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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, 2020

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

T

Accelerated Filer

o

Non-accelerated Filer

o

Smaller Reporting Company

o

Emerging Growth Company

o


Table of Contents

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, 2020: 154,408,829  


2


Table of Contents

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

PAGE No

Item 1. Financial Statements (unaudited):

Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019

4

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019

5

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019

6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019

7

Notes to Condensed Consolidated Financial Statements

8

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

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk

27

Item 4. Controls and Procedures

27

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

29

Item 1A. Risk Factors

29

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

53

Item 3. Default Upon Senior Securities

53

Item 4. Mine Safety Disclosures

53

Item 5. Other Information

53

Item 6. Exhibits

53

3


Table of Contents

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)

2020

2019

Assets

Current assets

Cash and cash equivalents

$

43,342

$

29,627

Investments

76,621

19,472

Accounts receivable

11,346

15,266

Inventory

16,768

13,312

Prepaid expenses and other current assets

2,862

3,369

Total current assets

150,939

81,046

Property and equipment, net

27,733

30,070

Operating lease right-of-use assets, net

31,435

32,827

Long-term restricted cash

3,500

4,000

Other long-term assets

41

42

Total assets

$

213,648

$

147,985

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

7,436

$

8,368

Accrued expenses

12,203

13,242

Deferred revenue, current

6,932

7,610

Operating lease liabilities, current

4,103

3,837

Notes payable, current

15,871

Deferred gain from Reverse Termination Fee

98,000

Other liabilities, current

2,188

225

Total current liabilities

130,862

49,153

Deferred revenue, non-current

1,531

1,951

Operating lease liabilities, non-current

39,863

41,964

Total liabilities

172,256

93,068

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 154,318 shares and 153,119 shares at June 30, 2020 and December 31, 2019, respectively

154

153

Additional paid-in capital

1,129,091

1,120,999

Accumulated other comprehensive income

243

5

Accumulated deficit

(1,088,096)

(1,066,240)

Total stockholders’ equity

41,392

54,917

Total liabilities and stockholders’ equity

$

213,648

$

147,985

See accompanying notes to the condensed consolidated financial statements.

4


Table of Contents

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)

2020

2019

2020

2019

Revenue:

Product revenue

$

13,756

$

21,250

$

26,049

$

34,707

Service and other revenue

3,321

3,371

6,626

6,339

Total revenue

17,077

24,621

32,675

41,046

Cost of revenue:

Cost of product revenue

8,225

11,980

13,646

20,598

Cost of service and other revenue

2,239

3,028

4,928

5,718

Total cost of revenue

10,464

15,008

18,574

26,316

Gross profit

6,613

9,613

14,101

14,730

Operating expense:

Research and development

15,010

14,910

30,260

30,395

Sales, general and administrative

15,127

19,083

40,074

38,849

Total operating expense

30,137

33,993

70,334

69,244

Operating loss

(23,524)

(24,380)

(56,233)

(54,514)

Gain from Continuation Advances

34,000

Interest expense

(644)

(267)

(1,269)

Other income, net

438

428

676

863

Net loss

(23,086)

(24,596)

(21,824)

(54,920)

Other comprehensive income (loss):

Unrealized income on investments

213

11

238

53

Comprehensive loss

$

(22,873)

$

(24,585)

$

(21,586)

$

(54,867)

Net loss per share:

Basic and diluted net loss per share

$

(0.15)

$

(0.16)

$

(0.14)

$

(0.36)

Shares used in computing basic and diluted net loss per share

154,172

152,776

153,229

152,029

See accompanying notes to the condensed consolidated financial statements.


5


Table of Contents

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

Accumulated

Additional

Other

Total

Paid-in

Comprehensive

Accumulated

Stockholders'

(in thousands)

Common Stock

Capital

Income (Loss)

Deficit

Equity

For the three months ended June 30, 2020

Balance at March 31, 2020

153,953 

$

154 

$

1,125,229 

$

30 

$

(1,065,010)

$

60,403 

Net loss

(23,086)

(23,086)

Other comprehensive income

213 

213 

Issuance of common stock in conjunction with equity plans

365 

628 

628 

Stock-based compensation expense

3,234 

3,234 

Balance at June 30, 2020

154,318 

$

154 

$

1,129,091 

$

243 

$

(1,088,096)

$

41,392 

For the three months ended June 30, 2019

Balance at March 31, 2019

152,672 

$

153 

$

1,107,121 

$

6 

$

(1,012,430)

$

94,850 

Net loss

(24,596)

(24,596)

Other comprehensive income

11 

11 

Issuance of common stock in conjunction with equity plans

287 

1,400 

1,400 

Stock-based compensation expense

4,089 

4,089 

Balance at June 30, 2019

152,959 

$

153 

$

1,112,610 

$

17 

$

(1,037,026)

$

75,754 

For the six months ended June 30, 2020

Balance at December 31, 2019

153,119 

$

153 

$

1,120,999 

$

5 

$

(1,066,240)

$

54,917 

Net loss

(21,824)

(21,824)

Other comprehensive income

238 

238 

Adoption effect of Topic 326

(32)

(32)

Issuance of common stock in conjunction with equity plans

1,199 

1 

826 

827 

Stock-based compensation expense

7,266 

7,266 

Balance at June 30, 2020

154,318 

$

154 

$

1,129,091 

$

243 

$

(1,088,096)

$

41,392 

For the six months ended June 30, 2019

Balance at December 31, 2018

150,244 

$

150 

$

1,096,053 

$

(36)

$

(982,106)

$

114,061 

Net loss

(54,920)

(54,920)

Other comprehensive income

53 

53 

Issuance of common stock in conjunction with equity plans

2,715 

3 

8,087