What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-28 compared with 2021-03-01 · 165 added, 207 removed, 476 unchanged (44% of the section changed)

19 unchanged sentences

Additionally, we have licensed our proprietary CodeEvolver ® protein engineering technology platform to global pharmaceutical companies 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”).

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 (Codexis’ 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 biocatalysts and enzyme products for use in a broader set of industrial markets, including several large verticals, such as food, feed, consumer care and fine chemicals.

In addition, we are using our technology to develop enzymes for various life science related applications, such as next generation sequencing (“NGS”) and polymerase chain reaction (“PCR/qPCR”) for in vitro molecular diagnostic and genomic research applications.

In addition, we are using our technology to develop enzymes for various life science related applications, such as next generation sequencing (“NGS”), DNA and RNA synthesis and other molecular biology research applications.

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

3 unchanged sentences

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

("MAI") (the “MAI Agreement”) pursuant to which we are leveraging our CodeEvolver ® platform technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA

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 Operating Officer, also joined MAI’s board of directors.

Approximately five years ago, we began using the CodeEvolver ® protein engineering technology platform to develop early stage, novel biotherapeutic product candidates, both in partnership with customers and for our own proprietary Codexis drug candidates.

("MAI") (the “MAI Agreement”) pursuant to which we are leveraging our CodeEvolver ® platform

technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis.

We anticipate completing an enzyme engineering project with MAI in the first quarter of 2022.

We have been using the CodeEvolver ® protein engineering technology platform to develop early stage, novel biotherapeutic product candidates, both in partnership with customers and for our own proprietary Codexis drug candidates.

Our first program was for the potential treatment of phenylketonuria ("PKU") in humans.

3 unchanged sentences

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 Nestle Health Science (“Nestlé SCA”) in 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 gastro-intestinal disorder.

In parallel, the Nestlé SCA was extended through December 2021 to support the discovery of therapeutic candidates for additional disorders.

Also in October 2017, we entered into a strategic collaboration agreement with Nestle 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 March 2020, we entered into a Strategic Collaboration and License Agreement (“Takeda Agreement”) with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Company Limited (“Takeda”), for the research and development of novel gene therapies for certain disease indications, including the treatment of lysosomal storage disorders and a blood factor deficiency.

18 unchanged sentences

The initiation of the trial triggered a $4.0 million milestone payment from Nestlé Health Science.

$1.0 million milestone payment that was triggered by the achievement of a formulation relating to CDX-6114 was received in February 2019.

The $1.0 million milestone payment that was triggered by the achievement of a formulation relating to CDX-6114 was received in February 2019.

In January 2019, we received notice from the U.S.

1 unchanged sentence

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.

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 separately entered into the Nestlé SCA with Nestlé Health Science 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 and Nestlé Health Science entered into a development agreement pursuant to which we and Nestlé Health Science are collaborating to advance into pre-clinical and early clinical studies a lead candidate targeting a gastro-intestinal disorder, CDX-7108, discovered through the Nestlé SCA.

The Nestlé SCA was extended through December 2021.

During 2020, we, together with Nestlé Health Science, continued to advance CDX-7108 towards initiation of a Phase 1 clinical trial which we anticipate will begin in 2021.

Additionally, the parties initiated two new programs under the Nestlé SCA targeting a gastro-intestinal disorder.

The term of the Nestlé SCA has been extended through December 2022.

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 CDX-7108, a lead candidate targeting a gastrointestinal disorder, discovered through the Nestlé SCA, into preclinical and early clinical studies.

During 2021, we, together with Nestlé Health Science, continued to advance CDX-7108 towards initiation of a Phase 1 clinical trial with the first subject being dosed in November 2021.

In March 2020, we entered into the Takeda Agreement with Takeda pursuant to which we are collaborating to research and develop protein sequences for use in gene therapy products for certain disease indications in accordance with the respective program plans for Fabry Disease, Pompe Disease, and an undisclosed blood factor deficiency.

In March 2020, we received a one-time, non-refundable cash 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 Takeda.

Of these programs, the Fabry disease program is the most advanced, with multiple sequences, including CDX-6311, which were provided to Takeda.

We also provided sequences to Takeda for the Pompe program.

In May 2021, Takeda elected to exercise their option to initiate an additional program for a certain undisclosed rare genetic disorder and we received the option exercise fee during the third quarter of 2021.

RECENT DEVELOPMENT - PFIZER (PAXLOVID™)

In the first and second quarters of 2021, we began to receive purchase orders from Pfizer, Inc.

(“Pfizer”) for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir.

Pfizer markets, sells and distributes nirmatrelvir, in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets;

ritonavir tablets) product, which received emergency use authorization by the U.S.

Food and Drug Administration (“FDA”) in late 2021 for the treatment of COVID-19 in humans.

In 2021, we recognized approximately $34.5 million in revenue from the sale of quantities of CDX-616 to Pfizer.

In addition, as of December 31, 2021, we have received additional purchase orders from Pfizer for delivery of a significant quantity of CDX-616 in 2022.

We have received and currently expect to receive additional purchase orders from Pfizer for significant quantities of CDX-616 during the course of 2022 for delivery in 2022 and 2023.

As of December 31, 2021, we have not yet executed a long-term purchase and sale agreement with Pfizer for CDX-616;

with or without a long-term purchase and sale agreement, we currently expect that future orders for quantities of CDX-616 by Pfizer will continue to be based on the needs of Pfizer for quantities of CDX-616 and there will be no minimum purchase obligation on the part of Pfizer.

BUSINESS UPDATE REGARDING COVID-19

2 unchanged sentences

economy and other economies worldwide.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and may not be accurately predicted, including the duration and severity of the pandemic 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.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and may not be accurately predicted, including the duration and severity of the pandemic, the prevalence of more contagious and or virulent variants such as the Delta and Omicron variants, and the extent and severity of the impact on our customers, new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

In the United States, the impact of COVID-19, including governmental orders (“Orders”) governing the operation of businesses during the pandemic, caused the temporary closure of our Redwood City, California facilities in 2020 and disrupted our R&D operatio ns.

R&D operations for several projects were temporarily suspended from mid-March 2020 through the end of April 2020 in accordance with these Orders.

In May 2020, we re-initiated limited R&D operations and have ramped up operations such that we are currently utilizing our normal R&D capacity while following county, state and federal COVID-19 guidance for the protection of our employees.

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

To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide.

1 unchanged sentence

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 believe that these disruptions had a negative impact on our revenue for the year ended December 31, 2020, although we are unable to fully determine and quantify the extent to which this pandemic has affected the amount and timing of our total revenues.

We believe that these disruptions have had a minimal

impact on our revenue for the year ended December 31, 2021.

The extent to which the pandemic may impact our business operations and operating results will continue to remain highly dependent on future developments, which are uncertain and cannot be predicted with confidence.

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 R&D operations.

R&D operations for several projects were temporarily suspended from mid-March 2020 through the end of April 2020 in accordance with these Orders.

In May 2020, we re-initiated limited R&D operations and have ramped up operations such that we are currently utilizing the majority of our normal R&D capacity while following county, state and federal COVID-19 guidance for the protection of our employees.

Additionally, we 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.

The near-and-long term impact of COVID-19 to our financial condition, liquidity, or results of operations remains uncertain.

Although some of the Orders that were enacted to control the spread of COVID-19 have begun to be scaled back and the vaccine rollout has expanded, surges in the spread of COVID-19 due to the emergence of new more contagious or virulent variants or the ineffectiveness of the vaccines against such strains, may result in the reimplementation of certain Orders, which could adversely impact our business.

The extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity, or results of operations in the future is uncertain.

As a result of the COVID-19 pandemic we have received purchase orders from Pfizer for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir, used by Pfizer in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets;

ritonavir tablets) product for the treatment of COVID-19 infections in humans.

These purchase orders have had a substantial impact on our revenue in 2021.

For additional information on the various risks posed by the COVID-19 pandemic, see “Risk Factors” set forth in Item 1A of this Annual Report on Form 10-K.

RECENT INVESTING AND FINANCING ACTIVITIES

In June 2020, 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.

In connection with the transaction, John Nicols, our President and Chief Operating Officer, also joined MAI’s board of directors.

Concurrently with our initial equity investment, we entered into the MAI Agreement pursuant to which we are performing services utilizing our CodeEvolver ® protein engineering platform technology to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A preferred stock.

We received 714,171 shares of MAI's Series A preferred stock from research and development activities in the year ended December 31, 2020, and recognized $0.9 million in research and development revenue from these activities with MAI in the year ended December 31, 2020.

At December 31, 2020, we had $0.5 million of financial assets due from MAI for services rendered.

In November 2020, we announced the SynBio Innovation Accelerator (“Accelerator”) collaboration with Casdin Capital, LLC ("Casdin").

The goal of the Accelerator is to fund the early-stage companies with disruptive technology platforms or unique product development capabilities in the field of synthetic and industrial biotechnology.

The first investment by Codexis associated with the Accelerator collaboration was made in Arzeda Corp., a privately-held computational protein design company that focuses on computational approaches to designing novel enzyme functionality.

We invested $1.0 million in Arzeda and received a convertible subordinated note issued by Arzeda Corp.

The note is an available-for-sale non-marketable interest-bearing debt security which will mature within one year.

In December 2020, we completed an underwritten public offering of 4,928,572 shares of our common stock, including the exercise in full by the underwriters of their option to purchase an additional 642,857 of our shares, at a public offering price of $17.50 per share.

After deducting the underwriting discounts, commissions, and estimated offering expenses, net proceeds were approximately $80.8 million.

Our strategy is to grow our revenues, profits, and stockholder value by leveraging our CodeEvolver ® protein engineering technology platform in the following ways:

19 unchanged sentences

To meet these pressures, pharmaceutical companies are discovering and developing novel protein-based drug products, as well as seeking manufacturing processes for their new and existing drugs that reduce overall costs, simplify production and increase efficiency and product yield, while not affecting drug safety and efficacy.

Cost reduction is even more important to developers (known as innovators) of patent-protected pharmaceutical products when the patents for those products expire and such innovators are forced to compete with manufacturers of generic drugs.

Cost reduction is even more important to developers (known as innovators)

of patent-protected pharmaceutical products when the patents for those products expire and such innovators are forced to compete with manufacturers of generic drugs.

The pharmaceutical product lifecycle begins with the discovery of new chemical entities and continues through preclinical and clinical development, regulatory review and approval, commercial scale-up, product launch, and, ultimately, patent expiration and the transition from branded to generic products.

2 unchanged sentences

However, as pressures to reduce costs have increased, innovators have pursued cost reduction measures much earlier in the pharmaceutical product lifecycle and are increasingly looking for opportunities to improve their operating margins, including making manufacturing process changes for marketed products after the products have been launched if these changes can result in significant cost reductions.

As a result, innovators are investing in new technologies, including our CodeEvolver ® protein engineering technology platform, to improve their manufacturing productivity and efficiency or outsourcing the manufacture of their intermediates and APIs.

Our Solutions for the Pharmaceutical Market

18 unchanged sentences

Typically, pharmaceutical companies will only seek regulatory approval for a manufacturing change if substantial cost savings are realizable.

We believe that the cost savings associated with our products may lead our customers to change their manufacturing processes for approved products and, if necessary, seek regulatory approval of the new processes which

incorporate our biocatalyst products.

Moreover, we believe these cost savings are potentially attractive to generics manufacturers, who compete primarily on price.

3 unchanged sentences

All three of these awards were associated with blockbuster drug products.

Licensing Our CodeEvolver ® Protein Engineering Technology Platform

Licensing our CodeEvolver ® protein engineering technology platform to pharmaceutical companies enables them to rapidly develop custom-designed enzymes that are highly optimized for efficient manufacturing processes.

To date, we have entered into platform technology licensing agreements with each of GlaxoSmithKline Intellectual Property Development Limited, a

subsidiary of GlaxoSmithKline plc ("GSK"), Merck, Sharp & Dohme ("Merck") and Novartis Pharma AG ("Novartis"), and we intend to continue to enter into license arrangements with third parties that will allow them to use our CodeEvolver ® protein engineering technology platform to discover and develop novel proteins for their internal use.

GlaxoSmithKline

We entered into our first CodeEvolver ® protein engineering Platform Technology Transfer, Collaboration and License Agreement (“GSK CodeEvolver ® Agreement”) in July 2014 with GlaxoSmithKline Intellectual Property Development Limited, a subsidiary of GSK, pursuant to which we granted GSK a non-exclusive, worldwide license to use our CodeEvolver ® protein engineering technology platform in the field of human healthcare for its internal development purposes.

Under the GSK CodeEvolver ® Agreement, we licensed and transferred our certain patents, patent applications and know-how from our CodeEvolver ® protein engineering technology platform to GSK, completing the transfer in April 2016.

Under this agreement, we have the potential to receive 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, if any, of a limited set of products developed by GSK using our CodeEvolver ® protein engineering technology platform.

The term of the GSK CodeEvolver ® Agreement continues, unless earlier terminated, until the expiration of all payment obligations under the GSK CodeEvolver ® Agreement.

GSK can terminate the GSK CodeEvolver ® Agreement by providing 90 days written notice to us.

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.

In 2021, we received two additional milestone payments from GSK under the GSK CodeEvolver ® Agreement .

In August 2015, we entered into a CodeEvolver ® Platform Technology Transfer and License Agreement (the “Merck CodeEvolver ® Agreement”) with Merck.

The Merck CodeEvolver ® Agreement allows Merck to use our proprietary CodeEvolver ® protein engineering platform technology in the field of human and animal healthcare.

Under the terms of the Merck CodeEvolver ® Agreement, we granted to Merck an exclusive license under certain patents, patent applications and know-how from our CodeEvolver ® protein engineering technology platform for the research, development and manufacture of novel enzymes for use by Merck in the chemical synthesis of therapeutic products owned or controlled by Merck ("Merck Exclusive Field") and a non-exclusive worldwide license to use the CodeEvolver ® protein engineering technology platform to research, develop and manufacture novel enzymes for use by Merck in its internal research programs (“Merck Non-Exclusive Field”).

Under the terms of the Merck CodeEvolver ® Agreement, Merck paid us upfront technology transfer and license fees and milestone payments over the technology transfer period of 15 months from August 2015.

We also have the potential to receive product-related payments of up to $15.0 million for each API that is manufactured by Merck using one or more enzymes that have been developed or are in development using the CodeEvolver ® protein engineering technology platform during the 10-year period that begins on the conclusion of the 15-month technology transfer period.

These product-related payments, if any, will be paid by Merck to us for each quarter that Merck manufactures API using a CodeEvolver ® -developed enzyme.

The payments will be based on the total volume of API produced using the CodeEvolver ® -developed enzyme.

In September 2016, we completed the full transfer of the engineering platform technology.

In October 2018, we entered into an amendment to the Merck CodeEvolver ® Agreement whereby we amended certain licensing provisions and one exhibit.

In January 2019, we entered in to an amendment to the Merck CodeEvolver ® Agreement whereby we installed certain CodeEvolver ® protein engineering technology upgrades into Merck’s platform license installation.

We maintained those upgrades for a multi-year term that expired in January 2022.

In May 2019, we entered into a Platform Technology Transfer and License Agreement (the “Novartis CodeEvolver ® Agreement”) with Novartis.

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

Under the terms of the Novartis CodeEvolver ® Agreement, Codexis granted to Novartis a worldwide license to use certain patents, patent applications and know-how from our CodeEvolver ® protein engineering technology platform to research, develop and manufacture novel enzymes for use by or on behalf of Novartis as biocatalysts in the chemical synthesis of small molecule and bioconjugate active pharmaceutical ingredients (“API”).

The license is exclusive for the research, development

and manufacture of novel enzymes for use by Novartis as biocatalysts in the chemical synthesis of API owned or controlled by Novartis (“Novartis Exclusive Field”) and non-exclusive license for the research, development and manufacture of novel enzymes for use by Novartis in the chemical synthesis of API not owned or controlled by Novartis or any third party (“Novartis Non-Exclusive Field”).

In July 2021, we announced the completion of the technology transfer period during which we transferred our proprietary CodeEvolver ® platform technology to Novartis (the “Technology Transfer Period”).

Pursuant to the Novartis CodeEvolver ® Agreement , we received an upfront payment of $5.0 million shortly after the effective date.

We completed the second technology milestone transfer under the agreement and received a milestone payment of $4.0 million in 2020.

We have also received an aggregate of $5.0 million for the completion of the third technology transfer milestone in 2021.

In consideration for the continued disclosure and license of improvements to the technology and materials during a multi-year period that began on the conclusion of the Technology Transfer Period (“Improvements Term”), Novartis will pay us annual payments over four years which amount to an additional $8.0 million in aggregate.

We also have 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 ® platform technology during the period that began 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.

The licenses to Novartis are granted under patents, patent applications and know-how that Codexis owns or controls as of the effective date and that cover the CodeEvolver ® platform technology.

Any improvements to the CodeEvolver ® platform technology during the Technology Transfer Period will also be included in the license grants from Codexis to Novartis.

See also "Recent Development - Pfizer (PAXLOVID™)" above for information on our relationship with Pfizer.

Biotherapeutic Discovery and Development Partnerships

3 unchanged sentences

We approach biopharmaceutical companies to collaborate and utilize our platform technology for the discovery of specific novel biotherapeutic candidates.

We currently have one such biotherapeutic discovery partnership in progress under the Nestlé SCA with Nestlé Health Science.

We continue to pursue other customers who could benefit by applying our CodeEvolver ® protein engineering platform technology to improve the discovery and/or development of other biotherapeutics in partnership with us.

We currently have one such biotherapeutic discovery partnership in progress under the Nestlé SCA with Nestlé Health Science and another discovery partnership in progress under the Takeda Agreement with Takeda.

We continue to pursue other partners who could benefit by the application of our CodeEvolver ® protein engineering platform technology to improve the discovery and/or development of other biotherapeutics in partnership with us.

Biotherapeutic Product Discovery and Development

We are also using our platform technology to self-fund the development of our own early stage, novel enzyme therapeutic product candidates.

The lead product candidate is CDX-6114, an enzyme which we have engineered to be orally administered and is being developed as a potential treatment of PKU in humans.

The first product candidate that resulted from this is CDX-6114, an enzyme which we have engineered to be orally administered and is being developed by Nestlé Health Science as a potential treatment of PKU in humans.

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

3 unchanged sentences

There are an estimated 50,000 people with PKU in the developed world.

In addition to the PKU program, we have focused our self-funded biotherapeutic investments with aim to discover therapeutic solutions for four additional rare disease conditions.

Two of those programs are targeting potential enzyme replacement treatments for patients with inborn errors of amino acid metabolism diseases.

The other two programs are targeting potential treatments for patients with lysosomal storage diseases.

Our self-funded biotherapeutic investments aim to discover therapeutic solutions for five additional rare disease conditions.

Two of those programs are targeting potential enzyme substitution treatments for patients with inborn errors of amino acid metabolism diseases.

CDX-6512 is an orally administrable enzyme substitution therapy candidate in IND-enabling studies for potential treatment of homocystinuria (HCU).

Food and Drug Administration (FDA) has granted the company orphan drug designation (ODD) and rare pediatric disease (RPD) designation for CDX-6512 for the treatment of HCU, an inborn metabolic disorder most commonly due to cystathionine beta-synthase (CBS) deficiency.

CBS is an enzyme involved in the metabolism of

homocysteine, a methionine metabolite.

As a result, methionine and/or homocysteine accumulate to toxic levels, that may lead to learning and intellectual disabilities, cardiovascular disease, osteoporosis, and stroke.

To prevent blood levels of methionine and/or homocysteine to become toxic, individuals with HCU must follow a strict, life-long diet that is low in methionine and supplement their diet with a synthetic methionine-free formula to provide them with sufficient nutrients.

Maintaining a strict, life-long diet can be challenging for individuals with HCU.

World-wide about 1 in 150,000 people has HCU due to either a CBS or an MTHFR gene mutation.

HCU is listed on the Recommended Uniform Screening Panel of disorders recommended by the Secretary of the Department of Health and Human Services for states to screen as part of their universal newborn screening programs.

CDX-6210 is an orally administrable enzyme substitution therapy lead for potential treatment of Maple Syrup Urine Disease (MSUD).

MSUD is an inborn metabolic disorder in which the branched-chain keto acid dehydrogenase enzyme that is involved in the metabolism of branched-chain amino acids such as leucine, isoleucine, and valine, is deficient.

As a result, these amino acids and their ketoacid metabolites accumulate to toxic levels, that can lead to intellectual and developmental disabilities.

To prevent blood levels of these amino acids and their metabolites to become toxic, individuals with MSUD must follow a strict, life-long diet that is low in branched-chain amino acids and supplement their diet with a synthetic branched-chain amino acids-free formula to provide them with sufficient nutrients.

Maintaining a strict, life-long diet can be challenging for individuals with MSUD.

According to the Genetic and Rare Disease Information Center (GARD), about 1 in 150,000-185,000 people is born with MSUD.

MSUD is listed on the Recommended Uniform Screening Panel of disorders recommended by the Secretary of the Department of Health and Human Services for states to screen as part of their universal newborn screening programs.

Our discovery program target a potential enzyme therapy for gluten management and potential treatments for patients with lysosomal storage diseases, via a specific novel transgene, or via a new AAV technology.

We expect to continue to make additional investments with the aim of generating additional product candidates targeting these, and potentially other therapeutic areas.

1 unchanged sentence

In October 2017, we entered into the Nestlé License Agreement with Nestlé Health Science pursuant to which we granted to Nestlé Health Science, under certain of our patent rights and know-how:

(i) an option to obtain an exclusive, worldwide, royalty-bearing, sublicensable license to develop and commercialize certain products (each, a “Product”) based on CDX-6114 and our other therapeutic enzyme product candidates covered by specified patent applications for the treatment of HPA, and (ii) an exclusive right of first negotiation (the “Right of First Negotiation”) for a period of five years to obtain an exclusive worldwide license to develop and commercialize up to two enzymes discovered by us for use in the field of the prevention, diagnosis, treatment and management of inborn errors of amino acid metabolism.

(i) an option to obtain an exclusive, worldwide, royalty-bearing, sublicensable license to develop and commercialize certain products (each, a “Product”) based on CDX-6114 and our other therapeutic enzyme product candidates covered by specified patent applications for the treatment of HPA (also referred to as PKU), and (ii) an exclusive right of first negotiation (the “Right of First Negotiation”) for a period of five years to obtain an exclusive worldwide license to develop and commercialize up to two enzymes discovered by us for use in the field of the prevention, diagnosis, treatment and management of inborn errors of amino acid metabolism.

We are not under any obligation to undertake any research and development activities relating to inborn errors of amino acid metabolism.

HPA (also referred to as PKU) is a medical condition characterized by elevated concentrations of the amino acid phenylalanine in the blood.

HPA is a medical condition characterized by elevated concentrations of the amino acid phenylalanine in the blood.

PKU can result in severe HPA.

In February 2019, Nestlé Health Science exercised its option to receive an exclusive license to further develop and commercialize CDX-6114 and our other therapeutic enzyme product candidates covered by specified patent applications for the treatment of PKU (each, a “Compound”).

Under the terms of the Nestlé License Agreement, upon option exercise, Nestlé Health Science received a license to the Compound, other than any enzyme that has other clinically significant, specified activity against another molecule, unless that enzyme’s specified activity against phenylalanine is ten times greater than its activity against such other molecule (in which case it is not excluded).

Furthermore, we generally will retain the right to use any enzyme as a biocatalyst, provided that preclinical development of such enzyme has not commenced.

The first Compound to be developed under the Nestlé License Agreement was our enzyme CDX-6114.

The Nestlé License Agreement also sets forth the parties’ respective obligations for development, commercialization, regulatory and manufacturing and supply activities for CDX-6114 and Product containing CDX-6114.

Prior to Nestlé Health Science exercising its option to receive an exclusive license to CDX-6114, we were generally responsible for development activities, including conducting a Phase 1a clinical study.

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.

Our development activities were governed by a development plan and overseen by a joint steering committee.

The parties established a patent committee to discuss strategies and coordinate activities for the patents related to CDX-6114 and product containing CDX-6114, and we will jointly own all inventions and information that result from each party’s activities performed under the Nestlé License Agreement.

The Nestlé License Agreement also contains customary representations and warranties by the parties, intellectual property protection provisions, certain indemnification rights in favor of each party and customary confidentiality provisions and limitations of liability.

Nestlé Health Science paid us an upfront cash payment of $14.0 million in 2017.

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.

The $4.0 million milestone payment that was triggered by the initiation of the trial was received in September 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.

In January 2019, we received notice from the U.S.

Food and Drug Administration (the “FDA”) that it had completed its review of our IND for CDX-6114 and concluded that we may proceed with the proposed Phase 1b multiple ascending dose study in healthy volunteers in the United States.

In February 2019, Nestlé Health Science exercised its option to obtain an exclusive license for the global development and commercialization of CDX-6114 for the management of PKU.

The exercise of the option triggered a $3.0 million milestone payment.

Other potential payments from Nestlé Health Science to us under the Nestlé License 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 products containing an enzyme covered by the agreement as its sole active ingredient.

In October 2017, we entered into the Nestlé SCA pursuant to which we and Nestlé Health Science are collaborating to leverage the CodeEvolver ® protein engineering technology platform to develop novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas.

The Nestlé SCA 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 the Nestlé SCA into pre-clinical and early clinical studies.

We are also eligible to receive payments from Nestlé Health Science under the Nestlé License Agreement that include (i) development and approval milestones of up to $85.0 million, (ii) sales-based milestones of up to $250.0 million in the aggregate, which aggregate amount is achievable if net sales exceed $1.0 billion in a single year, and (iii) tiered royalties, at percentages ranging from the mid-single digits to low double-digits, of net sales of products.

In October 2017, we entered into the Nestlé SCA pursuant to which we and Nestlé Health Science are collaborating to leverage the CodeEvolver ® protein engineering technology platform to develop novel enzymes for Nestlé Health Science’s e stablished Consumer Care and Medical Nutrition business areas.

The term of the Nestlé SCA has been extended through December 2022 .

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 CDX-7108 into preclinical and early clinical studies.

CDX-7108 is the lead candidate targeting exocrine pancreatic insufficiency discovered under the Nestlé SCA.

During 2021, we, together with Nestlé Health Science, continued to advance CDX-7108 towards initiation of a Phase 1 clinical trial with the first subject being dosed in November 2021.

Additionally, the parties are progressing one orally administered enzyme therapy program under the Nestlé SCA targeting a gastrointestinal disorder.

Shire Human Genetic Therapies/Takeda Pharmaceutical

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 (each, a “Field”) in accordance with each applicable program plan (each, a “Program Plan”).

We received an upfront nonrefundable cash payment of $8.5 million and we initiated activities under three Program Plans for Fabry Disease, Pompe Disease, and an undisclosed 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 earn up to $15.4 million of research and development fees and pre-clinical milestone payments for the Initial Programs.

In March 2020, we entered into the Takeda Agreement with Takeda pursuant to which we are collaborating to research and develop protein sequences for use in gene therapy products for certain diseases (each, a “Field”) in accordance with each applicable program plan (each, a “Program Plan”).

On execution of the Takeda Agreement, we received an upfront nonrefundable cash payment of $8.5 million and we initiated activities under three Program Plans for Fabry Disease, Pompe Disease, and an undisclosed 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 earn up to $10.5 million of resea rch and development fees and preclinical 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.

1 unchanged sentence

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.

In May 2021, Takeda elected to exercise their option to initiate an additional program for a certain undisclosed rare genetic disorder;

as a result we received the option exercise fee during the third quarter of 2021.

We are also eligible to receive up t o $8.3 million o f research and development fees and preclinical milestone payments for the fourth program under the Takeda Agreement.

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.

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.

5 unchanged sentences

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.

Licensing Our CodeEvolver ® Protein Engineering Technology Platform

To date, we have entered into platform technology licensing agreements with each of GlaxoSmithKline Intellectual Property Development Limited, a subsidiary of GlaxoSmithKline plc ("GSK"), Merck, Sharp & Dohme ("Merck") and Novartis Pharma AG ("Novartis"), and we intend to continue to enter into license arrangements with third parties that will allow them to use our CodeEvolver ® protein engineering technology platform to discover and develop novel proteins for their internal use.

GlaxoSmithKline

Under the GSK CodeEvolver ® Agreement, we transferred our CodeEvolver ® protein engineering technology platform to GSK over a twenty-one-month period that began in July 2014.

As a part of this technology transfer, we provided to GSK our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms.

In addition, teams of our and GSK scientists participated in technology training sessions and collaborative research projects at our laboratories in Redwood City, California and at GSK’s laboratories in Upper Merion, Pennsylvania.

The technology transfer was completed in April 2016 and our CodeEvolver ® protein engineering technology platform has been installed at GSK’s Upper Merion, Pennsylvania site.

We have the potential to receive additional 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, if any, of a limited set of products developed by GSK using our CodeEvolver ® protein engineering technology platform.

The licenses to GSK were granted under certain patents, patent applications and know-how that we owned or controlled as of the effective date of the GSK CodeEvolver ® Agreement and that cover our CodeEvolver ® protein engineering technology platform and certain enzymes useful in the Field.

Any improvements to our CodeEvolver ® protein engineering technology platform during the technology transfer period were included in the license grants from us to GSK.

Under the GSK CodeEvolver ® Agreement, GSK owns (the “GSK-Owned Technology”) (a) any enzyme technology that was developed during a project under the GSK CodeEvolver ® Agreement that used our CodeEvolver ® protein engineering technology platform during the technology transfer period and (b) the methods of use of any Project Enzyme in compound synthesis that were developed during the technology transfer period.

GSK granted to us a worldwide, non-exclusive, fully paid-up, royalty-free license, with the right to grant sublicenses, to use outside of the GSK Exclusive Field, the GSK-Owned Technology that was developed during the technology transfer period.

The term of the GSK CodeEvolver ® Agreement continues, unless earlier terminated, until the expiration of all payment obligations under the GSK CodeEvolver ® Agreement.

GSK can terminate the GSK CodeEvolver ® Agreement by providing 90 days written notice to us.

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.

In August 2015, we entered into a CodeEvolver ® Platform Technology Transfer and License Agreement (the “Merck CodeEvolver ® Agreement”) with Merck.

The Merck CodeEvolver ® Agreement allows Merck to use our proprietary CodeEvolver ® protein engineering platform technology in the field of human and animal healthcare.

Under the terms of the Merck CodeEvolver ® Agreement, we granted to Merck a non-exclusive worldwide license to use the CodeEvolver ® protein engineering technology platform to research, develop and manufacture novel enzymes for use by Merck in its internal research programs (“Merck Non-Exclusive Field”).

The license to Merck is exclusive for the research, development and manufacture of novel enzymes for use by Merck in the chemical synthesis of therapeutic products owned or controlled by Merck (“Merck Exclusive Field”).

Merck has the right to grant sublicenses to affiliates of Merck and, in certain limited circumstances, to third parties.

We also granted to Merck a license to make or have made products manufactured using the CodeEvolver ® protein engineering technology platform with a right to grant sublicenses solely to affiliates of Merck, contract manufacturing organizations and contract research organizations.

The manufacturing license is exclusive in the Merck Exclusive Field and non-exclusive in the Merck Non-Exclusive Field.

The licenses are subject to certain limitations based on pre-existing contractual obligations that apply to the technology and intellectual property that are the subject of the license grants.

The licenses do not permit the use of the CodeEvolver ® protein engineering technology platform to discover any therapeutic enzyme, diagnostic product or vaccine.

In addition, Merck is prohibited from using the CodeEvolver ® protein engineering technology platform to develop or produce enzymes or any other compounds for or on behalf of any third parties except in a very limited manner when Merck divests a therapeutic product that is manufactured using an enzyme developed using the CodeEvolver ® protein engineering technology platform.

These product-related payments, if any, will be paid by Merck to us for each quarter that Merck manufactures API using a CodeEvolver ® -developed enzyme.

The payments will be based on the total volume of API produced using the CodeEvolver ® -developed enzyme.

We have the right to conduct an annual audit to confirm that all payments that are owed to us have been paid in full and on time.

The licenses to Merck are granted under patents, patent applications and know-how that we owned or controlled as of the effective date of the Merck CodeEvolver ® Agreement and that cover the CodeEvolver ® protein engineering technology platform.

Any improvements to the CodeEvolver ® protein engineering technology platform during the technology transfer period are also included in the license grants from Codexis to Merck.

Following the technology transfer period, Merck can exercise annual options that, upon payment of certain option fees, would extend Merck’s license to include certain improvements to the CodeEvolver ® protein engineering technology platform that arise during the three-year period that begins at the end of the technology transfer period.

Under the Merck CodeEvolver ® Agreement, we own any improvements to our protein engineering methods, processes and algorithms that arose and any enzyme technology or process technology that are developed during an evolution program or additional services.

Merck owns (the “Merck-Owned Technology”) (a) any enzyme technology that is developed solely by Merck under the Merck CodeEvolver ® Agreement using the CodeEvolver ® protein engineering technology platform (a “Project Enzyme”) and (b) the methods of use of any Project Enzyme or any enzyme developed jointly by Merck and us using the CodeEvolver ® protein engineering technology platform.

Merck granted to us a worldwide, non-exclusive, fully paid-up, royalty-free license, with the right to grant sublicenses, to use the Merck-Owned Technology outside of the Merck Exclusive Field.

For each API that Merck manufactures using an enzyme developed with the CodeEvolver ® protein engineering technology platform, we will have a right of first refusal to supply Merck with the enzyme used to manufacture the API if Merck outsources the supply of the enzyme.

Our right of first refusal applies during the period that begins on the completion of a Phase 3 clinical trial for the product containing the API and ends five years following regulatory approval for such product.

The Merck CodeEvolver ® Agreement has a term that continues, unless earlier terminated, until the expiration of all payment obligations under the agreement.

Merck may terminate the Merck CodeEvolver ® Agreement by providing 90 days written notice to us.

We can terminate the Merck CodeEvolver ® Agreement by providing 30 days written notice to Merck if we determine, pursuant to our contractual audit rights under the Merck CodeEvolver ® Agreement, that Merck has repeatedly failed to make required payments to us and/or materially underpaid us an amount due under the Merck CodeEvolver ® Agreement.

In the event the Merck CodeEvolver ® Agreement is terminated earlier by Merck, or by us due to an uncured material breach by Merck, or if Merck sells or transfers to a third party any Merck business or facility that includes any of our proprietary materials, information or technology, we have the right to conduct an audit of Merck’s facilities to confirm that all of our proprietary materials, information and technology have been destroyed.

The Merck CodeEvolver ® Agreement contains indemnification provisions under which Merck and we have agreed to indemnify each other against certain third party claims.

In September 2016, we completed the full transfer of the engineering platform technology.

In October 2018, we entered into an amendment to the Merck CodeEvolver ® Agreement whereby we amended certain licensing provisions and one exhibit.

In January 2019, we entered into an amendment to the Merck CodeEvolver ® Agreement whereby we installed certain CodeEvolver ® protein engineering technology upgrades into Merck’s platform license installation.

We will maintain those upgrades for a multi-year term expiring in January 2022.

In May 2019, we entered into a Platform Technology Transfer and License Agreement (the “Novartis CodeEvolver ® Agreement”) with Novartis.

The Novartis CodeEvolver ® Agreement allows Novartis to use our proprietary CodeEvolver ® protein engineering platform technology (the “CodeEvolver ® Platform Technology”) in the field of human healthcare.

The CodeEvolver ® Platform Technology enables rapid development of custom-designed enzymes that are highly optimized for efficient manufacturing processes.

The CodeEvolver ® Platform Technology, which is comprised of proprietary methods for the design and generation of diverse genetic libraries, automated screening techniques, algorithms for the interpretation of screening data and predictive modelling, is covered by more than 250 issued patents and patent applications worldwide.

Under the Novartis CodeEvolver ® Agreement, Codexis will transfer its CodeEvolver ® Platform Technology to Novartis over approximately 20 months starting with the date on which Codexis commences the technology transfer (the “Technology Transfer Period”).

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

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

Upon completion of technology transfer, Novartis will have CodeEvolver ® Platform Technology installed at its designated laboratory.

Under the terms of the Novartis CodeEvolver ® Agreement, Codexis granted to Novartis a worldwide license to use Codexis’ CodeEvolver ® Platform Technology to research, develop and manufacture novel enzymes for use by or on behalf of Novartis as biocatalysts in the chemical synthesis of small molecule and bioconjugate active pharmaceutical ingredients (“API”).

The license to Novartis is exclusive for the research, development and manufacture of novel enzymes for use by Novartis as biocatalysts in the chemical synthesis of API owned or controlled by Novartis (“Novartis Exclusive Field”) and non-exclusive for the research, development and manufacture of novel enzymes for use by Novartis in the chemical synthesis of API not owned or controlled by Novartis or any third party (“Novartis Non-Exclusive Field”).

Novartis has the right to grant sublicenses to affiliates of Novartis and, in certain limited circumstances, to third parties.

Codexis has also granted to Novartis a license to make or have made enzymes engineered using the CodeEvolver ® Platform Technology for use in the manufacture of therapeutic products or API with a right to grant sublicenses solely to affiliates of Novartis, contract manufacturing organizations and contract research organizations.

The manufacturing license is exclusive in the Novartis Exclusive Field and non-exclusive in the Novartis Non-Exclusive Field.

The licenses are subject to certain limitations based on pre-existing contractual obligations that apply to the technology and intellectual property that are the subject of the license grants.

The licenses do not permit the use of the CodeEvolver ® Platform Technology to discover any biologic, therapeutic enzyme, diagnostic product or vaccine.

In addition, Novartis is prohibited from using the CodeEvolver ® Platform Technology to develop or produce enzymes or any other compounds for or on behalf of any third parties except in a very limited manner when Novartis divests an API that is manufactured using an enzyme developed using the CodeEvolver ® Platform Technology.

Novartis will pay Codexis up to $14.0 million over approximately the period through March 2021, of which $5.0 million was received shortly after the effective date of the Novartis CodeEvolver ® Agreement.

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 have also billed $3.4 million for partial completion of the third technology milestone and we expect to receive payment in the first quarter of 2021.

In addition to this payment, we are eligible

for an additional payment of $1.6 million for completion of the third technology milestone transfer, which would bring total cash payment for this milestone to $5 million as specified in the Novartis CodeEvolver ® Agreement.

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 (“Improvements Term”), Novartis will pay us 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 ® 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.

The usage payments will be based on the total volume of API produced using the CodeEvolver ® -developed enzyme.

These usage payments can begin in clinical stage and will extend throughout the commercial life of each API.

Codexis has the right to conduct an annual audit to confirm that all payments that are owed to Codexis have been paid in full and on time.

The licenses to Novartis are granted under patents, patent applications and know-how that Codexis owns or controls as of the effective date and that cover the CodeEvolver ® Platform Technology.

Any improvements to the CodeEvolver ® Platform Technology during the Technology Transfer Period will also be included in the license grants from Codexis to Novartis.

Under the Novartis CodeEvolver ® Agreement, Codexis will own any improvements to Codexis’ protein engineering methods, processes and algorithms that arise and any enzyme technology or process technology that is developed during the Technology Transfer Period or during the Improvements Term.

Novartis will own (a) any enzyme technology that is developed solely by Novartis or jointly by Novartis and Codexis under an enzyme evolution project using the CodeEvolver ® Platform Technology (a “Project Enzyme”) and (b) the methods of use of any Project Enzyme or any enzyme developed solely by Novartis or jointly by Novartis and Codexis under an enzyme evolution project using the CodeEvolver ® Platform Technology (“Process Technology”).

Novartis granted to Codexis a worldwide, exclusive, fully paid-up, royalty-free license, with the right to grant sublicenses, to use Project Enzymes outside of the Novartis Exclusive Field.

Novartis also granted to Codexis a worldwide, non-exclusive, fully paid-up, royalty-free license, with the right to grant sublicenses, to use the Process Technology outside of the Novartis Exclusive Field.

For each Novartis-controlled API that Novartis manufactures using an enzyme developed using the CodeEvolver ® Platform Technology, Codexis will have a right of first refusal to supply Novartis with the enzyme used to manufacture the API, once Novartis’s requirement for such enzyme exceeds a certain quantity, if Novartis self-produces or outsources the supply of the enzyme.

Codexis’ right of first refusal applies during the period that begins on the completion of a Phase 1 clinical trial for the first therapeutic product containing the API and ends on the earlier of five years following regulatory approval for such product and termination of the Novartis CodeEvolver ® Agreement.

The Novartis CodeEvolver ® Agreement has a term that begins on its effective date and continues unless and until terminated under the Novartis CodeEvolver ® Agreement.

At any time following the first technology transfer stage, Novartis may terminate the Novartis CodeEvolver ® Agreement by providing 90 days written notice to Codexis.

If Novartis exercises this termination right prior to making the first technology transfer milestone payment, Novartis will make a one-time termination payment of $9.0 million to Codexis.

If Novartis exercises this termination right after making the first technology transfer milestone payment but prior to making the second technology transfer milestone payment, Novartis will make a one-time termination payment of $5.0 million to Codexis.

In addition, either party may terminate the Novartis CodeEvolver ® Agreement for the other party’s uncured material breach or insolvency or bankruptcy.

In the event the Novartis CodeEvolver ® Agreement is terminated by Novartis, or by Codexis due to an uncured material breach by Novartis or insolvency or bankruptcy of Novartis, or if Novartis sells or transfers to a third party any Novartis business or facility that includes any Codexis proprietary materials, information or technology, Codexis has the right to conduct an audit of Novartis’s facilities to confirm that all proprietary Codexis materials, information and technology have been destroyed.

The Novartis CodeEvolver ® Agreement also contains indemnification provisions under which Novartis and Codexis indemnify each other against certain third party claims.

Pursuant to the Takeda Agreement, we are eligible to receive other payments that include (i) clinical development and commercialization-based milestones, per target gene, of up to $100.0 million and (ii) tiered royalty payments based on net sales of applicable products at percentages ranging from the mid-single digits to low single-digits.

Fine Chemicals and Industrial Enzyme Markets

3 unchanged sentences

We engineered a suite of enzymes that enable Tate & Lyle’s novel bioconversion route for the manufacture of their newly-launched zero-calorie TASTEVA ® M Stevia sweetener.

We are seeking to expand our enzyme offerings in the fine chemical and industrial enzyme markets within and beyond the food

industry, including, for example, to the animal feed, agricultural chemicals, consumer care, flavors and fragrances markets.

In July 2021, we entered into a multi-year supply agreement with Kalsec to supply an enzyme product for

use in the production of Kalsec's newest natural hop acid.

We are seeking to expand our enzyme offerings in the fine chemical and industrial enzyme markets within and beyond the food industry, including, for example, to the animal feed, agricultural chemicals, consumer care, flavors and fragrances markets.

Molecular Biology and In Vitro Diagnostic Enzymes

2 unchanged sentences

In December 2019, we entered into a license agreement to provide Roche with our EvoT4™ DNA ligase high-performance molecular diagnostic enzyme.

This enzyme was developed using our proprietary CodeEvolver ® protein engineering platform and is expected to be incorporated into Roche’s NGS library preparation kits and other sequencing products.

We are also currently working on a second enzyme independently of Roche, a DNA polymerase, which is being prepared for beta testing.

During 2021, we commercialized three additional enzymes, our Codex ® HiFi DNA Polymerase for use in next generation sequencing, our Codex ® HiTemp Reverse Transcriptase for use in molecular diagnostic applications, and our Codex ® HiCap RNA Polymerase for use in RNA synthesis applications.

Biocatalyst Products and Services

60 unchanged sentences

As of December 31, 2021, we owned or controlled approximately 1,900 issued patents and pending patent applications in the United States and in various foreign jurisdictions, many of which are directed to our enabling technologies and specific methods and products that support our business in the pharmaceutical markets.

In addition, our portfolio includes patents and pending patent applications that support our businesses in the biotherapeutics, molecular diagnostics, food and other markets.

In addition, our portfolio includes patents and pending patent applications that support our businesses in the biotherapeutics, mo lecular diagnostics, food and other markets.

Our patents and pending patent applications, if issued, have terms that expire between 2022 and approximately 2042.

Our United States patents and pending patent applications directed to the CodeEvolver ® proprietary enabling technology platform developed internally by us have terms that expire between 2029 and approximately 2034.

It is possible that some US patents may be entitled to patent term extensions and/or patent term adjustments, which would extend the protection beyond these expiration dates.

Our United States ("U.S.") patents and pending patent applications directed to the CodeEvolver ® proprietary enabling technology platform developed internally by us have terms that expire between 2029 and approximately 2034.

It is possible that some U.S.

patents may be entitled to patent term extensions and/or patent term adjustments, which would extend the protection beyond these expiration dates.

It is also possible that some patents in other jurisdictions will be entitled to additional patent term.

Our current intellectual property rights also include patents, trademarks, copyrights, software and certain assumed contracts that we acquired from Maxygen, Inc.

(“Maxygen”) in October 2010, which are associated with directed evolution technology, known as

the MolecularBreeding™ technology platform developed by Maxygen.

(“Maxygen”) in October 2010, which are associated with directed evolution technology, known as the MolecularBreeding™ technology platform developed by Maxygen.

The intellectual property rights and assets that we acquired from Maxygen continue to be subject to existing exclusive and non-exclusive license rights granted by Maxygen to third parties.

We continue to file new patent applications, for which terms generally extend 20 years from the non-provisional filing date in the United States.

As of December 31, 2020, we owned approximately 110 trademark registrations in the United States and foreign jurisdictions, as well as many common law trademarks.

As of December 31, 2021, we owned 100 trademark registrations in the United States and foreign jurisdictions, as well as many common law trademarks.

These include, but are not limited to:

13 unchanged sentences

Our biocatalyst based manufacturing processes must compete with these internally developed routes.

Companies developing and marketing conventional catalysts include Solvias AG, BASF, Johnson-Matthey and Takasago International Corporation.

We also compete with companies developing and marketing conventional catalysts include Solvias AG, BASF, Johnson-Matthey and Takasago International Corporation.

The market for supplying enzymes for use in pharmaceutical manufacturing is quite fragmented.

13 unchanged sentences

Subsequently in May 2019, BioMarin obtained marketing authorization for Palynziq ® from the European Commission.

Several companies, including Synlogic,

Homology Medicines and Rubius have reported clinical efforts to develop biotherapeutic candidates for PKU.

Several companies, including Synlogic, Homology Medicines and Rubius have reported clinical efforts to develop biotherapeutic candidates for PKU.

Beyond targeting PKU, Takeda, Genzyme / Sanofi S.A., BioMarin, and other companies market or are actively developing enzyme therapeutics.

1 unchanged sentence

Fine Chemicals

We entered the fine chemicals market in 2013 by applying our protein engineering technology in the manufacture of food ingredients.

We face similar forms of competition in this market as in the small molecule pharmaceutical markets, with the exception that the risk of losing opportunities to larger competitors in fine chemicals is greater given the larger scale of opportunities available in the fine chemicals market compared to the pharmaceutical market.

Our significant competitors in the fine chemicals markets include companies that have been in these marketplaces for many years, such as DuPont Industrial Biosciences (DuPont Genencor), DSM, Novozymes and A.B.

Our significant competitors in the fine chemicals markets include companies that have been in these marketplaces for many years, s uch as DuPont Industrial Biosciences ("DuPont Genencor"), DSM, Novozymes and A.B.

These companies have greater resources in these markets than we do and have long-term supply arrangements already in place with customers.

5 unchanged sentences

We are aware that other companies, organizations and persons have developed technologies that appear to have some similarities to our patented proprietary technologies.

For example, we are aware that other companies, including DSM, Bayer and BASF, have alternative methods for obtaining and generating genetic diversity or use mutagenesis techniques to produce genetic diversity.

For example, we are aware that other companies, includin g Zymergen, Gingko Bioworks, Amyris, Absci and Amicus Therapeutics have alternative methods for obtaining and generating genetic diversity or use mutagenesis techniques to produce genetic diversity.

In addition, academic institutions such as the California Institute of Technology, the Max Planck Institute and the Austrian Centre of Industrial Biotechnology are also working in this field.

10 unchanged sentences

We also supply initial commercial quantities of biocatalysts for use by our collaborators to produce pharmaceutical intermediates and manufacture biocatalysts that we sell.

In the first quarter of 2021, we entered into an arrangement with a lessor to lease a facility in San Carlos, California to serve as additional office and research and development laboratory space which we expect to occupy in November 2021.

Please see Note 15, “ Segment, Geographical and Other Revenue Information ” in the Notes to our Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for a description of our revenues and long-lived assets both within and outside of the United States.

Please see Note 15, “ Segment, Geographical and Other Revenue Information ” for a description of our revenues and long-lived assets both within and outside of the United States, and with respect to the San Carlos facility, please see Note 17, “ Subsequent Events ” in the Notes to our Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

In the first quarter of 2021, we entered into an arrangement to lease a facility in San Carlos, California to serve as an additional office and research and development laboratory space which we occupied beginning December 20 21.

Please see Note 15, “Segment, Geographical and Other Revenue Information” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for a description of our revenues and long-lived assets both within and outside of the United States, and with respect to the San Carlos facility, please see Note 13, “Commitments and Contingencies” in the Notes to our Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

Our research and development operations include efforts directed towards engineering biocatalysts, bioprocess development, cellular engineering, biocatalyst screening, metabolites, strain improvement, fermentation development and process engineering.

We conduct enzyme evolution, enzyme production development, microbial bioprocess development, cellular engineering, microbial evolution and process engineering evaluations and design primarily at our headquarters in Redwood

City, California.

For more information on our research and development expenditures, see Item 8 of this Annual Report on Form 10-K.

Manufacturing of our enzymes is conducted primarily in three locations, at our in-house facility in Redwood City, California and at third-party contract manufacturing organizations, Lactosan GmbH & Co.

KG (“Lactosan”) in Kapfenberg, Austria and DPhar S.p.A.

(“DPhar”) in Anagni, Italy.

Manufacturing of our enzymes is conducted primarily in four locations, at our in-house facility in Redwood City, California and at third-party contract manufacturing organizations , Lactosan GmbH & Co.

KG (“Lactosan”) in Kapfenberg, Austria, ACS Dobfar S.p.A.

("ACSD") (formerly know as DPhar S.p.A.) in Anagni, Italy, and Alphazyme LLC ("Alphazyme") in Florida, United States.

Generally, we perform smaller scale manufacturing in-house and outsource the larger scale manufacturing and a large percentage of our production of novel enzymes to contract manufacturing organizations.

42 unchanged sentences

The manufacturing process must be capable of consistently producing quality batches of the product candidate and manufacturers must develop, among other things, methods for testing the identity, strength, quality and purity of the final biological product.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Additionally,

appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Although most clinical research performed in the United States in support of a BLA must be authorized in advance by the FDA, under the IND regulations and procedures described above, there are certain circumstances under which clinical trials can be conducted without submission of an IND.

2 unchanged sentences

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of preclinical studies and clinical trials, together with other detailed information, including extensive manufacturing information and information on the composition of the biologic, are submitted to the FDA in the form of a BLA requesting approval to market the biologic for one or more specified indications.

The BLA must include all relevant data available from preclinical and

clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.

The BLA must include all relevant data available from preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.

Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of a use of the product, or from a number of alternative sources, including studies initiated by investigators.

47 unchanged sentences

Post-Approval Requirements

Licensed biologics that are manufactured and distributed in the United States are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product distribution,

advertising and promotion and reporting of adverse experiences with the product.

There is also a continuing, annual prescription drug program user fee.

23 unchanged sentences

Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies.

Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

Interchangeability requires that a product is biosimilar to the reference product and the product must

demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

Under the BPCIA, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed.

26 unchanged sentences

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA.

Supreme Court is currently reviewing the constitutionality of the ACA in its entirety, and it is unclear how the Supreme Court will rule.

On June 17, 2021, the U.S Supreme Court dismissed the most recent judicial challenge to the AC brought by several states without specifically ruling on the constitutionality of the ACA.

Thus, the ACA will remain in effect in its current form.

Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year, which was temporarily suspended from May 1, 2020 through March 31, 2022, and reduced payments to several types of Medicare providers.

Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries, proposed and enacted legislation and executive orders issued by the President designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and

manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Data Privacy and Security Laws

Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality, and security of personal information, including health-related information.

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, and federal and state consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act) that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.

In addition, certain state and non-U.S.

laws, such as the California Consumer Privacy Act ("CCPA"), the California Privacy Rights Act ("CPRA"), and the General data Protection Regulation ("GDPR"), govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, were applicable, can result in the imposition of significant civil and /or criminal penalties and private litigation.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing.

We rely on a limited number of key customers for the majority of our revenues.

3 unchanged sentences

2021 2020 2019

Merck 26 % 28 % 29 %

Nestlé Health Science 11 % 15 % 22 %

Novartis * 23 % *

Tate & Lyle * * 13 %

Takeda 19 % * *

Customer A 33 % * *

Customer B 11 % 26 % 28 %

Customer C * 19 % *

Customer D * 11 % 15 %

Customer E * * 23 %

* Percentage was less than 10%

20 unchanged sentences

In addition, we modified the way we conduct many aspects of our business including the practice of social distancing, wearing face coverings mandated by state and local regulations, and maintaining a quarantine for employees determined to be in close contact with a COVID-19 case.

For example, we implemented day-time shift hours in our

R&D and small scale manufacturing at our Redwood City pilot plant to minimize the number of employees in close proximity to each other and we have significantly expanded the use of virtual interaction whenever possible in our business.

For example, we implemented day-time shift hours in our R&D and manufacturing at our Redwood City pilot plant to minimize the number of employees in close proximity to each other and we have significantly expanded the use of virtual interaction whenever possible in our business.

For a detailed discussion of the impact of the COVID-19 pandemic on our human capital resources, see “Risk Factors" Item 1A of this Form 10-K.

We also launched the Employee-Requested Work from Home Policy in late 2020.

We previously launched the Employee-Requested Work from Home Policy in late 2020.

This policy establishes the process and criteria to enable Redwood City employees to request permission to work from home on a regular basis.

13 unchanged sentences

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-K

Item 1. Business