Quarterly report pursuant to Section 13 or 15(d)

Segment, Geographical and Other Revenue Information

v3.21.1
Segment, Geographical and Other Revenue Information
3 Months Ended
Mar. 31, 2021
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. Our chief operating decision maker ("CODM") is our Chief Executive Officer. Our business segments are primarily based on our organizational structure and our operating results as used by our CODM in assessing performance and allocating resources for the Company.
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 table provides financial information by our reportable business segments along with a reconciliation to consolidated income (loss) before income taxes (in thousands):
Three months ended March 31, 2021 Three months ended March 31, 2020
Performance Enzymes Novel Biotherapeutics Total Performance Enzymes Novel Biotherapeutics Total
Revenues:
Product revenue $ 10,226  $ —  $ 10,226  $ 5,100  $ —  $ 5,100 
Research and development revenue 4,003  3,803  7,806  5,774  3,796  9,570 
Total revenues 14,229  3,803  18,032  10,874  3,796  14,670 
Costs and operating expenses:
Cost of product revenue 4,218  —  4,218  2,541  —  2,541 
Research and development(1)
6,444  4,605  11,049  5,696  4,925  10,621 
Selling, general and administrative(1)
2,818  600  3,418  2,345  591  2,936 
Total segment costs and operating expenses 13,480  5,205  18,685  10,582  5,516  16,098 
Income (loss) from operations $ 749  $ (1,402) (653) $ 292  $ (1,720) (1,428)
Corporate costs (2)
(7,728) (5,727)
Unallocated depreciation and amortization (685) (492)
Loss before income taxes $ (9,066) $ (7,647)
(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.
The following table provides stock-based compensation expense included in income (loss) from operations (in thousands):
Three months ended March 31,
2021 2020
Performance Enzymes Novel Biotherapeutics Corporate cost Total Performance Enzymes Novel Biotherapeutics Corporate cost Total
Stock-based compensation $ 994  $ 238  $ 1,455  $ 2,687  $ 756  $ 241  $ 1,172  $ 2,169 
Significant Customers
Customers that each accounted for 10% or more of our total revenues were as follows:
Percentage of Total Revenues for the
Three Months Ended March 31,
2021 2020
Customer A 28  % 24  %
Customer B * 19  %
Customer C 11  % 15  %
Customer D 10  % 11  %
Customer E 14  % *
* 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
March 31, 2021 December 31, 2020
Customer A 41  % 32  %
Customer B * 25  %
Customer D 11  % 13  %
Customer F 12  % *
Customer G 11  % *
* Percentage was less than 10%

Geographical Information
Geographic revenues are identified by the location of the customer and consist of the following (in thousands):
  Three Months Ended March 31,
2021 2020
Revenues
Americas $ 4,929  $ 5,225 
EMEA 6,282  5,971 
APAC 6,821  3,474 
Total revenues $ 18,032  $ 14,670 
Identifiable long-lived assets by location was as follows (in thousands):
March 31, 2021 December 31, 2020
United States $ 31,248  $ 31,176 
Identifiable goodwill by reporting unit was as follows (in thousands):
As of March 31, 2021 and December 31, 2020
Performance Enzymes Novel Biotherapeutics Total
Goodwill $ 2,463  $ 778  $ 3,241