PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total assets | 234,970 | 246,383 | (11,413) | | Total liabilities | 75,511 | 81,992 | (6,481) | | Total stockholders' equity | 159,459 | 164,391 | (4,932) | | Cash and cash equivalents | 90,113 | 116,797 | (26,684) | | Total current assets | 145,283 | 161,888 | (16,605) | | Total current liabilities | 30,014 | 33,371 | (3,357) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, costs, and net loss over specific reporting periods, highlighting operational performance | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Total revenues | 38,406 | 25,453 | 12,953 | 51% | | Product revenue | 34,645 | 14,717 | 19,928 | 135% | | Research and development revenue | 3,761 | 10,736 | (6,975) | (65)% | | Total costs and operating expenses | 41,015 | 29,939 | 11,076 | 37% | | Net loss | (2,640) | (4,265) | 1,625 | (38)% | | Net loss per share, basic and diluted | (0.04) | (0.07) | 0.03 | (43)% | | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Total revenues | 73,746 | 43,485 | 30,261 | 70% | | Product revenue | 65,335 | 24,943 | 40,392 | 162% | | Research and development revenue | 8,411 | 18,542 | (10,131) | (55)% | | Total costs and operating expenses | 84,741 | 57,126 | 27,615 | 48% | | Net loss | (10,996) | (13,333) | 2,337 | (18)% | | Net loss per share, basic and diluted | (0.17) | (0.21) | 0.04 | (19)% | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in the company's equity accounts, including additional paid-in capital and accumulated deficit | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------- | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | 159,459 | 164,391 | | Additional Paid-in Capital | 558,147 | 552,083 | | Accumulated Deficit | (398,694) | (387,698) | - Employee stock-based compensation for the six months ended June 30, 2022, was **$6,951 thousand**, contributing to additional paid-in capital[17](index=17&type=chunk) - Net loss for the six months ended June 30, 2022, was **$(10,996) thousand**, increasing the accumulated deficit[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Presents the cash inflows and outflows from operating, investing, and financing activities, showing liquidity changes | Metric | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | Change (in thousands) | | :----------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | | Net cash used in operating activities | (13,367) | (14,735) | 1,368 | | Net cash used in investing activities | (12,302) | (4,945) | (7,357) | | Net cash provided by (used in) financing activities | (1,047) | 473 | (1,520) | | Net decrease in cash, cash equivalents and restricted cash | (26,716) | (19,207) | (7,509) | | Cash, cash equivalents and restricted cash at end of period | 92,179 | 131,610 | (39,431) | - Investing activities included **$5,300 thousand** for investment in non-marketable securities and **$7,030 thousand** for purchase of property and equipment in H1 2022[19](index=19&type=chunk) - Financing activities included **$1,437 thousand** for taxes paid related to net share settlement of equity awards, partially offset by **$432 thousand** from stock option exercises in H1 2022[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Description of Business](index=9&type=section&id=Note%201.%20Description%20of%20Business) Describes the company's core business of discovering, developing, and selling enzymes and proteins across two segments - The company discovers, develops, and sells enzymes and other proteins, operating in two reportable segments: **Performance Enzymes** and **Novel Biotherapeutics**[24](index=24&type=chunk)[25](index=25&type=chunk) - The COVID-19 pandemic has had a **minimal impact on revenue** for the three and six months ended June 30, 2022, but future impacts remain highly uncertain[27](index=27&type=chunk) [Note 2. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Explains the preparation of financial statements in accordance with GAAP and SEC rules, noting no significant policy changes - The unaudited condensed consolidated financial statements are prepared in accordance with **GAAP and SEC rules** for interim financial information, consistent with the 2021 Annual Report on Form 10-K[28](index=28&type=chunk) - There have been **no significant changes** in the company's significant accounting policies or critical accounting estimates since December 31, 2021[28](index=28&type=chunk) - Recently adopted accounting pronouncements (ASU 2021-04, ASU 2020-06, ASU 2020-04) had **no significant impact** on the unaudited condensed consolidated financial statements[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 3. Revenue Recognition](index=11&type=section&id=Note%203.%20Revenue%20Recognition) Details the company's revenue recognition policies, including product and R&D revenue, contract assets, and deferred revenue | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Total revenues | 38,406 | 25,453 | 73,746 | 43,485 | | Product revenue | 34,645 | 14,717 | 65,335 | 24,943 | | Research and development revenue | 3,761 | 10,736 | 8,411 | 18,542 | | APAC revenue | 30,102 | 13,440 | 57,582 | 20,262 | | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------- | :----------------------------- | :------------------------------- | | Contract assets | 11,287 | 4,557 | | Deferred revenue | 5,381 | 6,335 | - The increase in contract assets was primarily due to increases in product revenue from contracts subject to over time revenue recognition, while the decrease in deferred revenue was due to **timing of recognition**[42](index=42&type=chunk) - Estimated future revenue from unsatisfied performance obligations totals **$5,381 thousand**, with **$3,048 thousand** from product revenue and **$2,333 thousand** from R&D revenue[45](index=45&type=chunk) [Note 4. Net Loss per Share](index=12&type=section&id=Note%204.%20Net%20Loss%20per%20Share) Explains the calculation of basic and diluted net loss per share, noting the anti-dilutive effect of potential common shares - Basic and diluted net loss per share are identical for all periods presented because potential common stock shares are excluded from the calculation as their effect was **anti-dilutive due to net losses**[46](index=46&type=chunk)[47](index=47&type=chunk) - Shares issuable under the Equity Incentive Plan were **5,792 thousand** for the three and six months ended June 30, 2022[48](index=48&type=chunk) [Note 5. Investments in Non-Marketable Securities](index=13&type=section&id=Note%205.%20Investments%20in%20Non-Marketable%20Securities) Provides details on the company's investments in privately held non-marketable equity securities, including recent purchases - In March 2022, the company purchased **1,000,000 shares** of seqWell, Inc.'s Series C preferred stock for **$5.0 million**[54](index=54&type=chunk) | Company | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Molecular Assemblies, Inc. (MAI) | 12,713 | 12,713 | | seqWell | 5,000 | — | | Arzeda | 1,289 | 1,289 | | Other investments | 300 | — | | Total non-marketable equity securities | 19,302 | 14,002 | - No remeasurement event or realized gains or losses occurred for non-marketable equity securities during the three and six months ended June 30, 2022 and 2021[56](index=56&type=chunk) [Note 6. Fair Value Measurements](index=14&type=section&id=Note%206.%20Fair%20Value%20Measurements) Discusses the fair value hierarchy for financial assets, primarily money market funds, and the absence of significant impairment losses | Asset Type | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :---------------- | :----------------------------- | :------------------------------- | | Money market funds | 67,218 | 86,095 | - Money market funds are classified within **Level 1** of the fair value hierarchy[59](index=59&type=chunk) - No significant credit losses or other-than-temporary impairment losses on non-marketable securities were recognized during the reported periods[59](index=59&type=chunk) [Note 7. Balance Sheets Details](index=14&type=section&id=Note%207.%20Balance%20Sheets%20Details) Offers additional details on specific balance sheet accounts, including cash, inventories, property and equipment, and goodwill | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | 90,113 | 116,797 | | Inventories | 1,718 | 1,160 | | Property and equipment, net | 23,694 | 21,345 | | Goodwill | 3,241 | 3,241 | | Other accrued liabilities | 12,934 | 12,578 | - Depreciation expense for the six months ended June 30, 2022, was **$2,556 thousand**, up from **$1,375 thousand** in the prior year[64](index=64&type=chunk) [Note 8. Stock-based Compensation](index=15&type=section&id=Note%208.%20Stock-based%20Compensation) Presents information on stock-based compensation expenses, unrecognized compensation, and performance goal achievements for equity awards | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | | Total Stock-based compensation | 3,231 | 2,844 | | Research and development | 959 | 597 | | Selling, general and administrative | 2,272 | 2,247 | | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | | Total Stock-based compensation | 7,069 | 5,531 | | Research and development | 1,895 | 1,074 | | Selling, general and administrative | 5,174 | 4,457 | - Unrecognized stock-based compensation expense as of June 30, 2022, totaled **$19.5 million**, comprising **$5.8 million** for unvested stock options, **$8.4 million** for RSUs and RSAs, **$1.8 million** for PSUs, and **$3.5 million** for PBOs[79](index=79&type=chunk) - Estimated achievement for 2022 PSUs and PBOs performance goals was **92%** and **46%** of the target level, respectively[75](index=75&type=chunk) - 2021 PSUs and PBOs performance goals were achieved at **146%** and **73%** of the target level, respectively, with **50% vesting in Q1 2022** and the remaining **50% in Q1 2023**[76](index=76&type=chunk) [Note 9. Capital Stock](index=17&type=section&id=Note%209.%20Capital%20Stock) Details common stock issuances from option exercises and the remaining availability under the Equity Distribution Agreement - For the six months ended June 30, 2022, the company issued **174,600 shares** upon option exercises for net cash proceeds of **$0.4 million**, compared to **212,631 shares** for **$1.7 million** in the same period of 2021[80](index=80&type=chunk) - No shares of common stock were issued pursuant to the Equity Distribution Agreement (EDA) during the three and six months ended June 30, 2022, with **$50.0 million** worth of shares remaining available for sale[84](index=84&type=chunk) [Note 10. Commitments and Contingencies](index=18&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) Outlines the company's operating lease liabilities, other contractual commitments, credit facility status, and legal settlements | Metric | Amount (in thousands) | | :----------------------------------------- | :-------------------- | | Total operating lease liabilities (June 30, 2022) | 46,109 | | Total minimum lease payments (undiscounted) | 55,981 | | Other commitments (Development/manufacturing services) | 3,970 | | Other commitments (Facility maintenance) | 1,450 | - The company has a Credit Facility with Western Alliance Bank for up to **$10.0 million** in term loans (expired Dec 2021) and **$5.0 million** revolving credit, with **no amounts drawn** as of June 30, 2022, and in compliance with covenants[97](index=97&type=chunk)[98](index=98&type=chunk) - In April 2022, the company reached a settlement resolving a **non-material trademark dispute**[100](index=100&type=chunk) [Note 11. Related Party Transactions](index=21&type=section&id=Note%2011.%20Related%20Party%20Transactions) Discloses revenue recognized from and investment in Molecular Assemblies, Inc., and a subsequent commercial license agreement - Recognized **$0.1 million** in product revenue from Molecular Assemblies, Inc. (MAI) for the three and six months ended June 30, 2022[104](index=104&type=chunk) - Recognized **nil** and **$0.2 million** in research and development revenue from MAI for the three and six months ended June 30, 2022, respectively[103](index=103&type=chunk) - The carrying value of the investment in MAI Series A and B preferred stock was **$12.7 million** as of June 30, 2022[105](index=105&type=chunk) - On August 2, 2022, the company executed a Commercial License and Enzyme Supply Agreement with MAI to utilize an evolved terminal deoxynucleotidyl transferase (TdT) enzyme[106](index=106&type=chunk) [Note 12. Segment, Geographical and Other Revenue Information](index=21&type=section&id=Note%2012.%20Segment,%20Geographical%20and%20Other%20Revenue%20Information) Provides a breakdown of revenues and operating results by business segment and geographical region, including major customer concentration | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Performance Enzymes Total Revenues | 36,530 | 21,585 | 69,629 | 35,815 | | Novel Biotherapeutics Total Revenues | 1,876 | 3,868 | 4,117 | 7,670 | | APAC Total Revenues | 30,102 | 13,440 | 57,582 | 20,262 | - Customer A accounted for **62% of total revenues** for the three and six months ended June 30, 2022, and **67% of accounts receivable** as of June 30, 2022[117](index=117&type=chunk)[119](index=119&type=chunk) - Performance Enzymes segment income from operations increased to **$14,455 thousand** in Q2 2022 from **$9,040 thousand** in Q2 2021[113](index=113&type=chunk) - Novel Biotherapeutics segment loss from operations increased to **$(9,882) thousand** in Q2 2022 from **$(3,946) thousand** in Q2 2021[113](index=113&type=chunk) [Note 13. Allowance for Credit Losses](index=24&type=section&id=Note%2013.%20Allowance%20for%20Credit%20Losses) Details the changes in the allowance for credit losses, including write-offs and adjustments, and current accounts receivable | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Balance at beginning of period | 416 | 74 | | Provision for credit losses | — | — | | Write-offs | (257) | — | | Adjustment to existing allowance | (50) | — | | Balance at end of period | 109 | 74 | - Accounts receivable current portion was **$26,883 thousand** as of June 30, 2022[121](index=121&type=chunk) [Note 14. Subsequent Events](index=25&type=section&id=Note%2014.%20Subsequent%20Events) Reports significant events occurring after the reporting period, including a new supply agreement with Pfizer and CEO appointment - On July 14, 2022, the company entered into an Enzyme Supply Agreement with Pfizer Inc. for CDX-616, effective October 30, 2021[123](index=123&type=chunk) - Received a **$25.9 million retainer fee** from Pfizer in August 2022, creditable against future CDX-616 orders and new development/licensing agreements[124](index=124&type=chunk) - Dr. Stephen Dilly was appointed President and CEO, effective August 9, 2022, succeeding John Nicols[125](index=125&type=chunk) - On August 2, 2022, the company executed a Commercial License and Enzyme Supply Agreement with MAI[127](index=127&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial performance, highlighting revenue growth, segment results, liquidity, and internal control issues [BUSINESS OVERVIEW](index=26&type=section&id=BUSINESS%20OVERVIEW) Describes the company's core business of enzyme and protein development using its CodeEvolver platform across various markets - Codexis discovers, develops, and sells enzymes and other proteins, leveraging its **CodeEvolver protein engineering technology platform**[130](index=130&type=chunk)[131](index=131&type=chunk) - The CodeEvolver platform is powered by proprietary, **AI-based computational algorithms**, integrating robotic high-throughput screening and genomic sequencing[131](index=131&type=chunk) - The technology is applied in small molecule pharmaceuticals, industrial markets (food, feed, consumer care, fine chemicals), life sciences (NGS, PCR/qPCR), and novel biotherapeutics[131](index=131&type=chunk)[133](index=133&type=chunk) [BUSINESS SEGMENTS](index=27&type=section&id=BUSINESS%20SEGMENTS) Outlines the company's two reportable segments: Performance Enzymes and Novel Biotherapeutics, and their respective focuses - The company manages its business through two segments: **Performance Enzymes** and **Novel Biotherapeutics**[134](index=134&type=chunk) - Performance Enzymes focuses on pharmaceutical manufacturing, industrial markets, and life sciences applications[135](index=135&type=chunk) - Novel Biotherapeutics targets the discovery and development of biotherapeutic drug candidates for human diseases[136](index=136&type=chunk) [BUSINESS UPDATE REGARDING COVID-19](index=27&type=section&id=BUSINESS%20UPDATE%20REGARDING%20COVID-19) Assesses the minimal direct impact of the COVID-19 pandemic on revenue, noting the significant contribution from Pfizer's PAXLOVID™ enzyme - The COVID-19 pandemic has presented substantial public health and economic challenges, but its direct impact on the company's revenue for the three and six months ended June 30, 2022, has been **minimal**[137](index=137&type=chunk)[139](index=139&type=chunk) - Future impacts remain highly dependent on the pandemic's duration, severity, prevalence of variants, and economic effects[137](index=137&type=chunk)[139](index=139&type=chunk) - Purchase orders from Pfizer for the **CDX-616 enzyme product**, used in PAXLOVID™, have substantially impacted revenue for the three and six months ended June 30, 2022, and for the year ended December 31, 2021[140](index=140&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) Highlights key recent events, including a new enzyme supply agreement with Pfizer and a significant retainer fee - In July 2022, the company entered into an Enzyme Supply Agreement with Pfizer Inc. for the manufacture and sale of **CDX-616** for use in nirmatrelvir (PAXLOVID™)[141](index=141&type=chunk) - Pfizer will pay a retainer fee of **$25.9 million**, received in August 2022, which is creditable against future CDX-616 orders and new development/licensing agreements[141](index=141&type=chunk) - The retainer fee is anticipated to be recognized as revenue in **2022, 2023, and 2024**[141](index=141&type=chunk) [Results of Operations Overview](index=28&type=section&id=Results%20of%20Operations%20Overview) Provides a summary of key financial metrics, including total revenues, product revenue, R&D revenue, and net loss | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Total revenues | 38,406 | 25,453 | 12,953 | 51% | | Product revenue | 34,645 | 14,717 | 19,928 | 135% | | Research and development revenue | 3,761 | 10,736 | (6,975) | (65)% | | Product gross margin | 67% | 71% | (4)% | | | Research and development expenses | 19,089 | 12,826 | 6,263 | 49% | | Selling, general and administrative expenses | 10,656 | 12,795 | (2,139) | (17)% | | Net loss | (2,640) | (4,265) | 1,625 | (38)% | - The increase in product revenue was primarily due to sales of **CDX-616 enzyme products to Pfizer**[143](index=143&type=chunk) - The decrease in research and development revenue was primarily due to **lower fees from Takeda** and other existing collaboration agreements[144](index=144&type=chunk) - Research and development expenses increased due to higher headcount, facilities costs, lab supplies, outside services (CMC and regulatory), stock-based compensation, and depreciation[147](index=147&type=chunk) [Merck Sitagliptin Catalyst Supply Agreement](index=29&type=section&id=Merck%20Sitagliptin%20Catalyst%20Supply%20Agreement) Discusses the amended supply agreement with Merck for Sitagliptin catalyst and its revenue recognition changes - The Sitagliptin Catalyst Supply Agreement with Merck was amended in September 2021 to extend through **December 2026**[152](index=152&type=chunk) | Metric | 3 Months Ended June 30, 2022 (in millions) | 3 Months Ended June 30, 2021 (in millions) | 6 Months Ended June 30, 2022 (in millions) | 6 Months Ended June 30, 2021 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Product revenue from Sitagliptin | 0.7 | 2.2 | 2.4 | 5.5 | | % of Total Revenues (3 months) | 2% | 9% | | | | % of Total Revenues (6 months) | | | 3% | 13% | - Product revenue from this agreement is now recognized based on contractually stated prices, effective February 2022, as the variable pricing no longer provides Merck material rights[153](index=153&type=chunk) [Global Development, Option and License Agreement and Strategic Collaboration Agreement](index=30&type=section&id=Global%20Development,%20Option%20and%20License%20Agreement%20and%20Strategic%20Collaboration%20Agreement) Details collaborations with Nestlé Health Science for CDX-6114 and CDX-7108, including milestones and R&D fees - Nestlé Health Science exercised its option for **CDX-6114** in February 2019, assuming all responsibilities for future clinical development and commercialization[158](index=158&type=chunk) - The company is eligible to receive up to **$85.0 million** in development/approval milestones, up to **$250.0 million** in sales-based milestones, and tiered royalties for CDX-6114[158](index=158&type=chunk) - Collaboration with Nestlé Health Science on **CDX-7108** for Exocrine Pancreatic Insufficiency is ongoing, with a Phase 1 clinical trial initiated in Q4 2021[159](index=159&type=chunk) | Metric | 3 Months Ended June 30, 2022 (in millions) | 3 Months Ended June 30, 2021 (in millions) | 6 Months Ended June 30, 2022 (in millions) | 6 Months Ended June 30, 2021 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | R&D fees from Nestlé | 0.6 | 1.7 | 1.6 | 3.5 | [Platform Technology Transfer and License Agreement](index=30&type=section&id=Platform%20Technology%20Transfer%20and%20License%20Agreement) Covers the completed technology transfer to Novartis, ongoing annual payments, and potential usage payments - The technology transfer of the **CodeEvolver protein engineering platform to Novartis** was completed in July 2021[161](index=161&type=chunk) - Novartis will pay an additional **$8.0 million** in aggregate annual payments over four years for continued disclosure and license of improvements to the technology[163](index=163&type=chunk) - The company has the potential to receive quantity-dependent usage payments for APIs manufactured by Novartis using the CodeEvolver platform[163](index=163&type=chunk) | Metric | 3 Months Ended June 30, 2022 (in millions) | 3 Months Ended June 30, 2021 (in millions) | 6 Months Ended June 30, 2022 (in millions) | 6 Months Ended June 30, 2021 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | R&D revenue from Novartis | 0.3 | 0.3 | 0.5 | 1.1 | [Strategic Collaboration and License Agreement](index=31&type=section&id=Strategic%20Collaboration%20and%20License%20Agreement) Describes the collaboration with Takeda for gene therapy products, including R&D fees and potential milestone payments - The company is collaborating with Takeda to research and develop protein sequences for gene therapy products, including three initial programs and an additional program initiated in May 2021[164](index=164&type=chunk)[165](index=165&type=chunk) - Eligible to receive R&D fees and preclinical development milestones of up to **$10.5 million** for initial programs and **$5.9 million** for the fourth program[165](index=165&type=chunk) - Potential for clinical development and commercialization-based milestones up to **$100.0 million per target gene** and tiered royalty payments[165](index=165&type=chunk) | Metric | 3 Months Ended June 30, 2022 (in millions) | 3 Months Ended June 30, 2021 (in millions) | 6 Months Ended June 30, 2022 (in millions) | 6 Months Ended June 30, 2021 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | R&D revenue from Takeda | 1.3 | 2.1 | 2.5 | 4.2 | [Pfizer, Inc. purchase orders](index=31&type=section&id=Pfizer,%20Inc.%20purchase%20orders) Highlights significant product revenue generated from Pfizer's purchase orders for the CDX-616 enzyme | Metric | 3 Months Ended June 30, 2022 (in millions) | 3 Months Ended June 30, 2021 (in millions) | 6 Months Ended June 30, 2022 (in millions) | 6 Months Ended June 30, 2021 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Product revenue from Pfizer (CDX-616) | 23.8 | 3.9 | 45.1 | 4.3 | | % of Total Revenues (3 months) | 62% | 15% | | | | % of Total Revenues (6 months) | | | 61% | 10% | - As of June 30, 2022, the company recorded **$9.7 million** in revenue and contract assets from CDX-616 sales recognized over time, with products expected to be shipped within three months[167](index=167&type=chunk) [RESULTS OF OPERATIONS](index=32&type=section&id=RESULTS%20OF%20OPERATIONS) Provides a detailed analysis of the company's financial results, including revenues, costs, and net loss [Revenues](index=32&type=section&id=Revenues) Analyzes the changes in total revenues, product revenue, and research and development revenue | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Total revenues | 38,406 | 25,453 | 12,953 | 51% | | Product revenue | 34,645 | 14,717 | 19,928 | 135% | | Research and development revenue | 3,761 | 10,736 | (6,975) | (65)% | - Product revenue increased primarily due to **$23.8 million** (Q2 2022) and **$45.1 million** (H1 2022) in revenue from Pfizer related to the purchase of CDX-616 enzyme products[176](index=176&type=chunk) - Research and development revenue decreased primarily due to **lower fees from Takeda** and other existing collaboration agreements[177](index=177&type=chunk) [Cost and Operating Expenses](index=33&type=section&id=Cost%20and%20Operating%20Expenses) Examines the trends in cost of product revenue, research and development, and selling, general and administrative expenses | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Cost of product revenue | 11,270 | 4,318 | 6,952 | 161% | | Research and development | 19,089 | 12,826 | 6,263 | 49% | | Selling, general and administrative | 10,656 | 12,795 | (2,139) | (17)% | | Total costs and operating expenses | 41,015 | 29,939 | 11,076 | 37% | | Product gross margin (%) | 67% | 71% | (4)% | | - Cost of product revenue increased due to a **higher volume of product sales** and variations in product mix[180](index=180&type=chunk) - Research and development expenses increased due to higher headcount, facilities cost, lab supplies, outside services (CMC and regulatory), stock-based compensation, and depreciation[183](index=183&type=chunk) - Selling, general and administrative expenses decreased in Q2 2022 primarily due to **lower legal fees from a trademark dispute settlement**, partially offset by higher headcount and outside services[185](index=185&type=chunk) [Interest Income](index=34&type=section&id=Interest%20Income) Discusses the decrease in interest income due to lower average interest rates and declining cash balances | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :--------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Interest income | 140 | 206 | (66) | (32)% | - Interest income decreased primarily due to earned interest income and amortization of debt discount on non-marketable debt security in the prior year and reduction in interest income from **lower average interest rates on declining average cash balances**[187](index=187&type=chunk) [Other Income (Expense), net](index=34&type=section&id=Other%20Income%20(Expense),%20net) Explains the decrease in other income (expense), net, primarily due to prior year interest expense charges | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Other income (expense), net | (63) | 23 | (86) | (374)% | - Other income (expense), net, decreased primarily due to interest expense charges recognized on the amortization of an embedded bifurcated derivative of a share-settled redemption feature on non-marketable securities in the prior year[188](index=188&type=chunk) [Provision for Income Taxes](index=34&type=section&id=Provision%20for%20Income%20Taxes) Details the provision for income taxes, mainly due to foreign withholding taxes and accruals for uncertain tax positions | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | Provision for income taxes | 108 | 8 | 100 | 1,250% | - The provision for income taxes was primarily due to **income tax withholding imposed by foreign taxing authorities** and the accrual of interest and penalties on historic uncertain tax positions[189](index=189&type=chunk) [Net Loss](index=35&type=section&id=Net%20Loss) Summarizes the factors contributing to the decrease in net loss, including increased product revenues and operating expenses | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Net loss | (2,640) | (4,265) | 1,625 | (38)% | - The decrease in net loss for both the three and six months ended June 30, 2022, was primarily related to an **increase in product revenues with higher margins**, partially offset by higher operating expenses and lower research and development revenues[192](index=192&type=chunk) [RESULTS OF OPERATIONS BY SEGMENT](index=35&type=section&id=RESULTS%20OF%20OPERATIONS%20BY%20SEGMENT) Presents a breakdown of revenues and expenses by the Performance Enzymes and Novel Biotherapeutics segments | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :--------- | | Performance Enzymes Total Revenues | 36,530 | 21,585 | 14,945 | 69% | | Novel Biotherapeutics Total Revenues | 1,876 | 3,868 | (1,992) | (51)% | | Performance Enzymes R&D expense | 6,929 | 5,057 | 1,872 | 37% | | Novel Biotherapeutics R&D expense | 11,078 | 7,194 | 3,884 | 54% | | Performance Enzymes SG&A expense | 3,876 | 3,170 | 706 | 22% | | Novel Biotherapeutics SG&A expense | 680 | 620 | 60 | 10% | - Performance Enzymes revenue increase was primarily due to **higher product revenue from Pfizer**, partially offset by lower R&D revenue from Novartis and other collaborations[193](index=193&type=chunk) - Novel Biotherapeutics revenue decrease was primarily due to **lower R&D fees from Takeda and Nestlé Health Science**[193](index=193&type=chunk) - Research and development expense increases in both segments were due to higher headcount, outside services, lab supplies, and facilities costs[196](index=196&type=chunk)[198](index=198&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=37&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Assesses the company's cash position, working capital, and ability to fund operations, including potential milestone payments | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | 90,113 | 116,797 | | Working capital | 115,269 | 128,517 | - The company believes its existing cash and cash equivalents, combined with future product and R&D revenues and expense management, will provide **adequate funds for operations through the end of 2024**[210](index=210&type=chunk) - The company is eligible to earn milestone and other contingent payments from collaboration agreements with Merck, GSK, Novartis, and Nestlé[203](index=203&type=chunk) - **$50.0 million** worth of shares remained available for sale under the Equity Distribution Agreement (EDA) as of June 30, 2022, with no shares issued during the six months ended June 30, 2022[207](index=207&type=chunk) - No amounts were borrowed under the Credit Facility as of June 30, 2022, and the company was in compliance with its covenants[209](index=209&type=chunk) [Cash Flows](index=39&type=section&id=Cash%20Flows) Analyzes changes in cash flows from operating, investing, and financing activities, detailing key drivers | Metric | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | Change (in thousands) | | :----------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | | Net cash used in operating activities | (13,367) | (14,735) | 1,368 | | Net cash used in investing activities | (12,302) | (4,945) | (7,357) | | Net cash provided by (used in) financing activities | (1,047) | 473 | (1,520) | - The decrease in net cash used in operations was primarily due to **increases in cash received from revenue**, partially offset by higher cash paid for cost of revenues and operating expenses[215](index=215&type=chunk) - The increase in net cash used in investing activities was primarily due to **$5.3 million** for additional new equity investments and **$7.0 million** for purchases of property and equipment[216](index=216&type=chunk)[217](index=217&type=chunk) - The increase in net cash used in financing activities was primarily due to **higher taxes paid related to net share settlement of equity awards** and lower proceeds from exercises of stock options[218](index=218&type=chunk)[219](index=219&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=39&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Confirms no material changes to critical accounting policies or estimates since the 2021 Annual Report on Form 10-K - There have been **no material changes** to the company's critical accounting policies or estimates during the three and six months ended June 30, 2022, from those discussed in its 2021 Annual Report on Form 10-K[220](index=220&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the company's exposure to market risks, including interest rate sensitivity and foreign currency risk, and discusses the valuation of non-marketable equity securities [Market Risk Management](index=40&type=section&id=Market%20Risk%20Management) States that the company's cash flows and earnings are subject to fluctuations from foreign currency, interest rates, and other factors - The company's cash flows and earnings are subject to fluctuations due to changes in foreign currency exchange rates, interest rates, and other factors[222](index=222&type=chunk) [Interest Rate Sensitivity](index=40&type=section&id=Interest%20Rate%20Sensitivity) Assesses the impact of hypothetical interest rate changes on cash and cash equivalents, primarily money market funds - Unrestricted cash and cash equivalents totaled **$90.1 million** at June 30, 2022, primarily invested in money market funds[223](index=223&type=chunk) - A hypothetical **10% decrease** in market interest rates would have a **$0.1 million impact** on potential loss in future interest income[223](index=223&type=chunk) - As there are no outstanding borrowings under the Credit Facility as of June 30, 2022, a hypothetical **10% change in interest rates would not impact interest expense**[224](index=224&type=chunk) [Foreign Currency Risk](index=40&type=section&id=Foreign%20Currency%20Risk) Discusses the most significant foreign currency exposure from non-functional currency monetary assets and potential impact on earnings - The most significant foreign currency exposure is due to non-functional currency denominated monetary assets[225](index=225&type=chunk) - A hypothetical **10% unfavorable change** in exchange rates would result in a potential loss of approximately **$44 thousand** in future earnings and a reduction in the fair value of assets[225](index=225&type=chunk) [Investment in Non-Marketable Equity Securities](index=40&type=section&id=Investment%20in%20Non-Marketable%20Equity%20Securities) Addresses the valuation challenges of privately held non-marketable equity securities without readily determinable fair values - The company owns investments in privately held non-marketable equity securities without readily determinable fair values[226](index=226&type=chunk) - Valuation of these securities is based on significant recent arms-length equity transactions, but quantifying the impact of differing transaction terms can be difficult[226](index=226&type=chunk) [ITEM 4. Controls and Procedures](index=41&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective due to an unremediated material weakness in revenue recognition, with remediation plans underway [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective due to a material weakness in revenue recognition - Management concluded that disclosure controls and procedures were **not effective** as of June 30, 2022[229](index=229&type=chunk) - A **material weakness** in internal control over financial reporting exists related to management's controls over the revenue recognition process, specifically the completeness and accuracy of reports used to calculate product revenue from arrangements subject to over time revenue recognition[230](index=230&type=chunk) - This material weakness had **not been remediated** as of June 30, 2022[230](index=230&type=chunk) [Management's Plan to Remediate Material Weakness](index=41&type=section&id=Management's%20Plan%20to%20Remediate%20Material%20Weakness) The company has initiated a detailed plan to remediate the material weakness by enhancing review controls over revenue recognition - The company has begun implementing a detailed plan to remediate the material weakness by enhancing management's review controls over revenue and the level of detail and precision applied when reviewing reports for over time revenue recognition[231](index=231&type=chunk) - The material weakness will not be considered remediated until applicable controls operate for a sufficient period and are tested for effectiveness[231](index=231&type=chunk) [Changes in Internal Control over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports no other material changes in internal control over financial reporting during the quarter, apart from the identified weakness - Other than the material weakness described, there were **no other changes** in internal control over financial reporting during the last fiscal quarter that materially affected or are reasonably likely to materially affect internal control over financial reporting[232](index=232&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=41&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Acknowledges that controls provide only reasonable assurance and are subject to inherent limitations and potential for deterioration - Management recognizes that controls, even if effective, can provide only reasonable assurance of achieving desired control objectives and are subject to resource constraints[233](index=233&type=chunk) - Projections of effectiveness to future periods are subject to the risk that controls may become inadequate due to changing conditions or deterioration in compliance[233](index=233&type=chunk) PART II. OTHER INFORMATION This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently involved in any material pending litigation or other significant legal proceedings - The company is **not currently a party to any material pending litigation** or other material legal proceedings[236](index=236&type=chunk) [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) Highlights an additional risk factor concerning the unremediated material weakness in internal control over financial reporting - A **material weakness** in internal control over accounting related to the product revenue recognition process was identified, leading to a conclusion that internal control over financial reporting and disclosure controls were not effective as of March 31, 2022, and remained unremediated as of June 30, 2022[238](index=238&type=chunk)[239](index=239&type=chunk) - Failure to remediate this material weakness could impair the company's ability to produce accurate financial statements, adversely affect business decisions, harm results of operations, and negatively impact the stock price[240](index=240&type=chunk)[242](index=242&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=43&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Reports no unregistered sales of equity securities or use of proceeds for the specified period - None[244](index=244&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=43&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Confirms that there were no defaults upon senior securities to report for the period - None[245](index=245&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=43&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations - Not applicable[246](index=246&type=chunk) [ITEM 5. OTHER INFORMATION](index=43&type=section&id=ITEM%205.%20OTHER%20INFORMATION) States that there is no other information to report for the period - Not applicable[247](index=247&type=chunk) [ITEM 6. EXHIBITS](index=44&type=section&id=ITEM%206.%20EXHIBITS) Lists the exhibits filed with the Form 10-Q, including organizational documents, agreements, and certifications - Includes Amended and Restated Certificate of Incorporation, Bylaws, and Certifications of Principal Executive and Financial Officers[249](index=249&type=chunk) - Lists the Platform Technology Transfer, Collaboration and License Agreement with GlaxoSmithKline Intellectual Property Limited[249](index=249&type=chunk) - Financial statements are formatted in **Inline Extensible Business Reporting Language ("iXBRL")**[249](index=249&type=chunk) [Signatures](index=45&type=section&id=Signatures) Confirms the report's official signing by the company's President and CEO and Senior VP and CFO on August 5, 2022 - The report was signed by John J. Nicols (President and Chief Executive Officer) and Ross Taylor (Senior Vice President and Chief Financial Officer) on August 5, 2022[254](index=254&type=chunk)

CODEXIS® We engineer enzymes to improve health… of people and the planet Corporate Presentation May 2022 Forward Looking Statements 2 • These slides and any accompanying oral presentation contain forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results or levels of activity, performance or achievement to d ...

CODEXIS® We engineer enzymes to improve health… of people and the planet Q1'2022 Results May 5, 2022 Forward Looking Statements 2 • These slides and any accompanying oral presentation contain forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results or levels of activity, performance or achievement to diffe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-34705 ___________________________ Codexis, Inc. (Exact name of registrant as specified in its charter) ________________________ ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $35.3 million, nearly doubling year-over-year, with product revenues tripling compared to last year and gross margin reaching 72% [4][21] - Product revenues for Q1 2022 were $30.7 million, up from $10.2 million in Q1 2021, driven by $21.3 million in sales of enzymes to Pfizer for Paxlovid [21][22] - R&D revenues decreased to $4.7 million from $7.8 million in the prior year [22] Business Line Data and Key Metrics Changes - Performance Enzymes segment revenue increased 134% to $33.1 million in Q1 2022, while Novel Biotherapeutics generated $2.2 million [21][23] - The operating income for the Performance Enzymes segment was $14.9 million, with an operating profit margin of 45% [23] Market Data and Key Metrics Changes - Codexis is working with 21 of the 25 largest pharmaceutical companies, indicating strong market penetration in the sustainable manufacturing sector [8][9] - The food sector generated nearly $1 million in revenues in Q1 2022, showing solid growth momentum [10][44] Company Strategy and Development Direction - Codexis aims to grow total company revenue by nearly 50% in 2022, focusing on sustainable manufacturing, life science tools, and biotherapeutics [5][24] - The company is expanding its pipeline of high-value assets and partnerships in the Biotherapeutics segment, with key clinical milestones expected in 2022 [26][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the robust progress across all core markets and reiterated guidance for 2022, expecting total revenues between $152 million and $158 million [24][26] - The company highlighted the importance of partnerships to de-risk its pipeline and manage costs effectively in the current capital market environment [48] Other Important Information - Codexis has made significant advancements in enzyme engineering, particularly in the life sciences tools market, with three new products launched in 2021 [11][12] - The company is also focused on leveraging its CodeEvolver platform for biotherapeutics, with multiple programs in the pipeline [17][18] Q&A Session Summary Question: Can you provide insight into Paxlovid revenue cadence for the rest of 2022? - Management indicated that Q2 could be stronger than Q1 for Paxlovid, with expectations for Q3 and Q4 to be more equal [28] Question: Is there any front-loading of enzyme stockpiling by Pfizer? - Management clarified that there is no stockpiling; Pfizer is expanding manufacturing capacity rapidly [30] Question: What is the expected demand from Molecular Assemblies for the Life Science Tools enzyme? - Management expects modest product revenues in 2022, with significant growth anticipated in 2023 as Molecular Assemblies commercializes its business [32] Question: Can you break out the revenue contribution from life sciences in Q1? - Management did not provide a specific breakdown but maintained an outlook for the life sciences sector to generate over $12 million in sales [35] Question: What is the status of the food and nutritional side, particularly with Tate & Lyle? - Management reported solid momentum in the food sector, with Tate & Lyle successfully marketing new products enabled by Codexis enzymes [44]

PART I [Business](index=5&type=section&id=Item%201%20Business) Codexis discovers, develops, and sells enzymes and proteins using its proprietary CodeEvolver® protein engineering technology platform, operating in Performance Enzymes and Novel Biotherapeutics segments - Codexis utilizes its proprietary **CodeEvolver® protein engineering technology platform**, which leverages artificial intelligence and high-throughput screening, to develop novel enzymes for various industries[11](index=11&type=chunk)[12](index=12&type=chunk) - The company operates through two business segments: **Performance Enzymes** (for pharmaceuticals, food, diagnostics) and **Novel Biotherapeutics** (drug candidates)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) - In 2021, Codexis began supplying a proprietary enzyme (CDX-616) to Pfizer for the manufacturing of its COVID-19 therapeutic, **PAXLOVID™**, recognizing approximately **$34.5 million in revenue** from these sales[22](index=22&type=chunk)[23](index=23&type=chunk) - As of December 31, 2021, the company had **261 full-time and part-time employees**, with 159 in R&D, 37 in operations, and 65 in SG&A[131](index=131&type=chunk) Key Customer Revenue Concentration (2019-2021) | Customers: | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Customer A | 33 % | * | * | | Customer B | 11 % | 26 % | 28 % | | Customer C | * | 19 % | * | | Customer D | * | 11 % | 15 % | | Customer E | * | * | 23 % | *Percentage was less than 10% [Company Overview](index=5&type=section&id=COMPANY%20OVERVIEW) - Codexis discovers, develops, and sells enzymes and proteins, leveraging its **CodeEvolver® protein engineering technology platform**, which uses proprietary AI-based computational algorithms[11](index=11&type=chunk)[12](index=12&type=chunk) - The company has expanded from its initial focus on small molecule pharmaceuticals to broader markets including **food, feed, consumer care, life sciences (e.g., NGS), and biotherapeutics**[12](index=12&type=chunk)[15](index=15&type=chunk) - Codexis has licensed its CodeEvolver® platform to major pharmaceutical companies like **Novartis, Merck, and GSK**, and has strategic collaborations with **Nestlé Health Science and Takeda** for biotherapeutic development[12](index=12&type=chunk)[15](index=15&type=chunk) [Business Segments](index=6&type=section&id=BUSINESS%20SEGMENTS) - The **Performance Enzymes segment** provides products and services for manufacturing small molecule pharmaceuticals, food, feed, consumer care, and life science applications like NGS and DNA/RNA synthesis[17](index=17&type=chunk) - The **Novel Biotherapeutics segment** focuses on discovering and developing biotherapeutic drug candidates, such as CDX-6114 for PKU (partnered with Nestlé Health Science) and novel gene therapies (partnered with Takeda)[18](index=18&type=chunk) [Recent Development - Pfizer (PAXLOVID™)](index=7&type=section&id=RECENT%20DEVELOPMENT%20-%20PFIZER%20(PAXLOVID%E2%84%A2)) - In 2021, Codexis began receiving large purchase orders from Pfizer for its proprietary enzyme, **CDX-616**, used to manufacture nirmatrelvir, a key ingredient in the COVID-19 treatment **PAXLOVID™**[22](index=22&type=chunk) - The company recognized approximately **$34.5 million in revenue from Pfizer in 2021** and expects significant additional orders for delivery in 2022 and 2023, although no long-term purchase agreement is in place[23](index=23&type=chunk) [Our Market Opportunities](index=8&type=section&id=OUR%20MARKET%20OPPORTUNITIES) - The **pharmaceutical market** is a primary focus, where Codexis' technology helps reduce manufacturing costs for small molecule drugs and enables the discovery of novel biotherapeutics[33](index=33&type=chunk)[37](index=37&type=chunk) - Codexis has licensed its CodeEvolver® platform to **GSK, Merck, and Novartis**, allowing them to develop enzymes in-house for human healthcare applications[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - The company is developing its own biotherapeutic candidates, including **CDX-6512 for homocystinuria (HCU)** and **CDX-6210 for Maple Syrup Urine Disease (MSUD)**, and has partnerships with Nestlé and Takeda for other therapeutic programs[51](index=51&type=chunk)[52](index=52&type=chunk)[55](index=55&type=chunk) - Codexis is expanding into **fine chemicals and industrial enzymes**, with partnerships like the one with Tate & Lyle for producing a zero-calorie stevia sweetener[65](index=65&type=chunk)[67](index=67&type=chunk) - The company is developing high-performance enzymes for **molecular biology and in vitro diagnostics**, including a licensed DNA ligase to Roche for NGS applications[68](index=68&type=chunk) [Government Regulation](index=18&type=section&id=GOVERNMENT%20REGULATION) - Biotherapeutic product candidates are regulated by the FDA as biologics and require a **Biologics License Application (BLA)** before marketing in the U.S, a process involving extensive preclinical testing, IND submission, and multi-phase clinical trials[96](index=96&type=chunk)[99](index=99&type=chunk) - The FDA offers expedited programs like **Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval** to facilitate the development of drugs for serious conditions[110](index=110&type=chunk) - Products may receive **Orphan Drug Designation** for rare diseases, granting seven years of market exclusivity upon approval[111](index=111&type=chunk) - Post-approval, products are subject to ongoing FDA regulation, including requirements for manufacturing (**cGMP**), labeling, advertising, and reporting of adverse events[114](index=114&type=chunk)[115](index=115&type=chunk) - The business is also subject to healthcare laws like the **Anti-Kickback Statute, False Claims Act, and data privacy laws such as HIPAA and GDPR**, which govern interactions and data handling[123](index=123&type=chunk)[129](index=129&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A%20Risk%20Factors) Codexis faces substantial risks from its revenue dependence on Pfizer, a history of net losses, customer concentration, and the uncertain, costly nature of its early-stage biotherapeutics programs - A significant portion of 2021 revenue growth came from **Pfizer purchase orders for the enzyme CDX-616 used in PAXLOVID™**, with future revenue being uncertain as there is no long-term purchase agreement[147](index=147&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) - The company has a **history of net losses**, with an **accumulated deficit of $387.7 million** as of December 31, 2021, and may not achieve or maintain profitability[154](index=154&type=chunk) - Codexis is **dependent on a limited number of customers**, with two customers accounting for **44% of total revenue in 2021**, and on a few contract manufacturers for large-scale enzyme production[161](index=161&type=chunk)[177](index=177&type=chunk) - The **biotherapeutic programs are early-stage**, highly regulated, and expensive, with a high degree of uncertainty regarding clinical trial success and regulatory approval[185](index=185&type=chunk)[186](index=186&type=chunk) - The ongoing **COVID-19 pandemic** could continue to adversely affect business operations, supply chains, and clinical trials[162](index=162&type=chunk)[164](index=164&type=chunk) [Properties](index=57&type=section&id=Item%202%20Properties) Codexis leases office and lab space in Redwood City and San Carlos, California, which it believes is adequate for its immediate needs - The company's headquarters are located in Redwood City, California, consisting of approximately **77,300 square feet** of leased office and laboratory space[334](index=334&type=chunk)[335](index=335&type=chunk) - In January 2021, Codexis leased an additional **36,593 square feet** in San Carlos, California, for office and R&D laboratory space, with occupancy beginning in December 2021[337](index=337&type=chunk) [Legal Proceedings](index=57&type=section&id=Item%203%20Legal%20Proceedings) As of the report date, Codexis is not a party to any material pending litigation or other material legal proceedings - The company is currently **not a party to any material pending litigation** or other material legal proceedings[340](index=340&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=58&type=section&id=Item%205%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Codexis's common stock trades on the Nasdaq under "CDXS," and the company has never paid cash dividends, intending to retain future earnings for business growth - The company's common stock is traded on the **Nasdaq Global Select Market** under the symbol "**CDXS**"[344](index=344&type=chunk) - Codexis has **never declared or paid cash dividends** and does not intend to in the foreseeable future, expecting to retain earnings for business expansion[345](index=345&type=chunk) Comparison of Cumulative Total Return (2016-2021) | $100 investment in stock or index | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Codexis, Inc. (CDXS) | $100.00 | $181.52 | $363.04 | $347.61 | $474.57 | $679.78 | | Nasdaq Composite Total Return | $100.00 | $129.63 | $125.95 | $172.17 | $249.51 | $304.84 | | Nasdaq Biotechnology (Total Return) Index | $100.00 | $121.64 | $110.86 | $138.69 | $175.33 | $175.37 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%207%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, total revenues grew 52% to $104.8 million, driven by a 134% increase in product revenue from Pfizer sales, while operating expenses also rose significantly, narrowing the net loss to $21.3 million - **Total revenues increased by 52% in 2021**, driven by a **134% increase in product revenue**, primarily due to **$34.5 million in revenue from Pfizer** for the company's performance enzyme product used in its COVID-19 therapeutic[372](index=372&type=chunk)[385](index=385&type=chunk) - **Research and development revenue decreased by 12% in 2021**, mainly due to lower license fees from Takeda and Novartis, partially offset by higher fees from other collaborations[372](index=372&type=chunk)[386](index=386&type=chunk) - Operating expenses increased in 2021, with **R&D expenses rising 26% to $55.9 million** and **SG&A expenses increasing 41% to $49.3 million**, largely due to higher headcount and related costs[373](index=373&type=chunk)[374](index=374&type=chunk) - The company's cash and cash equivalents **decreased from $149.1 million at year-end 2020 to $116.8 million at year-end 2021**, with net cash used in operations at $14.3 million in 2021[376](index=376&type=chunk) Consolidated Results of Operations (in thousands) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Total revenues** | **$104,754** | **$69,056** | **$68,458** | | Product revenue | $70,657 | $30,220 | $29,465 | | R&D revenue | $34,097 | $38,836 | $38,993 | | **Total costs and operating expenses** | **$127,451** | **$92,976** | **$81,007** | | Cost of product revenue | $22,209 | $13,742 | $15,632 | | Research and development | $55,919 | $44,185 | $33,873 | | Selling, general and administrative | $49,323 | $35,049 | $31,502 | | **Loss from operations** | **($22,697)** | **($23,920)** | **($12,549)** | | **Net loss** | **($21,279)** | **($24,010)** | **($11,935)** | [Results of Operations](index=64&type=section&id=Results%20of%20Operations) - **Product gross margin increased to 69% in 2021** from 55% in 2020, primarily due to a favorable product mix from sales of higher-margin branded products, including sales to Pfizer[372](index=372&type=chunk)[393](index=393&type=chunk) - **R&D expenses increased by $11.7 million (26%) in 2021**, driven by higher headcount costs ($7.6M), increased lab supplies ($2.6M), and higher allocable expenses ($2.2M), partially offset by a decrease in CMC and regulatory outside services[396](index=396&type=chunk) - **SG&A expenses increased by $14.3 million (41%) in 2021**, mainly due to higher headcount costs ($6.6M), increased legal fees ($5.1M), and higher stock-based compensation ($3.1M)[400](index=400&type=chunk) Revenue by Type (2020 vs 2021, in thousands) | Revenue Type | 2021 | 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $70,657 | $30,220 | $40,437 | 134% | | Research and development revenue | $34,097 | $38,836 | ($4,739) | (12)% | | **Total revenues** | **$104,754** | **$69,056** | **$35,698** | **52%** | [Results of Operations by Segment](index=68&type=section&id=Results%20of%20Operations%20by%20Segment) - **Performance Enzymes segment revenue grew 88% in 2021**, driven by a 134% increase in product revenue, largely from Pfizer sales[409](index=409&type=chunk) - **Novel Biotherapeutics segment revenue decreased 32% in 2021**, primarily due to lower license and R&D fees from the Takeda Agreement[409](index=409&type=chunk) Revenues by Segment (2020 vs 2021, in thousands) | Segment | 2021 | 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Performance Enzymes | $90,515 | $48,106 | $42,409 | 88% | | Novel Biotherapeutics | $14,239 | $20,950 | ($6,711) | (32)% | | **Total Revenues** | **$104,754** | **$69,056** | **$35,698** | **52%** | Income (Loss) from Operations by Segment (2020 vs 2021, in thousands) | Segment | 2021 | 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Performance Enzymes | $33,061 | $3,844 | $29,217 | 760% | | Novel Biotherapeutics | ($18,735) | ($3,110) | ($15,625) | (502)% | [Liquidity and Capital Resources](index=71&type=section&id=Liquidity%20and%20Capital%20Resources) - **Net cash used in operating activities was $14.3 million in 2021**, an improvement from $16.5 million used in 2020[376](index=376&type=chunk)[442](index=442&type=chunk) - **Net cash used in investing activities was $21.4 million in 2021**, primarily for property and equipment purchases ($13.8M) and investments in non-marketable securities ($7.6M)[446](index=446&type=chunk) - The company has an Equity Distribution Agreement (EDA) to sell up to **$50.0 million of common stock**, but no shares were sold under this agreement in 2021[436](index=436&type=chunk) - The company believes its existing cash and cash equivalents are **sufficient to fund operations**, capital expenditures, and working capital for at least the next 12 months[438](index=438&type=chunk) Cash and Working Capital (in thousands) | | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $116,797 | $149,117 | | Working capital | $128,517 | $159,442 | [Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%207A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Codexis's primary market risks are interest rate and foreign currency fluctuations, though the potential impact of both is considered immaterial - The company's primary market risk exposure is **interest rate sensitivity** on its **$116.8 million in cash and cash equivalents**, which are primarily in money market funds; a hypothetical 10% decrease in rates would have an immaterial impact[483](index=483&type=chunk) - **Foreign currency risk is present but limited**, as substantially all sales are denominated in U.S. dollars; a hypothetical 10% unfavorable change in exchange rates would result in a potential loss of approximately $46 thousand[485](index=485&type=chunk) - As of December 31, 2021, the company had **no outstanding borrowings** under its variable-rate Credit Facility, thus having no immediate exposure to interest rate risk from debt[484](index=484&type=chunk) [Financial Statements and Supplementary Data](index=80&type=section&id=Item%208%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for the year ended December 31, 2021, which received an unqualified opinion from the independent auditor BDO USA, LLP - The independent auditor, BDO USA, LLP, issued an **unqualified opinion**, stating the financial statements are presented fairly in all material respects and that the company maintained effective internal control over financial reporting as of December 31, 2021[492](index=492&type=chunk)[509](index=509&type=chunk) - The auditor identified **Revenue Recognition as a Critical Audit Matter** due to the significant judgments and estimates required in evaluating performance obligations, standalone selling prices, and variable consideration in customer contracts[497](index=497&type=chunk)[499](index=499&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$246,383** | **$221,646** | | Cash and cash equivalents | $116,797 | $149,117 | | **Total Liabilities** | **$81,992** | **$51,543** | | **Total Stockholders' Equity** | **$164,391** | **$170,103** | Consolidated Statement of Operations Highlights (in thousands) | | 2021 | 2020 | | :--- | :--- | :--- | | Total revenues | $104,754 | $69,056 | | Loss from operations | ($22,697) | ($23,920) | | Net loss | ($21,279) | ($24,010) | | Net loss per share | ($0.33) | ($0.40) | [Controls and Procedures](index=126&type=section&id=Item%209A%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of December 31, 2021 - Management, including the CEO and CFO, concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2021[753](index=753&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2021[755](index=755&type=chunk) - The independent registered public accounting firm, BDO USA, LLP, audited the internal control over financial reporting and issued an **unqualified opinion on its effectiveness**[756](index=756&type=chunk) - There were **no changes in internal control over financial reporting** during the fourth quarter of 2021 that materially affected, or are reasonably likely to materially affect, these controls[758](index=758&type=chunk) PART III [Directors, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=127&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) This section incorporates by reference information on directors, compensation, security ownership, and accountant fees from the company's 2022 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and accountant fees is **incorporated by reference** from the company's forthcoming 2022 Proxy Statement[763](index=763&type=chunk)[765](index=765&type=chunk)[767](index=767&type=chunk)[768](index=768&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=128&type=section&id=Item%2015%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and provides an index of all exhibits filed with the Form 10-K, including material contracts and required CEO/CFO certifications - This section contains the **index of all exhibits** filed as part of the Annual Report, including corporate governance documents, material contracts, and required certifications[771](index=771&type=chunk)[773](index=773&type=chunk) - Key material contracts listed include platform technology and license agreements with **GlaxoSmithKline, Merck, and Novartis**, as well as collaboration agreements with **Nestlé Health Science and Takeda**[787](index=787&type=chunk)[791](index=791&type=chunk) - **Certifications by the Principal Executive Officer and Principal Financial Officer** as required under the Securities Exchange Act of 1934 are included as exhibits[792](index=792&type=chunk)

CODEXIS® We engineer enzymes to improve health… of people and the planet Q4 & FY'2021 Results February 24, 2022 Forward Looking Statements 2 • These slides and any accompanying oral presentation contain forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results or levels of activity, performance or achieveme ...

Financial Data and Key Metrics Changes - Total revenue for fiscal 2021 was $104.8 million, up 52% from 2020, marking the highest annual growth in over 10 years [45] - Product revenue for fiscal 2021 was $70.7 million, up 134% from 2020, primarily driven by sales to Pfizer for Paxlovid [47] - Gross margin on product revenue for fiscal 2021 was 68.6%, up from 54.5% in 2020, attributed to a favorable product mix [47] - The net loss for fiscal year 2021 was $21.2 million, an improvement from a net loss of $24.0 million in 2020 [48] Business Line Data and Key Metrics Changes - Performance Enzymes segment generated $90.5 million in revenue for fiscal 2021, compared to $48.1 million in 2020, driven by Paxlovid sales [45][46] - Novel Biotherapeutics segment reported $14.2 million in revenue for fiscal 2021, down from $21.0 million in 2020, impacted by strong R&D revenue in the prior year [45][46] - Product revenue for Q4 2021 was $17.0 million, up 39% from $12.2 million in Q4 2020, with $11.3 million from Paxlovid sales [43] Market Data and Key Metrics Changes - The Life Science Tools market generated over $7 million in sales in 2021, doubling from the prior year, with expectations for 50% growth in 2022 [24] - The food sector saw significant growth, with sales exceeding $3 million in 2021, driven by key partnerships [22] - The Performance Enzymes business is expected to deliver a nearly fourfold increase in product revenues over two years [11] Company Strategy and Development Direction - The company aims to continue investing in high ROI opportunities, particularly in the Life Science Tools and Biotherapeutics segments [10][57] - Codexis plans to maintain its focus on enzyme discovery and commercialization, with a goal of translating developmental-stage products into recurring commercial-stage products [77] - The strategy includes expanding R&D capabilities and investing in IND-enabling work for several programs in the Biotherapeutics segment [52][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 50% year-on-year sales growth in 2022, driven by the Life Science Tools market and continued demand for Paxlovid [9][51] - The company highlighted the importance of maintaining a strong balance sheet, with cash and cash equivalents of $116.8 million as of December 31, 2021 [49] - Management noted the ongoing uncertainty related to the COVID-19 pandemic but emphasized the company's ability to adapt and capitalize on growth opportunities [4][10] Other Important Information - The company has not drawn any funds from its $50 million ATM facility established in May 2021, indicating a strong cash position [49] - Codexis expects to continue its focus on sustainable manufacturing processes, leveraging its engineered enzymes to reduce costs and improve efficiency [13][14] Q&A Session Summary Question: What are the expectations for product revenues excluding Pfizer? - Management confirmed modest growth in product revenues outside of Pfizer's Paxlovid sales, emphasizing confidence in translating developmental products into commercial sales [60][61] Question: What is the visibility on Paxlovid revenues for 2022? - Management stated that they have orders in hand covering the guidance range of $75 million to $80 million for Paxlovid sales in 2022, with additional purchase orders secured for early 2023 [62] Question: What is the likelihood of partnering Biotherapeutics programs? - Management indicated that they plan to advance their IND-enabling programs independently for now, with potential partnerships considered for later-stage clinical trials [63][64] Question: Are there opportunities to supply enzymes to generic manufacturers? - Management clarified that any business through the medicines patent pool with generic companies is not part of the Pfizer relationship, and visibility on this opportunity is limited [68][69] Question: What is the philosophy on capital allocation and reinvestment? - Management emphasized the importance of investing in enzyme discovery and development, particularly in the Biotherapeutics segment, to enhance long-term value [75][76]

CODEXIS® We engineer enzymes to improve health… of people and the planet Corporate Presentation November 2021 Forward Looking Statements 2 • These slides and any accompanying oral presentation contain forward-looking statements that involve risks and uncertainties, including Codexis' guidance on 2021 total revenues, product revenues and product gross margin. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and othe ...

CODEXIS® We engineer enzymes to improve health… of people and the planet Q3 2021 Financial Results November 4, 2021 Forward Looking Statements 2 • These slides and any accompanying oral presentation contain forward-looking statements that involve risks and uncertainties, including Codexis' guidance on 2021 total revenues, product revenues and product gross margin. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties an ...