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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 June 30, 2022

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

 

A picture containing text, clipart

Description automatically generated

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

T

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting company

o

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 July 31, 2022: 224,840,799.  



TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

PAGE No.

Item 1. Financial Statements (unaudited):

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021

4

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021

5

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021

6

Notes to Condensed Consolidated Financial Statements

7

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

27

Item 3. Quantitative and Qualitative Disclosures About Market Risk

39

Item 4. Controls and Procedures

39

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

40

Item 1A. Risk Factors

40

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

79

Item 3. Default Upon Senior Securities

79

Item 4. Mine Safety Disclosures

79

Item 5. Other Information

79

Item 6. Exhibits

80

2


PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

June 30,

December 31,

(in thousands, except per share amounts)

2022

2021

Assets

Current assets

Cash and cash equivalents

$

310,445

$

460,725

Investments

588,706

583,675

Accounts receivable, net

27,058

24,241

Inventory, net

36,121

24,599

Prepaid expenses and other current assets

7,657

7,394

Short-term restricted cash

300

500

Total current assets

970,287

1,101,134

Property and equipment, net

37,957

32,504

Operating lease right-of-use assets, net

43,274

46,617

Long-term restricted cash

2,922

4,592

Intangible assets, net

410,523

410,979

Goodwill

409,974

409,974

Other long-term assets

1,205

1,170

Total assets

$

1,876,142

$

2,006,970

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

12,883

$

11,002

Accrued expenses

25,174

36,261

Deferred revenue, current

32,084

10,977

Operating lease liabilities, current

8,350

7,710

Other liabilities, current

5,905

5,759

Total current liabilities

84,396

71,709

Deferred revenue, non-current

1,827

25,049

Contingent consideration liability, non-current

163,216

169,717

Operating lease liabilities, non-current

45,497

49,970

Convertible senior notes, net, non-current

896,374

896,067

Other liabilities, non-current

2,946

3,471

Total liabilities

1,194,256

1,215,983

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 224,756 and 220,978 shares at June 30, 2022 and December 31, 2021, respectively

225

221

Additional paid-in capital

2,058,103

2,009,945

Accumulated other comprehensive loss

(5,457)

(1,087)

Accumulated deficit

(1,370,985)

(1,218,092)

Total stockholders’ equity

681,886

790,987

Total liabilities and stockholders’ equity

$

1,876,142

$

2,006,970

See accompanying notes to the condensed consolidated financial statements.

3


PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except per share amounts)

2022

2021

2022

2021

Revenue:

Product revenue

$

30,175 

$

26,533 

$

58,419 

$

51,836 

Service and other revenue

5,292 

4,077 

10,221 

7,771 

Total revenue

35,467 

30,610 

68,640 

59,607 

Cost of revenue:

Cost of product revenue

15,499 

13,222 

30,319 

25,919 

Cost of service and other revenue

3,592 

3,635 

7,607 

6,958 

Amortization of intangible assets

183 

366 

Total cost of revenue

19,274 

16,857 

38,292 

32,877 

Gross profit

16,193 

13,753 

30,348 

26,730 

Operating expense:

Research and development

50,348 

22,266 

103,285 

42,815 

Sales, general and administrative

39,252 

29,060 

79,056 

55,198 

Change in fair value of contingent consideration

(5,438)

(6,501)

Total operating expense

84,162 

51,326 

175,840 

98,013 

Operating loss

(67,969)

(37,573)

(145,492)

(71,283)

Loss from Continuation Advances from Illumina

-

-

(52,000)

Interest expense

(3,681)

(3,589)

(7,378)

(5,378)

Other income (expense), net

256 

161 

(23)

225 

Net loss

(71,394)

(41,001)

(152,893)

(128,436)

Other comprehensive loss:

Unrealized loss on investments

(1,372)

(80)

(4,370)

(91)

Comprehensive loss

$

(72,766)

$

(41,081)

$

(157,263)

$

(128,527)

Net loss per share:

Basic

$

(0.32)

$

(0.21)

$

(0.68)

$

(0.65)

Diluted

$

(0.32)

$

(0.21)

$

(0.68)

$

(0.65)

Weighted average shares outstanding used in calculating net loss per share:

Basic

224,499 

198,568 

223,400 

196,690 

Diluted

224,499 

198,568 

223,400 

196,690 

See accompanying notes to the condensed consolidated financial statements.


4


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

(Loss) Income

Deficit

Equity

For the three months ended June 30, 2022

Balance at March 31, 2022

224,329

$

224

$

2,038,030

$

(4,085)

$

(1,299,591)

$

734,578

Net loss

(71,394)

(71,394)

Other comprehensive loss

(1,372)

(1,372)

Issuance of common stock in conjunction with equity plans

427

1

847

848

Stock-based compensation expense

19,226

19,226

Balance at June 30, 2022

224,756

$

225

$

2,058,103

$

(5,457)

$

(1,370,985)

$

681,886

For the three months ended June 30, 2021

Balance at March 31, 2021

198,340

$

198

$

1,404,585

$

74

$

(1,124,304)

$

280,553

Net loss

(41,001)

(41,001)

Other comprehensive loss

(80)

(80)

Issuance of common stock in conjunction with equity plans

577

1

2,967

2,968

Stock-based compensation expense

15,805

15,805

Balance at June 30, 2021

198,917

$

199

$

1,423,357

$

(6)

$

(1,165,305)

$

258,245

For the six months ended June 30, 2022

Balance at December 31, 2021

220,978

$

221

$

2,009,945

$

(1,087)

$

(1,218,092)

$

790,987

Net loss

(152,893)

(152,893)

Other comprehensive loss

(4,370)

(4,370)

Issuance of common stock in conjunction with equity plans

3,778

4

6,436

6,440

Stock-based compensation expense

41,722

41,722

Balance at June 30, 2022

224,756

$

225

$

2,058,103

$

(5,457)

$

(1,370,985)

$

681,886

For the six months ended June 30, 2021