SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


☒			QUARTERLY 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

Registrant's telephone number, including area code: (650) 421-8100

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~July 31, 2020,~~August 2, 2021, there were ~~59,126,820~~64,640,734 shares of the registrant’s Common Stock, par value $0.0001 per share, outstanding.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, ~~2020~~2021

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

Common stock, $0.0001 par value per share; 100,000 shares authorized;

59,125 shares and 58,877 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Common stock, $0.0001 par value per share; 100,000 shares authorized;

64,623 shares and 64,283 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

See accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

Condensed Consolidated Statements of Stockholders' Equity


	Common Stock			Additional paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
Three months ended June 30, 2021	Shares	Amount

Balance as of April 1, 2021	64,488	$	6	$	539,220	$	(375,487)	$	163,739
Exercise of stock options	95	—		455		—		455
Release of stock awards	42	—		—		—		—
Employee stock-based compensation	—	—		2,779		—		2,779
Non-employee stock-based compensation	—	—		65		—		65
Taxes paid related to net share settlement of equity awards	(2)	—		—		—		—
Net loss	—	—		—		(4,265)		(4,265)
Balance as of June 30, 2021	64,623	$	6	$	542,519	$	(379,752)	$	162,773


	Common Stock			Additional paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
Three months ended June 30, 2020	Shares	Amount

Balance as of April 1, 2020	59,017	$	6	$	449,121	$	(350,061)	$	99,066
Exercise of stock options	27	—		158		—		158
Release of stock awards	81	—		—		—		—
Employee stock-based compensation	—	—		1,935		—		1,935
Non-employee stock-based compensation	—	—		4		—		4
Taxes paid related to net share settlement of equity awards	—	—		(33)		—		(33)
Net loss	—	—		—		(6,344)		(6,344)
Balance as of June 30, 2020	59,125	$	6	$	451,185	$	(356,405)	$	94,786

Condensed Consolidated Statements of Stockholders' Equity

Condensed Consolidated Statements of Cash Flows

(Unaudited, in Thousands)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of June 30, ~~2020~~2021 and ~~2019~~2020 to the total of the same such amounts shown ~~above:~~above in the unaudited condensed consolidated statements of cash flows:


	June 30,
	2021		2020
Cash and cash equivalents	$	129,506	$	75,649
Restricted cash, current and non-current	2,104		1,681
Total cash, cash equivalents and restricted cash	$	131,610	$	77,330

June 30,
2020 2019
Cash and cash equivalents $ 75,649 $ 93,421
Restricted cash, current and non-current 1,681 1,749
Total cash, cash equivalents and restricted cash at the end of the period $ 77,330 $ 95,170

See accompanying notes to the unaudited condensed consolidated financial statements

Notes to Condensed Consolidated Financial Statements

Note 1. Description of Business

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

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 ~~materials,~~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 ~~proteins,~~enzymes, both as proprietary Codexis products and in partnership with our customers.

We are a pioneer in ~~the~~ harnessing of computational technologies to drive biology advancements. Since 2002, we have made substantial investments in the development of our CodeEvolver^® protein 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’ performance attributes.~~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 a time-efficient manner.~~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 ~~process~~bioprocess development which are all coordinated to ~~create our~~rapidly innovate novel, ~~protein innovations.~~fit-for-purpose products.

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

The successful embodiment of our CodeEvolver^® protein engineering technology platform in commercial manufacturing processes requires well-integrated expertise in a number of technical disciplines. In addition to those competencies directly ~~involved~~integrated in ~~practicing~~ our CodeEvolver^® protein engineering platform, ~~technology,~~ such as molecular biology, enzymology, microbiology, cellular engineering, metabolic engineering, bioinformatics, biochemistry and high throughput analytical chemistry, our process development projects also involve integrated expertise in organic chemistry, chemical process development, chemical engineering, ~~fermentation process~~bioprocess development and fermentation engineering. Our integrated, multi-disciplinary approach to ~~biocatalyst~~product and process development is a critical success factor for the Company.

We initially commercialized our CodeEvolver^® protein engineering technology platform and products in the manufacture of small molecule pharmaceuticals, ~~market,~~ which remains a primary business focus. Our customers, which include many large, global pharmaceutical companies, use our technology, products and services in their ~~manufacturing processes~~process development and ~~process development. We~~in manufacturing. Additionally, we have ~~also~~ licensed our proprietary CodeEvolver^®protein engineering technology platform to global pharmaceutical companies ~~so that they may in turn~~enabling them to use this technology, in house, to engineer enzymes for their own businesses. Most recently, in May 2019, we entered into a Platform Technology Transfer and License Agreement (the “Novartis CodeEvolver^®Agreement”) with ~~Novartis Pharma AG (“Novartis”).~~Novartis. The Novartis CodeEvolver^®Agreement (our third such agreement with large pharma companies) allows Novartis to use our proprietary CodeEvolver^® protein engineering platform technology in the field of human healthcare.

As evidence of our strategy to extend our technology beyond pharmaceutical manufacturing, we have also used the technology to develop ~~protein catalysts~~biocatalysts and ~~industrial enzymes~~enzyme products for use in a ~~wider~~broader set of industrial ~~markets. These target industries consist of~~markets, including several large ~~market~~ verticals, ~~including~~such as food, ~~and food ingredients, animal~~ feed, consumer care ~~flavors, fragrances~~ and ~~agricultural~~fine chemicals. In addition, we are using our technology to develop enzymes for ~~customers using~~various life science related applications, such as next generation sequencing ~~("NGS"~~(“NGS”) and polymerase chain reaction ("(“PCR/~~qPCR"~~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. ~~(“Roche”)~~ with our first enzyme for this target ~~market,~~market: the ~~Company's~~Company’s EvoT4™ DNA ligase. In June 2020, we entered into a co-marketing and enzyme supply collaboration agreement with Alphazyme LLC for the production and co-marketing of enzymes for life science applications including, initially, high-fidelity DNA polymerase, T7 RNA polymerase and reverse transcriptase enzymes.

We have ~~also begun~~been using the CodeEvolver^® protein engineering technology platform to develop early stage, novel biotherapeutic product candidates, both ~~for our~~in partnership with customers and for our own ~~business. In October 2017, we entered into the "Nestlé Agreement” with Nestlé Health Science to advance CDX-6114, our enzyme biotherapeutic product candidate~~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 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”) 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 a strategic collaboration agreement with Nestlé Health Science (“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 January 2020, we entered into a development agreement with Nestlé Health Science to advance a new lead candidate discovered under the Nestlé SCA, CDX-7108, into preclinical development and early clinical studies as a potential treatment for a gastrointestinal disorder. In parallel, the Nestlé SCA was extended through December 2021 to support the discovery of therapeutic candidates for additional disorders. 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 ~~deficiencies.~~ deficiency.

In June 2020, we entered into a Master Collaboration and Research Agreement (the “MAI Agreement”) with Molecular Assemblies, Inc ("MAI") pursuant to which we are leveraging our CodeEvolver® platform technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis. Concurrently with the MAI Agreement, we entered into a Stock Purchase Agreement with MAI pursuant to which we purchased 1,587,050 shares of MAI's Series A preferred stock for $1.0 million and, in connection with the transaction, John Nicols, our President and Chief Executive Officer, joined MAI’s board of directors. In April 2021, we purchased an additional 1,000,000 shares of MAI's Series A preferred stock for $0.6 million.

See Note 12 "Segment, Geographical and Other Revenue Information" for additional information.

Below are brief descriptions of our business segments:

We initially commercialized our CodeEvolver^®protein engineering technology platform and products in the manufacture of small molecule pharmaceuticals ~~market,~~ 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, ~~and food ingredients, animal~~ feed, consumer care, ~~flavors, fragrances,~~ and ~~agricultural~~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.

Our first lead program was for the potential treatment of ~~hyperphenylalaninemia (“HPA”) (also referred to as PKU)~~PKU in humans. PKU is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient. In October 2017, we announced a global development, option and license agreement with Nestlé Health Science to advance CDX-6114, our own novel orally administrable enzyme therapeutic candidate for the potential treatment of PKU. In July 2018, we announced that we had dosed the first subjects in a first-in-human Phase 1a dose-escalation trial with CDX-6114, which was conducted in Australia. In November 2018, we announced top-line results from the Phase 1a study in healthy volunteers with CDX-6114. In December 2018, Nestlé Health Science became obligated to pay us an additional $1.0 million within 60 days after the achievement of a milestone relating to formulation of CDX-6114. In January 2019, we received notice from the U.S. Food and Drug Administration that it had completed its review of our investigational drug application 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. As a result of the option exercise, we earned a milestone and recognized $3.0 million in revenues in the first quarter of 2019. Upon exercising its option, Nestlé Health Science assumed all responsibilities for future clinical development and commercialization of CDX-6114.

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. The Nestlé SCA was extended through December 2021. In January 2020,

we and Nestlé Health Science entered into a development agreement pursuant to which we and Nestlé Health Science are collaborating to advance into preclinical and early clinical studies a lead candidate targeting a ~~gastro-intestinal~~gastrointestinal disorder, CDX-7108, discovered through ~~our Strategic Collaboration Agreement into pre-clinical and early~~the Nestlé SCA. During 2021, we, together with Nestlé Health Science, continued to advance CDX-7108 towards initiation of a Phase 1 clinical ~~studies. The Strategic Collaboration Agreement was extended through December~~trial which we anticipate will begin in the fourth quarter of 2021. ~~Using our CodeEvolver~~^® ~~protein engineering platform technology, we have also developed a pipeline of other biotherapeutic drug candidates, all of which~~Additionally, the parties are ~~in preclinical development.~~progressing three programs under the Nestlé SCA targeting different gastrointestinal disorders.

~~Our most recent achievement in novel biotherapeutics came in~~In March 2020, ~~when~~ we ~~announced a strategic collaboration and license agreement with~~entered into the Takeda inAgreement pursuant to which we ~~will collaborate with Takeda~~are collaborating to research and develop protein sequences for use in gene therapy products for certain disease ~~indications. Under~~indications in accordance with the terms of the Takeda Agreement, we will generate novel gene sequences encoding protein variants tailored to enhance efficacy as a result of increased activity, stability, and cellular uptake using our CodeEvolver^® ~~protein engineering platform. Takeda will combine these improved transgenes with its gene therapy capabilities to generate novel candidates~~respective program plans for ~~the treatment of rare genetic disorders. We are currently collaborating on 3 initial programs for the treatment of~~ Fabry ~~disease,~~Disease, Pompe ~~disease,~~Disease, and an ~~unnamed~~undisclosed blood factor deficiency. The Company is responsible for the creation of novel enzyme sequences for advancement as gene therapies into pre-clinical development. Takeda is responsible for the pre-clinical and clinical development and commercialization of gene therapy products resulting from the collaboration programs. Under the terms of the agreement, in addition to the 3 initial programs, Takeda may initiate up to 4 additional programs for separate target indications. In March 2020, we ~~began research and development activities under the program plans and~~ received a ~~$8.5 million~~ one-time, non-refundable cash ~~payment.~~

~~We expect~~payment of $8.5 million. Of these programs, the Fabry disease program is the most advanced, with multiple sequences, including CDX-6311, having been provided to ~~continue~~Takeda. In May 2021, Takeda elected to ~~make additional investments in our pipeline with~~exercise their option to expand the ~~aim of advancing additional product candidates targeting other therapeutic areas.~~

~~For additional discussion of our business segments, see Note 13, "Segment, Geographical and Other Revenue Information."~~

collaboration into a fourth program for an undisclosed rare genetic disorder.

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 ~~cannot~~may not be accurately predicted, including the duration and severity of the pandemic 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.

To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide. However, we are dependent on our manufacturing and logistics partners and consequently, disruptions in operations of our partners and customers may affect our ability to supply enzymes to our customers. Furthermore, our ability to provide future research and development ("R&D") services will continue to be impacted as a result of governmental orders and any disruptions in operations of our customers with whom we collaborate. We ~~are continuing to assess~~believe that these disruptions have had a minimal impact on revenue for the ~~potential impact of the COVID-19 pandemic on our business~~three and ~~operations, including our product sales, R&D service revenue, expenses and manufacturing. However, we are unable to fully determine and quantify the~~six months ended June 30, 2021. The extent to which ~~this~~the pandemic ~~affected~~may impact our ~~total revenues due~~business operations and operating results will continue to ~~complex accounting judgments.~~remain highly dependent on future developments, which are uncertain and cannot be predicted with confidence.

Our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that we may undertake to address financial and operations challenges faced by our customers. AsThe near and long term impact of ~~the date of issuance of the unaudited condensed consolidated financial statements, the extent~~COVID-19 to ~~which the COVID-19 pandemic may materially impact~~ our financial condition, liquidity, or results of operations ~~is uncertain~~ in the ~~future.~~

~~Recent Investing Activities~~

~~In June 2020, we entered into a Master Collaboration~~future remains uncertain. Although some of the Orders that were enacted to control the spread of COVID-19 were scaled back and ~~Research Agreement with Molecular Assemblies, Inc. (“MAI”), a privately held company,~~the vaccine rollout has expanded, surges in the spread of COVID-19 due to ~~engineer enzymes to deliver differentiated and cost-effective solutions for~~ the ~~enzymatic synthesis~~emergence of ~~DNA (“MAI Agreement”). Under an associated stock purchase agreement, we purchased 1,587,050 shares~~new more contagious variants or the ineffectiveness of ~~MAI's Series A preferred stock for $1.0 million, and~~the vaccines against such strains, may result in ~~connection with~~the reimplementation of certain Orders, which could adversely impact our investment, John Nicols, our chief executive officer joined MAI’s board of directors. Under the MAI Agreement, for a fixed monthly fee payable in shares of Series A preferred stock, we will apply our CodeEvolver^®protein engineering platform technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis. Through the provision of these services, we are eligible to earn additional shares of Series A preferred stock. MAI will combine its advanced chemistries with our enzymes to drive the process to commercialization.business. For additional information ~~see Note 12,~~ "~~Related Party Transactions," in~~on the ~~Notes to Unaudited Condensed Consolidated Financial Statements~~various risks posed by the COVID-19 pandemic, please read Item 1A. Risk Factors included in ~~this Quarterly~~our Annual Report on Form ~~10-Q.~~

10-K, for the fiscal year ended December 31, 2020, filed on March 1, 2021.

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

Basis of Presentation and Principles of Consolidation

The accompanying ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial ~~information. Accordingly, they do~~information but does not include all the information and notes required by GAAP for complete financial statements. These interim ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. The condensed consolidated balance sheet at

December 31, ~~2019~~2020 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements. The significant accounting policies used in preparation of the ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021 and 2020, are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s ~~2019~~2020 Annual Report on Form 10-K and are updated below as necessary. There have been no significant changes in our significant accounting policies or critical accounting estimates since December 31, 2020.

Certain prior year amounts have been reclassified in the Unaudited Condensed Statements of Cash Flows to conform to ~~2020 presentation. In June 2016,~~ the 2021 presentation, however these reclassifications had no effect on the reported results of of operations.

The Unaudited Condensed Consolidated Financial Accounting Standards Board (“FASB”) issued guidance requiring implementation of a new impairment model applicable to financial assets measured at amortized cost which, among other things required that accounts receivable, contract assets, unbilled receivables and related allowances be reclassified as financial assets.

~~Except as noted above, the unaudited condensed consolidated financial statements~~Statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of June 30, ~~2020,~~2021, results of our operations for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, changes in stockholders' equity for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, and cash flows for the six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. The interim results are not necessarily indicative of the results for any future interim period or for the entire year. ~~The results of the six months ended June 30, 2020 reflect the adoption of the accounting standards including: Accounting Standard Update ("ASU") 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ ~~which added a new impairment model applicable to our financial assets measured at amortized cost, and (ii) ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,~~ ~~which adjusts testing for goodwill impairment. See "Recently adopted accounting pronouncements" for details regarding the adoption of these standards.~~

The ~~unaudited interim condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements include the accounts of Codexis, Inc. and its wholly owned subsidiaries. All ~~significant~~ intercompany balances and transactions have been eliminated in consolidation.

The preparation of our unaudited condensed 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, ~~the interest rate used to adjust the promised amount of consideration for the effects of significant financial assets (comprised of accounts receivable, contract assets, and unbilled receivables),~~ inventories, 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 ~~unaudited condensed~~ consolidated financial statements. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, and may not be accurately predicted, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers, markets and economies.

Financial ~~assets and Allowances~~Statement Exclusion

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 as follows:

~~Allowance for credit losses from January 1, 2020~~

~~On and subsequent to January 1, 2020, our financial results reflect an impairment model (known as the “current expected credit~~The net 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 financial assets measured at amortized costs which is comprised of accounts receivable, contract assets, and unbilled receivables. We have determined that our financial assets share similar risk characteristics including: (i) customer origination in the ~~pharmaceutical and fine chemicals industry, (ii) similar historical credit loss pattern~~Unaudited Condensed Consolidated Statements 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 allowanceOperations 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 financial assets 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 financial asset 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 financial assets and record charges to the ACL as a provision to credit loss expense in the Statement of Operations. Financial assets 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.

In the three and six months ended June 30, 2021 and 2020, inputs to our CECL forecast incorporated forward-looking adjustments associated with the COVID-19 pandemic which we believe are appropriate to incorporate due to the uncertainty of the economic impact on cash flows from our financial assets.

~~Allowance for credit losses before January 1, 2020~~

Prior to January 1, 2020, the allowances for doubtful accounts reflected our best estimates of probable losses inherent in our accounts receivable, contract assets, and unbilled receivables balances. The allowance determination was based on known troubled accounts, historical experience, and other currently available evidence. Uncollectible accounts receivable were written off against the allowance for doubtful accounts when all efforts to collect them have been exhausted. Recoveries were recognized when they were received. Actual collection losses may differ from our estimates and could be material to our consolidated financial position, results of operations, and cash flows.

~~Investment in Equity Securities~~

~~We own an equity investment in Molecular Assemblies, Inc. (“MAI”) which~~ is a privately held company. Concurrently with our initial equity investment, John Nicols, our chief executive officer, joined MAI’s board of directors, and we entered into the MAI Agreement pursuant to which we will provide technical services and expertise in exchange for compensation in the form of additional shares of voting preferred stock. We and MAI envision entering into an arrangement to commercialize products developed under the MAI Agreement.

To analyze the fair value measurement of our equity investment in MAI, we perform a qualitative analysis using significant unobservable inputs. Significant changes to the unobservable inputs may result in a significantly higher or lower fair value estimate. We may value our equity investment based on significant recent arms-length equity transactions with sophisticated non-strategic unrelated new investors, providing the terms of these equity transactions are substantially similar to the equity transactions terms between the company 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.

~~We evaluate our investment for impairment when circumstances indicate that we may~~ not be able to recover the carrying value. We impair our investment when we determine that there has been an “other-than-temporary” decline in the company's estimated fair value compared to its carrying value. We calculate the estimated fair value of the investment using informationdifferent from the ~~company, which may include:~~

•~~Audited~~Unaudited Condensed Consolidated Statements of Comprehensive Loss for the same periods. Accordingly, the Unaudited Condensed Consolidated Financial Statements exclude the Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three 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;~~

•~~Qualitative assessment of key management;~~

•~~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.~~

Goodwill represents the excess of 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 the trading price of our stock on the Nasdaq Global Select Market. 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 as 2 reporting units 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 approximately 76% of goodwill was to be allocated to the Performance Enzymes segment and 24% allocated to the Novel Biotherapeutics segment. As a result of the calculation, $2.4 million of the goodwill is assigned to the Performance Enzymes segment and $0.8 million is assigned to the Novel Biotherapeutics segment. We test goodwill for impairment on an annual basis on the last day of the fourth fiscal quarter and, when specific circumstances dictate, between annual tests, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. During 2020 and 2019, we did not record impairment charges related to goodwill. We test for goodwill impairment is as follows:

~~Goodwill impairment testing from January 1, 2020~~

On and subsequent to January 1, 2020, we test for goodwill impairment by comparing the fair value of each reporting unit to its respective carrying value. Using the 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.

~~Goodwill impairment testing before January 1, 2020~~

Prior to January 1, 2020, the goodwill impairment test consisted of a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compared the fair value of each reporting unit to its carrying value. Using the relative fair value allocation methodology for assets and liabilities used in both of our reporting units, we compared 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 exceeded its carrying amount, goodwill of the reporting unit was considered not impaired, and the second step of the impairment test was not required. The second step, if required, compared the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. Implied fair value was the excess of the fair value of the reporting unit over the fair value of all identified or allocated assets and liabilities. Any excess of the reporting unit’s carrying amount goodwill over the respective implied fair value was recognized as an impairment.

~~Interim Goodwill Impairment Testing~~

~~We tested goodwill for impairment in the quarter~~six months ended June 30, ~~2020. In late 2019, COVID-19 was reported to have surfaced~~2021 and has since spread worldwide. The impact of COVID-19 has caused a decline in global and domestic macroeconomic conditions, the general deterioration of the U.S. economy and other economies worldwide, all of which may negatively impact our overall financial performance, driving a reduction in our cash flows. We believe that the impact of the COVID-19 pandemic was a triggering event that gave rise to the need to perform a goodwill impairment test. We tested for goodwill impairment by comparing the fair value of each reporting unit to its respective carrying value. We used the relative fair value allocation methodology for assets and liabilities used in both of our reporting units. We compared the allocated carrying amounts of each reporting unit’s net assets at June 30, 2020 and the assigned goodwill to its fair value at June 30, 2020. ~~We concluded that there was 0 goodwill impairment at June 30, 2020.~~

~~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 ("CODM"), or decision making group, 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 dis~~cover or improve novel biotherapeutic drug candidates that will target human diseases that are in need of improved therapeutic interventions. The Performance Enzymes segment consists of protein catalyst products and services with focus on pharmaceutical, food, molecular diagnostics, and other industrial markets.

~~Changes to Tax Law~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), P.L. 116-136,was passed into law, amending portions of certain relevant US tax laws. The CARES Act includes a number of federal income tax law changes, including, but not limited to: (i) permitting net operating loss carrybacks to offset 100% of taxable income for taxable years beginning before 2021, (ii) accelerating alternative minimum tax credit refunds, (iii) temporarily increasing the allowable business interest deduction from 30% to 50% of adjusted taxable income, and (iv) providing a technical correction for depreciation related to qualified improvement property. The Company is currently evaluating if it will claim the Employee Retention Credit and apply for payroll tax deferrals under the CARES Act.

Accounting Pronouncements

Recently adopted accounting pronouncements

In ~~June 2016,~~December 2019, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU ~~2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which ~~amends the FASB's guidance on the impairment of financial instruments. The standard adds a new impairment model, known as CECL, which replaces the probable loss model. The CECL impairment model~~ is based on estimates and forecasts of future conditions which requires recognition of a lifetime of expected credit losses at inception on financial assets measured at amortized costs. Our financial assets measured at amortized cost are comprised of accounts receivable, contract assets, and unbilled receivables.intended to simplify various aspects related to accounting for income taxes. We adopted the ~~new~~ standard ~~in the first quarter of 2020 using~~on January 1, 2021, on a modified retrospective approach requiring a cumulative-effect adjustment to the opening accumulated deficit as of the date of adoption. The ASU establishes a new valuation account “allowance for credit losses” replacing the “allowance for doubtful accounts” in the consolidated balance sheet, which is used to adjust the amortized cost basis of assets in presentation of the net amount expected to be collected.basis. The adoption ~~required certain additional disclosures but~~of this standard had no ~~other~~ impact on our ~~unaudited condensed consolidated financial statements.~~Unaudited Condensed Consolidated Financial Statements.

In ~~January 2017,~~October 2020, the FASB issued ASU No. ~~2017-04,~~2020-10, ~~Intangibles - Goodwill and Other (Topic 350): Simplifying~~Codification Improvements. ASU 2020-10 provides amendments to a wide variety of topics in the ~~Test for Goodwill Impairment.~~ ~~The amendments eliminate Step 2 from~~FASB’s Accounting Standards Codification, which applies to all reporting entities within the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit to its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax-deductible goodwill on the carrying amountscope of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment, and if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.affected accounting guidance. We adopted the standard ~~in the first quarter of 2020 using~~on January 1, 2021 on a ~~prospective approach.~~retrospective basis. The adoption ~~required certain additional disclosures but~~of this standard had no impact on our ~~unaudited condensed consolidated financial statements.~~

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.~~ The primary focus of the standard is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. The standard requires the use of the prospective method of transition for disclosures related to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop fair value measurements categorized within Level 3 of the fair value hierarchy, and narrative description of measurement uncertainty. All other amendments in the standard are required to be adopted retrospectively. We adopted the standard in the first quarter of 2020 and the adoption had no impact on our unaudited condensed consolidated financial statements and related disclosures.

~~In November 2018, the FASB issued ASU 2018-18,~~ ~~Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606.~~ ASU 2018-18 provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard. The standard also provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants. The standard is to be applied retrospectively to the date of the initial application of Topic 606 which also requires recognition of the cumulative effect of applying the amendments as an adjustment to the opening balance of retained earnings of the later or the earliest annual period presented and the annual period inclusive of the initial application of Topic 606. We adopted the standard in the first quarter of 2020. The adoption will adjust certain annual disclosures but had no impact on our unaudited condensed consolidated financial statements and related disclosures.Unaudited Condensed Consolidated Financial Statements.

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 ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements upon adoption.

In ~~December 2019, the~~May 2021, FASB issued ASU ~~2019-12, Income Taxes~~No. 2021-04, Earnings Per Share (Topic ~~740):~~ ~~Simplifying the~~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 ~~Income Taxes which is intended to simplify various aspects related to~~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 ~~income taxes~~.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 ~~and~~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 will evaluate modifications of equity-classified written call options to determine applicability of the standard on occurrence; however, we believe that the adoption of ASU 2021-04 will have no impact on our Unaudited Condensed 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 for fiscal years beginning after December 15, ~~2020,~~2021, including interim periods within those fiscal years with early adoption ~~permitted.~~permitted for fiscal years beginning December 15, 2020. The standard ~~will~~may be adopted ~~upon~~on a modified retrospective or fully retrospective method of transition and on adoption, entities may irrevocably elect the ~~effective date~~fair value option in accordance with Subtopic 825-10, Financial Instruments—Overall, for ~~us beginning January 1, 2021.~~any financial instrument that is a convertible security. We ~~are currently evaluating~~believe that the ~~effects~~adoption of ~~the standard~~ASU 2020-06 will have no impact on our ~~consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements and related disclosures.

In March 2020, the FASB issued ASU No. 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.~~entities and can be adopted no later than December 1, 2022, with early adoption permitted. The standard may be adopted on a prospective basis. We will evaluate transactions or contract modifications occurring as a result of ~~any date from~~reference rate reform and determine whether to elect optional expedients for contract modification; however, we believe that the ~~beginning~~adoption of ~~an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022. We are currently evaluating the effects of the standard~~ASU 2020-04 will have no impact on our ~~consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements and related disclosures.

~~In May 2020,~~There have been no other recent accounting pronouncements or changes in accounting pronouncements during the ~~Securities~~three and ~~Exchange Commission formally adopted amendments~~six months ended June 30, 2021, as compared to ~~financial disclosure regulations regarding~~ the ~~acquisition and disposition~~recent accounting pronouncements described in herein, that are of ~~certain business and among other things, amends the definition of a “significant subsidiary” by altering prescribed~~ significance ~~tests under Rule 1-02(w) of Regulation S-X, as well as under Rule 405 of the Securities Act of 1933 and Rule 12b-2 under the Securities Exchange Act of 1934. The amendments apply~~or potential significance to reports and information filings as of January 1, 2021, with early adoption permitted. The effect of adoption will adjust certain annual disclosures but we expect no impact on our consolidated financial statements.us.

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 with reportable segments. 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 information is as follows (in thousands):


	Three months ended June 30, 2021						Three months ended June 30, 2020
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total
Major products and service:
Product Revenue	$	14,717	$	0	$	14,717	$	4,504	$	0	$	4,504
Research and development revenue	6,868		3,868		10,736		3,002		7,461		10,463
Total revenues	$	21,585	$	3,868	$	25,453	$	7,506	$	7,461	$	14,967

Primary geographical markets:
Americas	3,703		2,141		$	5,844	$	1,173	$	5,733	$	6,906
EMEA	4,442		1,727		6,169		1,586		1,728		3,314
APAC	13,440		0		13,440		4,747		0		4,747
Total revenues	$	21,585	$	3,868	$	25,453	$	7,506	$	7,461	$	14,967

Three months ended June 30, 2020 Three months ended June 30, 2019
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Major products and service:
Product Revenue $ 4,504 $ — $ 4,504 $ 6,249 $ — $ 6,249
Research and development revenue 3,002 7,461 10,463 4,340 1,730 6,070
Total revenues $ 7,506 $ 7,461 $ 14,967 $ 10,589 $ 1,730 $ 12,319
Primary geographical markets:
Americas $ 1,173 $ 5,733 $ 6,906 $ 4,076 $ — $ 4,076
EMEA 1,586 1,728 3,314 3,011 1,730 4,741
APAC 4,747 — 4,747 3,502 — 3,502
Total revenues $ 7,506 $ 7,461 $ 14,967 $ 10,589 $ 1,730 $ 12,319

Six months ended June 30, 2020 Six months ended June 30, 2019
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Major products and service:
Product revenue $ 9,604 $ — $ 9,604 $ 14,236 $ — $ 14,236
Research and development revenue 8,775 11,258 20,033 6,440 7,225 13,665
Total revenues $ 18,379 $ 11,258 $ 29,637 $ 20,676 $ 7,225 $ 27,901
Primary geographical markets:
Americas $ 4,171 $ 7,960 $ 12,131 $ 6,913 $ — $ 6,913
EMEA 5,987 3,298 9,285 5,241 7,225 12,466
APAC 8,221 — 8,221 8,522 — 8,522
Total revenues $ 18,379 $ 11,258 $ 29,637 $ 20,676 $ 7,225 $ 27,901


	Six months ended June 30, 2021						Six months ended June 30, 2020
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total
Major products and service:
Product Revenue	$	24,943	$	0	$	24,943	$	9,604	$	0	$	9,604
Research and development revenue	10,872		7,670		18,542		8,775		11,258		20,033
Total revenues	$	35,815	$	7,670	$	43,485	$	18,379	$	11,258	$	29,637

Primary geographical markets:
Americas	$	6,574	$	4,199	$	10,773	$	4,171	$	7,960	$	12,131
EMEA	8,979		3,471		12,450		5,987		3,298		9,285
APAC	20,262		0		20,262		8,221		0		8,221
Total revenues	$	35,815	$	7,670	$	43,485	$	18,379	$	11,258	$	29,637

Contract Balances

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

June 30, 2020 December 31, 2019
Contract Assets $ — $ 1,027
Unbilled receivables $ 12,412 $ 10,099
Contract Costs $ 172 $ —
Contract Liabilities: Deferred Revenue $ 5,045 $ 2,044


	June 30, 2021		December 31, 2020
Contract assets	$	4,528	$	4,526
Unbilled receivables	$	12,417	$	10,942
Contract costs	$	86	$	90
Contract liabilities: deferred revenue	$	5,479	$	4,791

We had 0 asset impairment charges related to ~~contract~~financial assets in the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

~~During the six months ended~~

Contract assets remained unchanged as of June 30, ~~2020, decreases in contract assets were primarily due to contract assets that were subsequently invoiced as our right to consideration for goods~~2021 and ~~services became unconditional. Increases~~December 31, 2020. The increase in unbilled receivables ~~were~~was primarily due to the timing of billings. The increase in deferred revenue ~~were~~was primarily due to cash advances received in excess of revenue recognized.

~~During the three and six months ended June 30, 2020 and 2019, we~~We recognized the following revenues (in thousands):

Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
Amounts included in contract liabilities at the beginning of the period:
Performance obligations satisfied $ 4,272 $ 1,367 $ 57 $ 3,752
Changes in the period:
Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods 1,357 (92) 637 43
Performance obligations satisfied from new activities in the period - contract revenue 9,338 11,044 28,943 24,106
Total revenues $ 14,967 $ 12,319 $ 29,637 $ 27,901


	Three months ended June 30,				Six months ended June 30,
Revenue recognized in the period for:	2021		2020		2021		2020
Amounts included in contract liabilities at the beginning of the period:
Performance obligations satisfied	$	1,239	$	4,272	$	1,391	$	57
Changes in the period:
Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods	4,306		1,357		4,336		637
Performance obligations satisfied from new activities in the period - contract revenue	19,908		9,338		37,758		28,943
Total revenues	$	25,453	$	14,967	$	43,485	$	29,637

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 June 30, ~~2020.~~2021.

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 as of June 30, 2021 (in thousands):

Remainder of 2020 2021 2022 and Thereafter Total
Product Revenue $ 567 $ 385 $ 1,883 $ 2,835
Research and development revenue 1,107 624 479 2,210
Total revenues $ 1,674 $ 1,009 $ 2,362 $ 5,045


	Remainder of 2021		2022		2023		2024 and Thereafter		Total
Product revenue	$	0	$	67	$	67	$	1,843	$	1,977
Research and development revenue	1,568		1,388		546		0		3,502
Total revenues	$	1,568	$	1,455	$	613	$	1,843	$	5,479

Note 4. ~~Net loss~~Net Loss per ~~Share~~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 ~~stock~~ shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities. ~~For periods of net loss, 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 ~~included~~considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands):

Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
Shares issuable under the Equity Incentive Plan 5,289 6,254 5,289 6,254


	Three months ended June 30,		Six months ended June 30,
	2021	2020	2021	2020
Shares issuable under the Equity Incentive Plan	5,366	5,289	5,366	5,289

Note 5. ~~Collaborative Arrangements~~Investments in Non-Marketable Securities

~~GSK Platform Technology Transfer, Collaboration~~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 ~~License Agreement~~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 unaudited condensed 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.

In ~~July 2014, we entered into a CodeEvolver~~^® ~~protein engineering platform technology transfer collaboration and license agreement (the "GSK CodeEvolver~~^®~~Agreement") with GlaxoSmithKline ("GSK"). Pursuant to the terms of the agreement, we granted GSK a non-exclusive license to use the CodeEvolver~~^® ~~protein engineering platform technology to develop novel enzymes for use in the manufacture of GSK's pharmaceutical and health care products.~~

~~We received an upfront fee upon the execution of the agreement in July 2014 and milestone payments in each of the years from 2014 through April 2016. We completed the transfer of the CodeEvolver~~^®protein engineering platform technology to GSK in April 2016 and all revenues relating to the technology transfer have been recognized as of April 2016. We have the potential to receive additional cumulative contingent payments that range from $5.75 million to $38.5 million per project based on GSK’s successful application of the licensed technology. We are also eligible to receive royalties based on net sales of GSK's sales of licensed enzyme products that are currently not being recognized.

~~In 2019, we received a $2.0 million milestone payment on the advancement of an enzyme developed by GSK using our CodeEvolver~~^®~~protein engineering platform technology. We recognized 0 research and development revenue for~~ the three and six months ended June 30, ~~2020 and 2019.~~

~~Merck Platform Technology Transfer and License Agreement~~

~~In August 2015,~~2021, we ~~entered into a CodeEvolver~~^® ~~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.~~

~~We received an up-front license fee upon execution of the Merck CodeEvolver~~^® ~~Agreement, and milestone payments in September 2015 and in September 2016, when we completed the transfer of the engineering platform technology. We~~ recognized ~~research and development revenues~~ $0.2 million and ~~$1.0~~$0.3 million, ~~for~~respectively, in interest income from amortization of debt discount and interest earned on our investment in non-marketable debt security, and $57.5 thousand in other income and $10.5 thousand in other expense, respectively, in other income (expense), net, on the change in the fair value of an embedded bifurcated derivative. We recognized 0 unrealized or realized gains or losses during the three and six months ended June 30, ~~2020, respectively, compared to $1.0 million~~2021. We recognized 0 interest income, other expenses, and ~~$2.0 million for~~unrealized or realized gains or losses during the three and six months ended June 30, ~~2019, respectively, for various research projects under our collaborative arrangement.~~2020.

The following table presents balances of the adjusted cost and carrying value and fair value of non-marketable debt security by contractual maturity (in thousands):


	June 30, 2021
	Adjusted Cost and Carrying Value		Fair Value
Non-marketable debt security due in 1 year or less	$	1,289	$	1,289

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

Non-Marketable Equity Securities

Non-marketable equity securities are investments in privately held companies without readily determinable market value. 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. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3. We adjust the ~~potential to receive payments~~carrying value of ~~up to~~non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a ~~maximum~~component of ~~$15.0 million for each commercial active pharmaceutical ingredient ("API") that is manufactured by Merck using one~~other income (expense), net. We recognized 0 unrealized 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 January 2019, we entered into an amendment to the Merck CodeEvolver~~^® ~~Agreement to install certain CodeEvolver~~^® protein engineering technology upgrades into Merck’s platform license installation and maintain those upgrades for a multi-year term. The license installation was completed in 2019 and we recognized $0.9 million inrealized gain or losses during the three and six months ended June 30, 2019 as a license fee revenue accordingly under the amendment. Pursuant to the agreement, Merck has options to future technology enhancements for a specified fee. As of June 30, 2020, Merck has not exercised its option for technology enhancements. We recognized $25 thousand2021 and ~~$50 thousand in research and development revenues under the terms~~2020.

The following table presents balances of the ~~amendment in the three and six months ended June 30, 2020, respectively. As~~carrying value of ~~June 30, 2020 and December 31, 2019, we had deferred revenue balances of $0.1 million and NaN, respectively.~~non-marketable equity securities (in thousands):

~~Merck Sitagliptin Catalyst Supply Agreement~~


	June 30, 2021		December 31, 2020
Non-marketable equity securities	$	3,430	$	1,450

In February 2012, we entered into a five-year Sitagliptin Catalyst Supply Agreement (“Sitagliptin Catalyst 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. In December 2015, Merck exercised its option under the terms of the sitagliptin Catalyst Supply Agreement to extend the agreement for an additional five years through February 2022.

Effective as of January 2016, we and Merck amended the Sitagliptin Catalyst Supply Agreement to prospectively provide for variable pricing based on the cumulative volume of sitagliptin catalyst purchased by Merck and to allow Merck to purchase a percentage of its requirements for sitagliptin catalyst from a specified third-party supplier. Merck received a distinct, functional license to manufacture a portion of its demand beginning January 1, 2018, which we recognized as research and development revenue.

1916

We have determined that the variable pricing, which provides a discount based on the cumulative volume of sitagliptin catalyst purchased by Merck, provides Merck material rights and we are recognizing product revenues using the alternative method. Under the alternative approach, we estimate the total expected consideration and allocate it proportionately with the expected sales.

The Sitagliptin Catalyst Supply Agreement requires Merck to pay an annual fee for the rights to the sitagliptin technology each year for the term of the Sitagliptin Catalyst Supply Agreement. Amounts of annual license fees are based on contractually agreed prices and are on a declining scale over the term of the contract.

Pursuant to the terms of the Sitagliptin Catalyst Supply Agreement, Merck may purchase supply from us for a fee based on contractually stated prices. Deferred revenues were offset against contract assets where the right of offset exists within the contract. We recognized revenue of $2.0 million and $3.8 million for the three and six months ended June 30, 2020, respectively, compared to $2.5 million and $7.8 million in the three and six months ended June 30, 2019, respectively, in product revenue under this agreement. As of June 30, 2020 and December 31, 2019, we had deferred revenue balances related to the Sitagliptin Catalyst Supply Agreement of $0.3 million and NaN, respectively.

~~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 revenues. 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 provides the customer material rights and we are recognizing revenues using the alternative method. As of June 30, 2020 and December 31, 2019, we had deferred revenue balances from the supply agreement of $2.0 million.

~~Global Development, Option and License Agreement, Strategic Collaboration Agreement, and Development Agreement~~

In October 2017, we entered into a Global Development, Option and License Agreement (the “Nestlé Agreement”) with Société des Produits Nestlé (formerly known as Nestec Ltd.) (“Nestlé Health Science”) and, solely for the purpose of the integration and the dispute resolution clauses of the Nestlé 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 Agreement, a $4.0 million milestone payment 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 upon achievement of a milestone relating to formulation of CDX-6114. The $4.0 million milestone payment that was triggered by the initiation of the trial was received in 2018 and the $1.0 million milestone payment that was triggered by the achievement of a formulation relating to CDX-6114 was received in February 2019. The upfront payment and the variable consideration relating to the progress payment of $4.0 million and 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 0minal research and development revenue for the three and six months ended June 30, 2020, respectively, compared to $0.5 million and $1.7 million for the three and six months ended June 30, 2019, respectively.

In January 2019, we received notice from the FDA that it had completed its review of our investigational new drug application ("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 paid us $3.0 million which we recognized as research and development revenue in 2019. Upon exercising its option, Nestlé Health Science assumed all responsibilities for future clinical development and commercialization of CDX-6114, with the exception of the completion of an extension study, CDX-6114-004, which was substantially completed in the fourth quarter of 2019. Other potential payments from Nestlé Health Science to us under the Nestlé Agreement 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 middle single digits to low double-digits, of net sales of product.

In October 2017, we also entered into a Strategic Collaboration Agreement (the “Strategic Collaboration Agreement”) with Nestlé Health Science 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. Under the Strategic Collaboration Agreement, we received an upfront payment of $1.2 million in 2017 and an incremental payment of $0.6 million in September 2018 for additional services. The Strategic Collaboration Agreement has been extended through December 2021.

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 targeting a gastro-intestinal disorder discovered through our Strategic Collaboration Agreement into pre-clinical and early clinical studies.

We recognized research and development fees of $1.7 million and $3.3 million for the three and six months ended June 30, 2020, respectively, compared to $1.2 million and $2.5 million in the three and six months ended June 30, 2019, respectively.

~~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 business. Under the Porton Agreement, we are eligible to receive annual collaboration fees and research and development revenues. We received an initial collaboration fee of $0.5 million within 30 days of the effective date of the Porton Agreement, $1.5 million upon the first anniversary of the effective date of the agreement. In the second quarter of 2020, we recognized $1.0 million in research and development revenue on the second anniversary of the effective date of the agreement. We are eligible to receive $1.0 million on the third anniversary of the effective date of the agreement. We completed the technical transfer in the fourth quarter of 2018 and recognized $2.8 million in research and development revenue. 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. We recognized research and development revenue related to the Porton Agreement of $1.0 million and $1.1 million in the three and six months ended June 30, 2020, respectively, and 0 revenue in the three and six months ended June 30, 2019.

~~Platform Technology Transfer and License Agreement~~

~~In May 2019, we entered into a Platform Technology Transfer and License Agreement (the “Novartis CodeEvolver~~^®~~Agreement”) with Novartis Pharma AG (“Novartis”). The Agreement allows Novartis to use our proprietary CodeEvolver~~^®~~protein engineering platform technology in the field of human healthcare. Under the Novartis CodeEvolver~~^®~~Agreement, we are transferring our proprietary CodeEvolver~~^®protein engineering platform technology to Novartis over approximately 23 months, starting with the date on which we commenced the technology transfer (the “Technology Transfer Period”). As a part of this technology transfer, the Company provided to Novartis our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms. In addition, teams of the Company and Novartis scientists participated in technology training sessions and collaborative research projects at the our laboratories in Redwood City, California and at a designated Novartis laboratory in Basel, Switzerland. Upon completion of technology transfer, Novartis will have the CodeEvolver^® ~~protein engineering platform technology installed 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~~^®~~Agreemen~~t. In the second quarter of 2020, we completed the second technology milestone transfer under the agreement and became eligible to receive a milestone payment of $4.0 million, which we subsequently received in July 2020. We are eligible to receive an additional $5.0 million upon satisfactory completion of the third technology transfer milestone. In consideration for the continued disclosure and license of improvements to our technology and materials during a multi-year period that begins on the conclusion of the Technology Transfer Period, Novartis will pay us annual payments which amount to an additional $8.0 million. 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 platform technology during the period that begins on the conclusion of the Technology Transfer Period and ends on the expiration date of the last to expire licensed patent. These product-related usage payments, if any, will be paid by Novartis to us for each quarter that Novartis manufactures API using a CodeEvolver^®~~-developed enzyme. The usage payments will be based on the total volume of API produced using the CodeEvolver~~^®-developed enzyme. These usage payments can begin in the clinical stage and will extend throughout the commercial life of each API. Revenue for the combined initial license and technology transfer performance obligation, which is expected to occur over twenty-three months, is being recognized using a single measure of progress that depicts our performance in transferring control of the services, which is based on the ratio of level of effort incurred to date compared to the total estimated level of effort required to complete the performance obligation relating to the combined initial license and technology transfer. Revenue allocated to future improvements will be recognized during the Improvement Term. We recognized $0.9 million and $3.7 million in research and

~~development revenue for the three and six months ended June 30, 2020, respectively and 0 revenue in the three and six months ended June 30, 2019 from the Novartis CodeEvolver~~^®~~Agreement.~~

~~License Agreement~~

In December 2019, we entered a license agreement with Roche Sequencing Solutions, Inc. (“Roche”) to provide Roche with our EvoT4 DNA™ ligase high-performance molecular diagnostic enzyme. The royalty bearing license grants Roche worldwide rights to include the EvoT4 DNA™ ligase in its nucleic acid sequencing products and workflows. Under the license agreement, we received an initial collaboration fee payment within 45 days of the effective date of the agreement and we are eligible to receive an additional milestone within 60 days after the completion of technology transfer. The agreement also contemplates milestone payments to the Company upon the achievement of various development and commercialization events and royalty payments from commercial sales of the enzyme. We recognized research and development fees of $0.2 million and $0.8 million for the three and six months ended June 30, 2020, respectively.

~~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 which we will 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”).

In March 2020, we received an up-front nonrefundable cash payment of $8.5 million and we initiated activities under three Program Plans for Fabry Disease, Pompe Disease, and an unnamed blood factor deficiency respectively (the “Initial Programs”). We are primarily responsible for the research and development of protein sequences under the Program Plans (the “Protein Sequences”) and we are eligible to receive up to $22.3 million of research and development fees and pre-clinical milestone payments for the Initial Programs. Takeda has the right, but not the obligation, to develop, manufacture and commercialize gene therapy products that include nucleic acid sequences that encode the Protein Sequences (“Products”) at their expense. Takeda has the right to a certain number of additional disease indications (“Reserved Target Indications”) for a limited period in which Takeda may initiate a Program Plan for one or more Reserved Target Indications (“Additional/Option Program,” with Initial Programs, the “Programs”), provided, (a) if Takeda elects to initiate an Additional/Option Program while the parties are collaborating on three other Programs at the time of such election, or (b) if Takeda elects to initiate an Additional/Option Program using the last remaining Reserved Target Indication, then Takeda must pay us an option exercise fee to initiate such Additional/Option Program. We will own all rights to the Protein Sequences and corresponding nucleic acid sequences and related intellectual property rights and Takeda will own all rights to Products and related intellectual property rights.

We granted to Takeda an exclusive, worldwide, royalty-bearing, sublicensable license to use the Protein Sequences and their corresponding nucleic acid sequences to develop, manufacture and commercialize the applicable Products in the applicable Field. We also granted to Takeda a limited non-exclusive, worldwide, sublicensable license (a) to research the Protein Sequences within or outside the applicable Fields and (b) to research the Products outside of the applicable Fields, which such rights exclude Takeda's right to perform any Investigational New Drug-enabling activities. The licenses to research the Protein Sequences expire after a pre-determined period of time.

The term of the Takeda Agreement begins on the Effective Date and continues on a Product-by-Product and country-by-country basis, until the expiration of Takeda’s obligation to pay royalties to the Company with respect to that Product in that country. The Takeda Agreement expires in its entirety upon the expiration of Takeda’s obligation to pay royalties to the Company with respect to the Products in all countries worldwide. Subject to the terms of the Takeda Agreement, and after the first anniversary of the Effective Date with respect to the Initial Programs or after the first anniversary of confirmation of the applicable Program Plan by the parties with respect to the Additional/Option Programs, Takeda may terminate a Program upon specified prior written notice to the Company. Subject to the terms of the Takeda Agreement, Takeda may terminate the Takeda Agreement, at will, on a Product-by-Product basis upon specified prior written notice to the Company and the Takeda Agreement in its entirety upon specified prior written notice to the Company. Subject to the terms of the Takeda Agreement, Takeda may terminate the Takeda Agreement on a Product-by-Product basis for safety reasons upon specified prior written notice to the Company. Either party may terminate the Takeda Agreement for an uncured material breach by the other party, or the other party’s insolvency or bankruptcy.

We are eligible to receive certain development and commercialization milestone payments up to $100.0 million per target gene, the modulation of which would lead to the treatment of the disease indications by the applicable Product. We are also eligible to receive tiered royalties based on net sales of Products at percentages ranging from the middle-single digits to low single-digits. We recognized research and development revenue related to the Takeda Agreement of $5.7 million and $8.0 million in the three and six months ended June 30, 2020, respectively. As of June 30, 2020, we had a deferred revenue balance of $2.2 million from Takeda.

~~Master Collaboration and Research Agreement and Stock Purchase Agreement~~

In June 2020, we entered into a Stock Purchase Agreement with Molecular Assemblies, Inc. ("MAI") 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, our chief executive officer, John Nicols, also joined MAI’s board of directors.

At the same time, we entered into a Master Collaboration and Research Agreement (the “MAI Agreement”) with MAI to engineer DNA polymerase enzymes to deliver differentiated and cost-effective solutions for the enzymatic synthesis of DNA. Under the MAI Agreement and its related statement of work (“SOW”), we will apply our CodeEvolver^® protein engineering platform technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis. Based on these services, the Company is eligible to earn additional shares of MAI's Series A preferred stock. MAI will combine its advanced chemistries with our enzymes to drive the process to commercialization. Under the MAI Agreement and its associated SOW, we will engage in research and development activities to engineer DNA polymerase enzymes for the enzymatic synthesis of DNA in exchange for monthly fees in the form of shares of Series A preferred stock in MAI. We are eligible to earn such non-monetary payments over ~~ten~~ to thirteen 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 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. Under the MAI Agreement, the Company 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 MAI Agreement contemplates that we and MAI will enter into a Commercialization and Enzyme Supply Agreement (the “CESA”) within six months following the completion of certain timelines specified in the SOW. In addition, we and MAI have agreed pursuant to the MAI Agreement 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 in the synthesis of native DNA and a non-exclusive license to use these enzymes for research and development on the synthesis of non-native DNA, and (b) we would become the exclusive manufacturer of these enzymes for MAI, its affiliates and licensees.

~~We recognized 0 research and development revenue in the three and six months ended June 30, 2020 from transactions with MAI.~~

~~Note 6. Cash Equivalents and Equity Securities~~

~~Cash equivalents at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):~~

June 30, 2020 December 31, 2019
Adjusted Cost Estimated
Fair Value Adjusted Cost Estimated Fair Value
Money market funds⁽¹⁾
$ 58,482 $ 58,482 $ 71,248 $ 71,248

⁽¹⁾~~Money market funds are classified in cash and cash equivalents on our unaudited condensed consolidated balance sheets.~~

As of June 30, 2020, the total cash and cash equivalents balance of $75.6 million was comprised of money market funds of $58.5 million and cash of $17.1 million held with major financial institutions worldwide. As of December 31, 2019, the total cash and cash equivalents balance of $90.5 million was comprised of money market funds of $71.2 million and cash of $19.3 million held with major financial institutions worldwide.

~~Investment in Equity Securities~~

No single investor in MAI holds 20% or more of the voting stock. Our investment represented approximately 4% of MAI's voting stock at the time of the transaction. Concurrently with our initial equity investment, John Nicols, our chief executive officer, joined MAI’s board of directors, and we entered into the MAI Agreement pursuant to which we will provide technical services and expertise in exchange for compensation in the form of additional shares of voting preferred stock. Our investment was $1.0 million at June 30, 2020. For additional information, see Note 12, "~~Related Party Transactions."~~

Note 7.6. Fair Value Measurements

The following tables present the financial instruments that were measured at fair value on a recurring basis ~~at June 30, 2020 and December 31, 2019 by level~~ within the fair value hierarchy (in thousands):


	June 30, 2021
	Level 1		Level 2		Level 3		Total
Money market funds	$	111,083	$	—	$	—	$	111,083
Non-marketable debt security	—		—		1,289		1,289
Total	$	111,083	$	—	$	1,289	$	112,372

June 30, 2020
Level 1 Level 2 Level 3 Total
Money market funds $ 58,482 $ — $ — $ 58,482


	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, 2019
Level 1 Level 2 Level 3 Total
Money market funds $ 71,248 $ — $ — $ 71,248

The fair value of non-marketable securities remeasured due to impairment would be classified within Level 3. During the three and six months ended June 30, 2021 and 2020, we did 0t recognize any significant credit losses 0r other-than-temporary impairment losses on non-marketable securities. The carrying value of our non-marketable securities approximated fair value.

Note 8.7. Balance Sheets Details

Cash Equivalents

Cash equivalents as of June 30, 2021 and December 31, 2020, consisted of the following (in thousands):


	June 30, 2021				December 31, 2020
	Adjusted Cost		Estimated Fair Value		Adjusted Cost		Estimated Fair Value
Money market funds (1)	$	111,083	$	111,083	$	127,567	$	127,567

(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 June 30, 2021, the total cash and cash equivalents balance of $129.5 million was comprised of money market funds of $111.1 million and cash of $18.4 million held with major financial institutions. As of December 31, 2020, the total cash and cash equivalents balance of $149.1 million was comprised of money market funds of $127.6 million and cash of $21.5 million held with major financial institutions.

Inventories

Inventories consisted of the following (in thousands):


	June 30, 2021		December 31, 2020
Raw materials	$	49	$	77
Work-in-process	98		82
Finished goods	931		805
Inventories	$	1,078	$	964

June 30, 2020 December 31, 2019
Raw materials $ 77 $ 7
Work-in-process 28 26
Finished goods 581 338
Inventories $ 686 $ 371

Inventories includes reserves of $1.5 million as of June 30, 2021 and December 31, 2020.

Property and Equipment, net

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

June 30, 2020 December 31, 2019
Laboratory equipment $ 24,717 $ 23,561
Leasehold improvements 10,774 10,804
Computer equipment and software 3,135 3,016
Office equipment and furniture 1,115 1,461
Construction in progress 648 691
Property and equipment 40,389 39,533
Less: accumulated depreciation and amortization (33,567) (33,251)
Property and equipment, net $ 6,822 $ 6,282

2417


	June 30, 2021		December 31, 2020
Laboratory equipment	$	28,623	$	25,468
Leasehold improvements	10,785		10,785
Computer equipment and software	3,283		3,192
Office equipment and furniture	1,246		1,246
Construction in progress	1,736		2,357
Property and equipment	45,673		43,048
Less: accumulated depreciation and amortization	(34,441)		(33,373)
Property and equipment, net	$	11,232	$	9,675

Depreciation expense included in the Unaudited Condensed Consolidated Statements of Operations was follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Depreciation Expense	$	716	$	462	$	1,375	$	900

Goodwill

Goodwill had a carrying value of ~~approximately~~ $3.2 million as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Other Accrued Liabilities

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

June 30, 2020 December 31, 2019
Accrued purchases $ 3,669 $ 4,386
Accrued professional and outside service fees 2,949 1,802
Other 325 352
Total $ 6,943 $ 6,540


	June 30, 2021		December 31, 2020
Accrued purchases	$	5,107	$	7,170
Accrued professional and outside service fees	3,899		2,589


Other	76		513
Total	$	9,082	$	10,272

Note 9.8. Stock-based Compensation

Equity Incentive Plans

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

The number of shares of our common stock 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”). 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”).

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

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 10ten 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.

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

We also grant employees RSUs, which generally vest over either a three year period with ~~one-third~~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")

~~We also grant our executives and our~~The compensation committee of the Board approved, solely in respect of non-executive employees, delegated to our Chief Executive Officer the authority to approve grants of PSUs. The compensation committee of the Board also approved grants of PBOs and PSUs ~~and we grant~~to our ~~executives PBOs.~~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 2 equal installments with 50% vesting upon achievement 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 0 shares being eligible to vest in respect of the PSUs and PBOs.

In the first quarter of ~~2020,~~2021, we awarded PSUs ("~~2020~~2021 PSUs") and PBOs ("~~2020~~2021 PBOs"), each of which commence vesting based upon the achievement of various weighted performance goals, including ~~sustained~~corporate revenue, ~~and~~ performance enzyme ~~growth,~~segment gross margin, major new biotherapeutics publicity events, strategic ~~advancements of~~performance enzyme and biotherapeutics ~~pipeline,~~deliverables, safety, and technology and strategic plan development. As of June 30, 2021, we estimated that the 2021 PSUs and 2021 PBOs performance goals would be achieved at 136% and 68% of the target level, respectively, and recognized expenses accordingly.

In 2020, we ~~estimated~~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 ~~would be~~had been achieved at ~~100%~~88% of the target level, and recognized expenses accordingly. Accordingly, 50% of the shares underlying the 2020 PSUs and PBOs vested in the first quarter of 2021 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 ~~106%~~84% of the target level, and recognized expenses accordingly. Accordingly, 50% of the shares underlying the 2019 PSUs and PBOs vested in the first quarter of 2020 and 50%

of the shares underlying the 2019 PSUs and PBOs ~~will vest~~vested in the first quarter of 2021, in each case, subject to the recipient’s continued service on each vesting date.

In 2018, we awarded PSUs ("2018 PSUs") and PBOs ("2018 PBOs"), each of which commenced vesting based upon the achievement of various weighted performance goals, including core business revenue growth, cash balance, new licensing collaborations, new research and development service revenue arrangements, technology advancement and novel therapeutic enzymes advancement. In the first quarter of 2019, we determined that the 2018 PSUs and 2018 PBOs performance goals had been achieved at 118% of the target level, and recognized expenses accordingly. Accordingly, 50% of the shares underlying the 2018 PSUs and PBOs vested in the first quarter of 2019 and 50% of the shares underlying the 2018 PSUs and PBOs vested in the first quarter of 2020, in each case subject to the recipient’s continued service on each vesting date.

Stock-Based Compensation Expense

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

Three Months Ended June 30, Six months ended June 30,
2020 2019 2020 2019
Research and development $ 471 $ 403 $ 894 $ 791
Selling, general and administrative 1,468 1,585 3,214 3,260
Total $ 1,939 $ 1,988 $ 4,108 $ 4,051


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	597	$	471	$	1,074	$	894
Selling, general and administrative	2,247		1,468		4,457		3,214
Total	$	2,844	$	1,939	$	5,531	$	4,108

The following table presents total stock-based compensation expense by security type included in the unaudited condensed consolidated statements of operations ~~for the three and six months ended June 30, 2020 and 2019~~ (in thousands):

Three Months Ended June 30, Six months ended June 30,
2020 2019 2020 2019
Stock options $ 575 $ 581 $ 1,116 $ 1,135
RSUs and RSAs 610 386 1,210 847
PSUs 296 316 627 707
PBOs 458 705 1,155 1,362
Total $ 1,939 $ 1,988 $ 4,108 $ 4,051


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Stock options	$	682	$	575	$	1,347	$	1,116
RSUs and RSAs	690		610		1,232		1,210
PSUs	573		296		1,043		627
PBOs	899		458		1,909		1,155
Total	$	2,844	$	1,939	$	5,531	$	4,108

In June 2020, we granted an option to purchase 60,000 shares of common stock to a non-employee as compensation for services. The estimated fair value of the grant was valued at $0.3 million using the Black-Scholes-Merton option pricing model with the following assumptions used to estimate the fair value of non-employee stock options: (i) volatility rate at 51.9%, (ii) risk-free interest rate of 0.4% and (iii) 0 expected dividend yield. The option vests over 2 years from the date of grant with 50% vesting after one year and the remaining 50% vesting monthly in the second year. We recognized stock-based compensation expense related to the non-employee of $4 thousand for the three and six months ended June 30, 2020.

As of June 30, ~~2020,~~2021, unrecognized stock-based compensation expense, net of expected forfeitures, was $4.8 million related to unvested ~~employee~~ stock options, ~~$0.2 million related to unvested non-employee stock options, $2.7~~$4.7 million related to unvested RSUs and RSAs, ~~$1.1~~$1.9 million ~~related~~related to unvested PSUs, and ~~$1.7~~$3.3 million related to unvested PBOs based on current estimates of the level of achievement. Stock-based compensation ~~expense~~expense for these awards will be recognized through the year ~~of 2024.~~

o
f 2025.

Note ~~10.~~9. Capital Stock

Exercise of Options

For the six months ended June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, we issued ~~32,749~~212,631 and ~~529,187~~32,749 shares, respectively, upon option exercises at a weighted-average exercise price of ~~$6.03~~$8.03 and ~~$5.37~~$6.03 per share, respectively, with net cash proceeds of ~~$0.2~~$1.7 million and ~~$2.8~~$0.2 million, respectively.

~~Private Offering~~Equity Distribution Agreement

We filed a Registration Statement on Form S-3 with the SEC, 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 May 7, 2021. In ~~June 2019,~~May 2021, we entered into an Equity Distribution Agreement ("EDA") with Piper Sandler & Co ("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 the market offering” as defined in Rule 415 under the Securities ~~Purchase Agreement~~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 ~~an affiliate of Casdin~~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 ~~issued~~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 ~~sold to Casdin 3,048,780~~reimbursement of PSC's expenses and fees.

During the three and six months ended June 30, 2021, 0 shares of our common stock ~~at a purchase price of $16.40 per share. After deducting legal fees of $74 thousand from the Private Offering, our net proceeds~~ were ~~$49.9 million.~~

~~The Private Offering was exempt from registration~~issued 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~~EDA. As of June 30, 2021, $50.0 million of shares remained available under the ~~Securities Act.~~

EDA.

Note ~~11.~~10. 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 4multiple buildings within the same business park of Metropolitan Life Insurance Company ("MetLife"). Our lease ~~(“Lease”)~~agreement with MetLife ("RWC Lease") includes approximately 28,200 square feet of space located at 200 and 220 Penobscot Drive, Redwood City, California (the ~~“Penobscot~~“200/220 Penobscot Space”), and approximately 37,900 square feet of space located at 400 Penobscot Drive, Redwood City, California (the ~~“Building 2~~“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 ~~31,~~ 2020, we also leased approximately 29,900 square feet of space located at 101 Saginaw Drive, Redwood City, California (the “Saginaw Space”). During ~~the period~~ January ~~1, 2020 through January 31,~~ 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 ~~of the~~at 101 Saginaw ~~Space~~Drive from Minerva Surgical, Inc. The sublease expired at the end of April 2020.

We entered into the initial lease with MetLife for ~~a portion of this space~~our facilities in Redwood City in 2004 and the ~~lease~~RWC Lease has been amended multiple times since then to adjust the leased space and terms of the ~~lease ("Lease").~~Lease. In February 2019, we entered into an Eighth Amendment to the Lease ~~( the~~(the “Eighth Amendment”) with MetLife with respect to the Penobscot ~~Space, the Building 2~~ 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 ~~and the Building 2 Space~~ has been extended through May 2027. The lease term for the 501 Chesapeake Space has been extended to May 2029. We have ~~two consecutive options~~1 (1) option to extend the term of the lease for the Penobscot Space for five (5) years, and 1 (1) separate option to extend the ~~Building 2 Space and~~term of the lease for the 501 Chesapeake Space for ~~an additional period of~~ five ~~years per option.~~(5) years.

We are required to restore certain areas of the Redwood City facilities that we are renting to their original form. We are expensing the asset retirement obligation over the terms of the respective leases. We review the estimated obligation each reporting period and make adjustments if our estimates change. We recorded asset retirement obligations of $0.2 million as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, which are included in other long-term liabilities onin the unaudited condensed consolidated balance sheets. Accretion expense related to our asset retirement obligations was ~~0minal.~~nominal in the three and six months ended June 30, 2021 and 2020.

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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, and are recorded as non-current restricted cash on the unaudited condensed 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 $0.1 million as of June 30, 2021.

Finance Leases

In December 2016, we entered into a three-year financing lease agreement with a third party supplier for the purchase of laboratory equipment that was partially financed through a finance lease of ~~approximately~~ $0.4 million. The lease became effective upon delivery of the equipment in February 2017, and the term of the three-year lease was from February 2017 and expired in February 2020. This financing agreement was accounted for as a finance lease due to bargain purchase options at the end of the lease. In April 2017, we entered into a three-year financing lease agreement with a third-party supplier for the purchase of information technology equipment for ~~approximately~~ $0.3 million. The effective term of the three-year lease was from May 2017 and expired in April 2020.

2821

Lease ~~Costs~~ and other information

Lease costs, amounts included in measurement of lease obligations and other information related ~~costs~~to non-cancellable operating leases and finance leases were as follows (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Finance lease costs:
Amortization of right-of-use assets	$	27	$	45	$	53	$	99
Interest on lease obligations	0		1		0		1
Finance lease costs	27		46		53		100
Operating lease cost	1,033		1,032		2,065		2,100
Short-term lease costs (1)	10		16		10		47
Sublease income	0		0		0		(55)
Total lease cost (2)	$	1,070	$	1,094	$	2,128	$	2,192

Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
Finance lease costs:
Amortization of right-of-use assets $ 45 $ 54 $ 99 $ 109
Interest on lease obligations 1 3 1 6
Finance lease costs 46 57 100 115
Operating lease cost 1,032 1,100 2,100 2,278
Short-term lease cost ⁽¹⁾
16 — 47 —
Sublease income — (254) (55) (465)
Total lease cost $ 1,094 $ 903 $ 2,192 $ 1,928

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

~~Other information related to non-cancellable finance leases and operating leases under non-cancellable subleases as of June 30, 2020 was as follows:~~(2) The Company had 0 variable lease costs.


Other information:	Operating Leases
Weighted-average remaining lease term (in years)	~~7.2~~6.2 years
Weighted-average discount rate	6.6	%

~~Cash paid for amounts included in the measurement of lease obligations was as follows (in thousands):~~

Six months ended June 30,
2020 2019
Operating cash flows from operating leases $ 774 $ 1,633
Operating cash flows from finance leases $ — $ 6
Financing cash flows from finance leases $ 60 $ 119


	Six months ended June 30,
Cash paid:	2021		2020
Operating cash flows from operating leases	$	2,093	$	774
Financing cash flows from finance leases	$	0	$	60

As of June 30, ~~2020,~~2021, our maturity analysis of annual undiscounted cash flows of the non-cancellable ~~finance and~~ operating leases are as follows (in thousands):


Years ending December 31,	Years ending December 31,	Operating Leases		Years ending December 31,	Operating Leases
2020 (remaining 6 months)		$	2,042
2021		4,197
2021 (remaining 6 months)				2021 (remaining 6 months)	$	2,104
2022	2022	4,285		2022	4,285
2023	2023	4,589		2023	4,589
2024	2024	4,726		2024	4,726
2025 and thereafter		13,494
2025				2025	4,868
Thereafter				Thereafter	8,626
Total minimum lease payments	Total minimum lease payments	33,333		Total minimum lease payments	29,198
Less: imputed interest	Less: imputed interest	(7,186)		Less: imputed interest	5,534
Lease Obligations		$	26,147
Lease obligations				Lease obligations	$	23,664

Future Lease Commitment

In the first quarter of 2021, we entered into a lease agreement with ARE-San Francisco No. 63, LLC (“ARE”) to lease a portion of a facility comprising 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”). We expect to commence occupancy of the San Carlos Space in November 2021 once tenant improvements are substantially completed by ARE in accordance with the construction plan. The budget provides a net tenant improvement allowance of $6.3 million and an additional allowance of up to $2.7 million, which we expect to use. 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 has a 10-year term from the lease commencement date with 1 option to extend the term for an additional period of 5 years. We have provided ARE with a $0.5 million security deposit in the form of a letter of credit. We have the right to sublease the facility, subject to landlord consent. We determined that the lease commencement date is in November 2021 at which point we will record a right of use asset and a corresponding lease liability.

An estimated maturity analysis of the annual undiscounted cash flows of the lease is as follows (in thousands):


Years ending December 31,	Operating Lease
2021 (remaining 6 months)	$	0
2022	2,463
2023	2,988
2024	3,066
2025	3,145
2026 and thereafter	20,061
Total minimum lease payments	$	31,723

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 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

~~704~~162

Development and manufacturing services agreements

September 2019

~~3,785~~1,852

~~Strategic Collaboration and License Agreement~~

~~March 2020~~

~~364~~

Total other commitments

~~4,853~~2,014

In June 30, 2017, we entered into a credit facility (the “Credit Facility”) with Western Alliance Bank consisting of term loans (“Term Debt”) up to $10.0 million, and advances (“Advances”) under a revolving line of credit ("Revolving Line of Credit") up to $5.0 million with an accounts receivable borrowing base of 80% of eligible accounts receivable. AtAs of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we have not drawn from the Credit Facility. We may draw on the Term Debt and the Revolving Line of Credit at any time prior to ~~the September 30, 2020 maturity date.~~October 1, 2021 and October 1, 2024, respectively. On October 1, ~~2023,~~2024 loans drawn under the Term Debt mature and the Revolving Line of Credit ~~terminates.~~terminate. Loans made under the Term Debt ~~bears~~bear interest through maturity ~~at a variable~~equal to the greater of (i) 3.75% or (ii) the sum of (A) Index Rate (prime rate ~~based on~~published in the ~~LIBOR~~Money Rates section of the Western Edition of The Wall Street Journal plus ~~3.60%~~(B) 0.50%. Advances made under the Revolving Line of Credit bear interest at a variable annual rate equal to the equal to the greater of (i) ~~1.00% above~~4.25% or (ii) the sum of (A) the prime rate ~~and (ii) 5.00%~~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 Facilities and our cash. AtAs of June 30, ~~2020,~~2021, we were in compliance with the covenants for the Credit Facility.

The Credit Facility allows for interest-only payments on the Term Debt through November 1, ~~2021.~~2022. Monthly payments of principal and interest on the Term Debt are required following the applicable amortization date. We may elect to prepay in full the Term Debt and Advances under the Revolving Line of Credit at any time.

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

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 0 accruals for expenses related to indemnification issues for any periods presented.

Note 11. Related Party Transactions

30Molecular Assemblies, Inc.

~~Impact of COVID-19~~

~~We are subject to risks and uncertainties as~~In June 2020, we entered into 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 extentStock Purchase Agreement with MAI pursuant to which we purchased 1,587,050 shares of MAI's Series A preferred stock for $1.0 million. In connection with the ~~COVID-19 pandemic will directly or indirectly impact~~transaction, John Nicols, our ~~business, results~~President and Chief Executive Officer, also joined MAI’s board of ~~operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including~~directors. Concurrently with our initial equity investment, we entered into the ~~duration and severity of the pandemic and the extent and severity of the impact on our customers, new information that may emerge concerning COVID-19, the actions taken~~MAI Agreement with MAI, pursuant to ~~contain it or treat its impact and the economic impact on local, regional, national and international markets.~~

~~To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide. However,~~which we are ~~dependent on~~performing services utilizing our ~~manufacturing~~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, we purchased an additional 1,000,000 shares of MAI's Series A preferred stock for $0.6 million.

We recognized $0.3 million and ~~logistics partners and consequently, disruptions~~$0.5 million in ~~operations of our partners and customers may affect our ability to supply enzymes to our customers. Furthermore, our ability to provide future~~ research and development ~~("R&D") services will continue to be impacted as a result of governmental orders~~revenue from transactions with MAI in the three and ~~any disruptions in operations of our customers with whom~~six months ended June 30, 2021, respectively, and we ~~collaborate. We are continuing to assess the potential impact of the COVID-19 pandemic on our business and operations, including our product sales, R&D service~~recognized 0 revenue ~~expenses and manufacturing. However, we are unable to fully determine and quantify the extent to which this pandemic affected our total revenues due to complex accounting judgments.~~

In the U.S., 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 ourfrom research and development ~~operations. Research~~service transactions with MAI in the three and six months ended June 30, 2020. We received 714,171 and 1,428,342 shares of MAI's Series A preferred stock from research and development ~~operations for all other projects were temporarily suspended~~services we provided to MAI in the three and six months ended June 30, 2021, respectively, and 0 shares of MAI's Series A preferred stock from ~~mid-March 2020 through~~research and development services in the ~~end~~three and six months ended June 30, 2020. As of ~~April in accordance~~June 30, 2021, we have 5,443,734 shares of MAI's Series A preferred stock since executing the Stock Purchase Agreement with ~~these Orders. In May 2020, we initiated limited operations and gradually ramped up our R&D operations so that we are currently utilizing the majority~~MAI. The carrying value of our ~~normal R&D capacity. Additionally, we have resumed small scale manufacturing~~investment in MAI Series A preferred stock was $3.4 million and $1.5 million at ~~our Redwood City pilot plant~~June 30, 2021 and December 31, 2020, respectively. We had $0.4 million and NaN in ~~May 2020.~~

~~Our future results~~deferred revenue as of ~~operations~~June 30, 2021 and ~~liquidity could be adversely impacted by delays~~December 31, 2020, respectively, and NaN and $0.5 million in ~~payments~~contract asset due from MAI for services rendered as of ~~outstanding receivable amounts beyond normal payment terms, supply chain disruptions~~June 30, 2021 and ~~uncertain demand, and~~December 31, 2020, respectively. Payment for the ~~impact~~services rendered was received in the form of any initiatives or programs that we may undertake to address financial and operations challenges faced by our customers. As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity, or results of operations is uncertain.

additional MAI Series A preferred stock.

~~Note 12. Related Party~~

Pam P. Cheng, who served as a member of our board of directors ~~for a three-year term expiring at our Annual Shareholder Meeting in~~until June 2020, joined AstraZeneca PLC as Executive Vice President, Operations and Information Technology in June 2015. We ~~sell~~sold biocatalyst products to AstraZeneca PLC and its controlled purchasing agents and contract manufacturers.

We recognized $20 thousand and $0.1 million inof revenue infrom transactions with AstraZeneca and its controlled purchasing agents and contract manufacturers for the three and six months ended June 30, 2020, respectively, ~~compared to $0.4 million~~ and ~~$0.4 million in~~through the ~~three and six months ended~~date of Ms. Cheng’s departure from our board of directors. As of June 30, ~~2019, respectively, from transactions with AstraZeneca PLC and its controlled purchasing agents and contract manufacturers. At June 30, 2020~~2021 and December 31, ~~2019,~~2020, we had ~~0minal and $0.3 million, respectively, of~~0 receivables from AstraZeneca PLC and its controlled purchasing agents and contract manufacturers from related party transactions, respectively.

~~Molecular Assemblies, Inc.~~

In June 2020, we entered into a Stock Purchase Agreement with Molecular Assemblies, Inc (“MAI”) pursuant to which we purchased 1,587,050 shares of Series A preferred stock for $1.0 million in MAI and, concurrently with our initial equity investment, John Nicols, our chief executive officer, joined MAI’s board of directors.

Based on these services, we are eligible to earn additional Series A preferred stock of MAI. MAI will combine its advanced chemistries with our enzymes to drive the process to commercialization. Under the MAI Agreement and its associated SOW, we will engage in research and development activities to engineer DNA polymerase enzymes for the enzymatic synthesis of DNA and will receive monthly fees in the form of shares of Series A preferred stock in MAI. Such non-monetary payments will be earned over ~~ten~~ to thirteen months and 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 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. 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 on meeting a milestone of $5.0 million in aggregate commercial sales by the Company 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 MAI Agreement contemplates that we and MAI will enter into a Commercialization and Enzyme Supply Agreement (the “CESA”) within six months following the completion of certain timelines specified in the SOW. In addition, we and MAI have agreed pursuant to the MAI Agreement 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 in the synthesis of native DNA and a non-exclusive license to use these enzymes for research and development on the synthesis of non-native DNA, and (b) that we would become the exclusive manufacturer of these enzymes for MAI, its affiliates and licensees.

~~We recognized 0 research and development revenue in the three and six months ended June 30, 2020 from transactions with MAI.~~

Note ~~13.~~12. Segment, Geographical and Other Revenue Information

We manage our business as 2 business segments: Performance Enzymes and Novel ~~Biotherapeutics, which are based on our~~Biotherapeutics. Our chief operating ~~segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM, or~~ decision ~~making group, in deciding how to allocate resources, and in assessing performance. Our CODM~~maker ("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 report corporate-related expenses such as legal, accounting, information technology, and other costs that are not otherwise included 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.

We initially commercialized our CodeEvolver^® protein engineering technology platform and products in the pharmaceuticals market, 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 and food ingredients, animal feed, flavors, fragrances, and agricultural chemicals. We also use our technology to develop enzymes for customers using NGS and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications.

Novel Biotherapeutics

We have also developed a pipeline of other biotherapeutic drug candidates, which are in preclinical development, and in which we expect to continue to make additional investments with the aim of advancing additional product candidates targeting other therapeutic areas. In March 2020, we entered into the Takeda Agreement with Takeda under which we will research and develop protein sequences for use in gene therapy products for certain diseases.

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.

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

Research and development⁽¹⁾

Research and development(1)

Selling, general and administrative⁽¹⁾

Selling, general and administrative(1)

Corporate costs ⁽²⁾


	Six months ended June 30, 2021						Six months ended June 30, 2020
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total
Revenues:
Product revenue	$	24,943	$	0	$	24,943	$	9,604	$	0	$	9,604
Research and development revenue	10,872		7,670		18,542		8,775		11,258		20,033
Total revenues	35,815		7,670		43,485		18,379		11,258		29,637
Costs and operating expenses:
Cost of product revenue	8,536		0		8,536		4,240		0		4,240
Research and development(1)	11,502		11,799		23,301		10,693		10,415		21,108
Selling, general and administrative(1)	5,988		1,221		7,209		4,720		1,213		5,933
Total segment costs and operating expenses	26,026		13,020		39,046		19,653		11,628		31,281
Income (loss) from operations	$	9,789	$	(5,350)	4,439		$	(1,274)	$	(370)	(1,644)
Corporate costs (2)					(16,335)						(11,042)
Unallocated depreciation and amortization					(1,426)						(998)
Loss before income taxes					$	(13,322)					$	(13,684)

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

Six months ended June 30, 2020 Six months ended June 30, 2019
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Revenues:
Product revenue $ 9,604 $ — $ 9,604 $ 14,236 $ — $ 14,236
Research and development revenue 8,775 11,258 20,033 6,440 7,225 13,665
Total revenues 18,379 11,258 29,637 20,676 7,225 27,901
Costs and operating expenses:
Cost of product revenue 4,240 — 4,240 7,163 — 7,163
Research and development⁽¹⁾
10,693 10,415 21,108 9,576 6,172 15,748
Selling, general and administrative⁽¹⁾
4,720 1,213 5,933 4,463 1,078 5,541
Total segment costs and operating expenses 19,653 11,628 31,281 21,202 7,250 28,452
Loss from operations (1,274) (370) (1,644) (526) (25) (551)
Corporate costs ⁽²⁾
(11,042) (10,271)
Depreciation and amortization (998) (802)
Loss before income taxes $ (13,684) $ (11,624)
(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 and expenses.

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

The following ~~tables~~table provides stock-based compensation expense included in ~~loss~~income (loss) from operations (in thousands):

Three months ended June 30,
2020 2019
Performance Enzymes Novel Biotherapeutics Corporate cost Total Performance Enzymes Novel Biotherapeutics Corporate cost Total
Stock-based compensation $ 741 $ 252 $ 946 $ 1,939 $ 601 $ 197 $ 1,190 $ 1,988
Six months ended June 30,
2020 2019
Performance Enzymes Novel Biotherapeutics Corporate cost Total Performance Enzymes Novel Biotherapeutics Corporate cost Total
Stock-based compensation $ 1,496 $ 494 $ 2,118 $ 4,108 $ 1,237 $ 338 $ 2,476 $ 4,051


	Three months ended June 30,
	2021								2020
	Performance Enzymes		Novel Biotherapeutics		Corporate cost		Total		Performance Enzymes		Novel Biotherapeutics		Corporate cost		Total
Stock-based compensation	$	1,115	$	257	$	1,472	$	2,844	$	741	$	252	$	946	$	1,939


	Six months ended June 30,
	2021								2020
	Performance Enzymes		Novel Biotherapeutics		Corporate cost		Total		Performance Enzymes		Novel Biotherapeutics		Corporate cost		Total
Stock-based compensation	$	2,109	$	495	$	2,927	$	5,531	$	1,496	$	494	$	2,118	$	4,108

Significant Customers

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

Percentage of Total Revenues for the
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Customer A 16% 35% 20% 38%
Customer B 12% 14% 11% 26%
Customer C * 11% * *
Customer D * * 13% *
Customer E 38% * 27% *


	Percentage of Total Revenues for the
	Three months ended June 30,		Six months ended June 30,
	2021	2020	2021	2020
Customer A	15%	*	10%	*
Customer B	12%	*	*	*
Customer C	12%	*	13%	*
Customer D	*	16%	17%	20%
Customer E	*	38%	10%	27%
Customer F	*	12%	*	11%
Customer G	*	*	*	13%
* Percentage was less than 10%

Customers that each accounted for 10% or more of accounts receivable ~~had~~ balances as of the periods presented as follows:

Geographical Information

Geographic revenues are identified by the location of the customer and consist of the following (in thousands):

Three Months Ended June 30, Six months ended June 30,
2020 2019 2020 2019
Revenues
Americas $ 6,906 $ 4,076 $ 12,131 $ 6,913
EMEA 3,314 4,741 9,285 12,466
APAC 4,747 3,502 8,221 8,522
Total revenues $ 14,967 $ 12,319 $ 29,637 $ 27,901


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues
Americas	$	5,844	$	6,906	$	10,773	$	12,131
EMEA	6,169		3,314		12,450		9,285
APAC	13,440		4,747		20,262		8,221
Total revenues	$	25,453	$	14,967	$	43,485	$	29,637

Identifiable long-lived assets by location was as follows (in thousands):

Long-lived assets June 30, 2020 December 31, 2019
United States $ 6,822 $ 6,282


	June 30, 2021		December 31, 2020
United States	$	31,424	$	31,176

Identifiable goodwill by reporting unit was as follows (in thousands):

As of June 30, 2020 and December 31, 2019
Performance Enzymes Novel Biotherapeutics Total
Goodwill $ 2,463 $ 778 $ 3,241


	As of June 30, 2021 and December 31, 2020
	Performance Enzymes		Novel Biotherapeutics		Total
Goodwill	$	2,463	$	778	$	3,241

Note ~~14.~~13. Allowance for Credit Losses

~~An analysis of~~The following table summarizes the financial assets allowance for credit losses ~~is as follows~~ (in thousands):


	Three and six months ended June 30, 2020
~~Beginning Balance January 1, 2020~~	$	34
~~Write-offs charged against the allowance~~		—
~~Recoveries of amounts previously written off~~		—
~~Ending Balance June 30, 2020~~	$	34



	June 30, 2021		December 31, 2020
Allowance for credit losses	$	74	74

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


	June 30, 2021
	Current		31-60 Days		61-90 Days		91 Days and over		Total balance
Accounts receivable	$	17,414	$	83	$	1,602	$	389	$	19,488

June 30, 2020
31-60 Days 61-90 Days 91 days and over Total over 31 days Current Total balance
Accounts receivable $ — $ 1,000 $ 39 $ 1,039 $ 12,996 $ 14,035

December 31, 2019
31-60 Days 61-90 Days 91 days and over Total over 31 days Current Total balance
Accounts receivable $ 185 $ 7 $ 65 $ 257 $ 8,806 $ 9,063


	December 31, 2020
	Current		31-60 Days		61-90 Days		91 Days and over		Total balance
Accounts receivable	$	13,398	$	489	$	7	$	0	$	13,894


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


Title of Each Class	Trading	Name of Each Exchange on Which Registered
	Symbol(s)
Common Stock, par value $0.0001 per share	CDXS	The Nasdaq Global Select Market


	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	75,649	$	90,498
Restricted cash, current	619		661
Financial assets:
Accounts receivable	14,035		9,063
Contract assets	—		1,027
Unbilled receivables	12,412		10,099
Total Financial assets	26,447		20,189
Less: allowances	(34)		(34)
Total Financial assets, net	26,413		20,155
Inventories	686		371
Prepaid expenses and other current assets	3,131		2,520
Total current assets	106,498		114,205
Restricted cash	1,062		1,062
Investment in Equity Securities	1,000		—
Right-of-use assets - Operating leases, net	22,599		23,837
Right-of-use assets - Finance leases, net	170		268
Property and equipment, net	6,822		6,282
Goodwill	3,241		3,241
Other non-current assets	391		178
Total assets	$	141,783	$	149,073
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	2,637	$	2,621
Accrued compensation	4,979		5,003
Other accrued liabilities	6,943		6,540
Current portion of lease obligations - Operating leases	2,482		1,107
Current portion of lease obligations - Finance leases	—		60
Deferred revenue	1,903		57
Total current liabilities	18,944		15,388
Deferred revenue, net of current portion	3,142		1,987
Long-term lease obligations - Operating leases	23,665		24,951

Other long-term liabilities	1,246		1,230
Total liabilities	46,997		43,556

Commitments and Contingencies (Note 11)
Stockholders' equity:
Preferred stock, $0.0001 par value per share; 5,000 shares authorized, NaN issued and outstanding	—		—
Common stock, $0.0001 par value per share; 100,000 shares authorized; 59,125 shares and 58,877 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	6		6
Additional paid-in capital	451,185		447,920
Accumulated deficit	(356,405)		(342,409)
Total stockholders' equity	94,786		105,517
Total liabilities and stockholders' equity	$	141,783	$	149,073


	June 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	129,506	$	149,117
Restricted cash, current	585		638
Investment in non-marketable debt security	1,289		1,000
Financial assets:
Accounts receivable	19,488		13,894
Contract assets	4,528		4,526
Unbilled receivables	12,417		10,942
Total financial assets	36,433		29,362
Less: allowances	(74)		(74)
Total financial assets, net	36,359		29,288
Inventories	1,078		964
Prepaid expenses and other current assets	3,578		3,416
Total current assets	172,395		184,423
Restricted cash	1,519		1,062
Investment in non-marketable equity securities	3,430		1,450
Right-of-use assets - Operating leases, net	20,124		21,382
Right-of-use assets - Finance leases, net	68		119
Property and equipment, net	11,232		9,675
Goodwill	3,241		3,241
Other non-current assets	301		294
Total assets	$	212,310	$	221,646
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,164	$	2,970
Accrued compensation	6,859		7,288
Other accrued liabilities	9,082		10,272
Current portion of lease obligations - Operating leases	2,672		2,627
Deferred revenue	2,313		1,824
Total current liabilities	24,090		24,981
Deferred revenue, net of current portion	3,166		2,967
Long-term lease obligations - Operating leases	20,992		22,324
Other long-term liabilities	1,289		1,271
Total liabilities	49,537		51,543
Commitments and Contingencies (Note 10)	0		0
Stockholders' equity:
Preferred stock, $0.0001 par value per share; 5,000 shares authorized, NaN issued and outstanding	0		0
Common stock, $0.0001 par value per share; 100,000 shares authorized; 64,623 shares and 64,283 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	6		6
Additional paid-in capital	542,519		536,516
Accumulated deficit	(379,752)		(366,419)
Total stockholders' equity	162,773		170,103
Total liabilities and stockholders' equity	$	212,310	$	221,646


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(13,996)	$	(11,643)	Net loss	$	(13,333)	$	(13,996)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	Depreciation	900		693		Depreciation	1,375		900
Amortization expense - right-of-use assets - operating and finance leases	Amortization expense - right-of-use assets - operating and finance leases	1,336		1,486		Amortization expense - right-of-use assets - operating and finance leases	1,309		1,336
Gain on disposal of property and equipment		—		(1)
Stock-based compensation	Stock-based compensation	4,108		4,051		Stock-based compensation	5,531		4,108

Unrealized loss on investment in equity securities		—		168
Equity securities earned from research and development activities						Equity securities earned from research and development activities	(477)		0
Other non-cash items						Other non-cash items	(318)		0
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net		(4,972)		(262)
Contract assets		1,027		35
Unbilled receivables		(2,313)		365
Financial assets, net						Financial assets, net	(7,521)		(6,258)
Inventories	Inventories	(315)		(131)		Inventories	(113)		(315)
Prepaid expenses and other current assets		(611)		(882)
Other non-current assets		(213)		59
Prepaid expenses and other assets						Prepaid expenses and other assets	(170)		(824)
Accounts payable	Accounts payable	(19)		(1,625)		Accounts payable	436		(19)
Accrued compensation		(24)		(721)
Other accrued liabilities		1,863		402
Accrued compensation and other accrued liabilities						Accrued compensation and other accrued liabilities	(404)		1,839
Other long-term liabilities	Other long-term liabilities	(1,270)		(715)		Other long-term liabilities	(1,314)		(1,270)
Deferred revenue	Deferred revenue	3,001		812		Deferred revenue	264		3,001
Net cash used in operating activities	Net cash used in operating activities	(11,498)		(7,909)		Net cash used in operating activities	(14,735)		(11,498)
Investing activities:	Investing activities:					Investing activities:
Purchase of property and equipment	Purchase of property and equipment	(1,490)		(1,258)		Purchase of property and equipment	(4,344)		(1,490)
Proceeds from disposal of property and equipment		—		1
Proceeds from sale of property and equipment						Proceeds from sale of property and equipment	29		0
Investment in equity securities	Investment in equity securities	(1,000)		—		Investment in equity securities	(630)		(1,000)
Net cash used in investing activities	Net cash used in investing activities	(2,490)		(1,257)		Net cash used in investing activities	(4,945)		(2,490)
Financing activities:	Financing activities:					Financing activities:
Proceeds from exercises of stock options	Proceeds from exercises of stock options	197		2,843		Proceeds from exercises of stock options	1,679		197
Proceeds from issuance of common stock in connection with private placement		—		50,000
Costs incurred in connection with private placement		—		(74)
Payments of lease obligations - Finance leases	Payments of lease obligations - Finance leases	(60)		(119)		Payments of lease obligations - Finance leases	0		(60)
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(1,040)		(2,799)		Taxes paid related to net share settlement of equity awards	(1,206)		(1,040)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(903)		49,851		Net cash provided by (used in) financing activities	473		(903)
Net increase (decrease) in cash, cash equivalents and restricted cash		(14,891)		40,685
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(19,207)		(14,891)
Cash, cash equivalents and restricted cash at the beginning of the period	Cash, cash equivalents and restricted cash at the beginning of the period	92,221		54,485		Cash, cash equivalents and restricted cash at the beginning of the period	150,817		92,221
Cash, cash equivalents and restricted cash at the end of the period	Cash, cash equivalents and restricted cash at the end of the period	$	77,330	$	95,170	Cash, cash equivalents and restricted cash at the end of the period	$	131,610	$	77,330

Supplemental disclosure of cash flow information
Supplemental disclosure of cash flow information:						Supplemental disclosure of cash flow information:
Interest paid	Interest paid	$	4	$	9	Interest paid	$	3	$	4

Income taxes paid	Income taxes paid	$	5	$	—	Income taxes paid	$	0	$	5
Purchase of property and equipment recorded in accounts payable and accrued expenses		$	90	$	773
Supplemental non-cash investing and financing activities:						Supplemental non-cash investing and financing activities:
Capital expenditures incurred but not yet paid						Capital expenditures incurred but not yet paid	$	338	$	90
Assets received for research and development revenue earned						Assets received for research and development revenue earned	$	1,350	$	0


	Three months ended June 30, 2020										Three months ended June 30, 2019
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total
Major products and service:
Product Revenue	$	4,504	$	—	$	4,504	$	6,249	$	—	$	6,249
Research and development revenue	3,002		7,461		10,463		4,340		1,730		6,070
Total revenues	$	7,506	$	7,461	$	14,967	$	10,589	$	1,730	$	12,319

Primary geographical markets:
Americas	$	1,173	$	5,733	$	6,906	$	4,076	$	—	$	4,076
EMEA	1,586		1,728		3,314		3,011		1,730		4,741
APAC	4,747		—		4,747		3,502		—		3,502
Total revenues	$	7,506	$	7,461	$	14,967	$	10,589	$	1,730	$	12,319


	Six months ended June 30, 2020										Six months ended June 30, 2019
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total
Major products and service:
Product revenue	$	9,604	$	—	$	9,604	$	14,236	$	—	$	14,236
Research and development revenue	8,775		11,258		20,033		6,440		7,225		13,665
Total revenues	$	18,379	$	11,258	$	29,637	$	20,676	$	7,225	$	27,901

Primary geographical markets:
Americas	$	4,171	$	7,960	$	12,131	$	6,913	$	—	$	6,913
EMEA	5,987		3,298		9,285		5,241		7,225		12,466
APAC	8,221		—		8,221		8,522		—		8,522
Total revenues	$	18,379	$	11,258	$	29,637	$	20,676	$	7,225	$	27,901


	Remainder of 2020		2021		2022 and Thereafter		Total
Product Revenue	$	567	$	385	$	1,883	$	2,835
Research and development revenue	1,107		624		479		2,210
Total revenues	$	1,674	$	1,009	$	2,362	$	5,045


Long-lived assets	June 30, 2020		December 31, 2019
United States	$	6,822	$	6,282


ITEM 2.			MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


	Three months ended June 30,						Change					Six months ended June 30,			Change
	2020		2019		$		%	2020		2019		$		%
Revenues:
Product revenue	$	4,504	$	6,249	$	(1,745)	(28)%	$	9,604	$	14,236	$	(4,632)	(33)%
Research and development revenue	10,463		6,070		4,393		72%	20,033		13,665		6,368		47%
Total revenues	14,967		12,319		2,648		21%	29,637		27,901		1,736		6%
Costs and operating expenses:
Cost of product revenue	1,699		2,772		(1,073)		(39)%	4,240		7,163		(2,923)		(41)%
Research and development	10,853		8,274		2,579		31%	21,820		16,290		5,530		34%
Selling, general and administrative	8,522		7,896		626		8%	17,512		16,311		1,201		7%
Total costs and operating expenses	21,074		18,942		2,132		11%	43,572		39,764		3,808		10%
Loss from operations	(6,107)		(6,623)		516		8%	(13,935)		(11,863)		(2,072)		(17)%
Interest income	57		220		(163)		(74)%	323		450		(127)		(28)%
Other income (expenses), net	13		(88)		101		115%	(72)		(211)		139		66%
Loss before income taxes	(6,037)		(6,491)		454		7%	(13,684)		(11,624)		(2,060)		(18)%
Provision for income taxes	307		16		291		1,819%	312		19		293		1,542%
Net loss	$	(6,344)	$	(6,507)	$	163	3%	$	(13,996)	$	(11,643)	$	(2,353)	(20)%


(In Thousands)	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	75,649	$	90,498
Working capital	$	87,554	$	98,817


	Payments due by period
	Total		Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years
Operating lease (1)	$	29,198	$	4,156	$	9,179	$	9,738	$	6,125
Operating lease (2)	31,723		1,000		5,977		7,912		16,834
Total	$	60,921	$	5,156	$	15,156	$	17,650	$	22,959


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




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			Amended and Restated Bylaws of Codexis, Inc. effective as of April 27, 2010 (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010).

4.1			Reference is made to Exhibits 3.1 through 3.3.
10.1		E quity Distribution Agreement by and between the Company and Piper Sa ndler & C o. dated as of May 7, 2021 (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K , filed on May 7, 2021).

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.

101				The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2020,~~2021, formatted in Inline Extensible Business Reporting Language ~~(iXBRL)~~("iXBRL") includes: (i) Unaudited Condensed Consolidated Balance Sheets at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020 (ii) Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019,~~2020, (iii) Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019,~~2020, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020 and (v) Notes to Unaudited Condensed 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

104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2020,~~2021, formatted in Inline XBRL and contained in Exhibit 101.

	*			Portions of the exhibit, marked by brackets, have been omitted because the omitted information is (i) not material and (ii) would be competitively harmful if publicly disclosed.