What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-02 · 81 added, 64 removed, 153 unchanged (49% of the section changed)

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

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

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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.

As of March 31, 2024, we manage our business as one business segment.

As of June 30, 2024, we manage our business as one business segment.

For additional information, see Note 12, “Segment, Geographical and Other Revenue Information” in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.

Recent Developments

Entered into exclusive licensing agreement for newly engineered double-stranded DNA ligase with Roche

On February 26, 2024, we announced that we entered into an agreement with Roche Sequencing Solutions, Inc.

(“Roche”) for an exclusive, global license for the Company’s newly engineered double-stranded DNA (dsDNA) ligase for next-generation sequencing (NGS) library preparation and the Company’s EvoT4™ DNA ligase.

Under the terms of the deal, Codexis will receive upfront and technical milestone payments.

This deal supersedes the prior exclusive license on the EvoT4™ DNA ligase.

Secured $40.0 million in strategic financing deal with Innovatus Capital Partners to further strengthen cash position ahead of key milestones

On February 13, 2024, we announced that we entered into a loan facility agreement with an affiliate of Innovatus Capital Partners, LLC (Innovatus) for up to $40.0 million, including $30.0 million upfront and access to an additional $10.0 million upon achieving certain prespecified revenue thresholds.

Appointment of new members of our Strategic Advisory Board (“SAB”)

On February 20, 2024, we announced the appointment Masad Damha, PhD and Jim Lalonde, PhD to our SAB.

On April 11, 2024, we announced the appointment of Carole Cobb, MBA to our SAB as well.

Damha and Lalonde and Ms.

Cobb join John Maraganore, PhD, the founder and former Chief Executive Officer of Alnylam Pharmaceuticals on our SAB, which is now comprised of experts across oligonucleotide synthesis and manufacturing and was established to help guide the Company’s strategic direction, providing critical insights to inform the continued development of Codexis’ ECO Synthesis™ manufacturing platform.

Finalized Purchase Agreements for Biotherapeutics Assets

In July 2024, we announced that we entered into an asset purchase agreement with Crosswalk Therapeutics for our investigational Fabry and Pompe disease compounds.

Under the terms of the agreement, Codexis is eligible to receive future development and commercial milestone payments in addition to a low-to-mid single-digit percentage net sales-based royalty.

Both programs were previously part of Codexis’ collaboration agreement with Takeda Pharmaceutical Co.

In April 2023, Takeda discontinued its efforts in AAV gene therapy, which included these development programs .

Additionally, in April 2024 we entered into an asset acquisition agreement with another private biotherapeutics company under which we divested assets related to our investigational homocystinuria and maple syrup urine disease programs, and in June 2024, we entered into an asset sale agreement under which we divested assets related to our programs for the GLB1, GBM1, and SGSH genes, and our investigational AAV capsid technology.

Under these agreements, Codexis is eligible to receive milestone and earnout payments.

Presentation of Groundbreaking Enzymatic Synthesis Data at TIDES USA Annual Meeting and Launch of RNA Ligase Screening and Optimization Services

In May 2024, we announced that we successfully synthesized an oligonucleotide via an enzymatic route using our ECO Synthesis™ manufacturing platform from a starter oligonucleotide to the inclusion of a conjugation moiety to support RNA-based therapeutics manufacturing.

We presented data highlighting this manufacturing milestone at the TIDES USA annual meeting in Boston, Massachusetts held from May 14 to 17, 2024.

We also announced the launch of our RNA Ligase Screening and Optimization Services.

Significant Collaborative Arrangements Update

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Pfizer Enzyme Supply Agreement

We are a party to the Pfizer Supply Agreement, covering the manufacture, sale and purchase of CDX-616 for use by Pfizer in the manufacture of nirmatrelvir.

We are a party to an Enzyme Supply Agreement (the “Pfizer Supply Agreement”), with Pfizer Ireland Pharmaceuticals, a subsidiary of Pfizer, Inc.

(“Pfizer”), covering the manufacture, sale and purchase of CDX-616 for use by Pfizer in the manufacture of nirmatrelvir.

Under the terms of the Pfizer Supply Agreement, Pfizer paid us a fee of $25.9 million in August 2022 which was recorded as deferred revenue.

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Up to 50% of any portion of the $25.9 million which has not been credited under items (i) and (ii) is creditable against future orders of CDX-616 used to manufacture PAXLOVID™ with shipment dates in 2024.

No product revenue was recognized from the Pfizer Supply Agreement during the three months ended March 31, 2024 and 2023.

As of March 31, 2024 and December 31, 2023, we had $9.5 million in deferred revenue related to the $25.9 million fee received from Pfizer.

No product revenue was recognized from the Pfizer Supply Agreement during the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023 , we had $9.5 million in deferred revenue related to the $25.9 million fee received from Pfizer.

Strategic Collaboration Agreement

In October 2017, we entered into the Nestlé Strategic Collaboration Agreement (“SCA”) pursuant to which we and Nestlé Health Science have collaborated to leverage the CodeEvolver ® protein engineering technology platform to develop novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas.

The term of the Nestlé SCA has expired in December 2023, as we opted out of a renewal period through December 2024.

In October 2017, we entered into the Nestlé Strategic Collaboration Agreement (the “Nestle SCA”) pursuant to which we and Nestlé Health Science have collaborated to leverage the CodeEvolver ® protein engineering technology platform to develop novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas.

In January 2020, we entered into a development agreement with Nestlé Health Science pursuant to which we and Nestlé Health Science have collaborated to advance a lead candidate discovered through our Nestlé SCA, CDX-7108, targeting exocrine pancreatic insufficiency, into preclinical and early clinical studies.

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In July 2023, we announced plans to discontinue our development support of CDX-7108.

Under the Nestlé SCA and the development agreement, we recognize d nil and $1.8 million in research and development fees for the three months ended March 31, 2024 and 2023, respectively.

Both the Nestlé SCA and development agreement were terminated under the terms of the CDX-7108 Acquisition Agreement with Nestlé Health Science.

Under the Nestlé SCA and the development agreement, we recognized nil in research and development fees for the three and six months ended June 30, 2024, compared to $1.7 million and $3.6 million for the three and six months ended June 30, 2023, respectively.

License Agreement

In February 2024, we entered into an agreement with Roche Sequencing Solutions, Inc.

Under the terms of the deal, Codexis will receive upfront and technical milestone payments.

This deal superseded the prior exclusive license on the EvoT4™ DNA ligase.

We recognized research and development revenue of $6.0 million during the first quarter of 2024 related to the license agreement.

Results of Operations

The following table shows the amounts from our unaudited condensed consolidated statements of operations for the periods presented (in thousands, except percentages):

Three Months Ended March 31, Change

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

2024 2023 $ % 2024 2023 $ %

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Restructuring charges — 72 (72) (100) % — 145 (145) (100) %

Asset impairment and other charges 165 — 165 100 % 165 — 165 100 %

Total costs and operating expenses 30,711 33,949 (3,238) (10) % 59,672 70,596 (10,924) (15) %

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Interest income 972 1,121 (149) (13) % 1,881 2,209 (328) (15) %

Other expense, net (516) (25) (491) 1,964%

Interest and other expense, net

(985) (9) (976) 10,844 % (1,500) (33) (1,467) 4,445 %

Loss before income taxes (22,745) (11,514) (11,231) 98 % (34,239) (34,115) (124) — %

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Revenues are as follows (in thousands, except percentages):

Three Months Ended March 31, Change

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

2024 2023 $ % 2024 2023 $ %

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Considering these industry practices and our experience, we do not believe the total of customer purchase orders outstanding (backlog) provides meaningful information that can be relied on to predict actual sales for future periods.

Total revenues increased by $4.1 million to $17.1 million in the three months ended March 31, 2024 compared to the same period in 2023, or 32%.

Product revenue increased by $1.2 million to $9.6 million in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to higher sales of branded pharmaceutical products.

Research and development revenue increased by $2.9 million to $7.5 million in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to $6.0 million higher revenue from Roche licensing agreement entered into in February 2024.

This was offset by $1.8 million lower research and development fees from Nestlé Health Science under the Nestlé SCA and development agreement and $1.7 million lower revenue from Takeda under the Strategic Collaboration and License Agreement we entered into with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda, in March 2020.

Total revenues decreased by $13.3 million and by $9.3 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to lower product revenue and lower research and development revenue.

Product revenue decreased by $4.8 million and $3.6 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to lower sales of branded pharmaceutical products and with the prior year benefiting from the $2.9 million release of prior periods' product revenue deferrals during the second quarter of 2023 due to early termination of the enzyme supply obligations to a customer for a deprioritized asset related to a prior restructuring of our business.

Research and development revenue decreased by $8.6 million in the three months ended June 30, 2024 compared to the same period in 2023 primarily due to the recognition of $5.7 million in non-cash revenue related to our license and master service agreements with Pfizer in the second quarter of 2023, $1.7 million lower research and development fees from Nestlé Health Science under the Nestlé SCA and development agreement and $1.1 million lower revenue from both legacy and existing collaboration agreements being recognized in 2024 as compared to the same period in the prior year.

Research and development revenue decreased by $5.7 million in the six months ended June 30, 2024 compared to the same period in 2023, primarily due to the recognition of $5.7 million in non-cash revenue related to our license and master service agreements with Pfizer in the six months ended June 30, 2023, $3.6 million lower research and development fees from Nestlé Health Science, $1.8 million lower revenue from Takeda under a Strategic Collaboration and License Agreement and $2.3 million lower revenue from other legacy collaboration agreements being recognized in 2024 as compared to the same period in 2023.

This was offset by $6.0 million higher revenue from our licensing agreement with Roche entered into in February 2024 and $1.8 million higher revenue from existing collaboration agreements recognized in the current year.

Cost and Operating Expenses

The following table shows the amounts of our cost of product revenue, research and development expense, selling, general and administrative expense, and restructuring charges from our unaudited condensed consolidated statements of operations for the periods presented (in thousands, except percentages):

Three Months Ended March 31, Change

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

2024 2023 $ % 2024 2023 $ %

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Restructuring charges — 72 (72) (100) % — 145 (145) (100) %

Asset impairment and other charges 165 — 165 100 % 165 — 165 100 %

Total costs and operating expenses $ 30,711 $ 33,949 $ (3,238) (10) % $ 59,672 $ 70,596 $ (10,924) (15) %

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The following table shows the amounts of our product revenue, cost of product revenue, product gross profit and product gross margin from our unaudited condensed consolidated statements of operations for the periods presented (in thousands, except percentages):

Three Months Ended March 31, Change

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

2024 2023 $ % 2024 2023 $ %

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Product gross margin (%) (2)

45 % 71 % 47 % 60 %

(1) Cost of product revenue consists of both internal and third-party fixed and variable costs, including materials and supplies, labor, facilities and other overhead costs associated with our product revenue.

(2) Product gross margin is used as a performance measure to provide additional information regarding our results of operations on a consolidated basis.

Cost of product revenue increased by $0.3 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to a higher volume of product sales as compared to the same period in prior year.

The product gross margin increased to 49% in the three months ended March 31, 2024 compared to 46% in the three months ended March 31, 2023, primarily due to variability in the product mix.

Cost of product revenue increased by $0.3 million and $0.6 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to variations in product mix.

Product gross margins were 45% and 47% in the three and six months ended June 30, 2024, respectively, compared to 71% and 60% in the corresponding periods in 2023 due to variability in the product mix and with 2023 benefiting from revenue recognized with no related cost in the second quarter of 2023 related to the early termination of an enzyme supply agreement with a customer for a deprioritized asset related to a prior restructuring of our business.

Research and Development Expenses

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Research and development expenses are expensed when incurred.

Research and development expenses were $11.2 million in the first quarter of 2024, a decrease of $5.4 million, or 32%, from $16.7 million in the first quarter of 2023.

This decrease was primarily due to $2.4 million decrease in costs associated with lower headcount, $1.2 million decrease in outside services related to Chemistry, Manufacturing and Controls and regulatory expenses, $1.2 million decrease in lease costs due to the assignment of our San Carlos facility lease during the fourth quarter of 2023, and $0.5 million lower lab supply costs.

Research and development expenses decreased by $5.9 million, or 34%, in the three months ended June 30, 2024 compared to the same period in 2023 primarily due to a $2.3 million decrease in costs associated with lower headcount, $1.8 million decrease from lower use of outside services related to Chemistry, Manufacturing and Controls (“CMC”) and lower regulatory expense s, $1.3 million decrease in lease and facilities costs due to the assignment of our San Carlos facility lease during the fourth quarter of 2023, and $0.2 million lower stock-based compensation costs.

The decrease in research and development expenses of $11.3 million, or 33%, in the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to a $4.8 million decrease in costs associated with lower headcount, $3.0 million decrease in CMC and outside services, $2.8 million de crease from lower lease and facilities associated costs, and $0.5 million lower lab supply costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of employee-related costs, which include salaries and other personnel-related expenses (including stock-based compensation), hiring and training costs, consulting and outside services expenses (including audit and legal counsel related costs), marketing costs, building lease costs, and depreciation expenses and amortization expenses.

Selling, general and administrative expenses were $12.9 million in the first quarter of 2024, a decrease of $2.5 million, or 16%, compared to $15.4 million in the first quarter of 2023.

This decrease was primarily due to $1.6 million decrease in costs associated with lower headcount , $0.7 million in lower consulting and outside services, and $0.2 million of lower marketing and advertising costs.

These were partially offset by a $0.3 million higher stock based compensation expense.

Selling, general and administrative expenses increased by $2.3 million, or 17%, during the three months ended June 30, 2024, compared to the same period in 2023 primarily due to $2.1 million higher stock-based compensation expense, $0.7 million higher legal expense and $0.2 million increase in facilities associated costs, partially offset by a $0.9 million decrease in costs associated with lower headcount.

Selling, general and administrative expenses decreased by $0.2 million, or 1%, during the six months ended June 30, 2024 as compared to the same period in 2023 primarily due to a $2.9 million decrease in costs associated with lower headcount and $0.8 million in lower consulting and outside services, partially offset by $2.5 million higher stock-based compensation expense, a $0.8 million increase in legal costs, and a $0.3 million increase in facilities associated costs.

Restructuring Charges

Restructuring charges consist of one-time employee severance and other termination benefits due to workforce reduction plans that were initiated in the prior years.

There were no restructuring charges recognized in the three months ended March 31, 2024.

Restructuring charges were $0.1 million for the three months ended March 31, 2023.

Interest Income and Other Expense, net (in thousands, except percentages):

Three Months Ended March 31, Change

There were no restructuring charges recognized in the three and six months ended June 30, 2024.

Restructuring charges were $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively.

Asset Impairment and Other Charges

Asset impairment and other charges for the three and six months ended June 30, 2024 was due to a $0.2 million write-down on assets held for sale.

Interest Income and Interest and Other Expense, net (in thousands, except percentages):

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

2024 2023 $ % 2024 2023 $ %

Interest income $ 972 $ 1,121 $ (149) (13) % $ 1,881 $ 2,209 $ (328) (15) %

Other expense, net (516) (25) (491) 1,964%

Total other income, net $ 393 $ 1,064 $ (671) (63)%

Interest and other expense, net

(985) (9) (976) 10,844 % (1,500) (33) (1,467) 4,445 %

Total other income (expense), net

$ (13) $ 1,112 $ (1,125) (101) % $ 381 $ 2,176 $ (1,795) (82) %

Interest Income

Interest income decreased by $0.2 million in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to lower average cash balances.

Other Expense, net

Other expense, net increased by $0.5 million in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to interest related to long-term debt.

Interest income decreased by $0.1 million and $0.3 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to lower average cash balances.

Interest and Other Expense, net

Interest and other expense, net increased by $1.0 million and $1.5 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to interest related to long-term debt.

Provision for Income Taxes (in thousands, except percentages):

Three Months Ended March 31, Change

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

2024 2023 $ % 2024 2023 $ %

Provision for income taxes $ 10 $ 9 $ 1 11 % $ 21 $ 25 $ (4) (16) %

The provision for income taxes for the three months ended March 31, 2024 and 2023, was primarily due to the accrual of interest and penalties on historic uncertain tax positions.

Net loss for the three months ended March 31, 2024 was $11.5 million, or a net loss per basic and diluted share of $0.16.

This compared to a net loss of $22.6 million, or a net loss per basic and diluted share of $0.34 for the three months ended March 31, 2023.

The decrease in net loss is primarily related to higher product and research and development revenues and lower operating expenses.

The provision for income taxes for the three and six months ended June 30, 2024 and 2023, was primarily due to the accrual of interest and penalties on historic uncertain tax positions.

Net loss for the three months ended June 30, 2024 was $22.8 million, or a net loss per basic and diluted share of $0.32.

This compared to a net loss of $11.5 million, or a net loss per basic and diluted share of $0.17, for the three months ended June 30, 2023.

The increase in net loss was primarily related to lower revenue, partially offset by lower operating expenses during the three months ended June 30, 2024.

Net loss for the six months ended June 30, 2024 was $34.3 million, or a net loss per basic and diluted share of $0.49.

This compared to a net loss of $34.1 million, or a net loss per basic and diluted share of $0.51, for the six months ended June 30, 2023.

The increase in net loss was primarily related to lower revenue and higher interest expenses, partially offset by lower operating expenses in 2024.

LIQUIDITY AND CAPITAL RESOURCES

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We have historically funded our operations primarily through cash generated from operations, stock option exercises and public and private offerings of our common stock.

In addition, pursuant to the Loan Agreement, we received $30.0 million from Innovatus, as Lender, on February 13, 2024 and may become eligible to borrow up to an additional $10.0 million upon the achievement of certain financial milestones.

In addition, pursuant to our five-year term loan and security agreement (the “Loan Agreement”) with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”), an affiliate of Innovatus Capital Partners, LLC, we borrowed $30.0 million from Innovatus, as Lender, on February 13, 2024 and may become eligible to borrow up to an additional $10.0 million upon the achievement of certain financial milestones.

The Loan Agreement provides for an aggregate principal amount of up to $40.0 million and with a maturity date of February 13, 2029 (the “Innovatus Loan”).

We actively manage our cash usage and investment of liquid cash to ensure the maintenance of sufficient funds to meet our working capital needs.

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Our primary uses of capital for the foreseeable future, including the next 12 months, are for compensation and related expenses, research and development expenses including manufacturing costs, laboratory and related supplies, legal and other regulatory expenses, and general overhead costs.

The following summarizes our cash and cash equivalents and short-term investments balances and working capital as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

The following summarizes our cash and cash equivalents and short-term investments balances and working capital as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 18,595 $ 65,116

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Sources of Capital

In addition to our existing cash and cash equivalents and revenue generated through our existing operations, we are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives under our collaboration agreements.

In addition to our existing cash and cash equivalents, short-term investments and revenue generated through our existing operations, we are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives under our collaboration agreements.

Our ability to earn these milestone and contingent payments and the timing of achieving these milestones is primarily dependent upon the outcome of our collaborators’ research and development activities and is uncertain at this time .

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We will be eligible to draw on the second tranche of $10.0 million upon achievement of certain milestones including certain pre-specified revenue thresholds.

The Term Loan carries an interest-only period of 36 months and will bear an interest at a floating rate of the sum of (a) the greater of (i) prime rate and (ii) 7.50% , plus (b) 3.25% .

The Loan Agreement carries an interest-only period of 36 months and will bear an interest at a floating rate of the sum of (a) the greater of (i) prime rate and (ii) 7.50% , plus (b) 3.25% .

Sales Agreements

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In 2023, 3,079,421 shares of our common stock were issued and sold pursuant to the EDA, all during the first half of 2023, and we received net proceeds of $7.9 million.

As of March 31, 2024, $41.3 million of shares remained available for sale under the EDA.

The registration statement registering the offer and sale of the shares pursuant to the EDA is set to expire on May 7, 2024.

On April 24, 2024, we terminated the EDA.

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

We intend to file a registration statement on Form S-3 registering the offer and sale of these shares under the Securities Act.

On May 2, 2024, we filed a registration statement on Form S-3 registering the offer and sale of these shares under the Securities Act which became effective on May 14, 2024.

We will pay a commission of up to 3.0% of gross sales proceeds of any common stock sold under the Cantor Sales Agreement.

We have made no sales under the Cantor Sales Agreement and as of June 30, 2024, $75.0 million of shares remained available for sale under the Cantor Sales Agreement.

Sales of our common stock under these arrangements could be subject to business, economic or competitive unce rtainties and contingencies, many of which may be beyond our control, and which could cause actual results from the sale of our common stock to differ materially from expectations.

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If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.

The following is a summary of cash flows for three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

The following is a summary of cash flows for six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30,

Net cash used in operating activities $ (19,957) $ (25,299)

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Cash Flows from Operating Activities

The $1.4 million decrease in net cash used in operations for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to the net effect of decreases in cash paid for operating expenses, primarily driven by the restructuring of our business in 2023 which included the assignment of our San Carlos facility lease in the fourth quarter of 2023, and changes in operating assets and liabilities.

The $5.3 million decrease in net cash used in operating activities for the six months ended June 30, 2024 as compared to the same period in 2023, was primarily due to the net effect of decreases in cash paid for operating expenses, primarily driven by the restructuring of our business in 2023 which included the assignment of our San Carlos facility lease in the fourth quarter of 2023, and changes in operating assets and liabilities.

Cash Flows from Investing Activities

The $25.3 million increase in net cash used in investing activities for the three months ended March 31, 2024 as compared to the same period in 2023, was primarily due to higher cash utilized for purchase of short-term investments.

The $50.8 million increase in net cash used in investing activities for the six months ended June 30, 2024 as compared to the same period in 2023, was primarily due to higher cash utilized for purchases of short-term investments, partially offset by lower purchases of property and equipment during the period.

Cash Flows from Financing Activities

The $27.9 million increase in net cash provided by financing activities for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to proceeds from the Innovatus Loan in February 2024.

The $20.8 million increase in net cash provided by financing activities for the six months ended June 30, 2024 as compared to the same period in 2023 was primarily due to proceeds from the Innovatus Loan in February 2024, partially offset by proceeds from issuance of common stock under the EDA during the six months ended June 30, 2023 .

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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Actual results could differ from those estimates.

There have been no material changes to our critical accounting policies or estimates during the three months ended March 31, 2024 from those discussed in our Annual Report.

There have been no material changes to our critical accounting policies or estimates during the three and six months ended June 30, 2024 from those discussed in our Annual Report.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis