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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

Or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission File Number 001-34899

 

Pacific Biosciences of California, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

16-1590339

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1305 O’Brien Drive

Menlo Park, CA

94025

(Address of principal executive offices)

(Zip Code)

(650521-8000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

PACB

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes T   No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  T No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

T

Smaller reporting company

T

Emerging growth company

o


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No   T

Number of shares outstanding of the issuer’s common stock as of October 31, 2021: 220,598,363.  


2


TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

PAGE No

Item 1. Financial Statements (unaudited):

Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020

4

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020

5

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020

6

Condensed Consolidated Statements of Cash Flows for the NineMonths Ended September 30, 2021 and 2020

7

Notes to Condensed Consolidated Financial Statements

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3. Quantitative and Qualitative Disclosures About Market Risk

37

Item 4. Controls and Procedures

38

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

38

Item 1A. Risk Factors

38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3. Default Upon Senior Securities

67

Item 4. Mine Safety Disclosures

67

Item 5. Other Information

67

Item 6. Exhibits

68

3


PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

September 30,

December 31,

(in thousands, except per share amounts)

2021

2020

Assets

Current assets

Cash and cash equivalents

$

425,388

$

81,611

Investments

654,502

237,203

Accounts receivable

23,946

16,837

Inventory

18,276

14,230

Prepaid expenses and other current assets

7,193

4,870

Short-term restricted cash

500

836

Total current assets

1,129,805

355,587

Property and equipment, net

31,119

24,899

Operating lease right-of-use assets, net

45,862

29,951

Long-term restricted cash

4,560

3,500

Intangible assets, net

411,206

Goodwill

411,533

Other long-term assets

70

43

Total assets

$

2,034,155

$

413,980

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

4,960

$

3,579

Accrued expenses

30,820

17,350

Deferred revenue, current

9,773

8,722

Operating lease liabilities, current

7,128

4,332

Other liabilities, current

2,927

4,519

Total current liabilities

55,608

38,502

Deferred revenue, non-current

18,447

1,568

Contingent consideration liability, non-current

168,574

Operating lease liabilities, non-current

49,954

37,667

Convertible senior notes, net, non-current

895,915

Other liabilities, non-current

4,850

752

Total liabilities

1,193,348

78,489

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 220,547 shares and 192,294 shares at September 30, 2021 and December 31, 2020, respectively

221

192

Additional paid-in capital

1,989,322

1,372,083

Accumulated other comprehensive income

27

85

Accumulated deficit

(1,148,763)

(1,036,869)

Total stockholders’ equity

840,807

335,491

Total liabilities and stockholders’ equity

$

2,034,155

$

413,980

See accompanying notes to the condensed consolidated financial statements.

4


PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share amounts)

2021

2020

2021

2020

Revenue:

Product revenue

$

30,502

$

15,749

$

82,338

$

41,798

Service and other revenue

4,385

3,333

12,156

9,959

Total revenue

34,887

19,082

94,494

51,757

Cost of revenue:

Cost of product revenue

15,530

9,228

41,449

22,874

Cost of service and other revenue

3,870

2,790

10,828

7,718

Amortization of intangible assets

123

123

Total cost of revenue

19,523

12,018

52,400

30,592

Gross profit

15,364

7,064

42,094

21,165

Operating expense:

Research and development

27,508

16,467

70,323

46,727

Sales, general and administrative

31,606

14,772

86,804

54,846

Merger-related expenses

30,726

30,726

Total operating expense

89,840

31,239

187,853

101,573

Operating loss

(74,476)

(24,175)

(145,759)

(80,408)

Gain (loss) from Continuation Advances

(52,000)

34,000

Interest expense

(3,673)

(9,051)

(267)

Other income (expense), net

(133)

467

92

1,143

Loss before benefit from income taxes

(78,282)

(23,708)

(206,718)

(45,532)

Benefit from income taxes

(94,824)

(94,824)

Net income (loss)

16,542

(23,708)

(111,894)

(45,532)

Other comprehensive income (loss):

Unrealized income (loss) on investments

33

(125)

(58)

113

Comprehensive income (loss)

$

16,575

$

(23,833)

$

(111,952)

$

(45,419)

Net income (loss) per share:

Basic

$

0.08

$

(0.14)

$

(0.56)

$

(0.29)

Diluted

$

0.08

$

(0.14)

$

(0.56)

$

(0.29)

Weighted average shares outstanding used in computing net income (loss) per share

Basic

202,194

166,862

198,545

158,195

Diluted

215,127

166,862

198,545

158,195

See accompanying notes to the condensed consolidated financial statements.


5


PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders'

(in thousands)

Shares

Amount

Capital

Income (Loss)

Deficit

Equity

For the three months ended September 30, 2021

Balance at June 30, 2021

198,917 

$

199 

$

1,423,357 

$

(6)

$

(1,165,305)

$

258,245 

Net income

16,542 

16,542 

Other comprehensive income

33 

33 

Issuance of common stock in conjunction with equity plans

1,503 

2 

4,809 

4,811 

Issuance of common stock in Private Placement, net of issuance costs

11,215 

11 

294,834 

294,845 

Issuance of common stock in acquisition of Omniome

8,912 

9 

237,875

237,884

Stock-based compensation expense

28,447

28,447

Balance at September 30, 2021

220,547 

$

221 

$

1,989,322 

$

27 

$

(1,148,763)

$

840,807 

For the three months ended September 30, 2020

Balance at June 30, 2020

154,318 

$

154 

$

1,129,091 

$

243 

$

(1,088,096)

$

41,392 

Net loss

(23,708)

(23,708)

Other comprehensive loss

(125)

(125)

Issuance of common stock in conjunction with equity plans

3,274 

3 

13,344 

13,347 

Issuance of common stock from underwritten public equity offering, net of issuance costs

22,345 

23 

93,575 

93,598 

Stock-based compensation expense

4,992 

4,992 

Balance at September 30, 2020

179,937 

$

180 

$

1,241,002 

$

118 

$

(1,111,804)

$

129,496