What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2024-10-31 · 128 added, 239 removed, 380 unchanged (49% of the section changed)

3 unchanged sentences

(In Thousands, Except Per Share Amounts)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets:

38 unchanged sentences

200,000 shares authorized;

81,376 shares and 69,905 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

82,841 shares and 81,850 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 633,101 629,673

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(In Thousands, Except Per Share Amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Product revenue $ 6,059 $ 9,551

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Selling, general and administrative 12,355 12,860

Restructuring charges — 3,140 — 3,284

Asset impairment and other charges — 9,984 165 9,984

Total costs and operating expenses 28,029 28,961

2 unchanged sentences

Interest and other expense, net ( 942 ) ( 516 )

( 4,922 ) ( 3,895 ) ( 6,421 ) ( 3,930 )

Loss before income taxes ( 20,677 ) ( 11,495 )

7 unchanged sentences

(In Thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net loss $ ( 20,688 ) $ ( 11,505 )

Other comprehensive gain:

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

Other comprehensive loss:

Unrealized loss on available-for-sale short-term investments, net of tax ( 38 ) ( 16 )

Comprehensive loss $ ( 20,726 ) $ ( 11,521 )

4 unchanged sentences

Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss)

Accumulated Deficit Total Stockholders' Equity

Three Months Ended September 30, 2024 Shares Amount

Balance as of July 1, 2024

70,914 $ 7 $ 593,253 $ ( 23 ) $ ( 531,790 ) $ 61,447

Issuance of common stock upon release of stock awards 22 — — — — —

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

Stock-based compensation — — 2,708 — — 2,708

Net Loss — — — — ( 20,640 ) ( 20,640 )

Other comprehensive gain

— — — 149 — 149

Balance as of September 30, 2024

81,376 $ 8 $ 625,696 $ 126 $ ( 552,430 ) $ 73,400

Common Stock Additional

Capital Accumulated Other Comprehensive Income

Accumulated Deficit Total Stockholders' Equity

Three Months Ended September 30, 2023 Shares Amount

Balance as of July 1, 2023

69,804 $ 6 $ 579,555 $ — $ ( 455,430 ) $ 124,131

Issuance of common stock upon release of stock awards 23 — — — — —

Stock-based compensation — — 2,283 — — 2,283

Net Loss — — — — ( 34,908 ) ( 34,908 )

Balance as of September 30, 2023

69,827 $ 6 $ 581,838 $ — $ ( 490,338 ) $ 91,506

See accompanying notes to the unaudited condensed consolidated financial statements.

Codexis, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(In Thousands)

Common Stock Additional

Capital Accumulated Other Comprehensive Income

Accumulated Deficit Total Stockholders' Equity

Nine Months Ended September 30, 2024 Shares Amount

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity

Three Months Ended March 31, 2025 Shares Amount

Balance as of January 1, 2025

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Issuance of common stock upon release of stock awards 652 — — — — —

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

Issuance of common stock under employee stock purchase plan 124 — 260 — — 260

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

Stock-based compensation — — 2,379 — — 2,379

Net loss — — — — ( 20,688 ) ( 20,688 )

Other comprehensive gain

— — — 126 — 126

Balance as of September 30, 2024

Other comprehensive loss — — — ( 38 ) — ( 38 )

Balance as of March 31, 2025

82,841 $ 8 $ 633,101 $ 14 $ ( 583,494 ) $ 49,629

Common Stock Additional

Capital Accumulated Other Comprehensive Income

Accumulated Deficit Total Stockholders' Equity

Nine Months Ended September 30, 2023 Shares Amount

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity

Three Months Ended March 31, 2024 Shares Amount

Balance as of January 1, 2024

2 unchanged sentences

Issuance of common stock upon release of stock awards 576 — — — — —

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

3,080 — 7,931 — — 7,931

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

Stock-based compensation — — 3,171 — — 3,171

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

Net loss — — — — ( 11,505 ) ( 11,505 )

Balance as of September 30, 2023

Other comprehensive loss — — — ( 16 ) — ( 16 )

Balance as of March 31, 2024

70,554 $ 7 $ 588,311 $ ( 16 ) $ ( 509,035 ) $ 79,267

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(In Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities:

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Stock-based compensation 2,379 3,171

Asset impairment and other charges 165 9,984

Impairment of investment in non-marketable equity securities 3,910 3,875

Equity securities earned from research and development activities — ( 187 )

Provision (recovery) for credit losses ( 113 ) —

Non-cash interest expense 281 82

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Proceeds from maturity of short-term investments 23,350 —

Proceeds from sale of short-term investments

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

Net cash used in investing activities ( 54,117 ) ( 5,962 )

Net cash provided by (used in) investing activities 11,769 ( 28,563 )

Financing activities:

Proceeds from exercises of stock options 1,098 281

Proceeds from issuance of stock under employee stock purchase plan 525 —

Proceeds from issuance of common stock in connection with equity sales agreements

Costs incurred in connection with equity sales agreements ( 13 ) ( 60 )

1 unchanged sentence

Payment of debt issuance costs — ( 461 )

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

Net cash provided by financing activities 1,085 29,281

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Capital expenditures incurred but not yet paid $ 2,073 $ 371

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of September 30, 2024 and 2023 to the total of the same such amounts shown above in the unaudited condensed consolidated statements of cash flows:

September 30,

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of March 31, 2025 and 2024 to the total of the same such amounts shown above in the unaudited condensed consolidated statements of cash flows:

Cash and cash equivalents $ 18,319 $ 58,046

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Total cash, cash equivalents and restricted cash $ 19,885 $ 59,626

This table excludes short-term investments of $ 52.8 million as of September 30, 2024.

Total cash, cash equivalents, and short-term investments as of September 30, 2024 were $ 90.3 million.

This table excludes short-term investments of $ 41.5 million and $ 27.5 million as of March 31, 2025 and 2024, respectively.

Total cash, cash equivalents, and short-term investments as of March 31, 2025 and 2024 were $ 59.8 million and $ 85.5 million, respectively.

See accompanying notes to the unaudited condensed consolidated financial statements.

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Description of Business

In these notes to the unaudited condensed consolidated financial statements, the “Company,” “Codexis,” “we,” “us,” and “our” refers to Codexis, Inc.

In these notes to the unaudited condensed consolidated financial statements, the “Company,” “we,” “us,” and “our” refers to Codexis, Inc.

and its subsidiaries on a consolidated basis.

We discover, develop, enhance, and commercialize novel, high performance enzymes and other classes of proteins leveraging our proprietary CodeEvolver directed evolution technology platform.

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

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.

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 allocates resources based on the consolidated results of operations.

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 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.

The Company's operations are managed and reported to the Chief Executive Officer (“CEO”), our chief operating decision maker (“CODM”), on a consolidated basis as one reportable segment.

Basis of Presentation and Summary of Significant Accounting Policies

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The condensed consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023, are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2023 Annual Report on Form 10-K and are updated below as necessary.

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements for the three months ended March 31, 2025 and 2024, are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K and are updated below as necessary.

There have been no significant changes in our significant accounting policies or critical accounting estimates since December 31, 2024.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of September 30, 2024 and results of operations for the interim periods presented.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of March 31, 2025 and results of operations for the interim periods presented.

The interim results are not necessarily indicative of the results for any future interim period or for the entire year.

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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 unaudited condensed 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.

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” in the unaudited condensed consolidated statements of operations.

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.

Impairment of Long-Lived Assets

We evaluate the carrying values of long-lived assets, which include property and equipment and right-of-use assets, whenever events, changes in business circumstances or our planned use of long-lived assets indicate that their carrying amounts may not be fully recoverable or that their useful lives are no longer appropriate.

If these facts and circumstances exist, we assess for recovery by comparing the carrying values of long-lived assets with the future net undiscounted cash flows expected to be generated by the asset.

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.

Assets Held For Sale

The Company classifies assets as held for sale when the following conditions are met:

(i) management has committed to a plan to sell, (ii) the assets are available for immediate sale in their present condition, (iii) the Company has initiated an active program to identify a buyer, (iv) it is probable that a sale will occur within one year, (v) the assets are actively marketed for sale at a reasonable price in relation to their current fair value, and (vi) there is a low likelihood of significant changes to the plan or that the plan will be withdrawn.

If all of the criteria are met as of the balance sheet date, the assets are presented separately in the consolidated balance sheet as held for sale at the lower of the carrying amount or fair value less costs to sell.

The assets are then no longer depreciated or amortized while classified as held for sale.

There were no assets classified as held for sale as of September 30, 2024 and December 31, 2023.

Accounting Pronouncements

Recently adopted accounting pronouncements

There were no recent accounting pronouncements or changes in accounting pronouncements during the three and nine months ended September 30, 2024, that are of significance or potential significance to us.

Recently issued accounting pronouncements not yet adopted

In March 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No.

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

This 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.

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

2023-09, Income Taxes (Topic 740):

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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 November 2023, FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

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

The standard was adopted beginning January 1, 2025 on a prospective basis.

2023-09 will become effective in the Company’s Annual Report on Form 10-K for the year ending December 31, 2025 and we are continuing to evaluate whether adoption of this standard will have a material impact on our unaudited condensed consolidated financial statements and related disclosures.

Aside from the recently adopted accounting pronouncements described above and recently issued accounting pronouncements not yet adopted and described below, there were no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2025, 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.

In January 2025, the FASB issued ASU 2025-01, “ Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Clarifying the Effective Date ” to clarify the effective date for non-calendar year-end entities.

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.

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Disaggregated information is as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Primary geographical markets:

Americas $ 1,534 $ 4,278 $ 9,823 $ 10,798

EMEA 2,229 3,191 6,768 14,630

APAC 9,070 1,808 21,294 18,154

$ 3,919 $ 2,572

Total revenues $ 7,543 $ 17,073

Contract Balances

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

September 30, 2024 December 31, 2023

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

March 31, 2025 December 31, 2024

Contract assets $ 1,788 $ 4,375

2 unchanged sentences

deferred revenue $ 928 $ 450

We had no asset impairment charges related to financial assets in the three and nine months ended September 30, 2024 and 2023.

The increase in contract assets was primarily due to increases in product revenue from contracts subject to over time revenue recognition.

The decrease in unbilled receivables was primarily due to the timing of billings.

The decrease in deferred revenue was primarily due to the timing of recognition of revenue.

As of September 30, 2024, we have $ 3.5 million of short-term unbilled receivables presented as unbilled receivables within current assets and $ 1.3 million of long-term unbilled receivables that is included within the other non-current assets line item in the condensed consolidated balance sheets.

We ha d no a sset impairment charges related to financial assets in the three months ended March 31, 2025 and 2024.

The decrease in contract assets was primarily due to decreases in product revenue from contracts subject to over time revenue recognition.

The increase in unbilled receivables was primarily due to the timing of billings.

The increase in deferred revenue was primarily due to the timing of recognition of revenue.

As of March 31, 2025, we have $ 3.4 million of short-term unbilled receivables presented as unbilled receivables within current assets and $ 0.4 million of long-term unbilled receivables that is included within the other non-current assets line item in the condensed consolidated balance sheets.

As of December 31, 2024 , we had $ 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 condensed consolidated balance sheets.

We recognized the following revenues (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Revenue recognized in the period for:

2024 2023 2024 2023

Amounts included in contract liabilities at the beginning of the period:

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

The estimated revenue does not include contracts with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that are unexercised as of September 30, 2024.

The balances in the table below a re partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts as of September 30, 2024 (in thousands):

Th e balances in the table below are partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts as of March 31, 2025 (in thousands):

Remainder of 2025

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The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Shares issuable under the Equity Incentive Plan and ESPP (1)

13,800 13,105

Total potentially dilutive securities 14,224 13,529

( 1) Included 386,635 and 568,224 of anti-dilutive potential common shares from ESPP for the three months ended March 31, 2025 and 2024, respectively.

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

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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 Molecular Assemblies, Inc.

(“MAI”) and seqWell, Inc.

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

(“seqWell”) and other investments in non-marketable equity securities.

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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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 interest and other expense, net in the unaudited condensed consolidated statements of operations.

For the three and nine months ended September 30, 2024, we recognized an impairment charge of $ 3.9 million which is presented within interest and other expense, net in the condensed consolidated statements of operations.

This adjustment is related to the write-down of our investment in MAI to its related fair value as determined based on valuation methods using the latest observed transaction price of MAI’s preferred stock securities to be issued during the fourth quarter of 2024 and adjusted for the rights and obligations of the preferred stock securities the Company holds.

There was no remeasurement event for our investments in seqWell and other non-marketable equity securities that occurred during the three and nine months ended September 30, 2024.

For the three and nine months ended September 30, 2023, we recognized an impairment charge of $ 3.9 million and included this as an adjustment to the carrying value of our investments in seqWell and Arzeda Corp.

This adjustment, which is presented within interest and other expense, net in the condensed consolidated statements of operations, is related to the write-down of the carrying value of our investments in seqWell by $ 3.0 million and in Arzeda by $ 0.9 million to their estimated fair values as determined based on valuation methods using the recent transaction price of similar p referred stock securities issued by the investees and adjusted for the rights and obligations of the preferred stock securities the Company holds.

We recognized no realized gains or losses during the three and nine months ended September 30, 2024 and 2023.

There was no remeasurement event for our investments in non-marketable equity securities that occurred during the three months ended March 31, 2025 and 2024.

We recognized no realized gains or losses during the three months ended March 31, 2025 and 2024.

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

September 30, 2024 December 31, 2023

$ 2,783 $ 6,693

March 31, 2025 December 31, 2024

seqWell $ 2,416 $ 2,416

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Fair Value Measurements

The following tables show the Company’s cash, cash equivalents, and short-term investments by significant investment category as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

The following tables show the Company’s cash, cash equivalents, and short-term investments by significant investment category as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

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

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Total $ 59,767 $ 24 $ ( 10 ) $ 59,781 $ 18,319 $ 41,462

(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, 2024

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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

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 September 30, 2024, and December 31, 2023, the contractual maturity of all investments held was less than one year.

During the three and nine months ended September 30, 2024 and 2023, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on our short-term investments.

Balance Sheets Details

As of March 31, 2025 and December 31, 2024, the contractual maturity of all investments held was less than one year.

During the three months ended March 31, 2025 and 2024, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on our short-term investments.

Balance Sheet Details

Inventories consisted of the following (in thousands):

September 30, 2024 December 31, 2023

Raw materials $ — $ 108

March 31, 2025 December 31, 2024

Work in process $ — $ 29

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Total inventories

$ 1,781 $ 1,799

Prepaid expenses and other current assets

As of September 30, 2024, prepaid expenses and other current assets consisted of prepaid expenses of $ 3.2 million and other current assets of $ 0.3 million.

As of March 31, 2025, prepaid expenses and other current assets consisted of prepaid expenses of $ 3.7 million and other current assets of $ 0.5 million.

As of December 31, 2024, prepaid expenses and other current assets consisted of prepaid expenses of $ 3.7 million and other current assets of $ 0.5 million.

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Property and equipment, net consisted of the following (in thousands):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Laboratory equipment $ 36,198 $ 35,949

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Research and development $ 946 $ 1,032

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Total depreciation expense

$ 1,158 $ 1,252

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Accrued purchases $ 2,544 $ 2,908

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Stock-based Compensation

Equity Incentive Plans

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.

Employee Stock Purchase Plan

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 Annual Meeting in June 2023.

In April 2023, our Board of Directors 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.

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

For the three and nine months ended September 30, 2024, nil and 123,889 shares of our common stock were purchased under the ESPP, respectively.

As of September 30, 2024, 1,876,111 shares of common stock were available for future issuance under the ESPP.

We recognized $ 0.1 million and $ 0.2 million of stock-based compensation expenses related to the ESPP for the three and nine months ended September 30, 2024, respectively.

As of September 30, 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

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 .

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 .

Restricted Stock Units (“RSUs”)

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

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

No shares of our common stock were purchased under the ESPP during the three months ended March 31, 2025 and 2024.

As of March 31, 2025, 1,736,843 shares of common stock were available for future issuance under the ESPP.

We recognized $ 0.1 million of stock-based compensation expenses related to the ESPP for each of the three months ended March 31, 2025 and 2024.

As of March 31, 2025, the total unrecognized stock-based compensation expense, net of expected forfeitures, related to the ESPP was $ 0.4 million and is expected to be recognized over the remaining offering period.

Stock-Based Compensation Expense

Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Cost of product revenue $ 61 $ 115

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The following table presents total stock-based compensation expense by security type included in the unaudited condensed consolidated statements of operations (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Stock options $ 1,355 $ 1,514

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Performance based options (“PBOs”) — 16

ESPP 93 — 242 —

Total $ 2,379 $ 3,171

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.

The modification resulted in a stock-based compensation expense of $ 2.0 million recognized in selling, general and administrative expenses during the nine months ended September 30, 2024.

As of September 30, 2024, unrecognized stock-based compensation expense, net of expected forfeitures, was $ 12.0 million related to unvested stock options, and $ 5.0 million related to unvested RSUs and RSAs.

As of March 31, 2025, unr ecognized stock-based compensation expense, net of expected forfeitures, was $ 12.3 million related to unvested stock options and $ 5.6 million related to unvested RSUs and RSAs.

Stock-based compensation expense for these awards will be recognized through 2029.

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Exercise of Options

For the nine months ended September 30, 2024 and September 30, 2023, we issued 72,856 and 214,284 shares, respectively, upon option exercises at a weighted-average exercise price of $ 1.97 per share, with net cash proceeds of $ 0.1 million and $ 0.4 million, respectively.

For the three months ended March 31, 2025 and March 31, 2024, we issued 339,142 and 72,856 shares, respectively, upon option exercises at a weighted-average exercise price of $ 3.09 and $ 1.97 per share, respectively, with net cash proceeds of $ 1.0 million and $ 0.1 million, respectively.

Sales Agreements

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On April 24, 2024, we terminated the EDA.

No shares of our common stock were issued and sold pursuant to the EDA during the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2023, nil and 3,079,421 shares of our common stock, respectively, were issued and sold pursuant to the EDA and we received gross proceeds of nil and $ 8.7 million, or nil and $ 7.9 million in net proceeds after PSC's commissions and direct offering expenses of nil and $ 0.7 million, respectively.

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

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.

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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 three and nine months ended September 30, 2024, 10,440,000 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement and 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 September 30, 2024, $ 43.7 million remained available for sale under the Cantor Sales Agreement.

In 2024, 10,440,000 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement, all during the third quarter of 2024, and we received net proceeds of $ 29.7 million after Cantors’ commissions and direct offering expenses.

During the three months ended March 31, 2025, no shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement.

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

Commitments and Contingencies

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The Company has entered into operating leases primarily for office and laboratory space.

Lease cost amounts included in the measurement of lease obligations and other information related to non-cancellable operating leases were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Operating lease costs (1)

Lease costs amounts included in the measurement of lease obligations and other information related to non-cancellable operating leases were as follows (in thousands):

Three Months Ended March 31,

Operating lease cost (1)

$ 1,243 $ 1,032

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Weighted-average discount rate 7.0 %

Nine Months Ended September 30,

Three Months Ended March 31,

Cash paid (in thousands) :

Operating cash flows from operating leases $ 1,208 $ 1,173

As of September 30, 2024, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

As of March 31, 2025, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

Years Ending December 31, Operating Leases

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Total operating lease liabilities $ 30,311

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 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 condensed consolidated statements of operations, for the three and nine months ended September 30, 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 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 of $ 1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations for the three and nine months ended September 30, 2023.

Other Commitments

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Supply arrangements are primarily for fixed-price manufacture and supply.

Service agreements are primarily for the development of manufacturing processes.

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

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

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

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 (Remaining 3 Months) 2025 and Thereafter

Facility maintenance agreement $ 281 $ 281 $ —

As of March 31, 2025, the future minimum payments that we expect to pay, including potential obligations under services agreements subject to risk of cancellation by us, is minimal.

Legal Proceedings

We may be involved in legal actions in the ordinary course of business, including inquiries and proceedings concerning business practices and intellectual property infringement, employee relations and other claims.

We will recognize a loss contingency in the condensed consolidated financial statements when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated.

We will recognize a loss contingency in the consolidated financial statements when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated.

We will disclose any loss contingencies that do not meet both conditions if there is a reasonable possibility that a material loss may have been incurred.

Gain contingencies are not recorded until they are realized.

We are not currently 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.

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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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 pre-specified revenue thresholds.

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, 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.

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.

Following the interest-only period, the Company is required to make monthly amortizing payments, with the remaining balance of the principal plus accrued and unpaid interest due at maturity.

For the first three years of the term, 2.0 % of the interest is payable in-kind 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.

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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 September 30, 2024.

The Innovatus Loan is secured by perfected first priority liens on the Company's assets, including a commitment by the Company to not allow any liens to be placed upon the Company's intellectual property.

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 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 during the first quarter of 2024 .

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

Interest expense for the Innovatus Loan for the three and nine months ended September 30, 2024 was $ 1.0 million and $ 2.5 million respectively, and is inclusive of non-cash amortization of the debt discount, debt issuance costs, payable in-kind interest, and accretion of final payment.

Interest expense for the Innovatus Loan for the three months ended March 31, 2025 and 2024 was $ 0.9 million and $ 0.5 million , respectively, 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 13.5 % as of September 30, 2024 .

The effective interest rate for the Innovatus Loan was 13.1 % as of March 31, 2025 .

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.

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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 September 30, 2024 (in thousands):

September 30, 2024

Long-term debt consisted of the following at March 31, 2025 (in thousands):

March 31, 2025

Face value of debt $ 30,000

1 unchanged sentence

amortized exit fee 166

unamortized debt issuance cost ( 523 )

unamortized debt discount ( 1,091 )

unamortized debt issuance costs ( 580 )

Total long-term debt $ 29,186

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uncapitalized payment in-kind interest ( 1,200 )

unamortized debt issuance fee ( 1,208 )

unamortized debt issuance costs ( 580 )

unamortized debt issuance cost ( 523 )

unamortized debt discount ( 1,091 )

Total long-term debt $ 29,186

1 unchanged sentence

Segment Information

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

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.

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

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.

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 asset impairment and other charges in the condensed consolidated statements of operation for the three and nine months ended September 30, 2023 .

We manage our business as one reportable segment.

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 expenses, and general, selling and administrative expenses.

Significant Customers

1 unchanged sentence

Percentage of Total Revenues for the

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

18 % * 17 % 10 %

17 % * 10 % *

Three Months Ended March 31,

Customer A 34 % *

Customer B 17 % 10 %

Customer C 15 % 15 %

Customer D * 35 %

* Percentage was less than 10%

1 unchanged sentence

Percentage of Accounts Receivables as of

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Customer C 39 % 16 %

Customer E 36 % 18 %

Customer F * 12 %

Customer G * 10 %

* Percentage was less than 10%

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

United States $ 43,952 $ 43,098

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

What changed 10-Q

Item 1. Financial Statements