Annual report pursuant to Section 13 and 15(d)

Segment, Geographical and Other Revenue Information

v3.20.4
Segment, Geographical and Other Revenue Information
 12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Segment, Geographical and Other Revenue Information Segment, Geographical and Other Revenue Information
Segment Information
We manage our business as two business segments: 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.
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. In March 2020 we entered into the Takeda Agreement with Takeda under which we will research and develop protein sequences for use in gene therapy products for certain diseases.
Factors considered in determining the two reportable segments of the Company include the nature of business activities, the management structure directly accountable to our CODM for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors. 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 tables provide financial information by our reportable business segments along with a reconciliation to consolidated loss before income taxes (in thousands):

Year Ended December 31, 2020 Year Ended December 31, 2019
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Revenues:
Product revenue $ 30,220  $ —  $ 30,220  $ 29,465  $ —  $ 29,465 
Research and development revenue 17,886  20,950  38,836  28,691  10,302  38,993 
Total revenues 48,106  20,950  69,056  58,156  10,302  68,458 
Costs and operating expenses:
Cost of product revenue 13,742  —  13,742  15,632  —  15,632 
Research and development (1)
20,923  21,705  42,628  19,380  13,278  32,658 
Selling, general and administrative(1)
9,597  2,355  11,952  8,462  2,222  10,684 
Total segment costs and operating expenses 44,262  24,060  68,322  43,474  15,500  58,974 
Income (loss) from operations $ 3,844  $ (3,110) 734  $ 14,682  $ (5,198) 9,484 
Corporate costs (2)
(22,306) (19,624)
Depreciation and amortization (2,099) (1,778)
Loss before income taxes $ (23,671) $ (11,918)
(1) Research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases.
(2) Corporate costs include unallocated selling, general and administrative expense, interest income, and other income and expenses.
Year Ended December 31, 2019 Year Ended December 31, 2018
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Revenues:
Product revenue $ 29,465  $ —  $ 29,465  $ 25,590  $ —  $ 25,590 
Research and development revenue 28,691  10,302  38,993  21,483  13,521  35,004 
Total revenues 58,156  10,302  68,458  47,073  13,521  60,594 
Costs and operating expenses:
Cost of product revenue 15,632  —  15,632  12,620  —  12,620 
Research and development (1)
19,380  13,278  32,658  18,924  10,185  29,109 
Selling, general and administrative(1)
8,462  2,222  10,684  7,538  771  8,309 
Total segment costs and operating expenses 43,474  15,500  58,974  39,082  10,956  50,038 
Income (loss) from operations $ 14,682  $ (5,198) 9,484  $ 7,991  $ 2,565  10,556 
Corporate costs (2)
(19,624) (20,324)
Depreciation (1,778) (1,147)
Loss before income taxes $ (11,918) $ (10,915)
(1) For the year ended December 31, 2019, research and development expenses and selling, general and administrative expenses exclude depreciation and amortization of finance leases. For the year ended December 31, 2018, research and development expenses and selling, general and administrative 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 (in thousands):
Years Ended December 31,
2020 2019 2018
Performance Enzymes $ 2,970  $ 2,303  $ 2,591 
Novel Biotherapeutics 768  695  338 
Corporate cost 3,990  3,945  4,960 
Total $ 7,728  $ 6,943  $ 7,889 
Significant Customers
Customers that each accounted for 10% or more of our total revenues were as follows:
Percentage of Total Revenues
For the Years Ended December 31,
  2020 2019 2018
Merck 26  % 28  % 29  %
Nestlé Health Science 11  % 15  % 22  %
Novartis * 23  % *
Tate & Lyle * * 13  %
Takeda Pharmaceutical Co. Ltd. 19  % * *
* Percentage was less than 10%
Customers that each accounted for 10% or more of accounts receivable balances as of the periods presented as follows:
 
Percentage of Accounts Receivables
As Of December 31,
  2020 2019
Merck & Co. 32  % 38  %
Nestlé Health Science 13  % 10  %
Novartis 25  % *
* Percentage was less than 10%
Geographical Information
Geographic revenues are identified by the location of the customer and consist of the following (in thousands):
  Year Ended December 31, 2020
2020 2019 2018
Revenues
Americas $ 24,352  $ 13,039  $ 15,370 
EMEA 19,257  37,133  22,361 
APAC 25,447  18,286  22,863 
Total revenues $ 69,056  $ 68,458  $ 60,594 
Identifiable long-lived assets by location was as follows (in thousands):
  December 31,
  2020 2019
United States $ 31,176  $ 30,387 
Identifiable goodwill was as follows (in thousands):`
Year Ended December 31, 2020 Year Ended December 31, 2019
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Goodwill $ 2,463  $ 778  $ 3,241  $ 2,463  $ 778  $ 3,241