Document

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, 2017



¨	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, California		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, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth 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	¨

Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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 28, 2017, there were 48,169,923 shares of the registrant’s Common Stock, par value $0.0001 per share, outstanding.

Codexis, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2017

TABLE OF CONTENTS



		PAGE NUMBER

PART I. FINANCIAL INFORMATION

ITEM 1:	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
ITEM 3:	Quantitative and Qualitative Disclosures about Market Risk	37
ITEM 4:	Controls and Procedures	37

PART II. OTHER INFORMATION

ITEM 1:	Legal Proceedings	38
ITEM 1A:	Risk Factors	38
ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	38
ITEM 3:	Default Upon Senior Securities	38
ITEM 4:	Mine Safety Disclosures	38
ITEM 5:	Other Information	38
ITEM 6:	Exhibits	39
Signatures

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Codexis, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In Thousands, Except Per Share Amounts)



	March 31, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	13,923		$	19,240
Accounts receivable, net of allowances of $421 at March 31, 2017 and December 31, 2016	5,381			5,924
Inventories	1,124			825
Prepaid expenses and other current assets	1,314			1,238
Total current assets	21,742			27,227
Restricted cash	1,592			1,624
Marketable securities	1,051			1,142
Property and equipment, net	2,752			2,155
Goodwill	3,241			3,241
Other non-current assets	253			259
Total assets	$	30,631		$	35,648
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,493		$	4,232
Accrued compensation	5,334			4,314
Other accrued liabilities	3,055			2,111
Deferred revenue	1,644			1,710
Total current liabilities	13,526			12,367
Deferred revenue, net of current portion	2,180			1,066
Lease incentive obligation, net of current portion	779			885
Financing obligation, net of current portion	255			—
Other long-term liabilities	2,211			2,231
Total liabilities	18,951			16,549

Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value per share; 5,000 shares authorized; none issued and outstanding	—			—
Common stock, $0.0001 par value per share; 100,000 shares authorized; 41,841 shares and 41,255 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	4			4
Additional paid-in capital	311,296			311,164
Accumulated other comprehensive loss	(91		)	—
Accumulated deficit	(299,529		)	(292,069		)
Total stockholders' equity	11,680			19,099
Total liabilities and stockholders' equity	$	30,631		$	35,648

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,
	2017			2016
Revenues:
Product sales	$	5,586		$	3,740
Research and development revenues	2,001			3,534
Revenue sharing arrangement	384			722
Total revenues	7,971			7,996
Costs and operating expenses:
Cost of product sales	3,002			2,489
Research and development	5,839			5,686
Selling, general and administrative	6,606			6,802
Total costs and operating expenses	15,447			14,977
Loss from operations	(7,476		)	(6,981		)
Interest income	18			15
Other income, net	22			3
Loss before income taxes	(7,436		)	(6,963		)
Provision for income taxes	24			11
Net loss	$	(7,460	)	$	(6,974	)

Net loss per share, basic and diluted	$	(0.18	)	$	(0.17	)
Weighted average common stock shares used in computing net loss per share, basic and diluted	41,250			40,072

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,
	2017			2016
Net loss	$	(7,460	)	$	(6,974	)
Other comprehensive loss
Unrealized loss on marketable securities, net of tax expense of $0 for each of the three months ended March 31, 2017 and 2016	(91		)	(90		)
Other comprehensive loss	(91		)	(90		)
Total comprehensive loss	$	(7,551	)	$	(7,064	)

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,
	2017			2016
Operating activities:
Net loss	$	(7,460	)	$	(6,974	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of intangible assets	—			844
Depreciation and amortization of property and equipment	326			465
Gain on disposal of property and equipment	(1		)	(27		)
Stock-based compensation	1,669			1,389
Changes in operating assets and liabilities:
Accounts receivable, net	543			2,977
Inventories	(299		)	(30		)
Prepaid expenses and other current assets	(174		)	5
Restricted cash	(43		)	—
Other assets	6			109
Accounts payable	(882		)	(395		)
Accrued compensation	1,020			974
Other accrued liabilities	763			1,172
Long term lease incentive	(106		)	(106		)
Other long term liabilities	(19		)	—
Deferred revenue	1,048			(184		)
Net cash provided by (used in) operating activities	(3,609		)	219
Investing activities:
Purchase of property and equipment	(237		)	(265		)
Proceeds from disposal of property and equipment	1			27
Change in restricted cash	75			—
Net cash used in investing activities	(161		)	(238		)
Financing activities:
Proceeds from exercises of options	99			7
Principal payments on capital lease obligations	(10		)	—
Taxes paid related to net share settlement of equity awards	(1,636		)	(1,098		)
Net cash used in financing activities	(1,547		)	(1,091		)
Net decrease in cash and cash equivalents	(5,317		)	(1,110		)
Cash and cash equivalents at the beginning of the period	19,240			23,273
Cash and cash equivalents at the end of the period	$	13,923		$	22,163

Supplemental non-cash financing activities disclosures:
Equipment acquired under a capital lease	$	528		$	—

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 consolidated financial statements, the “Company,” “we,” “us,’” and “our” refers to Codexis, Inc. and its subsidiaries on a consolidated basis.

We discover, develop and sell proteins that deliver value to our clients in a growing set of industries. We view proteins as a vast untapped source of value-creating materials, and we are using our proven technologies, which have been continuously improved over our fifteen year history, to commercialize an increasing number of novel proteins, both as proprietary Codexis products and in partnership with our customers.

Many companies have historically used naturally occurring proteins to produce or enhance goods used in everyday life. Despite the growing number of commercial applications of naturally occurring proteins across many industries, the inherent limitations of naturally-occurring proteins frequently restrict their commercial use. Through the application of our proprietary CodeEvolver^® protein engineering technology platform, we are able to engineer novel proteins to overcome these restrictions, thereby adding value or opening up new prospects for our potential clients’ products, processes or businesses. We have developed new proteins that are significantly more stable and/or active in our customers' commercial applications than proteins derived from nature.

We are a pioneer in the harnessing of computational technologies to drive biology advancements. Over the last fifteen years, we have made substantial investments in the development of our CodeEvolver^® protein engineering technology platform, the primary source of our competitive advantage. Our technology platform is powered by proprietary, artificial intelligence-based, computational algorithms that rapidly mine our large and continuously growing library of protein variants’ performance attributes. These computational outputs enable increasingly reliable predictions for next generation protein variants to be engineered, enabling delivery of targeted performance enhancements in a time-efficient manner. In addition to its computational prowess, our CodeEvolver^® protein engineering technology platform integrates additional modular competencies, including robotic high-throughput screening and genomic sequencing, organic chemistry and process development, which are all coordinated to create our novel protein innovations.

We use our CodeEvolver^® protein engineering technology platform to engineer custom enzymes. Most of our custom enzymes are intended for use as biocatalysts or protein catalysts. In simple terms, our protein catalysts can accelerate and/or improve yields of chemical reactions. We use our CodeEvolver^® protein engineering technology platform to develop novel enzymes that enable industrial biocatalytic reactions and fermentations. Our technology platform has enabled commercially viable products and processes for the manufacture of pharmaceutical intermediates and active ingredients and fine chemicals.

Our approach to develop commercially viable biocatalytic manufacturing processes begins by conceptually designing the most cost-effective and practical process for a targeted product. We then develop optimized protein catalysts to enable that process design, using our CodeEvolver^® protein engineering platform technology. Engineered protein catalyst candidates, many thousands for each protein engineering project, are then rapidly screened and validated in high throughput under relevant manufacturing operating conditions. This approach results in an optimized protein catalyst enabling cost-efficient processes that typically are relatively simple to run in conventional manufacturing equipment. This also allows for the efficient technical transfer of our process to our manufacturing partners.

The successful embodiment of our CodeEvolver^® protein engineering technology platform in commercial manufacturing processes requires well-integrated expertise in a number of technical disciplines. In addition to those directly involved in practicing our CodeEvolver^® protein engineering platform technology, such as molecular biology, enzymology, microbiology, cellular engineering, metabolic engineering, bioinformatics, biochemistry and high throughput analytical chemistry, our process development projects also involve integrated expertise in organic chemistry, chemical process development, chemical engineering, fermentation process development and fermentation engineering. Our integrated, multi-disciplinary approach to biocatalyst and process development is a critical success factor for our company.

We initially commercialized our CodeEvolver^® protein engineering technology platform and products in the pharmaceuticals market, which remains 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 have also used the technology to develop protein catalysts 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, fragrances, and agricultural chemicals.

More recently, we are also using the CodeEvolver^® protein engineering technology platform to develop early stage, novel biotherapeutic product candidates, both for our customers and for our own business, most notably our lead program for the potential treatment of phenylketonuria ("PKU") disease in humans. PKU is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient.

We have also used our technology to develop an enzyme for customers using next generation sequencing (“NGS”) and polymerase chain reaction (“PCR/qPCR”) for in vitro molecular diagnostic and genomic research applications.

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 generally accepted accounting principles 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, 2016. The condensed consolidated balance sheet at December 31, 2016 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, 2017 and results of our operations and comprehensive loss for the three months ended March 31, 2017 and 2016, and cash flows for the three months ended March 31, 2017 and 2016. 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, 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 for purposes of 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 reportable segment.

Revenue Recognition

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.

Where a portion of non-refundable up-front fees or other payments received are allocated to continuing performance obligations under the terms of a collaborative arrangement, they are recorded as deferred revenue and recognized as revenue ratably over the term of our estimated performance period under the agreement. We determine the estimated performance periods, and they 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.

Product Sales

Product sales consist of sales of protein catalysts, pharmaceutical intermediates, and Codex^® Biocatalyst Panels and Kits. 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.

Research and Development

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 fees, 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 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 as revenue 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 products or products using our technologies. Royalties are recognized as earned in accordance with the contractual terms when royalties from licensees can be reasonably estimated and collectability is reasonably assured. For the majority of our royalty revenue, 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 sharing 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 sharing 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 product sales.

Cost of Product Sales

Cost of product sales comprises both internal and third party fixed and variable costs including materials and supplies, labor, facilities and other overhead costs associated with our product sales. Shipping costs are included in our cost of 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 FTE services under research and development agreements approximate the research funding over the term of the respective agreements and are included in research and development expense. Costs of services provided under license and platform technology transfer agreements are included in research and development expenses and are expensed in the periods in which such costs are incurred.

Research and Development Expenses

Research and development expenses consist of costs incurred for internal projects, partner-funded collaborative research and development activities, as well as license and platform technology transfer agreements, 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. The expected term is based on historical exercise behavior on similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. We use historical volatility to estimate expected stock price volatility. The risk-free rate assumption is based on United States Treasury instruments whose terms are consistent with the expected term of the stock options. The expected dividend assumption is based on our history and expectation of dividend payouts.

Restricted Stock Units ("RSUs"), Restricted Stock Awards ("RSAs"), performance vesting options ("PBOs"), and performance-contingent restricted stock units ("PSUs") are measured based on the fair market values of the underlying stock on the dates of grant. The vesting of PBOs and PSUs awarded is conditioned upon the attainment of one or more performance objectives over a specified period and upon continued employment through the applicable vesting date. At the end of the performance period, shares of stock subject to the PBOs and PSUs vest based upon both the level of achievement of performance objectives within the performance period and continued employment through the applicable vesting date.

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

The estimated fair value of stock options, RSUs and RSAs are expensed on a straight-line basis over the vesting term of the grant and the estimated fair value of PSUs and PBOs are 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 $13.9 million at March 31, 2017 and were comprised of cash of $2.7 million and money market funds of $11.2 million. At December 31, 2016, cash and cash equivalents totaled $19.2 million and were comprised of cash of $8.1 million and money market funds of $11.2 million.

Restricted Cash

In 2016, we began the process of liquidating our Indian subsidiary. The local legal requirements for liquidation require us to maintain our subsidiary's cash balance in an account managed by a legal trustee to satisfy our financial obligations. This balance is recorded as non-current restricted cash on the consolidated balance sheets and totaled $0.9 million at March 31, 2017 and $0.8 million at December 31, 2016.

In addition, pursuant to the terms of the lease agreement for our Redwood City, CA facilities, our letters of credit are collateralized by deposit balances of $0.7 million as of March 31, 2017 and $0.8 million as of December 31, 2016, which is recorded as non-current restricted cash on the consolidated balance sheets (see Note 10, "Commitments and Contingencies" for details).

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using a weighted-average approach, assuming full absorption of direct and indirect manufacturing costs, or based on cost of purchasing from our vendors. If inventory costs exceed expected net realizable value due to obsolescence or lack of demand, valuation adjustments are recorded for the difference between the cost and the expected net realizable 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, "Cash Equivalents and 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.

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. No charge for the other-than-temporary impairment has been recorded in any of the periods presented.

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 and cash equivalents, accounts receivable, prepaid expenses and other current assets, restricted cash, marketable securities, accounts payable, accrued compensation, deferred revenue, and other 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

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, marketable securities, and restricted cash. Cash that is not required for immediate operating needs is invested principally in money market funds. Cash and cash equivalents are invested through banks and other financial institutions in the United States, India and Netherlands. Such deposits in those countries may be in excess of insured limits.

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 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.

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.

The Core IP became fully amortized in 2016 and there are no finite-lived intangible assets with a net carrying value on our consolidated balance sheet as of December 31, 2016.

In the fourth quarter of 2016, we determined that there were no events or changes in circumstances that indicated the carrying value of the Asset Group might not be recoverable. We concluded that there was no impairment. During the three months ended March 31, 2017, we did not identify any indicators of potential impairment of our long-lived assets.

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 consolidated 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 2016. 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, 2016. During the three months ended March 31, 2017, 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, 2016.

Income Taxes

their reported amounts in the financial statements using enacted tax rates and tax laws in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are provided against deferred tax assets that are not likely to 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.

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.

The provision for income taxes was $24 thousand and $11 thousand for the three months ended March 31, 2017 and 2016, respectively.

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 May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." 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 in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers by one year the effective date of ASU 2014-09. The standard becomes effective for us beginning January 1, 2018, but allows us to adopt the standard one year earlier if it so chooses. In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)," which requires an entity to determine whether the nature of its promise is to provide a good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the entity is an agent). In April, 2016, the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing," which clarifies the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. In May, 2016, the FASB issued ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients," which clarifies guidance in certain narrow areas and adds some practical expedients. The amendments have the same effective date and transition requirements as the new revenue recognition standard. We intend to elect the modified retrospective method in adopting the

guidance of ASC 606 starting January 2018. The modified retrospective method requires us to apply the new revenue standard only to the financial statements in the year of adoption and record a cumulative-effect adjustment to the opening balance of retained earnings in the year the new revenue standard is first applied. The opening adjustment to retained earnings will be determined on the basis of the impact of the new revenue standard’s application on contracts that were not completed as of the date of initial application. We will continue to evaluate the effect that the standard will have on our consolidated financial statements and related disclosures.

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. We adopted ASU 2014-15 in the first quarter of 2017, which had no impact on our consolidated financial statements.

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 adopted ASU 2015-11 in the first quarter of 2017, which had no impact on our financial statements, and we will apply the new guidance to our measurement of inventory in the future.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” This guidance principally affects accounting standards for equity investments, financial liabilities where the fair value option has been elected, and the presentation and disclosure requirements for financial instruments. Upon the effective date of the new guidance, all equity investments in unconsolidated entities, other than those accounted for using the equity method of accounting, will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification and therefore, no changes in fair value will be reported in other comprehensive income (loss) for equity securities with readily determinable fair values. The new guidance on the classification and measurement will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and early adoption is permitted. The Company is in the process of evaluating the impact of the adoption of ASU 2016-01 on the consolidated financial statements and currently anticipates the new guidance would impact its consolidated statements of operations and consolidated statements of comprehensive income as the Company’s marketable equity securities, are currently classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which replaces prior lease guidance (Topic 840.) This guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statement of Operations. 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 expect that upon adoption, ROU assets and lease liabilities will be recognized in the balance sheet in amounts that will be material.

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 adopted ASU 2016-09 in the first quarter of 2017. No cumulative-effect adjustment was recorded to our accumulated deficit balance as the U.S. deferred tax assets from previously unrecognized excess tax benefits were fully offset by a full valuation allowance; and we did not elect to change our policy of estimating expected forfeitures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which amends the FASB's guidance on the impairment of financial instruments. The ASU adds to GAAP an impairment model (known as the "current expected credit loss model") that is based on expected losses rather than incurred losses. ASU 2016-13 is effective for annual reporting periods ending after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of ASU 2016-13 is not expected to have a material impact on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which provides the FASB's guidance on certain cash flow statements items. ASU 2016-15 is effective for fiscal reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted including adoption in an interim period. The adoption of ASU 2016-15 is not expected to have a material impact on our consolidated financial statements and related disclosures.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230) Restricted Cash a consensus of the FASB Emerging Issues Task Force." The standard requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents on the statement of cash flows. The new standard is expected to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2016-18 on our consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new standard is expected to be effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2017-04 on our consolidated financial statements and related disclosures.

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 plus all additional common stock shares that would have been outstanding, assuming dilutive potential common stock shares had been issued for other dilutive securities. For periods of net loss, diluted and basic net loss per share are identical since potential common stock shares are excluded from the calculation, as their effect was anti-dilutive.

Anti-Dilutive Securities

The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands):



	Three Months Ended March 31,
	2017	2016
Shares of common stock issuable pursuant to equity awards outstanding under the Equity Incentive Plan	7,661	6,577
Shares of common stock issuable upon exercise of outstanding warrants	73	73
Total shares excluded as anti-dilutive	7,734	6,650

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 and earned milestone revenue of $6.5 million. In April 2016, we completed the full transfer of the CodeEvolver^®protein engineering platform technology and earned milestone revenue of $7.5 million, for which payment was received in June 2016. 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.

In the third quarter of 2016, we earned and recognized the first contingent payment under the agreement related to the development of an enzyme for an already-commercialized product. 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. GSK can terminate the GSK CodeEvolver^® Agreement by providing 90 days written notice to us.

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 was being recognized ratably over the technology transfer period of three years since July 2014. We recognized all deferred revenue from GSK upon completion of technology transfer in April 2016. For the three months ended March 31, 2017 and 2016, $0 and $0.5 million were recognized as research and development revenue, respectively.

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. The Merck CodeEvolver^®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 was being recognized ratably over the estimated platform technology transfer period of two years. The technology transfer was completed in September 2016 and all remaining deferred revenue was recognized. Following the completion of the technology transfer, we may be eligible to receive payments of up to a maximum of $15.0 million for each commercial active pharmaceutical ingredient ("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 transferred the CodeEvolver^® protein engineering technology platform to Merck over the period from August 2015 through September 2016. As part of this technology transfer, we provided to Merck our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms.

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 Merck CodeEvolver^® Agreementand that cover the CodeEvolver^® protein engineering technology platform. Any improvements to the CodeEvolver^® protein engineering technology platform during the technology transfer period are also included in the license grants from Codexis to Merck. Following 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.

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 Merck CodeEvolver^® Agreement using the CodeEvolver^® protein engineering technology platform (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. 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 Merck CodeEvolver^® 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 was being recognized ratably over a two-year periods since August 2015. The technology transfer was completed in September 2016 and all remaining deferred revenue was recognized. For the three months ended March 31, 2017 and 2016, $0 and $0.6 million were recognized as research and development revenue, respectively. Additionally, we recognized research and development revenues of $0.9 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively, for various research projects under our collaborative arrangement.

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 Januvia^®, its product based on the active ingredient sitagliptin. 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.

Effective as of January 2016, we and Merck amended the Sitagliptin Catalyst Supply Agreement to prospectively provide for variable pricing based on the cumulative volume of sitagliptin purchased by Merck under the Sitagliptin Catalyst Supply Agreement and to allow Merck to purchase a percentage of its requirements for sitagliptin from a specified third-party supplier.

Merck has the right to terminate the Sitagliptin Catalyst Supply Agreement at any time after January 1, 2018 by giving us 24 months’ advance written notice.

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 $0.3 million for the three months ended March 31, 2017 and 2016, respectively, as research and development revenues. We had a deferred revenue balance from Merck related to license fees of $2.5 million at March 31, 2017 and $1.3 million at December 31, 2016. In addition, pursuant to the terms of the agreement, Merck may purchase supply from us for a fee based on contractually stated prices and we recognized $1.8 million and $1.6 million for the three months ended March 31, 2017 and 2016, respectively, in product sales under this agreement.

Biopharmaceutical Collaborative Development Agreement

In May 2015, we entered into a collaborative development agreement with a leading global biopharmaceutical company. Under the terms of the agreement, we used our CodeEvolver^® protein engineering platform technology to develop a novel enzyme for use in our partner’s therapeutic development program. We recognized revenues of $0.1 million and $1.4 million for the three months ended March 31, 2017 and 2016, respectively, as collaborative research and development revenues. Under the agreement, we have the potential to receive additional license fees and milestone payments.

Enzyme Supply Agreement

In November 2016, we entered into a supply agreement whereby our customer may purchase quantities of one of our proprietary enzymes for use in its commercial manufacture of a product. Pursuant to the supply agreement, we received an upfront payment of $0.75 million in December 2016, which we accordingly recorded as deferred revenues. Such upfront payment will be recognized over the period of the supply agreement as the customer purchases our proprietary enzyme. As of March 31, 2017 and December 31, 2016, we had deferred revenue from the supply agreement of $0.7 million. Under the agreement, we recognize product revenues for quantities of enzyme sold to our customer when all revenue recognition criteria are met.

Research and Development Agreement

In March 2017, we entered into a multiyear research and development services agreement with Tate & Lyle to develop novel enzymes to support the development of new food ingredient products. Under the agreement, we have the potential to receive research and development revenues and milestone payments based on Tate & Lyle's decision to continue the development process.

Note 5. Cash Equivalents and Marketable Securities

Cash equivalents and marketable securities classified as available-for-sale at March 31, 2017 and at December 31, 2016 consisted of the following (in thousands):



	March 31, 2017
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Money market funds⁽¹⁾	$	11,190	$	—	$	—	$	11,190
Common shares of CO2 Solutions ⁽²⁾	563		488		—		1,051
Total	$	11,753	$	488	$	—	$	12,241



	December 31, 2016
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Money market funds ⁽¹⁾	$	11,172	$	—	$	—	$	11,172
Common shares of CO2 Solutions⁽²⁾	563		579		—		1,142
Total	$	11,735	$	579	$	—	$	12,314

(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, 2017 or at December 31, 2016.

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, 2017 and December 31, 2016 by level within the fair value hierarchy (in thousands):



	March 31, 2017
	Level 1		Level 2		Level 3		Total
Money market funds	$	11,190	$	—	$	—	$	11,190
Common shares of CO2 Solutions	—		1,051		—		1,051
Total	$	11,190	$	1,051	$	—	$	12,241



	December 31, 2016
	Level 1		Level 2		Level 3		Total
Money market funds	$	11,172	$	—	$	—	$	11,172
Common shares of CO2 Solutions	—		1,142		—		1,142
Total	$	11,172	$	1,142	$	—	$	12,314

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, 2017		December 31, 2016
Raw materials	$	142	$	118
Work-in-process	163		59
Finished goods	819		648
Inventories	$	1,124	$	825

Property and Equipment, net

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



	March 31, 2017			December 31, 2016
Laboratory equipment	$	19,412		$	18,849
Leasehold improvements	10,466			10,395
Computer equipment and software	3,314			3,267
Office equipment and furniture	1,179			1,171
Construction in progress ⁽¹⁾	358			124
Property and equipment	34,729			33,806
Less: accumulated depreciation and amortization	(31,977		)	(31,651		)
Property and equipment, net	$	2,752		$	2,155

(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, 2017							December 31, 2016
	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		(20,244		)	—		20,244		(20,244		)	—		6
Intangible assets, net	$	21,778	$	(21,778	)	$	—	$	21,778	$	(21,778	)	$	—

Goodwill

Goodwill had a carrying value of approximately $3.2 million at March 31, 2017 and December 31, 2016.

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, PBOs, stock appreciation rights, and stock purchase rights to our employees, non-employee directors and consultants.

Stock Options

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, of which 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.

Restricted Stock Units

We also grant employees RSUs, which generally vest over either a three year period with one-third of the shares subject to the RSUs vesting on each yearly anniversary of the vesting commencement date or over a four year period with 25% of the shares subject to the RSU vesting on each yearly anniversary of the vesting commencement date, in each case contingent upon such employee’s continued service on such vesting date. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. We may grant RSUs with different vesting terms from time to time.

Performance-contingent Restricted Stock Units and Performance Vesting Options

In 2015 and 2016, the compensation committee of the Board approved, and, in February 2017 solely in respect of non-executive employees, delegated to our Chief Executive Officer the authority to approve, grants of PSUs. In February 2017, the compensation committee of the Board also approved grants of PBOs and PSUs to our executives. The PSUs and PBOs vest based upon both the successful achievement of certain corporate operating milestones in specified timelines and continued employment through the applicable vesting date. When the performance goals are deemed to be probable of achievement for these types of awards, recognition of stock-based compensation expense commences.

In the first quarter of 2017, our compensation committee and Chief Executive Officer granted PSUs (“2017 PSUs”) and our compensation committee granted PBOs (“2017 PBOs”), each of which commence vesting based upon the achievement of various weighted performance goals, including revenue growth, cash forecast, service revenue, new platform license revenue, and strategic advancement of biotherapeutics pipeline. The number of shares underlying the 2017 PSUs and 2017 PBOs that are eligible to vest are based upon our achievement of the performance goals and, once the number of shares eligible to vest is determined, those shares vest in two equal installments with 50% vesting upon achievement and the remaining 50% vesting on the first anniversary of achievement, in each case, subject to the recipient’s continued service through the applicable vesting date. If the performance goals are achieved at the threshold level, the number of shares eligible to vest in respect of the 2017 PSUs and the 2017 PBOs would be equal to half the number of 2017 PSUs granted and one-quarter the number of shares underlying the 2017 PBOs granted. If the performance goals are achieved at the target level, the number of shares eligible to vest in respect of the 2017 PSUs and 2017 PBOs would be equal to the number of 2017 PSUs granted and half of the shares underlying the 2017 PBOs granted. If the performance goals are achieved at the superior level, the number of shares eligible to vest in respect of the 2017 PSUs would be equal to two times the number of 2017 PSUs granted and equal to the number of 2017 PBOs granted. The number of shares issuable upon achievement of the performance goals at the levels between the threshold and target levels for the 2017 PSUs and 2017 PBOs or between the target level and superior levels for the 2017 PSUs would be determined using linear interpolation. Achievement below the threshold level would result in no shares being eligible to vest in respect of the 2017 PSUs and 2017 PBOs. As of March 31, 2017, we estimated that the 2017 PSU and 2017 PBOs performance goals would be achieved at 100.0% of the target level. Accordingly, we recognized expense to reflect the target level.

In 2016, we awarded PSUs ("2016 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. In the first quarter of 2017, we determined that the 2016 PSU performance goals had been achieved at 142.3% of the target level, and recognized expenses accordingly. Accordingly, one-half of the shares underlying the 2016 PSUs vested in the first quarter of 2017 and one-half of the shares underlying the 2016 PSUs will vested in the first quarter of 2018, in each case subject to the recipient’s continued service on each vesting date. No PBOs were awarded in 2016.

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, with other terms similar to the 2014 PSUs and 2016 PSUs. 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. One-half of the shares underlying the 2015 PSUs vested in the first quarter of each of 2016 and 2017, subject to the recipient’s continued service on each vesting date. No PBOs were awarded in 2015.

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,
	2017		2016
Research and development	$	323	$	220
Selling, general and administrative	1,346		1,169
Total	$	1,669	$	1,389

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, 2017 and 2016 (in thousands):



	Three Months Ended March 31,
	2017		2016
Stock options	$	334	$	304
RSUs and RSAs	459		574
PSUs	641		511
PBOs	235		—
Total	$	1,669	$	1,389

As of March 31, 2017, unrecognized stock-based compensation expense, net of expected forfeitures, was $3.4 million related to unvested employee stock options, $2.0 million related to unvested RSUs and RSAs, $1.2 million related to unvested PSUs, and $2.0 million related to unvested PBOs.

Valuation Assumptions

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



	Three Months Ended March 31,
	2017			2016
Expected term (in years)	5.3			5.4
Volatility	62		%	65		%
Risk-free interest rate	2.00		%	1.30		%
Dividend yield	—		%	—		%
Weighted-average estimated fair value of stock options granted	$	2.52		$	2.31

Note 9. Capital Stock

Exercise of options

For the three months ended March 31, 2017 and 2016, 40,582 and 4,466 shares, respectively, were exercised at a weighted-average exercise price of $2.45 and $1.61 per share, respectively, with net cash proceeds of $99 thousand and $7 thousand, respectively.

Warrants

Our outstanding warrants are exercisable for common stock at any time during their respective terms. As of March 31, 2017, the following warrants remain outstanding:



	March 31, 2017
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 in October 2016. The various terms for the spaces under the lease had expiration dates that range from January 2020 through January 2022. As described further below, in October 2016, we exercised an option to extend our lease of certain spaces through January 2022. Beginning in February 2014, we have subleased office space to different subtenants with separate options to extend the subleases. If all such options to extend were exercised, these agreements would expire at various dates through 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 $1.2 million at March 31, 2017, 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 areas 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, 2017 and December 31, 2016, 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, 2017 and 2016.

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, 2017 and $0.8 million as of December 31, 2016. These deposits are recorded as restricted cash on the consolidated balance sheets.

Rent expense was $0.9 million and $0.9 million during the three months ended March 31, 2017 and 2016, respectively, partially offset by sublease income of $0.3 million and $0.2 million, respectively.

Capital Leases

In December 2016, we entered into a financing lease agreement with a third party supplier for the purchase of laboratory equipment that was partially financed through a capital lease of approximately $0.4 million. The lease became effective upon delivery of the equipment, which occurred in February 2017, and the term of the lease is three years from the effective date. This financing agreement was accounted for as a capital lease due to the bargain purchase option at the end of the lease.

Leases

Future minimum payments under non-cancellable capital and operating leases are as follows at March 31, 2017 (in thousands):



Years ending December 31,	Capital Leases			Operating Leases
2017 (9 months remaining)	$	105		$	2,327
2018	140			3,185
2019	140			3,280
2020	23			712
2021 and beyond	—			531
Total minimum lease payments	408			$	10,035
Less: amount representing interest	(29		)
Present value of capital lease obligations	379
Less: current portion	(124		)
Long-term portion of capital leases	$	255

Minimum payments have not been reduced by future minimum sublease rentals of $2.0 million to be received under non-cancellable subleases at March 31, 2017.

Other Commitments

In April 2016, we entered into a new manufacture and supply agreement that resulted in an additional total commitment up to $1.8 million, with payment to be made in December 2022 or after.

In October 2016, we entered into a services agreement with a third party supplier for the development of a manufacturing process. The services agreement resulted in a maximum total commitment of $1.4 million. As of March 31, 2017, we have recorded $1.2 million in expense associated with this agreement and have a remaining obligation of approximately $0.2 million.

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. On April 29, 2016, we filed a First Amended Complaint. The First Amended Complaint alleges that the Defendants have engaged in willful patent infringement, trade secret misappropriation, breach of contract, 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. On May 13, 2016, the Defendants filed a Partial Motion to Dismiss the claims for breach of contract, intentional interference with contractual relations, intentional interference with prospective economic relations, statutory unfair competition, and common law unfair competition in the First Amended Complaint. We opposed the Defendant’s Partial Motion to Dismiss. On August 11, 2016, the judge issued an order that denied the Defendants’ Partial Motion to Dismiss with respect to all five claims and in all relevant parts, and granted the motion with respect to certain underlying arguments. The Defendants filed their Answer on September 1, 2016, stating that the Defendants would not contest infringement of the asserted patents and denying the trade secret claim and other non-patent claims. There are no counterclaims. On September 21, 2016, the parties filed a stipulation in which the Defendants agreed not to contest our construction of certain patent claim terms and vacating deadlines related to the claim construction proceedings. The Court entered the stipulated order on September 26, 2016. 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.

We entered into a commercialization agreement with Exela in 2007. Under the license agreement, as amended, we and Exela cross-licensed certain technology relating to the manufacture of argatroban, an API, in exchange for rights to certain sublicensing fees or development payments and profit sharing.

Thomas R. Baruch, one of our directors, serves on the board of directors of Exela, and is a retired general partner in Presidio Partners 2007, LP which owns over 10% of Exela’s outstanding capital stock. As such, Mr. Baruch has an indirect pecuniary interest in the shares of Exela held by Presidio Partners 2007, L.P.

We recognized $0.4 million and $0.7 million for the three months ended March 31, 2017 and 2016, respectively, in the condensed consolidated statement of operations as a revenue sharing arrangement. We had no receivables from Exela at March 31, 2017 and December 31, 2016.

AstraZeneca PLC

Pam P. Cheng, a member of our board of directors, joined AstraZeneca PLC as Executive Vice President, Operations and Information Technology in June 2015. We sell biocatalyst products to AstraZeneca and to Alfa Aesar, which is a purchasing agent of AstraZeneca.

In the three months ended March 31, 2017, we recognized de minimis revenue from AstraZeneca and no revenue from Alfa Aesar, respectively. In the three months ended March 31, 2016, we did not recognize any revenue from AstraZeneca and Alfa Aesar, respectively. We had no accounts receivables from Alfa Aesar at March 31, 2017 and $0.4 million in accounts receivable at December 31, 2016. At March 31, 2017, we had an accounts receivable of $19 thousand from AstraZeneca PLC and no accounts receivable from AstraZeneca PLC at December 31, 2016.

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,
	2017		2016
Customer A	28	%	37	%
Customer B	15	%	*
Customer C	14	%	*
Customer D	*		18	%

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, 2017		December 31, 2016
Customer A	30	%	54	%
Customer C	13	%	*
Customer E	*		16	%

* Less than 10% of the period presented

Geographic Information

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



	Three Months Ended March 31,
	2017		2016
Revenues:
United States	$	1,732	$	4,095
Asia
Singapore	1,346		955
India	749		1,023
Others	880		225
Europe
Slovenia	1,632		579
Others	1,575		1,119
Others	57		—
Total revenues	$	7,971	$	7,996

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



Long-lived assets:	March 31, 2017		December 31, 2016
United States	$	3,005	$	2,414

Note 13. Subsequent Events

In April 2017, we completed an underwritten public offering of 6,325,000 shares of our common stock, including the exercise in full by the underwriters of their option to purchase 825,000 shares from us, at a public offering price of $4.00 per share. After deducting the underwriting discounts and commissions and estimated offering expenses, the net proceeds to us were approximately $23.3 million.

In April 2017, we entered into a services agreement with a third party supplier for the development of a manufacturing process. The services agreement, which may, subject to the payment of certain cancellation fees, be canceled at our discretion, may result in a total commitment of up to $4.3 million.

In April 2017, we entered into a financing lease agreement with a third party supplier for the purchase of information technology equipment for approximately $0.3 million. The effective date of the lease is upon delivery of the equipment, which is expected to be received in May 2017 and the term of the lease is three years. This financing agreement was accounted for as a capital lease due to the bargain purchase option at the end of the lease.



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, 2016 included in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 9, 2017 (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 (the “Exchange Act”). 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

We are a pioneer in the harnessing of computational technologies to drive biology advancements. Over the last fifteen years, we have made substantial investments in the development of our CodeEvolver^® protein engineering technology platform, the primary source of our competitive advantage. Our technology platform is powered by proprietary, artificial intelligence-based, computational algorithms that rapidly mine our large and continuously growing library of protein variants’ performance attributes. These computational outputs enable increasingly reliable predictions for next generation protein variants to be engineered, enabling delivery of targeted performance enhancements in a time-efficient manner. In addition to its computational prowess, our CodeEvolver^® protein engineering technology platform integrates additional modular competencies, including robotic high-throughput screening and genomic sequencing, organic chemistry and process development which are all coordinated to create our novel protein innovations.

Our approach to develop commercially viable biocatalytic manufacturing processes begins by conceptually designing the most cost-effective and practical process for a targeted product. We then develop optimized protein catalysts to enable that process design, using our CodeEvolver^® protein engineering platform technology. Engineered protein catalyst candidates - many thousands for each protein engineering project - are then rapidly screened and validated in high throughput under relevant manufacturing operating conditions. This approach results in an optimized protein catalyst enabling cost-efficient

processes that typically are relatively simple to run in conventional manufacturing equipment. This also allows for the efficient technical transfer of our process to our manufacturing partners.

Results of Operations Overview

Revenues were $8.0 million for the first quarter of 2017, the same as revenues of $8.0 million for the first quarter of 2016. Product sales increased by approximately $1.8 million, or 49%, from the prior year, which was primarily due to higher customer demand for enzymes for both generic and branded products. The increase in product sales for the first quarter of 2017 was offset by a decrease of $1.5 million, or 43%, in research and development revenues primarily due to lower milestone revenue from a collaboration agreement and $1.1 million from the combined pro-rata revenue recognition of upfront payments from GlaxoSmithKline and Merck. These were offset by increased R&D service revenues for Merck and another major pharmaceutical company. Revenues from Exela in a revenue sharing arrangement decreased by $0.3 million, or 47%.

Cost of product sales increased by $0.5 million, or 21%, to $3.0 million for the first quarter of 2017, compared to the same period in 2016, due primarily to higher product sales.

Product gross margins were 46% in the three months ended March 31, 2017, compared to 33% in the same period in 2016 due to improved sales mix.

Research and development expenses increased by $0.2 million, or 3%, to $5.8 million for the first quarter of 2017, compared to the first quarter of 2016, due primarily to increased outside services and increased costs associated with higher headcount, which was partially offset by lower amortization of intangibles, which amortization ceased in the fourth quarter of 2016.

Selling, general and administrative expense decreased by $0.2 million, or 3%, to $6.6 million for the first quarter of 2017, compared to the first quarter of 2016, due primarily to a decrease in legal expenses related to intellectual property and decreased outside services, offset by increased costs associated with higher headcount.

Net loss for the first quarter of 2017 was $7.5 million, representing a net loss of $0.18 per basic and diluted share. This compares to a net loss of $7.0 million, or a net loss of $0.17 per basic and diluted share for the first quarter of 2016. The increase in net loss for the first quarter of 2017 over the same period of the prior year is primarily related to decreased research and development revenues which was partially offset by increased revenue from product sales.

Cash and cash equivalents decreased by $5.3 million to $13.9 million as of March 31, 2017 compared to $19.2 million as of December 31, 2016. Net cash used in operating activities was $3.6 million in the three months ended March 31, 2017 compared to net cash provided by operations of $0.2 million in the three months ended March 31, 2016. On April 12, 2017, we completed a public offering of approximately 6.3 million shares of our common stock at an offering price of $4.00 per share

resulting in net proceeds to us of approximately $23.3 million. 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 a CodeEvolver^® platform technology transfer and license agreement (the "GSK CodeEvolver^® Agreement") with 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 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 earned milestone revenue of $6.5 million. In the second quarter of 2016, we completed the full transfer of the protein engineering platform technology and earned milestone revenue of $7.5 million of which payment was received in June 2016. 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.

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 was being recognized ratably over the technology transfer period of three years, starting July 2014. The technology transfer was completed in September 2016 and all remaining deferred revenue was recognized. For the three months ended March 31, 2017 and 2016, $0 and $0.5 million were recognized as research and development revenue, respectively.

In September 2016, we recorded our first project-specific contingent fee based on GSK's successful application of our technology in an existing pharmaceutical product.

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 execution of the Merck CodeEvolver^® Agreement, which was being recognized ratably over the estimated platform technology transfer period of two years. The technology transfer was completed in September 2016 and all remaining deferred revenue was recognized. For the three months ended March 31, 2017 and 2016, $0 and $0.6 million were recognized as research and development revenue, respectively. Additionally, we recognized research and development revenues of $0.9 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively, for various research projects under our collaborative arrangement.

Following the completion of the technology transfer, we may 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.

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
	2017			2016			$			%
Revenues:
Product sales	$	5,586		$	3,740		$	1,846		49	%
Research and development revenues	2,001			3,534			(1,533		)	(43	)%
Revenue sharing arrangement	384			722			(338		)	(47	)%
Total revenues	7,971			7,996			(25		)	—	%
Costs and operating expenses:
Cost of product sales	3,002			2,489			513			21	%
Research and development	5,839			5,686			153			3	%
Selling, general and administrative	6,606			6,802			(196		)	(3	)%
Total costs and operating expenses	15,447			14,977			470			3	%
Loss from operations	(7,476		)	(6,981		)	(495		)	(7	)%
Interest income	18			15			3			20	%
Other income, net	22			3			19			633	%
Loss before income taxes	(7,436		)	(6,963		)	(473		)	(7	)%
Provision for income taxes	24			11			13			118	%
Net loss	$	(7,460	)	$	(6,974	)	$	(486	)	(7	)%

Revenues

Our revenue is comprised of product sales, research and development revenues, and a revenue sharing arrangement, as follows:


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


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


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

The following table shows the amounts of our product sales, research and development revenues from our condensed consolidated statements of operations for the periods presented (in thousands):



	Three months ended March 31,				Change
(In Thousands)	2017		2016		$			%
Product sales	$	5,586	$	3,740	$	1,846		49	%
Research and development revenues	2,001		3,534		(1,533		)	(43	)%
Revenue sharing arrangement	384		722		(338		)	(47	)%
Total revenues	$	7,971	$	7,996	$	(25	)	—	%

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.

customer demand for enzymes for both generic and branded products. The increase in product sales for the first quarter of 2017 was offset by a decrease of $1.5 million, or 43%, in research and development revenues primarily due to lower milestone revenue from a collaboration agreement and $1.1 million from the combined pro-rata revenue recognition of upfront payments from GlaxoSmithKline and Merck. These were offset by increased R&D service revenues for Merck and another major pharmaceutical company. Revenues from Exela in a revenue sharing arrangement decreased by $0.3 million, or 47%.

Cost and Operating Expenses

Our cost and operating expenses are comprised of cost of product sales, research and development expense, and selling, general and administrative expense. The following table shows the amounts of our cost of product sales, research and development expense, and selling, general and administrative expense from our consolidated statements of operations for the periods presented (in thousands):



	Three months ended March 31,				Change
(In Thousands)	2017		2016		$			%
Cost of product sales	$	3,002	$	2,489	$	513		21	%
Research and development expense	5,839		5,686		153			3	%
Selling, general and administrative expense	6,606		6,802		(196		)	(3	)%
Total costs and operating expenses	$	15,447	$	14,977	$	470		3	%

Cost of Product Sales and Product Gross Margin

The following table shows the amounts of our revenues from product sales, cost of product sales, product gross profit and product gross margin from our consolidated statements of operations for the periods presented (in thousands):



	Three months ended March 31,				Change
(In Thousands)	2017		2016		$		%
Revenues from product sales	$	5,586	$	3,740	$	1,846	49	%
Cost of product sales	3,002		2,489		513		21	%
Product gross profit	$	2,584	$	1,251	$	1,333	107	%
Product gross margin (%)	46%		33%

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

Cost of product sales increased by $0.5 million, or 21%, during the three months ended March 31, 2017, compared to the corresponding period in 2016, due primarily to higher product sales.

Product gross margins increased to 46% in the three months ended March 31, 2017 from 33% in the corresponding period of the prior year due to improved 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 $0.2 million, or 3% to $5.8 million for the first quarter of 2017 compared to the first quarter of 2016 due primarily to an increase in outside services and increased costs associated with higher headcount, which was partially offset by lower amortization of intangibles, which amortization ceased in the fourth quarter of 2016.

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 decreased by $0.2 million, or 3%, to $6.6 million for the first quarter of 2017, compared to the first quarter of 2016 due primarily to a decrease in legal expenses related to intellectual property and decreased outside services, offset by increased costs associated with higher headcount.

Interest income and other income



	Three months ended March 31,				Change
(In Thousands)	2017		2016		$		%
Interest income	$	18	$	15	$	3	20	%
Other income	22		3		19		633	%
Total other income	$	40	$	18	$	22	122	%

Interest income was not material during the three months ended March 31, 2017 and 2016.

The change in other income for the three months ended March 31, 2017 compared to the same period in 2016 was primarily related to fluctuations in foreign currency.

Provision for income taxes

We recognized income tax provisions of $24 thousand and $11 thousand for the three months ended March 31, 2017 and 2016, 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.

Net loss

Net loss for the first quarter of 2017 was $7.5 million, representing a net loss of $0.18 per basic and diluted share. This compares to a net loss of $7.0 million, or a net loss of $0.17 per basic and diluted share for the first quarter of 2016. The increase in net loss for the first quarter of 2017 over the same period of the prior year is primarily related to decreased research and development revenue which was partially offset by increased revenue from product sales.

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 stock option exercises. We actively manage our cash usage and investment of liquid cash to ensure the maintenance of sufficient funds to meet our working capital 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, 2017 and December 31, 2016, as well as our statements of cash flows for the three months ended March 31, 2017 and 2016:



(In Thousands)	March 31, 2017		December 31, 2016
Cash and cash equivalents	$	13,923	$	19,240
Working capital	$	8,216	$	14,860



	Three months ended March 31,
(In Thousands)	2017			2016
Net cash provided by (used in) operating activities	$	(3,609	)	$	219
Net cash used in investing activities	(161		)	(238		)
Net cash used in financing activities	(1,547		)	(1,091		)
Net decrease in cash and cash equivalents	$	(5,317	)	$	(1,110	)

We have historically experienced negative cash flows from operations as we continue to invest in key technology development projects and improvements to our CodeEvolver^® protein engineering 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 product sales and collaborative 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 products and/or collaborative 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 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. In addition, on April 12, 2017, we completed a public offering of approximately 6.3 million shares of our common stock at an offering price of $4.00 per share resulting in net proceeds of approximately $23.3 million and on May 2, 2017, we received a payment in the low single-digit million dollar range from Tate & Lyle relating to our March 2017 research and development agreement. 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 used in operating activities was $3.6 million net for the three months ended March 31, 2017, which resulted from a net loss of $7.5 million for the three months ended March 31, 2017 adjusted for non-cash charges for depreciation and amortization of $0.3 million and stock-based compensation of $1.7 million. Additional cash provided from changes in operating assets and liabilities was $1.9 million. Changes in operating assets and liabilities included a $1.0 million increase in deferred revenues, a $1.0 million increase in accrued compensation and a $0.5 million decrease in accounts receivable, which was partially offset by a $0.9 million decrease in accounts payable primarily reflecting the timing of payments.

Cash provided by operating activities was $0.2 million for the three months ended March 31, 2016, which resulted 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 Flows from Investing Activities

Cash used in investing activities was $0.2 million and 0.2 million for the three months ended March 31, 2017 and 2016, respectively, primarily related to the purchase of property and equipment.

Cash Flows from Financing Activities

Cash used in financing activities was $1.5 million and $1.1 million for the three months ended March 31, 2017 and 2016, respectively. Cash used consisted primarily of taxes paid related to net share settlement of equity awards for the three months ended March 31, 2017 and 2016, respectively.

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, 2016.

In October 2016, we entered into a services agreement with a third party supplier for the development of a manufacturing process. The services agreement resulted in a total commitment of up to $1.4 million. As of March 31, 2017, we have recorded $1.2 million in expense associated with this agreement and have a remaining obligation of approximately $0.2 million.

For additional information about our contractual obligations, see Note 10 "Commitments and Contingencies" in the accompanying notes to the unaudited condensed consolidated financial statements. There have been no other material 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, 2016.

Off-Balance Sheet Arrangements

As of March 31, 2017, 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 material changes to our critical accounting policies or estimates as discussed in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 9, 2017.



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. As of March 31, 2017, there were no material changes in our market risk exposures compared to the disclosures in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 9, 2017.

Equity Price Risk

As described in Note 5, "Cash Equivalents and 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, 2017, the fair value of our investment in CO2 Solutions' common stock was $1.1 million, including an unrealized gain of $0.5 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, 2017 would have been an unrealized loss of approximately $0.1 million, recognized as a component of our condensed consolidated statements of comprehensive income (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, 2017 would have been an unrealized loss of approximately $0.1 million, recognized as a component of our condensed consolidated statements of comprehensive income (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.

Our management, including our principal executive officer and our principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on this review, our principal executive officer and our principal financial and accounting officer concluded that these disclosure controls and procedures were effective as of March 31, 2017 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, 2016, 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, 2017, 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, 2016. 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, 2017	By:	/s/ John J. Nicols
			John J. Nicols President and Chief Executive Officer (principal executive officer)

Date:	May 9, 2017	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.

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, 2017, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets at March 31, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016, 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.

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Use of Estimates

Segment Reporting

Revenue Recognition

We recognize revenues from the sale of our products, research and development agreements and revenue sharing arrangements. 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.

Product Sales

Research and Development

Revenue Sharing Arrangement

Sales Allowances

Cost of Product Sales

Cost of Research and Development Services

Research and Development Expenses

Stock-Based Compensation

Foreign Currency Translation

Cash and Cash Equivalents

Restricted Cash

Inventories

Marketable Securities

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. No charge for the other-than-temporary impairment has been recorded in any of the periods presented.

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

Impairment of Long-Lived Assets

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.

The Core IP became fully amortized in 2016 and there are no finite-lived intangible assets with a net carrying value on our consolidated balance sheet as of December 31, 2016.

Goodwill

Income Taxes

We account for income taxes using the asset and liability approach. Under this approach, deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and tax laws in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are provided against deferred tax assets that are not likely to be realized.

The provision for income taxes was $24 thousand and $11 thousand for the three months ended March 31, 2017 and 2016, respectively.

Recently Issued and Adopted Accounting Guidance

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2017	Apr. 28, 2017
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, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding (shares)		48,169,923

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 421	$ 421
Preferred Stock, Par or Stated Value Per Share (usd per share)	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized (shares)	5,000,000	5,000,000
Preferred Stock, Shares Issued (shares)	0	0
Preferred Stock, Shares Outstanding (shares)	0	0
Preferred Stock, Shares Outstanding (usd per share)	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized (shares)	100,000,000	100,000,000
Common Stock, Shares, Issued (shares)	41,841,000	41,255,000
Common Stock, Shares, Outstanding (shares)	41,841,000	41,255,000

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (7,460)	$ (6,974)
Other comprehensive loss
Unrealized loss on marketable securities, net of tax expense of $0 for each of the three months ended March 31, 2017 and 2016	(91)	(90)
Other comprehensive loss	(91)	(90)
Total comprehensive loss	$ (7,551)	$ (7,064)

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Tax (benefit) expense from marketable securities	$ 0	$ 0

Description of Business	3 Months Ended
Description of Business	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business In these notes to the consolidated financial statements, the “Company,” “we,” “us,’” and “our” refers to Codexis, Inc. and its subsidiaries on a consolidated basis. We discover, develop and sell proteins that deliver value to our clients in a growing set of industries. We view proteins as a vast untapped source of value-creating materials, and we are using our proven technologies, which have been continuously improved over our fifteen year history, to commercialize an increasing number of novel proteins, both as proprietary Codexis products and in partnership with our customers. Many companies have historically used naturally occurring proteins to produce or enhance goods used in everyday life. Despite the growing number of commercial applications of naturally occurring proteins across many industries, the inherent limitations of naturally-occurring proteins frequently restrict their commercial use. Through the application of our proprietary CodeEvolver^® protein engineering technology platform, we are able to engineer novel proteins to overcome these restrictions, thereby adding value or opening up new prospects for our potential clients’ products, processes or businesses. We have developed new proteins that are significantly more stable and/or active in our customers' commercial applications than proteins derived from nature. We are a pioneer in the harnessing of computational technologies to drive biology advancements. Over the last fifteen years, we have made substantial investments in the development of our CodeEvolver^® protein engineering technology platform, the primary source of our competitive advantage. Our technology platform is powered by proprietary, artificial intelligence-based, computational algorithms that rapidly mine our large and continuously growing library of protein variants’ performance attributes. These computational outputs enable increasingly reliable predictions for next generation protein variants to be engineered, enabling delivery of targeted performance enhancements in a time-efficient manner. In addition to its computational prowess, our CodeEvolver^® protein engineering technology platform integrates additional modular competencies, including robotic high-throughput screening and genomic sequencing, organic chemistry and process development, which are all coordinated to create our novel protein innovations. We use our CodeEvolver^® protein engineering technology platform to engineer custom enzymes. Most of our custom enzymes are intended for use as biocatalysts or protein catalysts. In simple terms, our protein catalysts can accelerate and/or improve yields of chemical reactions. We use our CodeEvolver^® protein engineering technology platform to develop novel enzymes that enable industrial biocatalytic reactions and fermentations. Our technology platform has enabled commercially viable products and processes for the manufacture of pharmaceutical intermediates and active ingredients and fine chemicals. Our approach to develop commercially viable biocatalytic manufacturing processes begins by conceptually designing the most cost-effective and practical process for a targeted product. We then develop optimized protein catalysts to enable that process design, using our CodeEvolver^® protein engineering platform technology. Engineered protein catalyst candidates, many thousands for each protein engineering project, are then rapidly screened and validated in high throughput under relevant manufacturing operating conditions. This approach results in an optimized protein catalyst enabling cost-efficient processes that typically are relatively simple to run in conventional manufacturing equipment. This also allows for the efficient technical transfer of our process to our manufacturing partners. The successful embodiment of our CodeEvolver^® protein engineering technology platform in commercial manufacturing processes requires well-integrated expertise in a number of technical disciplines. In addition to those directly involved in practicing our CodeEvolver^® protein engineering platform technology, such as molecular biology, enzymology, microbiology, cellular engineering, metabolic engineering, bioinformatics, biochemistry and high throughput analytical chemistry, our process development projects also involve integrated expertise in organic chemistry, chemical process development, chemical engineering, fermentation process development and fermentation engineering. Our integrated, multi-disciplinary approach to biocatalyst and process development is a critical success factor for our company. We initially commercialized our CodeEvolver^® protein engineering technology platform and products in the pharmaceuticals market, which remains 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 have also used the technology to develop protein catalysts 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, fragrances, and agricultural chemicals. More recently, we are also using the CodeEvolver^® protein engineering technology platform to develop early stage, novel biotherapeutic product candidates, both for our customers and for our own business, most notably our lead program for the potential treatment of phenylketonuria ("PKU") disease in humans. PKU is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient. We have also used our technology to develop an enzyme for customers using next generation sequencing (“NGS”) and polymerase chain reaction (“PCR/qPCR”) for in vitro molecular diagnostic and genomic research applications.


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, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 13,923	$ 19,240
Accounts receivable, net of allowances of $421 at March 31, 2017 and December 31, 2016	5,381	5,924
Inventories	1,124	825
Prepaid expenses and other current assets	1,314	1,238
Total current assets	21,742	27,227
Restricted cash	1,592	1,624
Marketable securities	1,051	1,142
Property and equipment, net	2,752	2,155
Goodwill	3,241	3,241
Other non-current assets	253	259
Total assets	30,631	35,648
Current liabilities:
Accounts payable	3,493	4,232
Accrued compensation	5,334	4,314
Other accrued liabilities	3,055	2,111
Deferred revenue	1,644	1,710
Total current liabilities	13,526	12,367
Deferred revenue, net of current portion	2,180	1,066
Lease incentive obligation, net of current portion	779	885
Financing obligation, net of current portion	255	0
Other long-term liabilities	2,211	2,231
Liabilities	18,951	16,549
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value per share; 5,000 shares authorized; none issued and outstanding	0	0
Common stock, $0.0001 par value per share; 100,000 shares authorized; 41,841 shares and 41,255 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	4	4
Additional paid-in capital	311,296	311,164
Accumulated other comprehensive loss	(91)	0
Accumulated deficit	(299,529)	(292,069)
Total stockholders' equity	11,680	19,099
Total liabilities and stockholders' equity	$ 30,631	$ 35,648

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Product sales	$ 5,586	$ 3,740
Research and development revenues	2,001	3,534
Revenue sharing arrangement	384	722
Total revenues	7,971	7,996
Costs and operating expenses:
Cost of product sales	3,002	2,489
Research and development	5,839	5,686
Selling, general and administrative	6,606	6,802
Total costs and operating expenses	15,447	14,977
Loss from operations	(7,476)	(6,981)
Interest income	18	15
Other income, net	22	3
Loss before income taxes	(7,436)	(6,963)
Provision for income taxes	24	11
Net loss	$ (7,460)	$ (6,974)
Net loss per share, basic and diluted (usd per share)	$ (0.18)	$ (0.17)
Weighted average common stock shares used in computing net loss per share, basic and diluted (shares)	41,250	40,072

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities:
Net loss	$ (7,460)	$ (6,974)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of intangible assets	0	844
Depreciation and amortization of property and equipment	326	465
Gain on disposal of property and equipment	(1)	(27)
Stock-based compensation	1,669	1,389
Changes in operating assets and liabilities:
Accounts receivable, net	543	2,977
Inventories	(299)	(30)
Prepaid expenses and other current assets	(174)	5
Restricted cash	(43)	0
Other assets	6	109
Accounts payable	(882)	(395)
Accrued compensation	1,020	974
Other accrued liabilities	763	1,172
Long term lease incentive	(106)	(106)
Other long term liabilities	(19)	0
Deferred revenue	1,048	(184)
Net cash provided by (used in) operating activities	(3,609)	219
Investing activities:
Purchase of property and equipment	(237)	(265)
Proceeds from disposal of property and equipment	1	27
Change in restricted cash	75	0
Net cash used in investing activities	(161)	(238)
Financing activities:
Proceeds from exercises of options	99	7
Principal payments on capital lease obligations	(10)	0
Taxes paid related to net share settlement of equity awards	(1,636)	(1,098)
Net cash used in financing activities	(1,547)	(1,091)
Net decrease in cash and cash equivalents	(5,317)	(1,110)
Cash and cash equivalents at the beginning of the period	19,240	23,273
Cash and cash equivalents at the end of the period	13,923	22,163
Noncash Investing and Financing Items [Abstract]
Equipment acquired under a capital lease	$ 528	$ 0

Collaborative Arrangements	3 Months Ended
Collaborative Arrangements	Mar. 31, 2017
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 and earned milestone revenue of $6.5 million. In April 2016, we completed the full transfer of the CodeEvolver^®protein engineering platform technology and earned milestone revenue of $7.5 million, for which payment was received in June 2016. 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. In the third quarter of 2016, we earned and recognized the first contingent payment under the agreement related to the development of an enzyme for an already-commercialized product. 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. GSK can terminate the GSK CodeEvolver^® Agreement by providing 90 days written notice to us. 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 was being recognized ratably over the technology transfer period of three years since July 2014. We recognized all deferred revenue from GSK upon completion of technology transfer in April 2016. For the three months ended March 31, 2017 and 2016, $0 and $0.5 million were recognized as research and development revenue, respectively. 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. The Merck CodeEvolver^®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 was being recognized ratably over the estimated platform technology transfer period of two years. The technology transfer was completed in September 2016 and all remaining deferred revenue was recognized. Following the completion of the technology transfer, we may be eligible to receive payments of up to a maximum of $15.0 million for each commercial active pharmaceutical ingredient ("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 transferred the CodeEvolver^® protein engineering technology platform to Merck over the period from August 2015 through September 2016. As part of this technology transfer, we provided to Merck our proprietary enzymes, proprietary protein engineering protocols and methods, and proprietary software algorithms. 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 Merck CodeEvolver^® Agreementand that cover the CodeEvolver^® protein engineering technology platform. Any improvements to the CodeEvolver^® protein engineering technology platform during the technology transfer period are also included in the license grants from Codexis to Merck. Following 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. 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 Merck CodeEvolver^® Agreement using the CodeEvolver^® protein engineering technology platform (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. 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 Merck CodeEvolver^® 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 was being recognized ratably over a two-year periods since August 2015. The technology transfer was completed in September 2016 and all remaining deferred revenue was recognized. For the three months ended March 31, 2017 and 2016, $0 and $0.6 million were recognized as research and development revenue, respectively. Additionally, we recognized research and development revenues of $0.9 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively, for various research projects under our collaborative arrangement. 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 Januvia^®, its product based on the active ingredient sitagliptin. 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. Effective as of January 2016, we and Merck amended the Sitagliptin Catalyst Supply Agreement to prospectively provide for variable pricing based on the cumulative volume of sitagliptin purchased by Merck under the Sitagliptin Catalyst Supply Agreement and to allow Merck to purchase a percentage of its requirements for sitagliptin from a specified third-party supplier. Merck has the right to terminate the Sitagliptin Catalyst Supply Agreement at any time after January 1, 2018 by giving us 24 months’ advance written notice. 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 $0.3 million for the three months ended March 31, 2017 and 2016, respectively, as research and development revenues. We had a deferred revenue balance from Merck related to license fees of $2.5 million at March 31, 2017 and $1.3 million at December 31, 2016. In addition, pursuant to the terms of the agreement, Merck may purchase supply from us for a fee based on contractually stated prices and we recognized $1.8 million and $1.6 million for the three months ended March 31, 2017 and 2016, respectively, in product sales under this agreement. Biopharmaceutical Collaborative Development Agreement In May 2015, we entered into a collaborative development agreement with a leading global biopharmaceutical company. Under the terms of the agreement, we used our CodeEvolver^® protein engineering platform technology to develop a novel enzyme for use in our partner’s therapeutic development program. We recognized revenues of $0.1 million and $1.4 million for the three months ended March 31, 2017 and 2016, respectively, as collaborative research and development revenues. Under the agreement, we have the potential to receive additional license fees and milestone payments. Enzyme Supply Agreement In November 2016, we entered into a supply agreement whereby our customer may purchase quantities of one of our proprietary enzymes for use in its commercial manufacture of a product. Pursuant to the supply agreement, we received an upfront payment of $0.75 million in December 2016, which we accordingly recorded as deferred revenues. Such upfront payment will be recognized over the period of the supply agreement as the customer purchases our proprietary enzyme. As of March 31, 2017 and December 31, 2016, we had deferred revenue from the supply agreement of $0.7 million. Under the agreement, we recognize product revenues for quantities of enzyme sold to our customer when all revenue recognition criteria are met. Research and Development Agreement In March 2017, we entered into a multiyear research and development services agreement with Tate & Lyle to develop novel enzymes to support the development of new food ingredient products. Under the agreement, we have the potential to receive research and development revenues and milestone payments based on Tate & Lyle's decision to continue the development process.

Related Party Transactions	3 Months Ended
Related Party Transactions	Mar. 31, 2017
Related Party Transaction, Due from (to) Related Party [Abstract]
Related Party Transactions	Related Party Transactions Exela PharmSci, Inc. We entered into a commercialization agreement with Exela in 2007. Under the license agreement, as amended, we and Exela cross-licensed certain technology relating to the manufacture of argatroban, an API, in exchange for rights to certain sublicensing fees or development payments and profit sharing. Thomas R. Baruch, one of our directors, serves on the board of directors of Exela, and is a retired general partner in Presidio Partners 2007, LP which owns over 10% of Exela’s outstanding capital stock. As such, Mr. Baruch has an indirect pecuniary interest in the shares of Exela held by Presidio Partners 2007, L.P. We recognized $0.4 million and $0.7 million for the three months ended March 31, 2017 and 2016, respectively, in the condensed consolidated statement of operations as a revenue sharing arrangement. We had no receivables from Exela at March 31, 2017 and December 31, 2016. AstraZeneca PLC Pam P. Cheng, a member of our board of directors, joined AstraZeneca PLC as Executive Vice President, Operations and Information Technology in June 2015. We sell biocatalyst products to AstraZeneca and to Alfa Aesar, which is a purchasing agent of AstraZeneca. In the three months ended March 31, 2017, we recognized de minimis revenue from AstraZeneca and no revenue from Alfa Aesar, respectively. In the three months ended March 31, 2016, we did not recognize any revenue from AstraZeneca and Alfa Aesar, respectively. We had no accounts receivables from Alfa Aesar at March 31, 2017 and $0.4 million in accounts receivable at December 31, 2016. At March 31, 2017, we had an accounts receivable of $19 thousand from AstraZeneca PLC and no accounts receivable from AstraZeneca PLC at December 31, 2016.

Subsequent Events	3 Months Ended
Subsequent Events	Mar. 31, 2017
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events In April 2017, we completed an underwritten public offering of 6,325,000 shares of our common stock, including the exercise in full by the underwriters of their option to purchase 825,000 shares from us, at a public offering price of $4.00 per share. After deducting the underwriting discounts and commissions and estimated offering expenses, the net proceeds to us were approximately $23.3 million. In April 2017, we entered into a services agreement with a third party supplier for the development of a manufacturing process. The services agreement, which may, subject to the payment of certain cancellation fees, be canceled at our discretion, may result in a total commitment of up to $4.3 million. In April 2017, we entered into a financing lease agreement with a third party supplier for the purchase of information technology equipment for approximately $0.3 million. The effective date of the lease is upon delivery of the equipment, which is expected to be received in May 2017 and the term of the lease is three years. This financing agreement was accounted for as a capital lease due to the bargain purchase option at the end of the lease.

Description of Business (Details)	3 Months Ended
Description of Business (Details)	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of years company has been in business	15 years

Basis of Presentation and Summary of Significant Accounting Policies (Details)	3 Months Ended			12 Months Ended
	Mar. 31, 2017 USD ($) operating_segment	Dec. 31, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Loss Contingencies [Line Items]
Cash and cash equivalents	$ 13,923,000	$ 19,240,000	$ 22,163,000	$ 19,240,000	$ 23,273,000
Cash	2,700,000	8,100,000		8,100,000
Money market funds	11,200,000	11,200,000		11,200,000
Noncurrent restricted cash	1,592,000	1,624,000		1,624,000
Impairment charge	$ 0	0
Number of operating segments \| operating_segment	1
Number of reportable segments \| operating_segment	1
Goodwill impairment	$ 0			0
Provision for income taxes	24,000		$ 11,000
Financial Standby Letter of Credit [Member]
Loss Contingencies [Line Items]
Noncurrent restricted cash	700,000	800,000		800,000
India
Loss Contingencies [Line Items]
Restricted Cash and Cash Equivalents, Noncurrent	$ 900,000	$ 800,000		$ 800,000

Net Loss per Share (Details) - shares shares in Thousands	3 Months Ended
Net Loss per Share (Details) - shares shares in Thousands	Mar. 31, 2017	Mar. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares excluded as anti-dilutive (shares)	7,734	6,650
Equity awards outstanding under the Equity Incentive Plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares excluded as anti-dilutive (shares)	7,661	6,577
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares excluded as anti-dilutive (shares)	73	73

Collaborative Arrangements (Details) - USD ($)	1 Months Ended						3 Months Ended		5 Months Ended
Collaborative Arrangements (Details) - USD ($)	Dec. 31, 2016	Apr. 30, 2016	Sep. 30, 2015	Aug. 31, 2015	Jul. 31, 2014	Feb. 29, 2012	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2014
Technology Transfer, Collaboration and License Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Termination notice period				30 days
Supply Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue	$ 700,000						$ 700,000
Milestone revenue	750,000
Merck [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Sales revenue							1,800,000	$ 1,600,000
Merck [Member] \| Technology Transfer, Collaboration and License Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from license fees received				$ 5,000,000
Termination notice period				90 days
License and services revenue							0	600,000
Upfront License fee, period for recognition				2 years
Potential royalty revenue							15,000,000
Duration of license agreement				3 years
Right of refusal period				5 years
Merck [Member] \| Supply Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Termination notice period						24 months
License and services revenue							300,000	300,000
Deferred revenue	$ 1,300,000						2,500,000
Upfront License fee, period for recognition						5 years
Term of collaborative research and development agreement (years)						5 years
Optional extension period						5 years
GlaxoSmithKline [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from license fees received					$ 6,000,000
Revenue recognized		$ 7,500,000	$ 6,500,000						$ 5,000,000
Minimum milestone receivable							5,750,000.00
Maximum milestone receivable							38,500,000.0
Termination notice period					90 days
Term of milestone agreement					3 years
License and services revenue							0	500,000
Collaborative Arrangement [Member] \| Merck [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
License and services revenue							900,000	200,000
Therapeutic Development Program [Member] \| Collaborative Arrangement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recognized							$ 100,000	$ 1,400,000

Cash Equivalents and Marketable Securities (Components of Cash Equivalents and Marketable Securities) (Details) $ in Thousands	Mar. 31, 2017 USD ($) security	Dec. 31, 2016 USD ($) security
Cash Equivalents and Marketable Securities [Line Items]
Adjusted Cost	$ 11,753	$ 11,735
Gross Unrealized Gains	488	579
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 12,241	$ 12,314
Number of Marketable Securities In Unrealized Loss Position \| security	0	0
Common shares of CO2 Solution [Member]
Cash Equivalents and Marketable Securities [Line Items]
Adjusted Cost	$ 563	$ 563
Gross Unrealized Gains	488	579
Gross Unrealized Losses	0	0
Estimated Fair Value	1,051	1,142
Money Market Funds [Member]
Cash Equivalents and Marketable Securities [Line Items]
Adjusted Cost	11,190	11,172
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 11,190	$ 11,172

Fair Value Measurements (Schedule of Financial Instruments Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	$ 12,241	$ 12,314
Cash, Cash Equivalents, and Short-term Investments	12,241	12,314
Transfers from Level 1 to Level 2	0
Transfers from Level 2 to Level 1	0
Level 1 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Cash, Cash Equivalents, and Short-term Investments	11,190	11,172
Level 2 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Cash, Cash Equivalents, and Short-term Investments	1,051	1,142
Level 3 [Member]
Summary of financial instruments measured at fair value on a recurring basis
Cash, Cash Equivalents, and Short-term Investments	0	0
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Equivalents, at Carrying Value	11,190	11,172
Summary of financial instruments measured at fair value on a recurring basis
Total financial assets measured at fair value on a recurring basis	11,190	11,172
Money Market Funds [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Equivalents, at Carrying Value	11,190	11,172
Money Market Funds [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Equivalents, at Carrying Value	0	0
Money Market Funds [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Equivalents, at Carrying Value	0	0
Common Shares of Co Two 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	1,051	1,142
Common Shares of Co Two 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 Co Two 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	$ 1,051	1,142
Investment owned (shares)	10,000,000
Common Shares of Co Two 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, 2017	Dec. 31, 2016
Schedule of Inventory Components
Raw materials	$ 142	$ 118
Work-in-process	163	59
Finished goods	819	648
Inventories	$ 1,124	$ 825

Balance Sheets Details (Property and Equipment, net) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment	$ 34,729	$ 33,806
Less: accumulated depreciation and amortization	(31,977)	(31,651)
Property and equipment, net	2,752	2,155
Laboratory equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	19,412	18,849
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	10,466	10,395
Computer equipment and software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	3,314	3,267
Office equipment and furniture [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	1,179	1,171
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	$ 358	$ 124

Balance Sheets Details (Intangible Assets, net) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 21,778	$ 21,778
Accumulated Amortization	(21,778)	(21,778)
Net Carrying Amount	0	0
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
Maxygen intellectual property [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 20,244	20,244
Accumulated Amortization	(20,244)	(20,244)
Net Carrying Amount	$ 0	$ 0
Amortization Period (years)	6 years

Stock-Based Compensation (Textual) (Details) $ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
Stock-Based Compensation (Textual) (Details) $ in Millions	Mar. 31, 2010 shares	Mar. 31, 2016	Dec. 31, 2016 shares	Dec. 31, 2015 shares	Mar. 31, 2017 USD ($)
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
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
Compensation not yet recognized, stock options					$ 3.4
Stock options [Member] \| Performance Goal: Threshold Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights	75.00%
Stock options [Member] \| Performance Goal: Superior Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights	25.00%
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					2.0
Restricted Stock Units (RSUs) [Member] \| Performance Goal: Threshold Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Award vesting rights	33.3333%
Restricted Stock Units (RSUs) [Member] \| Performance Goal: Target Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Award vesting rights	25.00%
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					1.2
Performance Based Options (PBOs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation not yet recognized, share-based awards other than options					$ 2.0
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%
2016 PSU Plan [Member] \| Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future vesting rights percentage					142.30%
PBOs granted in period (shares) \| shares			0
2016 PSU Plan [Member] \| Performance Shares [Member] \| Second Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future vesting rights percentage		50.00%
2016 PSU Plan [Member] \| Minimum [Member] \| Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards, threshold level, number of shares, multiplier		0
2010 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (shares) \| shares	1,100,000
2015 PSU Plan [Member] \| Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future vesting rights percentage		92.80%
PBOs granted in period (shares) \| shares				0
2015 PSU Plan [Member] \| Performance Shares [Member] \| Second Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future vesting rights percentage					50.00%
2017 PSU and PBO Plan [Member] \| Performance Shares [Member] \| Second Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future vesting rights percentage					50.00%
2017 PSU and PBO Plan [Member] \| Performance Based Options (PBOs) [Member] \| Second Year Vesting Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated performance goal achievement rate					100.00%
2017 PSU Plan [Member] \| Maximum [Member] \| Performance Shares [Member] \| Performance Goal: Threshold Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards, threshold level, number of shares, multiplier		0.5
2017 PSU Plan [Member] \| Maximum [Member] \| Performance Shares [Member] \| Performance Goal: Target Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards, threshold level, number of shares, multiplier		1
2017 PSU Plan [Member] \| Maximum [Member] \| Performance Shares [Member] \| Performance Goal: Superior Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards, threshold level, number of shares, multiplier		2
2017 PBO Plan [Member] \| Maximum [Member] \| Performance Shares [Member] \| Performance Goal: Threshold Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards, threshold level, number of shares, multiplier		0.25
2017 PBO Plan [Member] \| Maximum [Member] \| Performance Shares [Member] \| Performance Goal: Target Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards, threshold level, number of shares, multiplier		0.5
2017 PBO Plan [Member] \| Maximum [Member] \| Performance Shares [Member] \| Performance Goal: Superior Level [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards, threshold level, number of shares, multiplier		1

Stock-Based Compensation (Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Schedule of stock-based compensation expense
Stock-based compensation	$ 1,669	$ 1,389
Stock options [Member]
Schedule of stock-based compensation expense
Stock-based compensation	334	304
RSAs and RSUs [Member]
Schedule of stock-based compensation expense
Stock-based compensation	459	574
Performance stock units [Member]
Schedule of stock-based compensation expense
Stock-based compensation	641	511
Performance Based Options (PBOs) [Member]
Schedule of stock-based compensation expense
Stock-based compensation	235	0
Research and development [Member]
Schedule of stock-based compensation expense
Stock-based compensation	323	220
Selling, General and Administrative Expenses [Member]
Schedule of stock-based compensation expense
Stock-based compensation	$ 1,346	$ 1,169

Capital Stock (Textual) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Equity [Abstract]
Stock options exercised (shares)	40,582	4,466
Weighted average exercise price of stock options exercised (usd per share)	$ 2.45	$ 1.61
Proceeds from exercises of stock options	$ 99	$ 7