UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

February 4, 2014

 

 

Pacific Biosciences of California, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-34899		16-1590339
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1380 Willow Road

Menlo Park, California 94025

(Address of principal executive offices, including zip code)

(650) 521-8000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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ITEM 2.02.

RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

This current report on Form 8-K contains forward-looking statements that involve risks and uncertainties. Forward-looking statements are based on management’s beliefs and assumptions and on information currently available to them. Such forward looking statements include, but are not limited to, statements related to: expectations regarding future revenue growth, losses, expectations regarding the Company’s development, commercialization and license agreement, expectations regarding the Company’s product and services revenue, operating expenses and other statements not of a historical nature. In some cases you can identify forward-looking statements by words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. The Company’s actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described in the Company’s most recently filed Quarterly Report on Form 10-Q, Annual Report on Form 10-K, and the Company’s other filings with the SEC. You should not place undue reliance on forward-looking statements, which apply only as of the date of this current report on Form 8-K. The Company assumes no obligation to update these forward-looking statements.

On February 4, 2014, Pacific Biosciences of California, Inc. (the “Company”) released its financial results for the year ended December 31, 2013. The Company’s unaudited Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Loss and Consolidated Statements of Cash Flows are included as Exhibits 99.1, 99.2 and 99.3 hereto, respectively, and are incorporated herein by reference.

Revenue for the year ended December 31, 2013 totaled $28.2 million compared to $26.0 million for the year ended December 31, 2012. Total revenue for the year ended December 31, 2013 also included $1.7 million of revenue recognized pursuant to the Company’s previously announced development agreement with Roche. The Company expects year-over-year growth in total revenue and also expects product and service revenue in 2014 to be higher than 2013.

As of December 31, 2013, the Company’s backlog was comprised of 13 instruments.

Gross profit for the year ended December 31, 2013 totaled $6.4 million, resulting in a gross margin of 22.8%, compared to a $0.9 million gross profit for the year ended December 31, 2012 and a gross margin of 3.6%. The $5.5 million increase in gross profit from 2012 to 2013 primarily resulted from lower product and service costs and $1.7 million of gross profit recognized in 2013 in relation to the development agreement with Roche. Cost of revenue for the year ended December 31, 2012 included $0.7 million of expense associated with a new product release in the first quarter of 2012 and a $0.9 million charge associated with a provision for excess and obsolete inventory based on a review of on hand inventory and future demand. Cost of product revenue of $15.7 million for the year ended December 31, 2013 reflected the costs relating to 17 instruments and consumables recognized in revenue during the year ended December 31, 2013, compared with $18.8 million for the year ended December 31, 2012 reflecting the costs relating to components and manufacturing overhead incurred on the 23 instruments that were installed and consumables that were shipped during the year ended December 31, 2012.

Operating expenses totaled $84.0 million for the year ended December 31, 2013 compared to $95.3 million for the year ended December 31, 2012. The decrease of $11.3 million in operating expenses in 2013 compared to 2012 was due to a decrease of $4.8 million in legal, professional, and consulting expenses primarily as a result of decreased class action litigation related expenses and other legal expenses, a decrease of $2.4 million in expenses incurred for trade show and conference expenses, a decrease of $1.7 million in personnel related expense, a decrease of $1.0 million in depreciation and a decrease of $1.4 million in other net expenses. Operating expenses in 2014 are expected to be consistent with those recognized in 2013.

Cash and investments at December 31, 2013 totaled $112.5 million compared to $100.6 million at December 31, 2012. During the year ended December 31, 2013, the Company received a $35.0 million upfront payment from Roche upon execution of the development agreement, $19.8 million through the previously announced debt facility entered into with Deerfield and $19.9 million through the sale of common stock under the Company’s previously announced “at-the-market” offering program. Excluding proceeds from these three transactions, cash and investments decreased by $62.8 million compared to December 31, 2012, primarily reflecting $64.8 million of cash used in operating activities and $0.9 million of fixed asset purchases partially offset by $3.1 million of proceeds received from equity sales through the Company’s employee stock plans.

The information set forth in this Item 2.02, as well as Exhibit 99.1, 99.2 and 99.3 referenced therein, shall be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, and shall be incorporated by reference into the Company’s filings under the Securities Act of 1933, as amended.

 

ITEM 9.01.

FINANCIAL STATEMENTS AND EXHIBITS.

 

(d)

Exhibits.

 

99.1		Consolidated Balance Sheets (unaudited)
99.2		Consolidated Statements of Operations and Comprehensive Loss (unaudited)
99.3		Consolidated Statements of Cash Flows (unaudited)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 4, 2014

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Consolidated Balance Sheets (unaudited)
99.2		Consolidated Statements of Operations and Comprehensive Loss (unaudited)
99.3		Consolidated Statements of Cash Flows (unaudited)

Exhibit 99.1

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Consolidated Balance Sheets

(Unaudited)

 

		December 31,
(in thousands, except per share amounts)		2013				2012
Assets
Current assets
Cash and cash equivalents		$	26,362			$	46,540
Investments			86,166				54,040
Accounts receivable			2,746				2,822
Inventory, net			10,050				9,592
Prepaid expenses and other current assets			1,135				2,006
Total current assets			126,459				115,000
Property and equipment, net			9,236				14,329
Other long-term assets			490				354
Total assets		$	136,185			$	129,683
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	1,717			$	2,988
Accrued expenses and other current liabilities			9,797				8,204
Deferred service revenue, current			4,046				3,378
Deferred development revenue, current			6,785				—
Facility financing obligation, current			210				173
Total current liabilities			22,555				14,743
Deferred service revenue, non-current			518				800
Deferred development revenue, non-current			26,519				—
Deferred rent and other long-term liabilities			1,114				2,145
Notes payable, non-current			13,347				—
Financing derivative			549				—
Facility financing obligation, non-current			2,403				2,613
Total liabilities			67,005				20,301
Stockholders’ equity
Convertible Preferred Stock, $0.001 par value:
Authorized 50,000 shares; No shares issued or outstanding at December 31, 2013 and 2012			—				—
Common Stock and additional paid-in-capital, $0.001 par value:
Authorized 1,000,000 shares; Issued and outstanding 66,275 and 56,170 shares at December 31, 2013 and 2012, respectively			684,479				645,372
Accumulated other comprehensive income			14				30
Accumulated deficit			(615,313	)			(536,020	)
Total stockholders’ equity			69,180				109,382
Total liabilities and stockholders’ equity		$	136,185			$	129,683

Exhibit 99.2

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

		Years ended December 31,
(in thousands, except per share amounts)		2013				2012				2011
Revenue:
Product revenue		$	20,039			$	20,089			$	31,486
Service and other revenue			6,446				5,894				2,377
Revenue from development agreement			1,696				—				—
Total revenue			28,181				25,983				33,863
Cost of Revenue:
Cost of product revenue			15,706				18,796				18,725
Cost of service and other revenue			6,056				6,247				2,104
Total cost of revenue			21,762				25,043				20,829
Gross profit			6,419				940				13,034
Operating Expense:
Research and development			45,217				47,623				76,080
Sales, general and administrative			38,745				47,655				46,710
Total operating expense			83,962				95,278				122,790
Operating loss			(77,543	)			(94,338	)			(109,756	)
Interest expense			(2,478	)			(274	)			(287	)
Other income, net			728				147				655
Net loss			(79,293	)			(94,465	)			(109,388	)
Other comprehensive income (loss):
Unrealized gain (loss) on investments			(16	)			(27	)			78
Comprehensive loss		$	(79,309	)		$	(94,492	)		$	(109,310	)
Net loss per share:
Basic and diluted net loss per share		$	(1.26	)		$	(1.69	)		$	(2.03	)
Shares used in computing basic and diluted net loss per share			62,784				55,733				53,874

Exhibit 99.3

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Consolidated Statements of Cash Flow

(Unaudited)

 

		Years Ended December 31,
(in thousands)		2013				2012				2011
Cash flows from operating activities
Net loss		$	(79,293	)		$	(94,465	)		$	(109,388	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization			5,648				6,649				5,803
Amortization of debt discount and financing costs			595				—				—
Stock-based compensation			9,905				9,705				12,384
Other items			(418	)			287				226
Changes in assets and liabilities
Accounts receivable			76				1,735				(4,216	)
Inventory			(60	)			4,761				(11,409	)
Prepaid expenses and other assets			906				1,058				1,874
Accounts payable			(1,271	)			(1,754	)			(4,773	)
Accrued expenses and other current liabilities			1,593				(2,054	)			3,044
Deferred service revenue			386				(1,674	)			2,631
Deferred development revenue			33,304				—				—
Lease incentives and other long-term liabilities			(1,204	)			(1,070	)			850
Net cash used in operating activities			(29,833	)			(76,822	)			(102,974	)
Cash flows from investing activities
Purchase of property and equipment			(909	)			(1,703	)			(9,284	)
Purchase of investments			(201,547	)			(87,889	)			(264,071	)
Sales of investments			100				7,896				36,520
Maturities of investments			169,239				143,488				243,281
Net cash provided by (used in) investing activities			(33,117	)			61,792				6,446
Cash flows from financing activities
Proceeds from issuance of common stock from equity plans			3,079				2,705				7,743
Proceeds from issuance of common stock from equity offering, net of issuance costs			19,927				—				—
Proceeds from issuance of debt facility, net of issuance costs			19,766				—				—
Net cash provided by financing activities			42,772				2,705				7,743
Net decrease in cash and cash equivalents			(20,178	)			(12,325	)			(88,785	)
Cash and cash equivalents at beginning of period			46,540				58,865				147,650
Cash and cash equivalents at end of period		$	26,362			$	46,540			$	58,865
Supplemental disclosure of cash flow information
Interest paid			1,165				—				—
Supplemental disclosure of non-cash investing and financing activities
Inventory transferred to property and equipment for internal use			558				1,164				2,756