Series A and B preferred stock that we have earned or purchased from MAI. See Note 14, “Related Party Transactions” for additional information on our investment in MAI.

In March 2022, we entered into a Stock Purchase Agreement with seqWell Inc. (“seqWell”), a privately held life sciences company, pursuant to which we purchased 1,000,000 shares of seqWell's Series C preferred stock for $5.0 million. In March 2023, we entered into a Master Collaboration Agreement and Research Agreement with seqWell (the “seqWell Agreement”), pursuant to which we are providing research and experimental screening and protein engineering activities in exchange for compensation in the form of additional shares of seqWell's common stock. In addition to our initial equity investment and the shares we have received under the seqWell Agreement, in September 2023, we purchased an additional 88,256 shares of seqWell's Series C-1 preferred stock and 44,128 common stock warrants for $0.4 million. We received 205,279 shares of seqWell's common stock from research and development services with seqWell and we recognized $0.2 million in research and development revenue from these services in the year ended December 31, 2023. As of December 31, 2023, we held an aggregate of 1,088,256 shares of Series C and C-1 preferred stock, 205,279 shares of common stock and 44,128 of common stock warrants that we have earned or purchased from seqWell.

For the year ended December 31, ~~2021,~~2023, we recognized ~~a $1.0~~an impairment charge of $12.2 million ~~unrealized gain~~and included this as adjustment to the carrying value of our investments in seqWell, Arzeda and MAI. This adjustment, which is presented within other income (expense), net in the consolidated statements of operations, included the write-down of the carrying value of our investment in seqWell by $3.0 million during the third quarter of 2023 to its estimated fair value as determined based on valuation methods using the recent transaction price of similar preferred stock securities issued by seqWell and adjusted for the rights and obligations of the preferred stock securities the Company holds. The $1.2 million of impairment charge on our investment in Arzeda is related to the write-down to its estimated fair value based on the latest observed transaction price of Arzeda's preferred stock securities issued during the fourth quarter of 2023 and the subsequent conversion of our existing Series B preferred stock into Arzeda's common stock during the fourth quarter of 2023. The other $8.0 million of impairment charge represents the difference between the estimated fair value and carrying value of our investment in MAI as of December 31, 2023 based on quantitative and qualitative analysis. This analysis involved use of judgment, estimates and assumptions, such as the near-term prospects of the investee in the market in which it operates, evaluation of the investee’s financial condition in relation to its outstanding obligations, and probabilities of securing additional capital through various alternative scenarios.

For the year ended December 31, 2022, we recognized a $0.2 million unrealized gain in other income, net, and included as adjustment to the carrying value of our investment in MAI, for the remeasurement of the additional 1,587,049 shares of Series B preferred stock received as a milestone payment during the third quarter of 2022 based on ~~an analysis of~~the latest observed transaction price ~~from~~of MAI's ~~recent round of financing during the third and fourth quarter of 2021. There was~~preferred stock.

Other than as disclosed above, there were no remeasurement ~~event~~events for our ~~investment~~investments in ~~MAI~~non-marketable equity securities in 2023 and ~~Arzeda Corp that occurred during the remainder of 2021.~~2022. We recognized no realized gains or losses during the years ended December 31, ~~2021~~2023 and ~~2020. The carrying value of our investment in MAI was $12.7 million and $1.5 million at December 31, 2021 and December 31, 2020, respectively. The carrying value of our investment in Arzeda Corp. was $1.3 million at December 31, 2021~~.2022.

The following table presents the carrying value of our non-marketable equity securities (in thousands):
December 31, 2021 December 31, 2020
Non-marketable equity securities $ 14,002 $ 1,450


	December 31, 2023		December 31, 2022
MAI	$	6,693	$	13,921
seqWell	2,625		5,000
Arzeda	82		1,289
Other investments in non-marketable equity securities	300		300
Total non-marketable equity securities	$	9,700	$	20,510

Note 7. Fair Value Measurements

The following tables present the financial instruments that were measured at fair value on a recurring basis ~~at December 31, 2021 and 2020 by level~~ within the fair value hierarchy (in thousands):

December 31, 2021
Level 1 Level 2 Level 3 Total
Money market funds $ 86,095 $ — $ — $ 86,095


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Money market funds	$	56,374	$	—	$	—	$	56,374

December 31, 2020
Level 1 Level 2 Level 3 Total
Money market funds $ 127,567 $ — $ — $ 127,567
Non-marketable debt security — — 1,000 1,000
Total $ 127,567 $ — $ 1,000 $ 128,567


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Money market funds	$	77,309	$	—	$	—	$	77,309

During the years ended December 31, ~~2021~~2023 and ~~2020,~~2022, we did not recognize any significant credit losses nor other-than-temporary impairment losses on non-marketable securities.

~~104~~85

Note 8. Balance Sheet Details

Cash Equivalents

Cash equivalents consisted of the following (in thousands):

December 31, 2021 December 31, 2020
Adjusted Cost Estimated Fair Value Adjusted Cost Estimated Fair Value
Money market funds (1)
$ 86,095 $ 86,095 $ 127,567 $ 127,567


	December 31, 2023				December 31, 2022
	Adjusted Cost		Estimated Fair Value		Adjusted Cost		Estimated Fair Value
Money market funds(1)	$	56,374	$	56,374	$	77,309	$	77,309

(1)Money market funds are classified in cash and cash equivalents on our consolidated balance sheets. Average contractual maturities (in days) is not applicable.

As of December 31, ~~2021,~~2023, the total cash and cash equivalents balance of ~~$116.8~~$65.1 million consisted of money market funds of ~~$86.1~~$56.4 million and cash of ~~$30.7~~$8.7 million held ~~with~~with major financial institutions. As of December 31, ~~2020,~~2022, the total cash and cash equivalents balance of ~~$149.1~~$114.0 million consisted of money market funds of ~~$127.6~~$77.3 million and cash of ~~$21.5~~$36.7 million held with major financial institutions.

Inventories

Inventories consisted of the following (in thousands):


		December 31,				December 31,
		2021		2020		2023	2022
Raw materials	Raw materials	$	49	$	77
Work in process	Work in process	65		82
Finished goods	Finished goods	1,046		805
Inventories		$	1,160	$	964
Total inventories

Prepaid expenses and other current assets

~~Inventories are recorded net of reserves of $1.4 million and $1.5 million as~~As of December 31, ~~2021~~2023, prepaid expenses and other current assets consists of prepaid expenses of $4.6 million and other current assets of $0.6 million. As of December 31, ~~2020 respectively.~~2022, prepaid expenses and other current assets consists of prepaid expenses of $4.8 million and other current assets of $0.7 million.

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

December 31,
2021 2020
Laboratory equipment (1)
$ 33,101 $ 25,468
Leasehold improvements 16,117 10,785
Computer equipment and software 3,481 3,192
Office equipment and furniture 1,297 1,246
Construction in progress (2)
3,231 2,357
Property and equipment 57,227 43,048
Less: accumulated depreciation and amortization (35,882) (33,373)
Property and equipment, net $ 21,345 $ 9,675


	December 31,
	2023		2022
Laboratory equipment(1)	$	37,216	$	39,679
Leasehold improvements	11,912		16,633
Computer equipment and software	2,565		3,039
Office equipment and furniture	1,469		1,345
Construction in progress(2)	1,636		1,739
Property and equipment	54,798		62,435
Less: accumulated depreciation and amortization	(39,311)		(39,821)
Property and equipment, net	$	15,487	$	22,614

(1) Fully depreciated property and equipment with a cost of ~~$0.6~~$3.0 million and ~~$1.8~~$1.5 million were retired during the years ended December 31, ~~2021~~2023 and ~~2020,~~2022, respectively.

(2) Construction in progress includes equipment received but not yet placed into service pending installation.

~~105~~86

In July 2023, we announced our plan to consolidate operations from our San Carlos facility to our headquarters in Redwood City. As part of this plan, we entered into agreements to sell certain laboratory equipment located in our San Carlos facility through an asset auction and as part of the lease assignment of the San Carlos Space to Vaxcyte (see further discussion at Note 13, “Commitments and Contingencies”). These certain items of laboratory equipment met the assets held for sale criteria and were sold during the fourth quarter of 2023. Using a fair value estimate based of Level 3 inputs in the fair value hierarchy, the Company determined that the carrying value of these assets exceeds fair value less costs to sell, which resulted in a write-down of $1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023.

During the year ended December 31, 2023, the Company recorded a non-cash impairment charge of $4.7 million associated with the San Carlos facility leasehold improvements. For additional information, see Note 13, “Commitments and Contingencies.”

Depreciation expense included in both research and development expenses and selling, general and administrative expenses in the consolidated statements of operations was as follows (in thousands):

Year Ended December 31,
2021 2020 2019
Depreciation expense $ 3,113 $ 1,950 $ 1,570


	Year Ended December 31,
	2023		2022		2021
Depreciation expense	$	5,518	$	5,402	$	3,113

Goodwill


	December 31,
	2023		2022
Goodwill at beginning of period	$	3,241	$	3,241
Impairment	(778)		—
Goodwill at end of period	$	2,463	$	3,241

Goodwill was previously allocated to each of the Company's reporting units. In July 2023, we announced a restructuring of our business and that we are discontinuing investment in certain development programs, primarily in Novel Biotherapeutics. As a result of this plan, the Company determined that a triggering event had occurred that required an interim goodwill impairment test during the third quarter of 2023. The fair value estimate used in the interim goodwill impairment test was primarily based on Level 3 inputs in the fair value hierarchy. Based on the results of the impairment evaluation, the Company determined that the goodwill within the Novel Biotherapeutics reporting unit was impaired, which resulted in a non-cash impairment charge of $0.8 million to write off all of the associated goodwill. The impairment charge is recorded within the asset impairment and other charges in the condensed consolidated statements of operation in the year ended December 31, 2023. Goodwill had a carrying value of $2.5 million and $3.2 million as of December 31, ~~2021~~2023 and ~~2020.~~2022, respectively.

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):


		December 31,				December 31,
		2021		2020		2023	2022
Accrued professional and outside service fees
Accrued purchases	Accrued purchases	$	6,755	$	7,170
Accrued professional and outside service fees		5,147		2,589
Other	Other	676		513
Total		$	12,578	$	10,272
Total other accrued liabilities

Note 9. Stock-based Compensation

Equity Incentive Plans

In ~~2019,~~January 2023, our board of directors (the ~~"Board"~~“Board”) approved the 2022 Employment Inducement Award Plan (the “2022 Inducement Plan”) which provides for the grant of non-qualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance awards, other stock awards and dividend equivalents to eligible employees with respect to an aggregate of up to 2,000,000 shares of our common stock. In June 2023, the 2022 Inducement Plan was terminated upon the approval of an amendment to the Company's 2019 Incentive Award Plan (the “2019 Plan”) at the annual meeting of the Company's stockholders (the “Annual Meeting”) in June 2023.

In 2019, the Board and stockholders approved the 2019 ~~Incentive Award Plan (the "2019 Plan").~~Plan. The 2019 Plan superseded and replaced in its entirety our 2010 Equity Incentive Plan (the “2010 Plan”) which was effective in March 2010, and no further awards will be granted under the 2010 Plan; however, the terms and conditions of the 2010 Plan will continue to govern any outstanding awards thereunder.

The 2010 Plan provided for the grant of incentive stock options, non-statutory stock options, RSUs, RSAs, PSUs, PBOs, stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants. The 2019 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, ~~restricted stock awards ("RSAs"), restricted stock units ("RSUs"),~~RSA, RSUs, performance-contingent restricted stock units ~~("PSUs"~~(“PSUs”), ~~performance-based~~performance based options ~~("PBOs"~~(“PBOs”), other stock or ~~cash-based~~cash based awards and dividend equivalents to eligible employees and consultants of the Company or any parent or subsidiary, as well as members of the Board.

The number of shares of our common stock that were initially available for issuance under the 2019 Plan is equal to the sum of (i) 7,897,144 shares, and (ii) any shares subject to awards granted under the 2010 Plan that were outstanding as of April 22, 2019 and thereafter terminate, expire, lapse or are ~~forfeited; provided that no more than 14,000,000 shares may be issued upon the exercise of incentive stock options (“ISOs”).~~forfeited. In June 2019, 8.1 million shares authorized for issuance under the 2019 Plan were registered under the Securities Act of 1933, as amended (the “Securities Act”).

In April 2023, the Board approved an amendment to the 2019 Plan (the “2019 Amended Plan”) which became effective upon stockholders' approval at the Annual Meeting in June 2023. The 2019 Amended Plan included the (i) increase in the number of shares available by 8,000,000 shares, such that an aggregate of 15,897,144 shares are reserved for issuance under the 2019 Amended Plan and any shares subject to awards granted under the 2010 Plan, ~~provided for~~and (ii) increase in the ~~grant~~number of shares that may be granted as incentive stock options ~~non-statutory~~under the 2019 Amended Plan such that an aggregate of 22,000,000 shares of common stock may be granted as incentive stock options ~~RSUs, RSAs, PSUs, PBOs,~~

~~stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants.~~under the 2019 Amended Plan.

As of December 31, ~~2021,~~2023, total shares remaining available for issuance under the 2019 Plan were~~5.9~~ 9.1 million ~~shares.~~shares.

Employee Stock Purchase Plan

In April 2023, the Board approved an employee stock purchase plan (the “ESPP”) which became effective upon approval at the Annual Meeting in June 2023. The ESPP allows eligible employees of the Company to purchase shares of our common stock through payroll deductions over 24-month offering periods. The per share purchase price will be the lower of 85% of the closing trading price per share of our common stock on the first trading date of an offering period in which a participant is enrolled or 85% of the closing trading price per share on the purchase date. Participant purchases are limited to a maximum of $25,000 of fair value of our stock per calendar year. The Company is authorized to grant up to 2,000,000 shares of common stock under the ESPP. The first offering period of the ESPP commenced in December 2023 and as of December 31, 2023, the Company had not issued any shares of common stock under the ESPP. We recognized $25 thousand of stock-based compensation expenses related to the ESPP in the year ended December 31, 2023.

Stock Options

The option exercise price for incentive stock options must be at least 100% of the fair value of our common stock on the date of grant and the option exercise price for non-statutory stock options is at least 85% of the fair value of our common stock on the date of grant, as determined by the Board. If, at the time of a grant, the optionee directly or by attribution owns stock possessing more than 10% of the total combined voting power of all of our outstanding capital stock, the exercise price for these options must be at least 110% of the fair value of the underlying common stock. Stock options granted to employees generally have a maximum term of ten years and vest over four years from the date of grant, of which 25% vest at the end of one year, and 75% vest monthly over the remaining three years. We may grant options with different vesting terms from time to time. Unless an employee's termination of service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of three months or the expiration of the option, whichever is earlier.

~~106~~

Restricted Stock Units ~~("RSUs"~~(“RSUs”)

We also grant employees RSUs, which generally vest over either a three year period with 33% of the shares subject to the RSUs vesting on each yearly anniversary of the vesting commencement date or over a four-year period with 25% of the shares subject to the RSU vesting on each yearly anniversary of the vesting commencement date, in each case contingent upon such employee’s continued service on such vesting date. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. We may grant RSUs with different vesting terms from time to time.

Performance-contingent Restricted Stock Units ~~("PSUs"~~(“PSUs”) and Performance Based Options ~~("PBOs"~~(“PBOs”)

~~The~~In prior years, the compensation committee of the Board approved grants of PBOs and PSUs to our executives, and solely in respect of non-executive employees, delegated to our ~~Chief Executive Officer~~CEO the authority to approve grants of PSUs. ~~The compensation committee of the Board also approved grants of PBOs and PSUs to our executives.~~ The PSUs and PBOs vest based upon both the successful achievement of certain corporate operating milestones in specified timelines and continued employment through the applicable vesting date. When the performance goals are deemed to be probable of achievement for these types of awards, recognition of stock-based compensation expense commences. Once the number of shares eligible to vest is determined, those shares vest in 2two equal installments with 50% vesting upon achievement, as determined by the compensation committee of the Board, and the remaining 50% vesting on the first anniversary of achievement, in each case, subject to the recipient’s continued service through the applicable vesting date. If the performance goals are achieved at the threshold level, the number of shares eligible to vest in respect of the PSUs and PBOs would be equal to half the number of PSUs granted and one-quarter the number of shares underlying the PBOs granted. If the performance goals are achieved at the target level, the number of shares eligible to vest in respect of the PSUs and PBOs would be equal to the number of PSUs granted and half of the shares underlying the PBOs granted. If the performance goals are achieved at the superior level, the number of shares eligible to vest in respect of the PSUs would be equal to two times the number of PSUs granted and equal to the number of PBOs granted. The number of shares issuable upon achievement of the performance goals at the levels between the threshold and target levels for the PSUs and PBOs or between the target level and superior levels for the PSUs would be determined using linear interpolation. Achievement below the threshold level would result in no shares being eligible to vest in respect of the PSUs and PBOs.

No PSUs and PBOs were granted in 2023. In ~~2021,~~2022, we awarded PSUs ~~("2021 PSUs"~~(“2022 PSUs”) and PBOs ~~("2021 PBOs"~~(“2022 PBOs”), each of which ~~commenced~~commence vesting based upon the achievement of various weighted performance ~~goals,~~goals, including finance and corporate ~~revenue,~~strategy, performance ~~enzyme segment gross margin, major new biotherapeutics publicity events, strategic performance enzyme~~enzymes and biotherapeutics deliverables, ~~safety,~~research plans, and ~~technology~~organizational development. In the first quarter of 2023, the compensation committee of the Board determined that the 2022 PSUs and ~~strategic plan development. As~~2022 PBOs performance goals had been achieved at 85.0% and 42.5% of ~~December 31,~~the target level, respectively, and recognized stock-based compensation expenses accordingly. Accordingly, 50% of the shares underlying the 2022 PSUs and PBOs vested in the first quarter of 2023 and 50% of the shares underlying the 2022 PSUs and PBOs will vest in the first quarter of 2024, in each case, subject to the recipient’s continued service on each vesting date.

In 2021, we ~~estimated~~awarded PSUs (“2021 PBOs”) and PBOs (“2021 PBOs”), each of which commence vesting based upon the determination of the compensation committee of the Board of the achievement of various weighted performance goals, including total revenues, product revenue, performance enzymes pipeline advancements, biotherapeutics pipeline advancements, organization and infrastructure upgrades, and significant events that can be publicly announced. In the first quarter of 2022, we determined that the 2021 PSUs and 2021 PBOs performance goals ~~would be~~had been achieved at 146% and 73% of the target level, respectively, and recognized stock-based compensation expenses accordingly.

In 2020, we awarded PSUs ("2020 PSUs") and PBOs ("2020 PBOs"), each of which commenced vesting based upon the achievement of various weighted performance goals, including corporate revenue, performance enzyme segment gross margin, major new biotherapeutics publicity events, strategic performance enzyme and biotherapeutics deliverables, and strategic plan development. In the first quarter of 2021, we determined that the 2020 PSUs and 2020 PBOs performance goals had been achieved at 88% and 44% of the target level, respectively, and recognized the stock-based compensation expenses accordingly. Accordingly, 50% of the shares underlying the ~~2020~~2021 PSUs and PBOs vested in the first quarter of ~~2021~~2022 and 50% of the shares underlying the ~~2020 PSUs and PBOs will vest in the first quarter of 2022, in each case, subject to the recipient’s continued service on each vesting date.~~

In 2019, we awarded PSUs ("2019 PSUs") and PBOs ("2019 PBOs"), each of which commenced vesting based upon the achievement of various weighted performance goals, including sustained revenue and performance enzyme growth, strategic advancement of biotherapeutics, cash balance and strategic plan development. In the first quarter of 2020, we determined that the 2019 PSUs and 2019 PBOs performance goals had been achieved at 84% and 42% of the target level, respectively, and recognized the stock-based compensation expenses accordingly. Accordingly, 50% of the shares underlying the 20192021 PSUs and PBOs vested in the first quarter of ~~2020 and 50% of the shares underlying the 2019 PSUs and PBOs vested in the first quarter of 2021,~~2023, in each case, subject to the recipient’s continued service on each vesting date.

Stock-Based Compensation Expense

~~107~~

Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Costs of product revenue	$	354	$	452	$	224
Research and development	2,631		3,907		2,663
Selling, general and administrative	6,986		10,172		8,706
Total	$	9,971	$	14,531	$	11,593

Year Ended December 31,
2021 2020 2019
Research and development $ 2,353 $ 1,620 $ 1,562
Selling, general and administrative 9,240 6,108 5,381
Total $ 11,593 $ 7,728 $ 6,943

The following table presents total stock-based compensation expense by security type included in the consolidated statements of operations (in thousands):


		Year Ended December 31,							Year Ended December 31,
		2021		2020		2019			2023		2022		2021
Stock options	Stock options	$	2,764	$	2,381	$	2,149
RSUs and RSAs	RSUs and RSAs	2,768		2,231		1,805		RSUs and RSAs	4,447	4,807		4,807		2,768
PSUs	PSUs	2,333		1,160		1,087
PBOs	PBOs	3,728		1,956		1,902		PBOs	(112)	2,289		2,289		3,728
ESPP
Total	Total	$	11,593	$	7,728	$	6,943

In connection with the retirement of John Nicols, our former President and Chief Executive Officer, in August 2022, and the Transition and Separation Agreement between Mr. Nicols and the Company, certain supplementary modifications were made to Mr. Nicols' vested and unvested stock option and PBOs awards including voluntary forfeiture of certain unvested stock option and PBOs awards and the extension of the post-termination exercise period of certain vested stock option and PBOs awards. During the year ended December 31, 2022, we recorded a one-time, non-cash incremental compensation expense of $1.0 million, net of the required reversal of previously recognized stock-based compensation expenses attributed to unvested shares, in selling, general and administrative expenses related to these stock option award modifications.

Grant Award Activities:

Stock Option Awards

We estimated the fair value of stock options using the Black-Scholes-Merton option-pricing model based on the date of grant. The following summarizes the weighted-average assumptions used to estimate the fair value of employee ~~and non-employee~~ stock options granted:


		Year Ended December 31,							Year Ended December 31,
		2021		2020		2019			2023		2022		2021
Expected life (years)	Expected life (years)	5.6		5.3		5.6		Expected life (years)	5.8		5.7		5.6
Volatility	Volatility	52.5	%	50.4	%	55.3	%	Volatility	66.2	%	62.1	%	52.5	%
Risk-free interest rate	Risk-free interest rate	0.8	%	1.0	%	2.4	%	Risk-free interest rate	4.0	%	3.1	%	0.8	%
Expected dividend yield	Expected dividend yield	0.0	%	0.0	%	0.0	%	Expected dividend yield	0.0	%	0.0	%	0.0	%

The following summarizes the weighted-average assumptions used to estimate the fair value of ~~9,000~~50,000, nil, and ~~76,000~~9,000 shares of stock options granted to non-employees for services valued at $0.1 million, nil, and ~~$0.4~~$0.1 million during the years ended December 31, 2023, 2022, and 2021 ~~and 2020~~ respectively:


		Year Ended December 31,					Year Ended December 31,
		2021		2020			2023		2022		2021
Expected life (years)	Expected life (years)	5.6		5.4		Expected life (years)	5.8		0.0		5.6
Volatility	Volatility	54.1	%	51.6	%	Volatility	70.1	%	—	%	54.1	%
Risk-free interest rate	Risk-free interest rate	0.9	%	0.4	%	Risk-free interest rate	4.7	%	—	%	0.9	%
Expected dividend yield	Expected dividend yield	0.0	%	0.0	%	Expected dividend yield	0.0	%	0.0	%	0.0	%

The weighted average grant date fair value per share of non-employee stock options granted respectively in 2023, 2022, and 2021 was $1.05, nil and ~~2020 was~~ $11.29, ~~and $5.04. The Company did not grant shares of stock options to non-employees during the year ended December 31, 2019.~~

respectively.

~~108~~90

The following tables ~~summarizes~~summarizes stock option activities:


		Number of Shares	Weighted Average Exercise Price Per Share
		(In Thousands)
Outstanding at December 31, 2018		4,112	$	4.81
Granted		406	$	20.68
Exercised		(1,045)	$	4.50
Forfeited/Expired		(326)	$	11.01
Outstanding at December 31, 2019		3,147	$	6.31
Granted		496	$	13.30
Exercised		(210)	$	6.30
Forfeited/Expired		(48)	$	16.71
	Number of Shares				Number of Shares	Weighted Average Exercise Price Per Share
	(In Thousands)
Outstanding at December 31, 2020
Outstanding at December 31, 2020
Outstanding at December 31, 2020	Outstanding at December 31, 2020	3,385	$	7.19
Granted	Granted	286	$	26.85
Exercised	Exercised	(664)	$	6.96
Forfeited/Expired	Forfeited/Expired	(72)	$	17.99
Outstanding at December 31, 2021	Outstanding at December 31, 2021	2,935	$	8.90
Granted
Exercised
Forfeited/Expired
Outstanding at December 31, 2022
Granted
Exercised
Forfeited/Expired
Outstanding at December 31, 2023

Number
of
Shares Weighted
Average
Exercise Price Per Share Weighted
Average
Remaining
Contractual Term Aggregate Intrinsic
Value
(In Thousands) (In Years) (In Thousands)
Outstanding at December 31, 2021 2,935 $ 8.90 5.0 $ 65,963
Exercisable at December 31, 2021 2,861 $ 8.56 4.9 $ 65,186
Vested and expected to vest at December 31, 2021 2,338 $ 5.99 4.2 $ 59,103


	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In Thousands)			(In Years)	(In Thousands)
Outstanding at December 31, 2023	5,174	$	7.31	6.7	$	198
Exercisable at December 31, 2023	2,231	$	8.61	3.6	$	79
Vested and expected to vest at December 31, 2023	4,748	$	7.42	6.4	$	170

The weighted average grant date fair value per share of employee stock options granted in 2023, 2022, and 2021 ~~2020~~were $3.31, $4.99 and ~~2019 were~~ $12.80, ~~$6.03 and $10.77,~~ respectively. The total intrinsic value of options exercised in 2023, 2022, and 2021 ~~2020~~were $0.7 million, $3.1 million and ~~2019 were~~ $14.9 million, ~~$1.8 million and $13.6 million,~~ respectively.

As of December 31, ~~2021, there~~2023, there was ~~$4.4~~$8.2 million of unrecognized stock-based compensation, net of expected forfeitures, related to unvested stock options, which we expect to recognize over a weighted average period of ~~2.4~~2.9 years.

~~109~~

Restricted Stock Awards ~~("RSAs"~~(“RSAs”)

The following table summarizes RSA activities:


		Number of Shares	Weighted Average Grant Date Fair Value Per Share
		(In Thousands)
Non-vested balance at December 31, 2018		55	$	12.83
Granted		40	$	17.18
Vested		(56)	$	12.83
Forfeited/Expired		(4)	$	17.18
Non-vested balance at December 31, 2019		35	$	17.18
Granted		96	$	11.44
Vested		(35)	$	17.18

	Number of Shares				Number of Shares	Weighted Average Grant Date Fair Value Per Share
	(In Thousands)
Non-vested balance at December 31, 2020
Non-vested balance at December 31, 2020
Non-vested balance at December 31, 2020	Non-vested balance at December 31, 2020	96	$	11.44
Granted	Granted	46	$	21.91
Vested	Vested	(62)	$	11.31
Non-vested balance at December 31, 2021	Non-vested balance at December 31, 2021	80	$	17.53
Granted
Vested
Non-vested balance at December 31, 2022
Granted
Vested
Non-vested balance at December 31, 2023

The total fair value, as of the vesting date, of RSAs vested in fiscal ~~2021, 2020~~years 2023, 2022 and ~~2019~~2021 were $0.4 million, $0.5 million and $1.3 million ~~$0.4 million and $1.0 million~~ respectively.

As of December 31, ~~2021,~~2023, there was ~~$0.7~~$0.6 million of unrecognized stock-based compensation cost related to non-vested RSAs, which we expect to recognize over a weighted average period of ~~1.1~~0.7 years.

Restricted Stock Units ("RSUs")

The following table summarizes RSU activities:


		Number of Shares	Weighted Average Grant Date Fair Value Per Share
		(In Thousands)
Non-vested balance at December 31, 2018		348	$	5.66
Granted		72	$	19.19
Vested		(210)	$	5.03
Forfeited/Expired		(9)	$	13.60
Non-vested balance at December 31, 2019		201	$	10.76
Granted		156	$	14.22
Vested		(168)	$	10.05
Forfeited/Expired		(13)	$	15.16
	Number of Shares				Number of Shares	Weighted Average Grant Date Fair Value Per Share
	(In Thousands)
Non-vested balance at December 31, 2020
Non-vested balance at December 31, 2020
Non-vested balance at December 31, 2020	Non-vested balance at December 31, 2020	176	$	14.17
Granted	Granted	163	$	26.59
Vested	Vested	(70)	$	13.57
Forfeited/Expired	Forfeited/Expired	(37)	$	21.89
Non-vested balance at December 31, 2021	Non-vested balance at December 31, 2021	232	$	21.83
Granted
Vested
Forfeited/Expired
Non-vested balance at December 31, 2022
Granted
Vested
Forfeited/Expired
Non-vested balance at December 31, 2023

The total fair value, as of the vesting date, of RSUs vested in fiscal years 2023, 2022 and 2021 ~~2020 and 2019~~ were$1.1 million, $1.8 million ~~$2.1~~and $1.8 million ~~and $4.1 million~~ respectively.

As of December 31, ~~2021,~~2023, there was ~~$2.8~~$4.1 million of unrecognized stock-based compensation cost related to non-vested RSUs, which we expect to recognize over a weighted average period of ~~1.6~~2.0 years.

~~110~~

Performance-Contingent Restricted Stock Units ~~("PSUs"~~(“PSUs”)

The following table summarizes PSU activities:


		Number of Shares	Weighted Average Grant Date Fair Value Per Share
		(In Thousands)
Non-vested balance at December 31, 2018		240	$	7.48
Granted		95	$	14.98
Vested		(200)	$	6.58
Forfeited/Expired		(15)	$	15.58
Non-vested balance at December 31, 2019		120	$	13.88
Granted		124	$	13.59
Vested		(107)	$	11.28
Forfeited/Expired		(6)	$	21.80
	Number of Shares				Number of Shares	Weighted Average Grant Date Fair Value Per Share
	(In Thousands)
Non-vested balance at December 31, 2020
Non-vested balance at December 31, 2020
Non-vested balance at December 31, 2020	Non-vested balance at December 31, 2020	131	$	15.34
Granted	Granted	82	$	26.16
Vested	Vested	(66)	$	16.14
Forfeited/Expired	Forfeited/Expired	(19)	$	19.38
Non-vested balance at December 31, 2021	Non-vested balance at December 31, 2021	128	$	21.24
Granted
Vested
Forfeited/Expired
Non-vested balance at December 31, 2022
Vested
Forfeited/Expired
Other
Non-vested balance at December 31, 2023

The total fair value, as of the vesting date, of PSUs vested in the years ended December 31, 2023, 2022, and 2021 ~~2020, and 2019~~ were ~~$1.3~~$1.6 million, ~~$1.3~~$2.1 million, and ~~$3.8~~$1.3 million, respectively.

As of December 31, ~~2021,~~2023, there was ~~$1.0~~$0.2 million of unrecognized stock-based compensation cost related to non-vested PSUs, which we expect to recognize over a weighted average period of ~~0.5~~0.2 years.

Performance Based Options ~~("PBOs"~~(“PBOs”)

We estimated the fair value of PBOs using the Black-Scholes-Merton option-pricing model based on the date of grant. No PBOs were granted to employees for their services during the year ended December 31, 2023. The following summarize the ~~ranges of~~ weighted-average assumptions used to estimate the fair value of ~~employee stock options~~PBOs granted:
Year Ended December 31,
2021 2020 2019
Expected life (years) 5.5 5.3 5.6
Volatility 51.9 % 49.9 % 55.8 %
Risk-free interest rate 0.7 % 1.3 % 2.5 %
Expected dividend yield 0.0 % 0.0 % 0.0 %

~~111~~


	Year Ended December 31,
	2022		2021
Expected life (years)	5.6		5.5
Volatility	54.9	%	51.9	%
Risk-free interest rate	1.8	%	0.7	%
Expected dividend yield	0.0	%	0.0	%

The following tables summarizes ~~PBO~~PBOs activities:


		Number of Shares	Weighted Average Grant Date Fair Value Per Share
		(In Thousands)
Outstanding at December 31, 2018		1,582	$	3.47
Granted		718	$	11.44
Exercised		(422)	$	3.17
Forfeited/Expired		(618)	$	10.34
Outstanding at December 31, 2019		1,260	$	4.75
Granted		689	$	6.37

Forfeited/Expired		(389)	$	6.42
	Number of Shares				Number of Shares	Weighted Average Grant Date Fair Value Per Share
	(In Thousands)
Outstanding at December 31, 2020
Outstanding at December 31, 2020
Outstanding at December 31, 2020	Outstanding at December 31, 2020	1,560	$	5.05
Granted	Granted	433	$	12.23
Exercised	Exercised	(35)	$	9.02
Forfeited/Expired	Forfeited/Expired	(118)	$	12.23
Outstanding at December 31, 2021	Outstanding at December 31, 2021	1,840	$	4.11
Granted
Forfeited/Expired
Outstanding at December 31, 2022
Forfeited/Expired
Outstanding at December 31, 2023

Number
of
Shares Weighted
Average
Exercise Price Per Share Weighted
Average
Remaining
Contractual Term Aggregate Intrinsic
Value
(In Thousands) (In Years) (In Thousands)
Exercisable at December 31, 2021 1,374 $ 9.08 6.0 $ 30,809
Vested and expected to vest at December 31, 2021 1,784 $ 12.11 6.6 $ 34,263


	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In Thousands)			(In Years)	(In Thousands)
Exercisable at December 31, 2023	1,627	$	10.96	4.4	$	—
Vested and expected to vest at December 31, 2023	1,646	$	11.06	4.5	$	—

The total fair value of ~~exercised~~exercised PBOs for 2023, 2022 and 2021, ~~2020 and 2019,~~ was ~~$0.3 million,~~nil, nil, and ~~$1.3~~$0.3 million, respectively.

As of December 31, ~~2021,~~2023, there was ~~$1.3 million~~$15.9 thousand of unrecognized stock-based compensation cost related to non-vested PBOs, which we expect to recognize over a weighted average period of ~~1.0~~0.2 years.

Employee Stock Purchase Plan (“ESPP”)

The fair value of shares to be issued under the ESPP is computed using the Black-Scholes-Merton option pricing model at the commencement of the offering period. The following summarizes the weighted-average assumptions used to estimate the fair value of ESPP for the initial offering period:


	Year Ended December 31,
	2023
Expected life (years)	0.4
Volatility	89.6	%
Risk-free interest rate	5.3	%
Expected dividend yield	0.0	%

Note 10. Capital Stock

Equity Distribution Agreement

WeIn May 2021, we filed a Registration Statement on Form S-3 with the SEC, that automatically became effective upon its filing, under which we may sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings. ~~The registration statement became effective~~On February 27, 2023, we filed a post-effective amendment to that Registration Statement on ~~May 7, 2021.~~Form S-3. Pursuant to that post-effective amendment, we registered an aggregate $200.0 million of securities. In May 2021, we entered into an Equity Distribution Agreement ("~~EDA"~~EDA”) with Piper Sandler & Co ~~("PSC"~~(“PSC”), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of $50.0 million of shares of our common stock. Under the terms of the EDA, PSC may sell the shares at market prices by any method that is deemed to be ~~an“at~~an "at the market ~~offering”~~offering" as defined in Rule 415 under the Securities Act of 1933, as amended.

We are not required to sell any shares at any time during the term of the EDA. The EDA will terminate upon the earlier of: (i) the issuance and sale of all shares through PSC on the terms and conditions of the EDA, or (ii) the termination of the EDA in accordance with its terms. Either party may terminate the EDA at any time upon written notification to the other party in accordance with the EDA, and upon such notification, the offering will terminate. Under no circumstances shall any shares be sold pursuant to the EDA after the date which is three years after the registration statement is first declared effective by the SEC. We agreed to pay PSC a commission of 3% of the gross sales price of any shares sold pursuant to the EDA. With the exception of certain expenses, we will pay PSC up to 8% of the gross sales price of the shares sold pursuant to the EDA for a combined amount of commission and reimbursement of PSC's expenses and fees.

During the year ended December 31, ~~2021, no~~2023, 3,079,421 shares of our common stock were issued and sold pursuant to the EDA. During the year ended December 31, 2023, we received gross proceeds of $8.7 million or $7.9 million in net proceeds after PSC's commissions and direct offering expenses of $0.7 million. As of December 31, ~~2021, $50.0~~2023, $41.3 million of shares remained available for sale under the EDA.

~~112~~

~~Public Offerings~~

In During the year ended December ~~2020, we completed an underwritten public offering in which we issued and sold 4.9 million~~31, 2022, no shares of our common stock par value $0.0001 per share, at a public offering price of $17.50 per share. We received gross proceeds of $86.3 million, net of underwriting discounts and commissions of $5.2 million and direct offering expenses of $0.3 million for net proceeds of $80.8 million.

~~Private Placement~~

~~In June 2019, we entered into a Securities Purchase Agreement with an affiliate of Casdin Capital, LLC ("Casdin") pursuant to which we issued and~~were sold to Casdin 3,048,780 shares of our common stock at a purchase price of $16.40 per share. After deducting issuance costs of $0.1 million from the Private Offering, our net proceeds were $49.9 million. The Private Offering was exempt from registration pursuant to the ~~exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) the Securities Act, and Regulation D under the Securities Act.~~EDA.

Note 11. 401(k) Plan

In January 2005, we implemented a 401(k) Plan covering certain employees. Currently, all of our United States based employees over the age of 18 are eligible to participate in the 401(k) Plan. Under the 401(k) Plan, eligible employees may elect to reduce their current compensation up to a certain annual limit and contribute these amounts to the 401(k) Plan. We may make matching or other contributions to the 401(k) Plan on behalf of eligible employees. We recorded employer matching contributions expense of o~~$1.1~~f $1.4 million, ~~$0.8~~$1.6 million, and ~~$0.7~~$1.1 million in the years ended December 31, ~~2021, 2020,~~2023, 2022, and ~~2019,~~2021, respectively.

~~113~~94

Note 12. Income Taxes

Our loss before provision for ~~(benefit from)~~ income taxes were as follows (in thousands):


		Year Ended December 31,						Year Ended December 31,
		2021		2020		2019		2023	2022	2021
United States	United States	$	(21,037)	$	(23,452)	$	(11,751)
Foreign	Foreign	(53)		(219)		(167)
Loss before provision for income taxes	Loss before provision for income taxes	$	(21,090)	$	(23,671)	$	(11,918)

The tax provision for the years ended December 31, ~~2021, 2020~~2023 and ~~2019~~2022 consists primarily of current year state and foreign income taxes. The tax provision for the year ended December 31, 2021 consists primarily of taxes attributable to foreign operations. The components of the provision for income taxes are as follows (in thousands):


		Year Ended December 31,						Year Ended December 31,
		2021		2020		2019		2023	2022	2021
Current provision:	Current provision:
State	State	$	—	$	5	$	5
State
State
Foreign	Foreign	198		342		18
Total current provision	Total current provision	$	198	$	347	$	23
Deferred benefit:	Deferred benefit:
Foreign	Foreign	(9)		(8)		(6)
Foreign
Foreign
Total deferred benefit	Total deferred benefit	$	(9)	$	(8)	$	(6)
Provision for income taxes	Provision for income taxes	$	189	$	339	$	17

Reconciliation of the provision for income taxes calculated at the statutory rate to our provision for income taxes is as follows (in thousands):


		Year Ended December 31,						Year Ended December 31,
		2021		2020		2019		2023	2022	2021
Tax benefit at federal statutory rate	Tax benefit at federal statutory rate	$	(4,429)	$	(4,971)	$	(2,503)
State taxes	State taxes	(2,235)		(708)		(1,120)
Research and development credits	Research and development credits	(1,132)		(811)		(693)
Foreign operations taxed at different rates	Foreign operations taxed at different rates	80		245		1
Stock-based compensation	Stock-based compensation	(2,698)		140		(3,599)
Other nondeductible items	Other nondeductible items	711		61		498
Executive compensation	Executive compensation	257		24		872
Change in valuation allowance	Change in valuation allowance	9,635		6,359		6,561

Provision for income taxes	Provision for income taxes	$	189	$	339	$	17

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

~~114~~95

Significant components of our deferred tax assets and liabilities are as follows (in thousands):


		December 31,				December 31,
		2021		2020		2023	2022
Deferred tax assets:	Deferred tax assets:
Net operating losses	Net operating losses	$	78,525	$	72,530
Net operating losses
Net operating losses
Credits	Credits	11,895		9,914
Deferred revenues	Deferred revenues	1,490		1,080
Stock-based compensation	Stock-based compensation	3,946		2,576
Reserves and accruals	Reserves and accruals	2,928		1,914
Depreciation		514		1,115
Property and Equipment
Intangible assets	Intangible assets	1,356		1,714
Capital losses	Capital losses	26		25
Unrealized gain/loss		418		400
R&D Capitalization
Lease liability	Lease liability	11,206		5,626
Other assets	Other assets	122		100
Total deferred tax assets:	Total deferred tax assets:	112,426		96,994
Valuation allowance	Valuation allowance	(101,762)		(92,126)
Deferred tax liabilities:	Deferred tax liabilities:
Right-of-use assets	Right-of-use assets	(10,373)		(4,848)
Right-of-use assets
Right-of-use assets
Property and Equipment
Other	Other	(314)		(52)
Total deferred tax liabilities:	Total deferred tax liabilities:	(10,687)		(4,900)
Net deferred tax liabilities	Net deferred tax liabilities	$	(23)	$	(32)

ASC 740 requires that the tax benefit of NOLs, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is ~~“more~~"more likely than not.”" Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. Because of our history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not more likely than not to be realized and, accordingly, has provided a valuation allowance against our deferred tax assets. Accordingly, the net deferred tax assets in all our jurisdictions have been fully reserved by a valuation allowance. The net valuation allowance increased by $16.7 million during the year ended December 31, 2023, increased by $9.4 million during the year ended December 31, 2022, and increased by $9.6 million during the year ended December 31, ~~2021, increased by $6.4 million during the year ended December 31, 2020, and increased by $6.5 million during the year ended December 31, 2019.~~2021. At such time as it is determined that it is more likely than not that the deferred tax assets are realizable, the valuation allowance will be reduced.

~~115~~

The following table sets forth our federal, state and foreign NOL carryforwards and federal research and development tax credits as of December 31, ~~2021~~2023 (in thousands):

December 31, ~~2021~~2023

Amount

~~Expiration~~

~~Years~~

~~Net operating losses, federal~~

~~224,475~~

~~2022-2037~~Expiration
Years

Net operating losses, federal

~~108,314~~182,918

2026-2037

Net operating losses, federal

118,569

Do not expire

Net operating losses, state

~~138,770~~147,481

2028-2041

Tax credits, federal

~~12,917~~17,815

2023-2041

Tax credits, state

~~14,126~~19,223

Do not expire

~~Net operating losses, foreign~~

—

~~Various~~

Current U.S. federal and California tax laws include substantial restrictions on the utilization of NOLs and tax credit carryforwards in the event of an ownership change of a corporation. Accordingly, the Company's ability to utilize NOLs and tax credit carryforwards may be limited as a result of such ownership ~~changes.~~changes. We performed an analysis in ~~2020~~2023 and determined that there was not a limitation that would result in the expiration of carryforwards before they are utilized.

Income tax expense or benefit from continuing operations is generally determined without regard to other categories of earnings, such as discontinued operations and other comprehensive income. An exception is provided in ASC 740 when there is aggregate income from categories other than continuing operations and a loss from continuing operations in the current year. In this case, the tax benefit allocated to continuing operations is the amount by which the loss from continuing operations reduces the tax expenses recorded with respect to the other categories of earnings, even when a valuation allowance has been established against the deferred tax assets. In instances where a valuation allowance is established against current year losses, income from other sources is considered when determining whether sufficient future taxable income exists to realize the deferred tax assets.

In 2014, we determined that the undistributed earnings ofof our India subsidiary will be repatriated to the United States, and accordingly, we have provided a deferred tax liability totaling ~~$23~~$16 thousand ~~and~~ ~~$32 thousand~~ as of December 31, ~~2021~~2023 and ~~2020 respectively,~~2022, for local taxes that would be incurred upon repatriation.

We apply the provisions of ASC 740 to account for uncertain income ~~taxes.~~taxes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


		December 31,						December 31,
		2021		2020		2019		2023	2022	2021
Balance at beginning of year	Balance at beginning of year	$	12,683	$	11,330	$	9,980
Additions based on tax positions related to current year	Additions based on tax positions related to current year	2,206		1,357		1,362
Additions to tax position of prior years	Additions to tax position of prior years	372		—		—
Reductions to tax position of prior years	Reductions to tax position of prior years	—		(4)		(12)
Balance at end of year	Balance at end of year	$	15,261	$	12,683	$	11,330

We recognize interest and penalties as a ~~component~~component of our income tax expense. Total interest and penalties recognized in the consolidated statements of operations were $42 thousand, $42 thousand and $61 thousand ~~$39 thousand~~in 2023, 2022 and ~~$32 thousand in~~ 2021, ~~2020 and 2019,~~ respectively. Total penalties and interest recognized in the balance sheet was $0.6 million, $0.5 million ~~$0.4 million~~ and ~~$0.4~~$0.5 million as of December 31, ~~2021, 2020~~2023, 2022 and ~~2019,~~2021, respectively. The total unrecognized tax benefits that, if recognized currently, would impact our company’s effective tax rate were $0.3 million as of December 31, ~~2021, 2020~~2023, 2022 and ~~2019.~~2021. We do not expect any material changes to our uncertain tax positions within the next 12 months. We are not subject toto examination by United States federal or state tax authorities for years prior to 2002 and foreign tax authorities for years prior to 2014.

~~116~~

Note 13. Commitments and Contingencies

Operating Leases

Our headquarters are located in Redwood City, California, where we occupy approximately 77,300 square feet of office and laboratory space in multiple buildings within the same business park ofoperated by Metropolitan Life Insurance Company ~~("MetLife"~~(“MetLife”). Our lease agreement with MetLife ("(“RWC ~~Lease"~~Lease”) includes approximately 28,200 square feet of space located at 200 and 220 Penobscot Drive, Redwood City, California (the “200/220 Penobscot Space”) and approximately 37,900 square feet of space located at 400 Penobscot Drive, Redwood City, California (the “400 Penobscot Space”) (the 200/220 Penobscot Space and the 400 Penobscot Space are collectively referred to as the “Penobscot Space”), and approximately 11,200 square feet of space located at 501 Chesapeake Drive, Redwood City, California (the “501 Chesapeake Space”).

Until the end of January 2020, we also leased approximately 29,900 square feet of space located at 101 Saginaw Drive, Redwood City, California (the “Saginaw Space”). During January 2020, we subleased approximately 26,500 square feet of the Saginaw Space to Minerva Surgical, Inc. The lease and sublease for the Saginaw Space both expired at the end of January 2020. During the period from February 1, 2020 through April 30, 2020, we subleased approximately 3,400 square feet at 101 Saginaw Drive from Minerva Surgical, Inc. The sublease expired at the end of April 2020.

We entered into the initial lease with MetLife for our facilities in Redwood City in 2004 and the RWC Lease has been amended multiple times since then to adjust the leased space and terms of the Lease. In February 2019, we entered into an Eighth Amendment to the Lease (the “Eighth Amendment”) with MetLife with respect to the Penobscot Space and the 501 Chesapeake Space to extend the term of the Lease for additional periods. Pursuant to the Eighth Amendment, the term of the lease of the Penobscot Space has been extended through May 2027. The lease term for the 501 Chesapeake Space has been extended to May 2029. We have 1one (1) option to extend the term of the lease for the Penobscot Space for five (5) years, and 1one (1) separate option to extend the term of the lease for the 501 Chesapeake Space for five (5) years.

Pursuant to the terms of the RWC Lease, we exercised our right to deliver a letter of credit in lieu of a security deposit. The letter of credit is collateralized by deposit balances held by the bank in the amount of $1.1 million as of December 31, ~~2021~~2023 and ~~2020,~~2022, and are recorded as non-current restricted cash on the consolidated balance sheets.

We entered into a short-term office lease in San Carlos, California during the second quarter of 2021 and this lease will expire in April 2022. Our remaining future commitment pursuant to this lease is $40 thousand as of December 31, 2021.

In January 2021, we entered into a lease agreement with ARE-San Francisco No. 63, LLC (“ARE”) to lease a portion of a facility ~~comprising~~consisted of approximately 36,593 rentable square feet in San Carlos, California to serve as additional office and research and development laboratory space (the “San Carlos Space”). The budget provided a net tenant improvement allowance of $6.3 million and an additional allowance of up to $2.7 million. ARE will have an enforceable right to payment by us in the form of equal monthly additional rent payments at a certain interest rate through the lease term for the additional allowance. The terms include an initial annualized base rent of $2.5 million, subject to scheduled 3% annual rent increases, an annualized additional allowance payment of $0.4 million, plus certain operating expenses. The lease hashad a 10-year term from the lease commencement date of November 30, 2021 with 1one option to extend the term for an additional period of 5 years.

In July 2023, we announced our plan to consolidate operations from our San Carlos facility to our headquarters in Redwood City. On September 1, 2023, the Company entered into an Assignment and Assumption of Lease (the “Assignment Agreement”) with Vaxcyte, Inc. (“Vaxcyte”) to assign to Vaxcyte all of the Company’s right, title and interest in, under and to the San Carlos Space and the Lease Agreement, dated as of January 29, 2021. On September 6, 2023, the Company, Vaxcyte and ARE entered into a Consent to Assignment and First Amendment (the “Consent”) pursuant to which ARE consented to the Assignment Agreement and the assignment by the Company and the assumption by Vaxcyte of the Company’s interest as tenant in the lease and agreed to release the Company from all of its obligations under the lease that accrue from and after the assignment. Under the Assignment Agreement, the Company prepaid to ARE (i) the base rent, as defined in the lease agreement, and (ii) certain amounts payable to ARE in connection with tenant improvements completed by ARE pursuant to the lease, which amounted to $3.1 million. We ~~have~~ provided ARE with a $0.5 million security deposit in the form of a letter of ~~credit. We have~~credit, which was released in November 2023 following the ~~right to sublease~~effectiveness of the ~~facility, subject to landlord consent. We commenced occupancy~~lease assignment on October 1, 2023.

As a result of the Assignment Agreement, the Company remeasured the lease obligation for the San Carlos Space as $3.1 million, or the present value of the remaining lease payments, which consist of the remaining rent through the effectiveness of the lease assignment and certain amounts payable to ARE pursuant to the Assignment Agreement, and wrote off the remaining lease liability of $19.6 million and the corresponding right of use asset balance. Simultaneously, the Company determined that indicators of impairment existed because the lease assignment will impact the utilization of the related right of use assets and leasehold improvements in ~~December 2021~~the San Carlos Space, and therefore performed a recoverability test by estimating future undiscounted net cash flows expected to be generated from the use of these assets. As there were no substantial future cash inflows associated with these assets, the carrying values of these assets were deemed unrecoverable. As a result, the Company recognized a non-cash impairment charge of $7.7 million, of which $4.7 million is related to leasehold improvements and $3.0 million for the right of use assets, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023.

The tables below show the balance of right-of-use assets and lease obligations as of January 1, 2023 and the ~~corresponding operating lease liability.~~balance as of December 31, 2023, including the changes during the period (in thousands):


	Right-of-use Assets - Operating Lease, net
Right-of-use assets - Operating leases, net, at January 1, 2023	$	39,263
Amortization of right-of-use assets	(4,405)
Additions	898
Remeasurement due to lease modification	(19,622)
Impairment	(2,997)
Right-of-use assets - Operating leases, net, at December 31, 2023	$	13,137


	Lease Obligations - Operating Leases
Lease obligations - Operating leases, net, at January 1, 2023	$	43,638
Lease payments	(9,897)
Interest accretion	1,905
Remeasurement due to lease modification	(19,622)
Lease obligations - Operating leases, net, at December 31, 2023	$	16,024

We are required to restore certain areas of the Redwood City ~~and San Carlos facilities~~facility that we are renting to ~~their~~its original form. We are expensing the asset retirement obligation over the ~~terms~~term of the ~~respective leases.~~Redwood City lease. We review the estimated obligation each reporting period and make adjustments if our estimates change. As a result of the lease assignment for the San Carlos Space, discussed further above, we wrote off the related asset retirement obligation of $0.2 million in 2023. We recorded asset retirement obligations of ~~$0.4~~$0.3 million and ~~$0.2~~$0.5 million as of December 31, ~~2021~~2023 and ~~2020,~~2022, respectively, which are included in other liabilities on the consolidated balance sheets. Accretion expense related to our asset retirement obligations was nominal in ~~2021~~the years ended December 31, 2023 and ~~2020.~~

~~Lease and other information~~2022.

~~117~~98

Lease and other information

Lease costs amounts included in measurement of lease obligations and other information related to non-cancellable operating leases and finance leases ~~for the years ended December 31, 2021, 2020 and 2019~~ were as follows (in thousands):
Year Ended December 31,
2021 2020 2019
Amortization of right-of-use assets $ 106 $ 152 $ 217
Interest on lease obligations — 1 10
Finance lease costs 106 153 227
Operating lease cost 4,396 3,879 4,556
Short-term lease costs (1)
70 47 —
Sublease income — (55) (957)
Total lease cost (2)
$ 4,572 $ 4,024 $ 3,826
(1) Short-term lease costs on leases with terms of over one month and less than one year.
(2) The Company had no variable lease costs.


	Year Ended December 31,
	2023		2022		2021
Finance lease costs	$	—	$	18	$	106
Operating lease cost	6,310		7,321		4,396
Short-term lease costs(1)	—		40		70
Total lease cost(2)	$	6,310	$	7,379	$	4,572

(1) Short-term lease costs on leases with terms of over one month and less than one year.

(2) The Company had no variable lease costs.

Amounts included in measurement of lease ~~obligations:~~obligations (in thousands):


		Year Ended December 31,
		2021		2020				2019
	Year Ended December 31,												Year Ended December 31,
	2023										2023	2022		2021
Cash paid:	Cash paid:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	4,197	$	2,816			$	3,279
Operating cash flow from finance leases		$	—	$	1			$	10
Financing cash flows from finance leases		$	—	$	60			$	242
Operating cash flows from operating leases
Operating cash flows from operating leases
Non-cash activity:	Non-cash activity:
Operating Lease - Right-of-use assets obtained in exchange for lease liabilities	Operating Lease - Right-of-use assets obtained in exchange for lease liabilities	$	25,445	$	—			$	26,617
Finance Lease - Right-of-use assets obtained in exchange for lease liabilities		$	—	$	—			$	493
Operating Lease - Right-of-use assets obtained in exchange for lease liabilities
Operating Lease - Right-of-use assets obtained in exchange for lease liabilities

				Operating Lease				Finance Lease
							Operating Lease
							Operating Lease
							Operating Lease
Other information:	Other information:
Weighted-average remaining lease term (in years)	Weighted-average remaining lease term (in years)			7.9 years				—
Weighted-average remaining lease term (in years)
Weighted-average remaining lease term (in years)															3.8
Weighted-average discount rate	Weighted-average discount rate			5.6		%		—		Weighted-average discount rate					6.6	%

As of December 31, ~~2021,~~2023, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):
Years ending December 31, Operating Leases
2022 $ 6,500
2023 7,571
2024 7,785
2025 8,007
2026 8,235
Thereafter 20,718
Total minimum lease payments 58,816
Less: imputed interest 11,162
Lease obligations $ 47,654


Years ending December 31,	Operating Leases
2024	$	4,727
2025	4,868
2026	5,014
2027	2,533
2028	760
Thereafter	318
Total minimum lease payments	18,220
Less: imputed interest	2,196
Lease obligations	$	16,024

Reconciliation of operating lease liabilities as shown within the audited consolidated balance sheets:
Current portion of lease obligations - Operating leases	$	3,781
Long-term lease obligations - Operating leases	12,243
Total operating lease liabilities	$	16,024

Other Commitments

We enter into supply and service arrangements in the normal course of business. Supply arrangements are primarily for fixed-price manufacture and supply. Service agreements are primarily for the development of manufacturing processes and certain studies. Commitments under service agreements are subject to cancellation at our discretion which may require payment

~~118~~

of certain cancellation fees. The timing of completion of service arrangements is subject to variability in estimates of the time required to complete the work.

The following table provides quantitative data regarding our other commitments. Future minimum payments reflect amounts that we expect to pay including potential obligations under services agreements subject to risk of cancellation by us (in thousands):

~~Other Commitment Agreement Type~~

~~Agreement Date~~

~~Future Minimum Payment~~

~~Manufacture and supply agreement with expected future payment date of December 2022~~

~~April 2016~~

~~101~~

~~Development and manufacturing services agreements~~

~~September 2019~~

~~2,469~~

~~Facility maintenance agreement~~

~~September 2021~~

~~1,475~~

~~Total other commitments~~

~~4,045~~


	Payments Due by Period
	Total		2024		2025 and Thereafter
Facility maintenance agreement	$	701	$	701	$	—

Credit Facility

InOn June 30, 2017, we entered into a credit facility (the ~~"Credit Facility"~~“Credit Facility”) with Western Alliance Bank consisting of term loans (“Term Debt”) up to $10.0 million, and advances ~~("Advances"~~(“Advances”) under a revolving line of credit ("(“Revolving Line of ~~Credit"~~Credit”) up to $5.0 million with an accounts receivable borrowing base of 80% of eligible accounts receivable. ~~In September 2021, we entered into the Ninth Amendment to the Credit Facility whereby we may draw on the Term Debt and the Revolving Line of Credit at any time prior to~~ ~~December 31, 2021 and~~ ~~October 1, 2024, respectively.~~ The right to take draws on the Term Debt expired on December 31, ~~2021 and no amounts were drawn under~~2022. In March 2023, we terminated the Credit Facility ~~as of December 31, 2021.~~ with Western Alliance Bank.

On ~~October 1,~~February 13, 2024, ~~loans drawn under~~we entered into the ~~Revolving Line of Credit terminate.Advances made under the Revolving Line of Credit bear interest~~Loan Agreement with Innovatus. See further discussion at ~~a variable annual rate equal to the equal to the greater of (i) 4.25% or (ii) the sum of (A) the prime rate plus (B) 1.00%.~~

Our obligations under the Credit Facility are secured by a lien on substantially all of our personal property other than our intellectual property. The Credit Facility includes a number of customary covenants and restrictive financial covenants including meeting minimum product revenue levels and maintaining certain minimum cash levels with the lender. The Credit Facility's financial covenants restrict the ability of the Company to transfer collateral, incur additional indebtedness, engage in mergers or acquisitions, pay dividends or make other distributions, make investments, create liens, sell assets, or sell certain assets held at foreign subsidiaries. A failure to comply with these covenants could permit the lender to exercise remedies against us and the collateral securing the Credit Facility, including foreclosure of our properties securing the Credit Facility and our cash. At December 31, 2021, we were in compliance with the covenants for the Credit Facility.Note 18, “Subsequent Events.”

Legal Proceedings

We may be involved in legal actions in the ordinary course of business, including inquiries and proceedings concerning business practices and intellectual property infringement, employee relations and other claims. We will recognize a loss contingency in the consolidated financial statements when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. We will disclose any loss contingencies that do not meet both conditions if there is a reasonable possibility that a material loss may have been incurred. Gain contingencies are not recorded until they are realized.

In April 2022, we reached a settlement resolving a non-material dispute involving the Company's trademark. The terms of the settlement are not material to our business or the results of operations. We are currently not a party to any material pending litigation or other material ~~legal~~ proceedings.

Indemnifications

We are required to recognize a liability for the fair value of any obligations we assume upon the issuance of a guarantee. We have certain agreements with licensors, licensees and collaborators that contain indemnification provisions. In such provisions, we typically agree to indemnify the licensor, licensee and collaborator against certain types of third party claims. The maximum amount of the indemnifications is not limited. We accrue for known indemnification issues when a loss is probable and can be reasonably estimated. There were no accruals for expenses related to indemnification issues for any periods presented.

100

Note 14. Related Party Transactions

Molecular Assemblies, Inc.

In June 2020, we entered into a Stock Purchase Agreement with MAI, a privately held life sciences company, pursuant to which we purchased 1,587,050 shares of MAI's Series A preferred stock for $1.0 million. ~~In connection with the transaction, John~~Mr. Nicols, our former President and ~~Chief Executive Officer,~~CEO until August 2022, also joined MAI’s board of ~~directors.~~directors in June 2020 and remained on MAI's board until September 2023. Concurrently with our initial equity investment, we entered into ~~the MAI~~a Master Collaboration and Research Agreement with MAI (the “MAI Agreement”), pursuant to which ~~we are performing~~performed services utilizing our CodeEvolver® ~~protein engineering~~technology platform ~~technology~~ to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A and B preferred ~~stock.~~stock which are valued based on the observed transaction price of similar securities that MAI issued to third parties. We completed the R&D service with MAI pursuant to the MAI Agreement during the first quarter of 2022. In addition to our initial equity investment and the shares we have received under the MAI Agreement, in April 2021, we purchased an additional 1,000,000 shares of MAI's Series A preferred stock for $0.6 ~~million.~~million and Inin September 2021, we purchased 9,198,423 shares of MAI's Series B preferred stock for $7.0 million.

In ~~the~~

~~119~~

~~fourth quarter of 2021, we became eligible to receive the primary milestone payment of $1.0 million which~~April 2022, we received a purchase order from MAI for the delivery of certain enzyme products to MAI in 2022. In July 2022, we and MAI executed the MAI Supply Agreement that will enable MAI to utilize an evolved terminal deoxynucleotidyl transferase (TdT) enzyme in MAI’s Fully Enzymatic Synthesis™ (or FES™) technology.

Revenues recognized from transactions with MAI in the ~~form~~year ended December 31, 2023, and subsequent to the related party period which ended in August 2022, are included in the consolidated statement of ~~additional of 1,587,049 Series B preferred stock during December 2021.~~

operations. We ~~recognized $2.0~~recognized $1.2 million and ~~$0.9~~$2.0 million in research and development revenue pursuant to the MAI Agreement in the years ended December 31, 2022 and 2021, respectively. We recognized $0.5 million in product revenue from transactions with MAI in the ~~years~~year ended December 31, ~~2021~~2022 and 2020, respectively. We received 3,491,505 and 714,171 shares of MAI's Series A and B preferred stock from research and development services we provided to MAI for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, we have 16,705,320 shares of MAI's Series A and B preferred stock that we have earned or purchased since executing the Stock Purchase Agreement with MAI.

The carrying value of our investment in MAI Series A and B preferred stock was $12.7 million and $1.5 million at December 31, 2021 and 2020, respectively. We had $0.2 million and nil in deferred revenue as of December 31, 2021 and 2020, respectively, and ~~nil~~ and $0.5 million in contract assets due from MAI for services rendered as of December 31, 2021 and 2020, respectively. Payment for the services rendered was received in the form of additional Series A and Series B preferred stock. For additional information, see Note 5, "Collaborative Arrangements".

~~AstraZeneca PLC~~

Pam P. Cheng, who served as a member of our board of directors until June 2020, joined AstraZeneca PLC as Executive Vice President, Operations and Information Technology in June 2015. We sold biocatalyst products to AstraZeneca PLC and its controlled purchasing agents and contract manufacturers. We recognized $0.1 million of revenue in 2020, through the date of Ms. Cheng's departure from our board of directors. As of December 31, 2020, we had no receivables from AstraZeneca PLC and its controlled purchasing agents and contract manufacturers that was generated during the related party period.

Note 15. Segment, Geographical and Other Revenue Information

Segment Information

We ~~manage~~previously managed our business as 2two business ~~segments:~~segments, Performance Enzymes and Novel Biotherapeutics. ~~Our~~During the fourth quarter of 2023, we made changes to the structure of our organization in connection with the restructuring of our business that we announced in July 2023, including the discontinuation of investment in certain development programs, primarily in our biotherapeutics business, consolidation of operations to our Redwood City, California headquarters, and headcount reduction. In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and how our CEO, our chief operating decision maker, ~~("CODM") is~~assesses performance and allocates resources. As a result of these changes, our ~~Chief Executive Officer. Our business~~previous Performance Enzymes and Novel Biotherapeutics operating segments were combined into a single reportable segment.

Effective October 1, 2023, the Company's operations are ~~primarily~~managed and reported to the CEO on a consolidated basis. The CEO assesses performance and allocated resources based on the consolidated results of operations. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. Under this new organizational and reporting structure, we managed our ~~organizational structure and our operating results~~business as ~~used by our CODM in assessing performance and allocating resources for~~one reportable segment as of December 31, 2023. Comparative prior period disclosures that reflected the ~~Company.~~

~~We report corporate-related expenses such as legal, accounting,~~previous two segments' information ~~technology, and other costs that are not otherwise included~~have been revised to conform to this change in our reportable ~~business segments as "Corporate costs." All items not included in income (loss) from operations are excluded from the business segments.~~

We manage our assets on a total company basis, not by business segment, as the majority of our operating assets are shared or commingled. Our CODM does not review asset information by business segment in assessing performance or allocating resources, and accordingly, we do not report asset information by business segment.

Factors considered in determining the 2 reportable segments of the Company include the nature of business activities, the management structure directly accountable to our CODM for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors. Our CODM regularly reviews our segments and the approach provided by management for performance evaluation and resource allocation.

Operating expenses that directly support the segment activity are allocated based on segment headcount, revenue contribution or activity of the business units within the segments, based on the corporate activity type provided to the segment. The expense allocation excludes certain corporate costs that are separately managed from the segments. This provides the CODM with more meaningful segment profitability reporting to support operating decisions and allocate resources.

~~120~~

~~The following table provides financial information by our reportable business segments along with a reconciliation to consolidated loss before income taxes (in thousands):~~

Year Ended December 31, 2021 Year Ended December 31, 2020
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Revenues:
Product revenue $ 70,657 $ — $ 70,657 $ 30,220 $ — $ 30,220
Research and development revenue 19,858 14,239 34,097 17,886 20,950 38,836
Total revenues 90,515 14,239 104,754 48,106 20,950 69,056
Costs and operating expenses:
Cost of product revenue 22,209 — 22,209 13,742 — 13,742
Research and development (1)
23,140 30,219 53,359 20,923 21,705 42,628
Selling, general and administrative(1)
12,105 2,755 14,860 9,597 2,355 11,952
Total segment costs and operating expenses 57,454 32,974 90,428 44,262 24,060 68,322
Income (loss) from operations $ 33,061 $ (18,735) 14,326 $ 3,844 $ (3,110) 734
Corporate costs (2)
(32,201) (22,306)
Depreciation and amortization (3,215) (2,099)
Loss before income taxes $ (21,090) $ (23,671)

~~(1)~~ ~~Research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases.~~

~~(2)~~ ~~Corporate costs include unallocated selling, general and administrative expense, interest income, and other income (expense), net.~~

Year Ended December 31, 2020 Year Ended December 31, 2019
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Revenues:
Product revenue $ 30,220 $ — $ 30,220 $ 29,465 $ — $ 29,465
Research and development revenue 17,886 20,950 38,836 28,691 10,302 38,993
Total revenues 48,106 20,950 69,056 58,156 10,302 68,458
Costs and operating expenses:
Cost of product revenue 13,742 — 13,742 15,632 — 15,632
Research and development (1)
20,923 21,705 42,628 19,380 13,278 32,658
Selling, general and administrative(1)
9,597 2,355 11,952 8,462 2,222 10,684
Total segment costs and operating expenses 44,262 24,060 68,322 43,474 15,500 58,974
Income (loss) from operations $ 3,844 $ (3,110) 734 $ 14,682 $ (5,198) 9,484
Corporate costs (2)
(22,306) (19,624)
Depreciation and amortization (2,099) (1,778)
Loss before income taxes $ (23,671) $ (11,918)

~~(1)~~ ~~For the years ended December 31, 2020 and 2019, research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases.~~

~~(2)~~ ~~Corporate costs include unallocated selling, general and administrative expense, interest income, and other income (expense), net.~~

~~121~~

~~The following table provides stock-based compensation expense included in income (loss) from operations (in thousands):~~
Year Ended December 31,
2021 2020 2019
Performance Enzymes $ 4,514 $ 2,970 $ 2,303
Novel Biotherapeutics 1,100 768 695
Corporate cost 5,979 3,990 3,945
Total $ 11,593 $ 7,728 $ 6,943

Significant Customers

Customers that each accounted for 10% or more of our total revenues were as follows:


		Percentage of Total Revenues For the Year Ended December 31,
	Percentage of Total Revenues For the Year Ended December 31,													Percentage of Total Revenues For the Year Ended December 31,
		2021		2020		2019			2023		2022				2021
Customer A	Customer A	33	%	*		*		Customer A	22	%	56	%			33	%
Customer B	Customer B	11	%	26	%	28	%	Customer B	13	%			*
Customer C	Customer C	*		19	%	*		Customer C	*		*				11	%
Customer D		*		11	%	15	%
Customer E		*		*		23	%
* Percentage was less than 10%

* Percentage was less than 10%

101

Customers that each accounted for 10% or more of accounts receivable balances as of the periods presented are as follows:
As of December 31,
2021 2020
Customer A 62 % *
Customer B * 32 %
Customer D * 13 %
Customer E * 25 %

* Percentage was less than 10%


	As of December 31,
	2023		2022
Customer A	*		53	%
Customer B	*		10	%
Customer C	12	%	*
Customer D	21	%	*
Customer E	13	%	*
Customer F	12	%	*
* Percentage was less than 10%

Geographical Information

Geographic revenues are identified by the location of the customer and consist of the following (in thousands):
Year Ended December 31,
2021 2020 2019
Revenues
Americas $ 23,481 $ 24,352 $ 13,039
EMEA 20,187 19,257 37,133
APAC 61,086 25,447 18,286
Total revenues $ 104,754 $ 69,056 $ 68,458


	Year Ended December 31,
	2023		2022		2021
Revenues
Americas(1)	$	13,733	$	17,000	$	23,481
EMEA(2)(3)	22,907		56,540		20,187
APAC(4)	33,503		65,050		61,086
Total revenues	$	70,143	$	138,590	$	104,754

(1) United States revenue was $13.7 million, $17.0 million, and $23.4 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

(2) Ireland revenue was $0.5 million, $37.2 million, and $1.4 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

(3) Switzerland revenue was $11.1 million, $9.2 million, and $10.1 million, for the for the years ended December 31, 2023, 2022, and 2021, respectively.

(4) China revenue was $20.3 million, $48.6 million, and $43.5 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

Identifiable long-lived assets by location ~~were~~was as follows (in thousands):
December 31,
2021 2020
United States $ 65,457 $ 31,176

~~122~~


	December 31,
	2023		2022
United States	$	28,624	$	61,877

Identifiable goodwill was as follows (in thousands):`
December 31, 2021 December 31, 2020
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Goodwill $ 2,463 $ 778 $ 3,241 $ 2,463 $ 778 $ 3,241


	December 31,
	2023		2022
Goodwill at beginning of period	$	3,241	$	3,241
Impairment	(778)		—
Goodwill at end of period	$	2,463	$	3,241

Note 16. Allowance for Credit Losses

The following table summarizes the ~~receivables~~financial assets allowance for credit losses (in thousands):


		December 31,
	December 31,									December 31,
		2021		2020		2019		2023	2022		2021
Balance at beginning of period	Balance at beginning of period	$	74	$	34	$	34
Provision for credit losses	Provision for credit losses	342		40		—
Write-offs
Adjustment to existing allowance
Balance at end of period	Balance at end of period	$	416	$	74	$	34

102

The following tables ~~below summarizes~~summarize accounts receivable by aging category (in thousands):

December 31, 2021

31-60 Days

61-90 Days

91 Days and over

Total over 31 Days

Current

Total balance

December 31, 2023

Current

31-60 Days

61-90 Days

91 Days and Over

Total over 31 Days

Total Balance

Accounts receivable

536

569

1,151

2,256

22,697

24,953

December 31, 2020

31-60 Days

61-90 Days

91 Days and over

Total over 31 Days

Current

Total balance

December 31, 2022

Current

31-60 Days

61-90 Days

91 Days and Over

Total over 31 Days

Total Balance

Accounts receivable

489

—

496

13,398

13,894


Delaware						71-0872999
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

200 Penobscot Drive, Redwood City, California						94063
(Address of principal executive offices)						(Zip Code)


Title of Each Class:	Trading Symbols(s):	Name of Each Exchange on which Registered:
Common Stock, par value $0.0001 per share	CDXS	The Nasdaq Global Select Market
Securities Registered Pursuant to Section 12(g) of the Act: None


~~INDEX~~TABLE OF CONTENTS

PART I
Item 1	Business	4
Item 1A	Risk Factors	2516
Item 1B	Unresolved Staff Comments	5644
Item 1C	Cybersecurity	44
Item 2	Properties	5645
Item 3	Legal Proceedings	5645
Item 4	Mine Safety Disclosures	5645
PART II
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5746
Item 6	[Reserved]	5847
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	5948
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	7860
Item 8	Financial Statements and Supplementary Data	7961
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	~~124~~104
Item 9A	Controls and Procedures	~~124~~104
Item 9B	Other Information	~~124~~104
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~125~~105
PART III
Item 10	Directors, Executive Officers and Corporate Governance	~~125~~105
Item 11	Executive Compensation	~~125~~105
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~125~~105
Item 13	Certain Relationships and Related Transactions, and Director Independence	~~125~~105
Item 14	Principal Accounting Fees and Services	~~125~~105
PART IV
Item 15	Exhibits and Financial Statement Schedules	~~126~~106
Item 16	Form 10-K Summary	~~132~~111
	Signatures	~~133~~112


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Percentage of Total Revenues For the Years Ended December 31.
Customers:	2021		2020		2019
Customer A	33	%	*		*
Customer B	11	%	26	%	28	%
Customer C	*		19	%	*
Customer D	*		11	%	15	%
Customer E	*		*		23	%
* Percentage was less than 10%


	Year Ended December 31, 2021						Year Ended December 31, 2020						Change
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes				Novel Biotherapeutics
													$		%		$		%
Revenues:
Product revenue	$	70,657	$	—	$	70,657	$	30,220	$	—	$	30,220	$	40,437	134	%	$	—	—	%
Research and development revenue	19,858		14,239		34,097		17,886		20,950		38,836		1,972		11	%	(6,711)		(32)	%
Total revenues	$	90,515	$	14,239	$	104,754	$	48,106	$	20,950	$	69,056	$	42,409	88	%	$	(6,711)	(32)	%


	Year Ended December 31, 2020						Year Ended December 31, 2019						Change
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes				Novel Biotherapeutics
													$		%		$		%
Revenues:
Product revenue	$	30,220	$	—	$	30,220	$	29,465	$	—	$	29,465	$	755	3	%	$	—	—	%
Research and development revenue	17,886		20,950		38,836		28,691		10,302		38,993		(10,805)		(38)	%	10,648		103	%
Total revenues	$	48,106	$	20,950	$	69,056	$	58,156	$	10,302	$	68,458	$	(10,050)	(17)	%	$	10,648	103	%


	December 31, 2020
	Adjusted Cost and Carrying Value		Fair Value
Non-marketable debt securities due in 1 year or less	$	1,000	$	1,000


	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In Thousands)			(In Years)	(In Thousands)
Outstanding at December 31, 2021	2,935	$	8.90	5.0	$	65,963
Exercisable at December 31, 2021	2,861	$	8.56	4.9	$	65,186
Vested and expected to vest at December 31, 2021	2,338	$	5.99	4.2	$	59,103


Exhibit No.						Description

1.1						Equity Distribution Agreement, dated as of May 7, 2021, between Codexis, Inc. and Piper Sandler & Co. (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed on May 7, 2021).

3.1						Amended and Restated Certificate of Incorporation of Codexis, Inc. filed with the Secretary of the State of the State of Delaware on April 27, 2010 and effective as of April 27, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010).

3.2						Certificate of Designations of Series A Junior Participating Preferred Stock of Codexis, Inc., filed with the Secretary of State of the State of Delaware on September 4, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on September 4, 2012).

3.3						Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Codexis, Inc., filed with the Secretary of the State of the State of Delaware on June 14, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 16, 2023).

3.4						Amended and Restated Bylaws of Codexis, Inc. effective as of ~~April 27, 2010~~February 8 , 2024 (incorporated by reference to Exhibit ~~3.2~~3.1 to the Company’s ~~Quarterly~~ Current Report on Form ~~10-Q for the quarter ended March 31, 2010,~~8-K , filed on ~~May 28, 2010)~~February 9, 2024 ).

4.1						Reference is made to Exhibits 3.1 through ~~3.3.~~3.4.

4.2						Form of the Company’s Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed on August 9, 2012).

4.3						Form of Warrant to Purchase Common Stock for Codexis, Inc., issued pursuant to the Loan and Security Agreement by and between the Company and Innovatus Life Sciences Fund I, LP. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on February 13, 2024).

4.4						Description of Codexis' Securities Registered Pursuant to Section 12 of the Securities Exchange Act of ~~1934~~1934.

10.1A*						Lease Agreement by and between the Company and Metropolitan Life Insurance Company dated as of February 1, 2004.

10.1B*						Amendment to Lease Agreement by and between the Company and Metropolitan Life Insurance Company dated as of June 1, 2004.

10.1C*						Amendment to Lease Agreement by and between the Company and Metropolitan Life Insurance Company dated as of March 9, 2007.

10.1D*						Amendment to Lease Agreement by and between the Company and Metropolitan Life Insurance Company dated as of March 31, 2008.

10.1E						Fourth Amendment to Lease Agreement by and between the Company and Metropolitan Life Insurance Company dated as of September 17, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, filed on November 4, 2010).

10.1F						Fifth Amendment to Lease Agreement by and between the Company and Metropolitan Life Insurance Company dated as of March 16, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed on May 6, 2011).

10.1G						Sixth Amendment to Lease by and between the Company and Metropolitan Life Insurance Company dated as of September 27, 2012 (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, filed on November 7, 2012).


Exhibit No.						Description
10.1H						Seventh Amendment to Lease by and between the Company and Metropolitan Life Insurance Company dated as of October 11, 2016 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed on November 8, 2016).


~~Exhibit~~ ~~No.~~						~~Description~~
10.1I***						Eighth Amendment to Lease, dated as of February 8, 2019, by and between the Company and Metropolitan Life Insurance Company (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, filed on May 8, 2019).


10.2+*						Codexis, Inc. 2010 Equity Incentive Award Plan and Form of Stock Option Agreement.

10.3A+						Codexis, Inc. 2019 Incentive Award Plan (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 (File No. 333-232262) filed with the SEC on June 21, 2019).

10.3B+						Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under 2019 Incentive Award Plan (incorporated by reference to Exhibit 99.2 to the Company's Registration Statement on Form S-8 (File No. 333-232262) filed with the SEC on June 21, 2019).

10.3C+						Form of Stock Option Grant Notice and Stock Option Agreement under 2019 Incentive Award Plan (incorporated by reference to Exhibit 99.3 to the Company's Registration Statement on Form S-8 (File No. 333-232262) filed with the SEC on June 21, 2019).

10.3D+						Form of Stock Option Grant Notice and Stock Option Agreement under 2019 Incentive Award Plan (incorporated by reference to Exhibit 99.4 to the Company's Registration Statement on Form S-8 (File No. 333-232262) filed with the SEC on June 21, 2019).

10.3E+						Form of Performance Stock Unit Award Grant Notice and Performance Stock Unit Award Agreement under 2019 Incentive Award Plan (incorporated by reference to Exhibit 99.5 to the Company's Registration Statement on Form S-8 (File No. 333-232262) filed with the SEC on June 21, 2019).

10.3F+						Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under 2019 Incentive Award Plan (incorporated by reference to Exhibit 99.6 to the Company's Registration Statement on Form S-8 (File No. 333-232262) filed with the SEC on June 21, 2019).

10.3G+						Amendment to the Codexis, Inc. 2019 Incentive Award Plan (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 16, 2023).
10.4*
10.4A+						Codexis, Inc. 2022 Employment Inducement Award Plan (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 (File No. 333-269163) filed with the SEC on January 9, 2023).

10.4B+						Form of Stock Option Grant Notice and Stock Option Agreement under the 2022 Employment Inducement Award Plan (incorporated by reference to Exhibit 99.2 to the Company's Registration Statement on Form S-8 (File No. 333-269163) filed with the SEC on January 9, 2023).

10.4C+						Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under the 2022 Employment Inducement Award Plan (incorporated by reference to Exhibit 99.3 to the Company's Registration Statement on Form S-8 (File No. 333-269163) filed with the SEC on January 9, 2023).

10.5+						Codexis, Inc. 2023 Employee Stock Purchase Plan (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 16, 2023).

10.6						Form of Indemnification Agreement between the Company and each of its directors, officers and certain ~~employees.~~employees (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 27, 2023).

~~10.5+~~10.7+						Form of Amended and Restated Change in Control Severance Agreement between the Company and certain of its officers (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on November 6, 2019).


Exhibit No.						Description
~~10.6~~10.8						Asset Purchase Agreement, dated October 28, 2010, by and among the Company, Codexis Mayflower Holdings, LLC and Maxygen, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on October 28, 2010).

~~10.7A†~~10.9A+						Manufacture and Supply Agreement, dated May 16, 2011, by and between the Company and Lactosan GmbH & Co. KG (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed on August 3, 2011).

~~10.7B~~						Amendment No. 1 to the Manufacture and Supply Agreement by and between the Company and Lactosan GmbH & Co. KG dated as of March 9, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed on May 10, 2012).

~~10.8+~~						Employment Agreement by and between the Company and Ross Taylor effective as of August 4, 2019 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on November 6, 2019).

10.9B+						Transition and Separation Agreement by and between the Company and Ross Taylor, dated as of February 3, 2023 (incorporated by reference to Exhibit 10.8B to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 27, 2023).
~~10.9A+~~
10.10A+						Employment Agreement by and between the Company and John Nicols effective as of May 28, 2012 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed on August 9, 2012).


~~Exhibit~~ ~~No.~~						~~Description~~
~~10.12A†~~						~~Platform Technology Transfer, Collaboration and License~~Separation Agreement by and between the Company and ~~GlaxoSmithKline Intellectual Property Limited, effective~~John Nicols, dated as of July ~~10, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 31, 2014, filed on November 6, 2014).~~

~~10.12B†~~						Letter Agreement, effective as of February 21, 2020, by and between Codexis, Inc. and GlaxoSmithKline Intellectual Property Development Limited (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed on May 8, 2020).

10.13A***						~~Platform Technology Transfer and License Agreement by and between the Company and Merck Sharp & Dohme Corp., dated as of August 3, 2015.~~

~~10.13B†~~						Amendment No. 1 to Platform Technology Transfer and License Agreement by and between the Company and Merck Sharp & Dohme Corp., dated as of October 10, 2018, incorporated by reference to Exhibit 10.14A to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed on March 3, 2019).

10.13C***						Amendment No. 2 to Platform Technology Transfer and License Agreement by and between Merck and the Company dated as of January 1, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, filed on May 8, 2019).

10.14***						Platform Technology Transfer and License Agreement, dated May 2, 2019, by and between the Company and Novartis Pharma AG (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed on August 6, 2019).

10.15***						Strategic Collaboration and License Agreement by and between Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Company Limited and the Company, dated March 23, 202018, 2022 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended ~~March 31, 2020,~~September 30, 2022, filed on ~~May 8, 2020)~~.

~~10.16A†~~						Loan and Security Agreement effective as of June 30, 2017 by and between the Company and Western Alliance Bank (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed on August 9, 2017)November 4, 2022).

~~10.16B†~~10.11†						~~First Amendment to Loan~~Acquisition Agre ement by and ~~Security Agreement~~among the Company, Societé des Produits Nestlé S.A., formerly known as Nestec Ltd. ("Nestlé Health Science"), effective as of September 28, 2017 by and between the Company and Western Alliance Bank (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)December 26, 2023 .

~~10.16C†~~10.12A						Second Amendment to Loan and Security Agreement effective as of November 7, 2017 by and between the Company and Western Alliance Bank (incorporated by reference to Exhibit 10.15B to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on March 15, 2018).

~~10.16D†~~						Third Amendment to Loan and Security Agreement by and between the Company and Western Alliance Bank dated as of June 29, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, filed on August 9, 2018).

~~10.16E†~~						Fourth Amendment to Loan and Security Agreement effective as of September 28, 2018 by and between the Company and Western Alliance Bank (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed on November 9, 2018).

~~10.16F~~						Fifth Amendment to Loan and Security Agreement effective as of January 23, 2019 by and between the Company and Western Alliance Bank (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, filed on May 8, 2019).


~~Exhibit~~ ~~No.~~						~~Description~~
~~10.16G~~						Sixth Amendment to Loan and Security Agreement by and between the Company and Western Alliance Bank dated as of July 11, 2019 (incorporated by reference to Exhibit 10.1A to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on November 6, 2019).

~~10.16H~~						Seventh Amendment to Loan and Security Agreement by and between the Company and Western Alliance Bank dated as of September 30, 2019 (incorporated by reference to Exhibit 10.1B to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on November 6, 2019).

~~10.16I~~						Eighth Amendment to Loan and Security Agreement by and between the Company and Western Alliance Bank dated as of September 30, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed on November 6, 2020.)

~~10.16J~~						Ninth Amendment to Loan and Security Agreement by and between the Company and Western Alliance Bank dated as of September 30, 2021 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed on November 5, 2021 ).

~~10.17~~						Lease Agreement by and between the Company and ARE-SAN FRANCISCO NO. 63, LLC dated as of January 29, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, filed on May 7, 2021).

10.12B†						Assignment and Assumption of Lease by and between the Company and Vaxcyte, Inc. dated as of September 1, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 3, 2023).

10.12C†						Consent to Assignment and First Amendment to Lease Agreement by and between the Company, Vaxcyte Inc. and ARE-San Francisco No. 63, LLC dated as of September 6, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 3, 2023).

10.13+						Employment Agreement by and between the Company and Stephen Dilly dated as of August 9, 2022 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed on November 4, 2022).

10.14A+						Offer Letter by and between the Company and Kevin Norrett dated as of September 12, 2022 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed on November 4, 2022).

10.14B+						Change in Control Severance Agreement by and between the Company and Kevin Norrett dated September 12, 2022 (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed on November 4, 2022).


Exhibit No.						Description
10.15A+						Offer Letter by and between the Company and Margaret Fitzgerald dated as of October 5, 2022 (incorporated by reference to Exhibit 10.13A to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 27, 2023).

10.15B+						Change in Control Severance Agreement by and between the Company and Margaret Fitzgerald dated October 10, 2022 (incorporated by reference to Exhibit 10.13A to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 27, 2023).

10.16A+						Offer Letter by and between the Company and Sriram Ryali dated as of December 30, 2023 (incorporated by reference to Exhibit 10.13A to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 27, 2023).

10.16B+						Change in Control Severance Agreement by and between the Company and Sriram Ryali dated January 27, 2023 (incorporated by reference to Exhibit 10.13A to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 27, 2023).

10.17						Loan and Security Agreement by and between the Company and Innovatus Life Sciences Fund I, LP., e ffective as of February 13, 2024

23.1						Consent of BDO USA, ~~LLP,~~P.C., independent registered public accounting firm.

24.1						Power of Attorney (see signature page to this Annual Report on Form 10-K).

31.1						Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2						Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1**						Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

97.1						C odexis, Inc. Clawback Policy effective August 24, 2023

101						The following materials from Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2023 formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) Consolidated Balance Sheets at December 31, ~~2021~~2023 and December 31, ~~2020,~~2022, (ii) Consolidated Statements of Operations for the years ended December 31, ~~2021,~~2023, December 31, ~~2020~~2022 and December 31, ~~2019,~~2021, (iii) Consolidated Statements of Cash Flows for the years ended December 31, ~~2021,~~2023, December 31, ~~2020~~2022 and December 31, ~~2019,~~2021, (vi) Consolidated Statements of Stockholders’ Equity for the years ended December 31, ~~2021,~~2023, December 31, ~~2020~~2022 and December 31, ~~2019~~2021 and (vii) Notes to Consolidated Financial Statements.

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document


Exhibit No.						Description
104						The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2023, formatted in Inline XBRL and contained in Exhibit 101.


		CODEXIS, INC.

Date:	February 28, ~~2022~~2024	By:	/s/ ~~John J. Nicols~~Stephen Dilly
			President and Chief Executive Officer
			(Principal Executive Officer)