CODEXIS INC

Previous wording

In December 2023, we entered into an acquisition agreement (the “Acquisition Agreement”) with Nestlé Health Science, pursuant to which we agreed to assign our interests in CDX-7108 (including associated agreements and intellectual property rights) to Nestlé Health Science. Under the terms of the Acquisition Agreement, Nestlé Health Science will be solely responsible for the continued development and commercialization of CDX-7108, including all associated costs, and Codexis will receive upfront payment, future potential milestone payments and net-sales based royalties. We recognized research and development revenue of $5.0 million during the fourth quarter of 2023 related to the Acquisition Agreement and received the $5.0 million upfront fee in January 2024.

Current wording

In December 2023, we entered into an acquisition agreement (the “Acquisition Agreement”) with Nestlé Health Science, pursuant to which we agreed to assign our interests in CDX-7108 (including associated agreements and intellectual property rights) to Nestlé Health Science. Under the terms of the Acquisition Agreement, Nestlé Health Science will be solely responsible for the continued development and commercialization of CDX-7108, including all associated costs, and Codexis received an upfront payment, and will receive future potential milestone payments and net-sales based royalties. We recognized $5.0 million in research and development revenue during the fourth quarter of 2023 related to the Acquisition Agreement, with the $5.0 million upfront fee received in January 2024.

Previous 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.

Current wording

No product revenue was recognized from the Pfizer Supply Agreement during the three and nine months ended September 30, 2024 and 2023. As of September 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 (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.

Current wording

In October 2017, we entered into the Nestlé Strategic Collaboration Agreement (the “Nestlé 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

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.

Current wording

Both the Nestlé SCA and the development agreement were terminated under the Nestlé Acquisition Agreement. Under the Nestlé SCA and the development agreement, we recognized nil in research and development fees for the three and nine months ended September 30, 2024, compared to $0.6 million and $4.1 million for the three and nine months ended September 30, 2023, respectively.

Previous 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.

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 received 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

Total revenues decreased by $13.3 million and by $9.3 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to lower product revenue and lower research and development revenue.

Current wording

Total revenues increased by $3.6 million inthe three months ended September 30, 2024 compared to the same period in 2023 primarily due to higher product revenue, which was partially offset by lower research and development revenue. Total revenues decreased by $5.7 million in thenine months ended September 30, 2024 compared to the same period in 2023 primarily due to lower research and development revenue.

Previous wording

Product revenue decreased by $4.8 million and $3.6 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to lower sales of branded pharmaceutical products and with the prior year benefiting from the $2.9 million release of prior periods' product revenue deferrals during the second quarter of 2023 due to early termination of the enzyme supply obligations to a customer for a deprioritized asset related to a prior restructuring of our business.

Current wording

Product revenue increased by $5.8 million and $2.2 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to higher sales of branded pharmaceutical products. This increase was partially offset with the prior year benefiting from the $2.9 million release of prior periods' product revenue deferrals during the second quarter of 2023 due to early termination of the enzyme supply obligations to a customer for a deprioritized asset related to a prior restructuring of our business, and $1.3 million of product revenue recognized during the third quarter of 2023 as a settlement fee pursuant to the enzyme supply agreement with the same customer.

Previous 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.

Current wording

Research and development revenue decreased by $7.9 million in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to the recognition of $6.3 million in non-cash revenue related to our license and our master service agreements with Pfizer in the nine months ended September 30, 2023, $4.1 million lower research and development fees from Nestlé Health Science, $1.6 million lower revenue from Takeda Pharmaceutical Co. Ltd. under a Strategic Collaboration and License Agreement and $2.8 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 $0.9 million higher revenue from existing collaboration agreements recognized in the current year.

Previous wording

Cost of product revenue increased by $0.3 million and $0.6 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to variations in product mix.

Current wording

Cost of product revenue increased by $2.1 million and $2.7 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to a higher volume of product sales.

Previous wording

Product gross margins were 45% and 47%in the three and six months ended June 30, 2024, respectively, compared to 71% and 60% in the corresponding periods in 2023 due to variability in the product mix and with 2023 benefiting from revenue recognized with no related cost in the second quarter of 2023 related to the early termination of an enzyme supply agreement with a customer for a deprioritized asset related to a prior restructuring of our business.

Current wording

Product gross margins were 61% and 53%in the three and nine months ended September 30, 2024, respectively, compared to 58% and 60% in the corresponding periods in 2023 due to variability in the product mix and with 2023 benefiting from revenue recognized with no related cost in the second and third quarters of 2023 related to the early termination of an enzyme supply agreement with a customer for a deprioritized asset related to a prior restructuring of our business.

Previous wording

Research and development expenses decreased by $5.9 million, or 34%, in the three months ended June 30, 2024 compared to the same period in 2023 primarily due to a $2.3 million decrease in costs associated with lower headcount, $1.8 million decrease from lower use of outside services related to Chemistry, Manufacturing and Controls (“CMC”) and lower regulatory expenses, $1.3 million decrease in lease and facilities costs due to the assignment of our San Carlos facility lease during the fourth quarter of 2023, and $0.2 million lower stock-based compensation costs. The decrease in research and development expenses of $11.3 million, or 33%, in the six months ended June 30, 2024, compared to the same period in 2023, was primarily due to a $4.8 million decrease in costs associated with lower headcount, $3.0 million decrease in CMC and outside services, $2.8 million decrease from lower lease and facilities associated costs, and $0.5 million lower lab supply costs.

Current wording

Research and development expenses decreased by $2.2 million, or 16%, in the three months ended September 30, 2024 compared to the same period in 2023 primarily due to a $1.3 million decrease from lower use of outside services related to Chemistry, Manufacturing and Controls (“CMC”) and lower regulatory expenses and$0.9 million decrease in lease and facilities costs due to the assignment of our San Carlos facility lease during the fourth quarter of 2023, partially offset by a $0.2 million increase in costs associated with headcount. The decrease in research and development expenses of $13.5 million, or 28%, in the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to a$4.8 million decrease in CMC and outside services,$4.6 million decrease in costs associated with lower headcount,$3.7 million decrease from lower lease and facilities associated costs, $0.4 million lower lab supply, and a $0.2 million decrease in depreciation costs.

Previous wording

Selling, general and administrative expenses increased by $2.3 million, or 17%, during the three months ended June 30, 2024, compared to the same period in 2023 primarily due to $2.1 million higher stock-based compensation expense, $0.7 million higher legal expense and $0.2 million increase in facilities associated costs, partially offset by a $0.9 million decrease in costs associated with lower headcount. Selling, general and administrative expenses decreased by $0.2 million, or 1%, during the six months ended June 30, 2024 as compared to the same period in 2023 primarily due to a $2.9 million decrease in costs associated with lower headcount and $0.8 million in lower consulting and outside services, partially offset by $2.5 million higher stock-based compensation expense, a $0.8 million increase in legal costs, and a $0.3 million increase in facilities associated costs.

Current wording

Selling, general and administrative expenses increased by $1.3 million, or 10%, during the three months ended September 30, 2024, compared to the same period in 2023 primarily due to $1.2 million in higher consulting and outside services and a $0.3 million higher legal expense. Selling, general and administrative expenses increased by $1.0 million, or 3%, during the nine months ended September 30, 2024 as compared to the same period in 2023 primarily due to a $2.6 million higher stock-based compensation expense, a $1.1 million increase in legal costs, and a $0.7 million increase in consulting and outside services, partially offset by $2.8 million decrease in payroll-related expenses, and a $0.5 million decrease in facility associated costs.

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 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.

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 nine months ended September 30, 2024. Restructuring charges were $3.1 million and $3.3 million for the three and nine months ended September 30, 2023, respectively.

Previous 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.

Current wording

Interest income decreased by $0.2 million and $0.5 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to lower average cash balances.

Previous 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.

Current wording

Interest and other expense, net increasedby $1.0 million and $2.5 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to the impairment of our investment in MAI during the third quarter of 2024 and interest related to long-term debt in the current year, partially offset by the impairment of our investments in seqWell and Arzeda recognized in 2023.

Previous 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.

Current wording

The provision for income taxes for the three and nine months ended September 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 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.

Current wording

Net loss for the three months ended September 30, 2024 was $20.6 million, or a net loss per basic and diluted share of $0.29. This compared to a net loss of $34.9 million, or a net loss per basic and diluted share of $0.50, for the three months ended September 30, 2023. Net loss for the nine months ended September 30, 2024 was $54.9 million, or a net loss per basic and diluted share of $0.78. This compared to a net loss of $69.0 million, or a net loss per basic and diluted share of $1.02, for the nine months ended September 30, 2023. The decrease in net loss for both thethree and nine months ended September 30, 2024, was primarily related to higher product revenue and lower operating expenses in 2024.

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 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%.

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%. The Company believes it is in compliance with the terms included within the Innovatus Loanas of September 30, 2024.

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. 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.

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. During thethree and nine months ended September 30, 2024,10,440,000 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement and we received gross proceeds of$31.3 million, or$29.7 million in net proceeds after Cantor’s commissions and direct offering expenses of$1.6 million. As of September 30, 2024, $43.7 million of shares remained available for sale under the Cantor Sales Agreement.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous 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.

Current wording

The $8.7 million decrease in net cash used in operating activities for the nine months ended September 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 $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.

Current wording

The $48.2 million increase in net cash used in investing activities for the nine months ended September 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 $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.

Current wording

The $51.2 million increase in net cash provided by financing activities for the nine months ended September 30, 2024 as compared to the same period in 2023 was primarily due to proceeds from the Innovatus Loan in February 2024 and proceeds from issuance of common stock under the Cantor Sales Agreement, partially offset by proceeds from issuance of common stock under the EDA during the nine months ended September 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 and six months ended June 30, 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 nine months ended September 30, 2024 from those discussed in our Annual Report.