CODEXIS INC

Previous wording

We are a leading enzyme engineering company leveraging our proprietary CodeEvolver® directed evolution technology platform to discover, develop, enhance, and commercialize novel, high-performance enzymes and other classes of proteins. Enzymes are naturally occurring biological molecules critical to almost all biochemical reactions that sustain life. They can be precisely engineered and optimized for specific functions, and to have particular characteristics, such as an ability to survive environments in which natural enzymes cannot, or to perform (bio)chemical transformations different than those for which they naturally evolved. We focus on leveraging our capacity to enhance the properties and performance of enzymes to drive pivotal improvements across two key focus areas: our foundational, revenue-generating pharmaceutical manufacturing business and our Enzyme-Catalyzed Oligonucleotide (ECO) Synthesis™ (“ECO Synthesis™”) manufacturing platform, which is currently in development to enable the commercial scale manufacture of RNA interference (“RNAi”) therapeutics. Our unique enzymes drive improvements such as higher yields, increased purity, reduced energy usage and waste generation, and improved efficiency in manufacturing. In July 2023, we announced that we discontinued investment in certain development programs, primarily in our novel biotherapeutics business segment and that we are actively exploring options to drive value by potentially monetizing non-core assets within our biotherapeutics and Life Science portfolios.

Current wording

We are a leading enzyme engineering company leveraging our proprietary CodeEvolver® directed evolution technology platform to discover, develop, enhance, and commercialize novel, high-performance enzymes and other classes of proteins. Enzymes are naturally occurring biological molecules critical to almost all biochemical reactions that sustain life. They can be precisely engineered and optimized for specific functions, and to have particular characteristics, such as an ability to survive environments in which natural enzymes cannot, or to perform (bio)chemical transformations different than those for which they naturally evolved. We focus on leveraging our capacity to enhance the properties and performance of enzymes to drive pivotal improvements across two key focus areas: our foundational, revenue-generating pharmaceutical manufacturing business and our Enzyme-Catalyzed Oligonucleotide (ECO) Synthesis™ (“ECO Synthesis™”) manufacturing platform, which is currently in development to enable the commercial scale manufacture of RNA interference (“RNAi”) and other RNA-based therapeutics. Our unique enzymes drive improvements such as higher yields, increased purity, reduced energy usage and waste generation, and improved efficiency in manufacturing. In July 2023, we announced that we discontinued investment in certain development programs, primarily in our novel biotherapeutics business segment and that we are actively exploring options to drive value by potentially monetizing non-core assets within our Biotherapeutics and Life Science portfolios.

Previous wording

We are a party to the Pfizer Supply Agreement, covering the manufacture, sale and purchase of CDX-616 for use by Pfizer in the manufacture of nirmatrelvir. Under the terms of the Pfizer Supply Agreement, Pfizer paid us a fee of $25.9 million in August 2022 which was recorded as deferred revenue. Pursuant to the agreement, 90% of the fee ($23.3 million) is creditable against (i) future orders of CDX-616 used to manufactureits PAXLOVID™ with shipment dates prior to December 31, 2023, and (ii) fees associated with any new development and licensing agreements with Pfizer entered into prior to April 4, 2023. On March 31, 2023, we entered into a license agreement whereby Pfizer utilized a portion of the $23.3 million credit towards a license to develop future product candidates, for which we recognized $5.0 million as non-cash research and development revenue in the second quarter of 2023. Pfizer's ability to utilize the credit under item (i) above expired on December 31, 2023, and under item (ii) above expired on April 4, 2023. Up to 50% of any portion of the $25.9 million which has not been credited under items (i) and (ii) is creditable against future orders of CDX-616 used to manufacture PAXLOVID™ with shipment dates in 2024.

Current wording

We are a party to an Enzyme Supply Agreement (the “Pfizer Supply Agreement”), with Pfizer Ireland Pharmaceuticals, a subsidiary of Pfizer, Inc. (“Pfizer”), covering the manufacture, sale and purchase of CDX-616 for use by Pfizer in the manufacture of nirmatrelvir. Under the terms of the Pfizer Supply Agreement, Pfizer paid us a fee of $25.9 million in August 2022 which was recorded as deferred revenue. Pursuant to the agreement, 90% of the fee ($23.3 million) is creditable against (i) future orders of CDX-616 used to manufactureits PAXLOVID™ with shipment dates prior to December 31, 2023, and (ii) fees associated with any new development and licensing agreements with Pfizer entered into prior to April 4, 2023. On March 31, 2023, we entered into a license agreement whereby Pfizer utilized a portion of the $23.3 million credit towards a license to develop future product candidates, for which we recognized $5.0 million as non-cash research and development revenue in the second quarter of 2023. Pfizer's ability to utilize the credit under item (i) above expired on December 31, 2023, and under item (ii) above expired on April 4, 2023. Up to 50% of any portion of the $25.9 million which has not been credited under items (i) and (ii) is creditable against future orders of CDX-616 used to manufacture PAXLOVID™ with shipment dates in 2024.

Previous wording

No product revenue was recognized from the Pfizer Supply Agreement during the three months ended March 31, 2024 and 2023. As of March 31, 2024 and December 31, 2023, we had$9.5 million in deferred revenue related to the$25.9 million fee received from Pfizer.

Current wording

No product revenue was recognized from the Pfizer Supply Agreement during the three and six months ended June 30, 2024 and 2023. As of June 30, 2024 and December 31, 2023, we had$9.5 million in deferred revenue related to the$25.9 million fee received from Pfizer.

Previous wording

In October 2017, we entered into the Nestlé Strategic Collaboration Agreement (“SCA”) pursuant to which we and Nestlé Health Science have collaborated to leverage the CodeEvolver® protein engineering technology platform to develop novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas. The term of the Nestlé SCA has expired in December 2023, as we opted out of a renewal period through December 2024.

Current wording

In October 2017, we entered into the Nestlé Strategic Collaboration Agreement (the “Nestle SCA”) pursuant to which we and Nestlé Health Science have collaborated to leverage the CodeEvolver® protein engineering technology platform to develop novel enzymes for Nestlé Health Science’s established Consumer Care and Medical Nutrition business areas.

Previous wording

In January 2020, we entered into a development agreement with Nestlé Health Science pursuant to which we and Nestlé Health Science have collaborated to advance a lead candidate discovered through our Nestlé SCA, CDX-7108, targeting exocrine pancreatic insufficiency, into preclinical and early clinical studies. We, together with Nestlé Health Science, initiated a Phase 1 clinical trial of CDX-7108 in the fourth quarter of 2021, and on February 23, 2023, we and Nestlé Health Science announced interim results. In July 2023, we announced plans to discontinue our development support of CDX-7108.

Current wording

In January 2020, we entered into a development agreement with Nestlé Health Science pursuant to which we and Nestlé Health Science have collaborated to advance a lead candidate discovered through our Nestlé SCA, CDX-7108, targeting exocrine pancreatic insufficiency, into preclinical and early clinical studies. We, together with Nestlé Health Science, initiated a Phase 1 clinical trial of CDX-7108 in the fourth quarter of 2021, and on February 23, 2023, we and Nestlé Health Science announced interim results. In July 2023, we announced plans to discontinue our development support of CDX-7108. Both the Nestlé SCA and development agreement were terminated under the terms of the CDX-7108 Acquisition Agreement with Nestlé Health Science.

Previous wording

Under the Nestlé SCA and the development agreement, we recognized niland $1.8 million in research and development fees for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Under the Nestlé SCA and the development agreement, we recognized nil in research and development fees for the three and six months ended June 30, 2024, compared to $1.7 million and $3.6 million for the three and six months ended June 30, 2023, respectively.

Previous wording

On February 26, 2024, we announced that we entered into an agreement with Roche Sequencing Solutions, Inc. (“Roche”) for an exclusive, global license for the Company’s newly engineered double-stranded DNA (dsDNA) ligase for next-generation sequencing (NGS) library preparation and the Company’s EvoT4™ DNA ligase. Under the terms of the deal, Codexis will receive upfront and technical milestone payments. This deal supersedes the prior exclusive license on the EvoT4™ DNA ligase.

Current wording

In February 2024, we entered into an agreement with Roche Sequencing Solutions, Inc. (“Roche”) for an exclusive, global license for the Company’s newly engineered double-stranded DNA (dsDNA) ligase for next-generation sequencing (NGS) library preparation and the Company’s EvoT4™ DNA ligase. Under the terms of the deal, Codexis will receive upfront and technical milestone payments. This deal superseded the prior exclusive license on the EvoT4™ DNA ligase. We recognized research and development revenue of$6.0 million during the first quarter of 2024 related to the license agreement.

Previous wording

Research and development revenue increased by $2.9 million to $7.5 million in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to $6.0 million higher revenue from Roche licensing agreement entered into in February 2024. This was offset by $1.8 million lower research and development fees from Nestlé Health Science under the Nestlé SCA and development agreement and $1.7 million lower revenue from Takeda under the Strategic Collaboration and License Agreement we entered into with Shire Human Genetic Therapies, Inc., a wholly-owned subsidiary of Takeda, in March 2020.

Current wording

Research and development revenue decreased by $8.6 million in the three months ended June 30, 2024 compared to the same period in 2023 primarily due to the recognition of $5.7 million in non-cash revenue related to our license and master service agreements with Pfizer in the second quarter of 2023, $1.7 million lower research and development fees from Nestlé Health Science under the Nestlé SCA and development agreement and $1.1 million lower revenue from both legacy and existing collaboration agreements being recognized in 2024 as compared to the same period in the prior year. Research and development revenue decreased by $5.7 million in the six months ended June 30, 2024 compared to the same period in 2023, primarily due to the recognition of $5.7 million in non-cash revenue related to our license and master service agreements with Pfizer in the six months ended June 30, 2023, $3.6 million lower research and development fees from Nestlé Health Science, $1.8 million lower revenue from Takeda under a Strategic Collaboration and License Agreement and $2.3 million lower revenue from other legacy collaboration agreements being recognized in 2024 as compared to the same period in 2023. This was offset by $6.0 million higher revenue from our licensing agreement with Roche entered into in February 2024 and $1.8 million higher revenue from existing collaboration agreements recognized in the current year.

Previous wording

Restructuring charges consist of one-time employee severance and other termination benefits due to workforce reduction plans that were initiated in the prior years. There were no restructuring charges recognized in the three months ended March 31, 2024. Restructuring charges were $0.1 million for the three months ended March 31, 2023.

Current wording

Restructuring charges consist of one-time employee severance and other termination benefits due to workforce reduction plans that were initiated in the prior years. There were no restructuring charges recognized in the three and six months ended June 30, 2024. Restructuring charges were $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively.

Previous wording

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

Current wording

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

Previous wording

Interest income decreased by $0.2 million in the three months ended March 31, 2024 compared to the same period in 2023, primarily due to lower average cash balances.

Current wording

Interest income decreased by $0.1 million and $0.3 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to lower average cash balances.

Previous wording

Other expense, net increased by $0.5 million in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to interest related to long-term debt.

Current wording

Interest and other expense, net increased by $1.0 million and $1.5 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to interest related to long-term debt.

Previous wording

The provision for income taxes for the three months ended March 31, 2024 and 2023, was primarily due tothe accrual of interest and penalties on historic uncertain tax positions.

Current wording

The provision for income taxes for the three and six months ended June 30, 2024 and 2023, was primarily due to the accrual of interest and penalties on historic uncertain tax positions.

Previous wording

Net loss for the three months ended March 31, 2024 was $11.5 million, or a net loss per basic and diluted share of $0.16. This compared to a net loss of $22.6 million, or a net loss per basic and diluted share of $0.34 for the three months ended March 31, 2023. The decrease in net loss is primarily related to higher product and research and development revenues and lower operating expenses.

Current wording

Net loss for the three months ended June 30, 2024 was $22.8 million, or a net loss per basic and diluted share of $0.32. This compared to a net loss of $11.5 million, or a net loss per basic and diluted share of $0.17, for the three months ended June 30, 2023. The increase in net loss was primarily related to lower revenue, partially offset by lower operating expenses during thethree months ended June 30, 2024.

Previous wording

Liquidity is the measurement of our ability to meet working capital needs and to fund capital expenditures. We have historically funded our operations primarily through cash generated from operations, stock option exercises and public and private offerings of our common stock. In addition, pursuant to the Loan Agreement, we received $30.0 million from Innovatus, as Lender, on February 13, 2024 and may become eligible to borrow up to an additional $10.0 million upon the achievement of certain financial milestones. We actively manage our cash usage and investment of liquid cash to ensure the maintenance of sufficient funds to meet our working capital needs. Our cash and cash equivalents are held in U.S. banks.

Current wording

Liquidity is the measurement of our ability to meet working capital needs and to fund capital expenditures. We have historically funded our operations primarily through cash generated from operations, stock option exercises and public and private offerings of our common stock. In addition, pursuant to our five-year term loan and security agreement (the “Loan Agreement”) with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”), an affiliate of Innovatus Capital Partners, LLC, we borrowed $30.0 million from Innovatus, as Lender, on February 13, 2024 and may become eligible to borrow up to an additional $10.0 million upon the achievement of certain financial milestones. The Loan Agreement provides for an aggregate principal amount of up to $40.0 million and with a maturity date of February 13, 2029 (the “Innovatus Loan”). We actively manage our cash usage and investment of liquid cash to ensure the maintenance of sufficient funds to meet our working capital needs. Our cash and cash equivalents are held in U.S. banks.

Previous wording

In addition to our existing cash and cash equivalents and revenue generated through our existing operations, we are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives under our collaboration agreements. Our ability to earn these milestone and contingent payments and the timing of achieving these milestones is primarily dependent upon the outcome of our collaborators’ research and development activities and is uncertain at this time.

Current wording

In addition to our existing cash and cash equivalents, short-term investments and revenue generated through our existing operations, we are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives under our collaboration agreements. Our ability to earn these milestone and contingent payments and the timing of achieving these milestones is primarily dependent upon the outcome of our collaborators’ research and development activities and is uncertain at this time.

Previous wording

On February 13, 2024, we entered into the Loan Agreement with Innovatus consisting of two tranches, of which the first tranche of$30.0 million was completed upon execution of the Loan Agreement. We will be eligible to draw on the second tranche of$10.0 million upon achievement of certain milestones including certain pre-specified revenue thresholds. The Term Loan carries an interest-only period of 36 months and will bear an interest at a floating rate of the sum of (a) the greater of (i) prime rate and (ii)7.50%, plus (b)3.25%.

Current wording

On February 13, 2024, we entered into the Loan Agreement with Innovatus consisting of two tranches, of which the first tranche of$30.0 million was completed upon execution of the Loan Agreement. We will be eligible to draw on the second tranche of$10.0 million upon achievement of certain milestones including certain pre-specified revenue thresholds. The Loan Agreement carries an interest-only period of 36 months and will bear an interest at a floating rate of the sum of (a) the greater of (i) prime rate and (ii)7.50%, plus (b)3.25%.

Previous wording

In May 2021, we entered into an Equity Distribution Agreement (“EDA”) with Piper Sandler & Co (“PSC”), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of$50.0 million of shares of our common stock. In 2023, 3,079,421 shares of our common stock were issued and sold pursuant to the EDA, all during the first half of 2023, and we received net proceeds of $7.9 million. As of March 31, 2024, $41.3 million of shares remained available for sale under the EDA. The registration statement registering the offer and sale of the shares pursuant to the EDA is set to expire on May 7, 2024. On April 24, 2024, we terminated the EDA.

Current wording

In May 2021, we entered into an Equity Distribution Agreement (“EDA”) with Piper Sandler & Co (“PSC”), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of$50.0 million of shares of our common stock. In 2023, 3,079,421 shares of our common stock were issued and sold pursuant to the EDA, all during the first half of 2023, and we received net proceeds of $7.9 million. On April 24, 2024, we terminated the EDA.

Previous wording

On May 2, 2024, we entered into a Controlled Equity Offering℠ Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), under which Cantor, at our discretion and at such times that we may determine from time to time, may sell up to a maximum of $75.0 million of shares of our common stock. Under the terms of the Cantor Sales Agreement, Cantor may sell the shares at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. We intend to file a registration statement on Form S-3 registering the offer and sale of these shares under the Securities Act. We will pay a commission of up to 3.0%of gross sales proceeds of any common stock sold under the Cantor Sales Agreement.

Current wording

On May 2, 2024, we entered into a Controlled Equity Offering℠ Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), under which Cantor, at our discretion and at such times that we may determine from time to time, may sell up to a maximum of $75.0 million of shares of our common stock. Under the terms of the Cantor Sales Agreement, Cantor may sell the shares at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. On May 2, 2024, we filed a registration statement on Form S-3 registering the offer and sale of these shares under the Securities Act which became effective on May 14, 2024. We will pay a commission of up to 3.0%of gross sales proceeds of any common stock sold under the Cantor Sales Agreement. We have made no sales under the Cantor Sales Agreement andas of June 30, 2024,$75.0 million of shares remained available for sale under the Cantor Sales Agreement.

Previous wording

The following is a summary of cash flows for three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following is a summary of cash flows for six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

The $1.4 million decrease in net cash used in operations for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to the net effect of decreases in cash paid for operating expenses, primarily driven by the restructuring of our business in 2023 which included the assignment of our San Carlos facility lease in the fourth quarter of 2023, and changes in operating assets and liabilities.

Current wording

The $5.3 million decrease in net cash used in operating activities for the six months ended June 30, 2024 as compared to the same period in 2023, was primarily due to the net effect of decreases in cash paid for operating expenses, primarily driven by the restructuring of our business in 2023 which included the assignment of our San Carlos facility lease in the fourth quarter of 2023, and changes in operating assets and liabilities.

Previous wording

The $25.3 million increase in net cash used in investing activities for the three months ended March 31, 2024 as compared to the same period in 2023, was primarily due to higher cash utilized for purchase of short-term investments.

Current wording

The $50.8 million increase in net cash used in investing activities for the six months ended June 30, 2024 as compared to the same period in 2023, was primarily due to higher cash utilized for purchases of short-term investments, partially offset by lower purchases of property and equipment during the period.

Previous wording

The $27.9 million increase in net cash provided by financing activities for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to proceeds from the Innovatus Loan in February 2024.

Current wording

The $20.8 million increase in net cash provided by financing activities for the six months ended June 30, 2024 as compared to the same period in 2023 was primarily due to proceeds from the Innovatus Loan in February 2024, partially offset by proceeds from issuance of common stock under the EDA during thesix months ended June 30, 2023.

Previous wording

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions in the preparation of our consolidated financial statements and accompanying notes. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies or estimates during the three months ended March 31, 2024 from those discussed in our Annual Report.

Current wording

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions in the preparation of our consolidated financial statements and accompanying notes. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies or estimates during the three and six months ended June 30, 2024 from those discussed in our Annual Report.