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 triggers a $3 million milestone payment. 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. See Note 16, “Subsequent Events” in the notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for details.

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

For the year ended December 31, 2018, primarily all revenues related to the Novel Biotherapeutics segment were generated from our collaboration with customer projects. There was no revenue related to the Novel Biotherapeutics segment in the year ended December 31, 2017. Novel Biotherapeutics had no operational activity in the year ended December 31, 2016.

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):



	Year Ended December 31, 2018							Year Ended December 31, 2017
	Performance Enzymes		Novel Biotherapeutics		Total			Performance Enzymes		Novel Biotherapeutics			Total
Revenues:
Product revenue	$	25,590	$	—	$	25,590		$	26,685	$	—		$	26,685
Research and development revenue	21,483		13,521		35,004			15,648		7,691			23,339
Total revenues	47,073		13,521		60,594			42,333		7,691			50,024
Costs and operating expenses:
Cost of product revenue	12,620		—		12,620			14,327		—			14,327
Research and development⁽¹⁾	18,924		10,185		29,109			16,847		12,107			28,954
Selling, general and administrative	7,538		771		8,309			7,371		—			7,371
Total segment costs and operating expenses	39,082		10,956		50,038			38,545		12,107			50,652
Income (loss) from operations	$	7,991	$	2,565	$	10,556		$	3,788	$	(4,416	)	$	(628	)
Corporate costs⁽²⁾					(20,324		)						(21,245		)
Depreciation					(1,147		)						(1,042		)
Loss before income taxes					$	(10,915	)						$	(22,915	)

⁽¹⁾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 by segment (in thousands):



	2018						2017
	Performance Enzymes		Novel Biotherapeutics		Total		Performance Enzymes		Novel Biotherapeutics		Total
Stock-based compensation	$	2,591	$	338	$	2,929	$	2,306	$	208	$	2,514

Significant Customers

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



	Percentage of Total Revenues For The Years Ended December 31,
	2018		2017		2016
Merck	29	%	28	%	47	%
Nestlé Health Science	22	%	15	%	*
Tate & Lyle	13	%	11	%	*
Novartis	*		14	%	*
GSK	*		*		22	%

Customers that each accounted for 10% or more of our accounts receivable balance for the period presented were as follows:



	Percentage of Accounts Receivables As Of December 31,
	2018		2017
Merck	37	%	31	%
Nestlé Health Science	17	%	*
Tate & Lyle	*		16	%
Novartis	11	%	15	%
Kyorin Pharmaceutical Co Ltd	16	%	*
Exela PharmaSci, Inc.	*		14	%

* Percentage was less than 10%

Geographic Information

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



	Year Ended December 31,
	2018		2017		2016
Revenues
Americas	$	15,370	$	15,575	$	23,126
EMEA	22,361		19,610		17,138
APAC	22,863		14,839		8,573
Total revenues	$	60,594	$	50,024	$	48,837

Identifiable long-lived assets by location and goodwill by reporting unit as of year-end were as follows (in thousands):



	December 31,
	2018		2017
Long-lived assets
United States	$	4,759	$	2,815



	December 31, 2018
	Performance Enzymes		Novel Biotherapeutics		Total

Goodwill	$	2,463	$	778	$	3,241