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Document And Entity Information - shares	9 Months Ended
Sep. 30, 2018	Oct. 31, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	PACB
Entity Registrant Name	PACIFIC BIOSCIENCES OF CALIFORNIA, INC.
Entity Central Index Key	0001299130
Entity Emerging Growth Company	false
Entity Small Business	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		148,901,892

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 38,063	$ 16,507
Investments	77,684	46,365
Accounts receivable	6,404	13,433
Inventory	19,694	23,065
Prepaid expenses and other current assets	2,028	2,249
Total current assets	143,873	101,619
Property and equipment, net	34,490	37,920
Long-term restricted cash	4,500	4,500
Other long-term assets	43	45
Total assets	182,906	144,084
Current liabilities
Accounts payable	5,966	9,093
Accrued expenses	9,298	12,618
Deferred service revenue, current	5,740	6,319
Other liabilities, current	645	605
Total current liabilities	21,649	28,635
Deferred service revenue, non-current	1,016	1,075
Deferred rent, non-current	13,949	14,453
Notes payable, non-current	14,384	13,635
Financing derivative	28	183
Total liabilities	51,026	57,981
Commitments and contingencies
Stockholders' equity
Preferred Stock, $0.001 par value: Authorized 50,000 shares; No shares issued or outstanding
Common Stock, $0.001 par value: Authorized 1,000,000 shares; Issued and outstanding 148,894 and 116,277 shares at September 30, 2018 and December 31, 2017, respectively	149	116
Additional paid-in-capital	1,083,062	965,752
Accumulated other comprehensive loss	(24)	(32)
Accumulated deficit	(951,307)	(879,733)
Total stockholders' equity	131,880	86,103
Total liabilities and stockholders' equity	$ 182,906	$ 144,084

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue:
Revenue	$ 18,160	$ 23,545	$ 59,100	$ 68,533
Cost of revenue:
Cost of revenue	14,968	15,318	39,750	43,368
Gross profit	3,192	8,227	19,350	25,165
Operating expense:
Research and development	14,356	15,844	46,331	49,698
Sales, general and administrative	13,506	13,952	43,383	44,722
Total operating expense	27,862	29,796	89,714	94,420
Operating loss	(24,670)	(21,569)	(70,364)	(69,255)
Interest expense	(616)	(633)	(1,795)	(2,297)
Other income, net	242	181	396	125
Net loss	(25,044)	(22,021)	(71,763)	(71,427)
Other comprehensive loss:
Unrealized income (loss) on investments	(8)	14	8	(7)
Comprehensive loss	$ (25,052)	$ (22,007)	$ (71,755)	$ (71,434)
Net loss per share:
Basic and diluted net loss per share	$ (0.19)	$ (0.19)	$ (0.55)	$ (0.70)
Shares used in computing basic and diluted net loss per share	135,130	115,771	130,302	102,117
Product [Member]
Revenue:
Revenue	$ 15,150	$ 20,343	$ 49,917	$ 58,185
Cost of revenue:
Cost of revenue	12,250	11,547	31,127	31,064
Service and Other [Member]
Revenue:
Revenue	3,010	3,202	9,183	10,348
Cost of revenue:
Cost of revenue	$ 2,718	$ 3,771	$ 8,623	$ 12,304

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities
Net loss	$ (71,763)	$ (71,427)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	5,436	6,632
Amortization of debt discount and financing costs	749	931
(Gain) loss on derivative	(155)	640
Stock-based compensation	15,631	14,962
Other items	(398)	36
Changes in assets and liabilities
Accounts receivable	7,029	2,524
Inventory	3,014	(4,027)
Prepaid expenses and other assets	537	7,361
Accounts payable	(2,926)	432
Accrued expenses	(3,497)	(6,001)
Deferred service revenue	(638)	(1,202)
Other liabilities	(464)	1,821
Net cash used in operating activities	(47,445)	(47,318)
Cash flows from investing activities
Purchase of property and equipment	(1,796)	(9,373)
Disposal of property and equipment		2
Purchase of investments	(104,228)	(74,591)
Sales of investments	2,442	3,662
Maturities of investments	70,680	68,071
Net cash used in investing activities	(32,902)	(12,229)
Cash flows from financing activities
Proceeds from issuance of common stock from equity plans	4,181	8,818
Notes payable principal payment		(4,500)
Net cash provided by financing activities	101,903	68,713
Net increase in cash and cash equivalents and restricted cash	21,556	9,166
Cash and cash equivalents and restricted cash at beginning of period	21,007	21,265
Cash and cash equivalents and restricted cash at end of period	42,563	30,431
Cash and cash equivalents and restricted cash at end of period	21,007	21,265
Supplemental disclosure of non-cash investing and financing activities
Inventory transferred to property and equipment	664	1,460
Changes in unpaid property and equipment	215	846
Property and equipment paid by landlord		12,600
Changes in deposits for property and equipment paid in prior period		9,694
Property and equipment returned to landlord		1,854
At the Market Offering [Member]
Cash flows from financing activities
Proceeds from issuance of common stock from equity offering, net of issuance costs		11,865
Underwritten Public Equity Offering [Member]
Cash flows from financing activities
Proceeds from issuance of common stock from equity offering, net of issuance costs	$ 97,722	$ 52,530

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

In the opinion of management, our accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) have been prepared on a consistent basis with our December 31, 2017 audited Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, as permitted by such rules and regulations, omit certain information and footnote disclosures necessary to present the statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the entire year or any future periods.

The consolidated financial statements include the accounts of Pacific Biosciences and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes to the financial statements. Our estimates include, but are not limited to, the valuation of inventory, revenue valuation, the valuation of a financing derivative and long-term notes, the valuation and recognition of share-based compensation, the expected renewal period for service contracts, the useful lives assigned to long-lived assets, and the computation of provisions for income taxes. Actual results could differ materially from these estimates.

Fair Value of Financial Instruments

The carrying amount of our accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other liabilities, current, approximate fair value due to their short maturities. The carrying value of our other liabilities, non-current, approximates fair value due to the time to maturity and prevailing market rates.

The fair value hierarchy established under U.S. GAAP requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are as follows:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

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.

We consider an active market as one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, we view an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our non-performance risk, or that of our counterparty, is considered in determining the fair values of liabilities and assets, respectively.

We classify our cash deposits and money market funds within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. We classify our investments as Level 2 instruments based on market pricing and other observable inputs. We did not classify any of our investments within Level 3 of the fair value hierarchy.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis as of September 30, 2018 and December 31, 2017 respectively (in thousands):



	September 30, 2018								December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Cash and money market funds	$	27,386	$	—	$	—	$	27,386	$	14,858	$	—	$	—	$	14,858
Commercial paper		—		10,677		—		10,677		—		1,649		—		1,649
Total cash and cash equivalents		27,386		10,677		—		38,063		14,858		1,649		—		16,507
Investments:
Commercial paper		—		51,633		—		51,633		—		20,394		—		20,394
Corporate debt securities		—		9,068		—		9,068		—		9,034		—		9,034
US government & agency securities		—		16,983		—		16,983		—		16,937		—		16,937
Total investments		—		77,684		—		77,684		—		46,365		—		46,365
Long-term restricted cash:
Cash		4,500		—		—		4,500		4,500		—		—		4,500
Total assets measured at fair value	$	31,886	$	88,361	$	—	$	120,247	$	19,358	$	48,014	$	—	$	67,372

Liabilities
Financing derivative	$	—	$	—	$	28	$	28	$	—	$	—	$	183	$	183
Total liabilities measured at fair value	$	—	$	—	$	28	$	28	$	—	$	—	$	183	$	183

The estimated fair value of the Financing Derivative liability was determined using Level 3 inputs, or significant unobservable inputs.

During the nine months ended September 30, 2018, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis and our valuation techniques did not change compared to the prior year.

Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

We determined the fair value of the Notes from the debt facility that we entered into during the first quarter of 2013 using Level 3 inputs, or significant unobservable inputs. The value of the Notes was determined by comparing the difference between the fair value of the Notes with and without the Financing Derivative by calculating the respective present values from future cash flows using 9.2% and 10.3% weighted average market yield at September 30, 2018 and December 31, 2017, respectively. Refer to “Note 5. Notes Payable” for additional details regarding the Notes. The estimated fair value and carrying value of the Notes are as follows (in thousands):

The estimated fair value and carrying value of the Notes are as follows (in thousands):



	September 30, 2018				December 31, 2017
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes payable	$	15,973	$	14,384	$	15,664	$	13,635

Net Loss per Share

The following outstanding common stock options, restricted stock units, or “RSUs”, with time-based vesting and RSUs with performance-based vesting were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. See “Note 7. Stockholders’ Equity” for detailed information on RSUs with time-based vesting and RSUs with performance-based vesting.



	Nine Months Ended September 30,
(in thousands)	2018	2017
Options to purchase common stock	27,397	25,133
RSUs with time-based vesting	349	—
RSUs with performance-based vesting	634	—

Concentration and Other Risks

For the three and nine months ended September 30, 2018, one of our customers, Gene Company Limited, accounted for approximately 20% and 28% of our total revenue, respectively. For the three and nine months ended September 30, 2017, the same customer, Gene Company Limited, accounted for approximately 35% and 30% of our total revenue, respectively. Gene Company Limited is our distributor in China.

Going Concern

Cash, cash equivalents and investments, excluding restricted cash, at September 30, 2018 totaled $115.7 million, compared to $62.9 million at December 31, 2017. We believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements for at least twelve months from the filing of this Quarterly Report on Form 10-Q; however, we may need to raise additional capital in the future. Our view regarding sufficiency of cash and liquidity is primarily based on our operating plans and financial forecast for 2018, which includes various assumptions regarding demand for our products.

Factors that may affect our capital needs include, but are not limited to, slower than expected adoption of our products resulting in lower sales of our products and services; future acquisitions; our ability to obtain new collaboration, distribution and customer arrangements; the progress of our research and development programs; initiation or expansion of research programs and collaborations; litigation costs, including the costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; the purchase of patent licenses; and other factors.

To the extent we raise additional funds through the sale of equity or convertible debt securities, the issuance of such securities will result in dilution to our stockholders. There can be no assurance that such funds will be available on favorable terms, or at all, particularly in light of restrictions under our debt agreement. If adequate funds are not available, we may be required to obtain funds by entering into collaboration, licensing or debt agreements on unfavorable terms. If we are unable to raise funds on favorable terms, or at all, we may have to reduce our cash burn rate and may not be able to support our commercialization efforts, or to increase or maintain the level of our research and development activities. If we are unable to generate sufficient cash flows or to raise adequate funds to finance our forecasted expenditures, we may have to make significant changes to our operations, including delaying or reducing the scope of or eliminating some or all of our development programs. We also may have to reduce sales, marketing, engineering, customer support or other resources devoted to our existing or new products or cease operations. If our cash, cash equivalents and investments are insufficient to fund our projected operating requirements, and we are unable to raise capital, it would have a material adverse effect on our business, financial condition and results of operations.

Significant Accounting Policies

Except as noted below relating to our adoption of ASC 606, there have been no material changes to our significant accounting policies as discussed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Recent Accounting Pronouncements

Recently Issued Accounting Standards

In June 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, to simplify the accounting for nonemployee share-based payment transactions by expanding the scope of Accounting Standards Codification, or ASC, Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods, with early adoption permitted. We expect to adopt this standard beginning in 2019. While we continue to assess the potential impact of this standard, we do not expect the adoption of this standard to have a material impact on our condensed consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from U.S. tax reform to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. We are currently evaluating the impact of this standard on our Consolidated Financial Statements and whether we will make the allowed election.

In February 2016, the FASB issued ASU 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements - Leases (Topic 842)”. This update provides an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. We intend to adopt the optional transition method and we expect to adopt this standard beginning in 2019. We do not expect that this standard will have a material impact on our operating results, but we do expect that upon adoption, it will have a material impact on our assets and liabilities. The primary effect of adoption will be the requirement to record right-of-use assets and corresponding lease obligations for current operating leases. We are currently quantifying the impact of adoption.

Recently Adopted Accounting Standards

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. We adopted this standard effective January 1, 2018 using the retrospective transition method by restating our condensed consolidated statements of cash flows to include restricted cash of $4.5 million in the beginning and ending cash, cash equivalents, and restricted cash balances for all periods presented. As a result of adoption, net cash flows for the nine months ended September 30, 2017 did not change as a result of including restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts presented on the statements of cash flows.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12 and 2016-20 (collectively ASC 606). ASC 606 superseded existing revenue recognition standards with a single model unless those contracts are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. The revenue recognition principle in ASC 606 is that an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. On January 1, 2018, we adopted ASC 606 using the modified retrospective method with the cumulative effect of adoption recognized as an adjustment to our accumulated deficit on January 1, 2018. Prior period financial statements and disclosures have not been restated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 606 did not have a material impact on our condensed consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the three and nine months ended September 30, 2018. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Upon adopting ASC 606, the incremental direct costs of obtaining a contract are now deferred and amortized over the period of contract performance or a longer period if renewals are expected and the renewal commission is not commensurate with the initial commission. We classify deferred commissions as current and included it in “Prepaid expenses and other current assets” in our condensed consolidated balance sheets.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows (in thousands):


Balance Sheet	Balance at December 31, 2017		Adjustments Due to ASC 606		Balance at January 1, 2018
Assets
Prepaid expenses and other current assets	$	2,249	$	189	$	2,438
Liabilities and Stockholders' Equity
Accumulated deficit		(879,733)		189		(879,544)

In accordance with ASC 606, the disclosure of the impact of adoption on our condensed consolidated statement of operations and comprehensive loss, condensed consolidated balance sheets, and condensed consolidated statements of cash flows is as follows (in thousands):


	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
Statement of Operations and Comprehensive Loss	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)		As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Operating Expense:
Sales, general and administrative	$	13,506	$	13,518	$	(12)	$	43,383	$	43,430	$	(47)


	As of September 30, 2018
Balance Sheet	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Assets
Prepaid expenses and other current assets	$	2,028	$	1,792	$	236
Liabilities and Stockholders' Equity
Accumulated deficit	$	(951,307)	$	(951,071)	$	236


	Nine Months Ended September 30, 2018
Statement of Cash Flows	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Cash Flows from Operating Activities
Net loss	$	(71,763)	$	(71,810)	$	47
Adjustments to reconcile net loss to net cash used in operating activities
Prepaid expenses and other current assets	$	537	$	490	$	47

At September 30, 2018, we had $0.2 million of deferred commissions included in “Prepaid expenses and other current assets” which will be recognized as the related revenue is recognized. Additionally, as a practical expedient, we expense costs to obtain a contract as incurred if the amortization period would have been a year or less.

A summary of our revenue by category for the three and nine months ended September 30, 2018 and 2017 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2018		2017 (1)		2018		2017 (1)
Instrument revenue	$	6,296	$	9,716	$	21,965	$	29,468
Consumable revenue		8,854		10,627		27,952		28,717
Product revenue		15,150		20,343		49,917		58,185
Service and other revenue		3,010		3,202		9,183		10,348
Total revenue	$	18,160	$	23,545	$	59,100	$	68,533

(1)

As noted above, prior period amounts have not been adjusted under the modified retrospective method.

A summary of our revenue by geographic location for the three and nine months ended September 30, 2018 and 2017 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017 (1)		2018		2017 (1)
North America	$	8,960	$	9,115	$	25,974	$	30,127
Europe (including the Middle East and Africa)		2,914		3,197		10,614		10,430
Asia Pacific		6,286		11,233		22,512		27,976
Total	$	18,160	$	23,545	$	59,100	$	68,533

(1)

As noted above, prior period amounts have not been adjusted under the modified retrospective method.

Our revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of our instruments and related consumables; Service and other revenue consist primarily of revenue earned from product maintenance agreements with some additional revenue from instrument lease agreements and grant revenue.

We account for a contract with a customer when there is a legally enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Taxes we collect concurrent with revenue-producing activities are excluded from revenue.

Our instrument sales are generally sold in a bundled arrangement and commonly include the instrument, instrument accessories, installation, training, and consumables. Additionally, our instrument sale arrangements generally include a one-year period of service. For such bundled arrangements, we account for individual products and services separately if they are distinct, that is, if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. Our customers cannot benefit from the system without installation, and installation can only be performed by us or qualified distributors. As a result, the system and installation are considered to be a single performance obligation recognized after installation is completed except for sales to qualified distributors, in which case the system is distinct and recognized when control has transferred to the distributor which typically occurs upon shipment.

The consideration for bundled arrangements is allocated between separate performance obligations based on their individual standalone selling price (“SSP”). The SSP is determined based on observable prices at which we separately sell the products and services. If an SSP is not directly observable, then we will estimate the SSP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, internal costs, profit objectives, pricing practices and other observable inputs.

We recognize revenues as the performance obligations are satisfied by transferring control of the product or service to the customer or over the term of a product maintenance agreement with a customer. Our revenue arrangements generally do not provide a right of return.

Contract liabilities and contract assets - Contract liabilities primarily consist of deferred revenue. We record deferred service revenues when cash payments are received or due in advance of our performance for product maintenance agreements. Deferred service revenue is recognized over the related performance period, generally one to three years, on a straight-line basis as the Company is standing ready to provide services and a time-based measure of progress best reflects the satisfaction of the performance obligation. As of September 30, 2018, we had a total of $6.7 million of deferred service revenue from our service contracts, $5.7 million of which was recorded as “deferred service revenue, current” to be recognized over the next year and the remaining $1.0 million was recorded as “deferred service revenue, non-current” to be recognized in the next 2 to 5 years. Revenue recorded in the nine months ended September 30, 2018 includes $5.5 million of previously deferred revenue that was included in “deferred service revenue, current” as of December 31, 2017. Contract assets as of December 31, 2017 and September 30, 2018 were not material.

Instrument lease agreements - Instrument leases are generally classified as operating-type leases and revenue from these leases is recognized on a straight-line basis over the respective lease term, once the lessee takes (or has the right to take) control/possession of the property under the lease. Effectively, this occurs once the installation is complete and control of the instrument is transferred to our customers.

Other practical expedients and exemptions - Customers generally are invoiced upon acceptance of the system, which is also the start of the one-year service period. As such, there is typically not more than a one-year difference between the receipt of cash and the provision of services. Therefore, we apply the practical expedient and do not account for any potential significant financing benefit. However, it is noted that some customers will pre-order extended service periods at the time of the initial system sale. These customers may choose to make quarterly or annual payments or prepay multiple years of service upfront but there is no pricing difference between these different payment options. As such, no significant financing component is believed to exist with any of our existing arrangements.

Cash, Cash Equivalents and Investments

9 Months Ended

Sep. 30, 2018

Cash, Cash Equivalents and Investments [Abstract]

Cash, Cash Equivalents and Investments

NOTE 3. CASH, CASH EQUIVALENTS AND INVESTMENTS

The following tables summarize our cash, cash equivalents and investments as of September 30, 2018 and December 31, 2017 (in thousands):



	As of September 30, 2018
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	Cost		gains		losses		Value
Cash and cash equivalents:
Cash and money market funds	$	27,386	$	—	$	—	$	27,386
Commercial paper		10,679		—		(2)		10,677
Total cash and cash equivalents		38,065		—		(2)		38,063
Investments:
Commercial paper		51,647		—		(14)		51,633
Corporate debt securities		9,070		—		(2)		9,068
US government & agency securities		16,989		—		(6)		16,983
Total investments		77,706		—		(22)		77,684
Total cash, cash equivalents and investments	$	115,771	$	—	$	(24)	$	115,747
Long-term restricted cash:
Cash	$	4,500	$	—	$	—	$	4,500


	As of December 31, 2017
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	Cost		gains		losses		Value
Cash and cash equivalents:
Cash and money market funds	$	14,858	$	—	$	—	$	14,858
Commercial paper		1,649		—		—		1,649
Total cash and cash equivalents		16,507		—		—		16,507
Investments:
Commercial paper		20,408		—		(14)		20,394
Corporate debt securities		9,043		—		(9)		9,034
US government & agency securities		16,946		—		(9)		16,937
Total investments		46,397		—		(32)		46,365
Total cash, cash equivalents and investments	$	62,904	$	—	$	(32)	$	62,872
Long-term restricted cash:
Cash	$	4,500	$	—	$	—	$	4,500

The following table summarizes the contractual maturities of our cash equivalents and available-for-sale investments, excluding money market funds, as of September 30, 2018:



(in thousands)	Fair Value
Due in one year or less	$	85,383
Due after one year through 5 years		2,978
Total investments	$	88,361

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies [Abstract]

Commitments and Contingencies

NOTE 6. COMMITMENTS AND CONTINGENCIES

As of September 30, 2018, the future annual minimum lease payments under noncancelable operating leases with remaining term in excess of one year are as follows:


	Amount
Years ending December 31,	(in thousands)
Remaining of 2018	$	1,719
2019		6,930
2020		7,056
2021		7,272
2022		7,488
Thereafter		39,222
Total minimum lease payments	$	69,687

Rent expense for three and nine months ended September 30, 2018 was $1.6 million and $4.7 million, respectively. Rent expense for three and nine months ended September 30, 2017 was $1.6 million and $4.7 million, respectively;

Legal

USITC Proceedings

On November 2, 2016, we filed a complaint against Oxford Nanopore Technologies Ltd. (“ONT Ltd.”), Oxford Nanopore Technologies, Inc. (“ONT Inc.”) and Metrichor, Ltd. (“Metrichor” and, together with ONT Ltd. and ONT Inc., “ONT”) with the U.S. International Trade Commission (“USITC”) for patent infringement. On December 5, 2016, the USITC provided notice that an investigation had been instituted based on the complaint. We sought exclusionary relief with respect to several ONT products, including ONT’s MinION and PromethION devices. The complaint was based on our U.S. Patent No. 9,404,146, entitled “Compositions and methods for nucleic acid sequencing” which covers novel methods for sequencing single nucleic acid molecules using linked double-stranded nucleic acid templates, providing improved sequencing accuracy. On March 1, 2017, we filed an amended complaint to add a second patent in the same patent family, U.S. Patent No. 9,542,527, which was granted on January 10, 2017, to the investigation. We sought, among other things, an exclusion order permanently barring entry of infringing ONT products into the United States, and a cease and desist order preventing ONT from advertising and selling infringing products in the United States. On May 23, 2017, the Administrative Law Judge (“ALJ”) assigned to the matter issued an order construing certain claim terms of the asserted patents. On June 8, 2017, ONT filed a summary determination motion to terminate the proceedings based on the ALJ’s claim construction decision, and we did not oppose the motion. The ALJ granted the motion on July 19, 2017, and, on July 31, 2017, we filed a petition to review with the USITC to correct what we believe was an incorrect construction of the claims. On September 5, 2017, the USITC issued a notice granting our petition to review the ALJ’s claim construction decision. On February 7, 2018, the USITC issued a notice indicating that it had determined to adopt the ALJ’s claim construction and terminating the investigation. On February 13, 2018, we filed a petition to appeal the USITC’s ruling to the U.S. Court of Appeals for the Federal Circuit.

U.S. District Court Proceedings

On March 15, 2017, we filed a complaint in the U.S. District Court for the District of Delaware against ONT Inc. for patent infringement (C.A. No. 17-cv-275 (“275 Action”)). The complaint is based on our U.S. Patent No. 9,546,400 (the “’400 Patent”), entitled “Nanopore sequencing using n-mers” which covers novel methods for nanopore sequencing of nucleic acid molecules using the signals from multiple monomeric units. This patent was granted on January 17, 2017. We are seeking remedies including injunctive relief, damages and costs. On May 8, 2017, the defendants filed a motion to dismiss the complaint, alleging that the asserted patent claims recite patent ineligible subject matter. On November 9, 2017, the judge denied ONT Inc.’s motion to dismiss. On June 1, 2018, we filed a motion for leave to amend the complaint to add ONT Ltd. as a defendant. On August 20, 2018, the judge granted our motion, and on August 23, 2018, we filed an amended complaint, adding ONT Ltd. as a defendant in the 275 Action. On September 24, 2018, ONT Ltd. filed a motion to dismiss the amended complaint, alleging failure to state a claim.

On September 12, 2018, ONT Inc. filed its answer, defenses and counterclaims in the 275 Action, seeking declaratory judgements of non-infringement and invalidity of the ’400 Patent and unenforceability of the ’400 Patent based on alleged inequitable conduct before the U.S. Patent and Trademark Office (“USPTO”), as well as antitrust, false advertising, and unfair competition counterclaims. On September 25, 2018, it was stipulated that the motion to dismiss ONT Inc.’s counterclaims that we submitted in the 1353 Action would also serve as our motion to dismiss ONT Inc.’s counterclaims in the 275 Action.

Related to the 275 Action, on March 15, 2018, ONT Inc. filed a petition to institute an inter partes review with the Patent Trial and Appeal Board (“PTAB”) of the USPTO, alleging invalidity of the ’400 Patent. On July 5, 2018, we filed a preliminary response outlining for the PTAB why the petition should be denied, and no review should be instituted. On September 25, 2018, the PTAB denied ONT Inc.’s petition for institution of the inter partes review for all claims of the ’400 Patent.

On September 25, 2017, we filed a second complaint in the U.S. District Court for the District of Delaware against ONT Inc. for patent infringement (C.A. No. 17-cv-1353 (“1353 Action”)). The complaint is based on our U.S. Patent No. 9,678,056 (the “’056 Patent”) entitled “Control of Enzyme Translation in Nanopore Sequencing”, granted June 13, 2017, and U.S. Patent No. 9,738,929 (the “’929 Patent”) entitled “Nucleic Acid Sequence Analysis”, granted August 22, 2017. We are seeking remedies including injunctive relief, damages and costs. On December 14, 2017, the defendants filed a motion to dismiss the complaint, alleging that the asserted patent claims in the ’929 Patent recite patent ineligible subject matter. On March 22, 2018, the judge denied ONT Inc.’s motion to dismiss. On March 28, 2018, we added a claim for infringement of our U.S. Patent No. 9,772,323 (the “’323 Patent”), entitled “Nanopore sequencing using n-mers.” On June 1, 2018, we filed a motion for leave to amend the complaint to add ONT Ltd. as a defendant. On August 20, 2018, the judge granted our motion, and on August 23, 2018 we filed an amended complaint, adding ONT Ltd. as a defendant in the 1353 Action. On September 24, 2018, ONT filed a motion to dismiss the amended complaint, alleging failure to state a claim.

On April 25, 2018, ONT Inc. filed its answer, defenses and counterclaims in the 1353 Action, seeking declaratory judgements of non-infringement and invalidity of the ’056 and ’323 Patents and unenforceability of the ’056 and ’323 Patents based on alleged inequitable conduct before the USPTO, as well as antitrust, false advertising, and unfair competition counterclaims. On June 15, 2018, we filed a motion to dismiss ONT Inc.’s counterclaims in the 1353 Action and, on June 18, 2018, we filed a motion to bifurcate and stay discovery on ONT Inc.’s antitrust counterclaims in the 1353 Action.

Related to the 1353 Action, on September 24, 2108, ONT Inc. filed a first petition to institute an inter partes review with the PTAB of the USPTO, alleging invalidity of the ’929 Patent. On September 25, 2018, ONT filed a second petition to institute an inter partes review of the ’929 Patent based on the same art and arguments as the first petition. We intend to file a preliminary response outlining for the PTAB why the petitions should be denied and no review should be instituted.

Also related to the 1353 Action, on September 25, 2018, ONT Inc. filed a petition to institute an inter partes review with the PTAB of the USPTO, alleging invalidity of the ’056 Patent. We intend to file a preliminary response outlining for the PTAB why the petition should be denied and no review should be instituted.

A claim construction (or “Markman”) hearing for the U.S. District Court matters is scheduled to occur on December 17, 2018. A trial for the U.S. District Court matters is scheduled to occur in March 2020.

UK and German Court Proceedings

On February 2, 2017, we filed a claim in the High Court of England and Wales against ONT Ltd. and Metrichor for infringement of Patent EP(UK) 3 045 542 (the “’542 Patent”), which is in the same patent family as the patents asserted in the USITC action referred to above. We sought remedies including injunctive relief, damages, and costs. On March 27, 2017, the defendants in the case filed their defense and counterclaim, denying infringement and seeking a declaration that the asserted patent is invalid. We filed our reply and defense to counterclaim on April 12, 2017. A case management conference was held on June 13, 2017. On August 31, 2017 we added a claim for infringement of a newly granted divisional, EP(UK) 3 170 904 (the “’904 Patent”). On December 22, 2017, ONT Ltd. added to the action a request for declaration of non-infringement of its 1D2 product. On January 12, 2018 we served reply to ONT Ltd.’s request for a declaration of non-infringement, asserting infringement of both patents by ONT’s 1D2 product. A trial for these matters was scheduled to occur in May 2018.

On April 21, 2017, ONT Ltd. and Harvard University filed a claim against us in the High Court of England and Wales for infringement of Patent EP(UK) 1 192 453 (the “’453 Patent”), a patent owned by Harvard University and entitled “Molecular and atomic scale evaluation of biopolymers,” and for which ONT Ltd. alleges it holds an exclusive license. ONT Ltd. and Harvard University sought remedies including injunctive relief, damages, and costs. On April 25, 2017, ONT Ltd. announced that it also had filed a claim against us in the District Court of Mannheim, Germany, for infringement of the German version of the patent. On November 2, 2017, we filed our statement of defense in the German infringement matter and we also filed a separate nullity action in Germany to establish that the ’453 Patent is invalid. On December 6, 2017, we filed a cross-complaint in the German infringement matter alleging ONT Ltd.’s infringement in Germany of our ’542 Patent. The trial date for the German infringement matter and cross-complaint was set for July 27, 2018. A trial for the UK matter was scheduled to occur in March 2019.

On May 8, 2018, the parties entered a settlement of all UK and German court proceedings pending as of such date. Under the terms of the settlement, ONT agreed not to make, dispose of, use or import any “2D” nanopore sequencing products, or to induce or assist others to carry out a “2D” sequencing process, in the UK or Germany, through the end of 2023. During this time, we agreed not to assert the ’542 Patent and ’904 Patent against either ONT or its customers in the UK or Germany. Accordingly, the High Court of England and Wales entered an order staying our UK action against ONT through the end of 2023. As part of the settlement, ONT and Harvard University dismissed their UK and German actions under the ’453 Patent and agreed not to assert the ’453 Patent against us or our customers through the end of 2023. We correspondingly agreed to dismiss our separate German nullity action seeking to invalidate the ’453 Patent, which expires on June 22, 2020.

Related to these proceedings, on August 15, 2017, ONT Ltd. filed a notice of opposition to our ’542 Patent with the European Patent Office, and on August 16, 2017, an anonymous party filed a second notice of opposition to the same patent, each alleging invalidity of the patent. On April 5, 2018, we filed our response to the combined opposition. An oral hearing in the matter is scheduled for January 22, 2019.

Also related to these proceedings, on May 16, 2018, ONT Ltd. filed a notice of opposition to our ’904 Patent with the European Patent Office alleging invalidity of the ’904 Patent. On October 11, 2018, we filed our response to the opposition.

Litigation is inherently unpredictable, and it is too early in the proceedings to predict the outcome of these lawsuits or any impact they may have on us. As such, the estimated financial effect associated with these complaints cannot be made as of the date of filing of this Quarterly Report on Form 10-Q. Litigation is a significant ongoing expense with an uncertain outcome, and has been in the past and may in the future be a material expense for the Company. Management believes this investment is important to protect the Company’s intellectual property position, even recognizing the uncertainty of the outcome.

Other Proceedings

From time to time, we may also be involved in a variety of other claims, lawsuits, investigations and proceedings relating to securities laws, product liability, patent infringement, contract disputes, employment and other matters that arise in the normal course of our business. In addition, third parties may, from time to time, assert claims against us in the form of letters and other communications. We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We currently do not believe that the ultimate outcome of any of the matters described above is probable or reasonably estimable, or that these matters will have a material adverse effect on our business; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of litigation and settlement costs, diversion of management resources and other factors.

Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Stockholders' Equity [Abstract]

Stockholders' Equity

NOTE 7. STOCKHOLDERS’ EQUITY

Underwritten Public Equity Offerings

In August 2017, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we may, from time to time, sell up to an aggregate of $150.0 million of our common stock, preferred stock, depository shares, warrants, units or debt securities. On August 18, 2017, the registration statement was declared effective by the SEC, which allows us to access the capital markets for the three-year period following this effective date.

In February 2018, we entered into an underwriting agreement, relating to the public offering of 12,500,000 shares of our common stock, $0.001 par value per share, at a price to the public of $2.40 per share. Under the terms of the underwriting agreement, we also granted the Underwriters a 30-day option to purchase up to an additional 1,875,000 shares of our common stock, which was subsequently exercised in full, and the offering as well as the sale of shares of common stock subject to the Underwriters’ option, closed in February 2018. In total, we sold 14.4 million shares of our common stock at a price of $2.40 per share. We paid a commission equal to 4% of the gross proceeds from the sale of shares of our common stock under the underwriting agreement. The total net proceeds to us from the offering after deducting the underwriting discount were approximately $33.1 million, which excludes approximately $0.3 million of offering expenses fully paid as of September 30, 2018.

In September 2018, we entered into an underwriting agreement, relating to the public offering of 14,117,647 shares of our common stock, $0.001 par value per share, at a price to the public of $4.25 per share. Under the terms of the underwriting agreement, we also granted the Underwriters a 30-day option to purchase up to an additional 2,117,647 shares of our common stock, which was subsequently exercised in full, and the offering as well as the sale of shares of common stock subject to the Underwriters’ option, closed in September 2018. In total, we sold 16.2 million shares of our common stock at a price of $4.25 per share. We paid a commission equal to 6% of the gross proceeds from the sale of shares of our common stock under the underwriting agreement. The total net proceeds to us from the offering after deducting the underwriting discount were approximately $64.9 million, excluding approximately $0.2 million of offering expenses unpaid as of September 30, 2018.

In total, for the nine months ended September 30, 2018, we issued 30.6 million shares of our common stock through our equity offerings, resulting in net proceeds of $97.7 million, excluding approximately $0.2 million of offering expenses unpaid as of September 30, 2018.

Subject to certain exceptions set forth in our Facility Agreement, holders of our Notes may elect to receive up to 25% of the net proceeds from financing activities that include an equity component as prepayment of the Notes to be applied first, to accrued and unpaid interest and second, to principal. However, in both February 2018 and September 2018, holders representing a majority of the aggregate principal amount of the outstanding Notes waived such right in connection with the issuance and sale of shares of common stock in our public offering.

Equity Plans

As of September 30, 2018, we had three active equity compensation plans: the 2010 Equity Incentive Plan (“2010 Plan”), the 2010 Outside Director Equity Incentive Plan (“2010 Director Plan”), and the 2010 Employee Stock Purchase Plan (“ESPP”). Under the 2010 Plan, with the approval of the Compensation Committee of the Board of Directors, we may grant restricted stock, RSU, stock appreciation rights and new shares of common stock upon exercise of stock options.

In January 2018, an additional 5.8 million shares were reserved under the 2010 Plan, an additional 1.2 million shares were reserved under the 2010 Director Plan and an additional 2.3 million shares were reserved under the ESPP.

Stock Options

The following table summarizes stock option activity for all our stock option plans for the nine months ended September 30, 2018 (in thousands, except per share amounts):



		Stock Options Outstanding
					Weighted
	Shares available	Number			average
	for grant	of shares	Exercise price		exercise price
Balances, December 31, 2017	6,795	25,404	$	1.16 – 16.00	$	6.10
Additional shares reserved	6,976
Options granted	(4,183)	4,183		2.47 – 4.28		2.56
Options exercised	—	(340)		1.16 – 5.27		2.49
Options canceled	1,850	(1,850)		1.16 – 16.0		6.12
Balances, September 30, 2018	11,438	27,397	$	1.16 – 16.00	$	5.60

Restricted Stock Units, or “RSUs”

Time-based RSUs

Beginning in the three months ended March 31, 2018, the Compensation Committee of the Board of Directors has approved awards of RSUs with time-based vesting from the 2010 Plan to certain employees. Each RSU represents one equivalent share of our common stock to be awarded after the vesting period. These RSUs vest over four years at a rate of 25% annually. The fair value for these RSUs is based on the closing price of our common stock on the date of grant. We measure compensation expense for these RSUs at fair value on the date of grant and recognize the expense over the expected vesting period on a straight-line basis. The RSUs do not entitle participants to the rights of holders of common stock, such as voting rights, until the shares are issued. The number of RSUs vested includes shares of common stock that we will withhold on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures.

The following table summarizes the time-based RSUs activity for the nine months ended September 30, 2018 (in thousands, except per share amounts):


		Weighted average
	Number	grant date
	of shares	fair value
RSUs outstanding at December 31, 2017	—	$	—
RSUs granted	365		2.57
RSUs released	—		—
RSUs forfeited	(16)		2.54
Unvested RSUs outstanding at September 30, 2018	349	$	2.57

For the three and nine months ended September 30, 2018, we recognized compensation expense of $55,000 and $128,000, respectively, related to time-based RSUs.

Performance-based RSUs

During the three months ended March 31, 2018, the Compensation Committee of the Board of Directors approved awards of RSUs with performance-based vesting from the 2010 Plan to certain employees. Each RSU represents one equivalent share of our common stock to be awarded upon vesting at the end of the performance periods, if specific performance goals set by the Compensation Committee of the Board of Directors are achieved. No RSUs with performance-based vesting will vest if the performance goals are not met. The fair value of these RSUs is based on the closing price of our common stock on the date of grant. We make a quarterly probability assessment as to whether the performance goals will be achieved. Changes in our assessment of the probability of vesting results in adjustments to stock-based compensation, which may include either a cumulative catch-up of expense or a reduction of expense depending on whether the likelihood of vesting has increased or decreased, that is recognized in the period such determination is made. The RSUs do not entitle participants to the rights of holders of common stock, such as voting rights, until the shares are issued. The number of RSUs vested includes shares of common stock that we will withhold on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures.

The following table summarizes the performance-based RSUs activity for the nine months ended September 30, 2018 (in thousands, except per share amounts):


		Weighted average
	Number	grant date
	of shares	fair value
PSUs outstanding at December 31, 2017	—	$	—
PSUs granted	657		2.58
PSUs released	—		—
PSUs forfeited	(23)		2.54
Unvested PSUs outstanding at September 30, 2018	634	$	2.58

For the three and nine months ended September 30, 2018, we recognized compensation expense of $178,000 and $430,000, respectively, related to performance-based RSUs.

ESPP shares

Shares issued under our ESPP totaled 1,674,960 and 1,289,663 shares during the nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, 1,952,507 shares of our common stock remain available for issuance under our ESPP.

Stock-Based Compensation

The following table summarizes the stock-based compensation expense for stock options, RSUs and shares from the ESPP for the three and nine months ended September 30, 2018 and 2017, respectively (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of revenue	$	608	$	608	$	1,905	$	1,703
Research and development		2,207		2,071		6,658		6,131
Sales, general and administrative		2,310		2,289		7,068		7,128
Total stock-based compensation expense	$	5,125	$	4,968	$	15,631	$	14,962

We estimated the fair value of employee stock options on the grant date using the Black-Scholes option pricing model. The estimated fair value of employee stock options is amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the following weighted average assumptions:



	Three Months Ended September 30,		Nine Months Ended September 30,
Stock Option	2018	2017	2018	2017
Expected term in years	5.2	6.1	5.2	6.1
Expected volatility	65%	70%	67%	70%
Risk-free interest rate	2.8%	1.9%	2.5%	2.1%
Dividend yield	—	—	—	—

We estimate the value of employee stock purchase rights on the grant date using the Black-Scholes option pricing model. The fair value of shares to be purchased under our ESPP was estimated using the following assumptions:



	Three Months Ended September 30,		Nine Months Ended September 30,
ESPP	2018	2017	2018	2017
Expected term in years	0.5-2.0	0.5-2.0	0.5-2.0	0.5-2.0
Expected volatility	65%	70%	65% - 67%	70%
Risk-free interest rate	1.3%-2.7%	1.1%-1.4%	1.3%-2.7%	0.8%-1.4%
Dividend yield	—	—	—	—

Summary of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of Pacific Biosciences and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

Use of Estimates

Fair Value of Financial Instruments

Level 1: quoted prices in active markets for identical assets or liabilities;

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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis



	September 30, 2018								December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Cash and money market funds	$	27,386	$	—	$	—	$	27,386	$	14,858	$	—	$	—	$	14,858
Commercial paper		—		10,677		—		10,677		—		1,649		—		1,649
Total cash and cash equivalents		27,386		10,677		—		38,063		14,858		1,649		—		16,507
Investments:
Commercial paper		—		51,633		—		51,633		—		20,394		—		20,394
Corporate debt securities		—		9,068		—		9,068		—		9,034		—		9,034
US government & agency securities		—		16,983		—		16,983		—		16,937		—		16,937
Total investments		—		77,684		—		77,684		—		46,365		—		46,365
Long-term restricted cash:
Cash		4,500		—		—		4,500		4,500		—		—		4,500
Total assets measured at fair value	$	31,886	$	88,361	$	—	$	120,247	$	19,358	$	48,014	$	—	$	67,372

Liabilities
Financing derivative	$	—	$	—	$	28	$	28	$	—	$	—	$	183	$	183
Total liabilities measured at fair value	$	—	$	—	$	28	$	28	$	—	$	—	$	183	$	183

The estimated fair value of the Financing Derivative liability was determined using Level 3 inputs, or significant unobservable inputs.

Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

The estimated fair value and carrying value of the Notes are as follows (in thousands):



	September 30, 2018				December 31, 2017
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes payable	$	15,973	$	14,384	$	15,664	$	13,635

Net Loss per Share



	Nine Months Ended September 30,
(in thousands)	2018	2017
Options to purchase common stock	27,397	25,133
RSUs with time-based vesting	349	—
RSUs with performance-based vesting	634	—

Concentration and Other Risks

Going Concern

Significant Accounting Policies

Recent Accounting Pronouncements

Recently Issued Accounting Standards

Recently Adopted Accounting Standards

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows (in thousands):


Balance Sheet	Balance at December 31, 2017		Adjustments Due to ASC 606		Balance at January 1, 2018
Assets
Prepaid expenses and other current assets	$	2,249	$	189	$	2,438
Liabilities and Stockholders' Equity
Accumulated deficit		(879,733)		189		(879,544)


	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
Statement of Operations and Comprehensive Loss	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)		As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Operating Expense:
Sales, general and administrative	$	13,506	$	13,518	$	(12)	$	43,383	$	43,430	$	(47)


	As of September 30, 2018
Balance Sheet	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Assets
Prepaid expenses and other current assets	$	2,028	$	1,792	$	236
Liabilities and Stockholders' Equity
Accumulated deficit	$	(951,307)	$	(951,071)	$	236


	Nine Months Ended September 30, 2018
Statement of Cash Flows	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Cash Flows from Operating Activities
Net loss	$	(71,763)	$	(71,810)	$	47
Adjustments to reconcile net loss to net cash used in operating activities
Prepaid expenses and other current assets	$	537	$	490	$	47

A summary of our revenue by category for the three and nine months ended September 30, 2018 and 2017 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2018		2017 (1)		2018		2017 (1)
Instrument revenue	$	6,296	$	9,716	$	21,965	$	29,468
Consumable revenue		8,854		10,627		27,952		28,717
Product revenue		15,150		20,343		49,917		58,185
Service and other revenue		3,010		3,202		9,183		10,348
Total revenue	$	18,160	$	23,545	$	59,100	$	68,533

(1)

As noted above, prior period amounts have not been adjusted under the modified retrospective method.

A summary of our revenue by geographic location for the three and nine months ended September 30, 2018 and 2017 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017 (1)		2018		2017 (1)
North America	$	8,960	$	9,115	$	25,974	$	30,127
Europe (including the Middle East and Africa)		2,914		3,197		10,614		10,430
Asia Pacific		6,286		11,233		22,512		27,976
Total	$	18,160	$	23,545	$	59,100	$	68,533

(1)

As noted above, prior period amounts have not been adjusted under the modified retrospective method.

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis



	September 30, 2018								December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Cash and money market funds	$	27,386	$	—	$	—	$	27,386	$	14,858	$	—	$	—	$	14,858
Commercial paper		—		10,677		—		10,677		—		1,649		—		1,649
Total cash and cash equivalents		27,386		10,677		—		38,063		14,858		1,649		—		16,507
Investments:
Commercial paper		—		51,633		—		51,633		—		20,394		—		20,394
Corporate debt securities		—		9,068		—		9,068		—		9,034		—		9,034
US government & agency securities		—		16,983		—		16,983		—		16,937		—		16,937
Total investments		—		77,684		—		77,684		—		46,365		—		46,365
Long-term restricted cash:
Cash		4,500		—		—		4,500		4,500		—		—		4,500
Total assets measured at fair value	$	31,886	$	88,361	$	—	$	120,247	$	19,358	$	48,014	$	—	$	67,372

Liabilities
Financing derivative	$	—	$	—	$	28	$	28	$	—	$	—	$	183	$	183
Total liabilities measured at fair value	$	—	$	—	$	28	$	28	$	—	$	—	$	183	$	183

Estimated Fair Value and Carrying Value of Notes



	September 30, 2018				December 31, 2017
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes payable	$	15,973	$	14,384	$	15,664	$	13,635

Anti-dilutive Shares Excluded from Computation of Diluted Net Loss per Share



	Nine Months Ended September 30,
(in thousands)	2018	2017
Options to purchase common stock	27,397	25,133
RSUs with time-based vesting	349	—
RSUs with performance-based vesting	634	—

Schedule of Cumulative Effect on Consolidated Balance Sheet for Adoption of ASC 606


Balance Sheet	Balance at December 31, 2017		Adjustments Due to ASC 606		Balance at January 1, 2018
Assets
Prepaid expenses and other current assets	$	2,249	$	189	$	2,438
Liabilities and Stockholders' Equity
Accumulated deficit		(879,733)		189		(879,544)

Schedule of Impact of Revenue Standards Adoption on Financial Statements


	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
Statement of Operations and Comprehensive Loss	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)		As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Operating Expense:
Sales, general and administrative	$	13,506	$	13,518	$	(12)	$	43,383	$	43,430	$	(47)


	As of September 30, 2018
Balance Sheet	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Assets
Prepaid expenses and other current assets	$	2,028	$	1,792	$	236
Liabilities and Stockholders' Equity
Accumulated deficit	$	(951,307)	$	(951,071)	$	236


	Nine Months Ended September 30, 2018
Statement of Cash Flows	As Reported		Balances Without Adoption of ASC606		Effect of Change Higher/(Lower)
Cash Flows from Operating Activities
Net loss	$	(71,763)	$	(71,810)	$	47
Adjustments to reconcile net loss to net cash used in operating activities
Prepaid expenses and other current assets	$	537	$	490	$	47

Summary of Revenue by Category


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2018		2017 (1)		2018		2017 (1)
Instrument revenue	$	6,296	$	9,716	$	21,965	$	29,468
Consumable revenue		8,854		10,627		27,952		28,717
Product revenue		15,150		20,343		49,917		58,185
Service and other revenue		3,010		3,202		9,183		10,348
Total revenue	$	18,160	$	23,545	$	59,100	$	68,533

(1)

As noted above, prior period amounts have not been adjusted under the modified retrospective method.

Schedule of Revenue by Geographic Location


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017 (1)		2018		2017 (1)
North America	$	8,960	$	9,115	$	25,974	$	30,127
Europe (including the Middle East and Africa)		2,914		3,197		10,614		10,430
Asia Pacific		6,286		11,233		22,512		27,976
Total	$	18,160	$	23,545	$	59,100	$	68,533

(1)

As noted above, prior period amounts have not been adjusted under the modified retrospective method.

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Cash, Cash Equivalents and Investments (Tables)

9 Months Ended

Sep. 30, 2018

Cash, Cash Equivalents and Investments [Abstract]

Summary of Cash, Cash Equivalents and Investments



	As of September 30, 2018
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	Cost		gains		losses		Value
Cash and cash equivalents:
Cash and money market funds	$	27,386	$	—	$	—	$	27,386
Commercial paper		10,679		—		(2)		10,677
Total cash and cash equivalents		38,065		—		(2)		38,063
Investments:
Commercial paper		51,647		—		(14)		51,633
Corporate debt securities		9,070		—		(2)		9,068
US government & agency securities		16,989		—		(6)		16,983
Total investments		77,706		—		(22)		77,684
Total cash, cash equivalents and investments	$	115,771	$	—	$	(24)	$	115,747
Long-term restricted cash:
Cash	$	4,500	$	—	$	—	$	4,500


	As of December 31, 2017
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	Cost		gains		losses		Value
Cash and cash equivalents:
Cash and money market funds	$	14,858	$	—	$	—	$	14,858
Commercial paper		1,649		—		—		1,649
Total cash and cash equivalents		16,507		—		—		16,507
Investments:
Commercial paper		20,408		—		(14)		20,394
Corporate debt securities		9,043		—		(9)		9,034
US government & agency securities		16,946		—		(9)		16,937
Total investments		46,397		—		(32)		46,365
Total cash, cash equivalents and investments	$	62,904	$	—	$	(32)	$	62,872
Long-term restricted cash:
Cash	$	4,500	$	—	$	—	$	4,500

Summary of Contractual Maturities of Cash Equivalents and Available-for-Sale Investments



(in thousands)	Fair Value
Due in one year or less	$	85,383
Due after one year through 5 years		2,978
Total investments	$	88,361

Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Stockholders' Equity [Abstract]

Summary of Stock Option Activity



		Stock Options Outstanding
					Weighted
	Shares available	Number			average
	for grant	of shares	Exercise price		exercise price
Balances, December 31, 2017	6,795	25,404	$	1.16 – 16.00	$	6.10
Additional shares reserved	6,976
Options granted	(4,183)	4,183		2.47 – 4.28		2.56
Options exercised	—	(340)		1.16 – 5.27		2.49
Options canceled	1,850	(1,850)		1.16 – 16.0		6.12
Balances, September 30, 2018	11,438	27,397	$	1.16 – 16.00	$	5.60

Summary of Time-Based RSUs Activity


		Weighted average
	Number	grant date
	of shares	fair value
RSUs outstanding at December 31, 2017	—	$	—
RSUs granted	365		2.57
RSUs released	—		—
RSUs forfeited	(16)		2.54
Unvested RSUs outstanding at September 30, 2018	349	$	2.57

Summary of Performance-Based RSUs Activity


		Weighted average
	Number	grant date
	of shares	fair value
PSUs outstanding at December 31, 2017	—	$	—
PSUs granted	657		2.58
PSUs released	—		—
PSUs forfeited	(23)		2.54
Unvested PSUs outstanding at September 30, 2018	634	$	2.58

Schedule of Stock-Based Compensation Expense



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of revenue	$	608	$	608	$	1,905	$	1,703
Research and development		2,207		2,071		6,658		6,131
Sales, general and administrative		2,310		2,289		7,068		7,128
Total stock-based compensation expense	$	5,125	$	4,968	$	15,631	$	14,962

Schedule of Fair Value of Employee Stock Options



	Three Months Ended September 30,		Nine Months Ended September 30,
Stock Option	2018	2017	2018	2017
Expected term in years	5.2	6.1	5.2	6.1
Expected volatility	65%	70%	67%	70%
Risk-free interest rate	2.8%	1.9%	2.5%	2.1%
Dividend yield	—	—	—	—

Schedule of Fair Value of Employee Stock Purchase Plan



	Three Months Ended September 30,		Nine Months Ended September 30,
ESPP	2018	2017	2018	2017
Expected term in years	0.5-2.0	0.5-2.0	0.5-2.0	0.5-2.0
Expected volatility	65%	70%	65% - 67%	70%
Risk-free interest rate	1.3%-2.7%	1.1%-1.4%	1.3%-2.7%	0.8%-1.4%
Dividend yield	—	—	—	—

Stockholders' Equity (Narrative) (Details) $ / shares in Units, $ in Thousands		1 Months Ended		3 Months Ended	9 Months Ended
	Aug. 18, 2017	Sep. 30, 2018 USD ($) item $ / shares shares	Feb. 28, 2018 USD ($) $ / shares shares	Sep. 30, 2018 USD ($) item $ / shares shares	Sep. 30, 2018 USD ($) item $ / shares shares	Sep. 30, 2017 USD ($) shares	Jan. 31, 2018 shares	Dec. 31, 2017 $ / shares	Aug. 31, 2017 USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Amount of common stock, preferred stock, depositiry shares, warrants, units or debt securities available in future public offerings \| $									$ 150,000
Common stock, preferred stock, depositiry shares, warrants, units or debt securities available in future public offerings, period from effective date	3 years
Common Stock, par value \| $ / shares		$ 0.001		$ 0.001	$ 0.001			$ 0.001
Number of equity compensation plans \| item		3		3	3
Share-based compensation expense \| $					$ 15,631	$ 14,962
Proceeds from issuance of common stock from equity plans \| $					$ 4,181	$ 8,818
Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Holders may elect to receive net proceeds from financing activities, percentage					25.00%
2010 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance \| shares							5,800,000
2010 Director Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance \| shares							1,200,000
ESPP [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued \| shares					1,674,960	1,289,663
Common stock reserved for issuance \| shares		1,952,507		1,952,507	1,952,507		2,300,000
Underwriting Agreement [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares authorized, underwriting agreement \| shares			12,500,000
Common Stock, par value \| $ / shares			$ 0.001
Option to purchase additional shares, period			30 days
Additional shares authorized, underwriting agreement \| shares			1,875,000
Shares issued \| shares			14,400,000
Price per share \| $ / shares			$ 2.40
Commissions, percentage of gross proceeds			4.00%
Proceeds from issuance of common stock from equity offering, net of issuance costs \| $			$ 33,100
Other accrued offering expenses \| $			$ 300
At the Market Offering [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Proceeds from issuance of common stock from equity offering, net of issuance costs \| $						$ 11,865
Underwritten Public Equity Offering [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares authorized, underwriting agreement \| shares		14,117,647		14,117,647	14,117,647
Common Stock, par value \| $ / shares		$ 0.001		$ 0.001	$ 0.001
Option to purchase additional shares, period		30 days
Additional shares authorized, underwriting agreement \| shares		2,117,647		2,117,647	2,117,647
Shares issued \| shares		16,200,000			30,600,000
Price per share \| $ / shares		$ 4.25		$ 4.25	$ 4.25
Commissions, percentage of gross proceeds		6.00%
Proceeds from issuance of common stock from equity offering, net of issuance costs \| $		$ 64,900			$ 97,722	$ 52,530
Other accrued offering expenses \| $		$ 200		$ 200	$ 200
Time-Based Restricted Stock Units (RSUs) [Member] \| 2010 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period					4 years
Share-based compensation expense \| $				55	$ 128
Time-Based Restricted Stock Units (RSUs) [Member] \| 2010 Plan [Member] \| Share-based Compensation Award, Tranche One, Two, Three and Four [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percentage					25.00%
Performance-Based Restricted Stock Units (RSUs) [Member] \| 2010 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense \| $				$ 178	$ 430

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets [Abstract]
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	50,000,000	50,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	1,000,000,000	1,000,000,000
Common Stock, shares issued	148,894,000	116,277,000
Common Stock, shares outstanding	148,894,000	116,277,000

Overview	9 Months Ended
Overview	Sep. 30, 2018
Overview [Abstract]
Overview	NOTE 1. OVERVIEW We design, develop and manufacture sequencing systems to help scientists resolve genetically complex problems. Based on our novel Single Molecule, Real-Time (SMRT®) sequencing technology, our products enable: de novo genome assembly to finish genomes in order to more fully identify, annotate and decipher genomic structures; full-length transcript analysis to improve annotations in reference genomes, characterize alternatively spliced isoforms in important gene families, and find novel genes; targeted sequencing to more comprehensively characterize genetic variations; and real-time kinetic information for epigenome characterization. Our technology provides high accuracy, ultra-long reads, uniform coverage and the ability to simultaneously detect epigenetic changes. PacBio® sequencing systems, including consumables and software, provide a simple and fast end-to-end workflow for SMRT sequencing. Our most advanced products offered today include the Sequel instrument and the Sequel SMRT Cell 1M, which together are capable of sequencing up to approximately one million DNA molecules simultaneously. We are continuously developing new products including what we refer to as the SMRT Cell 8M, which is designed to have up to eight times as much throughput capability as the current Sequel SMRT Cell 1M. We anticipate starting beta testing of the SMRT Cell 8M in early 2019 and launching this new product more broadly some months thereafter. The names “Pacific Biosciences,” “PacBio,” “SMRT,” “SMRTbell,” “Sequel” and our logo are our trademarks.

Subsequent Event	9 Months Ended
Subsequent Event	Sep. 30, 2018
Subsequent Event [Abstract]
Subsequent Event	NOTE 8. SUBSEQUENT EVENT Proposed Merger with Illumina, Inc. On November 1, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) among Illumina, Inc. (“Illumina”), FC Ops Corp. (“Merger Subsidiary”), and the Company. Pursuant to the Merger Agreement, Merger Subsidiary will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving company in the Merger and as a wholly owned subsidiary of Illumina. As a result of the Merger, Pacific Biosciences will cease to be a publicly traded company. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, (a) each issued and outstanding share of Company common stock (other than shares (i) owned or held in treasury by the Company or owned by Illumina or Merger Subsidiary, (ii) held by any subsidiary of the Company or Illumina (other than Merger Subsidiary) or (iii) held by stockholders who have properly exercised and perfected appraisal rights under Delaware law), and (b) each outstanding share of Company restricted stock, will be cancelled and automatically converted into the right to receive $8.00 in cash, without interest (the “Merger Consideration”). In addition, subject to certain exceptions, each share of Company common stock underlying restricted stock units and stock options (whether vested or unvested) will be converted into the right to receive the Merger Consideration (or, in the case of a stock option, the spread between the Merger Consideration and the applicable exercise price), without interest. For additional information regarding the Merger, please refer to the Merger Agreement, which was filed with the Securities and Exchange Commission on November 5, 2018 as an exhibit to a Current Report on Form 8-K. Consummation of the Merger is subject to certain conditions, including the receipt of the necessary approval from the Company’s stockholders and other customary closing conditions. The parties currently expect to close the Merger in mid-2019. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances, the Company will be obligated to pay Illumina a termination fee of $43.0 million. Payment to Chief Financial Officer and Chief Executive Officer The Board approved a cash bonus of $617,500 to Susan Barnes and $1,030,000 to Michael Hunkapiller, as compensation for their services as our Chief Financial Officer and Chief Executive Officer, respectively. Ms. Barnes and Dr. Hunkapiller had previously received $1 per year as cash compensation for their services and the bonuses are intended to recognize their commitment to the best interests of the Company and to appropriately compensate them for their services. Dr. Hunkapiller is also a member and chairman of our Board.

Overview (Narrative) (Details)	9 Months Ended
Overview (Narrative) (Details)	Sep. 30, 2018 item
Sequel Instrument and Sequel SMRT Cell 1M [Member]
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Number of DNA molecules that can be sequenced simultaneously	1,000,000
SMRT Cell 8M [Member]
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Throughput capability, multiple factor	8

Summary of Significant Accounting Policies (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($) customer	Sep. 30, 2017 USD ($) customer	Sep. 30, 2018 USD ($) customer	Sep. 30, 2017 USD ($) customer	Jan. 01, 2018 USD ($)	Dec. 31, 2017 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Fair value assets liabilities transfer between levels			$ 0
Future cash flows weighted average market yield	9.20%		9.20%			10.30%
Cash, cash equivalents, and investments, excluding restricted cash	$ 115,700,000		$ 115,700,000			$ 62,900,000
Prepaid expenses and other current assets	2,028,000		2,028,000		$ 2,438,000	2,249,000
Deferred service revenue	6,700,000		6,700,000
Deferred service revenue, current	5,740,000		5,740,000			6,319,000
Deferred service revenue, non-current	1,016,000		1,016,000			$ 1,075,000
Deferred contractual revenue	5,500,000		$ 5,500,000
Service period			1 year
Restricted cash	4,500,000	$ 4,500,000	$ 4,500,000	$ 4,500,000
Deferred Commission [Member]
Summary Of Significant Accounting Policies [Line Items]
Prepaid expenses and other current assets	$ 200,000		$ 200,000
Gene Company Limited [Member] \| Sales Revenue, Net [Member]
Summary Of Significant Accounting Policies [Line Items]
Number of individual customers \| customer	1	1	1	1
Concentration risk, percentage	20.00%	35.00%	28.00%	30.00%
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Deferred service revenue, performance period			1 year
Deferred service revenue, non-current, recognition period			2 years
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Deferred service revenue, performance period			3 years
Deferred service revenue, non-current, recognition period			5 years

Summary of Significant Accounting Policies (Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Assets
Total assets measured at fair value	$ 120,247	$ 67,372
Liabilities
Total liabilities measured at fair value	28	183
Financing Derivative [Member]
Liabilities
Total liabilities measured at fair value	28	183
Cash and cash equivalents [Member]
Assets
Total cash and cash equivalents	38,063	16,507
Cash and cash equivalents [Member] \| Cash and money market funds [Member]
Assets
Total cash and cash equivalents	27,386	14,858
Cash and cash equivalents [Member] \| Commercial paper [Member]
Assets
Total cash and cash equivalents	10,677	1,649
Investments [Member]
Assets
Total investments	77,684	46,365
Investments [Member] \| Commercial paper [Member]
Assets
Total investments	51,633	20,394
Investments [Member] \| Corporate debt securities [Member]
Assets
Total investments	9,068	9,034
Investments [Member] \| U.S. government and agency securities [Member]
Assets
Total investments	16,983	16,937
Long-term restricted cash [Member] \| Cash [Member]
Assets
Long-term restricted cash	4,500	4,500
Level 1 [Member]
Assets
Total assets measured at fair value	31,886	19,358
Level 1 [Member] \| Cash and cash equivalents [Member]
Assets
Total cash and cash equivalents	27,386	14,858
Level 1 [Member] \| Cash and cash equivalents [Member] \| Cash and money market funds [Member]
Assets
Total cash and cash equivalents	27,386	14,858
Level 1 [Member] \| Long-term restricted cash [Member] \| Cash [Member]
Assets
Long-term restricted cash	4,500	4,500
Level 2 [Member]
Assets
Total assets measured at fair value	88,361	48,014
Level 2 [Member] \| Cash and cash equivalents [Member]
Assets
Total cash and cash equivalents	10,677	1,649
Level 2 [Member] \| Cash and cash equivalents [Member] \| Commercial paper [Member]
Assets
Total cash and cash equivalents	10,677	1,649
Level 2 [Member] \| Investments [Member]
Assets
Total investments	77,684	46,365
Level 2 [Member] \| Investments [Member] \| Commercial paper [Member]
Assets
Total investments	51,633	20,394
Level 2 [Member] \| Investments [Member] \| Corporate debt securities [Member]
Assets
Total investments	9,068	9,034
Level 2 [Member] \| Investments [Member] \| U.S. government and agency securities [Member]
Assets
Total investments	16,983	16,937
Level 3 [Member]
Liabilities
Total liabilities measured at fair value	28	183
Level 3 [Member] \| Financing Derivative [Member]
Liabilities
Total liabilities measured at fair value	$ 28	$ 183

Summary of Significant Accounting Policies (Estimated Fair Value and Carrying Value of Notes) (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Estimated Fair Value [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Notes payable	$ 15,973	$ 15,664
Carrying Value [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Notes payable	$ 14,384	$ 13,635

Summary of Significant Accounting Policies (Anti-Dilutive Shares Excluded from Computation of Diluted Net Loss per Share) (Details) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Stock Options [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive shares outstanding excluded from computation	27,397	25,133
RSUs with Time-Based Vesting [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive shares outstanding excluded from computation	349
RSUs with Performance-Based Vesting [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive shares outstanding excluded from computation	634

Summary of Significant Accounting Policies (Schedule of Cumulative Effect on Consolidated Balance Sheet for Adoption of ASC 606) (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Assets
Prepaid expenses and other current assets	$ 2,028	$ 2,438	$ 2,249
Liabilities and Stockholders’ Equity
Accumulated deficit	(951,307)	(879,544)	$ (879,733)
Accounting Standards Update 2014-09 [Member] \| Effect of Change Higher/(Lower) [Member]
Assets
Prepaid expenses and other current assets	236	189
Liabilities and Stockholders’ Equity
Accumulated deficit	$ 236	$ 189

Cash, Cash Equivalents and Investments (Summary of Cash, Cash Equivalents and Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 115,771	$ 62,904
Gross unrealized gains
Gross unrealized losses	(24)	(32)
Fair value	115,747	62,872
Cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	38,065	16,507
Gross unrealized gains
Gross unrealized losses	(2)
Fair value	38,063	16,507
Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	77,706	46,397
Gross unrealized gains
Gross unrealized losses	(22)	(32)
Fair value	77,684	46,365
Cash and money market funds [Member] \| Cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	27,386	14,858
Gross unrealized gains
Gross unrealized losses
Fair value	27,386	14,858
Commercial paper [Member] \| Cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	10,679	1,649
Gross unrealized gains
Gross unrealized losses	(2)
Fair value	10,677	1,649
Commercial paper [Member] \| Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	51,647	20,408
Gross unrealized gains
Gross unrealized losses	(14)	(14)
Fair value	51,633	20,394
Corporate debt securities [Member] \| Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	9,070	9,043
Gross unrealized gains
Gross unrealized losses	(2)	(9)
Fair value	9,068	9,034
U.S. government and agency securities [Member] \| Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	16,989	16,946
Gross unrealized gains
Gross unrealized losses	(6)	(9)
Fair value	16,983	16,937
Cash [Member] \| Long-term restricted cash [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	4,500	4,500
Gross unrealized gains
Gross unrealized losses
Fair value	$ 4,500	$ 4,500

Cash, Cash Equivalents and Investments (Summary of Contractual Maturities of Cash Equivalents and Available-for-Sale Investments) (Details) $ in Thousands	Sep. 30, 2018 USD ($)
Cash, Cash Equivalents and Investments [Abstract]
Due in one year or less	$ 85,383
Due after one year through five years	2,978
Total investments	$ 88,361

Balance Sheet Components (Details) - USD ($) $ in Thousands	3 Months Ended
Balance Sheet Components (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Balance Sheet Components [Abstract]
Product transition costs	$ 2,400
Purchased materials	7,557	$ 8,884
Work in process	7,367	9,994
Finished goods	4,770	4,187
Inventory	$ 19,694	$ 23,065

Notes Payable (Schedule of Payments due under Notes Payable) (Details) $ in Thousands	Sep. 30, 2018 USD ($)
Notes Payable [Abstract]
Remainder of 2018	$ 353
2019	1,400
2020	16,491
Total remaining payments	18,244
Less: interest and discounts	(3,860)
Notes payable	$ 14,384

Commitments and Contingencies (Schedule of Future Annual Minimum Lease Payments) (Details) $ in Thousands	Sep. 30, 2018 USD ($)
Commitments and Contingencies [Abstract]
Remaining of 2018	$ 1,719
2019	6,930
2020	7,056
2021	7,272
2022	7,488
Thereafter	39,222
Total minimum lease payments	$ 69,687

Stockholders' Equity (Summary of Stock Option Activity) (Details) - Stock Options [Member] - $ / shares shares in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares available for grant, Additional shares reserved	6,976
$1.16 – 16.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares available for grant, Balances, December 31, 2017	6,795
Shares available for grant, Balances,September 30, 2018	11,438	6,795
Number of shares, Balances, December 31, 2017	25,404
Number of shares, Balances, September 30, 2018	27,397	25,404
Exercise price, lower range	$ 1.16	$ 1.16
Exercise price, upper range	16.00	16.00
Weighted average exercise price, Balances, December 31, 2017	6.10
Weighted average exercise price, Balances, September 30, 2018	$ 5.60	$ 6.10
$2.47 – 4.28 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares available for grant, Options granted	(4,183)
Number of shares, Options granted	4,183
Exercise price, lower range	$ 2.47
Exercise price, upper range	4.28
Weighted average exercise price, Options granted	$ 2.56
$1.16 – 5.27 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares available for grant, Options exercised
Number of shares, Options exercised	(340)
Exercise price, lower range	$ 1.16
Exercise price, upper range	5.27
Weighted average exercise price, Options exercised	$ 2.49
$1.16 – 16.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares available for grant, Options canceled	1,850
Number of shares, Options canceled	(1,850)
Exercise price, lower range	$ 1.16
Exercise price, upper range	16.00
Weighted average exercise price, Options canceled	$ 6.12

Stockholders' Equity (Summary of Time-Based RSUs Activity) (Details) - Time-Based Restricted Stock Units (RSUs) [Member] shares in Thousands	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, outstanding at December 31, 2017 \| shares
Number of shares, granted \| shares	365
Number of shares, released \| shares
Number of shares, forfeited \| shares	(16)
Number of shares, Unvested outstanding at September 30, 2018 \| shares	349
Weighted average grant date fair value, outstanding at December 31, 2017 \| $ / shares
Weighted average grant date fair value, granted \| $ / shares	2.57
Weighted average grant date fair value, released \| $ / shares
Weighted average grant date fair value, forfeited \| $ / shares	2.54
Weighted average grant date fair value, Unvested outstanding at September 30, 2018 \| $ / shares	$ 2.57

Subsequent Event (Narrative) (Details) - USD ($)		9 Months Ended
Subsequent Event (Narrative) (Details) - USD ($)	Nov. 01, 2018	Sep. 30, 2018
Chief Financial Officer [Member]
Subsequent Event [Line Items]
Officers compensation		$ 1
Chief Executive Officer [Member]
Subsequent Event [Line Items]
Officers compensation		$ 1
Subsequent Event [Member]
Subsequent Event [Line Items]
Fee required upon termination of merger agreement under certain specified circumstances	$ 43,000,000
Subsequent Event [Member] \| Chief Financial Officer [Member] \| Deferred Bonus [Member]
Subsequent Event [Line Items]
Officers cash bonus	617,500
Subsequent Event [Member] \| Chief Executive Officer [Member] \| Deferred Bonus [Member]
Subsequent Event [Line Items]
Officers cash bonus	$ 1,030,000
Restricted Stock Units (RSUs) [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Outstanding shares at merger, amount per share converted to cash without interest	$ 8.00