x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
71-0872999
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
200 Penobscot Drive, Redwood City, California
|
|
94063
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
¨
|
|
Accelerated filer
|
x
|
Non-accelerated filer
|
¨
|
|
Smaller reporting company
|
¨
|
|
|
|
Emerging growth company
|
¨
|
|
PAGE
NUMBER
|
|
|
||
PART I. FINANCIAL INFORMATION
|
||
|
|
|
ITEM 1:
|
|
|
|
||
|
||
|
||
|
||
|
||
ITEM 2:
|
||
ITEM 3:
|
||
ITEM 4:
|
||
|
|
|
|
|
|
ITEM 1:
|
||
ITEM 1A:
|
||
ITEM 2:
|
||
ITEM 3:
|
||
ITEM 4:
|
||
ITEM 5:
|
||
ITEM 6:
|
||
|
September 30,
2018 |
|
December 31,
2017 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
54,225
|
|
|
$
|
31,219
|
|
Accounts receivable, net of allowances of $34 at September 30, 2018 and December 31, 2017
|
9,308
|
|
|
11,800
|
|
||
Inventories, net
|
830
|
|
|
1,036
|
|
||
Prepaid expenses and other current assets
|
2,219
|
|
|
984
|
|
||
Contract assets
|
1,868
|
|
|
—
|
|
||
Total current assets
|
68,450
|
|
|
45,039
|
|
||
Restricted cash
|
1,422
|
|
|
1,557
|
|
||
Marketable securities
|
652
|
|
|
671
|
|
||
Property and equipment, net
|
4,531
|
|
|
2,815
|
|
||
Goodwill
|
3,241
|
|
|
3,241
|
|
||
Other non-current assets
|
304
|
|
|
302
|
|
||
Total assets
|
$
|
78,600
|
|
|
$
|
53,625
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,280
|
|
|
$
|
3,545
|
|
Accrued compensation
|
5,162
|
|
|
4,753
|
|
||
Other accrued liabilities
|
5,933
|
|
|
4,362
|
|
||
Deferred revenue
|
4,253
|
|
|
12,292
|
|
||
Total current liabilities
|
17,628
|
|
|
24,952
|
|
||
Deferred revenue, net of current portion
|
4,431
|
|
|
1,501
|
|
||
Lease incentive obligation, net of current portion
|
142
|
|
|
460
|
|
||
Financing obligation, net of current portion
|
122
|
|
|
302
|
|
||
Other long-term liabilities
|
1,504
|
|
|
1,863
|
|
||
Total liabilities
|
23,827
|
|
|
29,078
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 11)
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.0001 par value per share; 5,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value per share; 100,000 shares authorized; 53,935 shares and 48,365 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
384,782
|
|
|
340,079
|
|
||
Accumulated other comprehensive loss
|
—
|
|
|
(472
|
)
|
||
Accumulated deficit
|
(330,014
|
)
|
|
(315,065
|
)
|
||
Total stockholders' equity
|
54,773
|
|
|
24,547
|
|
||
Total liabilities and stockholders' equity
|
$
|
78,600
|
|
|
$
|
53,625
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Product revenue
|
$
|
8,405
|
|
|
$
|
6,948
|
|
|
$
|
18,291
|
|
|
$
|
19,134
|
|
Research and development revenue
|
8,541
|
|
|
3,036
|
|
|
26,235
|
|
|
9,167
|
|
||||
Total revenues
|
16,946
|
|
|
9,984
|
|
|
44,526
|
|
|
28,301
|
|
||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of product revenue
|
3,791
|
|
|
3,976
|
|
|
10,228
|
|
|
10,768
|
|
||||
Research and development
|
7,917
|
|
|
8,055
|
|
|
22,464
|
|
|
20,242
|
|
||||
Selling, general and administrative
|
7,344
|
|
|
7,989
|
|
|
22,485
|
|
|
21,141
|
|
||||
Total costs and operating expenses
|
19,052
|
|
|
20,020
|
|
|
55,177
|
|
|
52,151
|
|
||||
Loss from operations
|
(2,106
|
)
|
|
(10,036
|
)
|
|
(10,651
|
)
|
|
(23,850
|
)
|
||||
Interest income
|
199
|
|
|
28
|
|
|
444
|
|
|
96
|
|
||||
Other expenses, net
|
(80
|
)
|
|
(68
|
)
|
|
(221
|
)
|
|
(80
|
)
|
||||
Loss before income taxes
|
(1,987
|
)
|
|
(10,076
|
)
|
|
(10,428
|
)
|
|
(23,834
|
)
|
||||
Provision for (benefit from) income taxes
|
1
|
|
|
150
|
|
|
(11
|
)
|
|
132
|
|
||||
Net loss
|
$
|
(1,988
|
)
|
|
$
|
(10,226
|
)
|
|
$
|
(10,417
|
)
|
|
$
|
(23,966
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share, basic and diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.53
|
)
|
Weighted average common stock shares used in computing net loss per share, basic and diluted
|
53,597
|
|
|
48,147
|
|
|
51,609
|
|
|
45,568
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
$
|
(1,988
|
)
|
|
$
|
(10,226
|
)
|
|
$
|
(10,417
|
)
|
|
$
|
(23,966
|
)
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on marketable securities, net of tax
(1)
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
13
|
|
||||
Other comprehensive income (loss)
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
13
|
|
||||
Total comprehensive loss
|
$
|
(1,988
|
)
|
|
$
|
(10,316
|
)
|
|
$
|
(10,417
|
)
|
|
$
|
(23,953
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(10,417
|
)
|
|
$
|
(23,966
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation
|
812
|
|
|
795
|
|
||
Gain on disposal of property and equipment
|
—
|
|
|
(5
|
)
|
||
Income tax benefit related to marketable securities
|
—
|
|
|
(8
|
)
|
||
Stock-based compensation
|
6,207
|
|
|
5,212
|
|
||
Unrealized gain on investment in marketable securities
|
20
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
3,556
|
|
|
(1,757
|
)
|
||
Inventories, net
|
206
|
|
|
(24
|
)
|
||
Prepaid expenses and other current assets
|
(1,188
|
)
|
|
(1,303
|
)
|
||
Contract Assets
|
(1,868
|
)
|
|
—
|
|
||
Other assets
|
188
|
|
|
(68
|
)
|
||
Accounts payable
|
(1,686
|
)
|
|
150
|
|
||
Accrued compensation
|
409
|
|
|
(519
|
)
|
||
Other accrued liabilities
|
1,332
|
|
|
2,287
|
|
||
Long term lease incentive
|
(319
|
)
|
|
(319
|
)
|
||
Other long term liabilities
|
(391
|
)
|
|
(60
|
)
|
||
Deferred revenue
|
(10,235
|
)
|
|
3,204
|
|
||
Net cash used in operating activities
|
(13,374
|
)
|
|
(16,381
|
)
|
||
Investing activities:
|
|
|
|
||||
Purchase of property and equipment
|
(2,074
|
)
|
|
(743
|
)
|
||
Proceeds from disposal of property and equipment
|
1
|
|
|
5
|
|
||
Net cash used in investing activities
|
(2,073
|
)
|
|
(738
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from exercises of stock options
|
4,319
|
|
|
175
|
|
||
Proceeds from issuance of common stock in connection with public offering, net of underwriting discounts and commission
|
37,497
|
|
|
23,782
|
|
||
Costs incurred in connection with public offering
|
(180
|
)
|
|
(553
|
)
|
||
Principal payments on capital lease obligations
|
(178
|
)
|
|
(117
|
)
|
||
Taxes paid related to net share settlement of equity awards
|
(3,140
|
)
|
|
(1,670
|
)
|
||
Net cash provided by financing activities
|
38,318
|
|
|
21,617
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
22,871
|
|
|
4,498
|
|
||
Cash, cash equivalents and restricted cash at the beginning of the period
|
32,776
|
|
|
20,864
|
|
||
Cash, cash equivalents and restricted cash at the end of the period
|
$
|
55,647
|
|
|
$
|
25,362
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
61
|
|
|
$
|
131
|
|
Income taxes paid
|
$
|
5
|
|
|
$
|
32
|
|
Supplemental non-cash investing and financing activities:
|
|
|
|
||||
Equipment acquired under capital leases
|
$
|
—
|
|
|
$
|
840
|
|
Purchase of property and equipment recorded in accounts payable and accrued expenses
|
$
|
420
|
|
|
$
|
20
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
54,225
|
|
|
$
|
23,826
|
|
Restricted cash included in non-current assets
|
1,422
|
|
|
1,536
|
|
||
Total cash, cash equivalents and restricted cash at the end of the period
|
$
|
55,647
|
|
|
$
|
25,362
|
|
•
|
Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
|
•
|
Level 2: Inputs that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
|
•
|
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
|
|
Three months ended September 30, 2018
|
|
Three months ended September 30, 2017
|
||||||||||||||||||||
(in thousands)
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
||||||||||||
Major products and service:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product Revenue
|
$
|
8,405
|
|
|
$
|
—
|
|
|
$
|
8,405
|
|
|
$
|
6,948
|
|
|
$
|
—
|
|
|
$
|
6,948
|
|
Research and development revenue
|
3,720
|
|
|
4,821
|
|
|
8,541
|
|
|
3,036
|
|
|
—
|
|
|
3,036
|
|
||||||
Total revenues
|
$
|
12,125
|
|
|
$
|
4,821
|
|
|
$
|
16,946
|
|
|
$
|
9,984
|
|
|
$
|
—
|
|
|
$
|
9,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Primary geographical markets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Americas
|
$
|
4,315
|
|
|
$
|
—
|
|
|
$
|
4,315
|
|
|
$
|
3,606
|
|
|
$
|
—
|
|
|
$
|
3,606
|
|
EMEA
|
1,453
|
|
|
4,821
|
|
|
6,274
|
|
|
3,415
|
|
|
—
|
|
|
3,415
|
|
||||||
APAC
|
6,357
|
|
|
—
|
|
|
6,357
|
|
|
2,963
|
|
|
—
|
|
|
2,963
|
|
||||||
Total revenues
|
$
|
12,125
|
|
|
$
|
4,821
|
|
|
$
|
16,946
|
|
|
$
|
9,984
|
|
|
$
|
—
|
|
|
$
|
9,984
|
|
|
Nine months ended September 30, 2018
|
|
Nine months ended September 30, 2017
|
||||||||||||||||||||
(in thousands)
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
||||||||||||
Major products and service:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product Revenue
|
$
|
18,291
|
|
|
$
|
—
|
|
|
$
|
18,291
|
|
|
$
|
19,134
|
|
|
$
|
—
|
|
|
$
|
19,134
|
|
Research and development revenue
|
15,728
|
|
|
10,507
|
|
|
26,235
|
|
|
9,167
|
|
|
—
|
|
|
9,167
|
|
||||||
Total revenues
|
$
|
34,019
|
|
|
$
|
10,507
|
|
|
$
|
44,526
|
|
|
$
|
28,301
|
|
|
$
|
—
|
|
|
$
|
28,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Primary geographical markets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Americas
|
$
|
13,968
|
|
|
$
|
—
|
|
|
$
|
13,968
|
|
|
$
|
9,795
|
|
|
$
|
—
|
|
|
$
|
9,795
|
|
EMEA
|
4,568
|
|
|
10,507
|
|
|
15,075
|
|
|
8,581
|
|
|
—
|
|
|
8,581
|
|
||||||
APAC
|
15,483
|
|
|
—
|
|
|
15,483
|
|
|
9,925
|
|
|
—
|
|
|
9,925
|
|
||||||
Total revenues
|
$
|
34,019
|
|
|
$
|
10,507
|
|
|
$
|
44,526
|
|
|
$
|
28,301
|
|
|
$
|
—
|
|
|
$
|
28,301
|
|
|
Balance
|
||
Deferred Revenue, balance at December 31, 2017
|
$
|
13,793
|
|
Changes in estimated consideration
|
—
|
|
|
Unsatisfied performance obligations
|
$
|
5,173
|
|
Deferred Revenue, balance at January 1, 2018
|
$
|
18,966
|
|
|
As of September 30, 2018
|
||||||||||||||
|
January 1, 2018 balance
|
|
Additions
|
|
Deductions
(1)
|
|
Ending balance
|
||||||||
Contract Assets
|
$
|
—
|
|
|
$
|
3,953
|
|
|
$
|
(2,085
|
)
|
|
$
|
1,868
|
|
Contract Costs
|
239
|
|
|
—
|
|
|
(176
|
)
|
|
63
|
|
||||
Contract Liabilities: Deferred Revenue
|
18,966
|
|
|
6,446
|
|
|
(16,728
|
)
|
|
8,684
|
|
Revenue recognized in the period from:
|
Three months ended September 30, 2018
|
|
Nine months ended September 30, 2018
|
||||
Amounts included in contract liabilities at the beginning of the period:
|
|
|
|
||||
Performance obligations satisfied
|
$
|
4,052
|
|
|
$
|
12,873
|
|
Changes in the period:
|
|
|
|
||||
Changes in the estimated transaction price allocated to performance obligations satisfied in prior periods
|
(229
|
)
|
|
(165
|
)
|
||
Performance obligations satisfied from new activities in the period - contract revenue
|
13,123
|
|
|
31,818
|
|
||
Total revenue
|
$
|
16,946
|
|
|
$
|
44,526
|
|
(in thousands)
|
2018
|
|
2019
|
|
2020
|
|
2021 and Thereafter
|
|
Total
|
||||||||||
Product Revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,784
|
|
|
$
|
1,623
|
|
|
$
|
4,407
|
|
Research and development revenue
|
3,952
|
|
|
325
|
|
|
—
|
|
|
—
|
|
|
4,277
|
|
|||||
Total
|
$
|
3,952
|
|
|
$
|
325
|
|
|
$
|
2,784
|
|
|
$
|
1,623
|
|
|
$
|
8,684
|
|
|
Three months ended September 30, 2018
|
|
Nine months ended September 30, 2018
|
||||||||||||||||||||
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product revenue
|
$
|
8,405
|
|
|
$
|
(2,935
|
)
|
|
$
|
5,470
|
|
|
$
|
18,291
|
|
|
$
|
(5,904
|
)
|
|
$
|
12,387
|
|
Research and development revenue
|
8,541
|
|
|
1,975
|
|
|
10,516
|
|
|
26,235
|
|
|
(496
|
)
|
|
25,739
|
|
||||||
Total revenues
|
16,946
|
|
|
(960
|
)
|
|
15,986
|
|
|
44,526
|
|
|
(6,400
|
)
|
|
38,126
|
|
||||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of product revenue
|
3,791
|
|
|
(441
|
)
|
|
3,350
|
|
|
10,228
|
|
|
(1,796
|
)
|
|
8,432
|
|
||||||
Research and development
|
7,917
|
|
|
(96
|
)
|
|
7,821
|
|
|
22,464
|
|
|
(176
|
)
|
|
22,288
|
|
||||||
Selling, general and administrative
|
7,344
|
|
|
—
|
|
|
7,344
|
|
|
22,485
|
|
|
—
|
|
|
22,485
|
|
||||||
Total costs and operating expenses
|
19,052
|
|
|
(537
|
)
|
|
18,515
|
|
|
55,177
|
|
|
(1,972
|
)
|
|
53,205
|
|
||||||
Loss from operations
|
(2,106
|
)
|
|
(423
|
)
|
|
(2,529
|
)
|
|
(10,651
|
)
|
|
(4,428
|
)
|
|
(15,079
|
)
|
||||||
Interest income
|
199
|
|
|
—
|
|
|
199
|
|
|
444
|
|
|
—
|
|
|
444
|
|
||||||
Other expenses
|
(80
|
)
|
|
—
|
|
|
(80
|
)
|
|
(221
|
)
|
|
—
|
|
|
(221
|
)
|
||||||
Loss before income taxes
|
(1,987
|
)
|
|
(423
|
)
|
|
(2,410
|
)
|
|
(10,428
|
)
|
|
(4,428
|
)
|
|
(14,856
|
)
|
||||||
Provision for (benefit from) income taxes
|
1
|
|
|
—
|
|
|
1
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
||||||
Net loss
|
$
|
(1,988
|
)
|
|
$
|
(423
|
)
|
|
$
|
(2,411
|
)
|
|
$
|
(10,417
|
)
|
|
$
|
(4,428
|
)
|
|
$
|
(14,845
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss per share, basic and diluted
|
$
|
(0.04
|
)
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.29
|
)
|
Weighted average common shares used in computing net loss per share, basic and diluted
|
53,597
|
|
|
|
|
53,597
|
|
|
51,609
|
|
|
|
|
51,609
|
|
|
As of September 30, 2018
|
||||||||||
|
As reported
|
|
Adjustments
|
|
Balances without adoption of Topic 606
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts Receivable
|
$
|
9,308
|
|
|
$
|
(1,860
|
)
|
|
$
|
7,448
|
|
Contract Assets
|
1,868
|
|
|
(1,868
|
)
|
|
—
|
|
|||
Inventory
|
830
|
|
|
116
|
|
|
946
|
|
|||
Other non-current assets
|
304
|
|
|
(63
|
)
|
|
241
|
|
|||
Liabilities
|
|
|
|
|
|
||||||
Other accrued liabilities
|
5,933
|
|
|
(1,916
|
)
|
|
4,017
|
|
|||
Deferred revenue - current
|
4,253
|
|
|
(655
|
)
|
|
3,598
|
|
|||
Deferred revenue - non-current
|
4,431
|
|
|
(734
|
)
|
|
3,697
|
|
|||
Stockholders' equity
|
|
|
|
|
|
|
|
|
|||
Accumulated deficit
|
(330,014
|
)
|
|
(369
|
)
|
|
(330,383
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Shares of common stock issuable pursuant to equity awards outstanding under the Equity Incentive Plan
|
7,607
|
|
|
7,494
|
|
|
7,607
|
|
|
7,494
|
|
|
September 30, 2018
|
||||||||||||||
|
Adjusted Cost
|
|
Gross Unrealized
Gains |
|
Gross Unrealized
Losses |
|
Estimated
Fair Value |
||||||||
Money market funds
(1)
|
$
|
31,058
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,058
|
|
Common shares of CO2 Solutions
(2)
|
563
|
|
|
89
|
|
|
—
|
|
|
652
|
|
||||
Total
|
$
|
31,621
|
|
|
$
|
89
|
|
|
$
|
—
|
|
|
$
|
31,710
|
|
|
December 31, 2017
|
||||||||||||||
|
Adjusted Cost
|
|
Gross Unrealized
Gains |
|
Gross Unrealized
Losses |
|
Estimated
Fair Value |
||||||||
Money market funds
(1)
|
$
|
6,778
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,778
|
|
Common shares of CO2
Solutions
(2)
|
563
|
|
|
108
|
|
|
—
|
|
|
671
|
|
||||
Total
|
$
|
7,341
|
|
|
$
|
108
|
|
|
$
|
—
|
|
|
$
|
7,449
|
|
|
September 30, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Money market funds
(1)
|
$
|
31,058
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,058
|
|
Common shares of CO2 Solutions
(2)
|
—
|
|
|
652
|
|
|
—
|
|
|
652
|
|
||||
Total
|
$
|
31,058
|
|
|
$
|
652
|
|
|
$
|
—
|
|
|
$
|
31,710
|
|
|
December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Money market funds
(1)
|
$
|
6,778
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,778
|
|
Common shares of CO2
Solutions
(2)
|
—
|
|
|
671
|
|
|
—
|
|
|
671
|
|
||||
Total
|
$
|
6,778
|
|
|
$
|
671
|
|
|
$
|
—
|
|
|
$
|
7,449
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
159
|
|
|
$
|
215
|
|
Work-in-process
|
79
|
|
|
53
|
|
||
Finished goods
|
2,035
|
|
|
2,147
|
|
||
Less: reserve
|
(1,443
|
)
|
|
(1,379
|
)
|
||
Inventories, net
|
$
|
830
|
|
|
$
|
1,036
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Laboratory equipment
(1)
|
$
|
21,184
|
|
|
$
|
19,777
|
|
Leasehold improvements
|
10,359
|
|
|
10,327
|
|
||
Computer equipment and software
|
3,901
|
|
|
3,695
|
|
||
Office equipment and furniture
|
1,195
|
|
|
1,185
|
|
||
Construction in progress
(2)
|
663
|
|
|
85
|
|
||
Property and equipment
|
37,302
|
|
|
35,069
|
|
||
Less: accumulated depreciation
|
(32,771
|
)
|
|
(32,254
|
)
|
||
Property and equipment, net
|
$
|
4,531
|
|
|
$
|
2,815
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Accrued purchases
(1)
|
$
|
688
|
|
|
$
|
941
|
|
Accrued professional and outside service fees
|
2,229
|
|
|
2,393
|
|
||
Accrued expenses - cost of sales over time recognition
|
1,761
|
|
|
—
|
|
||
Deferred rent
|
318
|
|
|
258
|
|
||
Lease incentive obligation
|
425
|
|
|
425
|
|
||
Other
|
512
|
|
|
345
|
|
||
Total
|
$
|
5,933
|
|
|
$
|
4,362
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Research and development
|
$
|
552
|
|
|
$
|
386
|
|
|
$
|
1,555
|
|
|
$
|
1,050
|
|
Selling, general and administrative
|
1,218
|
|
|
1,447
|
|
|
4,652
|
|
|
4,162
|
|
||||
Total
|
$
|
1,770
|
|
|
$
|
1,833
|
|
|
$
|
6,207
|
|
|
$
|
5,212
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock options
|
$
|
472
|
|
|
$
|
393
|
|
|
$
|
1,482
|
|
|
$
|
1,107
|
|
RSUs and RSAs
|
416
|
|
|
456
|
|
|
1,293
|
|
|
1,399
|
|
||||
PSUs
|
407
|
|
|
385
|
|
|
1,251
|
|
|
1,373
|
|
||||
PBOs
|
475
|
|
|
599
|
|
|
2,181
|
|
|
1,333
|
|
||||
Total
|
$
|
1,770
|
|
|
$
|
1,833
|
|
|
$
|
6,207
|
|
|
$
|
5,212
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||
|
|
|
(1)
|
|
|
|
|
|||||||
Expected term (in years)
|
5.7
|
|
|
—
|
|
|
5.6
|
|
|
5.3
|
|
|||
Volatility
|
57
|
%
|
|
—
|
|
|
60
|
%
|
|
62
|
%
|
|||
Risk-free interest rate
|
2.78
|
%
|
|
—
|
|
|
2.70
|
%
|
|
2.02
|
%
|
|||
Dividend yield
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Weighted-average estimated fair value of stock options granted
|
$
|
8.39
|
|
|
—
|
|
|
$
|
5.10
|
|
|
$
|
2.52
|
|
|
Common Stock
|
|
Additional
paid-in Capital |
|
Accumulated Other
Comprehensive Income (Loss) |
|
Accumulated Deficit
|
|
Total Stockholders' Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2016
|
41,255
|
|
|
$
|
4
|
|
|
$
|
311,164
|
|
|
$
|
—
|
|
|
$
|
(292,069
|
)
|
|
$
|
19,099
|
|
Exercise of stock options
|
64
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
—
|
|
|
175
|
|
|||||
Release of stock awards
|
1,096
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
5,212
|
|
|
—
|
|
|
—
|
|
|
5,212
|
|
|||||
Net shares settlements for taxes
|
(397
|
)
|
|
—
|
|
|
(1,670
|
)
|
|
—
|
|
|
—
|
|
|
(1,670
|
)
|
|||||
Issuance of common stock, net of issuance costs of $553
|
6,325
|
|
|
1
|
|
|
23,229
|
|
|
—
|
|
|
—
|
|
|
23,230
|
|
|||||
Total comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
(23,966
|
)
|
|
(23,953
|
)
|
|||||
Balance at September 30, 2017
|
48,343
|
|
|
$
|
5
|
|
|
$
|
338,110
|
|
|
$
|
13
|
|
|
$
|
(316,035
|
)
|
|
$
|
22,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2017
|
48,365
|
|
|
$
|
5
|
|
|
$
|
340,079
|
|
|
$
|
(472
|
)
|
|
$
|
(315,065
|
)
|
|
$
|
24,547
|
|
Exercise of stock options
|
730
|
|
|
—
|
|
|
4,319
|
|
|
—
|
|
|
—
|
|
|
4,319
|
|
|||||
Release of stock awards
|
824
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
6,183
|
|
|
—
|
|
|
—
|
|
|
6,183
|
|
|||||
Non-employee stock-based compensation
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||
Net shares settlements for taxes
|
(297
|
)
|
|
—
|
|
|
(3,140
|
)
|
|
—
|
|
|
—
|
|
|
(3,140
|
)
|
|||||
Issuance of common stock, net of issuance costs of $180
|
4,313
|
|
|
—
|
|
|
37,317
|
|
|
—
|
|
|
—
|
|
|
37,317
|
|
|||||
ASC 606 Adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,060
|
)
|
|
(4,060
|
)
|
|||||
ASU 2016-01 Adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
472
|
|
|
(472
|
)
|
|
—
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,417
|
)
|
|
(10,417
|
)
|
|||||
Balance at September 30, 2018
|
53,935
|
|
|
$
|
5
|
|
|
$
|
384,782
|
|
|
$
|
—
|
|
|
$
|
(330,014
|
)
|
|
$
|
54,773
|
|
Years ending December 31,
|
Capital Leases
|
|
Operating Leases
|
||||
2018 (remaining 3 months)
|
$
|
62
|
|
|
$
|
799
|
|
2019
|
252
|
|
|
3,280
|
|
||
2020
|
61
|
|
|
712
|
|
||
2021
|
—
|
|
|
490
|
|
||
2022
|
—
|
|
|
41
|
|
||
Total minimum lease payments
(1)
|
375
|
|
|
$
|
5,322
|
|
|
Less: amount representing interest
|
(15
|
)
|
|
|
|||
Present value of capital lease obligations
|
360
|
|
|
|
|||
Less: current portion
|
(238
|
)
|
|
|
|||
Long-term portion of capital leases
|
$
|
122
|
|
|
|
Other Commitment Agreement Type
|
Agreement Date
|
|
Future Minimum Payment
|
||
Manufacture and supply agreement with expected future payment date of December 2022
|
April 2016
|
|
$
|
1,693
|
|
Service agreement for the development of manufacturing process
|
April 2017
|
|
2
|
|
|
Service agreement for stability study
|
July 2017
|
|
335
|
|
|
Service agreement for clinical trial
|
December 2017
|
|
$
|
1,319
|
|
Total other commitments
|
|
|
$
|
3,349
|
|
|
|
Three months ended September 30, 2018
|
|
Three months ended September 30, 2017
|
||||||||||||||||||||
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product revenue
|
|
$
|
8,405
|
|
|
$
|
—
|
|
|
$
|
8,405
|
|
|
$
|
6,948
|
|
|
$
|
—
|
|
|
$
|
6,948
|
|
Research and development revenue
|
|
3,720
|
|
|
4,821
|
|
|
8,541
|
|
|
3,036
|
|
|
—
|
|
|
3,036
|
|
||||||
Total revenues
|
|
12,125
|
|
|
4,821
|
|
|
16,946
|
|
|
9,984
|
|
|
—
|
|
|
9,984
|
|
||||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of product revenue
|
|
3,791
|
|
|
—
|
|
|
3,791
|
|
|
3,976
|
|
|
—
|
|
|
3,976
|
|
||||||
Research and development
(1)
|
|
4,758
|
|
|
2,920
|
|
|
7,678
|
|
|
4,410
|
|
|
3,474
|
|
|
7,884
|
|
||||||
Selling, general and administrative
|
|
1,870
|
|
|
165
|
|
|
2,035
|
|
|
1,649
|
|
|
—
|
|
|
1,649
|
|
||||||
Total segment costs and operating expenses
|
|
10,419
|
|
|
3,085
|
|
|
13,504
|
|
|
10,035
|
|
|
3,474
|
|
|
13,509
|
|
||||||
Income (loss) from operations
|
|
$
|
1,706
|
|
|
$
|
1,736
|
|
|
$
|
3,442
|
|
|
$
|
(51
|
)
|
|
$
|
(3,474
|
)
|
|
$
|
(3,525
|
)
|
Corporate costs
(2)
|
|
|
|
|
|
(5,120
|
)
|
|
|
|
|
|
(6,310
|
)
|
||||||||||
Depreciation
|
|
|
|
|
|
(309
|
)
|
|
|
|
|
|
(241
|
)
|
||||||||||
Loss before income taxes
|
|
|
|
|
|
$
|
(1,987
|
)
|
|
|
|
|
|
$
|
(10,076
|
)
|
|
|
Nine months ended September 30, 2018
|
|
Nine months ended September 30, 2017
|
||||||||||||||||||||
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product revenue
|
|
$
|
18,291
|
|
|
$
|
—
|
|
|
$
|
18,291
|
|
|
$
|
19,134
|
|
|
$
|
—
|
|
|
$
|
19,134
|
|
Research and development revenue
|
|
15,728
|
|
|
10,507
|
|
|
26,235
|
|
|
9,167
|
|
|
—
|
|
|
9,167
|
|
||||||
Total revenues
|
|
34,019
|
|
|
10,507
|
|
|
44,526
|
|
|
28,301
|
|
|
—
|
|
|
28,301
|
|
||||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of product revenue
|
|
10,228
|
|
|
—
|
|
|
10,228
|
|
|
10,768
|
|
|
—
|
|
|
10,768
|
|
||||||
Research and development
(1)
|
|
14,548
|
|
|
7,294
|
|
|
21,842
|
|
|
12,582
|
|
|
7,134
|
|
|
19,716
|
|
||||||
Selling, general and administrative
|
|
5,695
|
|
|
615
|
|
|
6,310
|
|
|
5,238
|
|
|
—
|
|
|
5,238
|
|
||||||
Total segment costs and operating expenses
|
|
30,471
|
|
|
7,909
|
|
|
38,380
|
|
|
28,588
|
|
|
7,134
|
|
|
35,722
|
|
||||||
Income (loss) from operations
|
|
$
|
3,548
|
|
|
$
|
2,598
|
|
|
$
|
6,146
|
|
|
$
|
(287
|
)
|
|
$
|
(7,134
|
)
|
|
$
|
(7,421
|
)
|
Corporate costs
(2)
|
|
|
|
|
|
(15,762
|
)
|
|
|
|
|
|
(15,618
|
)
|
||||||||||
Depreciation
|
|
|
|
|
|
(812
|
)
|
|
|
|
|
|
(795
|
)
|
||||||||||
Loss before income taxes
|
|
|
|
|
|
$
|
(10,428
|
)
|
|
|
|
|
|
$
|
(23,834
|
)
|
|
|
Three months ended September 30, 2018
|
|
Three months ended September 30, 2017
|
||||||||||||||||||||
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
||||||||||||
Stock-based compensation
|
|
$
|
354
|
|
|
$
|
97
|
|
|
$
|
451
|
|
|
$
|
607
|
|
|
$
|
55
|
|
|
$
|
662
|
|
|
|
Nine months ended September 30, 2018
|
|
Nine months ended September 30, 2017
|
||||||||||||||||||||
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
||||||||||||
Stock-based compensation
|
|
$
|
2,005
|
|
|
$
|
243
|
|
|
$
|
2,248
|
|
|
$
|
1,670
|
|
|
$
|
154
|
|
|
$
|
1,824
|
|
|
Percentage of Total Revenues for the
|
||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Customer A
|
27%
|
|
27%
|
|
33%
|
|
37%
|
Customer B
|
28%
|
|
*
|
|
24%
|
|
*
|
Customer C
|
10%
|
|
11%
|
|
17%
|
|
11%
|
Customer D
|
15%
|
|
29%
|
|
11%
|
|
18%
|
Customer E
|
*
|
|
10%
|
|
*
|
|
*
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
4,315
|
|
|
$
|
3,606
|
|
|
$
|
13,968
|
|
|
$
|
9,795
|
|
EMEA
|
6,274
|
|
|
3,415
|
|
|
15,075
|
|
|
8,581
|
|
||||
APAC
|
6,357
|
|
|
2,963
|
|
|
15,483
|
|
|
9,925
|
|
||||
Total revenues
|
$
|
16,946
|
|
|
$
|
9,984
|
|
|
$
|
44,526
|
|
|
$
|
28,301
|
|
Long-lived assets:
|
September 30, 2018
|
|
December 31, 2017
|
||
United States
|
100
|
%
|
|
100
|
%
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three months ended September 30,
|
|
Change
|
|
Nine months ended September 30,
|
|
Change
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product revenue
|
$
|
8,405
|
|
|
$
|
6,948
|
|
|
$
|
1,457
|
|
|
21%
|
|
$
|
18,291
|
|
|
$
|
19,134
|
|
|
$
|
(843
|
)
|
|
(4)%
|
Research and development revenue
|
8,541
|
|
|
3,036
|
|
|
5,505
|
|
|
181%
|
|
26,235
|
|
|
9,167
|
|
|
17,068
|
|
|
186%
|
||||||
Total revenues
|
16,946
|
|
|
9,984
|
|
|
6,962
|
|
|
70%
|
|
44,526
|
|
|
28,301
|
|
|
16,225
|
|
|
57%
|
||||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of product revenue
|
3,791
|
|
|
3,976
|
|
|
(185
|
)
|
|
(5)%
|
|
10,228
|
|
|
10,768
|
|
|
(540
|
)
|
|
(5)%
|
||||||
Research and development
|
7,917
|
|
|
8,055
|
|
|
(138
|
)
|
|
(2)%
|
|
22,464
|
|
|
20,242
|
|
|
2,222
|
|
|
11%
|
||||||
Selling, general and administrative
|
7,344
|
|
|
7,989
|
|
|
(645
|
)
|
|
(8)%
|
|
22,485
|
|
|
21,141
|
|
|
1,344
|
|
|
6%
|
||||||
Total costs and operating expenses
|
19,052
|
|
|
20,020
|
|
|
(968
|
)
|
|
(5)%
|
|
55,177
|
|
|
52,151
|
|
|
3,026
|
|
|
6%
|
||||||
Loss from operations
|
(2,106
|
)
|
|
(10,036
|
)
|
|
7,930
|
|
|
79%
|
|
(10,651
|
)
|
|
(23,850
|
)
|
|
13,199
|
|
|
55%
|
||||||
Interest income
|
199
|
|
|
28
|
|
|
171
|
|
|
611%
|
|
444
|
|
|
96
|
|
|
348
|
|
|
363%
|
||||||
Other expenses, net
|
(80
|
)
|
|
(68
|
)
|
|
(12
|
)
|
|
(18)%
|
|
(221
|
)
|
|
(80
|
)
|
|
(141
|
)
|
|
(176)%
|
||||||
Loss before income taxes
|
(1,987
|
)
|
|
(10,076
|
)
|
|
8,089
|
|
|
80%
|
|
(10,428
|
)
|
|
(23,834
|
)
|
|
13,406
|
|
|
56%
|
||||||
Provision for (benefit from) income taxes
|
1
|
|
|
150
|
|
|
(149
|
)
|
|
(99)%
|
|
(11
|
)
|
|
132
|
|
|
(143
|
)
|
|
(108)%
|
||||||
Net loss
|
$
|
(1,988
|
)
|
|
$
|
(10,226
|
)
|
|
$
|
8,238
|
|
|
81%
|
|
$
|
(10,417
|
)
|
|
$
|
(23,966
|
)
|
|
$
|
13,549
|
|
|
57%
|
•
|
Product revenue consist of sales of protein catalysts, pharmaceutical intermediates, and Codex
®
Biocatalyst Panels and Kits.
|
•
|
Research and development revenue include license, technology access and exclusivity fees, research services fees, milestone payments, royalties, optimization and screening fees, and revenue sharing arrangement revenues based upon sales of licensed products by Exela.
|
|
Three months ended September 30,
|
|
Change
|
|
Nine months ended September 30,
|
|
Change
|
||||||||||||||||||||
(In Thousands)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||
Product revenue
|
$
|
8,405
|
|
|
$
|
6,948
|
|
|
$
|
1,457
|
|
|
21%
|
|
$
|
18,291
|
|
|
$
|
19,134
|
|
|
$
|
(843
|
)
|
|
(4)%
|
Research and development revenue
|
8,541
|
|
|
3,036
|
|
|
5,505
|
|
|
181%
|
|
26,235
|
|
|
9,167
|
|
|
17,068
|
|
|
186%
|
||||||
Total revenues
|
$
|
16,946
|
|
|
$
|
9,984
|
|
|
$
|
6,962
|
|
|
70%
|
|
$
|
44,526
|
|
|
$
|
28,301
|
|
|
$
|
16,225
|
|
|
57%
|
|
Three months ended September 30,
|
|
Change
|
|
Nine months ended September 30,
|
|
Change
|
||||||||||||||||||||
(In Thousands)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||
Cost of product revenue
|
$
|
3,791
|
|
|
$
|
3,976
|
|
|
$
|
(185
|
)
|
|
(5)%
|
|
$
|
10,228
|
|
|
$
|
10,768
|
|
|
$
|
(540
|
)
|
|
(5)%
|
Research and development
|
7,917
|
|
|
8,055
|
|
|
(138
|
)
|
|
(2)%
|
|
22,464
|
|
|
20,242
|
|
|
2,222
|
|
|
11%
|
||||||
Selling, general and administrative
|
7,344
|
|
|
7,989
|
|
|
(645
|
)
|
|
(8)%
|
|
22,485
|
|
|
21,141
|
|
|
1,344
|
|
|
6%
|
||||||
Total costs and operating expenses
|
$
|
19,052
|
|
|
$
|
20,020
|
|
|
$
|
(968
|
)
|
|
(5)%
|
|
$
|
55,177
|
|
|
$
|
52,151
|
|
|
$
|
3,026
|
|
|
6%
|
|
Three months ended September 30,
|
|
Change
|
|
Nine months ended September 30,
|
|
Change
|
||||||||||||||||||||
(In Thousands)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||
Product revenue
|
$
|
8,405
|
|
|
$
|
6,948
|
|
|
$
|
1,457
|
|
|
21%
|
|
$
|
18,291
|
|
|
$
|
19,134
|
|
|
$
|
(843
|
)
|
|
(4)%
|
Cost of product revenue
|
3,791
|
|
|
3,976
|
|
|
(185
|
)
|
|
(5)%
|
|
10,228
|
|
|
10,768
|
|
|
(540
|
)
|
|
(5)%
|
||||||
Product gross profit
|
$
|
4,614
|
|
|
$
|
2,972
|
|
|
$
|
1,642
|
|
|
55%
|
|
$
|
8,063
|
|
|
$
|
8,366
|
|
|
$
|
(303
|
)
|
|
(4)%
|
Product gross margin (%)
|
55%
|
|
43%
|
|
|
|
|
|
44%
|
|
44%
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Change
|
|
Nine months ended September 30,
|
|
Change
|
||||||||||||||||||||
(In Thousands)
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||
Interest income
|
$
|
199
|
|
|
$
|
28
|
|
|
$
|
171
|
|
|
611%
|
|
$
|
444
|
|
|
$
|
96
|
|
|
$
|
348
|
|
|
363%
|
Other expense, net
|
(80
|
)
|
|
(68
|
)
|
|
(12
|
)
|
|
(18)%
|
|
(221
|
)
|
|
(80
|
)
|
|
(141
|
)
|
|
(176)%
|
||||||
Total other income (expense)
|
$
|
119
|
|
|
$
|
(40
|
)
|
|
$
|
159
|
|
|
398%
|
|
$
|
223
|
|
|
$
|
16
|
|
|
$
|
207
|
|
|
1,294%
|
|
Three months ended September 30,
|
|
Change
|
||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
||||||||||||||||||||||||||||||
(In Thousands)
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||
Product revenue
|
$
|
8,405
|
|
|
$
|
—
|
|
|
$
|
8,405
|
|
|
$
|
6,948
|
|
|
$
|
—
|
|
|
$
|
6,948
|
|
|
$
|
1,457
|
|
|
21
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Research and development revenue
|
3,720
|
|
|
4,821
|
|
|
8,541
|
|
|
3,036
|
|
|
—
|
|
|
3,036
|
|
|
684
|
|
|
23
|
%
|
|
4,821
|
|
|
100
|
%
|
||||||||
Total revenues
|
$
|
12,125
|
|
|
$
|
4,821
|
|
|
$
|
16,946
|
|
|
$
|
9,984
|
|
|
$
|
—
|
|
|
$
|
9,984
|
|
|
$
|
2,141
|
|
|
21
|
%
|
|
$
|
4,821
|
|
|
100
|
%
|
|
Nine months ended September 30,
|
|
Change
|
||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
||||||||||||||||||||||||||||||
(In Thousands)
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||
Product revenue
|
$
|
18,291
|
|
|
$
|
—
|
|
|
$
|
18,291
|
|
|
$
|
19,134
|
|
|
—
|
|
|
$
|
19,134
|
|
|
$
|
(843
|
)
|
|
(4
|
)%
|
|
$
|
—
|
|
|
—
|
%
|
|
Research and development revenue
|
15,728
|
|
|
10,507
|
|
|
26,235
|
|
|
9,167
|
|
|
$
|
—
|
|
|
9,167
|
|
|
6,561
|
|
|
72
|
%
|
|
10,507
|
|
|
100
|
%
|
|||||||
Total revenues
|
$
|
34,019
|
|
|
$
|
10,507
|
|
|
$
|
44,526
|
|
|
$
|
28,301
|
|
|
$
|
—
|
|
|
$
|
28,301
|
|
|
$
|
5,718
|
|
|
20
|
%
|
|
$
|
10,507
|
|
|
100
|
%
|
|
Three months ended September 30,
|
|
Change
|
||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
||||||||||||||||||||||||||||||
(In Thousands)
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||
Cost of product revenue
|
$
|
3,791
|
|
|
$
|
—
|
|
|
$
|
3,791
|
|
|
$
|
3,976
|
|
|
—
|
|
|
$
|
3,976
|
|
|
$
|
(185
|
)
|
|
(5
|
)%
|
|
$
|
—
|
|
|
—
|
%
|
|
Research and development
|
4,758
|
|
|
2,920
|
|
|
7,678
|
|
|
4,410
|
|
|
$
|
3,474
|
|
|
7,884
|
|
|
348
|
|
|
8
|
%
|
|
(554
|
)
|
|
(16
|
)%
|
|||||||
Selling, general and administrative
|
1,870
|
|
|
165
|
|
|
2,035
|
|
|
1,649
|
|
|
$
|
—
|
|
|
1,649
|
|
|
221
|
|
|
13
|
%
|
|
165
|
|
|
100
|
%
|
|||||||
Total segment costs and operating expenses
|
$
|
10,419
|
|
|
$
|
3,085
|
|
|
13,504
|
|
|
$
|
10,035
|
|
|
$
|
3,474
|
|
|
13,509
|
|
|
$
|
384
|
|
|
4
|
%
|
|
$
|
(389
|
)
|
|
(11
|
)%
|
||
Corporate costs
|
|
|
|
|
5,239
|
|
|
|
|
|
|
6,270
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Depreciation
|
|
|
|
|
309
|
|
|
|
|
|
|
241
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total costs and operating expenses
|
|
|
|
|
$
|
19,052
|
|
|
|
|
|
|
$
|
20,020
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
Change
|
||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
||||||||||||||||||||||||||||||
(In Thousands)
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
Performance Enzymes
|
|
Novel Biotherapeutics
|
|
Total
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||
Cost of product revenue
|
$
|
10,228
|
|
|
$
|
—
|
|
|
$
|
10,228
|
|
|
$
|
10,768
|
|
|
$
|
—
|
|
|
$
|
10,768
|
|
|
$
|
(540
|
)
|
|
(5
|
)%
|
|
$
|
—
|
|
|
—
|
%
|
Research and development
|
14,548
|
|
|
7,294
|
|
|
21,842
|
|
|
12,582
|
|
|
7,134
|
|
|
19,716
|
|
|
1,966
|
|
|
16
|
%
|
|
160
|
|
|
2
|
%
|
||||||||
Selling, general and administrative
|
5,695
|
|
|
615
|
|
|
6,310
|
|
|
5,238
|
|
|
—
|
|
|
5,238
|
|
|
457
|
|
|
9
|
%
|
|
615
|
|
|
100
|
%
|
||||||||
Total segment costs and operating expenses
|
$
|
30,471
|
|
|
$
|
7,909
|
|
|
38,380
|
|
|
$
|
28,588
|
|
|
$
|
7,134
|
|
|
35,722
|
|
|
$
|
1,883
|
|
|
7
|
%
|
|
$
|
775
|
|
|
11
|
%
|
||
Corporate costs
|
|
|
|
|
15,985
|
|
|
|
|
|
|
15,634
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Depreciation
|
|
|
|
|
812
|
|
|
|
|
|
|
795
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total costs and operating expenses
|
|
|
|
|
$
|
55,177
|
|
|
|
|
|
|
$
|
52,151
|
|
|
|
|
|
|
|
|
|
(In Thousands)
|
September 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
54,225
|
|
|
$
|
31,219
|
|
Working capital
|
$
|
50,822
|
|
|
$
|
20,087
|
|
|
Nine months ended September 30,
|
||||||
(In Thousands)
|
2018
|
|
2017
|
||||
Net cash used in operating activities
|
$
|
(13,374
|
)
|
|
$
|
(16,381
|
)
|
Net cash used in investing activities
|
(2,073
|
)
|
|
(738
|
)
|
||
Net cash provided by financing activities
|
38,318
|
|
|
21,617
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
22,871
|
|
|
$
|
4,498
|
|
|
|
|
Payments due by period
|
||||||||||||||
(In Thousands)
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|||||||||
Capital lease obligations
|
|
$
|
375
|
|
|
$
|
62
|
|
|
$
|
313
|
|
|
$
|
—
|
|
|
Operating leases obligations
(1)
|
|
5,322
|
|
|
799
|
|
|
4,482
|
|
|
41
|
|
|||||
|
Total
|
|
$
|
5,697
|
|
|
$
|
861
|
|
|
$
|
4,795
|
|
|
$
|
41
|
|
Other Commitment Agreement Type
|
|
Agreement Date
|
|
Future Minimum Payment
|
||
Manufacture and supply agreement with expected future payment date of December 2022
|
|
April 2016
|
|
$
|
1,693
|
|
Service agreement for the development of manufacturing process
|
|
April 2017
|
|
2
|
|
|
Service agreement for stability study
|
|
July 2017
|
|
335
|
|
|
Service agreement for clinical trial
|
|
December 2017
|
|
$
|
1,319
|
|
Total other commitments
|
|
|
|
$
|
3,349
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
completion of extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with the Good Laboratory Practice, or GLP, regulations;
|
•
|
submission to the FDA of an IND, which must become effective before human clinical studies may begin in the United States;
|
•
|
approval by an independent institutional review board, or IRB, representing each clinical site before each clinical study may be initiated;
|
•
|
performance of adequate and well-controlled human clinical studies (generally divided into three phases) in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the product candidate for each proposed indication;
|
•
|
preparation of and submission to the FDA of a new drug application, or NDA after completion of all clinical studies;
|
•
|
potential review of the product candidate by an FDA advisory committee;
|
•
|
satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities where the product candidate is produced to assess compliance with current Good Manufacturing Practice, or cGMP, regulations; and
|
•
|
FDA review and approval of an NDA prior to any commercial marketing or sale of the drug in the United States.
|
•
|
The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable. If we, or Nestlé Health Science, as applicable, are ultimately unable to obtain regulatory approval for CDX-6114 or any other product candidates that we may develop in the future, our business will be harmed. To obtain regulatory approval to market any product candidate, preclinical studies and costly and lengthy clinical trials are required, and the results of the studies and trials are highly uncertain. A failure of one or more pre-clinical or clinical trials can occur at any stage, and many companies that have believed their drug candidates performed satisfactorily in pre-clinical and clinical testing have nonetheless failed to obtain marketing approval of their product candidates.
|
•
|
We may find it difficult to enroll patients in our clinical trials given the limited number of patients that have PKU. Any enrollment difficulties could delay clinical trials and any potential product approval.
|
•
|
We may experience difficulty or delay in obtaining the FDA’s acceptance of an IND for CDX-6114 or any other product candidates we may seek to enter into clinical development, which would delay initiation of Phase 1 clinical testing. Delays in the commencement or completion of clinical testing could significantly affect our product development costs or the product development costs of our present and any future collaborators. We do not know whether planned clinical trials will begin on time or be completed on schedule, if at all. The commencement and completion of clinical trials can be delayed for a number of reasons. For example, a clinical trial may be suspended or terminated by us, by the Institutional Review Board (IRB) of the institution in which such trial is being conducted, or by the FDA due to a number of factors, including unforeseen safety issues, changes in governmental regulations or lack of adequate funding to continue the clinical trial.
|
•
|
We do not have experience in drug development or regulatory matters related to drug development. As a result, we rely or will rely on third parties to conduct our pre-clinical and clinical studies, assist us with drug manufacturing and formulation and perform other tasks for us. If these third parties do not successfully carry out their responsibilities or comply with regulatory requirements, we may receive lower quality products or services, suffer reputational harm and not be able to obtain regulatory approval for CDX-6114 or any other product candidates that we may develop in the future.
|
•
|
Our efforts to use CodeEvolver
®
protein engineering technology platform to generate new lead biotherapeutic candidates, whether under our collaboration with Nestlé Health Science or otherwise, may not be successful in creating candidates of value.
|
•
|
We will be exposed to potential product liability risks through the testing of experimental therapeutics in humans, which may expose us to substantial uninsured liabilities.
|
•
|
Third parties may develop intellectual property that could limit our ability to develop, market and commercialize CDX-6114, if approved, or any other product candidates that we may develop in the future.
|
•
|
Changes in methods of treatment of disease, such as gene therapy, could cause us to stop development of our product candidate or reduce or eliminate potential demand for CDX-6114, if approved, or any other product candidates that we may develop in the future.
|
•
|
the development of our product candidates subject to the agreement may be terminated or significantly delayed;
|
•
|
our cash expenditures could increase significantly if it is necessary for us to hire additional employees and allocate scarce resources to the development and commercialization of product candidates;
|
•
|
we would bear all of the risks and costs related to the further development and commercialization of product candidates that were previously the subject of the Nestlé Agreement, including the reimbursement of third parties; and
|
•
|
in order to fund further development and commercialization of new product candidates or programs, we may need to seek out and establish alternative collaboration arrangements with third-party partners; this may not be possible, or we may not be able to do so on terms which are acceptable to us, in which case it may be necessary for us to limit the size or scope of one or more of our programs or increase our expenditures and seek additional funding by other means.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
3.1
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
3.3
|
|
|
|
|
|
|
|
4.1
|
|
|
Reference is made to Exhibits 3.1 through 3.3.
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
101
|
|
|
The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Unaudited Condensed Consolidated Balance Sheets at September 30, 2018 and December 31, 2017, (ii) Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2018 and 2017, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
Codexis, Inc.
|
|
|
|
|
|
Date:
|
November 9, 2018
|
By:
|
/s/ John J. Nicols
|
|
|
|
John J. Nicols
President and Chief Executive Officer
(principal executive officer)
|
|
|
|
|
Date:
|
November 9, 2018
|
By:
|
/s/ Gordon Sangster
|
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Gordon Sangster
Chief Financial Officer
(principal financial and accounting officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Codexis, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ John J. Nicols
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John J. Nicols
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President and Chief Executive Officer
(principal executive officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Codexis, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Gordon Sangster
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Gordon Sangster
Senior Vice President and Chief Financial Officer
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(principal financial and accounting officer)
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•
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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•
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The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ John J. Nicols
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John J. Nicols
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President and Chief Executive Officer
(principal executive officer)
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/s/ Gordon Sangster
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Gordon Sangster
Senior Vice President and Chief Financial Officer |
(principal financial and accounting officer)
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