What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-28 · 364 added, 373 removed, 1018 unchanged (42% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm ( KPMG LLP ;

San Francisco, CA ;

Reports of Independent Registered Public Accounting Firm ( BDO USA, P.C.

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders' Equity

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Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

To the Stockholders and Board of Directors

Codexis, Inc.:

Redwood City, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Codexis, Inc.

(the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dat ed February 28, 2024 expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheet of Codexis, Inc.

and subsidiaries (the Company) as of December 31, 2024, the related consolidated statement of operations, comprehensive loss, stockholders’ equity, and cash flows for the period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

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

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

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

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

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

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

Revenue Recognition

As described in Notes 2, 3 and 5 to the consolidated financial statements, the Company enters into contracts with customers that include enzyme supply, licensing, and collaborative research and development agreements.

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

The Company recognizes revenue in a manner that best depicts the transfer of promised goods or services to the customer when control of the product or service is transferred to a customer.

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

We identified the evaluation of management’s accounting for revenue from certain new and amended contracts with customers as a critical audit matter due to significant judgments and estimates involved in the identification of distinct performance obligations, allocation of transaction price to distinct performance obligations, determination and estimation of material rights, determination of the pattern of transfer of control for each distinct performance obligation and estimation of variable consideration.

Auditing these elements involved especially subjective and complex auditor judgments due to the nature and extent of audit effort required.

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

• Testing the design, implementation and operating effectiveness of internal controls relating to the Company's accounting for certain new and amended revenue contracts, including controls over identification of distinct performance obligations and material rights, the determination of the timing of revenue recognition, allocation of transaction price to distinct performance obligations, and the estimation of variable consideration.

• Examining a sample of these contracts to test management's identification of significant terms for completeness, including the identification of distinct performance obligations, material rights and variable consideration.

• Evaluating the reasonableness and accuracy of management’s judgments and estimates used in identification and accounting for material rights.

• Assessing the reasonableness of management’s judgments and estimates to calculate variable consideration, and the timing of recognizing the related revenue subject to any constraints.

• Evaluating the appropriateness of management’s allocation of the transaction price to the distinct performance obligations and determination of whether identified performance obligations meet the criteria for over-time revenue recognition.

/s/ BDO USA, P.C.

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

Sufficiency of audit evidence over revenue from contracted customers

As discussed in Note 3 to the consolidated financial statements, the Company recorded $59.3 million of total revenues for the year-ended December 31, 2024 comprised of $36.8 million of product revenue and $22.6 million of research and development revenue.

As discussed in Note 2, the Company enters into contracts with customers, some of which contain multiple products and services.

Further, the majority of the Company’s collaborative contracts, including research and development agreements, contain multiple revenue streams.

In determining the appropriate amount of revenue to be recognized for product revenue and research and development revenue, the Company performs the following steps:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations based on estimated selling prices;

and (v) recognition of revenue when, or as, the Company satisfies each performance obligation.

We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter.

Evaluating the sufficiency of audit evidence obtained required subjective auditor judgment due to the volume of revenue streams and disparate nature of contracts with customers, which involved determining the contracts and related revenue transactions to test and evaluating the recognition and measurement of revenue with respect to certain contracts with considerations around multiple elements, material rights, or timing of recognition.

The following are the primary procedures we performed to address this critical audit matter.

We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue, including the determination of the types of contracts, transactions and measurement elements to test such as considerations of certain contracts with multiple elements, material rights, and timing of revenue recognition.

We read a selection of contracts and evaluated the Company’s identification and assessment of the contract terms impacting the recognition and measurement of revenue.

For certain transactions, we inspected the terms of the contract, agreed such terms to underlying documentation, such as external and internal evidence as applicable, recalculated revenue based on the underlying documentation, and compared it to the amount of revenue recognized.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

We have served as the Company’s auditor since 2024.

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Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Stockholders and Board of Directors

Codexis, Inc.

Redwood City, California

Opinion on Internal Control over Financial Reporting

We have audited Codexis, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 28, 2024 expressed an unqualified opinion thereon.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Codexis, Inc.

(the “Company”) as of December 31, 2023, the related consolidated statement of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023 , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Controls and Procedures”.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

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

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We conducted our audits in accordance with the standards of the PCAOB.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We served as the Company's auditor from 2013 to 2024.

San Francisco, California

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Restricted cash, current 503 519

Short-term investments 54,194 —

Financial assets:

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Restricted cash 1,062 1,062

Investment in non-marketable equity securities ($ 0 and $ 13,921 with a related party)

Investment in non-marketable equity securities 2,798 9,700

Right-of-use assets - Operating leases, net 28,700 13,137

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Long-term lease obligations - Operating leases 28,163 12,243

Long-term debt 28,905 —

Other long-term liabilities 1,268 1,233

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Additional paid-in capital 629,673 584,138

Accumulated other comprehensive income 52 —

Accumulated deficit ( 562,806 ) ( 497,530 )

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Interest income 3,670 4,172 1,441

Other income (expense), net ($ 0 , $ 208 and $ 983 from a related party)

Interest and other expense, net ($ 0 , $ 0 and $ 208 from a related party)

( 10,393 ) ( 12,274 ) 124

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Codexis, Inc.

Consolidated Statements of Comprehensive Loss

(In Thousands)

Year Ended December 31,

2024 2023 2022

Net loss $ ( 65,276 ) $ ( 76,240 ) $ ( 33,592 )

Other comprehensive gain:

Unrealized gain on available-for-sale short-term investments, net of tax

Comprehensive loss $ ( 65,224 ) $ ( 76,240 ) $ ( 33,592 )

See accompanying notes to consolidated financial statements

Codexis, Inc.

Consolidated Statements of Stockholders’ Equity

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Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Total

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

Exercise of stock options 699 — 5,180 — 5,180

Release of stock awards 181 — — — —

Employee stock-based compensation — — 11,346 — 11,346

Non-employee stock-based compensation — — 247 — 247

Issuance of common stock upon exercise of stock options 410 — 955 — — 955

Issuance of common stock upon release of stock awards 373 — — — — —

Stock-based compensation — — 14,531 — — 14,531

Taxes paid related to net share settlement of equity awards ( 81 ) — ( 1,488 ) — — ( 1,488 )

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December 31, 2022 65,811 6 566,081 — ( 421,290 ) 144,797

Exercise of stock options 410 — 955 — 955

Release of stock awards 373 — — — —

Employee stock-based compensation — — 14,398 — 14,398

Non-employee stock-based compensation — — 133 — 133

Issuance of common stock upon exercise of stock options 283 — 559 — — 559

Issuance of common stock upon release of stock awards 796 — — — — —

Issuance of common stock in connection with an equity sales agreement, net of issuance costs of $ 721

3,080 1 7,931 — — 7,932

Stock-based compensation — — 9,971 — — 9,971

Taxes paid related to net share settlement of equity awards ( 65 ) — ( 404 ) — — ( 404 )

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December 31, 2023 69,905 7 584,138 — ( 497,530 ) 86,615

Exercise of stock options 283 — 559 — 559

Release of stock awards 796 — — — —

Employee stock-based compensation — — 9,969 — 9,969

Non-employee stock-based compensation — — 2 — 2

Issuance of common stock, net of issuance costs of $ 721

Issuance of common stock upon exercise of stock options 399 — 1,291 — — 1,291

Issuance of common stock upon release of stock awards 842 — — — — —

Issuance of common stock warrants in connection with debt issuance — — 859 — — 859

Issuance of common stock under employee stock purchase plan 264 — 563 — — 563

Issuance of common stock in connection with an equity sales agreement, net of issuance costs of $ 1,584

10,440 1 29,735 — — 29,736

Taxes paid related to net share settlement of equity awards ( 65 ) — ( 404 ) — ( 404 )

Stock-based compensation — — 13,087 — — 13,087

Net Loss — — — — ( 65,276 ) ( 65,276 )

Other comprehensive loss — — — 52 — 52

December 31, 2024 81,850 $ 8 $ 629,673 $ 52 $ ( 562,806 ) $ 66,927

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Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation 5,518 5,402 3,113

Amortization expense - right-of-use assets - operating and finance leases 4,405 4,849 2,834

Depreciation and amortization 4,946 5,518 5,402

Reduction in the carrying amount of right-of-use assets 3,184 4,405 4,849

Stock-based compensation 13,087 9,971 14,531

Provision (recovery) for credit losses 97 ( 65 ) 4

Asset impairment and other charges 165 9,984 —

Impairment of investment in non-marketable securities 6,902 12,215 —

Equity securities earned from research and development activities ($ 0 , $ 0 , and ($ 1,245 ) from a related party)

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Unrealized gain on non-marketable securities ($ 0 , $ 0 , and ($ 208 ) from a related party)

— ( 208 ) ( 1,272 )

Asset impairment and other charges 9,984 — —

Impairment of investment in non-marketable securities 12,215 — —

Non-cash interest expense 885 — —

Amortization of discount on short-term investments ( 1,380 ) — —

Other non-cash items ( 4 ) 4 ( 29 )

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Other long-term liabilities ( 4,151 ) ( 5,341 ) ( 5,223 )

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

( 19,848 ) 24,518 1,300

Deferred revenue ( 10,311 ) ( 19,848 ) 24,518

Net cash provided by (used in) operating activities ( 49,410 ) ( 52,638 ) 11,284

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Proceeds from sale of property and equipment 87 751 29

Investment in non-marketable securities ($ 0 , $ 0 , and ($ 7,630 ) in a related party)

( 1,191 ) ( 5,300 ) ( 7,630 )

Purchases of short-term investments ( 90,235 ) — —

Proceeds from maturity of short-term investments 35,500 — —

Proceeds from sale of short-term investments 1,973 — —

Investment in non-marketable securities — ( 1,191 ) ( 5,300 )

Net cash used in investing activities ( 56,980 ) ( 4,858 ) ( 13,578 )

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Proceeds from exercises of stock options 1,384 422 955

Proceeds from issuance of common stock in connection with public offering 8,652 — —

Costs incurred in connection with issuance of common stock at public offering ( 503 ) ( 42 ) ( 207 )

Proceeds from issuance of stock under employee stock purchase plan 646 — —

Proceeds from issuance of common stock in connection with equity sales agreements 31,319 8,652 —

Costs incurred in connection with equity sales agreements ( 1,706 ) ( 503 ) ( 42 )

Proceeds from long-term debt 29,521 — —

Payment of debt issuance costs ( 642 ) — —

Taxes paid related to net share settlement of equity awards — ( 404 ) ( 1,488 )

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Total cash, cash equivalents and restricted cash at the end of the period $ 20,829 $ 66,697 $ 116,026

This table excludes short-term investments of $ 54.2 million as of December 31, 2024.

Total cash, cash equivalents, and short-term investments as of December 31, 2024 were $ 73.5 million.

See accompanying notes to consolidated financial statements

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We previously managed our business as two business segments, Performance Enzymes and Novel Biotherapeutics.

During the fourth quarter of 2023, we made changes to the structure of our organization in connection with the restructuring of our business that we announced in July 2023, including the discontinuation of investment in certain development programs, primarily in our biotherapeutics business, consolidation of operations to our Redwood City, California headquarters, and headcount reduction.

During the third and fourth quarters of 2023, we made changes to the structure of our organization in connection with the restructuring of our business that we announced in July 2023, including the discontinuation of investment in certain development programs, primarily in our biotherapeutics business, consolidation of operations to our Redwood City, California headquarters, and headcount reduction.

In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and how our Chief Executive Officer (“CEO”), our chief operating decision maker, assesses performance and allocates resources.

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The CEO assesses performance and allocates resources based on the consolidated results of operations.

We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure.

Under this new organizational and reporting structure, we managed our business as one reportable segment as of December 31, 2023.

We believe that these changes better align internal resources to create a more efficient and effective organizational structure.

Under this new organizational and reporting structure, we managed our business as one reportable segment since the fourth quarter of 2023.

Comparative prior period disclosures that reflected the previous two segments' information have been revised to conform to this change in our reportable segment.

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Our revenues are derived primarily from product revenue and collaborative research and development agreements.

The majority of our contracts with customers typically contain multiple products and services.

Some of our contracts with customers contain multiple products and services.

We account for individual products and services separately if they are distinct-that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

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If an SSP is not directly observable, then we estimate the SSP taking into consideration market conditions, forecasted sales, entity-specific factors and available information about the customer.

We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers and for new licenses, we consider multiple methods, including a discounted cash flow method which includes the following key assumptions:

the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success.

We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers.

We account for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

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

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

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

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

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If we determine that a license is distinct and has significant standalone functionality, we recognize revenues from a functional license at a point in time when the license is transferred to the customer, and the customer can use and benefit from it.

the development timelines, revenue forecasts, commercialization expenses, discount rate, and the probability of technical and regulatory success.

For licenses that have been previously sold to other customers, we use historical information to determine SSP.

We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers.

At the inception of each arrangement that includes variable consideration such as development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method.

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Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the consolidated statements of operations.

Advertising costs were $ 0.3 million for each of the years ended December 31, 2023, 2022 and 2021.

Advertising costs were nil , $ 0.3 million, and $ 0.3 million for each of the years ended December 31, 2024, 2023 and 2022, respectively.

Stock-Based Compensation

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Restricted Cash

In 2016, we began the process of liquidating our Indian subsidiary.

We are currently in the process of liquidating our Indian subsidiary.

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

This balance is recorded as current restricted cash on the consolidated balance sheets of $ 0.5 million as of December 31, 2024 and 2023.

Pursuant to the terms of our lease agreements, we obtained letters of credit collateralized by cash deposit balances of $ 1.1 million and $ 1.5 million as of December 31, 2023 and 2022, respectively.

Pursuant to the terms of our lease agreements, we obtained letters of credit collateralized by cash deposit balances of $ 1.1 million as of December 31, 2024 and 2023.

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

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

Short-term Investments

We classify all marketable debt securities that have effective maturities of three months or less from the date of purchase as cash equivalents and those with effective maturities of greater than three months as short-term investment securities in the consolidated balance sheets.

We determine the appropriate classification of our short-term investments at the time of purchase and reevaluate such designation at each balance sheet date.

We have classified and accounted for our short-term investments as available-for-sale.

After consideration of our risk versus reward objectives, as well as our liquidity requirements, we may sell these debt securities prior to their effective maturities.

We carry these short-term investments at fair value, and report the unrealized gains and losses, net of taxes, as a component of stockholders’ equity, except for the changes in allowance for expected credit losses, which are included in “Interest and other expense, net” in the consolidated statements of operations.

We determine any realized gains or losses on the sale of short-term investments on a specific identification method, and we record such gains and losses as a component of interest income.

Short-term investments are reviewed periodically for allowances for credit losses and impairment.

When evaluating the investments, the Company reviews factors such as the extent to which the fair value of the security is less than the amortized cost basis, adverse conditions specifically related to the security, the financial condition of the issuer, the Company’s intent to sell, and whether it would be more likely than not that the Company would be required to sell the investments before the recovery of the amortized cost basis.

Fair Value Measurements

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As of December 31, 2024, we h ad four customers that accounted for 56 % of our ac counts receivable balance.

As of December 31, 2022, two customers accounted for 63 % of our accounts receivable balance.

As of December 31, 2023, four customers accounted for 58 % of our accounts receivable balance.

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

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If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

For additional information on the impairment charge recorded for the year ended December 31, 2023, s ee Note 8, “Balance Sheets Details” and Note 13, “Commitments and Contingencies.” No impairment charges for long-lived assets were recorded during the year ended December 31, 2022.

For additional information on the impairment charge recorded for the years ended December 31, 2024 and 2023 , s ee Note 8, “Balance Sheet Details” and Note 13, “Commitments and Contingencies.” No impairment charges for long-lived assets were recorded during the year ended December 31, 2022.

Investment in Non-Marketable Equity Securities

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

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

Gains and losses on these securities are recognized in interest and other expense, net.

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

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If the factors that led to a reduction in valuation are overcome, the valuation may be readjusted.

For additional information on the impairment charge recorded for the year ended December 31, 2023, s ee Note 6, “Investments in Non-Marketable Securities.”

For additional information on the impairment charge recorded for the year ended December 31, 2024 and 2023, s ee Note 6, “Investments in Non-Marketable Securities.”

Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired and is assigned to reporting units.

We test goodwill for impairment considering amongst other things, whether there have been sustained declines in our share price.

We test goodwill for impairment, considering, among other factors, whether there have been sustained declines in our share price.

If we conclude it is more likely than not that the fair value is less than its carrying amount, a quantitative fair value test is performed.

Goodwill had a carrying value of $ 2.5 million and $ 3.2 million as of December 31, 2023 and 2022, respectively.

Goodwill had a carrying value of $ 2.5 million as of December 31, 2024 and 2023.

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

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Any excess carrying amount of goodwill over its fair value is recognized as an impairment.

We recorded impairment charges related to goodwill of $ 0.8 million, nil , and nil for the years ended December 31, 2023, 2022, and 2021, respectively.

For additional information on the impairment charge recorded for the year ended December 31, 2023, s ee Note 8, “Balance Sheets Details.”

No impairment charges related to goodwill were recognized in 2024.

We recorded impairment charges related to goodwill of $ 0.8 million for the year ended December 31, 2023.

For additional information on the impairment charge recorded in 2023 , s ee Note 8, “Balance Sheet Details.”

Lease Accounting

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The ultimate realization of deferred tax assets is dependent upon the generation of taxable income in the future.

We have recorded a valuation allowance against these deferred tax assets in jurisdictions where ultimate realization of deferred tax assets is more likely than not to occur.

In the event that it is determined that these deferred tax assets are not more likely than not to be realized, a valuation allowance is recorded against these deferred tax assets.

As of December 31, 2024 and 2023, we maintain a full valuation allowance in all jurisdictions against the net deferred tax assets as we believe that it is more likely than not that the majority of deferred tax assets will not be realized.

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Recently adopted accounting pronouncements

Aside from those recently issued accounting pronouncements not yet adopted and described below, there have not been any recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 2023 that are of significance or potential significance to us.

Recently issued accounting pronouncements not yet adopted

In December 2023, the Financial Accounting Standards Board ( “ FASB ” ) issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in the ASU are intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.

This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted.

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

In November 2023, FASB issued ASU No.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

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The standard should be applied retrospectively to all prior periods presented in the financial statements.

The Company adopted ASU No.

2023-07 during the year ended December 31, 2024.

For additional information, see Note 15, “Segment, Geographical and Other Revenue Information.”

Aside from those recently issued accounting pronouncements adopted and described above and not yet adopted and described below, there have not been any recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 2024 that are of significance or potential significance to us.

Recently issued accounting pronouncements not yet adopted

In November 2024, the FASB issued ASU No.

2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The amendment in the ASU will require additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement.

This guidance is effective for the Company for fiscal years beginning after December 15, 2026.

Early adoption is permitted.

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

In March 2024, the FASB issued ASU No.

2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements .

The amendments in the ASU amends the FASB Accounting Standard Codification (the “ASC”) to remove references to various concepts statements and impacts a variety of topics in the ASC.

This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted.

If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.

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

In December 2023, FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in the ASU require public companies, on an annual basis, to provide disclosures of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted.

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

In October 2023, FASB issued ASU No.

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Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

The amendments in the ASU are intended to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification ( “ ASC ”) .

The amendments in the ASU are intended to amend certain disclosure and presentation requirements for a variety of topics within the ASC.

These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, as announced by the SEC.

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Contract Balances

The following table presents balances of contract assets, unbilled receivables, contract costs, and contract liabilities (in thousands):

The following table presents balances of contract assets, unbilled receivables, and contract liabilities (in thousands):

December 31, 2024 December 31, 2023

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Unbilled receivables $ 3,208 $ 9,904

Contract costs $ — $ 19

Contract liabilities:

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

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

We maintain an allowance for credit losses on accounts receivables and unbilled receivables.

As of December 31, 2024, we have $ 2.8 million of short-term unbilled receivables presented as unbilled receivables within current assets and $ 0.5 million of long-term unbilled receivables that is included within the other non-current assets line item in the consolidated balance sheets.

As of December 31, 2022, we had $ 7.0 million of short-term unbilled receivables presented as unbilled receivables within current asset.

As of December 31, 2023, we had $ 9.1 million of short-term unbilled receivables presented as unbilled receivables within current asset and $ 0.8 million of long-term unbilled receivables that is included within the other non-current assets line item in the consolidated balance sheets.

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

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

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

In addition, we recognize a contract asset related to milestones when we assess it is probable of being achieved and there will be no significant reversal of cumulative revenues.

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

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Contract liabilities are classified as a liability on the consolidated balance sheets.

Contract costs relate to incremental costs of obtaining a contract with a customer.

Contract costs are amortized along with the associated revenue over the term of the contract.

During the years ended December 31, 2024, 2023 and 2022, we had no asset impairment charges related to contract assets.

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13,613 9,028 7,442

(1) Included 568,224 of anti-dilutive potential common shares from ESPP for the year ended December 31, 2023.

Total potentially dilutive securities 14,037 9,028 7,442

(1) Included 665,160 and 568,224 of anti-dilutive potential common shares from ESPP for the years ended December 31, 2024 and 2023, respectively.

(2) Pertains to the warrants issued in connection with the Innovatus Loan.

For additional information, see Note 14, “Debt.”

Collaborative Arrangements

GSK Platform Technology Transfer, Collaboration and License Agreement

In July 2014, we entered into a CodeEvolver ® Platform Technology Transfer, Collaboration and License agreement (the “GSK CodeEvolver ® Agreement”) with GSK.

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

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

Depending upon GSK's successful application of the licensed technology, we have the potential to receive additional contingent payments that range from $ 5.8 million to $ 38.5 million per project.

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

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

In 2023, we received an additional milestone payment from GSK under the agreement.

We recognized research and development revenue of $ 1.3 million, nil , and $ 4.3 million in the years ended December 31, 2023, 2022, and 2021, respectively.

Merck Platform Technology Transfer and License Agreement

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

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

We recognized research and development revenues of nil , $ 40 thousand, and $ 0.6 million in the years ended December 31, 2023, 2022 and 2021, respectively, for various research projects under our collaborative arrangement.

We have the potential to receive payments of up to a maximum of $ 15.0 million for each commercial active pharmaceutical ingredient ("API") that is manufactured by Merck using one or more novel enzymes developed by Merck using the CodeEvolver ® technology platform.

The API payments, which are currently not recognized in revenue, are based on the quantity of API developed and manufactured by Merck and will be recognized as usage-based royalties.

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

In January 2019, we amended the Merck CodeEvolver ® Agreement to install certain CodeEvolver ® technology platform upgrades into Merck’s platform license installation and maintain those upgrades for a multi-year term that expired in January 2022.

The license installation was completed in 2019.

No research and development revenues were recognized in the years ended December 31, 2023 and 2022.

We recognized $ 0.1 million in research and development revenues under the terms of the amendment in the year ended December 31, 2021.

Merck Sitagliptin Catalyst Supply Agreement

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These products will be shipped within the three-month period following the end of 2024.

Enzyme Supply Agreement

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

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

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

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

In 2023, due to the early termination of the enzyme supply agreement with the customer, we recognized $ 3.2 million of product revenue from the release of prior periods' product revenue deferrals and also recognized $ 1.3 million of product revenue as settlement fee pursuant to the enzyme supply agreement with the same customer.

As of December 31, 2023 and 2022, we had deferred revenue balances from the supply agreement of nil and $ 3.3 million.

Commercial Agreement

In April 2019, we entered into a multi-year commercial agreement with Tate & Lyle under which Tate & Lyle has received an exclusive license to use a suite of Codexis novel performance enzymes in the manufacture of Tate & Lyle’s zero-calorie stevia sweetener, TASTEVA ® M, and other stevia products.

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

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

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

The commercial agreement with Tate & Lyle was terminated in 2023.

Global Development, Option and License Agreement and Strategic Collaboration Agreement

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

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

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

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

Upon exercising its option, Nestlé Health Science made an option payment and assumed all responsibilities for future clinical development and commercialization of CDX-61 14.

In October 2023, we provided notice pursuant to Nestlé License Agreement of our intent to abandon or transfer to Nestlé Health Science (at their option) the patents and patent applications related to CDX-6114 as of December 5, 2023, and Nestlé Health Science notified us that they did not exercise their right to assume responsibility of such patents and patent applications.

In October 2017, we entered into the Nestlé SCA pursuant to which we and Nestlé Health Science are collaborating to leverage the CodeEvolver ® 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 January 2020, we entered into a development agreement with Nestlé Health Science pursuant to which we and Nestlé Health Science are collaborating to advance a lead candidate discovered through our Nestlé SCA, CDX-7108, targeting exocrine pancreatic insufficiency, into preclinical and early clinical studies.

We, together with Nestlé Health Science, initiated a Phase 1 clinical trial of CDX-7108 in the fourth quarter of 2021, and on February 23, 2023, we and Nestlé Health Science announced interim results.

Enzyme Supply Agreement and Commercial Agreement

In November 2016, we entered into an enzyme supply agreement with a customer, receiving an upfront payment recorded as deferred revenue which was recognized as the customer purchased our enzyme.

In April 2019, we entered into a multi-year commercial agreement with the same customer for the exclusive use of our enzymes in some of their products, with royalties to be earned.

Both the enzyme supply agreement and commercial agreement were terminated in 2023.

Due to the early termination of the enzyme supply agreement in 2023, we recognized $ 3.2 million of product revenue from the release of prior periods' product revenue deferrals and also recognized an additional $ 1.3 million of product revenue as settlement fee.

Strategic Collaboration Agreement

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

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

We, together with Nestlé Health Science, initiated a Phase 1 clinical trial of CDX-7108 in the fourth quarter of 2021, and on February 23, 2023, we and Nestlé announced interim results.

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

Under the Nestlé SCA and the development agreement, we recognized $ 4.1 million , $ 7.1 million and $ 6.9 million in research and development revenue in the years ended December 31, 2023, 2022 and 2021, respectively.

Both the Nestlé SCA and the development agreement were terminated in January 2024 .

Both the Nestlé SCA and development agreement were terminated in January 2024 under the terms of the CDX-7108 Acquisition Agreement with Nestlé.

Under the Nestlé SCA and the development agreement, we recognized nil , $ 4.1 million and $ 7.1 million in research and development revenue in the years ended December 31, 2024, 2023 and 2022, respectively.

Acquisition Agreement

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

Under the terms of the Acquisition Agreement, Nestlé Health Science will be solely responsible for the continued development and commercialization of CDX-7108, including all associated costs, and Codexis will receive upfront payment, future potential milestone payments and net-sales based royalties.

We recognized research and development revenue of $ 5.0 million f or the year ended December 31, 2023 related to the Acquisition Agreement.

We received the $ 5.0 million upfront fee in January 2024.

Strategic Collaboration Agreement

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

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

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

We also received annual collaboration payments of $ 1.0 million each during the first through fourth anniversaries of the effective date of the Porton Agreement.

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

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

The initial term of the Porton Agreement expired in April 2023 and was not renewed for an extended term.

We recognized research and development revenue related to the Porton Agreement of nil , $ 0.1 million and $ 1.1 million in the years ended December 31, 2023, 2022 and 2021, respectively.

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

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, and Codexis will receive upfront payment, future potential milestone payments and net-sales based royalties.

We recognized $ 5.0 million in research and development revenue f or the year ended December 31, 2023 related to the Acquisition Agreement, with the $ 5.0 million upfront fee received in January 2024.

Platform Technology Transfer and License Agreement

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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 Codexis annual payments over four years which amount to an additional $ 8.0 million in aggregate.

We received an aggregate of $ 4.0 million for the first two annual payments in 2022 and 2023.

We received an aggregate of $ 6.0 million for the first three annual payments in 2022 to 2024.

The Company also has the potential to receive quantity-dependent, usage payments for each API that is manufactured by Novartis using one or more enzymes that have been developed or are in development using the CodeEvolver 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.

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License Agreement

In December 2019, we entered a license agreement with Roche Sequencing Solutions, Inc.

(“Roche”) to provide Roche with our evolved T4 DNA ligase high-performance molecular diagnostic enzyme.

In December 2019, we entered a license agreement with Roche to provide Roche with our evolved T4 DNA ligase high-performance molecular diagnostic enzyme.

The royalty bearing license grants Roche worldwide rights to include the evolved T4 DNA ligase in its nucleic acid sequencing products and workflows.

Under the license agreement, we received an initial collaboration fee payment of $ 0.8 million within 45 days of the effective date of the agreement, and we received an additional $ 0.9 million milestone payment after the completion of technology transfer in October 202 0.

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.

No research and development revenues were recognized in the years ended December 31, 2023 and 2022.

We recognized research and development fees of $ 0.9 million in the year ended December 31, 2021.

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

Under the terms of the deal, we received upfront and technical milestones payments.

We recognized research and development fees of $ 6.0 million in the year ended December 31, 2024 related to the license agreement.

Strategic Collaboration and License Agreement

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We completed the research and development services relating to the fourth program with Takeda during the second quarter of 2023.

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.

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

Pursuant to the Takeda Agreement, we were eligible to receive other payments that included ( 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.

Takeda announced in April 2023 the discontinuation of these development programs, and in 2024 we divested our rights in some of the underlying assets to Crosswalk Therapeutics.

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

We recognized research and development revenue related to the Takeda Agreement of $ 0.8 million, $ 2.0 million and $ 4.9 million in the years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2023 and 2022, we had deferred revenue balances of nil and $ 0.9 million, respectively.

As of December 31, 2024 and 2023, we had deferred revenue balances of nil .

Master Collaboration and Research Agreement, Stock Purchase Agreement and Enzyme Supply Agreement

In June 2020, we entered into a Stock Purchase Agreement with Molecular Assemblies, Inc.

(“MAI”) in which we purchased 1,587,050 shares of MAI's Series A preferred stock for $ 1.0 million.

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

See Note 14, “Related Party Transactions” for additional information on our investment in MAI.

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

Concurrently with our initial equity investment, we entered into the MAI Agreement, pursuant to which we performed services utilizing our CodeEvolver technology platform to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A and B preferred stock which are valued based on the observed transaction price of similar securities of MAI issued to third parties.

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Upon execution of the MAI Supply Agreement in July 2022, we received the commercialization and enzyme supply agreement milestone payment pursuant to the MAI Agreement 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, we recognized $ 1.2 million and $ 2.0 million in research and development revenue from transactions with MAI in the years ended December 31, 2022 and 2021, respectively.

Pursuant to the MAI Agreement, we recognized nil , nil , and $ 1.2 million in research and development revenue from transactions with MAI in the years ended December 31, 2024, 2023, and 2022, respectively.

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

We received an aggregate of 1,587,049 and 3,491,505 shares of MAI's Series A and B preferred stock in the years ended December 31, 2022 and 2021, respectively.

We received an aggregate of nil , nil , and 1,587,049 shares of MAI's Series A and B preferred stock in the years ended December 31, 2024, 2023, and 2022, respectively.

In April 2022, we received a purchase order from MAI for the delivery of certain enzyme products to MAI in 2022.

In July 2022, we and MAI executed the MAI Supply Agreement that will enable MAI to utilize an evolved terminal deoxynucleotidyl transferase (“TdT”) enzyme in MAI’s Fully Enzymatic Synthesis™ (“FES™”) technology.

We recognized $ 0.2 million and $ 0.5 million in product revenue in the years ended December 31, 2023 and 2022, respectively .

In July 2022, we and MAI executed the MAI Supply Agreement that will enable MAI to utilize an evolved terminal deoxynucleotidyl transferase enzyme in MAI’s Fully Enzymatic Synthesis technology.

Pursuant to the MAI Supply Agreement, we recognized $ 0.1 million of minimum royalty as part of the research and development revenue in the year ended December 31, 2024.

In January 2025, MAI assigned the MAI Supply Agreement to a third party in connection with the sale of its related assets to such third party.

We recognized $ 0.2 million, $ 0.2 million, and $ 0.5 million in product revenue in the years ended December 31, 2024, 2023, and 2022, respectively .

MAI was considered a related party until August 2022, when the related party relationship ended following the retirement of our former President and CEO, who also served on MAI’s board of directors.

Pfizer Enzyme Supply Agreement

During 2021 and 2022, we received purchase orders from Pfizer, Inc.

(“Pfizer”) for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir, used by Pfizer in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets;

During 2021 and 2022, we received purchase orders from Pfizer for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir, used by Pfizer in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID (nirmatrelvir tablets;

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

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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.

Pursuant to the agreement, 90 % of the fee ($ 23.3 million) is creditable against (i) future orders of CDX-616 used to manufacture its PAXLOVID™ with shipment dates prior to December 31, 2023, and (ii) fees associated with

any new development and licensing agreements with Pfizer entered into prior to April 4, 2023.

Pursuant to the agreement, 90 % of the fee ($ 23.3 million) is creditable against (i) future orders of CDX-616 used to manufacture its PAXLOVID with shipment dates prior to December 31, 2023, and (ii) fees associated with any new development and licensing agreements with Pfizer entered into prior to April 4, 2023.

On March 31, 2023, we entered into a license agreement whereby Pfizer utilized a portion of the $ 23.3 million credit towards a license to develop future product candidates, for which we recognized $ 5.0 million as non-cash research and development revenue in the second quarter of 2023.

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We also recognized $ 2.0 million of non-cash research and development revenue, and credited against the $ 25.9 million fee, for other services provided to Pfizer during the year ended December 31, 2023.

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.

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

On December 20, 2024, we entered into a license agreement whereby Pfizer utilized the remaining credit toward the upfront fee under the license agreement, pursuant to the terms of the same-day amendment to the Pfizer Supply Agreement that allowed the product credit to be utilized for this license.

We recognized $ 9.5 million of non-cash research and development revenue in the year ended December 31, 2024 related to the license agreement, and no further credit remains available for Pfizer.

During the fourth quarter of 2023, and pursuant to the Pfizer Supply Agreement, we released the prior year deferrals for the unused portion of the retainer fee that is not creditable beyond 2023 and we recognized product revenue of $ 8.2 million in the year ended December 31, 2023.

We recognized product revenue of $ 75.4 million and $ 34.5 million in the years ended December 31, 2022 and 2021, respectively, from the sale of quantities of CDX-616 to Pfizer.

We recognized product revenue of $ 75.4 million in the year ended December 31, 2022, from the sale of quantities of CDX-616 to Pfizer.

Product revenues recognized by us from the Pfizer Supply Agreement represented 0 %, 12 %, and 54 % of our total revenues for the years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2023 and 2022, we had $ 9.5 million and $ 24.4 million, respectively, in deferred revenue related to the $ 25.9 million fee received from Pfizer.

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

Investments in Non-Marketable Securities

Non-Marketable Debt Securities

We classify non-marketable debt securities, which are accounted for as available-for-sale, within Level 3 in the fair value hierarchy because we estimate the fair value based on a qualitative analysis using the most recent observable transaction price and other significant unobservable inputs including volatility, rights, and obligations of the securities we hold.

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

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

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

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

In November 2020, we purchased convertible subordinated notes issued by Arzeda Corp.

(“Arzeda”), an early-stage computational protein design company, for $ 1.0 million and the investment was classified as available-for-sale non-marketable interest-bearing debt securities.

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

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

There were no investments in non-marketable debt securities as of December 31, 2023 and 2022.

Non-Marketable Equity Securities

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

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

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

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The fair value of non-marketable equity securities are classified within Level 3 when we estimate fair value using unobservable inputs such as when we remeasure due to impairment and we use discount rates, market data of comparable companies, and rights and obligations of the securities the Company holds, among others.

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

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

In November 2023, the 207,070 shares of Arzeda’s Series B preferred stock were converted into 41,414 common stock pursuant to the Stock Purchase Agreement.

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As of December 31, 2024 , we held an aggregate of 19,277,914 shares of MAI's Series A and B preferred stock that we have earned or purchased from MAI.

See Note 14, “Related Party Transactions” for additional information on our investment in 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.

In March 2022, we entered into a Stock Purchase Agreement with 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 provided research and experimental screening and protein engineering activities in exchange for compensation in the form of additional shares of seqWell's common stock.

In January 2025, we sold assets that were developed under the seqWell Agreement to seqWell in exchange for the right to receive a cash payment upon future events and a warrant to purchase seqWell’s common stock exercisable upon future events, and terminated the seqWell Agreement.

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.

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As of December 31, 2024, we held an aggregate of 1,088,256 shares of Series C and C-1 preferred stock, 205,279 shares of common stock and 44,128 of common stock warrants that we have earned or purchased from seqWell.

For the year ended December 31, 2024, we recognized an impairment charge of $ 6.9 million which is presented within interest and other expense, net in the consolidated statements of operations.

This adjustment included the write-down of our investment in MAI by $ 3.9 million during the third quarter of 2024 to its related fair value as determined based on valuation methods using the latest observed transaction price of MAI’s preferred stock securities anticipated to be issued during the fourth quarter of 2024 and adjusted for the rights and obligations of the preferred stock securities the Company holds, and an additional $ 2.8 million impairment charge during the fourth quarter of 2024 to adjust the carrying value of our investment to zero as the investee ceased its operations during the fourth quarter of 2024 due to liquidity position and lack of access to additional capital .

The other $ 0.2 million of impairment charge on our investment in seqWell is related to the write-down to its estimated fair value using the recent transaction price of similar preferred stock securities issued by the investee and adjusted for the rights and obligations of the preferred stock securities the Company holds.

For the year ended December 31, 2023, we recognized an impairment charge of $ 12.2 million and included this as adjustment to the carrying value of our investments in seqWell, Arzeda and MAI.

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This analysis involved use of judgment, estimates and assumptions, such as the near-term prospects of the investee in the market in which it operates, evaluation of the investee’s financial condition in relation to its outstanding obligations, and probabilities of securing additional capital through various alternative scenarios.

For the year ended December 31, 2022, we recogniz ed a $ 0.2 million u nrealized gain in other income, net, and included as adjustment to the carrying value of our investment in MAI, for the remeasurement of the additional 1,587,049 shares of Series B preferred stock received as a milestone payment during the third quarter of 2022 based on the latest observed transaction price of MAI's preferred stock.

For the year ended December 31, 2022, we recogniz ed a $ 0.2 million u nrealized gain in interest and other expense, net, and included as adjustment to the carrying value of our investment in MAI, for the remeasurement of the additional 1,587,049 shares of Series B preferred stock received as a milestone payment during the third quarter of 2022 based on the latest observed transaction price of MAI's preferred stock.

Other than as disclosed above, there were no remeasurement events for our investments in non-marketable equity securities in 2024 and 2023 .

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December 31, 2024 December 31, 2023

MAI $ 6,693 $ 13,921

seqWell $ 2,416 $ 2,625

Arzeda 82 1,289

Other investments in non-marketable equity securities 382 382

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Fair Value Measurements

The following tables present the financial instruments that were measured at fair value on a recurring basis within the fair value hierarchy (in thousands):

The following tables show the Company’s cash, cash equivalents, and short-term investments by significant investment category (in thousands):

December 31, 2024

Level 1 Level 2 Level 3 Total

Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-term Investments

Cash $ 3,284 $ — $ — $ 3,284 $ 3,284 $ —

Money market funds 15,980 — — 15,980 15,980 —

Level 2 (1) :

Commercial paper 6,768 1 — 6,769 — 6,769

Corporate debt 17,187 8 ( 15 ) 17,180 — 17,180

agency securities 1,989 2 — 1,991 — 1,991

treasury securities 28,198 56 — 28,254 — 28,254

Subtotal 54,142 67 ( 15 ) 54,194 — 54,194

Total $ 73,406 $ 67 $ ( 15 ) $ 73,458 $ 19,264 $ 54,194

(1) The valuation techniques used to measure the fair values of the Company’s Level 2 financial instruments uses inputs that are either directly or indirectly observable for the asset through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

December 31, 2023

Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-term Investments

Cash $ 8,742 $ — $ — $ 8,742 $ 8,742 $ —

Money market funds 56,374 — — 56,374 56,374 —

Total $ 65,116 $ — $ — $ 65,116 $ 65,116 $ —

We limit the credit risk associated with our cash equivalents and short-term investments by placing them with banks and institutions we believe are highly credit-worthy and investing in highly-rated investments.

As of December 31, 2024, the contractual maturity of all investments held was less than one year.

During the years ended December 31, 2024 and 2023, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on non-marketable securities.

Balance Sheet Details

Cash Equivalents

Cash equivalents consisted of the following (in thousands):

December 31, 2023 December 31, 2022

Adjusted Cost Estimated Fair Value Adjusted Cost Estimated Fair Value

Money market funds (1)

$ 56,374 $ 56,374 $ 77,309 $ 77,309

(1) Money market funds are classified in cash and cash equivalents on our consolidated balance sheets.

Average contractual maturities (in days) is not applicable.

As of December 31, 2023, the total cash and cash equivalents balance of $ 65.1 million consisted of money market funds of $ 56.4 million and cash of $ 8.7 million held w ith major financial institutions.

As of December 31, 2022, the total cash and cash equivalents balance of $ 114.0 million consisted of money market funds of $ 77.3 million and cash of $ 36.7 million held with major financial institutions.

Inventories consisted of the following (in thousands):

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Leasehold improvements 12,159 11,912

Computer equipment and software 2,565 3,039

Office equipment and furniture 1,469 1,345

Computer equipment 2,459 2,565

Office furniture and equipment 1,124 1,469

Construction in progress (2)

Property and Equipment 55,132 54,798

accumulated depreciation and amortization ( 39,311 ) ( 39,821 )

accumulated depreciation ( 40,935 ) ( 39,311 )

Property and equipment, net $ 14,197 $ 15,487

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In July 2023, we announced our plan to consolidate operations from our San Carlos facility to our headquarters in Redwood City.

As part of this plan, we entered into agreements to sell certain laboratory equipment located in our San Carlos facility through an asset auction and as part of the lease assignment of the San Carlos Space to Vaxcyte (see further discussion at Note 13, “Commitments and Contingencies”).

As part of this plan, we entered into agreements to sell certain laboratory equipment located in our San Carlos facility through an asset auction and as part of the lease assignment of the San Carlos facility to Vaxcyte (see further discussion at Note 13, “Commitments and Contingencies”).

These certain items of laboratory equipment met the assets held for sale criteria and were sold during the fourth quarter of 2023.

Using a fair value estimate based of Level 3 inputs in the fair value hierarchy, the Company determined that the carrying value of these assets exceeds fair value less costs to sell, which resulted in a write-down o f $ 1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023 .

Using a fair value estimate based on Level 3 inputs in the fair value hierarchy, the Company determined that the carrying value of these assets exceeded fair value less costs to sell, which resulted in a write-down o f $ 1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023.

During the year ended December 31, 2023, the Company recorded a n on-cash impairment charge of $ 4.7 million associated with the San Carlos facility leasehold improvements.

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2024 2023 2022

Depreciation expense $ 5,518 $ 5,402 $ 3,113

Research and development $ 3,964 $ 4,594 $ 4,556

Selling, general and administrative 881 924 846

Total depreciation expense $ 4,845 $ 5,518 $ 5,402

Goodwill at beginning of period

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Based on the results of the impairment evaluation, the Company determined that the goodwill within the Novel Biotherapeutics reporting unit was impaired, which resulted in a non-cash impairment charge of $ 0.8 million to write off all of the associated goodwill.

The impairment charge is recorded within the asset impairment and other charges in the condensed consolidated statements of operation in the year ended December 31, 2023 .

Goodwill had a carrying value of $ 2.5 million and $ 3.2 million as of December 31, 2023 and 2022, respectively.

The impairment charge is recorded within the asset impairment and other charges in the consolidated statements of operation in the year ended December 31, 2023 .

Goodwill had a carrying value of $ 2.5 million as of December 31, 2024 and 2023, respectively.

Other Accrued Liabilities

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Equity Incentive Plans

In January 2023, our board of directors (the “Board”) approved the 2022 Employment Inducement Award Plan (the “2022 Inducement Plan”) which provides for the grant of non-qualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance awards, other stock awards and dividend equivalents to eligible employees with respect to an aggregate of up to 2,000,000 shares of our common stock.

In June 2023, the 2022 Inducement Plan was terminated upon the approval of an amendment to the Company's 2019 Incentive Award Plan (the “2019 Plan”) at the annual meeting of the Company's stockholders (the “Annual Meeting”) in June 2023.

In August 2024, our Board of Directors (the “Board”) approved the 2024 Employment Inducement Award Plan (the “2024 Inducement Plan”) which provides for the grant of non-qualified stock options, RSAs, restricted stock units (“RSUs”), and performance awards to eligible employees with respect to an aggregate of up to 1,000,000 shares of our common stock.

In January 2023, our Board approved the 2022 Employment Inducement Award Plan (the “2022 Inducement Plan”) which provides for the grant of non-qualified stock options, RSAs, RSUs, performance awards, other stock awards and dividend equivalents to eligible employees with respect to an aggregate of up to 2,000,000 shares of our common stock.

In June 2023, the 2022 Inducement Plan was terminated upon the approval of an amendment to the Company's 2019 Incentive Award Plan (the “2019 Plan”) at the Annual Meeting of Stockholders in June 2023 (the “2023 Annual Meeting”).

In 2019, the Board and stockholders approved the 2019 Plan.

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The 2010 Plan provided for the grant of incentive stock options, non-statutory stock options, RSUs, RSAs, PSUs, PBOs, stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants.

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

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

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

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

In April 2023, the Board approved an amendment to the 2019 Plan (the “2019 Amended Plan”) which became effective upon stockholders' approval at the Annual Meeting in June 2023.

In June 2019, 8.1 million shares authorized for issuance under the 2019 Plan were registered under the Securities Act.

In April 2023, the Board approved an amendment to the 2019 Plan (the “2019 Amended Plan”) which became effective upon stockholders' approval at the 2023 Annual Meeting.

The 2019 Amended Plan included the (i) increase in the number of shares available by 8,000,000 shares, such that an aggregate of 15,897,144 shares are reserved for issuance under the 2019 Amended Plan and any shares subject to awards granted under the 2010 Plan, and (ii) increase in the number of shares that may be granted as incentive stock options under the 2019 Amended Plan such that an aggregate of 22,000,000 shares of common stock may be granted as incentive stock options under the 2019 Amended Plan.

As of December 31, 2023, total shares remaining available for issuance under the 2019 Plan were 9.1 million s hares.

As of December 31, 2024, total shares remaining available for issuance under the 2019 Plan and 2024 Inducement Plan were 3,937,070 s hares.

Employee Stock Purchase Plan

In April 2023, the Board approved an employee stock purchase plan (the “ESPP”) which became effective upon approval at the Annual Meeting in June 2023.

The ESPP allows eligible employees of the Company to purchase shares of our common stock through payroll deductions over 24 -month offering periods.

In April 2023, the Board approved an employee stock purchase plan (as may be amended from time to time, the “ESPP”) which became effective upon approval at the 2023 Annual Meeting.

The ESPP allows eligible employees of the Company to purchase shares of our common stock through payroll deductions.

Offering periods are generally over a 24 -month period and begin in May and November of each year.

The per share purchase price will be the lower of 85 % of the closing trading price per share of our common stock on the first trading date of an offering period in which a participant is enrolled or 85 % of the closing trading price per share on the purchase date.

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The Company is authorized to grant up to 2,000,000 shares of common stock under the ESPP.

The first offering period of the ESPP commenced in December 2023 and as of December 31, 2023, the Company had not issued any shares of common stock under the ESPP.

We recognized $ 25 thousand of stock-based compensation expenses related to the ESPP in the year ended December 31, 2023.

The first offering period of the ESPP commenced in December 2023.

For the year ended December 31, 2024, 263,157 shares of our common stock were purchased under the ESPP.

As of December 31, 2024, 1,736,843 shares of common stock were available for future issuance under the ESPP.

We recognized $ 0.3 million of stock-based compensation expenses related to the ESPP for the year ended December 31, 2024.

As of December 31, 2024, the total unrecognized stock-based compensation expense, net of expected forfeitures, related to the ESPP was $ 0.6 million and is expected to be recognized over the remaining offering period.

Stock Options

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

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

Stock options granted to employees generally have a maximum term of ten years and vest over four years from the date of grant, of which 25 % vest at the end of one year , and 75 % vest monthly over the remaining three years .

We may grant options with different vesting terms from time to time.

In January 2024, the Board approved the grants of stock options with a vesting term over three years from the date of grant, of which 33 % vest at the end of one year , and 67 % vest monthly over the remaining two years .

Unless an employee's termination of service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of three months or the expiration of the option, whichever is earlier.

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

No PSUs and PBOs were granted in 2023.

No PSUs and PBOs were granted in 2024 and 2023.

In 2022, we awarded PSUs (“2022 PSUs”) and PBOs (“2022 PBOs”), each of which commence vesting based upon the achievement of various weighted performance go als, including finance and corporate strategy, performance enzymes and biotherapeutics deliverables, research plans, and organizational development.

In the first quarter of 2023, the compensation committee of the Board determined that the 2022 PSUs and 2022 PBOs performance goals had been achieved at 85.0 % and 42.5 % of the target level, respectively, and recognized stock-based compensation expenses accordingly.

Accordingly, 50 % of the shares underlying the 2022 PSUs and PBOs vested in the first quarter of 2023 and 50 % of the shares underlying the 2022 PSUs and PBOs will vest in the first quarter of 2024, in each case, subject to the recipient’s continued service on each vesting date.

In 2021, we awarded PSUs (“2021 PBOs”) and PBOs (“2021 PBOs”), each of which commence vesting based upon the determination of the compensation committee of the Board of the achievement of various weighted performance goals, including total revenues, product revenue, performance enzymes pipeline advancements, biotherapeutics pipeline advancements, organization and infrastructure upgrades, and significant events that can be publicly announced.

In the first quarter of 2022, we determined that the 2021 PSUs and 2021 PBOs performance goals had been achieved at 146 % and 73 % of the target level, respectively, and recognized stock-based compensation expenses accordingly.

Accordingly, 50 % of the shares underlying the 2022 PSUs and PBOs vested in the first quarter of 2023 and 50 % of the shares underlying the 2022 PSUs and PBOs vested in the first quarter of 2024, in each case, subject to the recipient’s continued service on each vesting date.

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PBOs 1,357 $ ( 112 ) 2,289

ESPP 343 25 —

Total $ 13,087 $ 9,971 $ 14,531

During the fourth quarter of 2024, we entered into Separation and Consulting Agreements with Sri Ryali, our former Chief Financial Officer, and two other former executives.

Under these agreements, the outstanding unvested options and awards for each of the three former executives will continue to vest through the end of their consultancy period, which concludes on February 28, 2025.

This modification resulted in a reduction of stock-based compensation expense of $ 0.4 million recognized in selling, general and administrative expenses during the year ended December 31, 2024.

On June 29, 2024, we entered into an Advisory Services Agreement with a former executive of the Company.

Pursuant to the advisory agreement, the exercise period for the former executive’s vested stock options and performance-based options was also extended.

This modification resulted in a stock-based compensation expense of $ 2.0 million recognized in selling, general and administrative expenses during the year ended December 31, 2024.

In connection with the retirement of John Nicols, our former President and Chief Executive Officer, in August 2022, and the Transition and Separation Agreement between Mr.

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Expected dividend yield 0.0 % 0.0 % 0.0 %

The following summarizes the weighted-average assumptions used to estimate the fair value of 50,000 , nil , and 9,000 shares of stock options granted to non-employees for services valued at $ 0.1 million, nil , and $ 0.1 million during the years ended December 31, 2023, 2022, and 2021 respectively:

The following summarizes the weighted-average assumptions used to estimate the fair value of 20,000 and 50,000 shares of stock options granted to non-employees for services valued at $ 44 thousand and $ 0.1 million during the years ended December 31, 2024 and 2023, respectively:

Year Ended December 31,

2023 2022 2021

Expected life (years) 5.8 5.8

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Expected dividend yield 0.0 % 0.0 %

The weighted average grant date fair value per share of non-employee stock options granted respectively in 2023, 2022, and 2021 was $ 1.05 , nil and $ 11.29 , respectively.

The weighted average grant date fair value per share of non-employee stock options granted respectively in 2024 and 2023 was $ 2.19 and $ 1.05 , respectively.

The following tables summarize s stock option activities:

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Non-vested balance at December 31, 2022 667 $ 9.41

Granted 686 $ 9.55

Vested ( 315 ) $ 11.02

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The total fair value, as of the vesting date, of PSUs vested in the years ended December 31, 2024, 2023, and 2022 were $ 0.9 million, $ 1.6 million, and $ 2.1 million, respectively.

As of December 31, 2023, there was $ 0.2 million of unrecognized stock-based compensation cost related to non-vested PSUs, which we expect to recognize over a weighted average period of 0.2 years.

As of December 31, 2024, there was nil of unrecognized stock-based compensation cost related to non-vested PSUs.

Performance Based Options (“PBOs”)

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Granted 733 $ 9.89

Exercised ( 35 ) $ 9.02

Forfeited/Expired ( 747 ) $ 8.29

Outstanding at December 31, 2022 1,826 $ 4.70

Granted 733 $ 9.89

Forfeited/Expired ( 178 ) $ 9.73

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Vested and expected to vest at December 31, 2024 1,575 $ 10.62 3.4 $ 114

The total fair value of e xercised PBOs for 2023, 2022 and 2021, was nil , nil , and $ 0.3 million, respectively.

As of December 31, 2023, there was $ 15.9 thousand of unrecognized stock-based compensation cost related to non-vested PBOs, which we expect to recognize over a weighted average period of 0.2 years.

The total fair value of e xercised PBOs for 2024, 2023 and 2022, was nil .

As of December 31, 2024, there was nil of unrecognized stock-based compensation cost related to non-vested PBOs.

Employee Stock Purchase Plan (“ESPP”)

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Capital Stock

Equity Distribution Agreement

In May 2021, we filed a Registration Statement on Form S-3 with the SEC, that automatically became effective upon its filing, under which we may sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings.

On February 27, 2023, we filed a post-effective amendment to that Registration Statement on Form S-3.

Sales Agreements

In May 2021, we filed a Registration Statement on Form S-3 with the SEC (the “2021 Registration Statement”), that automatically became effective upon its filing, under which we were permitted to sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings.

On February 27, 2023, we filed a post-effective amendment to the 2021 Registration Statement.

Pursuant to that post-effective amendment, we registered an aggregate $ 200.0 million of securities.

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

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

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

The EDA will terminate upon the earlier of:

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

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

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

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

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

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

Under the terms of the EDA, PSC was permitted to 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 were not required to sell any shares at any time during the term of the EDA.

On April 24, 2024, we terminated the EDA.

No shares of our common stock were issued and sold pursuant to the EDA during the year ended December 31, 2024.

During the year ended December 31, 2023, 3,079,421 shares of our common stock were issued and sold pursuant to the EDA.

During the year ended December 31, 2023, we received gross proceeds of $ 8.7 million or $ 7.9 million in net proceeds after PSC's commissions and direct offering expenses of $ 0.7 million.

As of December 31, 2023, $ 41.3 million of shares remained available for sale under the EDA.

During the year ended December 31, 2022, no shares of our common stock were sold pursuant to the EDA.

On May 2, 2024, we entered into a Controlled Equity Offering℠ Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), under which Cantor, at our discretion and at such times that we may determine from time to time, may sell up to a maximum of $ 75.0 million of shares of our common stock.

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.

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.

During the year ended December 31, 2024, 10,440,000 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement.

During the year ended December 31, 2024, we received gross proceeds of $ 31.3 million or $ 29.7 million in net proceeds after Cantor’s commissions and direct offering expenses of $ 1.6 million.

As of December 31, 2024, $ 43.7 million remained available for sale under the Cantor Sales Agreement.

In January 2005, we implemented a 401(k) Plan covering certain employees.

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Loss before provision for income taxes $ ( 65,242 ) $ ( 76,171 ) $ ( 33,316 )

The tax provision for the years ended December 31, 2023 and 2022 consists primarily of current year state and foreign income taxes.

The tax provision for the year ended December 31, 2024 and 2023 consists primarily of current year state and foreign income taxes.

The tax provision for the year ended December 31, 2022 consists primarily of taxes attributable to foreign operations.

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R&D Capitalization 28,471 26,821

Unrealized gain/loss 2 —

Lease liability 7,445 3,608

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Right-of-use assets ( 6,895 ) ( 2,958 )

Property and Equipment — ( 736 )

Other — ( 263 )

Total deferred tax liabilities:

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We performed an analysis in 2024 and determined that there was not a limitation that would result in the expiration of carryforwards before they are utilized.

Income tax expense or benefit from continuing operations is generally determined without regard to other categories of earnings, such as discontinued operations and other comprehensive income.

An exception is provided in ASC 740 when there is aggregate income from categories other than continuing operations and a loss from continuing operations in the current year.

In this case, the tax benefit allocated to continuing operations is the amount by which the loss from continuing operations reduces the tax expenses recorded with respect to the other categories of earnings, even when a valuation allowance has been established against the deferred tax assets.

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

In 2014, we determined that the undistributed earnings o f our India subsidiary will be repatriated to the United States, and accordingly, we have provided a deferred tax liability totaling $ 16 thousand as of December 31, 2023 and 2022, for local taxes that would be incurred upon repatriation.

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

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We entered into the initial lease with MetLife for our facilities in Redwood City in 2003 and the RWC Lease has been amended multiple times since then to adjust the leased space and terms of the Lease.

In February 2019, we entered into an Eighth Amendment to the Lease (the “Eighth Amendment”) with MetLife with respect to the Penobscot Space and the 501 Chesapeake Space to extend the term of the Lease for additional periods.

Pursuant to the Eighth Amendment, the term of the lease of the Penobscot Space has been extended through May 2027.

The lease term for the 501 Chesapeake Space has been extended to May 2029.

In December 2024, we entered into a Ninth Amendment to the Lease (the “Ninth Amendment”) with MetLife with respect to the Penobscot Space and the Chesapeake Space to extend the term of the Lease for additional periods.

Pursuant to the Ninth Amendment, the term of the lease of for both the Penobscot Space and the Chesapeake Space has been extended through August 2032.

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

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

The letter of credit is collateralized by deposit balances held by the bank in the amount of $ 1.1 million as of December 31, 2023 and 2022, and are recorded as non-current restricted cash on the consolidated balance sheets.

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

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

The lease had a 10 -year term from the lease commencement date of November 30, 2021 with one option to extend the term for an additional period of 5 years.

In July 2023, we announced our plan to consolidate operations from our San Carlos facility to our headquarters in Redwood City.

On September 1, 2023, the Company entered into an Assignment and Assumption of Lease (the “Assignment Agreement”) with Vaxcyte, Inc.

(“Vaxcyte”) to assign to Vaxcyte all of the Company’s right, title and interest in, under and to the San Carlos Space and the Lease Agreement, dated as of January 29, 2021.

On September 6, 2023, the Company, Vaxcyte and ARE entered into a Consent to Assignment and First Amendment (the “Consent”) pursuant to which ARE consented to the Assignment Agreement and the assignment by the Company and the assumption by Vaxcyte of the Company’s interest as tenant in the lease and agreed to release the Company from all of its obligations under the lease that accrue from and after the assignment.

Under the Assignment Agreement, the Company prepaid to ARE (i) the base rent, as defined in the lease agreement, and (ii) certain amounts payable to ARE in connection with tenant improvements completed by ARE pursuant to the lease, which a mounted to $ 3.1 million .

We provided ARE with a $ 0.5 million security deposit in the form of a letter of credit, which was released in November 2023 following the effectiveness of the lease assignment on October 1, 2023.

As a result of the Assignment Agreement, the Company remeasured the lease obligation for the San Carlos Space as $ 3.1 million, or the present value of the remaining lease payments, which consist of the remaining rent through the effectiveness of the lease assignment and certain amounts payable to ARE pursuant to the Assignment Agreement, and wrote off the remaining lease liability of $ 19.6 million and the corresponding right of use asset balance.

Simultaneously, the Company determined that indicators of impairment existed because the lease assignment will impact the utilization of the related right of use assets and leasehold improvements in the San Carlos Space, and therefore performed a recoverability test by estimating future undiscounted net cash flows expected to be generated from the use of these assets.

As there were no substantial future cash inflows associated with these assets, the carrying values of these assets were deemed unrecoverable.

As a result, the Company recognized a non-cash impairment charge of $ 7.7 million, of which $ 4.7 million is related to leasehold improvements and $ 3.0 million for the right of use assets, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023.

The Ninth Amendment provided a net tenant improvement allowance of $ 3.0 million.

As a result of the lease extension, the Company remeasured the lease liability and adjusted the corresponding right-of-use asset based on the updated lease payments.

The impact of this remeasurement, which included a non-cash increase in both the lease liability and right-of-use asset, was recorded as of December 31, 2024.

The tables below show the balance of right-of-use assets and lease obligations as of January 1, 2024 and the balance as of December 31, 2024, including the changes during the period (in thousands):

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Amortization of right-of-use assets ( 3,184 )

Additions 898

Remeasurement due to lease modification ( 19,622 )

Impairment ( 2,997 )

Addition due to lease modification 18,747

Right-of-use assets - Operating leases, net, at December 31, 2024

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Interest accretion 946

Remeasurement due to lease modification ( 19,622 )

Addition due to lease modification 18,747

Lease obligations - Operating leases, net, at December 31, 2024

In July 2023, we announced our plan to consolidate operations from our previous San Carlos facility to our headquarters in Redwood City.

On September 1, 2023, the Company entered into an Assignment and Assumption of Lease (the “Assignment Agreement”) with Vaxcyte, Inc.

(“Vaxcyte”) to assign to Vaxcyte all of the Company’s right, title and interest in, under and to the San Carlos facility and the related Lease Agreement, dated as of January 29, 2021.

On September 6, 2023, the Company, Vaxcyte and ARE-San Francisco No.

63, LLC (“ARE”) entered into a Consent to Assignment and First Amendment pursuant to which ARE consented to the Assignment Agreement and the assignment by the Company and the assumption by Vaxcyte of the Company’s interest as tenant in the lease.

The effective date of the assignment was October 1, 2023.

As a result of the Assignment Agreement, the Company remeasured the lease obligation for the San Carlos facility to its present value of $ 3.1 million and wrote off the remaining lease liability of $ 19.6 million and the corresponding right of use asset balance.

Simultaneously, the Company determined that indicators of impairment existed because the lease assignment impacts the utilization of the related right of use assets and leasehold improvements in the San Carlos facility, and therefore performed a recoverability test by estimating future undiscounted net cash flows expected to be generated from the use of these assets.

As there were no substantial future cash inflows associated with these assets, the carrying values of these assets were deemed unrecoverable.

As a result, during the third quarter of 2023, the Company recognized a non-cash impairment charge of $ 7.7 million, of which $ 4.7 million was related to leasehold improvements and $ 3.0 million for the right of use assets, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023.

As part of the plan, the Company entered into agreements to sell certain laboratory equipment previously located in the San Carlos facility through an asset auction and as part of the lease assignment of the San Carlos facility to Vaxcyte.

These certain items of laboratory equipment met the assets held for sale criteria and were sold during the fourth quarter of 2023.

Using a fair value estimate based on Level 3 inputs in the fair value hierarchy, the Company determined that the carrying value of these assets exceeds fair value less costs to sell, which resulted in a write-down of $ 1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023.

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

The letter of credit is collateralized by deposit balances held by the bank in the amount of $ 1.1 million as of December 31, 2024 and 2023, and are recorded as non-current restricted cash on the consolidated balance sheets.

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

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

As a result of the lease assignment for the San Carlos Space, discussed further above, we wrote off the related asset retirement obligation of $ 0.2 million in 2023.

We recorded asset retirement obligations of $ 0.3 million and $ 0.5 million as of December 31, 2023 and 2022, respectively, which are included in other liabilities on the consolidated balance sheets.

We recorded asset retirement obligations of $ 0.3 million as of December 31, 2024 and 2023, which are included in other liabilities on the consolidated balance sheets.

Accretion expense related to our asset retirement obligations was nominal in the years ended December 31, 2024 and 2023.

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(2) The Company had no variable lease costs.

Amounts included in measurement of lease obligations (in thousands):

Amounts included in the measurement of lease obligations (in thousands):

Year Ended December 31,

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Operating cash flows from operating leases $ 4,727 $ 9,897 $ 6,506

Non-cash activity:

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

Operating Lease

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Lease obligations $ 30,990

Reconciliation of operating lease liabilities as shown within the audited consolidated balance sheets:

Reconciliation of operating lease liabilities as shown within the consolidated balance sheets:

Current portion of lease obligations - Operating leases $ 2,827

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

The following table provides quantitative data regarding our other commitments.

Future minimum payments reflect amounts that we expect to pay including potential obligations under services agreements subject to risk of cancellation by us (in thousands):

Payments Due by Period

Total 2024 2025 and Thereafter

Facility maintenance agreement $ 701 $ 701 $ —

As of December 31, 2024, the future minimum payments that we expect to pay, including potential obligations under services agreements subject to risk of cancellation by us, is minimal.

Credit Facility

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

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

The right to take draws on the Term Debt expired on December 31, 2022.

In March 2023, we terminated the Credit Facility with Western Alliance Bank.

On February 13, 2024, we entered into the Loan Agreement with Innovatus.

See further discussion at Note 18, “Subsequent Events.”

Legal Proceedings

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Gain contingencies are not recorded until they are realized.

In April 2022, we reached a settlement resolving a non-material dispute involving the Company's trademark.

The terms of the settlement are not material to our business or the results of operations.

We are currently not a party to any material pending litigation or other material proceedings.

We are currently not a party to any material pending litigation or other material legal proceedings that management believes could have a material adverse effect on our financial statements.

Indemnifications

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

Related Party Transactions

Molecular Assemblies, Inc.

In June 2020, we entered into a Stock Purchase Agreement with MAI, a privately held life sciences company, pursuant to which we purchased 1,587,050 shares of MAI's Series A preferred stock for $ 1.0 million.

Nicols, our former President and CEO until August 2022, also joined MAI’s board of directors in June 2020 and remained on MAI's board until September 2023.

Concurrently with our initial equity investment, we entered into a Master Collaboration and Research Agreement with MAI (the “MAI Agreement”), pursuant to which performed services utilizing our CodeEvolver ® technology platform to improve DNA polymerase enzymes in exchange for compensation in the form of additional shares of MAI's Series A and B preferred stock which are valued based on the observed transaction price of similar securities that MAI issued to third parties.

We completed the R&D service with MAI pursuant to the MAI Agreement during the first quarter of 2022.

In addition to our initial equity investment and the shares we have received under the MAI Agreement, in April 2021, we purchased an additional 1,000,000 shares of MAI's Series A preferred stock for $ 0.6 million and in September 2021, we purchased 9,198,423 shares of MAI's Series B preferred stock for $ 7.0 million.

In April 2022, we received a purchase order from MAI for the delivery of certain enzyme products to MAI in 2022.

In July 2022, we and MAI executed the MAI Supply Agreement that will enable MAI to utilize an evolved terminal deoxynucleotidyl transferase (TdT) enzyme in MAI’s Fully Enzymatic Synthesis™ (or FES™) technology.

Revenues recognized from transactions with MAI in the year ended December 31, 2023, and subsequent to the related party period which ended in August 2022, are included in the consolidated statement of operations.

We recogniz ed $ 1.2 million and $ 2.0 million in research and development revenue pursuant to the MAI Agreement in the years ended December 31, 2022 and 2021, respectively.

We recognized $ 0.5 million in product revenue from transactions with MAI in the year ended December 31, 2022 and during the related party period.

Innovatus Loan Agreement

On February 13, 2024 (the “Closing Date”), we entered into a 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, for an aggregate principal amount of up to $ 40.0 million and with a maturity date of February 13, 2029 (the “Innovatus Loan”).

The Innovatus Loan consists of two tranches, of which the first tranche of $ 30.0 million was funded on February 13, 2024.

We will be eligible to draw down the second tranche of $ 10.0 million upon achievement of certain milestones including certain pre-specified revenue thresholds and subject to a payment of a facility fee equal to 1.00 % of the amount of such term loan.

The floating per annum interest rate of the Innovatus Loan is equal to the sum of (a) the greater of (i) prime rate published in the Money Rates section of the Wall Street Journal and (ii) 7.50 % , plus (b) 3.25 %;

provided that, at the election of the Company, up to 2.0 % of such rate shall be payable in-kind until the third anniversary of the closing date.

The Company is required to make monthly interest-only payments through February 1, 2027 (with the ability to extend the interest-only period through February 1, 2028 upon the achievement of certain pre-specified financial milestones), after which the Company is required to make monthly amortizing payments, with the remaining balance of the principal plus accrued and unpaid interest due at maturity.

2.0 % of the interest is payable in-kind for the first three years of the term by increasing the principal balance.

Prepayments of the loan, in whole or in part, will be subject to an early prepayment fee which ranges between 3.0 % and 1.0 % and declines each year until the third anniversary date of the Closing Date, after which no prepayment fee is required.

The Company is also required to pay an exit fee upon any payment or prepayment equal to 3.0 % of the aggregate principal amount of the tranches funded under the Innovatus Loan.

The Innovatus Loan contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to liquidity and net product revenue, with the latter beginning with the period ended December 31, 2024.

The Innovatus Loan is secured by perfected first priority liens on the Company's assets, and the Loan Agreement includes a negative pledge by the Company which prohibits the Company from permitting liens to be placed upon the Company's intellectual property in favor of any party other than Innovatus.

In connection with the issuance of the Innovatus Loan, we recorded a debt discount of $ 1.3 million and capitalized debt issuance costs of $ 0.6 million .

The discount and issuance costs will be amortized over the life of the Innovatus Loan.

Interest expense for the Innovatus Loan for the year ended December 31, 2024 was $ 3.5 million, and is inclusive of non-cash amortization of the debt discount, debt issuance costs, payable in-kind interest, and accretion of final payment.

The carrying amount of the Innovatus Loan approximates fair value given its recent issuance and the interest rate is based on the current prime rate.

The effective interest rate for the Innovatus Loan was 13.1 % as of December 31, 2024 .

Additionally, in connection with entering into the Innovatus Loan, we entered into a Warrant Agreement with Innovatus on February 13, 2024 and issued to Innovatus a warrant to purchase an aggregate of 424,028 shares of the Company’s common stock at an exercise price of $ 2.83 per share.

The warrants may be exercised on a cashless basis, and are immediately exercisable through the 10th anniversary of the issuance date.

At the time of issuance, the Company determined the estimated fair value of the warrants of $ 0.9 million using the Black-Scholes model.

As the warrants represent a freestanding equity instrument, the Company recorded the fair value of the warrants in additional paid-in capital during the first quarter of 2024 .

The Company accounts for the amortization of the debt discount and issuance costs utilizing the effective interest method.

Long-term debt consisted of the following at December 31, 2024 (in thousands):

December 31, 2024

Face value of debt $ 30,000

payment in-kind interest 483

amortized exit fee 125

unamortized debt discount ( 1,151 )

unamortized debt issuance costs ( 552 )

Total long-term debt $ 28,905

The future principal payments under the Innovatus Loan are as follows (in thousands):

Years Ending December 31,

Total principal payments 31,834

amortized exit fee 125

uncapitalized payment in-kind interest ( 1,351 )

unamortized debt issuance fee ( 1,151 )

unamortized debt issuance costs ( 552 )

Total long-term debt $ 28,905

Segment, Geographical and Other Revenue Information

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In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and how our CEO, our chief operating decision maker, assesses performance and allocates resources.

As a result of these changes, our previous Performance Enzymes and Novel Biotherapeutics operating segments were combined into a single reportable segment.

Effective October 1, 2023, the Company's operations are managed and reported to the CEO on a consolidated basis.

The CEO assesses performance and allocated resources based on the consolidated results of operations.

We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure.

Under this new organizational and reporting structure, we managed our business as one reportable segment as of December 31, 2023.

Comparative prior period disclosures that reflected the previous two segments' information have been revised to conform to this change in our reportable segment.

Under this new organizational and reporting structure, we managed our business as one reportable segment since the fourth quarter of 2023.

Effective October 1, 2023, the Company's operations are managed and reported to the CODM on a consolidated basis.

The CODM uses consolidated income (loss) from operations and net income (loss) to assess financial performance and make resource allocation decisions.

These financial measures are used by the CODM to balance short-term financial results with long-term strategic goals, guiding the allocation of budget between product costs, research and development, and general, selling and administrative expenses.

As a result of the restructuring of our business, the Company determined that a triggering event had occurred that required an interim goodwill impairment test during the third quarter of 2023.

The fair value estimate used in the interim goodwill impairment test was primarily based on Level 3 inputs in the fair value hierarchy.

The impairment charge is recorded within asset impairment and other charges in the consolidated statements of operation for the year ended December 31, 2023 .

Significant Customers

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Customer C 10 % * *

Customer D 10 % * *

Customer E * 13 % *

* Percentage was less than 10%

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As of December 31,

Customer A * 53 %

Customer B 16 % 12 %

Customer C 12 % *

Customer D 18 % 12 %

Customer E 13 % *

Customer F 12 % *

Customer G 10 % *

Customer H * 21 %

Customer I * 13 %

* Percentage was less than 10%

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10,359 22,907 56,540

APAC (4)(5)(6)

27,708 33,503 65,050

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(2) Ireland revenue was $ 1.8 million, $ 0.5 million, and $ 37.2 million, for the years ended December 31, 2024, 2023, and 2022, respectively

(3) Switzerland revenue was $ 11.1 million, $ 9.2 million, and $ 10.1 million, for the for the years ended December 31, 2023, 2022, and 2021, respectively.

(3) Switzerland revenue was $ 3.4 million, $ 11.1 million, and $ 9.2 million, for the years ended December 31, 2024, 2023, and 2022, respectively

(4) China revenue was $ 9.8 million, $ 20.3 million, and $ 48.6 million, for the years ended December 31, 2024, 2023, and 2022, respectively

(5) India revenue was $ 7.3 million, $ 5.7 million, and $ 8.8 million, for the years ended December 31, 2024, 2023, and 2022, respectively

(6) Singapore revenue was $ 6.2 million, $ 2.4 million, and $ 3.2 million, for the years ended December 31, 2024, 2023, and 2022, respectively

Identifiable long-lived assets by location was as follows (in thousands):

United States $ 43,098 $ 28,624

Identifiable goodwill was as follows (in thousands):

Goodwill at beginning of period

$ 3,241 $ 3,241

Impairment ( 778 ) —

Goodwill at end of period

$ 2,463 $ 3,241

Allowance for Credit Losses

The following table summarizes the financial assets allowance for credit losses (in thousands):

2023 2022 2021

Balance at beginning of period $ 163 $ 416 $ 74

Provision for credit losses — 54 342

Write-offs ( 33 ) ( 257 ) —

Adjustment to existing allowance ( 65 ) ( 50 ) —

Balance at end of period $ 65 $ 163 $ 416

The following tables summarize accounts receivable by aging category (in thousands):

December 31, 2023

Current 31-60 Days 61-90 Days 91 Days and Over Total over 31 Days Total Balance

Accounts receivable $ 9,583 $ 209 $ 77 $ 167 $ 453 $ 10,036

December 31, 2022

Current 31-60 Days 61-90 Days 91 Days and Over Total over 31 Days Total Balance

Accounts receivable $ 28,896 $ 1,747 $ 469 $ 792 $ 3,008 $ 31,904

Restructuring Charges

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We do not expect to record any future charges related to the restructuring plans initiated in 2023 and 2022.

Subsequent Events

On February 13, 2024, we entered into a 5-year loan and security agreement (the “Loan Agreement”) with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”), an affiliate of Innovatus Capital Partners, LLC, for an aggregate principal amount of up to $ 40.0 million (the “Term Loans”).

The Term Loans consist of two tranches, of which the first tranche of $ 30.0 million was completed on February 13, 2024.

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 %.

In connection with the Term Loans, we are required to issue to Innovatus a warrant to purchase an aggregate of 424,028 shares of the Company’s common stock at an exercise price of $ 2.83 per share.

The Loan Agreement contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to liquidity and net product revenue, with the latter beginning with the period ending September 30, 2024.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data