What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-28 compared with 2021-03-01 · 359 added, 639 removed, 1067 unchanged (48% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm ( BDO USA, LLP ;

San Jose, CA ;

Consolidated Balance Sheets

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In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Change in Accounting Principle

As discussed in Note 13 to the consolidated financial statements, the Company has changed its accounting method for accounting for leases in fiscal year 2019 due to the adoption of Topic 842:

Leases using a modified retrospective approach.

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

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s Consolidated Financial Statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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The critical audit matter communicated below is a matter arising from the current period audit of the Consolidated Financial Statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments.

(1) relates to accounts or disclosures that are material to the Consolidated Financial Statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

As described in Note 2 to the consolidated financial statements, the Company recognizes revenue in a manner that best depicts the transfer of promised goods or services to the customer, when control of the product or service is transferred to a customer.

As described in Notes 2 and 3 to the Consolidated Financial Statements, the Company recognizes revenue in a manner that best depicts the transfer of promised goods or services to the customer, when control of the product or service is transferred to a customer.

The Company's contracts with customers include enzyme supply, licensing, and collaborative research and development agreements.

Contracts with customers may contain multiple performance obligations and may contain up-front or annual

license fees, fees for full time employee research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage.

Contracts with customers may contain multiple performance obligations and may contain up-front or annual license fees, fees for full time employee research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage.

The Company makes significant judgments in determining revenue recognition for customer contracts.

We identified management’s significant judgments and estimates related to revenue recognition for contracts with customers as a critical audit matter.

Auditing the evaluation of distinct performance obligations, determination and estimation of material rights, determination of standalone selling prices, determination of the pattern of transfer of control for each distinct performance obligation and estimation of variable consideration required significant audit effort and auditor subjectivity in evaluating management's judgments and estimates.

Auditing the evaluation of distinct performance obligations, determination and estimation of material

rights, determination of standalone selling prices, determination of the pattern of transfer of control for each distinct performance obligation and estimation of variable consideration required significant audit effort and subjective judgments in evaluating management's estimates.

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

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San Jose, California

March 1, 2021

February 28, 2022

Report of Independent Registered Public Accounting Firm

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020 and the related Notes, and our report dated March 1, 2021 expressed an unqualified opinion thereon.

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

Basis for Opinion

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San Jose, California

March 1, 2021

February 28, 2022

Codexis, Inc.

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Accounts receivable 24,953 13,894

Contract assets 4,526 1,027

Contract assets ($ 0 and $ 450 from a related party)

Unbilled receivables 8,558 10,942

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Restricted cash 1,519 1,062

Investment in non-marketable equity securities 1,450 —

Investment in non-marketable equity securities ($ 12,713 and $ 1,450 with a related party)

Right-of-use assets - Operating leases, net 44,095 21,382

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Current portion of lease obligations - Operating leases 4,093 2,627

Current portion of lease obligations - Finance leases — 60

Deferred revenue 1,824 57

Deferred revenue ($ 245 and $ 0 to a related party)

Total current liabilities 33,371 24,981

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Product revenue $ 70,657 $ 30,220 $ 29,465

Research and development revenue 38,836 38,993 35,004

Research and development revenue ($ 1,955 , $ 900 and $ 0 from a related party)

34,097 38,836 38,993

Total revenues 104,754 69,056 68,458

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Interest income 459 405 1,287

Other expenses, net ( 156 ) ( 656 ) ( 291 )

Other income (expense), net ($ 983 , $ 0 and $ 0 from a related party)

1,148 ( 156 ) ( 656 )

Loss before income taxes ( 21,090 ) ( 23,671 ) ( 11,918 )

Provision for (benefit from) income taxes 339 17 ( 37 )

Provision for income taxes 189 339 17

Net loss $ ( 21,279 ) $ ( 24,010 ) $ ( 11,935 )

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Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Total

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Employee stock-based compensation — — 6,943 — 6,943

Non-employee stock-based compensation — — 24 — — 24

Taxes paid related to net share settlement of equity awards ( 152 ) — ( 2,850 ) — ( 2,850 )

Issuance of common stock, net of issuance costs 4,313 — 37,317 — — 37,317

Cumulative effect of change in accounting principles (1)

Issuance of common stock, net of issuance costs of $ 123

3,049 1 49,876 — 49,877

Short swing profit settlement — — 77 — 77

Net loss — — — ( 11,935 ) ( 11,935 )

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Employee stock-based compensation — — 7,622 — 7,622

Non-employee stock-based compensation — — 106 — 106

Taxes paid related to net share settlement of equity awards ( 103 ) — ( 1,257 ) — ( 1,257 )

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4,929 — 80,802 — 80,802

Short swing profit settlement — — 77 — — 77

Net loss — — — ( 24,010 ) ( 24,010 )

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Taxes paid related to net share settlement of equity awards ( 54 ) — ( 1,206 ) — ( 1,206 )

Issuance of common stock, net of issuance costs of $ 5,448

4,929 — 80,802 — — 80,802

Net loss — — — ( 21,279 ) ( 21,279 )

December 31, 2021 65,109 $ 6 $ 552,083 $ ( 387,698 ) $ 164,391

(1) Cumulative effect of change in accounting principles included:

Accounting Standards Update 2014-9 (Topic 606), of $ 4.1 million and Accounting Standards Update 2016-01 (Subtopic 825-10), of $ 0.5 million.

See accompanying notes to consolidated financial statements

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Stock-based compensation 11,593 7,728 6,943

Equity securities earned from research and development activities ( 900 ) — —

Allowance for credit losses 342 40 —

Equity securities earned from research and development activities from a related party ( 1,955 ) ( 900 ) —

Unrealized gain on non-marketable securities (($ 983 ) from a related party)

( 1,272 ) — —

Other non-cash items ( 19 ) 15 525

Changes in operating assets and liabilities:

Financial assets, net ( 8,723 ) ( 5,867 ) ( 1,424 )

Financial assets ($ 0 , ($ 450 ) and ($ 332 ) from a related party)

( 9,156 ) ( 8,723 ) ( 5,867 )

Inventories ( 196 ) ( 593 ) 217

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Other long-term liabilities ( 4,147 ) ( 2,586 ) ( 1,210 )

Deferred revenue 2,747 ( 6,243 ) ( 10,631 )

Deferred revenue ($ 245 , $ 0 and $ 0 to a related party)

1,300 2,747 ( 6,243 )

Net cash used in operating activities ( 14,267 ) ( 16,464 ) ( 12,560 )

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Purchase of property and equipment ( 13,828 ) ( 3,748 ) ( 3,730 )

Proceeds from disposal of property and equipment — 3 2

Proceeds from sale of property and equipment 36 — 3

Proceeds from sale of investment securities — — 62

Investment in non-marketable securities ( 2,000 ) — —

Investment in non-marketable securities (($ 7,630 ) and ($ 1,000 ) in a related party)

( 7,630 ) ( 2,000 ) —

Net cash used in investing activities ( 21,422 ) ( 5,748 ) ( 3,665 )

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Proceeds from exercises of stock options 5,180 1,323 7,099

Proceeds from issuance of common stock in connection with public offering, net of underwriting discounts and commission 86,250 — 37,497

Costs incurred in connection with public offering ( 5,448 ) — ( 180 )

Proceeds from issuance of common stock in connection with public offering — 86,250 —

Costs incurred in connection with equity financing ( 207 ) ( 5,448 ) ( 123 )

Proceeds from issuance of common stock in connection with private offering — — 50,000

Costs incurred in connection with private placement — ( 123 ) —

Payments of lease obligations - Finance leases — ( 60 ) ( 242 )

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Net cash provided by financing activities 3,767 80,808 53,961

Net increase in cash, cash equivalents and restricted cash 58,596 37,736 21,709

Net increase (decrease) in cash, cash equivalents and restricted cash ( 31,922 ) 58,596 37,736

Cash, cash equivalents and restricted cash at the beginning of the year 150,817 92,221 54,485

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Capital expenditures incurred but not yet paid $ 2,533 $ 1,750 $ 140

Assets received for research & development revenue earned $ 900 $ — $ —

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown above (in thousands):

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and its subsidiaries on a consolidated basis.

We discover, develop and sell enzymes and other proteins that deliver value to our clients in a growing set of industries.

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

We are a pioneer in harnessing computational technologies to drive biology advancements.

Since 2002, we have made substantial investments in the development of our CodeEvolver ® protein engineering technology platform, the primary source of our competitive advantage.

Our technology platform is powered by proprietary, artificial intelligence-based, computational algorithms that rapidly mine the structural and performance attributes of our large and continuously growing library of protein variants.

These computational outputs enable increasingly reliable predictions for next generation protein variants to be engineered, enabling time- and cost-efficient delivery of the targeted performance enhancements.

In addition to its computational prowess, our CodeEvolver ® protein engineering technology platform integrates additional modular competencies, including robotic high-throughput screening and genomic sequencing, organic chemistry and bioprocess development which are all coordinated to rapidly innovate novel, fit-for-purpose products.

The core historical application of the technology has been in developing commercially viable biocatalytic manufacturing processes for more sustainable production of complex chemicals.

It begins by conceptually designing the most cost-effective and practical process for a targeted product.

We then develop optimized biocatalysts to enable the designed process, using our CodeEvolver ® platform.

Engineered biocatalyst candidates, numbering many thousands for each project, are then rapidly screened and validated using high throughput methods under process-relevant operating conditions.

This approach results in an optimized biocatalyst that enables cost-efficient processes that are relatively simple to run in conventional manufacturing equipment.

This also allows for efficient technical transfer of our processes to our manufacturing partners.

The successful embodiment of our CodeEvolver ® protein engineering technology platform in commercial manufacturing processes requires well-integrated expertise in a number of technical disciplines.

In addition to those competences directly integrated in our CodeEvolver ® protein engineering platform, 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, bioprocess development and fermentation engineering.

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

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

Our customers, which include many large, global pharmaceutical companies, use our technology, products and services in their process development and in manufacturing.

Additionally, we have 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.

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

with our first enzyme for this target market:

the Company’s EvoT4™ DNA ligase.

In June 2020, we also entered into a Master Collaboration and Research Agreement with MAI (the “MAI Agreement”) pursuant to which we are leveraging our CodeEvolver ® platform technology to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis.

Concurrently with the MAI Agreement, 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 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.

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

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

In October 2017, we entered into a Global Development, Option and License Agreement (the “Nestlé License Agreement”) with Societé des Produits Nestlé S.A., formerly known as Nestec Ltd.

(“Nestlé Health Science”) to advance CDX-6114, our enzyme biotherapeutic product candidate for the potential treatment of PKU.

In February 2019, Nestlé Health Science exercised its option to obtain an exclusive license to develop and commercialize CDX-6114.

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

In 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.

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.

Below are brief descriptions of our business segments:

Performance Enzymes

We initially commercialized our CodeEvolver ® protein engineering technology platform and products in the manufacture of small molecule pharmaceuticals and, to date, this continues to be our largest market served.

Our customers, which include many large global pharmaceutical companies, use our technology, products and services in their manufacturing processes and process development.

We have also used the technology to develop customized enzymes for use in other industrial markets.

These markets consist of several large industrial verticals, including food, feed, consumer care, and fine chemicals.

We also use our technology in the life sciences markets to develop enzymes for customers using NGS and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications, as well DNA/RNA synthesis and health monitoring applications.

Novel Biotherapeutics

We are also targeting new opportunities in the pharmaceutical industry to discover, improve, and/or develop biotherapeutic drug candidates.

We believe that our CodeEvolver ® protein engineering platform technology can be used to discover novel biotherapeutic drug candidates that will target human diseases that are in need of improved therapeutic interventions.

Similarly, we believe that we can deploy our platform technology to improve specific characteristics of a customer’s pre-existing biotherapeutic drug candidate, such as its activity, stability or immunogenicity.

Our first lead program was for the potential treatment of hyperphenylalaninemia (“HPA”) (also referred to as PKU) in humans.

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

In October 2017, we announced a global development, option and license agreement with Nestlé Health Science to advance CDX-6114, our own novel orally administrable enzyme therapeutic candidate for the potential treatment of PKU.

In July 2018, we announced that we had dosed the first subjects in a first-in-human Phase 1a dose-escalation trial with CDX-6114, which was conducted in Australia.

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

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 that it had completed its review of our investigational drug application for CDX-6114 and concluded that we may proceed with the proposed Phase 1b multiple ascending dose study in healthy volunteers in the United States.

As a result of the option exercise, we earned a milestone and recognized $ 3.0 million in revenues in the first quarter of 2019.

Upon exercising its option, Nestlé Health Science assumed all responsibilities for future clinical development and commercialization of CDX-6114.

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

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.

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, we have agreed to generate novel gene sequences encoding protein variants designed 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.

We are currently collaborating on three initial programs for the treatment of Fabry disease, Pompe disease, and an undisclosed blood factor deficiency.

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

Takeda is responsible for the pre-clinical and clinical development and commercialization of gene therapy products resulting from the collaboration programs.

Under the terms of the agreement, in addition to the three initial programs, Takeda may initiate up to four additional programs for separate target indications.

In March 2020, we began research and development activities under the program plans and received a $ 8.5 million one-time, non-refundable cash payment.

We expect to continue to make additional investments in our pipeline with the aim of advancing additional product candidates targeting other therapeutic areas.

For additional discussion of our business segments, see Note 15, “Segment, Geographical and Other Revenue Information.”

We discover, develop and sell enzymes and other proteins that deliver value to our clients in a growing set of industries to commercialize an increasing number of novel enzymes, both as proprietary Codexis products and in partnership with our customers.

We report our financial results based on two reportable segments:

Performance Enzymes and Novel Biotherapeutics.

The segment information aligns with how the chief operating decision maker (CODM), who is our Chief Executive Officer (CEO), reviews and manages the business.

Business Update Regarding COVID-19

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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.

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

However, we are dependent on our manufacturing and logistics partners and consequently, disruptions in operations of our partners and customers may affect our ability to supply enzymes to our customers.

Furthermore, our ability to provide future research and development (“R&D”) services will continue to be impacted as a result of governmental orders and any disruptions in operations of our customers with whom we collaborate.

We believe that these disruptions have had a negative impact on 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.

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.

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 Orders governing the operation of businesses during the pandemic, caused the temporary closure of our Redwood City, California facilities and disrupted our R&D operations in 2020 .

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

In May 2020, we 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.

As of the date of issuance of our Consolidated Financial Statements, the extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity, or results of operations in the future is uncertain.

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

To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide, however, there can be no guarantee this will continue.

Furthermore, our ability to provide future research and development ("R&D") services may continue to be impacted as a result of governmental orders ("Orders") and any disruptions in operations of our customers with whom we collaborate.

We believe that these disruptions have had a minimal impact on revenue for the year ended December 31, 2021.

Basis of Presentation and Summary of Significant Accounting Policies

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and its wholly-owned subsidiaries.

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.

The results of the year ended December 31, 2020 reflect the adoption of the accounting standards including Accounting Standard Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments which added a new impairment model applicable to our financial assets measured at amortized cost.

See “Recently adopted accounting pronouncements” for details regarding the adoption of these standards.

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

The consolidated financial statements include the accounts of Codexis, Inc.

and its wholly owned subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

Financial Statement Exclusion

The total net loss in the consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018 is not different from our consolidated comprehensive loss.

The consolidated financial statements exclude the consolidated statements of comprehensive loss for the years ended December 31, 2020, 2019 and 2018.

All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

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

We regularly assess these estimates which primarily affect revenue recognition, 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,

inventories, valuation of equity investments, goodwill arising out of business acquisitions, accrued liabilities, stock awards, and the valuation allowances associated with deferred tax assets.

Actual results could differ from those estimates and such differences may be material to the consolidated financial statements.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, and may not be accurately predicted, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers, markets and economies.

Segment Reporting

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The USD is the functional currency for our operations outside the United States.

Accordingly, nonmonetary assets and liabilities originally acquired or assumed in other currencies are recorded in USD at the exchange rates in effect at the date they were acquired or assumed.

Accordingly, non-monetary assets and liabilities originally acquired or assumed in other currencies are recorded in USD at the exchange rates in effect at the date they were acquired or assumed.

Monetary assets and liabilities denominated in other currencies are translated into United States dollars at the exchange rates in effect at the balance sheet date.

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

A majority of our product revenue is made pursuant to purchase orders or supply agreements and is recognized at a point in time when the control of the product has been transferred to the customer typically upon shipment.

For some of the products that we develop, we recognize revenue over time as the product is manufactured because we have a right to payment from the customer under a binding, non-cancellable purchase order, and there is no alternate use of the product for us as it is specifically made for the customer’s use.

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

Certain of our agreements provide options to customers which they can exercise at a future date, such as the option to purchase our product during the contract duration at discounted prices and an option to extend their contract, among others.

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Therefore, the transaction price is calculated as the expected consideration to be received for all the goods and services we expect to provide under the contract.

We update the transaction price for expected consideration, subject to constraint, each reporting period if our estimate of future goods to be ordered by customers change.

We update the transaction price for expected consideration, subject to constraint, each reporting period if our estimates of future goods to be ordered by customers change.

Research and Development Revenues

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Milestone payments that are not within our control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied.

The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we

recognize revenue as or when the performance obligations under the contract are satisfied.

At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price.

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We have recognized revenues from our platform technology transfer agreements over time as our customer learns to use our technology.

We also have an agreement under which we have granted a functional license to some elements of our biocatalyst technology.

We recognize revenues for the functional license at a point in time when the control of the license and technology transfers to the customer.

For license agreements that include sales or usage-based royalty payments to us, we do not recognize revenue until the underlying sales of the product or usage has occurred.

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Examples of contract costs are commissions paid to sales personnel.

We do not typically incur significant incremental costs because the compensation of our salespeople are not based on contracts closed but on a mixture of company goals, individual goals, and sales goals.

We do not typically incur significant incremental costs because the compensation of our salespeople is not based on contracts closed but on a mixture of company goals, individual goals, and sales goals.

If a commission paid is directly related to obtaining a specific contract, our policy is to capitalize and amortize such costs on a systematic basis, consistent with the pattern of transfer of the good or service to which the asset relates.

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

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

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

Research and Development Expenses

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Deposits with these financial institutions may exceed the amount of insurance provided on such deposits.

Cash and cash equivalents totaled $ 149.1 million and were comprised of cash of $ 21.5 million and money market funds of $ 127.6 million at December 31, 2020.

Cash and cash equivalents totaled $ 90.5 million, comprised of cash of $ 19.3 million and money market funds of $ 71.2 million at December 31, 2019.

Restricted Cash

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The local legal requirements for liquidation required us to maintain our subsidiary's cash balance in an account managed by a legal trustee to satisfy our financial obligations.

This balance is recorded as current restricted cash on the consolidated balance sheets of $ 0.6 million as of December 31, 2020 and $ 0.7 million as of December 31, 2019.

Pursuant to the terms of a lease agreement for our Redwood City, CA facilities, we obtained a letter of credit collateralized by cash deposit balance s of $ 1.1 million as of December 31, 2020 and 2019.

These cash deposit balances are recorded as non-current restricted cash on the consolidated balance sheets.

See Note 13, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

This balance is recorded as current restricted cash on the consolidated balance sheets of $ 0.6 million as of December 31, 2021 and 2020.

Pursuant to the terms of a lease agreement for our Redwood City, CA facilities, we obtained a letter of credit collateralized by cash deposit balances of $ 1.1 million as of December 31, 2021 and 2020.

Pursuant to the terms of our new lease agreement for our San Carlos, CA facility, we also obtained a letter of credit collateralized by cash deposit balances of $ 0.5 million as of December 31, 2021.

These cash deposits balances are recorded as non-current restricted cash on the consolidated balance sheets.

For additional information, see Note 13, “Commitments and Contingencies”.

Fair Value Measurements

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

See Note 7, “ Fair Value Measurements” for additional details.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, contract assets, non-marketable securities, and restricted cash.

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and unbilled receivables, contract assets, non-marketable securities, and restricted cash.

Cash that is not required for immediate operating needs is invested principally in money market funds.

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Such deposits in those countries may be in excess of insured limits.

The Company has not experienced material losses on its deposits of cash and cash equivalents.

We perform ongoing credit evaluations of our customer's financial condition whenever deemed necessary.

We maintain an allowance for doubtful accounts based on the expected collectability of all financial assets, which takes into consideration an analysis of historical bad debts, specific customer creditworthiness and current economic trends.

As of December 31, 2021, we had one customer that accounted for 62 % of our accounts receivable balance.

As of December 31, 2020, three customers accounted for 70 % of our accounts receivable balance.

We believe the accounts receivable balances from our largest customers do not represent a significant credit risk, based on cash flow forecasts, balance sheet analysis, and past collection experience.

Financial Assets and Allowances

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In addition, accounts receivable include amounts owed to us under our collaborative research and development agreements.

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

Allowance for credit losses from January 1, 2020

O n 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 financing receivables measured at amortized costs which is comprised of accounts receivable, contract assets, and unbilled receivables.

We recognize accounts receivable at invoiced amounts and we maintain a valuation allowance for credit losses using an impairment model (known as the “current expected credit loss model” or “CECL”) based on estimates and forecasts of future conditions requiring recognition of a lifetime of expected credit losses at inception on our financing receivables measured at amortized costs which consisted of accounts receivable, contract assets, and unbilled receivables.

We have determined that our financing receivables share similar risk characteristics including:

(i) customer origination in the pharmaceutical and fine chemicals industry, (ii) similar historical credit loss pattern of customers (iii) no meaningful trade receivable differences in terms, (iv) similar historical credit loss experience and (v) our belief that the composition of certain assets are comparable to our historical portfolio used to develop loss history.

historical portfolio used to develop loss history.

As a result, we measured the allowance for credit loss (“ACL”) on a collective basis.

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

In the year ended December 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.

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 and contract assets balances.

The allowance determination was based on known troubled accounts, historical experience, and other currently available evidence.

Uncollectible accounts receivable were written off against the allowance for doubtful accounts when all efforts to collect them have been exhausted.

Recoveries were recognized when they were received.

Accounts Receivable

Trade credit terms are generally offered without collateral and may include an insignificant discount for prompt payment for specific customers.

To manage our credit exposure, we perform ongoing evaluations of our customers' financial conditions.

In addition, accounts receivable include amounts owed to us under our collaborative research and development agreements and we recognize accounts receivables at invoiced amounts.

Unbilled Receivable

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When we satisfy (or partially satisfy) a performance obligation, prior to being able to invoice the customer, we recognize an unbilled receivable when the right to consideration is unconditional.

As of December 31, 2020 and 2019, unbilled receivables of $ 10.9 million and $ 10.1 million, respectively, were included in our consolidated balance sheets.

Inventories are stated at the lower of cost or net realizable value.

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Property and Equipment

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

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

Asset classification Estimated useful life

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If the comparison indicates that impairment exists, long-lived assets are written down to their respective fair values based on discounted cash flows.

Significant management judgment is required in the forecast of future operating results that are used in the preparation of unexpected undiscounted cash flows.

management judgment is required in the forecast of future operating results that are used in the preparation of unexpected undiscounted cash flows.

As of December 31, 2021 and 2020, there were no events or changes in circumstances which indicated that the carrying amount of our asset group might not be recoverable.

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Investment in Non-Marketable Equity Securities

Our non-marketable equity securities are accounted for under the measurement alternative.

Under the measurement alternative, the carrying value of our non-marketable equity investments is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment.

Adjustments are determined primarily based on a market approach as of the transaction date and are recorded as a component of other income (expense), net.

We measure investments in non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis.

Gains and losses on these securities are recognized in other income and expenses.

Gains and losses on these securities are recognized in other income (expense), net.

Investment in Non-Marketable Debt Securities

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Significant changes to the unobservable inputs may result in a significantly higher or lower fair value estimate.

We may value these securities based on significant recent arms-length transactions with sophisticated non-strategic unrelated new investors, providing the terms of these transactions are substantially similar to the terms between the company and us.

The impact of the difference in transaction terms on the market value of the investment may be difficult or impossible to quantify.

See Note 7, “ Fair Value Measurements” for additional details.

We may value these securities based on significant recent arms-length transactions with sophisticated non-strategic unrelated new investors.

We evaluate both equity and debt securities for impairment when circumstances indicate that we may not be able to recover the carrying value.

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We allocated goodwill to the two reporting units using a relative fair value allocation methodology that primarily relied on our estimates of revenue and future earnings for each reporting unit.

Using the relative fair value allocation methodology, we have determined that approximately $ 2.4 million, or 76 %, of the goodwill allocated to the Performance Enzymes segment and $ 0.8 million, or 24 %, is assigned to the Novel Biotherapeutics segment.

We test goodwill for impairment for each reporting unit on an annual basis on the last day of the fourth fiscal quarter and, when

specific circumstances dictate, between annual tests by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

During 2020, 2019 and 2018, we did no t record impairment charges related to goodwill.

We test for goodwill impairment as follows:

Goodwill impairment testing from January 1, 2020

We test for impairment annually on a reporting unit basis, on the last day of the fourth fiscal quarter, and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Using the relative fair value allocation methodology, we have determined that approximatel y $ 2.4 million, or 76 %, of the goodwill is allocated to the Performance Enzymes segment and $ 0.8 million, or 24 %, is assigned to the Novel Biotherapeutics segment.

We test goodwill for impairment annually on a reporting unit basis, on the last day of the fourth fiscal quarter, and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The annual impairment test is completed using either:

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Any excess of the reporting unit’s carrying amount of goodwill over its fair value is recognized as an impairment.

Since late 2019, the COVID-19 pandemic has spread worldwide.

The COVID-19 pandemic has caused a decline in global and domestic macroeconomic conditions, the general deterioration of the U.S.

economy and other economies worldwide, all of which may negatively impact our overall financial performance, driving a reduction in our cash flows.

We believe that the impact of the COVID-19 pandemic was a triggering event that gave rise to a qualitative goodwill impairment test in the second quarter ended June 30, 2020.

We also conducted a qualitative impairment assessment as of December 31, 2020, which included an evaluation of our cash flow projections to reflect the current economic environment, including the uncertainty surrounding the nature, timing, and extent of the impact of the pandemic in operating our business.

We determined that it was more likely than not that the fair value of each of the reporting units exceeded its respective carrying amount as of December 31, 2020.

Therefore, a quantitative impairment test of our goodwill at the reporting unit level was not required to be performed.

Goodwill impairment testing before January 1, 2020

Prior to January 1, 2020, the goodwill impairment test consisted of a two-step process.

The first step of the goodwill impairment test, used to identify potential impairment, compared the fair value of each reporting unit to its carrying value.

Using the relative fair value allocation methodology for assets and liabilities used in both of our reporting units, we compared the allocated carrying amount of each reporting unit’s net assets and the assigned goodwill to its fair value.

If the fair value of the reporting unit exceeded its carrying amount, goodwill of the reporting unit was considered not impaired, and the second step of the impairment test was not required.

The second step, if required, compared the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill.

Implied fair value was the excess of the fair value of the reporting unit over the fair value of all identified or allocated assets and liabilities.

Any excess of the reporting unit’s carrying amount goodwill over the respective implied fair value was recognized as an impairment.

During 2021, 2020 and 2019, we did not record impairment charges related to goodwill.

Lease Accounting

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We make certain estimates and judgments in determining income tax expense for financial statement purposes.

These estimates and judgments occur in the calculation of tax credits, benefits and deductions and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenues and expenses for tax and financial statement

Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

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We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes.

The Tax Reform Act of 1986 and similar state provisions limit the use of net operating loss (“NOL”) carryforwards in certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section 382.

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

certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section 382.

In the event we should experience such a change of ownership, utilization of our federal and state NOL carryforwards could be limited.

We recognized income tax provision of $ 0.3 million, income tax provision of $ 17 thousand and income tax benefit of $ 37 thousand for the years ended December 31, 2020, 2019 and 2018, respectively.

The provision for income taxes for 2020 was primarily due to foreign withholding taxes on certain sales to a non-U.S.

The provision for income taxes in 2019 was primarily due to the accrual of interest and penalties on historic uncertain tax positions.

The benefit from income taxes in 2018 was primarily related to a net loss from our foreign operations and a reduction in the deferred tax liability for accrued future withholding taxes on dividends.

We continue to maintain a full valuation allowance against our net deferred tax assets as we believe that it is more likely than not that the majority of our deferred tax assets will not be realized.

Changes to Tax Law

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), P.L.

116-136, was passed into law, amending portions of certain relevant US tax laws.

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

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

The CARES Act had no impact on our consolidated financial statements.

Beginning in 2018, the global intangible low-taxed income (“GILTI”) provisions in the Tax Act required us to include, in our U.S.

income tax return, foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets.

Per guidance issued by the FASB, companies can either account for deferred taxes related to GILTI or treat tax arising from GILTI as a period cost.

Both are acceptable methods subject to an accounting policy election.

At December 31, 2018, we finalized our policy and elected to use the period cost method for GILTI.

In 2020, we did not incur any GILTI inclusion as our foreign subsidiaries generated losses.

Due to losses incurred in the U.S.

we will not be eligible for an Internal Revenue Code Section 250 deduction for foreign derived intangible income.

The BEAT provisions in the Tax Act eliminated the deduction of certain base-erosion payments made to related foreign corporations and imposed a minimum base erosion anti-abuse tax if greater than regular tax.

In 2020, our company was not subject to BEAT as it did not meet the requirements to be subject to BEAT.

Accounting Pronouncements

Recently adopted accounting pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which amends the FASB's guidance on the impairment of financial instruments.

The standard adds a new impairment model, known as CECL, which replaces the probable loss model.

The CECL impairment model is based on estimates and forecasts of future conditions which requires recognition of a lifetime of expected credit losses at inception on financial assets measured at amortized costs.

Our financial assets consist of non-marketable debt and equity securities and financing receivable assets measured at amortized cost, comprised of accounts receivable, contract assets, and unbilled receivables .

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 sheets, which is used to adjust the amortized cost basis of assets in presentation of the net amount expected to be collected.

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

In January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

The amendment eliminates Step 2 from the goodwill impairment test.

The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit to its carrying amount.

An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

In addition, income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.

The ASU eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment, and if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

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

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

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

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

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.

The primary focus of the standard is to improve the effectiveness of the disclosure requirements for fair value measurements.

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

The standard requires the use of the prospective method of transition for disclosures related to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop fair value measurements categorized within Level 3 of the fair value hierarchy, and narrative description of measurement uncertainty.

All other amendments in the standard are required to be adopted retrospectively.

We adopted the ASU in the first quarter of 2020 and the adoption had no impact on our consolidated financial statements nor on our related disclosures.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction Between Topic 808 and Topic 606 .

ASU 2018-18 provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard.

The standard also provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants.

The ASU 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 ASU in the first quarter of 2020 and the adoption had no impact on our consolidated financial statements nor on our related disclosures.

Recently issued accounting pronouncements not yet adopted

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date.

Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

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The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted.

The standard will be adopted upon the effective date for us beginning January 1, 2021 on a retrospective basis.

We believe that the adoption of ASU 2019-12 will have minimal impact on our consolidated financial Statements and related disclosures.

The standard was adopted beginning January 1, 2021 on a retrospective basis.

The adoption of ASU 2019-12 did not have an impact on our consolidated financial statements and related disclosures.

In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements .

ASU 2020-10 provides amendments to a wide variety of topics in the FASB’s Accounting Standards Codification, which applies to all reporting entities within the scope of the affected accounting guidance.

We adopted the standard on January 1, 2021 and it had no impact on our consolidated financial statements and related disclosures.

Recently issued accounting pronouncements not yet adopted

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date.

Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

In May 2021, FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, a consensus of the Emerging Issues Task Force .

The standard establishes a principles-based framework in accounting for modifications of freestanding equity-classified written call options on the basis of the economic substance of the underlying transaction.

The standard also requires incremental financial statement disclosures.

The standard affects entities that present earnings per share in accordance with the guidance in Topic 260, Earnings Per Share.

The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years with early adoption is permitted by applying the standard as of the beginning of the fiscal year that includes that interim period.

The standard may be adopted prospectively for modifications or exchanges occurring on or after the effective date.

We have evaluated that the adoption of ASU 2021-04 will not have an impact on our consolidated financial statements and related disclosures.

In August 2020, FASB issued ASU No 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) No.

2020-06 August 2020 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , to reduce the complexity and to simplify the accounting for convertible debt instruments and convertible preferred stock, and the derivatives scope exception for contracts in an entity's own equity.

In addition, the guidance on calculating diluted earnings per share has been simplified and made more internally consistent.

The standard is effective the for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted for fiscal periods beginning after December 15, 2020.

The standard may be adopted on a modified retrospective or fully retrospective method of transition and on adoption, entities may irrevocably elect the fair value option in accordance with Subtopic 825-10, Financial Instruments—Overall, for any financial instrument that is a convertible security.

We have evaluated that the adoption of ASU 2020-06 will not have an impact on our consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) :

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We will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to elect the optional expedients for contract modification;

however, we believe that the adoption of ASU 2020-04 will have minimal impact on our consolidated financial statements and related disclosures.

In August 2020, FASB issued ASU No 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) No.

In addition, the guidance on calculating diluted earnings per share has been simplified and made more internally consistent.

The standard will be adopted by us beginning January 1, 2021.

Entities are allowed to adopt the standard using a either a modified retrospective method of transition or a fully retrospective method of transition.

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

however, we believe that the adoption of ASU 2020-06 will have minimal impact on our consolidated financial statements and related disclosures.

In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements .

The standard is effective for annual periods beginning after December 15, 2020 with early adoption permitted.

The standard will be adopted upon the effective date for us beginning January 1, 2021 on a retrospective basis.

We are currently evaluating the effects of the standard on our consolidated financial statements and related disclosures, however we believe that the adoption of ASU 2020-10 will have no impact the our consolidated financial statements and related disclosures.

however, we believe that the adoption of ASU 2020-04 will have no significant impact on our consolidated financial statements and related disclosures.

Revenue Recognition

Disaggregation of Revenue

The following table provides information about disaggregated revenue from contracts with customers into the nature of the products and services, and geographic regions, and includes a reconciliation of the disaggregated revenue with reportable segments.

The geographic regions that are tracked are the Americas (United States, Canada, and Latin America), EMEA (Europe, Middle East, and Africa), and APAC (Australia, New Zealand, Southeast Asia, and China).

Segment information for fiscal year 2020 is as follows (in thousands):

Segment information for each of the fiscal years are as follows (in thousands):

Year Ended December 31, 2021

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Total revenues $ 90,515 $ 14,239 $ 104,754

Segment information for fiscal year 2019 is as follows (in thousands):

Year Ended December 31, 2020

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Total revenues $ 48,106 $ 20,950 $ 69,056

Segment information for fiscal year 2018 is as follows (in thousands):

Year Ended December 31, 2019

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We recognize unbilled receivables when we have an unconditional right to recognize revenue and have not issued an invoice to our customer.

Unbilled receivables, current are transferred to accounts receivable on issuance of an invoice.

Unbilled receivables, non-current are transferred to accounts receivable on issuance of an invoice;

payment is expected from the customer thereon.

Unbilled receivables are transferred to accounts receivable on issuance of an invoice.

Unbilled receivables are classified separately on the consolidated balance sheets as assets.

We maintain a valuation allowance on accounts receivables and unbilled receivables.

Contract assets represent our right to recognize revenue for custom products with no alternate use and under binding non-cancellable purchase orders and are largely related to our procurement of product.

Contract assets represent our right to recognize revenue for custom products with no alternate use and under binding non-cancellable contracts and are largely related to our procurement of product.

We recognize contract assets when we have a conditional right to recognize revenue.

The delivery pattern of certain of products occurs in advance of the invoicing process, which generates contract assets.

The transfer of control of certain of products occurs in advance of the invoicing process, which generates contract assets.

In addition, we recognize a contract asset related to milestones not eligible for royalty accounting when we assess it is probable of being achieved and there will be no significant reversal of cumulative revenues.

Contract assets are classified separately on the consolidated balance sheets as an asset and transferred to accounts receivable when our rights to payment become unconditional.

We maintain a valuation allowance on contract assets.

Contract assets are classified separately on the consolidated balance sheets as an asset and transferred to accounts receivables when our rights to payment become unconditional.

Contract liabilities, or deferred revenue, represent our obligation to transfer a product or service to the customer, and for which we have received consideration from the customer.

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The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting periods.

The estimated revenue does not include contracts with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that are unexercised as of December 31, 2020.

The estimated revenue does not include contracts

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

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):

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Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock shares outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities.

For periods presented, diluted and basic net loss per share are identical since potential common stock shares are excluded from the calculation, as their effect was anti-dilutive.

For all periods presented, diluted and basic net loss per share are identical since potential common stock shares are excluded from the calculation, as their effect was anti-dilutive.

Anti-Dilutive Securities

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Pursuant to the terms of the agreement, we granted GSK a non-exclusive license to use the CodeEvolver ® protein engineering platform technology to develop novel enzymes for use in the manufacture of GSK's pharmaceutical and health care products.

We received an upfront fee upon the execution of the agreement in July 2014 and milestone payments in each of the years from 2014 through April 2016.

We completed the transfer of the CodeEvolver ® protein engineering platform technology to GSK in April 2016 and all revenues relating to the technology transfer have been recognized as of April 2016.

We have the potential to receive additional cumulative contingent payments that range from $ 5.75 million to $ 38.5 million per project based on GSK’s successful application of the licensed technology.

We are also eligible to receive royalties, based on net sales of GSK’s sales of licensed enzyme products, that are currently not being recognized.

Depending upon GSK's successful application of the licensed technology, we have the potential to receive additional contingent payments that range from $ 5.75 million to $ 38.5 million per project.

In 2019, we received a $ 2.0 million milestone payment relating to the advancement of an enzyme developed by GSK using our CodeEvolver ® protein engineering platform technology.

We recognized research and development revenue of nil , $ 2.0 million, and nil in the year ended December 31, 2020, 2019, and 2018, respectively.

In 2021, we received two additional milestone payments from GSK under the agreement.

We recognized research and development revenue of $ 4.3 million, nil , and $ 2.0 million in the years ended December 31, 2021, 2020, and 2019, respectively.

Merck Platform Technology Transfer and License Agreement

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

We received an upfront 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 $ 3.1 million, $ 4.0 million, and $ 4.1 million in the years ended December 31, 2020, 2019 and 2018, respectively, for various research projects under our collaborative arrangement.

In 2016, we completed the final phase in the transfer of CodeEvolver ® technology to Merck under the Merck CodeEvolver ® Agreement.

We recognized research and development revenues o f $ 0.6 million , $ 3.1 million, and $ 4.0 million in the years ended December 31, 2021, 2020 and 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.

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

In January 2019, we 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 expiring in January 2022.

In January 2019, we amended 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 expiring in January 2022.

The license installation was completed in 2019 and we recognized $ 0.9 million as license fee revenue accordingly under the amendment.

Pursuant to the agreement, Merck has options to future technology enhancements for a specified fee.

As of December 31, 2020, Merck has not exercised its option for technology enhancements.

We recognized $ 0.1 million and $ 0.9 million in research and development revenues under the terms of the amendment in 2020 and 2019, respectively.

We recognized $ 0.1 million, $ 0.1 million and $ 0.9 million in research and development revenues under the terms of the amendment in 2021, 2020 and 2019 respectively.

Merck Sitagliptin Catalyst Supply Agreement

In February 2012, we entered into a five-year Sitagliptin Catalyst Supply Agreement (“Sitagliptin Catalyst Supply Agreement”) with Merck whereby Merck may obtain commercial scale enzyme for use in the manufacture of Januvia ® , its product based on the active ingredient sitagliptin.

In December 2015, Merck exercised its option under the terms of the Sitagliptin Catalyst Supply Agreement to extend the agreement for an additional five years through February 2022.

Effective as of January 2016, we and Merck amended the Sitagliptin Catalyst Supply Agreement to prospectively provide for variable pricing based on the cumulative volume of sitagliptin catalyst purchased by Merck and to allow Merck to purchase a percentage of its requirements for sitagliptin catalyst from a specified third-party supplier.

Merck received a distinct, functional license to manufacture a portion of its demand beginning January 1, 2018, which we recognized as research and development revenue.

We recognized no research and development revenues in the years ended December 31, 2020 and 2019 and $ 1.3 million of research and development revenues in the year ended December 31, 2018.

We have determined that the variable pricing, which provides a discount based on the cumulative volume of sitagliptin catalyst purchased by Merck, provides Merck material rights and we are recognizing product revenues using the alternative method.

In February 2012, we entered into a five-year Sitagliptin Catalyst Supply Agreement (“Sitagliptin Supply Agreement”) with Merck whereby Merck may obtain commercial scale enzyme for use in the manufacture of Januvia ® , its product based on the active ingredient Sitagliptin.

In December 2015, Merck exercised its options under the terms of the Sitagliptin Catalyst Supply Agreement to extend the agreement for an additional five years through February 2022.

In September 2021, the Sitagliptin Catalyst Supply Agreement was amended to extend the agreement through December 2026.

Effective as of January 2016, we and Merck amended the Sitagliptin Supply Agreement to prospectively provide for variable pricing based on the cumulative volume of sitagliptin enzyme purchased by Merck.

We have determined that the variable pricing, which provides a discount based on the cumulative volume of Sitagliptin catalyst purchased by Merck, provides Merck material rights and we are recognizing product revenues over time using the alternative method.

Under the alternative approach, we estimate the total expected consideration and allocate it proportionately with the expected sales.

The Sitagliptin Catalyst Supply Agreement requires Merck to pay an annual fee for the rights to the sitagliptin technology each year for the term of the Sitagliptin Catalyst Supply Agreement.

Amounts of annual license fees are based on contractually agreed prices and are on a declining scale over the term of the contract.

Pursuant to the terms of the Sitagliptin Catalyst Supply Agreement, Merck may purchase supply from us for a fee based on contractually stated prices.

We recognized $ 13.4 million, $ 15.1 million and $ 12.3 million in product revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

Revenues recognized by us under the Sitagliptin Catalyst Supply Agreement comprised 19 %, 22 %, and 22 % of our total revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

The Sitagliptin Catalyst Supply Agreement will terminate in February 2022 unless extended and we have not received an amendment to extend the agreement.

Pursuant to the terms of the Sitagliptin Supply Agreement, Merck may purchase supply of sitagliptin enzyme from us for a fee based on contractually stated prices.

We recognized $ 9.8 million , $ 13.4 million and $ 15.1 million in product revenue under this contract for the years ended December 31, 2021, 2020 and 2019, respectively.

Revenues recognized by us under the Sitagliptin Supply Agreement comprised 9 %, 19 %, and 22 % of our total revenues for the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, we recorded revenue of $ 2.8 million from sitagliptin enzyme sales that were recognized over time based on the progress of the manufacturing process.

These products will be shipped within the six months period following the end of the quarter.

Enzyme Supply Agreement

In November 2016, we entered into a supply agreement whereby our customer may purchase quantities of one of our proprietary enzymes for use in its commercial manufacture of a product.

Pursuant to the supply agreement, we received an upfront payment in December 2016 which was recorded as deferred revenues.

Pursuant to the supply agreement, we received an upfront payment in December 2016 which was recorded as deferred revenue.

Such upfront payment will be recognized over the period of the supply agreement as the customer purchases our proprietary enzyme.

We additionally have determined that the volume discounts under the supply agreement provides the customer material rights and we are recognizing revenues using the alternative method.

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

We additionally have determined that the volume discounts under the supply agreement provide the customer material rights and we are recognizing revenues using the alternative method.

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

Research and Development Agreement

In March 2017, we entered into a multi-year research and development services agreement with Tate & Lyle Ingredients Americas LLC (“Tate & Lyle”) to develop enzymes for use in the manufacture of Tate & Lyle’s zero-calorie TASTEVA ® M Stevia sweetener.

Under the agreement, we received an upfront payment of $ 3.0 million, which was recognized ratably over the maximum term of the services period of 21 months .

Beginning January 1, 2018, we are recognizing revenue using a single measure of progress that depicts our performance in transferring the services.

During the second quarter of 2018, Tate & Lyle opted to obtain additional development services that we completed by June 30, 2018 and we earned milestone payments upon completion of the services.

We recognized nil , $ 0.1 million and $ 7.1 million in revenue in the years ended December 31, 2020, 2019 and 2018, respectively, in research and development services under the research and development services agreement.

Under the agreement, we received an upfront payment which was recognized ratably over the maximum term of the service period of 21 months.

Commercial Agreement

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

In November 2020, we amended the commercial agreement based on Tate & Lyle's intent to use a specific Codexis novel performance enzyme in its production of TASTEVA ® M Stevia Sweetener and became eligible to receive milestone payments of up to $ 1.1 million.

In the fourth quarter of 2020, we became eligible to receive a milestone payment of $ 0.4 million, which we subsequently received in the fourth

quarter of 2020.

We recognized $ 0.2 million in revenue in the year ended December 31, 2020.

As of December 31, 2020, we had a deferred revenue balance of $ 0.2 million.

In November 2020, we

amended the commercial agreement based on Tate & Lyle's intent to use a specific Codexis novel performance enzyme in its production of TASTEVA ® M Stevia Sweetener and became eligible to receive milestone payments of up to $ 1.1 million.

In the fourth quarter of 2020, we became eligible to receive a milestone payment of $ 0.4 million which we subsequently received in February 2021.

Global Development, Option and License Agreement and Strategic Collaboration Agreement

In October 2017, we entered into a Global Development, Option and License Agreement (the “Nestlé License 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 License Agreement, Nestlé Health Science S.A., to advance CDX-6114, our enzyme biotherapeutic product candidate for the potential treatment of PKU.

We received an upfront cash payment of $ 14.0 million in 2017 upon the execution of the Nestlé License Agreement, a $ 4.0 million milestone payment after dosing the first subjects in a first-in-human Phase 1a dose-escalation trial with CDX-6114, and a $ 1.0 million milestone payment upon achievement of a milestone relating to formulation of CDX-6114.

The $ 4.0 million milestone payment that was triggered by the initiation of the trial was received in 2018 and the $ 1.0 million milestone payment that was triggered by the achievement of a formulation relating to CDX-6114 was received in February 2019.

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

We received an upfront cash payment of $ 14.0 million in 2017 upon the execution of the Nestlé License Agreement, a $ 4.0 million milestone payment received in 2018 after dosing the first subjects in a first-in-human Phase 1a dose-escalation trial with CDX-6114, and a $ 1.0 million milestone payment received in 2019 upon achievement of a milestone relating to formulation of CDX-6114.

The upfront payment and the variable consideration relating to the progress payment of $ 4.0 million and a milestone payment of $ 1.0 million were recognized over time as the development work was performed.

Revenue was recognized using a single measure of progress that depicted our performance in transferring control of the services, which was based on the ratio of level of effort incurred to date compared to the total estimated level of effort required to complete all performance obligations under the agreement.

We recognized $ 13 thousand, $ 1.9 million and $ 9.9 million in research and development revenue in 2020, 2019 and 2018, respectively.

We recognized nil , $ 13 thousand and $ 1.9 million in research and development revenue in 2021, 2020 and 2019, respectively.

In January 2019, we received notice from the FDA that it had completed its review of our IND for CDX-6114 and concluded that we may proceed with the proposed Phase 1b multiple ascending dose study in healthy volunteers in the United States.

In February 2019, Nestlé Health Science exercised its option to obtain an exclusive, worldwide, royalty-bearing, sub-licensable license for the global development and commercialization of CDX-6114 for the management of PKU and paid us $ 3.0 million which we recognized as research and development revenue in 2019.

In February 2019, Nestlé Health Science exercised its option to obtain an exclusive, worldwide, royalty-bearing, sub-licensable license for the global development and commercialization of CDX-6114 for the management of PKU and made an option payment of $ 3.0 million which we recognized as research and development revenue in 2019.

Upon exercising its option, Nestlé Health Science assumed all responsibilities for future clinical development and commercialization of CDX-6114.

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 product.

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

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.

Under the Strategic Collaboration Agreement, we received an upfront payment of $ 1.2 million in 2017 and an incremental payment of $ 0.6 million in September 2018 for additional services.

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

Under the Nestlé SCA and the development agreement, we recognized $ 7.9 million, $ 5.4 million and $ 3.6 million in research and development revenue in years ended December 31, 2020, 2019, and 2018, respectively.

The term of the Nestlé SCA has been extended throug h 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 a lead candidate, CDX-7108, targeting a gastrointestinal disorder discovered through our 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.

Under the Nestlé SCA and the development agreement, we recognized $ 6.9 million, $ 7.9 million and $ 5.4 million in research and development revenue for the years ended December 31, 2021, 2020 and 2019 , respectively.

Strategic Collaboration Agreement

In April 2018, we entered into the Porton Agreement with Porton to license key elements of our biocatalyst technology for use in Porton’s global custom intermediate and API development and manufacturing business.

Under the Porton Agreement, we are eligible to receive annual collaboration fees and research and development revenues.

We received initial collaboration payments of $ 0.5 million and $ 0.5 million within 30 days of the effective date and on the first anniversary of the effective date of the Porton Agreement, respectively.

We also received annual collaboration payments of $ 1.0 million for each on the first and second anniversaries of the effective date of the Porton Agreement, respectively.

We are eligible to re ceive $ 1.0 million each annual collaboration payment on the third and fourth anniversaries of the effective date of the Porton Agreement, respectively .

We completed the technical transfer in the fourth quarter of 2018 and recognized $ 2.8 million in research and development revenue.

We also received annual collaboration payments of $ 1.0 million each during the first through third anniversaries of the effective date of the Porton Agreement and are eligible to receive $ 1.0 million on the fourth anniversary of the effective date of the Porton Agreement.

We completed the technical transfer in the fourth quarter of 2018 and recognized the related revenue in 2018.

We recognized revenue related to the functional license provided to Porton at a point in time when control of the license was transferred to the customer.

We recognized research and development revenue related to the Porton Agreement of $ 1.1 million, nil and $ 2.8 million in the years ended December 31, 2020, 2019 and 2018, respectively.

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

We recognized research and development revenue related to the Porton Agreement of $ 1.1 million, $ 1.1 million and nil in the years ended December 31, 2021, 2020 and 2019, respectively.

Platform Technology Transfer and License Agreement

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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 25 months, starting with the date on which we commenced the technology transfer (the “Technology Transfer Period”).

In July 2021, we announced the completion of the technology transfer period during which we transferred our CodeEvolver ® protein engineering platform technology to Novartis (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 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.

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

Novartis has now installed the CodeEvolver ® protein engineering platform technology at its designated laboratory.

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

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

Additionally, we are eligible to receive an additional $ 1.6 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 (“Improvements Term”), Novartis will pay Codexis 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 the Company for each quarter that Novartis manufactures API using a CodeEvolver ® -developed enzyme.

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

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

Revenue for the combined initial license and technology transfer performance obligation, which is expected to occur over twenty-three months, is being recognized using a single measure of progress that depicts our performance in transferring control of the services, which is based on the ratio of level of effort incurred to date compared to the total estimated level of effort required to complete the performance obligation relating to the combined initial license and technology transfer.

Revenue allocated to future improvements will be recognized during the Improvement Term.

We recognized $ 6.2 million and $ 11.3 million in research and development revenue in the year ended December 31, 2020 and 2019, respectively, from the Novartis CodeEvolver ® Agreement.

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

We have also received an aggregate of $ 5.0 million for the completion of the third technology milestone in 2021 In consideration for the continued disclosure and license of improvements to the technology and materials during a multi-year period that began on the conclusion of the Technology Transfer Period (“Improvements Term”), Novartis will pay Codexis annual payments over four years which amount to an additional $ 8.0 million in aggregate.

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 began on the conclusion of the Technology Transfer Period and ends on the expiration date of the last to expire licensed patent.

Revenue for the combined initial license and technology transfer performance obligation was recognized using a single measure of progress that depicted our performance in transferring control of the services.

Revenue allocated to improvements made during the Improvements Term are being recognized during the Improvement Term.

We recognized $ 1.6 million, $ 6.2 million and $ 11.3 million in research and development revenue in the year ended December 31, 2021, 2020 and 2019, respectively.

License Agreement

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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 of $ 0.8 million within 45 days of the effective date of the agreement, and we received an additional $ 0.9 million milestone after the completion of technology transfer in October 2020.

Under the license agreement, we received an initial collaboration fee payment of $ 0.8 million within 45 days of the effective date of the agreement, and we received an additional $ 0.9 million milestone payment after the completion of technology transfer in October 2020.

The 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 $ 1.1 million and nil in the years ended December 31, 2020 and 2019.

We recognized research and development fees of $ 0.9 million and $ 0.9 million for the years ended December 31, 2021 and 2020, respectively.

Strategic Collaboration and License Agreement

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(“Takeda”) under 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”).

In March 2020, 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 $ 15.4 million of research and development fees and pre-clinical milestone payments for the Initial Programs.

Takeda has the right, but not the obligation, to develop, manufacture and commercialize gene

therapy products that include nucleic acid sequences that encode the Protein Sequences (“Products”) at their expense.

Takeda has the right to a certain number of additional disease indications (“Reserved Target Indications”) for a limited period in which Takeda may initiate a Program Plan for one or more Reserved Target Indications (“Additional/Option Program,” with Initial Programs, the “Programs”), provided, (a) if Takeda elects to initiate an Additional/Option Program while the parties are collaborating on three other Programs at the time of such election, or (b) if Takeda elects to initiate an Additional/Option Program using the last remaining Reserved Target Indication, then Takeda must pay us an option exercise fee to initiate such Additional/Option Program.

We will own all rights to the Protein Sequences and corresponding nucleic acid sequences and related intellectual property rights and Takeda will own all rights to Products and related intellectual property rights.

We granted to Takeda an exclusive, worldwide, royalty-bearing, sublicensable license to use the Protein Sequences and their corresponding nucleic acid sequences to develop, manufacture and commercialize the applicable Products in the applicable Field.

We also granted to Takeda a limited non-exclusive, worldwide, sublicensable license (a) to research the Protein Sequences within or outside the applicable Fields and (b) to research the Products outside of the applicable Fields, which such rights exclude Takeda's right to perform any Investigational New Drug-enabling activities.

The licenses to research the Protein Sequences expire after a pre-determined period of time.

The term of the Takeda Agreement begins on the Effective Date and continues on a Product-by-Product and country-by-country basis, until the expiration of Takeda’s obligation to pay royalties to the Company with respect to that Product in that country.

The Takeda Agreement expires in its entirety upon the expiration of Takeda’s obligation to pay royalties to the Company with respect to the Products in all countries worldwide.

Subject to the terms of the Takeda Agreement, and after the first anniversary of the Effective Date with respect to the Initial Programs or after the first anniversary of confirmation of the applicable Program Plan by the parties with respect to the Additional/Option Programs, Takeda may terminate a Program upon specified prior written notice to the Company.

Subject to the terms of the Takeda Agreement, Takeda may terminate the Takeda Agreement, at will, on a Product-by-Product basis upon specified prior written notice to the Company and the Takeda Agreement in its entirety upon specified prior written notice to the Company.

Subject to the terms of the Takeda Agreement, Takeda may terminate the Takeda Agreement on a Product-by-Product basis for safety reasons upon specified prior written notice to the Company.

Either party may terminate the Takeda Agreement for an uncured material breach by the other party, or the other party’s insolvency or bankruptcy.

We are eligible to receive certain development and commercialization milestone payments up to $ 100.0 million per target gene, the modulation of which would lead to the treatment of the disease indications by the applicable Product.

We are also eligible to receive tiered royalties based on net sales of Products at percentages ranging from the middle-single digits to low single-digits.

We recognized research and development revenue related to the Takeda Agreement of $ 13.2 million in the year ended December 31, 2020.

As of December 31, 2020, we had a deferred revenue balance of $ 1.5 million from Takeda.

On execution of the Takeda Agreement in March 2020, 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”).

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

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

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

Revenue recognized relating to the functional licenses provided to Takeda was recognized at a point in time when the control of the license transferred to the customer.

We recognized research and development revenue related to the Takeda Agreement of $ 7.4 million and $ 13.2 million in the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, we had deferred revenue balances of $ 2.2 million and $ 1.5 million, respectively.

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, John Nicols, our President and Chief Operating Officer, also joined MAI’s board of directors.

Concurrently with our initial equity investment, we entered into a Master Collaboration and Research Agreement with MAI (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.

Based on these services, the Company is eligible to earn additional shares of MAI's Series A preferred stock.

In June 2020, we entered into a Stock Purchase Agreement with MAI in which we purchased 1,587,050 shares of MAI's Series A preferred stock for $ 1.0 million.

In connection with the June 2020, transaction, John Nicols, our President and Chief Executive Officer, joined MAI’s board of directors.

For additional information, see Note 14, "Related Party Transactions".

Concurrent with our initial equity investment, we entered into a Master Collaboration and Research Agreement with MAI (the “MAI Agreement”) in June 2020, 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 preferred stock.

Based on these services, the Company is eligible to earn additional shares of MAI's preferred stock.

MAI will combine its advanced chemistries with our enzymes to drive the process to commercialization.

We are eligible to earn such non-monetary payments over ten to thirteen months , and any such shares would be issued thirty days in arrears after each calendar quarter-end.

We are eligible to earn such non-monetary payments over 14 months, and any such shares would be issued thirty days in arrears after each calendar quarter-end.

We are also eligible to receive amounts for bonuses, targets and milestones on achievement of timeline and project goals specified in the statement of work ("SOW").

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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.

In addition, we and MAI have agreed 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 received 714,171 shares of MAI's Series A preferred stock from research and development services in the year ended December 31, 2020, and recognized $ 0.9 million from these services with MAI in the year ended December 31, 2020.

At December 31, 2020, we had $ 0.5 million in contract asset due from MAI for services rendered.

Payment for the services rendered was subsequently received in form of additional MAI Series A preferred stock in the first quarter of 2021.

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

Payment for the services rendered was received in the form of additional MAI Series A and Series B preferred stock.

Pfizer purchase orders

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 infections in humans.

We recognized product revenue of $ 34.5 million from the sale of quantities of CDX-616 enzyme products to Pfizer in 2021.

Revenues recognized by us from the sale to Pfizer comprised 33 % of our total revenues for the year ended December 31, 2021.

As of December 31, 2021, we recorded revenue and contract assets of $ 1.7 million from the sale of this enzyme product that were recognized over time based on the progress of the manufacturing process.

Investments in Non-Marketable Securities

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We determine gains or losses on the sale or extinguishment of non-marketable debt securities using a specific identification method.

Unrealized gains and losses from bifurcated embedded derivatives, which represent share-settled redemption features, are recorded as other expense, net, in the consolidated statements of operations.

Unrealized gains and losses on non-marketable debt securities are recorded as a component of other comprehensive loss until realized.

Realized gains or losses are recorded as a component of other expenses, net.

We recognized no unrealized or realized gains or losses during the year ended December 31, 2020.

As of December 31, 2020 and 2019, the fair value of non-marketable debt securities was $ 1.0 million and nil , respectively.

As of December 31, 2020, the adjusted cost, carrying value and fair value of non-marketable debt securities is the following (in thousands):

Realized gains or losses are recorded as a component of other income (expense), net.

In November 2020, we purchased convertible subordinated notes issued by Arzeda Corp., an early-stage computational protein design company, for $ 1.0 million.

The investment was classified as available-for-sale non-marketable interest-bearing debt securities with a carrying value of $ 1.0 million as of December 31, 2020.

In July 2021, we converted the non-marketable debt security with a carrying value of $ 1.3 million into 207,070 shares of Series B-2 preferred stock of Arzeda Corp.

During the year ended December 31, 2021 , w e recognized $ 0.3 million in interest income from interest earned on our investment in this debt security.

There were no investments in non-marketable debt securities at December 31, 2021.

As of December 31, 2020, the adjusted cost, carrying value and fair value of the non-marketable debt security is the following (in thousands):

December 31, 2020

By contractual maturity:

Adjusted Cost and Carrying Value Fair Value

Non-marketable debt securities due in 1 year or less $ 1,000 $ 1,000

There were no investments in non-marketable debt securities at December 31, 2019.

Non-Marketable Equity Securities

Non-marketable equity securities are investments in privately held companies without readily determinable market values.

The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3.

We adjust the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other expenses, net.

We recognized no unrealized or realized gain or losses during the year ended December 31, 2020.

At December 31, 2020 and 2019, the carrying value of non-marketable equity securities is the following (in thousands):

Our non-marketable equity securities are investments in privately held companies without readily determinable market value and primarily relate to our investments in MAI and Arzeda Corp.

These investments are accounted for under the measurement alternative and are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar security of the same issuer.

Non-marketable equity securities are measured at fair value on a non-recurring basis and classified within Level 2 in the fair value hierarchy because we estimate the fair value of these using the observable transaction price paid by third party investors for the same or similar security of the same issuers.

We adjust the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other income (expense), net in the consolidated statements of operations.

For the year ended December 31, 2021, we recognized a $ 1.0 million unrealized gain in other income (expense), net, in the consolidated statements of operations, and included as adjustment to the carrying value of our investment in MAI based on an analysis of observed transaction price from MAI's recent round of financing during the third and fourth quarter of 2021.

There was no remeasurement event for our investment in MAI and Arzeda Corp that occurred during the remainder of 2021.

We recognized no realized gains or losses during the years ended December 31, 2021 and 2020.

The carrying value of our investment in MAI was $ 12.7 million and $ 1.5 million at December 31, 2021 and December 31, 2020 , respectively.

The carrying value of our investment in Arzeda Corp.

was $ 1.3 million at December 31, 2021 .

The following table presents the carrying value of non-marketable equity securities (in thousands):

December 31, 2021 December 31, 2020

Non-marketable equity securities $ 14,002 $ 1,450

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Money market funds $ 86,095 $ — $ — $ 86,095

Non-marketable debt securities $ — $ — $ 1,000 $ 1,000

Total $ 127,567 $ — $ 1,000 $ 128,567

December 31, 2020

Money market funds $ 127,567 $ — $ — $ 127,567

There were no investments in non-marketable debt and equity securities at December 31, 2019.

The fair value of non-marketable securities remeasured due to impairment would be classified within level 3.

During the year ended December 31, 2020, we did no t recognize any significant other-than-temporary impairment losses.

After the adoption of ASU 2016-13, we did no t recognize any significant credit losses.

Balance Sheets Details

Non-marketable debt security — — 1,000 1,000

Total $ 127,567 $ — $ 1,000 $ 128,567

During the years ended December 31, 2021 and 2020, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on non-marketable securities.

Balance Sheet Details

Cash Equivalents

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

Cash equivalents consisted of the following (in thousands):

December 31, 2021 December 31, 2020

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Average contractual maturities (in days) is not applicable.

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

As of December 31, 2021, the total cash and cash equivalents balance of $ 116.8 million consisted of money market funds of $ 86.1 million and cash of $ 30.7 million held with major financial institutions.

As of December 31, 2020, the total cash and cash equivalents balance of $ 149.1 million consisted of money market funds of $ 127.6 million and cash of $ 21.5 million held with major financial institutions.

Inventories consisted of the following (in thousands):

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Inventories $ 1,160 $ 964

Inventories are recorded net of reserves of $ 1.4 million and $ 1.5 million as of December 31, 2021 and December 31, 2020 respectively.

Property and Equipment, net

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Property and equipment, net $ 21,345 $ 9,675

(1) Fully depreciated property and equipment with a cost of $ 1.8 million and $ 1.0 million we re ret ired during the years ended December 31, 2020 and 2019, respectively.

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

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

Depreciation expense included in the consolidated statements of operations as follows (in thousands):

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

Year Ended December 31,

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Depreciation expense $ 3,113 $ 1,950 $ 1,570

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

Goodwill had a carrying value of $ 3.2 million as of December 31, 2021 and 2020.

Other Accrued Liabilities

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however, the terms and conditions of the 2010 Plan will continue to govern any outstanding awards thereunder.

The 2010 Plan provided for the grant of incentive stock options, non-statutory stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), performance-contingent

restricted stock units (“PSUs”), performance based options (“PBOs”), stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants.

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

The number of shares of our common stock available for issuance under the 2019 Plan is equal to the sum of (i) 7,897,144 shares and (ii) any shares subject to awards granted under the 2010 Plan that were outstanding as of April 22, 2019 and thereafter terminate, expire, lapse or are forfeited;

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In June 2019, 8.1 million shares authorized for issuance under the 2019 Plan were registered under the Securities Act of 1933, as amended (the “Securities Act”).

The 2019 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock or cash based awards and dividend equivalents to eligible employees and consultants of the Company or any parent or subsidiary, as well as members of the Board.

As of December 31, 2020, total shares remaining available for issuance under the 2019 Plan were approximately 6.8 million shares.

The 2010 Plan provided for the grant of incentive stock options, non-statutory stock options, RSUs, RSAs, PSUs, PBOs,

stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants.

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

Stock Options

The option exercise price for incentive stock options must be at least 100 % of the fair value of our common stock on the date of grant and the option exercise price for non-statutory stock options is 85 % of the fair value of our common stock on the date of grant, as determined by the Board.

The option exercise price for incentive stock options must be at least 100 % of the fair value of our common stock on the date of grant and the option exercise price for non-statutory stock options is at least 85 % of the fair value of our common stock on the date of grant, as determined by the Board.

If, at the time of a grant, the optionee directly or by attribution owns stock possessing more than 10 % of the total combined voting power of all of our outstanding capital stock, the exercise price for these options must be at least 110 % of the fair value of the underlying common stock.

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Restricted Stock Units ("RSUs")

We also grant employees RSUs, which generally vest over either a three year period with one-third of the shares subject to the RSUs vesting on each yearly anniversary of the vesting commencement date or over a four year period with 25 % of the shares subject to the RSU vesting on each yearly anniversary of the vesting commencement date, in each case contingent upon such employee’s continued service on such vesting date.

We also grant employees RSUs, which generally vest over either a three year period with 33 % of the shares subject to the RSUs vesting on each yearly anniversary of the vesting commencement date or over a four-year period with 25 % of the shares subject to the RSU vesting on each yearly anniversary of the vesting commencement date, in each case contingent upon such employee’s continued service on such vesting date.

RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions.

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Achievement below the threshold level would result in no shares being eligible to vest in respect of the PSUs and PBOs.

In 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 corporate revenue, performance enzyme segment gross margin, major new biotherapeutics publicity events, strategic performance enzyme and biotherapeutics deliverables, and strategic plan development.

As of December 31, 2020, we estimated that the 2020 PSUs and 2020 PBOs performance goals would be achieved at 88 % 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 84 % of the target level, and recognized expenses accordingly.

In 2021, we awarded PSUs ("2021 PSUs") and PBOs ("2021 PBOs"), each of which commenced vesting based upon the achievement of various weighted performance goals, including corporate revenue, performance enzyme segment gross margin, major new biotherapeutics publicity events, strategic performance enzyme and biotherapeutics deliverables, safety, and technology and strategic plan development.

As of December 31, 2021, we estimated that the 2021 PSUs and 2021 PBOs performance goals would be achieved at 146 % and 73 % of the target level, respectively, and recognized stock-based compensation expenses accordingly.

In 2020, we awarded PSUs ("2020 PSUs") and PBOs ("2020 PBOs"), each of which commenced vesting based upon the achievement of various weighted performance goals, including corporate revenue, performance enzyme segment gross margin, major new biotherapeutics publicity events, strategic performance enzyme and biotherapeutics deliverables, and strategic plan development.

In the first quarter of 2021, we determined that the 2020 PSUs and 2020 PBOs performance goals had been achieved at 88 % and 44 % of the target level, respectively, and recognized the stock-based compensation expenses accordingly.

Accordingly, 50 % of the shares underlying the 2020 PSUs and PBOs vested in the first quarter of 2021 and 50 % of the shares underlying the 2020 PSUs and PBOs will vest in the first quarter of 2022, in each case, subject to the recipient’s continued service on each vesting date.

In 2018, we awarded PSUs (“2018 PSUs”) and PBOs (“2018 PBOs”), each of which commenced vesting based upon the achievement of various weighted performance goals, including core business revenue growth, cash balance, new licensing collaborations, new research and development service revenue arrangements, technology advancement and novel therapeutic enzymes advancement.

In the first quarter of 2019, we determined that the 2018 PSUs and 2018 PBOs performance goals had been achieved at 118 % of the target level, and recognized expenses accordingly.

Accordingly, 50 % of the shares underlying the 2018 PSUs and PBOs vested in the first quarter of 2019 and in the first quarter of 2020, respectively, in each case subject to the recipient’s continued service on each vesting date.

In 2019, we awarded PSUs ("2019 PSUs") and PBOs ("2019 PBOs"), each of which commenced vesting based upon the achievement of various weighted performance goals, including sustained revenue and performance enzyme growth, strategic advancement of biotherapeutics, cash balance and strategic plan development.

In the first quarter of 2020, we determined that the 2019 PSUs and 2019 PBOs performance goals had been achieved at 84 % and 42 % of the target level, respectively, and recognized the stock-based compensation expenses accordingly.

Accordingly, 50 % of the shares underlying the 2019 PSUs and PBOs vested in the first quarter of 2020 and 50 % of the shares underlying the 2019 PSUs and PBOs vested in the first quarter of 2021, in each case subject to the recipient’s continued service on each vesting date.

Stock-Based Compensation Expense

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Expected dividend yield 0.0 % 0.0 % 0.0 %

The following summarizes the weighted-average assumptions used to estimate the fair value of 76,000 shares of stock options granted to non-employees during the year ended December 31, 2020 for services valued at $ 0.4 million:

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

Year Ended December 31,

Expected life (years) 5.6 5.4

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Expected dividend yield 0.0 % 0.0 %

The weighted average grant date fair value per share of non-employee stock options granted in 2020 was $ 5.04 .

The Company did no t grant shares of stock options to non-employees during the years ended December 31, 2019 and 2018.

The weighted average grant date fair value per share of non-employee stock options granted respectively in 2021 and 2020 was $ 11.29 and $ 5.04 .

The Company did no t grant shares of stock options to non-employees during the year ended December 31, 2019.

The following tables summarizes stock option activities:

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Outstanding at December 31, 2018 4,112 $ 4.81

( 772 ) $ 5.56

Granted 406 $ 20.68

Exercised ( 1,045 ) $ 4.50

Forfeited/Expired ( 326 ) $ 11.01

( 340 ) $ 6.66

Outstanding at December 31, 2019 3,147 $ 6.31

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Shares Weighted Average

Non-vested balance at December 31, 2017 159 $ 4.68

( 151 ) $ 4.71

(In Thousands)

Non-vested balance at December 31, 2018 55 $ 12.83

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Non-vested balance at December 31, 2020 96 $ 11.44

Granted 46 $ 21.91

Vested ( 62 ) $ 11.31

Non-vested balance at December 31, 2021 80 $ 17.53

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

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Non-vested balance at December 31, 2018 348 $ 5.66

( 290 ) $ 4.09

Granted 72 $ 19.19

Vested ( 210 ) $ 5.03

Forfeited/Expired ( 9 ) $ 13.60

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Non-vested balance at December 31, 2018 240 $ 7.48

( 495 ) $ 7.16

Granted 95 $ 14.98

Vested ( 200 ) $ 6.58

Forfeited/Expired ( 15 ) $ 15.58

Non-vested balance at December 31, 2019 120 $ 13.88

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Forfeited/Expired ( 6 ) $ 21.80

( 15 ) $ 15.58

Non-vested balance at December 31, 2020 131 $ 15.34

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Forfeited/Expired ( 19 ) $ 19.38

( 6 ) $ 21.80

Non-vested balance at December 31, 2021 128 $ 21.24

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Performance Based Options ("PBOs")

We estimated the fair value of PBO using the Black-Scholes-Merton option-pricing model based on the date of grant.

We estimated the fair value of PBOs using the Black-Scholes-Merton option-pricing model based on the date of grant.

The following summarize the ranges of weighted-average assumptions used to estimate the fair value of employee stock options granted:

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The following tables summarizes PBO activities:

Number of Shares Weighted Average Grant Date Fair Value Per Share

Shares Weighted Average Grant Date Fair Value Per Share

(In Thousands)

Outstanding at December 31, 2018 1,582 $ 3.47

Granted 718 $ 11.44

Exercised ( 422 ) $ 3.17

Forfeited ( 1,254 ) $ 3.73

Forfeited/Expired ( 618 ) $ 10.34

Outstanding at December 31, 2019 1,260 $ 4.75

( 422 ) $ 3.17

( 618 ) $ 10.34

Granted 689 $ 6.37

Forfeited/Expired ( 389 ) $ 6.42

Outstanding at December 31, 2020 1,560 $ 5.05

( 389 ) $ 6.42

Granted 433 $ 12.23

Exercised ( 35 ) $ 9.02

Forfeited/Expired ( 118 ) $ 12.23

Outstanding at December 31, 2021 1,840 $ 4.11

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Vested and expected to vest at December 31, 2021 1,784 $ 12.11 6.6 $ 34,263

The total fair value of exercised PBOs wer e nil for 2020, $ 1.3 million for 2019 and $ 0.2 million for 2018.

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

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

Capital Stock

Equity Distribution Agreement

We filed a Registration Statement on Form S-3 with the SEC, under which we may sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings.

The registration statement became effective on May 7, 2021.

In May 2021, we entered into an Equity Distribution Agreement ("EDA") with Piper Sandler & Co ("PSC"), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of $ 50.0 million of shares of our common stock.

Under the terms of the EDA, PSC may sell the shares at market prices by any method that is deemed to be an“at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended.

We are not required to sell any shares at any time during the term of the EDA.

The EDA will terminate upon the earlier of:

(i) the issuance and sale of all shares through PSC on the terms and conditions of the EDA, or (ii) the termination of the EDA in accordance with its terms.

Either party may terminate the EDA at any time upon written notification to the other party in accordance with the EDA, and upon such notification, the offering will terminate.

Under no circumstances shall any shares be sold pursuant to the EDA after the date which is three years after the registration statement is first declared effective by the SEC.

We agreed to pay PSC a commission of 3 % of the gross sales price of any shares sold pursuant to the EDA.

With the exception of certain expenses, we will pay PSC up to 8 % of the gross sales price of the shares sold pursuant to the EDA for a combined amount of commission and reimbursement of PSC's expenses and fees.

During the year ended December 31, 2021, no shares of our common stock were issued pursuant to the EDA.

As of December 31, 2021, $ 50.0 million of shares remained available for sale under the EDA.

Public Offerings

In December 2020, we completed an underwritten public offering in which we issued and sold 4,928,572 shares of our common stock, par value $ 0.0001 per share, at a public offering price of $ 17.50 per share.

In December 2020, we completed an underwritten public offering in which we issued and sold 4.9 million shares of our common stock, par value $ 0.0001 per share, at a public offering price of $ 17.50 per share.

We received gross proceeds of $ 86.3 million, net of underwriting discounts and commissions of $ 5.2 million and direct offering expenses of $ 0.3 million for net proceeds of $ 80.8 million.

In April 2018, we completed an underwritten public offering of 4,312,500 shares of our common stock, par value $ 0.0001 per share, at a public offering price of $ 9.25 per share.

We received net proceeds after deducting the underwriting discounts and commissions and estimated offering expenses of approximately $ 37.3 million.

Private Placement

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Currently, all of our United States based employees over the age of 18 are eligible to participate in the 401(k) Plan.

Under the 401(k) Plan, eligible employees may elect

to reduce their current compensation up to a certain annual limit and contribute these amounts to the 401(k) Plan.

Under the 401(k) Plan, eligible employees may elect to reduce their current compensation up to a certain annual limit and contribute these amounts to the 401(k) Plan.

We may make matching or other contributions to the 401(k) Plan on behalf of eligible employees.

We recorded employer matching contributions expense of $ 1.1 million, $ 0.8 million, and $ 0.7 million in the years ended December 31, 2021, 2020, and 2019, respectively.

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

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

Year Ended December 31,

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Loss before provision for income taxes $ ( 21,090 ) $ ( 23,671 ) $ ( 11,918 )

The tax provision (benefit from) for the years ended December 31, 2020, 2019 and 2018 consists primarily of taxes attributable to foreign operations.

The tax provision for the years ended December 31, 2021, 2020 and 2019 consists primarily of taxes attributable to foreign operations.

The components of the provision for income taxes are as follows (in thousands):

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2021 2020 2019

Current provision (benefit):

Current provision:

State $ — $ 5 $ 5

Foreign 198 342 18

Total current provision (benefit) 347 23 ( 8 )

Deferred provision (benefit):

Total current provision $ 198 $ 347 $ 23

Deferred benefit:

Foreign ( 9 ) ( 8 ) ( 6 )

Total deferred provision (benefit) ( 8 ) ( 6 ) ( 29 )

Provision for (benefit from) income taxes $ 339 $ 17 $ ( 37 )

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

Total deferred benefit $ ( 9 ) $ ( 8 ) $ ( 6 )

Provision for income taxes $ 189 $ 339 $ 17

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

Year Ended December 31,

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Change in valuation allowance 9,635 6,359 6,561

Provision for (benefit from) income taxes $ 339 $ 17 $ ( 37 )

Provision for income taxes $ 189 $ 339 $ 17

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

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In instances where a valuation allowance is established against current year losses, income from other sources is considered when determining whether sufficient future taxable income exists to realize the deferred tax assets.

In 2014, we determined that the undistributed earnings of our India subsidiary will be repatriated to the United States, and accordingly, we have provided a deferred tax liability totaling $ 0.1 million as of December 31, 2020, for local taxes that would be incurred upon repatriation.

We have not provided for U.S.

federal and state income taxes on all of the remaining non-U.S.

subsidiaries’ undistributed earnings as of December 31, 2020 as the remaining foreign jurisdictions are in an accumulative loss position.

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

We apply the provisions of ASC 740 to account for uncertain income taxes.

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Additions based on tax positions related to current year 2,206 1,357 1,362

Reductions to tax provision of prior years ( 4 ) ( 12 ) ( 529 )

Additions to tax position of prior years 372 — —

Reductions to tax position of prior years — ( 4 ) ( 12 )

Balance at end of year $ 15,261 $ 12,683 $ 11,330

We recognize interest and penalties as a component of our income tax expense.

Total interest and penalties recognized in the consolidated statement of operations was $ 39 thousand, $ 32 thousand and $ 37 thousand, respectively, in 2020, 2019 and 2018.

Total penalties and interest recognized in the balance sheet was $ 0.4 million in 2020 and 2019.

Total interest and penalties recognized in the consolidated statements of operations were $ 61 thousand, $ 39 thousand and $ 32 thousand in 2021, 2020 and 2019, respectively.

Total penalties and interest recognized in the balance sheet was $ 0.5 million, $ 0.4 million and $ 0.4 million as of December 31, 2021, 2020 and 2019, respectively.

The total unrecognized tax benefits that, if recognized currently, would impact our company’s effective tax rate were $ 0.3 million as of December 31, 2021, 2020 and 2019.

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We are not subject to examination by United States federal or state tax authorities for years prior to 2002 and foreign tax authorities for years prior to 2014.

In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No.

118 (“SAB 118”), which provided a measurement period of up to one year from the enactment date of the Tax Cuts and Jobs Act of 2017 (the “Act”) for companies to complete the accounting for the Tax Act and its related impacts.

In 2018, the Company completed its accounting for the Tax Act.

The income tax effects of the Tax Act for which the accounting was completed in 2018 include:

the impact of the Transition Tax, the revaluation of deferred tax assets and liabilities to reflect the 21% corporate tax rate, the impact to the aforementioned items on state income taxes.

We completed our accounting for the income tax effects under the Tax Cuts and Jobs Act (the “Act”) that are relevant to the Company and required to be recorded and disclosed pursuant to ASC 740.

Accordingly, any and all provisional amounts previously recorded in accordance with SAB 118 were adjusted to reflect their final amounts.

Beginning in 2018, the global intangible low-taxed income (“GILTI”) provisions in the Tax Act required us to include, in our U.S.

income tax return, foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets.

Per guidance issued by the FASB, companies can either account for deferred taxes related to GILTI or treat tax arising from GILTI as a period cost.

Both are acceptable methods subject to an accounting policy election.

At December 31, 2018, we finalized our policy and elected to use the period cost method for GILTI.

In 2020, we did not incur any GILTI inclusion as our foreign subsidiaries generated losses.

The BEAT provisions in the Tax Act eliminated the deduction of certain base-erosion payments made to related foreign corporations and impose a minimum base erosion anti-abuse tax if greater than regular tax.

In 2020, our company was not subject to BEAT as it did not meet the requirements to be subject to BEAT.

Commitments and Contingencies

Operating Leases

Our headquarters are located in Redwood City, California, where we occupy approximately 77,300 square feet of office and laboratory space in four buildings within the same business park of Metropolitan Life Insurance Company (“MetLife”).

Our headquarters are located in Redwood City, California, where we occupy approximately 77,300 square feet of office and laboratory space in multiple buildings within the same business park of Metropolitan Life Insurance Company ("MetLife").

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

Until the end of January 2020, we also leased approximately 29,900 square feet of space located at 101 Saginaw Drive, Redwood City, California (the “Saginaw Space”).

During the period January 1, 2020 through January 31, 2020, we subleased approximately 26,500 square feet of the Saginaw Space to Minerva Surgical, Inc.

During January 2020, we subleased approximately 26,500 square feet of the Saginaw Space to Minerva Surgical, Inc.

The lease and sublease for the Saginaw Space both expired at the end of January 2020.

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We have one (1) option to extend the term of the lease for the Penobscot Space for five ( 5 ) years, and one (1) separate option to extend the term of the lease for the 501 Chesapeake Space for five ( 5 ) years.

We incurred $ 3.6 million of capital improvement costs related to the facilities leased from MetLife through December 31, 2012.

During 2011 and 2012, we requested and received $ 3.1 million of reimbursements from the landlord for the tenant improvement and HVAC allowances for the completed construction.

The reimbursements were recorded once cash was received.

In those fiscal periods prior to January 1, 2019, we recorded reimbursements from the landlord for tenant improvements as liabilities in the consolidated balance sheets and we amortized the reimbursements on a straight line basis over the term of the RWC Lease as a reduction to rent expense.

On January 1, 2019 we adopted ASU 2016-02 and related amendments, Leases (Topic 842) (“ASC 842”), which provided a new basis of accounting for leases.

Under the provisions of ASC 842, we reclassified lease incentive obligations as operating lease right-of-use assets in the consolidated balance sheets.

Rent expense for the Redwood City properties is recognized on a straight-line basis over the term of the RWC Lease.

We are required to restore certain areas of the Redwood City facilities that we are renting to their original form.

Pursuant to the terms of the RWC Lease, we exercised our right to deliver a letter of credit in lieu of a security deposit.

The letter of credit is collateralized by deposit balances held by the bank in the amount of $ 1.1 million as of December 31, 2021 and 2020, and are recorded as non-current restricted cash on the consolidated balance sheets.

We entered into a short-term office lease in San Carlos, California during the second quarter of 2021 and this lease will expire in April 2022.

Our remaining future commitment pursuant to this lease is $ 40 thousand as of December 31, 2021.

In January 2021, we entered into a lease agreement with ARE-San Francisco No.

63, LLC (“ARE”) to lease a portion of a facility comprising approximately 36,593 rentable square feet in San Carlos, California to serve as additional office and research and development laboratory space (the “San Carlos Space”).

The budget provided a net tenant improvement allowance of $ 6.3 million and an additional allowance of up to $ 2.7 million.

ARE will have an enforceable right to payment by us in the form of equal monthly additional rent payments at a certain interest rate through the lease term for the additional allowance.

The terms include an initial annualized base rent of $ 2.5 million, subject to scheduled 3 % annual rent increases, an annualized additional allowance payment of $ 0.4 million, plus certain operating expenses.

The lease has a 10 -year term from the lease commencement date with one option to extend the term for an additional period of 5 years.

We have provided ARE with a $ 0.5 million security deposit in the form of a letter of credit.

We have the right to sublease the facility, subject to landlord consent.

We commenced occupancy of the San Carlos Space in December 2021 and recognized the right of use asset and the corresponding operating lease liability.

We are required to restore certain areas of the Redwood City and San Carlos facilities that we are renting to their original form.

We are expensing the asset retirement obligation over the terms of the respective leases.

We review the estimated obligation each reporting period and make adjustments if our estimates change.

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

We recorded asset retirement obligations of $ 0.4 million and $ 0.2 million as of December 31, 2021 and 2020, respectively, which are included in other liabilities on the consolidated balance sheets.

Accretion expense related to our asset retirement obligations was nominal in 2021 and 2020.

Pursuant to the terms of the RWC Lease, we exercised our right to deliver a letter of credit in lieu of a security deposit.

The letter of credit is collateralized by deposit balances held by the bank in the amount of $ 1.1 million as of December 31, 2020 and 2019, and are recorded as non-current restricted cash on the 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 term of the three-year lease was from February 2017 and expired in February 2020.

This financing agreement was accounted for as a finance lease due to bargain purchase options at the end of the lease.

In April 2017, we entered into a three-year financing lease agreement with a third party supplier for the purchase of information technology equipment for approximately $ 0.3 million.

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

Lease costs, amounts included in measurement of lease obligations and other information related to non-cancellable operating leases and finance leases for the year ended December 31, 2020 and 2019 were as follows (in thousands):

Lease and other information

Lease costs, amounts included in measurement of lease obligations and other information related to non-cancellable operating leases and finance leases for the years ended December 31, 2021, 2020 and 2019 were as follows (in thousands):

Year Ended December 31,

2021 2020 2019

Amortization of right-of-use assets $ 106 $ 152 $ 217

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(2) The Company had no variable lease costs.

Lease costs for the years ended December 31, 2020 and 2019 as compared to year ended December 31, 2018 reflected the effects of adopting the provisions of ASC 842 which provided a new basis of accounting for leases in 2019.

Operating lease costs were $ 3.2 million for the year ended December 31, 2018, partially offset by sublease income of $ 1.1 million.

Finance lease payments were $ 0.3 million for the year ended December 31, 2018.

Amounts included in measurement of lease obligations:

Year Ended December 31,

2021 2020 2019

Operating cash flows from operating leases $ 4,197 $ 2,816 $ 3,279

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Operating Lease - Right-of-use assets obtained in exchange for lease liabilities $ 25,445 $ — $ 26,617

Finance Lease - Right-of-use assets obtained in exchange for lease liabilities $ — $ 493

Finance Lease - Right-of-use assets obtained in

exchange for lease liabilities $ — $ — $ 493

Operating Lease Finance Lease

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Weighted-average discount rate 5.6 % —

As of December 31, 2020, our maturity analyses of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

As of December 31, 2021, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

Years ending December 31, Operating Leases

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Lease obligations $ 47,654

Subsequent Event

In the first quarter of 2021, we entered into a lease agreement with ARE-San Francisco No.

We expect to commence occupancy of the San Carlos Space in November 2021 once tenant improvements are substantially completed by ARE in accordance with the construction plan.

For additional information and a maturity analyses of the estimated annual undiscounted cash flows of the operating lease, see Note 17, “Subsequent Events”

Other Commitments

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Service agreements are primarily for the development of manufacturing processes and certain studies.

Commitments under service agreements are subject to cancellation at our discretion which may require payment of certain cancellation fees.

Commitments under service agreements are subject to cancellation at our discretion which may require payment

of certain cancellation fees.

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

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Development and manufacturing services agreements September 2019 2,469

Facility maintenance agreement September 2021 1,475

Total other commitments $ 4,045

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In June 30, 2017, we entered into a credit facility (the "Credit Facility") with Western Alliance Bank consisting of term loans (“Term Debt”) up to $ 10.0 million, and advances ("Advances") under a revolving line of credit ("Revolving Line of Credit") up to $ 5.0 million with an accounts receivable borrowing base of 80 % of eligible accounts receivable.

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

We may draw on the Term Debt and the Revolving Line of Credit at any time prior to October 1, 2021 and October 1, 2024, respectively.

On October 1, 2024 loans drawn under the Term Debt mature and the Revolving Line of Credit terminate.

Loans made under the Term Debt bear interest through maturity equal to the greater of (i) 3.75 % or (ii) the sum of (A) Index Rate (prime rate published in the Money Rates section of the Western Edition of The Wall Street Journal plus (B) 0.50 %.

In September 2021, we entered into the Ninth Amendment to the Credit Facility whereby we may draw on the Term Debt and the Revolving Line of Credit at any time prior to December 31, 2021 and October 1, 2024, respectively.

The right to take draws on the Term Debt expired on December 31, 2021 and no amounts were drawn under the Credit Facility as of December 31, 2021.

On October 1, 2024, loans drawn under the Revolving Line of Credit terminate.

Advances made under the Revolving Line of Credit bear interest at a variable annual rate equal to the equal to the greater of (i) 4.25 % or (ii) the sum of (A) the prime rate plus (B) 1.00 %.

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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 December 31, 2021, we were in compliance with the covenants for the Credit Facility.

The Credit Facility allows for interest-only payments on the Term Debt through November 1, 2022.

Monthly payments of principal and interest on the Term Debt are required following the applicable amortization date.

We may elect to prepay in full the Term Debt and Advances under the Revolving Line of Credit at any time.

Legal Proceedings

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There were no accruals for expenses related to indemnification issues for any periods presented.

Impact of COVID-19

We are subject to risks and uncertainties as a result of the current COVID-19 pandemic.

The COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the U.S.

economy and other economies worldwide.

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

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

In May 2020, we initiated limited R&D operations and have gradually ramped up operations such that we are currently utilizing the majority of our normal R&D capacity.

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

As of the date of issuance of these consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity, or results of operations in the future is uncertain.

Related Party Transactions

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 MAI's Series A preferred stock for $ 1.0 million.

In connection with the transaction,

John Nicols, our President and Chief Executive Officer, also joined MAI’s board of directors.

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

Our investment in MAI Series A preferred stock was $ 1.5 million at December 31, 2020.

At December 31, 2020, we had $ 0.5 million in contract asset due from MAI for services rendered.

Payment for the services rendered was subsequently received in the form of additional MAI Series A preferred stock in the first quarter of 2021.

For addition information, see Note 5, "Collaborative Arrangements."

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

The Accelerator is an informal collaboration with no commitment, designed to invest in the bio-production space to stimulate innovation which may deliver products leveraging the engineering technology and operational capability of Codexis and the resources, network and investment processes of Casdin, a shareholder with greater than a 5% ownership in Codexis' publicly traded common stock.

The first Accelerator investment was in an available-for-sale non-marketable interest-bearing debt securities which are convertible subordinated notes issued by Arzeda Corp., an early-stage computational protein design company.

The cost to acquire and the carrying value of the investment as of December 31, 2020 was $ 1.0 million.

For additional information, see Note 7, “Fair Value Measurements.”

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

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

In April 2021, we purchased an additional 1,000,000 shares of MAI's Series A preferred stock for $ 0.6 million.

In September 2021, we purchased 9,198,423 shares of MAI's Series B preferred stock for $ 7.0 million.

fourth quarter of 2021, we became eligible to receive the primary milestone payment of $ 1.0 million which we received in the form of additional of 1,587,049 Series B preferred stock during December 2021.

We recognized $ 2.0 million and $ 0.9 million in research and development revenue from transactions with MAI in the years ended December 31, 2021 and 2020, respectively.

We received 3,491,505 and 714,171 shares of MAI's Series A and B preferred stock from research and development services we provided to MAI for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, we have 16,705,320 shares of MAI's Series A and B preferred stock that we have earned or purchased since executing the Stock Purchase Agreement with MAI.

The carrying value of our investment in MAI Series A and B preferred stock was $ 12.7 million and $ 1.5 million at December 31, 2021 and 2020, respectively.

We had $ 0.2 million and nil in deferred revenue as of December 31, 2021 and 2020, respectively, and nil and $ 0.5 million in contract assets due from MAI for services rendered as of December 31, 2021 and 2020, respectively.

Payment for the services rendered was received in the form of additional Series A and Series B preferred stock.

For additional information, see Note 5, "Collaborative Arrangements".

AstraZeneca PLC

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Cheng's departure from our board of directors.

We recognized $ 1.0 million and $ 0.6 million of revenue from transactions with AstraZeneca in the years ended December 30, 2019 and 2018, respectively.

At December 31, 2020 and 2019, we had nil

and $ 0.3 million of related party receivables from AstraZeneca PLC and its controlled purchasing agents and contract manufacturers, respectively.

Settlement of Short Swing Profit Claim

In August 2019, we recorded approximately $ 77 thousand related to the short swing profit settlement remitted by a shareholder of our company under Section 16(b) of the Securities Exchange Act of 1934, as amended.

We recognized the proceeds as an increase to additional paid-in capital in the consolidated balance sheets as of December 31, 2019 and consolidated statements of stockholders’ equity as well as in cash provided by financing activities in the consolidated statements of cash flows for the year ended December 31, 2019.

As of December 31, 2020, we had no receivables from AstraZeneca PLC and its controlled purchasing agents and contract manufacturers that was generated during the related party period.

Segment, Geographical and Other Revenue Information

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Performance Enzymes and Novel Biotherapeutics.

Our chief operating decision maker ("CODM") is our Chief Executive Officer.

Our business segments are primarily based on our organizational structure and our operating results as used by our CODM in assessing performance and allocating resources for the Company.

We report corporate-related expenses such as legal, accounting, information technology, and other costs that are not otherwise included in our reportable business segments as "Corporate costs." All items not included in income (loss) from operations are excluded from the business segments.

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Our CODM does not review asset information by business segment in assessing performance or allocating resources, and accordingly, we do not report asset information by business segment.

Performance Enzymes

We initially commercialized our CodeEvolver ® protein engineering technology platform and products in the pharmaceuticals market, and to date this continues to be our largest market served.

Our customers, which include many large global pharmaceutical companies, use our technology, products and services in their manufacturing processes and process development.

We have also used the technology to develop customized enzymes for use in other industrial markets.

These markets consist of several large industrial verticals, including food and food ingredients, animal feed, flavors, fragrances, and agricultural chemicals.

We also use our technology to develop enzymes for customers using NGS and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications.

Novel Biotherapeutics

We are also targeting new opportunities in the pharmaceutical industry to discover, improve, and/or develop biotherapeutic drug candidates.

Most notable is our lead program for the potential treatment of PKU in humans.

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

We have also developed a pipeline of other biotherapeutic drug candidates, which are in preclinical development, and in which we expect to continue to make additional investments with the aim of advancing additional product candidates targeting other therapeutic areas.

In March 2020 we entered into the Takeda Agreement with Takeda under which we will research and develop protein sequences for use in gene therapy products for certain diseases.

Factors considered in determining the 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.

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

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

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

Year Ended December 31, 2021 Year Ended December 31, 2020

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

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

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

Year Ended December 31, 2020 Year Ended December 31, 2019

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( 22,306 ) ( 19,624 )

Depreciation ( 1,778 ) ( 1,147 )

Depreciation and amortization ( 2,099 ) ( 1,778 )

Loss before income taxes $ ( 23,671 ) $ ( 11,918 )

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

For the year ended December 31, 2018, research and development expenses and selling, general and administrative expenses exclude depreciation.

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

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

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

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

Years Ended December 31,

Year Ended December 31,

2021 2020 2019

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Percentage of Total Revenues

For the Years Ended December 31,

For the Year Ended December 31,

2021 2020 2019

Merck 26 % 28 % 29 %

Nestlé Health Science 11 % 15 % 22 %

Novartis * 23 % *

Tate & Lyle * * 13 %

Takeda Pharmaceutical Co.

Customer A 33 % * *

Customer B 11 % 26 % 28 %

Customer C * 19 % *

Customer D * 11 % 15 %

Customer E * * 23 %

* Percentage was less than 10%

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

Percentage of Accounts Receivables

As of December 31,

Nestlé Health Science 13 % 10 %

Novartis 25 % *

Customer A 62 % *

Customer B * 32 %

Customer D * 13 %

Customer E * 25 %

* Percentage was less than 10%

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Total revenues $ 104,754 $ 69,056 $ 68,458

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

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

United States $ 65,457 $ 31,176

Identifiable goodwill was as follows (in thousands):`

Year Ended December 31, 2020 Year Ended December 31, 2019

December 31, 2021 December 31, 2020

Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total

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Allowance for Credit Losses

The following summarizes the financing receivables allowance for credit losses (in thousands):

Year Ended December 31, 2020

Beginning Balance, January 1, 2020 $ 34

Current year provision 40

Ending Balance, December 31, 2020 $ 74

The following summarizes the receivables allowance for credit losses (in thousands):

2021 2020 2019

Balance at beginning of period $ 74 $ 34 $ 34

Provision for credit losses 342 40 —

Balance at end of period $ 416 $ 74 $ 34

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

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Accounts receivable $ 489 $ 7 $ — $ 496 $ 13,398 $ 13,894

Subsequent Events

In the first quarter of 2021, we entered into a lease agreement with ARE-San Francisco No.

We expect to commence occupancy of the San Carlos Space in November 2021 once tenant improvements are substantially completed by ARE in accordance with the construction plan.

The construction plan includes Codexis-specific improvements necessary for operations at the lease commencement date.

The budget provides a net tenant improvement allowance of $ 6.3 million plus an additional allowance of up to $ 2.7 million.

If we use the additional allowance, ARE will have an enforceable right to payment by us in the form of equal monthly additional rent payments at a certain interest rate through the lease term.

The useful life of improvements made under the additional allowance are the lesser of useful life or lease term.

The terms include an initial annualized base rent of approximately $ 2.5 million which are subject to scheduled 3 % annual rent increases, plus certain operating expenses.

The lease has a 10-year term with one option to extend the term for an additional period of 5 years.

We have provided ARE with an approximately $ 0.4 million security deposit in the form of a letter of credit.

We have the right to sublease the facility, subject to landlord consent.

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

Years ending December 31, Operating lease

Thereafter 17,690

Total minimum lease payments 27,969

imputed interest 5,328

Lease obligations $ 22,641

Selected Quarterly Financial Data (Unaudited)

The following table provides the selected quarterly financial data for 2020 and 2019:

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

Quarter Ended (1)

December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31,

2020 2020 2020 2019 (3)

2019 2019 2019

Product revenue $ 12,215 $ 8,401 $ 4,504 $ 5,100 $ 4,877 $ 10,351 $ 6,249 $ 7,988

Research and development revenue 8,819 9,984 10,463 9,570 13,773 11,555 6,070 7,595

Total revenues $ 21,034 $ 18,385 $ 14,967 $ 14,670 $ 18,650 $ 21,906 $ 12,319 $ 15,583

Costs and operating expenses:

Cost of product revenue $ 5,860 $ 3,642 $ 1,699 $ 2,541 $ 3,402 $ 5,067 $ 2,772 $ 4,391

Research and development 10,355 12,010 10,853 10,967 8,872 8,711 8,274 8,016

Selling, general and administrative 8,741 8,797 8,522 8,989 7,322 7,869 7,896 8,415

Total costs and operating expenses $ 24,956 $ 24,449 $ 21,074 $ 22,497 $ 19,596 $ 21,647 $ 18,942 $ 20,822

Income (loss) from operations $ (3,922) $ (6,064) $ (6,107) $ (7,827) $ (946) $ 259 $ (6,623) $ (5,239)

Income (loss) before income taxes $ (3,912) $ (6,075) $ (6,037) $ (7,647) $ (630) $ 336 $ (6,491) $ (5,133)

Net income (loss) $ (3,920) $ (6,094) $ (6,344) $ (7,652) $ (635) $ 343 $ (6,507) $ (5,136)

Net income (loss) per share, basic $ (0.06) $ (0.10) $ (0.11) $ (0.13) $ (0.01) $ 0.01 $ (0.12) $ (0.09)

Net income (loss) per share, diluted $ (0.06) $ (0.10) $ (0.11) $ (0.13) $ (0.01) $ 0.01 $ (0.12) $ (0.09)

Weighted average common shares used in computing net income (loss) per share, basic (2)

60,483 59,061 59,000 58,888 58,620 58,287 54,954 54,170

Weighted average common shares used in computing net income (loss) per share, diluted (2)

60,483 59,061 59,000 58,888 58,620 61,412 54,954 54,170

(1) Amounts were computed independently for each quarter, and the sum of the quarters may not total the annual amounts due to rounding differences.

(2 ) The full year net loss per share of common stock, basic and diluted, may not equal the sum of the quarters due to weighting of outstanding shares.

(3) PSUs, PBOs, and cash bonus awards are granted to certain employees and executives and are subject to our performance in achieving pre-determined criteria approved by our board of directors.

Based on the actual achievement of the annual goals, we updated the calculation of the annual expense in the fourth quarter which resulted in estimate revisions of approximately $(0.1) million in 2020 and $(0.9) million in 2019, primarily in selling, general and administrative expense.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

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 8. Financial Statements and Supplementary Data