CDXS filing — read by section

Item 8. Financial Statements and Supplementary Data

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
 Codexis, Inc. 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 
 
 Reports of Independent Registered Public Accounting Firm ( BDO USA, LLP ; San Jose, CA ; PCAOB ID: 243 ) 
 80 
 
 Consolidated Balance Sheets 
 83 
 
 Consolidated Statements of Operations 
 84 
 
 Consolidated Statements of Stockholders' Equity 
 85 
 
 Consolidated Statements of Cash Flows 
 86 
 
 Notes to Consolidated Financial Statements 
 87 
 

 
 
 79 

 
 
 

 Report of Independent Registered Public Accounting Firm 
 Shareholders and Board of Directors 
 Codexis, Inc. 
 Redwood City, California 
 Opinion on the Consolidated Financial Statements 
 
 
 We have audited the accompanying consolidated balance sheets of Codexis, Inc. (the “Company”) 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 (collectively referred to as the “Consolidated Financial Statements”). 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, 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 
 
 
 These Consolidated Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s Consolidated Financial Statements based on our audits. 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. 
 
 
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free of material misstatement, whether due to error or fraud. 
 
 
 Our audits included performing procedures to assess the risks of material misstatement of the Consolidated Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Consolidated Financial Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements. We believe that our audits provide a reasonable basis for our opinion. 
 
 
 Critical Audit Matter 
 
 
 The critical audit matter communicated below is a matter arising from the current period audit of the Consolidated Financial Statements 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 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 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. 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 
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 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: 
 
 
 • Testing the design and operating effectiveness of internal controls relating to the identification of distinct performance obligations and material rights, the determination of the timing of revenue recognition, the estimation of standalone selling prices, and the estimation of variable consideration. 
 
 
 • Examining a sample of revenue contracts and other source documents to test management's identification of significant terms for completeness, including the identification of distinct performance obligations, material rights and variable consideration including sending confirmations to a sample of customers to confirm our understanding of the parties’ rights and obligations. 
 
 
 • Assessing the reasonableness of management's estimates and assumptions used in determining stand-alone selling prices for new products and services and those products and services that are not sold separately. 
 
 
 • Evaluating the reasonableness of management’s judgments and estimates used to assess the stand-alone selling prices for new functional licenses when granted to customers as part of contracts containing multiple performance obligations. 
 
 
 • Evaluating the reasonableness and accuracy of management’s judgments and estimates used in accounting for identified material rights, including transactions accounted for under the alternative approach to estimating the standalone selling price of a material right. This includes testing management’s estimates of the expected consideration from the customer’s exercise of options. 
 
 
 • Assessing the reasonableness of management’s judgments and estimates to calculate variable consideration, and the timing of recognizing the related revenue subject to any constraints. 
 
 
 • Evaluating the appropriateness of management’s determination of whether identified performance obligations meet the criteria for over-time revenue recognition, including whether certain products and services have alternative use. 
 
 
 /s/ BDO USA, LLP 
 We have served as the Company's auditor since 2013. 
 San Jose, California 
 February 28, 2022 
 81 

 
 

 Report of Independent Registered Public Accounting Firm 
 Shareholders and Board of Directors 
 Codexis, Inc. 
 Redwood City, California 
 
 
 Opinion on Internal Control over Financial Reporting 
 
 
 We have audited Codexis, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria . 
 
 
 We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2021 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 
 
 
 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 
 
 We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 
 
 
 Definition and Limitations of Internal Control over Financial Reporting 
 
 
 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 
 
 
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
 
 
 
 
 /s/ BDO USA, LLP 
 San Jose, California 
 February 28, 2022 
 82 

 
 
 

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

 
 
 
 
 See accompanying notes to consolidated financial statements 
 83 

 
 
 

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

 
 
 See accompanying notes to consolidated financial statements 
 84 

 
 
 

 Codexis, Inc. 
 Consolidated Statements of Stockholders’ Equity 
 (In Thousands)
 
 
 Common Stock Additional
Paid-in
Capital Accumulated
Deficit Total
Stockholders’
Equity 
 Shares Amount 
 December 31, 2018 54,065 $ 5 $ 386,775 $ ( 330,474 ) $ 56,306 
 Exercise of stock options 1,466 — 7,099 — 7,099 
 Release of stock awards 449 — — — — 
 Employee stock-based compensation — — 6,943 — 6,943 
 Taxes paid related to net share settlement of equity awards ( 152 ) — ( 2,850 ) — ( 2,850 ) 
 Issuance of common stock, net of issuance costs of $ 123 
 3,049 1 49,876 — 49,877 
 Short swing profit settlement — — 77 — 77 
 Net loss — — — ( 11,935 ) ( 11,935 ) 
 December 31, 2019 58,877 6 447,920 ( 342,409 ) 105,517 
 Exercise of stock options 210 — 1,323 — 1,323 
 Release of stock awards 370 — — — — 
 Employee stock-based compensation — — 7,622 — 7,622 
 Non-employee stock-based compensation — — 106 — 106 
 Taxes paid related to net share settlement of equity awards ( 103 ) — ( 1,257 ) — ( 1,257 ) 
 Issuance of common stock, net of issuance costs of $ 5,448 
 4,929 — 80,802 — 80,802 
 Net loss — — — ( 24,010 ) ( 24,010 ) 
 December 31, 2020 64,283 6 536,516 ( 366,419 ) 170,103 
 Exercise of stock options 699 — 5,180 — 5,180 
 Release of stock awards 181 — — — — 
 Employee stock-based compensation — — 11,346 — 11,346 
 Non-employee stock-based compensation — — 247 — 247 
 Taxes paid related to net share settlement of equity awards ( 54 ) — ( 1,206 ) — ( 1,206 ) 
 
 Net loss — — — ( 21,279 ) ( 21,279 ) 
 December 31, 2021 65,109 $ 6 $ 552,083 $ ( 387,698 ) $ 164,391 
 

 
 
 
 
 
 
 
 
 
 
 See accompanying notes to consolidated financial statements 
 
 
 85 

 
 
 

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

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

 
 
 
 
 
 See accompanying notes to consolidated financial statements 
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 Codexis, Inc. 
 Notes to Consolidated Financial Statements 
 
 Note 1. Description of Business 
 In these notes to the Consolidated Financial Statements, the “Company,” “we,” “us,” and “our” refers to Codexis, Inc. and its subsidiaries on a consolidated basis. 
 We discover, develop and sell enzymes and other proteins that deliver value to our clients in a growing set of industries 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 
 We are subject to risks and uncertainties as a result of the current COVID-19 pandemic. The COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the U.S. economy and other economies worldwide. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and may not be accurately predicted, including the duration and severity of the pandemic, the prevalence of more contagious and or virulent variants such as the Delta and Omicron variants, and the extent and severity of the impact on our customers, new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. 
 
 
 In the United States, the impact of COVID-19, including Orders governing the operation of businesses during the pandemic, caused the temporary closure of our Redwood City, California facilities and disrupted our R&D operations in 2020 . R&D operations for several projects were temporarily suspended from mid-March 2020 through the end of April 2020 in accordance with these Orders. In May 2020, we initiated limited R&D operations and resumed manufacturing operations at our Redwood City pilot plant and have ramped up operations such that we are currently utilizing our normal R&D capacity while following county, state and federal COVID-19 guidance for the protection of our employees. 
 
 
 To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide, however, there can be no guarantee this will continue. Furthermore, our ability to provide future research and development ("R&D") services may continue to be impacted as a result of governmental orders ("Orders") and any disruptions in operations of our customers with whom we collaborate. We believe that these disruptions have had a minimal impact on revenue for the year ended December 31, 2021. The extent to which the pandemic may impact our business operations and operating results will continue to remain highly dependent on future developments, which are uncertain and cannot be predicted with confidence. 
 
 Note 2. Basis of Presentation and Summary of Significant Accounting Policies 
 Basis of Presentation and Principles of Consolidation 
 The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") and include the accounts of Codexis, Inc. and its wholly-owned subsidiaries. 
 Certain prior year amounts have been reclassified in the Consolidated Statements of Cash Flows to conform to the 2021 presentation, however these reclassifications had no effect on the reported results of operations. 
 The consolidated financial statements include the accounts of Codexis, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 
 Use of Estimates 
 The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. We regularly assess these estimates which primarily affect revenue recognition, 
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 inventories, valuation of equity investments, goodwill arising out of business acquisitions, accrued liabilities, stock awards, and the valuation allowances associated with deferred tax assets. Actual results could differ from those estimates and such differences may be material to the consolidated financial statements. 
 Segment Reporting 
 We report two business segments, Performance Enzymes and Novel Biotherapeutics, which are based on our operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker or decision making group (“CODM”), in deciding how to allocate resources, and in assessing performance. Our CODM is our Chief Executive Officer. Our business segments are primarily based on our organizational structure and our operating results as used by our CODM in assessing performance and allocating resources for the Company . We do not allocate or evaluate assets by segment. 
 The Novel Biotherapeutics segment focuses on new opportunities in the pharmaceutical industry to discover or improve novel biotherapeutic drug candidates that will target human diseases that are in need of improved therapeutic interventions. Similarly, we believe that we can deploy our platform technology to improve specific characteristics of a customer’s pre-existing biotherapeutic drug candidate, such as its activity, stability, or immunogenicity. The Performance Enzymes segment consists of biocatalyst products and services with focus on pharmaceutical, food, molecular diagnostics, and other industrial markets. 
 Foreign Currency Translation 
 The USD is the functional currency for our operations outside the United States. Accordingly, non-monetary assets and liabilities originally acquired or assumed in other currencies are recorded in USD at the exchange rates in effect at the date they were acquired or assumed. Monetary assets and liabilities denominated in other currencies are translated into United States dollars at the exchange rates in effect at the balance sheet date. Translation adjustments are recorded in other expense in the consolidated statements of operations. Gains and losses realized from non-USD transactions, including intercompany balances not considered as permanent investments, denominated in currencies other than an entity’s functional currency are included in other expense in the accompanying consolidated statements of operations. 
 Revenue Recognition 
 Our revenues are derived primarily from product revenue and collaborative research and development agreements. The majority of our contracts with customers typically contain multiple products and services. We account for individual products and services separately if they are distinct-that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. 
 In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our product revenue and collaborative research and development agreements, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation. 
 The majority of our collaborative contracts contain multiple revenue streams such as upfront and/or annual license fees, fees for research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage, among others. We determine the stand-alone selling price (“SSP”) and allocate consideration to distinct performance obligations. Typically, we base our SSPs on our historical sales. If an SSP is not directly observable, then we estimate the SSP taking into consideration market conditions, forecasted sales, entity-specific factors and available information about the customer. We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers and for new licenses, we consider multiple methods, including a discounted cash flow method which includes the following key assumptions: the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success. 
 We account for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Non-cancellable purchase orders received from customers to deliver a specific quantity of product, when combined with our order confirmation, in exchange for future consideration, create enforceable rights and obligations on both parties and constitute a contract with a customer. 
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 We measure revenue based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected on behalf of government authorities. We recognize revenue in a manner that best depicts the transfer of promised goods or services to the customer, when control of the product or service is transferred to a customer. We make significant judgments when determining the appropriate timing of revenue recognition. 
 The following is a description of principal activities from which we generate revenue: 
 Product Revenue 
 Product revenue consist of sales of biocatalysts, pharmaceutical intermediates and Codex ® biocatalyst panels and kits. A majority of our product revenue is made pursuant to purchase orders or supply agreements and is recognized either at a point in time when the control of the product has been transferred to the customer typically upon shipment or over time as the product is manufactured because we have a right to payment from the customer under a binding, non-cancellable purchase order, and there is no alternate use of the product for us as it is specifically made for the customer’s use. 
 Certain of our agreements provide options to customers which they can exercise at a future date, such as the option to purchase our product during the contract duration at discounted prices and an option to extend their contract, among others. In accounting for customer options, we determine whether an option is a material right and this requires us to exercise significant judgment. If a contract provides the customer an option to acquire additional goods or services at a discount that exceeds the range of discounts that we typically give for that product or service for the same class of customer, or if the option provides the customer certain additional goods or services for free, the option may be considered a material right. If the contract gives the customer the option to acquire additional goods or services at their normal SSPs, we would likely determine that the option is not a material right and, therefore, account for it as a separate performance obligation when the customer exercises the option. We primarily account for options which provide material rights using the alternative approach available pursuant to the applicable accounting guidance, as we concluded we meet the criteria for using the alternative approach. Therefore, the transaction price is calculated as the expected consideration to be received for all the goods and services we expect to provide under the contract. We update the transaction price for expected consideration, subject to constraint, each reporting period if our estimates of future goods to be ordered by customers change. 
 Research and Development Revenues 
 We perform research and development activities as specified in each respective customer agreement. We identify each performance obligation in our research and development agreements at contract inception. We allocate the consideration to each distinct performance obligation based on the estimated SSP of each performance obligation. Performance obligations included in our research and services agreements typically include research and development services for a specified term, periodic reports and small samples of enzyme produced. 
 The majority of our research and development agreements are based on a contractual rate per dedicated project team working on the project. The underlying product that we develop for customers does not create an asset with an alternative use to us and the customer receives benefits as we perform the work towards completion. Thus, our performance obligations are generally satisfied over time as the service is performed. We utilize an appropriate method of measuring progress towards the completion of our performance obligations to determine the timing of revenue recognition. For each performance obligation that is satisfied over time, we recognize revenue using a single measure of progress, typically based on hours incurred. 
 Our contracts frequently provide customers with rights to use or access our products or technology, along with other promises or performance obligations. We must first determine whether the license is distinct from other promises, such as our promise to manufacture a product. If we determine that the customer cannot benefit from the license without our manufacturing capability, the license will be accounted for as combined with the other performance obligations. If we determine that a license is distinct and has significant standalone functionality, we would recognize revenues from a functional license at a point in time when the license is transferred to the customer, and the customer can use and benefit from it. We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers and for new licenses, we consider multiple methods, including a discounted cash flow method which includes the following key assumptions: the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success. For licenses that have been previously sold to other customers, we use historical information to determine SSP. 
 At the inception of each arrangement that includes variable consideration such as development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we 
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 recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment. 
 Our CodeEvolver ® platform technology transfer collaboration agreements typically include license fees, upfront fees, and variable consideration in the form of milestone payments, and sales or usage-based royalties. We have recognized revenues from our platform technology transfer agreements over time as our customer learns to use our technology. 
 For license agreements that include sales or usage-based royalty payments to us, we do not recognize revenue until the underlying sales of the product or usage has occurred. At the end of each reporting period, we estimate the royalty amount. We recognize revenue at the later of (i) when the related sale of the product occurs, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied. 
 Practical Expedients, Elections, and Exemptions 
 We apply certain practical expedients available which permit us not to adjust the amount of consideration for the effects of a significant financing component if, at contract inception, the expected period between the transfer of promised goods or services and customer payment is one year or less. 
 We perform monthly services under our research and development agreements, and we use a practical expedient permitting us to recognize revenue at the same time that we have the right to invoice our customer for monthly services completed to date. 
 We have elected to treat shipping and handling activities as fulfillment costs. 
 We have elected to record revenue net of sales and other similar taxes. 
 Contract Assets 
 Contract assets include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Contract assets are reclassified to receivables when the rights become unconditional. 
 Contract Liabilities 
 Contract liabilities are recorded as deferred revenues and include payments received in advance of performance under the contract. Contract liabilities are realized when the development services are provided to the customer or control of the products has been transferred to the customer. A portion of our contract liabilities relate to supply arrangements that contain material rights that are recognized using the alternative method, under which the aggregate amount invoiced to the customer for shipped products, including contractual fees, is higher than the amount of revenue recognized based on the transaction price allocated to the shipped products. 
 Contract Costs 
 We recognize a non-current asset for the incremental costs of obtaining a contract with a customer if the entity expects to recover such costs. Incremental costs are costs that would not have been incurred if the contract had not been obtained. Examples of contract costs are commissions paid to sales personnel. We do not typically incur significant incremental costs because the compensation of our salespeople is not based on contracts closed but on a mixture of company goals, individual goals, and sales goals. If a commission paid is directly related to obtaining a specific contract, our policy is to capitalize and amortize such costs on a systematic basis, consistent with the pattern of transfer of the good or service to which the asset relates. Contract costs are reported in other non-current assets. 
 Cost of Product Revenue 
 Cost of product revenue comprises both internal and third party fixed and variable costs including materials and supplies, labor, facilities, and other overhead costs associated with our product sales. Shipping costs are included in our cost of product revenue. Such charges were not significant in any of the periods presented. 
 Fulfillment costs, such as shipping and handling, are recognized at a point in time and are included in cost of product sales. 
 Cost of Research and Development Services 
 Cost of research and development services related to services under research and development agreements approximate the research funding over the term of the respective agreements and is included in research and development expense. Costs of 
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 services provided under license and platform technology transfer agreements are included in research and development expenses and are expensed in the periods in which such costs are incurred. 
 Research and Development Expenses 
 Research and development expenses consist of costs incurred for internal projects and partner-funded collaborative research and development activities, as well as license and platform technology transfer agreements, as mentioned above. These costs include our direct and research-related overhead expenses, which include salaries and other personnel-related expenses (including stock-based compensation), occupancy-related costs, supplies, and depreciation of facilities and laboratory equipment, as well as external costs, and are expensed as incurred. Costs to acquire technologies that are utilized in research and development and that have no alternative future use are expensed when incurred. 
 Advertising 
 Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the consolidated statements of operations. Advertising costs were $ 0.3 million, $ 0.3 million and $ 0.5 million in the years ended December 31, 2021, 2020 and 2019, respectively. 
 Stock-Based Compensation 
 We use the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under our equity incentive plans. The Black-Scholes-Merton option pricing model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. The expected term is based on historical exercise behavior on similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. We use historical volatility to estimate expected stock price volatility. The risk-free rate assumption is based on United States Treasury instruments whose terms are consistent with the expected term of the stock options. The expected dividend assumption is based on our history and expectation of dividend payouts. 
 Restricted Stock Units (“RSUs"), Restricted Stock Awards (“RSAs”) and performance-contingent restricted stock units (“PSUs”) are measured based on the fair market values of the underlying stock on the dates of grant. Performance based options (“PBOs”) are measured using Black-Scholes-Merton option pricing model. The vesting of PBOs and PSUs awarded is conditioned upon the attainment of one or more performance objectives over a specified period and upon continued employment through the applicable vesting date. At the end of the performance period, shares of stock subject to the PBOs and PSUs vest based upon both the level of achievement of performance objectives within the performance period and continued employment through the applicable vesting date. 
 Stock-based compensation expense is calculated based on awards ultimately expected to vest and is reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated annual forfeiture rates for stock options, RSUs, PSUs, PBOs, and RSAs are based on historical forfeiture experience. 
 The estimated fair value of stock options, RSUs and RSAs are expensed on a straight-line basis over the vesting term of the grant and the estimated fair value of PSUs and PBOs are expensed using an accelerated method over the term of the award once management has determined that it is probable that the performance objective will be achieved. Compensation expense is recorded over the requisite service period based on management's best estimate as to whether it is probable that the shares awarded are expected to vest. Management assesses the probability of the performance milestones being met on a continuous basis. 
 Cash and Cash Equivalents 
 We consider all highly liquid investments with maturity dates of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. The majority of cash and cash equivalents is maintained with major financial institutions in the United States. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits. 
 Restricted Cash 
 In 2016, we began the process of liquidating our Indian subsidiary. The local legal requirements for liquidation required us to maintain our subsidiary's cash balance in an account managed by a legal trustee to satisfy our financial obligations. This balance is recorded as current restricted cash on the consolidated balance sheets of $ 0.6 million as of December 31, 2021 and 2020. 
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 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 
 Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and we consider counterparty credit risk in our assessment of fair value. Carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate their fair values as of the balance sheet dates because of their short maturities. 
 The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: 
 • Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. 
 • Level 2: Inputs that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. 
 • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. 
 Concentrations of Credit Risk 
 Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and unbilled receivables, contract assets, non-marketable securities, and restricted cash. Cash that is not required for immediate operating needs is invested principally in money market funds. Cash and cash equivalents are invested through banks and other financial institutions in the United States, India, and the Netherlands. 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 
 W e currently sell enzymes primarily to pharmaceutical and fine chemicals companies throughout the world by the extension of trade credit terms based on an assessment of each customer's financial condition. Trade credit terms are generally offered without collateral and may include an insignificant discount for prompt payment for specific customers. To manage our credit exposure, we perform ongoing evaluations of our customers' financial conditions. In addition, accounts receivable include amounts owed to us under our collaborative research and development agreements. 
 We recognize accounts receivable at invoiced amounts and we maintain a valuation allowance for credit losses using an impairment model (known as the “current expected credit loss model” or “CECL”) based on estimates and forecasts of future conditions requiring recognition of a lifetime of expected credit losses at inception on our financing receivables measured at amortized costs which consisted of accounts receivable, contract assets, and unbilled receivables. We have determined that our financing receivables share similar risk characteristics including: (i) customer origination in the pharmaceutical and fine chemicals industry, (ii) similar historical credit loss pattern of customers (iii) no meaningful trade receivable differences in terms, (iv) similar historical credit loss experience and (v) our belief that the composition of certain assets are comparable to our 
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 historical portfolio used to develop loss history. As a result, we measured the allowance for credit loss (“ACL”) on a collective basis. Our ACL methodology considers how long the asset has been past due, the financial condition of the customers, which includes ongoing quarterly evaluations and assessments of changes in customer credit ratings, and other market data that we believe are relevant to the collectability of the assets. Nearly all financing receivables are due from customers that are highly rated by major rating agencies and have a long history of no credit loss. We derive our ACL by establishing an impairment rate attributable to assets not yet identified as impaired. 
 We derive our ACL by initially relying on our historical financing receivable loss rate which contemplates the full contractual life of the assets sharing similar risk characteristics, adjusted to reflect (i) the extent to which we have determined current conditions differ from the conditions that existed for the period over which historical loss information was evaluated and (ii) by taking into consideration the changes in certain macroeconomic historical and forecasted information. We apply the ACL to past due financing receivables and record charges to the ACL as a provision to credit loss expense in the Statement of Operations. Financing receivables we identify as uncollectible are also charged against the ACL. We adjust the impairment rate to reflect the extent to which we have determined current conditions differ from the conditions that existed for the period over which historical loss information was evaluated. Adjustments to historical loss information may be qualitative or quantitative in nature and reflect changes related to relevant data. 
 Unbilled Receivable 
 The timing of revenue recognition may differ from the timing of invoicing to our customers. When we satisfy (or partially satisfy) a performance obligation, prior to being able to invoice the customer, we recognize an unbilled receivable when the right to consideration is unconditional. 
 Inventories 
 Inventories are stated at the lower of cost or net realizable value. Cost is determined using a weighted-average approach, assuming full absorption of direct and indirect manufacturing costs, or based on cost of purchasing from our vendors. If inventory costs exceed expected net realizable value due to obsolescence or lack of demand, valuation adjustments are recorded for the difference between the cost and the expected net realizable value. 
 Concentrations of Supply Risk 
 We rely on a limited number of suppliers for our products. We believe that other vendors would be able to provide similar products; however, the qualification of such vendors may require substantial start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical single-sourced materials. For certain materials, our vendors maintain a supply for us. We outsource the large scale manufacturing of our products to contract manufacturers with facilities in Austria and Italy. 
 Property and Equipment 
 Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization calculated using the straight-line method over their estimated useful lives as follows:
 
 Asset classification Estimated useful life 
 Laboratory equipment 5 years 
 Computer equipment and software 3 to 5 years 
 
 Office equipment and furniture 5 years 
 Leasehold improvements Lesser of useful life or lease term 

 
 Property and equipment classified as construction in process includes equipment that has been received but not yet placed in service. Normal repairs and maintenance costs are expensed as incurred. 
 Impairment of Long-Lived Assets 
 We have not identified property and equipment by segment since these assets are shared or commingled. We evaluate the carrying values of long-lived assets, which include property and equipment and right-of-use assets, whenever events, changes in business circumstances or our planned use of long-lived assets indicate that their carrying amounts may not be fully recoverable or that their useful lives are no longer appropriate. If these facts and circumstances exist, we assess for recovery by comparing the carrying values of long-lived assets with their future net undiscounted cash flows. If the comparison indicates that impairment exists, long-lived assets are written down to their respective fair values based on discounted cash flows. Significant 
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 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. No impairment charges for long-lived assets were recorded during the years ended December 31, 2021, 2020 and 2019. 
 Investment in Non-Marketable Securities 
 Investment in Non-Marketable Equity Securities 
 We measure investments in non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis. Gains and losses on these securities are recognized in other income (expense), net. 
 Investment in Non-Marketable Debt Securities 
 We measure available-for-sale investments in non-marketable debt at fair value. Unrealized gains and losses on these securities are recognized in other comprehensive income until realized. Non-marketable debt securities are classified as available-for-sale securities. 
 We classify non-marketable debt securities as Level 3 in the fair value hierarchy because we estimate the fair value based on a qualitative analysis using the most recent observable transaction price and other significant unobservable inputs including volatility, rights, and obligations of the securities we hold. Significant changes to the unobservable inputs may result in a significantly higher or lower fair value estimate. We may value these securities based on significant recent arms-length transactions with sophisticated non-strategic unrelated new investors. 
 We evaluate both equity and debt securities for impairment when circumstances indicate that we may not be able to recover the carrying value. We may impair these securities and establish an allowance for a credit loss when we determine that there has been an “other-than-temporary” decline in estimated fair value of the debt or equity security compared to its carrying value. We calculate the estimated fair value of these securities using information from the investee, which may include: 
 • Audited and unaudited financial statements; 
 • Projected technological developments of the company; 
 • Projected ability of the company to service its debt obligations; 
 • If a deemed liquidation event were to occur; 
 • Current fundraising transactions; 
 • Current ability of the company to raise additional financing if needed; 
 • Changes in the economic environment which may have a material impact on the operating results of the company; 
 • Contractual rights, obligations or restrictions associated with the investment; and 
 • Other factors deemed relevant by our management to assess valuation. 
 • The valuation may be reduced if the company's potential has deteriorated significantly. If the factors that led to a reduction in valuation are overcome, the valuation may be readjusted. 
 Goodwill 
 Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired and is assigned to reporting units. We test goodwill for impairment considering amongst other things, whether there have been sustained declines in our share price. If we conclude it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative fair value test is performed. We manage our business as two reporting units and we test goodwill for impairment at the reporting unit level. 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 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. 
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 We test goodwill for impairment annually on a reporting unit basis, on the last day of the fourth fiscal quarter, and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The annual impairment test is completed using either: a qualitative “Step 0” assessment based on reviewing relevant events and circumstances; or a quantitative “Step 1” assessment, which determines the fair value of the reporting unit. To the extent the carrying amount of a reporting unit is less than its estimated fair value, an impairment charge is recorded. Using the relative fair value allocation methodology for assets and liabilities used in both of our reporting units, we compare the allocated carrying amount of each reporting unit’s net assets and the assigned goodwill to its fair value. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. Any excess of the reporting unit’s carrying amount of goodwill over its fair value is recognized as an impairment. During 2021, 2020 and 2019, we did not record impairment charges related to goodwill. 
 Lease Accounting 
 We determine if an arrangement is a lease at inception. Where an arrangement is a lease, we determine if it is an operating lease or a finance lease. At lease commencement, we record a lease liability and ROU asset. Lease liabilities represent the present value of our future lease payments over the expected lease term which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of our lease liability is determined using our incremental collateralized borrowing rate at lease inception. ROU assets represent our right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than 12 months. Over the lease term, we use the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to the consolidated statement of operations in a manner that results in straight-line expense recognition. We do not apply lease recognition requirements for short-term leases. Instead, we recognize payments related to these arrangements in the consolidated statement of operations as lease costs on a straight-line basis over the lease term. 
 Income Taxes 
 We use the liability method of accounting for income taxes, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount that will more likely than not be realized. 
 We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenues and expenses for tax and financial statement purposes. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period. 
 In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized on a jurisdiction by jurisdiction basis. The ultimate realization of deferred tax assets is dependent upon the generation of taxable income in the future. We have recorded a valuation allowance against these deferred tax assets in jurisdictions where ultimate realization of deferred tax assets is more likely than not to occur. As of December 31, 2021, we maintain a full valuation allowance in all jurisdictions against the net deferred tax assets as we believe that it is more likely than not that the majority of deferred tax assets will not be realized. 
 We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance may be materially impacted. Any adjustment to the deferred tax asset valuation allowance would be recorded in the statements of operations for the periods in which the adjustment is determined to be required. 
 We account for uncertainty in income taxes as required by the provisions of ASU 2009-06, Income Taxes (Topic 740) Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities , which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes. 
 The Tax Reform Act of 1986 and similar state provisions limit the use of net operating loss (“NOL”) carryforwards in 
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 certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section 382. In the event we should experience such a change of ownership, utilization of our federal and state NOL carryforwards could be limited. 
 Accounting Pronouncements 
 Recently adopted accounting pronouncements 
 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which is intended to simplify various aspects related to accounting for income taxes . The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted. 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) : Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions in which the reference LIBOR or another reference rate are expected to be discontinued as a result of the Reference Rate Reform. The standard is effective for all entities. The standard may be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022, on a prospective basis. We will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to elect the optional expedients for contract modification; however, we believe that the adoption of ASU 2020-04 will have no significant impact on our consolidated financial statements and related disclosures. 
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 Note 3. Revenue Recognition 
 Disaggregation of Revenue 
 The following table provides information about disaggregated revenue from contracts with customers into the nature of the products and services, and geographic regions, and includes a reconciliation of the disaggregated revenue for reportable segments. 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 each of the fiscal years are as follows (in thousands): 
 Year Ended December 31, 2021 
 Performance Enzymes Novel Biotherapeutics Total 
 Major products and service: 
 Product revenue $ 70,657 $ — $ 70,657 
 Research and development revenue 19,858 14,239 34,097 
 Total revenues $ 90,515 $ 14,239 $ 104,754 
 
 Primary geographical markets: 
 Americas 
 $ 16,114 $ 7,367 $ 23,481 
 EMEA 
 13,315 6,872 20,187 
 APAC 
 61,086 — 61,086 
 Total revenues $ 90,515 $ 14,239 $ 104,754 
 

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

 
 Year Ended December 31, 2019 
 Performance Enzymes Novel Biotherapeutics Total 
 Major products and service: 
 Product revenue $ 29,465 $ — $ 29,465 
 Research and development revenue 28,691 10,302 38,993 
 Total revenues $ 58,156 $ 10,302 $ 68,458 
 
 Primary geographical markets: 
 Americas 
 $ 13,039 $ — $ 13,039 
 EMEA 
 26,831 10,302 37,133 
 APAC 
 18,286 — 18,286 
 Total revenues $ 58,156 $ 10,302 $ 68,458 
 

 Contract Balances 
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 The following table presents balances of contract assets, unbilled receivables, contract costs, and contract liabilities (in thousands): 
 December 31, 2021 December 31, 2020 
 Contract assets $ 4,557 $ 4,526 
 Unbilled receivables $ 8,558 $ 10,942 
 Contract costs $ 56 $ 90 
 Contract liabilities: deferred revenue $ 6,335 $ 4,791 

 
 We recognize accounts receivable when we have an unconditional right to recognize revenue and have issued an invoice to the customer. Our payment terms are generally between 30 and 90 days. We recognize unbilled receivables when we have an unconditional right to recognize revenue and have not issued an invoice to our customer. Unbilled receivables are transferred to accounts receivable on issuance of an invoice. Unbilled receivables are classified separately on the consolidated balance sheets as assets. 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 contracts and are largely related to our procurement of product. We recognize contract assets when we have a conditional right to recognize revenue. The transfer of control of certain of products occurs in advance of the invoicing process, which generates contract assets. In addition, we recognize a contract asset related to milestones not eligible for royalty accounting when we assess it is probable of being achieved and there will be no significant reversal of cumulative revenues. Contract assets are classified separately on the consolidated balance sheets as an asset and transferred to accounts receivables when our rights to payment become unconditional. 
 Contract liabilities, or deferred revenue, represent our obligation to transfer a product or service to the customer, and for which we have received consideration from the customer. We recognize a contract liability when we receive advance customer payments under development agreements for research and development services, upfront license payments, and from upfront customer payments received under product supply agreements. Contract liabilities are classified as a liability on the consolidated balance sheet. 
 Contract costs relate to incremental costs of obtaining a contract with a customer. Contract costs are amortized along with the associated revenue over the term of the contract. 
 During the years ended December 31, 2021, 2020 and 2019, we had no asset impairment charges related to contract assets. 
 We recognized the following revenues (in thousands): 
 Year Ended December 31, 
 Revenue recognized in the period for: 2021 2020 
 Amounts included in contract liabilities at the beginning of the period: 
 Performance obligations satisfied $ 1,858 $ 57 
 Changes in the period: 
 Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods 7,645 774 
 Performance obligations satisfied from new activities in the period - contract revenue 95,251 68,225 
 Total revenues $ 104,754 $ 69,056 
 

 
 Performance Obligations 
 The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting periods. The estimated revenue does not include contracts 
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 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): 
 2022 2023 2024 2025 and Thereafter Total 
 Product revenue $ 89 $ 87 $ 120 $ 2,985 $ 3,281 
 Research and development revenue 2,497 557 — — 3,054 
 Total revenues $ 2,586 $ 644 $ 120 $ 2,985 $ 6,335 
 

 
 
 
 
 Note 4. Net Loss per Share 
 Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding, less restricted stock awards (“RSAs”) subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock shares outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities. For all periods presented, diluted and basic net loss per share are identical since potential common stock shares are excluded from the calculation, as their effect was anti-dilutive. 
 Anti-Dilutive Securities 
 In periods of net loss, the weighted average number of shares outstanding, prior to the application of the treasury stock method, excludes potentially dilutive securities from the computation of diluted net loss per common share because including such shares would have an anti-dilutive effect. 
 The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands): 
 Year Ended December 31, 
 2021 2020 2019 
 Shares issuable under the Equity Incentive Plan 5,215 5,348 4,763 
 

 
 
 
 
 Note 5. Collaborative Arrangements 
 GSK Platform Technology Transfer, Collaboration and License Agreement 
 In July 2014, we entered into a CodeEvolver ® protein engineering platform technology transfer collaboration and license agreement (the “GSK CodeEvolver ® Agreement”) with GSK. Pursuant to the terms of the agreement, we granted GSK a non-exclusive license to use the CodeEvolver ® protein engineering platform technology to develop novel enzymes for use in the manufacture of GSK's pharmaceutical and health care products. We completed the transfer of the CodeEvolver ® protein engineering platform technology to GSK in April 2016 and all revenues relating to the technology transfer have been recognized as of April 2016. Depending upon GSK's successful application of the licensed technology, we have the potential to receive additional contingent payments that range from $ 5.75 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. 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. In 2016, we completed the final phase in the transfer of CodeEvolver ® technology to Merck under the Merck CodeEvolver ® Agreement. 
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 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. The API payments, which are currently not recognized in revenue, are based on the quantity of API developed and manufactured by Merck and will be recognized as usage-based royalties. 
 In October 2018, we entered into an amendment to the Merck CodeEvolver ® Agreement which amended certain licensing provisions and one exhibit. In January 2019, we amended the Merck CodeEvolver ® Agreement to install certain CodeEvolver ® protein engineering technology 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. 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 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. 
 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 revenue. Such upfront payment will be recognized over the period of the supply agreement as the customer purchases our proprietary enzyme. We additionally have determined that the volume discounts under the supply agreement provide the customer material rights and we are recognizing revenues using the alternative method. 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 which was recognized ratably over the maximum term of the service period of 21 months. 
 Commercial Agreement 
 In April 2019, we entered into a multi-year commercial agreement with Tate & Lyle under which Tate & Lyle has received an exclusive license to use a suite of Codexis novel performance enzymes in the manufacture of Tate & Lyle’s zero-calorie stevia sweetener, TASTEVA ® M, and other stevia products. Under the agreement, we will supply Tate & Lyle with its requirements for these enzymes over a multiple year period and receive royalties on stevia products. In November 2020, we 
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 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 the Nestlé License Agreement with Nestlé Health Science and, solely for the purpose of the integration and the dispute resolution clauses of the Nestlé License Agreement, Nestlé Health Science S.A., to advance CDX-6114, our enzyme biotherapeutic product candidate for the potential treatment of PKU. 
 We received an upfront cash payment of $ 14.0 million in 2017 upon the execution of the Nestlé License Agreement, a $ 4.0 million milestone payment received in 2018 after dosing the first subjects in a first-in-human Phase 1a dose-escalation trial with CDX-6114, and a $ 1.0 million milestone payment received in 2019 upon achievement of a milestone relating to formulation of CDX-6114. The upfront payment and the variable consideration relating to the progress payment of $ 4.0 million and a milestone payment of $ 1.0 million were recognized over time as the development work was performed. Revenue was recognized using a single measure of progress that depicted our performance in transferring control of the services, which was based on the ratio of level of effort incurred to date compared to the total estimated level of effort required to complete all performance obligations under the agreement. We recognized nil , $ 13 thousand and $ 1.9 million in research and development revenue in 2021, 2020 and 2019, respectively. 
 In January 2019, we received notice from the FDA that it had completed its review of our IND for CDX-6114 and concluded that we may proceed with the proposed Phase 1b multiple ascending dose study in healthy volunteers in the United States. In February 2019, Nestlé Health Science exercised its option to obtain an exclusive, worldwide, royalty-bearing, sub-licensable license for the global development and commercialization of CDX-6114 for the management of PKU and made an option payment of $ 3.0 million which we recognized as research and development revenue in 2019. Upon exercising its option, Nestlé Health Science assumed all responsibilities for future clinical development and commercialization of CDX-6114. We are also eligible to receive payments from Nestlé Health Science under the Nestlé License Agreement that include (i) development and approval milestones of up to $ 85.0 million, (ii) sales-based milestones of up to $ 250.0 million in the aggregate, which aggregate amount is achievable if net sales exceed $ 1.0 billion in a single year, and (iii) tiered royalties, at percentages ranging from the mid-single digits to low double-digits of net sales of product. 
 In October 2017, we entered into the Nestlé SCA pursuant to which we and Nestlé Health Science are collaborating to leverage the CodeEvolver ® protein engineering technology platform to develop novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas. The term of the Nestlé SCA has been extended throug 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 bu siness. 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 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, $ 1.1 million and nil in the years ended December 31, 2021, 2020 and 2019, respectively. 
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 Platform Technology Transfer and License Agreement 
 In May 2019, we entered into a Platform Technology Transfer and License Agreement (the “Novartis CodeEvolver ® Agreement”) with Novartis. The Agreement allows Novartis to use our proprietary CodeEvolver ® protein engineering platform technology in the field of human healthcare. In July 2021, we announced the completion of the technology transfer period during which we transferred our 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, 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. 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 
 In December 2019, we entered a license agreement with Roche Sequencing Solutions, Inc. (“Roche”) to provide Roche with our EvoT4 DNA™ ligase high-performance molecular diagnostic enzyme. The royalty bearing license grants Roche worldwide rights to include the EvoT4 DNA™ ligase in its nucleic acid sequencing products and workflows. Under the license agreement, we received an initial collaboration fee payment 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 $ 0.9 million and $ 0.9 million for the years ended December 31, 2021 and 2020, respectively. 
 Strategic Collaboration and License Agreement 
 In March 2020, we entered into a Strategic Collaboration and License Agreement (the “Takeda Agreement”) with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Co. Ltd. (“Takeda”) under which we are collaborating to research and develop protein sequences for use in gene therapy products for certain diseases (each, a “Field”) in accordance with each applicable program plan (each, a “Program Plan”). 
 On execution of the Takeda Agreement 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. 
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 Master Collaboration and Research Agreement and Stock Purchase Agreement 
 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 14 months, and any such shares would be issued thirty days in arrears after each calendar quarter-end. We are also eligible to receive amounts for bonuses, targets and milestones on achievement of timeline and project goals specified in the statement of work ("SOW"). Payments for bonuses, targets and milestones on achievement of timeline and project goals are to be issued thirty days after the Company provides notification of completion. Under the MAI Agreement, we will have the right to use and sell the engineered enzymes to third parties for any purpose other than for the synthesis of native DNA. Under the MAI Agreement, we would make a $ 0.5 million payment to MAI upon our achievement of a milestone of $ 5.0 million in aggregate commercial sales to third parties of the engineered enzymes or any product incorporating or derived from the engineered enzymes for any purpose other than the synthesis of native DNA. The 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 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 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. 
 
 Note 6. Investments in Non-Marketable Securities 
 Non-Marketable Debt Securities 
 We classify non-marketable debt securities, which are accounted for as available-for-sale, within Level 3 in the fair value hierarchy because we estimate the fair value based on a qualitative analysis using the most recent observable transaction price and other significant unobservable inputs including volatility, rights, and obligations of the securities we hold.
 
 We determine gains or losses on the sale or extinguishment of non-marketable debt securities using a specific identification method. Unrealized gains and losses from bifurcated embedded derivatives, which represent share-settled redemption features, are recorded as other expense, net, in the consolidated statements of operations. Unrealized gains and losses on non-marketable debt securities are recorded as a component of other comprehensive loss until realized. Realized gains or losses are recorded as a component of other income (expense), net. 
 
 
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 In November 2020, we purchased convertible subordinated notes issued by Arzeda Corp., 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 
 Adjusted Cost and Carrying Value Fair Value 
 Non-marketable debt securities due in 1 year or less $ 1,000 $ 1,000 

 
 Non-Marketable Equity Securities 
 Our non-marketable equity securities are investments in privately held companies without readily determinable market value and primarily relate to our investments in MAI 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 

 
 
 
 
 Note 7. Fair Value Measurements 
 The following tables present the financial instruments that were measured at fair value on a recurring basis at December 31, 2021 and 2020 by level within the fair value hierarchy (in thousands): 
 
 December 31, 2021 
 Level 1 Level 2 Level 3 Total 
 Money market funds $ 86,095 $ — $ — $ 86,095 
 
 

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

 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. 
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 Note 8. Balance Sheet Details 
 Cash Equivalents 
 Cash equivalents consisted of the following (in thousands): 
 
 December 31, 2021 December 31, 2020 
 Adjusted Cost Estimated Fair Value Adjusted Cost Estimated Fair Value 
 Money market funds (1) 
 $ 86,095 $ 86,095 $ 127,567 $ 127,567 
 

 (1) Money market funds are classified in cash and cash equivalents on our consolidated balance sheets. Average contractual maturities (in days) is not applicable. 
 As of December 31, 2021, 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 
 Inventories consisted of the following (in thousands): 
 
 December 31, 
 2021 2020 
 Raw materials $ 49 $ 77 
 Work in process 65 82 
 Finished goods 1,046 805 
 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 
 Property and equipment, net consisted of the following (in thousands): 
 
 December 31, 
 2021 2020 
 Laboratory equipment (1) 
 $ 33,101 $ 25,468 
 Leasehold improvements 16,117 10,785 
 Computer equipment and software 3,481 3,192 
 Office equipment and furniture 1,297 1,246 
 Construction in progress (2) 
 3,231 2,357 
 Property and equipment 57,227 43,048 
 Less: accumulated depreciation and amortization ( 35,882 ) ( 33,373 ) 
 
 Property and equipment, net $ 21,345 $ 9,675 

 
 
 (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. 
 
 
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 Depreciation expense included in both research and development expenses and selling, general and administrative expenses in the consolidated statements of operations was as follows (in thousands):
 
 Year Ended December 31, 
 2021 2020 2019 
 Depreciation expense $ 3,113 $ 1,950 $ 1,570 

 
 Goodwill 
 Goodwill had a carrying value of $ 3.2 million as of December 31, 2021 and 2020. 
 Other Accrued Liabilities 
 Other accrued liabilities consisted of the following (in thousands): 
 
 December 31, 
 2021 2020 
 Accrued purchases $ 6,755 $ 7,170 
 Accrued professional and outside service fees 5,147 2,589 
 Other 676 513 
 Total 
 $ 12,578 $ 10,272 

 
 
 Note 9. Stock-based Compensation 
 Equity Incentive Plans 
 In 2019, our board of directors (the "Board") and stockholders approved the 2019 Incentive Award Plan (the "2019 Plan"). The 2019 Plan superseded and replaced in its entirety our 2010 Equity Incentive Plan (the “2010 Plan”) which was effective in March 2010, and no further awards will be granted under the 2010 Plan; however, the terms and conditions of the 2010 Plan will continue to govern any outstanding awards thereunder. 
 
 The 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; provided that no more than 14,000,000 shares may be issued upon the exercise of incentive stock options (“ISOs”). In June 2019, 8.1 million shares authorized for issuance under the 2019 Plan were registered under the Securities Act of 1933, as amended (the “Securities Act”). 
 The 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 at least 85 % of the fair value of our common stock on the date of grant, as determined by the Board. If, at the time of a grant, the optionee directly or by attribution owns stock possessing more than 10 % of the total combined voting power of all of our outstanding capital stock, the exercise price for these options must be at least 110 % of the fair value of the underlying common stock. Stock options granted to employees generally have a maximum term of ten years and vest over four years from the date of grant, of which 25 % vest at the end of one year , and 75 % vest monthly over the remaining three years . We may grant options with different vesting terms from time to time. Unless an employee's termination of service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of three months or the expiration of the option, whichever is earlier. 
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 Restricted Stock Units ("RSUs") 
 We also grant employees RSUs, which generally vest over either a three year period with 33 % of the shares subject to the RSUs vesting on each yearly anniversary of the vesting commencement date or over a four-year period with 25 % of the shares subject to the RSU vesting on each yearly anniversary of the vesting commencement date, in each case contingent upon such employee’s continued service on such vesting date. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. We may grant RSUs with different vesting terms from time to time. 
 Performance-contingent Restricted Stock Units ("PSUs") and Performance Based Options ("PBOs") 
 The compensation committee of the Board approved, solely in respect of non-executive employees, delegated to our Chief Executive Officer the authority to approve grants of PSUs. The compensation committee of the Board also approved grants of PBOs and PSUs to our executives. The PSUs and PBOs vest based upon both the successful achievement of certain corporate operating milestones in specified timelines and continued employment through the applicable vesting date. When the performance goals are deemed to be probable of achievement for these types of awards, recognition of stock-based compensation expense commences. Once the number of shares eligible to vest is determined, those shares vest in two equal installments with 50 % vesting upon achievement and the remaining 50 % vesting on the first anniversary of achievement, in each case, subject to the recipient’s continued service through the applicable vesting date. If the performance goals are achieved at the threshold level, the number of shares eligible to vest in respect of the PSUs and PBOs would be equal to half the number of PSUs granted and one-quarter the number of shares underlying the PBOs granted. If the performance goals are achieved at the target level, the number of shares eligible to vest in respect of the PSUs and PBOs would be equal to the number of PSUs granted and half of the shares underlying the PBOs granted. If the performance goals are achieved at the superior level, the number of shares eligible to vest in respect of the PSUs would be equal to two times the number of PSUs granted and equal to the number of PBOs granted. The number of shares issuable upon achievement of the performance goals at the levels between the threshold and target levels for the PSUs and PBOs or between the target level and superior levels for the PSUs would be determined using linear interpolation. Achievement below the threshold level would result in no shares being eligible to vest in respect of the PSUs and PBOs. 
 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 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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 Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands): 
 Year Ended December 31, 
 2021 2020 2019 
 Research and development $ 2,353 $ 1,620 $ 1,562 
 Selling, general and administrative 9,240 6,108 5,381 
 Total $ 11,593 $ 7,728 $ 6,943 

 The following table presents total stock-based compensation expense by security type included in the consolidated statements of operations (in thousands): 
 Year Ended December 31, 
 2021 2020 2019 
 Stock options $ 2,764 $ 2,381 $ 2,149 
 RSUs and RSAs 2,768 2,231 1,805 
 PSUs 2,333 1,160 1,087 
 PBOs 3,728 1,956 1,902 
 Total $ 11,593 $ 7,728 $ 6,943 

 Grant Award Activities: 
 Stock Option Awards 
 We estimated the fair value of stock options using the Black-Scholes-Merton option-pricing model based on the date of grant. The following summarizes the weighted-average assumptions used to estimate the fair value of employee and non-employee stock options granted: 
 Year Ended December 31, 
 2021 2020 2019 
 Expected life (years) 5.6 5.3 5.6 
 Volatility 52.5 % 50.4 % 55.3 % 
 Risk-free interest rate 0.8 % 1.0 % 2.4 % 
 Expected dividend yield 0.0 % 0.0 % 0.0 % 

 
 The following summarizes the weighted-average assumptions used to estimate the fair value of 9,000 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, 
 2021 2020 
 Expected life (years) 5.6 5.4 
 Volatility 54.1 % 51.6 % 
 Risk-free interest rate 0.9 % 0.4 % 
 Expected dividend yield 0.0 % 0.0 % 

 
 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. 
 
 
 108 

 
 

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

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

 
 
 The weighted average grant date fair value per share of employee stock options granted in 2021, 2020 and 2019 were $ 12.80 , $ 6.03 and $ 10.77 , respectively. The total intrinsic value of options exercised in 2021, 2020 and 2019 were $ 14.9 million, $ 1.8 million and $ 13.6 million, respectively. 
 As of December 31, 2021, there was $ 4.4 million of unrecognized stock-based compensation, net of expected forfeitures, related to unvested stock options, which we expect to recognize over a weighted average period of 2.4 years. 
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 Restricted Stock Awards ("RSAs") 
 The following table summarizes RSA activities: 
 Number 
of 
Shares Weighted Average
Grant Date
Fair Value
Per Share 
 (In Thousands) 
 Non-vested balance at December 31, 2018 55 $ 12.83 
 Granted 40 $ 17.18 
 Vested ( 56 ) $ 12.83 
 Forfeited/Expired ( 4 ) $ 17.18 
 Non-vested balance at December 31, 2019 35 $ 17.18 
 Granted 96 $ 11.44 
 Vested ( 35 ) $ 17.18 
 
 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. 
 As of December 31, 2021, there was $ 0.7 million of unrecognized stock-based compensation cost related to non-vested RSAs, which we expect to recognize over a weighted average period of 1.1 years. 
 Restricted Stock Units ("RSUs") 
 The following table summarizes RSU activities: 
 Number 
of 
Shares Weighted Average
Grant Date
Fair Value
Per Share 
 (In Thousands) 
 Non-vested balance at December 31, 2018 348 $ 5.66 
 Granted 72 $ 19.19 
 Vested ( 210 ) $ 5.03 
 Forfeited/Expired ( 9 ) $ 13.60 
 Non-vested balance at December 31, 2019 201 $ 10.76 
 Granted 156 $ 14.22 
 Vested ( 168 ) $ 10.05 
 Forfeited/Expired ( 13 ) $ 15.16 
 Non-vested balance at December 31, 2020 176 $ 14.17 
 Granted 163 $ 26.59 
 Vested ( 70 ) $ 13.57 
 Forfeited/Expired ( 37 ) $ 21.89 
 Non-vested balance at December 31, 2021 232 $ 21.83 
 

 
 The total fair value, as of the vesting date, of RSUs vested in fiscal 2021, 2020 and 2019 were $ 1.8 million, $ 2.1 million and $ 4.1 million respectively. 
 As of December 31, 2021, there was $ 2.8 million of unrecognized stock-based compensation cost related to non-vested RSUs, which we expect to recognize over a weighted average period of 1.6 years. 
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 Performance-Contingent Restricted Stock Units ("PSUs") 
 The following table summarizes PSU activities: 
 Number 
of 
Shares Weighted Average
Grant Date
Fair Value
Per Share 
 (In Thousands) 
 Non-vested balance at December 31, 2018 240 $ 7.48 
 Granted 95 $ 14.98 
 Vested ( 200 ) $ 6.58 
 Forfeited/Expired ( 15 ) $ 15.58 
 Non-vested balance at December 31, 2019 120 $ 13.88 
 Granted 124 $ 13.59 
 Vested ( 107 ) $ 11.28 
 Forfeited/Expired ( 6 ) $ 21.80 
 Non-vested balance at December 31, 2020 131 $ 15.34 
 Granted 82 $ 26.16 
 Vested ( 66 ) $ 16.14 
 Forfeited/Expired ( 19 ) $ 19.38 
 Non-vested balance at December 31, 2021 128 $ 21.24 

 
 The total fair value, as of the vesting date, of PSUs vested in the years ended December 31, 2021, 2020, and 2019 were $ 1.3 million, $ 1.3 million, and $ 3.8 million, respectively. 
 As of December 31, 2021, there was $ 1.0 million of unrecognized stock-based compensation cost related to non-vested PSUs, which we expect to recognize over a weighted average period of 0.5 years. 
 Performance Based Options ("PBOs") 
 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: 
 Year Ended December 31, 
 2021 2020 2019 
 Expected life (years) 5.5 5.3 5.6 
 Volatility 51.9 % 49.9 % 55.8 % 
 Risk-free interest rate 0.7 % 1.3 % 2.5 % 
 Expected dividend yield 0.0 % 0.0 % 0.0 % 
 

 
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 The following tables summarizes PBO activities: 
 Number
of
Shares Weighted Average Grant Date Fair Value Per Share 
 (In Thousands) 
 Outstanding at December 31, 2018 1,582 $ 3.47 
 Granted 718 $ 11.44 
 Exercised ( 422 ) $ 3.17 
 Forfeited/Expired ( 618 ) $ 10.34 
 Outstanding at December 31, 2019 1,260 $ 4.75 
 Granted 689 $ 6.37 
 
 Forfeited/Expired ( 389 ) $ 6.42 
 Outstanding at December 31, 2020 1,560 $ 5.05 
 Granted 433 $ 12.23 
 Exercised ( 35 ) $ 9.02 
 Forfeited/Expired ( 118 ) $ 12.23 
 Outstanding at December 31, 2021 1,840 $ 4.11 

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

 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. 
 
 Note 10. 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. 
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 Public Offerings 
 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. 
 Private Placement 
 In June 2019, we entered into a Securities Purchase Agreement with an affiliate of Casdin Capital, LLC ("Casdin") pursuant to which we issued and sold to Casdin 3,048,780 shares of our common stock at a purchase price of $ 16.40 per share. After deducting issuance costs of $ 0.1 million from the Private Offering, our net proceeds were $ 49.9 million. The Private Offering was exempt from registration pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) the Securities Act, and Regulation D under the Securities Act. 
 
 Note 11. 401(k) Plan 
 In January 2005, we implemented a 401(k) Plan covering certain employees. Currently, all of our United States based employees over the age of 18 are eligible to participate in the 401(k) Plan. Under the 401(k) Plan, eligible employees may elect to reduce their current compensation up to a certain annual limit and contribute these amounts to the 401(k) Plan. We may make matching or other contributions to the 401(k) Plan on behalf of eligible employees. We recorded employer matching contributions expense of $ 1.1 million, $ 0.8 million, and $ 0.7 million in the years ended December 31, 2021, 2020, and 2019, respectively. 
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 Note 12. Income Taxes 
 Our loss before provision for (benefit from) income taxes were as follows (in thousands): 
 
 Year Ended December 31, 
 2021 2020 2019 
 United States $ ( 21,037 ) $ ( 23,452 ) $ ( 11,751 ) 
 Foreign ( 53 ) ( 219 ) ( 167 ) 
 Loss before provision for income taxes $ ( 21,090 ) $ ( 23,671 ) $ ( 11,918 ) 
 

 
 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): 
 
 Year Ended December 31, 
 2021 2020 2019 
 Current provision: 
 State $ — $ 5 $ 5 
 Foreign 198 342 18 
 Total current provision $ 198 $ 347 $ 23 
 Deferred benefit: 
 Foreign ( 9 ) ( 8 ) ( 6 ) 
 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, 
 2021 2020 2019 
 Tax benefit at federal statutory rate $ ( 4,429 ) $ ( 4,971 ) $ ( 2,503 ) 
 State taxes ( 2,235 ) ( 708 ) ( 1,120 ) 
 Research and development credits ( 1,132 ) ( 811 ) ( 693 ) 
 Foreign operations taxed at different rates 80 245 1 
 Stock-based compensation ( 2,698 ) 140 ( 3,599 ) 
 Other nondeductible items 711 61 498 
 Executive compensation 257 24 872 
 Change in valuation allowance 9,635 6,359 6,561 
 
 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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 Significant components of our deferred tax assets and liabilities are as follows (in thousands): 
 
 December 31, 
 2021 2020 
 Deferred tax assets: 
 Net operating losses $ 78,525 $ 72,530 
 Credits 11,895 9,914 
 Deferred revenues 1,490 1,080 
 Stock-based compensation 3,946 2,576 
 Reserves and accruals 2,928 1,914 
 Depreciation 514 1,115 
 Intangible assets 1,356 1,714 
 Capital losses 26 25 
 Unrealized gain/loss 418 400 
 Lease liability 11,206 5,626 
 Other assets 122 100 
 Total deferred tax assets: 112,426 96,994 
 Valuation allowance ( 101,762 ) ( 92,126 ) 
 Deferred tax liabilities: 
 Right-of-use assets ( 10,373 ) ( 4,848 ) 
 Other ( 314 ) ( 52 ) 
 Total deferred tax liabilities: ( 10,687 ) ( 4,900 ) 
 Net deferred tax liabilities $ ( 23 ) $ ( 32 ) 
 

 
 ASC 740 requires that the tax benefit of NOLs, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. Because of our history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not more likely than not to be realized and, accordingly, has provided a valuation allowance against our deferred tax assets. Accordingly, the net deferred tax assets in all our jurisdictions have been fully reserved by a valuation allowance. The net valuation allowance increased by $ 9.6 million during the year ended December 31, 2021, increased by $ 6.4 million during the year ended December 31, 2020, and increased by $ 6.5 million during the year ended December 31, 2019. At such time as it is determined that it is more likely than not that the deferred tax assets are realizable, the valuation allowance will be reduced. 
 115 

 
 

 The following table sets forth our federal, state and foreign NOL carryforwards and federal research and development tax credits as of December 31, 2021 (in thousands): 
 
 December 31, 2021 
 Amount Expiration 
 Years 
 
 Net operating losses, federal $ 224,475 2022-2037 
 Net operating losses, federal $ 108,314 Do not expire 
 Net operating losses, state $ 138,770 2028-2041 
 Tax credits, federal $ 12,917 2023-2041 
 Tax credits, state $ 14,126 Do not expire 
 Net operating losses, foreign $ — Various 
 

 
 Current U.S. federal and California tax laws include substantial restrictions on the utilization of NOLs and tax credit carryforwards in the event of an ownership change of a corporation. Accordingly, the Company's ability to utilize NOLs and tax credit carryforwards may be limited as a result of such ownership changes. We performed an analysis in 2020 and determined that there was not a limitation that would result in the expiration of carryforwards before they are utilized. 
 Income tax expense or benefit from continuing operations is generally determined without regard to other categories of earnings, such as discontinued operations and other comprehensive income. An exception is provided in ASC 740 when there is aggregate income from categories other than continuing operations and a loss from continuing operations in the current year. In this case, the tax benefit allocated to continuing operations is the amount by which the loss from continuing operations reduces the tax expenses recorded with respect to the other categories of earnings, even when a valuation allowance has been established against the deferred tax assets. In instances where a valuation allowance is established against current year losses, income from other sources is considered when determining whether sufficient future taxable income exists to realize the deferred tax assets. 
 In 2014, we determined that the undistributed earnings 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. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): 
 
 December 31, 
 2021 2020 2019 
 Balance at beginning of year $ 12,683 $ 11,330 $ 9,980 
 Additions based on tax positions related to current year 2,206 1,357 1,362 
 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 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. We do not expect any material changes to our uncertain tax positions within the next 12 months. 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. 
 
 
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 Note 13. Commitments and Contingencies 
 Operating Leases 
 Our headquarters are located in Redwood City, California, where we occupy approximately 77,300 square feet of office and laboratory space in multiple buildings within the same business park 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 January 2020, we subleased approximately 26,500 square feet of the Saginaw Space to Minerva Surgical, Inc. The lease and sublease for the Saginaw Space both expired at the end of January 2020. During the period from February 1, 2020 through April 30, 2020, we subleased approximately 3,400 square feet at 101 Saginaw Drive from Minerva Surgical, Inc. The sublease expired at the end of April 2020. 
 We entered into the initial lease with MetLife for our facilities in Redwood City in 2004 and the RWC Lease has been amended multiple times since then to adjust the leased space and terms of the Lease. In February 2019, we entered into an Eighth Amendment to the Lease (the “Eighth Amendment”) with MetLife with respect to the Penobscot Space and the 501 Chesapeake Space to extend the term of the Lease for additional periods. Pursuant to the Eighth Amendment, the term of the lease of the Penobscot Space has been extended through May 2027. The lease term for the 501 Chesapeake Space has been extended to May 2029. We have 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. 
 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 $ 0.4 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. 
 Lease and other information 
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 Lease costs, amounts included in measurement of lease obligations and other information related to non-cancellable operating leases and finance leases for the years ended December 31, 2021, 2020 and 2019 were as follows (in thousands): 
 Year Ended December 31, 
 2021 2020 2019 
 Amortization of right-of-use assets $ 106 $ 152 $ 217 
 Interest on lease obligations — 1 10 
 Finance lease costs 106 153 227 
 Operating lease cost 4,396 3,879 4,556 
 Short-term lease costs (1) 
 70 47 — 
 Sublease income — ( 55 ) ( 957 ) 
 Total lease cost (2) 
 $ 4,572 $ 4,024 $ 3,826 
 (1) Short-term lease costs on leases with terms of over one month and less than one year. 
 
 (2) The Company had no variable lease costs. 
 

 Amounts included in measurement of lease obligations: 
 Year Ended December 31, 
 2021 2020 2019 
 Cash paid: 
 Operating cash flows from operating leases $ 4,197 $ 2,816 $ 3,279 
 Operating cash flow from finance leases $ — $ 1 $ 10 
 Financing cash flows from finance leases $ — $ 60 $ 242 
 Non-cash activity: 
 Operating Lease - Right-of-use assets obtained in exchange for lease liabilities $ 25,445 $ — $ 26,617 
 Finance Lease - Right-of-use assets obtained in
exchange for lease liabilities $ — $ — $ 493 
 
 Operating Lease Finance Lease 
 Other information: 
 Weighted-average remaining lease term (in years) 7.9 years — 
 Weighted-average discount rate 5.6 % — 

 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 
 2022 $ 6,500 
 2023 7,571 
 2024 7,785 
 2025 8,007 
 2026 8,235 
 Thereafter 20,718 
 Total minimum lease payments 58,816 
 Less: imputed interest 11,162 
 Lease obligations $ 47,654 
 

 
 
 
 Other Commitments 
 We enter into supply and service arrangements in the normal course of business. Supply arrangements are primarily for fixed-price manufacture and supply. Service agreements are primarily for the development of manufacturing processes and certain studies. Commitments under service agreements are subject to cancellation at our discretion which may require payment 
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 of certain cancellation fees. The timing of completion of service arrangements is subject to variability in estimates of the time required to complete the work. 
 The following table provides quantitative data regarding our other commitments. Future minimum payments reflect amounts that we expect to pay including potential obligations under services agreements subject to risk of cancellation by us (in thousands): 
 Other Commitment Agreement Type Agreement Date Future Minimum Payment 
 Manufacture and supply agreement with expected future payment date of December 2022 April 2016 $ 101 
 Development and manufacturing services agreements September 2019 2,469 
 
 Facility maintenance agreement September 2021 1,475 
 Total other commitments $ 4,045 
 

 
 Credit Facility 
 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. 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 %. 
 Our obligations under the Credit Facility are secured by a lien on substantially all of our personal property other than our intellectual property. The Credit Facility includes a number of customary covenants and restrictive financial covenants including meeting minimum product revenue levels and maintaining certain minimum cash levels with the lender. The Credit Facility's financial covenants restrict the ability of the Company to transfer collateral, incur additional indebtedness, engage in mergers or acquisitions, pay dividends or make other distributions, make investments, create liens, sell assets, or sell certain assets held at foreign subsidiaries. A failure to comply with these covenants could permit the lender to exercise remedies against us and the collateral securing the Credit Facility, including foreclosure of our properties securing the Credit Facility and our cash. At December 31, 2021, we were in compliance with the covenants for the Credit Facility. 
 Legal Proceedings 
 We are not currently a party to any material pending litigation or other material legal proceedings. 
 Indemnifications 
 We are required to recognize a liability for the fair value of any obligations we assume upon the issuance of a guarantee. We have certain agreements with licensors, licensees and collaborators that contain indemnification provisions. In such provisions, we typically agree to indemnify the licensor, licensee and collaborator against certain types of third party claims. The maximum amount of the indemnifications is not limited. We accrue for known indemnification issues when a loss is probable and can be reasonably estimated. There were no accruals for expenses related to indemnification issues for any periods presented. 
 
 Note 14. Related Party Transactions 
 Molecular Assemblies, Inc. 
 
 
 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. In the 
 119 

 
 

 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 
 Pam P. Cheng, who served as a member of our board of directors until June 2020, joined AstraZeneca PLC as Executive Vice President, Operations and Information Technology in June 2015. We sold biocatalyst products to AstraZeneca PLC and its controlled purchasing agents and contract manufacturers. We recognized $ 0.1 million of revenue in 2020, through the date of Ms. Cheng's departure from our board of directors. As of December 31, 2020, we had no receivables from AstraZeneca PLC and its controlled purchasing agents and contract manufacturers that was generated during the related party period. 
 
 
 Note 15. Segment, Geographical and Other Revenue Information 
 
 Segment Information 
 
 
 We manage our business as two business segments: 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. 
 We manage our assets on a total company basis, not by business segment, as the majority of our operating assets are shared or commingled. Our CODM does not review asset information by business segment in assessing performance or allocating resources, and accordingly, we do not report asset information by business segment. 
 Factors considered in determining the two reportable segments of the Company include the nature of business activities, the management structure directly accountable to our CODM for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors. Our CODM regularly reviews our segments and the approach provided by management for performance evaluation and resource allocation. 
 Operating expenses that directly support the segment activity are allocated based on segment headcount, revenue contribution or activity of the business units within the segments, based on the corporate activity type provided to the segment. The expense allocation excludes certain corporate costs that are separately managed from the segments. This provides the CODM with more meaningful segment profitability reporting to support operating decisions and allocate resources. 
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 The following table provides financial information by our reportable business segments along with a reconciliation to consolidated loss before income taxes (in thousands): 
 
 Year Ended December 31, 2021 Year Ended December 31, 2020 
 Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total 
 Revenues: 
 Product revenue $ 70,657 $ — $ 70,657 $ 30,220 $ — $ 30,220 
 Research and development revenue 19,858 14,239 34,097 17,886 20,950 38,836 
 Total revenues 90,515 14,239 104,754 48,106 20,950 69,056 
 Costs and operating expenses: 
 Cost of product revenue 22,209 — 22,209 13,742 — 13,742 
 Research and development (1) 
 23,140 30,219 53,359 20,923 21,705 42,628 
 Selling, general and administrative (1) 
 12,105 2,755 14,860 9,597 2,355 11,952 
 Total segment costs and operating expenses 57,454 32,974 90,428 44,262 24,060 68,322 
 Income (loss) from operations $ 33,061 $ ( 18,735 ) 14,326 $ 3,844 $ ( 3,110 ) 734 
 Corporate costs (2) 
 ( 32,201 ) ( 22,306 ) 
 Depreciation and amortization ( 3,215 ) ( 2,099 ) 
 Loss before income taxes $ ( 21,090 ) $ ( 23,671 ) 
 

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

 (1) For the years ended December 31, 2020 and 2019, research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases. 
 (2) Corporate costs include unallocated selling, general and administrative expense, interest income, and other income (expense), net. 
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 The following table provides stock-based compensation expense included in income (loss) from operations (in thousands): 
 Year Ended December 31, 
 2021 2020 2019 
 Performance Enzymes $ 4,514 $ 2,970 $ 2,303 
 Novel Biotherapeutics 1,100 768 695 
 Corporate cost 5,979 3,990 3,945 
 Total $ 11,593 $ 7,728 $ 6,943 
 

 
 Significant Customers 
 Customers that each accounted for 10% or more of our total revenues were as follows: 
 Percentage of Total Revenues
For the Year Ended December 31, 
 2021 2020 2019 
 Customer A 33 % * * 
 Customer B 11 % 26 % 28 % 
 Customer C * 19 % * 
 Customer D * 11 % 15 % 
 Customer E * * 23 % 

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

 * Percentage was less than 10% 
 Geographical Information 
 Geographic revenues are identified by the location of the customer and consist of the following (in thousands): 
 Year Ended December 31, 
 2021 2020 2019 
 Revenues 
 Americas $ 23,481 $ 24,352 $ 13,039 
 EMEA 20,187 19,257 37,133 
 APAC 61,086 25,447 18,286 
 Total revenues $ 104,754 $ 69,056 $ 68,458 
 

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

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

 
 
 
 
 Note 16. Allowance for Credit Losses 
 The following summarizes the receivables allowance for credit losses (in thousands): 
 December 31, 
 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): 
 
 December 31, 2021 
 31-60 Days 61-90 Days 91 Days and over Total over 31 Days Current Total balance 
 Accounts receivable $ 536 $ 569 $ 1,151 $ 2,256 $ 22,697 $ 24,953 
 
 December 31, 2020 
 31-60 Days 61-90 Days 91 Days and over Total over 31 Days Current Total balance 
 Accounts receivable $ 489 $ 7 $ — $ 496 $ 13,398 $ 13,894 
 

 
 
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 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES 
 None.
CODEXIS, INC. 10-K

Item 8. Financial Statements and Supplementary Data
