CODEXIS, INC. 10-Q

Item 1. Financial Statements Codexis, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In Thousands, Except Per Share Amounts) March 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 18,319 $ 19,264 Restricted cash, current 504 503 Short-term investments 41,462 54,194 Financial assets: Accounts receivable 6,442 11,920 Contract assets 1,788 4,375 Unbilled receivables 3,406 2,751 Total financial assets 11,636 19,046 Less: allowances ( 49 ) ( 162 ) Total financial assets, net 11,587 18,884 Inventories 1,781 1,799 Prepaid expenses and other current assets 4,155 4,128 Total current assets 77,808 98,772 Restricted cash 1,062 1,062 Investment in non-marketable equity securities 2,798 2,798 Right-of-use assets - Operating leases, net 27,986 28,700 Property and equipment, net 15,803 14,197 Goodwill 2,463 2,463 Other non-current assets 967 1,019 Total assets $ 128,887 $ 149,011 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 6,046 $ 2,838 Accrued compensation 6,387 11,410 Other accrued liabilities 5,117 6,223 Current portion of lease obligations - Operating leases 2,913 2,827 Deferred revenue 438 350 Total current liabilities 20,901 23,648 Deferred revenue, net of current portion 490 100 Long-term lease obligations - Operating leases 27,398 28,163 Long-term debt 29,186 28,905 Other long-term liabilities 1,283 1,268 Total liabilities 79,258 82,084 Commitments and Contingencies (Note 10) Stockholders' equity: Preferred stock, $ 0.0001 par value per share; 5,000 shares authorized, none issued and outstanding — — Common stock, $ 0.0001 par value per share; 200,000 shares authorized; 82,841 shares and 81,850 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively 8 8 Additional paid-in capital 633,101 629,673 Accumulated other comprehensive income 14 52 Accumulated deficit ( 583,494 ) ( 562,806 ) Total stockholders' equity 49,629 66,927 Total liabilities and stockholders' equity $ 128,887 $ 149,011 See accompanying notes to the unaudited condensed consolidated financial statements. 3 Codexis, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In Thousands, Except Per Share Amounts) Three Months Ended March 31, 2025 2024 Revenues: Product revenue $ 6,059 $ 9,551 Research and development revenue 1,484 7,522 Total revenues 7,543 17,073 Costs and operating expenses: Cost of product revenue 2,732 4,855 Research and development 12,942 11,246 Selling, general and administrative 12,355 12,860 Total costs and operating expenses 28,029 28,961 Loss from operations ( 20,486 ) ( 11,888 ) Interest income 751 909 Interest and other expense, net ( 942 ) ( 516 ) Loss before income taxes ( 20,677 ) ( 11,495 ) Provision for income taxes 11 10 Net loss $ ( 20,688 ) $ ( 11,505 ) Net loss per share, basic and diluted $ ( 0.25 ) $ ( 0.16 ) Weighted average common stock shares used in computing net loss per share, basic and diluted 82,410 69,854 See accompanying notes to the unaudited condensed consolidated financial statements. 4 Codexis, Inc. Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (In Thousands) Three Months Ended March 31, 2025 2024 Net loss $ ( 20,688 ) $ ( 11,505 ) Other comprehensive loss: Unrealized loss on available-for-sale short-term investments, net of tax ( 38 ) ( 16 ) Comprehensive loss $ ( 20,726 ) $ ( 11,521 ) See accompanying notes to the unaudited condensed consolidated financial statements. 5 Codexis, Inc. Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (In Thousands) Common Stock Additional Paid-in 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 81,850 $ 8 $ 629,673 $ 52 $ ( 562,806 ) $ 66,927 Issuance of common stock upon exercise of stock options 339 — 1,049 — — 1,049 Issuance of common stock upon release of stock awards 652 — — — — — Stock-based compensation — — 2,379 — — 2,379 Net loss — — — — ( 20,688 ) ( 20,688 ) Other comprehensive loss — — — ( 38 ) — ( 38 ) Balance as of March 31, 2025 82,841 $ 8 $ 633,101 $ 14 $ ( 583,494 ) $ 49,629 Common Stock Additional Paid-in 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 69,905 $ 7 $ 584,138 $ — $ ( 497,530 ) $ 86,615 Issuance of common stock upon exercise of stock options 73 — 143 — — 143 Issuance of common stock upon release of stock awards 576 — — — — — Issuance of common stock warrants in connection with debt issuance — — 859 — — 859 Stock-based compensation — — 3,171 — — 3,171 Net loss — — — — ( 11,505 ) ( 11,505 ) Other comprehensive loss — — — ( 16 ) — ( 16 ) Balance as of March 31, 2024 70,554 $ 7 $ 588,311 $ ( 16 ) $ ( 509,035 ) $ 79,267 See accompanying notes to the unaudited condensed consolidated financial statements. 6 Codexis, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In Thousands) Three Months Ended March 31, 2025 2024 Operating activities: Net loss $ ( 20,688 ) $ ( 11,505 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,195 1,252 Reduction in the carrying amount of right-of-use assets 714 773 Stock-based compensation 2,379 3,171 Provision (recovery) for credit losses ( 113 ) — Non-cash interest expense 281 82 Amortization of discount on short-term investments ( 330 ) ( 41 ) Other non-cash items ( 3 ) ( 10 ) Changes in operating assets and liabilities: Financial assets 7,426 5,571 Inventories 18 244 Prepaid expenses and other assets 31 ( 146 ) Accounts payable 2,065 ( 2,038 ) Accrued compensation and other accrued liabilities ( 6,501 ) ( 3,875 ) Other long term liabilities ( 750 ) ( 996 ) Deferred revenue 478 ( 271 ) Net cash used in operating activities ( 13,798 ) ( 7,789 ) Investing activities: Purchase of property and equipment ( 1,256 ) ( 1,130 ) Proceeds from sale of property and equipment 1 11 Purchases of short-term investments ( 10,326 ) ( 27,444 ) Proceeds from maturity of short-term investments 23,350 — Net cash provided by (used in) investing activities 11,769 ( 28,563 ) Financing activities: Proceeds from exercises of stock options 1,098 281 Costs incurred in connection with equity sales agreements ( 13 ) ( 60 ) Proceeds from long-term debt — 29,521 Payment of debt issuance costs — ( 461 ) Net cash provided by financing activities 1,085 29,281 Net decrease in cash, cash equivalents and restricted cash ( 944 ) ( 7,071 ) Cash, cash equivalents and restricted cash at the beginning of the period 20,829 66,697 Cash, cash equivalents and restricted cash at the end of the period $ 19,885 $ 59,626 Supplemental disclosure of cash flow information: Interest paid $ 432 $ 147 Income taxes paid $ — $ 17 Supplemental non-cash investing and financing activities: Capital expenditures incurred but not yet paid $ 2,073 $ 371 7 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: March 31, 2025 2024 Cash and cash equivalents $ 18,319 $ 58,046 Restricted cash, current and non-current 1,566 1,580 Total cash, cash equivalents and restricted cash $ 19,885 $ 59,626 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. 8 Codexis Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Description of Business 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. 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. Note 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information but does not include all the information and notes required by GAAP for complete financial statements. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2024. 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 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 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. The unaudited condensed consolidated financial statements include the accounts of Codexis, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. We regularly assess these estimates which primarily affect revenue recognition, deferred revenue, inventories, valuation of equity investments, goodwill arising out of business acquisitions, accrued liabilities, stock awards, and the valuation allowances associated with deferred tax assets. Actual results could differ from those estimates and such differences may be material to the condensed consolidated financial statements. 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 condensed 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. 9 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” 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. Accounting Pronouncements Recently adopted accounting pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. The standard was adopted beginning January 1, 2025 on a prospective basis. ASU No. 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. In October 2023, FASB issued ASU No. 2023-06, Disclosure Improvements: 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 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. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. We are currently evaluating the effects of the standard on our consolidated financial statements and related disclosures. Note 3. Revenue Recognition Disaggregation of Revenue The following table provides information about disaggregated revenue from contracts with customers by g eographic regions. The geographic regions that are tracked are the Americas (United States, Canada, and Latin America), EMEA (Europe, Middle East, and Africa), and APAC (Australia, New Zealand, Southeast Asia, and China). 10 Disaggregated information is as follows (in thousands): Three Months Ended March 31, 2025 2024 Primary geographical markets: EMEA $ 3,919 $ 2,572 Americas 2,088 7,244 APAC 1,536 7,257 Total revenues $ 7,543 $ 17,073 Contract Balances 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 Unbilled receivables $ 3,849 $ 3,208 Contract liabilities: deferred revenue $ 928 $ 450 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 March 31, Revenue recognized in the period for: 2025 2024 Amounts included in contract liabilities at the beginning of the period: Performance obligations satisfied $ 250 $ 371 Changes in the period: Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods 387 189 Performance obligations satisfied from new activities in the period - contract revenue 6,906 16,513 Total revenues $ 7,543 $ 17,073 Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting periods. The estimated revenue does not include contracts with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that are unexercised as of March 31, 2025. 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 2026 2027 2028 and Thereafter Total Product revenue $ 428 $ 140 $ 40 $ 320 $ 928 11 Note 4. N et Loss per S hare Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding, less restricted stock awards (“RSAs”) subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock shares outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities. For all periods presented, diluted and basic net loss per share are identical since potential common stock shares are excluded from the calculation, as their effect was anti-dilutive. Anti-Dilutive Securities In periods of net loss, the weighted average number of shares outstanding, prior to the application of the treasury stock method, excludes potentially dilutive securities from the computation of diluted net loss per common share because including such shares would have an anti-dilutive effect. The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands): Three Months Ended March 31, 2025 2024 Shares issuable under the Equity Incentive Plan and ESPP (1) 13,800 13,105 Warrants (2) 424 424 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. For additional information, see Note 11, “Debt.” Note 5. Investments in Non-Marketable Securities 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 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. Non-marketable equity securities are measured at fair value on a non-recurring basis and classified within Level 2 in the fair value hierarchy when we estimate the fair value of these investments using the observable transaction price paid by third party investors for the same or similar security of the same issuers. 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 interest and other expense, net in the unaudited condensed consolidated statements of operations. 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): March 31, 2025 December 31, 2024 seqWell $ 2,416 $ 2,416 Other investments in non-marketable equity securities 382 382 Total non-marketable equity securities $ 2,798 $ 2,798 12 Note 6. Fair Value Measurements 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 Cash $ 4,391 $ — $ — $ 4,391 $ 4,391 $ — Level 1: Money market funds 6,209 — — 6,209 6,209 — Level 2 (1) : Commercial paper 15,123 2 ( 2 ) 15,123 7,719 7,404 Corporate debt 11,244 2 ( 8 ) 11,238 — 11,238 U.S. agency securities 1,995 1 — 1,996 — 1,996 U.S. treasury securities 20,805 19 — 20,824 — 20,824 Subtotal 49,167 24 ( 10 ) 49,181 7,719 41,462 Total $ 59,767 $ 24 $ ( 10 ) $ 59,781 $ 18,319 $ 41,462 December 31, 2024 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-term Investments Cash $ 3,284 $ — $ — $ 3,284 $ 3,284 $ — Level 1: 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 U.S. agency securities 1,989 2 — 1,991 — 1,991 U.S. 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. 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 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. Note 7. Balance Sheet Details Inventories Inventories consisted of the following (in thousands): March 31, 2025 December 31, 2024 Work in process $ — $ 29 Finished goods 1,781 1,770 Total inventories $ 1,781 $ 1,799 13 Prepaid expenses and other current assets 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. Property and Equipment, net Property and equipment, net consisted of the following (in thousands): March 31, 2025 December 31, 2024 Laboratory equipment $ 36,198 $ 35,949 Leasehold improvements 14,256 12,159 Computer equipment and software 2,534 2,459 Office equipment and furniture 1,164 1,124 Construction in progress 3,223 3,441 Property and equipment 57,375 55,132 Less: accumulated depreciation and amortization ( 41,572 ) ( 40,935 ) Property and equipment, net $ 15,803 $ 14,197 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 March 31, 2025 2024 Research and development $ 946 $ 1,032 Selling, general and administrative 212 220 Total depreciation expense $ 1,158 $ 1,252 Other Accrued Liabilities Other accrued liabilities consisted of the following (in thousands): March 31, 2025 December 31, 2024 Accrued purchases $ 2,544 $ 2,908 Accrued professional and outside service fees 2,396 3,064 Other 177 251 Total other accrued liabilities $ 5,117 $ 6,223 Note 8. Stock-based Compensation Employee Stock Purchase Plan 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. 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. Participant purchases are limited to a maximum of $ 25,000 of fair value of our stock per calendar year. 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. 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. 14 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 March 31, 2025 2024 Cost of product revenue $ 61 $ 115 Research and development 665 820 Selling, general and administrative 1,653 2,236 Total $ 2,379 $ 3,171 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 March 31, 2025 2024 Stock options $ 1,355 $ 1,514 RSUs and RSAs 919 1,317 Performance-contingent restricted stock units (“PSUs”) — 247 Performance based options (“PBOs”) — 16 ESPP 105 77 Total $ 2,379 $ 3,171 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. Note 9. Capital Stock Exercise of Options 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 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 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 of 1933, as amended (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 three months ended March 31, 2024. 15 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. 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. Note 10. Commitments and Contingencies Lease and other information The Company has entered into operating leases primarily for office and laboratory space. 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, 2025 2024 Operating lease cost (1) $ 1,243 $ 1,032 (1) The Company had no variable lease costs. Other information: Operating Leases Weighted-average remaining lease term (in years) 7.6 years Weighted-average discount rate 7.0 % Three Months Ended March 31, Cash paid (in thousands) : 2025 2024 Operating cash flows from operating leases $ 1,208 $ 1,173 16 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 2025 (remaining 9 months) $ 3,660 2026 5,014 2027 4,053 2028 5,400 2029 5,365 Thereafter 15,695 Total minimum lease payments 39,187 Less: imputed interest 8,876 Lease obligations $ 30,311 Reconciliation of operating lease liabilities as shown within the unaudited condensed consolidated balance sheets (in thousands): Current portion of lease obligations - Operating leases $ 2,913 Long-term lease obligations - Operating leases 27,398 Total operating lease liabilities $ 30,311 Other Commitments We enter into supply and service arrangements in the normal course of business. Supply arrangements are primarily for fixed-price manufacture and supply. Service agreements are primarily for the development of manufacturing processes and certain studies. Commitments under service agreements are subject to cancellation at our discretion which may require payment 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. 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 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 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 We are required to recognize a liability for the fair value of any obligations we assume upon the issuance of a guarantee. We have certain agreements with licensors, licensees and collaborators that contain indemnification provisions. In such provisions, we typically agree to indemnify the licensor, licensee and collaborator against certain types of third-party claims. The maximum amount of the indemnifications is not limited. We accrue for known indemnification issues when a loss is probable and can be reasonably estimated. There were no accruals for expenses related to indemnification issues for any periods presented. 17 Note 11. Debt 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. 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. 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 September 30, 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 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 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 13.1 % 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. The warrants may be exercised on a cashless basis, and are immediately exercisable through the 10 th 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 March 31, 2025 (in thousands): March 31, 2025 Face value of debt $ 30,000 Add: payment in-kind interest 634 Add: amortized exit fee 166 Less: unamortized debt issuance cost ( 523 ) Less: unamortized debt discount ( 1,091 ) Total long-term debt $ 29,186 18 The future principal payments under the Innovatus Loan are as follows (in thousands): Years Ending December 31, 2025 $ — 2026 — 2027 13,264 2028 15,917 2029 2,653 Total principal payments 31,834 Add: amortized exit fee 166 Less: uncapitalized payment in-kind interest ( 1,200 ) Less: unamortized debt issuance cost ( 523 ) Less: unamortized debt discount ( 1,091 ) Total long-term debt $ 29,186 Note 12. Segment, Geographical and Other Revenue Information Segment Information 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 Customers that each accounted for 10% or more of our total revenues were as follows: Percentage of Total Revenues for the Three Months Ended March 31, 2025 2024 Customer A 34 % * Customer B 17 % 10 % Customer C 15 % 15 % Customer D * 35 % * Percentage was less than 10% Customers that each accounted for 10% or more of accounts receivable balances as of the periods presented as follows: Percentage of Accounts Receivables as of 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): March 31, 2025 December 31, 2024 United States $ 43,952 $ 43,098 19