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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, 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 October 31, 2022: 226,109,275.  


TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

PAGE No.

Item 1. Financial Statements (unaudited):

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

3

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2022 and 2021

4

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

5

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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

25

Item 3. Quantitative and Qualitative Disclosures About Market Risk

35

Item 4. Controls and Procedures

35

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

36

Item 1A. Risk Factors

36

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

71

Item 3. Default Upon Senior Securities

71

Item 4. Mine Safety Disclosures

71

Item 5. Other Information

71

Item 6. Exhibits

72

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)

2022

2021

Assets

Current assets

Cash and cash equivalents

$

304,433 

$

460,725 

Investments

529,907 

583,675 

Accounts receivable, net

22,756 

24,241 

Inventory, net

43,495 

24,599 

Prepaid expenses and other current assets

13,005 

7,394 

Short-term restricted cash

300 

500 

Total current assets

913,896 

1,101,134 

Property and equipment, net

39,154 

32,504 

Operating lease right-of-use assets, net

41,533 

46,617 

Long-term restricted cash

2,922 

4,592 

Intangible assets, net

410,294 

410,979 

Goodwill

409,974 

409,974 

Other long-term assets

1,176 

1,170 

Total assets

$

1,818,949 

$

2,006,970 

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

12,853 

$

11,002 

Accrued expenses

24,886 

36,261 

Deferred revenue, current

30,689 

10,977 

Operating lease liabilities, current

8,612 

7,710 

Other liabilities, current

4,609 

5,759 

Total current liabilities

81,649 

71,709 

Deferred revenue, non-current

1,762 

25,049 

Contingent consideration liability, non-current

167,496 

169,717 

Operating lease liabilities, non-current

43,163 

49,970 

Convertible senior notes, net, non-current

896,529 

896,067 

Other liabilities, non-current

1,759 

3,471 

Total liabilities

1,192,358 

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 225,916 and 220,978 shares at September 30, 2022 and December 31, 2021, respectively

226 

221 

Additional paid-in capital

2,080,581 

2,009,945 

Accumulated other comprehensive loss

(6,260)

(1,087)

Accumulated deficit

(1,447,956)

(1,218,092)

Total stockholders’ equity

626,591 

790,987 

Total liabilities and stockholders’ equity

$

1,818,949 

$

2,006,970 

See accompanying notes to the condensed consolidated financial statements.

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share amounts)

2022

2021

2022

2021

Revenue:

Product revenue

$

27,509

$

30,502 

$

85,928

$

82,338 

Service and other revenue

4,802

4,385 

15,023

12,156 

Total revenue

32,311

34,887 

100,951

94,494 

Cost of revenue:

Cost of product revenue

15,568

15,530 

45,887

41,449 

Cost of service and other revenue

3,012

3,870 

10,619

10,828 

Amortization of intangible assets

184

123 

550

123 

Total cost of revenue

18,764

19,523 

57,056

52,400 

Gross profit

13,547

15,364 

43,895

42,094 

Operating expense:

Research and development

47,092

27,508 

150,377

70,323 

Sales, general and administrative

36,795

31,606 

115,851

86,804 

Merger-related expenses

30,726 

30,726 

Change in fair value of contingent consideration

4,280

(2,221)

Total operating expense

88,167

89,840 

264,007

187,853 

Operating loss

(74,620)

(74,476)

(220,112)

(145,759)

Loss from Continuation Advances

(52,000)

Interest expense

(3,664)

(3,673)

(11,042)

(9,051)

Other income (expense), net

1,313

(133)

1,290

92 

Loss before benefit from income taxes

(76,971)

(78,282)

(229,864)

(206,718)

Benefit from income taxes

(94,824)

(94,824)

Net (loss) income

(76,971)

16,542 

(229,864)

(111,894)

Other comprehensive (loss) income:

Unrealized (loss) gain on investments

(803)

33

(5,173)

(58)

Comprehensive (loss) income

$

(77,774)

$

16,575

$

(235,037)

$

(111,952)

Net (loss) income per share:

Basic

$

(0.34)

$

0.08 

$

(1.03)

$

(0.56)

Diluted

$

(0.34)

$

0.08 

$

(1.03)

$

(0.56)

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

Basic

225,123

202,194 

223,981

198,545 

Diluted

225,123

215,127 

223,981

198,545 

See accompanying notes to the condensed consolidated financial statements.


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 September 30, 2022

Balance at June 30, 2022

224,756 

$

225 

$

2,058,103 

$

(5,457)

$

(1,370,985)

$

681,886 

Net loss

(76,971)

(76,971)

Other comprehensive loss

(803)

(803)

Issuance of common stock in conjunction with equity plans

1,160

1 

3,542 

3,543 

Stock-based compensation expense

18,936 

18,936 

Balance at September 30, 2022

225,916

$

226 

$

2,080,581 

$

(6,260)

$

(1,447,956)

$

626,591 

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 nine months ended September 30, 2022

Balance at December 31, 2021

220,978 

$

221 

$

2,009,945 

$

(1,087)

$

(1,218,092)

$

790,987 

Net loss

(229,864)

(229,864)

Other comprehensive loss

(5,173)