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Item 7. Management’s Discussion and Analysis

2026-03-11 compared with 2025-02-27 · 81 added, 126 removed, 205 unchanged (50% of the section changed)

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The following management's discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K.

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

These statements include, but are not limited to, expectations regarding our strategy, business plans, financial performance and developments relating to our industry.

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Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item IA:

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A:

"Risk Factors," of this Annual Report on Form 10-K and elsewhere in this report.

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Business Overview

We are a leading provider of enzymatic solutions for efficient and scalable therapeutics manufacturing, and we leverage our proprietary CodeEvolver directed evolution technology platform to discover, develop, enhance, and commercialize novel, high-performance enzymes and other classes of proteins.

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

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

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

our foundational, revenue-generating pharma biocatalysis business and our Enzyme-Catalyzed Oligonucleotide (ECO) Synthesis (“ECO Synthesis”) manufacturing platform, which is comprised of enzymatic tools and processes, designed to enable large-scale manufacture of RNA interference ( “ RNAi ” ) therapeutics.

In July 2023, we announced that we discontinued investment in certain development programs, primarily in our novel biotherapeutics business segment.

As part of this strategic prioritization, during 2024, we completed the divestiture and monetization of certain biotherapeutics assets as well as certain non-core life science assets, including in genomics and next generation sequencing applications.

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

We are a leading provider of technology solutions to improve therapeutics manufacturing.

We focus on impacting the manufacturing process by using o ur proprietary CodeEvolver directed evolution technology platform to discover, develop, enhance, and commercialize novel, high-performance enzymes and other classes of proteins.

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

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

We employ our technology and expertise to enhance the properties and performance of enzymes to drive pivotal improvements in manufacturing of complex therapeutics across two key areas:

ECO Synthesis manufacturing platform

Our ECO Synthesis ® manufacturing platform is comprised of enzymatic tools and processes that are designed to enable large-scale manufacture of RNA interference (“RNAi”) therapeutics.

We use the CodeEvolver platform technology to develop enzymes for the synthesis of RNAi therapeutics in production processes that deliver improvements, including purity, yield, and manufacturing efficiency.

In November 2024, we presented data at the TIDES Europe conference demonstrating the successful end-to-end enzymatic synthesis of an entire commercially approved small interfering ribonucleic acid (“siRNA”) therapeutic asset with the ECO Synthesis manufacturing platform.

In addition to using full enzymatic sequential synthesis, adding one nucleotide at a time to synthesize the two strands from beginning to end, we demonstrated synthesis of the same siRNA asset using three other routes utilizing enzymatic ligation with our double-stranded RNA (“dsRNA”) ligase, which can stitch together fragments of chemically and/or enzymatically synthesized RNA to form the full siRNA drug structure.

For the three other routes, our data highlighted that full-length oligonucleotides of equal quality and yields were obtained whether the fragments were made with enzymes or by traditional solid phase oligonucleotide synthesis (“SPOS”) (current standard production route for oligonucleotide manufacturing).

At the end of 2024, we completed the build out of our ECO Synthesis Innovation Lab, a facility where our ECO Synthesis manufacturing platform is deployed to synthesize gram-scale quantities of a customer’s desired siRNA construct suitable for pre-clinical testing.

In addition, the infrastructure allows us to provide process development, analytical method development and other manufacturing process optimization which is required to enable the siRNA to proceed to clinical-stage manufacturing and testing.

In 2025, we successfully manufactured non- good manufacturing practice (“GMP”)-grade siRNA drug substance for customers in our Innovation Lab under development services contracts.

We also entered into partnerships with three large-scale contract development and manufacturing organizations (“CDMOs”) to evaluate our ECO platform of enzymatic tools and processes to ultimately synthesize GMP -grade siRNA drug substance for our customers.

In each of these agreements, we are currently in the feasibility testing stage and expect to advance at least one of these partnerships, including initiating a technology transfer to that organization, in 2026.

We believe these relationships to be a vital extension of our strategy to be a technology solutions provider for our customers.

Through these arrangements, our customers will have access to proven, large-scale commercial manufacturers who are familiar with our process, who can then offer a seamless manufacturing scale-up of our customers’ products.

We expect to expand our enzymatic tools and process offerings as we further enhance the ECO Synthesis platform to address the overall market needs for scalable and sustainable RNAi manufacturing.

Small molecule pharma biocatalysis

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

Our unique enzymes drive improvements such as higher yields, increased purity, reduced energy usage and waste generation, all of which lead to improved efficiency and reduced costs in small-molecule manufacturing.

We also use the CodeEvolver platform technology to develop enzymes for the synthesis of RNAi therapeutics through our ECO Synthesis manufacturing platform, where our enzymes are poised to deliver many of the same benefits we offer in pharma biocatalysis across purity, yield, and improved manufacturing efficiency.

In November 2024, we presented data at the TIDES EU conference demonstrating the successful end-to-end enzymatic synthesis of an entire commercially approved siRNA therapeutic asset with the ECO Synthesis manufacturing platform.

In addition to using full enzymatic sequential synthesis, adding one nucleotide at time to synthesize the two strands from beginning to end, we demonstrated synthesis of the same siRNA asset using three other routes utilizing enzymatic ligation with our double-stranded RNA (“dsRNA”) ligase, which can stitch together fragments of chemically and/or enzymatically synthesized RNA to form the full siRNA drug structure.

For the three other routes, our data highlighted that full-length oligos of equal quality and yields were obtained whether the fragments were made with enzymes or by traditional phosphoramidite chemistry.

At the end of 2024, we completed the build-out of our ECO Synthesis Innovation Lab, a facility that uses our ECO Synthesis manufacturing platform to synthesize gram-scale quantities of a customer’s desired siRNA construct suitable for pre-clinical testing.

In 2025, we expect to manufacture good laboratory practice (“GLP”)-grade siRNA for customers in our Innovation Lab under development services contracts model, and we anticipate entering a partnership with a large-scale contract development and manufacturing organization (“CDMO”) to use our ECO Synthesis platform of enzymatic tools and processes to synthesize good manufacturing practices ( “ GMP ” ) -grade siRNA drug substance for our customers.

We expect to expand our enzymatic tools and process offering as further enhance the ECO Synthesis manufacturing platform to address the overall market needs for scalable and sustainable RNAi manufacturing.

Recent Developments

Finalized Acquisition and License Agreement for certain non-core Life Sciences assets

In line with our strategy relating to non-core Life Sciences assets, in January 2025 we sold assets that were developed under the seqWell Agreement to seqWell in exchange for the right to receive a cash payment upon future events and a warrant to purchase seqWell’s common stock exercisable upon future events, and terminated the seqWell Agreement.

Strengthened Board of Directors with new appointments

We announced the appointment of Raymond De Vré , PhD, to our Board of Directors on November 12, 2024, followed by the appointment of Christos Richards on January 16, 2025.

Financing Activities

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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.

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”).

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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 year ended December 31, 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 .

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

During the year ended December 31, 2025, 7,244,966 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement, all during the second quarter of 2025, and we received net proceeds of $16.4 million after Cantor’s commissions and direct offering expenses.

As of December 31, 2025, $26.4 million remained available for sale under the Cantor Sales Agreement.

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

On February 13, 2024, 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, as Lender, consisting of up to two tranches, of which the first tranche of $30.0 million was disbursed upon execution of the Loan Agreement and the second tranche of $10.0 million was funded on June 27, 2025 upon achievement of certain financial milestones.

The Term Loan carries an interest-only period of 36 months (with the possibility to extend up to 48 months upon achievement of certain pre-specified financial milestones) and will bear interest at a floating rate of the sum of (a) the greater of (i) prime rate and (ii) 7.50%, plus (b) 3.25%.

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Our revenues consist of product revenue and research and development revenue as follows:

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

• Research and development revenue include license, technology access and exclusivity fees, research services fees, milestone payments, royalties, optimization and screening fees.

• Product revenue consists of sales of biocatalysts used in the manufacture of small molecule active pharmaceutical intermediates, enzymes such as dsRNA ligase used in the manufacture of siRNA molecules, enzymes for the molecular biology and diagnostic markets, and Codex ™ biocatalyst panels and kits.

• Research and development revenue includes license, technology access and exclusivity fees, research services fees, milestone payments, royalties, optimization and screening fees.

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

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In addition, we have limited internal capacity to manufacture enzymes.

As a result, we are dependent upon the performance and capacity of third party manufacturers for the commercial scale manufacturing of the enzymes used in our pharmaceutical and fine chemicals business.

As a result, we are dependent upon the performance and capacity of third-party manufacturers for the commercial scale manufacturing of the enzymes used in our pharma biocatalysis, ECO and molecular biology and diagnostics enzymes businesses .

We accept purchase orders for deliveries covering periods from one day up to 14 months from the date on which the order is placed.

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2025 compared to 2024

Total revenues decreased by $10.8 million in 2024 to $59.3 million, as compared to 2023.

The decrease was driven by lower product revenue and lower research and development revenue as compared to the prior year.

Total revenues increased by $11.0 million in 2025 to $70.4 million, as compared to 2024.

The increase was primarily driven by higher research and development revenue as compared to the prior year.

Product revenue was $26.0 million in 2025, a decrease of 29% compared with $36.8 million in 2024.

The decrease in product revenue was primarily due to one-time revenue recognition of $8.2 million in 2023 related to Pfizer's fee previously received under the Enzyme Supply Agreement with Pfizer Ireland Pharmaceuticals, a subsidiary of Pfizer, Inc., a $2.9 million decrease due to the early termination of an enzyme supply agreement with a customer in 2023, and the one-time recognition of a $1.3 million settlement fee in 2023 under the same enzyme supply agreement.

This decrease was partially offset with higher sales of branded pharmaceutical products in 2024.

Research and development revenue decreased by $4.7 million in 2024 to $22.6 million, or 17% compared with $27.2 million in 2023.

The decrease was primarily due to $9.1 million lower research and development fees from Nestlé Health Science (“Nestlé”), the one-time recognition of $5.0 million revenue related to a license agreement in 2023 and $2.0 million lower revenue from our master service agreements with Pfizer Inc.

(“Pfizer”), $1.2 million lower revenue from T akeda Pharmaceutical Co.

under a Strategic Collaboration and License Agreement, and $4.3 million lower revenue from other legacy collaboration agreements.

This decrease was offset by $6.0 million higher revenue from our licensing agreement with Roche Sequencing Solutions, Inc.

(“Roche”) entered into in February 2024, recognition of $9.5 million revenue related to a license agreement with Pfizer entered into in December 2024, and $1.9 million higher revenue from existing collaboration agreements.

The decrease in product revenue was primarily due to variability in manufacturing schedules and timing in clinical trial progression of our

customers, which impacted order volumes for our enzyme products.

Research and development revenue increased by $21.8 million in 2025 to $44.4 million, or 97% compared with $22.6 million in 2024.

The increase was primarily due to $34.0 million higher revenue from our licensing agreements with Merck entered into during the second and fourth quarters of 2025, and $3.3 million higher revenue from existing and legacy collaboration agreements.

This increase was partially offset by the non-recurrence of $6.0 million revenue from our licensing agreement with Roche Sequencing Solutions, Inc.

(“Roche”) entered into in February 2024, and $9.5 million of revenue related to a license agreement with Pfizer Inc.

(“Pfizer”) entered into in December 2024.

2024 compared to 2023

Total revenues decreased by $68.4 million in 2023 to $70.1 million, as compared to 2022.

The decrease was driven by lower product revenue as compared to the prior year.

Product revenue was $42.9 million in 2023, a decrease of 63% compared with $116.7 million in 2022.

The decrease in product revenue was primarily due to decreased sales of CDX-616 to Pfizer.

This decrease was partially offset by $8.2 million release of prior year's deferrals related to Pfizer's fee, $3.2 million release of prior periods' product revenue deferrals due to early termination of the enzyme supply obligations to a customer and $1.3 million of product revenue recognized as settlement fee pursuant to the enzyme supply agreement with the same customer .

Research and development revenue increased by $5.3 million in 2023 to $27.2 million, or 24% compared with $21.9 million in 2022, primarily due to higher revenue from a 2023 Pfizer license agreement and from Nestlé Health Science under a Strategic Collaboration Agreement with Nestlé (the “Nestlé SCA”) and development agreement and an acquisition agreement with Nestlé (the “Acquisition Agreement”), which was partially offset by lower research and development fees from existing collaboration agreements being recognized in 2023 as compared to the prior year.

For a discussion of our results of operations pertaining to 2024 as compared to 2023 see Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 (filed with the Securities and Exchange Commission on February 27, 2025).

Costs and Operating Expenses (in thousands, except percentages):

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

2024 compared to 2023

Cost of product revenue increased by $3.5 million in 2024 to $16.3 million, as compared to 2023.

The increase was primarily due to the combination of increased sales of certain enzyme product and higher costs.

Product gross margins decreased to 56% in 2024 as compared to 70% in 2023, primarily due to variability in the product mix and with 2023 benefiting from product revenue recognized with no related cost in 2023 related to the utilization of Pfizer’s fee and to the early termination of an enzyme supply agreement with a customer.

2023 compared to 2022

Cost of product revenue decreased by $7.0 million in 2025 to $9.3 million, as compared to 2024.

The decrease was primarily due to lower volu me of product sales as compared to the prior year.

Product gross margins increased to 70% in 2023 as compared to 67% in 2022, primarily due to product revenue recognized with no related costs in 2023 related to the utilization of Pfizer's fee and early termination of an enzyme supply agreement with a customer, and was partially offset by variability in the product mix.

Product gross margins increased to 64% in 2025 as compared to 56% in 2024.

The changes in cost of product revenue and product gross margin are primarily due to shift in sales toward more profitable products, and declines in less profitable legacy products.

Research and Development Expenses

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Research and development expenses are expensed when incurred.

2024 compared to 2023

Research and development expenses were $46.3 million in 2024 compared to $58.9 million in 2023, a decrease of $12.6 million, or 21%.

This decrease was primarily due to a $4.4 million decrease from lower use of outside services related to Chemistry, Manufacturing and Controls procedures (“CMC”) and lower regulatory expense, $4.3 million decrease in costs associated with lower headcount, $3.8 million decrease from lower lease and facilities costs due to the assignment of our San Carlos facility lease during the fourth quarter of 2023, and $0.3 million in lower depreciation expenses.

These were partially offset by $0.4 million in higher allocable costs.

2023 compared to 2022

Research and development expenses were $58.9 million in 2023 compared to $80.1 million in 2022, a decrease of $21.2 million, or 26%.

This decrease was primarily due to a $10.0 million decrease in costs associated with lower headcount, $6.4 million decrease in outside services and CMC and regulatory expense, $4.1 million in lower lab supplies expense, $1.3 million in lower stock comp expense, and a $1.0 million decrease in lease costs due to the assignment of our San Carlos facility lease.

These were partially offset by $1.7 million in higher allocable costs.

Research and development expenses were $52.3 million in 2025 compared to $46.3 million in 2024, an increase of $6.0 million, or 13%.

This increase was primarily due to a $2.3 million increase in employee-related costs, $1.4 million in higher lab supplies, $3.7 million in higher allocable costs and $0.2 million in higher depreciation expenses .

These were partially offset by a $1.3 million decrease from lower use of outside services related to Chemistry, Manufacturing and Controls procedures (“CMC”) and $0.7 million in lower stock-based compensation expense.

Selling, General and Administrative Expenses

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

2024 compared to 2023

Selling, general and administrative expenses were $55.1 million in 2024 compared to $53.3 million in 2023, an increase of $1.9 million, or 4%.

This increase was primarily due to $2.9 million in higher stock-based compensation expense, $0.9 million in higher consulting and outside services, and $0.7 million in higher legal fees.

This was partially offset by a $1.9 million in lower payroll-based expenses and $0.7 million in lower allocable expenses.

2023 compared to 2022

Selling, general and administrative expenses were $53.3 million in 2023 compared to $52.2 million in 2022, an increase of $1.1 million, or 2%.

This increase was primarily due to $3.6 million in higher payroll-based expenses, $0.6 million in higher legal expense, $0.4 million in higher repairs and maintenance expense, and $0.3 million in higher consulting and outside services.

This was partially offset by $3.2 million in lower stock-based compensation expense and $0.4 million in lower allocable expenses.

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

Selling, general and administrative expenses were $47.1 million in 2025 compared to $55.1 million in 2024, a decrease of $8.1 million, or 15%.

This decrease was primarily due to $2.7 million in lower stock-based compensation expense, $1.8 million in lower consulting and outside services, $2.6 million in lower legal fees, $1.5 million in lower allocable expenses and $0.6 million decrease in employee-related costs.

This was partially offset by $1.1 million increase in lease and facilities associated costs.

Restructuring Charges

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

Restructuring charges consist of employee severance and other termination benefits due to workforce reduction plans that were initiated in the fourth quarter of 2025 and in the third quarter of 2023.

There were no restructuring charges recognized for the year ended December 31, 2024.

Restructuring charges were $3.3 million and $3.2 million for the years ended December 31, 2023, and 2022, respectively.

Restructuring charges were $3.4 million in 2025 and $3.3 million in 2023.

Asset Impairment and Other Charges

No asset impairment charges were recognized for the year ended December 31, 2025.

Asset impairment and other charges for the year ended December 31, 2024 were $0.2 million related to a long-lived asset impairment charge in the second quarter of 2024.

Asset impairment and other charges for the year ended December 31, 2023 were $10.0 million, consisting o f a $ 9.2 million long-lived asset impairment charge and a $0.8 million goodwill impairment charge, all of which are non-cash charges.

No asset impairment charges were recorded for the year ended December 31, 2022.

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

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Interest Income

Interest income decreased by $0.5 million in 2024 compared to 2023, primarily due to lower average cash balances.

Interest income increased by $2.7 million in 2023 compared to 2022, primarily due to higher average interest rates on cash balances.

Interest income decreased by $1.0 million in 2025 compared to 2024, primarily due to lower average cash, cash equivalents and short-term investments balances.

Interest and Other Expense, net

Interest and other expense, net, decreased by $1.9 million in 2024 compared to 2023, primarily due to the higher impairment charges recognized in 2023 related to our investments in Molecular Assemblies, Inc.

(“MAI”), seqWell Inc.

(“seqWell”) and Arzeda Corp.

(“Arzeda”), offset by $3.5 million in interest related to the long-term debt in the current year.

Interest and other expense, net, increased by $12.4 million in 2023 compared to 2022, primarily due to impairment of our investments in MAI, seqWell and Arzeda.

Interest and other expense, net, decreased by $5.6 million in 2025 compared to 2024, primarily due to the $6.9 million impairment of our investments in Molecular Assemblies, Inc.

(“MAI”) and seqWell Inc.

(“seqWell”) during the third and fourth quarter of 2024 that did not reoccur in the current year.

This decrease was partially offset by higher interest related to the long-term debt due to the funding of the second tranche of the Innovatus Loan in June 2025.

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

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Provision for income taxes $ 47 $ 34 $ 69 $ 13 38 % $ (35) (51) %

The provision for income taxes in 2024 was primarily due to the accrual of interest and penalties on historic uncertain tax positions.

The provision for income taxes in 2025 and 2024 was primarily due to the accrual of interest and penalties on historic uncertain tax positions.

The provision for income taxes in 2023 was primarily for fiscal year 2023 state income taxes and the accrual of interest and penalties on historic uncertain tax positions.

The provision for income taxes in 2022 was primarily due to the income tax withholding imposed by foreign taxing authorities on income earned in certain countries outside of the Unites Stated and remitted to the United States and the accrual of interest and penalties on historic uncertain tax positions, as well as current year state income taxes.

Net loss for 2025 was $44.0 million , or a net loss per basic and diluted share of $0.50.

This compared to a net loss of $65.3 million , or $0.89 per basic and diluted share, for 2024.

The decrease in net loss was primarily related to lower operating expenses in 2024.

Net loss for 2023 was $76.2 million, or a net loss per basic and diluted share of $1.12.

This compared to a net loss of $33.6 million, or $0.51 per basic and diluted share, for 2022.

The increase in net loss was primarily related to lower product revenues from CDX-616 and one-time charges recognized during 2023 related to asset impairment, including impairment in our investments in non-marketable equity securities, and restructuring charges, which was partially offset by lower operating expenses in 2023.

The decrease in net loss was primarily related to higher revenues and lower costs and operating expenses in 2025.

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

In addition, pursuant to our Loan Agreement with Innovatus, an affiliate of Innovatus Capital Partners, LLC, we borrowed $30.0 million from Innovatus, as Lender, on February 13, 2024 and borrowed an additional $10.0 million on June 27, 2025 upon the achievement of certain financial milestones.

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

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

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Loan Agreement and Term Loans

On February 13, 2024, we entered into the Loan Agreement with Innovatus consisting of up to two tranches, of which the first tranche of $30.0 million was disbursed upon execution of the Loan Agreement and the second tranche of $10.0 million was funded in June 2025 upon achievement of certain milestones including certain pre-specified revenue thresholds.

Both tranches were subject to payment of a facility fee equal to 1.00% of the amount of such term loan.

As of December 31, 2025, we were in compliance with all covenants of the Loan Agreement.

Sales Agreements

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

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

On April 24, 2024, we terminated the EDA.

On May 2, 2024, we entered into the Cantor Sales Agreement with 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 year ended December 31, 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 .

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 a fter Cantor’s commissions and direct offering expenses.

During the year ended December 31, 2025 , 7,244,966 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement, all during the second quarter of 2025, and we received gross proceeds of $17.3 million , or $16.4 million in net proceeds after Cantor’s commissions and direct offering expenses of $0.8 million .

As of December 31, 2025, $26.4 million of shares remained available for sale under the Cantor Sales Agreement.

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

We believe that our existing cash and cash equivalents, combined with our future expectations for product revenues, research and development revenue, and expense management will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirement s for at least the next 12 months.

We believe that our existing cash and cash equivalents, combined with our future expectations for product revenues, research and development revenue, and expense management will provide adequate funds for planned ongoing operations, capital expenditures and working capital requirement s for at least the next 12 months.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our capital resources sooner than we expect.

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2025 2024 2023

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

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

Net cash provided by (used in) financing activities 60,522 8,167 (575)

Net decrease in cash, cash equivalents and restricted cash

Net cash used in operating activities $ (19,376) $ (49,410) $ (52,638)

Net cash provided by (used in) investing activities 23,502 (56,980) (4,858)

Net cash provided by financing activities 27,928 60,522 8,167

Net increase (decrease) in cash, cash equivalents and restricted cash

$ 32,054 $ (45,868) $ (49,329)

Cash Flows from Operating Activities

The $3.2 million decrease in net cash used in operating activities in 2024 as compared to 2023 was primarily due to the net effect of decreases in cash paid from operating expenses, primarily driven by the restructuring of our business in 2023 which included the assignment of our previous San Carlos facility lease in the fourth quarter of 2023, and changes in operating assets and liabilities.

The $63.9 million decrease in net cash provided by operating activities in 2023 as compared to 2022 was primarily due to the net effect of decreases in cash received from our customers due to lower revenue in 2023 and with 2022 benefiting from the receipt of a $25.9 million fee from Pfizer that is creditable against future orders, partially offset by decreases in cash paid for cost of revenues and operating expenses.

The $30.0 million decrease in net cash used in operating activities in 2025 as compared to 2024 was primarily due to the receipt of a $37.8 million fee from Merck in the fourth quarter of 2025, which was partially offset by increased payments associated with higher operating costs and reduction in force.

Cash Flows from Investing Activities

The $52.1 million increase in net cash used in investing activities in 2024 as compared to 2023 was primarily due to higher cash utilized for purchases of short-term investments, partially offset by lower purchases of property and equipment in the current year.

The $8.7 million decrease in net cash used in investing activities in 2023 as compared to 2022 was primarily due to higher cash utilized for additional investments in equity securities and purchases of property and equipment in the prior year.

The $80.5 million decrease in net cash used in investing activities in 2025 as compared to 2024 was primarily due to the net effect of higher proceeds from the maturity of short-term investments and lower cash utilized for purchase of short-term investments.

Cash Flows from Financing Activities

The $52.4 million increase in net cash provided by financing activities in 2024 as compared to 2023 was primarily due to proceeds from the Innovatus Loan in February 2024 and proceeds from issuance of common stock under the Cantor Sales Agreement in the third quarter of 2024, partially offset by proceeds from issuance of common stock under the EDA during the first half of 2023.

The $8.7 million increase in net cash provided by financing activities in 2023 as compared to 2022 was primarily due to proceeds from issuance of common stock under the EDA and lower cash paid on taxes related to net share settlement of equity awards.

The $32.6 million decrease in net cash provided by financing activities in 2025 as compared to 2024, was primarily due to the $29.5 million proceeds from the first tranche of the Innovatus Loan in February 2024 and higher proceeds from issuance of common stock under the Cantor Sales Agreement in 2024, partially offset by the proceeds from the funding of the second tranche of the Innovatus Loan in June 2025.

OFF-BALANCE SHEET ARRANGEMENTS

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Our contracts frequently provide customers with rights to use or access our products or technology, along with other promises or performance obligations.

If we determine that the customer cannot benefit from the license without our services, the license will be accounted for as combined with the other performance obligations.

We evaluate whether the license is distinct from other performance obligations based on whether the customer cannot benefit from the license on its own or together with readily available resources.

When the license does not have standalone functionality and is interdependent with other promises, such as the receipt of essential enzyme starting materials, the rights to use the license and receipt of materials are treated as combined performance obligations.

These combined performance obligations are considered interdependent and are recognized upon the later of the commencement of the license right or the transfer of control of the materials to the customer.

If we determine that a license is distinct, we would recognize an allocable portion of the transaction price when the license is transferred to the customer, and the customer can use and benefit from it.

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If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within our control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

Milestone payments that are not within our control or the control of the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

Our CodeEvolver platform technology transfer collaboration agreements typically include license fees, upfront fees, and variable consideration in the form of milestone payments, and sales or usage-based royalties.

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We recognize revenue at the later of (i) when the related sale of the product occurs, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied.

Investment in Non-Marketable Securities

Investment in Non-Marketable Equity Securities

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

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

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

We may impair these securities and establish an allowance for a credit loss when we determine that there has been an “other-than-temporary” decline in estimated fair value of the debt or equity security compared to its carrying value.

We calculate the estimated fair value of these securities using information from the investee, which may include:

• Audited and unaudited financial statements;

• Projected technological developments of the company;

• Projected ability of the company to service its debt obligations;

• If a deemed liquidation event were to occur;

• Current fundraising transactions;

• Current ability of the company to raise additional financing if needed;

• Changes in the economic environment which may have a material impact on the operating results of the company;

• Contractual rights, obligations or restrictions associated with the investment;

• Other factors deemed relevant by our management to assess valuation.

The valuation may be reduced if the company's potential has deteriorated significantly.

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

Impairment of Long-Lived Assets

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

What changed 10-K

Item 7. Management’s Discussion and Analysis