CODEXIS, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Codexis, Inc. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm ( KPMG LLP ; San Francisco, CA ; PCAOB ID: 185 ) 60 Repor t of Independent Registered Public Accounting Firm ( BDO USA, P.C. ; San Francisco, CA ; PCAOB ID: 243) 62 Consolidated Balance Sheets 63 Consolidated Statements of Operations 64 Consolidated Statements of Comprehensive Loss 65 Consolidated Statements of Stockholders' Equity 66 Consolidated Statements of Cash Flows 67 Notes to Consolidated Financial Statements 68 59 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Codexis, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Codexis, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024 , the related consolidated statement of operations, comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sufficiency of audit evidence over revenue from contracted customers As discussed in Note 3 to the consolidated financial statements, the Company recorded $70.4 million of total revenues for the year-ended December 31, 2025 comprised of $26.0 million of product revenue and $44.4 million of research and development revenue. As discussed in Note 2, the Company enters into contracts with customers, some of which contain multiple products and services. Further, the majority of the Company’s collaborative contracts, including research and development agreements, contain multiple revenue streams. In determining the appropriate amount of revenue to be recognized for product revenue and research and development revenue, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when, or as, the Company satisfies each performance obligation. 60 We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. Evaluating the sufficiency of audit evidence obtained required subjective auditor judgment due to the volume of revenue streams and disparate nature of contracts with customers, which involved determining the contracts and related revenue transactions to test and evaluating the recognition and measurement of revenue with respect to certain contracts with considerations around multiple elements, material rights, or timing of recognition. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue, including the determination of the types of contracts, transactions and measurement elements to test such as considerations of certain contracts with multiple elements, material rights, and timing of revenue recognition. We read a selection of contracts and evaluated the Company’s identification and assessment of the contract terms impacting the recognition and measurement of revenue. For certain transactions, we inspected the terms of the contract, agreed such terms to underlying documentation, such as external and internal evidence as applicable, recalculated revenue based on the underlying documentation, and compared it to the amount of revenue recognized. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence. /s/ KPMG LLP We have served as the Company’s auditor since 2024. San Francisco, California March 11, 2026 61 Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Codexis, Inc. Redwood City, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of operations, stockholders’ equity, and cash flows of Codexis, Inc. (the “Company”) for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ BDO USA, P.C. We served as the Company's auditor from 2013 to 2024. San Francisco, California February 28, 2024 62 Codexis, Inc. Consolidated Balance Sheets (In Thousands, Except Per Share Amounts) December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 50,793 $ 19,264 Restricted cash, current 478 503 Short-term investments 27,416 54,194 Financial assets: Accounts receivable 8,757 11,920 Contract assets 492 4,375 Unbilled receivables 1,480 2,751 Total financial assets 10,729 19,046 Less: allowances ( 43 ) ( 162 ) Total financial assets, net 10,686 18,884 Inventories 1,817 1,799 Prepaid expenses and other current assets 5,626 4,128 Total current assets 96,816 98,772 Restricted cash 1,612 1,062 Investment in non-marketable equity securities 2,498 2,798 Right-of-use assets - Operating leases, net 30,501 28,700 Property and equipment, net 13,024 14,197 Goodwill 2,463 2,463 Other non-current assets 883 1,019 Total assets $ 147,797 $ 149,011 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 1,554 $ 2,838 Accrued compensation 11,042 11,410 Other accrued liabilities 2,768 6,223 Current portion of lease obligations - Operating leases 2,944 2,827 Deferred revenue 7,009 350 Total current liabilities 25,317 23,648 Deferred revenue, net of current portion 360 100 Long-term lease obligations - Operating leases 30,159 28,163 Long-term debt 40,105 28,905 Other long-term liabilities 1,327 1,268 Total liabilities 97,268 82,084 Commitments and contingencies (Note 13) 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; 90,478 and 81,850 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 9 8 Additional paid-in capital 657,292 629,673 Accumulated other comprehensive income 8 52 Accumulated deficit ( 606,780 ) ( 562,806 ) Total stockholders’ equity 50,529 66,927 Total liabilities and stockholders’ equity $ 147,797 $ 149,011 See accompanying notes to consolidated financial statements 63 Codexis, Inc. Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) Year Ended December 31, 2025 2024 2023 Revenues: Product revenue $ 26,028 $ 36,786 $ 42,906 Research and development revenue 44,359 22,559 27,237 Total revenues 70,387 59,345 70,143 Costs and operating expenses: Cost of product revenue 9,338 16,288 12,809 Research and development 52,307 46,263 58,885 Selling, general and administrative 47,074 55,148 53,250 Restructuring charges 3,407 — 3,284 Asset impairment and other charges — 165 9,984 Total costs and operating expenses 112,126 117,864 138,212 Loss from operations ( 41,739 ) ( 58,519 ) ( 68,069 ) Interest income 2,625 3,670 4,172 Interest and other expense, net ( 4,813 ) ( 10,393 ) ( 12,274 ) Loss before income taxes ( 43,927 ) ( 65,242 ) ( 76,171 ) Provision for income taxes 47 34 69 Net loss $ ( 43,974 ) $ ( 65,276 ) $ ( 76,240 ) Net loss per share, basic and diluted $ ( 0.50 ) $ ( 0.89 ) $ ( 1.12 ) Weighted average common stock shares used in computing net loss per share, basic and diluted 87,142 73,408 68,131 See accompanying notes to consolidated financial statements 64 Codexis, Inc. Consolidated Statements of Comprehensive Loss (In Thousands) Year Ended December 31, 2025 2024 2023 Net loss $ ( 43,974 ) $ ( 65,276 ) $ ( 76,240 ) Other comprehensive gain (loss): Unrealized gain (loss) on available-for-sale short-term investments, net of tax ( 44 ) 52 — Comprehensive loss $ ( 44,018 ) $ ( 65,224 ) $ ( 76,240 ) See accompanying notes to consolidated financial statements 65 Codexis, Inc. Consolidated Statements of Stockholders’ Equity (In Thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount December 31, 2022 65,811 $ 6 $ 566,081 $ — $ ( 421,290 ) $ 144,797 Issuance of common stock upon exercise of stock options 283 — 559 — — 559 Issuance of common stock upon release of stock awards 796 — — — — — Issuance of common stock, net of issuance costs 3,080 1 7,931 — — 7,932 Stock-based compensation — — 9,971 — — 9,971 Taxes paid related to net share settlement of equity awards ( 65 ) — ( 404 ) — — ( 404 ) Net Loss — — — — ( 76,240 ) ( 76,240 ) December 31, 2023 69,905 7 584,138 — ( 497,530 ) 86,615 Issuance of common stock upon exercise of stock options 399 — 1,291 — — 1,291 Issuance of common stock upon release of stock awards 842 — — — — — Issuance of common stock warrants in connection with debt issuance — — 859 — — 859 Issuance of common stock under employee stock purchase plan 264 — 563 — — 563 Issuance of common stock in connection with an equity sales agreement, net of issuance costs of $ 1,584 10,440 1 29,735 — — 29,736 Stock-based compensation — — 13,087 — — 13,087 Net Loss — — — — ( 65,276 ) ( 65,276 ) Other comprehensive income — — — 52 — 52 December 31, 2024 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 766 — — — — — Issuance of common stock under employee stock purchase plan 278 — 505 — — 505 Issuance of common stock in connection with an equity sales agreement, net of issuance costs of $ 826 7,245 1 16,441 — — 16,442 Stock-based compensation — — 9,624 — — 9,624 Net Loss — — — — ( 43,974 ) ( 43,974 ) Other comprehensive loss — — — ( 44 ) — ( 44 ) December 31, 2025 90,478 $ 9 $ 657,292 $ 8 $ ( 606,780 ) $ 50,529 See accompanying notes to consolidated financial statements 66 Codexis, Inc. Consolidated Statements of Cash Flows (In Thousands) Year Ended December 31, 2025 2024 2023 Operating activities: Net loss $ ( 43,974 ) $ ( 65,276 ) $ ( 76,240 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,248 4,946 5,518 Reduction in the carrying amount of right-of-use assets 3,044 3,184 4,405 Stock-based compensation 9,624 13,087 9,971 Provision (recovery) for credit losses ( 113 ) 97 ( 65 ) Asset impairment and other charges — 165 9,984 Impairment of investment in non-marketable securities 300 6,902 12,215 Equity securities earned from research and development activities — — ( 213 ) Non-cash interest expense 1,305 885 — Amortization of discount on short-term investments ( 1,234 ) ( 1,380 ) — Other non-cash items 6 ( 4 ) 4 Changes in operating assets and liabilities: Financial assets 8,507 1,252 20,247 Inventories ( 19 ) 886 ( 656 ) Prepaid expenses and other assets ( 1,694 ) 893 ( 865 ) Accounts payable ( 1,286 ) ( 2,567 ) 2,287 Accrued compensation and other accrued liabilities ( 2,848 ) 1,982 ( 14,041 ) Other long-term liabilities ( 3,161 ) ( 4,151 ) ( 5,341 ) Deferred revenue 6,919 ( 10,311 ) ( 19,848 ) Net cash used in operating activities ( 19,376 ) ( 49,410 ) ( 52,638 ) Investing activities: Purchase of property and equipment ( 4,471 ) ( 4,305 ) ( 4,418 ) Proceeds from sale of property and equipment 5 87 751 Purchases of short-term investments ( 57,158 ) ( 90,235 ) — Proceeds from maturity of short-term investments 85,126 35,500 — Proceeds from sale of short-term investments — 1,973 — Investment in non-marketable securities — — ( 1,191 ) Net cash provided by (used in) investing activities 23,502 ( 56,980 ) ( 4,858 ) Financing activities: Proceeds from exercises of stock options 1,098 1,384 422 Proceeds from issuance of stock under employee stock purchase plan 505 646 — Proceeds from issuance of common stock in connection with equity sales agreements 17,267 31,319 8,652 Costs incurred in connection with equity sales agreements ( 836 ) ( 1,706 ) ( 503 ) Proceeds from long-term debt 9,897 29,521 — Payment of debt issuance costs ( 3 ) ( 642 ) — Taxes paid related to net share settlement of equity awards — — ( 404 ) 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, cash equivalents and restricted cash at the beginning of the year 20,829 66,697 116,026 Cash, cash equivalents and restricted cash at the end of the year $ 52,883 $ 20,829 $ 66,697 Supplemental disclosure of cash flow information: Interest paid $ 3,149 $ 2,566 $ 44 Income taxes paid $ — $ 17 $ 194 Supplemental non-cash investing and financing activities: Capital expenditures incurred but not yet paid $ 31 $ 566 $ 1,068 The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown above (in thousands): Year Ended December 31, 2025 2024 2023 Cash and cash equivalents $ 50,793 $ 19,264 $ 65,116 Restricted cash, current and non-current 2,090 1,565 1,581 Total cash, cash equivalents and restricted cash at the end of the period $ 52,883 $ 20,829 $ 66,697 This table excludes short-term investments of $ 27.4 million and $ 54.2 million as of December 31, 2025 and 2024, respectively. Total cash, cash equivalents, and short-term investments as of December 31, 2025 and 2024 were $ 78.2 million and $ 73.5 million, respectively. See accompanying notes to consolidated financial statements 67 Codexis, Inc. Notes to Consolidated Financial Statements Note 1. Description of Business In these notes to the 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 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”) and 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 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 consolidated financial statements. Foreign Currency Translation The USD is the functional currency for our operations outside the United States. Accordingly, non-monetary assets and liabilities originally acquired or assumed in other currencies are recorded in USD at the exchange rates in effect at the date they were acquired or assumed. Monetary assets and liabilities denominated in other currencies are translated into United States dollars at the exchange rates in effect at the balance sheet date. Translation adjustments are recorded in other expense in the consolidated statements of operations. Gains and losses realized from non-USD transactions, including intercompany balances not considered as permanent investments, are included in other expense in the accompanying consolidated statements of operations. Revenue Recognition Our revenues are derived primarily from product revenue and collaborative research and development agreements. Some of our contracts with customers contain multiple products and services. We account for individual products and services separately if they are distinct-that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our product revenue and collaborative research and development agreements, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation. 68 The majority of our collaborative contracts contain multiple revenue streams such as upfront and/or annual license fees, fees for research and development services, contingent milestone payments upon achievement of contractual criteria, and royalty fees based on the licensees' product revenue or usage, among others. We determine the stand-alone selling price (“SSP”) and allocate consideration to distinct performance obligations. Typically, we base our SSPs on our historical sales. If an SSP is not directly observable, then we estimate the SSP taking into consideration market conditions, forecasted sales, entity-specific factors and available information about the customer. We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers. We account for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Non-cancellable purchase orders received from customers to deliver a specific quantity of product, when combined with our order confirmation, in exchange for future consideration, create enforceable rights and obligations on both parties and constitute a contract with a customer. We measure revenue based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected on behalf of government authorities. We recognize revenue in a manner that best depicts the transfer of promised goods or services to the customer, when control of the product or service is transferred to a customer. We make significant judgments when determining the appropriate timing of revenue recognition. The following is a description of principal activities from which we generate revenue: Product Revenue Product revenue consists of sales of biocatalysts, pharmaceutical intermediates and Codex biocatalyst panels and kits. A majority of our product revenue is made pursuant to purchase orders or supply agreements and is recognized either at a point in time when the control of the product has been transferred to the customer which generally aligns with shipping terms, or over time as the product is manufactured because we have a right to payment from the customer under a binding, non-cancellable purchase order, and there is no alternate use of the product for us as it is specifically made for the customer’s use. Certain of our agreements provide options to customers which they can exercise at a future date, such as the option to purchase our product during the contract duration at discounted prices and an option to extend their contract, among others. In accounting for customer options, we determine whether an option is a material right and this requires us to exercise significant judgment. If a contract provides the customer an option to acquire additional goods or services at a discount that exceeds the range of discounts that we typically give for that product or service for the same class of customer, or if the option provides the customer certain additional goods or services for free, the option may be considered a material right. If the contract gives the customer the option to acquire additional goods or services at their normal SSPs, we would likely determine that the option is not a material right and, therefore, account for it as a separate performance obligation when the customer exercises the option. We primarily account for options which provide material rights using the alternative approach available pursuant to the applicable accounting guidance, as we concluded we meet the criteria for using the alternative approach. Therefore, the transaction price is calculated as the expected consideration to be received for all the goods and services we expect to provide under the contract. We update the transaction price for expected consideration, subject to constraint, each reporting period if our estimates of future goods to be ordered by customers change. Research and Development Revenue We perform research and development activities as specified in each respective customer agreement. We identify each performance obligation in our research and development agreements at contract inception. We allocate the consideration to each distinct performance obligation based on the SSP of each performance obligation. Performance obligations included in our research and services agreements typically include research and development services for a specified term, periodic reports and small samples of enzyme produced. The majority of our research and development agreements are based on a contractual rate per dedicated project team working on the project. The underlying product that we develop for customers does not create an asset with an alternative use to us and the customer receives benefits as we perform the work towards completion. Thus, our performance obligations are generally satisfied over time as the service is performed. We utilize an appropriate method of measuring progress towards the completion of our performance obligations to determine the timing of revenue rec ognition. For each performance obligation that is satisfied over time, we recognize revenue using a single measure of progress either based on hours incurred or output of services provided. 69 Our contracts frequently provide customers with rights to use or access our products or technology, along with other promises or 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 and has significant standalone functionality, we recognize revenues from a functional license at a point in time when the license is transferred to the customer, and the customer can use and benefit from it. We estimate the SSP for license rights by using historical information if licenses have been previously sold to customers. At the inception of each arrangement that includes variable consideration such as development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. 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 control of the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment. Our CodeEvolver technology platform transfer collaboration agreements typically include license fees, upfront fees, and variable consideration in the form of milestone payments, and sales or usage-based royalties. We have recognized revenues from our platform technology transfer agreements over time as our customer uses our technology. For license agreements that include sales or usage-based royalty payments to us, we do not recognize revenue until the underlying sales of the product or usage has occurred. At the end of each reporting period, we estimate the royalty amount. 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. Practical Expedients, Elections, and Exemptions We apply certain practical expedients available which permit us not to adjust the amount of consideration for the effects of a significant financing component if, at contract inception, the expected period between the transfer of promised goods or services and customer payment is one year or less. We perform monthly services under our research and development agreements, and we use a practical expedient permitting us to recognize revenue at the same time that we have the right to invoice our customer for monthly services completed to date. We have elected to treat shipping and handling activities as fulfillment costs. We have elected to record revenue net of sales and other similar taxes. Contract Assets Contract assets include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Contract assets are reclassified to receivables when the rights become unconditional. Contract Liabilities Contract liabilities are recorded as deferred revenues and include payments received in advance of performance under the contract. Contract liabilities are realized when the development services are provided to the customer or control of the products has been transferred to the customer. A portion of our contract liabilities relate to supply arrangements that contain material rights that are recognized using the alternative method, under which the aggregate amount invoiced to the customer for shipped products, including contractual fees, is higher than the amount of revenue recognized based on the transaction price allocated to the shipped products. 70 Contract Costs We recognize a non-current asset for the incremental costs of obtaining a contract with a customer if the entity expects to recover such costs and if those costs would not have been incurred if the contract had not been obtained, such as commissions paid to sales personnel. We do not typically incur significant incremental costs because the compensation of our salespeople is not based on contracts closed but on a mixture of company goals, individual goals, and sales goals. If a commission paid is directly related to obtaining a specific contract, our policy is to capitalize and amortize such costs on a systematic basis, consistent with the pattern of transfer of the good or service to which the asset relates, and over a period beyond 12 months. Contract costs are reported in other non-current assets and were not significant in any of the periods presented. Cost of Product Revenue Cost of product revenue comprises both internal and third party fixed and variable costs including materials and supplies, labor, facilities, and other overhead costs associated with our product sales. Shipping costs are included in our cost of product revenue. Shipping costs were $ 0.9 million, $ 1.0 million, and $ 1.0 million for the years ended December 31, 2025, 2024, and 2023, respectively. Fulfillment costs, such as shipping and handling, are recognized at a point in time and are included in cost of product revenue. Cost of Research and Development Services Cost of research and development services related to services under research and development agreements approximate the research funding over the term of the respective agreements and is included in research and development expense. Costs of services provided under license and platform technology transfer agreements are included in research and development expenses and are expensed in the periods in which such costs are incurred. Research and Development Expenses Research and development expenses consist of costs incurred for internal projects and partner-funded collaborative research and development activities, as well as license and platform technology transfer agreements, as mentioned above. These costs include our direct and research-related overhead expenses, which include salaries and other personnel-related expenses (including stock-based compensation), occupancy-related costs, supplies, and depreciation of facilities and laboratory equipment, as well as external costs, and are expensed as incurred. Costs to acquire technologies that are utilized in research and development and that have no alternative future use are expensed when incurred. Advertising Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the consolidated statements of operations. Advertising costs were $ 0.1 million, nil , and $ 0.3 million for each of the years ended December 31, 2025, 2024 and 2023, respectively. Stock-Based Compensation We use the Black-Scholes-Merton option pricing model to estimate the fair value of stock options granted under our equity incentive plans and for our employee stock purchase plan ( “ ESPP ” ). The Black-Scholes-Merton option pricing model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. The expected term is based on historical exercise behavior for similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. We use historical volatility to estimate expected stock price volatility. The risk-free rate assumption is based on United States Treasury instruments whose terms are consistent with the expected term of the stock options. The expected dividend assumption is based on our history and expectation of dividend payouts. Restricted Stock Units ( “ RSUs ” ), Restricted Stock Awards ( “ RSAs”) and performance-contingent restricted stock units ( “ PSUs”) are measured based on the fair market values of the underlying stock on the dates of grant. Performance based options ( “ PBOs ” ) are measured using the Black-Scholes-Merton option pricing model. The vesting of PBOs and PSUs awarded is conditioned upon the attainment of one or more performance objectives over a specified period and upon continued employment through the applicable vesting date. At the end of the performance period, shares of stock subject to the PBOs and PSUs vest based upon both the level of achievement of performance objectives within the performance period and continued employment through the applicable vesting date. 71 Stock-based compensation expense is calculated based on awards ultimately expected to vest and is reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated annual forfeiture rates for stock options, RSUs, PSUs, PBOs, and RSAs are based on historical forfeiture experience. The estimated fair value of stock options, RSUs, RSAs and shares to be issued under the ESPP are expensed on a straight-line basis over the vesting term of the grant and the estimated fair value of PSUs and PBOs are expensed using an accelerated method over the term of the award once management has determined that it is probable that the performance objective will be achieved. Compensation expense is recorded over the requisite service period based on management's best estimate as to whether it is probable that the shares awarded are expected to vest. Management assesses the probability of the performance milestones being met on a continuous basis. Cash and Cash Equivalents We consider all highly liquid investments with maturity dates of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. The majority of cash and cash equivalents is maintained with major financial institutions in the United States. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits. Restricted Cash We are currently in the process of liquidating our Indian subsidiary. The local legal requirements for liquidation required us to maintain our subsidiary's cash balance in an account managed by a legal trustee to satisfy our financial obligations. This balance is recorded as current restricted cash on the consolidated balance sheets of $ 0.5 million as of December 31, 2025 and 2024. Pursuant to the terms of our lease agreements, we obtained letters of credit collateralized by cash deposit balances of $ 1.6 million and $ 1.1 million as of December 31, 2025 and 2024, respectively. These cash deposits balances are recorded as non-current restricted cash on the consolidated balance sheets. For additional information, see Note 13, “Commitments and Contingencies.” Short-term Investments We classify all marketable debt securities that have effective maturities of three months or less from the date of purchase as cash equivalents and those with effective maturities of greater than three months as short-term investment securities in the consolidated balance sheets. We determine the appropriate classification of our short-term investments at the time of purchase and reevaluate such designation at each balance sheet date. We have classified and accounted for our short-term investments as available-for-sale. After consideration of our risk versus reward objectives, as well as our liquidity requirements, we may sell these debt securities prior to their effective maturities. We carry these short-term investments at fair value, and report the unrealized gains and losses, net of taxes, as a component of stockholders’ equity, except for the changes in allowance for expected credit losses, which are included in “Interest and other expense, net” in the consolidated statements of operations. We determine any realized gains or losses on the sale of short-term investments on a specific identification method, and we record such gains and losses as a component of interest income. Short-term investments are reviewed periodically for allowances for credit losses and impairment. When evaluating the investments, the Company reviews factors such as the extent to which the fair value of the security is less than the amortized cost basis, adverse conditions specifically related to the security, the financial condition of the issuer, the Company’s intent to sell, and whether it would be more likely than not that the Company would be required to sell the investments before the recovery of the amortized cost basis. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and we consider counterparty credit risk in our assessment of fair value. Carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate their fair values as of the balance sheet dates because of their short maturities. 72 The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2: Inputs that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and unbilled receivables, contract assets, non-marketable securities, and restricted cash. Cash that is not required for immediate operating needs is invested principally in money market funds. Cash and cash equivalents are invested through banks and other financial institutions in the United States and India. Such deposits in those countries may be in excess of insured limits. The Company has not experienced material losses on its deposits of cash and cash equivalents. We perform ongoing credit evaluations of our customer's financial condition whenever deemed necessary. We maintain an allowance for doubtful accounts based on the expected collectability of all financial assets, which takes into consideration an analysis of historical bad debts, specific customer creditworthiness and current economic trends. As of December 31, 2025, we h ad three customers that accounted for 67 % of our ac counts receivable balance. As of December 31, 2024, four customers accounted for 56 % of our accounts receivable balance. We believe the accounts receivable balances from our largest customers do not represent a significant credit risk, based on cash flow forecasts, balance sheet analysis, and past collection experience. Financial Assets and Allowances W e currently sell enzymes primarily to pharmaceutical and fine chemicals companies throughout the world by the extension of trade credit terms based on an assessment of each customer's financial condition. Trade credit terms are generally offered without collateral and may include an insignificant discount for prompt payment for specific customers. To manage our credit exposure, we perform ongoing evaluations of our customers' financial conditions. In addition, accounts receivable include amounts owed to us under our collaborative research and development agreements. We recognize accounts receivable at invoiced amounts and we maintain a valuation allowance for credit losses using an impairment model (known as the “current expected credit loss model” or “CECL”) based on estimates and forecasts of future conditions requiring recognition of a lifetime of expected credit losses at inception on our financing receivables measured at amortized costs which consisted of accounts receivable, contract assets, and unbilled receivables. We have determined that our financing receivables share similar risk characteristics including: (i) customer origination in the pharmaceutical and fine chemicals industry, (ii) similar historical credit loss pattern of customers (iii) no meaningful trade receivable differences in terms, (iv) similar historical credit loss experience and (v) our belief that the composition of certain assets are comparable to our historical portfolio used to develop loss history. As a result, we measured the allowance for credit loss (“ACL”) on a collective basis. Our ACL methodology considers how long the asset has been past due, the financial condition of the customers, which includes ongoing quarterly evaluations and assessments of changes in customer credit ratings, and other market data that we believe are relevant to the collectability of the assets. Nearly all financing receivables are due from customers that are highly rated by major rating agencies and have a long history of no credit loss. We derive our ACL by establishing an impairment rate attributable to assets not yet identified as impaired. Unbilled Receivable The timing of revenue recognition may differ from the timing of invoicing to our customers. When we satisfy (or partially satisfy) a performance obligation, prior to being able to invoice the customer, we recognize an unbilled receivable when the right to consideration is unconditional. 73 Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using a weighted-average approach, assuming full absorption of direct and indirect manufacturing costs, or based on cost of purchasing from our vendors. If inventory costs exceed expected net realizable value due to obsolescence or lack of demand, valuation adjustments are recorded for the difference between the cost and the expected net realizable value. Concentrations of Supply Risk We rely on a limited number of suppliers for our products. We believe that other vendors would be able to provide similar products; however, the qualification of such vendors may require substantial start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical single-sourced materials. For certain materials, our vendors maintain a supply for us. We outsource the large - scale manufacturing of our products to contract manufacturers with facilities in Austria and Italy. Property and Equipment Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization calculated using the straight-line method over their estimated useful lives as follows: Asset classification Estimated useful life Laboratory equipment 5 years Computer equipment and software 3 years Office equipment and furniture 5 years Leasehold improvements Lesser of useful life or lease term Property and equipment classified as construction in process includes equipment that has been received but not yet placed in service. Normal repairs and maintenance costs are expensed as incurred. 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 their 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. No impairment charges for long-lived assets were recorded during the year ended December 31, 2025. For additional information on the impairment charge recorded for the years ended December 31, 2024 and 2023, s ee Note 8, “Balance Sheet Details” and Note 13, “Commitments and Contingencies.” 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 the estimated fair value of the 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; 74 • 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; and • 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. For additional information on the impairment charge recorded for the years ended December 31, 2025, 2024 and 2023, see Note 6, “Investments in Non-Marketable Securities.” Goodwill Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired and is assigned to reporting units. We test goodwill for impairment, considering, among other factors, whether there have been sustained declines in our share price. If we conclude it is more likely than not that the fair value is less than its carrying amount, a quantitative fair value test is performed. Goodwill had a carrying value of $ 2.5 million as of December 31, 2025 and 2024. We test goodwill for impairment annually, on the last day of the fourth fiscal quarter, and between annual tests if events and circumstances indicate it is more likely than not that the fair value is less than its carrying amount. The annual impairment test is completed using either: a qualitative “Step 0” assessment based on reviewing relevant events and circumstances; or a quantitative “Step 1” assessment, which determines the fair value. To the extent the carrying amount is less than its estimated fair value, an impairment charge is recorded. Using a relative fair value allocation methodology for assets and liabilities, we compare the carrying amount of net assets and the goodwill to its fair value. If the fair value exceeds its carrying amount, goodwill is considered not impaired. Any excess carrying amount of goodwill over its fair value is recognized as an impairment. No impairment charges related to goodwill were recognized in 2025 and 2024. We recorded impairment charges related to goodwill of $ 0.8 million for the year ended December 31, 2023. For additional information on the impairment charge recorded in 2023 , s ee Note 8, “Balance Sheet Details.” Lease Accounting We determine if an arrangement is a lease at inception. Where an arrangement is a lease, we determine if it is an operating lease or a finance lease. At lease commencement, we record a lease liability and ROU asset. Lease liabilities represent the present value of our future lease payments over the expected lease term which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of our lease liability is determined using our incremental collateralized borrowing rate at lease inception. ROU assets represent our right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than 12 months. Over the lease term, we use the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to the consolidated statement of operations in a manner that results in straight-line expense recognition. We do not apply lease recognition requirements for short-term leases. Instead, we recognize payments related to these arrangements in the consolidated statement of operations as lease costs on a straight-line basis over the lease term. Income Taxes We use the liability method of accounting for income taxes, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount that will more likely than not be realized. We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenues and expenses for tax and financial statement purposes. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period. 75 In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized on a jurisdiction-by-jurisdiction basis. The ultimate realization of deferred tax assets is dependent upon the generation of taxable income in the future. In the event that it is determined that these deferred tax assets are not more likely than not to be realized, a valuation allowance is recorded against these deferred tax assets. As of December 31, 2025 and 2024, we maintain a full valuation allowance in all jurisdictions against the net deferred tax assets as we believe that it is more likely than not that the majority of deferred tax assets will not be realized. We account for uncertainty in income taxes by evaluating each tax position to determine whether it is more likely than not that the position will be sustained upon examination by the relevant taxing authority, including the resolution of any related appeals or litigation. Tax positions that meet the recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes. We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance may be materially impacted. Any adjustment to the deferred tax asset valuation allowance would be recorded in the statements of operations for the periods in which the adjustment is determined to be required. The Tax Reform Act of 1986 and similar state provisions limit the use of net operating loss (“NOL ” ) carryforwards in certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section 382. In the event we should experience such a change of ownership, utilization of our federal and state NOL carryforwards could be limited. 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 Company adopted ASU 2023‑09 on a prospective basis during the year ended December 31, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures. For additional information, see Note 12, “Income Taxes.” Aside from those recently issued accounting pronouncements adopted and described above and not yet adopted and described below, there have not been any recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 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 to provide greater transparency into the nature of expense components. 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. As clarified, this guidance is effective for public business entities for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. 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 monitoring SEC rulemaking activity and evaluating the potential effects of this standard on our consolidated financial statements and related disclosures. 76 Note 3. Revenue Recognition Disaggregation of Revenue The following table provides information about disaggregated revenue from contracts with customers into the nature of the products and services, and geographic regions, and includes a reconciliation of the disaggregated revenue. 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). Disaggregated information is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Major products and service: Product revenue $ 26,028 $ 36,786 $ 42,906 Research and development revenue 44,359 22,559 27,237 Total revenues $ 70,387 $ 59,345 $ 70,143 Primary geographical markets: Americas $ 43,537 $ 21,278 $ 13,733 EMEA 9,292 10,359 22,907 APAC 17,558 27,708 33,503 Total revenues $ 70,387 $ 59,345 $ 70,143 For additional information regarding revenue disaggregated by geography, see Note 15, “Segment, Geographical and Other Revenue Information. ” Contract Balances The following table presents balances of contract assets, unbilled receivables, and contract liabilities (in thousands): December 31, 2025 December 31, 2024 Contract assets $ 492 $ 4,375 Unbilled receivables $ 1,741 $ 3,208 Contract liabilities: deferred revenue $ 7,369 $ 450 We recognize accounts receivable when we have an unconditional right to recognize revenue and have issued an invoice to the customer. Our payment terms are generally between 30 and 90 days. We recognize unbilled receivables when we have an unconditional right to recognize revenue and have not issued an invoice to our customer. Unbilled receivables are transferred to accounts receivable on issuance of an invoice. Unbilled receivables are classified separately on the consolidated balance sheets as an asset. We maintain an allowance for credit losses on accounts receivable and unbilled receivables. As of December 31, 2025, we have $ 1.5 million of short-term unbilled receivables presented as unbilled receivables within current assets and $ 0.3 million of long-term unbilled receivables that is included within the other non-current assets line item in the consolidated balance sheets. As of December 31, 2024, we had $ 2.8 million of short-term unbilled receivables presented as unbilled receivables within current asset and $ 0.5 million of long-term unbilled receivables that is included within the other non-current assets line item in the consolidated balance sheets. Contract assets represent our right to recognize revenue for custom products with no alternate use and under binding non-cancellable contracts and are largely related to our procurement of product. We recognize contract assets when we have a conditional right to recognize revenue. The transfer of control of certain products occurs in advance of the invoicing process, which generates contract assets. In addition, we recognize a contract asset related to milestones when we assess it is probable of being achieved and there will be no significant reversal of cumulative revenues. Contract assets are classified separately on the consolidated balance sheets as an asset and transferred to accounts receivables when our rights to payment become unconditional. 77 Contract liabilities, or deferred revenue, represent our obligation to transfer a product or service to the customer, and for which we have received consideration from the customer. We recognize a contract liability when we receive advance customer payments under development agreements for research and development services, upfront license payments, and from upfront customer payments received under product supply agreements. Contract liabilities are classified as a liability on the consolidated balance sheets. During the years ended December 31, 2025, 2024 and 2023, we had no asset impairment charges related to contract assets. We recognized the following revenues (in thousands): Year Ended December 31, Revenue recognized in the period for: 2025 2024 Amounts included in contract liabilities at the beginning of the period: Performance obligations satisfied $ 350 $ 10,121 Changes in the period: Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods ( 13 ) 314 Revenue recognized on performance obligations previously completed upon the customer achieving a milestone 4,700 — Performance obligations satisfied from new activities in the period - contract revenue 65,350 48,910 Total revenues $ 70,387 $ 59,345 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 December 31, 2025. The 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 (in thousands): 2026 2027 2028 2029 and Thereafter Total Product revenue $ 640 $ 40 $ 40 $ 280 $ 1,000 Research and development revenue 6,369 — — — 6,369 Total $ 7,009 $ 40 $ 40 $ 280 $ 7,369 Note 4. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding, less 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. 78 The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands): Year Ended December 31, 2025 2024 2023 Shares issuable under the Equity Incentive Plans and ESPP (1) 11,173 13,613 9,028 Warrants (2) 424 424 — Total potentially dilutive securities 11,597 14,037 9,028 (1) Included 541,616 , 665,160 , and 568,224 of anti-dilutive potential common shares from ESPP for the years ended December 31, 2025, 2024, 2023, respectively. (2) Pertains to the warrants issued in connection with the Innovatus Loan. For additional information, see Note 14, “Debt.” Note 5. Collaborative Arrangements Merck Sitagliptin Catalyst Supply Agreement In February 2012, we entered into a five-year Sitagliptin Catalyst Supply Agreement (the “Sitagliptin Supply Agreement”) with Merck Sharp & Dohme LLC (“Merck”) whereby Merck may obtain commercial scale enzyme for use in the manufacture of Januvia, its product based on the active ingredient sitagliptin. In December 2015, Merck exercised its options under the terms of the Sitagliptin Supply Agreement to extend the agreement for an additional five years through February 2022, and the agreement was further amended in September 2021 to continue through December 2026. In May 2025, the Sitagliptin Supply Agreement was amended to extend the agreement through December 2034. Effective January 2016, we and Merck amended the Sitagliptin Supply Agreement to implement variable pricing based on Merck’s cumulative purchase volumes of sitagliptin enzyme. We have previously determined that this variable pricing provided Merck with material rights, and we recognized product revenues using the alternative method wherein we estimated the total expected consideration and allocated it proportionately with the expected sales. Pursuant to the amendment of the Sitagliptin Supply Agreement in September 2021, we have determined that the latest price per volume of sitagliptin enzyme to be purchased by Merck no longer provides Merck material rights, and as such we have recognized product revenue based on contractually stated prices effective as of February 2022. We recognized $ 0.4 million, $ 7.1 million and $ 4.4 million in product revenue under this agreement in the years ended December 31, 2025, 2024 and 2023, respectively. Merck Technology Transfer and License Agreements In May 2025, we entered into a license agreement that provides Merck with limited rights to use our proprietary enzyme technology to enable the manufacture of essential enzyme materials for sitagliptin production under the existing Sitagliptin Supply Agreement. In connection with this agreement, we received a one-time, non-refundable license payment of $ 2.5 million, which we recognized as research and development revenue upon transfer of control of the licensed technology in the second quarter of 2025. The license agreement did not modify the rights, obligations, or pricing terms under the Sitagliptin Supply Agreement, which continues to govern the commercial supply of sitagliptin enzymes. In October 2025, we entered into a Technology Transfer Agreement with Merck (the “Merck TTA”), as amended in December 2025, pursuant to which Merck made a one-time non-refundable and non-creditable payment of $ 37.8 million, which we received during the fourth quarter of 2025, in exchange for rights to access and use essential enzyme starting materials and license to related intellectual property for supply assurance purposes. Pursuant to the Merck TTA, as amended, our performance obligation consists of transferring the essential enzyme materials to the Merck‑authorized facility. Upon delivery, Merck obtains control of both the materials and the associated intellectual property rights, consistent with the terms of the Merck TTA. Because the license conveys a right to use existing intellectual property that does not require ongoing or future development activities, we determined that the obligation is satisfied at a point in time. Accordingly, we recognized $ 31.5 million in research and development revenue in the year ended December 31, 2025, when we fulfilled part of our obligation to deliver the materials and Merck obtained control of the licensed intellectual property. As of December 31, 2025, we had $ 6.3 million in deferred revenue related to the remaining materials expected to be delivered in the first quarter of 2026. 79 Nestlé Strategic Collaboration Agreement and Development Agreement In October 2017, we entered into the Nestlé Strategic Collaboration Agreement (the “Nestlé SCA”) with Nestlé Health Science (“Nestlé”), pursuant to which we and Nestlé collaborated to leverage the CodeEvolver technology platform to develop novel enzymes for Nestlé’s established Consumer Care and Medical Nutrition business areas. In January 2020, we entered into a development agreement with Nestlé pursuant to which we and Nestlé collaborated to advance a lead candidate discovered through our Nestlé SCA, CDX-7108, targeting exocrine pancreatic insufficiency, into preclinical and early clinical studies. We, together with Nestlé Health Science, initiated a Phase 1 clinical trial of CDX-7108 in the fourth quarter of 2021, and in February 2023, we and Nestlé announced interim results. In July 2023, we announced plans to discontinue our development support of CDX-7108. In January 2024, both the Nestlé SCA and development agreement were terminated under the terms of the CDX-7108 Acquisition Agreement with Nestlé. No revenue was recognized under the Nestlé SCA and the development agreement during the years ended December 31, 2025 and 2024. We recognized $ 4.1 million in research and development revenue under these agreements in the year ended December 31, 2023. Nestlé CDX-7108 Acquisition Agreement In December 2023 , we entered into an acquisition agreement (the “Acquisition Agreement”) with Nestlé, pursuant to which we agreed to assign our interests in CDX-7108 (including associated agreements and intellectual property rights) to Nestlé. Under the terms of the Acquisition Agreement, Nestlé will be solely responsible for the continued development and commercialization of CDX-7108, including all associated costs, and Codexis will receive an upfront payment, future potential milestone payments and net-sales based royalties. We recognized $ 5.0 million in research and development revenue f or the year ended December 31, 2023 related to the Acquisition Agreement, with the $ 5.0 million upfront fee received in January 2024. Novartis Platform Technology Transfer and License Agreement In May 2019, we entered into a Platform Technology Transfer and License Agreement (the “Novartis CodeEvolver Agreement”) with Novartis Pharma AG (“Novartis”). The Novartis CodeEvolver Agreement allows Novartis to use our proprietary CodeEvolver technology platform in the field of human healthcare. In July 2021, we announced the completion of the technology transfer period during which we transferred our proprietary CodeEvolver technology platform to Novartis (the “Technology Transfer Period”). Pursuant to the agreement, we received a $ 5.0 million upfront payment, a $ 4.0 million milestone payment upon completion of the second technology milestone in 2020, and an aggregate of $ 5.0 million payment for the completion of the third technology milestone in 2021. In consideration for the continued disclosure and license of improvements to the technology and materials during a multi-year period that began on the conclusion of the Technology Transfer Period (the “Improvements Term”), Novartis will pay us $ 8.0 million in aggregate annual payments over a four-year period, all of which were received from 2022 through 2025. The Company also has the potential to receive quantity-dependent, usage payments for each API that is manufactured by Novartis using one or more enzymes that have been developed or are in development using the CodeEvolver technology platform during the period beginning on the conclusion of the Technology Transfer Period and ending on the expiration date of the last to expire licensed patent. Revenue for the combined initial license and technology transfer performance obligation was recognized over time based on hours incurred, and revenue allocated to improvements made during the Improvements Term is being recognized during the Improvements Term. Under the Novartis CodeEvolver Agreement, we rec ognized $ 0.6 million , $ 1.0 million and $ 1.1 million in research and development revenue in the years ended December 31, 2025, 2024 and 2023, respectively. Roche License Agreements In December 2019, we entered into a license agreement with Roche to provide Roche with our evolved T4 DNA ligase high-performance molecular diagnostic enzyme. The royalty bearing license grants Roche worldwide rights to include the evolved T4 DNA ligase in its nucleic acid sequencing products and workflows. We received an upfront collaboration fee payment of $ 0.8 million following the execution of the agreement, and we received an additional $ 0.9 million milestone payment after the completion of technology transfer in October 202 0. 80 In February 2024, we entered into a new license agreement with Roche granting them rights to our newly engineered DNA ligase, superseding our prior 2019 agreement. Under the new agreement, we received upfront and technical milestones payments. We recognized $ 6.0 million in research and development revenue in the year ended December 31, 2024 related to this license agreement. Takeda Strategic Collaboration and License Agreement In March 2020, we entered into a Strategic Collaboration and License Agreement (the “Takeda Agreement”) with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Co. Ltd. (“Takeda”), to research and develop protein sequences for potential use in gene therapy products for certain diseases in accordance with each applicable program plan. On execution of the Takeda Agreement, we received an upfront non-refundable cash payment of $ 8.5 million and we initiated activities under three initial program plans for Fabry Disease, Pompe Disease, and an undisclosed blood factor deficiency, respectively. In May 2021, Takeda elected to exercise its option to initiate an additional program for a certain undisclosed rare genetic disorder; as a result, we received the option exercise fee during the third quarter of 2021. We completed the research and development services relating to the fourth program with Takeda during the second quarter of 2023. Revenue relating to the functional licenses provided to Takeda was recognized at a point in time when the control of the license transferred to the customer. Pursuant to the Takeda Agreement, we were eligible to receive other payments that included ( i) clinical development and commercialization-based milestones, per target gene, and (ii) tiered royalty payments based on net sales of applicable products at percentages ranging from the mid-single digits to low single-digits. In April 2023, Takeda announced the discontinuation of these development programs, and in 2024 we divested our rights in some of the underlying assets to Crosswalk Therapeutics. No revenue was recognized under the Takeda Agreement during the year ended December 31, 2025. We recognized research and development revenue under this agreement of $ 0.8 million and $ 2.0 million in the years ended December 31, 2024 and 2023, respectively. Enzyme Supply Agreement and Commercial Agreement In November 2016, we entered into an enzyme supply agreement with a customer, receiving an upfront payment recorded as deferred revenue which was recognized as the customer purchased our enzyme. In April 2019, we entered into a multi-year commercial agreement with the same customer for the exclusive use of our enzymes in some of their products, with royalties to be earned. Both the enzyme supply agreement and commercial agreement were terminated in 2023. Due to the early termination of the enzyme supply agreement in 2023, we recognized $ 3.2 million of product revenue from the release of prior periods' product revenue deferrals and also recognized an additional $ 1.3 million of product revenue as settlement fee. Pfizer Enzyme Supply Agreement During 2021 and 2022, we received significant purchase orders from Pfizer Inc. (“Pfizer”) for CDX-616, our proprietary enzyme product used in the manufacture of nirmatrelvir, a key component of Pfizer’s PAXLOVID product for the treatment of COVID-19 infections in humans. We supplied the CDX‑616 enzymes under an Enzyme Supply Agreement with Pfizer Ireland Pharmaceuticals, a subsidiary of Pfizer (the “Pfizer Supply Agreement”). Under the terms of the Pfizer Supply Agreement, Pfizer paid us a fee of $ 25.9 million in August 2022, which was initially recorded as deferred revenue. Pursuant to the agreement, 90 % of the fee ($ 23.3 million) was creditable toward (i) qualifying CDX-616 orders shipped through December 31, 2023, and (ii) fees associated with new development or licensing agreements with Pfizer entered into before April 4, 2023. On March 31, 2023, we entered into a license agreement whereby Pfizer utilized a portion of the $ 23.3 million credit, for which we recognized $ 5.0 million as non-cash research and development revenue in the second quarter of 2023. We also recognized $ 2.0 million of non-cash research and development revenue, and credited against the $ 25.9 million fee, for other services provided to Pfizer in 2023. Credits under item (i) above expired on December 31, 2023, and credits under item (ii) above expired on April 4, 2023. During the fourth quarter of 2023, and pursuant to the Pfizer Supply Agreement, we released the prior year deferrals for the unused portion of the retainer fee that is not creditable beyond 2023 and we recognized product revenue of $ 8.2 million in the year ended December 31, 2023. In December 2024, Pfizer applied the remaining available credit toward an upfront license fee under a new agreement, resulting in $ 9.5 million of non-cash research and development revenue in the year ended December 31, 2024, and no further credit remains available for Pfizer. 81 Note 6. 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 interest and other expense, net in the consolidated statements of operations. In March 2022, we entered into a Stock Purchase Agreement with seqWell, a privately held life sciences company, pursuant to which we purchased 1,000,000 shares of seqWell's Series C preferred stock for $ 5.0 million. In March 2023, we entered into a Master Collaboration Agreement and Research Agreement with seqWell (the “seqWell Agreement”), pursuant to which we provided research and experimental screening and protein engineering activities in exchange for compensation in the form of additional shares of seqWell's common stock. In January 2025, we sold assets that were developed under the seqWell Agreement to seqWell in exchange for the right to receive a cash payment upon future events and a warrant to purchase seqWell’s common stock exercisable upon future events, and terminated the seqWell Agreement. In addition to our initial equity investment and the shares we have received under the seqWell Agreement, in September 2023, we purchased an additional 88,256 shares of seqWell's Series C-1 preferred stock and 44,128 common stock warrants for $ 0.4 million. We received 205,279 shares of seqWell's common stock from research and development services with seqWell and we recognized $ 0.2 million in research and development revenue from these services in the year ended December 31, 2023. As of December 31, 2025, we held an aggregate of 1,088,256 shares of Series C and C-1 preferred stock, 205,279 shares of common stock and 44,128 of common stock warrants that we have earned or purchased from seqWell. For the year ended December 31, 2025, we recognized a $ 0.3 million impairment charge on a non-marketable equity investment after concluding that the investee’s ongoing liquidity challenges and lack of near-term financing or cash flows warranted a reduction in the investment’s carrying value. The impairment reduced the carrying value of our investment to zero and is included within interest and other expense, net in the consolidated statements of operations, For the year ended December 31, 2024, we recognized an impairment charge of $ 6.9 million which is presented within interest and other expense, net in the consolidated statements of operations. This adjustment included the write-down of our investment in Molecular Assemblies, Inc. (“MAI”) by $ 3.9 million during the third quarter of 2024 to its related fair value as determined based on valuation methods using the latest observed transaction price of MAI’s preferred stock securities anticipated to be issued during the fourth quarter of 2024 and adjusted for the rights and obligations of the preferred stock securities the Company holds, and an additional $ 2.8 million impairment charge during the fourth quarter of 2024 to adjust the carrying value of our investment in MAI to zero as the investee ceased its operations during the fourth quarter of 2024 due to liquidity position and lack of access to additional capital . The other $ 0.2 million of impairment charge on our investment in seqWell is related to the write-down to its estimated fair value using the recent transaction price of similar preferred stock securities issued by the investee and adjusted for the rights and obligations of the preferred stock securities the Company holds. For the year ended December 31, 2023, we recognized an impairment charge of $ 12.2 million and included this as adjustment to the carrying value of our investments in seqWell, MAI and Arzeda Corp (“Arzeda”). This adjustment, which is presented within other income (expense), net in the consolidated statements of operations, included the write-down of the carrying value of our investment in seqWell by $ 3.0 million during the third quarter of 2023 to its estimated fair value as determined based on valuation methods using the recent transaction price of similar preferred stock securities issued by seqWell and adjusted for the rights and obligations of the preferred stock securities the Company holds. The $ 1.2 million of impairment charge on our investment in Arzeda is related to the write-down to its estimated fair value based on the latest observed transaction price of Arzeda's preferred stock securities issued during the fourth quarter of 2023 and the subsequent conversion of our existing Series B preferred stock into Arzeda's common stock during the fourth quarter of 2023. The other $ 8.0 million of impairment charge represents the difference between the estimated fair value and carrying value of our investment in MAI as of December 31, 2023, based on quantitative and qualitative analysis. This analysis involved use of judgment, estimates and assumptions, such as the near-term prospects of the investee in the market in which it operates, evaluation of the investee’s financial condition in relation to its outstanding obligations, and probabilities of securing additional capital through various alternative scenarios. Other than as disclosed above, there were no remeasurement events for our investments in non-marketable equity securities in 2025 and 2024 . We recognized no realized gains or losses during the years ended December 31, 2025 and 2024. The following table presents the carrying value of our non-marketable equity securities (in thousands): December 31, 2025 December 31, 2024 seqWell $ 2,416 $ 2,416 Other investments in non-marketable equity securities 82 382 Total non-marketable equity securities $ 2,498 $ 2,798 Note 7. Fair Value Measurements The following tables show the Company’s cash, cash equivalents, and short-term investments by significant investment category (in thousands): December 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-term Investments Cash $ 30,648 $ — $ — $ 30,648 $ 30,648 $ — Level 1: Money market funds 17,156 — — 17,156 17,156 — Level 2 (1) : Commercial paper 13,035 2 — 13,037 2,989 10,048 Corporate debt 499 — — 499 — 499 U.S. agency securities — — — — — — U.S. treasury securities 16,863 6 — 16,869 — 16,869 Subtotal 30,397 8 — 30,405 2,989 27,416 Total $ 78,201 $ 8 $ — $ 78,209 $ 50,793 $ 27,416 82 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 use 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 December 31, 2025, the contractual maturity of all investments held was less than one year. During the years ended December 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 8. Balance Sheet Details Inventories Inventories consisted of the following (in thousands): December 31, 2025 2024 Work in process $ — $ 29 Finished goods 1,817 1,770 Total inventories $ 1,817 $ 1,799 Prepaid expenses and other current assets As of December 31, 2025, prepaid expenses and other current assets consists of prepaid expenses of $ 5.2 million and other current assets of $ 0.5 million. As of December 31, 2024, prepaid expenses and other current assets consists of prepaid expenses of $ 3.7 million and other current assets of $ 0.5 million. 83 Property and Equipment, net Property and equipment, net consisted of the following (in thousands): December 31, 2025 2024 Laboratory equipment (1) $ 38,943 $ 35,949 Leasehold improvements 15,229 12,159 Computer equipment 2,556 2,459 Office furniture and equipment 1,133 1,124 Construction in progress (2) 405 3,441 Property and Equipment 58,266 55,132 Less: accumulated depreciation ( 45,242 ) ( 40,935 ) Property and equipment, net $ 13,024 $ 14,197 (1) Fully depreciated property and equipment with a cost of $ 0.8 million and $ 2.6 million were retired during the years ended December 31, 2025 and 2024, respectively. (2) Construction in progress includes equipment received but not yet placed into service pending installation. In July 2023, we announced our plan to consolidate operations from our San Carlos facility to our headquarters in Redwood City. As part of this plan, we entered into agreements to sell certain laboratory equipment located in our San Carlos facility through an asset auction and as part of the lease assignment of the San Carlos facility to Vaxcyte (see further discussion at Note 13, “Commitments and Contingencies”). These certain items of laboratory equipment met the assets held for sale criteria and were sold during the fourth quarter of 2023. Using a fair value estimate based on Level 3 inputs in the fair value hierarchy, the Company determined that the carrying value of these assets exceeded fair value less costs to sell, which resulted in a write-down o f $ 1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023. During the year ended December 31, 2023, the Company recorded a n on-cash impairment charge of $ 4.7 million associated with the San Carlos facility leasehold improvements. For additional information, see Note 13, “Commitments and Contingencies.” Depreciation expense included in both research and development expenses and selling, general and administrative expenses in the consolidated statements of operations was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Research and development $ 4,125 $ 3,964 $ 4,594 Selling, general and administrative 972 881 924 Total depreciation expense $ 5,097 $ 4,845 $ 5,518 Goodwill Goodwill was previously allocated to each of the Company's reporting units. In July 2023, we announced a restructuring of our business and that we were discontinuing investment in certain development programs, primarily in Novel Biotherapeutics. As a result of this plan, 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 the associated goodwill. The impairment charge is recorded within the asset impairment and other charges in the consolidated statements of operation in the year ended December 31, 2023 . During the years ended December 31, 2025 and 2024, we had no impairment charges related to goodwill. Goodwill had a carrying value of $ 2.5 million as of December 31, 2025 and 2024, respectively. 84 Other Accrued Liabilities Other accrued liabilities consisted of the following (in thousands): December 31, 2025 2024 Accrued professional and outside service fees $ 1,384 $ 3,064 Accrued purchases 938 2,908 Other 446 251 Total other accrued liabilities $ 2,768 $ 6,223 Note 9. Stock-based Compensation Equity Incentive Plans In 2019, our Board of Directors (the “Board”) and stockholders approved the Company's 2019 Incentive Award Plan (the “2019 Plan”). The 2019 Plan superseded and replaced in its entirety our 2010 Equity Incentive Plan (the “2010 Plan”) which was effective in March 2010, and no further awards will be granted under the 2010 Plan; however, the terms and conditions of the 2010 Plan will continue to govern any outstanding awards thereunder. The 2010 Plan provided for the grant of incentive stock options, non-statutory stock options, RSUs, RSAs, PSUs, PBOs, stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants. The 2019 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, RSAs, RSUs, PSUs, PBOs, other stock or cash-based awards and dividend equivalents to eligible employees and consultants of the Company or any parent or subsidiary, as well as members of the Board. The number of shares of our common stock that were initially available for issuance under the 2019 Plan is equal to the sum of (i) 7,897,144 shares, and (ii) any shares subject to awards granted under the 2010 Plan that were outstanding as of April 22, 2019 and thereafter terminate, expire, lapse or are forfeited. In June 2019, 8.1 million shares authorized for issuance under the 2019 Plan were registered under the Securities Act. In April 2023, the Board approved an amendment to the 2019 Plan (the “2019 Amended Plan”) which became effective upon stockholders' approval at the 2023 Annual Meeting. The 2019 Amended Plan included the (i) increase in the number of shares available by 8,000,000 shares, such that an aggregate of 15,897,144 shares are reserved for issuance under the 2019 Amended Plan and any shares subject to awards granted under the 2010 Plan, and (ii) increase in the number of shares that may be granted as incentive stock options under the 2019 Amended Plan such that an aggregate of 22,000,000 shares of common stock may be granted as incentive stock options under the 2019 Amended Plan. In April 2025, our Board approved the second amendment to the 2019 Plan which amendment became effective upon stockholders' approval at the Annual Meeting of the Company’s stockholders in June 2025. The second amendment provided for an increase in the number of shares authorized and available for issuance under the 2019 Plan by 8,000,000 shares, resulting in an increase to the total shares authorized and available for issuance under the 2019 Plan from 15,897,144 shares to 23,897,144 shares. In January 2023, our Board approved the 2022 Employment Inducement Award Plan (the “2022 Inducement Plan”) which provides for the grant of non-qualified stock options, RSAs, RSUs, performance awards, other stock awards and dividend equivalents to eligible employees with respect to an aggregate of up to 2,000,000 shares of our common stock. In June 2023, the 2022 Inducement Plan was terminated upon the approval of an amendment to the 2019 Plan at the Annual Meeting of Stockholders in June 2023. In August 2024, our Board approved the 2024 Employment Inducement Award Plan (the “2024 Inducement Plan”) which provides for the grant of non-qualified stock options, RSAs, RSUs, and performance awards to eligible employees with respect to an aggregate of up to 1,000,000 shares of our common stock. As of December 31, 2025, the number of total shares remaining available for issuance under the 2019 Plan and 2024 Inducement Plan was 12,329,669 shares. Employee Stock Purchase Plan In April 2023, our Board approved an employee stock purchase plan (as may be amended from time to time, the “ESPP”) which became effective upon approval at the 2023 Annual Meeting. The ESPP allows eligible employees of the Company to purchase shares of our common stock through payroll deductions. Offering periods are generally over a 24 -month period and begin in May and November of each year. The per share purchase price will be the lower of 85 % of the closing trading price 85 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. For the years ended December 31, 2025 and 2024, 277,577 and 263,157 shares of our common stock were purchased under the ESPP, respectively. As of December 31, 2025, 1,459,266 shares of common stock were available for future issuance under the ESPP. We recognized $ 0.4 million and $ 0.3 million of stock-based compensation expenses related to the ESPP for the years ended December 31, 2025, and 2024, respectively. As of December 31, 2025, 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 . We may grant options with different vesting terms from time to time. In January 2024, the Board approved the grants of stock options with a vesting term over three years from the date of grant, of which 33 % vest at the end of one year , and 67 % vest monthly over the remaining two years . Unless an employee's termination of service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of three months or the expiration of the option, whichever is earlier. Restricted Stock Units (“RSUs”) We also grant employees RSUs, which generally vest over either a three-year period with 33 % of the shares subject to the RSUs vesting on each yearly anniversary of the vesting commencement date or over a four-year period with 25 % of the shares subject to the RSU vesting on each yearly anniversary of the vesting commencement date, in each case contingent upon such employee’s continued service on such vesting date. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. We may grant RSUs with different vesting terms from time to time. Performance-contingent Restricted Stock Units (“PSUs”) and Performance Based Options (“PBOs”) In prior years, the compensation committee of the Board approved grants of PBOs and PSUs to our executives, and solely in respect of non-executive employees, delegated to our CEO the authority to approve grants of PSUs. The PSUs and PBOs vest based upon both the successful achievement of certain corporate operating milestones in specified timelines and continued employment through the applicable vesting date. When the performance goals are deemed to be probable of achievement for these types of awards, recognition of stock-based compensation expense commences. Once the number of shares eligible to vest is determined, those shares vest in two equal installments with 50 % vesting upon achievement, as determined by the compensation committee of the Board, and the remaining 50 % vesting on the first anniversary of achievement, in each case, subject to the recipient’s continued service through the applicable vesting date. If the performance goals are achieved at the threshold level, the number of shares eligible to vest in respect of the PSUs and PBOs would be equal to half the number of PSUs granted and one-quarter the number of shares underlying the PBOs granted. If the performance goals are achieved at the target level, the number of shares eligible to vest in respect of the PSUs and PBOs would be equal to the number of PSUs granted and half of the shares underlying the PBOs granted. If the performance goals are achieved at the superior level, the number of shares eligible to vest in respect of the PSUs would be equal to two times the number of PSUs granted and equal to the number of PBOs granted. The number of shares issuable upon achievement of the performance goals at the levels between the threshold and target levels for the PSUs and PBOs or between the target level and superior levels for the PSUs would be determined using linear interpolation. Achievement below the threshold level would result in no shares being eligible to vest in respect of the PSUs and PBOs. No PSUs and PBOs were granted in 2025, 2024 and 2023. In 2022, we awarded PSUs (“2022 PSUs”) and PBOs (“2022 PBOs”), each of which commence vesting based upon the achievement of various weighted performance go als, including finance and corporate strategy, performance enzymes and biotherapeutics deliverables, research plans, and organizational development. In the first quarter of 2023, the compensation committee of the Board determined that the 2022 PSUs and 2022 PBOs performance goals had been achieved at 85.0 % and 42.5 % of the target level, respectively, and recognized stock-based compensation expenses accordingly. Accordingly, 50 % of the shares underlying the 2022 PSUs and PBOs vested in the first quarter of 2023 and 50 % of the shares underlying the 2022 PSUs and PBOs vested in the first quarter of 2024, in each case, subject to the recipient’s continued service on each vesting date. 86 Stock-Based Compensation Expense Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands): Year Ended December 31, 2025 2024 2023 Costs of product revenue $ 159 $ 429 $ 354 Research and development 2,478 2,928 2,631 Selling, general and administrative 6,987 9,730 6,986 Total $ 9,624 $ 13,087 $ 9,971 The following table presents total stock-based compensation expense by security type included in the consolidated statements of operations (in thousands): Year Ended December 31, 2025 2024 2023 Stock options $ 5,924 $ 6,423 $ 3,962 RSUs and RSAs 3,333 4,717 4,447 PSUs — 247 1,649 PBOs — $ 1,357 ( 112 ) ESPP 367 343 25 Total $ 9,624 $ 13,087 $ 9,971 During the fourth quarter of 2025, we entered into a Transition Agreement with Stephen Dilly, our former President and Chief Executive Officer. Under this agreement, the outstanding unvested options and awards of Mr. Dilly will continue to vest in accordance with their original terms based on his continued service to our Board. We also entered into Separation and Consulting Agreements with a former executive during the fourth quarter of 2025. Under this agreement, the outstanding unvested options and awards of the former executive will continue to vest through the end of his consultancy period, which concludes in November 2025. These modifications resulted in an incremental stock-based compensation expense of $ 0.7 million recognized in selling, general and administrative expenses during the year ended December 31, 2025. During the fourth quarter of 2024, we entered into Separation and Consulting Agreements with Sri Ryali, our former Chief Financial Officer, and two other former executives. Under these agreements, the outstanding unvested options and awards for each of the three former executives will continue to vest through the end of their consultancy period, which concluded on February 28, 2025. This modification resulted in a reduction of stock-based compensation expense of $ 0.4 million recognized in selling, general and administrative expenses during the year ended December 31, 2024. On June 29, 2024, we entered into an Advisory Services Agreement with a former executive of the Company. Pursuant to the advisory agreement, the exercise period for the former executive’s vested stock options and performance-based options was also extended. This modification resulted in a stock-based compensation expense of $ 2.0 million recognized in selling, general and administrative expenses during the year ended December 31, 2024. Grant Award Activities: Stock Option Awards We estimated the fair value of stock options using the Black-Scholes-Merton option-pricing model based on the date of grant. The following summarizes the weighted-average assumptions used to estimate the fair value of employee stock options granted: Year Ended December 31, 2025 2024 2023 Expected life (years) 4.6 5.9 5.8 Volatility 62.3 % 73.3 % 66.2 % Risk-free interest rate 3.3 % 3.9 % 4.0 % Expected dividend yield 0.0 % 0.0 % 0.0 % 87 The following summarizes the weighted-average assumptions used to estimate the fair value of 20,000 , 20,000 , and 50,000 shares of stock options granted to non-employees for services during the years ended December 31, 2025, 2024, and 2023 , valued at $ 60 thousand, $ 44 thousand and $ 0.1 million, respectively: Year Ended December 31, 2025 2024 2023 Expected life (years) 5.9 5.8 5.8 Volatility 77.2 % 74.7 % 70.1 % Risk-free interest rate 4.3 % 4.4 % 4.7 % Expected dividend yield 0.0 % 0.0 % 0.0 % The weighted average grant date fair value per share of non-employee stock options granted respectively in 2025, 2024 and 2023 was $ 3.02 , $ 2.19 and $ 1.05 , respectively. The following tables summarize stock option activities: Number of Shares Weighted Average Exercise Price Per Share (In Thousands) Outstanding at December 31, 2024 9,128 $ 5.17 Granted 3,344 $ 3.61 Exercised ( 339 ) $ 3.09 Forfeited/Expired ( 3,568 ) $ 5.35 Outstanding at December 31, 2025 8,565 $ 4.58 Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In Thousands) (In Years) (In Thousands) Outstanding at December 31, 2025 8,565 $ 4.58 7.7 $ 1,800 Exercisable at December 31, 2025 3,815 $ 5.82 6.4 $ 900 Vested and expected to vest at December 31, 2025 8,068 $ 4.68 7.6 $ 1,662 The weighted average grant date fair value per share of employee stock options granted in 2025, 2024, and 2023 were $ 2.03 , $ 2.05 and $ 3.31 , respectively. The total intrinsic value of options exercised in 2025, 2024, and 2023 were $ 0.6 million, $ 0.6 million and $ 0.7 million, respectively. As of December 31, 2025, the re was $ 5.4 million of unrecognized stock-based compensation, net of expected forfeitures, related to unvested stock options, which we expect to recognize over a weighted average period of 2.9 years. Restricted Stock Awards (“RSAs”) The following table summarizes RSA activities: Number of Shares Weighted Average Grant Date Fair Value Per Share (In Thousands) Non-vested balance at December 31, 2024 234 $ 3.56 Granted — $ — Vested ( 234 ) $ 3.56 Non-vested balance at December 31, 2025 — $ — The total fair value, as of the vesting date, of RSAs vested in fiscal years 2025, 2024 and 2023 were $ 0.6 million, $ 1.0 million and $ 0.4 million, respectively. 88 As of December 31, 2025, there were no unrecognized stock-based compensation cost related to non-vested RSAs. Restricted Stock Units (“RSUs”) The following table summarizes RSU activities: Number of Shares Weighted Average Grant Date Fair Value Per Share (In Thousands) Non-vested balance at December 31, 2024 2,010 $ 4.16 Granted 1,484 $ 3.14 Vested ( 766 ) $ 5.08 Forfeited/Expired ( 717 ) $ 3.86 Non-vested balance at December 31, 2025 2,011 $ 2.96 The total fair value, as of the vesting date, of RSUs vested in fiscal years 2025, 2024 and 2023 were $ 3.4 million , $ 1.1 million and $ 1.1 million respectively. As of December 31, 2025, there was $ 2.9 million of unrecognized stock-based compensation cost related to non-vested RSUs, which we expect to recognize over a weighted average period of 1.0 years. Performance-Contingent Restricted Stock Units (“PSUs”) Th e total fair value, as of the vesting date, of PSUs vested in the years ended December 31, 2025, 2024, and 2023 were nil , $ 0.9 million, and $ 1.6 million, respectively. As of December 31, 2025, there was no unrecognized stock-based compensation cost related to non-vested PSUs. Performance Based Options (“PBOs”) We estimated the fair value of PBOs using the Black-Scholes-Merton option-pricing model based on the date of grant. No PBOs were granted to employees for their services since 2022. The following tables summarize PBOs activities: Number of Shares Weighted Average Grant Date Fair Value Per Share (In Thousands) Outstanding at December 31, 2024 1,575 $ 5.43 Forfeited/Expired ( 1,520 ) $ 10.28 Outstanding at December 31, 2025 55 $ 20.15 Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In Thousands) (In Years) (In Thousands) Exercisable at December 31, 2025 55 $ 20.15 5.53 $ — Vested and expected to vest at December 31, 2025 55 $ 20.15 5.53 $ — The total fair value of e xercised PBOs for 2025, 2024 and 2023, was nil . As of December 31, 2025, there was no unrecognized stock-based compensation cost related to non-vested PBOs. 89 Employee Stock Purchase Plan (“ESPP”) The fair value of shares to be issued under the ESPP is computed using the Black-Scholes-Merton option pricing model at the commencement of the offering period. The following summarizes the weighted-average assumptions used to estimate the fair value of ESPP: Year Ended December 31, 2025 2024 2023 Expected life (years) 1.3 1.2 0.4 Volatility 82.2 % 89.4 % 89.6 % Risk-free interest rate 3.9 % 4.6 % 5.3 % Expected dividend yield 0.0 % 0.0 % 0.0 % Note 10. Capital Stock 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. We were not required to sell any shares at any time during the term of the EDA. On April 24, 2024, we terminated the EDA. No shares of our common stock were issued and sold pursuant to the EDA during the year ended December 31, 2024. During the year ended December 31, 2023, 3,079,421 shares of our common stock were issued and sold pursuant to the EDA. During the year ended December 31, 2023, we received gross proceeds of $ 8.7 million or $ 7.9 million in net proceeds after PSC's commissions and direct offering expenses of $ 0.7 million. 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 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 remained available for sale under the Cantor Sales Agreement. Note 11. 401(k) Plan In January 2005, we implemented a 401(k) Plan covering certain employees. Currently, all of our United States based employees over the age of 18 are eligible to participate in the 401(k) Plan. Under the 401(k) Plan, eligible employees may elect to reduce their current compensation up to a certain annual limit and contribute these amounts to the 401(k) Plan. We may make matching or other contributions to the 401(k) Plan on behalf of eligible employees. We recorded employer matching contributions expense o f $ 1.4 million, $ 1.2 million, and $ 1.4 million in the years ended December 31, 2025, 2024, and 2023, respectively. 90 Note 12. Income Taxes Our loss before provision for income taxes were as follows (in thousands): Year Ended December 31, 2025 2024 2023 United States $ ( 43,908 ) $ ( 65,231 ) $ ( 76,169 ) Foreign ( 19 ) ( 11 ) ( 2 ) Loss before provision for income taxes $ ( 43,927 ) $ ( 65,242 ) $ ( 76,171 ) The tax provision for the years ended December 31, 2025 and 2024 consists primarily of taxes attributable to foreign operations. The tax provision for the year ended December 31, 2023 consists primarily of current year state and foreign income taxes. The components of the provision for income taxes are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current provision: State $ 7 $ ( 6 ) $ 27 Foreign 43 42 42 Total current provision 50 36 69 Deferred benefit: Foreign ( 3 ) ( 2 ) — Total deferred benefit ( 3 ) ( 2 ) — Provision for income taxes $ 47 $ 34 $ 69 As further described in Note 2, “Summary of Significant Accounting Policies”, we have elected to prospectively adopt the guidance in ASU No. 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to our effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (in thousands, except percentages): Year Ended December 31, 2025 $ % Provision for income taxes at U.S. federal statutory rate $ ( 9,225 ) 21.00 % State and local income taxes, net of federal — — Foreign tax effects 2 — Tax credits ( 1,295 ) 2.95 Changes in valuation allowance 7,494 ( 17.06 ) Nontaxable or nondeductible items: Stock-based compensation 2,645 ( 6.02 ) Others 242 ( 0.55 ) Changes in unrecognized tax benefits 180 ( 0.41 ) Other adjustments 4 ( 0.02 ) Provision for income taxes $ 47 ( 0.11 ) % 91 The following table is a reconciliation of the provision for income taxes calculated at the statutory rate to our provision for income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU No. 2023-09 (in thousands): Year Ended December 31, 2024 2023 Tax benefit at federal statutory rate $ ( 13,701 ) $ ( 15,995 ) State taxes ( 3,133 ) ( 2,208 ) Research and development credits ( 419 ) ( 925 ) Foreign operations taxed at different rates — — Stock-based compensation 1,930 1,967 Other nondeductible items ( 108 ) 438 Executive compensation 306 152 Change in valuation allowance 15,159 16,640 Provision for income taxes $ 34 $ 69 Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards. Significant components of our deferred tax assets and liabilities are as follows (in thousands): December 31, 2025 2024 Deferred tax assets: Net operating losses $ 101,027 $ 82,925 Credits 19,682 17,660 Deferred revenues 256 48 Stock-based compensation 3,187 4,786 Reserves and accruals 2,506 2,650 Property and Equipment 131 830 Intangible assets 57 244 Capital losses 453 452 R&D Capitalization 20,637 28,471 Unrealized gain/loss 3 2 Interest carryforward 399 — Lease liability 8,474 7,445 Other assets 4,788 4,362 Total deferred tax assets: 161,600 149,875 Valuation allowance ( 153,803 ) ( 142,994 ) Deferred tax liabilities: Right-of-use assets ( 7,808 ) ( 6,895 ) Total deferred tax liabilities: ( 7,808 ) ( 6,895 ) Net deferred tax liabilities $ ( 11 ) $ ( 14 ) 92 ASC 740 requires that the tax benefit of NOLs, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. Because of our history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not more likely than not to be realized and, accordingly, has provided a valuation allowance against our deferred tax assets. Accordingly, the net deferred tax assets in all our jurisdictions have been fully reserved by a valuation allowance. The net valuation allowance increased by $ 10.8 million d uring the year ended December 31, 2025, increased by $ 15.2 million during the year ended December 31, 2024, and increased by $ 16.7 million during the year ended December 31, 2023. At such time as it is determined that it is more likely than not that the deferred tax assets are realizable, the valuation allowance will be reduced. The following table sets forth our federal, state and foreign NOL carryforwards and federal research and development tax credits as of December 31, 2025 (in thousands): December 31, 2025 Amount Expiration Years Net operating losses, federal $ 182,918 2026-2037 Net operating losses, federal $ 237,257 Do not expire Net operating losses, state $ 196,540 2028-2045 Tax credits, federal $ 21,388 2025-2045 Tax credits, state $ 22,978 Do not expire Current U.S. federal and California tax laws include substantial restrictions on the utilization of NOLs and tax credit carryforwards in the event of an ownership change of a corporation. Accordingly, the Company's ability to utilize NOLs and tax credit carryforwards may be limited as a result of such ownership changes . We performed an analysis in 2025 and determined that there was not a limitation that would result in the expiration of carryforwards before they are utilized. We apply the provisions of ASC 740 to account for uncertain income tax es. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): December 31, 2025 2024 2023 Balance at beginning of year $ 21,618 $ 20,204 $ 18,571 Additions based on tax positions related to current year 2,243 1,332 2,164 Additions to tax position of prior years 138 82 — Reductions to tax position of prior years ( 130 ) — ( 531 ) Balance at end of year $ 23,869 $ 21,618 $ 20,204 We recognize interest and penalties as a co mponent of our income tax expense. Total interest and penalties recognized in the consolidated statements of operations were $ 42 thousand, $ 42 thousand and $ 42 thousand in 2025, 2024 and 2023, respectively. Total penalties and interest recognized in the consolidated balance sheet was $ 0.7 million, $ 0.6 million and $ 0.6 million as of December 31, 2025, 2024 and 2023, respectively. The total unrecognized tax benefits that, if recognized currently, would impact our company’s effective tax rate were $ 0.3 million as of December 31, 2025, 2024 and 2023. We are not subject t o examination by United States federal or state tax authorities for years prior to 2002 and foreign tax authorities for years prior to 2014. Our 2023 U.S. federal tax return is under audit by the Internal Revenue Service, and we will adjust our federal R&D credits based on the outcome of the investigation. 93 Note 13. Commitments and Contingencies Operating Leases Our headquarters are located in Redwood City, California, where we occupy approximately 77,300 square feet of office and laboratory space in multiple buildings within the same business park operated by Metropolitan Life Insurance Company (“MetLife”). Our lease agreement with MetLife (“RWC Lease”) includes approximately 28,200 square feet of space located at 200 and 220 Penobscot Drive, Redwood City, California (the “200/220 Penobscot Space”) and approximately 37,900 square feet of space located at 400 Penobscot Drive, Redwood City, California (the “400 Penobscot Space”) (the 200/220 Penobscot Space and the 400 Penobscot Space are collectively referred to as the “Penobscot Space”), and approximately 11,200 square feet of space located at 501 Chesapeake Drive, Redwood City, California (the “Chesapeake Space”). We entered into the initial lease with MetLife for our facilities in Redwood City in 2003 (the “RWC Lease”) and the RWC Lease has been amended multiple times since then to adjust the leased space and terms of the RWC Lease. In December 2024, we entered into a Ninth Amendment to the RWC Lease (the “Ninth Amendment”) with MetLife with respect to the Penobscot Space and the Chesapeake Space to extend the term of the Lease for additional periods. Pursuant to the Ninth Amendment, the term of the lease for both the Penobscot Space and the Chesapeake Space has been extended through August 2032. We have one (1) option to extend the term of the lease for the Penobscot Space for five ( 5 ) years, and one (1) separate option to extend the term of the lease for the Chesapeake Space for five ( 5 ) years. The Ninth Amendment provided a net tenant improvement allowance of $ 3.0 million. Pursuant to the terms of the RWC Lease, we exercised our right to deliver a letter of credit in lieu of a security deposit. The letter of credit is collateralized by deposit balances held by the bank in the amount of $ 1.1 million as of December 31, 2025 and 2024, and are recorded as non-current restricted cash on the consolidated balance sheets In November 2025, we entered into a lease agreement with 30831 Huntwood Avenue LLC (“Huntwood”) for approximately 34,304 square feet of office, laboratory, research and development, and manufacturing space located in Hayward, California (the “Huntwood Space”). The lease has an initial term of six years from the lease commencement date, with two options to extend the term for additional five-year period each. The initial base monthly rent is approximately $ 0.1 million, subject to a 3 % annual escalation on each anniversary of the operating expense commencement date. Upon execution of the lease, we have provided Huntwood with a security deposit of $ 0.6 million in the form of a letter of credit, which is recorded as non-current restricted cash on the consolidated balance sheets. We expect to commence occupancy at Huntwood Space in the first quarter of 2027, following the substantial completion of tenant improvements in accordance with the construction plan. The tables below show the balance of right-of-use assets and lease obligations as of January 1, 2025 and the balance as of December 31, 2025, including the changes during the period (in thousands): Right-of-use Assets - Operating Lease, net Right-of-use assets - Operating leases, net, at January 1, 2025 $ 28,700 Amortization of right-of-use assets ( 3,044 ) Addition due to new lease 4,845 Right-of-use assets - Operating leases, net, at December 31, 2025 $ 30,501 Lease Obligations - Operating Leases Lease obligations - Operating leases, net, at January 1, 2025 $ 30,990 Lease payments ( 4,868 ) Interest accretion 2,095 Addition due to new lease 4,886 Lease obligations - Operating leases, net, at December 31, 2025 $ 33,103 94 In July 2023, we announced our plan to consolidate operations from our previous San Carlos facility to our headquarters in Redwood City. On September 1, 2023, the Company entered into an Assignment and Assumption of Lease (the “Assignment Agreement”) with Vaxcyte, Inc. (“Vaxcyte”) to assign to Vaxcyte all of the Company’s right, title and interest in, under and to the San Carlos facility and the related Lease Agreement, dated as of January 29, 2021. On September 6, 2023, the Company, Vaxcyte and ARE-San Francisco No. 63, LLC (“ARE”) entered into a Consent to Assignment and First Amendment pursuant to which ARE consented to the Assignment Agreement and the assignment by the Company and the assumption by Vaxcyte of the Company’s interest as tenant in the lease. The effective date of the assignment was October 1, 2023. As a result of the Assignment Agreement, the Company remeasured the lease obligation for the San Carlos facility to its present value of $ 3.1 million and wrote off the remaining lease liability of $ 19.6 million and the corresponding right of use asset balance. Simultaneously, the Company determined that indicators of impairment existed because the lease assignment impacts the utilization of the related right of use assets and leasehold improvements in the San Carlos facility, and therefore performed a recoverability test by estimating future undiscounted net cash flows expected to be generated from the use of these assets. As there were no substantial future cash inflows associated with these assets, the carrying values of these assets were deemed unrecoverable. As a result, during the third quarter of 2023, the Company recognized a non-cash impairment charge of $ 7.7 million, of which $ 4.7 million was related to leasehold improvements and $ 3.0 million for the right of use assets, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023. As part of the plan, the Company entered into agreements to sell certain laboratory equipment previously located in the San Carlos facility through an asset auction and as part of the lease assignment of the San Carlos facility to Vaxcyte. These certain items of laboratory equipment met the assets held for sale criteria and were sold during the fourth quarter of 2023. Using a fair value estimate based on Level 3 inputs in the fair value hierarchy, the Company determined that the carrying value of these assets exceeds fair value less costs to sell, which resulted in a write-down of $ 1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations in the year ended December 31, 2023. We are required to restore certain areas of the Redwood City facility that we are renting to its original form. We are expensing the asset retirement obligation over the term of the Redwood City lease. We review the estimated obligation each reporting period and make adjustments if our estimates change. We recorded asset retirement obligations of $ 0.3 million as of December 31, 2025 and 2024, which are included in other liabilities on the consolidated balance sheets. Accretion expense related to our asset retirement obligations was nominal in the years ended December 31, 2025 and 2024. Lease and other information Lease cost amounts included in measurement of lease obligations and other information related to non-cancellable operating leases and finance leases were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Operating lease cost (1) $ 5,139 $ 4,130 $ 6,310 (1) The Company had no variable lease costs. Amounts included in the measurement of lease obligations (in thousands): Year Ended December 31, 2025 2024 2023 Cash paid: Operating cash flows from operating leases $ 4,868 $ 4,727 $ 9,897 Operating Lease Other information: Weighted-average remaining lease term (in years) 6.7 Weighted-average discount rate 6.9 % 95 As of December 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 2026 $ 5,110 2027 5,222 2028 6,604 2029 6,605 2030 7,020 Thereafter 11,156 Total minimum lease payments 41,717 Less: imputed interest 8,614 Lease obligations $ 33,103 Reconciliation of operating lease liabilities as shown within the consolidated balance sheets (in thousands): Current portion of lease obligations - Operating leases $ 2,944 Long-term lease obligations - Operating leases 30,159 Total operating lease liabilities $ 33,103 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. Note 14. 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 funded in two tranches with a maturity date of February 13, 2029 (the “Innovatus Loan”). The first tranche of $ 30.0 million was funded on February 13, 2024 and the second tranche of $ 10.0 million was funded on June 27, 2025 upon achievement of certain milestones including certain pre-specified revenue thresholds. Both tranches were subject to a payment of a facility fee equal to 1.00 % of the amount of such term loan. 96 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 funding of the first tranche of the Innovatus Loan in February 2024, we recorded a debt discount of $ 1.3 million and capitalized debt issuance costs of $ 0.6 million during the first quarter of 2024 . Additionally, in connection with the funding of the second tranche of the Innovatus Loan in June 2025, we recorded a debt discount of $ 0.1 million during the second quarter of 2025. The discount and issuance costs will be amortized over the life of the Innovatus Loan. Interest expense for the Innovatus Loan for the years ended December 31, 2025 and 2024 were $ 4.5 million and $ 3.5 million, respectively, and are 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 and the interest rate is based on the current prime rate. The effective interest rate for the Innovatus Loan was 12.7 % as of December 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 10th anniversary of the issuance date. At the time of issuance, the Company determined the estimated fair value of the warrants of $ 0.9 million using the Black-Scholes model. As the warrants represent a freestanding equity instrument, the Company recorded the fair value of the warrants in additional paid-in capital during the first quarter of 2024 . The Company accounts for the amortization of the debt discount and issuance costs utilizing the effective interest method. Long-term debt consisted of the following at December 31, 2025 (in thousands): December 31, 2025 Face value of debt $ 40,000 Add: payment in-kind interest 1,185 Add: amortized exit fee 334 Less: unamortized debt discount ( 983 ) Less: unamortized debt issuance costs ( 431 ) Total long-term debt $ 40,105 97 The future principal payments under the Innovatus Loan are as follows (in thousands): Years Ending December 31, 2026 $ — 2027 17,566 2028 21,080 2029 3,513 Total principal payments 42,159 Add: amortized exit fee 334 Less: uncapitalized payment in-kind interest ( 974 ) Less: unamortized debt discount ( 983 ) Less: unamortized debt issuance costs ( 431 ) Total long-term debt $ 40,105 Note 15. Segment, Geographical and Other Revenue Information Segment Information We previously managed our business as two business segments, Performance Enzymes and Novel Biotherapeutics. During the fourth quarter of 2023, we made changes to the structure of our organization in connection with the restructuring of our business that we announced in July 2023, including the discontinuation of investment in certain development programs, primarily in our biotherapeutics business, consolidation of operations to our Redwood City, California headquarters, and headcount reduction. 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 (“CODM”), 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. 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 since the fourth quarter of 2023. Effective October 1, 2023, the Company's operations are managed and reported to the CODM on a consolidated basis. The CODM uses primarily consolidated income (loss) from operations and net income (loss) to assess financial performance and make resource allocation decisions. These financial measures are used by the CODM to balance short-term financial results with long-term strategic goals, guiding the allocation of budget between product costs, research and development, and general, selling and administrative expenses. Significant Customers Customers that each accounted for 10% or more of our total revenues were as follows: Percentage of Total Revenues For the Year Ended December 31, 2025 2024 2023 Customer A * 18 % 22 % Customer B 51 % 13 % * Customer C * 10 % * Customer D * 10 % * Customer E * * 13 % * Percentage was less than 10% 98 Customers that each accounted for 10% or more of accounts receivable balances as of the periods presented are as follows: As of December 31, 2025 2024 Customer B * 16 % Customer D 40 % 18 % Customer F 13 % 12 % Customer G * 10 % Customer H * * Customer I * * Customer J 14 % * * Percentage was less than 10% Geographical Information Geographic revenues are identified by the location of the customer and consist of the following (in thousands): Year Ended December 31, 2025 2024 2023 Revenues Americas (1) $ 43,537 $ 21,278 $ 13,733 EMEA (2)(3) 9,292 10,359 22,907 APAC (4)(5)(6) 17,558 27,708 33,503 Total revenues $ 70,387 $ 59,345 $ 70,143 (1) United States revenue was $ 43.5 million, $ 21.3 million, and $ 13.7 million, for the years ended December 31, 2025, 2024, and 2023, respectively (2) Ireland revenue was $ 0.7 million, $ 1.8 million, and $ 0.5 million, for the years ended December 31, 2025, 2024, and 2023, respectively (3) Switzerland revenue was $ 4.2 million, $ 3.4 million, and $ 11.1 million, for the years ended December 31, 2025, 2024, and 2023, respectively (4) China revenue was $ 9.3 million, $ 9.8 million, and $ 20.3 million, for the years ended December 31, 2025, 2024, and 2023, respectively (5) India revenue was $ 5.7 million, $ 7.3 million, and $ 5.7 million, for the years ended December 31, 2025, 2024, and 2023, respectively (6) Singapore revenue was $ 0.4 million, $ 6.2 million, and $ 2.4 million, for the years ended December 31, 2025, 2024, and 2023, respectively Identifiable long-lived assets by location was as follows (in thousands): December 31, 2025 2024 United States $ 43,575 $ 43,098 Note 16. Restructuring Charges In November 2025, in alignment with our enhanced strategic focus , we announced a plan for a workforce reduction of approximately 24 %. This measure was implemented in support of the Company’s organizational streamlining to focus on our ECO Synthesis platform. During the year ended December 31, 2025, we recorded a restructuring charge of $ 3.4 million related to severance and related benefit costs in connection with the workforce reduction. As of December 31, 2025, we have accrued $ 1.6 million as a current liability within accrued compensation on our consolidated balance sheets, which is expected to be paid in the first quarter of 2026. In July 2023, in alignment with our enhanced strategic focus, we announced a restructuring of our business, including a plan for a workforce reduction of approximately 25 %. During the year ended December 31, 2023 , w e recorded a restructuring charge related to this workforce reduction of $ 3.1 million related to severance and related benefit costs. The plan was substantially completed in September 2023 and severance costs were paid through the fourth quarter of 2023. We do not expect to record any significant future charges related to the restructuring plans initiated in 2025 and 2023. 99 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.