What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-07 compared with 2020-05-08 · 327 added, 170 removed, 682 unchanged (42% of the section changed)

3 unchanged sentences

(In Thousands, Except Per Share Amounts)

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Current assets:

12 unchanged sentences

Restricted cash 1,062 1,062

Investment in Equity Securities 1,000 —

Right-of-use assets - Operating leases, net 22,599 23,837

23 unchanged sentences

100,000 shares authorized;

59,017 shares and 58,877 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

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

Additional paid-in capital 451,185 447,920

6 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Product revenue $ 4,504 $ 6,249 $ 9,604 $ 14,236

8 unchanged sentences

Interest income 57 220 323 450

Other expenses, net ( 86 ) ( 125 )

Other income (expenses), net 13 ( 88 ) ( 72 ) ( 211 )

Loss before income taxes ( 6,037 ) ( 6,491 ) ( 13,684 ) ( 11,624 )

9 unchanged sentences

Capital Accumulated Deficit Total Stockholders' Equity

Three months ended March 31, 2020 Shares Amount

Balance as of January 1, 2020 58,877 $ 6 $ 447,920 $ ( 342,409 ) $ 105,517

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

1 unchanged sentence

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 March 31, 2020 59,017 $ 6 $ 449,121 $ ( 350,061 ) $ 99,066

Balance as of June 30, 2020 59,125 $ 6 $ 451,185 $ ( 356,405 ) $ 94,786

Common Stock Additional

Capital Accumulated Deficit Total Stockholders' Equity

Three months ended March 31, 2019 Shares Amount

Three months ended June 30, 2019 Shares Amount

Balance as of April 1, 2019 54,541 $ 5 $ 386,815 $ ( 335,610 ) $ 51,210

Exercise of stock options 310 — 2,067 — 2,067

Release of stock awards 40 — — — —

Employee stock-based compensation — — 1,988 — 1,988

Issuance of common stock, net of issuance costs of $ 74

3,049 1 49,925 — 49,926

Net loss — — — ( 6,507 ) ( 6,507 )

Balance as of June 30, 2019 57,940 $ 6 $ 440,795 $ ( 342,117 ) $ 98,684

See accompanying notes to the unaudited condensed consolidated financial statements

Codexis, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(In Thousands)

Common Stock Additional paid-in Capital Accumulated Deficit Total Stockholders' Equity

Six months ended June 30, 2020 Shares Amount

Balance as of January 1, 2020 58,877 $ 6 $ 447,920 $ ( 342,409 ) $ 105,517

2 unchanged sentences

Employee stock-based compensation — — 4,104 — 4,104

Non-employee stock-based compensation — — 4 — 4

Taxes paid related to net share settlement of equity awards ( 84 ) — ( 1,040 ) — ( 1,040 )

Net loss — — — ( 13,996 ) ( 13,996 )

Balance as of March 31, 2019 54,541 $ 5 $ 386,815 $ ( 335,610 ) $ 51,210

Balance as of June 30, 2020 59,125 $ 6 $ 451,185 $ ( 356,405 ) $ 94,786

Common Stock Additional paid-in Capital Accumulated Deficit Total Stockholders' Equity

Six months ended June 30, 2019 Shares Amount

Balance as of January 1, 2019 54,065 $ 5 $ 386,775 $ ( 330,474 ) $ 56,306

Exercise of stock options 529 — 2,843 — 2,843

Release of stock awards 441 — — — —

Employee stock-based compensation — — 4,051 — 4,051

Taxes paid related to net share settlement of equity awards ( 144 ) — ( 2,799 ) — ( 2,799 )

Issuance of common stock, net of issuance costs of $ 74

3,049 1 49,925 — 49,926

Net loss — — — ( 11,643 ) ( 11,643 )

Balance as of June 30, 2019 57,940 $ 6 $ 440,795 $ ( 342,117 ) $ 98,684

See accompanying notes to the unaudited condensed consolidated financial statements

2 unchanged sentences

(Unaudited, in Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities:

3 unchanged sentences

Amortization expense - right-of-use assets - operating and finance leases 1,336 1,486

Gain on disposal of property and equipment — ( 1 )

Stock-based compensation 4,108 4,051

15 unchanged sentences

Purchase of property and equipment ( 1,490 ) ( 1,258 )

Proceeds from disposal of property and equipment — 1

Investment in equity securities ( 1,000 ) —

Net cash used in investing activities ( 2,490 ) ( 1,257 )

1 unchanged sentence

Proceeds from exercises of stock options 197 2,843

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 ( 60 ) ( 119 )

Taxes paid related to net share settlement of equity awards ( 1,040 ) ( 2,799 )

Net cash used in financing activities ( 1,019 ) ( 2,082 )

Net decrease in cash, cash equivalents and restricted cash ( 3,205 ) ( 5,378 )

Net cash provided by (used in) financing activities ( 903 ) 49,851

Net increase (decrease) in cash, cash equivalents and restricted cash ( 14,891 ) 40,685

Cash, cash equivalents and restricted cash at the beginning of the period 92,221 54,485

2 unchanged sentences

Interest paid $ 4 $ 9

Income taxes paid $ 5 $ —

Purchase of property and equipment recorded in accounts payable and accrued expenses $ 90 $ 773

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of March 31, 2020 and March 31, 2019 to the total of the same such amounts shown above:

Three Months Ended March 31,

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 and 2019 to the total of the same such amounts shown above:

Cash and cash equivalents $ 75,649 $ 93,421

20 unchanged sentences

In addition to those directly involved 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 development and fermentation engineering.

Our integrated, multi-disciplinary approach to biocatalyst and process development is a critical success factor for our company.

Our integrated, multi-disciplinary approach to biocatalyst and process development is a critical success factor for the Company.

We initially commercialized our CodeEvolver ® protein engineering technology platform and products in the pharmaceuticals market, which remains a primary business focus.

2 unchanged sentences

Most recently, in May 2019, we entered into a Platform Technology Transfer and License Agreement (the “Novartis CodeEvolver ® Agreement”) with Novartis Pharma AG (“Novartis”).

The Novartis CodeEvolver ® Agreement allows Novartis to use Codexis’ proprietary CodeEvolver ® protein engineering platform technology in the field of human healthcare.

The Novartis CodeEvolver ® Agreement 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 and industrial enzymes for use in a wider set of industrial markets.

2 unchanged sentences

In December 2019, we entered into a license agreement to provide Roche Sequencing Solutions, Inc.

(“Roche”) with our first enzyme for this target market, Codexis’ EvoT4™ DNA ligase.

(“Roche”) with our first enzyme for this target market, the 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 using the CodeEvolver ® protein engineering technology platform to develop early stage, novel biotherapeutic product candidates, both for our 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 for the

potential treatment of PKU.

In October 2017, we entered into the "Nestlé Agreement” with Nestlé Health Science to advance CDX-6114, our enzyme biotherapeutic product candidate for the potential treatment of phenylketonuria ("PKU").

PKU is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient.

25 unchanged sentences

Our most recent achievement in novel biotherapeutics came in March 2020, when we announced a strategic collaboration and license agreement with Takeda in which we will collaborate with Takeda to research and develop protein sequences for use in gene therapy products for certain disease indications.

Under the terms of the Takeda Agreement, Codexis 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.

Under 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 for the treatment of rare genetic disorders.

The parties will begin collaborative work on three initial programs for the treatment of Fabry disease, Pompe disease, and an unnamed blood factor deficiency.

Codexis is responsible for the creation of novel enzyme sequences for advancement as gene therapies into pre-clinical development.

We are currently collaborating on three initial programs for the treatment of Fabry disease, Pompe disease, and an unnamed 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.

10 unchanged sentences

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 disrupted as a result of local shelter-in-place orders and any disruptions in operations of our customers with whom we collaborate.

For the three months ended March 31, 2020, the COVID-19 pandemic resulted in lower research and development revenues of approximately $0.6 million as completion of those services were deferred to the future periods.

We are unable to fully determine and quantify the extent to which delays in our R&D projects will be affected by the COVID-19 pandemic.

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 the potential impact of the COVID-19 pandemic on our business and operations, including our product sales, R&D service revenue, expenses and manufacturing.

In the U.S., the impact of COVID-19, including governmental orders governing the operation of non-essential businesses during the pandemic, has caused the temporary closure of our Redwood City, California facilities and has disrupted our research and development operations.

Our Redwood City employees have been working from home since mid-March 2020, while ensuring essential staffing levels in our operations remain in place.

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 our research and development operations.

Research and development operations for all other projects were temporarily suspended from mid-March 2020 through the end of April in accordance 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 of our normal R&D capacity.

Additionally, we have resumed small scale manufacturing at our Redwood City pilot plant in May 2020.

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.

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.

As of the date of issuance of the unaudited 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 in the future.

Recent Investing Activities

In June 2020, we entered into a Master Collaboration and Research Agreement with Molecular Assemblies, Inc.

(“MAI”), a privately held company, to engineer enzymes to deliver differentiated and cost-effective solutions for the enzymatic synthesis of DNA (“MAI Agreement”).

Under an associated stock purchase agreement, we purchased 1,587,050 shares of MAI's Series A preferred stock for $ 1.0 million, and in connection with 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.

For additional information, see Note 12, " Related Party Transactions," in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Basis of Presentation and Summary of Significant Accounting Policies

4 unchanged sentences

The condensed consolidated balance sheet at December 31, 2019 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 for the three months ended March 31, 2020 are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2019 Annual Report on Form 10-K and are updated below as necessary.

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020 are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2019 Annual Report on Form 10-K and are updated below as necessary.

Certain prior year amounts have been reclassified to conform to 2020 presentation.

In June 2016, the 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.

months ended March 31, 2020 and 2019, changes in stockholders' equity for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019.

The interim results are not necessarily indicative of the results for any future interim periods or for the entire year.

The results of the three months ended March 31, 2020 reflect the adoption of the accounting standards including:

Except as noted above, the unaudited condensed consolidated financial 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, results of our operations for the three and six months ended June 30, 2020 and 2019, changes in stockholders' equity for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019.

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):

8 unchanged sentences

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 a 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.

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.

1 unchanged sentence

Financial assets and Allowances

We currently sell 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.

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.

2 unchanged sentences

We recognize accounts receivable at invoiced amounts and we maintain a valuation allowance as follows:

Valuation Allowance from January 1, 2020

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 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.

10 unchanged sentences

Adjustments to historical loss information may be qualitative or quantitative in nature and reflect changes related to relevant data.

In the three months ended March 31, 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.

Valuation Allowance before January 1, 2020

In the three and six months ended June 30, 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.

3 unchanged sentences

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 information from the company, which may include:

• Audited and unaudited financial statements;

• Projected technological developments of the company;

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

• If a deemed liquidation event were to occur;

• Current fundraising transactions;

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

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

• Qualitative assessment of key management;

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

• 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.

22 unchanged sentences

Interim Goodwill Impairment Testing

We tested goodwill for impairment in quarter ended March 31, 2020.

We tested goodwill for impairment in the quarter ended June 30, 2020.

In late 2019, COVID-19 was reported to have surfaced and has since spread worldwide.

4 unchanged sentences

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 March 31, 2020 and the assigned goodwill to its fair value at March 31, 2020.

We concluded that there was no goodwill impairment at March 31, 2020.

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 no goodwill impairment at June 30, 2020.

Segment Reporting

2 unchanged sentences

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 our company.

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.

5 unchanged sentences

The CARES Act includes a number of federal income tax law changes, including, but not limited to:

1) permitting net operating loss carrybacks to offset 100% of taxable income for taxable years beginning before 2021, 2) accelerating alternative minimum tax credit refunds, 3) temporarily increasing the allowable business interest deduction from 30% to 50% of adjusted taxable income, and 4) providing a technical correction for depreciation related to qualified improvement property.

(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.

6 unchanged sentences

Our financial assets measured at amortized cost are comprised of accounts receivable, contract assets, and unbilled receivables.

We adopted the new standard on January 1, 2020 using a modified retrospective approach requiring a cumulative-effect adjustment to the opening accumulated deficit as of the date of adoption.

We adopted the new standard in the first quarter of 2020 using 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.

The adoption of this standard required certain additional disclosures but had no other impact on our unaudited condensed consolidated financial statements.

The adoption required certain additional disclosures but had no other impact on our unaudited condensed consolidated financial statements.

In January 2017, the FASB issued ASU No.

8 unchanged sentences

An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

We adopted the standard on January 1, 2020 using a prospective approach.

The adoption of this standard required certain additional disclosures but had no impact on our unaudited condensed consolidated financial statements.

We adopted the standard in the first quarter of 2020 using a prospective approach.

The adoption required certain additional disclosures but had no impact on our unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

2 unchanged sentences

The changes affect all companies that are required to include fair value measurement disclosures.

value measurements categorized within Level 3 of the fair value hierarchy, and narrative description of measurement uncertainty.

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 on January 1, 2020.

Adoption of this standard had no impact on our unaudited condensed consolidated financial statements and related disclosures.

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):

3 unchanged sentences

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 on January 1, 2020.

Adoption of this standard had no impact on our unaudited condensed consolidated financial statements and related disclosures.

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.

Recently issued accounting pronouncements not yet adopted

12 unchanged sentences

We are currently evaluating the effects of the standard on our consolidated financial statements and related disclosures.

In May 2020, the Securities and Exchange Commission formally adopted amendments to financial disclosure regulations regarding the acquisition and disposition 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 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.

Revenue Recognition

3 unchanged sentences

Segment information is as follows (in thousands):

Three months ended March 31, 2020 Three months ended March 31, 2019

Three months ended June 30, 2020 Three months ended June 30, 2019

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

8 unchanged sentences

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

Contract Balances

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

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Contract Assets $ — $ 1,027

3 unchanged sentences

Deferred Revenue $ 5,045 $ 2,044

We had no asset impairment charges related to contract assets in the three months ended March 31, 2020 and 2019.

During the three months ended March 31, 2020, decreases in contract assets were primarily due to contract assets that were subsequently invoiced as our right to consideration for goods and services became unconditional.

We had no asset impairment charges related to contract assets in the three and six months ended June 30, 2020 and 2019.

During the six months ended June 30, 2020, decreases in contract assets were primarily due to contract assets that were subsequently invoiced as our right to consideration for goods and services became unconditional.

Increases in unbilled receivables were primarily due to the timing of billings.

The increase in deferred revenue were primarily due to cash advances received in excess of revenue recognized.

During the three months ended March 31, 2020 and 2019, we recognized the following revenues (in thousands):

Three months ended March 31,

During the three and six months ended June 30, 2020 and 2019, 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:

6 unchanged sentences

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 March 31, 2020.

The balances in the table below are partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts (in thousands):

10 unchanged sentences

The following shares were not included in the computation of diluted net loss per share (in thousands):

Three months ended March 31,

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

7 unchanged sentences

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 and we recognized research and development revenue of $ 2.0 million in the year ended December 31, 2019.

We had no deferred revenue balances as of March 31, 2020 and December 31, 2019.

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 no research and development revenue for the three and six months ended June 30, 2020 and 2019.

Merck Platform Technology Transfer and License Agreement

1 unchanged sentence

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 of $ 0.9 million and $ 1.0 million for the three months ended March 31, 2020 and 2019, respectively, for various research projects under our collaborative arrangement.

We recognized research and development revenues $ 0.2 million and $ 1.0 million for the three and six months ended June 30, 2020, respectively, compared to $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2019, respectively, for various research projects under our collaborative arrangement.

We have the potential to receive payments of up to a maximum of $ 15.0 million for each commercial active pharmaceutical ingredient ("API") that is manufactured by Merck using one or more novel enzymes developed by Merck using the CodeEvolver ® protein engineering technology platform.

1 unchanged sentence

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 as license fee revenue accordingly.

The license installation was completed in 2019 and we recognized $ 0.9 million in 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 March 31, 2020, Merck has not exercised its option for technology enhancements.

We recognized $ 25 thousand in research and development revenues under the terms of the amendment in the three months ended March 31, 2020.

As of March 31, 2020 and December 31, 2019, we had deferred revenue balances of $ 0.1 million and nil , respectively.

As of June 30, 2020, Merck has not exercised its option for technology enhancements.

We recognized $ 25 thousand and $ 50 thousand in research and development revenues under the terms of the amendment in the three and six months ended June 30, 2020, respectively.

As of June 30, 2020 and December 31, 2019, we had deferred revenue balances of $ 0.1 million and nil , respectively.

Merck Sitagliptin Catalyst Supply Agreement

9 unchanged sentences

Deferred revenues were offset against contract assets where the right of offset exists within the contract.

We recognized revenue of $ 1.8 million and $ 5.3 million for the three months ended March 31, 2020, and 2019, respectively, in product revenue under this agreement.

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 nil , respectively.

Enzyme Supply Agreement

3 unchanged sentences

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 March 31, 2020 and December 31, 2019, we had deferred revenue balances from the supply agreement of $ 2.0 million.

Global Development, Option and License Agreement and Strategic Collaboration Agreement

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.

1 unchanged sentence

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 are being recognized over time as the development work is being performed.

Revenue 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 all performance obligations under the agreement.

We recognized development fees of nil and $ 1.3 million in research and development revenue for the three months ended March 31, 2020 and 2019, respectively.

We had deferred revenue balances related to the development fees attributed to the milestone payment and up-front fees of a no minal amount at March 31, 2020 and $ 13 thousand at December 31, 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 no minal 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.

2 unchanged sentences

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 addition to the Nestlé Agreement, we and Nestlé Health Science entered into a Strategic Collaboration Agreement (the “Strategic Collaboration Agreement”) pursuant to which we and Nestlé Health Science will collaborate 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.

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.

We recognized research and development fees of $ 1.6 million and $ 1.2 million for the three months ended March 31, 2020 and 2019, respectively.

The Strategic Collaboration Agreement has been extended through December 2021.

Development Agreement

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

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 Codexis’ biocatalyst technology for use in Porton’s global custom intermediate and API development and manufacturing business.

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 agreement and $ 1.5 million upon the first 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 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 agreeme nt.

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 technica l 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 $ 0.1 million and nil in the three months ended March 31, 2020 and 2019, respectively.

Commercial Agreement

In April 2019, we entered into a multi-year commercial agreement with Tate & Lyle under which Tate & Lyle has received an exclusive license to use a suite of Codexis novel performance enzymes in the manufacture of Tate & Lyle’s zero-calorie stevia sweetener, TASTEVA ® M, and other stevia products.

Under the agreement, we will supply Tate & Lyle with its requirements for these enzymes over a multiple year period and receive royalties on stevia products.

We recognized a no minal amount of royalty revenue for the three months ended March 31, 2020 in product revenue under this agreement.

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 no 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 Codexis’ proprietary CodeEvolver ® protein engineering platform technology in the field of human healthcare.

Under the Novartis CodeEvolver ® Agreement, we will transfer Codexis' proprietary CodeEvolver ® protein engineering platform technology to Novartis over approximately 20 months, starting with the date on which we commence the technology transfer (the “Technology Transfer Period”).

As a part of this technology transfer, our company provided to Novartis Codexis’ proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms.

In addition, teams of Codexis and Novartis scientists participated in technology training sessions and collaborative research projects at Codexis’ laboratories in Redwood City, California and at a designated Novartis laboratory in Basel, Switzerland.

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 ® Agreement.

We are entitled to receive an additional $ 4.0 million subject to satisfactory completion of the second technology transfer milestone and 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 the Codexis technology and materials during a multi-year period that begins on the conclusion of the Technology Transfer Period, Novartis will pay Codexis annual payments which amount to an additional $ 8.0 million.

Codexis 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 Codexis for each quarter that Novartis manufactures API using a CodeEvolver ® -developed enzyme.

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 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 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 $ 2.4 million in research and development revenue for the three months ended March 31, 2020 from the Novartis CodeEvolver ® Agreement.

In April 2020, we achieved a technology transfer milestone associated with the Novartis CodeEvolver ® Agreement.

(See Note 15, "Subsequent Events" for more details.)

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 no 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 Codexis’ EvoT4 DNA™ ligase high-performance molecular diagnostic enzyme.

(“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 Codexis 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 $ 0.7 million for the three months ended March 31, 2020.

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

17 unchanged sentences

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 $ 2.2 million in the three months ended March 31, 2020.

As of March 31, 2020 we had deferred revenue balance of $ 6.4 million from Takeda.

Cash Equivalents

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

March 31, 2020 December 31, 2019

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 no research and development revenue in the three and six months ended June 30, 2020 from transactions with MAI.

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

3 unchanged sentences

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

As of March 31, 2020, the total cash and cash equivalents balance of $ 87.3 million was comprised of money market funds of $ 68.5 million and cash of $ 18.8 million held with major financial institutions worldwide.

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.

Our investment was $ 1.0 million at June 30, 2020.

For additional information, see Note 12, " Related Party Transactions."

Fair Value Measurements

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

March 31, 2020

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, 2020

Level 1 Level 2 Level 3 Total

5 unchanged sentences

Inventories consisted of the following (in thousands):

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Raw materials $ 77 $ 7

4 unchanged sentences

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

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Laboratory equipment $ 24,717 $ 23,561

6 unchanged sentences

Property and equipment, net $ 6,822 $ 6,282

Goodwill had a carrying value of approximately $ 3.2 million as of March 31, 2020 and December 31, 2019.

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

Other Accrued Liabilities

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

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Accrued purchases $ 3,669 $ 4,386

33 unchanged sentences

In the first quarter of 2020, we awarded PSUs ("2020 PSUs") and PBOs ("2020 PBOs"), each of which commence vesting based upon the achievement of various weighted performance goals, including sustained revenue and performance enzyme growth, strategic advancements of biotherapeutics pipeline, safety and technology development.

As of March 31, 2020, we estimated that the 2020 PSUs and 2020 PBOs performance goals would be achieved at 100 % of the target level, and recognized expenses accordingly.

In the first quarter of 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.

As of June 30, 2020, we estimated that the 2020 PSUs and 2020 PBOs performance goals would be achieved at 100 % of the target level, and recognized expenses accordingly.

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 % 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 in the first quarter of 2021, in each case subject to the recipient’s continued service on each vesting date.

In the first quarter of 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 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.

2 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six months ended June 30,

2020 2019 2020 2019

Research and development $ 471 $ 403 $ 894 $ 791

1 unchanged sentence

Total $ 1,939 $ 1,988 $ 4,108 $ 4,051

The following table presents total stock-based compensation expense by security type included in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended March 31,

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

As of March 31, 2020, unrecognized stock-based compensation expense, net of expected forfeitures, was $ 4.7 million related to unvested employee stock options, $ 2.4 million related to unvested RSUs and RSAs, $ 1.2 million related to unvested PSUs, and $ 2.0 million related to unvested PBOs based on current estimates of the level of achievement.

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) no 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, 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 million related to unvested RSUs and RSAs, $ 1.1 million related to unvested PSUs, and $ 1.7 million related to unvested PBOs based on current estimates of the level of achievement.

Stock-based compensation expense for these awards will be recognized through the year of 2024.

1 unchanged sentence

Exercise of Options

For the three months ended March 31, 2020 and March 31, 2019, 5,333 and 218,572 shares, respectively, were issued upon option exercises at a weighted-average exercise price of $ 7.31 and $ 3.55 per share, respectively, with net cash proceeds of $ 39.0 thousand and $ 0.8 million, respectively.

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

Private Offering

In June 2019, we entered into a Securities Purchase Agreement with an affiliate of Casdin pursuant to which we issued and sold to Casdin 3,048,780 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 pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) the Securities Act, and Regulation D under the Securities Act.

Commitments and Contingencies

5 unchanged sentences

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 are subleasing approximately 3,400 square feet of the Saginaw Space from Minerva Surgical, Inc.

This sublease will end on April 30, 2020.

During the period from February 1, 2020 through April 30, 2020, we subleased approximately 3,400 square feet of the Saginaw Space 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 in 2004 and the lease has been amended multiple times since then to adjust space and terms of the lease ("Lease").

In February 2019, we have entered into an Eighth Amendment to the Lease ( 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.

In February 2019, we entered into an Eighth Amendment to the Lease ( 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.

4 unchanged sentences

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 March 31, 2020 and December 31, 2019, which are included in other liabilities on the unaudited condensed consolidated balance sheets.

We recorded asset retirement obligations of $ 0.2 million as of June 30, 2020 and December 31, 2019, which are included in other liabilities on the unaudited condensed consolidated balance sheets.

Accretion expense related to our asset retirement obligations was no minal.

Pursuant to the terms of the 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 March 31, 2020 and December 31, 2019, and are recorded as non-current restricted cash on the unaudited condensed consolidated balance sheets.

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 and December 31, 2019, and are recorded as non-current restricted cash on the unaudited condensed consolidated balance sheets.

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 lease was three years from the effective date was expired in February 2020.

The lease became effective upon delivery of the equipment in February 2017, and 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 date of the lease was May 19, 2017 and the term of the lease was three years to be expired in April 2020.

The effective term of the three-year lease was from May 2017 and expired in April 2020.

Lease Costs and other information

Lease related costs were as follows (in thousands):

Three Months Ended March 31,

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

Finance lease costs:

7 unchanged sentences

(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 March 31, 2020 was as follows:

Operating Leases Finance Leases

Weighted-average remaining lease term (in years) 7.4 years 0.1 years

Other information related to non-cancellable finance leases and operating leases under non-cancellable subleases as of June 30, 2020 was as follows:

Operating Leases

Weighted-average remaining lease term (in years) 7.2 years

Weighted-average discount rate 6.6 %

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

Three Months Ended March 31,

Six months ended June 30,

Operating cash flows from operating leases $ 774 $ 1,633

1 unchanged sentence

Financing cash flows from finance leases $ 60 $ 119

As of March 31, 2020, 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, Finance Leases Operating Leases

As of June 30, 2020, 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, Operating Leases

2020 (remaining 6 months) $ 2,042

14 unchanged sentences

Development and manufacturing services agreements September 2019 3,785

Strategic Collaboration and License Agreement March 2020 364

Total other commitments $ 4,853

1 unchanged sentence

In June 30, 2017, we entered into a credit facility (the “Credit Facility”) 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.

At March 31, 2020 and December 31, 2019, we have not drawn from the Credit Facility.

At June 30, 2020 and December 31, 2019, we have not drawn from the Credit Facility.

We may draw on the Revolving Line of Credit at any time prior to the September 30, 2020 maturity date.

3 unchanged sentences

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 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.

At March 31, 2020, we were in compliance with the covenants for the Credit Facility.

At June 30, 2020, 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.

17 unchanged sentences

For the three months ended March 31, 2020, the COVID-19 pandemic resulted in lower research and development revenues of approximately $ 0.6 million as completion of certain R&D services were deferred to the future periods.

We are unable to fully determine and quantify the extent to which delays in our R&D projects will be affected by the COVID-19 pandemic.

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 revenue, expenses and manufacturing.

Our Redwood City employees have been working from home since mid-March 2020, while ensuring essential staffing levels in our operations remain in place.

However, we are unable to fully determine and quantify the extent to which this pandemic affected our total revenues due to complex accounting judgments.

Research and development operations for all other projects were temporarily suspended from mid-March 2020 through the end of April in accordance 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 of our normal R&D capacity.

Additionally, we have resumed small scale manufacturing at our Redwood City pilot plant in May 2020.

Related Party Transactions

Related Party

AstraZeneca PLC

Cheng, a member of our board of directors, joined AstraZeneca PLC as Executive Vice President, Operations and Information Technology in June 2015.

Cheng, a member of our board of directors for a three-year term expiring at our Annual Shareholder Meeting in June 2020, joined AstraZeneca PLC as Executive Vice President, Operations and Information Technology in June 2015.

We sell biocatalyst products to AstraZeneca PLC and its controlled purchasing agents and contract manufacturers.

We recognized $ 0.1 million and no minal revenue in the three months ended March 31, 2020, and 2019, respectively, from transactions with AstraZeneca PLC and its controlled purchasing agents and contract manufacturers.

At March 31, 2020 and December 31, 2019, we had $ 0.1 million and $ 0.3 million of receivables from AstraZeneca PLC and its controlled purchasing agents and contract manufacturers, respectively.

We recognized $ 20 thousand and $ 0.1 million in revenue in the three and six months ended June 30, 2020, respectively, compared to $ 0.4 million and $ 0.4 million in the three and six months ended June 30, 2019, respectively, from transactions with AstraZeneca PLC and its controlled purchasing agents and contract manufacturers.

At June 30, 2020 and December 31, 2019, we had no minal and $ 0.3 million, respectively, of receivables from AstraZeneca PLC and its controlled purchasing agents and contract manufacturers, 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.

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 no research and development revenue in the three and six months ended June 30, 2020 from transactions with MAI.

Segment, Geographical and Other Revenue Information

4 unchanged sentences

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 our company.

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.

15 unchanged sentences

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 two 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.

2 unchanged sentences

This provides the CODM with more meaningful segment profitability reporting to support operating decisions and allocate resources.

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

Three months ended March 31, 2020 Three months ended March 31, 2019

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

Three months ended June 30, 2020 Three months ended June 30, 2019

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

16 unchanged sentences

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

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

Three months ended March 31,

Six months ended June 30, 2020 Six months ended June 30, 2019

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

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.

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

Three months ended June 30,

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,

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

Significant Customers

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

Three Months Ended March 31,

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 %

2 unchanged sentences

Customer D * * 13 % *

Customer E 38 % * 27 % *

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

Percentage of Accounts Receivables as of

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Customer A 26 % 38 %

Customer B 11 % 10 %

Customer D 30 % *

Customer F 10 % *

* Percentage was l ess than 10%

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended June 30, Six months ended June 30,

2020 2019 2020 2019

Americas $ 6,906 $ 4,076 $ 12,131 $ 6,913

3 unchanged sentences

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

Long-lived assets March 31, 2020 December 31, 2019

Long-lived assets June 30, 2020 December 31, 2019

United States $ 6,822 $ 6,282

Identifiable goodwill was as follows (in thousands):

March 31, 2020 December 31, 2019

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

As of June 30, 2020 and December 31, 2019

Performance Enzymes Novel Biotherapeutics Total

Goodwill $ 2,463 $ 778 $ 3,241

1 unchanged sentence

An analysis of the allowance for credit losses is as follows (in thousands):

Three months ended March 31, 2020

Three and six months

June 30, 2020

Beginning Balance January 1, 2020 $ 34

1 unchanged sentence

Recoveries of amounts previously written off —

Ending Balance March 31, 2020 $ 34

Ending Balance June 30, 2020 $ 34

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

March 31, 2020

June 30, 2020

31-60 Days 61-90 Days 91 days and over Total over 31 days Current Total balance

3 unchanged sentences

Accounts receivable $ 185 $ 7 $ 65 $ 257 $ 8,806 $ 9,063

Subsequent Events

Achievement of milestone under Platform Technology Transfer and License Agreement

In April 2020, we achieved a technology transfer milestone associated with the Novartis CodeEvolver ® Agreement.

We are entitled to receive $ 4.0 million within 60 days of achievement of the technology transfer milestone.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements