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Item 1. Business

2024-02-28 compared with 2023-02-27 · 185 added, 419 removed, 116 unchanged (84% of the section changed)

COMPANY OVERVIEW

We are a leading enzyme engineering company leveraging our proprietary CodeEvolver ® technology platform to discover, develop and enhance novel, high performance enzymes and other classes of proteins.

We are a leading enzyme engineering company leveraging our proprietary CodeEvolver ® directed evolution technology platform to discover, develop, enhance, and commercialize novel, high-performance enzymes and other classes of proteins.

Enzymes are naturally occurring biological molecules critical to almost all biochemical reactions that sustain life.

They can be precisely engineered and optimized for specific functions, and to have particular characteristics, such as an ability to survive environments in which natural enzymes cannot, or to perform (bio)chemical transformations different than those for which they naturally evolved.

The capacity to enhance the properties and performance of enzymes has led to pivotal improvements across three healthcare industry pillars:

pharmaceutical manufacturing, life sciences, and biotherapeutics.

The enzymes we produce solve for real-world challenges associated with small molecule pharmaceuticals manufacturing, nucleic acid synthesis and genomic sequencing, and – as biotherapeutic candidates – they have the potential to treat challenging diseases.

Our unique enzymes drive improvements such as higher yields, reduced energy usage and waste generation, improved efficiency in manufacturing, greater sensitivity in genomic and diagnostic applications, and potentially more efficacious therapeutics.

Our novel biotherapeutics business includes a diverse pipeline of product candidates in clinical and preclinical development.

Our initial biotherapeutic product candidates include enzymes that are orally administered for function in the gastrointestinal tract (“GI”), such as our partnered product candidates CDX-7108 for the treatment of exocrine pancreatic insufficiency and CDX-6114 for the treatment of phenylketonuria, which are both in Phase 1 clinical trials.

We have also engineered a series of transgenes that code for enzymes that may be used as gene therapies to treat rare lysosomal storage disorders with our partner Takeda, such as Fabry Disease and Pompe Disease, as well as a blood factor disorder.

Our performance enzymes business consists primarily of two focus areas:

i) biocatalysts for the sustainable manufacturing of pharmaceuticals and ii) enzymes for life science applications, including genomic sequencing and nucleic acid synthesis.

In our pharmaceutical manufacturing business, we utilize our CodeEvolver ® platform to develop optimized enzymes that are used by some of the world’s largest pharmaceutical companies to reduce their costs and improve the efficiency and productivity of their manufacturing processes for some small molecule therapeutics.

In life science markets, we use our platform technology to develop enzymes for customers using next generation sequencing (“NGS”), a parallel sequencing technology used to identify genomic information in the study of biological systems, and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications, as well as for synthesis of nucleic acids such as DNA/RNA.

We focus on leveraging our capacity to enhance the properties and performance of enzymes to drive pivotal improvements across two key focus areas:

our foundational, revenue-generating biocatalysis pharmaceutical manufacturing business and our Enzyme-Catalyzed Oligonucleotide Synthesis™ (“ECO Synthesis™”) manufacturing platform, which is currently in development to enable the commercial scale manufacture of RNA interference ( “ RNAi ” ) therapeutics.

In July 2023, we announced that we discontinued investment in certain development programs, primarily in our novel biotherapeutics business segment and that we are actively exploring options to drive value by potentially monetizing non-core life science assets, including in genomics and next generation sequencing (“NGS”).

In o ur revenue-generating pharmaceutical manufacturing business, we utilize our CodeEvolver ® technology platform to develop optimized enzymes that are used by some of the world’s largest pharmaceutical companies to reduce their costs and improve the efficiency and productivity of their manufacturing processes for small molecule therapeutics.

Our unique enzymes drive improvements such as higher yields, increased purity, reduced energy usage and waste generation, and improved efficiency in manufacturing.

We also use the CodeEvolver ® platform technology to develop enzymes for the synthesis of nucleic acids such as DNA/RNA, including enzymes utilized in our ECO Synthesis™ manufacturing platform, where our enzymes are poised to deliver many of the same benefits we offer in pharmaceutical manufacturing across purity, yield, and improved efficiency.

We demonstrated gram-scale synthesis under process-like conditions with the ECO Synthesis™ manufacturing platform in December 2023 and expect to begin pre-commercial customer testing in 2024.

We anticipate that this will be followed by early commercial licenses to the ECO Synthesis™ manufacturing platform in 2025 and a full commercial launch in 2026.

History and Core Technology

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

Since 2002, we have made substantial investments in the development of our proprietary CodeEvolver ® technology platform, the primary source of our competitive advantage for both our performance enzymes and biotherapeutics businesses.

The CodeEvolver ® platform has the power to transform the performance of an enzyme, tailoring it for a specific application and/or process.

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

The CodeEvolver ® technology platform has the power to transform the performance of an enzyme, tailoring it for a specific application and/or process.

Using powerful machine learning tools and sophisticated molecular, cellular, and bioanalytical workflows, we design and screen libraries of thousands of variants in high throughput every two to four weeks on each project, sequencing every variant and correlating its sequence with its performance in a highly application-relevant screen.

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These enhanced properties provide differentiated technical performance in the target application and can provide our customers increased value in the commercial deployment of their products.

Novel Biotherapeutics

We are developing a diverse pipeline of product candidates in our novel biotherapeutics business.

These product candidates, which are in clinical and preclinical development, range from orally delivered enzymes to engineered transgenes for delivery as gene therapies that have the potential to address a range of diseases with high unmet patient need.

Each of our product candidates is discovered utilizing our proprietary CodeEvolver ® protein engineering platform.

Our Partnered Oral Enzyme Programs

CDX-7108 for the treatment of exocrine pancreatic insufficiency

Under a Strategic Collaboration Agreement with Nestlé Health Science (“Nestlé SCA”), we have collaboratively developed CDX-7108, a potent lipase intended for use as a pancreatic enzyme replacement therapy (“PERT”).

PERT is used to treat pancreatic exocrine insufficiency.

There are multiple causes of pancreatic exocrine insufficiency including chronic pancreatitis, cystic fibrosis and pancreatic cancer.

We estimate there are approximately 190,000 patients in the United States and the market for current therapies is greater than $2.5 billion globally.

Although existing therapies are reasonably effective at delivering amylase and protease activity, achieving adequate levels of lipase activity is challenging due to patient compliance and pill burden often leading patients to experience continued symptoms associated with fat malabsorption.

CDX-7108 has been specifically engineered for increased potency as a lipase and also to remain stable in acidic conditions such as those encountered in the stomach.

The goal is to study whether this combination of properties will deliver adequate lipase activity with a less burdensome dosing schedule.

Under the Nestlé SCA, we and Nestlé Health Science are also working on the development of engineered amylase and protease enzymes for possible use with CDX-7108.

Nestlé Health Science is currently dosing patients in a Phase 1b three-party study.

The first two parts of the study evaluated the safety, tolerability, and pharmacokinetics (“PK”) of escalating single and multiple oral doses of CDX-7108 in 48 healthy adult subjects, with no safety issues noted.

The third part of the study is evaluating the pharmacodynamics of a single dose of oral CDX-7108 in six enrolled patients with exocrine pancreatic insufficiency (“EPI”).

An interim analysis conducted in January 2023 of five patients who had completed the study at the time showed a clear indication of improved lipid absorption when patients are administered CDX-7108 versus placebo, which we believe supports a path forward together with Nestlé Health Science to further develop CDX-7108, with the potential for the initiation of a Phase 2 study in early 2024.

CDX-6114 for the treatment of phenylketonuria

We internally developed CDX-6114, an enzyme we engineered to be orally administrated for the treatment of phenylketonuria (“PKU”) in humans.

PKU, one of the most common inborn errors of metabolism (“IEMs”), is a metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient.

As a result, phenylalanine accumulates to toxic levels in the brain, causing serious neurological problems including intellectual disability, seizures and cognitive and behavioral problems.

To avoid toxic levels of phenylalanine in their blood, individuals with PKU must follow a strict, life-long diet that is low in phenylalanine and supplement their diet with a synthetic phenylalanine-free protein supplements to provide them with sufficient nutrients.

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

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

We have partnered with Nestlé Health Science under a Global Development, Option and License Agreement (“Nestlé License Agreement”) to further develop CDX-6114.

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

Nestlé Health Science is currently optimizing the formulation of CDX-6114 to improve performance and we expect Nestlé Health Science to announce an IND filing and clinical trial initiation in 2023.

If this collaboration can successfully demonstrate benefit in PKU patients with CDX-6114, this will inform our decisions around the oral enzyme approach to several other IEMs.

Our Wholly-owned Oral Enzyme Programs

In the past we have also worked on internal programs to develop orally administrable enzyme substitution therapy candidates for the treatment of homocystinuria (“HCU”) and Maple Syrup Urine Disease (“MSUD”), that we are now considering partnering options for pursuing further development.

In addition, we have a program to develop orally administrable enzyme substitution therapy candidates for the treatment of Celiac Disease (“CD”).

We have also used CodeEvolver ® to engineer transgenes that encode for enzymes which may improve targeting and expression within the body when administered as gene therapies, offering potentially improved therapeutic benefit as compared to current options.

Our Partnered Gene Therapy Programs

Our first significant program involving engineered transgenes commenced in March 2020 when we entered into a Strategic Collaboration and License Agreement (“Takeda Agreement”) with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Co.

(“Takeda”) pursuant to which we are collaborating to research and develop transgenes for use in gene therapy delivery technology for rare lysosomal storage disorders such as Fabry Disease, Pompe Disease, a blood factor disorder, and another lysosomal storage disorder.

In March 2020, we received a one-time, non-refundable cash payment of $8.5 million.

Of these programs, the Fabry disease program is the most advanced, with a lead candidate identified in investigational new drug ("IND") enabling activities.

We have also provided sequences to Takeda for the Pompe program and await updates on preclinical testing and potential IND enabling activities.

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

In addition to our partnered gene therapy programs, we continue to explore the possible application of our CodeEvolver ® technology to develop therapeutic options for devastating diseases as well as to develop and test our own proprietary gene therapy delivery mechanisms.

Recent Changes to Business Strategy

In July 2023, we announced the restructuring of our business to focus resources on programs that we believe have the strongest probability of creating significant value in the near-term and beyond, including the advancement and commercialization of our ECO Synthesis™ manufacturing platform and growing our complementary pharmaceutical manufacturing business.

As part of this enhanced strategic focus, we also streamlined operations, including the discontinuation of investment in certain development programs, primarily in our biotherapeutics business , consolidated operations to our Redwood City, California headquarters, and reduced headcount by approximately 25%.

Our biotherapeutic product candidates, which were in clinical and preclinical development, were discovered using our proprietary CodeEvolver ® technology platform and ranged from orally delivered enzymes to engineered transgenes for delivery as gene therapies.

The most advanced of our biotherapeutics programs was CDX-7108, a potent lipase intended for use as a potential treatment for exocrine pancreatic insufficiency (“EPI”), which was being developed under a Strategic Collaboration Agreement with Nestlé Health Science (“Nestlé”) (the “Nestlé SCA”).

As part of the Nestlé SCA, we and Nestlé completed a Phase 1 clinical trial of CDX-7108.

In December 2023, we entered into an acquisition agreement with Nestlé (the “Acquisition Agreement”), pursuant to which we agreed to assign our interests in CDX-7108 (including associated agreements and intellectual property rights) to Nestlé and terminate the Nestlé SCA.

Under the terms of the Acquisition Agreement, Nestlé will be solely responsible for the continued development and commercialization of CDX-7108, including all associated costs, with Codexis retaining an economic interest in the program through an upfront payment, future potential milestone payments and net-sales based royalties.

In addition, we used our CodeEvolver® technology platform to engineer a series of transgenes that code for enzymes that may be used as gene therapies to treat rare lysosomal storage disorders, such as Fabry Disease and Pompe Disease, as well as a blood factor disorder, with Takeda Pharmaceutical Co.

Takeda announced in April 2023 the discontinuation of these development programs.

Performance Enzymes

Our performance enzymes business consists primarily of two focus areas, pharmaceutical manufacturing and life science products.

Our performance enzymes business consists primarily of two complementary focus areas:

pharmaceutical manufacturing and our ECO Synthesis™ manufacturing platform, which is currently in development to enable the commercial-scale manufacture of RNAi therapeutics.

In addition to the overlap in technical enzyme engineering expertise required for operating our pharmaceutical manufacturing business and developing the ECO Synthesis™ manufacturing platform, we believe both areas include a similar set of potential customers.

Many of our longstanding pharmaceutical manufacturing customers are currently investing in the development of RNAi therapeutics, providing us with an advantage in terms of commercial reach.

Further, our pharmaceutical manufacturing business establishes credibility for the ECO Synthesis™ manufacturing platform by demonstrating our proven history of engineering technically complex enzymes for large pharmaceutical companies and effectively scaling up to multiple metric tons of manufactured product using our existing platforms.

Pharmaceutical Manufacturing

We believe the pharmaceutical industry represents a significant market opportunity for our performance enzymes as pharmaceutical companies are in constant search of new drugs to offer to their customers and are under significant competitive pressure both to reduce costs and to increase the speed to market for their products.

We believe the pharmaceutical industry represents a significant market opportunity for our performance enzymes as pharmaceutical companies are in constant search of new small molecule drugs and are under significant competitive pressure both to reduce costs and to increase the speed to market for their products.

To address these pressures, pharmaceutical companies are driven to identify reliable, cost-effective, and sustainable manufacturing processes to produce both their new drug candidates and their existing products, while not impacting drug safety and efficacy.

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In addition, cost pressures further intensify as innovators lose their patent exclusivities and begin to experience competition from manufacturers of generic versions of their products.

Our pharmaceutical manufacturing customers, which include many large global pharmaceutical companies, partner with us to develop optimized enzymes for use as biocatalysts, meeting precisely defined criteria, with the goal of lowering costs and improving the efficiency, productivity and sustainability of their manufacturing processes by:

Our pharmaceutical manufacturing customers, which include many large global pharmaceutical companies, partner with us to develop engineered enzymes for use as biocatalysts, meeting precisely defined criteria, with the goal of lowering costs and improving the efficiency, productivity and sustainability of their manufacturing processes by:

improving productivity, yield and purity;

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and reducing the need for late-stage purifications.

As of December 31, 2022, we are selling biocatalysts to pharmaceutical manufacturers for 18 therapeutic drugs that are currently approved for commercial sales.

Of particular note for 2022, in July 2022 we announced that we and Pfizer had entered into an agreement to supply Pfizer with CDX-616, a proprietary high performance enzyme used to manufacture a critical intermediate for nirmatrelvir, an active pharmaceutical ingredient in PAXLOVID™, Pfizer’s antiviral therapeutic, which is currently authorized for emergency use by the FDA for the treatment of mild-to-moderate COVID-19 in people at high risk of progression to severe illness and authorized or approved by other regulatory authorities across the globe.

While we have generated significant revenue from supplying CDX-616 to Pfizer, there is no future binding commitment for them to purchase any particular quantity or quantities of CDX-616 from us.

As of December 31, 2023, we are selling biocatalysts to pharmaceutical manufacturers fo r 16 therapeutic drugs that are currently approved for commercial sales.

In July 2022, we announced that we and Pfizer Inc.

( “Pfizer” ) had entered into an agreement to supply Pfizer with CDX-616, a proprietary high-performance enzyme used to manufacture a critical intermediate for nirmatrelvir, an active pharmaceutical ingredient in PAXLOVID™, Pfizer’s antiviral therapeutic, which is now approved in the United States for the treatment of mild-to-moderate COVID-19 in people at high risk of progression to severe illness, and also authorized or approved by other regulatory authorities across the globe.

While we have generated significant revenue from supplying CDX-616 to Pfizer, particularly in 2021 and 2022, there is no future binding commitment for Pfizer to purchase any particular quantity or quantities of CDX-616 from us.

We regularly sell biocatalysts, at multi-kilograms to metric tons per annum scale, that have already been engineered, scaled up, and installed in a customer’s commercial process.

For example, in addition to Pfizer, we sell biocatalysts to Merck for their manufacture of sitagliptin, the active ingredient in JANUVIA ® , to Urovant and Kyorin for the manufacture of vibregon, the active ingredient in Urovant’s GEMTESA™ and Kyorin’s BEOVA ® , products for the treatment of overactive bladder, as well as supporting other products and customers for which public disclosures have not been made.

In addition to these larger volumes of biocatalysts that are sold for our customers’ ongoing commercial requirements, we also sell lesser quantities of enzymes for use in a customer’s developmental, qualification or regulatory approval operations.

As of December 31, 2022, 18 drug candidates currently in Phase 2 and Phase 3 clinical trials use enzymes engineered using CodeEvolver ® technology (either by Codexis or by our platform licensing partners) in their chemistry, manufacturing and control processes.

This pipeline of potential approvals reinforces our confidence in our ability to continue to grow this business over time.

Finally, we also sell even smaller quantities of enzymes (typically grams to multi-kilograms scale) to customers for experimental, testing and qualification purposes, or as part of an enzyme engineering project.

For example, in addition to Pfizer, we sell biocatalysts to Merck, Sharp & Dohme ( “Merck”) for their manufacture of sitagliptin, the active ingredient in JANUVIA ® , to Urovant Sciences GmbH ( “ Urovant ” ) and KYORIN Pharmaceutical Co., Ltd.

( “ Kyorin ” ) for the manufacture of vibregon, the active ingredient in Urovant’s GEMTESA™ and Kyorin’s BEOVA ® products for the treatment of overactive bladder, as well as supporting other products and customers for which public disclosures have not been made.

In addition to these larger volumes of biocatalysts that are sold for our customers’ ongoing commercial requirements, we also sell lesser quantities of engineered enzymes for use in a customer’s developmental, qualification or regulatory approval operations.

As of December 31, 2023, Codexis is selling biocatalysts to pharmaceutical manufacturers for 12 drug candidates currently in Phase 2 and Phase 3 clinical trials, or to customers working to convert to an enzymatic manufacturing process for drugs that have been commercially approved.

This pipeline reinforces our confidence in our ability to continue to grow this business over time.

Finally, we also sell even smaller quantities of enzymes (typically grams to multi-kilogram scale) to customers for experimental, testing, and qualification purposes, or as part of an enzyme engineering project.

In addition to the sale of biocatalysts, we also offer research and development partnerships to our customers.

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upfront payments, milestone payments, payments for screening and engineering, with other exclusive supply of enzyme or licensing fees and royalties as the customer’s product commercializes.

We also have licensed our CodeEvolver ® enzyme engineering technology platform to pharmaceutical companies to help them develop custom-designed enzymes that are highly optimized for efficient manufacturing processes.

To date, we have entered into platform technology licensing agreements with each of GlaxoSmithKline Intellectual Property Development Limited, a subsidiary of GlaxoSmithKline plc ("GSK"), Merck, Sharp & Dohme ("Merck") and Novartis Pharma AG ("Novartis").

Life Sciences

We also apply our CodeEvolver ® technology to develop enzymes for customers using NGS and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications, as well DNA/RNA synthesis applications.

We view these as attractive markets in which Codexis’ technology and products can deliver a strong competitive advantage – in part because manipulation of nucleic acids by enzymes (be it “reading” or “writing”) is at the core of these markets and our technology has the proven ability to create enzymes which are stable to the workflow and/or supply chain demands or – importantly – which are less biased in the nucleic acids they are able to sequence or synthesis, which can be of significant benefit in various applications.

We also have licensed our CodeEvolver ® technology platform to pharmaceutical companies to help them develop custom-designed enzymes that are highly optimized for efficient manufacturing processes.

To date, we have entered into platform technology licensing agreements with each of GlaxoSmithKline Intellectual Property Development Limited, a subsidiary of GlaxoSmithKline plc (“GSK”), Merck and Novartis Pharma AG (“Novartis”).

ECO Synthesis™ Manufacturing Platform

ECO Synthesis™ Manufacturing Platform Overview

A key strategic priority for Codexis is the advancement and commercialization of our ECO Synthesis™ manufacturing platform, which is currently in development to enable the commercial scale manufacture of RNAi therapeutics.

As of December 31, 2023, there are six approved small interfering ribonucleic acid (“siRNA”) therapeutics on the market in the United Sates, primarily targeting rare orphan disease indications.

However, there are more than 450 RNAi therapeutic assets in development, including over forty that are in Phase 2 and Phase 3 clinical trials, with more th an 40 of these targeting large disease indications such as Alzheimer’s, hyperlipidemia and hypertension.

We expect worldwide demand for RNAi therapeutics to grow significantly as RNAi therapeutics progress through clinical development and are commercially approved.

The current industry standard for manufacturing RNAi therapeutics is a well-established, chemical-based method called phosphoramidite chemistry.

This approach has existed for more than forty years and works effectively for small-scale manufacturing required during the discovery stage of clinical development.

However, phosphoramidite chemistry faces multiple limitations in the context of commercial-scale manufacture of RNAi therapeutics.

This approach requires significant infrastructure and capital investment in order to meet the anticipated future growth in demand for RNAi therapeutics.

Phosphoramidite chemistry is also currently limited to single-digit kilogram batch sizes, which presents challenges around quality control and scalability.

Further, chemical synthesis requires large volumes of acetonitrile to facilitate the reaction environment necessary to produce RNAi therapeutics.

Acetonitrile is a toxic solvent with high waste disposal costs and future supply may face constraints and price volatility as demand for RNAi therapeutics grows.

As additional RNAi therapeutic candidates are approved for large disease indications, we believe using traditional chemical synthesis for commercial scale production will become prohibitively expensive, time-intensive, and challenging for many drug developers and contract development and manufacturing organizations (“CDMOs”).

We believe that the ECO Synthesis™ manufacturing platform presents several advantages to potentially address these limitations.

First, this technology is being developed to integrate within existing manufacturing facilities, potentially eliminating much of the infrastructure investment required for commercial scale manufacturing of RNAi therapeutics with phosphoramidite chemistry.

The ECO Synthesis™ manufacturing platform is also being designed to manufacture tens to hundreds of kilograms of high-purity RNA per batch, with a closed-loop system intended to increase volumetric reagent efficiency.

Finally, our process is aqueous based, potentially mitigating the need for high volumes of acetonitrile, significantly decreasing chemical waste streams, and reducing heavy disposal and purification costs.

ECO Synthesis™ Manufacturing Platform Potential Commercial Opportunity

We believe we have significant competitive advantages to successfully execute on the ECO Synthesis™ manufacturing platform opportunity, largely stemming from synergies with our pharmaceutical manufacturing business in terms of technical expertise and commercial reach.

Many of our pharmaceutical manufacturing customers are developing RNAi therapeutics, and we believe that their familiarity with our ability to engineer and scale complex enzymes is a significant commercial advantage for our ECO Synthesis™ manufacturing platform.

However, there are also key differences that make this platform a compelling opportunity as compared to our existing pharmaceutical manufacturing business.

Pharmaceutical manufacturing generally requires one-to-one custom enzyme engineering projects, which involve significant time and resource investment from Codexis.

Our top five selling pharmaceutical manufacturing enzymes in 2023, excluding sales of CDX-616 related to PAXLOVID™, generated on average between $2.0 million to $9.0 million annually per enzyme between 2021 and 2023.

By contrast, the ECO Synthesis™ manufacturing platform could be applicable to many customers and has the potential to manufacture a range of siRNA.

Further, the potential scalability of our solution is differentiated from phosphoramidite chemistry, which is limited in batch size and requires high volumes of toxic solvent.

We believe that the ECO Synthesis™ manufacturing platform could enable CDMOs and drug developers to scale production of RNA therapeutics and as a result could potentially command significantly better economic terms than the current annual revenues for pharmaceutical manufacturing enzymes.

A critical component that is complimentary to the ECO Synthesis™ manufacturing platform is our engineered double stranded RNA (“dsRNA”) ligase, which can stitch together fragments of chemically and/or, in the future, enzymatically synthesized RNA.

We believe the dsRNA ligase has the potential to reduce the cost because the cost and impurity profile of phosphoramidite chemistry-built molecules has been shown to increase with the length of the oligonucleotide.

Our capabilities in RNA ligase engineering have been in development throughout 2023 via customized evolution programs with medium and large pharmaceutical customers developing RNAi therapeutics.

The dsRNA ligase is our early market entry into the RNAi therapeutics manufacturing market.

In addition to potentially improving upon the wildtype ligation-based approaches currently available, our dsRNA ligase will serve as a way to introduce our ECO Synthesis TM manufacturing platform to customers who want to begin utilizing an enzymatic approach to the manufacture of RNAi therapeutics.

Other Differentiated Enzymes

In addition to DNA/RNA synthesis applications, we have also applied our CodeEvolver ® technology platform to develop customized enzymes for customers using NGS and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications.

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

("Roche") with an improved DNA ligase (EvoT4™ DNA ligase) for NGS library prep, which continues to progress towards commercialization in new NGS kits.

In June 2020, we entered into a co-marketing and enzyme supply collaboration agreement with Alphazyme LLC for the production and co-marketing of enzymes for life science applications.

("Roche ” ) with an evolved DNA ligase for NGS library prep.

In February 2024, we entered into a new license agreement with Roche granting them rights to our newly engineered DNA ligase, superseding our prior agreement in December 2019 for our evolved T4 DNA ligase.

We are eligible to receive an aggregate of mid-single digit millions in upfront and technical milestones payments.

This is consistent with our business strategy to focus our resources on high-value opportunities in pharmaceutical manufacturing and the ECO Synthesis™ manufacturing platform while monetizing non-core assets within our Life Sciences portfolio.

In June 2020, we entered into a co-marketing and enzyme supply collaboration agreement with Alphazyme LLC ( “ Alphazyme ” ) for the production and co-marketing of enzymes for life science applications.

Since then, this collaboration has enabled the commercialization of Codex ® HiFi DNA Polymerase, Codex ® HiFi Hot Start DNA Polymerase, Codex ® HiFi Hot Start 2X NGS Mix, Codex ® HiCap RNA Polymerase, Codex ® HiFi UL DNA Polymerase, and Codex ® HiTemp Reverse Transcriptase.

Development of other novel enzymes for life science applications continues.

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

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

At that time, we purchased $1.0 million in MAI’s Series A financing and John Nicols, the Codexis’ then President and CEO, and current director, joined MAI’s board of directors.

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

(“MAI ” ) (the “MAI Agreement”), and between June 2020 and April 2022, we leveraged our CodeEvolver ® technology platform to improve the DNA polymerase enzymes that are critical for enzymatic DNA synthesis.

At the time we entered into the MAI Agreement, we purchased $1.0 million in MAI’s Series A financing.

In April 2021, Codexis invested an additional $0.6 million in MAI’s Series A financing and, in September 2021, Codexis invested an additional $7.0 million in MAI’s Series B financing.

As of December 31, 2022, we currently hold 5,443,734 shares of MAI Series A preferred stock and 12,848,635 shares of MAI Series B preferred stock.

In April 2022, we and MAI announced that, using our CodeEvolver ® platform technology, we had developed a novel, engineered terminal deoxynucleotidyl transferase (“TdT”) enzyme which would enable MAI’s Fully Enzymatic Synthesis™ (“FES™”) technology that produces highly pure, sequence-specific DNA on demand.

In April 2022, we and MAI announced that, using our CodeEvolver ® technology platform, we had developed a novel, engineered terminal deoxynucleotidyl transferase (“TdT”) enzyme which would enable MAI’s Fully Enzymatic Synthesis™ (“FES™”) technology that produces highly pure, sequence-specific DNA on demand.

In August 2022, we and MAI announced that we had entered into a Commercial License and Enzyme Supply Agreement with MAI (the “MAI Supply Agreement”) under which Codexis shall manufacture and sell the TdT enzyme to MAI for use in native DNA synthesis.

In connection with the execution of the MAI Supply Agreement, we received a milestone payment of $1.0 million in the form of an additional 1,587,049 shares of Series B preferred stock pursuant to the MAI Agreement.

In March 2022, we announced the initiation of a strategic partnership with seqWell Inc., a developer of transformative library preparation products for demanding genomics plan application, which included an investment to accelerate the commercialization of seqWell’s genomics workflow solutions.

Codexis and seqWell plan to collaborate on using our CodeEvolver ® platform technology for enzyme optimization with seqWell’s growing portfolio of genomics workflow and library preparation products.

As part of this partnership, we led seqWell’s Series C financing with a $5.0 million investment.

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

• Creating and advancing novel biotherapeutic drug candidates.

We intend to continue to pursue opportunities to apply our protein engineering capabilities to the creation and development of novel biotherapeutic drug candidates.

In addition, we intend to extend our biotherapeutics pipeline by developing, with our partner Takeda and developing internally, novel gene therapies and transgene products.

• Growing our pharmaceutical manufacturing business.

In connection with the execution of the MAI Supply Agreement, we received a milestone payment of $1.0 million in the form of an additional 1,587,049 shares of MAI Series B preferred stock pursuant to the MAI Agreement.

In March 2023, we purchased an additional 985,545 shares of MAI Series B preferred stock for $0.8 million.

As of December 31, 2023 , we held 5,443,734 shares of MAI Series A preferred stock and 13,834,180 shares of MAI Series B preferred stock, for an aggregate of 19,277,914 shares of MAI's Series A and B preferred stock earned or purchased from MAI.

In March 2022, we entered into a Stock Purchase Agreement with seqWell, Inc.

(“seqWell”), a privately held life sciences company, pursuant to which we purchased 1,000,000 shares of seqWell's Series C preferred stock for $5.0 million .

In March 2023, we entered into a Master Collaboration Agreement and Research Agreement with seqWell (the “seqWell Agreement”), pursuant to which we are providing research and experimental screening and protein engineering activities in exchange for compensation in the form of additional shares of seqWell's common stock.

W e received 205,279 shares of seqWell's common stock from research and development services with seqWell i n the year ended December 31, 2023.

In addition to our initial equity investment and the shares we have received under the seqWell Agreement, in September 2023, we purchased an additional 88,256 shares of seqWell's Series C-1 preferred stock and 44,128 common stock warrants for $0.4 million .

In December 2023, we announced that we have entered into an exclusive licensing agreement with Aldevron LLC ( “ Aldevron ” ), a global leader in the custom development and manufacture of plasmid DNA, RNA and proteins for the biotech industry, whereby Aldevron licensed our Codex® HiCap RNA Polymerase.

Under the terms of the deal, Aldevron received global manufacturing and commercialization rights to the Codex® HiCap RNA Polymerase in exchange for payments for near-term technical milestones, along with commercial milestones and sales-based royalties for research use only material as well as good manufacturing practices ( “ GMP ” ) material.

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

• Growing our foundational revenue-generating pharmaceutical manufacturing business.

We intend to continue to pursue opportunities in the pharmaceutical market to use our enzymes to reduce the costs for manufacturing small molecule drugs.

We intend to increase the number of pharmaceutical customers and processes that utilize and benefit from our novel, cost-saving enzyme biocatalyst solutions.

• Developing high-performance enzymes for use in life science applications and nucleic acid synthesis .

We intend to offer high-performance enzymes to customers using NGS and PCR/qPCR for in vitro molecular diagnostic applications and to enable the future of enzymatic nucleic acid synthesis.

• Developing and commercializing high-performance enzymes for use in nucleic acid synthesis, including our dsRNA Ligase and our proprietary ECO Synthesis™ manufacturing platform .

We intend to enable fully enzymatic nucleic acid synthesis, which includes the development of o ur proprietary ECO Synthesis™ manufacturing platform to manufacture RNAi therapeutics at commercial scale through an enzymatic route, including enabling enzymes to manufacture the building blocks, starter materials, and targeting moieties.

• Monetizing non-core assets and leveraging channel partners with strong commercial reach to drive penetration of other developed, non-core enzymes.

Consistent with our strategy to focus on programs that we believe have the strongest probability of creating significant value in the near-term and beyond, we continue to look for opportunities to monetize non-core assets and to leverage channel partners with stronger commercial reach to drive penetration of other developed, non-core life sciences enzymes.

Recent examples of this strategy include monetizing CDX-7108 through the purchase agreement with Nestl é and the exclusive licensing agreement with Aldevron for our Codex® HiCap RNA Polymerase, both of which were announced in December 2023, as well as the exclusive licensing agreement with Roche in February 2024 for the newly engineered DNA ligase.

Strategic Collaborations

Biotherapeutics

Nestlé Health Science

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

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

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

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

PKU can result in severe HPA.

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

Upon exercising its option, Nestlé Health Science assumed all responsibilities for future clinical development and commercialization of CDX-6114, with the exception of the completion of an extension study, CDX-6114-004, which was substantially completed in the fourth quarter of 2019.

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

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

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

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

The term of the Nestlé SCA has been extended through December 2023 with automatic renewal through December 2024 .

In January 2020, we entered into the Nestlé development agreement (the “ Nestlé DA ” ) pursuant to which we and Nestlé Health Science are collaborating to advance CDX-7108 into preclinical and early clinical studies.

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

The term of the Nestlé DA has been extended through December 2023 with automatic renewal through December 2024.

Shire Human Genetic Therapies/Takeda Pharmaceutical

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

On execution of the Takeda Agreement, we received an upfront nonrefundable cash payment of $8.5 million and we initiated activities under three Program Plans for Fabry Disease, Pompe Disease, and an unnamed blood factor disorder, respectively (the “Initial Programs”).

We are primarily responsible for the research and development of protein sequences under the Program Plans (the “Protein Sequences”) and we are eligible to earn up to $10.5 million of resea rch and development fees and preclinical milestone payments for the Initial Programs.

We will own all rights to the protein sequences and corresponding nucleic acid sequences and related intellectual property rights and Takeda will own all rights to products and related intellectual property rights.

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

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

We are also eligible to receive up t o $3.4 million o f research and development fees and preclinical milestone payments for the fourth program under the Takeda Agreement.

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

We also granted to Takeda a limited non-exclusive, worldwide, sublicensable license (a) to research the protein sequences within or outside the applicable Fields and (b) to research the products outside of the applicable Fields, which such rights exclude Takeda's right to perform any IND-enabling activities.

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

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

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

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

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

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

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

Pursuant to the Takeda Agreement, we are eligible to receive other payments that include (i) clinical development and commercialization-based milestones, per target gene, of up to $104.0 million and (ii) tiered royalty payments based on net sales of applicable products at percentages ranging from the mid-single digits to low single-digits.

Licensing Our CodeEvolver ® Enzyme Engineering Technology Platform

Licensing Our CodeEvolver ® Directed Evolution Technology Platform

GlaxoSmithKline

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

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

Under this agreement, we have the potential to receive contingent payments that range from $5.75 million to $38.5 million per project based on GSK's successful application of the licensed technology.

We are also eligible to receive royalties based on net sales, if any, of a limited set of products developed by GSK using our CodeEvolver ® enzyme engineering technology platform.

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

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

Under this agreement, we have the potential to receive contingent payments that range from $5.75 million to $38.5 million per project, dependent on GSK's successful application of the licensed technology.

We are also eligible to receive royalties based on net sales, if any, of a limited set of products developed by GSK using our CodeEvolver ® technology platform.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Under the terms of the Novartis CodeEvolver ® Agreement, we granted to Novartis a worldwide license to use certain patents, patent applications and know-how from our CodeEvolver ® technology platform to research, develop and manufacture novel enzymes for use by or on behalf of Novartis as biocatalysts in the chemical synthesis of small molecule and bioconjugate APIs.

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

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

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

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

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

We also have the potential to receive quantity-dependent, usage payments for each API that is manufactured by Novartis using one or more enzymes that have been developed or are in development using the CodeEvolver ® platform technology during the period that began on the conclusion of the Technology Transfer Period and ends on the expiration date of the last to expire licensed patent.

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 (the “Improvements Term”), Novartis will pay us annual payments over four years which amount to an additional $8.0 million in aggregate.

We also have the potential to receive quantity-dependent, usage payments for each API that is manufactured by Novartis using one or more enzymes that have been developed or are in development using the CodeEvolver ® technology platform during the period beginning on the conclusion of the Technology Transfer Period and ending on the expiration date of the last to expire licensed patent.

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

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

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

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

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

INTELLECTUAL PROPERTY

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Likewise, in the generic pharmaceutical area, protection of our proprietary technology, products and services directed to our enzymes and methods of producing pharmaceutical products, through patent or trade secret laws or other legal protections is important for us and our customers to maintain a lower cost production advantage over competitors.

As of December 31, 2022, we owned or controlled approximately 2,090 issued patents and pending patent applications in the United States and in various foreign jurisdictions, many of which are directed to our enabling technologies and specific methods and products that support our business in the pharmaceutical markets.

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

Our patents and pending patent applications, if issued, have terms that expire between 2023 and approximately 2043.

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

As of December 31, 2023, we owned or controlled approximate ly 1,990 active issued patents and pending patent applications in the United States and in various foreign jurisdictions, many of which are directed to our enabling technologies and specific methods and products that support our business in the pharmaceutical and oligonucleotide synthesis markets.

This portfolio also includes patents and pending patent applications in the biotherapeutics, mo lecular diagnostics, and other markets.

As of December 31, 2023, our patents and pending patent applications, if issued, have terms that expire between 2024 and approximately 2044.

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

It is possible that some U.S.

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

It is also possible that some patents and patent applications (if issued) in other jurisdictions will be entitled to additional patent term.

It is also possible that some patents and patent applications (if issued) in other jurisdictions will be entitled to additional patent terms.

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

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

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

As of December 31, 2022, we owned approximately 100 trademark registrations in the United States and foreign jurisdictions, as well as many common law trademarks.

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

As of December 31, 2023, we owned approximately 100 trademark registrations in the United States and foreign jurisdictions, as well as various common law trademarks.

These include, but are not limited to:

Codexis ® , Codex ® , CodeEvolver ® , Mosaic ® , Sage ® , Microcyp ® , MCYP ® , ProSAR ® , Unlock the Power of Proteins ® , the Codexis Protein Engineering Experts ® logo, Strategist ® , Continuity ® , Ameli ® , Forager ® , Analogene ® , Harvester ® , Atoms ® , Riptide ® , APS ® and a Codexis design mark (i.e., the stylized Codexis logo).

We face differing forms of competition in the biotherapeutics, pharmaceutical manufacturing and life sciences markets, as set forth below.

Biotherapeutics

There are other companies that participate in the biotherapeutics market generally and the PKU market specifically.

Many of these companies are large, successful and well-capitalized.

BioMarin Pharmaceutical Inc.

(“BioMarin”) and Daiichi Sankyo Company market Kuvan ® in the United States, Europe and Japan for the treatment of a certain type of PKU.

In addition, BioMarin had gained FDA approval in May 2018 and began the commercial sales of Palynziq ® , an injectable enzyme substitution therapy to address different options for care in the treatment of PKU.

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

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

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

There are numerous companies that are developing other forms of therapeutics, such as small molecules, gene therapy, as well as therapies based on gene editing, which could compete with biotherapeutics.

There are several companies developing or marketing pancreatic enzyme replacement therapies (PERTs) for the treatment of exocrine pancreatic insufficiency (EPI).

Approved products derived from porcine pancreas and taken orally with meals include:

Creon ® (marketed by Abbvie in the US, and by Abbott in the EU, China, Taiwan, Japan, and India), Zenpep ® (marketed by Nestlé in the US and EU), Pancreaze ® (marketed by Vivus in the US), and Pertzye ® (marketed by Chiesi in the US).

There are also companies developing recombinant PERTs for treating EPI.

First Wave Biopharma is presently testing a recombinant lipase enzyme, adrulipase, in Phase 2 clinical trials.

There are also therapies in pre-clinical development for EPI treatment, including SNSP003 (developed by Synspira Therapeutics), a combination of purified lipase, amylase, and protease, in collaboration with the Cystic Fibrosis Foundation.

Current marketed PERT therapies as well as potential future PERT therapies in development could compete with CDX-7108.

We face differing forms of competition in pharmaceutical manufacturing and RNAi therapeutics manufacturing, as set forth below.

Performance Enzyme

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We market our biocatalyst products and services to manufacturers of small molecule pharmaceutical intermediates and APIs.

Our primary competitors in that market are companies marketing either conventional, non-enzymatic catalysts or alternative biocatalyst products and services, or from full service contract development and manufacturing service providers (“CDMOs”) offering conventional chemistry approaches to the production of APIs.

We also sometimes face competition from existing in-house technologies (both biocatalysts and conventional chemistries) within our client and potential client companies.

The principal methods of competition and competitive differentiation in this market are price, product quality and performance, including manufacturing yield, safety and environmental benefits and speed of delivery of product.

Pharmaceutical manufacturers that use biocatalytic processes can face competition from manufacturers that use more conventional processes and/or manufacturers that are based in regions (such as India and China) with lower regulatory, safety and environmental costs.

Our primary competitors in that market are companies marketing either conventional, non-enzymatic catalysts or alternative biocatalyst products and services, or from full-service CDMOs offering conventional chemistry approaches to the production of APIs.

We also face competition from existing in-house technologies (both biocatalysis and conventional chemistries) within our client and potential client companies.

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

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

There is competition from large industrial enzyme companies, as well as subsidiaries of larger contract research/contract manufacturing organizations, such as Royal DSM N.V.

(“DSM”), Cambrex Corporation, Lonza, WuXi STA and Almac Group Ltd.

Some fermentation pathway design companies, such as Zymergen, which was acquired by Gingko BioWorks, and Amyris, whose traditional focus has been to design microorganisms that express small molecule chemicals, could extend into designing organisms that express enzymes.

There is also competition in the enzyme customization and optimization area from several smaller companies, such as BRAIN AG, Arzeda, c-LEcta GmbH and evoxx technologies GmbH.

There is competition from large industrial enzyme companies, as well as subsidiaries of larger contract research/contract manufacturing organizations, such as DSM Firmenich, Cambrex Corporation, Lonza, WuXi STA and Almac Group Ltd.

Some fermentation pathway design companies, such as Ginkgo Bioworks, whose traditional focus has been to design microorganisms that express small molecule chemicals, could extend into designing organisms that express enzymes.

There is also competition in the enzyme customization and optimization area from several smaller companies, such as BRAIN AG, evoxx technologies GmbH, c-LEcta GmbH, Enzymicals AG, and Enzymaster.

The market for the manufacture and supply of APIs and intermediates is large, with many established companies.

These companies include many of our large innovator and generic pharmaceutical customers, such as Merck, GSK, Novartis, Pfizer Inc.

("Pfizer"), Bristol-Myers Squibb Company ("Bristol-Myers"), KYORIN Pharmaceutical Co., Ltd.

("Kyorin"), Urovant Sciences GmbH ("Urovant"), and Teva Pharmaceutical Industries Limited ("Teva") , which have significant internal research and development efforts directed at developing processes to manufacture APIs and intermediates for use in their drug product manufacturing.

There is also a large network of contract (development &) manufacturing organizations (“C(D)MOs”) servicing the innovator companies with supply of APIs and/or intermediates, These C(D)MOs include Cambrex Corporation, Lonza, WuXi STA and Almac Group Ltd, among many others.

These companies include many of our large innovator and generic pharmaceutical customers, such as Merck, GSK, Novartis, Pfizer, Bristol-Myers Squibb Company ("Bristol-Myers"), Kyorin, Urovant, and Teva Pharmaceutical Industries Limited ("Teva") , which have significant internal research and development efforts directed at developing processes to manufacture APIs and intermediates for use in their drug product manufacturing.

There is also a large network of CDMOs servicing the innovator companies with supply of APIs and/or intermediates.

These C(D)MOs include Cambrex Corporation, Asymchem, WuXi STA and Almac Group Ltd, among many others.

The processes used by these companies (both C(D)MOs and innovators) include classical organic chemistry reactions, chemo-catalytic reactions, biocatalytic reactions or combinations thereof.

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This capability has allowed us to create a breadth of biocatalysts with improved performance characteristics including, for example, better activity, stability, and activity on a range of substrates, compared to traditional chemistry-based manufacturing processes and naturally occurring (and thus not optimized) biocatalysts.

We believe that our CodeEvolver ® enzyme engineering platform technology provides substantially superior results, in shorter time frames, than companies offering competing biocatalyst development services.

Life Sciences

Our Life Sciences business is focused in two key areas, nucleic acid manufacturing and genomics.

We supply engineered enzymes and custom services to manufacturers of messenger RNA (“mRNA”), small interfering RNA (“RNAi”), antisense oligonucleotides (“ASOs”), and other RNA-based molecules as well as manufacturers of next generation sequencing (“NGS”) workflows and kits, in vitro diagnostics (“IVD”), and molecular diagnostic assays.

Several of our competitors, such as ThermoFisher Scientific, Roche Diagnostics (a division of Roche Holding AG), New England Biolabs (“NEB”), and QIAGEN group offer a wide diversity of products across the life sciences market, including products that support multiple applications in RNA manufacturing and genomics.

We also compete with companies that are more focused on offering products and services for RNA manufacturing, such as Aldevron (a Danaher company) as well as companies focused on providing enzymes and services to genomic sequencing applications, such as Promega Corporation and Watchmaker Genomics.

The life science industry has seen great technological leaps since the introduction of enzymes into laboratory and clinical workflows and we recognize the importance of enzymes in this market and the need for purpose-fit, robust, and highly active enzymes that are made possible with our core technology.

We believe that our CodeEvolver ® technology platform can provide substantially superior results, in shorter time frames, than companies offering competing biocatalyst development services.

ECO Synthesis TM Manufacturing Platform for RNAi Therapeutics

Following the restructuring of our business announced in July 2023, our Life Sciences business is now primarily focused on RNAi therapeutics manufacturing as we develop and commercialize the ECO Synthesis™ manufacturing platform.

Phosphoramidite chemistry is the current and long-established industry standard for the manufacture of RNAi therapeutics, examples including antisense oligonucleotides ( “ ASO ” ), small-interfering RNA ( “ siRNA ” ), RNA aptamers, and guide RNA ( “ gRNA ” ).

Primary competitors in this space include CDMOs, such as Agilent Technologies, which has made significant capital investment to expand their RNA manufacturing capabilities using phosphoramidite chemistry.

In addition, CDMOs and large pharmaceutical companies are seeking to make incremental improvements to phosphoramidite chemistry, including the development of ligation-based approaches, liquid-phase synthesis, and solvent recycling.

There are also multiple early-stage competitors who are pursuing fully enzymatic approaches to the manufacture of RNA, including EnPlusOne, a private startup company, and a UK-based consortium led by the Centre for Process Innovation ( “ CPI ”) and consisting of multiple academic and research organizations, including The University of Manchester and large pharmaceutical companies, including AstraZeneca plc and Novartis.

Core Technology

We are a leader in the field of enzyme engineering to create novel enzymes.

Each of our segments rely on our core technology.

We are a leader in the field of enzyme engineering to create novel enzymes, and our work across Pharmaceutical Manufacturing and the Eco Synthesis TM manufacturing platform relies on our core technology.

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

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

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

For example, we are aware that other companies, includin g Ginkgo Bioworks, BRAIN, Enzymaster, and Enzymicals AG have alternative methods for obtaining and generating genetic diversity or use mutagenesis techniques to produce genetic diversity.

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

This field is highly competitive with companies and academic and research institutions actively seeking to develop technologies that could be competitive with our technologies.

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Our technologies and products may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors.

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

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

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

Additionally, we have licensed our proprietary CodeEvolver ® enzyme engineering technology platform to global pharmaceutical companies enabling them to use this technology, in house, to engineer enzymes for their own businesses.

Additionally, we have licensed our proprietary CodeEvolver ® technology platform to global pharmaceutical companies enabling them to use this technology, in-house, to engineer enzymes for their own businesses.

We rely on certain key customers for a significant portion of our total revenues and our accounts receivable balances.

For the year ended December 31, 2023, two customers accounted for approximately 22% and 13% of our total revenues.

As of December 31, 2023, four customers accounted for approximately 21%, 13%, 12% and 12% of our accounts receivable balances.

For more information, see Note 15, “Segment, Geographical and Other Revenue Information” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

Our corporate headquarters are located in Redwood City, California and provide general administrative support to our business and are the center of our research, development and business operations.

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

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

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

In September 2023, we announced that we had entered into an agreement for the assignment and assumption of lease for our San Carlos, California facility.

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

As part of the restructuring of our business announced in July 2023, we consolidated operations to our Redwood City headquarters and discontinued investment in biotherapeutics.

For additional information on the San Carlos facility, s ee Note 13, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

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

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

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

Manufacturing of our enzymes is conducted primarily in four locations:

at our in-house facility in Redwood City, California and at third-party contract manufacturing organizations , Lactosan GmbH & Co.

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

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

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

(“ACSD”) (formerly known as DPhar S.p.A.) in Anagni, Italy, and Alphazyme in Jupiter, Florida, United States.

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

GOVERNMENT REGULATION

In the United States, the FDA extensively regulates, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of drug and biologic products under the Federal Food, Drug and Cosmetic Act, its implementing regulations and other laws, including, in the case of biologics, the Public Health Service Act.

Our biotherapeutic product candidates are subject to regulation by the FDA as biologics.

Biologics require the submission of a biologics license application (“BLA”) and licensure, which constitutes approval, by the FDA before being marketed in the United States.

We, along with third-party contractors and our collaborators, will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.

Our enzymes are used by pharmaceutical and biopharmaceutical companies in the manufacture of their drug or biologic product candidates and finished products.

In the United States, the manufacture, distribution, marketing, and sale of drug products and the provision of certain services for development-stage pharmaceutical and biotechnology products are subject to extensive ongoing regulation by the United States Food and Drug Administration (“FDA”), the United States Department of Health and Human Services (“HHS”), state boards of pharmacy, state health departments, various accrediting bodies, and similar regulatory authorities in other countries, including laws and regulations governing bribery, fraud, kickbacks, and false claims.

The costs associated with complying with the various applicable federal, state, local, national, and international laws and regulations could be significant, and the failure to comply with such legal requirements could have an adverse effect on our results of operations and financial condition.

The FDA extensively regulates, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of drug and biologic products under the Federal Food, Drug and Cosmetic Act, its implementing regulations and other laws, including, in the case of biologics, the Public Health Service Act.

Our third-party contractors, collaborators, and customers will be required to navigate the various preclinical, clinical and commercial approval requirements of the governing regulatory agencies of the countries in which they wish to conduct studies or seek approval or licensure of their product candidates, which may include regulatory inspections for compliance with current good manufacturing practices (“cGMP”).

The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

The process required by the FDA before a biologic product may be marketed in the United States generally involves the following:

• completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s good laboratory practice (“GLP”) regulations;

This regulatory scrutiny results in our customers imposing rigorous quality and other requirements on us as their supplier through supplier qualification processes and customer contracts and specifications.

The process required by the FDA before a drug or biologic may be marketed in the United States generally involves the following:

• completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s good laboratory practice regulations;

• submission to the FDA of an IND, which must become effective before clinical trials in the United States may begin;

• approval by an institutional review board (“IRB”), or ethics committee at each clinical site before the trial is commenced;

• performance of adequate and well-controlled human clinical trials to establish the safety and potency of the product candidate for each proposed indication, conducted in accordance with the FDA’s good clinical practice (“GCP”) regulations;

• preparation and submission to the FDA of a BLA after completion of all pivotal clinical trials:

• satisfactory completion of an FDA Advisory Committee review, if applicable;

• a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;

• satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice (“cGMP”) regulations and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCPs;

• FDA review and approval of the BLA prior to any commercial marketing, sale or distribution of the product.

Preclinical and Clinical Trials

Once a product candidate is identified for development, it enters the preclinical testing stage.

Preclinical studies include laboratory evaluations of drug chemistry, formulation and stability, as well as studies to evaluate toxicity in animals, which must be conducted in accordance with GLP requirements.

The results of preclinical studies, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND.

An IND is a request for authorization from the FDA to administer an investigational new drug to humans.

The central focus of an IND submission is on the general investigational plan and the protocol(s) for clinical studies.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks, and imposes a clinical hold.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

A separate submission to an existing IND must also be made for each successive clinical trial conducted during product development, and the FDA must grant permission, either explicitly or implicitly by not objecting, before each clinical trial can begin.

Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse events, findings from other studies or animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

Clinical trials involve the administration of the product candidate to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical study.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial and the parameters and criteria to be used in monitoring safety and evaluating effectiveness.

Each protocol must be submitted to the FDA as part of the IND.

An independent IRB for each investigator site proposing to participate in a clinical trial must also review and approve the clinical trial and its informed consent form before it can begin at that site, and the IRB must monitor the clinical trial until it is completed.

The FDA, the IRB, or the sponsor may suspend or discontinue a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meet its stated objectives.

Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy.

There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.

For purposes of BLA approval, clinical trials are typically conducted in three sequential phases, which may overlap or be combined.

• Phase 1 - Phase 1 clinical trials involve initial introduction of the investigational product into healthy human subjects or patients with the target disease or condition.

These studies are typically designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

• Phase 2 - Phase 2 clinical trials typically involve administration of the investigational product to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosage and dosing schedule and to identify possible adverse side effects and safety risks.

• Phase 3 - Phase 3 clinical trials typically involve administration of the investigational product to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval and physician labeling.

In some cases, the FDA may condition approval of a BLA on the sponsor’s agreement to conduct additional clinical trials to further assess the biologic’s safety and effectiveness after BLA approval.

Such post-approval clinical trials are typically referred to as Phase 4 clinical trials.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the biologic and finalize a process for manufacturing the biologic in commercial quantities in accordance with cGMP requirements.

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

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

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

For example, a sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND.

BLA Submission and FDA Review

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

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

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

The submission of a BLA requires payment of a substantial user fee unless a waiver is granted.

Each BLA submitted to the FDA is reviewed for administrative completeness and reviewability within 60 days of the FDA’s receipt of the application.

If the BLA is found to be complete, the FDA will file the BLA, triggering a full substantive review of the application.

The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission.

Once a BLA has been accepted for filing under the Prescription Drug User Fee Act, the FDA has a goal of reviewing BLAs within ten months of the 60-day filing date for BLAs designated for standard review or six months for priority review, but the overall timeframe is often extended by FDA requests for additional information or clarification.

The FDA reviews a BLA to determine, among other things, whether the biological product is safe, pure and potent and whether the facility or facilities in which it is manufactured meet standards designed to assure the product’s continued safety, purity and potency.

The FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved.

The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations.

Before approving a BLA, the FDA will inspect the facility or the facilities at which the biologic product is manufactured, and will not license the product unless cGMP compliance is satisfactory.

The FDA may also inspect the sites at which the clinical trials were conducted to assess their compliance with GCP requirements, and will not license the biologic unless compliance with such requirements is satisfactory.

If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information.

Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response Letter (“CRL”).

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

A CRL will describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.

In issuing the CRL, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification.

The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed.

For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy (“REMS”), to ensure the benefits of the product outweigh its risks.

A REMS is a safety strategy implemented to manage a known or potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.

Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace.

The FDA may require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies.

Expedited Development and Review Programs

The FDA maintains several programs intended to facilitate and expedite development and review of new drugs and biologics designed to address unmet medical needs in the treatment of serious or life-threatening diseases or conditions.

For example, a product candidate is eligible for Fast Track designation if it is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address unmet medical needs for such disease or condition.

Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied.

Fast Track designation provides increased opportunities for sponsor meetings with the FDA during preclinical and clinical development, in addition to the potential for rolling review once a marketing application is filed, meaning that the FDA may review portions of the marketing application before the sponsor submits the complete application, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.

In addition, a product candidate may be eligible for Breakthrough Therapy designation if it is intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product candidate may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

Breakthrough Therapy designation provides all the features of Fast Track designation in addition to intensive guidance on an efficient development program beginning as early as Phase 1, and FDA organizational commitment to expedited development, including involvement of senior managers and experienced review staff in a cross-disciplinary review, where appropriate.

Any product candidate submitted to the FDA for approval, including a product candidate with Fast Track or Breakthrough Therapy designation, may also be eligible for additional FDA programs intended to expedite the review process, including Priority Review designation and Accelerated Approval.

A BLA is eligible for Priority Review if the product candidate is designed to treat a serious or life-threatening disease or condition, and if approved, would provide a significant improvement in safety or effectiveness in the treatment, diagnosis or prevention of a serious disease or condition.

Additionally, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive Accelerated Approval if they can be shown to have an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or an effect on a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality which is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.

Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit.

In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

Fast Track designation, Breakthrough Therapy designation, Priority Review designation and Accelerated Approval do not change the standards for approval but may expedite the development or review process.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 individuals in the United States and when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic.

Orphan drug designation must be requested before submitting a BLA.

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

If a product candidate that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated.

Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee.

A designated orphan drug many not receive orphan drug exclusivity if it is approved for a use that is broader than the disease or condition for which it received orphan designation.

In addition, orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or, as noted above, if a second applicant demonstrates that its product is clinically superior to the approved product with orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Emergency Use Authorization

The Commissioner of the FDA, under delegated authority from the Secretary of HHS may, under certain circumstances in connection with a declared public health emergency, allow for the marketing of a product that does not otherwise comply with FDA regulations by issuing an EUA for such product.

Before an EUA may be issued by HHS, the Secretary must declare an emergency based a determination that public health emergency exists that effects or has the significant potential to affect, national security, and that involves a specified biological, chemical, radiological, or nuclear agent or agents (“CBRN”), or a specified disease or condition that may be attributable to such CBRN.

On February 4, 2020, the HHS Secretary determined that there is such a public health emergency that involves the virus now known as SARS-CoV-2, the virus that causes the COVID-19 infection.

Once the determination of the threat or emergency has been made, the Secretary of HHS must then declare that an emergency exists justifying the issuance of EUAs for certain types of products (referred to as EUA declarations).

On March 27, 2020, the Secretary of HHS declared – on the basis of his determination of a public health emergency that has the potential to affect national security or the health and security of U.S.

citizens living abroad that involves SARS-CoV-2 – that circumstances exist justifying authorization of drugs and biologics during the COVID-19 pandemic, subject to the terms of any EUA that is issued.

Once an EUA declaration has been issued, the FDA can issue EUAs for products that fall within the scope of that declaration.

To issue an EUA, the FDA Commissioner must conclude that (1) the CBRN that is referred to in the EUA declaration can cause serious or life-threatening diseases or conditions;

(2) based on the totality of scientific evidence available, it is reasonable to believe that the product may be effective in diagnosing, treating, or preventing the disease or condition attributable to the CBRN and that the product’s known and potential benefits outweigh its known and potential risks;

and (3) there is no adequate, approved, and available alternative to the product.

Products subject to an EUA must still comply with the conditions of the EUA, including labeling and marketing requirements.

Moreover, the authorization to market products under an EUA is limited to the period of time the EUA declaration is in effect, and the FDA can revoke an EUA in certain circumstances.

Rare Pediatric Disease Priority Review Voucher Program

In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications.

This program is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases.

Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.

The sponsor of a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor.

The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application.

The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the U.S.

within one year following the date of approval.

For purposes of this program, a “rare pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents;

and (b) rare diseases or conditions within the meaning of the Orphan Drug Act.

On December 27, 2020, the Rare Pediatric Disease Priority Review Voucher Program was extended.

Under the current statutory sunset provisions, after September 30, 2024, FDA may only award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the drug, and that designation was granted by September 30, 2024.

After September 30, 2026, FDA may not award any Rare Pediatric Disease Priority Review Voucher.

Post-Approval Requirements

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

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

Any biologics manufactured or distributed pursuant to FDA approvals remain subject to ongoing regulation by the FDA.

Manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMP, which impose extensive procedural and documentation requirements.

Failure to comply with statutory and regulatory requirements can subject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, product seizures, injunctions, civil penalties or criminal prosecution.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, requirements for post-market studies or clinical trials to assess new safety risks, imposition of distribution or other restrictions under a REMS.

Other potential consequences include, among other things:

• restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

• fines, warning letters, untitled letters, or holds on post-approval clinical trials;

• refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of product approvals;

• product seizure or detention, or refusal to permit the import or export of products;

• mandated modification of promotional materials and labeling and the issuance of corrective information;

• the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product;

• injunctions or the imposition of civil or criminal penalties.

The FDA closely regulates the post-approval marketing and promotion of biologics, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities, and promotional activities involving the internet and social media.

A company can make only those claims relating to safety and efficacy that are approved by the FDA.

Physicians may prescribe legally available biologics for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Such off-label uses are common across medical specialties.

Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances.

The FDA does not regulate the behavior of physicians in their choice of treatments.

The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use.

Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

Biosimilars and Regulatory Exclusivity

As part of the Patient Protection and Affordable Care Act enacted in 2010, as amended by the Health Care and Education Reconciliation Act of 2010, the Biologics Price Competition and Innovation Act (“BPCIA”) established an abbreviated pathway for the approval of biosimilar and interchangeable biological products.

The abbreviated regulatory pathway provides legal authority for the FDA to review and approve biosimilar biologics based on their similarity to an existing brand product, referred to as a reference product, including the possible designation of a biosimilar as interchangeable with a brand product.

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

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

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

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

During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

In addition, the period of exclusivity provided by the BPCIA only operates against third parties seeking approval via the abbreviated pathway, but would not prevent third parties from pursuing approval via the traditional BLA approval pathway.

In addition, a biological product can also obtain pediatric market exclusivity in the United States.

Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms.

This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.

Other Healthcare Laws

Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business and may constrain the financial arrangements and relationships through which we and our partners research, sell, market and distribute any products for which we obtain marketing approval.

Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims and transparency laws regarding drug pricing and payments and other transfer of value to physicians and other healthcare providers.

If their operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and individual imprisonment.

Coverage and Reimbursement

Sales of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors.

Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.

These third-party payors are increasingly reducing reimbursements for medical products, drugs and services.

In addition, the U.S.

government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products.

Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product.

Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product and also have a material adverse effect on sales.

Healthcare Reform

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, each as amended (collectively known as the “ACA”), was enacted, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affected the pharmaceutical industry.

The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and changes to fraud and abuse laws.

For example, the ACA:

• increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the average manufacturer price;

• required collection of rebates for drugs paid by Medicaid managed care organizations;

• required manufacturers to participate in a coverage gap discount program, under which they must agree to offer 70 percent point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

• imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federal government programs.

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

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

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

Other legislative changes have been proposed and adopted since the ACA was enacted.

In March 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory cap on the Medicaid drug rebate, currently set at 100% of a drug’s AMP, beginning January 1, 2024.

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

Most recently, the Inflation Reduction Act of 2022, or IRA, included a number of significant drug pricing reforms, which include the establishment of a drug price negotiation program within the U.S.

Department of Health and Human Services, or HHS (beginning in 2026) that requires manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers under Medicare Parts B and D to penalize price increases that outpace inflation (first due in 2023), and a redesign of the Part D benefit, as part of which manufacturers are required to provide discounts on Part D drugs (beginning in 2025).

The IRA permits the HHS Secretary to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

Additional drug pricing proposals could appear in future legislation.

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

Data Privacy and Security Laws

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

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

In addition, certain foreign laws govern the privacy and security of personal data, including health-related data.

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

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

Cybersecurity

In the normal course of business, we may collect and store personal information and other sensitive information, including proprietary and confidential business information, trade secrets, intellectual property, information regarding trial participants in connection with clinical trials, sensitive third-party information and employee information.

To protect this information, our existing cybersecurity policies require continuous monitoring and detection programs, network security precautions, and in depth security assessment of technology vendors.

We maintain various protections designed to safeguard against cyberattacks, including firewalls and virus detection software.

We have established and regularly test our disaster recovery plan and we protect against business interruption by backing up our major systems.

In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing and engage third parties to assess effectiveness of our data security practices.

A third party security consultant conducts regular network security reviews, scans and audits.

In addition, we maintain insurance that includes cybersecurity coverage.

The program incorporates industry-standard frameworks, policies and practices designed to protect the privacy and security of our sensitive information.

Despite the implementation of our cybersecurity program, our security measures cannot guarantee that a significant cyberattack will not occur.

A successful attack on our information technology systems could have significant consequences to the business.

While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security.

See “Risk Factors – General Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our information technology systems.

• preparation and submission to the FDA of a new drug application ("NDA") or biologics license application ("BLA") after completion of all pivotal clinical trials;

• satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP regulations and to assure that the facilities, methods and controls are adequate to preserve the drug's continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCPs;

• FDA review and approval of the NDA or BLA prior to any commercial marketing, sale or distribution of the product.

Environmental, Health and Safety Regulations

We are responsible for ensuring an environmentally responsible, safe, and healthy workplace.

We are required to abide by all relevant county, state and federal agency regulations for environmental, health and safety requirements and have the necessary procedure, permits, and licenses in place to operate accordingly.

Our contracts with outside suppliers and vendors require compliance with applicable laws and regulations.

HUMAN CAPITAL RESOURCES

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Of these employees, 61 were engaged in research and development, 41 were engaged in operations and quality control and 72 were engaged in selling, general and administrative activities.

None of our employees is represented by a labor union.

None of our employees are represented by a labor union.

Supported by our annual employee survey, we believe our relationship with our employees to be generally good.

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Our goal is to attract, motivate and retain talent with a focus on encouraging performance, promoting accountability and adhering to our company values.

We offer competitive compensation and benefit programs including a company-matched 401(k) Plan, stock options for eligible employees, health savings and flexible spending accounts, paid time off, education and training programs, and employee assistance programs.

We believe it is important to help build community and enabling our employees actively participate in community service projects and in company-sponsored philanthropic activities.

Diversity, inclusion and belonging

We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports the global workforce and the communities we serve.

We offer competitive compensation and benefit programs including a company-matched 401(k) Plan, an Employee Stock Purchase Plan ( “ ESPP ” ), stock options for eligible employees, health savings and flexible spending accounts, paid time off, education and training programs, and employee assistance programs.

Diversity, equity and inclusion

We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports our global workforce and the communities we serve.

We recruit the best people for the job regardless of gender, ethnicity or other protected traits and it is our policy to fully comply with all laws applicable to discrimination in the workplace.

Our diversity, equity and inclusion principles are also reflected in our employee training and policies.

We continue to enhance our diversity, equity and inclusion policies which are guided by our executive leadership team.

We continue to enhance our diversity, equity and inclusion policies which are guided by our executive leadership team, including our commitment to green chemistry, demonstrated, among other things, by our “My Green Lab Certification.

Health and safety

We are committed to maintain a safe and healthy workplace for our employees.

Our policies and practices are intended to protect our employees and surrounding communities in which we operate.

In 2020, in response to the COVID-19 pandemic, we implemented safety protocols and new procedures to protect our employees.

These protocols include complying with social distancing and other health and safety standards as required by state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

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

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

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

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

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

Our policies and practices are intended to protect our employees and the surrounding communities in which we operate.

We continue to monitor COVID-19 local, state, and federal guidance, policies and regulations for changes and we implement modifications to internal guidelines as needed.

In response to the COVID-19 pandemic, we implemented safety protocols and new procedures to protect our employees.

These protocols include health and safety standards as required by state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

CORPORATE & AVAILABLE INFORMATION

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What changed 10-K

Item 1. Business