10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2019

OR

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

For the transition period from            to           .

Commission File Number: 001‑38319

QUANTERIX CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	20‑8957988
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
900 Middlesex Turnpike
Billerica, MA	01821
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 301 9400

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

Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock, $0.001 par value per share	QTRX	The Nasdaq Global Market

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  ☒    No  ☐

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  ☒    No  ☐

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	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

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. ☐

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

As of October 31, 2019, the registrant had 28,014,764 shares of common stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

	Page
Special Note Regarding Forward-Looking Statements	3
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	4
Unaudited Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018	4
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	5
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2019 and 2018	6
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	7
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018	9
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk	32
Item 4. Controls and Procedures	32
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	33
Item 6. Exhibits	34
Signatures	35

2

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about our financial performance, and are subject to a number of risks, uncertainties and assumptions, including those described in this Quarterly Report on Form 10-Q and in “Part I, Item 1A, Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018 or other filings that we make with the Securities and Exchange Commission, or SEC. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, events or circumstances reflected in the forward-looking statements will be achieved or occur. You should read this Quarterly Report on Form 10-Q, and the documents that we reference herein and have filed with the SEC, with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to new information, actual results or to changes in our expectations, except as required by law.

Unless the context otherwise requires, the terms “Quanterix,” the “Company,” “we,” “us” and “our” in this Quarterly Report on Form 10-Q refer to Quanterix Corporation and its subsidiaries. “Quanterix,” “Simoa,” “Simoa HD-1,” “SR-X,” “HD-1 Analyzer,” “SP-X” and our logo are our trademarks. All other service marks, trademarks and trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Quanterix Corporation

Condensed Consolidated Balance Sheets

(amounts in thousands, except share and per share data)

	(Unaudited)
	September 30, 2019		December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	113,327	$	44,429
Accounts receivable (less reserve for doubtful accounts of $98 and $36 as of September 30, 2019 and December 31, 2018, respectively; including $321 and $48 from related parties as of September 30, 2019 and December 31, 2018, respectively)		11,914		6,792
Inventory		11,161		5,945
Prepaid expenses and other current assets		2,297		2,330
Total current assets		138,699		59,496
Restricted cash		1,026		1,000
Property and equipment, net		12,064		2,923
Intangible assets, net		14,221		2,348
Goodwill		8,961		1,308
Other non-current assets		574		536
Total assets	$	175,545	$	67,611
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable (including $0 and $36 to related parties as of September 30, 2019 and December 31, 2018, respectively)	$	4,245	$	5,110
Accrued compensation and benefits		5,251		4,449
Other accrued expenses (including $258 and $226 to related parties as of September 30, 2019 and December 31, 2018, respectively)		3,539		3,129
Deferred revenue (including $62 and $33 with related parties as of September 30, 2019 and December 31, 2018, respectively)		4,909		5,437
Current portion of long term debt		75		—
Other current liabilities		204		—
Total current liabilities		18,223		18,125
Deferred revenue, net of current portion		357		520
Long term debt, net of current portion		7,565		7,623
Other non-current liabilities		13,165		278
Total liabilities		39,310		26,546
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value:
Authorized—120,000,000 shares as of September 30, 2019 and December 31, 2018; issued and outstanding — 27,967,713 and 22,369,036 shares as of September 30, 2019 and December 31, 2018, respectively		28		22
Additional paid-in capital		342,628		216,931
Accumulated other comprehensive loss		(1,135)		—
Accumulated deficit		(205,286)		(175,888)
Total stockholders’ equity		136,235		41,065
Total liabilities and stockholders’ equity	$	175,545	$	67,611

See accompanying notes

4

Quanterix Corporation

Condensed Consolidated Statements of Operations

(amounts in thousands, except share and per share data)

(Unaudited)

		Three Months Ended September 30,			Nine Months Ended September 30,
	2019		2018		2019		2018
Product revenue (including related party activity of $321 and $43 for the three months ended September 30, 2019 and 2018, respectively, and $526 and $179 for the nine months ended September 30, 2019 and 2018, respectively)	$	10,737	$	5,962	$	29,059	$	15,907
Service and other revenue (including related party activity of $31 and $34 for the three months ended September 30, 2019 and 2018, respectively, and $73 and $100 for the nine months ended September 30, 2019 and 2018, respectively)		4,207		3,017		11,757		8,699
Collaboration and license revenue (including related party activity of $0 and $1,612 for the three months ended September 30, 2019 and 2018, respectively, and $0 and $2,149 for the nine months ended September 30, 2019 and 2018, respectively)		—		1,612		—		2,149
Total revenue		14,944		10,591		40,816		26,755
Costs of goods sold:
Cost of product revenue (including related party activity of $80 and $36 for the three months ended September 30, 2019 and 2018, respectively, and $150 and $158 for the nine months ended September 30, 2019 and 2018, respectively; including stock compensation of $31 and $20 for the three months ended September 30, 2019 and 2018, respectively, and $75 and $49 for the nine months ended September 30, 2019 and 2018, respectively)		5,513		3,277		14,217		8,995
Cost of services and other revenue (including stock compensation of $58 and $38 for the three months ended September 30, 2019 and 2018, respectively, and $175 and $121 for the nine months ended September 30, 2019 and 2018, respectively)		2,398		1,719		6,630		5,021
Total costs of goods sold and services		7,911		4,996		20,847		14,016
Gross profit		7,033		5,595		19,969		12,739
Operating expense:
Research and development (including stock compensation of $175 and $152 for the three months ended September 30, 2019 and 2018, respectively, and $523 and $361 for the nine months ended September 30, 2019 and 2018, respectively)		3,924		4,411		11,792		11,759
Selling, general and administrative (including stock compensation of $1,564 and $1,657 for the three months ended September 30, 2019 and 2018, respectively, and $3,940 and $2,862 for the nine months ended September 30, 2019 and 2018, respectively)		13,352		8,846		38,293		23,117
Total operating expenses		17,276		13,257		50,085		34,876
Loss from operations		(10,243)		(7,662)		(30,116)		(22,137)
Interest income (expense), net		282		30		346		21
Other income (expense), net		(34)		(25)		(149)		(86)
Loss before income tax		(9,995)		(7,657)		(29,919)		(22,202)
Income tax benefit		(125)		—		(81)		—
Net loss	$	(9,870)	$	(7,657)	$	(29,838)	$	(22,202)
Net loss per share, basic and diluted	$	(0.37)	$	(0.35)	$	(1.24)	$	(1.01)
Weighted-average common shares outstanding, basic and diluted		26,627,831		22,070,786		24,102,887		21,917,823

See accompanying notes

5

Quanterix Corporation

Condensed Consolidated Statements of Comprehensive Loss

(amounts in thousands)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net loss	$	(9,870)	$	(7,657)	$	(29,838)	$	(22,202)
Other comprehensive loss:
Cumulative translation adjustment		(1,135)		-		(1,135)		-
Total other comprehensive loss		(1,135)		-		(1,135)		-
Comprehensive loss	$	(11,005)	$	(7,657)	$	(30,973)	$	(22,202)

6

Quanterix Corporation

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2019		2018
Operating activities
Net loss	$	(29,838)	$	(22,202)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		2,188		1,020
Stock-based compensation expense		4,713		3,393
Non-cash interest expense		68		133
Loss on disposal of fixed assets		24		—
Change in fair value of preferred stock warrants		—		1
Changes in operating assets and liabilities:
Accounts receivable		(4,474)		1,160
Prepaid expenses and other assets		(104)		(753)
Inventory		(3,943)		(976)
Other non-current assets		(21)		(33)
Accounts payable		(835)		152
Accrued compensation and benefits, other accrued expenses and other current liabilities		573		(55)
Contract acquisition costs		533		—
Other non-current liabilities		10,068		—
Deferred revenue		(604)		(2,453)
Net cash used in operating activities		(21,652)		(20,613)
Investing activities
Purchases of property and equipment		(10,303)		(1,397)
Purchase of investments		—		(150)
Acquisitions, net of cash acquired		(14,529)		(3,800)
Net cash used in investing activities		(24,832)		(5,347)
Financing activities
Proceeds from sale of common stock, net of issuance costs		—		(53)
Proceeds from stock options exercised		2,176		684
Net proceeds from at-the-market offering		48,019		—
Net proceeds from underwritten public offering		64,529		—
Proceeds from ESPP purchase		799		—
Payments on notes payable		(50)		(1,930)
Net cash provided by (used in) financing activities		115,473		(1,299)
Net increase (decrease) in cash and cash equivalents		68,989		(27,259)
Effect of foreign currency exchange rate on cash		(65)		—
Cash, restricted cash, and cash equivalents at beginning of period		45,429		79,682
Cash, restricted cash, and cash equivalents at end of period	$	114,353	$	52,423
Supplemental cash flow information
Cash paid for interest	$	478	$	506
Purchases of property and equipment included in accounts payable	$	45	$	—
191,152 shares of common stock issued in connection with the acquisition of Uman	$	5,467	$	—
Purchases of property and equipment included in other non-current liabilities	$	7,750	$	—
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	113,327	$	51,423
Restricted cash	$	1,026	$	1,000
Total cash, cash equivalents, and restricted cash	$	114,353	$	52,423

See accompanying notes

7

8

Quanterix Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(amounts in thousands, except share data)

(Unaudited)

						Accumulated
				Additional		other				Total
	Common	Common		paid-in		comprehensive		Accumulated		stockholders’
	stock shares	stock value		capital		loss		deficit		equity
Balance at June 30, 2019	24,894,019	$	25	$	270,136	$	—	$	(195,416)	$	74,745
Exercise of common stock warrants	45,690		—		—		—		—		—
Exercise of common stock options and vesting of restricted stock	87,476		—		265		—		—		265
Sale of common stock in underwritten public offering, net	2,732,673		3		64,526		—		—		64,529
Issuance of shares for acquisition of Uman	191,152		—		5,467		—		—		5,467
ESPP stock purchase	16,703		—		406		—		—		406
Stock-based compensation expense	—		—		1,828		—		—		1,828
Cumulative transition adjustment	—		—		—		(1,135)		—		(1,135)
Net loss	—		—		—		—		(9,870)		(9,870)
Balance at September 30, 2019	27,967,713	$	28	$	342,628	$	(1,135)	$	(205,286)	$	136,235
						Accumulated
				Additional		other				Total
	Common	Common		paid-in		comprehensive		Accumulated		stockholders’
	stock shares	stock value		capital		loss		deficit		equity
Balance at June 30, 2018	21,980,681	$	22	$	212,050	$	—	$	(158,897)	$	53,175
Exercise of common stock options and vesting of restricted stock	170,729		—		303		—		—		303
Stock-based compensation expense	—		—		1,867		—		—		1,867
Net loss	—		—		—		—		(7,657)		(7,657)
Balance at September 30, 2018	22,151,410	$	22	$	214,220	$	—	$	(166,554)	$	47,688
						Accumulated
				Additional		other				Total
	Common	Common		paid-in		comprehensive		Accumulated		stockholders’
	stock shares	stock value		capital		loss		deficit		equity
Balance at December 31, 2018	22,369,036	$	22	$	216,931	$	—	$	(175,888)	$	41,065
Cumulative-effect adjustment for the adoption of ASC 606	—		—		—		—		440		440
Exercise of common stock warrants	45,690		—		—		—		—		—
Exercise of common stock options and vesting of restricted stock	406,246		1		2,175		—		—		2,176
Sale of common stock in at-the-market offering, net	2,186,163		2		48,017		—		—		48,019
Sale of common stock in underwritten public offering, net	2,732,673		3		64,526		—		—		64,529
Issuance of shares for acquisition of Uman	191,152		—		5,467		—		—		5,467
ESPP stock purchase	36,753		—		799		—		—		799
Stock-based compensation expense	—		—		4,713		—		—		4,713
Cumulative transition adjustment	—		—		—		(1,135)		—		(1,135)
Net loss	—		—		—		—		(29,838)		(29,838)
Balance at September 30, 2019	27,967,713	$	28	$	342,628	$	(1,135)	$	(205,286)	$	136,235
						Accumulated
				Additional		other				Total
	Common	Common		paid-in		comprehensive		Accumulated		stockholders’
	stock shares	stock value		capital		loss		deficit		equity
Balance at December 31, 2017	21,707,041	$	22	$	210,196	$	—	$	(144,352)	$	65,866
Exercise of common stock warrants	16,718		—		—		—		—		—
Exercise of common stock options and vesting of restricted stock	427,651		—		684		—		—		684
Sale of common stock in at-the-market offering, net	—		—		(53)		—		—		(53)
Stock-based compensation expense	—		—		3,393		—		—		3,393
Net loss	—		—		—		—		(22,202)		(22,202)
Balance at September 30, 2018	22,151,410	$	22	$	214,220	$	—	$	(166,554)	$	47,688

See accompanying notes

9

Quanterix Corporation

Notes to condensed consolidated financial statements

(Unaudited)

1. Organization and operations

Quanterix Corporation (Nasdaq: QTRX) (the Company) is a life sciences company that has developed next generation, ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics. The Company's platforms are based on its proprietary digital "Simoa" detection technology. The Company's Simoa bead-based and planar array platforms enable customers to reliably detect protein biomarkers in extremely low concentrations in blood, serum and other fluids that, in many cases, are undetectable using conventional, analog immunoassay technologies, and also allow researchers to define and validate the function of novel protein biomarkers that are only present in very low concentrations and have been discovered using technologies such as mass spectrometry. These capabilities provide the Company's customers with insight into the role of protein biomarkers in human health that has not been possible with other existing technologies and enable researchers to unlock unique insights into the continuum between health and disease. The Company is currently focusing on protein detection, but is also developing its bead-based technology to detect nucleic acids in biological samples.

The Company launched its first immunoassay platform, the Simoa HD-1, in 2014.  The HD-1 is a fully automated immunoassay bead-based platform with multiplexing and custom assay capability, and related assay test kits and consumable materials. The Company launched a second bead-based immunoassay platform (SR-X) in the fourth quarter of 2017 with a more compact footprint than the Simoa HD-1 and less automation designed for lower volume requirements while still allowing multiplexing and custom assay capability. The Company initiated an early-access program for its third instrument (SP-X) on the new Simoa planar array platform in January 2019, with the full commercial launch commencing in April 2019. In July 2019, the Company launched the Simoa HD-X, an upgraded version of the Simoa HD-1 which replaces the HD-1. The HD-X has been designed to deliver significant productivity and operational efficiency improvements, as well as greater user flexibility.  The Company began shipping and installing HD-X instruments at customer locations in the third quarter of 2019, ahead of its original fourth quarter expectation.  The Company also performs research services on behalf of customers to apply the Simoa technology to specific customer needs. The Company's customers are primarily in the research use only market, which includes academic and governmental research institutions, the research and development laboratories of pharmaceutical manufacturers, contract research organizations, and specialty research laboratories.

The Company acquired Aushon Biosystems, Inc. (Aushon) in January 2018. With the acquisition of Aushon, the Company acquired a CLIA certified laboratory, as well as Aushon's proprietary sensitive planar array detection technology. Leveraging its proprietary sophisticated Simoa image analysis and data analysis algorithms, the Company further refined this planar array technology to develop the SP-X instrument to provide the same Simoa sensitivity found in its bead-based platform.

The Company acquired of UmanDiagnostics AB, a Swedish company located in Umea, Sweden (Uman), in August 2019. The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019.  Uman supplies neurofilament light (Nf-L) antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions. With the acquisition of Uman, the Company has secured a long-term source of supply for a critical technology.

At-the-market offering

On March 19, 2019, the Company entered into a Sales Agreement (the Sales Agreement) with Cowen and Company, LLC (Cowen) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $50.0 million through Cowen as its sales agent. 

On June 5, 2019, the Company issued approximately 2.2 million shares of common stock at an average stock price of $22.73 per share pursuant to the terms of the Sales Agreement. The at-the-market offering resulted in gross proceeds of $49.7 million. The Company incurred $1.7 million in issuance costs associated with the at-the-market offering, resulting in net proceeds to the Company of $48.0 million.

Underwritten public offering

On August 8, 2019, the Company entered into an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters, relating to an underwritten public offering of approximately 2.7 million shares of the Company’s common stock, par value $0.001 per share. The underwritten public offering resulted in gross proceeds of $69.0 million. The Company incurred $4.5 million in issuance costs associated with the underwritten public offering, resulting in net proceeds to the Company of $64.5 million.

Basis of presentation

The interim condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements reflect, in the opinion of our management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, comprehensive loss and cash flows for each period presented in accordance with United States generally accepted accounting principles (U.S. GAAP)

10

for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10‑K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on March 18, 2019 (the 2018 Annual Report on Form 10-K). The consolidated financial information as of December 31, 2018 has been derived from the audited 2018 consolidated financial statements included in the Company’s 2018 Annual Report on Form 10‑K.

2. Significant accounting policies

Principles of consolidation

The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of Quanterix Corporation and its wholly‑owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. In making those estimates and assumptions, the Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. The Company’s significant estimates included in the preparation of the consolidated financial statements are related to revenue recognition, fair value of equity instruments and notes receivable, fair value of assets acquired and liabilities assumed in acquisitions, valuation allowances recorded against deferred tax assets, and stock‑based compensation. Actual results could differ from those estimates.

Foreign Currency

The Company translates assets and liabilities of its foreign subsidiaries at rates in effect at the end of the reporting period. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive loss.

Income taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, Income Taxes (ASC 740). When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of September 30, 2019 the Company did not have any significant uncertain tax positions.

During the three months ended September 30, 2019, the Company acquired Uman. The Company analyzed the transaction from an income tax perspective and adjusted the deferred tax assets and liabilities related to the Uman acquisition. Of the total goodwill recorded, less than $0.1 million is amortizable related to the historical tax basis that Uman had prior to the acquisition.

Business combinations

Under the acquisition method of accounting, the Company allocates the fair value of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions determined by management. The excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. These valuations require significant estimates and assumptions, especially with respect to intangible assets.

The Company typically uses the discounted cash flow method to value acquired intangible assets. This method requires significant management judgment to forecast future operating results and establish residual growth rates and discount factors. The estimates used to value and amortize intangible assets are consistent with the plans and estimates that are used to manage the business and are based on available historical information and industry estimates and averages. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, the Company could experience impairment charges. In addition, the Company has estimated the economic lives of certain acquired assets and these lives are used to calculate

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depreciation and amortization expense. If estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.

Restricted cash

Restricted cash primarily represents collateral for a letter of credit issued as security for the lease for the Company’s new headquarters. The restricted cash is long term in nature as the Company will not have access to the funds until more than one year from September 30, 2019.

Recent accounting pronouncements

The Company is considered to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of this extended transition period and, as a result, the Company will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies so long as the Company remains an emerging growth company.

On January 1, 2019, the Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), using the modified retrospective method.  Under ASC 606, revenue is recognized upon the transfer of control of goods or services to customers and reflects the amount of consideration to which an entity expects to be entitled in exchange for those goods or services.  The adoption of ASC 606 has been applied to customer contracts that were not completed as of January 1, 2019, and did not materially change the pattern of revenue recognition for its current customer contracts.  The Company's consolidated financial statements for the prior-year period have not been revised and are reflective of the revenue recognition requirements which were in effect for that period.

The Company recorded an adjustment to the accumulated deficit of $0.4 million as of January 1, 2019 for the cumulative effect primarily related to the deferral of sales commissions.

In accordance with the reporting requirements of ASC 606, the disclosure of the impact on the Company's consolidated balance sheet and statement of operations, as a result of adopting the provisions of ASC 606, was as follows (in thousands):

											Prior to
											adoption of
	As				Adjusted under		As reported				ASC 606
	reported				ASC 606		September 30,				September 30,
	December 31, 2018		Adjustments		January 1, 2019		2019		Adjustments		2019
Assets:
Accounts receivable	$	6,792	$	47	$	6,839	$	11,914	$	—	$	11,914
Prepaid expenses and other current assets		2,330		288		2,618		2,297		290		2,007
Other non-current assets		536		19		555		574		18		592
Liabilities:
Deferred revenue		5,437		43		5,394		4,909		175		5,084
Deferred revenue, net of current portion		520		43		477		357		9		366
Stockholders’ equity:
Accumulated deficit	$	(175,888)	$	(440)	$	(175,448)	$	(205,286)	$	(492)	$	(205,778)

	For the Three Months Ended September 30, 2019						For the Nine Months Ended September 30, 2019
					Under ASC						Under ASC
	Under ASC 606		Adjustment		605		Under ASC 606		Adjustment		605
Product revenue	$	10,737	$	(332)	$	10,405	$	29,059	$	(381)	$	28,678
Service revenue		4,207		97		4,304		11,757		228		11,985
COGS		7,911		3		7,914		20,847		6		20,853
Gross profit		7,033		(238)		6,795		19,969		(159)		19,810
Selling general and administrative expenses		13,352		(55)		13,297		38,293		4		38,297
Net loss	$	(9,870)	$	(183)	$	(10,053)	$	(29,838)	$	(163)	$	(30,001)

The adoption of ASC 606 is discussed in further detail in Note 3.

In January of 2019, the Company adopted accounting standards update (ASU) 2016-01, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. For equity investments without readily determinable fair values that do not qualify for the practical expedient to estimate fair value using the net asset value per share or its equivalent, the Company has elected to measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. This election is made for each investment separately and is reassessed at each reporting period as to whether the investment continues to qualify for this election. Additionally, at each reporting period, the

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Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. The adoption of this standard did not have a material effect.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842):Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-02), which establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease.  Under ASU 2016-02, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short term leases) at the commencement date. ASU 2016-02 is effective for the Company for the year ending December 31, 2020. Early adoption is permitted.  In 2018, the FASB modified ASU 2016-02 by issuing ASU 2018-01 and ASU 2018-11, which collectively added two practical expedients, provided a second modified retrospective transition method which does not require retrospective adjustment of prior periods, and provided certain narrow scope improvements to ASU 2016-02. The Company is currently evaluating the expected impact of ASU 2016-2 on its financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments  — Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The standard is effective for the Company beginning in the first quarter of 2020, with early adoption permitted. The Company is currently evaluating the expected impact of ASU 2016-13 on its financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect adoption of this ASU to be material to its financial statements.

There have been no other material changes to the significant accounting policies and recent accounting pronouncements previously disclosed in the 2018 Annual Report on Form 10‑K.

3. Revenue recognition

The Company recognizes revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects consideration that the Company expects to be entitled to receive in exchange for these goods and services, incentives and taxes collected from customers, that are subsequently remitted to governmental authorities.

The Company adopted ASC 606 on January 1, 2019, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2019 reflect the application of ASC 606 guidance, while the reported results for 2018 were prepared under ASC 605, Revenue Recognition.  

Customers

The Company’s customers primarily consist of entities engaged in the life sciences research market that pursue the discovery and development of new drugs for a variety of neurologic, cardiovascular, oncologic and other protein biomarkers associated with diseases.  The Company’s customer base exceeds 200 customers and includes several of the largest biopharmaceutical companies, academic research organizations and distributors who serve certain geographic markets.

Product revenue

The Company’s products are composed of analyzer instruments, assay kits and other consumables such as reagents.  Products are sold directly to biopharmaceutical and academic research organizations or are sold through distributors in EMEA and Asia Pacific regions.  The sales of instruments are generally accompanied by an initial year of implied service-type warranties and may be bundled with assays and other consumables and may also include other items such as training and installation of the instrument and/or an extended service warranty. Revenues from the sale of products are recognized at a point in time when the Company transfers control of the product to the customer, which is upon installation for instruments sold to direct customers, and based upon shipping terms for assay kits and other consumables.  Revenue for instruments sold to distributors is generally recognized based upon shipping terms (either upon shipment or delivery).

Service and other revenue

Service revenues are composed of contract research services, initial implied one-year service-type warranties, extended services contracts and other services such as training.  Contract research services are provided through the Company’s Accelerator Laboratory and generally consist of fixed fee contracts.  Revenues from contract research services are recognized at a point in time when the Company completes and delivers its research report on each

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individually completed study, or over time if the contractual provisions allow for the collection of transaction consideration for costs incurred plus a reasonable margin through the period of performance of the services.  Revenues from service-type warranties are recognized ratably over the contract service period.  Revenues from other services are immaterial.

Collaboration and license revenue

The Company may enter into agreements to license the intellectual property and know-how associated with its instruments in exchange for license fees and future royalties (as described below).  The license agreements provide the licensee with a right to use the intellectual property with the license fee revenues recognized at a point in time as the underlying license is considered functional intellectual property.  The Company has not recognized any revenues from royalties.

Payment terms

The Company’s payment terms vary by the type and location of customer and the products or services offered. Payment from customers is generally required in a term ranging from 30 to 45 days from date of shipment or satisfaction of the performance obligation with no discounts for early payment.  The Company does not provide extended payment terms or financing arrangements to its customers.

Disaggregated revenue

When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. The following tables disaggregate the Company's revenue from contracts with customers by revenue type:

	Three Months Ended								Nine Months Ended
	September 30, 2019								September 30, 2019
(in thousands)	NA		EMEA		Asia Pacific		Total		NA		EMEA		Asia Pacific		Total
Product revenues
Instruments	$	1,795	$	1,387	$	957	$	4,139	$	4,350	$	3,425	$	2,482	$	10,257
Consumable and other products		3,707		2,557		334		6,598		10,982		6,739		1,081		18,802
Totals		5,502		3,944		1,291		10,737		15,332		10,164		3,563	$	29,059
Service and other revenues
Service-type warranties		806		293		54		1,153		2,309		827		119	$	3,255
Research services		2,412		87		198		2,697		6,687		310		411	$	7,408
Other services		195		159		3		357		597		475		22	$	1,094
Totals	$	3,413	$	539	$	255	$	4,207	$	9,593	$	1,612	$	552	$	11,757

The Company’s contracts with customers may include promises to transfer multiple products and services to a customer.  The Company combines any performance obligations that are immaterial with one or more other performance obligations that are material to the contract. For arrangements with multiple performance obligations, the Company allocates the contract transaction price, including discounts, to each performance obligation based on its relative standalone selling price.  Judgment is required to determine the standalone selling price for each distinct performance obligation.  The Company determines standalone selling prices based on prices charged to customers in observable transactions, and uses a range of amounts to estimate standalone selling prices for each performance obligation.  The Company may have more than one range of standalone selling price for certain products and services based on the pricing for different customer classes.

Variable consideration in the Company’s contracts primarily relates to (i) sales- and usage-based royalties related to the license of intellectual property in collaboration and license contracts and (ii) certain non-fixed fee research services contracts.  ASC 606 provides for an exception to estimating the variable consideration for sales- and usage-based royalties related to the license of intellectual property, such that the sales- or usage-based royalty will be recognized in the period the underlying transaction occurs.  The Company has not recorded any sales- or usage-based royalty revenue for the three and nine months ended September 30, 2019. 

The aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied or are partially satisfied as of September 30, 2019 is $5.3 million. Of the performance obligations not yet satisfied or are partially satisfied, $4.9 million is expected to be recognized as revenue in the next 12 months, with the remainder to be recognized within the 24 months thereafter. The $5.3 million principally consists of $2.8 million billed for undelivered services related to initial and extended service-type warranties and research services, as well as $1.7 million related to undelivered licenses of intellectual property for a diagnostics company (see Note 12). 

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Changes in deferred revenue from contracts with customers were as follows (in thousands):

	Nine Months Ended September 30, 2019
Balance at December 31, 2018	$	5,957
606 adoption adjustment		(86)
Deferral of revenue		2,650
Recognition of deferred revenue		(3,255)
Balance at September 30, 2019	$	5,266

Costs to obtain a contract

The Company’s sales commissions are generally based on revenues of the Company.  The Company has determined that certain commissions paid under its sales incentive programs meet the requirements to be capitalized as they are incremental and would not have occurred absent a customer contract. The change in the balance of costs to obtain a contract are as follows (in thousands):

	Nine Months Ended September 30, 2019
Balance at December 31, 2018	$	—
606 adoption adjustment		307
Deferral of costs to obtain a contract		636
Recognition of costs to obtain a contract		(635)
Balance at September 30, 2019	$	308

The Company has classified the balance of capitalized costs to obtain a contract as a component of prepaid expenses and other current assets as of January 1, 2019 and September 30, 2019 and classifies the expense as a component of cost of goods sold and selling, general and administrative expense over the estimated life of the contract. The Company considers potential impairment in these amounts each period.

ASC 606 provides entities with certain practical expedients and accounting policy elections to minimize the cost and burden of adoption.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.

The Company will exclude from its transaction price any amounts collected from customers related to sales and other similar taxes.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. The Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of January 1, 2019 or September 30, 2019.

The Company has elected to account for the shipping and handling as an activity to fulfill the promise to transfer the product, and therefore will not evaluate whether shipping and handling activities are promised services to its customers.

4. Net loss per share

Basic net loss per common share is calculated by dividing the net loss by the weighted‑average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted‑average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury‑stock and if‑converted methods. For purposes of the diluted net loss per share calculation, unvested restricted common stock, restricted stock units, stock options, and warrants are considered to be potentially dilutive securities, but are excluded from the calculation of diluted net loss per share because their effect would be anti‑dilutive and therefore basic and diluted net loss per share were the same for all periods presented.

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because to do so would be anti‑dilutive (in common stock equivalent shares):

	September 30,
	2019	2018
Unvested restricted common stock and restricted stock units	422,336	376,949
Outstanding stock options	2,662,334	2,565,895
Outstanding warrants	10,000	76,041
Total	3,094,670	3,018,885

As of September 30, 2019 and 2018, the Company had an obligation to issue warrants to purchase an additional 93,341 shares of common stock to a vendor if a contract is terminated prior to a minimum purchase commitment being

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met. No amounts are presented in the table above for this obligation to issue a warrant as the issuance of the warrant is not considered probable.

5. Fair value of financial instruments

ASC Topic 820, Fair Value Measurement (ASC 820), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three‑tier fair value hierarchy that distinguishes between the following:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

Fair value measurements as of September 30, 2019 are as follows (in thousands):

			Quoted prices				Significant
			in active		Significantother		unobservable
			markets		observable		inputs
Description	Total		(Level 1)		inputs(Level 2)		(Level 3)
Financial assets
Cash equivalents	$	101,255	$	101,255	$	—	$	—
Note receivable		150		—		—		150
	$	101,405	$	101,255	$	—	$	150

Fair value measurements as of December 31, 2018 are as follows (in thousands):

			Quoted prices				Significant
			in active		Significantother		unobservable
			markets		observable		inputs
Description	Total		(Level 1)		inputs(Level 2)		(Level 3)
Financial assets
Cash equivalents	$	42,608	$	42,608		—	$	—
Note receivable		150		—		—		150
	$	42,758	$	42,608		—	$	150

6. Inventory

Inventory consists of the following (in thousands):

	September 30, 2019		December 31, 2018
Raw materials	$	5,419	$	1,546
Work in process		2,402		2,331
Finished goods		3,340		2,068
Total	$	11,161	$	5,945

Inventory comprises commercial instruments, assays, and the materials required to manufacture assays.

7. Investments

During the third quarter of 2016, the Company purchased a minority interest in preferred stock in a privately held company for $0.3 million.  During the third quarter of 2018, the Company was issued a convertible note by a privately held company having a principal amount of $0.2 million.

The preferred stock investment is recorded on a cost basis in other non-current assets on the accompanying balance sheets as the Company does not have a controlling interest, does not have the ability to exercise significant influence over the privately held company, and the fair value of the equity investment is not readily determinable.  The Company performs an impairment analysis at each reporting period to determine if there is any readily available fair value information that would indicate an impairment. The Company has determined there was no impairment during the nine months ended September 30, 2019 or in any prior period.

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The convertible note is held as an available-for-sale investment, which is carried at fair market value, with the unrealized gains and losses included in the determination of comprehensive income and reporting stockholders equity. When determining the estimated fair value of the convertible notes, the Company used a commonly accepted valuation methodology.

Equity investments that do not result in consolidation and are not accounted for under the equity method are measured at fair value, with any changes in fair value recognized in net income. For any such investments that do not have readily determinable fair values, the Company elects the measurement alternative to measure the investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

8. Other accrued expenses and other non-current liabilities

Other accrued expenses consist of the following (in thousands):

	September 30, 2019		December 31, 2018
Accrued inventory	$	485	$	599
Accrued royalties		493		323
Accrued professional services		878		723
Accrued development costs		735		795
Accrued other		948		689
Total accrued expenses	$	3,539	$	3,129

Other non-current liabilities consist of the following (in thousands):

	September 30, 2019		December 31, 2018
Leasehold obligation incentive		7,750		—
Deferred Rent		2,592		272
Deferred tax liabilities		2,818		—
Other		5		6
Total non-current liabilities	$	13,165	$	278

9. Warrants, stock-based compensation, stock options, restricted stock and restricted stock units

Warrants

On July  2, 2019, 66,041 warrants were exercised by a holder on a net, non-cash, basis. Per terms of the warrant agreement, the Company issued 45,690 shares of common stock with a value equal to the holder’s gain. The Company issued no warrants during the nine months ended September 30, 2019, and had 10,000 warrants outstanding as of September 30, 2019.

Stock-based compensation

Stock‑based compensation expense for all stock awards consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of product revenue	$	31	$	20	$	75	$	49
Cost of service and other revenue		58		38		175		121
Research and development		175		152		523		361
Selling, general, and administrative		1,564		1,657		3,940		2,862
Total	$	1,828	$	1,867	$	4,713	$	3,393

As of September 30, 2019, under the 2007 Stock Option and Grant Plan (the 2007 Plan), options to purchase 1,324,255 shares of common stock were outstanding and no shares of common stock were available for future awards. In connection with the completion of the IPO, the Company terminated the 2007 Plan.

In December 2017, the Company adopted the 2017 Employee, Director and Consultant Equity Incentive Plan (the 2017 Plan), under which it may grant incentive stock options, non‑qualified stock options, restricted stock, and other stock‑based awards. Upon its adoption, the 2017 Plan allowed for the issuance of up to 1,042,314 shares of common stock plus up to 2,490,290 shares of common stock represented by awards granted under the 2007 Plan that are forfeited, expire or are cancelled without delivery of shares or which result in the forfeiture of shares of common stock back to the Company on or after the date the 2017 Plan became effective. The 2017 Plan contains an “evergreen” provision, which allows for an annual increase in the number of shares of common stock available for issuance under the 2017 Plan on the first day of each fiscal year during the period beginning in fiscal year 2019 and ending in fiscal year 2027. The annual increase in the number of shares shall be equal to the lowest of: 4% of the number of shares of common stock outstanding as of such date; and an amount determined by the Company’s Board of Directors or Compensation Committee. The number of shares available for grant under the 2017 Plan increased by 894,761 on January 1, 2019 due to this provision. As of September 30, 2019, under the 2017 Plan, options to purchase 1,338,079 shares of common stock

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were outstanding and unvested restricted stock units for 422,336 shares of common stock were outstanding. As of September 30, 2019,  207,589 shares were available for grant under the 2017 Plan.

In December 2017, the Company adopted the 2017 Employee Stock Purchase Plan (the 2017 ESPP). The 2017 ESPP contains an “evergreen” provision, which allows for an increase on the first day of each fiscal year beginning with fiscal year 2018. The increase in the number of shares shall be equal to the lowest of: 1% of the number of shares of common stock outstanding on the last day of the immediately preceding fiscal year or an amount determined by the Company’s Board of Directors or Compensation Committee. The number of shares available for grant under the 2017 ESPP increased by 223,690 on January 1, 2019 due to this provision. As of September 30, 2019, the 2017 ESPP allowed for the issuance of up to 649,223 shares of common stock and 612,470 shares were available for issuance under the 2017 ESPP.

Stock options

Under the 2007 Plan and the 2017 Plan, stock options may not be granted with exercise prices of less than fair market value on the date of the grant. Options generally vest ratably over a four‑year period with 25% vesting on the first anniversary and the remaining 75% vesting ratably on a monthly basis over the remaining three years. These options expire ten years after the grant date. Activity under the 2007 Plan and the 2017 Plan was as follows:

		Weighted-average		Remainingcontractual	Aggregateintrinsicvalue
	Options	exerciseprice		life(in years)	(in thousands)
Outstanding at December 31, 2018	2,476,911	$	9.65	7.73	$	22,108
Granted	818,918	$	24.25
Exercised	(322,250)	$	6.74
Cancelled	(311,245)	$	13.45
Outstanding at September 30, 2019	2,662,334	$	14.04	7.72	$	23,476
Vested and expected to vest at September 30, 2019	2,662,334	$	14.04	7.72	$	23,476
Exercisable at September 30, 2019	1,234,533	$	7.91	6.40	$	17,394

Using the Black-Scholes option pricing model, the weighted-average fair value of options granted to employees and directors during the nine months ended September 30, 2019 and 2018 was $8.85 and $7.32 per share, respectively. The expense related to awards granted to employees was  $1.0 million and $2.7 million for the three and nine months ended September 30, 2019, respectively.  The expense related to awards granted to employees was $0.7 million and $1.8 million for the three and nine months ended September 30, 2018, respectively. The intrinsic value of stock options exercised was $1.3 million and $5.5 million for the three and nine months ended September 30, 2019, respectively. The intrinsic value of stock options exercised was $0.6 million and $3.4 million for the three and nine months ended September 30, 2018, respectively. Activity related to non-employee awards was not material to the three and nine months ended September 30, 2019 and 2018.

Restricted stock

Restricted common stock awards represent shares of common stock issued to employees subject to forfeiture if the vesting conditions are not satisfied. In December 2014, the Company issued 78,912 shares of restricted common stock to a director of the Company under the 2007 Plan. Under the terms of the agreement, shares of common stock issued are subject to a four-year vesting schedule. Vesting occurs periodically at specified time intervals and specified percentages. In January 2015, the Company issued 781,060 shares of restricted common stock to an executive of the Company under the 2007 Plan. The majority of these shares were issued subject to a four-year vesting schedule with 25% vesting on the first anniversary and the remaining vesting 75% ratably on a monthly basis over the remaining three years, while another portion was issued subject to performance based vesting. The vesting of performance based awards is dependent upon achievement of specified financial targets of the Company. The majority of the performance criteria were achieved during the years ended December 31, 2016 and 2015 and the remaining unvested awards with performance conditions are not material. No restricted common stock awards were granted or vested during the nine months ended September 30, 2019.

Restricted stock units

Restricted stock units (RSUs) represent the right to receive shares of common stock upon meeting specified vesting requirements. In the nine months ended September 30, 2019, the Company issued 227,653 RSUs to employees of the Company under the 2017 Plan. Under the terms of the agreements, 135,058 of the RSUs issued are subject to a four-year vesting schedule with 25% vesting on the first anniversary of the grant date and the remaining vesting 75% ratably on a monthly basis over the remaining three years; 15,890 of the RSUs vest on December 31, 2019; 24,233 of the RSUs vest in equal amounts annually over four years;  10,194 of the RSUs vested with respect to 5/48th of the shares on the date of grant with the rest vesting ratably over the remaining 43 months; 31,732 of the RSUs vested with respect to 1,983 shares vesting on the grant date with the rest vesting ratably over the remaining 45 months; 4,540 of the RSUs vest

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equally over three years on the anniversary of the vesting start date; 3000 of the RSUs vest upon the one year anniversary of the grant date; and 3,006 vested immediately upon grant. A summary of RSU activity is as follows:

		Weighted-average
		grant date
		fair value
	Shares	per share
Unvested RSUs as of December 31, 2018	321,662	$	15.84
Granted	227,653	$	24.21
Vested	(83,996)	$	16.65
Cancelled	(42,983)	$	18.17
Unvested RSUs as of September 30, 2019	422,336	$	19.90

The expense related to awards granted to employees and directors was $0.8 million and $2.0 million for the three and nine months ended September 30, 2019, respectively, and $1.1 million and $1.2 million for the three and nine months ended September 30, 2018, respectively.

At September 30, 2019, there was $7.6 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over the remaining weighted‑average vesting period of 2.94 years.

10. Commitments and contingencies

Tufts University

In June 2007, the Company entered into a license agreement (the License Agreement) for certain intellectual property with Tufts University (Tufts). Tufts is a related party to the Company due to Tufts’ equity ownership in the Company and because a board member of the Company’s Board of Directors was affiliated with Tufts. The License Agreement, which was subsequently amended, is exclusive and sub licensable, and will continue in effect on a country by country basis as long as there is a valid claim of a licensed patent in a country. The Company is committed to pay license and maintenance fees, prior to commercialization, in addition to low single digit royalties on direct sales and services and a royalty on sublicense income. During the three months ended September 30, 2019 and 2018, and nine months ended September 30, 2019 and 2018, the Company recorded royalty expense of $0.3 million, $0.2 million, $0.7 million and $0.5 million, respectively, in cost of product revenue on the consolidated statements of operations.

License commitment

During the year ended December 31, 2012, the Company entered into a license agreement for certain intellectual property with a third party. The non‑exclusive, non‑sublicensable third party’s license provides the Company access to certain patents specifically for protein detection, and shall be in effect until the expiration of the last licensed patent. In consideration for these rights, the Company committed to certain license fees, milestone payments, minimum annual royalties and a mid‑single digit royalty. The Company is required to make mid‑single digit royalty payments on net sales of products and services which utilize the licensed technology. In September 2019, all remaining patents related to the intellectual property expired and the license agreement terminated.  During each of the three months ended September 30, 2019 and 2018, and nine months ended September 30, 2019 and 2018, the Company recorded royalty expense of less than $0.1 million in cost of product revenue on the consolidated statements of operations.

Lease commitments

During the year ended December 31, 2014, the Company entered into a lease agreement for the Company's corporate headquarters in Lexington, Massachusetts with a lease term that was to expire in June 2020; however, in November 2018, the Company agreed to terminate the lease with the lessor effective May 31, 2019. The lease was terminated in connection with the Company signing a new lease for facilities in Billerica, Massachusetts. On October 2, 2018, the Company entered into a 137-month operating lease for the Company's new headquarters in Billerica, Massachusetts. The lease contains a period of free rent and escalating monthly rent payments. As part of the lease, the Company was required to enter into a $1.0 million Letter of Credit drawable by the lessor under specifically outlined conditions. The amount of the Letter of Credit will be reduced at 41 and 65 months after the commencement date of the lease to $750,000 and then $250,000, respectively. The $1.0 million Letter of Credit is recorded as restricted cash on the balance sheet.

In connection with the acquisition of Aushon in January 2018, the Company assumed the existing Aushon lease for facilities in Billerica, Massachusetts. In August 2018, the Company terminated the Aushon lease effective September 1, 2019. The Company was required to pay a termination fee no later than July 1, 2019 in consideration for the early termination, which was paid in February 2019.

In connection with the acquisition of Uman in August 2019, the Company assumed the existing Uman leases for the facilities in Umeå, Sweden.

Rent expense is recognized straight‑line over the course of the lease term. As of September 30, 2019, $2.6 million of deferred rent expense was recorded in other non‑current liabilities. The table below includes committed lease expenditures related to the Company’s leases.

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As of September 30, 2019, the minimum future rent payments under the lease agreements are as follows (in thousands):

2019	$	473
2020		2,312
2021		3,575
2022		3,372
2023 and Forward		29,208
	$	38,940

The Company recorded $0.7 million, $0.4 million, $2.6 million and $1.0 million in rent expense for the three months ended September 30, 2019 and 2018, and the nine months ended September 30, 2019 and 2018, respectively.

Development and supply agreement

Through the Company’s development agreement with STRATEC Biomedical, as amended in December 2016, the parties agreed on additional development services for an additional fee, which is payable when the additional development is completed. A total of $11.7 million is payable to STRATEC upon completion of the development activities. This amount is being recorded to research and development expense and accrued expenses as the services are performed. The services were completed during the year ended December 31, 2018. Substantive efforts related to these additional development activities started in the first quarter of 2019 and were completed in the third quarter of 2019.

The Company’s supply agreement with STRATEC Biomedical requires the Company to purchase a minimum number of commercial units over a seven‑year period ending in May 2021. If the Company were to fail to purchase a required number of commercial units, the Company would be obligated to pay termination costs plus a fee based on the shortfall of commercial units purchased compared to the required minimum amount. Based on the number of commercial instruments purchased as of September 30, 2019, assuming no additional commercial units were purchased, this fee would equal $10.3 million. The amount the Company could be obligated to pay under the minimum purchase commitment is reduced as each commercial unit is purchased. Also, if the Company terminates the supply agreement under certain circumstances and has not purchased a required number of commercial units, it would be obligated to issue warrants to purchase 93,341 shares of common stock (the Supply Warrants) at $0.003214 per share. The Company believes that it will purchase sufficient units to meet the requirements of the minimum purchase commitment and, therefore, has not accrued for any of the potential cash consideration. The Supply Warrants are accounted for at fair value; however, the fair value of the Supply Warrants as of September 30, 2019 and December 31, 2018 was insignificant as there was a low probability of the warrants being issued.

Legal contingencies

The Company is subject to claims in the ordinary course of business; however, the Company is not currently a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations. The Company accrues for contingent liabilities to the extent that the liability is probable and estimable.

11. Notes payable

Loan agreement

On April 14, 2014, the Company executed a Loan Agreement with a lender, as subsequently amended multiple times, most recently in April 2019. As of September 30, 2019, there were no additional amounts available to borrow under the debt facility. The interest rate on this term loan is variable based on a calculation of the prime rate less 5.25% with a minimum interest rate of 8.25%. Interest is paid monthly beginning the month following the borrowing date. At loan inception and in connection with the amendments, the Company issued the lender warrants to purchase shares of stock. The Loan Agreement also contains prepayment penalties and an end of term charge. Fees incurred upon execution of the agreements, and the fair value of warrants on the date of grant were accounted for as a reduction in the book value of debt and accreted through interest expense, using the effective interest rate method, over the term of the debt.

No end of term charges or principal payments were paid during the nine months ended September 30, 2019. On April 15, 2019, the Company signed Amendment 7 to the Loan Agreement, which extends the interest only payment period through July 1, 2021 and also extends the maturity date until October 1, 2021. As part of this Amendment 7, a “2019 End of Term Fee” for $50,000 was added to the Loan Agreement due on the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that the Company prepays the outstanding Secured Obligations and (iii) the date that the Secured Obligations become due and payable. In addition, the Company is required to pay the loan principal in five equal installments starting July 1, 2021 with the final principal payment to be made on October 1, 2021. As of September 30, 2019, the remaining loan balance is classified as a long term liability since all principal payments are due greater than twelve months after the balance sheet date.

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As of September 30, 2019, debt payment obligations due based on principal payments are as follows (in thousands):

2019	$	—
2020		—
2021		7,688
	$	7,688

Non‑cash interest expense related to debt discount amortization and accretion of end of term fees was $0.1 million or less for each of the three months ended September 30, 2019 and 2018, and nine months ended September 30, 2019 and 2018.

12. Collaboration and license arrangements

Joint development and license agreement

In 2012, the Company entered into a Joint Development and License Agreement (the JDLA) with bioMérieux SA, a related party.  The JDLA was amended in 2016 (the Amended JDLA).  Following the amendment, a total of $3.2 million of consideration was assigned to the deliverables and collaboration activities outlined in the Amended JDLA. The consideration of $3.2 million was recognized over the performance period which began in the fourth quarter 2016. On September 6, 2018, bioMérieux notified the Company that it was terminating the Amended JDLA, forfeiting any future IVD licensing rights to the Company’s Simoa technology and enabling the Company to consolidate and regain control of all Simoa IVD licensing and IP rights. As a result of the termination, the Company recognized $1.6 million in previously deferred collaboration revenue related to the agreement during the three months ended September 30, 2018.

Evaluation and option agreements and license agreement

In 2015, the Company entered into three agreements, for three separate fields, with a diagnostic company for the evaluation of the Company’s Simoa technology. These agreements each allowed for the option to negotiate a license agreement. In return, the Company received non‑refundable payments totaling $2.0 million. In December 2016, the diagnostic company exercised one of its options and the parties entered into a non-exclusive license agreement in one of the fields. This agreement has a one‑time non‑refundable license fee of $1.0 million and the right to receive running low single digit royalties on licensed products. The negotiation periods for the other two agreements were extended and the negotiations remain ongoing.

Upon execution of the license in one of the fields in December 2016, the $1.0 million license fee, in addition to the $0.8 million allocated to the option for this field, resulted in a total of $1.8 million of consideration being recognized as revenue as there were no remaining undelivered performance obligations. In December 2018, the Company entered into an option agreement for the rights to negotiate an exclusive license in this field with the diagnostic company. In exchange for the rights to negotiate an exclusive agreement, the Company received $0.5 million in consideration. As the right to negotiate with the Company has not been executed, the consideration from this agreement is deferred until the sooner of the execution of the contract or the end of the option period. Because the negotiations remain ongoing with respect to the other two fields and the options have not been exercised, the consideration allocated to these options of $1.2 million has been deferred and is recorded as deferred revenue as of September 30, 2019 and December 31, 2018.

13. Employee benefit plans

The Company sponsors a 401(k) savings plan for its employees.   The Company may make discretionary contributions for each 401(k) plan year. During the three and nine months ended September 30, 2019, the Company made contributions of $0.1 million and $0.4 million, respectively. During the three and nine months ended September 30, 2018, the Company made contributions of less than $0.1 million.

14. Business Combinations

UmanDiagnostics AB

On August 1, 2019, the Company completed its acquisition of Uman for an aggregate purchase price of $21.2 million, comprised of (i) $15.7 million in cash plus (ii) 191,152 shares of common stock (representing $5.5 million based on the closing prices of the Company’s common stock on the Nasdaq Global Market on July 1, 2019 and August 1, 2019, the dates of issuance). The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019. 

Uman supplies Nf-L antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions. With the acquisition of Uman, the Company has secured a long-term source of supply for a critical technology. This acquisition was considered a business acquisition for accounting purposes.

The Company has accounted for the acquisition of Uman as a purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets and liabilities of Uman are recorded as of the acquisition date of July 1, 2019, at their respective fair values, and consolidated with those of the Company.

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The Company has preliminarily allocated the purchase price to the net tangible and intangible assets based on their estimated fair values as of July 1, 2019. As such, the fair value of the assets acquired and liabilities assumed, including intangible assets, presented in the table below are provisional and will be finalized in a later period once the fair value procedures are completed. Goodwill established as a result of the Uman acquisition is not tax deductible in any taxing jurisdiction.

The following table summarizes the preliminary purchase price allocation, net of $1.2 million in cash and cash equivalents acquired (in thousands):

Purchase price:
Cash and stock paid	$	21,217
Cash and cash equivalents acquired		1,221
Purchase price, net		19,996
Assets (liabilities) acquired:
Accounts receivable	$	638
Inventory		1,680
Prepaids and other current assets		114
Property and equipment		33
Intangibles		13,450
Goodwill		8,111
Accounts payable		(20)
Accrued expense and other current liabilities		(871)
Deferred tax liabilities		(3,139)
Total	$	19,996

Revenue and net income related to Uman’s operations was $0.4 million and less than $0.1 million, respectively, for the three months following the July 1, 2019 acquisition date, and is included in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2019.

The following unaudited pro forma information presents the condensed consolidated results of operations of the Company and Uman for the nine months ended September 30, 2019 and 2018 and the three month period ended September 30, 2018 as if the acquisition of Uman had been completed on January 1, 2018. There was no pro forma impact during the three months ended September 30, 2019. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments that reflect pro forma results of operations, such as increased amortization for the fair value of acquired intangible assets, increased cost of sales related to the inventory valuation adjustment, and adjustments relating to the tax effect of combining the Company and Uman businesses.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and Uman. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that actually would have been achieved had the acquisition occurred as of January 1, 2018, nor are they intended to represent or be indicative of future results of operations (in thousands):

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2018		2019		2018
Revenue (unaudited)	$	10,787	$	41,593	$	27,574
Pre-tax loss (unaudited)	$	(7,898)	$	(27,841)	$	(24,254)

During the three and nine months ended September 30, 2019, the Company incurred $1.0 million and $1.9 million, respectively, in costs associated with the acquisition of Uman. Costs associated with the acquisition Uman are recorded as selling, general, and administrative expenses within the consolidated statements of operations.

15. Goodwill and Acquired Intangible Assets

As of September 30, 2019, the carrying amount of goodwill was $9.0 million. The following is a rollforward of the Company’s goodwill balance (in thousands):

	Goodwill
Balance as of December 31, 2018	$	1,308
Goodwill acquired		8,111
Cumulative translation adjustment		(458)
Balance as of September 30, 2019	$	8,961

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Acquired intangible assets as of September 30, 2019 consist of the following (in thousands):

		September 30, 2019
		Gross				Cumulative		Net
	Estimated Useful	Carrying		Accumulated		Translation		Carrying
	Life (in years)	Value		Amortization		Adjustment		Value
Know-how	8.5	$	13,000	$	(383)	$	(711)	$	11,906
Developed technology	7		1,650		(648)		—		1,002
Customer relationships	8.5 - 10		1,360		(368)		(6)		986
Non-compete agreements	5.5		340		(17)		(18)		305
Trade names	3		50		(28)		—		22
Total		$	16,400	$	(1,444)	$	(735)	$	14,221

Acquired intangible assets as of December 31, 2018 consist of the following (in thousands):

		December 31, 2018
		Gross				Cumulative		Net
	Estimated Useful	Carrying		Accumulated		Translation		Carrying
	Life (in years)	Value		Amortization		Adjustment		Value
Developed technology	7	$	1,650	$	(379)	$	—	$	1,271
Customer relationships	10		1,250		(208)		—		1,042
Trade names	3		50		(15)		—		35
Total		$	2,950	$	(602)	$	—	$	2,348

The Company acquired $13.5 million of intangible assets in the Uman acquisition, of which $13.0 million was assigned to know-how, $0.4 million was assigned to non-compete agreements, and $0.1 million was assigned to customer relationships. The know-how and customer relationships intangible assets are being amortized on a straight-line basis over an 8.5 year amortization period, and the non-compete agreement intangible asset is being amortized on a straight-line basis over a 5.5 year amortization period. In total, the weighted-average amortization period for these intangible assets is 8.4 years.

The Company is currently evaluating the fair value of assets acquired and liabilities assumed from the Uman acquisition, including intangible assets and their related amortization periods. As such, the $13.5 million in intangible assets presented in the table above are provisional and will be finalized in a later period once the fair value procedures are completed.

The Company recorded amortization expense of $0.5 million and $0.8 million for the three and nine months ended September 30, 2019, respectively, and $0.2 million and $0.4 million for the three and nine months ended September 30, 2018, respectively. Amortization relating to developed technology is recorded within research and development expenses, amortization of customer relationships is recorded within selling, general, and administrative expenses, amortization of trade names is recorded within selling, general and administrative expenses, amortization of non-compete agreements is recorded within selling, general, and administrative expenses, and amortization of know-how is recorded within cost of goods sold.

Future estimated amortization expense of acquired intangible assets as of September 30, 2019 is as follows (in thousands):

For the Years Ended December 31,	Estimated Amortization Expense
2019	$	546
2020		2,110
2021		2,013
2022		1,930
2023		1,849
Thereafter		6,508
	$	14,956

16. At-the-market offering

On March 19, 2019, the Company entered into the Sales Agreement with Cowen with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, having an aggregate offering price of up to $50.0 million through Cowen as its sales agent. 

On June 5, 2019, the Company issued approximately 2.2 million shares of common stock at an average stock price of $22.73 per share pursuant to the terms of the Sales Agreement. The at-the-market offering resulted in gross proceeds of  $49.7 million. The Company incurred $1.7 million in issuance costs associated with the at-the-market offering, resulting in net proceeds to the Company of $48.0 million.

17.  Underwritten public offering

On August 8, 2019, the Company entered into an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters, relating to an underwritten underwritten public offering of approximately 2.7 million shares of the Company’s common stock, par value $0.001 per share. The underwritten public offering resulted in gross proceeds of $69.0 million. The Company incurred $4.5 million in issuance costs associated with the underwritten public offering, resulting in net proceeds to the Company of $64.5 million.

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18. Accumulated other comprehensive loss

Changes to accumulated other comprehensive loss during the nine months ended September 30, 2019 is as follows:

			Accumulated
	Cumulative		Other
	Translation		Comprehensive
	Adjustment		Loss
Balance - December 31, 2018	$	—	$	—
Current period accumulated other comprehensive loss		(1,135)		(1,135)
Balance - September 30, 2019	$	(1,135)	$	(1,135)

19. Related party transactions

bioMérieux is a customer and also a holder of the Company’s common stock. bioMérieux formerly also had a designee on the Company’s Board of Directors. On September 6, 2018, bioMérieux notified the Company that it was terminating the Amended JDLA. The termination of the agreement resulted in the immediate recognition of the remaining deferred revenue. The Company recognized revenue from bioMérieux related to the Amended JDLA of less than $0.1 million, $1.6 million, less than $0.1 million and $2.1 million in the three months ended September 30, 2019 and 2018 and the nine months ended September 30, 2019 and 2018, respectively.

The Company entered into the License Agreement for certain intellectual property with Tufts. Tufts is a related party to the Company due to Tufts’ equity ownership in the Company and because a member of the Company’s Board of Directors was affiliated with Tufts. During the three months ended September 30, 2019 and 2018 and the nine months ended September 30, 2019 and 2018, the Company recorded royalty expense of $0.3 million, $0.2 million, $0.7 million and $0.5 million, respectively, in cost of product revenue on the consolidated statements of operations.

During the year ended December 31, 2017, Harvard University became a related party because a member of the Company’s Board of Directors is affiliated with Harvard University. Revenue recorded from sales to Harvard University were $0.3 million and $0.4 million for the three and nine months ended September 30, 2019, respectively, and less than $0.1 million for each of the three and nine months ended September 30, 2018, respectively.

20. Subsequent events

The Company had no significant subsequent events for the period September 30, 2019 through the filing date of this Form 10-Q.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results, performance or experience could differ materially from what is indicated by any forward-looking statement due to various important factors, risks and uncertainties, including, but not limited to, those set forth under “Special Note Regarding Forward-Looking Statements” included elsewhere in this quarterly report or under “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018 or other filings that we make with the SEC.

Overview

We are a life sciences company that has developed next generation, ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics. Our platforms are based on our proprietary digital “Simoa” detection technology. Our Simoa bead-based and planar array platforms enable customers to reliably detect protein biomarkers in extremely low concentrations in blood, serum and other fluids that, in many cases, are undetectable using conventional, analog immunoassay technologies, and also allow researchers to define and validate the function of novel protein biomarkers that are only present in very low concentrations and have been discovered using technologies such as mass spectrometry. These capabilities provide our customers with insight into the role of protein biomarkers in human health that has not been possible with other existing technologies and enable researchers to unlock unique insights into the continuum between health and disease. We believe this greater insight will enable the development of novel therapies and diagnostics and facilitate a paradigm shift in healthcare from an emphasis on treatment to a focus on earlier detection, monitoring, prognosis and, ultimately, prevention. We are currently focusing on protein detection, which we believe is an area of significant unmet need and where we have significant competitive advantages. However, in addition to enabling new applications and insights in protein analysis, we are also developing our Simoa bead-based technology to detect nucleic acids in biological samples.

We currently sell all of our products for life science research, primarily to laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies, through a direct sales force and support organizations in North America and Europe, and through distributors or sales agents in other select markets, including Australia, Brazil, Czech Republic, China, India, Israel, Japan, Mexico, South Korea, Lebanon, Singapore, and Taiwan.

Our instruments are designed to be used either with assays fully developed by us, including all antibodies and supplies required to run the tests, or with “homebrew” kits where we supply some of the components required for testing, and the customer supplies the remaining required elements. Accordingly, our installed instruments generate a recurring revenue stream. We believe that our recurring consumable revenue is driven by our customers’ ability to extract more valuable data using our platform and to process a large number of samples quickly with little hands-on preparation.

We commercially launched our first immunoassay platform, the Simoa HD-1, in January 2014. The HD-1 is based on our bead-based technology, and assays run on the HD-1 are fully automated. We initiated commercial launch of the SR-X instrument in December 2017. The SR-X utilizes the same Simoa bead-based technology and assay kits as the HD-1 in a compact benchtop form with a lower price point, more flexible assay preparation, and a wider range of applications. In July 2019, we launched the Simoa HD-X, an upgraded version of the Simoa HD-1 which replaces the HD-1. The HD-X has been designed to deliver significant productivity and operational efficiency improvements, as well as greater user flexibility.  We began shipping and installing HD-X instruments at customer locations in the third quarter of 2019, ahead of our original fourth quarter expectation.  As the installed base of the Simoa instruments increases, total consumables revenue overall is expected to increase. We believe that consumables revenue should be subject to less period-to-period fluctuation than our instrument sales revenue, and will become an increasingly important contributor to our overall revenue.

On January 30, 2018, we acquired Aushon Biosystems, Inc. for $3.2 million in cash, with an additional payment of $0.8 million made in July 2018, six months after the acquisition date. With the acquisition of Aushon, we acquired a CLIA certified laboratory, as well as Aushon’s proprietary sensitive planar array detection technology. Leveraging our proprietary sophisticated Simoa image analysis and data analysis algorithms, we further refined this planar array technology to develop the SP-X instrument to provide the same Simoa sensitivity found in our Simoa bead-based platform. We initiated an early-access program for the SP-X instrument in January 2019, with the full commercial launch commenced in April 2019.

On August 1, 2019, we completed our acquisition of Uman for an aggregate purchase price of $21.2 million, comprised of (i) $15.7 million in cash plus (ii) 191,152 shares of our common stock (representing $5.5 million based on the closing prices of our common stock on the Nasdaq Global Market on July 1, 2019 and August 1, 2019, the dates of issuance). The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019. Uman supplies neurofilament light (Nf-L) antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions. 

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As of September 30, 2019, we had cash and cash equivalents of $113.3 million. Since inception, we have incurred net losses. Our net loss was $31.5 million, $27.0 million, and $23.2 million for the years ended December 31, 2018, 2017 and 2016, respectively, and $29.8 million and $22.2 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, we had an accumulated deficit of $205.3 million and stockholders' equity of $136.2 million. We expect to continue to incur significant expenses and operating losses at least through the next 24 months. We expect our expenses will increase substantially as we:

· expand our sales and marketing efforts to further commercialize our products;

· strategically acquire companies or technologies that may be complementary to our business;

· expand our research and development efforts to improve our existing products and develop and launch new products, particularly if any of our products are deemed by the United States Food and Drug Administration, or FDA, to be medical devices or otherwise subject to additional regulation by the FDA;

· seek premarket approval, or PMA, or 510(k) clearance from the FDA for our existing products or new products if or when we decide to market products for use in the prevention, diagnosis or treatment of a disease or other condition;

· hire additional personnel and continue to grow our employee headcount;

· enter into collaboration arrangements, if any, or in-license other products and technologies;

· add operational, financial and management information systems; and

· incur increased costs as a result of operating as a public company.

Results of Operations

Comparison of the Three Months Ended September 30, 2019 and September 30, 2018 (dollars in thousands):

	Three Months Ended				Three Months Ended
	September 30,		% of		September 30,		% of		$		%
	2019		revenue		2018		revenue		change		change
Product revenue	$	10,737	71.8	%	$	5,962	56.3	%	$	4,775	80.1	%
Service and other revenue		4,207	28.2	%		3,017	28.5	%		1,190	39.4	%
Collaboration and license revenue		—	0.0	%		1,612	15.2	%		(1,612)	(100.0)	%
Total revenue		14,944	100.0	%		10,591	100.0	%		4,353	41.1	%
Cost of goods sold:
Cost of product revenue		5,513	36.9	%		3,277	30.9	%		2,236	68.2	%
Cost of service revenue		2,398	16.0	%		1,719	16.2	%		679	39.5	%
Total costs of goods sold and services		7,911	52.9	%		4,996	47.2	%		2,915	58.3	%
Gross profit		7,033	47.1	%		5,595	52.8	%		1,438	25.7	%
Operating expense:
Research and development		3,924	26.3	%		4,411	41.6	%		(487)	(11.0)	%
Selling, general and administrative		13,352	89.3	%		8,846	83.5	%		4,506	50.9	%
Total operating expense		17,276	115.6	%		13,257	125.2	%		4,019	30.3	%
Loss from operations		(10,243)	(68.5)	%		(7,662)	(72.3)	%		(2,581)	(33.7)	%
Interest income (expense), net		282	1.9	%		30	0.3	%		252	840.0	%
Other income (expense), net		(34)	(0.2)	%		(25)	(0.2)	%		(9)	(36.0)	%
Loss before income tax		(9,995)	(66.9)	%		(7,657)	(72.3)	%		(2,338)	(30.5)	%
Income tax benefit		(125)	(0.8)	%		—	0.0	%		(125)	(100.0)	%
Net loss	$	(9,870)	(66.0)	%	$	(7,657)	(72.3)	%	$	(2,213)	(28.9)	%

Revenue

Total revenue increased by $4.4 million, or 41.1%, to $14.9 million for the three months ended September 30, 2019 as compared to $10.6 million for the three months ended September 30, 2018. Product revenue consisted primarily of sales of instruments totaling $4.1 million and sales of consumables and other products of $6.6 million for the three months ended September 30, 2019. Product revenue consisted of sales of instruments totaling $2.3 million and sales of consumables and other products totaling $3.7 million for the three months ended September 30, 2018. The increase in product revenue of $4.8 million was primarily due to increased instruments sales and increased consumables sales in the three months ended September 30, 2019. The installed base of instruments increased from September 30, 2018 to September 30, 2019, and as these additional instruments were used by customers, the consumable sales increased. The increase in service and other revenue of $1.2 million was due to increased services performed in our Accelerator Laboratory. We had no collaboration and license revenue in the three months ended September 30, 2019 as compared to the $1.6 million of revenue related to the collaboration arrangement with bioMérieux in the three months ended September 30, 2018. We adopted ASC 606 as of January 1, 2019, which did not have a material impact on revenue during the third quarter of 2019.

Cost of Goods Sold and Services

Cost of product revenue increased by $2.2 million, or 68.2%, to $5.5 million for the three months ended September 30, 2019 as compared to $3.3 million for the three months ended September 30, 2018. The increase was primarily due to an increase in sales of consumables and instruments, along with costs incurred from the amortization of

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the Uman acquisition-related inventory valuation adjustment and acquired intangibles. Cost of service revenue increased to $2.4 million for the three months ended September 30, 2019 from $1.7 million for the three months ended September 30, 2018. The increase was primarily due to higher utilization of the Accelerator Laboratory, plus increased personnel costs from the build out of our field service organization. Overall cost of goods sold as a percentage of revenue increased to 52.9% of total revenue for the three months ended September 30, 2019 as compared to 47.2% for the three months ended September 30, 2018, primarily as a result of the impact of the collaboration arrangement with bioMérieux during the three months ended September 30, 2018 and the impact of the Uman acquisition-related charges during the three months ended September 30, 2019.

Research and Development Expense

Research and development expense decreased by $0.5 million, or (11.0)%, to $3.9 million for the three months ended September 30, 2019 as compared to $4.4 million for the three months ended September 30, 2018. The decrease was primarily due to the completion of development of the HD-X in the early part of the third quarter of 2019.  

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $4.5 million, or 50.9%, to $13.4 million for the three months ended September 30, 2019 as compared to $8.8 million for the three months ended September 30, 2018. The increase was primarily due to headcount additions in various departments as we build out our organization to support future growth, the lease for the new headquarters, and stock compensation expense. In addition, we incurred approximately $1.0 million in costs associated with the acquisition of Uman during the three months ended September 30, 2019.

Interest Income and Other Expense, Net

Interest income and other expense, net increased by  $0.2 million for the three months ended September 30, 2019 as compared to same period in 2018, primarily due to the interest income earned on cash equivalents, which increased due to the at-the-market and underwritten public offerings  completed during 2019.

Comparison of the Nine Months Ended September 30, 2019 and September 30, 2018 (dollars in thousands):

p
	Nine Months Ended				Nine Months Ended
	September 30,		% of		September 30,		% of		$		%
	2019		revenue		2018		revenue		change		change
Product revenue	$	29,059	71.2	%	$	15,907	59.5	%	$	13,152	82.7	%
Service and other revenue		11,757	28.8	%		8,699	32.5	%		3,058	35.2	%
Collaboration and license revenue		—	—	%		2,149	8.0	%		(2,149)	(100.0)	%
Total revenue		40,816	100.0	%		26,755	100.0	%		14,061	52.6	%
Costs of Goods sold:
Cost of product revenue		14,217	34.8	%		8,995	33.6	%		5,222	58.1	%
Cost of services revenue		6,630	16.2	%		5,021	18.8	%		1,609	32.0	%
Total Costs of Goods sold and services		20,847	51.1	%		14,016	52.4	%		6,831	48.7	%
Gross Profit		19,969	48.9	%		12,739	47.6	%		7,230	56.8	%
Operating Expenses:
Research and development		11,792	28.9	%		11,759	44.0	%		33	0.3	%
Selling, general and administrative		38,293	93.8	%		23,117	86.4	%		15,176	65.6	%
Total operating expenses		50,085	122.7	%		34,876	130.4	%		15,209	43.6	%
Loss from operations		(30,116)	(73.8)	%		(22,137)	(82.7)	%		(7,979)	(36.0)	%
Interest income (expense), net		346	0.8	%		21	0.1	%		325	1,547.6	%
Other income (expense), net		(149)	(0.4)	%		(86)	(0.3)	%		(63)	(73.3)	%
Loss before income tax		(29,919)	(73.3)	%		(22,202)	(83.0)	%		(7,717)	(34.8)	%
Income tax benefit		(81)	(0.2)	%		—	—	%		(81)	(100.0)	%
Net loss	$	(29,838)	(73.1)	%	$	(22,202)	(83.0)	%	$	(7,636)	(34.4)	%

Revenue

Total revenue increased by $14.1 million, or 52.6%, to $40.8 million for the nine months ended September 30, 2019 as compared to $26.8 million for the nine months ended September 30, 2018. Product revenue consisted primarily of sales of instruments totaling $10.3 million and sales of consumables and other products of $18.8 million for the nine months ended September 30, 2019. Product revenue consisted of sales of instruments totaling $6.0 million and sales of consumables and other products totaling $9.9 million for the nine months ended September 30, 2018. The increase in product revenue of $13.2 million was primarily due to the sale of more instruments and increased sales of consumables in the nine months ended September 30, 2019. The installed base of instruments increased from September 30, 2018 to September 30, 2019, and as these additional instruments were used by customers, the consumable sales increased. The increase in service and other revenue of $3.1 million was due to increased services performed in our Accelerator Laboratory. We had no collaboration and license revenue in the nine months ended September 30, 2019 as compared to the $2.1 million of revenue related to the collaboration arrangement with bioMérieux in the nine months ended September 30, 2018. We adopted ASC 606 as of January 1, 2019, which did not have a material impact on revenue in the nine months ended September 30,  2019.

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Cost of Goods Sold and Services

Cost of product revenue increased by $5.2 million, or 58.1%, to $14.2 million for the nine months ended September 30, 2019 as compared to $9.0 million for the nine months ended September 30, 2018. The increase was primarily due to increased sales of consumables and instruments, along with costs incurred from the amortization of the Uman acquisition-related inventory valuation adjustment and acquired intangibles. Cost of service revenue increased to $6.6 million for the nine months ended September 30, 2019 from $5.0 million for the nine months ended September 30, 2018. The increase was primarily due to higher utilization of the Accelerator Laboratory, plus increased personnel costs from the build out of our field service organization. Overall cost of goods sold as a percentage of revenue decreased to 51.1% of total revenue for the nine months ended September 30, 2019 as compared to 52.4% for the nine months ended September 30, 2018, primarily as a result of decreased costs to produce products.

Research and Development Expense

Research and development expense increased slightly by less than $0.1 million, or 0.3%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. The increase was primarily due to the development of the SP-X and HD-X and the increased headcount in research and development.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $15.2 million, or 65.6%, to $38.3 million for the nine months ended September 30, 2019 as compared to $23.1 million for the nine months ended September 30, 2018. The increase was primarily due to headcount additions in various departments as we build out our organization to support future growth, the lease for the new headquarters, and stock compensation expense. In addition, we incurred approximately $1.9 million in costs associated with the acquisition of Uman during the nine months ended September 30, 2019.

Interest Income and Other Expense, Net

Interest income and other expense, net increased by $0.3 million for the nine months ended September 30, 2019 as compared to the same period in 2018, primarily due to the interest income earned on cash equivalents, which increased due to the at-the-market and underwritten public offerings  completed during 2019.

Liquidity and Capital Resources

To date, we have financed our operations principally through equity offerings, borrowings from credit facilities and revenue from our commercial operations.

Equity Offerings

In December 2017, we completed our IPO in which we sold 4,916,480 shares of common stock at an initial public offering price of $15.00 per share. The aggregate net proceeds received by us from the offering, net of underwriting discounts and commissions and offering expenses, were $65.6 million. Prior to the IPO, we had raised capital through the sale of redeemable convertible preferred stock in private placement transactions.

On March 19, 2019, we entered into a Sales Agreement for an “at the market offering” arrangement with Cowen, which allows us to issue and sell shares of common stock pursuant to a shelf registration statement for total gross sales proceeds of up to $50.0 million from time to time through Cowen, acting as our agent.  During the nine months ended September 30, 2019, we sold an aggregate of 2,186,163 shares of common stock pursuant to this agreement resulting in $49.7 million in gross proceeds and $48.0 million in net proceeds.

On August 8, 2019, we entered into an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters, relating to an underwritten public offering of 2,732,673 shares of common stock at a public offering price of $25.25 per share. We received $69.0 million in gross proceeds and $64.5 million in net proceeds.

Loan Facility with Hercules

On April 14, 2014, we executed a Loan Agreement with Hercules Capital, Inc. (formerly known as Hercules Technology Growth Capital, Inc.). The Loan Agreement provided a total debt facility of $10.0 million, which is secured by substantially all of our assets. At closing, we borrowed $5.0 million in principal and had the ability to draw the additional $5.0 million over the period from November 1, 2014 to March 31, 2015. The interest rate on this term loan was variable based on a calculation of 8% plus the prime rate less 5.25%, with a minimum interest rate of 8%. Interest was to be paid monthly beginning the month following the borrowing date. Principal payments were scheduled to begin on September 1, 2015, unless we achieved certain milestones which would have extended this date to December 1, 2015 or March 1, 2016. In connection with the execution of the Loan Agreement, we issued Hercules a warrant to purchase up to 173,428 shares of our Series C Preferred Stock at an exercise price of $3.3299 per share. Upon closing of the IPO, this warrant was automatically converted into a warrant to purchase up to 53,960 shares of our common stock at an exercise price of $10.70 per share.

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On March 4, 2015, we executed Amendment 1 to the Loan Agreement and drew the additional $5.0 million available under the Loan Agreement at that time. The terms of the amendment deferred principal payments to start on December 1, 2015 or March 1, 2016 if we obtained at least $10.0 million in equity financing before December 1, 2015. This equity financing did not occur before December 1, 2015.

In January 2016, we executed Amendment 2 to the Loan Agreement, which increased the total facility available by $5.0 million to a total of $15.0 million and further delayed the start of principal payments to July 1, 2016. Following the Series D Preferred Stock financing in March 2016, we could have elected to further delay the start of principal payments until January 1, 2017, however we voluntarily began paying principal on July 1, 2016. Upon signing this amendment, we drew an additional $3.0 million under the debt facility. The remaining $2.0 million available for borrowing expired unused in 2016, decreasing the amounts available under the debt facility to $13.0 million.

In March 2017, we signed Amendment 3 to the Loan Agreement increasing the total facility available by $5.0 million to a total of $18.0 million. We did not draw any of this additional amount, which was available for us to draw until February 28, 2018. Additionally, we did not request an optional term loan for an incremental $5.0 million which was available for us to request until September 3, 2018. Principal payments were delayed to September 1, 2018 and the loan maturity date was extended to March 1, 2019. We voluntarily made principal payments in the months of March, April, and May 2018. No principal payments were made in June, July or August 2018. The amendment did not affect the due date of the existing end of term fees (in aggregate $0.5 million) which were due on February 1, 2018. In connection with this amendment, we issued Hercules a warrant to purchase up to 38,828 shares of our Series D Preferred Stock at an exercise price of $3.67 per share. Upon closing of the IPO, this warrant was automatically converted into a warrant to purchase up to 12,080 shares of our common stock at an exercise price of $11.80 per share.

In July 2017, we signed Amendment 4 to the Loan Agreement, which capped the "Term Loan Interest Rate" with respect to the 2017 Term Loan Advance only at 10%. Amendment 4 to the Loan Agreement did not change or affect any other element of the Loan Agreement or the Term Loan Advance.

In August 2018, we signed Amendment 5 to the Loan Agreement, which extends the interest only payment period through March 1, 2020 and also extends the loan maturity date to March 1, 2020. We accounted for the August 2018 amendment as a modification pursuant to ASC 470-50 and determined that no material change occurred as a result of the modification. In addition, the amendment deferred the payment of principal until the maturity date. $0.1 million of end of term payments are due March 2020.

In October 2018, we signed Amendment 6 to the Loan Agreement, which amends the Loan Agreement's collateral clause to exclude the $1 million certificate of deposit associated with the lease on our new headquarters in Billerica, Massachusetts. The Loan Agreement and amendments contain end of term payments and are recorded in the debt accounts. $0.5 million of end of term payments were paid in the year ended December 31, 2018.

On April 15, 2019, we entered into Amendment No. 7 to the Loan Agreement, which extends the interest only payment period through July 1, 2021 and also extends the loan maturity date to October 1, 2021. We are required to pay the loan principal in five equal installments starting July 1, 2021 with the final principal payment to be made on October 1, 2021.

On July 2, 2019, 66,041 warrants were exercised by Hercules on a net, non-cash, basis. Per the terms of the warrant agreement, we issued 45,690 shares of common stock with a value equal to Hercules’ gain.

The Loan Agreement contains negative covenants restricting our activities, including limitations on dispositions, mergers or acquisitions, incurring indebtedness or liens, paying dividends or making investments and certain other business transactions. There are no financial covenants associated with the Loan Agreement. The obligations under the Loan Agreement are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in our business, operations or financial or other condition, which is subjective in nature. We have determined that the risk of subjective acceleration under the material adverse events clause is not probable and therefore have classified the outstanding principal in current and long-term liabilities based on scheduled principal payments.

Debt principal repayments, including the end of term fees, due as of September 30, 2019 are (in thousands):

Years ending December 31,
Remainder 2019	$	—
2020		—
2021		7,813
	$	7,813

Uman Acquisition

In August 2019, we completed the acquisition of Uman, in which we paid $15.7 million in cash to the shareholders of Uman. We funded this payment through our existing cash balances. In addition, we issued $5.5 million in stock in connection with the purchase of Uman. The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019.    

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Cash Flows

The following table presents our cash flows for each period presented (in thousands):

	Nine Months Ended September 30,
	2019		2018
Net cash used in operating activities	$	(21,652)	$	(20,613)
Net cash used in investing activities		(24,832)		(5,347)
Net cash provided by (used in) financing activities		115,473		(1,299)
Net increase (decrease) in cash and cash equivalents	$	68,989	$	(27,259)

Net Cash Used in Operating Activities

We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support the growth of our business. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure and this may continue in the future.

Net cash used in operating activities was $21.7 million during the nine months ended September 30, 2019. The net cash used in operating activities primarily consisted of the net loss of $29.8 million offset by non-cash charges of $4.7 million of stock-based compensation expense and $2.2 million of depreciation and amortization expense. Cash used as a result of changes in operating assets and liabilities of $1.2 million was primarily due to a $10.1 million increase in other non-current liabilities related to our new lease, offset by an increase in accounts receivable of $4.5 million, and an increase in inventory of $3.9 million. 

Net cash used in operating activities was $20.6 million during the nine months ended September 30, 2018. Net cash used in operating activities primarily consisted of the net loss of $22.2 million, and an increase in accounts payable and accrued expenses of $0.1 million.  Other cash outflows including a decrease in inventory of $1.0 million, an increase of prepaid and other expenses of $1.0 million and a  decrease in deferred revenue of $2.5 million are primarily offset by a decrease in accounts receivable of $1.2 million, an increase in non-cash stock compensation expense of $3.4 million, and an increase in other non-cash adjustments of $1.2 million.

Net Cash Used in Investing Activities

Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure and work force. We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods.

We used $24.8 million of cash in investing activities during the nine months ended September 30, 2019. The significant increase was related to the cash portion of the Uman acquisition, as well as the leasehold improvements for new headquarters, which is a component of our lease agreement.

We used $5.3 million of cash in investing activities during the nine months ended September 30, 2018 consisting of cash paid in the acquisition of Aushon, net of cash acquired, and for purchases of capital equipment to support our infrastructure. 

Net Cash Provided by (Used in) Financing Activities

Historically, we have financed our operations principally through private placements of our convertible preferred stock and borrowings from credit facilities, the sale of shares of our common stock in our IPO and revenues from our commercial operations.

Financing activities provided $115.5 million of cash during the nine months ended September 30, 2019, primarily from proceeds of our “at-the-market” offering during the second quarter of 2019 and our underwritten public offering during the third quarter of 2019.

We used $1.3 million of cash in financing activities during the nine months ended September 30, 2018, which was primarily used in payments of outstanding debt of $1.9 million, partially offset by proceeds of common stock option exercises of $0.7 million.

Capital Resources

We have not achieved profitability on a quarterly or annual basis since our inception, and we expect to continue to incur net losses in the future. We also expect that our operating expenses will increase as we continue to increase our marketing efforts to drive adoption of our commercial products. Additionally, as a public company, we have incurred and will continue to incur significant audit, legal and other expenses that we did not incur as a private company. Our liquidity requirements have historically consisted, and we expect that they will continue to consist, of sales and marketing expenses, research and development expenses, working capital, debt service and general corporate expenses.

We believe cash generated from commercial sales, our current cash and cash equivalents, and interest income we earn on these balances will be sufficient to meet our anticipated operating cash requirements for at least the next 12 months. In the future, we expect our operating and capital expenditures to increase as we increase headcount, expand our

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sales and marketing activities and grow our customer base. Our estimates of the period of time through which our financial resources will be adequate to support our operations and the costs to support research and development and our sales and marketing activities are forward-looking statements and involve risks and uncertainties and actual results could vary materially and negatively as a result of a number of factors, including the factors discussed in Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2018. We have based our estimates on assumptions that may prove to be wrong and we could utilize our available capital resources sooner than we currently expect. Our future funding requirements will depend on many factors, including:

· market acceptance of our products, including our SP-X and HD-X instruments; 

· the cost and timing of establishing additional sales, marketing and distribution capabilities; 

· the cost of our research and development activities; 

· our ability to enter into collaborations in the future, and the success of any such collaborations; 

· the cost and timing of potential regulatory clearances or approvals that may be required in the future for our products; and 

· the effect of competing technological and market developments.

If the conditions for raising capital are favorable, we may seek to finance future cash needs through public or private equity or debt offerings or other financings. On March 19, 2019, we filed a universal shelf registration statement on Form S-3, which was declared effective by the SEC on May 10, 2019, and pursuant to which we registered for sale up to $200 million of any combination of our common stock, preferred stock, debt securities, warrants, rights, and/or units from time to time and at prices and on terms that we may determine. After the sales of shares of common stock in our “at-the-market” offering during June 2019,  and the sale of 2,732,673 shares of common stock in our underwritten public offering in August 2019, approximately $81.3 million of securities remained available for issuance under this shelf registration statement. This registration statement will remain in effect up to May 10, 2022. We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products. We also may have to reduce marketing, customer support or other resources devoted to our products or cease operations.

Contractual Obligations and Commitments

As of September 30, 2019, there have been no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report on Form 10-K for the year ended December 31, 2018, except that, on April 15, 2019, we signed Amendment 7 to the Loan Agreement, which extends the interest only payment period through July 1, 2021 and also extends the loan the maturity date until October 1, 2021. We are required to pay the loan principal in five equal installments starting July 1, 2021 with the final principal payment to be made on October 1, 2021.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Critical Accounting Policies, Significant Judgements and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States, or U.S. GAAP, requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of assets and liabilities in our financial statements and accompanying notes. The most significant assumptions used in the financial statements are the underlying assumptions used in revenue recognition and stock-compensation. We base estimates and assumptions on historical experience when available and on various factors that we determined to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies, Significant Judgements and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2018. There have been no material changes to our critical accounting policies and estimates as disclosed therein, with the exception of our adoption of recent accounting pronouncements, as discussed below.

Recent Accounting Pronouncements

We adopted ASC 606, “Revenue Recognition — Revenue from Contracts with Customers” and its related amendment. See Notes 2 and 3 to our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

At September 30, 2019, there have been no material changes to the market risk information described under “Quantitative and Qualitative Disclosures About Market Risk” included in the Annual Report on Form 10-K for the year ended December 31, 2018.

Item 4. Controls and Procedures

(a)  Evaluation of Disclosure Controls and Procedures.   Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of the period covered by this Form 10‑Q, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b)  Changes in Internal Control over Financial Reporting.   There were no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during the three months ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 18, 2019, except as set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, as filed with the SEC on August 6, 2019.

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

Unregistered Sales of Equity Securities

On July 2, 2019, 66,041 warrants were exercised by Hercules on a net, non-cash, basis. Per the terms of the warrant agreement, we issued 45,690 shares of common stock.  The shares were issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, or the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, because the offer and sale of the shares did not involve a “public offering” as defined in Section 4(a)(2) of the Securities Act, and other applicable requirements were met.

See also Current Reports on Form 8-K filed with the SEC on July 2, 2019 and August 2, 2019.

Use of Proceeds from Initial Public Offering of Common Stock

On December 11, 2017, we completed the initial public offering of our common stock, which resulted in the sale of 4,916,480 shares, including 641,280 shares sold by us pursuant to the exercise in full by the underwriters of their option to purchase additional shares in connection with the initial public offering, at a price to the public of $15.00 per share. The offer and sale of all of the shares in our initial public offering was registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-221475), which was declared effective by the SEC on December 6, 2017, and a registration statement on Form S-1 (File No. 333-221932) under Rule 462(b) of the Securities Act that became effective upon its filing. Following the sale of all of the shares in connection with the closing of our initial public offering, the offering terminated. J.P. Morgan Securities LLC, Leerink Partners LLC and Cowen and Company, LLC acted as joint book-running managers for the initial public offering. BTIG, LLC and Evercore Group L.L.C. acted as co-managers.

We received approximately $65.6 million in net proceeds after deducting underwriting discounts and commissions and offering costs payable by us. As of September 30, 2019, we had used all of the net proceeds from the offering for: operating expenses, capital investments, debt payments and the acquisition of Aushon. None of the offering expenses consisted of direct or indirect payments made by us to directors, officers or persons owning 10% or more of our common stock or to their associates, or to our affiliates, and we have not used any of the net proceeds from the offering to make payments, directly or indirectly, to any such persons. There has been no material change in the planned use of the net proceeds from our initial public offering as described in our final prospectus filed with the SEC on December 7, 2017 pursuant to Rule 424(b)(4) under the Securities Act.

Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

33

Item 6.  Exhibits

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.

Exhibit Number		Exhibit Description	Filed Herewith	Incorporated by Reference herein from Form or Schedule	Filing Date	SEC File/ Reg. Number
10.1*		Letter Agreement, dated July 22, 2019, between the Registrant and Amee Desjourdy.	X
10.2*		Consulting Agreement, dated July 31, 2019, between the Registrant and Jackson Streeter, M.D.		8-K	8/1/2019	001-38319
31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1		Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101	.INS	XBRL Instance Document.	X
	.SCH	XBRL Taxonomy Extension Schema Document.	X
	.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	X
	.DEF	XBRL Taxonomy Extension Definition.	X
	.LAB	XBRL Taxonomy Extension Label Linkbase Document.	X
	.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	X

*Management contract or compensatory plan or arrangement.

34

SIGNATURES

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 thereunto duly authorized.

	QUANTERIX CORPORATION
Dated: November  8, 2019	By:	/s/ E. Kevin Hrusovsky
		E. Kevin Hrusovsky
		Chairman, President and Chief Executive Officer
		(principal executive officer)

Dated: November  8, 2019	By:	/s/ Amol Chaubal
		Amol Chaubal
		Chief Financial Officer
		(principal financial officer and principal accounting officer)

35

EX-10.1

Exhibit 10.1

July 21,  2019

Amee Desjourdy

Boston, MA

Dear Amee:

Quanterix Corporation (the "Company") is pleased to offer you,  subject to Compensation Committee approval, the full-time position of Chief Human Resource Officer. This will be an executive officer level position, reporting to me. Your start date will be August 19, 2019. We are excited about the prospect of you joining our team.

Salary: The Company will pay you a base salary at an annual rate of $300,000, paid at a bi­ weekly rate of $11,538.46 (subject to periodic review and adjustment at the discretion of the Company).

Bonus: You will be eligible to receive an annual performance bonus. The Company will target the bonus at up to 40% of your annual base salary earnings. The actual bonus percentage is discretionary and will be subject to your achievement of the metrics and goals established by and agreed to with Kevin Hrusovsky. For 2019, your target bonus will be 40% of your annual base salary of $300,000, or $120,000. The bonus also will be subject to your employment for the full period covered by the bonus, approval by and adjustment at the discretion of the Company and Company's Board of Directors, and the terms of any applicable bonus plan. You must be actively employed by Quanterix on the date the bonus is paid to receive a performance bonus.

Benefits: You will be eligible to participate in the employee benefits and insurance programs generally made available to its full-time employees, including medical insurance, dental insurance, 401K Plan and match, ESPP, Flexible Spending Account, term life insurance, and short and long term disability insurance. Details of these benefits programs, including mandatory employee contributions, will be made available to you when you start. You also will be eligible to receive paid vacation time. You will be eligible for up to 20 days of paid vacation per year, which shall accrue on a prorated basis. Other provisions of the Company's vacation policy are set forth in the policy itself.

Stock Options & RSUs: We will recommend to the Compensation Committee that you be granted a new hire award of 11,834 Restricted Stock Units (“RSUs”) and an option to purchase 17,354 shares (“Options”) of the Company’s common stock, with an exercise price equal to the stock’s fair market value on the later of (i) the date your award is approved by the Compensation Committee; and (ii) your effective date of employment. The RSUs and Options will vest over four years, with 25% vesting on the first anniversary of your start date, and the remaining vesting ratably on a monthly basis over the next three years. Notwithstanding the foregoing, in the event of the Company’s consummation of a Sale Event (as defined below) within the first eighteen (18) months after your effective date of employment and while you remain employed  by the Company, then: (1) you immediately will vest in fifty percent (50%) of any unvested outstanding portion of the RSUs and Options (with any such vesting, as stated below, pursuant to the terms and conditions of the Quanterix 2017 Employee, Director and Consultant Equity Incentive Plan and any associated agreement required to be entered into by you and the Company), and (2) any remaining unvested RSUs and Options (after giving effect to the aforementioned vesting acceleration) will vest on the original vesting schedule applicable to the RSUs and Options, with the vesting amounts to be reduced and pro-rated to reflect the above-described acceleration.

You will also be eligible to receive an annual equity grant as part of the Company’s next equity awards cycle, which we expect to commence in the first quarter of 2020. The Company will target a grant date fair value of the annual equity awards of up to $375,000. The target value of your award will be discretionary and will be subject to your achievement of the metrics and goals established by and agreed to with Kevin Hrusovsky. Your equity grant will be subject to valuation methodologies and other terms and conditions applicable to other similarly situated executives of the Company, and will be subject to Compensation Committee approval.

Your equity awards will be governed by the Quanterix 2017 Employee, Director and Consultant Equity Incentive Plan and any associated agreement required to be entered into by you and the Company.

At-Will Employment; Accrued Obligations; Severance

Your employment is “at will,” meaning you or the Company may terminate it at any time for any or no reason. In the event of the termination of your employment for any reason, the Company shall pay you the “Accrued Obligations,” defined as (1) your base salary through the date of termination, (2) an amount equal to the value of your accrued unused vacation days, and (3) the amount of any expenses properly incurred by you on behalf of the Company prior to any such termination and not yet reimbursed. In addition, in the event the Company terminates your employment without Cause (as defined below), the Company shall provide you with the following termination benefits (the “Termination Benefits”):

(i)continuation of your base salary for a period of six (6) months after the date of termination at the salary rate then in effect (“Salary Continuation Payments”) (solely for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, each Salary Continuation Payment is considered a separate payment). RSU’s and Options that otherwise would have vested during this severance period will vest and will not be forfeited;

(ii)continuation of group health plan benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and you as in effect on the date of termination until the earlier of (i) six (6) months from the termination date; or (ii) the date you become eligible for health benefits through another employer or otherwise become ineligible for COBRA (“Health Benefits Continuation Payments”). Notwithstanding the above, if the Company determines in its sole discretion that it cannot provide the foregoing Health Benefits Continuation Payments without potentially violating applicable law (including but not limited to the 2010   Patient Protection and Affordable Care Act, as amended by the 2010 Health  Care and Education Reconciliation Act), the Company shall in lieu thereof provide to you a taxable monthly payment in an amount equal to the Company’s portion of the monthly COBRA premium (as described above) that you would  be required to  pay to continue your group health coverage in effect on the date of your termination (which amount shall be based on the premium for the first month of COBRA coverage), which payments shall be made on the last day of each month regardless of whether you elect COBRA continuation coverage and shall end on the earlier of (y) the date upon which you obtain other employment; or (z) the last day of the sixth (6th) calendar month following your termination date;

(iii)if the date of termination occurs within the twelve (12) month period immediately following a Sale Event (such a termination a “Sale Event Termination”), then your Salary Continuation Payments and Health Benefits Continuation Payments shall continue for a period of twelve (12) months after the date of termination (such 12 month continuation period to be in lieu of, and not in addition to, the 6-month period referenced in (i) and (ii) above); and

(iv)if a Sale Event Termination occurs after the first eighteen (18) months after your effective date of employment, you will receive additional vesting of all outstanding equity awards held by you (including the Options and RSUs) equal to an amount that would have vested during the twelve (12) month Salary Continuation Payments period.

Notwithstanding anything to the contrary in this agreement, you shall not be entitled to any Termination Benefits unless you first (i) enter into, do not revoke, and comply with the terms of a separation agreement in a form acceptable to the Company, which shall include a general release in favor of the Company and related persons and entities (the “Release”); (ii) resign from any and all positions, including, without implication of limitation, as a director, trustee, and officer, that you then hold with the Company and any affiliate of the Company; (iii) comply with the terms of your Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement; and (iv) return all Company

property and comply with any instructions related to deleting and purging duplicates of such Company property. The Salary Continuation Payments shall commence within 60 days after the date of termination and shall be made on the Company’s regular payroll dates; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the Salary Continuation Payments shall begin to be paid in the second calendar year. In the event you miss a regular  payroll period between the date of termination and first Salary Continuation Payment, the first Salary Continuation Payment shall include a “catch up” payment.

For purposes of this section:

“Cause” means the occurrence of any of the following (and, if applicable, that the Company has complied with the Cause Process (hereinafter defined) following the occurrence of a circumstance subject to the Cause Process): (i) theft, fraud, embezzlement, misappropriation of assets or property of the Company; (ii) dishonesty, gross negligence, misconduct, neglect of duties, or breach of fiduciary duty to the Company; (iii) violation of federal or state securities laws; (iv) breach of an employment, consulting or other agreement with the Company; (v) the conviction of a felony, or any crime involving moral turpitude, including a plea of guilty or nolo contendere; or (vi) continued non- performance or unsatisfactory performance of your responsibilities hereunder. “Cause Process” means that (1) the Company has reasonably determined in good faith that a “Cause” condition has occurred; (2) the Company has notified you in writing of the first occurrence of the Cause condition within 60 days of the first occurrence of such condition; (3) you are provided a period of 30 days following such notice (the “Cause Cure Period”) to remedy the condition; (4) notwithstanding such efforts, the Company reasonably and in good faith determines at the end of the Cause Cure Period that the Cause condition continues to exist; and (5) the Company terminates your employment within 30 days after the end of the Cause Cure Period. If you cure the Cause condition during the Cause Cure Period, Cause shall be deemed not to have occurred. The Company shall not be required to follow the Cause Process as to those conditions which it reasonably determines in good faith cannot be cured within the Cause Cure Period. For the avoidance of doubt, you and the Company acknowledge and agree that clauses (i), (iii) and (v) cannot be cured, and shall not be subject to the requirements of the Cause Process.

“Sale Event” means the consummation of: (i) the sale of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis to an unrelated person or entity; or (ii) a merger, reorganization or consolidation in which the outstanding shares of Stock are converted into or exchanged for securities of the successor entity and the holders of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction (taking into account only ownership interests resulting from pre-transaction interests in the Company).

Representation Regarding Other Obligations: This offer is conditioned on your representation that you are not subject to any confidentiality, non-competition

agreement or any other similar type of restriction that may affect your ability to devote full time and attention to your work at the Company. If you have entered into any agreement that may restrict your activities on behalf of the Company, please provide me with a copy of the agreement as soon as possible.

Other Terms: Your employment with the Company shall be on an at-will basis. In other words, you or the Company may terminate employment for any reason and at any time, with or without notice. Similarly, the terms of employment outlined in this letter are subject to change at any time. You also will be required to sign the Company’s standard “Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement” as a condition of your employment. A copy of that Agreement is enclosed. In addition, as with all employees, our offer to you is contingent on your submission of

satisfactory proof of your identity and your legal authorization to work in the United States.

We are excited about the opportunity to work with you at Quanterix. If you have any questions about this information, please do not hesitate to call. Otherwise, please confirm your acceptance of this offer of employment by signing below and returning a copy to me no later than July 22, 2019.

We are confident that with your background and skills, you will have an immediate positive impact on our organization.

Sincerely,

/s/ Kevin Hrusovsky

Kevin Hrusovsky

Chairman, CEO and President

ACCEPTED:

/s/ Amee Desjourdy     7/22/19

EX-31.1

Exhibit 31.1

CERTIFICATIONS UNDER SECTION 302

I, E. Kevin Hrusovsky, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Quanterix Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)            designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)            evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)            all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019

/s/ E.Kevin Hrusovsky

E. Kevin Hrusovsky

Chairman, President and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS UNDER SECTION 302

I, Amol Chaubal, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Quanterix Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)            designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)            evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)            all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019

/s/ Amol Chaubal

Amol Chaubal

Chief Financial Officer

(principal financial officer and principal accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS UNDER SECTION 906

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Quanterix Corporation, a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report for the period ended September 30, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 8, 2019	/s/ E. Kevin Hrusovsky
	E. Kevin Hrusovsky
	Chairman, President and Chief Executive Officer
Dated: November 8, 2019	/s/ Amol Chaubal
	Amol Chaubal
	Chief Financial Officer

XML

Significant accounting policies (Tables)

9 Months Ended

Sep. 30, 2019

ASU 2014-09

Revenue recognition

Schedule of impact on consolidated balance sheet and statement of operations due to adoption of ASU 606

In accordance with the reporting requirements of ASC 606, the disclosure of the impact on the Company's consolidated balance sheet and statement of operations, as a result of adopting the provisions of ASC 606, was as follows (in thousands):

											Prior to
											adoption of
	As				Adjusted under		As reported				ASC 606
	reported				ASC 606		September 30,				September 30,
	December 31, 2018		Adjustments		January 1, 2019		2019		Adjustments		2019
Assets:
Accounts receivable	$	6,792	$	47	$	6,839	$	11,914	$	—	$	11,914
Prepaid expenses and other current assets		2,330		288		2,618		2,297		290		2,007
Other non-current assets		536		19		555		574		18		592
Liabilities:
Deferred revenue		5,437		43		5,394		4,909		175		5,084
Deferred revenue, net of current portion		520		43		477		357		9		366
Stockholders’ equity:
Accumulated deficit	$	(175,888)	$	(440)	$	(175,448)	$	(205,286)	$	(492)	$	(205,778)

	For the Three Months Ended September 30, 2019						For the Nine Months Ended September 30, 2019
					Under ASC						Under ASC
	Under ASC 606		Adjustment		605		Under ASC 606		Adjustment		605
Product revenue	$	10,737	$	(332)	$	10,405	$	29,059	$	(381)	$	28,678
Service revenue		4,207		97		4,304		11,757		228		11,985
COGS		7,911		3		7,914		20,847		6		20,853
Gross profit		7,033		(238)		6,795		19,969		(159)		19,810
Selling general and administrative expenses		13,352		(55)		13,297		38,293		4		38,297
Net loss	$	(9,870)	$	(183)	$	(10,053)	$	(29,838)	$	(163)	$	(30,001)

The adoption of ASC 606 is discussed in further detail in Note 3.

XML

Inventory (Tables)

9 Months Ended

Sep. 30, 2019

Inventory

Summary of inventory

Inventory consists of the following (in thousands):

	September 30, 2019		December 31, 2018
Raw materials	$	5,419	$	1,546
Work in process		2,402		2,331
Finished goods		3,340		2,068
Total	$	11,161	$	5,945

XML

Notes payable (Tables)

9 Months Ended

Sep. 30, 2019

Notes payable

Schedule of debt payment obligations due based on principal payments

As of September 30, 2019, debt payment obligations due based on principal payments are as follows (in thousands):

2019	$	—
2020		—
2021		7,688
	$	7,688

XML

Investments

9 Months Ended

Sep. 30, 2019

Investments

Investments

7. Investments

During the third quarter of 2016, the Company purchased a minority interest in preferred stock in a privately held company for $0.3 million.  During the third quarter of 2018, the Company was issued a convertible note by a privately held company having a principal amount of $0.2 million.

The preferred stock investment is recorded on a cost basis in other non-current assets on the accompanying balance sheets as the Company does not have a controlling interest, does not have the ability to exercise significant influence over the privately held company, and the fair value of the equity investment is not readily determinable.  The Company performs an impairment analysis at each reporting period to determine if there is any readily available fair value information that would indicate an impairment. The Company has determined there was no impairment during the nine months ended September 30, 2019 or in any prior period.

The convertible note is held as an available-for-sale investment, which is carried at fair market value, with the unrealized gains and losses included in the determination of comprehensive income and reporting stockholders equity. When determining the estimated fair value of the convertible notes, the Company used a commonly accepted valuation methodology.

Equity investments that do not result in consolidation and are not accounted for under the equity method are measured at fair value, with any changes in fair value recognized in net income. For any such investments that do not have readily determinable fair values, the Company elects the measurement alternative to measure the investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

XML

Revenue recognition

9 Months Ended

Sep. 30, 2019

Revenue recognition

Revenue recognition

3. Revenue recognition

The Company recognizes revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects consideration that the Company expects to be entitled to receive in exchange for these goods and services, incentives and taxes collected from customers, that are subsequently remitted to governmental authorities.

The Company adopted ASC 606 on January 1, 2019, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2019 reflect the application of ASC 606 guidance, while the reported results for 2018 were prepared under ASC 605, Revenue Recognition.  

Customers

The Company’s customers primarily consist of entities engaged in the life sciences research market that pursue the discovery and development of new drugs for a variety of neurologic, cardiovascular, oncologic and other protein biomarkers associated with diseases.  The Company’s customer base exceeds 200 customers and includes several of the largest biopharmaceutical companies, academic research organizations and distributors who serve certain geographic markets.

Product revenue

The Company’s products are composed of analyzer instruments, assay kits and other consumables such as reagents.  Products are sold directly to biopharmaceutical and academic research organizations or are sold through distributors in EMEA and Asia Pacific regions.  The sales of instruments are generally accompanied by an initial year of implied service-type warranties and may be bundled with assays and other consumables and may also include other items such as training and installation of the instrument and/or an extended service warranty. Revenues from the sale of products are recognized at a point in time when the Company transfers control of the product to the customer, which is upon installation for instruments sold to direct customers, and based upon shipping terms for assay kits and other consumables.  Revenue for instruments sold to distributors is generally recognized based upon shipping terms (either upon shipment or delivery).

Service and other revenue

Service revenues are composed of contract research services, initial implied one-year service-type warranties, extended services contracts and other services such as training.  Contract research services are provided through the Company’s Accelerator Laboratory and generally consist of fixed fee contracts.  Revenues from contract research services are recognized at a point in time when the Company completes and delivers its research report on each individually completed study, or over time if the contractual provisions allow for the collection of transaction consideration for costs incurred plus a reasonable margin through the period of performance of the services.  Revenues from service-type warranties are recognized ratably over the contract service period.  Revenues from other services are immaterial.

Collaboration and license revenue

The Company may enter into agreements to license the intellectual property and know-how associated with its instruments in exchange for license fees and future royalties (as described below).  The license agreements provide the licensee with a right to use the intellectual property with the license fee revenues recognized at a point in time as the underlying license is considered functional intellectual property.  The Company has not recognized any revenues from royalties.

Payment terms

The Company’s payment terms vary by the type and location of customer and the products or services offered. Payment from customers is generally required in a term ranging from 30 to 45 days from date of shipment or satisfaction of the performance obligation with no discounts for early payment.  The Company does not provide extended payment terms or financing arrangements to its customers.

Disaggregated revenue

When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. The following tables disaggregate the Company's revenue from contracts with customers by revenue type:

	Three Months Ended								Nine Months Ended
	September 30, 2019								September 30, 2019
(in thousands)	NA		EMEA		Asia Pacific		Total		NA		EMEA		Asia Pacific		Total
Product revenues
Instruments	$	1,795	$	1,387	$	957	$	4,139	$	4,350	$	3,425	$	2,482	$	10,257
Consumable and other products		3,707		2,557		334		6,598		10,982		6,739		1,081		18,802
Totals		5,502		3,944		1,291		10,737		15,332		10,164		3,563	$	29,059
Service and other revenues
Service-type warranties		806		293		54		1,153		2,309		827		119	$	3,255
Research services		2,412		87		198		2,697		6,687		310		411	$	7,408
Other services		195		159		3		357		597		475		22	$	1,094
Totals	$	3,413	$	539	$	255	$	4,207	$	9,593	$	1,612	$	552	$	11,757

The Company’s contracts with customers may include promises to transfer multiple products and services to a customer.  The Company combines any performance obligations that are immaterial with one or more other performance obligations that are material to the contract. For arrangements with multiple performance obligations, the Company allocates the contract transaction price, including discounts, to each performance obligation based on its relative standalone selling price.  Judgment is required to determine the standalone selling price for each distinct performance obligation.  The Company determines standalone selling prices based on prices charged to customers in observable transactions, and uses a range of amounts to estimate standalone selling prices for each performance obligation.  The Company may have more than one range of standalone selling price for certain products and services based on the pricing for different customer classes.

Variable consideration in the Company’s contracts primarily relates to (i) sales- and usage-based royalties related to the license of intellectual property in collaboration and license contracts and (ii) certain non-fixed fee research services contracts.  ASC 606 provides for an exception to estimating the variable consideration for sales- and usage-based royalties related to the license of intellectual property, such that the sales- or usage-based royalty will be recognized in the period the underlying transaction occurs.  The Company has not recorded any sales- or usage-based royalty revenue for the three and nine months ended September 30, 2019. 

The aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied or are partially satisfied as of September 30, 2019 is $5.3 million. Of the performance obligations not yet satisfied or are partially satisfied, $4.9 million is expected to be recognized as revenue in the next 12 months, with the remainder to be recognized within the 24 months thereafter. The $5.3 million principally consists of $2.8 million billed for undelivered services related to initial and extended service-type warranties and research services, as well as $1.7 million related to undelivered licenses of intellectual property for a diagnostics company (see Note 12). 

Changes in deferred revenue from contracts with customers were as follows (in thousands):

	Nine Months Ended September 30, 2019
Balance at December 31, 2018	$	5,957
606 adoption adjustment		(86)
Deferral of revenue		2,650
Recognition of deferred revenue		(3,255)
Balance at September 30, 2019	$	5,266

Costs to obtain a contract

The Company’s sales commissions are generally based on revenues of the Company.  The Company has determined that certain commissions paid under its sales incentive programs meet the requirements to be capitalized as they are incremental and would not have occurred absent a customer contract. The change in the balance of costs to obtain a contract are as follows (in thousands):

	Nine Months Ended September 30, 2019
Balance at December 31, 2018	$	—
606 adoption adjustment		307
Deferral of costs to obtain a contract		636
Recognition of costs to obtain a contract		(635)
Balance at September 30, 2019	$	308

The Company has classified the balance of capitalized costs to obtain a contract as a component of prepaid expenses and other current assets as of January 1, 2019 and September 30, 2019 and classifies the expense as a component of cost of goods sold and selling, general and administrative expense over the estimated life of the contract. The Company considers potential impairment in these amounts each period.

ASC 606 provides entities with certain practical expedients and accounting policy elections to minimize the cost and burden of adoption.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.

The Company will exclude from its transaction price any amounts collected from customers related to sales and other similar taxes.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. The Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of January 1, 2019 or September 30, 2019.

The Company has elected to account for the shipping and handling as an activity to fulfill the promise to transfer the product, and therefore will not evaluate whether shipping and handling activities are promised services to its customers.

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Follow-on offering (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions		9 Months Ended
	Aug. 08, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Subsidiary or Equity Method Investee [Line Items]
Shares issued	2.7
Share value	$ 0.001	$ 0.001		$ 0.001
Gross proceeds	$ 69,000
stock issuance cost	4,500
Net proceeds	$ 64,500		$ (53)
Underwritten public offering
Subsidiary or Equity Method Investee [Line Items]
Shares issued	2.7
Share value	$ 0.001
Gross proceeds	$ 69,000
stock issuance cost	4,500
Net proceeds	$ 64,500	$ 64,529

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Warrants, stock-based compensation, stock options, restricted stock and restricted stock units - Warrants (Details) - shares	Jul. 02, 2019	Sep. 30, 2019
Number outstanding
Issued (in shares)	45,690
Warrants
Number outstanding
Warrants And Rights, Exercised	66,041
Outstandind warrants		10,000

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Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Inventory
Raw Materials	$ 5,419	$ 1,546
Work in process	2,402	2,331
Finished goods	3,340	2,068
Total	$ 11,161	$ 5,945

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Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Condensed Consolidated Balance Sheet
Accounts receivable, reserve for doubtful accounts	$ 98	$ 36
Accounts receivable, related parties	321	48
Accounts payable, related parties	0	36
Other accrued expenses, related parties	258	226
Deferred revenue, current, related parties	$ 62	$ 33
Share value	$ 0.001	$ 0.001
Common stock, authorized shares	120,000,000	120,000,000
Common stock, shares issued	27,967,713	22,369,036
Common stock, shares outstanding	27,967,713	22,369,036

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Operating activities
Net loss	$ (29,838)	$ (22,202)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	2,188	1,020
Stock-based compensation expense	4,713	3,393
Non-cash interest expense	68	133
Loss on disposal of fixed assets	24
Change in fair value of preferred stock warrants		1
Changes in operating assets and liabilities:
Accounts receivable	(4,474)	1,160
Prepaid expenses and other assets	(104)	(753)
Inventory	(3,943)	(976)
Other non-current assets	(21)	(33)
Accounts payable	(835)	152
Accrued compensation and benefits, other accrued expenses and other current liabilities	573	(55)
Contract acquisition costs	533
Other non-current liabilities	10,068
Deferred revenue	(604)	(2,453)
Net cash used in operating activities	(21,652)	(20,613)
Investing activities
Purchases of property and equipment	(10,303)	(1,397)
Purchase of investments		(150)
Acquisitions, net of cash acquired	(14,529)	(3,800)
Net cash used in investing activities	(24,832)	(5,347)
Financing activities
Net proceeds		(53)
Proceeds from stock options exercised	2,176	684
Proceeds from ESPP purchase	799
Payments on notes payable	(50)	(1,930)
Net cash provided by (used in) financing activities	115,473	(1,299)
Net increase (decrease) in cash and cash equivalents	68,989	(27,259)
Effect of foreign currency exchange rate on cash	(65)
Cash, restricted cash, and cash equivalents at beginning of period	45,429	79,682
Cash, restricted cash, and cash equivalents at end of period	114,353	52,423
Supplemental cash flow information
Cash paid for interest	478	506
Purchases of property and equipment included in accounts payable	45
191,152 shares of common stock issued in connection with the acquisition of Uman	5,467
Purchases of property and equipment included in other non-current liabilities	7,750
Reconciliation of cash, cash equivalents, and restricted cash:
Total cash, cash equivalents, and restricted cash	45,429	$ 79,682
At-the-market offering
Financing activities
Net proceeds	48,019
Underwritten public offering
Financing activities
Net proceeds	$ 64,529

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Revenue recognition - Costs to obtain a contract (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Change in the balance of costs to obtain a contract
606 adoption adjustment	$ 307
Deferral of costs to obtain a contract	636
Recognition of costs to obtain a contract	(635)
Balance at end of period	$ 308

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Notes payable (Details) - Loan agreement $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Long Term Debt
Additional amounts available to borrow	$ 0
End Of Term Fee	$ 50
Minimum
Long Term Debt
Interest rate (as a percent)	8.25%
Prime rate
Long Term Debt
Margin on variable interest rate (as a percent)	(5.25%)

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Warrants, stock-based compensation, stock options, restricted stock and restricted stock units - Restricted stock (Details) - Restricted stock - shares	1 Months Ended		9 Months Ended
	Jan. 31, 2015	Dec. 31, 2014	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			0
2007 Plan | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		78,912
Vesting period (in years)		4 years
2007 Plan | Executive
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	781,060
Vesting period (in years)	4 years
2007 Plan | Executive | Subject to a four year vesting schedule with 25% vesting on the first anniversary and the remaining vesting ratably on a monthly basis over the remaining three years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage 1 (as a percent)	25.00%
2007 Plan | Executive | Subject to vesting with 50% vesting on December 31, 2018 and December 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Vesting percentage 1 (as a percent)	75.00%

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Goodwill and Acquired Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Acquired Intangible Assets

Rollforward of goodwill balance

The following is a rollforward of the Company’s goodwill balance (in thousands):

	Goodwill
Balance as of December 31, 2018	$	1,308
Goodwill acquired		8,111
Cumulative translation adjustment		(458)
Balance as of September 30, 2019	$	8,961

Summary of intangible assets

Acquired intangible assets as of September 30, 2019 consist of the following (in thousands):

		September 30, 2019
		Gross				Cumulative		Net
	Estimated Useful	Carrying		Accumulated		Translation		Carrying
	Life (in years)	Value		Amortization		Adjustment		Value
Know-how	8.5	$	13,000	$	(383)	$	(711)	$	11,906
Developed technology	7		1,650		(648)		—		1,002
Customer relationships	8.5 - 10		1,360		(368)		(6)		986
Non-compete agreements	5.5		340		(17)		(18)		305
Trade names	3		50		(28)		—		22
Total		$	16,400	$	(1,444)	$	(735)	$	14,221

Acquired intangible assets as of December 31, 2018 consist of the following (in thousands):

		December 31, 2018
		Gross				Cumulative		Net
	Estimated Useful	Carrying		Accumulated		Translation		Carrying
	Life (in years)	Value		Amortization		Adjustment		Value
Developed technology	7	$	1,650	$	(379)	$	—	$	1,271
Customer relationships	10		1,250		(208)		—		1,042
Trade names	3		50		(15)		—		35
Total		$	2,950	$	(602)	$	—	$	2,348

Schedule of future estimated amortization expense of acquired intangible assets

Future estimated amortization expense of acquired intangible assets as of September 30, 2019 is as follows (in thousands):

For the Years Ended December 31,	Estimated Amortization Expense
2019	$	546
2020		2,110
2021		2,013
2022		1,930
2023		1,849
Thereafter		6,508
	$	14,956

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Significant accounting policies - Recent accounting pronouncements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019	Dec. 31, 2018	Sep. 30, 2016
Assets:
Accounts receivable	$ 11,914		$ 11,914		$ 6,839	$ 6,792
Prepaid expenses and other current assets	2,297		2,297		2,618	2,330
Other non-current assets	574		574		555	536
Liabilities:
Deferred revenue	4,909		4,909		5,394	5,437
Deferred revenue, net of current portion	357		357		477	520
Stockholders’ equity:
Accumulated deficit	(205,286)		(205,286)		(175,448)	(175,888)
Revenue	14,944	$ 10,591	40,816	$ 26,755
Total costs of goods sold and services	7,911	4,996	20,847	14,016
Gross profit	7,033	5,595	19,969	12,739
Selling, general and administrative expenses	13,352	8,846	38,293	23,117
Net income	(9,870)	(7,657)	(29,838)	(22,202)
Restricted cash	1,026	1,000	1,026	1,000		$ 1,000
Minority interest in preferred stock in privately held company
Stockholders’ equity:
Purchase price of investment							$ 300
Investment in a convertible notes of a privately held company
Stockholders’ equity:
Investment principle amount		200		200
Product revenue
Stockholders’ equity:
Revenue	10,737	5,962	29,059	15,907
Total costs of goods sold and services	5,513	3,277	14,217	8,995
Service and other revenue
Stockholders’ equity:
Revenue	4,207	3,017	11,757	8,699
Total costs of goods sold and services	2,398	$ 1,719	6,630	$ 5,021
Adjustments
Assets:
Accounts receivable					47
Prepaid expenses and other current assets	290		290		288
Other non-current assets	18		18		19
Liabilities:
Deferred revenue	175		175		43
Deferred revenue, net of current portion	9		9		43
Stockholders’ equity:
Accumulated deficit	(492)		(492)		$ (440)
Gross profit	(238)		(159)
Selling, general and administrative expenses	(55)		4
Net income	(183)		(163)
Adjustments | Product revenue
Stockholders’ equity:
Revenue	(332)		(381)
Adjustments | Service and other revenue
Stockholders’ equity:
Revenue	97		228
Total costs of goods sold and services	3		6
Balances without adoption of ASU 606
Assets:
Accounts receivable	11,914		11,914
Prepaid expenses and other current assets	2,007		2,007
Other non-current assets	592		592
Liabilities:
Deferred revenue	5,084		5,084
Deferred revenue, net of current portion	366		366
Stockholders’ equity:
Accumulated deficit	(205,778)		(205,778)
Gross profit	6,795		19,810
Selling, general and administrative expenses	13,297		38,297
Net income	(10,053)		(30,001)
Balances without adoption of ASU 606 | Product revenue
Stockholders’ equity:
Revenue	10,405		28,678
Balances without adoption of ASU 606 | Service and other revenue
Stockholders’ equity:
Revenue	4,304		11,985
Total costs of goods sold and services	$ 7,914		$ 20,853

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Revenue recognition - Changes in deferred revenue from contracts with customers (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Changes in deferred revenue from contracts with customers
Balance at beginning of period	$ 5,957
606 adoption adjustment	(86)
Deferral of revenue	2,650
Recognition of deferred revenue	(3,255)
Balance at end of period	$ 5,266

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Related party transactions

9 Months Ended

Sep. 30, 2019

Related party transactions

Related party transactions

19. Related party transactions

bioMérieux is a customer and also a holder of the Company’s common stock. bioMérieux formerly also had a designee on the Company’s Board of Directors. On September 6, 2018, bioMérieux notified the Company that it was terminating the Amended JDLA. The termination of the agreement resulted in the immediate recognition of the remaining deferred revenue. The Company recognized revenue from bioMérieux related to the Amended JDLA of less than $0.1 million, $1.6 million, less than $0.1 million and $2.1 million in the three months ended September 30, 2019 and 2018 and the nine months ended September 30, 2019 and 2018, respectively.

The Company entered into the License Agreement for certain intellectual property with Tufts. Tufts is a related party to the Company due to Tufts’ equity ownership in the Company and because a member of the Company’s Board of Directors was affiliated with Tufts. During the three months ended September 30, 2019 and 2018 and the nine months ended September 30, 2019 and 2018, the Company recorded royalty expense of $0.3 million, $0.2 million, $0.7 million and $0.5 million, respectively, in cost of product revenue on the consolidated statements of operations.

During the year ended December 31, 2017, Harvard University became a related party because a member of the Company’s Board of Directors is affiliated with Harvard University. Revenue recorded from sales to Harvard University were $0.3 million and $0.4 million for the three and nine months ended September 30, 2019, respectively, and less than $0.1 million for each of the three and nine months ended September 30, 2018, respectively.

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Goodwill and Acquired Intangible Assets

9 Months Ended

Sep. 30, 2019

Goodwill and Acquired Intangible Assets

Goodwill and Acquired Intangible Assets

15. Goodwill and Acquired Intangible Assets

As of September 30, 2019, the carrying amount of goodwill was $9.0 million. The following is a rollforward of the Company’s goodwill balance (in thousands):

	Goodwill
Balance as of December 31, 2018	$	1,308
Goodwill acquired		8,111
Cumulative translation adjustment		(458)
Balance as of September 30, 2019	$	8,961

Acquired intangible assets as of September 30, 2019 consist of the following (in thousands):

		September 30, 2019
		Gross				Cumulative		Net
	Estimated Useful	Carrying		Accumulated		Translation		Carrying
	Life (in years)	Value		Amortization		Adjustment		Value
Know-how	8.5	$	13,000	$	(383)	$	(711)	$	11,906
Developed technology	7		1,650		(648)		—		1,002
Customer relationships	8.5 - 10		1,360		(368)		(6)		986
Non-compete agreements	5.5		340		(17)		(18)		305
Trade names	3		50		(28)		—		22
Total		$	16,400	$	(1,444)	$	(735)	$	14,221

Acquired intangible assets as of December 31, 2018 consist of the following (in thousands):

		December 31, 2018
		Gross				Cumulative		Net
	Estimated Useful	Carrying		Accumulated		Translation		Carrying
	Life (in years)	Value		Amortization		Adjustment		Value
Developed technology	7	$	1,650	$	(379)	$	—	$	1,271
Customer relationships	10		1,250		(208)		—		1,042
Trade names	3		50		(15)		—		35
Total		$	2,950	$	(602)	$	—	$	2,348

The Company acquired $13.5 million of intangible assets in the Uman acquisition, of which $13.0 million was assigned to know-how, $0.4 million was assigned to non-compete agreements, and $0.1 million was assigned to customer relationships. The know-how and customer relationships intangible assets are being amortized on a straight-line basis over an 8.5 year amortization period, and the non-compete agreement intangible asset is being amortized on a straight-line basis over a 5.5 year amortization period. In total, the weighted-average amortization period for these intangible assets is 8.4 years.

The Company is currently evaluating the fair value of assets acquired and liabilities assumed from the Uman acquisition, including intangible assets and their related amortization periods. As such, the $13.5 million in intangible assets presented in the table above are provisional and will be finalized in a later period once the fair value procedures are completed.

The Company recorded amortization expense of $0.5 million and $0.8 million for the three and nine months ended September 30, 2019, respectively, and $0.2 million and $0.4 million for the three and nine months ended September 30, 2018, respectively. Amortization relating to developed technology is recorded within research and development expenses, amortization of customer relationships is recorded within selling, general, and administrative expenses, amortization of trade names is recorded within selling, general and administrative expenses, amortization of non-compete agreements is recorded within selling, general, and administrative expenses, and amortization of know-how is recorded within cost of goods sold.

Future estimated amortization expense of acquired intangible assets as of September 30, 2019 is as follows (in thousands):

For the Years Ended December 31,	Estimated Amortization Expense
2019	$	546
2020		2,110
2021		2,013
2022		1,930
2023		1,849
Thereafter		6,508
	$	14,956

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Notes payable

9 Months Ended

Sep. 30, 2019

Notes payable

Notes payable

11. Notes payable

Loan agreement

On April 14, 2014, the Company executed a Loan Agreement with a lender, as subsequently amended multiple times, most recently in April 2019. As of September 30, 2019, there were no additional amounts available to borrow under the debt facility. The interest rate on this term loan is variable based on a calculation of the prime rate less 5.25% with a minimum interest rate of 8.25%. Interest is paid monthly beginning the month following the borrowing date. At loan inception and in connection with the amendments, the Company issued the lender warrants to purchase shares of stock. The Loan Agreement also contains prepayment penalties and an end of term charge. Fees incurred upon execution of the agreements, and the fair value of warrants on the date of grant were accounted for as a reduction in the book value of debt and accreted through interest expense, using the effective interest rate method, over the term of the debt.

No end of term charges or principal payments were paid during the nine months ended September 30, 2019. On April 15, 2019, the Company signed Amendment 7 to the Loan Agreement, which extends the interest only payment period through July 1, 2021 and also extends the maturity date until October 1, 2021. As part of this Amendment 7, a “2019 End of Term Fee” for $50,000 was added to the Loan Agreement due on the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that the Company prepays the outstanding Secured Obligations and (iii) the date that the Secured Obligations become due and payable. In addition, the Company is required to pay the loan principal in five equal installments starting July 1, 2021 with the final principal payment to be made on October 1, 2021. As of September 30, 2019, the remaining loan balance is classified as a long term liability since all principal payments are due greater than twelve months after the balance sheet date.

As of September 30, 2019, debt payment obligations due based on principal payments are as follows (in thousands):

2019	$	—
2020		—
2021		7,688
	$	7,688

Non‑cash interest expense related to debt discount amortization and accretion of end of term fees was $0.1 million or less for each of the three months ended September 30, 2019 and 2018, and nine months ended September 30, 2019 and 2018.

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Notes payable - Debt payment obligations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Debt payment obligations due based on principal payments
2021	$ 7,688		$ 7,688
Debt payment obligations	7,688		7,688
Non-cash interest expense	$ 100	$ 100	$ 100	$ 100

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Warrants, stock-based compensation, stock options, restricted stock and restricted stock units - Restricted stock units (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Weighted-average grant date fair value per share
Share-based compensation expense	$ 1,828	$ 1,867	$ 4,713	$ 3,393
Vested immediately upon grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage 1 (as a percent)			10.4167%
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			227,653
Number of restricted stock units
Unvested restricted common stock at the beginning of the period (in shares)			321,662
Granted (in shares)			227,653
Vested (in shares)			(83,996)
Cancelled (in shares)			(42,983)
Unvested restricted common stock at the end of the period (in shares)	422,336		422,336
Weighted-average grant date fair value per share
Unvested restricted common stock at the beginning of the period (in dollars per share)			$ 15.84
Granted (in dollars per share)			24.21
Vested (in dollars per share)			16.65
Cancelled (in dollars per share)			18.17
Unvested restricted common stock at the end of the period (in dollars per share)	$ 19.90		$ 19.90
Share-based compensation expense	$ 800	$ 1,100	$ 2,000	$ 1,200
Total unrecognized compensation cost related to unvested stock awards	$ 7,600		$ 7,600
Period of recognition of unrecognized compensation cost			2 years 11 months 9 days
Restricted stock units | Vested in equal amounts annually over three years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			4,540
Vesting period 1			3 years
Number of restricted stock units
Granted (in shares)			4,540
Restricted stock units | Vested immediately upon grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			1,983
Number of restricted stock units
Granted (in shares)			1,983
Restricted stock units | Vesting ratably over the remaining 45 months
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			31,732
Vesting period 3			45 months
Number of restricted stock units
Granted (in shares)			31,732
Restricted stock units | Vest upon the one year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			3,000
Vesting period 1			1 year
Number of restricted stock units
Granted (in shares)			3,000
2017 Plan | Restricted stock units | Subject to a four year vesting schedule with 25% vesting on the first anniversary and the remaining vesting ratably on a monthly basis over the remaining three years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			135,058
Vesting period 1			4 years
Vesting period 2			3 years
Vesting percentage 1 (as a percent)			25.00%
Vesting percentage 2 (as a percent)			75.00%
Number of restricted stock units
Granted (in shares)			135,058
2017 Plan | Restricted stock units | Vesting on December 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			15,890
Number of restricted stock units
Granted (in shares)			15,890
2017 Plan | Restricted stock units | Vested in equal amounts annually over four years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			24,233
Vesting period 2			43 months
Number of restricted stock units
Granted (in shares)			24,233
2017 Plan | Restricted stock units | Vesting equally over four years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			10,194
Number of restricted stock units
Granted (in shares)			10,194
2017 Plan | Restricted stock units | Vested immediately upon grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted common stock issued (in shares)			3,006
Number of restricted stock units
Granted (in shares)			3,006

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Revenue recognition - Future performance obligations (Details) $ in Millions	Sep. 30, 2019 USD ($)
Transaction Price Allocated to Future Performance Obligations
Amount of transaction price allocated to performance obligations	$ 5.3
Service-type warranties and research services
Transaction Price Allocated to Future Performance Obligations
Amount of transaction price allocated to performance obligations	2.8
Undelivered licenses of intellectual property
Transaction Price Allocated to Future Performance Obligations
Amount of transaction price allocated to performance obligations	1.7
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01
Transaction Price Allocated to Future Performance Obligations
Amount of transaction price allocated to performance obligations	$ 4.9
Revenue recognition period for remaining performance obligation	12 months

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Business combinations (Tables)

9 Months Ended

Sep. 30, 2019

Business combinations

Schedule of fair value of consideration transferred

The following table summarizes the preliminary purchase price allocation, net of $1.2 million in cash and cash equivalents acquired (in thousands):

Purchase price:
Cash and stock paid	$	21,217
Cash and cash equivalents acquired		1,221
Purchase price, net		19,996
Assets (liabilities) acquired:
Accounts receivable	$	638
Inventory		1,680
Prepaids and other current assets		114
Property and equipment		33
Intangibles		13,450
Goodwill		8,111
Accounts payable		(20)
Accrued expense and other current liabilities		(871)
Deferred tax liabilities		(3,139)
Total	$	19,996

Schedule of fair value of assets acquired and liabilities assumed

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2018		2019		2018
Revenue (unaudited)	$	10,787	$	41,593	$	27,574
Pre-tax loss (unaudited)	$	(7,898)	$	(27,841)	$	(24,254)

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Significant accounting policies - Income taxes (Details) $ in Millions	Sep. 30, 2019 USD ($)
UmanDiagnostics AB Acquisition [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Goodwill	$ 0.1

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At-the-market offering

9 Months Ended

Sep. 30, 2019

At-the-market offering

At-the-market offering

16. At-the-market offering

On March 19, 2019, the Company entered into the Sales Agreement with Cowen with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, having an aggregate offering price of up to $50.0 million through Cowen as its sales agent. 

On June 5, 2019, the Company issued approximately 2.2 million shares of common stock at an average stock price of $22.73 per share pursuant to the terms of the Sales Agreement. The at-the-market offering resulted in gross proceeds of  $49.7 million. The Company incurred $1.7 million in issuance costs associated with the at-the-market offering, resulting in net proceeds to the Company of $48.0 million.

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Collaboration and license arrangements

9 Months Ended

Sep. 30, 2019

Collaboration and license arrangements

Collaboration and license arrangements

12. Collaboration and license arrangements

Joint development and license agreement

In 2012, the Company entered into a Joint Development and License Agreement (the JDLA) with bioMérieux SA, a related party.  The JDLA was amended in 2016 (the Amended JDLA).  Following the amendment, a total of $3.2 million of consideration was assigned to the deliverables and collaboration activities outlined in the Amended JDLA. The consideration of $3.2 million was recognized over the performance period which began in the fourth quarter 2016. On September 6, 2018, bioMérieux notified the Company that it was terminating the Amended JDLA, forfeiting any future IVD licensing rights to the Company’s Simoa technology and enabling the Company to consolidate and regain control of all Simoa IVD licensing and IP rights. As a result of the termination, the Company recognized $1.6 million in previously deferred collaboration revenue related to the agreement during the three months ended September 30, 2018.

Evaluation and option agreements and license agreement

In 2015, the Company entered into three agreements, for three separate fields, with a diagnostic company for the evaluation of the Company’s Simoa technology. These agreements each allowed for the option to negotiate a license agreement. In return, the Company received non‑refundable payments totaling $2.0 million. In December 2016, the diagnostic company exercised one of its options and the parties entered into a non-exclusive license agreement in one of the fields. This agreement has a one‑time non‑refundable license fee of $1.0 million and the right to receive running low single digit royalties on licensed products. The negotiation periods for the other two agreements were extended and the negotiations remain ongoing.

Upon execution of the license in one of the fields in December 2016, the $1.0 million license fee, in addition to the $0.8 million allocated to the option for this field, resulted in a total of $1.8 million of consideration being recognized as revenue as there were no remaining undelivered performance obligations. In December 2018, the Company entered into an option agreement for the rights to negotiate an exclusive license in this field with the diagnostic company. In exchange for the rights to negotiate an exclusive agreement, the Company received $0.5 million in consideration. As the right to negotiate with the Company has not been executed, the consideration from this agreement is deferred until the sooner of the execution of the contract or the end of the option period. Because the negotiations remain ongoing with respect to the other two fields and the options have not been exercised, the consideration allocated to these options of $1.2 million has been deferred and is recorded as deferred revenue as of September 30, 2019 and December 31, 2018.

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Subsequent events

9 Months Ended

Sep. 30, 2019

Subsequent events

Subsequent events

20. Subsequent events

The Company had no significant subsequent events for the period September 30, 2019 through the filing date of this Form 10-Q.

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Commitments and contingencies (Tables)

9 Months Ended

Sep. 30, 2019

Commitments and contingencies

Schedule of minimum future rent payments under the lease agreement

As of September 30, 2019, the minimum future rent payments under the lease agreements are as follows (in thousands):

2019	$	473
2020		2,312
2021		3,575
2022		3,372
2023 and Forward		29,208
	$	38,940

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Significant accounting policies (Policies)

9 Months Ended

Sep. 30, 2019

Significant accounting policies

Principles of consolidation

Principles of consolidation

The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of Quanterix Corporation and its wholly‑owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. In making those estimates and assumptions, the Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. The Company’s significant estimates included in the preparation of the consolidated financial statements are related to revenue recognition, fair value of equity instruments and notes receivable, fair value of assets acquired and liabilities assumed in acquisitions, valuation allowances recorded against deferred tax assets, and stock‑based compensation. Actual results could differ from those estimates.

Foreign Currency

Foreign Currency

The Company translates assets and liabilities of its foreign subsidiaries at rates in effect at the end of the reporting period. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive loss.

Income taxes

Income taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, Income Taxes (ASC 740). When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of September 30, 2019 the Company did not have any significant uncertain tax positions.

During the three months ended September 30, 2019, the Company acquired Uman. The Company analyzed the transaction from an income tax perspective and adjusted the deferred tax assets and liabilities related to the Uman acquisition. Of the total goodwill recorded, less than $0.1 million is amortizable related to the historical tax basis that Uman had prior to the acquisition.

Business combinations

Business combinations

Under the acquisition method of accounting, the Company allocates the fair value of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions determined by management. The excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. These valuations require significant estimates and assumptions, especially with respect to intangible assets.

The Company typically uses the discounted cash flow method to value acquired intangible assets. This method requires significant management judgment to forecast future operating results and establish residual growth rates and discount factors. The estimates used to value and amortize intangible assets are consistent with the plans and estimates that are used to manage the business and are based on available historical information and industry estimates and averages. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, the Company could experience impairment charges. In addition, the Company has estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.

Restricted Cash

Restricted cash

Restricted cash primarily represents collateral for a letter of credit issued as security for the lease for the Company’s new headquarters. The restricted cash is long term in nature as the Company will not have access to the funds until more than one year from September 30, 2019.

Recent accounting pronouncements

Recent accounting pronouncements

The Company is considered to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of this extended transition period and, as a result, the Company will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies so long as the Company remains an emerging growth company.

On January 1, 2019, the Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), using the modified retrospective method.  Under ASC 606, revenue is recognized upon the transfer of control of goods or services to customers and reflects the amount of consideration to which an entity expects to be entitled in exchange for those goods or services.  The adoption of ASC 606 has been applied to customer contracts that were not completed as of January 1, 2019, and did not materially change the pattern of revenue recognition for its current customer contracts.  The Company's consolidated financial statements for the prior-year period have not been revised and are reflective of the revenue recognition requirements which were in effect for that period.

The Company recorded an adjustment to the accumulated deficit of $0.4 million as of January 1, 2019 for the cumulative effect primarily related to the deferral of sales commissions.

In accordance with the reporting requirements of ASC 606, the disclosure of the impact on the Company's consolidated balance sheet and statement of operations, as a result of adopting the provisions of ASC 606, was as follows (in thousands):

											Prior to
											adoption of
	As				Adjusted under		As reported				ASC 606
	reported				ASC 606		September 30,				September 30,
	December 31, 2018		Adjustments		January 1, 2019		2019		Adjustments		2019
Assets:
Accounts receivable	$	6,792	$	47	$	6,839	$	11,914	$	—	$	11,914
Prepaid expenses and other current assets		2,330		288		2,618		2,297		290		2,007
Other non-current assets		536		19		555		574		18		592
Liabilities:
Deferred revenue		5,437		43		5,394		4,909		175		5,084
Deferred revenue, net of current portion		520		43		477		357		9		366
Stockholders’ equity:
Accumulated deficit	$	(175,888)	$	(440)	$	(175,448)	$	(205,286)	$	(492)	$	(205,778)

	For the Three Months Ended September 30, 2019						For the Nine Months Ended September 30, 2019
					Under ASC						Under ASC
	Under ASC 606		Adjustment		605		Under ASC 606		Adjustment		605
Product revenue	$	10,737	$	(332)	$	10,405	$	29,059	$	(381)	$	28,678
Service revenue		4,207		97		4,304		11,757		228		11,985
COGS		7,911		3		7,914		20,847		6		20,853
Gross profit		7,033		(238)		6,795		19,969		(159)		19,810
Selling general and administrative expenses		13,352		(55)		13,297		38,293		4		38,297
Net loss	$	(9,870)	$	(183)	$	(10,053)	$	(29,838)	$	(163)	$	(30,001)

The adoption of ASC 606 is discussed in further detail in Note 3.

In January of 2019, the Company adopted accounting standards update (ASU) 2016-01, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. For equity investments without readily determinable fair values that do not qualify for the practical expedient to estimate fair value using the net asset value per share or its equivalent, the Company has elected to measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. This election is made for each investment separately and is reassessed at each reporting period as to whether the investment continues to qualify for this election. Additionally, at each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. The adoption of this standard did not have a material effect.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842):Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-02), which establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease.  Under ASU 2016-02, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short term leases) at the commencement date. ASU 2016-02 is effective for the Company for the year ending December 31, 2020. Early adoption is permitted. In 2018, the FASB modified ASU 2016-02 by issuing ASU 2018-01 and ASU 2018-11, which collectively added two practical expedients, provided a second modified retrospective transition method which does not require retrospective adjustment of prior periods, and provided certain narrow scope improvements to ASU 2016-02. The Company is currently evaluating the expected impact of ASU 2016-2 on its financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments  — Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The standard is effective for the Company beginning in the first quarter of 2020, with early adoption permitted. The Company is currently evaluating the expected impact of ASU 2016-13 on its financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect adoption of this ASU to be material to its financial statements.

There have been no other material changes to the significant accounting policies and recent accounting pronouncements previously disclosed in the 2018 Annual Report on Form 10‑K.

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Fair value of financial instruments (Tables)

9 Months Ended

Sep. 30, 2019

Fair value of financial instruments

Schedule of fair value measurements

Fair value measurements as of September 30, 2019 are as follows (in thousands):

			Quoted prices				Significant
			in active		Significantother		unobservable
			markets		observable		inputs
Description	Total		(Level 1)		inputs(Level 2)		(Level 3)
Financial assets
Cash equivalents	$	101,255	$	101,255	$	—	$	—
Note receivable		150		—		—		150
	$	101,405	$	101,255	$	—	$	150

Fair value measurements as of December 31, 2018 are as follows (in thousands):

			Quoted prices				Significant
			in active		Significantother		unobservable
			markets		observable		inputs
Description	Total		(Level 1)		inputs(Level 2)		(Level 3)
Financial assets
Cash equivalents	$	42,608	$	42,608		—	$	—
Note receivable		150		—		—		150
	$	42,758	$	42,608		—	$	150

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Other accrued expenses and other non-current liabilities

9 Months Ended

Sep. 30, 2019

Other accrued expenses and other non-current liabilities

Other accrued expenses and other non-current liabilities

8. Other accrued expenses and other non-current liabilities

Other accrued expenses consist of the following (in thousands):

	September 30, 2019		December 31, 2018
Accrued inventory	$	485	$	599
Accrued royalties		493		323
Accrued professional services		878		723
Accrued development costs		735		795
Accrued other		948		689
Total accrued expenses	$	3,539	$	3,129

Other non-current liabilities consist of the following (in thousands):

	September 30, 2019		December 31, 2018
Leasehold obligation incentive		7,750		—
Deferred Rent		2,592		272
Deferred tax liabilities		2,818		—
Other		5		6
Total non-current liabilities	$	13,165	$	278

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Net loss per share

9 Months Ended

Sep. 30, 2019

Net loss per share

Net loss per share

4. Net loss per share

Basic net loss per common share is calculated by dividing the net loss by the weighted‑average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted‑average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury‑stock and if‑converted methods. For purposes of the diluted net loss per share calculation, unvested restricted common stock, restricted stock units, stock options, and warrants are considered to be potentially dilutive securities, but are excluded from the calculation of diluted net loss per share because their effect would be anti‑dilutive and therefore basic and diluted net loss per share were the same for all periods presented.

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because to do so would be anti‑dilutive (in common stock equivalent shares):

	September 30,
	2019	2018
Unvested restricted common stock and restricted stock units	422,336	376,949
Outstanding stock options	2,662,334	2,565,895
Outstanding warrants	10,000	76,041
Total	3,094,670	3,018,885

As of September 30, 2019 and 2018, the Company had an obligation to issue warrants to purchase an additional 93,341 shares of common stock to a vendor if a contract is terminated prior to a minimum purchase commitment being met. No amounts are presented in the table above for this obligation to issue a warrant as the issuance of the warrant is not considered probable.

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At-the-market offering (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions			9 Months Ended
	Aug. 08, 2019	Jun. 05, 2019	Sep. 30, 2019	Sep. 30, 2018	Mar. 19, 2019	Dec. 31, 2018
Common Stock, Value, Issued			$ 28			$ 22
Shares issued	2.7
Gross Proceeds From Issuance Of Common Stock	$ 69,000
stock issuance cost	4,500
Net proceeds from issuance of common shares	$ 64,500			$ (53)
At-the-market offering
Common Stock, Value, Issued					$ 50,000
Shares issued		2.2
Shares issued (in dollars per share)		$ 22.73
Gross Proceeds From Issuance Of Common Stock		$ 49,700
stock issuance cost		1,700
Net proceeds from issuance of common shares		$ 48,000	$ 48,019
At-the-market offering | Maximum
Common Stock, Value, Issued					$ 50,000

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Investments (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2016
Minority interest in preferred stock in privately held company
Schedule of Cost-method Investments [Line Items]
Purchase price of investment			$ 0.3
Impairment on investments	$ 0.0
Investment in a convertible notes of a privately held company
Schedule of Cost-method Investments [Line Items]
Investment principle amount		$ 0.2

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Condensed Consolidated Balance Sheet - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 113,327	$ 44,429
Accounts receivable (less reserve for doubtful accounts of $98 and $36 as of September 30, 2019 and December 31, 2018, respectively; including $321 and $48 from related parties as of September 30, 2019 and December 31, 2018, respectively)	11,914	6,792
Inventory	11,161	5,945
Prepaid expenses and other current assets	2,297	2,330
Total current assets	138,699	59,496
Restricted cash	1,026	1,000
Property and equipment, net	12,064	2,923
Intangible assets, net	14,221	2,348
Goodwill	8,961	1,308
Other non-current assets	574	536
Total assets	175,545	67,611
Current liabilities:
Accounts payable (including $0 and $36 to related parties as of September 30, 2019 and December 31, 2018, respectively)	4,245	5,110
Accrued compensation and benefits	5,251	4,449
Other accrued expenses (including $258 and $226 to related parties as of September 30, 2019 and December 31, 2018, respectively)	3,539	3,129
Deferred revenue (including $62 and $33 with related parties as of September 30, 2019 and December 31, 2018, respectively)	4,909	5,437
Current portion of long term debt	75
Other current liabilities	204
Total current liabilities	18,223	18,125
Deferred revenue, net of current portion	357	520
Long term debt, net of current portion	7,565	7,623
Other non-current liabilities	13,165	278
Total liabilities	39,310	26,546
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value: Authorized—120,000,000 shares as of September 30, 2019 and December 31, 2018; issued and outstanding — 27,967,713 and 22,369,036 shares as of September 30, 2019 and December 31, 2018, respectively	28	22
Additional paid-in capital	342,628	216,931
Accumulated other comprehensive loss	(1,135)
Accumulated deficit	(205,286)	(175,888)
Total stockholders’ equity	136,235	41,065
Total liabilities and stockholders’ equity	$ 175,545	$ 67,611

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Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statements of Comprehensive Loss
Net income	$ (9,870)	$ (7,657)	$ (29,838)	$ (22,202)
Other comprehensive loss:
Cumulative translation adjustment	(1,135)		(1,135)
Total other comprehensive loss	(1,135)		(1,135)
Comprehensive loss	$ (11,005)	$ (7,657)	$ (30,973)	$ (22,202)

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Revenue recognition - Practical expedients (Details)	9 Months Ended
	Sep. 30, 2019
Revenue recognition
Revenue, Practical Expedient, Financing Component [true false]	true
Revenue, Remaining Performance Obligation, Optional Exemption, Performance Obligation [true false]	true

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Warrants, stock-based compensation, stock options, restricted stock and restricted stock units - Share-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Share-based compensation expense	$ 1,828	$ 1,867	$ 4,713	$ 3,393
Cost of product revenue
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Share-based compensation expense	31	20	75	49
Cost of service and other revenue
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Share-based compensation expense	58	38	175	121
Research and development
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Share-based compensation expense	175	152	523	361
General and administrative
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Share-based compensation expense	$ 1,564	$ 1,657	$ 3,940	$ 2,862

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Accumulated other comprehensive loss (Tables)

9 Months Ended

Sep. 30, 2019

AOCIIncludingPortionAttributableToNoncontrollingInterestAbstract

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

			Accumulated
	Cumulative		Other
	Translation		Comprehensive
	Adjustment		Loss
Balance - December 31, 2018	$	—	$	—
Current period accumulated other comprehensive loss		(1,135)		(1,135)
Balance - September 30, 2019	$	(1,135)	$	(1,135)

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Revenue recognition (Details)	9 Months Ended
	Sep. 30, 2019 customer
Revenue recognition
Minimum number of customers	200
Minimum
Revenue recognition
Period of payment	30 days
Maximum
Revenue recognition
Period of payment	45 days

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Employee benefit plans (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Contribution made to the 401 (k) Plan	$ 0.1		$ 0.4
Maximum
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Contribution made to the 401 (k) Plan		$ 0.1		$ 0.1

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Commitments and contingencies - Development and supply agreement and Legal contingencies (Details) - STRATEC Biomedical - Development and supply agreement $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Commitments and contingencies
Amount payable to counterparty	$ 11.7
Period to purchase minimum number of commercial units	7 years
Fee payable on shortfall of commercial units purchase	$ 10.3
Issuance of supply warrants on termination of agreement, number (in shares) | shares	93,341
Issuance of supply warrants on termination of agreement, value per share (in dollars per share) | $ / shares	$ 0.003214

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Warrants, stock-based compensation, stock options, restricted stock and restricted stock units - Stock options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Aggregate intrinsic value
Share-based compensation expense	$ 1,828	$ 1,867	$ 4,713	$ 3,393
Outstanding stock options
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Options expiration period (in years)			10 years
Number outstanding
Outstanding at the beginning of the period (in shares)			2,476,911
Granted (in shares)			818,918
Exercised (in shares)			(322,250)
Cancelled or forfeited (in shares)			(311,245)
Outstanding at the end of the period (in shares)	2,662,334		2,662,334		2,476,911
Vested and expected to vest at the end of the period (in shares)	2,662,334		2,662,334
Exercisable at the end of the period (in shares)	1,234,533		1,234,533
Weighted-average exercise price
Outstanding at the beginning of the period (in dollars per share)			$ 9.65
Granted (in dollars per share)			24.25
Exercised (in dollars per share)			6.74
Cancelled or forfeited (in dollars per share)			13.45
Outstanding at the end of the period (in dollars per share)	$ 14.04		14.04		$ 9.65
Vested and expected to vest at the end of the period (in dollars per share)	14.04		14.04
Exercisable at the end of the period (in dollars per share)	$ 7.91		$ 7.91
Remaining contractual life
Outstanding (in years)			7 years 8 months 19 days		7 years 8 months 23 days
Vested and expected to vest at the end of the period (in years)			7 years 8 months 19 days
Exercisable at the end of the period (in years)			6 years 4 months 24 days
Aggregate intrinsic value
Outstanding at the beginning of the period			$ 22,108
Exercised	$ 1,300	600	5,500	$ 3,400
Outstanding at the end of the period	23,476		23,476		$ 22,108
Vested and expected to vest at the end of the period	23,476		23,476
Exercisable at the end of the period	17,394		$ 17,394
Weighted-average fair value of options granted			$ 8.85	$ 7.32
Share-based compensation expense	1,000	700	$ 2,700	$ 1,800
Intrinsic value of stock options exercised	$ 1,300	$ 600	$ 5,500	$ 3,400
Outstanding stock options | Subject to a four year vesting schedule with 25% vesting on the first anniversary and the remaining vesting ratably on a monthly basis over the remaining three years
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Vesting period (in years)			4 years
Vesting percentage 1 (as a percent)			25.00%
Outstanding stock options | Subject to vesting with 50% vesting on December 31, 2018 and December 31, 2019
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Vesting period (in years)			3 years
Vesting percentage 1 (as a percent)			75.00%

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Accumulated other comprehensive loss

9 Months Ended

Sep. 30, 2019

AOCIIncludingPortionAttributableToNoncontrollingInterestAbstract

Accumulated other comprehensive loss

18. Accumulated other comprehensive loss

Changes to accumulated other comprehensive loss during the nine months ended September 30, 2019 is as follows:

			Accumulated
	Cumulative		Other
	Translation		Comprehensive
	Adjustment		Loss
Balance - December 31, 2018	$	—	$	—
Current period accumulated other comprehensive loss		(1,135)		(1,135)
Balance - September 30, 2019	$	(1,135)	$	(1,135)

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Business combinations

9 Months Ended

Sep. 30, 2019

Business combinations

Business combinations

14. Business Combinations

UmanDiagnostics AB

On August 1, 2019, the Company completed its acquisition of Uman for an aggregate purchase price of $21.2 million, comprised of (i) $15.7 million in cash plus (ii) 191,152 shares of common stock (representing $5.5 million based on the closing prices of the Company’s common stock on the Nasdaq Global Market on July 1, 2019 and August 1, 2019, the dates of issuance). The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019. 

Uman supplies Nf-L antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions. With the acquisition of Uman, the Company has secured a long-term source of supply for a critical technology. This acquisition was considered a business acquisition for accounting purposes.

The Company has accounted for the acquisition of Uman as a purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets and liabilities of Uman are recorded as of the acquisition date of July 1, 2019, at their respective fair values, and consolidated with those of the Company.

The Company has preliminarily allocated the purchase price to the net tangible and intangible assets based on their estimated fair values as of July 1, 2019. As such, the fair value of the assets acquired and liabilities assumed, including intangible assets, presented in the table below are provisional and will be finalized in a later period once the fair value procedures are completed. Goodwill established as a result of the Uman acquisition is not tax deductible in any taxing jurisdiction.

The following table summarizes the preliminary purchase price allocation, net of $1.2 million in cash and cash equivalents acquired (in thousands):

Purchase price:
Cash and stock paid	$	21,217
Cash and cash equivalents acquired		1,221
Purchase price, net		19,996
Assets (liabilities) acquired:
Accounts receivable	$	638
Inventory		1,680
Prepaids and other current assets		114
Property and equipment		33
Intangibles		13,450
Goodwill		8,111
Accounts payable		(20)
Accrued expense and other current liabilities		(871)
Deferred tax liabilities		(3,139)
Total	$	19,996

Revenue and net income related to Uman’s operations was $0.4 million and less than $0.1 million, respectively, for the three months following the July 1, 2019 acquisition date, and is included in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2019.

The following unaudited pro forma information presents the condensed consolidated results of operations of the Company and Uman for the nine months ended September 30, 2019 and 2018 and the three month period ended September 30, 2018 as if the acquisition of Uman had been completed on January 1, 2018. There was no pro forma impact during the three months ended September 30, 2019. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments that reflect pro forma results of operations, such as increased amortization for the fair value of acquired intangible assets, increased cost of sales related to the inventory valuation adjustment, and adjustments relating to the tax effect of combining the Company and Uman businesses.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and Uman. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that actually would have been achieved had the acquisition occurred as of January 1, 2018, nor are they intended to represent or be indicative of future results of operations (in thousands):

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2018		2019		2018
Revenue (unaudited)	$	10,787	$	41,593	$	27,574
Pre-tax loss (unaudited)	$	(7,898)	$	(27,841)	$	(24,254)

During the three and nine months ended September 30, 2019, the Company incurred $1.0 million and $1.9 million, respectively, in costs associated with the acquisition of Uman. Costs associated with the acquisition Uman are recorded as selling, general, and administrative expenses within the consolidated statements of operations.

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Commitments and contingencies

9 Months Ended

Sep. 30, 2019

Commitments and contingencies

Commitments and contingencies

10. Commitments and contingencies

Tufts University

In June 2007, the Company entered into a license agreement (the License Agreement) for certain intellectual property with Tufts University (Tufts). Tufts is a related party to the Company due to Tufts’ equity ownership in the Company and because a board member of the Company’s Board of Directors was affiliated with Tufts. The License Agreement, which was subsequently amended, is exclusive and sub licensable, and will continue in effect on a country by country basis as long as there is a valid claim of a licensed patent in a country. The Company is committed to pay license and maintenance fees, prior to commercialization, in addition to low single digit royalties on direct sales and services and a royalty on sublicense income. During the three months ended September 30, 2019 and 2018, and nine months ended September 30, 2019 and 2018, the Company recorded royalty expense of $0.3 million, $0.2 million, $0.7 million and $0.5 million, respectively, in cost of product revenue on the consolidated statements of operations.

License commitment

During the year ended December 31, 2012, the Company entered into a license agreement for certain intellectual property with a third party. The non‑exclusive, non‑sublicensable third party’s license provides the Company access to certain patents specifically for protein detection, and shall be in effect until the expiration of the last licensed patent. In consideration for these rights, the Company committed to certain license fees, milestone payments, minimum annual royalties and a mid‑single digit royalty. The Company is required to make mid‑single digit royalty payments on net sales of products and services which utilize the licensed technology. In September 2019, all remaining patents related to the intellectual property expired and the license agreement terminated. During each of the three months ended September 30, 2019 and 2018, and nine months ended September 30, 2019 and 2018, the Company recorded royalty expense of less than $0.1 million in cost of product revenue on the consolidated statements of operations.

Lease commitments

During the year ended December 31, 2014, the Company entered into a lease agreement for the Company's corporate headquarters in Lexington, Massachusetts with a lease term that was to expire in June 2020; however, in November 2018, the Company agreed to terminate the lease with the lessor effective May 31, 2019. The lease was terminated in connection with the Company signing a new lease for facilities in Billerica, Massachusetts. On October 2, 2018, the Company entered into a 137-month operating lease for the Company's new headquarters in Billerica, Massachusetts. The lease contains a period of free rent and escalating monthly rent payments. As part of the lease, the Company was required to enter into a $1.0 million Letter of Credit drawable by the lessor under specifically outlined conditions. The amount of the Letter of Credit will be reduced at 41 and 65 months after the commencement date of the lease to $750,000 and then $250,000, respectively. The $1.0 million Letter of Credit is recorded as restricted cash on the balance sheet.

In connection with the acquisition of Aushon in January 2018, the Company assumed the existing Aushon lease for facilities in Billerica, Massachusetts. In August 2018, the Company terminated the Aushon lease effective September 1, 2019. The Company was required to pay a termination fee no later than July 1, 2019 in consideration for the early termination, which was paid in February 2019.

In connection with the acquisition of Uman in August 2019, the Company assumed the existing Uman leases for the facilities in Umeå, Sweden.

Rent expense is recognized straight‑line over the course of the lease term. As of September 30, 2019, $2.6 million of deferred rent expense was recorded in other non‑current liabilities. The table below includes committed lease expenditures related to the Company’s leases.

As of September 30, 2019, the minimum future rent payments under the lease agreements are as follows (in thousands):

2019	$	473
2020		2,312
2021		3,575
2022		3,372
2023 and Forward		29,208
	$	38,940

The Company recorded $0.7 million, $0.4 million, $2.6 million and $1.0 million in rent expense for the three months ended September 30, 2019 and 2018, and the nine months ended September 30, 2019 and 2018, respectively.

Development and supply agreement

Through the Company’s development agreement with STRATEC Biomedical, as amended in December 2016, the parties agreed on additional development services for an additional fee, which is payable when the additional development is completed. A total of $11.7 million is payable to STRATEC upon completion of the development activities. This amount is being recorded to research and development expense and accrued expenses as the services are performed. The services were completed during the year ended December 31, 2018. Substantive efforts related to these additional development activities started in the first quarter of 2019 and were completed in the third quarter of 2019.

The Company’s supply agreement with STRATEC Biomedical requires the Company to purchase a minimum number of commercial units over a seven‑year period ending in May 2021. If the Company were to fail to purchase a required number of commercial units, the Company would be obligated to pay termination costs plus a fee based on the shortfall of commercial units purchased compared to the required minimum amount. Based on the number of commercial instruments purchased as of September 30, 2019, assuming no additional commercial units were purchased, this fee would equal $10.3 million. The amount the Company could be obligated to pay under the minimum purchase commitment is reduced as each commercial unit is purchased. Also, if the Company terminates the supply agreement under certain circumstances and has not purchased a required number of commercial units, it would be obligated to issue warrants to purchase 93,341 shares of common stock (the Supply Warrants) at $0.003214 per share. The Company believes that it will purchase sufficient units to meet the requirements of the minimum purchase commitment and, therefore, has not accrued for any of the potential cash consideration. The Supply Warrants are accounted for at fair value; however, the fair value of the Supply Warrants as of September 30, 2019 and December 31, 2018 was insignificant as there was a low probability of the warrants being issued.

Legal contingencies

The Company is subject to claims in the ordinary course of business; however, the Company is not currently a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations. The Company accrues for contingent liabilities to the extent that the liability is probable and estimable.

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Inventory

9 Months Ended

Sep. 30, 2019

Inventory

Inventory

6. Inventory

Inventory consists of the following (in thousands):

	September 30, 2019		December 31, 2018
Raw materials	$	5,419	$	1,546
Work in process		2,402		2,331
Finished goods		3,340		2,068
Total	$	11,161	$	5,945

Inventory comprises commercial instruments, assays, and the materials required to manufacture assays.

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Significant accounting policies

9 Months Ended

Sep. 30, 2019

Significant accounting policies

Significant accounting policies

2. Significant accounting policies

Principles of consolidation

The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of Quanterix Corporation and its wholly‑owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. In making those estimates and assumptions, the Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. The Company’s significant estimates included in the preparation of the consolidated financial statements are related to revenue recognition, fair value of equity instruments and notes receivable, fair value of assets acquired and liabilities assumed in acquisitions, valuation allowances recorded against deferred tax assets, and stock‑based compensation. Actual results could differ from those estimates.

Foreign Currency

The Company translates assets and liabilities of its foreign subsidiaries at rates in effect at the end of the reporting period. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive loss.

Income taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, Income Taxes (ASC 740). When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of September 30, 2019 the Company did not have any significant uncertain tax positions.

During the three months ended September 30, 2019, the Company acquired Uman. The Company analyzed the transaction from an income tax perspective and adjusted the deferred tax assets and liabilities related to the Uman acquisition. Of the total goodwill recorded, less than $0.1 million is amortizable related to the historical tax basis that Uman had prior to the acquisition.

Business combinations

Under the acquisition method of accounting, the Company allocates the fair value of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions determined by management. The excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. These valuations require significant estimates and assumptions, especially with respect to intangible assets.

The Company typically uses the discounted cash flow method to value acquired intangible assets. This method requires significant management judgment to forecast future operating results and establish residual growth rates and discount factors. The estimates used to value and amortize intangible assets are consistent with the plans and estimates that are used to manage the business and are based on available historical information and industry estimates and averages. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, the Company could experience impairment charges. In addition, the Company has estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.

Restricted cash

Restricted cash primarily represents collateral for a letter of credit issued as security for the lease for the Company’s new headquarters. The restricted cash is long term in nature as the Company will not have access to the funds until more than one year from September 30, 2019.

Recent accounting pronouncements

The Company is considered to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of this extended transition period and, as a result, the Company will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies so long as the Company remains an emerging growth company.

On January 1, 2019, the Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), using the modified retrospective method.  Under ASC 606, revenue is recognized upon the transfer of control of goods or services to customers and reflects the amount of consideration to which an entity expects to be entitled in exchange for those goods or services.  The adoption of ASC 606 has been applied to customer contracts that were not completed as of January 1, 2019, and did not materially change the pattern of revenue recognition for its current customer contracts.  The Company's consolidated financial statements for the prior-year period have not been revised and are reflective of the revenue recognition requirements which were in effect for that period.

The Company recorded an adjustment to the accumulated deficit of $0.4 million as of January 1, 2019 for the cumulative effect primarily related to the deferral of sales commissions.

In accordance with the reporting requirements of ASC 606, the disclosure of the impact on the Company's consolidated balance sheet and statement of operations, as a result of adopting the provisions of ASC 606, was as follows (in thousands):

											Prior to
											adoption of
	As				Adjusted under		As reported				ASC 606
	reported				ASC 606		September 30,				September 30,
	December 31, 2018		Adjustments		January 1, 2019		2019		Adjustments		2019
Assets:
Accounts receivable	$	6,792	$	47	$	6,839	$	11,914	$	—	$	11,914
Prepaid expenses and other current assets		2,330		288		2,618		2,297		290		2,007
Other non-current assets		536		19		555		574		18		592
Liabilities:
Deferred revenue		5,437		43		5,394		4,909		175		5,084
Deferred revenue, net of current portion		520		43		477		357		9		366
Stockholders’ equity:
Accumulated deficit	$	(175,888)	$	(440)	$	(175,448)	$	(205,286)	$	(492)	$	(205,778)

	For the Three Months Ended September 30, 2019						For the Nine Months Ended September 30, 2019
					Under ASC						Under ASC
	Under ASC 606		Adjustment		605		Under ASC 606		Adjustment		605
Product revenue	$	10,737	$	(332)	$	10,405	$	29,059	$	(381)	$	28,678
Service revenue		4,207		97		4,304		11,757		228		11,985
COGS		7,911		3		7,914		20,847		6		20,853
Gross profit		7,033		(238)		6,795		19,969		(159)		19,810
Selling general and administrative expenses		13,352		(55)		13,297		38,293		4		38,297
Net loss	$	(9,870)	$	(183)	$	(10,053)	$	(29,838)	$	(163)	$	(30,001)

The adoption of ASC 606 is discussed in further detail in Note 3.

In January of 2019, the Company adopted accounting standards update (ASU) 2016-01, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. For equity investments without readily determinable fair values that do not qualify for the practical expedient to estimate fair value using the net asset value per share or its equivalent, the Company has elected to measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. This election is made for each investment separately and is reassessed at each reporting period as to whether the investment continues to qualify for this election. Additionally, at each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. The adoption of this standard did not have a material effect.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842):Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-02), which establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease.  Under ASU 2016-02, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short term leases) at the commencement date. ASU 2016-02 is effective for the Company for the year ending December 31, 2020. Early adoption is permitted. In 2018, the FASB modified ASU 2016-02 by issuing ASU 2018-01 and ASU 2018-11, which collectively added two practical expedients, provided a second modified retrospective transition method which does not require retrospective adjustment of prior periods, and provided certain narrow scope improvements to ASU 2016-02. The Company is currently evaluating the expected impact of ASU 2016-2 on its financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments  — Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The standard is effective for the Company beginning in the first quarter of 2020, with early adoption permitted. The Company is currently evaluating the expected impact of ASU 2016-13 on its financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect adoption of this ASU to be material to its financial statements.

There have been no other material changes to the significant accounting policies and recent accounting pronouncements previously disclosed in the 2018 Annual Report on Form 10‑K.

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Other accrued expenses and other non-current liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Other accrued expenses and other non-current liabilities

Summary of other accrued expenses

Other accrued expenses consist of the following (in thousands):

	September 30, 2019		December 31, 2018
Accrued inventory	$	485	$	599
Accrued royalties		493		323
Accrued professional services		878		723
Accrued development costs		735		795
Accrued other		948		689
Total accrued expenses	$	3,539	$	3,129

Summary of other non-current liabilities

Other non-current liabilities consist of the following (in thousands):

	September 30, 2019		December 31, 2018
Leasehold obligation incentive		7,750		—
Deferred Rent		2,592		272
Deferred tax liabilities		2,818		—
Other		5		6
Total non-current liabilities	$	13,165	$	278

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Other accrued expenses and other non-current liabilities - Other non-current liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Other Liabilities, Noncurrent [Abstract]
Leasehold obligation incentive	$ 7,750
Deferred Rent	2,592	$ 272
Deferred tax liabilities	2,818
Other	5	6
Total non-current liabilities	$ 13,165	$ 278

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Condensed Consolidated Statement of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue	$ 14,944	$ 10,591	$ 40,816	$ 26,755
Cost of goods sold:
Total costs of goods sold and services	7,911	4,996	20,847	14,016
Gross profit	7,033	5,595	19,969	12,739
Operating expense:
Research and development (including stock compensation of $175 and $152 for the three months ended September 30, 2019 and 2018, respectively, and $523 and $361 for the nine months ended September 30, 2019 and 2018, respectively)	3,924	4,411	11,792	11,759
Selling, general and administrative (including stock compensation of $1,564 and $1,657 for the three months ended September 30, 2019 and 2018, respectively, and $3,940 and $2,862 for the nine months ended September 30, 2019 and 2018, respectively)	13,352	8,846	38,293	23,117
Total operating expenses	17,276	13,257	50,085	34,876
Loss from operations	(10,243)	(7,662)	(30,116)	(22,137)
Interest income (expense), net	282	30	346	21
Other income (expense), net	(34)	(25)	(149)	(86)
Loss before income tax	(9,995)	(7,657)	(29,919)	(22,202)
Income tax benefit	(125)		(81)
Net loss	$ (9,870)	$ (7,657)	$ (29,838)	$ (22,202)
Net loss per share, basic and diluted	$ (0.37)	$ (0.35)	$ (1.24)	$ (1.01)
Weighted-average common shares outstanding, basic and diluted	26,627,831	22,070,786	24,102,887	21,917,823
Product revenue
Revenue	$ 10,737	$ 5,962	$ 29,059	$ 15,907
Cost of goods sold:
Total costs of goods sold and services	5,513	3,277	14,217	8,995
Service and other revenue
Revenue	4,207	3,017	11,757	8,699
Cost of goods sold:
Total costs of goods sold and services	$ 2,398	1,719	$ 6,630	5,021
Collaboration and license revenue
Revenue		$ 1,612		$ 2,149

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Fair value measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash equivalents	$ 101,255	$ 42,608
Note receivable	150	150
Total	101,405	42,758
Level 1
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash equivalents	101,255	42,608
Total	101,255	42,608
Level 3
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Note receivable	150	150
Total	$ 150	$ 150

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Condensed Consolidated Statements of Cash Flows (Parenthetical)	Aug. 01, 2019 shares
UmanDiagnostics AB Acquisition [Member]
Common stock shares consideration	191,152

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Business combinations (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 01, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Fair value of consideration transferred:
Purchase price, net				$ 14,529	$ 3,800
Assets (liabilities) acquired:
Goodwill		$ 8,961		8,961		$ 1,308
Revenue		14,944	$ 10,591	40,816	26,755
Net income		(9,870)	(7,657)	(29,838)	(22,202)
Revenue (unaudited)			10,787	41,593	27,574
Pre-tax loss (unaudited)			$ (7,898)	(27,841)	$ (24,254)
UmanDiagnostics AB Acquisition [Member]
Fair value of consideration transferred:
Common stock shares consideration	191,152
Common stock	$ 5,500
Cash	15,700
Cash and stock paid	21,217
Cash and cash equivalents acquired	1,221
Purchase price, net	19,996
Assets (liabilities) acquired:
Accounts receivable	638
Inventory	1,680
Prepaids and other current assets	114
Property and equipment	33
Intangibles	13,450
Goodwill	8,111
Accounts payable	(20)
Accrued expense and other current liabilities	(871)
Deferred tax liabilities	(3,139)
Total	$ 19,996
Revenue		400
Net income		100
Transaction costs		$ 1,000		$ 1,900

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Accumulated other comprehensive loss (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Current period accumulated other comprehensive loss	$ (1,135)	$ (1,135)
Cumulative Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Current period accumulated other comprehensive loss		(1,135)
Ending Balance	(1,135)	(1,135)
Accumulated other comprehensive loss
Accumulated Other Comprehensive Income (Loss) [Line Items]
Current period accumulated other comprehensive loss	(1,135)	(1,135)
Ending Balance	$ (1,135)	$ (1,135)

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Fair value of financial instruments

9 Months Ended

Sep. 30, 2019

Fair value of financial instruments

Fair value of financial instruments

5. Fair value of financial instruments

ASC Topic 820, Fair Value Measurement (ASC 820), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three‑tier fair value hierarchy that distinguishes between the following:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

Fair value measurements as of September 30, 2019 are as follows (in thousands):

			Quoted prices				Significant
			in active		Significantother		unobservable
			markets		observable		inputs
Description	Total		(Level 1)		inputs(Level 2)		(Level 3)
Financial assets
Cash equivalents	$	101,255	$	101,255	$	—	$	—
Note receivable		150		—		—		150
	$	101,405	$	101,255	$	—	$	150

Fair value measurements as of December 31, 2018 are as follows (in thousands):

			Quoted prices				Significant
			in active		Significantother		unobservable
			markets		observable		inputs
Description	Total		(Level 1)		inputs(Level 2)		(Level 3)
Financial assets
Cash equivalents	$	42,608	$	42,608		—	$	—
Note receivable		150		—		—		150
	$	42,758	$	42,608		—	$	150

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Organization and operations

9 Months Ended

Sep. 30, 2019

Organization and operations

Organization and operations

1. Organization and operations

Quanterix Corporation (Nasdaq: QTRX) (the Company) is a life sciences company that has developed next generation, ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics. The Company's platforms are based on its proprietary digital "Simoa" detection technology. The Company's Simoa bead-based and planar array platforms enable customers to reliably detect protein biomarkers in extremely low concentrations in blood, serum and other fluids that, in many cases, are undetectable using conventional, analog immunoassay technologies, and also allow researchers to define and validate the function of novel protein biomarkers that are only present in very low concentrations and have been discovered using technologies such as mass spectrometry. These capabilities provide the Company's customers with insight into the role of protein biomarkers in human health that has not been possible with other existing technologies and enable researchers to unlock unique insights into the continuum between health and disease. The Company is currently focusing on protein detection, but is also developing its bead-based technology to detect nucleic acids in biological samples.

The Company launched its first immunoassay platform, the Simoa HD-1, in 2014.  The HD-1 is a fully automated immunoassay bead-based platform with multiplexing and custom assay capability, and related assay test kits and consumable materials. The Company launched a second bead-based immunoassay platform (SR-X) in the fourth quarter of 2017 with a more compact footprint than the Simoa HD-1 and less automation designed for lower volume requirements while still allowing multiplexing and custom assay capability. The Company initiated an early-access program for its third instrument (SP-X) on the new Simoa planar array platform in January 2019, with the full commercial launch commencing in April 2019. In July 2019, the Company launched the Simoa HD-X, an upgraded version of the Simoa HD-1 which replaces the HD-1. The HD-X has been designed to deliver significant productivity and operational efficiency improvements, as well as greater user flexibility.  The Company began shipping and installing HD-X instruments at customer locations in the third quarter of 2019, ahead of its original fourth quarter expectation.  The Company also performs research services on behalf of customers to apply the Simoa technology to specific customer needs. The Company's customers are primarily in the research use only market, which includes academic and governmental research institutions, the research and development laboratories of pharmaceutical manufacturers, contract research organizations, and specialty research laboratories.

The Company acquired Aushon Biosystems, Inc. (Aushon) in January 2018. With the acquisition of Aushon, the Company acquired a CLIA certified laboratory, as well as Aushon's proprietary sensitive planar array detection technology. Leveraging its proprietary sophisticated Simoa image analysis and data analysis algorithms, the Company further refined this planar array technology to develop the SP-X instrument to provide the same Simoa sensitivity found in its bead-based platform.

The Company acquired of UmanDiagnostics AB, a Swedish company located in Umea, Sweden (Uman), in August 2019. The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019.  Uman supplies neurofilament light (Nf-L) antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions. With the acquisition of Uman, the Company has secured a long-term source of supply for a critical technology.

At-the-market offering

On March 19, 2019, the Company entered into a Sales Agreement (the Sales Agreement) with Cowen and Company, LLC (Cowen) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $50.0 million through Cowen as its sales agent. 

On June 5, 2019, the Company issued approximately 2.2 million shares of common stock at an average stock price of $22.73 per share pursuant to the terms of the Sales Agreement. The at-the-market offering resulted in gross proceeds of $49.7 million. The Company incurred $1.7 million in issuance costs associated with the at-the-market offering, resulting in net proceeds to the Company of $48.0 million.

Underwritten public offering

On August 8, 2019, the Company entered into an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters, relating to an underwritten public offering of approximately 2.7 million shares of the Company’s common stock, par value $0.001 per share. The underwritten public offering resulted in gross proceeds of $69.0 million. The Company incurred $4.5 million in issuance costs associated with the underwritten public offering, resulting in net proceeds to the Company of $64.5 million.

Basis of presentation

The interim condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements reflect, in the opinion of our management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, comprehensive loss and cash flows for each period presented in accordance with United States generally accepted accounting principles (U.S. GAAP) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10‑K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on March 18, 2019 (the 2018 Annual Report on Form 10-K). The consolidated financial information as of December 31, 2018 has been derived from the audited 2018 consolidated financial statements included in the Company’s 2018 Annual Report on Form 10‑K.

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Warrants, stock-based compensation, stock options, restricted stock and restricted stock units

9 Months Ended

Sep. 30, 2019

Warrants, stock-based compensation, stock options, restricted stock and restricted stock units

Warrants, stock-based compensation, stock options, restricted stock and restricted stock units

9. Warrants, stock-based compensation, stock options, restricted stock and restricted stock units

Warrants

On July 2, 2019, 66,041 warrants were exercised by a holder on a net, non-cash, basis. Per terms of the warrant agreement, the Company issued 45,690 shares of common stock with a value equal to the holder’s gain. The Company issued no warrants during the nine months ended September 30, 2019, and had 10,000 warrants outstanding as of September 30, 2019.

Stock-based compensation

Stock‑based compensation expense for all stock awards consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of product revenue	$	31	$	20	$	75	$	49
Cost of service and other revenue		58		38		175		121
Research and development		175		152		523		361
Selling, general, and administrative		1,564		1,657		3,940		2,862
Total	$	1,828	$	1,867	$	4,713	$	3,393

As of September 30, 2019, under the 2007 Stock Option and Grant Plan (the 2007 Plan), options to purchase 1,324,255 shares of common stock were outstanding and no shares of common stock were available for future awards. In connection with the completion of the IPO, the Company terminated the 2007 Plan.

In December 2017, the Company adopted the 2017 Employee, Director and Consultant Equity Incentive Plan (the 2017 Plan), under which it may grant incentive stock options, non‑qualified stock options, restricted stock, and other stock‑based awards. Upon its adoption, the 2017 Plan allowed for the issuance of up to 1,042,314 shares of common stock plus up to 2,490,290 shares of common stock represented by awards granted under the 2007 Plan that are forfeited, expire or are cancelled without delivery of shares or which result in the forfeiture of shares of common stock back to the Company on or after the date the 2017 Plan became effective. The 2017 Plan contains an “evergreen” provision, which allows for an annual increase in the number of shares of common stock available for issuance under the 2017 Plan on the first day of each fiscal year during the period beginning in fiscal year 2019 and ending in fiscal year 2027. The annual increase in the number of shares shall be equal to the lowest of: 4% of the number of shares of common stock outstanding as of such date; and an amount determined by the Company’s Board of Directors or Compensation Committee. The number of shares available for grant under the 2017 Plan increased by 894,761 on January 1, 2019 due to this provision. As of September 30, 2019, under the 2017 Plan, options to purchase 1,338,079 shares of common stock were outstanding and unvested restricted stock units for 422,336 shares of common stock were outstanding. As of September 30, 2019, 207,589 shares were available for grant under the 2017 Plan.

In December 2017, the Company adopted the 2017 Employee Stock Purchase Plan (the 2017 ESPP). The 2017 ESPP contains an “evergreen” provision, which allows for an increase on the first day of each fiscal year beginning with fiscal year 2018. The increase in the number of shares shall be equal to the lowest of: 1% of the number of shares of common stock outstanding on the last day of the immediately preceding fiscal year or an amount determined by the Company’s Board of Directors or Compensation Committee. The number of shares available for grant under the 2017 ESPP increased by 223,690 on January 1, 2019 due to this provision. As of September 30, 2019, the 2017 ESPP allowed for the issuance of up to 649,223 shares of common stock and 612,470 shares were available for issuance under the 2017 ESPP.

Stock options

Under the 2007 Plan and the 2017 Plan, stock options may not be granted with exercise prices of less than fair market value on the date of the grant. Options generally vest ratably over a four‑year period with 25% vesting on the first anniversary and the remaining 75% vesting ratably on a monthly basis over the remaining three years. These options expire ten years after the grant date. Activity under the 2007 Plan and the 2017 Plan was as follows:

		Weighted-average		Remainingcontractual	Aggregateintrinsicvalue
	Options	exerciseprice		life(in years)	(in thousands)
Outstanding at December 31, 2018	2,476,911	$	9.65	7.73	$	22,108
Granted	818,918	$	24.25
Exercised	(322,250)	$	6.74
Cancelled	(311,245)	$	13.45
Outstanding at September 30, 2019	2,662,334	$	14.04	7.72	$	23,476
Vested and expected to vest at September 30, 2019	2,662,334	$	14.04	7.72	$	23,476
Exercisable at September 30, 2019	1,234,533	$	7.91	6.40	$	17,394

Using the Black-Scholes option pricing model, the weighted-average fair value of options granted to employees and directors during the nine months ended September 30, 2019 and 2018 was $8.85 and $7.32 per share, respectively. The expense related to awards granted to employees was $1.0 million and $2.7 million for the three and nine months ended September 30, 2019, respectively. The expense related to awards granted to employees was $0.7 million and $1.8 million for the three and nine months ended September 30, 2018, respectively. The intrinsic value of stock options exercised was $1.3 million and $5.5 million for the three and nine months ended September 30, 2019, respectively. The intrinsic value of stock options exercised was $0.6 million and $3.4 million for the three and nine months ended September 30, 2018, respectively. Activity related to non-employee awards was not material to the three and nine months ended September 30, 2019 and 2018.

Restricted stock

Restricted common stock awards represent shares of common stock issued to employees subject to forfeiture if the vesting conditions are not satisfied. In December 2014, the Company issued 78,912 shares of restricted common stock to a director of the Company under the 2007 Plan. Under the terms of the agreement, shares of common stock issued are subject to a four-year vesting schedule. Vesting occurs periodically at specified time intervals and specified percentages. In January 2015, the Company issued 781,060 shares of restricted common stock to an executive of the Company under the 2007 Plan. The majority of these shares were issued subject to a four-year vesting schedule with 25% vesting on the first anniversary and the remaining vesting 75% ratably on a monthly basis over the remaining three years, while another portion was issued subject to performance based vesting. The vesting of performance based awards is dependent upon achievement of specified financial targets of the Company. The majority of the performance criteria were achieved during the years ended December 31, 2016 and 2015 and the remaining unvested awards with performance conditions are not material. No restricted common stock awards were granted or vested during the nine months ended September 30, 2019.

Restricted stock units

Restricted stock units (RSUs) represent the right to receive shares of common stock upon meeting specified vesting requirements. In the nine months ended September 30, 2019, the Company issued 227,653 RSUs to employees of the Company under the 2017 Plan. Under the terms of the agreements, 135,058 of the RSUs issued are subject to a four-year vesting schedule with 25% vesting on the first anniversary of the grant date and the remaining vesting 75% ratably on a monthly basis over the remaining three years; 15,890 of the RSUs vest on December 31, 2019; 24,233 of the RSUs vest in equal amounts annually over four years; 10,194 of the RSUs vested with respect to 5/48th of the shares on the date of grant with the rest vesting ratably over the remaining 43 months; 31,732 of the RSUs vested with respect to 1,983 shares vesting on the grant date with the rest vesting ratably over the remaining 45 months; 4,540 of the RSUs vest equally over three years on the anniversary of the vesting start date; 3000 of the RSUs vest upon the one year anniversary of the grant date; and 3,006 vested immediately upon grant. A summary of RSU activity is as follows:

		Weighted-average
		grant date
		fair value
	Shares	per share
Unvested RSUs as of December 31, 2018	321,662	$	15.84
Granted	227,653	$	24.21
Vested	(83,996)	$	16.65
Cancelled	(42,983)	$	18.17
Unvested RSUs as of September 30, 2019	422,336	$	19.90

The expense related to awards granted to employees and directors was $0.8 million and $2.0 million for the three and nine months ended September 30, 2019, respectively, and $1.1 million and $1.2 million for the three and nine months ended September 30, 2018, respectively.

At September 30, 2019, there was $7.6 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over the remaining weighted‑average vesting period of 2.94 years.

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Net loss per share (Tables)

9 Months Ended

Sep. 30, 2019

Net loss per share

Schedule of outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share

	September 30,
	2019	2018
Unvested restricted common stock and restricted stock units	422,336	376,949
Outstanding stock options	2,662,334	2,565,895
Outstanding warrants	10,000	76,041
Total	3,094,670	3,018,885

XML

Warrants, stock-based compensation, stock options, restricted stock and restricted stock units (Tables)

9 Months Ended

Sep. 30, 2019

Warrants, stock-based compensation, stock options, restricted stock and restricted stock units

Summary of share-based compensation expense for all stock awards

Stock‑based compensation expense for all stock awards consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of product revenue	$	31	$	20	$	75	$	49
Cost of service and other revenue		58		38		175		121
Research and development		175		152		523		361
Selling, general, and administrative		1,564		1,657		3,940		2,862
Total	$	1,828	$	1,867	$	4,713	$	3,393

Summary of stock option activity

		Weighted-average		Remainingcontractual	Aggregateintrinsicvalue
	Options	exerciseprice		life(in years)	(in thousands)
Outstanding at December 31, 2018	2,476,911	$	9.65	7.73	$	22,108
Granted	818,918	$	24.25
Exercised	(322,250)	$	6.74
Cancelled	(311,245)	$	13.45
Outstanding at September 30, 2019	2,662,334	$	14.04	7.72	$	23,476
Vested and expected to vest at September 30, 2019	2,662,334	$	14.04	7.72	$	23,476
Exercisable at September 30, 2019	1,234,533	$	7.91	6.40	$	17,394

Summary of restricted stock units activity

		Weighted-average
		grant date
		fair value
	Shares	per share
Unvested RSUs as of December 31, 2018	321,662	$	15.84
Granted	227,653	$	24.21
Vested	(83,996)	$	16.65
Cancelled	(42,983)	$	18.17
Unvested RSUs as of September 30, 2019	422,336	$	19.90

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Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands	Common stock Underwritten public offering	Common stock At-the-market offering	Common stock	Additional paid-in capital Underwritten public offering	Additional paid-in capital At-the-market offering	Additional paid-in capital	Accumulated other comprehensive loss	Accumulated deficit	Underwritten public offering	At-the-market offering	Total
Beginning Balance at Dec. 31, 2017			$ 22			$ 210,196		$ (144,352)			$ 65,866
Beginning balance (in shares) at Dec. 31, 2017			21,707,041
Increase (Decrease) in Stockholders' Equity
Exercise of common stock warrants (in shares)			16,718
Exercise of common stock options and vesting restricted stock						684					684
Exercise of common stock options and vesting restricted stock (in shares)			427,651
Sale of common stock, net						(53)					(53)
Stock-based compensation expense						3,393					3,393
Net loss								(22,202)			(22,202)
Ending Balance at Sep. 30, 2018			$ 22			214,220		(166,554)			47,688
Ending Balance (in shares) at Sep. 30, 2018			22,151,410
Beginning Balance at Jun. 30, 2018			$ 22			212,050		(158,897)			53,175
Beginning balance (in shares) at Jun. 30, 2018			21,980,681
Increase (Decrease) in Stockholders' Equity
Exercise of common stock options and vesting restricted stock						303					303
Exercise of common stock options and vesting restricted stock (in shares)			170,729
Stock-based compensation expense						1,867					1,867
Net loss								(7,657)			(7,657)
Ending Balance at Sep. 30, 2018			$ 22			214,220		(166,554)			47,688
Ending Balance (in shares) at Sep. 30, 2018			22,151,410
Beginning Balance at Dec. 31, 2018			$ 22			216,931		(175,888)			41,065
Beginning balance (in shares) at Dec. 31, 2018			22,369,036
Increase (Decrease) in Stockholders' Equity
Exercise of common stock warrants (in shares)			45,690
Exercise of common stock options and vesting restricted stock			$ 1			2,175					2,176
Exercise of common stock options and vesting restricted stock (in shares)			406,246
Sale of common stock, net	$ 3	$ 2		$ 64,526	$ 48,017				$ 64,529	$ 48,019
Sale of common stock, net (in shares)	2,732,673	2,186,163
Issuance of shares for acquisition of Uman						5,467					5,467
Issuance of shares for acquisition of Uman (in shares)			191,152
ESPP stock purchase						799					799
ESPP stock purchase (in shares)			36,753
Stock-based compensation expense						4,713					4,713
Cumulative translation adjustment							$ (1,135)				(1,135)
Net loss								(29,838)			(29,838)
Ending Balance at Sep. 30, 2019			$ 28			342,628	(1,135)	(205,286)			136,235
Ending Balance (in shares) at Sep. 30, 2019			27,967,713
Beginning Balance at Jun. 30, 2019			$ 25			270,136		(195,416)			74,745
Beginning balance (in shares) at Jun. 30, 2019			24,894,019
Increase (Decrease) in Stockholders' Equity
Exercise of common stock warrants (in shares)			45,690
Exercise of common stock options and vesting restricted stock						265					265
Exercise of common stock options and vesting restricted stock (in shares)			87,476
Sale of common stock, net	$ 3			$ 64,526					$ 64,529
Sale of common stock, net (in shares)	2,732,673
Issuance of shares for acquisition of Uman						5,467					5,467
Issuance of shares for acquisition of Uman (in shares)			191,152
ESPP stock purchase						406					406
ESPP stock purchase (in shares)			16,703
Stock-based compensation expense						1,828					1,828
Cumulative translation adjustment							(1,135)				(1,135)
Net loss								(9,870)			(9,870)
Ending Balance at Sep. 30, 2019			$ 28			$ 342,628	$ (1,135)	(205,286)			136,235
Ending Balance (in shares) at Sep. 30, 2019			27,967,713
Increase (Decrease) in Stockholders' Equity
Cumulative-effect adjustment for the adoption of ASC 606								$ 440			$ 440

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Other accrued expenses and other non-current liabilities - Other accrued expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Other accrued expenses and other non-current liabilities
Accrued inventory	$ 485	$ 599
Accrued royalties	493	323
Accrued professional services	878	723
Accrued development costs	735	795
Accrued other	948	689
Total accrued expenses	$ 3,539	$ 3,129

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Document and Entity Information
Entity Registrant Name	Quanterix Corp
Entity Central Index Key	0001503274
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Common Stock, Shares Outstanding		28,014,764
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3

XML

Condensed Consolidated Statement of Operations and Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Cost of product revenue, related party activity	$ 80	$ 36	$ 150	$ 158
Stock compensation expense in cost of goods sold	31	20	75	49
Stock compensation expense in research and development expenses	175	152	523	361
Stock compensation expense in selling, general and administrative expenses	1,564	1,657	3,940	2,862
Product revenue
Related party revenue	321	43	526	179
Service and other revenue
Related party revenue	31	34	73	100
Stock compensation expense in cost of goods sold	58	38	175	121
Collaboration and license revenue
Related party revenue	$ 0	$ 1,612	$ 0	$ 2,149

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Net loss per share (Details) - shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Net loss per share
Number of dilutive securities excluded in the calculation of diluted net loss per share	3,094,670	3,018,885
Common stock
Net loss per share
Obligation to issue warrants, in shares	93,341	93,341
Unvested restricted common stock and restricted stock units
Net loss per share
Number of dilutive securities excluded in the calculation of diluted net loss per share	422,336	376,949
Outstanding stock options
Net loss per share
Number of dilutive securities excluded in the calculation of diluted net loss per share	2,662,334	2,565,895
Warrants
Net loss per share
Number of dilutive securities excluded in the calculation of diluted net loss per share	10,000	76,041

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Goodwill and Acquired Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Rollforward of goodwill balance
Balance as of beginning of period			$ 1,308
Goodwill acquired			8,111
Cumulative translation adjustment			(458)
Balance as of end of period	$ 8,961		8,961		$ 1,308
Purchased intangible assets
Gross Carrying Value	16,400		16,400		2,950
Accumulated Amortization	(1,444)		(1,444)		(602)
Cumulative Translation Adjustment	(735)		(735)
Net Carrying Value	14,221		14,221		$ 2,348
Amortization expense	500	$ 200	800	$ 400
Estimated amortization expense
2019	546		546
2020	2,110		2,110
2021	2,013		2,013
2022	1,930		1,930
2023	1,849		1,849
Thereafter	6,508		6,508
Estimated Amortization Expenses	14,956		14,956
UmanDiagnostics AB Acquisition [Member]
Rollforward of goodwill balance
Goodwill acquired			$ 13,500
Purchased intangible assets
Estimated Useful Life			8 years 4 months 24 days
Developed technology
Purchased intangible assets
Estimated Useful Life			7 years		7 years
Gross Carrying Value	1,650		$ 1,650		$ 1,650
Accumulated Amortization	(648)		(648)		(379)
Net Carrying Value	1,002		1,002		$ 1,271
Customer relationships
Purchased intangible assets
Estimated Useful Life					10 years
Gross Carrying Value	1,360		1,360		$ 1,250
Accumulated Amortization	(368)		(368)		(208)
Cumulative Translation Adjustment	(6)		(6)
Net Carrying Value	986		986		$ 1,042
Customer relationships | UmanDiagnostics AB Acquisition [Member]
Rollforward of goodwill balance
Goodwill acquired			$ 100
Purchased intangible assets
Estimated Useful Life			8 years 6 months
Trade names
Purchased intangible assets
Estimated Useful Life			3 years		3 years
Gross Carrying Value	50		$ 50		$ 50
Accumulated Amortization	(28)		(28)		(15)
Net Carrying Value	22		$ 22		$ 35
Know How
Purchased intangible assets
Estimated Useful Life			8 years 6 months
Gross Carrying Value	13,000		$ 13,000
Accumulated Amortization	(383)		(383)
Cumulative Translation Adjustment	(711)		(711)
Net Carrying Value	11,906		11,906
Know How | UmanDiagnostics AB Acquisition [Member]
Rollforward of goodwill balance
Goodwill acquired			$ 13,000
Purchased intangible assets
Estimated Useful Life			8 years 6 months
Noncompete Agreements
Purchased intangible assets
Estimated Useful Life			5 years 6 months
Gross Carrying Value	340		$ 340
Accumulated Amortization	(17)		(17)
Cumulative Translation Adjustment	(18)		(18)
Net Carrying Value	$ 305		305
Noncompete Agreements | UmanDiagnostics AB Acquisition [Member]
Rollforward of goodwill balance
Goodwill acquired			$ 400
Maximum | Customer relationships
Purchased intangible assets
Estimated Useful Life			10 years
Minimum | Customer relationships
Purchased intangible assets
Estimated Useful Life			8 years 6 months

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Related party transactions (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
bioMerieux | Joint development and license agreement
Related party transactions
Related party revenue	$ 0.1	$ 1.6	$ 0.1	$ 2.1
Tufts | License Agreement
Related party transactions
Royalty expense	0.3	0.2	0.7	0.5
Harvard University
Related party transactions
Related party revenue	$ 0.3	$ 0.1	$ 0.4	$ 0.1

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Organization and operations (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended	9 Months Ended
	Aug. 08, 2019	Jun. 05, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Aug. 01, 2019	Jul. 01, 2019	Mar. 19, 2019	Dec. 31, 2018
Initial Public Offering
Share value	$ 0.001		$ 0.001	$ 0.001					$ 0.001
Common Stock, Value, Issued			$ 28	$ 28					$ 22
Shares issued	2,700,000
Gross Proceeds From Issuance Of Common Stock	$ 69,000
Net proceeds from issuance of common shares	64,500				$ (53)
stock issuance cost	$ 4,500
Underwritten public offering
Initial Public Offering
Share value	$ 0.001
Shares issued	2,700,000
Gross Proceeds From Issuance Of Common Stock	$ 69,000
Net proceeds from issuance of common shares	64,500			$ 64,529
stock issuance cost	$ 4,500
Underwritten public offering | Common stock
Initial Public Offering
Shares issued			2,732,673	2,732,673
At-the-market offering
Initial Public Offering
Share value								$ 0.001
Common Stock, Value, Issued								$ 50,000
Shares issued		2,200,000
Shares issued (in dollars per share)		$ 22.73
Gross Proceeds From Issuance Of Common Stock		$ 49,700
Net proceeds from issuance of common shares		48,000		$ 48,019
stock issuance cost		$ 1,700
At-the-market offering | Maximum
Initial Public Offering
Common Stock, Value, Issued								$ 50,000
At-the-market offering | Common stock
Initial Public Offering
Shares issued				2,186,163
UmanDiagnostics AB Acquisition [Member]
Initial Public Offering
Capital stock shares outstanding, percent						5.00%	95.00%

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Revenue recognition - Disaggregated revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue recognition
Revenue	$ 14,944	$ 10,591	$ 40,816	$ 26,755
Product revenue
Revenue recognition
Revenue	10,737	5,962	29,059	15,907
Product revenue | NA
Revenue recognition
Revenue	5,502		15,332
Product revenue | EMEA
Revenue recognition
Revenue	3,944		10,164
Product revenue | Asia Pacific
Revenue recognition
Revenue	1,291		3,563
Instruments
Revenue recognition
Revenue	4,139		10,257
Instruments | NA
Revenue recognition
Revenue	1,795		4,350
Instruments | EMEA
Revenue recognition
Revenue	1,387		3,425
Instruments | Asia Pacific
Revenue recognition
Revenue	957		2,482
Consumable and other products
Revenue recognition
Revenue	6,598		18,802
Consumable and other products | NA
Revenue recognition
Revenue	3,707		10,982
Consumable and other products | EMEA
Revenue recognition
Revenue	2,557		6,739
Consumable and other products | Asia Pacific
Revenue recognition
Revenue	334		1,081
Service and other revenue
Revenue recognition
Revenue	4,207	3,017	11,757	8,699
Service and other revenue | NA
Revenue recognition
Revenue	3,413		9,593
Service and other revenue | EMEA
Revenue recognition
Revenue	539		1,612
Service and other revenue | Asia Pacific
Revenue recognition
Revenue	255		552
Service-type warranties
Revenue recognition
Revenue	1,153		3,255
Service-type warranties | NA
Revenue recognition
Revenue	806		2,309
Service-type warranties | EMEA
Revenue recognition
Revenue	293		827
Service-type warranties | Asia Pacific
Revenue recognition
Revenue	54		119
Research services
Revenue recognition
Revenue	2,697		7,408
Research services | NA
Revenue recognition
Revenue	2,412		6,687
Research services | EMEA
Revenue recognition
Revenue	87		310
Research services | Asia Pacific
Revenue recognition
Revenue	198		411
Other services
Revenue recognition
Revenue	357		1,094
Other services | NA
Revenue recognition
Revenue	195		597
Other services | EMEA
Revenue recognition
Revenue	159		475
Other services | Asia Pacific
Revenue recognition
Revenue	$ 3		$ 22
Collaboration and license revenue
Revenue recognition
Revenue		$ 1,612		$ 2,149

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Commitments and contingencies - License agreements and Lease commitments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Oct. 02, 2018
License agreements
Drawing capacity					$ 1,000,000
Letter of credit will be reduced at 41 months after the commencement date					750,000
Letter of credit will be reduced at 65 months after the commencement date					$ 250,000
Minimum future rent payments under the lease agreement
2019	$ 473,000		$ 473,000
2020	2,312,000		2,312,000
2021	3,575,000		3,575,000
2022	3,372,000		3,372,000
2023 and Forward	29,208,000		29,208,000
Total	38,940,000		38,940,000
Rent expense	700,000	$ 400,000	2,600,000	$ 1,000,000
Tufts
License agreements
Royalty expense	300,000	200,000	700,000	500,000
Other licenses | Maximum
License agreements
Royalty expense	100,000	$ 100,000	100,000	$ 100,000
Company headquarters
License agreements
Term of operating lease					137 months
Other non-current liabilities
Lease commitments
Deferred rent expense	$ 2,600,000		$ 2,600,000

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Warrants, stock-based compensation, stock options, restricted stock and restricted stock units - Stock-based award plans (Details) - shares	Jan. 01, 2019	Sep. 30, 2019	Dec. 31, 2018
2007 Plan
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Common stock available for future awards (in shares)		0
2017 Plan
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Shares authorized under the plan (in shares)		1,042,314
Shares available for grant under the plan (in shares)		207,589
Annual increase in the shares available for grant under the plan (as a percent of shares of common stock outstanding)		4.00%
Increase in the shares available for grant under the plan (in shares)	894,761
2017 ESPP
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Shares authorized under the plan (in shares)		649,223
Shares available for grant under the plan (in shares)		612,470
Annual increase in the shares available for grant under the plan (as a percent of shares of common stock outstanding)		1.00%
Increase in the shares available for grant under the plan (in shares)	223,690
Outstanding stock options
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Options outstanding (in shares)		2,662,334	2,476,911
Outstanding stock options | 2007 Plan
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Options outstanding (in shares)		1,324,255
Outstanding stock options | 2017 Plan
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Options outstanding (in shares)		1,338,079
Shares authorized under the plan (in shares)		2,490,290
Unvested restricted stock units | 2017 Plan
Warrants, stock-based compensation, stock options, restricted stock and restricted stock units
Options outstanding (in shares)		422,336

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Collaboration and license arrangements (Details) $ in Thousands		1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 06, 2018 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2015 USD ($) item agreement
Collaboration and license arrangements
Revenue			$ 14,944	$ 10,591	$ 40,816	$ 26,755
Joint development and license agreement
Collaboration and license arrangements
Consideration on collaboration activities					3,200
Revenue	$ 1,600
Evaluation and option agreements and license agreement
Collaboration and license arrangements
Revenue		$ 1,800
Number of agreements | agreement								3
Number of fields for which the agreements were entered | item								3
Non-refundable license fee		1,000						$ 2,000
Amount allocated to the option of the related field		$ 800
Deferred revenue			$ 1,200		$ 1,200		$ 1,200
Exclusive agreement
Collaboration and license arrangements
Consideration on collaboration activities							$ 500

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Underwritten public offering

9 Months Ended

Sep. 30, 2019

Underwritten public offering

Underwritten public offering

17. Underwritten public offering

On August 8, 2019, the Company entered into an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters, relating to an underwritten underwritten public offering of approximately 2.7 million shares of the Company’s common stock, par value $0.001 per share. The underwritten public offering resulted in gross proceeds of $69.0 million. The Company incurred $4.5 million in issuance costs associated with the underwritten public offering, resulting in net proceeds to the Company of $64.5 million.

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Employee benefit plans

9 Months Ended

Sep. 30, 2019

Employee benefit plans

Employee benefit plans

13. Employee benefit plans

The Company sponsors a 401(k) savings plan for its employees.  The Company may make discretionary contributions for each 401(k) plan year. During the three and nine months ended September 30, 2019, the Company made contributions of $0.1 million and $0.4 million, respectively. During the three and nine months ended September 30, 2018, the Company made contributions of less than $0.1 million.