Segment, Geographical and Other Revenue Information

Segment Information

As discussed in Note 2, "Basis of Presentation and Summary of Significant Accounting Policies," beginning in 2018, we identified our biotherapeutics business as a standalone business segment. Our two reportable business segments as of January 1, 2018, consisted of Performance Enzymes and Novel Biotherapeutics.

We report corporate-related expenses such as legal, accounting, information technology, and other costs that are not otherwise included in our reportable business segments as "Corporate costs." All items not included in income (loss) from operations are excluded from the business segments.

We manage our assets on a total company basis, not by business segment, as the majority of our operating assets are shared or commingled. Our CODM does not review asset information by business segment in assessing performance or allocating resources, and accordingly, we do not report asset information by business segment.

Performance Enzymes

We initially commercialized our CodeEvolver^® protein engineering technology platform and products in the pharmaceuticals market, and to date this continues to be our largest market served. Our customers, which include many 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 customized enzymes for use in other industrial markets. These markets consist of several large industrial verticals, including food and food ingredients, animal feed, flavors, fragrances, and agricultural chemicals. We also use our technology to develop enzymes for customers using NGS and PCR/qPCR for in vitro molecular diagnostic and molecular biology research applications.

Novel Biotherapeutics

We are also targeting new opportunities in the pharmaceutical industry to discover, improve, and/or develop biotherapeutic drug candidates. We believe that our CodeEvolver^® protein engineering platform technology can be used to discover novel biotherapeutic drug candidates that will target human diseases that are in need of improved therapeutic interventions. Similarly, we believe that we can deploy our platform technology to improve specific characteristics of a customer’s pre-existing biotherapeutic drug candidate, such as its activity, stability or immunogenicity. Most notable is our lead program for the potential treatment of PKU in humans. PKU is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient. In October 2017, we announced a strategic collaboration with Nestlé Health Science to advance CDX-6114, our own novel orally administrable enzyme therapeutic candidate for the potential treatment of PKU. In July 2018, we announced that we had dosed the first subjects in a first-in-human Phase 1a dose-escalation trial with CDX-6114, which was conducted in Australia. In November 2018, we announced top-line results from the Phase 1a study in healthy volunteers with CDX-6114. In December 2018, Nestlé Health Science became obligated to pay us an additional $1.0 million within 60 days after the achievement of a milestone relating to formulation of CDX-6114. In January 2019, we received notice from the U.S. Food and Drug Administration (the “FDA”) that it had completed its review of our investigational new drug application (“IND”) for CDX-6114 and concluded that we may proceed with the proposed Phase 1b multiple ascending dose study in healthy volunteers in the United States. In February 2019, Nestlé Health Science exercised its option to obtain an exclusive license for the global development and commercialization of CDX-6114 for the management of PKU. The exercise of the option triggered a $3 million milestone payment which we recognized in the first quarter of 2019. Upon exercising its option, Nestlé Health Science has assumed all responsibilities for future clinical development and commercialization of CDX-6114, with the exception of the completion of an extension study, CDX - 6114-004, which is expected to be completed in the second quarter of 2019. For the three months ended March 31, 2019 and 2018, all revenues related to the Novel Biotherapeutics segment were generated from our collaborations with Nestlé Health Science.

We have also developed a pipeline of other biotherapeutic drug candidates, which are in preclinical development, and in which we expect to continue to make additional investments with the aim of advancing additional product candidates targeting other therapeutic areas.

Our CODM regularly reviews our segments and the approach provided by management for performance evaluation and resource allocation.

Operating expenses that directly support the segment activity are allocated based on segment headcount, revenue contribution or activity of the business units within the segments, based on the corporate activity type provided to the segment. The expense allocation excludes certain corporate costs that are separately managed from the segments. This provides the CODM with more meaningful segment profitability reporting to support operating decisions and allocate resources.

The following table provides financial information by our reportable business segments along with a reconciliation to consolidated loss before income taxes (in thousands):



	Three months ended March 31, 2019								Three months ended March 31, 2018
	Performance Enzymes			Novel Biotherapeutics		Total			Performance Enzymes			Novel Biotherapeutics		Total
Revenues:
Product revenue	$	7,988		$	—	$	7,988		$	6,163		$	—	$	6,163
Research and development revenue	2,099			5,496		7,595			4,566			3,313		7,879
Total revenues	10,087			5,496		15,583			10,729			3,313		14,042
Costs and operating expenses:
Cost of product revenue	4,391			—		4,391			3,825			—		3,825
Research and development⁽¹⁾	4,442			3,317		7,759			5,066			1,932		6,998
Selling, general and administrative	2,101			517		2,618			2,096			146		2,242
Total segment costs and operating expenses	10,934			3,834		14,768			10,987			2,078		13,065
Income (loss) from operations	$	(847	)	$	1,662	$	815		$	(258	)	$	1,235	$	977
Corporate costs⁽²⁾						(5,575		)						(5,435		)
Depreciation and amortization						(373		)						(238		)
Loss before income taxes						$	(5,133	)						$	(4,696	)

⁽¹⁾Research and development expenses exclude depreciation.

⁽²⁾Corporate costs include unallocated selling, general and administrative expense, interest income, and other income and expenses.

The following table provides stock-based compensation expense included in income (loss) from operations by segment (in thousands):



	Three months ended March 31, 2019						Three months ended March 31, 2018
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total
Stock-based compensation	$	636	$	141	$	777	$	333	$	63	$	396

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,
	2019	2018
Customer A	41%	48%
Customer B	35%	24%
Customer C	*	10%

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



	Percentage of Accounts Receivables as of
	March 31, 2019	December 31, 2018
Customer A	33%	37%
Customer B	30%	17%
Customer D	17%	*
Customer E	*	11%
Customer F	*	16%

* Less than 10% of the period presented

Geographical Information

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



	Three Months Ended March 31,
	2019		2018
Revenues
Americas	$	2,838	$	3,597
EMEA	7,726		4,992
APAC	5,019		5,453
Total revenues	$	15,583	$	14,042

Identifiable long-lived assets by location and goodwill by reporting unit were as follows:



Long-lived assets:	March 31, 2019		December 31, 2018
United States	$	30,886	$	4,759



	As of March 31, 2019 and December 31, 2018
	Performance Enzymes		Novel Biotherapeutics		Total
Goodwill	$	2,463	$	778	$	3,241