10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-34705

_____________________________________________

Codexis, Inc.

(Exact name of registrant as specified in its charter)

_____________________________________________



Delaware		71-0872999
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 Penobscot Drive, Redwood City		94063
(Address of principal executive offices)		(Zip Code)

(650) 421-8100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

_____________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	¨		Accelerated filer	x

Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of April 29, 2016, there were 40,788,170 shares of the registrant’s Common Stock, par value $0.0001 per share, outstanding.

Codexis, Inc.

Quarterly Report on Form 10-Q

For The Three Months Ended March 31, 2016

TABLE OF CONTENTS



		PAGE NUMBER

PART I. FINANCIAL INFORMATION

ITEM 1:	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
ITEM 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3:	Quantitative and Qualitative Disclosures about Market Risk	33
ITEM 4:	Controls and Procedures	33

PART II. OTHER INFORMATION

ITEM 1:	Legal Proceedings	34
ITEM 1A:	Risk Factors	34
ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	34
ITEM 3:	Default Upon Senior Securities	34
ITEM 4:	Mine Safety Disclosures	34
ITEM 5:	Other Information	34
ITEM 6:	Exhibits	34
Signatures

Codexis, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In Thousands, Except Per Share Amounts)



	March 31, 2016			December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	22,163		$	23,273
Accounts receivable, net of allowances of $421 at March 31, 2016 and December 31, 2015	4,352			7,329
Inventories	1,021			992
Prepaid expenses and other current assets	1,239			1,245
Total current assets	28,775			32,839
Restricted cash	787			787
Marketable securities	1,459			1,549
Property and equipment, net	2,756			3,109
Intangible assets, net	1,968			2,812
Goodwill	3,241			3,241
Other non-current assets	202			310
Total assets	$	39,188		$	44,647
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	2,850		$	3,399
Accrued compensation	4,305			3,331
Other accrued liabilities	3,224			2,013
Deferred revenue	6,105			6,098
Total current liabilities	16,484			14,841
Deferred revenue, net of current portion	2,929			3,120
Lease incentive obligation, net of current portion	1,204			1,310
Other long-term liabilities	2,458			2,497
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized, none issued and outstanding	—			—
Common stock, $0.0001 par value; 100,000 shares authorized at March 31, 2016 and December 31, 2015; shares issued of 41,081 and 40,636 at March 31, 2016 and December 31, 2015, respectively; and shares outstanding of 40,788 and 40,343 at March 31, 2016 and December 31, 2015, respectively	4			4
Additional paid-in capital	306,279			305,981
Accumulated other comprehensive income	315			405
Accumulated deficit	(290,485		)	(283,511		)
Total stockholders' equity	16,113			22,879
Total liabilities and stockholders' equity	$	39,188		$	44,647

See accompanying notes to the unaudited condensed consolidated financial statements

Codexis, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In Thousands, Except Per Share Amounts)



	Three Months Ended March 31,
	2016			2015
Revenues:
Biocatalyst product sales	$	3,740		$	3,076
Biocatalyst research and development	3,534			2,197
Revenue sharing arrangement	722			1,525
Total revenues	7,996			6,798
Costs and operating expenses:
Cost of biocatalyst product sales	2,489			1,456
Research and development	5,686			5,293
Selling, general and administrative	6,802			5,578
Total costs and operating expenses	14,977			12,327
Loss from operations	(6,981		)	(5,529		)
Interest income	15			4
Other income (expense)	3			(25		)
Loss before income taxes	(6,963		)	(5,550		)
Provision for income taxes	11			12
Net loss	$	(6,974	)	$	(5,562	)
Net loss per share, basic and diluted	$	(0.17	)	$	(0.14	)
Weighted average common shares used in computing net loss per share, basic and diluted	40,072			38,779

See accompanying notes to the unaudited condensed consolidated financial statements

Codexis, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In Thousands)



	Three Months Ended March 31,
	2016			2015
Net loss	$	(6,974	)	$	(5,562	)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax expense of $0 and $8 for the three months ended March 31, 2016 and 2015, respectively.	(90		)	16
Other comprehensive income (loss)	(90		)	16
Total comprehensive loss	$	(7,064	)	$	(5,546	)

See accompanying notes to the unaudited condensed consolidated financial statements

Codexis, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)



	Three Months Ended March 31,
	2016			2015
Operating activities:
Net loss	$	(6,974	)	$	(5,562	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets	844			844
Depreciation and amortization of property and equipment	465			558
Gain on disposal of property and equipment	(27		)	(5		)
Stock-based compensation	1,389			1,285
Amortization of premium on marketable securities	—			1
Changes in operating assets and liabilities:
Accounts receivable, net	2,977			655
Inventories, net	(30		)	403
Prepaid expenses and other current assets	5			(11		)
Other assets	109			1
Accounts payable	(395		)	(2,731		)
Accrued compensation	974			654
Other accrued liabilities	1,172			(557		)
Long term lease incentive	(106		)	(106		)
Deferred revenue	(184		)	723
Net cash provided by (used in) operating activities	219			(3,848		)
Investing activities:
Purchase of property and equipment	(265		)	(52		)
Proceeds from sale of property and equipment	27			5
Net cash used in investing activities	(238		)	(47		)
Financing activities:
Proceeds from exercises of options to purchase common stock	7			124
Taxes paid related to net share settlement of equity awards	(1,098		)	(557		)
Net cash used in financing activities	(1,091		)	(433		)
Net decrease in cash and cash equivalents	(1,110		)	(4,328		)
Cash and cash equivalents at the beginning of the period	23,273			26,487
Cash and cash equivalents at the end of the period	$	22,163		$	22,159

See accompanying notes to the unaudited condensed consolidated financial statements

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business

In these notes to the condensed consolidated financial statements, the "Company," "we," "us," and "our" refer to Codexis, Inc. and its subsidiaries on a consolidated basis.

We develop biocatalysts for the pharmaceutical and fine chemicals markets. Our proven technologies enable scale-up and implementation of biocatalytic solutions to meet customer needs for rapid, cost-effective and sustainable process development, from research to manufacturing.

Once potentially beneficial mutations are identified through this proprietary process, combinations of these mutations can then be tested until variant enzymes have been created that exhibit marketable performance characteristics superior to competitive products. This process allows for continuous, efficient improvements to the performance of enzymes. In the past, we implemented the CodeEvolver^® protein engineering technology platform through paid collaborations with our customers. In July 2014, we entered into our first license agreement pursuant to which we granted a license to a global pharmaceutical company to use the CodeEvolver^® protein engineering technology platform for its internal development purposes. In August 2015, we entered into a license agreement involving the CodeEvolver^® protein engineering technology platform with a second global pharmaceutical company and we continue to pursue licensing opportunities with additional customers.

We have commercialized our technology and products in the pharmaceuticals market, which is our primary business focus. Our customers, which include several large global pharmaceutical companies, use our technology, products and services in their manufacturing processes and process development.

We also use our technology to develop biocatalysts for use in the fine chemicals market. The fine chemicals market consists of several large market verticals, including food, animal feed, flavors, fragrances, and agricultural chemicals.

We are also using our technology to develop an early stage, novel enzyme therapeutic product candidate for the potential treatment of phenylketonuria ("PKU") in humans. PKU is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient.

We are actively collaborating with new and existing customers in the pharmaceutical and other markets.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2015. The condensed consolidated balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of March 31, 2016 and results of our operations and comprehensive loss for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015. The interim results are not necessarily indicative of the results for any future interim period or for the entire year. Certain prior period amounts have been reclassified to conform to current period presentation.

The unaudited interim condensed consolidated financial statements include Codexis, Inc. and its wholly owned subsidiaries in the United States, India, Mauritius and the Netherlands. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. We regularly assess these estimates which primarily affect revenue recognition, accounts receivable, inventories, the valuation of investment securities and marketable securities, assets held for sale, intangible assets, goodwill arising out of business acquisitions, accrued liabilities, stock awards and the valuation allowances associated with deferred tax assets. Actual results could differ from those estimates and such differences may be material to the condensed consolidated financial statements.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenues by geographic region, for purposes of allocating resources and evaluating financial performance. We have one business activity and there are no segment managers who are held accountable for operations, operating results beyond revenue goals or plans for levels or components below the consolidated unit level. Accordingly, we have a single reporting segment.

Revenue Recognition

We recognize revenues from the sale of our biocatalyst products, biocatalyst research and development agreements and a revenue sharing arrangement. Revenue is recognized when the related costs are incurred and the four basic criteria of revenue recognition are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Where the revenue recognition criteria are not met, we defer the recognition of revenue by recording deferred revenue until such time that all criteria of revenue recognition are met.

We account for revenues from multiple element arrangements, such as license and platform technology transfer agreements and collaborative arrangements in which a licensee may purchase several deliverables, in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 605-25, "Multiple Element Arrangements." For new or materially amended multiple element arrangements, we identify the deliverables at the inception of the arrangement and each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met: (1) the delivered item or items have value to the customer on a standalone basis and (2) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in our control. Revenue allocated to each element is then recognized based on when the basic four revenue recognition criteria are met for each element.

Biocatalyst Product Sales

Biocatalyst product sales consist of sales of biocatalyst enzymes, chemical intermediates and Codex^® Biocatalyst Panels and Kits. Biocatalyst product sales are recognized once passage of title and risk of loss has occurred and contractually specified acceptance criteria, if any, have been met, provided all other revenue recognition criteria have also been met. Shipping and handling costs charged to customers are recorded as revenue.

Biocatalyst Research and Development

Biocatalyst research and development agreements typically provide us with multiple revenue streams, including research services fees for full time employee ("FTE") research services, up-front licensing fees, technology access, contingent payments upon achievement of contractual criteria, and royalty fees based on the licensees' product sales or cost savings achieved by our customers. We perform biocatalyst research and development activities as specified in each respective customer agreement. Payments for services received are not refundable. Certain research agreements are based on a contractual reimbursement rate per FTE working on the project. We recognize revenues from research services as those services are performed over the contractual performance periods. When up-front payments are combined with FTE services in a single unit of accounting, we recognize the up-front payments using the proportionate performance method of revenue recognition based upon the actual amount of research labor hours incurred relative to the amount of the total expected labor hours to be incurred by us, up to the amount of cash received. In cases where the planned levels of research services fluctuate substantially over the research term, we are required to make estimates of the total hours required to perform our obligations.

We recognize revenues from non-refundable, up-front license fees or technology access payments that are not dependent on any future performance by us when such amounts are earned. If we have continuing obligations to perform under the arrangement, such fees are recorded as deferred revenues and recognized over the estimated period of performance. Estimated performance periods are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated performance period, and therefore to revenue recognized, would occur on a prospective basis in the period that the change was made.

A payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is an event (i) that can only be achieved based in whole or in part on either our performance or on the occurrence of a specific outcome resulting from our performance, (ii) for which there is, as of the date the arrangement is entered into, substantive uncertainty that the event will be achieved and (iii) results in additional payments being due to us. Milestones are considered substantive when the consideration earned from the achievement of the milestone (i) is commensurate with either our performance to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from its performance, (ii) relates solely to past performance and (iii) is reasonable relative to all deliverable and payment terms in the arrangement.

We recognize revenues from other contingent payments based on the passage of time or when earned as the result of a customer's performance in accordance with contractual terms and when such payments can be reasonably estimated and collectability of such payments is reasonably assured.

We recognize revenues from royalties based on licensees' sales of our biocatalyst products or products using our technologies.

Royalties are recognized as earned in accordance with the contract terms when royalties from licensees can be reasonably estimated and collectability is reasonably assured. For the majority of our royalty revenues, estimates are made using notification of the sale of licensed products from the licensees.

Revenue Sharing Arrangement

We recognize revenues from a revenue sharing arrangement based upon sales of licensed products by our revenue share partner Exela PharmSci, Inc. ("Exela") (see Note 11, "Related Party Transactions"). We recognize revenues net of product and selling costs upon notification from our revenue share partner of our portion of net profit based on the contractual percentage from the sale of licensed product.

Sales Allowances

Sales allowances primarily relate to product returns and prompt pay sales discounts and are recorded in the same period that the related revenues are recognized, resulting in a reduction in biocatalyst product sales revenue.

Cost of Biocatalyst Product Sales

Cost of biocatalyst product sales comprises both internal and third party fixed and variable costs including amortization of purchased technology, materials and supplies, labor, facilities and other overhead costs associated with our biocatalyst product sales. Shipping costs are included in our cost of biocatalyst product sales. Such charges were not significant in any of the periods presented.

Cost of Research and Development Services

Cost of research and development services related to services under research and development agreements approximate the research funding over the term of the respective agreements and is included in research and development expense.

Research and Development Expenses

Research and development expenses consist of costs incurred for internal projects as well as partner-funded collaborative research and development activities, as mentioned above. These costs include our direct and research-related overhead expenses, which include salaries and other personnel-related expenses (including stock-based compensation), occupancy-related costs, supplies, depreciation of facilities and laboratory equipment and amortization of acquired technologies, as well as external costs, and are expensed as incurred. Costs to acquire technologies that are utilized in research and development and that have no alternative future use are expensed when incurred.

Stock-Based Compensation

We use the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under our equity incentive plans. The Black-Scholes-Merton option pricing model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. We had, due to insufficient historical data, used the “simplified method,” as described in Staff Accounting Bulletin No. 107, “Share-Based Payment,” to determine the expected term of all stock options granted from the inception of our equity plans through the first half of 2015. Beginning in the third quarter of 2015, we believe we have sufficient historical data to calculate expected terms for stock options granted. Thus, the expected term was based on historical exercise behavior on similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. We used historical volatility to estimate expected stock price volatility. The risk-free rate assumption was based on United States Treasury instruments whose terms were consistent with the expected term of the stock options. The expected dividend assumption was based on our history and expectation of dividend payouts.

Restricted Stock Units ("RSUs"), Restricted Stock Awards ("RSAs") and performance-contingent restricted stock units ("PSUs") were measured based on the fair market values of the underlying stock on the dates of grant. PSUs awarded may be conditional upon the attainment of one or more performance objectives over a specified period. At the end of the performance period, if the goals are attained, the awards are granted.

Stock-based compensation expense was calculated based on awards ultimately expected to vest and was reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. The estimated annual forfeiture rates for stock options, RSUs, PSUs, and RSAs are based on historical forfeiture experience.

The estimated fair value of stock options, RSUs and RSAs is expensed on a straight-line basis over the vesting term of the grant and the estimated fair value of PSUs is expensed using an accelerated method over the term of the award once management has determined that it is probable that the performance objective will be achieved. Compensation expense is recorded over the requisite service period based on management's best estimate as to whether it is probable that the shares awarded are expected to vest. Management assesses the probability of the performance milestones being met on a continuous basis.

We have not recognized, and do not expect to recognize in the near future, any excess income tax benefits related to employee stock-based compensation expense as a result of the full valuation allowance on our deferred tax assets including deferred tax assets related to net operating loss carryforwards.

Foreign Currency Translation

The United States dollar is the functional currency for our operations outside the United States. Accordingly, nonmonetary assets and liabilities originally acquired or assumed in other currencies are recorded in United States dollars at the exchange rates in effect at the date they were acquired or assumed. Monetary assets and liabilities denominated in other currencies are translated into United States dollars at the exchange rates in effect at the balance sheet date. Translation adjustments are recorded in other expense in the accompanying condensed consolidated statements of operations. Gains and losses realized from non-U.S. dollar transactions, including intercompany balances not considered as permanent investments, denominated in currencies other than an entity's functional currency, are included in other expense in the accompanying condensed consolidated statements of operations.

Cash and Cash Equivalents

We consider all highly liquid investments with maturity dates of three months or less at the date of purchase to be cash equivalents. Our cash and cash equivalents consist of cash on deposit with banks and money market funds. The majority of cash and cash equivalents is maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits. Cash and cash equivalents totaled $22.2 million at March 31, 2016 and were comprised of cash of $11.1 million and money market funds of $11.1 million.

Inventories

Inventories are stated at the lower of cost or market value. Cost is determined using a weighted-average approach, assuming full absorption of direct and indirect manufacturing costs, based on our product capacity utilization assumptions. If inventory costs exceed expected market value due to obsolescence or lack of demand, valuation adjustments are recorded for the difference between the cost and the estimated market value. These valuation adjustments are determined based on significant estimates.

Marketable Securities

We invest in equity securities and we classify those investments as available-for-sale. These securities are carried at estimated fair value (see Note 5, "Marketable Securities") with unrealized gains and losses included in accumulated other comprehensive income in stockholders' equity. Available-for-sale equity securities with remaining maturities of greater than one year or which we currently do not intend to sell are classified as long-term.

We review several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value, the length of time and the extent to which the market value of the investment has been less than cost and the financial condition and near-term prospects of the issuer. Unrealized losses are charged against "Other expense" when a decline in fair value is determined to be other-than-temporary. Amortization of purchase premiums and accretion of purchase discounts and realized gains and losses of debt securities are included in interest income. The cost of securities sold is based on the specific identification method.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and we consider counterparty credit risk in our assessment of fair value. Carrying amounts of financial instruments, including cash equivalents, short-term investments, marketable investments, accounts receivable, accounts payable and accrued liabilities, approximate their fair values as of the balance sheet dates because of their generally short maturities.

The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


•	Level 1: Inputs that are unadjusted, quoted prices in active markets that are accessible at the measurement date for assets or liabilities.


•	Level 2: Inputs (other than quoted prices included in Level 1) 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.

Concentrations of Credit Risk

Our financial instruments that are potentially subject to concentration of credit risk primarily consist of cash equivalents, short term investments, accounts receivable, marketable securities and restricted cash. We invest cash that is not required for immediate operating needs principally in money market funds.

Intangible Assets

Our intangible assets are finite-lived and consist of customer relationships, developed core technology, trade names, and the intellectual property ("IP") rights associated with the acquisition of Maxygen Inc.'s ("Maxygen") directed evolution technology in 2010. Intangible assets were recorded at their fair values at the date we acquired the assets and, for those assets having finite useful lives, are amortized using the straight-line method over their estimated useful lives.

Impairment of Long-Lived Assets

Our long-lived assets include property and equipment and intangible assets. We determined that we have a single entity wide asset group ("Asset Group"). The directed evolution technology patent portfolio acquired from Maxygen ("Core IP") is the most significant component of the Asset Group since it is the base technology for all aspects of our research and development activities, and represents the basis for all of our identifiable cash flow generating capacity. Consequently, we do not believe that identification of independent cash flows associated with long-lived assets is currently possible at any lower level than the Asset Group.

The Core IP is the only finite-lived intangible asset on our condensed consolidated balance sheet as of March 31, 2016. There has been no significant change in the utilization or estimated life of the Core IP since we acquired the technology patent portfolio from Maxygen.

The carrying value of our long-lived assets in the Asset Group may not be recoverable based upon the existence of one or more indicators of impairment which could include: a significant decrease in the market price of our common stock; current period cash flow losses or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the assets; slower growth rates in our industry; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the assets; loss of significant customers or partners; or the current expectation that the assets will more likely than not be sold or disposed of significantly before the end of their estimated useful life.

We evaluate recoverability of intangible assets based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the Asset Group. We make estimates and judgments about the future undiscounted cash flows over the remaining useful life of the Asset Group. Our anticipated future cash flows include our estimates of existing or in process product sales, production and operating costs, future capital expenditures, working capital needs, and assumptions regarding the ultimate sale of the Asset Group at the end of the life of the primary asset. The useful life of the Asset Group was based on the estimated useful life of the Core IP, the primary asset at the time of acquisition. There has been no change in the estimated useful life of the Asset Group. Although our cash flow forecasts are based on assumptions that are consistent with our plans, there is significant judgment involved in determining the cash flows attributable to the Asset Group over its estimated remaining useful life.

In the fourth quarter of 2015, we determined that there were no events or changes in circumstances that indicated that the carrying value of the Asset Group might not be recoverable. We concluded that the fair value of the reporting unit exceeded its carrying value and no impairment existed. During the three months ended March 31, 2016, we did not identify any indicators of potential impairment of intangible assets or new information that would have a material impact on the forecast or the impairment analysis prepared as of December 31, 2015.

Goodwill

We determined that we operate in one segment and reporting unit under the criteria in ASC 280, "Segment Reporting." Accordingly, our review of goodwill impairment indicators is performed at the parent level. We review goodwill impairment annually in the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

The goodwill impairment test consists of a two-step process. The first step of the goodwill impairment test used to identify potential impairment compares the fair value of the reporting unit to carrying value. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not required.

We use our market capitalization as an indicator of fair value. We believe that because our reporting unit is publicly traded, the ability of a controlling stockholder to benefit from synergies and other intangible assets that arise from control might cause the fair value of our reporting unit as a whole to exceed its market capitalization. Therefore, we believe that the fair value measurement need not be based solely on the quoted market price of an individual share of our common stock, but also can consider the impact of a control premium in measuring the fair value of its reporting unit.

If we were to use an income approach, it would establish a fair value by estimating the present value of our projected future cash flows expected to be generated from our business. The discount rate applied to the projected future cash flows to arrive at the present value would be intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. Our discounted cash flow methodology would consider projections of financial performance for a period of several years combined with an estimated residual value. The most significant assumptions we would use in a discounted cash flow methodology are the discount rate, the residual value and expected future revenue, gross margins and operating costs, along with considering any implied control premium.

Should our market capitalization be less than total stockholders' equity as of our annual test date or as of any interim impairment testing date, we would also consider market comparables, recent trends in our stock price over a reasonable period and, if appropriate, use an income approach to determine whether the fair value of our reporting unit is greater than the carrying amount.

The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. Implied fair value is the excess of the fair value of the reporting unit over the fair value of all identified assets and liabilities. We base our fair value estimates on assumptions we believe to be reasonable. Actual future results may differ from those estimates.

Goodwill was tested for impairment in the fourth quarter of 2015. We determined that the fair value of the reporting unit exceeded the carrying value and no impairment existed. Based on the results obtained, we concluded there was no impairment of our goodwill as of December 31, 2015. During the three months ended March 31, 2016, we did not identify any indicators of potential impairment of goodwill or new information that would have a material impact on the forecast or the impairment analysis prepared as of December 31, 2015.

Income Taxes

We use the liability method of accounting for income taxes, whereby deferred tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount that will more likely than not be realized.

We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expenses for tax and financial statement purposes. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized on a jurisdiction by jurisdiction basis. The ultimate realization of deferred tax assets is dependent upon the generation of taxable income in the future. We have recorded a deferred tax asset in jurisdictions where ultimate realization of deferred tax assets is more likely than not to occur.

We make estimates and judgments about future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted. Any adjustment to the deferred tax asset valuation allowance would be recorded in the income statement for the periods in which the adjustment is determined to be required.

We account for uncertainty in income taxes as required by the provisions of ASC Topic 740, "Income Taxes," which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes. We recognize interest and penalties as a component of our income tax expense.

could be limited. We maintain a full valuation allowance against net deferred tax assets as we believe that it is more likely than not that the majority of deferred tax assets will not be realized.

Recently Issued and Adopted Accounting Guidance

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." ASU 2014-15 defines management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and provide related disclosures. ASU 2014-15 is effective for annual reporting periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. The adoption of ASU 2014-15 is not expected to have a material impact on our consolidated financial statements and related disclosures.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. We do not expect the adoption of ASU 2014-11 will have a material impact on our consolidated financial statements and related disclosures.

In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date." This ASU defers the effective date of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" for all entities by one year. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The main principle of ASU 2014-09 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 provides companies with two implementation methods: (i) apply the standard retrospectively to each prior reporting period presented (full retrospective application); or (ii) apply the standard retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified retrospective application). ASU 2014-09 as amended by ASU 2015-14 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The FASB will permit companies to adopt the new standard early, but not before the original effective date of December 15, 2016. We are currently in the process of evaluating the impact of the pending adoption of this standard (including its three amendments) on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which replaces prior lease guidance (Topic 840.) The new guidance requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Entities have the option to use certain practical expedients. Full retrospective application is prohibited. This ASU is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2016-02 on our consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," changing certain aspects of accounting for share-based payments to employees (Topic 718), as well as affecting the accounting classification within the statement of cash flows. The new guidance will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It will allow a policy election to account for forfeitures as they occur and will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting. This ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2016-09 on our consolidated financial statements and related disclosures.

within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. For licensing, the ASU clarifies how an entity should evaluate the nature of its promise in granting a license of IP, which will determine whether it recognizes revenue over time (“symbolic IP”) or at a point in time (“functional IP”).The effective date and transition requirements for these amendments are the same as those of the new revenue standard (ASU 2014-09, as amended by ASU 2015-14).

Note 3. Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding, less RSAs subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding, less RSAs subject to forfeiture, plus all additional common shares that would have been outstanding, assuming dilutive potential common shares had been issued for other dilutive securities. For all periods presented, diluted and basic net loss per share were identical since potential common shares were excluded from the calculation, as their effect was anti-dilutive.

Anti-Dilutive Securities

In periods of net loss, the period-ending number of shares outstanding related to potentially dilutive securities, prior to the application of the treasury stock method, are excluded from the computation of diluted net loss per common share because including such shares would have an anti-dilutive effect. The following shares were not considered in the computation of diluted net loss per share (in thousands):



	Three Months Ended March 31,
	2016	2015
Shares issuable under Equity Incentive Plan	6,577	7,124
Shares issuable upon the conversion of warrants	73	75
Total shares excluded as anti-dilutive	6,650	7,199

Note 4. Collaborative Arrangements

GSK Platform Technology Transfer, Collaboration and License Agreement

In July 2014, we entered into a CodeEvolver^® platform technology transfer collaboration and license agreement (the “GSK CodeEvolver^®Agreement”) with GlaxoSmithKline (“GSK”). Pursuant to the terms of the agreement, we granted GSK a non-exclusive license to use the CodeEvolver^® protein engineering technology platform to develop novel enzymes for use in the manufacture of GSK's pharmaceutical and health care products.

We received a $6.0 million up-front licensing fee upon signing the GSK CodeEvolver^® Agreement and subsequently a $5.0 million non-creditable, non-refundable milestone payment upon achievement of the first milestone in 2014. In September 2015, we achieved the second milestone of the agreement earning another milestone payment of $6.5 million. We are eligible to receive an additional contingent payment of $7.5 million upon the completion of the technology transfer period. (See Note 13, "Subsequent event" for details.) We also have the potential to receive additional contingent payments that range from $5.75 million to $38.5 million per project based on GSK's successful application of the licensed technology. The contingent payments are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to GSK's performance of future development and commercialization activities.

For up to three years following the end of the technology transfer period, GSK can exercise an option, upon payment of certain additional fees, that would extend GSK’s license to include certain improvements to the CodeEvolver® protein engineering technology platform that arise during such additional period. In addition, we are eligible to receive royalties based on net sales, if any, of a limited set of products developed by GSK using the CodeEvolver® protein engineering technology platform.

The term of the GSK CodeEvolver^® Agreement continues, unless earlier terminated, until the expiration of all payment obligations under the GSK CodeEvolver^® Agreement. At any time following the completion of the first technology transfer stage, GSK can terminate the GSK CodeEvolver^® Agreement by providing 90 days written notice to us. If GSK exercises this termination right during the three-year technology transfer period, GSK will pay us a one-time termination payment.

Under the GSK CodeEvolver^®Agreement, the significant deliverables were determined to be the license, platform technology transfer, and contingent obligation to supply GSK with enzymes manufactured by us at GSK’s expense. We determined that the license did not have stand-alone value. In addition, we determined that the license and the platform technology transfer and our participation in joint steering committee activities in connection with the platform technology transfer represent a single unit of accounting. Our participation in the joint steering committee does not represent a separate unit of accounting because GSK could not negotiate for and/or acquire these services from other third parties and our participation on the joint steering committee is coterminous with the technology transfer period. Amounts to be received under the supply arrangement, if any, described above will be recognized as revenue to the extent GSK purchases enzymes from us.

The up-front license fee of $6.0 million is being recognized ratably over the technology transfer period of three years. We recognized license fees of $0.5 million and $0.5 million three months ended March 31, 2016 and 2015, respectively, as biocatalyst research and development revenues. We had a deferred revenue balance from GSK related to the upfront license fee of $2.5 million at March 31, 2016 and $3.0 million at December 31, 2015.

Merck Platform Technology Transfer and License Agreement

In August 2015, we entered into a CodeEvolver^® platform technology transfer and license agreement (the "Merck CodeEvolver^® Agreement") with Merck Sharp and Dohme Corp., known as MSD outside the United States and Canada ("Merck"). The Agreement allows Merck to use the CodeEvolver^® protein engineering technology platform in the field of human and animal healthcare.

We received a $5.0 million up-front license fee upon execution of the Merck CodeEvolver^® Agreement, which is being recognized ratably over two years. We achieved the first milestone in of the Merck CodeEvolver^®Agreement earning a milestone payment of $5.0 million in September 2015. We are eligible to receive an additional $8.0 million subject to the satisfactory completion of the second milestone of the technology transfer process. We will also be eligible to receive payments of up to a maximum of $15.0 million for each commercial API that is manufactured by Merck using one or more novel enzymes developed by Merck using the CodeEvolver^® protein engineering technology platform.

Under the terms of the Merck CodeEvolver^®Agreement, we granted to Merck a non-exclusive worldwide license to use the CodeEvolver^® protein engineering technology platform to research, develop and manufacture novel enzymes for use by Merck in its internal research programs ("Merck Non-Exclusive Field"). The license to Merck is exclusive for the research, development and manufacture of novel enzymes for use by Merck in the chemical synthesis of therapeutic products owned or controlled by Merck ("Merck Exclusive Field"). Merck has the right to grant sublicenses to affiliates of Merck and, in certain limited circumstances, to third parties. We also granted to Merck a license to make or have made products manufactured using the CodeEvolver^® protein engineering technology platform with a right to grant sublicenses solely to affiliates of Merck, contract manufacturing organizations and contract research organizations. The manufacturing license is exclusive in the Merck Exclusive Field and non-exclusive in the Merck Non-Exclusive Field. The licenses are subject to certain limitations based on pre-existing contractual obligations that apply to the technology and intellectual property that are the subject of the license grants. The licenses do not permit the use of the CodeEvolver^® protein engineering technology platform to discover any therapeutic enzyme, diagnostic product or vaccine. In addition, Merck is prohibited from using the CodeEvolver^® protein engineering technology platform to develop or produce enzymes or any other compounds for or on behalf of any third parties except in a very limited manner when Merck divests a therapeutic product that is manufactured using an enzyme developed using the CodeEvolver^® protein engineering technology platform.

Under the Merck CodeEvolver^® Agreement, we are transferring the CodeEvolver^® protein engineering technology platform to Merck over an approximately 15 to 24 month period starting on the effective date of the agreement. As part of this technology transfer, we provide to Merck our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms. Upon completion of technology transfer, Merck will have CodeEvolver^® protein engineering technology platform installed at its designated site.

The licenses to Merck are granted under patents, patent applications and know-how that we own or control as of the effective date of the agreement and that cover the CodeEvolver^® protein engineering technology platform. Any improvements to the CodeEvolver^® protein engineering technology platform during the technology transfer period will also be included in the license grants from Codexis to Merck. At the end of the technology transfer period, Merck can exercise annual options that, upon payment of certain option fees, would extend Merck's license to include certain improvements to the CodeEvolver^® protein engineering technology platform that arise during the three-year period that begins at the end of the technology transfer period. Through November 3, 2016, we will provide additional enzyme evolution services to Merck at our laboratories in Redwood City.

Under the Merck CodeEvolver^® Agreement, we will own any improvements to our protein engineering methods, processes and algorithms that arise and any enzyme technology or process technology that are developed during a technology transfer

project, an evolution program or additional services. Merck will own (the "Merck-Owned Technology") (a) any enzyme technology that is developed solely by Merck under the Agreement using the CodeEvolver® Platform Technology (a "Project Enzyme") and (b) the methods of use of any Project Enzyme or any enzyme developed jointly by Merck and us using the CodeEvolver^® protein engineering technology platform. Merck granted to us a worldwide, non-exclusive, fully paid-up, royalty-free license, with the right to grant sublicenses, to use the Merck-Owned Technology outside of the Merck Exclusive Field.

For each API that Merck manufactures using an enzyme developed with the CodeEvolver^®protein engineering technology platform, we will have a right of first refusal to supply Merck with the enzyme used to manufacture the API if Merck outsources the supply of the enzyme. Our right of first refusal applies during the period that begins on the completion of a phase III clinical trial for the product containing the API and ends five years following regulatory approval for such product.

The Merck CodeEvolver^® Agreement has a term that continues, unless earlier terminated, until the expiration of all payment obligations under the agreement. Merck may terminate the Merck CodeEvolver^® Agreement by providing 90 days written notice to us. If Merck exercises this termination right during the technology transfer period, Merck will make a one-term termination payment to us of $8.0 million. We can terminate the Merck CodeEvolver^® Agreement by providing 30 days written notice to Merck if we determine, pursuant to our contractual audit rights under the agreement, that Merck has repeatedly failed to make required payments to us and/or materially underpaid us an amount due under the Merck CodeEvolver^® Agreement. In the event the Merck CodeEvolver^® Agreement is terminated earlier by Merck, or by us due to an uncured material breach by Merck, or if Merck sells or transfers to a third party any Merck business or facility that includes any of our proprietary materials, information or technology, we have the right to conduct an audit of Merck's facilities to confirm that all of our proprietary materials, information and technology have been destroyed. The Merck CodeEvolver^® Agreement contains indemnification provisions under which Merck and we have agreed to indemnify each other against certain third party claims.

The up-front license fee of $5.0 million is being recognized ratably over a two-year period. We recognized license fees of $0.6 million for the three months ended March 31, 2016, as biocatalyst research and development revenues and had a deferred revenue balance from Merck related to the Merck CodeEvolver^® Agreement license fees of $3.3 million at March 31, 2016 and $4.0 million at December 31, 2015.

Merck Sitagliptin Catalyst Supply Agreement

In February 2012, we entered into a five-year Sitagliptin Catalyst Supply Agreement ("Sitagliptin Catalyst Supply Agreement") with Merck whereby Merck may obtain commercial scale substance for use in the manufacture of its products based on the active ingredient sitagliptin, e.g., Januvia^®. In December 2015, Merck exercised its option under the terms of the Sitagliptin Catalyst Supply Agreement to extend the agreement for an additional five years through February 2022.

The Sitagliptin Catalyst Supply Agreement requires Merck to pay an annual license fee for the rights to the Sitagliptin technology each year for the term of the agreement. Amounts of annual license fees are based on contractually agreed prices and are on a declining scale. Prior to December 2015, the aggregate license fee for the initial five year period was being recognized ratably over the initial five year term of the Sitagliptin Catalyst Supply Agreement as collaborative research and development revenue. Due to the amendment entered in December 2015 as noted above, we revised our performance period in December 2015 and began recognizing the remaining unamortized portion of the license fee and the aggregate license fees for the second five year period over the revised period on a straight line basis.

We recognized license fees of $0.3 million and $0.5 million for the three months ended March 31, 2016 and 2015 as biocatalyst research and development revenues. We had a deferred revenue balance from Merck related to license fees of $2.3 million at March 31, 2016 and $1.0 million at December 31, 2015. In addition, pursuant to the Sitagliptin Catalyst Supply Agreement, Merck may purchase supply from us for a fee based on contractually stated prices.

Note 5. Marketable Securities

Securities classified as available-for-sale at March 31, 2016 and at December 31, 2015 consisted of the following (in thousands):



	March 31, 2016
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Average Contractual Maturities
									(in days)
Money market funds⁽¹⁾	$	11,130	$	—	$	—	$	11,130	n/a
Common shares of CO2 Solutions ⁽²⁾	563		896		—		1,459		n/a
Total	$	11,693	$	896	$	—	$	12,589



	December 31, 2015
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Average Contractual Maturities
									(in days)
Money market funds ⁽¹⁾	$	11,120	$	—	$	—	$	11,120	n/a
Common shares of CO2 Solutions⁽²⁾	563		986		—		1,549		n/a
Total	$	11,683	$	986	$	—	$	12,669

(1) Money market funds are classified in cash and cash equivalents on our condensed consolidated balance sheets.

(2) Common shares of CO2 Solutions are classified in marketable securities on our condensed consolidated balance sheets.

There were no marketable securities in an unrealized loss position at March 31, 2016 or at December 31, 2015.

Note 6. Fair Value Measurements

The following tables present the financial instruments that were measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015, by level within the fair value hierarchy (in thousands):



	March 31, 2016
	Level 1		Level 2		Level 3		Total
Money market funds	$	11,130	$	—	$	—	$	11,130
Common shares of CO2 Solutions	—		1,459		—		1,459
Total	$	11,130	$	1,459	$	—	$	12,589



	December 31, 2015
	Level 1		Level 2		Level 3		Total
Money market funds	$	11,120	$	—	$	—	$	11,120
Common shares of CO2 Solutions	—		1,549		—		1,549
Total	$	11,120	$	1,549	$	—	$	12,669

We determine the fair value of Level 1 assets using quoted prices in active markets for identical assets. We estimated the fair value of our investment in 10,000,000 common shares of CO2 Solutions using the market value of common shares as determined by trading on the TSX Venture Exchange, and we classified our investment in CO2 Solutions as Level 2 assets due to the volatile and low trading volume. There were no transfers between Level 1 and Level 2 securities in the periods presented. See also Note 5 - Cash Equivalents and Marketable Securities.

Note 7. Balance Sheets Details

Inventories

Inventories consisted of the following (in thousands):



	March 31, 2016		December 31, 2015
Raw materials	$	272	$	262
Work-in-process	37		—
Finished goods	712		730
Inventories	$	1,021	$	992

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):



	March 31, 2016			December 31, 2015
Laboratory equipment	$	20,534		$	20,503
Leasehold improvements	10,395			10,369
Computer equipment	3,271			3,271
Office furniture and equipment	1,179			1,178
Construction in progress ⁽¹⁾	57			3
Property and equipment	35,436			35,324
Less: accumulated depreciation and amortization	(32,680		)	(32,215		)
Property and equipment, net	$	2,756		$	3,109

(1) Construction in progress includes equipment received but not yet placed into service pending installation.

Intangible Assets, net

Intangible assets, net consisted of the following (in thousands, except weighted average amortization period):



	March 31, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (years)
Developed and core technology	$	1,534	$	(1,534	)	$	—	$	1,534	$	(1,534	)	$	—	5
Maxygen intellectual property	20,244		(18,276		)	1,968		20,244		(17,432		)	2,812		6
Intangible assets, net	$	21,778	$	(19,810	)	$	1,968	$	21,778	$	(18,966	)	$	2,812

The remaining estimated future amortization expense to be charged to research and development through December 31, 2016 is $1.968 million.

Goodwill

Goodwill had a carrying value of approximately $3.2 million at March 31, 2016 and December 31, 2015.

Note 8. Stock-Based Compensation

Equity Incentive Plans

In March 2010, our board of directors (the "Board") and stockholders approved the 2010 Equity Incentive Award Plan (the "2010 Plan"), which became effective upon the completion of our initial public offering in April 2010. The number of shares of our common stock available for issuance under the 2010 Plan is equal to 1,100,000 shares plus any shares of common stock reserved for future grant or issuance under our 2002 Stock Plan (the "2002 Plan") that remained unissued at the time of completion of the initial public offering. The 2010 Plan also provides for automatic annual increases in the number of shares reserved for future issuance. All grants will reduce the 2010 Plan reserve by one share for every share granted.

The 2010 Plan provides for the grant of incentive stock options, non-statutory stock options, RSUs, RSAs, PSUs, stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants.

The option exercise price for incentive stock options is at least 100% of the fair value of our common stock on the date of grant and the option exercise price for nonstatutory stock options is at least 85% of the fair value of our common stock on the date of grant, as determined by the Board. If, at the time of a grant, the optionee directly or by attribution owns stock possessing more than 10% of the total combined voting power of all of our outstanding capital stock, the exercise price for these options must be at least 110% of the fair value of the underlying common stock. Stock options granted to employees generally have a maximum term of 10 years and vest over a four year period from the date of grant 25% vest at the end of one year, and 75% vest monthly over the remaining three years. We may grant options with different vesting terms from time to time. Unless an employee's termination of service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of three months or the expiration of the option, whichever is earlier.

We issue employees RSUs, which generally vest over either a three year period with one-third of the awards vesting on each annual anniversary or a four year period with 25% of the awards vesting on each annual anniversary. We may grant RSUs with different vesting terms from time to time.

Performance-contingent Restricted Stock Units

The compensation committee of the Board has approved grants of PSUs to employees. These awards have dual triggers of vesting based upon the successful achievement of certain corporate operating milestones in specified timelines, as well as a requirement of continued employment. When the performance goals are deemed to be probable of achievement for these types of awards, time-based vesting and, as a result, recognition of stock-based compensation expense commences.

In the first quarter of 2016, we awarded PSUs based upon the achievement of various weighted performance goals, including revenue growth, non-GAAP net income growth, new licensing collaborations, new R&D service revenue arrangements and novel therapeutic enzymes advancement ("2016 PSUs"). These 2016 PSUs vest such that one-half of the 2016 PSUs subject to the award vest approximately one year following the grant, and the remainder of the 2016 PSUs vest approximately two years following the grant, subject to our achievement of the performance goals and the recipient’s continued service on each vesting date. If the performance goals are achieved at the threshold level, the number of shares issuable in respect of the 2016 PSUs would be equal to half the number of 2016 PSUs granted. If the performance goals are achieved at the target level, the number of shares issuable in respect of the 2016 PSUs would be equal to the number of 2016 PSUs granted. If the performance goals are achieved at the superior level, the number of shares issuable in respect of the 2016 PSUs would be equal to two times the number of 2016 PSUs granted. The number of shares issuable upon achievement of the performance goals at the levels between the threshold and target levels or between the target level and superior levels would be determined using linear interpolation. Achievement below the threshold level would result in no shares being issuable in respect of the 2016 PSUs. In first quarter of 2016, we estimated that the 2016 PSU performance goals would be achieved at 100% of the target level. Accordingly, we recognized expense to reflect the target level.

In 2015, we awarded PSUs ("2015 PSUs") based upon the achievement of various weighted performance goals, including revenue growth, non-GAAP net income growth, new licensing collaborations, and securing a drug development partnership ("2015 PSUs"), with other terms similar to the 2014 PSUs and 2016 PSUs. The 2015 PSUs vest one-half respectively in the first quarters of 2016 and 2017, subject to the recipient’s continued service on each vesting date. In the first quarter of 2016, we determined that the 2015 PSU performance goals had been achieved at 92.8% of the target level, and recognized expenses accordingly.

In 2014, we awarded PSUs ("2014 PSUs") based upon the achievement of certain cash flow performance goals, with other terms similar to the 2015 PSUs and 2016 PSUs. The 2014 PSUs vested one-half respectively in the first quarters of 2015 and 2016, subject to the recipient’s continued service on each vesting date. In the first quarter of 2015, we determined that the 2014 PSU performance goals had been achieved at 53.0% of the target level, and recognized expenses accordingly.

Stock-Based Compensation Expense

Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands):



	Three Months Ended March 31,
	2016		2015
Research and development	$	220	$	291
Selling, general and administrative	1,169		994
Total	$	1,389	$	1,285

The following table presents total stock-based compensation expense by security types included in the condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015 (in thousands):



	Three Months Ended March 31,
	2016		2015
Stock options	$	304	$	248
RSUs and RSAs	574		792
PSUs	511		245
Total	$	1,389	$	1,285

As of March 31, 2016, unrecognized stock-based compensation expense, net of expected forfeitures, was $2.7 million related to unvested employee stock options, $2.2 million related to unvested RSUs and RSAs and $2.4 million related to unvested PSUs.

Valuation Assumptions

The weighted-average assumptions used to estimate the fair value of employee stock options granted were as follows:



	Three Months Ended March 31,
	2016			2015
Expected term (in years) ⁽¹⁾	5.4			6.0
Volatility	65		%	66		%
Risk-free interest rate	1.30		%	1.69		%
Dividend yield	—		%	—		%
Weighted-average estimated fair value of stock options granted	$	2.31		$	2.05

(1) We had, due to insufficient historical data, used the “simplified method,” as described in Staff Accounting Bulletin No. 107, “Share-Based Payment,” to determine the expected term of all stock options granted from the inception of our equity plans through the first half of 2015. Beginning in the third quarter of 2015, we believe we have sufficient historical data to calculate expected terms for stock options granted. (See Note 2, "Basis of Presentation and Summary of Significant Accounting Policies").

Note 9. Capital Stock

Exercise of options

For the three months ended March 31, 2016 and 2015, 4,466 and 64,263 shares were exercised at a weighted-average exercise price of $1.61 and $1.93 per share, respectively, with net cash proceeds of $7 thousand and $124 thousand, respectively.

Warrants

Our outstanding warrants are exercisable for common stock at any time during their respective terms. As of March 31, 2016, the following warrants remain outstanding:



	March 31, 2016
Issue Date	Shares Subject to Warrants	Exercise Price per Share		Expiration
September 28, 2007	72,727	$	8.25	September 28, 2017

Note 10. Commitments and Contingencies

Operating Leases

Our headquarters are located in Redwood City, California, where we occupy approximately 107,200 square feet of office and laboratory space in four buildings within the same business park of Metropolitan Life Insurance Company ("Met-Life"). We entered into the initial lease with Met-Life for a portion of this space in 2004 and the lease has been amended multiple times since then to adjust space and amend the terms of the lease, with the latest amendment being in 2012. The various terms for the spaces under the lease have expiration dates that range from January 2017 through January 2020. In October 2015, we entered into an agreement to sublet a portion of our headquarters to a subtenant effective January 2016. This sublease expires in November 2019.

We incurred $3.6 million of capital improvement costs related to the facilities leased from Met-Life through December 31, 2012. During 2011 and 2012, we requested and received $3.1 million of reimbursements from the landlord from the tenant improvement and HVAC allowances for the completed construction. The reimbursements were recorded once cash was received and are amortized on a straight line basis over the term of the lease as a reduction in rent expense. The remaining lease incentive obligation was $1.6 million at March 31, 2016, and is reflected in other liabilities on the consolidated balance sheet. Rent expense for the Redwood City properties is recognized on a straight-line basis over the term of the lease.

We are required to restore certain of the Redwood City facilities that we are renting to their original form. We are expensing the asset retirement obligation over the terms of the respective leases. We review the estimated obligation each reporting period and make adjustments if our estimates change. We recorded asset retirement obligations of $0.4 million as of both March 31, 2016 and December 31, 2015, which are included in other liabilities on the consolidated balance sheets Accretion expense related to our asset retirement obligations was nominal in the three months ended March 31, 2016 and nominal in the three months ended March 31, 2015.

Pursuant to the terms of the amended lease agreement, we exercised our right to deliver a letter of credit in lieu of a security deposit. The letters of credit are collateralized by deposit balances held by the bank in the amount of $0.7 million as of March 31, 2016 and December 31, 2015. These deposits are recorded as restricted cash on the consolidated balance sheets.

Rent expense was $0.9 million and $0.8 million in the three months ended March 31, 2016 and 2015, respectively, partially offset by sublease income of $0.2 million and $0.2 million during the respective periods.

Future minimum payments under noncancellable operating leases are as follows at March 31, 2016 (in thousands):



Years ending December 31,	Lease payments
2016 (9 months remaining)	$	2,128
2017	2,677
2018	2,736
2019	2,818
2020 and beyond	236
Total	$	10,595

Minimum payments have not been reduced by future minimum sublease rentals of $2.5 million to be received under non-cancellable subleases at March 31, 2016.

Legal Proceedings

On February 19, 2016, we filed a complaint against EnzymeWorks, Inc., a California corporation, EnzymeWorks, Inc., a Chinese corporation, and Junhua “Alex” Tao (collectively, the “Defendants”) in the United States District Court for the Northern District of California. The complaint alleges that the Defendants have engaged in willful patent infringement, trade secret misappropriation, breach of confidence, intentional interference with contractual relations, intentional interference with prospective economic relations and statutory and common law unfair competition. We have sought injunctive relief, monetary damages, treble damages, restitution, punitive damages and attorneys’ fees. We are unable to determine when this litigation will be resolved or its ultimate outcome.

Other than our litigation against the Defendants, we are not currently a party to any material litigation or other material legal proceedings.

Indemnifications

We are required to recognize a liability for the fair value of any obligations we assume upon the issuance of a guarantee. We have certain agreements with licensors, licensees and collaborators that contain indemnification provisions. In such provisions, we typically agree to indemnify the licensor, licensee and collaborator against certain types of third party claims. The maximum amount of the indemnifications is not limited. We accrue for known indemnification issues when a loss is probable and can be reasonably estimated. There were no accruals for expenses related to indemnification issues for any periods presented.

Note 11. Related Party Transactions

Exela PharmSci, Inc.

Since September 2007, we have been party to a license agreement with Exela PharmaSci, Inc. (“Exela”). Under the license agreement, as amended, we and Exela cross-licensed certain technology relating to the manufacture of argatroban, an active pharmaceutical ingredient, in exchange for rights to certain sublicensing fees or development payments and profit sharing.

CMEA Ventures Life Sciences 2000, L.P. and its affiliate held approximately 7.4% of our common stock until its sale of all such shares on November 10, 2014 to Presidio Partners 2014, L.P. Presidio Partners 2007, L.P. (formerly CMEA Ventures VII, L.P.) owns over 10% of Exela’s outstanding capital stock. Thomas R. Baruch, one of our directors, serves on the board of directors of Exela, and is a general partner in Presidio Partners 2007, L.P. Mr. Baruch is also a general partner in CMEA Ventures Life Sciences 2000, L.P. Mr. Baruch has no direct or indirect pecuniary interest in the shares of our common stock owned by Presidio Partners 2014, L.P.

We recognized $0.7 million and $1.5 million for the three months ended March 31, 2016 and 2015, respectively, shown in the consolidated statement of operations as revenue sharing arrangement. We had no receivables from Exela at March 31, 2016 and December 31, 2015.

Note 12. Significant Customer and Geographic Information

Significant Customers

Customers that each contributed 10% or more of our total revenues were as follows:



	Percentage of Total Revenues for the
	Three Months Ended March 31,
	2016		2015
Customer A	37	%	27	%
Customer B	18	%	*
Customer C (related party)	*		22	%
Customer D	*		11	%

* Less than 10% in period presented

Customers that each contributed 10% or more of our total accounts receivable had the following balances for the periods presented:



	Percentage of Accounts Receivables at
	March 31, 2016		December 31, 2015
Customer A	42	%	12	%
Customer B	17	%	*
Customer D	*		22	%
Customer E ⁽¹⁾	*		40	%

* Revenue percentage was less than 10%, accounts receivable balance not applicable

(1) This represents a $3.1 million settlement relating to past-due payments and settlement of future payments associated with our royalty business with a non-core customer as of December 31, 2015. We collected the full amount in February 2016.

Geographic Information

Geographic revenues are identified by the location of the customer and consist of the following (in thousands):



	Three Months Ended March 31,
Revenues:	2016		2015
United States	$	4,095	$	4,297
Asia
India	1,023		121
Singapore	955		—
Others	225		221
Europe	1,698		2,159
Total revenues	$	7,996	$	6,798

Identifiable long-lived assets were all in the United States as follows (in thousands):



Long-lived assets:	March 31, 2016		December 31, 2015
United States	$	4,926	$	6,231

Note 13. Subsequent event

On May 2, 2016, Codexis announced the completion of the third and final Wave in the transfer of its proprietary CodeEvolver^® protein engineering platform technology to GlaxoSmithKline (GSK). Codexis expects to receive a $7.5 million payment from GSK for completion of this milestone in the second quarter of 2016.



ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2015 included in our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 8, 2016 (the "Annual Report"). This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, expectations regarding our strategy, business plans, financial performance and developments relating to our industry. These statements are often identified by the use of words such as may, will, expect, believe, anticipate, intend, could, should, estimate, or continue, and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in Part I, Item 1A of our Annual Report, as incorporated herein and referenced in Part II, Item 1A of this Quarterly Report on Form 10-Q and elsewhere in this report. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Business Overview

Biocatalysts are enzymes that initiate and/or accelerate chemical reactions. Manufacturers have historically used naturally occurring biocatalysts to produce many goods used in everyday life. However, inherent limitations in naturally occurring biocatalysts have restricted their commercial use. Our proprietary CodeEvolver^® protein engineering technology platform (the "CodeEvolver^® protein engineering technology platform"), which introduces genetic mutations into microorganisms in order to give rise to changes in enzymes that they produce, is able to overcome many of these limitations, allowing us to evolve and optimize biocatalysts to perform specific and desired chemical reactions at commercial scale. Once potentially beneficial mutations are identified through this proprietary process, combinations of these mutations can then be tested until variant enzymes have been created that exhibit marketable performance characteristics superior to competitive products. This process allows for continuous, efficient improvements to the performance of enzymes. In the past, we implemented the CodeEvolver^® protein engineering technology platform through paid collaborations with our customers. In July 2014, we entered into our first license agreement pursuant to which we granted a license to a global pharmaceutical company to use the CodeEvolver^® protein engineering technology platform for their internal development purposes. In August 2015, we entered into a license agreement involving the CodeEvolver^® protein engineering technology platform with another global pharmaceutical company and we continue to pursue licensing opportunities with additional customers.

We also use our technology to develop biocatalysts for use in the fine chemicals market. The fine chemicals market consists of several large market verticals, including food and food ingredients, animal feed, flavors and fragrances, and agricultural chemicals.

We are actively collaborating with new and existing customers in the pharmaceutical and other markets and we believe that we can utilize our products and services, and develop new products and services, to increase our revenue and gross margins in future periods.

Results of Operations Overview

Revenues were $8.0 million for the first quarter of 2016, an increase of 18% from $6.8 million for the first quarter of 2015. The increase in revenues was due to the achievement of biocatalyst research and development milestones and higher biocatalyst product sales during the first quarter of 2016, partially offset by lower revenues from our revenue sharing arrangement with Exela PharmSci, Inc. ("Exela").

Revenues from biocatalyst product sales increased by $0.7 million, or 22%, to $3.7 million for the first quarter of 2016 compared to the same period in 2015, primarily due to the timing of customer demands, in particular higher sales of enzymes for Merck's sitagliptin manufacturing in the current quarter.

Revenues from biocatalyst research and development increased by $1.3 million, or 61% to $3.5 million for the first quarter of 2016, compared to the same period in 2015, primarily due to the achievement of a milestone under our collaboration agreement with a major biopharmaceutical company.

Revenues from our revenue sharing arrangement with Exela decreased by $0.8 million, or 53%, to $0.7 million for the first quarter of 2016 compared to the same period in 2015. The decrease was due to lower sales of the argatroban injectable drug, resulting from the expiration of the formulation patent for argatroban in June 2014, and subsequent generic competition.

Cost of biocatalyst product sales increased by $1.0 million or 71% to $2.5 million for the first quarter of 2016, compared to the same period in 2015, due primarily to higher biocatalyst product sales.

Product gross margins were 33% in the three months ended March 31, 2016, compared to 53% in the same period in 2015 due to the current period sales mix.

Research and development expenses increased by $0.4 million or 7% to $5.7 million in the first quarter of 2016, due primarily to incremental consulting fees related to the evaluation of new drug development targets.

Selling, general and administrative expense increased by $1.2 million or 22% to $6.8 million for the first quarter of 2016 primarily a result of higher legal expenses, incremental consulting fees relating to exploration of a new adjacent market, and higher marketing expenses.

Net loss for the first quarter of 2016 was $7.0 million, representing a net loss of $0.17 per share, which compares to a net loss of $5.6 million, or a net loss of $0.14 per share, for the first quarter of 2015. The net loss increase between the two periods of $1.4 million is primarily related to lower product gross margins and higher selling, general and administrative expense in the current period.

Cash and cash equivalents decreased by $1.1 million to $22.2 million as of March 31, 2016 compared to $23.3 million as of December 31, 2015. Net cash provided by operating activities was $0.2 million in the three months ended March 31, 2016 compared to $3.8 million cash used in the three months ended March 31, 2015. We believe that based on our current level of operations, our existing cash, cash equivalents, and marketable securities will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements for at least the next 12 months.

GSK Platform Technology Transfer, Collaboration and License Agreement

In July 2014, we entered into the GSK CodeEvolver^® Agreement. Pursuant to the terms of the agreement, we granted GSK a non-exclusive license to use the CodeEvolver^® Platform Technology to develop novel enzymes for use in the manufacture of GSK's pharmaceutical and health care products.

We received a $6.0 million up-front license fee upon execution of the GSK CodeEvolver^® Agreement and subsequently a $5.0 million non-creditable, non-refundable milestone payment upon achievement of the first milestone in 2014. In September 2015, we achieved the second milestone and recognized the related milestone payment of $6.5 million. In the second quarter of 2016, we became eligible to receive an additional contingent payment of $7.5 million upon the completion of the three-year technology transfer period. (See Note 13, "Subsequent event" for details.) We also have the potential to receive additional contingent payments that range from $5.75 million to $38.5 million per project based on GSK’s successful application of the licensed technology. The contingent payments are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to GSK’s performance of future development and commercialization activities.

For up to three years following the end of the technology transfer period, GSK can exercise an option, upon payment of certain additional fees, that would extend GSK’s license to include certain improvements to the CodeEvolver^® protein engineering technology platform that arise during such additional period. In addition, we are eligible to receive royalties based

on net sales, if any, of a limited set of products developed by GSK using the CodeEvolver® protein engineering technology platform.

The up-front license fee of $6.0 million is being recognized over the technology transfer period of three years, starting July 2014. We recognized license fees of $0.5 million and $0.5 million for the three months ended March 31, 2016 and 2015, respectively, as biocatalyst research and development revenues. We had a deferred revenue balance from GSK related to the upfront license fee of $2.5 million at March 31, 2016 and $3.0 million at December 31, 2015.

Merck Platform Technology Transfer and License Agreement

In August 2015, we entered into a CodeEvolver^® platform technology transfer and license agreement (the "Merck CodeEvolver^® Agreement") with Merck, which allows Merck to use the CodeEvolver^®protein engineering technology platform in the field of human and animal healthcare.

We received a $5.0 million up-front license fee upon signing the Merck CodeEvolver^® Agreement, which is being recognized ratably over two years. We achieved the first milestone in of the Merck CodeEvolver^® Agreement earning a milestone payment of $5.0 million. We are eligible to receive an additional $8.0 million subject to the satisfactory completion of the second milestone of the technology transfer process. We will also be eligible to receive payments of up to a maximum of $15.0 million for each commercial API that is manufactured by Merck using one or more novel enzymes developed by Merck using the CodeEvolver^® protein engineering technology platform.

Under the Merck CodeEvolver^®Agreement, we will transfer the CodeEvolver^® protein engineering technology platform to Merck over an approximately 15 to 24 month period starting on the effective date of the agreement. As part of this technology transfer, we will provide to Merck our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms. Upon completion of technology transfer, Merck will have CodeEvolver^® protein engineering technology platform installed at its designated site.

At the end of the technology transfer period, Merck can exercise annual options that, upon payment of certain option fees, would extend Merck's license to include certain improvements to the CodeEvolver^® protein engineering technology platform that arise during the three-year period that begins at the end of the technology transfer period. Through November 3, 2016, we will provide additional enzyme evolution services to Merck at our laboratories in Redwood City.

We recognized license fees of $0.6 million for the three months ended March 31, 2016, as biocatalyst research and development revenue and had a deferred revenue balance from Merck related to the Merck License Agreement license fees of $3.3 million at March 31, 2016 and $4.0 million at December 31, 2015.

Results of Operations

The following table shows the amounts from our consolidated statements of operations for the periods presented (in thousands):



	Three months ended March 31,						Change
	2016			2015			$			%
Revenues:
Biocatalyst product sales	$	3,740		$	3,076		$	664		22	%
Biocatalyst research and development	3,534			2,197			1,337			61	%
Revenue sharing arrangement	722			1,525			(803		)	(53	)%
Total revenues	7,996			6,798			1,198			18	%
Costs and operating expenses:
Cost of biocatalyst product sales	2,489			1,456			1,033			71	%
Research and development	5,686			5,293			393			7	%
Selling, general and administrative	6,802			5,578			1,224			22	%
Total costs and operating expenses	14,977			12,327			2,650			21	%
Loss from operations	(6,981		)	(5,529		)	(1,452		)	26	%
Interest income	15			4			11			275	%
Other income (expense)	3			(25		)	28			(112	)%
Loss before income taxes	(6,963		)	(5,550		)	(1,413		)	25	%
Provision for income taxes	11			12			(1		)	(8	)%
Net loss	$	(6,974	)	$	(5,562	)	$	(1,412	)	25	%

Our revenues are comprised of biocatalyst product sales, biocatalyst research and development arrangements, and a revenue sharing arrangement.

•Biocatalyst product sales revenues consist of sales of biocatalyst enzymes, chemical intermediates, and Codex^® Biocatalyst Panels and Kits.

•Biocatalyst research and development revenues include license, technology access and exclusivity fees, research services FTE, milestone payments, royalties, and optimization and screening fees.

•Revenue sharing arrangement revenues are recognized based upon sales of licensed products by Exela.



	Three months ended March 31,				Change
(In Thousands)	2016		2015		$			%
Biocatalyst product sales	$	3,740	$	3,076	$	664		22	%
Biocatalyst research and development	3,534		2,197		1,337			61	%
Revenue sharing arrangement	722		1,525		(803		)	(53	)%
Total revenues	$	7,996	$	6,798	$	1,198		18	%

Revenues typically fluctuate on a quarterly basis due to the variability in our customers' manufacturing schedules and the timing of our customers' clinical trials. In addition, we have limited internal capacity to manufacture enzymes. As a result, we are dependent upon the performance and capacity of third party manufacturers for the commercial scale manufacturing of the enzymes used in our pharmaceutical and fine chemicals business.

We accept purchase orders for deliveries covering periods from one day up to approximately one year from the date on which the order is placed. However, purchase orders can generally be revised or cancelled by the customer without penalty. Considering these industry practices and our experience, we do not believe the total of customer purchase orders outstanding (backlog) provides meaningful information that can be relied on to predict actual sales for future periods.

Total revenues increased $1.2 million or 18% in the three months ended March 31, 2016, compared to the same period in 2015 as a result of the increase in biocatalyst product sales and biocatalyst research and development revenues, partially offset by a decrease from our revenue-sharing arrangement with Exela.

Biocatalyst product sales increased $0.7 million or 22% in the three months ended March 31, 2016, compared to the same period in 2015, due to the timing of customer demands during the three months ended March 31, 2016 compared to 2015. This primarily resulted from a year-over-year increase in enzyme sales for Merck's sitagliptin manufacturing, offset by the timing of customer demand, including the $0.8 million shipment made to a customer in the first quarter of 2015, which did not recur in the corresponding period of 2016.

Biocatalyst research and development revenues increased approximately $1.3 million or 61% in the three months ended March 31, 2016, compared to the same period in 2015. This was primarily due to achievement of a milestone under our collaboration agreement with a major biopharmaceutical company in the first quarter of 2016.

Revenues from the revenue-sharing arrangement with Exela for the sales of argatroban injectable drug decreased $0.8 million or 53% during the three months ended March 31, 2016, compared to the same period in 2015. This is a result of the expiration of the formulation patent for argatroban in June 2014, allowing for generic competition in the subsequent quarters after expiration of the patent. We expect that revenue-sharing arrangement revenues may decline in future quarters due to increased competition resulting from the expiration of the third party patent related to the production of argatroban.

Cost and Operating Expenses



	Three months ended March 31,				Change
(In Thousands)	2016		2015		$		%
Cost of biocatalyst product sales	$	2,489	$	1,456	$	1,033	71	%
Research and development expense	5,686		5,293		393		7	%
Selling, general and administrative expense	6,802		5,578		1,224		22	%
Total costs and operating expenses	$	14,977	$	12,327	$	2,650	21	%

Cost of Biocatalyst Product Sales and Product Gross Margin



	Three months ended March 31,				Change
(In Thousands)	2016		2015		$			%
Revenues from biocatalyst product sales	$	3,740	$	3,076	$	664		22	%
Cost of biocatalyst product sales	2,489		1,456		1,033			71	%
Biocatalyst product gross profit	$	1,251	$	1,620	$	(369	)	(23	)%
Product gross margin (%)	33%		53%

Cost of biocatalyst product sales comprises both internal and third-party fixed and variable costs, including the amortization of purchased technology, materials and supplies, labor, facilities and other overhead costs associated with our biocatalyst product sales.

Our cost of biocatalyst product sales increased by $1.0 million, or 71%, during the three months ended March 31, 2016, compared to the same period in 2015, due primarily to higher biocatalyst product sales. Product gross margins were 33% in the three months ended March 31, 2016, compared to 53% in the same period in 2015 due to changes in the current period product sales mix.

Research and Development Expenses

Research and development expenses consist of costs incurred for internal projects as well as partner-funded collaborative research and development activities. These costs primarily consist of (i) employee-related costs, which include salaries and other personnel-related expenses (including stock-based compensation), (ii) various allocable expenses, which include occupancy-related costs, supplies, depreciation of facilities and laboratory equipment and amortization of acquired technologies, and (iii) external costs. Research and development expenses are expensed when incurred.

Research and development expenses increased by $0.4 million or 7% during the three months ended March 31, 2016, compared to the same period in 2015, due primarily to incremental consulting fees related to the evaluation of new drug development targets.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of employee-related costs, which include salaries and other personnel related expenses (including stock-based compensation), hiring and training costs, consulting and outside services expenses (including audit and legal counsel related costs), marketing costs, building lease costs, and depreciation and amortization expenses.

Selling, general and administrative expenses increased by $1.2 million, or 22%, for the three months ended March 31, 2016, compared to the same period in 2015, primarily a result of higher legal expenses, incremental consulting fees relating to exploration of a new adjacent market, and higher marketing expenses.

Interest income and other income (expense)



	Three months ended March 31,					Change
(In Thousands)	2016		2015			$		%
Interest income	$	15	$	4		$	11	275	%
Other income (expense)	3		(25		)	28		(112	)%
Total other expenses	$	18	$	(21	)	$	39	(186	)%

Changes in interest income were modest during the three months ended March 31, 2016 compared to the same period in 2015, driven primarily by higher interest rates earned on smaller cash and cash equivalent balances.

Other income (expense) improved for the three months ended March 31, 2016 compared to the same period in 2015, primarily related to fluctuations in foreign currency.

Provision for income taxes

We recognized income tax provisions of $11 thousand and $12 thousand for the three months ended March 31, 2016 and 2015, respectively. We continue to recognize a full valuation allowance against our net deferred tax assets as we believe that it is more likely than not that the majority of our deferred tax assets will not be realized.

Liquidity and Capital Resources

Liquidity is the measurement of our ability to meet working capital needs and to fund capital expenditures. Our sources of cash include operations and, to a lesser extent, stock option exercises. We actively manage our cash usage and investment of liquid cash to ensure the maintenance of sufficient funds to meet our daily needs. The majority of our cash and investments are held in U.S. banks, and our foreign subsidiaries maintain a limited amount of cash in their local banks to cover their short-term operating expenses.

The following tables summarize our cash and cash equivalents and working capital as of March 31, 2016 and December 31, 2015, as well as our statements of cash flows for the three months ended March 31, 2016 and 2015:



(In Thousands)	March 31, 2016		December 31, 2015
Cash and cash equivalents	$	22,163	$	23,273
Working capital	$	12,291	$	17,998



	Three months ended March 31,
(In Thousands)	2016			2015
Net cash provided by (used in) operating activities	$	219		$	(3,848	)
Net cash used in investing activities	(238		)	(47		)
Net cash used in financing activities	(1,091		)	(433		)
Net decrease in cash and cash equivalents	$	(1,110	)	$	(4,328	)

We have historically experienced negative cash flows from operations as we continue to invest in key technology development projects and improvements to our biocatalysis technology platform, and expand our business development and collaborations with new customers. Our cash flows from operations will continue to be affected principally by sales and gross margins from biocatalyst product sales and research and development services provided to customers, as well as our headcount costs, primarily in research and development. Our primary source of cash flows from operating activities is cash receipts from our customers for purchases of biocatalyst products and/or biocatalyst research and development services. Our largest uses of cash from operating activities are for employee-related expenditures, rent payments, inventory purchases to support our product sales and non-payroll research and development costs.

We are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives and certain royalty payments 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. We expect to receive payments totaling $15.5 million during the remaining nine months of 2016 from the achievement of milestones under our collaborative arrangements with Merck and GSK, including the completion of the $7.5 million third Wave milestone with GSK, announced May 2, 2016 (See Note 13 "Subsequent event"). We are actively collaborating with new and existing customers in the pharmaceutical and food industries. We expect that we can utilize our current products and services, and develop new products and services, to increase our revenue and gross margins in future periods.

We believe that based on our current level of operations, our existing cash and cash equivalents will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements for at least the next 12 months. However, we may need additional capital if our current plans and assumptions change. Our need for additional capital will depend on many factors, including the financial success of our business, the spending required to develop and commercialize new and existing products, the effect of any acquisitions of other businesses, technologies or facilities that we may make or develop in the future, our spending on new market opportunities, and the potential costs for the filing, prosecution, enforcement and defense of patent claims, if necessary.

If our capital resources are insufficient to meet our capital requirements, and we are unable to enter into or maintain collaborations with partners that are able or willing to fund our development efforts or commercialize any products that we develop or enable, we will have to raise additional funds to continue the development of our technology and products and complete the commercialization of products, if any, resulting from our technologies. If future financings involve the issuance of equity securities, our existing stockholders would suffer dilution. If we raise debt financing, we may be subject to restrictive covenants that limit our ability to conduct our business. We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. If we fail to raise sufficient funds and fail to generate sufficient revenue to achieve planned gross margins and to control operating costs, our ability to fund our operations, take advantage of strategic opportunities, develop products or technologies, or otherwise respond to competitive pressures could be significantly limited. If this happens, we may be forced to delay or terminate research or development programs or the commercialization of products resulting from our

technologies, curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights, or grant licenses on terms that are not favorable to us. If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.

Cash Flows from Operating Activities

Cash provided by operating activities was $0.2 million net for the three months ended March 31, 2016, resulting from a net loss of $7.0 million for the three months ended March 31, 2016 adjusted for non-cash charges for depreciation and amortization of $1.3 million and stock-based compensation of $1.4 million. Additional offset from changes in operating assets and liabilities provided $4.5 million net cash, related primarily to the $3.0 million net reduction in accounts receivable and increases of $1.2 million in other accrued liabilities and $1.0 million in accrued compensation compared to December 31, 2015. Such cash provided was partially offset by cash uses in working capital for decreases of $0.4 million in accounts payable, $0.2 million in deferred revenue and $0.1 million in lease incentives.

Cash used in operating activities was $3.8 million for the three months ended March 31, 2015, resulting from a net loss of $5.6 million for the three months ended March 31, 2015, adjusted for non-cash charges for depreciation and amortization of $1.4 million and stock-based compensation of $1.3 million. Additional cash used of $1.0 million for operating assets and liabilities related primarily to the payment of accounts payable and accrued liabilities as of December 31, 2014.

Cash Flows from Investing Activities

Cash used in investing activities was $238 thousand and $47 thousand for the three months ended March 31, 2016 and 2015, respectively, primarily due to the purchase of property and equipment.

Cash Flows from Financing Activities

Cash used in financing activities was $1.1 million and $0.4 million for the three months ended March 31, 2016 and 2015, respectively. This consisted primarily of the payment of taxes related to the net share settlement of equity awards, and in the case of the three months ended March 31, 2015 was partially offset by $0.1 million in proceeds from the exercise of employee stock options.

Contractual Obligations

Our contractual obligations principally arise from operating leases primarily related to our leased facilities in Redwood City, California. There have been no significant changes in our payments due under contractual obligations, compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

Off-Balance Sheet Arrangements

As of March 31, 2016. we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4) of Regulation S-K as promulgated by the SEC.

Critical Accounting Policies and Estimates

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 significant changes to our critical accounting policies as discussed in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 8, 2016.



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Management

Our cash flows and earnings are subject to fluctuations due to changes in foreign currency exchange rates, interest rates and other factors. There were no significant changes in our market risk exposures for the three months ended March 31, 2016. This is discussed in further detail in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 8, 2016.

Equity Price Risk

As described in Note 5, "Marketable Securities" and Note 6, "Fair Value Measurements" to the condensed consolidated financial statements, we have an investment in common shares of CO2 Solutions, whose shares are publicly traded in Canada on the TSX Venture Exchange. As of March 31, 2016, the fair value of our investment in CO2 Solutions' common stock was $1.5 million, including an unrealized gain of $0.9 million.

This investment is exposed to fluctuations in both the market price of CO2 Solutions' common shares and changes in the exchange rate between the U.S. dollar and the Canadian dollar. The effect of a 10% adverse change in the market price of CO2 Solution's common shares as of March 31, 2016 would have been an unrealized loss of approximately $0.1 million, recognized as a component of our condensed consolidated statements of comprehensive loss. The effect of a 10% adverse change in the exchange rate between the U.S. dollar and the Canadian dollar as of March 31, 2016 would have been an unrealized loss of approximately $0.1 million, recognized as a component of our condensed consolidated statements of comprehensive loss.



ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures and internal controls that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2016 based on the guidelines established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2016, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, even if determined effective and no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives to prevent or detect misstatements. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II. OTHER INFORMATION



ITEM 1.	LEGAL PROCEEDINGS

Other than our litigation against the Defendants, we are not currently a party to any material litigation or other material legal proceedings.



ITEM 1A.	RISK FACTORS

We have included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015, a description of certain risks and uncertainties that could affect our business, future performance or financial condition (the "Risk Factors"). During the three months ended March 31, 2016, there were no material changes with respect to the Risk Factors from the disclosure provided in the Form 10-K for the year ended December 31, 2015. Investors should consider the Risk Factors, as provided therein, prior to making an investment decision with respect to our stock.



ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.



ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.



ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.



ITEM 5.	OTHER INFORMATION

Not applicable.



ITEM 6.	EXHIBITS

See the Exhibit Index on the page immediately following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed as part of this Quarterly Report, which Exhibit Index is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




		Codexis, Inc.

Date:	May 9, 2016	By:	/s/ John J. Nicols
			John J. Nicols President and Chief Executive Officer (principal executive officer)

Date:	May 9, 2016	By:	/s/ Gordon Sangster
			Gordon Sangster Chief Financial Officer (principal financial and accounting officer)

EXHIBIT INDEX

Listed and indexed below are all Exhibits filed as part of this report.



ITEM 6.	Exhibits



3.1			Amended and Restated Certificate of Incorporation of Codexis, Inc. filed with the Secretary of the State of the State of Delaware on April 27, 2010 and effective as of April 27, 2010 (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010).

3.2			Certificate of Designations of Series A Junior Participating Preferred Stock of Codexis, Inc., filed with the Secretary of State of the State of Delaware on September 4, 2012 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on September 4, 2012).

3.3			Amended and Restated Bylaws of Codexis, Inc. effective as of April 27, 2010 (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on May 28, 2010).

4.1			Reference is made to Exhibits 3.1 through 3.3.

4.2			Form of the Company's Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed on August 9, 2012).

4.3*			Form of Warrant to purchase shares of Series D preferred stock issued in connection with the Bridge Loan Agreement dated as of May 25, 2006.

4.4.*			Form of Warrant to purchase shares of Series D preferred stock issued in connection with the Loan and Security Agreement dated as of September 28, 2007.

4.5*			Warrant to purchase shares of Common Stock issued to Alexandria Equities, LLC.

4.6*			Registration Rights Agreement among the Company, Jülich Fine Chemicals GmbH and the other parties named therein, dated February 11, 2005.

10.1+			Amendment to Change of Control Severance Agreement between the Company and James LaLonde, dated March 21, 2016.

10.2+			Amendment to Change of Control Severance Agreement between the Company and Gordon Sangster, dated March 21, 2016.

31.1			Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2			Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1			Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

101			The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015, (ii) Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2016 and 2015, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2016 and 2015, (iv) Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015, and (v) Notes to Condensed Consolidated Financial Statements.

* Filed as exhibits to the registrant’s Registration Statement on Form S-1 (File No. 333-164044), effective April 21, 2010, and incorporated herein by reference.

+ Indicates a management contract or compensatory plan or arrangement.

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Use of Estimates

Segment Reporting

Revenue Recognition

Biocatalyst Product Sales

Biocatalyst Research and Development

We recognize revenues from royalties based on licensees' sales of our biocatalyst products or products using our technologies.

Revenue Sharing Arrangement

Sales Allowances

Cost of Biocatalyst Product Sales

Cost of Research and Development Services

Research and Development Expenses

Stock-Based Compensation

Foreign Currency Translation

Cash and Cash Equivalents

Inventories

Marketable Securities

Fair Value Measurements


•	Level 1: Inputs that are unadjusted, quoted prices in active markets that are accessible at the measurement date for assets or liabilities.


•	Level 2: Inputs (other than quoted prices included in Level 1) 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.

Concentrations of Credit Risk

Intangible Assets

Impairment of Long-Lived Assets

Goodwill

Income Taxes

The Tax Reform Act of 1986 and similar state provisions limit the use of net operating loss carryforwards in certain situations where equity transactions result in a change of ownership as defined by Internal Revenue Code Section 382. In the event we should experience such a change of ownership, utilization of our federal and state net operating loss carryforwards could be limited. We maintain a full valuation allowance against net deferred tax assets as we believe that it is more likely than not that the majority of deferred tax assets will not be realized.

Recently Issued and Adopted Accounting Guidance

In April 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing," adding clarification, while retaining the core principles in the revenue guidance. For identifying performance obligations, the ASU clarifies when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. For licensing, the ASU clarifies how an entity should evaluate the nature of its promise in granting a license of IP, which will determine whether it recognizes revenue over time (“symbolic IP”) or at a point in time (“functional IP”).The effective date and transition requirements for these amendments are the same as those of the new revenue standard (ASU 2014-09, as amended by ASU 2015-14).

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2016	Apr. 29, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	CODEXIS INC
Entity Central Index Key	0001200375
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		40,788,170

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 421	$ 421
Preferred Stock, Par or Stated Value Per Share	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Preferred Stock, Shares Outstanding	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares, Issued	41,081,000	40,636,000
Common Stock, Shares, Outstanding	40,788,000	40,343,000

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (6,974)	$ (5,562)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax expense of $0 and $8 for the three months ended March 31, 2016 and 2015, respectively.	(90)	16
Other comprehensive income (loss)	(90)	16
Total comprehensive loss	$ (7,064)	$ (5,546)

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Tax (benefit) expense from marketable securities	$ 0	$ 8

Description of Business	3 Months Ended
Description of Business	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business In these notes to the condensed consolidated financial statements, the "Company," "we," "us," and "our" refer to Codexis, Inc. and its subsidiaries on a consolidated basis. We develop biocatalysts for the pharmaceutical and fine chemicals markets. Our proven technologies enable scale-up and implementation of biocatalytic solutions to meet customer needs for rapid, cost-effective and sustainable process development, from research to manufacturing. Biocatalysts are enzymes that initiate and/or accelerate chemical reactions. Manufacturers have historically used naturally occurring biocatalysts to produce many goods used in everyday life. However, inherent limitations in naturally occurring biocatalysts have restricted their commercial use. Our proprietary CodeEvolver^® protein engineering technology platform, which introduces genetic mutations into microorganisms in order to give rise to changes in enzymes that they produce, is able to overcome many of these limitations, allowing us to evolve and optimize biocatalysts to perform specific and desired chemical reactions at commercial scale. Once potentially beneficial mutations are identified through this proprietary process, combinations of these mutations can then be tested until variant enzymes have been created that exhibit marketable performance characteristics superior to competitive products. This process allows for continuous, efficient improvements to the performance of enzymes. In the past, we implemented the CodeEvolver^® protein engineering technology platform through paid collaborations with our customers. In July 2014, we entered into our first license agreement pursuant to which we granted a license to a global pharmaceutical company to use the CodeEvolver^® protein engineering technology platform for its internal development purposes. In August 2015, we entered into a license agreement involving the CodeEvolver^® protein engineering technology platform with a second global pharmaceutical company and we continue to pursue licensing opportunities with additional customers. We have commercialized our technology and products in the pharmaceuticals market, which is our primary business focus. Our customers, which include several large global pharmaceutical companies, use our technology, products and services in their manufacturing processes and process development. We also use our technology to develop biocatalysts for use in the fine chemicals market. The fine chemicals market consists of several large market verticals, including food, animal feed, flavors, fragrances, and agricultural chemicals. We are also using our technology to develop an early stage, novel enzyme therapeutic product candidate for the potential treatment of phenylketonuria ("PKU") in humans. PKU is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient. We are actively collaborating with new and existing customers in the pharmaceutical and other markets.


1.	I have reviewed this Quarterly Report on Form 10-Q of Codexis, Inc.;


2.	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;


3.	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;


4.	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:


(a)	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;


(b)	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;


(c)	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


(d)	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


(a)	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


(b)	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.


•	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


•	The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 22,163	$ 23,273
Accounts receivable, net of allowances of $421 at March 31, 2016 and December 31, 2015	4,352	7,329
Inventories	1,021	992
Prepaid expenses and other current assets	1,239	1,245
Total current assets	28,775	32,839
Restricted cash	787	787
Marketable securities	1,459	1,549
Property and equipment, net	2,756	3,109
Intangible assets, net	1,968	2,812
Goodwill	3,241	3,241
Other non-current assets	202	310
Total assets	39,188	44,647
Current liabilities:
Accounts payable	2,850	3,399
Accrued compensation	4,305	3,331
Other accrued liabilities	3,224	2,013
Deferred revenue	6,105	6,098
Total current liabilities	16,484	14,841
Deferred revenue, net of current portion	2,929	3,120
Lease incentive obligation, net of current portion	1,204	1,310
Other long-term liabilities	$ 2,458	$ 2,497
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized, none issued and outstanding	$ 0	$ 0
Common stock, $0.0001 par value; 100,000 shares authorized at March 31, 2016 and December 31, 2015; shares issued of 41,081 and 40,636 at March 31, 2016 and December 31, 2015, respectively; and shares outstanding of 40,788 and 40,343 at March 31, 2016 and December 31, 2015, respectively	4	4
Additional paid-in capital	306,279	305,981
Accumulated other comprehensive income	315	405
Accumulated deficit	(290,485)	(283,511)
Total stockholders' equity	16,113	22,879
Total liabilities and stockholders' equity	$ 39,188	$ 44,647

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues:
Biocatalyst product sales	$ 3,740	$ 3,076
Biocatalyst research and development	3,534	2,197
Revenue sharing arrangement	722	1,525
Total revenues	7,996	6,798
Costs and operating expenses:
Cost of biocatalyst product sales	2,489	1,456
Research and development	5,686	5,293
Selling, general and administrative	6,802	5,578
Total costs and operating expenses	14,977	12,327
Loss from operations	(6,981)	(5,529)
Interest income	15	4
Other income (expense)	3	(25)
Loss before income taxes	(6,963)	(5,550)
Provision for income taxes	11	12
Net loss	$ (6,974)	$ (5,562)
Net loss per share, basic and diluted (usd per share)	$ (0.17)	$ (0.14)
Weighted average common shares used in computing net loss per share, basic and diluted (shares)	40,072	38,779

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities:
Net loss	$ (6,974)	$ (5,562)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets	844	844
Depreciation and amortization of property and equipment	465	558
Gain on disposal of property and equipment	(27)	(5)
Stock-based compensation	1,389	1,285
Amortization of premium on marketable securities	0	1
Changes in operating assets and liabilities:
Accounts receivable, net	2,977	655
Inventories, net	(30)	403
Prepaid expenses and other current assets	5	(11)
Other assets	109	1
Accounts payable	(395)	(2,731)
Accrued compensation	974	654
Other accrued liabilities	1,172	(557)
Long term lease incentive	(106)	(106)
Deferred revenue	(184)	723
Net cash provided by (used in) operating activities	219	(3,848)
Investing activities:
Purchase of property and equipment	(265)	(52)
Proceeds from sale of property and equipment	27	5
Net cash used in investing activities	(238)	(47)
Financing activities:
Proceeds from exercises of options to purchase common stock	7	124
Taxes paid related to net share settlement of equity awards	(1,098)	(557)
Net cash used in financing activities	(1,091)	(433)
Net decrease in cash and cash equivalents	(1,110)	(4,328)
Cash and cash equivalents at the beginning of the period	23,273	26,487
Cash and cash equivalents at the end of the period	$ 22,163	$ 22,159

Collaborative Arrangements	3 Months Ended
Collaborative Arrangements	Mar. 31, 2016
Research and Development [Abstract]
Collaborative Arrangements	Collaborative Arrangements GSK Platform Technology Transfer, Collaboration and License Agreement In July 2014, we entered into a CodeEvolver^® platform technology transfer collaboration and license agreement (the “GSK CodeEvolver^®Agreement”) with GlaxoSmithKline (“GSK”). Pursuant to the terms of the agreement, we granted GSK a non-exclusive license to use the CodeEvolver^® protein engineering technology platform to develop novel enzymes for use in the manufacture of GSK's pharmaceutical and health care products. We received a $6.0 million up-front licensing fee upon signing the GSK CodeEvolver^® Agreement and subsequently a $5.0 million non-creditable, non-refundable milestone payment upon achievement of the first milestone in 2014. In September 2015, we achieved the second milestone of the agreement earning another milestone payment of $6.5 million. We are eligible to receive an additional contingent payment of $7.5 million upon the completion of the technology transfer period. (See Note 13, "Subsequent event" for details.) We also have the potential to receive additional contingent payments that range from $5.75 million to $38.5 million per project based on GSK's successful application of the licensed technology. The contingent payments are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to GSK's performance of future development and commercialization activities. For up to three years following the end of the technology transfer period, GSK can exercise an option, upon payment of certain additional fees, that would extend GSK’s license to include certain improvements to the CodeEvolver® protein engineering technology platform that arise during such additional period. In addition, we are eligible to receive royalties based on net sales, if any, of a limited set of products developed by GSK using the CodeEvolver® protein engineering technology platform. The term of the GSK CodeEvolver^® Agreement continues, unless earlier terminated, until the expiration of all payment obligations under the GSK CodeEvolver^® Agreement. At any time following the completion of the first technology transfer stage, GSK can terminate the GSK CodeEvolver^® Agreement by providing 90 days written notice to us. If GSK exercises this termination right during the three-year technology transfer period, GSK will pay us a one-time termination payment. Under the GSK CodeEvolver^®Agreement, the significant deliverables were determined to be the license, platform technology transfer, and contingent obligation to supply GSK with enzymes manufactured by us at GSK’s expense. We determined that the license did not have stand-alone value. In addition, we determined that the license and the platform technology transfer and our participation in joint steering committee activities in connection with the platform technology transfer represent a single unit of accounting. Our participation in the joint steering committee does not represent a separate unit of accounting because GSK could not negotiate for and/or acquire these services from other third parties and our participation on the joint steering committee is coterminous with the technology transfer period. Amounts to be received under the supply arrangement, if any, described above will be recognized as revenue to the extent GSK purchases enzymes from us. The up-front license fee of $6.0 million is being recognized ratably over the technology transfer period of three years. We recognized license fees of $0.5 million and $0.5 million three months ended March 31, 2016 and 2015, respectively, as biocatalyst research and development revenues. We had a deferred revenue balance from GSK related to the upfront license fee of $2.5 million at March 31, 2016 and $3.0 million at December 31, 2015. Merck Platform Technology Transfer and License Agreement In August 2015, we entered into a CodeEvolver^® platform technology transfer and license agreement (the "Merck CodeEvolver^® Agreement") with Merck Sharp and Dohme Corp., known as MSD outside the United States and Canada ("Merck"). The Agreement allows Merck to use the CodeEvolver^® protein engineering technology platform in the field of human and animal healthcare. We received a $5.0 million up-front license fee upon execution of the Merck CodeEvolver^® Agreement, which is being recognized ratably over two years. We achieved the first milestone in of the Merck CodeEvolver^®Agreement earning a milestone payment of $5.0 million in September 2015. We are eligible to receive an additional $8.0 million subject to the satisfactory completion of the second milestone of the technology transfer process. We will also be eligible to receive payments of up to a maximum of $15.0 million for each commercial API that is manufactured by Merck using one or more novel enzymes developed by Merck using the CodeEvolver^® protein engineering technology platform. Under the terms of the Merck CodeEvolver^®Agreement, we granted to Merck a non-exclusive worldwide license to use the CodeEvolver^® protein engineering technology platform to research, develop and manufacture novel enzymes for use by Merck in its internal research programs ("Merck Non-Exclusive Field"). The license to Merck is exclusive for the research, development and manufacture of novel enzymes for use by Merck in the chemical synthesis of therapeutic products owned or controlled by Merck ("Merck Exclusive Field"). Merck has the right to grant sublicenses to affiliates of Merck and, in certain limited circumstances, to third parties. We also granted to Merck a license to make or have made products manufactured using the CodeEvolver^® protein engineering technology platform with a right to grant sublicenses solely to affiliates of Merck, contract manufacturing organizations and contract research organizations. The manufacturing license is exclusive in the Merck Exclusive Field and non-exclusive in the Merck Non-Exclusive Field. The licenses are subject to certain limitations based on pre-existing contractual obligations that apply to the technology and intellectual property that are the subject of the license grants. The licenses do not permit the use of the CodeEvolver^® protein engineering technology platform to discover any therapeutic enzyme, diagnostic product or vaccine. In addition, Merck is prohibited from using the CodeEvolver^® protein engineering technology platform to develop or produce enzymes or any other compounds for or on behalf of any third parties except in a very limited manner when Merck divests a therapeutic product that is manufactured using an enzyme developed using the CodeEvolver^® protein engineering technology platform. Under the Merck CodeEvolver^® Agreement, we are transferring the CodeEvolver^® protein engineering technology platform to Merck over an approximately 15 to 24 month period starting on the effective date of the agreement. As part of this technology transfer, we provide to Merck our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms. Upon completion of technology transfer, Merck will have CodeEvolver^® protein engineering technology platform installed at its designated site. The licenses to Merck are granted under patents, patent applications and know-how that we own or control as of the effective date of the agreement and that cover the CodeEvolver^® protein engineering technology platform. Any improvements to the CodeEvolver^® protein engineering technology platform during the technology transfer period will also be included in the license grants from Codexis to Merck. At the end of the technology transfer period, Merck can exercise annual options that, upon payment of certain option fees, would extend Merck's license to include certain improvements to the CodeEvolver^® protein engineering technology platform that arise during the three-year period that begins at the end of the technology transfer period. Through November 3, 2016, we will provide additional enzyme evolution services to Merck at our laboratories in Redwood City. Under the Merck CodeEvolver^® Agreement, we will own any improvements to our protein engineering methods, processes and algorithms that arise and any enzyme technology or process technology that are developed during a technology transfer project, an evolution program or additional services. Merck will own (the "Merck-Owned Technology") (a) any enzyme technology that is developed solely by Merck under the Agreement using the CodeEvolver® Platform Technology (a "Project Enzyme") and (b) the methods of use of any Project Enzyme or any enzyme developed jointly by Merck and us using the CodeEvolver^® protein engineering technology platform. Merck granted to us a worldwide, non-exclusive, fully paid-up, royalty-free license, with the right to grant sublicenses, to use the Merck-Owned Technology outside of the Merck Exclusive Field. For each API that Merck manufactures using an enzyme developed with the CodeEvolver^®protein engineering technology platform, we will have a right of first refusal to supply Merck with the enzyme used to manufacture the API if Merck outsources the supply of the enzyme. Our right of first refusal applies during the period that begins on the completion of a phase III clinical trial for the product containing the API and ends five years following regulatory approval for such product. The Merck CodeEvolver^® Agreement has a term that continues, unless earlier terminated, until the expiration of all payment obligations under the agreement. Merck may terminate the Merck CodeEvolver^® Agreement by providing 90 days written notice to us. If Merck exercises this termination right during the technology transfer period, Merck will make a one-term termination payment to us of $8.0 million. We can terminate the Merck CodeEvolver^® Agreement by providing 30 days written notice to Merck if we determine, pursuant to our contractual audit rights under the agreement, that Merck has repeatedly failed to make required payments to us and/or materially underpaid us an amount due under the Merck CodeEvolver^® Agreement. In the event the Merck CodeEvolver^® Agreement is terminated earlier by Merck, or by us due to an uncured material breach by Merck, or if Merck sells or transfers to a third party any Merck business or facility that includes any of our proprietary materials, information or technology, we have the right to conduct an audit of Merck's facilities to confirm that all of our proprietary materials, information and technology have been destroyed. The Merck CodeEvolver^® Agreement contains indemnification provisions under which Merck and we have agreed to indemnify each other against certain third party claims. The up-front license fee of $5.0 million is being recognized ratably over a two-year period. We recognized license fees of $0.6 million for the three months ended March 31, 2016, as biocatalyst research and development revenues and had a deferred revenue balance from Merck related to the Merck CodeEvolver^® Agreement license fees of $3.3 million at March 31, 2016 and $4.0 million at December 31, 2015. Merck Sitagliptin Catalyst Supply Agreement In February 2012, we entered into a five-year Sitagliptin Catalyst Supply Agreement ("Sitagliptin Catalyst Supply Agreement") with Merck whereby Merck may obtain commercial scale substance for use in the manufacture of its products based on the active ingredient sitagliptin, e.g., Januvia^®. In December 2015, Merck exercised its option under the terms of the Sitagliptin Catalyst Supply Agreement to extend the agreement for an additional five years through February 2022. The Sitagliptin Catalyst Supply Agreement requires Merck to pay an annual license fee for the rights to the Sitagliptin technology each year for the term of the agreement. Amounts of annual license fees are based on contractually agreed prices and are on a declining scale. Prior to December 2015, the aggregate license fee for the initial five year period was being recognized ratably over the initial five year term of the Sitagliptin Catalyst Supply Agreement as collaborative research and development revenue. Due to the amendment entered in December 2015 as noted above, we revised our performance period in December 2015 and began recognizing the remaining unamortized portion of the license fee and the aggregate license fees for the second five year period over the revised period on a straight line basis. We recognized license fees of $0.3 million and $0.5 million for the three months ended March 31, 2016 and 2015 as biocatalyst research and development revenues. We had a deferred revenue balance from Merck related to license fees of $2.3 million at March 31, 2016 and $1.0 million at December 31, 2015. In addition, pursuant to the Sitagliptin Catalyst Supply Agreement, Merck may purchase supply from us for a fee based on contractually stated prices.

Related Party Transactions	3 Months Ended
Related Party Transactions	Mar. 31, 2016
Related Party Transaction, Due from (to) Related Party [Abstract]
Related Party Transactions	Related Party Transactions Exela PharmSci, Inc. Since September 2007, we have been party to a license agreement with Exela PharmaSci, Inc. (“Exela”). Under the license agreement, as amended, we and Exela cross-licensed certain technology relating to the manufacture of argatroban, an active pharmaceutical ingredient, in exchange for rights to certain sublicensing fees or development payments and profit sharing. CMEA Ventures Life Sciences 2000, L.P. and its affiliate held approximately 7.4% of our common stock until its sale of all such shares on November 10, 2014 to Presidio Partners 2014, L.P. Presidio Partners 2007, L.P. (formerly CMEA Ventures VII, L.P.) owns over 10% of Exela’s outstanding capital stock. Thomas R. Baruch, one of our directors, serves on the board of directors of Exela, and is a general partner in Presidio Partners 2007, L.P. Mr. Baruch is also a general partner in CMEA Ventures Life Sciences 2000, L.P. Mr. Baruch has no direct or indirect pecuniary interest in the shares of our common stock owned by Presidio Partners 2014, L.P. We recognized $0.7 million and $1.5 million for the three months ended March 31, 2016 and 2015, respectively, shown in the consolidated statement of operations as revenue sharing arrangement. We had no receivables from Exela at March 31, 2016 and December 31, 2015.

Subsequent Events	3 Months Ended
Subsequent Events	Mar. 31, 2016
Subsequent Events [Abstract]
Subsequent event	Subsequent event On May 2, 2016, Codexis announced the completion of the third and final Wave in the transfer of its proprietary CodeEvolver^® protein engineering platform technology to GlaxoSmithKline (GSK). Codexis expects to receive a $7.5 million payment from GSK for completion of this milestone in the second quarter of 2016.

Basis of Presentation and Summary of Significant Accounting Policies (Textual) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2016 USD ($) operating_segment reporting_unit	Dec. 31, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Accounting Policies [Abstract]
Maturity Date of Highly Liquid Investments	3 months
Cash and Cash Equivalents, at Carrying Value	$ 22,163,000	$ 23,273,000	$ 22,159,000	$ 26,487,000
Cash	11,100,000
Money market funds	$ 11,100,000
Number of Operating Segments \| operating_segment	1
Number of Reportable Segments \| reporting_unit	1
Goodwill Impairment	$ 0	$ 0

Net Loss per Share (Details) - shares shares in Thousands	3 Months Ended
Net Loss per Share (Details) - shares shares in Thousands	Mar. 31, 2016	Mar. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares excluded as anti-dilutive	6,650	7,199
Stock options RSA RSU PSU [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares excluded as anti-dilutive	6,577	7,124
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares excluded as anti-dilutive	73	75

Collaborative Arrangements (Details) - USD ($)	1 Months Ended				3 Months Ended
Collaborative Arrangements (Details) - USD ($)	Sep. 30, 2015	Aug. 31, 2015	Jul. 31, 2014	Feb. 29, 2012	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2015
GlaxoSmithKline [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from license fees received			$ 6,000,000
Revenue recognized	$ 6,500,000						$ 5,000,000
Term of milestone agreement			3 years
Duration of technology transfer			3 years
Minimum milestone receivable			$ 5,750,000.00
Maximum milestone receivable			$ 38,500,000.0
License extension acceptance period			3 years
Termination notice period			90 days
License and services revenue					$ 500,000	$ 500,000
Deferred revenue					2,500,000			$ 3,000,000
Technology Transfer, Collaboration and License Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Termination notice period		30 days
Technology Transfer, Collaboration and License Agreement [Member] \| Merck [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from license fees received		$ 5,000,000
Revenue recognized	$ 5,000,000
Contingent payment, completion of milestones and agreement		8,000,000
Potential royalty revenue		$ 15,000,000
Duration of license agreement		3 years
Right of refusal period		5 years
Termination notice period		90 days
License and services revenue					600,000
Deferred revenue					3,300,000			4,000,000
Upfront License fee, period for recognition		2 years
Contingent termination revenue		$ 8,000,000
Supply Agreement [Member] \| Merck [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
License and services revenue					300,000	$ 500,000
Deferred revenue					$ 2,300,000			$ 1,000,000
Term of collaborative research and development agreement (years)				5 years
Optional extension period				5 years
Upfront License fee, period for recognition				5 years
Minimum [Member] \| Technology Transfer, Collaboration and License Agreement [Member] \| Merck [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Duration of technology transfer		15 months
Maximum [Member] \| Technology Transfer, Collaboration and License Agreement [Member] \| Merck [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Duration of technology transfer		24 months

Marketable Securities (Components of Cash Equivalents and Marketable Securities) (Details) $ in Thousands	Mar. 31, 2016 USD ($) security	Dec. 31, 2015 USD ($) security
Cash Equivalents and Marketable Securities [Line Items]
Adjusted Cost	$ 11,693	$ 11,683
Gross Unrealized Gains	896	986
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 12,589	$ 12,669
Number of Marketable Securities In Unrealized Loss Position \| security	0	0
Money market funds [Member]
Cash Equivalents and Marketable Securities [Line Items]
Adjusted Cost	$ 11,130	$ 11,120
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	11,130	11,120
Common shares of CO2 Solution [Member]
Cash Equivalents and Marketable Securities [Line Items]
Adjusted Cost	563	563
Gross Unrealized Gains	896	986
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 1,459	$ 1,549

Fair Value Measurements (Schedule of Financial Instruments Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	$ 12,589	$ 12,669
Investment owned (shares)	10,000,000
Level 1 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	$ 11,130	11,120
Level 2 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	1,459	1,549
Level 3 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	0	0
Money market funds [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	11,130	11,120
Money market funds [Member] \| Level 1 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	11,130	11,120
Money market funds [Member] \| Level 2 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	0	0
Money market funds [Member] \| Level 3 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	0	0
Common shares of CO2 Solution [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	1,459	1,549
Common shares of CO2 Solution [Member] \| Level 1 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	0	0
Common shares of CO2 Solution [Member] \| Level 2 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	1,459	1,549
Common shares of CO2 Solution [Member] \| Level 3 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	$ 0	$ 0

Balance Sheets Details (Inventory) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Inventory Components
Raw materials	$ 272	$ 262
Work-in-process	37	0
Finished goods	712	730
Inventories	$ 1,021	$ 992

Balance Sheets Details (Property and Equipment, net) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 35,436	$ 35,324
Less: accumulated depreciation and amortization	(32,680)	(32,215)
Property and equipment, net	2,756	3,109
Laboratory equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	20,534	20,503
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	10,395	10,369
Computer equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3,271	3,271
Office furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,179	1,178
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 57	$ 3

Balance Sheets Details (Intangible Assets, net) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 21,778	$ 21,778
Accumulated Amortization	(19,810)	(18,966)
Net Carrying Amount	1,968	2,812
2016 (remaining 9 months)	1,968
Developed and core technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,534	1,534
Accumulated Amortization	(1,534)	(1,534)
Net Carrying Amount	$ 0	0
Amortization Period (years)	5 years
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 20,244	20,244
Accumulated Amortization	(18,276)	(17,432)
Net Carrying Amount	$ 1,968	$ 2,812
Amortization Period (years)	6 years

Stock-Based Compensation (Textual) (Details) $ in Millions	3 Months Ended		12 Months Ended
Stock-Based Compensation (Textual) (Details) $ in Millions	Mar. 31, 2016 USD ($)	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2010 shares
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation not yet recognized, stock options	$ 2.7
Percent of voting interests	10.00%
Purchase price of common stock above minimum threshold	110.00%
Expiration period	10 years
Award vesting period	4 years
Stock options [Member] \| One Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights	25.00%
Stock options [Member] \| Monthly, Three Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights	75.00%
RSAs and RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation not yet recognized, share-based awards other than options	$ 2.2
Restricted Stock Units (RSUs) [Member] \| Monthly, Three Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Award vesting rights	33.33%
Restricted Stock Units (RSUs) [Member] \| Annually, Four Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Award vesting rights	25.00%
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Performance awards, threshold level, number of shares, multiplier			0.5
Performance awards, superior level, number of shares, multiplier	2
Performance Shares [Member] \| Annually, Two Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	2 years
Performance stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation not yet recognized, share-based awards other than options	$ 2.4
2010 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (shares) \| shares				1,100,000
2016 PSU Plan [Member] \| Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated percent of performance goals that will be achieved	100.00%
2015 PSU Plan [Member] \| Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Goals achieved percent	92.80%
2014 PSU Plan [Member] \| Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Goals achieved percent		53.00%
Minimum [Member] \| Incentive Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase price of common stock	100.00%
Minimum [Member] \| Non-Statutory Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase price of common stock	85.00%

Stock-Based Compensation (Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Schedule of stock-based compensation expense
Stock-based compensation	$ 1,389	$ 1,285
Stock options [Member]
Schedule of stock-based compensation expense
Stock-based compensation	304	248
Restricted Stock Units (RSUs) [Member]
Schedule of stock-based compensation expense
Stock-based compensation	574	792
Performance stock units [Member]
Schedule of stock-based compensation expense
Stock-based compensation	511	245
Research and development [Member]
Schedule of stock-based compensation expense
Stock-based compensation	220	291
Selling, general and administrative [Member]
Schedule of stock-based compensation expense
Stock-based compensation	$ 1,169	$ 994

Capital Stock (Textual) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Equity [Abstract]
Stock options exercised	4,466	64,263
Weighted average exercise price of stock options exercised	$ 1.61	$ 1.93
Proceeds from exercises of stock options	$ 7	$ 124

Capital Stock (Warrants) (Details) - Warrants Issued on September 28, 2007 and Expiring on September 28, 2017 [Member]	Mar. 31, 2016 $ / shares shares
Class of Warrant or Right [Line Items]
Shares Subject to Warrants \| shares	72,727
Exercise Price per Share \| $ / shares	$ 8.25