Codexis(CDXS) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Codexis, Inc. for the quarter ended March 31, 2021, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, revenue recognition, and other financial details Condensed Consolidated Balance Sheets | Assets/Liabilities & Equity | March 31, 2021 (in Thousands) | December 31, 2020 (in Thousands) | | :-------------------------- | :---------------------------- | :------------------------------- | | Assets | | | | Total current assets | 173,563 | 184,423 | | Total assets | 212,170 | 221,646 | | Liabilities | | | | Total current liabilities | 22,553 | 24,981 | | Total liabilities | 48,431 | 51,543 | | Stockholders' Equity | | | | Total stockholders' equity | 163,739 | 170,103 | Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2021 (in Thousands) | Three Months Ended March 31, 2020 (in Thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Product revenue | 10,226 | 5,100 | | Research and development revenue | 7,806 | 9,570 | | Total revenues | 18,032 | 14,670 | | Total costs and operating expenses | 27,187 | 22,497 | | Loss from operations | (9,155) | (7,827) | | Net loss | (9,068) | (7,652) | | Net loss per share, basic and diluted | (0.14) | (0.13) | Condensed Consolidated Statements of Stockholders' Equity | Item | March 31, 2021 (in Thousands) | January 1, 2021 (in Thousands) | | :-------------------------- | :---------------------------- | :----------------------------- | | Total Stockholders' Equity | 163,739 | 170,103 | | Accumulated Deficit | (375,487) | (366,419) | | Additional Paid-in Capital | 539,220 | 536,516 | | Common Shares Outstanding | 64,488 | 64,283 | - Net loss for the three months ended March 31, 2021, was $9,068 thousand, contributing to an increased accumulated deficit[11] Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2021 (in Thousands) | Three Months Ended March 31, 2020 (in Thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net cash used in operating activities | (6,440) | (1,425) | | Net cash used in investing activities | (2,533) | (761) | | Net cash provided by (used in) financing activities | 17 | (1,019) | | Net decrease in cash, cash equivalents and restricted cash | (8,956) | (3,205) | | Cash, cash equivalents and restricted cash at end of period | 141,861 | 89,016 | - The company experienced a significant increase in net cash used in operating activities, from $1,425 thousand in Q1 2020 to $6,440 thousand in Q1 2021[15] Notes to Condensed Consolidated Financial Statements Note 1. Description of Business Codexis, Inc. discovers, develops, and sells enzymes and other proteins, leveraging its proprietary CodeEvolver® protein engineering technology platform. The company operates in two main segments: Performance Enzymes, focused on pharmaceuticals and industrial markets, and Novel Biotherapeutics, developing drug candidates for human diseases. The COVID-19 pandemic has caused R&D disruptions but had minimal revenue impact for Q1 2021 - Codexis utilizes its CodeEvolver® protein engineering technology platform, powered by AI-based computational algorithms, for enzyme discovery and development[22][131] - The company's core applications include biocatalytic manufacturing processes for complex chemicals, small molecule pharmaceuticals, and broader industrial markets (food, feed, consumer care, fine chemicals)[22][131][133] - In Novel Biotherapeutics, Codexis is developing biotherapeutic drug candidates, including CDX-6114 for PKU (licensed to Nestlé Health Science) and CDX-7108 for gastro-intestinal disorders, and collaborating with Takeda on gene therapies[24][25][28][29][134][138] - COVID-19 caused temporary R&D facility closures and disruptions in Q1 2020, but operations have largely ramped up by Q1 2021, with minimal impact on Q1 2021 revenue[31][32][141][142] Note 2. Basis of Presentation and Summary of Significant Accounting Policies This note outlines the basis of presentation for the unaudited condensed consolidated financial statements, confirming adherence to GAAP and SEC rules for interim reporting. It also details recently adopted and issued accounting pronouncements, noting no material impact on the financial statements from these changes - The financial statements are prepared in accordance with GAAP and SEC rules for interim financial information, consistent with the 2020 Annual Report on Form 10-K[34] - The adoption of ASU 2019-12 (Income Taxes) and ASU 2020-10 (Codification Improvements) on January 1, 2021, had no impact on the condensed consolidated financial statements[41][42] - ASU 2020-06 (Convertible Instruments) and ASU 2020-04 (Reference Rate Reform) are not expected to have a material impact upon adoption[45][46] Note 3. Revenue Recognition This note disaggregates revenue by product/service type and geographic region, and provides details on contract balances and performance obligations. Product revenue significantly increased, while R&D revenue saw a slight decrease. Contract assets and unbilled receivables increased, while deferred revenue remained stable | Revenue Type | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | Change (in Thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Product Revenue | 10,226 | 5,100 | 5,126 | 100.5% | | Research and development revenue | 7,806 | 9,570 | (1,764) | (18.4%) | | Total Revenues | 18,032 | 14,670 | 3,362 | 22.9% | | Geographic Region | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | | :---------------- | :--------------------- | :--------------------- | | Americas | 4,929 | 5,225 | | EMEA | 6,282 | 5,971 | | APAC | 6,821 | 3,474 | | Total Revenues | 18,032 | 14,670 | | Contract Balance Item | March 31, 2021 (in Thousands) | December 31, 2020 (in Thousands) | | :-------------------- | :---------------------------- | :------------------------------- | | Contract assets | 5,143 | 4,526 | | Unbilled receivables | 11,298 | 10,942 | | Contract liabilities: deferred revenue | 4,797 | 4,791 | - Estimated future revenue from unsatisfied performance obligations totals $4,797 thousand, with $2,821 thousand from product revenue and $1,976 thousand from R&D revenue[56] Note 4. Net Loss per Share This note details the calculation of basic and diluted net loss per share. Due to net losses, potentially dilutive securities were excluded from diluted EPS calculations as their inclusion would be anti-dilutive - Basic and diluted net loss per share for Q1 2021 was $(0.14), compared to $(0.13) for Q1 2020[8] | Item | Three Months Ended March 31, 2021 (in Thousands) | Three Months Ended March 31, 2020 (in Thousands) | | :---------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Shares issuable under Equity Incentive Plan (anti-dilutive) | 5,497 | 5,071 | Note 5. Investments in Non-Marketable Securities The company holds non-marketable debt and equity securities. Non-marketable debt securities are classified as available-for-sale and valued using Level 3 inputs. Non-marketable equity securities are measured at cost less impairment, with no significant gains or losses recognized in Q1 2021 or Q1 2020 - In Q1 2021, the company recognized $0.1 million in interest income from non-marketable debt securities and $68 thousand in other expenses from an embedded derivative[63] | Security Type | March 31, 2021 (in Thousands) | December 31, 2020 (in Thousands) | | :---------------------------- | :---------------------------- | :------------------------------- | | Non-marketable debt security | 1,067 | 1,000 | | Non-marketable equity securities | 2,350 | 1,450 | Note 6. Fair Value Measurements This note provides a fair value hierarchy for financial assets, primarily consisting of money market funds (Level 1) and non-marketable debt securities (Level 3). No significant credit losses or impairment losses were recognized on non-marketable securities | Asset Type | Level 1 (in Thousands) | Level 2 (in Thousands) | Level 3 (in Thousands) | Total (in Thousands) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | March 31, 2021 | | | | | | Money market funds | 122,075 | — | — | 122,075 | | Non-marketable debt security | — | — | 1,067 | 1,067 | | Total | 122,075 | — | 1,067 | 123,142 | | December 31, 2020 | | | | | | Money market funds | 127,567 | — | — | 127,567 | | Non-marketable debt security | — | — | 1,000 | 1,000 | | Total | 127,567 | — | 1,000 | 128,567 | Note 7. Balance Sheets Details This note provides detailed breakdowns of key balance sheet items, including cash equivalents, inventories, property and equipment, goodwill, and other accrued liabilities, showing changes between March 31, 2021, and December 31, 2020 | Item | March 31, 2021 (in Thousands) | December 31, 2020 (in Thousands) | | :-------------------------- | :---------------------------- | :------------------------------- | | Cash and cash equivalents | 139,748 | 149,117 | | Inventories | 1,029 | 964 | | Property and equipment, net | 10,396 | 9,675 | | Goodwill | 3,241 | 3,241 | | Other accrued liabilities | 9,516 | 10,272 | - Cash and cash equivalents decreased by $9.369 million from December 31, 2020, to March 31, 2021[67] - Depreciation expense increased to $659 thousand in Q1 2021 from $438 thousand in Q1 2020[70] Note 8. Stock-based Compensation This note details the company's equity incentive plans (2019 Plan and 2010 Plan), including stock options, RSUs, PSUs, and PBOs. It outlines vesting terms and the recognition of stock-based compensation expense, which increased significantly in Q1 2021 - The 2019 Incentive Award Plan allows for grants of various equity awards, with 7,897,144 shares available for issuance, plus certain shares from the superseded 2010 Plan[75][76] - Performance goals for 2021 PSUs and PBOs were estimated to be achieved at 100% of the target level as of March 31, 2021[84] | Expense Category | Three Months Ended March 31, 2021 (in Thousands) | Three Months Ended March 31, 2020 (in Thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Research and development | 477 | 424 | | Selling, general and administrative | 2,210 | 1,745 | | Total Stock-based Compensation Expense | 2,687 | 2,169 | - Unrecognized stock-based compensation expense totaled $15.3 million as of March 31, 2021, to be recognized through 2025[87] Note 9. Capital Stock This note reports the number of shares issued and proceeds received from the exercise of stock options during the three months ended March 31, 2021 and 2020 | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Shares issued upon option exercises | 118,437 | 5,333 | | Weighted-average exercise price | $10.33 | $7.31 | | Net cash proceeds (in Thousands) | $1,200 | $39 | Note 10. Commitments and Contingencies This note details the company's operating and finance lease obligations, including a significant new lease agreement for additional office and R&D space in San Carlos, California. It also covers other commitments like supply and service arrangements, and the terms of its credit facility - The company extended its Redwood City facility lease through May 2027 for Penobscot Space and May 2029 for Chesapeake Space, with options for five-year extensions[92] - A new 10-year lease agreement was entered into in Q1 2021 for 36,593 square feet in San Carlos, California, with an initial annualized base rent of approximately $2.5 million, commencing November 2021[98] | Lease Type | Q1 2021 Lease Cost (in Thousands) | Q1 2020 Lease Cost (in Thousands) | | :---------------------- | :-------------------------------- | :-------------------------------- | | Finance lease amortization | 26 | 54 | | Operating lease cost | 1,032 | 1,068 | | Total lease cost | 1,058 | 1,098 | - The company has a credit facility with Western Alliance Bank for up to $10.0 million in term loans and $5.0 million in a revolving line of credit, with no amounts drawn as of March 31, 2021[104] Note 11. Related Party Transactions This note details transactions with Molecular Assemblies, Inc. (MAI), where Codexis holds an equity investment and provides R&D services, and with AstraZeneca PLC, from which Codexis recognized revenue in Q1 2020 - Codexis purchased 1,587,050 shares of MAI's Series A preferred stock for $1.0 million in June 2020, and its CEO joined MAI's board[110] - Codexis recognized $0.1 million in R&D revenue from MAI in Q1 2021, receiving 1,428,342 shares of MAI's Series A preferred stock as compensation[110] - The carrying value of the investment in MAI Series A preferred stock was $2.4 million at March 31, 2021, up from $1.5 million at December 31, 2020[110] Note 12. Segment, Geographical and Other Revenue Information This note provides detailed financial information for the company's two reportable business segments: Performance Enzymes and Novel Biotherapeutics. It also disaggregates revenue by significant customers and geographical regions, and details identifiable long-lived assets and goodwill - The company manages its business in two segments: Performance Enzymes (pharmaceuticals, industrial, life sciences) and Novel Biotherapeutics (drug candidates for human diseases)[112][116][117] | Segment Revenue (in Thousands) | Q1 2021 | Q1 2020 | | :----------------------------- | :------ | :------ | | Performance Enzymes | 14,229 | 10,874 | | Novel Biotherapeutics | 3,803 | 3,796 | | Total Revenues | 18,032 | 14,670 | | Significant Customers (Revenue %) | Q1 2021 | Q1 2020 | | :-------------------------------- | :------ | :------ | | Customer A | 28% | 24% | | Customer B | * | 19% | | Customer C | 11% | 15% | | Customer D | 10% | 11% | | Customer E | 14% | * | | *Percentage was less than 10% | | | | Geographic Revenues (in Thousands) | Q1 2021 | Q1 2020 | | :--------------------------------- | :------ | :------ | | Americas | 4,929 | 5,225 | | EMEA | 6,282 | 5,971 | | APAC | 6,821 | 3,474 | | Total revenues | 18,032 | 14,670 | Note 13. Allowance for Credit Losses This note provides a summary of the allowance for credit losses on financial assets and an aging analysis of accounts receivable | Item | March 31, 2021 (in Thousands) | March 31, 2020 (in Thousands) | | :-------------------------- | :---------------------------- | :---------------------------- | | Allowance for credit losses | 74 | 34 | | Accounts Receivable Aging (in Thousands) | March 31, 2021 | December 31, 2020 | | :--------------------------------------- | :------------- | :---------------- | | Current | 11,329 | 13,172 | | 31-60 Days | 35 | 688 | | 61-90 Days | — | 7 | | 91 Days and over | 4 | 27 | | Total balance | 11,368 | 13,894 | Note 14. Subsequent Event This note discloses a subsequent event where the company purchased additional shares of MAI's Series A preferred stock in April 2021 - In April 2021, Codexis purchased an additional 1.0 million shares of MAI's Series A preferred stock for $0.6 million[128] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition for the quarter ended March 31, 2021. It covers business overview, segment performance, the impact of COVID-19, detailed results of operations, liquidity, capital resources, and critical accounting policies Business Overview - Codexis discovers, develops, and sells enzymes and proteins using its CodeEvolver® protein engineering technology platform, which leverages AI-based computational algorithms[130][131] - The technology is applied in small molecule pharmaceuticals, broader industrial markets (food, feed, consumer care, fine chemicals), life sciences (NGS, PCR/qPCR), and novel biotherapeutics[133][134] - Key collaborations include Novartis for CodeEvolver® platform licensing, Nestlé Health Science for PKU treatment (CDX-6114) and gastro-intestinal disorders (CDX-7108), and Takeda for gene therapies[133][134] Business Segments - The Performance Enzymes segment focuses on pharmaceuticals, industrial markets (food, feed, consumer care, fine chemicals), and life sciences applications[136] - The Novel Biotherapeutics segment aims to discover and develop biotherapeutic drug candidates for human diseases, with lead programs for PKU (CDX-6114) and a gastro-intestinal disorder (CDX-7108)[138] - CDX-6114 demonstrated safety and tolerability in a Phase 1a study in PKU patients, showing increased cinnamic acid levels consistent with its intended mode of action[138] Business Update Regarding COVID-19 - The COVID-19 pandemic has presented public health and economic challenges, affecting employees, communities, and business operations globally[140] - Supply of enzymes to customers has continued, but disruptions in manufacturing and logistics partners could affect future supply[141] - R&D operations were temporarily suspended in Q1 2020 but have since ramped up to near-normal capacity, following safety guidelines[142][144] - The pandemic's impact on future financial condition, liquidity, or results of operations remains uncertain, with potential risks including payment delays and supply chain disruptions[145] Results of Operations Overview | Metric | Q1 2021 (in Millions) | Q1 2020 (in Millions) | Change (in Millions) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Total Revenues | $18.0 | $14.7 | $3.3 | 23% | | Product Revenue | $10.2 | $5.1 | $5.1 | 101% | | Research and development revenue | $7.8 | $9.6 | $(1.8) | (18%) | - Product gross margins increased to 59% in Q1 2021 from 50% in Q1 2020, driven by improved product mix and higher demand for branded pharmaceutical products[147] | Expense Category | Q1 2021 (in Millions) | Q1 2020 (in Millions) | Change (in Millions) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Research and development expenses | $11.6 | $11.0 | $0.6 | 6% | | Selling, general and administrative expenses | $11.4 | $9.0 | $2.4 | 27% | - Net loss increased to $9.1 million ($0.14 per share) in Q1 2021 from $7.7 million ($0.13 per share) in Q1 2020, primarily due to higher operating expenses and lower R&D revenue, partially offset by increased product revenues and margins[150] - Cash and cash equivalents decreased to $139.7 million as of March 31, 2021, from $149.1 million as of December 31, 2020[151] Merck Sitagliptin Catalyst Supply Agreement - The Sitagliptin Catalyst Supply Agreement with Merck, extended through February 2022, involves the supply of commercial scale enzyme for Merck's Januvia® product[162] - Revenue recognized under this agreement was $3.3 million in Q1 2021 (18% of total revenues), up from $1.8 million in Q1 2020 (12% of total revenues)[166] - The company is currently negotiating an extension of the agreement, which is set to expire in February 2022[167] Global Development, Option and License Agreement and Strategic Collaboration Agreement - Under the Nestlé License Agreement, Nestlé Health Science exercised its option in February 2019 for an exclusive license to develop and commercialize CDX-6114 for PKU[171] - Codexis is eligible for development and approval milestones up to $85.0 million, sales-based milestones up to $250.0 million, and tiered royalties on net sales of CDX-6114[171] - Under the Nestlé SCA and a development agreement, Codexis recognized R&D fees of $1.8 million in Q1 2021, collaborating to advance CDX-7108 for a gastro-intestinal disorder[172][173] Platform Technology Transfer and License Agreement - The Novartis CodeEvolver® Agreement allows Novartis to use Codexis's protein engineering platform technology in human healthcare, with technology transfer ongoing over approximately 25 months[174] - Codexis received $3.4 million in March 2021 for partial completion of the third technology milestone, with an additional $1.6 million expected upon full completion[176] - Future payments include $8.0 million in aggregate annual payments during the 'Improvements Term' and quantity-dependent usage payments for APIs manufactured by Novartis using CodeEvolver®-developed enzymes[176] - R&D revenue from the Novartis CodeEvolver® Agreement decreased to $0.8 million in Q1 2021 from $2.4 million in Q1 2020, as technology transfer nears completion[176] Strategic Collaboration and License Agreement (Takeda) - Under the Takeda Agreement (March 2020), Codexis collaborates to research and develop protein sequences for gene therapy products for diseases like Fabry Disease and Pompe Disease[177] - Codexis received an upfront non-refundable cash payment of $8.5 million upon execution of the agreement[177] - Potential future payments from Takeda include $15.4 million in R&D fees and pre-clinical milestones, up to $100.0 million in clinical development and commercialization milestones per target gene, and tiered royalties on net sales[178] - R&D revenue from the Takeda Agreement was $2.1 million in Q1 2021, compared to $2.2 million in Q1 2020[178] Results of Operations (Detailed) Revenues Total revenues increased by 23% year-over-year, driven by a 101% increase in product revenue, primarily from branded pharmaceutical products. Research and development revenue decreased by 18% due to lower revenues from the Novartis CodeEvolver® Agreement | Revenue Type | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | Change (in Thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Product revenue | 10,226 | 5,100 | 5,126 | 101% | | Research and development revenue | 7,806 | 9,570 | (1,764) | (18)% | | Total revenues | 18,032 | 14,670 | 3,362 | 23% | - The increase in product revenue was primarily due to higher customer demand for branded pharmaceutical products[186] - The decrease in research and development revenue was primarily due to lower revenues from Novartis under the Novartis CodeEvolver® Agreement[187] Cost and Operating Expenses Total costs and operating expenses increased by 21% year-over-year. Cost of product revenue rose due to higher sales volume and product mix, while R&D and SG&A expenses increased primarily due to higher headcount and outside services/legal fees | Expense Category | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | Change (in Thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Cost of product revenue | 4,218 | 2,541 | 1,677 | 66% | | Research and development | 11,571 | 10,967 | 604 | 6% | | Selling, general and administrative | 11,398 | 8,989 | 2,409 | 27% | | Total costs and operating expenses | 27,187 | 22,497 | 4,690 | 21% | - Product gross margin increased to 59% in Q1 2021 from 50% in Q1 2020, driven by the sale of higher margin branded products[189] - R&D expenses increased due to higher headcount, lab supplies, depreciation, and other outside services, partially offset by decreased CMC and regulatory expenses[191][192] - SG&A expenses increased due to higher headcount, legal fees, and stock-based compensation, partially offset by lower travel and allocable expenses[194] Interest Income and Other Expense, Net Interest income decreased due to lower average interest rates and declining cash balances, while other expenses remained relatively stable | Item | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | Change (in Thousands) | Change (%) | | :------------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | Interest income | 177 | 266 | (89) | (33)% | | Other expenses, net | (88) | (86) | (2) | (2)% | | Total other income (expense) | 89 | 180 | (91) | (51)% | - Interest income decreased primarily due to lower average interest rates on declining average cash balances, partially offset by interest from non-marketable debt security[196] Provision for Income Taxes The provision for income taxes decreased, primarily due to accrual of interest and penalties on historic uncertain tax positions | Item | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | Change (in Thousands) | Change (%) | | :------------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | Provision for income taxes | 2 | 5 | (3) | (60)% | Net Loss Net loss increased in Q1 2021 compared to Q1 2020, driven by higher operating expenses and lower R&D revenues, partially offset by increased product revenue and margins | Item | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | Change (in Thousands) | Change (%) | | :------------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | Net loss | (9,068) | (7,652) | (1,416) | (19)% | | Net loss per share, basic and diluted | (0.14) | (0.13) | (0.01) | (7.7)% | Results of Operations by Segment Performance Enzymes segment revenues increased significantly due to higher product demand, while Novel Biotherapeutics segment revenues remained stable. Operating expenses for both segments saw changes primarily driven by headcount and outside services | Segment Revenues (in Thousands) | Q1 2021 | Q1 2020 | Change (in Thousands) | Change (%) | | :------------------------------ | :------ | :------ | :-------------------- | :--------- | | Performance Enzymes | 14,229 | 10,874 | 3,355 | 31% | | Novel Biotherapeutics | 3,803 | 3,796 | 7 | 0% | | Total revenues | 18,032 | 14,670 | 3,362 | 23% | - Performance Enzymes product revenue increased by 101% due to higher customer demand for branded pharmaceutical products[200] - Performance Enzymes R&D expense increased by 13% due to higher outside services, lab supplies, and headcount[203] - Novel Biotherapeutics R&D expense decreased by 6% due to lower outside services, including CMC regulatory expenses, partially offset by higher headcount[205] Liquidity and Capital Resources | Item | March 31, 2021 (in Thousands) | December 31, 2020 (in Thousands) | | :-------------------------- | :---------------------------- | :------------------------------- | | Cash and cash equivalents | 139,748 | 149,117 | | Working capital | 151,010 | 159,442 | - The company has historically funded operations through cash from operations, stock option exercises, and public/private equity offerings[207] - Codexis has access to a $15.0 million credit facility (term loan and revolving credit) with Western Alliance Bank, with no amounts drawn as of March 31, 2021[211] - Management believes existing cash and cash equivalents will provide adequate funds for operations, capital expenditures, and working capital for at least the next 12 months[214] - Future capital needs may arise from developing new products, acquisitions, new market opportunities, and patent-related costs. Failure to raise additional funds could limit business execution[215][217] Cash Flows | Cash Flow Activity | Q1 2021 (in Thousands) | Q1 2020 (in Thousands) | | :-------------------------- | :--------------------- | :--------------------- | | Net cash used in operating activities | (6,440) | (1,425) | | Net cash used in investing activities | (2,533) | (761) | | Net cash provided by (used in) financing activities | 17 | (1,019) | | Net decrease in cash, cash equivalents and restricted cash | (8,956) | (3,205) | - The increase in cash used in operating activities in Q1 2021 was primarily due to a higher net loss and changes in operating assets and liabilities, including decreases in accrued compensation and deferred revenue[219] - Cash used in investing activities was mainly for purchases of property and equipment[221] - Financing activities in Q1 2021 were near neutral, with proceeds from stock option exercises largely offset by taxes paid for equity award settlements[222] Material Cash Requirements | Commitment Type | Total (in Thousands) | Less than 1 year (in Thousands) | 1 to 3 years (in Thousands) | 4 to 5 years (in Thousands) | More than 5 years (in Thousands) | | :-------------------------- | :------------------- | :------------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | | Operating leases obligations (Redwood City) | 30,251 | 4,144 | 9,058 | 9,666 | 7,383 | | Operating leases obligations (San Carlos) | 31,723 | 276 | 5,939 | 6,252 | 19,256 | | Total | 61,974 | 4,420 | 14,997 | 15,918 | 26,639 | | Other Material Cash Requirements (in Thousands) | Future Minimum Payment | | :---------------------------------------------- | :--------------------- | | Manufacture and supply agreement | 55 | | Development and manufacturing services agreements | 2,374 | | Total other commitments | 2,429 | - The company has contingent commitments of $2.7 million for potential future R&D milestone payments and $0.6 million for sales-based milestones[226] Critical Accounting Policies and Estimates - There have been no material changes to the company's critical accounting policies or estimates during the three months ended March 31, 2021, from those discussed in the 2020 Annual Report on Form 10-K[229] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's exposure to market risks, including interest rate sensitivity, foreign currency risk, and risks related to investments in non-marketable debt and equity securities. It notes that a hypothetical 10% change in interest rates would have an immaterial impact due to no outstanding borrowings and that foreign currency risk is limited as most sales are USD denominated - A hypothetical 10% decrease in market interest rates would have an immaterial impact on future interest income and cash flows, as unrestricted cash and cash equivalents are primarily invested in money market funds[232] - The company's credit facility has variable interest rates, but with no outstanding borrowings as of March 31, 2021, a hypothetical 10% change in interest rates would not impact interest expense[233] - Foreign currency risk is limited as substantially all sales are denominated in United States dollars[234] - Investments in non-marketable debt and equity securities are subject to fair value measurement risks, relying on qualitative analysis and unobservable inputs or recent arms-length transactions[235][236] ITEM 4. Controls and Procedures This section confirms that the company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of March 31, 2021. No material changes in internal control over financial reporting were identified - Management concluded that disclosure controls and procedures were effective as of March 31, 2021, at a reasonable assurance level[239] - No material changes in internal control over financial reporting occurred during the last fiscal quarter[240] - Management acknowledges the inherent limitations of controls, which can only provide reasonable assurance and are subject to resource constraints and changes in conditions[241] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings This section states that the company is not currently involved in any material pending litigation or other material legal proceedings - The company is not a party to any material pending litigation or other material legal proceedings[244] ITEM 1A. Risk Factors This section refers to the risk factors described in the company's Annual Report on Form 10-K for the year ended December 31, 2020, and states that no material changes occurred during the three months ended March 31, 2021 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020, were identified during Q1 2021[245] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities and use of proceeds to report[246] ITEM 3. Default Upon Senior Securities This section states that there were no defaults upon senior securities to report for the period - There were no defaults upon senior securities to report[247] ITEM 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[248] ITEM 5. Other Information This section states that there is no other information to report for the period - There is no other information to report[249] ITEM 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, a new lease agreement, certifications, and XBRL-formatted financial statements - Exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, a new Lease Agreement with ARE-San Francisco No. 63, LLC, and certifications from executive officers[251] - The financial statements are provided in Inline Extensible Business Reporting Language (iXBRL) format[251] Signatures This section contains the required signatures of the registrant's principal executive officer and principal financial and accounting officer, certifying the filing of the report - The report is signed by John J. Nicols, President and Chief Executive Officer, and Ross Taylor, Senior Vice President and Chief Financial Officer, on May 7, 2021[257]