美國
證券和交易委員會
華盛頓特區 20549
______________________________________
表格
（標記一）
截至季度結束日期的財務報告
要麼
過渡期從到
_____________________________________________
委託文件號碼：
(根據其章程規定的註冊人準確名稱)
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註冊或組織的州或其他管轄區 |
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I.R.S.僱主識別號碼。 |
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首席執行官辦公室地址 |
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郵政編碼 |
公司電話，包括區號：(
_____________________________________________
在法案第12(b)條的規定下注冊的證券：
每個類別的標題 |
交易標的 |
在其上註冊的交易所的名稱 |
請在以下方框內打勾，以指示註冊人是否（1）已在過去12個月內（或在註冊人需要提交此類報告的較短期間內）提交了交易所法案第13或15（d）條規定的所有要求提交的報告，並且（2）在過去90天內一直需要遵守提交要求。
☑ 否 ☐
請在以下選項中勾選是否公司在過去12個月內(或公司需要提交這些文件的較短期間)已經以電子方式提交了根據規則405條和本章第232.405條提交的互動數據文件。
請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速報告人 |
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加速文件提交人 |
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較小的報告公司 |
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新興成長公司 |
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如果是新興成長型公司，在選中複選標記的同時，如果公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則，則表明該公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則。☐
請在以下方框內打勾，以指示註冊人是否爲殼公司（如交易所法規第12b-2條規定）。 是 ☐ 否
截至2024年11月1日，有
關於前瞻性聲明的特別說明
本Form 10-Q季度報告包含根據1933年證券法修正案第27A條和1934年證券交易法修正案第21E條含義的前瞻性聲明，這些聲明基於我司管理層的信念和假設，以及目前對我司管理層可獲得的信息。前瞻性聲明主要包含在名爲「管理層對財務狀況和運營結果的討論與分析」部分中。前瞻性聲明包括涉及我們可能或假定的未來現金流、營業收入、營業收入來源以及運營結果、產品收入成本和產品毛利、運營和其他費用、產品銷量及產品銷售價格、業務戰略、融資計劃、業務擴展、投資以擴大我們的客戶基礎、產品計劃、競爭位置、行業環境、潛在增長機會、市場增長預期、競爭影響、成本結構優化、增長加速、潛在的併購活動和重組計劃（包括涉及潛在分租、人才調動計劃和解僱義務、我們蛋白質組學和基因組學業務範圍的修改以及中止某些產品線的費用削減活動）以及與我們於2024年1月與SomaLogic, Inc.合併有關的收購業務和/或產品的效益與整合預期。前瞻性聲明包括非歷史事實的陳述，並可通過「預測」，「相信」，「可能」，「尋求」，「估計」，「預期」，「意圖」，「可能」，「計劃」，「潛在」，「預測」，「項目」，「應」，「將」，「會」或類似表達方式和這些表達的否定形式來識別。
前瞻性聲明涉及已知和未知的風險、不確定性以及其他因素，這些因素可能導致我們的實際結果、表現或成就與前瞻性聲明中表達或暗示的未來結果、表現或成就有實質性差異。我們在2023年12月31日結束的年度報告的「風險因素」部分中更詳細地討論了這些風險，該報告已於2024年3月1日提交給證券交易委員會。鑑於這些不確定性，您不應對這些前瞻性聲明過分依賴。
前瞻性聲明僅代表我們管理層在本季度報告（Form 10-Q）日期之日的信念和假設。除非法律要求，我們不承擔更新這些前瞻性聲明的義務，也不更新實際結果可能明顯不同於這些前瞻性聲明中預期的原因，即使將來出現新信息。您應該完整閱讀本季度報告（Form 10-Q），並理解我們實際未來的結果可能與我們的預期有很大不同。
標準生物工具，標準生物工具標誌，Fluidigm公司，Fluidigm標誌，48.Atlas，Access Array，Advanta，Advanta EASE，Atlas，Biomark，Biomark X，"爲人類健康帶來新的洞察"，C1，Callisto，Cell-ID，CyTOF，CyTOF XT，CyTOF Xt 標誌，D3，Delta Gene，Direct，Digital Array，Dynamic Array，EP1，EQ，FC1，Flex Six，Flow Conductor，FluiDesign，Helios，高精度96.96基因型分型，HTI，HTI+，Hyperion，Hyperion+，IMC，Imaging Mass Cytometry，Immune Profiling Assay，Juno，Maxpar，MCD，MSL，納米Flex，Open App，Pathsetter，polaris公司，qdPCR 37K，Script Builder，Script Hub，Singular，SNP Trace，SNP Type，"釋放工具，加速在盈健醫療領域的突破"，X9實時PCR系統，Xgrade，SomaLogic公司，SomaScan，SOMAmer，SomaSignal，Power by SomaLogic，DataDelve和Cardio DM爲標準生物工具公司或其附屬公司在美國和/或其他國家註冊的商標或商標。本季度10-Q表格中提到的其他服務標記、商標和商號屬於其各自所有者的財產。
標準生物工具股份有限公司
目錄
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頁面 |
第I部分 |
財務信息 |
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項目1。 |
1 |
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1 |
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2 |
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3 |
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4 |
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6 |
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7 |
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項目2。 |
29 |
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項目3。 |
37 |
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項目4。 |
37 |
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第二部分 |
其他信息 |
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項目1。 |
39 |
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項目1A。 |
39 |
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項目2。 |
39 |
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項目3。 |
39 |
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項目4。 |
39 |
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項目5。 |
40 |
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項目6。 |
41 |
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41 |
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42 |
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第一部分：財務信息
項目 1. F財務報表附註
標準生物工具股份有限公司
簡明合併資產負債表
（以千爲單位，除每股面值外）
(未經審計)
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9月30日, |
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2023年12月31日, |
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2024 |
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2023 |
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資產 |
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流動資產： |
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現金及現金等價物 |
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$ |
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$ |
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短期投資 |
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應收賬款，淨額 |
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存貨 |
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預付費用及其他流動資產 |
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總流動資產 |
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非流動庫存 |
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應收版稅，非流動資產 |
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物業和設備，淨值 |
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經營租賃權益資產，淨值 |
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其他非流動資產 |
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已取得無形資產，淨額 |
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商譽 |
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總資產 |
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$ |
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$ |
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負債、中間權益和股東權益（赤字） |
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流動負債: |
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應付賬款 |
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$ |
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$ |
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應計負債 |
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經營租賃負債，流動 |
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遞延收入，流動 |
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遞延撥款收入，流動 |
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短期貸款 |
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可轉換票據，目前 |
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總流動負債 |
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可轉換票據，非流動 |
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定期貸款，非流動 |
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遞延所得稅負債 |
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經營租賃負債，非流動 |
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遞延收入，非流動 |
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遞延撥款收入，非流動資產 |
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其他非流動負債 |
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總負債 |
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次級股權: |
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可贖回優先股：$ |
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股東權益（赤字）： |
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4,998,000,000 |
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普通股：$ |
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追加實收資本 |
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累計其他綜合損失 |
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( |
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累積赤字 |
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( |
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( |
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按成本計提的庫存股: 截至2024年3月31日，有500萬股，截至2023年12月31日有600萬股 |
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( |
) |
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( |
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股東權益（赤字） |
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( |
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負債合計、中間層權益和股東權益（赤字） |
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$ |
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$ |
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See accompanying notes
1
STANDARD BIOTOOLS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue: |
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Product revenue |
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$ |
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$ |
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$ |
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$ |
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Services revenue |
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Collaboration and other revenue |
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Total revenue |
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Cost of revenue: |
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Cost of product revenue |
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Cost of services revenue |
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Cost of collaboration and other revenue |
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— |
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— |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Restructuring and related charges |
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Transaction and integration expenses |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Bargain purchase gain |
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Interest income, net |
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Other income (expense), net |
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( |
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( |
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Loss before income taxes |
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( |
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( |
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( |
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( |
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Income tax expense |
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( |
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( |
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( |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Induced conversion of redeemable preferred stock |
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( |
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Net loss attributable to common stockholders |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per share attributable to common stockholders, basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Shares used in computing net loss per share attributable to common stockholders, basic and diluted |
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See accompanying notes
2
STANDARD BIOTOOLS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other comprehensive income (loss), net of tax: |
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Foreign currency translation adjustment |
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( |
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( |
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( |
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Net change in unrealized gain on investments |
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Other comprehensive income (loss), net of tax |
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( |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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See accompanying notes
3
STANDARD BIOTOOLS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands)
(Unaudited)
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Common Stock |
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Additional |
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Accum. |
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Accum. |
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Treasury Stock |
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Total Stockholders’ |
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Shares |
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Amount |
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Capital |
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Comp. Loss |
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Deficit |
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Shares |
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Amount |
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(Deficit) |
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Balance as of December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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( |
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$ |
( |
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$ |
( |
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Conversion of redeemable preferred stock |
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— |
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( |
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— |
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— |
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Issuance of restricted stock, net of shares withheld |
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( |
) |
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— |
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— |
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— |
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— |
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( |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
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Common stock relinquished in litigation settlement |
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— |
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— |
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— |
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— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Merger consideration (1) |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance as of March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
Issuance of restricted stock, net of shares withheld |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Issuance of common stock under ESPP |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Exercise of stock options |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive loss net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance as of June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
||||
Issuance of restricted stock, net of shares withheld |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Issuance of common stock from option exercises |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive loss net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance as of September 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
(1)
4
|
|
Common Stock |
|
|
Additional |
|
|
Accum. |
|
|
Accum. |
|
|
Treasury Stock |
|
|
Total |
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Comp. Loss |
|
|
Deficit |
|
|
Shares |
|
|
Amount |
|
|
(Deficit) |
|
||||||||
Balance as of December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
Issuance of restricted stock, net of shares withheld |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance as of March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
Issuance of restricted stock, net of shares withheld |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Issuance of common stock under ESPP |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance as of June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
Issuance of restricted stock, net of shares withheld |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
Issuance of common stock from option exercise |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance as of September 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
See accompanying notes
5
STANDARD BIOTOOLS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Bargain purchase gain |
|
|
( |
) |
|
|
— |
|
Stock-based compensation expense |
|
|
|
|
|
|
||
Amortization of acquired intangible assets |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Accretion of discount on short-term investments, net |
|
|
( |
) |
|
|
( |
) |
Non-cash lease expense |
|
|
|
|
|
|
||
Provision for excess and obsolete inventory |
|
|
|
|
|
|
||
Change in fair value of warrants |
|
|
( |
) |
|
|
— |
|
Other non-cash items |
|
|
|
|
|
|
||
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
|
|
|
|
||
Inventory |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other assets |
|
|
( |
) |
|
|
|
|
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued liabilities |
|
|
|
|
|
|
||
Deferred revenue |
|
|
( |
) |
|
|
|
|
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Other liabilities |
|
|
( |
) |
|
|
|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Investing activities |
|
|
|
|
|
|
||
Cash and restricted cash acquired in Merger |
|
|
|
|
|
— |
|
|
Purchases of short-term investments |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales and maturities of investments |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash provided by investing activities |
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Repayment of term loan and convertible notes |
|
|
( |
) |
|
|
( |
) |
Payment of term loan fee |
|
|
( |
) |
|
|
— |
|
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
Proceeds from ESPP stock issuance |
|
|
|
|
|
|
||
Payments for taxes related to net share settlement of equity awards and other |
|
|
( |
) |
|
|
( |
) |
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of foreign exchange rate fluctuations on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Net increase in cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosures of cash flow information |
|
|
|
|
|
|
||
Equity consideration transferred in connection with Merger (1) |
|
$ |
|
|
$ |
— |
|
|
Cash paid for interest |
|
|
|
|
|
|
||
Cash paid for income taxes, net of refunds |
|
|
|
|
|
|
||
Non-cash right-of-use assets and lease liabilities |
|
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
|
||
(1)
See accompanying notes
6
STANDARD BIOTOOLS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
1. Basis of Presentation and Summary of Significant Accounting Policies
Description of the Business
Standard BioTools Inc. ("Standard BioTools" or the "Company") is a Delaware corporation headquartered in South San Francisco, California. The Company has an established portfolio of essential technologies that assist biomedical researchers develop medicines faster and better. The Company has created high resolution instruments designed to provide reliable and repeatable insights in health and disease, through the use of proprietary mass cytometry and microfluidics technologies, which are useful in proteomics and genomics, to help transform scientific discoveries into better patient outcomes. Additionally, the Company has an integrated proteomics platform ("SomaScan® Platform"), capable of robust, high throughput proteomics analysis with broad proteome coverage, low limits of detection, and high reproducibility.
The Company works with leading academic, government, pharmaceutical, biotechnology, plant and animal research, and clinical laboratories worldwide, focusing on the most pressing needs in translational and clinical research, including oncology, immunology, and immunotherapy.
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and applicable rules and regulations of the U.S. Securities and Exchange Commission (the "SEC") regarding financial reporting. All intercompany transactions and balances have been eliminated in consolidation. These interim condensed consolidated financial statements and related disclosures are unaudited and have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying financial statements contain all adjustments of a normal and recurring nature, necessary for a fair statement of the Company's financial position as of September 30, 2024, results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023. The condensed consolidated balance sheet at December 31, 2023 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation.
Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements as of and for the year ended December 31, 2023 ("2023 Financial Statements") included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 1, 2024.
Interim results are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosed in the accompanying notes. Actual results could differ materially from these estimates.
Significant estimates and assumptions which form the basis of amounts reported in the condensed consolidated financial statements include, but are not limited to, the identification of performance obligations in contracts with customers; standalone selling prices of the Company's performance obligations; timing of revenue recognition; fair value measurements; net realizable value of inventory; income taxes; and the fair value of intangible assets acquired in business combinations. The Company bases its estimates on current facts and circumstances, historical experience, forecasted results, and various other assumptions that it believes to be reasonable. The Company obtains reports from third-party valuation experts to inform and support estimates related to certain fair value measurements.
Restructuring and Related Charges
Restructuring and related charges include employee separation costs, contract termination costs, and other costs associated with implementing restructuring plans. Employee separation costs principally consist of one-time termination benefits and contractual
7
termination benefits for severance, other termination benefit costs, and stock-based compensation expense for the acceleration of equity awards.
The Company records restructuring charges based on whether the termination benefits are provided under an ongoing benefit arrangement or under a one-time benefit arrangement. The Company accounts for ongoing benefit arrangements, such as those documented by employment agreements, in accordance with ASC 712, Compensation - Nonretirement Postemployment Benefits ("ASC 712"). Under ASC 712, liabilities for post-employment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated. The Company accounts for one-time employment benefit arrangements in accordance with ASC 420, Exit or Disposal Cost Obligations. One-time termination benefits expenses are recorded at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Other associated costs are recognized in the period in which the liability is incurred.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
Level 3 - Unobservable inputs that reflect the Company’s own assumptions incorporated into valuation techniques. These valuations require significant judgment.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When there is more than one input at different levels within the hierarchy, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessment of the significance of a particular input to the fair value measurement in its entirety requires substantial judgment and consideration of factors specific to the asset or liability. Level 3 inputs are inherently difficult to estimate. Changes to these inputs can have significant impact on fair value measurements.
Business Combinations
The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations ("ASC 805"). Application of this method of accounting requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill. When the fair value of net assets acquired and liabilities assumed exceeds the purchase price, the Company records a gain on bargain purchase in earnings in the period of acquisition. Determining the fair value of assets acquired and liabilities assumed in a business combination requires management to use significant judgment and estimates, especially with respect to intangible assets. Transaction costs, including legal, accounting, and integration expenses, are expensed as incurred and are included in operating expenses in the Company's condensed consolidated statements of operations.
Software Development Costs
Internal-Use Software
The Company capitalizes certain internal and external costs related to the acquisition and development of internal-use software or cloud computing arrangements during the application development stages of projects. The costs incurred for development of software intended for internal use and cloud computing arrangements are capitalized in accordance with authoritative accounting guidance. These costs are included in property and equipment, net of accumulated depreciation and amortization in the condensed consolidated balance sheets.
When the software is ready for its intended use, the Company amortizes these costs using the straight-line method over the estimated useful life of the asset, typically
Software Developed for Sale
The costs incurred for the development of computer software to be sold, leased, or otherwise marketed are capitalized in accordance with authoritative accounting guidance, when technological feasibility has been established. Technological feasibility generally occurs when all planning, design, coding and testing activities are completed that are necessary to establish that the product can be produced
8
to meet its design specifications, including functions, features and technical performance requirements. The establishment of technological feasibility is an ongoing assessment of judgment by management with respect to certain external factors, including, but not limited to, anticipated future revenues, estimated economic life and changes in technology.
Capitalized software costs include direct labor and related expenses for software development for new products. Capitalized software costs are included in other long-term assets in the condensed consolidated balance sheets. Amortization of capitalized software development costs begins when the product is available for general release. Amortization is provided on a product-by-product basis using the straight-line method over periods of
Revenue Recognition
Revenues are recognized when the Company's customers obtain control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the products or services (the "transaction price"). Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded from revenue.
The Company's contracts with customers typically include multiple distinct products and services, and the Company allocates transaction price to these performance obligations based on their relative standalone selling prices ("SSP"). The SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. SSPs are generally determined using observable data from recent transactions. In cases where sufficient data is not available, the Company estimates a product’s SSP using a cost plus a margin approach.
Payment terms may vary by customer, are based on customary commercial terms, and are generally less than one year. The Company does not adjust revenue for the effects of a significant financing component for contracts where the period between the transfer of the good or service and collection is one year or less. The Company expenses incremental costs to obtain a contract when incurred since the amortization period of the asset that would otherwise be recognized is one year or less.
Product Revenue
The Company generates product revenue from the sale of instruments and consumables, including Integrated Fluidic Circuits and reagents. The Company generally recognizes product revenue at the point in time when control of the goods passes to the customer, and the Company has an enforceable right to payment. This generally occurs either when the product is shipped from one of the Company's facilities or when it arrives at the customer’s facility, based on the contractual terms. Customers do not have a unilateral right to return products after delivery. Invoices are generally issued at shipment or in advance of service and become due in
Revenue from the sales of certain instruments that involve significant customization, which primarily includes sales of the SomaScan® equipment bundle, is recognized over time as the Company's performance creates an asset that the customer simultaneously controls (the instrument installation and customization occurs at the customer site). Revenue is recognized based on the progress made toward achieving the performance obligation utilizing an input method of costs incurred relative to total estimated costs.
The Company sometimes perform shipping and handling activities after control of the product passes to the customer. The Company has made an accounting policy election to account for these activities as product fulfillment activities rather than as separate performance obligations.
Services Revenue
The Company generates services revenue from the sale of lab services and field services. Lab services revenue is generated by performing the SomaScan® assay on customer samples to generate data on protein biomarkers. Lab services revenue is recognized at a point in time when the analysis data or report is delivered to the customer. SomaScan® services are sold at a fixed price per sample without any volume discounts, rebates, or refunds. The delivery of each assay data report is a separate performance obligation.
9
Field services revenue includes revenue from instrument service and support contracts. Revenue associated with these arrangements is recognized over time using a time-elapsed measure of progress, resulting in straight-line revenue recognition over the term of the agreement, which is generally to
Collaboration and Other Revenue
From time to time the Company enters into collaboration arrangements in which both parties are active participants in the arrangement and are exposed to the significant risks and rewards of the collaboration, in which case the collaboration is within the scope of ASC 808, Collaborative Arrangements. With such collaborations, the Company determines if any obligations are an output of the Company's ordinary activities in exchange for consideration, and if so, the Company applies ASC 606, Revenue from Contracts with Customers ("ASC 606"), to such activities.
For other payments received from collaborative partners for other collaboration activities, which primarily include research and development activities, the Company analogizes to ASC 606. Revenue from such activities is recognized as the Company satisfies its obligations.
Other revenue consists of license and royalty revenue and grant revenue. The Company recognizes revenue from license agreements when the license is transferred to the customer and the customer is able to use and benefit from the license. For contracts that include sales-based royalties, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied.
The Company receives grants from various entities to perform research and development activities over contractually defined periods. Grant revenue is not accounted for under ASC 606, as the grant agreement is not with a customer. As there is no authoritative GAAP guidance for grants awarded to for-profit entities, the Company has applied the guidance in ASC 958, Not-for-Profit Entities by analogy. Revenue is generally recognized provided that the conditions under which the grants were provided have been met and any remaining performance obligations are perfunctory.
Warrant Liabilities
In connection with the merger described in Note 2, Business Combination, the Company assumed warrant liabilities for the warrants issued in connection with the initial public offering CM Life Sciences II Inc ("CMLS II"), the predecessor company of SomaLogic, Inc. ("SomaLogic"). CMLS II issued
The Warrants are classified as liabilities on the condensed consolidated balance sheet as of September 30, 2024 as these instruments are precluded from being indexed to the Company's own stock given that the terms allow for a settlement adjustment that does not meet the scope for the fixed-for-fixed exception in ASC 815, Derivatives and Hedging. Since the Warrants meet the definition of a derivative under ASC 815-40, the Company recorded these warrants as long-term liabilities at fair value as of the Closing Date, with subsequent changes in fair value recognized within other income (expense), net in the condensed consolidated statement of operations for the three and nine months ended September 30, 2024.
Segment Reporting
The Company manages its business through
10
Recent Accounting Changes and Accounting Pronouncements
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which requires disclosure of more detailed information about a reportable segment’s expenses. The new standard is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The amendments must be applied retrospectively, and early adoption is permitted. The Company expects to adopt ASU 2023-07 in its Annual Report on Form 10-K for the year ended December 31, 2024, and expects to include additional segment disclosures as a result of adoption.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The new standard is effective for fiscal years beginning after December 15, 2024. The amendments may be applied prospectively or retrospectively, and early adoption is permitted. The Company is currently assessing the impact of adoption on its income tax disclosures; however, adoption will not impact the Company's results of operations.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. The new standard requires additional disclosure of the nature of the expenses included in the income statement, including disaggregation of the expense captions presented on the face of the income statement into specific categories. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively or prospectively. The Company is currently evaluating the impact of this standard on its financial statement disclosures.
2. Business Combination
On the Closing Date, the Company completed the merger (the "Merger") with SomaLogic. As a result, SomaLogic and its subsidiaries became wholly owned subsidiaries of Standard BioTools. Upon completion of the Merger, each share of SomaLogic common stock, par value $
Purchase consideration also included replacement of equity awards attributable to pre-combination services.
|
|
|
|
|
SomaLogic Common Stock issued and outstanding as of January 5, 2024 |
|
|
|
|
Fixed exchange ratio |
|
|
|
|
Shares of Standard BioTools common stock issued to SomaLogic stockholders |
|
|
|
|
Standard BioTools common stock price at close of Merger |
|
$ |
|
|
Fair value of Standard BioTools common stock issued to SomaLogic stockholders |
|
$ |
|
|
Fair value of Standard BioTools replacement equity awards attributable to pre-combination service |
|
|
|
|
Less: Fair value of restricted shares subject to service conditions |
|
|
( |
) |
Total consideration transferred |
|
$ |
|
|
11
The Company accounted for the Merger as a business combination, using the acquisition method of accounting in accordance with ASC 805. The identifiable assets acquired and liabilities assumed of SomaLogic were recorded at their estimated fair values as of the acquisition date and consolidated with those of the Company.
|
|
|
|
|
Total consideration |
|
$ |
|
|
|
|
|
|
|
Assets acquired |
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|
|
Cash and cash equivalents |
|
|
|
|
Short-term investments |
|
|
|
|
Accounts receivable |
|
|
|
|
Inventory |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
Property and equipment |
|
|
|
|
Non-current inventory |
|
|
|
|
Royalty receivable |
|
|
|
|
Operating lease right-of-use assets |
|
|
|
|
Other non-current assets |
|
|
|
|
Intangible Assets |
|
|
|
|
Total assets acquired |
|
|
|
|
Liabilities assumed |
|
|
|
|
Accounts payable and accrued liabilities |
|
|
|
|
Operating lease liabilities, current |
|
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|
|
Deferred revenue, current |
|
|
|
|
Operating lease liabilities, non-current |
|
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|
|
Deferred revenue, non-current |
|
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|
|
Warrant liabilities |
|
|
|
|
Other non-current liabilities |
|
|
|
|
Total Liabilities |
|
|
|
|
Total fair value of net assets acquired |
|
$ |
|
|
Gain on bargain purchase |
|
$ |
( |
) |
The fair value of the assets acquired and liabilities assumed exceeded the fair value of the consideration transferred, resulting in a bargain purchase gain. Before recognizing a gain on a bargain purchase, management reassessed the methods used in the acquisition accounting and verified that management had identified all of the assets acquired and all of the liabilities assumed, and that there were no additional assets or liabilities to be considered. Management also reassessed the procedures used to measure amounts recognized at the Closing Date to ensure that the measurements reflected all consideration transferred based on available information as of the Closing Date. Management determined that the bargain purchase gain was primarily attributable to a rapid decline in the price of the Company's common stock in the days following the announcement of the Merger, which persisted through the close of the Merger. The bargain purchase gain is separately stated below income from operations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.
The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations and are subject to change as the Company obtains additional information during the measurement period (up to one year from the Closing Date).
The identifiable intangible assets acquired consisted of developed technology, customer relationships, and tradename. The fair values of the developed technology and customer relationships were estimated using variations of the multi-period excess earnings method, which isolates the net earnings attributable to the asset being measured. The fair value of the SomaLogic trade name was estimated using the relief-from-royalty method, which determines the present value of license fees avoided by owning the trade name. The useful lives of acquired intangibles was estimated based on the contractual terms or period over which approximately
12
|
|
Fair Value |
|
|
Useful Life |
|
Developed technology |
|
$ |
|
|
||
Trade name |
|
|
|
|
||
Customer relationships |
|
|
|
|
||
Total fair value of intangible assets acquired |
|
$ |
|
|
|
|
As a result of the Merger, the Company incurred $
Unaudited Pro Forma Results
The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and SomaLogic, as if the companies were combined as of January 1, 2023.
The unaudited pro forma financial information for the nine months ended September 30, 2024 combines the Company's financial results for the nine months ended September 30, 2024 and the historical results of SomaLogic for the 5-day period ended on the Closing Date. The unaudited pro forma financial information for the three and nine months ended September 30, 2023 combines the historical results of the Company and SomaLogic for their respective three and nine-month periods ended September 30, 2023. The pro forma financial information for the three and nine months ended September 30, 2023 has been adjusted to include certain nonrecurring impacts associated with the Merger, including the bargain purchase gain and transaction costs. These same impacts have been eliminated from the pro forma financial information for the nine months ended September 30, 2024.
The unaudited pro forma financial information for all periods presented includes the business combination accounting effects resulting from the Merger, mainly including adjustments to reflect additional amortization expense from acquired intangible assets, adjustments to stock-based compensation expense, and additional depreciation expense from the acquired property and equipment.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
13
The results of SomaLogic have been consolidated with the Company's results since the Closing Date. For the period of January 6, 2024 to September 30, 2024, SomaLogic contributed revenue and loss of $
3. Revenue and Geographic Area
Disaggregation of Revenue by Product Type and Geographic Area
The following tables present the Company's revenue for the three and nine months ended September 30, 2024 and 2023, respectively, based on product type and the geographic location of customers’ facilities (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Product revenue: |
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|
|
|
|
|
|
|
|
|
|
|
||||
Instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Consumables |
|
|
|
|
|
|
|
|
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|
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|
||||
Total product revenue |
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|
|
|
|
|
|
|
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|
||||
Service revenue: |
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|
|
|
|
|
|
|
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|
||||
Lab services |
|
|
|
|
|
|
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|
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|
||||
Field services |
|
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|
|
|
|
|
|
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|
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|
||||
Total service revenue |
|
|
|
|
|
|
|
|
|
|
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|
||||
Product and service revenue |
|
|
|
|
|
|
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|
|
|
|
|
||||
Collaboration and other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Americas |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe, Middle East and Africa (EMEA) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia-Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Illumina Cambridge, Ltd.
In connection with the Merger, the Company assumed a multi-year arrangement with Illumina Cambridge, Ltd. ("Illumina"), originally entered into by SomaLogic and Illumina in December 2021 (the "Illumina Agreement"), to jointly develop and commercialize co-branded kits that will combine Illumina's Next Generation Sequencing ("NGS") technology with SomaScan® technology (the "Co-Branded Kits"). Pursuant to the Illumina Agreement, SomaLogic received a non-refundable upfront payment of $
Subsequent to commercialization of the Co-Branded Kits, Illumina has the right to purchase SOMAmer reagents below SSP through the remaining term of the Illumina Agreement, which will continue for approximately
During the first quarter of 2024, the Company determined that commercialization of the Co-Branded Kits is probable due to the launch of an early-access program, and adjusted the transaction price to include $
14
NEC Corporation
Additionally, in connection with the Merger, the Company assumed a joint development and commercialization agreement (the "JDCA") with NEC Solution Innovators, Ltd. ("NEC"), originally entered into by SomaLogic and NEC in March 2020, to develop and commercialize SomaScan® services in Japan. The JDCA is within the scope of ASC 808 as both companies are active participants and are exposed to significant rewards and risks dependent on commercial failure or success, and is accounted for by analogy to ASC 606.
In connection with the Merger, the Company assumed certain contract liabilities and recorded $
New England Biolabs, Inc.
Also in connection with the Merger, the Company assumed a non-exclusive licensing agreement with New England Biolabs, Inc. ("NEB"), originally entered into by SomaLogic and NEB in September 2022 (the "License Agreement"), whereby the Company provides a license to use certain proprietary information and know-how relating to SomaLogic's aptamer technology. Under the License Agreement, the Company is guaranteed fixed minimum royalties of $
Unfulfilled Performance Obligations
A summary of the change in deferred revenue is as follows (in thousands):
|
|
NEC |
|
|
Illumina |
|
|
Other |
|
|
Total |
|
||||
Deferred revenue at December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred revenue assumed in connection with merger |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recognition of revenue from beginning or assumed deferred revenue balances |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Revenue deferred during the period, net of revenue recognized |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred revenue at September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company expects to recognize revenue from unfulfilled performance obligations associated with service contracts that were partially completed as of September 30, 2024 in the following periods (in thousands):
Fiscal Year |
|
Expected Revenue (1) |
|
|
remainder of the year |
|
$ |
|
|
|
|
|
||
|
|
|
||
|
|
|
||
Total |
|
$ |
|
|
The Company also has unsatisfied performance obligations for service contracts with an expected term of one year or less not included in the amounts above.
15
4. Goodwill and Acquired Intangible Assets, net
The changes in the carrying value of goodwill by segment are as follows (in thousands):
|
|
Proteomics |
|
|
Genomics |
|
|
Total |
|
|||
Balance as of December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign currency translation |
|
|
|
|
|
( |
) |
|
|
|
||
Balance as of September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Acquired intangible assets, net consisted of the following (in thousands):
|
|
|
|
|||||||||||||||||||||
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||||||||||
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net |
|
||||||
Developed technology |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Trade name |
|
|
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Acquired intangible assets, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Total amortization expense of the Company's acquired intangible assets was $
As of September 30, 2024, future expected amortization expense of acquired intangible assets, net was as follows (in thousands):
Fiscal Period |
|
|
|
2024 remainder of the year |
$ |
|
|
2025 |
|
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
Thereafter |
|
|
|
Total |
$ |
|
|
5. Balance Sheet Details
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Restricted cash of $
Accounts Receivable
Accounts receivable consisted of the following (in thousands):
16
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Trade receivables |
|
$ |
|
|
$ |
|
||
Royalty receivable, current |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Less: allowance for expected credit losses |
|
|
( |
) |
|
|
( |
) |
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
Inventory
Inventory consisted of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work-in-process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventory |
|
|
|
|
|
|
||
Inventory, current |
|
|
|
|
|
|
||
Inventory, non-current (1) |
|
$ |
|
|
$ |
|
||
The Company recorded charges for excess and obsolete inventory of $
Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Laboratory and manufacturing equipment |
|
$ |
|
|
$ |
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Computer equipment |
|
|
|
|
|
|
||
Internal-use software |
|
|
|
|
|
|
||
Office furniture and fixtures |
|
|
|
|
|
|
||
Property and equipment, gross |
|
|
|
|
|
|
||
Less accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Construction-in-progress |
|
|
|
|
|
|
||
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation and amortization expense was $
Accrued Liabilities
Accrued liabilities, which are included in current liabilities on the condensed consolidated balance sheets consisted of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Accrued compensation and related benefits |
|
$ |
|
|
$ |
|
||
Loss contingency accruals |
|
|
|
|
|
|
||
Accrued warranties |
|
|
|
|
|
|
||
Accrued restructuring |
|
|
|
|
|
|
||
Uninvoiced receipts |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Accrued liabilities |
|
$ |
|
|
$ |
|
||
17
Refer to Note 16 for additional information on restructuring.
Deferred Grant Income
In September 2020, the Company executed a contract with the National Institutes of Health ("NIH") under NIH’s Rapid Acceleration of Diagnostics program to support the expansion of the Company’s production capacity for its COVID-19 test products. Under the now-completed contract, the Company received $
The current portion of deferred grant income on the Company’s condensed consolidated balance sheets represents amounts expected to be offset against depreciation expense over the next twelve months. The non-current portion of deferred grant income includes amounts expected to be offset against depreciation expense in later periods.
6. Debt
Total carrying value of debt consists of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Convertible notes: |
|
|
|
|
|
|
||
2014 Notes |
|
$ |
|
|
$ |
|
||
2019 Notes, current |
|
|
|
|
|
|
||
Total convertible notes, net |
|
|
|
|
|
|
||
Term loan, non-current |
|
|
|
|
|
|
||
Term loan, current |
|
|
|
|
|
|
||
Total debt |
|
$ |
|
|
$ |
|
||
Convertible Notes
In February 2014, the Company closed an underwritten public offering of 2014 Senior Convertible Notes (the "2014 Notes"), which will mature on February 1, 2034, unless earlier converted, redeemed or repurchased in accordance with the terms of the 2014 Notes. Holders may require the Company to repurchase all or a portion of their 2014 Notes beginning on February 6, 2029 at a repurchase price in cash equal to
In November 2019, the Company issued $
Offering-related costs related to the Convertible Notes were capitalized as debt issuance costs and are recorded as an offset to the carrying value of the 2019 Notes.
The carrying values of the Convertible Notes approximate fair values as the interest rate and terms are reflective of the rate the Company could obtain on debt with similar terms and conditions. The Convertible Notes are not regularly traded and there is no
18
public market for the Convertible Notes. The estimated fair values for the Convertible Notes represent Level 3 valuations since the fair values for the Convertible Notes cannot be determined by using readily observable inputs or measures, such as market prices.
Term Loan Facility, net
On August 2, 2021, the Company amended its revolving credit facility to, amongst other things, provide for a new $
On March 4, 2024, the Company fully repaid all outstanding indebtedness owed pursuant to the Term Loan Facility and terminated the agreement.
7. Leases
In connection with the Merger, the Company assumed
Lease Costs
Lease costs for operating leases are recognized on a straight-line basis over the lease term.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Sublease income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Lease Maturities
The table below reconciles the undiscounted lease payment maturities to the lease liabilities for the Company's operating leases:
|
|
September 30, 2024 |
|
|
Remainder of 2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
|
|
|
Less: amount of lease payments representing interest |
|
|
( |
) |
Present value of future minimum lease payments |
|
|
|
|
Less: current operating lease liabilities |
|
|
( |
) |
Long-term operating lease liabilities |
|
$ |
|
|
Supplemental Lease Information
Supplemental information related to the Company's operating leases was as follows:
|
|
September 30, 2024 |
|
|
Weighted average remaining lease term |
|
|
|
|
Weighted average discount rate |
|
|
% |
|
19
8. Commitments and Contingencies
Other Commitments
In the normal course of business, the Company enters into various contractual and legally binding purchase commitments. As of September 30, 2024, the Company's open commitments totaled $
In connection with the Illumina Agreement, SomaLogic, and now the Company, is required to engage with two contract manufacturing organizations in order to ensure manufacturing capacity. In 2023, SomaLogic contracted with Integrated DNA Technologies, Inc. (“IDT”) to manufacture custom products. Under the contract manufacturing agreement with IDT, SomaLogic committed to minimum annual purchases of $
The Company has entered into several license and patent agreements. Under these agreements, the Company pays annual license maintenance fees, non-refundable license issuance fees, and royalties as a percentage of net sales for the sale or sublicense of products using the licensed technology. Future payments related to these license agreements have not been included in the open commitments above, as the period of time over which the future license payments will be required to be made, and the amount of such payments, are indeterminable. The Company does not expect the license payments to be material in any particular year.
Indemnification
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.
In addition, the Company has entered into indemnification agreements with its officers, directors and certain other employees. With certain exceptions, these agreements provide for indemnification for related expenses including, among others, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding.
Legal Proceedings
From time to time, the Company may be subject to various legal proceedings and claims arising in the ordinary course of business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, the Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible loss can be estimated, the Company accrues a liability for the estimated loss.
Stockholder Litigation
On December 12, 2023 two separate stockholder complaints were filed in the District of Delaware. The complaints asserted claims under Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and Section 20(a) of the Exchange Act for allegedly causing the filing with the SEC on November 14, 2023 of a materially deficient registration statement on Form S-4. Among other remedies, the plaintiffs sought to enjoin a stockholder vote on the proposed Merger. These complaints were voluntarily dismissed. On December 13, 2023, a complaint was filed in the Delaware Court of Chancery against SomaLogic and certain officers and directors alleging Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty. This complaint also sought an injunction postponing the proposed business combination between SomaLogic and the Company, which was denied by the Court on January 4, 2024. An amended complaint was filed on June 20, 2024, containing primarily the same allegations, while removing some of the defendants. The remaining defendants filed a motion to dismiss on July 5, 2024, and served an opening brief on August 19, 2024. The Plaintiffs’ opposition brief is due on November 1, 2024, and the defendants’ reply brief is due on December 13, 2024. No date for oral argument has been set. Litigation is inherently uncertain and there can be no assurance regarding the outcome. Whether or not any plaintiffs’ claim is successful, this type of litigation may result in significant costs and divert management’s attention and resources, which could adversely affect the operation of our business.
20
Between October 24, 2023 and January 3, 2024, SomaLogic received 18 letters from purported stockholders demanding that SomaLogic allow the inspection of its books and records and/or make corrective disclosures to its registration statement. The Company has resolved fee disputes with all but two stockholder’s counsel.
In February 2024, the Company settled previously outstanding litigation with a former stockholder of SomaLogic, whereby the Company relinquished
In May 2024, the Company settled previously outstanding litigation with former stockholders of SomaLogic for $
On June 4, 2024, the Company received a demand pursuant to Section 220 of the Delaware General Corporation Law from a stockholder to inspect the Company’s books and records relating to the prior conversion of the Company’s Series B preferred stock. The Company has responded to the demand and has produced documents.
Additional lawsuits against us and certain of our officers or directors may be filed in the future. If additional similar complaints are filed, absent new or different allegations that are material, we will not necessarily announce such additional filings.
In the normal course of business, the Company is from time to time involved in legal proceedings or potential legal proceedings, including matters involving employment, intellectual property, or others. Although the results of litigation and claims cannot be predicted with certainty, management currently believes that the final outcome of any currently pending matters would not have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, the Company continues to reassess the potential liability related to pending claims and litigation and may revise estimates.
Other Contingencies
Following the Merger, the Company is responsible for SomaLogic’s liabilities and obligations, including with respect to legal, financial, regulatory, and compliance matters. These liabilities and obligations will result in additional cost and expense by the Company and, if the Company has underestimated the amount of these costs and expenses or if the Company fails to satisfy any such liabilities or obligations, the Company may not realize the anticipated benefits of the Merger and there may be an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. Further, it is possible that there may be unknown, contingent or other liabilities, obligations or other problems that may arise in the future, the existence and/or magnitude of which the Company was previously unaware. Any such liabilities, obligations or other problems could have an adverse effect on the company’s business, financial condition, results of operations or cash flows. With respect to these additional matters, the Company is not able to estimate the possible loss or range of losses that could be incurred.
9. Fair Value of Financial Instruments
Fair Value of Financial Instruments
The following tables summarize the Company’s financial instruments by significant investment category measured at fair value on a recurring basis within the fair value hierarchy as of September 30, 2024 (in thousands):
|
|
|
|
|
Fair Value Measurements At Reporting Date Using |
|
||||||||||
|
|
Total |
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobservable Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents—money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term investments—U.S. treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
21
The following tables summarize the Company’s financial instruments by significant investment category measured at fair value on a recurring basis within the fair value hierarchy as of December 31, 2023 (in thousands):
|
|
|
|
|
Fair Value Measurements At Reporting Date Using |
|
||||||||||
|
|
Total |
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobservable Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents—money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term investments—U.S. treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
There were no transfers within the hierarchy and no changes in the valuation techniques used during the nine months ended September 30, 2024.
The following table summarizes available-for-sale securities (in thousands):
|
|
|
|
|
|
|
As of September 30, 2024 |
|
||||||||||
|
|
Maturity (in years) |
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Estimated Fair Value |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents—money market funds |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term investments—U.S. treasury securities |
|
1 or less |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at fair value |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
As of December 31, 2023 |
|
||||||||||
|
|
Maturity (in years) |
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Estimated Fair Value |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents—money market funds |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term investments—U.S. treasury securities |
|
1 or less |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at fair value |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of September 30, 2024,
Liabilities measured at fair value on a recurring basis
The following table presents information about the Company's liabilities that are measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation inputs we utilized to determine such fair value:
|
|
|
|
|
Fair value of warrant liabilities as of Closing Date |
|
$ |
|
|
Change in fair value of warrant liabilities |
|
|
( |
) |
Fair value of warrant liabilities as of September 30, 2024 |
|
$ |
|
|
Warrant liabilities
The Warrants were valued using Level 2 inputs as of the Closing Date as the Public Warrants were actively traded at that date. Therefore, the Company had directly observable prices for identical instruments as of the Closing Date.
22
|
|
September 30, 2024 |
|
|
Volatility |
|
|
% |
|
Risk-free rate |
|
|
% |
|
Warrant term |
|
|
|
|
10. Mezzanine Equity
Series B Redeemable Preferred Stock
On March 18, 2024, the Company entered into an exchange agreement (the “Exchange Agreement”) with Casdin Private Growth Equity Fund II, L.P. and Casdin Partners Master Fund, L.P. (together, "Casdin"), and Viking Global Opportunities Illiquid Investments Sub Master LP and Viking Global Opportunities Drawdown LP (together, “Viking” and, collectively with Casdin, the “Investors”). Pursuant to the Exchange Agreement, the Investors exchanged (the “Exchange”) an aggregate of (i)
On June 18, 2024, the Company filed a registration statement on Form S-3 (File No. 333-280321), which became effective on June 27, 2024, registering the resale of
The Exchange was considered to be an induced conversion of preferred stock as the Investors received a lower conversion price, and were issued more shares of common stock than provided under the original terms of the Series B Convertible Preferred Stock Purchase Agreement entered into with the Investors. The $
11. Stockholders’ Equity (Deficit)
2024 Stock Repurchase Program
On February 6, 2024, the Company's board of directors authorized a share repurchase program (the "2024 Share Repurchase Program") pursuant to which the Company may repurchase up to $
Common Shares Reserved
As of September 30, 2024, the Company had reserved shares of common stock for future issuance under equity compensation plans as follows (in thousands):
|
|
Securities To Be Issued Upon Exercise Of Options |
|
|
Securities To Be Issued Upon Release Of Restricted Stock |
|
|
Number Of Remaining Securities Available For Future Issuance |
|
|||
2022 Inducement Equity Incentive Plan |
|
|
|
|
|
|
|
|
|
|||
2011 Equity Incentive Plan |
|
|
|
|
|
|
|
|
|
|||
2017 Inducement Award Plan |
|
|
|
|
|
|
|
|
|
|||
2017 Employee Stock Purchase Plan |
|
|
|
|
|
|
|
|
|
|||
SomaLogic Plans |
|
|
|
|
|
|
|
|
|
|||
Total common stock reserved for future issuance |
|
|
|
|
|
|
|
|
|
|||
23
12. Stock-based Compensation
The Company has various stock-based compensation plans, which are more fully described in our 2023 Financial Statements.
Upon completion of the Merger, the Company assumed SomaLogic's stock incentive plans. In addition, all outstanding options to purchase SomaLogic Common Stock and all restricted stock units in respect of shares of SomaLogic Common Stock that were outstanding immediately prior to the completion of the Merger were automatically adjusted by the exchange ratio of
During the three and nine months ended September 30, 2024, the Company recorded nil and $
Restricted Stock Units
|
|
Number of Units |
|
|
Weighted-Average |
|
||
Balance at December 31, 2023 |
|
|
|
|
$ |
|
||
Assumed through acquisition |
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Balance at September 30, 2024 |
|
|
|
|
$ |
|
||
As of September 30, 2024, unrecognized stock-based compensation expense related to outstanding unvested restricted stock units ("RSUs") under the Company’s equity incentive plans was $
Stock Options
|
|
Number of |
|
|
Weighted-Average |
|
|
Weighted- |
|
|
Aggregate |
|
||||
Balance at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Assumed through acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balance at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Unvested options at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The total intrinsic value of options exercised during the three and nine months ended September 30, 2024 was nil and $
24
Performance-based Awards
In July 2023, the Company granted performance-based restricted stock units ("PSUs") to certain executive officers that vest based upon the achievement of specified revenue and EBITDA targets for the twelve months ended December 31, 2023, and the executive’s continued employment with the Company. Stock-based compensation expense is being recognized over the requisite service period, as it is deemed probable the Company will satisfy the performance measures. Certain of the specified revenue and EBITDA targets were met and the PSUs vested and were released from restriction in April 2024.
Activity under the performance-based awards was as follows:
|
|
Number of Units |
|
|
Weighted-Average |
|
||
Balance at December 31, 2023 |
|
|
|
|
$ |
|
||
PSU granted |
|
|
|
|
|
|
||
Performance adjustment |
|
|
( |
) |
|
|
|
|
PSU released |
|
|
( |
) |
|
|
|
|
Balance at September 30, 2024 |
|
|
|
|
$ |
|
||
Stock-based Compensation Expense
Stock-based compensation expense is reported in the Company's condensed consolidated statement of operations as follows (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Cost of product revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of services revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of collaboration and other revenue |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Research and development expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
13. Net Loss Per Share
The Company’s basic and diluted net loss per share is calculated by dividing net loss less any redemption or induced conversion on the Series B Preferred Stock by the weighted-average number of shares of common stock outstanding for the period. RSUs, PSUs, options to purchase the Company’s common stock, restricted stock, Employee Stock Purchase Plan ("ESPP") shares pending issuance, Series B Preferred Stock and Convertible Notes are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for all periods presented.
As described above, on March 18, 2024, the Company consummated the Exchange in which all outstanding Series B Preferred Stock were exchanged for an aggregate of
Computation of net loss per share for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands, except per share data):
25
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss from operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Induced conversion of redeemable preferred stock |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to common stockholders, basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
RSUs, PSUs, stock options, restricted shares and ESPP shares |
|
|
|
|
|
|
||
Series B Preferred Stock |
|
|
— |
|
|
|
|
|
2019 Notes(1) |
|
|
|
|
|
|
||
2014 Notes |
|
|
|
|
|
|
||
Warrants |
|
|
|
|
|
— |
|
|
Total |
|
|
|
|
|
|
||
The
14. Income Taxes
The Company’s quarterly provision for income taxes is based on an estimated annual effective income tax rate. The quarterly provision for income taxes also includes discrete items, such as changes in valuation allowances or adjustments upon finalization of tax returns as well as infrequently occurring items, if any, such as the effects of changes in tax laws or rates, in the interim period in which they occur.
The Company recorded income tax expense of $
The Company’s effective tax rates for both periods differ from the
26
15. Segment Reporting
The Company operates in
During the first quarter of 2024, the CODM began using operating income to measure the operating performance of the segments. The Company determines each segment’s operating income by subtracting direct expenses, including cost of revenues, research and development expense, and sales and marketing expense, from revenues. Amortization, depreciation, and restructuring charges are included in each segment’s operating expenses. Corporate costs, including general and administrative expenses for functions shared by both operating segments such as executive management, human resources, and finance, along with interest and taxes, and transaction and integration expenses are excluded from each segment’s results, which is consistent with how our CODM evaluates segment performance.
The Company does not prepare or report segmented balance sheet information as the CODM does not use the information to assess segment operating performance. The segments adhere to the same accounting policies as the Company as a whole.
The Company’s business segment information was as follows (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proteomics |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Genomics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proteomics |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Genomics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Restructuring and related charges |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Transaction and integration expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total loss from operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation & amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proteomics |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
Genomics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total depreciation & amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
16. Restructuring and Related Charges
In April 2024, following a strategic review of the combined business after completion of the Merger, the Company announced a workforce reduction plan (the "Strategic Reorganization") to reduce operating costs and focus on long-term growth opportunities. Under this Strategic Reorganization, the Company reduced its workforce by approximately
One-time termination benefits were recorded pursuant to ASC 420, Exit or Disposal Cost Obligations, while termination benefits under ongoing benefit arrangement were recorded pursuant to ASC 712, Compensation - Nonretirement Postemployment Benefits.
The Company recognized restructuring charges of approximately $
For the three and nine months ended September 30, 2023, the Company recognized restructuring and related charges of $
27
The Company also continues to recognize ongoing restructuring charges from its restructuring plans for facility-related costs, which will continue through the termination of the facility leases.
The following table summarizes the change in the Company’s restructuring and other related liabilities for the nine months ended September 30, 2024 (in thousands):
|
|
Severance |
|
|
Facility |
|
|
Other(2) |
|
|
Total |
|
||||
Balance at December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restructuring and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company’s restructuring and related charges by segment and corporate were as follows (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Restructuring: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proteomics |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Genomics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total restructuring and related charges |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
17. Related Parties
In connection with the Merger, Eli Casdin, a member of the Company’s board of directors and the Company’s principal stockholder, and the former principal stockholder of SomaLogic, was issued
On March 18, 2024, Casdin and its affiliates entered into the Exchange Agreement with the Company whereby all of the outstanding shares of the Series B-1 Preferred Stock held by Casdin and its affiliates were converted into an aggregate of
28
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 the unaudited financial information and the notes thereto included appearing elsewhere in this Quarterly Report on Form 10-Q, and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the "SEC") on March 1, 2024 (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Standard BioTools” the “Company,” “we,” “us,” and “our” refer to Standard BioTools Inc. and its subsidiaries.
Overview
Standard BioTools Inc. is driven by a bold purpose – unleashing tools to accelerate breakthroughs in human health. We have an established portfolio of essential technologies that assist biomedical researchers develop medicines faster and better. We have created high resolution instruments designed to provide reliable and repeatable insights in health and disease, through the use of our proprietary mass cytometry and microfluidics technologies, which are useful in proteomics and genomics, to help transform scientific discoveries into better patient outcomes.
Additionally, we have an integrated proteomics platform ("SomaScan® Platform") capable of robust, high throughput proteomics analysis with broad proteome coverage, low limits of detection, and high reproducibility. Our SomaScan® Platform, together with our industry-leading single-cell proteomics and spatial proteomics solutions, comprise a comprehensive services offering to customers working to identify biomarkers of predictive response, mechanism of action, and patient stratification in their studies.
We distribute our instruments through our direct sales force and support organizations located in North America, Europe, and Asia-Pacific, and through distributors or sales agents in several European, Latin American, Middle Eastern, and Asia-Pacific countries. We also offer lab services where we use our instruments, especially the SomaScan® Platform, to analyze customer samples within our own facility. Additionally, we have authorized third-party sites globally to conduct SomaScan® assays using our proprietary technology.
We work with leading academic, government, pharmaceutical, biotechnology, plant and animal research, and clinical laboratories worldwide, focusing on the most pressing needs in translational and clinical research, including oncology, immunology, and immunotherapy.
Recent Developments
Our leadership team identified three strategic priorities: revenue growth, improving operating discipline and strategic capital allocation, as more fully discussed in Part I Item 1 “Business” in our Annual Report.
Merger
On January 5, 2024, we completed the Merger pursuant to an Agreement and Plan of Merger, dated as of October 4, 2023 (the “Merger Agreement”), by and among us, SomaLogic and Martis Merger Sub, Inc. (“Merger Sub”), pursuant to which Merger Sub merged with and into SomaLogic, with SomaLogic surviving as our wholly owned subsidiary. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of SomaLogic Common Stock converted into the right to receive 1.11 shares of our common stock.
In addition, as of the Effective Time, we assumed each SomaLogic stock incentive plan, outstanding option to purchase shares of SomaLogic Common Stock and outstanding RSUs, whether vested or unvested. In addition, as of the Effective Time, each SomaLogic warrant was treated in accordance with its terms.
Factors Affecting Our Performance
The following factors have been important to our business and we expect them to impact our results of operations and financial condition in future periods:
29
Financial Operations Overview
Revenue
30
We generate our revenue from three primary sources: (1) product revenue, (2) lab services revenue, and (3) field services revenues. We also derive revenue from collaborative arrangements, license agreements, grants, and royalties. Customers include top biopharmaceutical companies and leading academic research universities.
Product revenue
We generate product revenue from the sale of instruments and consumables. Consumables revenue is largely driven by the size of our active installed base of instruments and the level of usage per instrument. Consumables revenue is also driven by the sale of SomaScan® assay kits, which is driven by the number of active SomaScan® Authorized Sites and the number of assays performed at those sites.
Service revenue
We generate service revenue from the sale of lab services and field services. Lab services revenue is primarily generated by performing the SomaScan® assay on customer samples to generate data on protein biomarkers. We expect lab services revenue to increase over the long-term with new and recurring sales opportunities. With the enhancement of our proteomic services, we expect to capture more market opportunities outside of the United States region, as well as winning contracts with new customers and expanding the scope of sales with existing customers.
Field services revenue primarily consists of post-warranty service contracts, preventive maintenance plans, installation and training for our instruments. We expect the average selling prices of our products and services to fluctuate over time based on market conditions, product mix and currency fluctuations.
Collaboration and other revenue
Collaboration and other revenue consists of fees earned for research and development services, except for grant revenue research and development services that are classified in other revenue. We believe expanding collaborative arrangements with KOLs will allow for further enhancements of our integrated platform, lower barriers to adoption and introduce or expand new market channels and customers within geographic regions and markets we do not currently operate in.
Cost of Revenue
Cost of product revenue
Cost of product revenue consists primarily of raw materials, equipment and production costs, salaries and other personnel costs, overhead and other direct costs related to product revenue. In addition, cost of product revenue includes amortization of developed technology, royalty costs for licensed technologies included in our products, warranty costs, provisions for excess and obsolete inventory, and stock-based compensation expense, and shipping and handling costs. Cost of product revenue is recognized in the period the related revenue is recognized. Shipping and handling costs incurred for product shipments are included in cost of product revenue in the condensed consolidated statements of operations and comprehensive loss. Our cost of product revenue and related product margin may fluctuate depending on the capacity utilization of our manufacturing facilities in response to market conditions and the demand for our products.
Cost of service revenue
Cost of service revenue consists of raw materials and production costs, personnel-related costs, overhead and other direct costs. It also includes costs for production variances for SOMAmer® reagents, such as yield losses, material usages, spending and capacity variances. Cost of service revenue is recognized in the period the related revenue is recognized.
Our cost of service revenue and related service margin may fluctuate depending on the variability in material and labor costs of servicing.
Research and Development ("R&D")
R&D expenses consist primarily of personnel-related costs related to enhancing our technologies and supporting development and commercialization of new and existing products and services. R&D expenses also consist of laboratory supply costs, clinical study costs, consulting fees, and other allocated overhead expenses. We plan to continue to invest significantly in our R&D efforts, including hiring additional employees, with an expected focus on advancing our proteomics products and services. As a result, we expect R&D expenses will increase in absolute dollars in future periods and vary from period to period as a percentage of revenue.
31
Selling, General, and Administrative ("SG&A")
SG&A expenses consist primarily of personnel-related costs for our sales and marketing, business development, finance, legal, human resources, information technology and general management teams, as well as professional services, including legal and accounting services.
Restructuring and Related Charges
Restructuring and related charges primarily consist of severance costs related to our recent reduction-in-force and facilities costs for floors we have subleased or have the intent to sublease (net of sublease income) under our facility lease in South San Francisco. These costs, including a reduction-in-force, are incurred to improve operational efficiency, achieve cost savings and align our workforce to the future needs of the business. In addition to the reduction-in-force, we are reducing leased office space, optimizing our manufacturing footprint and streamlining support functions.
Transaction and Integration Expenses
Transaction and integration expenses consist of costs incurred in connection with acquisition-related activities, including legal, advisory, accounting and other transaction-related costs including integration costs.
Bargain Purchase Gain
Bargain purchase gain represents the excess of fair value of the assets acquired and liabilities assumed over the fair value of the consideration transferred in connection with the Merger. We determined that the bargain purchase gain was primarily attributable to a rapid decline in our stock price in the days following the announcement of the Merger, which persisted through the close of the Merger.
Results of Operations
The following table presents our unaudited condensed consolidated statements of operations and as a percentage of total revenue for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||||||||||||||||
Revenue |
|
$ |
44,969 |
|
|
|
100 |
% |
|
$ |
25,367 |
|
|
|
100 |
% |
|
$ |
127,714 |
|
|
|
100 |
% |
|
$ |
78,152 |
|
|
|
100 |
% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of product revenue |
|
|
8,159 |
|
|
|
18 |
% |
|
|
11,403 |
|
|
|
45 |
% |
|
|
33,142 |
|
|
|
26 |
% |
|
|
33,276 |
|
|
|
43 |
% |
Cost of services revenue |
|
|
13,536 |
|
|
|
30 |
% |
|
|
2,810 |
|
|
|
11 |
% |
|
|
32,115 |
|
|
|
25 |
% |
|
|
7,783 |
|
|
|
10 |
% |
Cost of collaboration and other revenue |
|
|
13 |
|
|
|
0 |
% |
|
|
— |
|
|
|
— |
% |
|
|
100 |
|
|
|
0 |
% |
|
|
— |
|
|
|
— |
% |
Total cost of revenue |
|
|
21,708 |
|
|
|
48 |
% |
|
|
14,213 |
|
|
|
56 |
% |
|
|
65,357 |
|
|
|
51 |
% |
|
|
41,059 |
|
|
|
52 |
% |
Gross profit |
|
|
23,261 |
|
|
|
52 |
% |
|
|
11,154 |
|
|
|
44 |
% |
|
|
62,357 |
|
|
|
49 |
% |
|
|
37,093 |
|
|
|
47 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development |
|
|
13,156 |
|
|
|
29 |
% |
|
|
6,370 |
|
|
|
25 |
% |
|
|
48,358 |
|
|
|
38 |
% |
|
|
19,039 |
|
|
|
24 |
% |
Selling, general and administrative |
|
|
34,403 |
|
|
|
77 |
% |
|
|
22,292 |
|
|
|
88 |
% |
|
|
119,020 |
|
|
|
93 |
% |
|
|
66,187 |
|
|
|
85 |
% |
Restructuring and related charges |
|
|
2,341 |
|
|
|
5 |
% |
|
|
1,998 |
|
|
|
8 |
% |
|
|
12,374 |
|
|
|
10 |
% |
|
|
5,415 |
|
|
|
7 |
% |
Transaction and integration expenses |
|
|
5,079 |
|
|
|
11 |
% |
|
|
1,666 |
|
|
|
7 |
% |
|
|
25,024 |
|
|
|
20 |
% |
|
|
1,666 |
|
|
|
2 |
% |
Total operating expenses |
|
|
54,979 |
|
|
|
122 |
% |
|
|
32,326 |
|
|
|
127 |
% |
|
|
204,776 |
|
|
|
160 |
% |
|
|
92,307 |
|
|
|
118 |
% |
Loss from operations |
|
|
(31,718 |
) |
|
|
(71 |
)% |
|
|
(21,172 |
) |
|
|
(83 |
)% |
|
|
(142,419 |
) |
|
|
(112 |
)% |
|
|
(55,214 |
) |
|
|
(71 |
)% |
Bargain purchase gain |
|
|
|
|
|
— |
% |
|
|
|
|
|
|
|
|
25,213 |
|
|
|
20 |
% |
|
|
— |
|
|
|
— |
% |
|||
Interest income, net |
|
|
3,941 |
|
|
|
9 |
% |
|
|
340 |
|
|
|
1 |
% |
|
|
13,559 |
|
|
|
11 |
% |
|
|
656 |
|
|
|
1 |
% |
Other income (expense), net |
|
|
957 |
|
|
|
2 |
% |
|
|
(115 |
) |
|
|
(0 |
)% |
|
|
(865 |
) |
|
|
(1 |
)% |
|
|
292 |
|
|
|
0 |
% |
Loss before income taxes |
|
|
(26,820 |
) |
|
|
(60 |
)% |
|
|
(20,947 |
) |
|
|
(82 |
)% |
|
|
(104,512 |
) |
|
|
(82 |
)% |
|
|
(54,266 |
) |
|
|
(69 |
)% |
Income tax expense |
|
|
(118 |
) |
|
|
(0 |
)% |
|
|
(50 |
) |
|
|
(0 |
)% |
|
|
(301 |
) |
|
|
(0 |
)% |
|
|
(614 |
) |
|
|
(1 |
)% |
Net loss |
|
$ |
(26,938 |
) |
|
|
(60 |
)% |
|
$ |
(20,997 |
) |
|
|
(82 |
)% |
|
$ |
(104,813 |
) |
|
|
(82 |
)% |
|
$ |
(54,880 |
) |
|
|
(70 |
)% |
Revenue
Revenue by product type and as a percentage of total revenue were as follows ($ in thousands):
32
|
|
Three Months Ended September 30, |
|
|
Year-over- |
|
|
Nine Months Ended September 30, |
|
|
Year-over- |
|
||||||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
||||||||||||||||||||||
Product revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Instruments |
|
$ |
5,586 |
|
|
|
12 |
% |
|
$ |
9,002 |
|
|
|
35 |
% |
|
|
(38 |
)% |
|
$ |
19,959 |
|
|
|
16 |
% |
|
$ |
26,512 |
|
|
|
34 |
% |
|
|
(25 |
)% |
Consumables |
|
|
14,007 |
|
|
|
31 |
% |
|
|
9,709 |
|
|
|
38 |
% |
|
|
44 |
% |
|
|
45,389 |
|
|
|
36 |
% |
|
|
31,302 |
|
|
|
40 |
% |
|
|
45 |
% |
Total product revenue |
|
|
19,593 |
|
|
|
44 |
% |
|
|
18,711 |
|
|
|
74 |
% |
|
|
5 |
% |
|
|
65,348 |
|
|
|
52 |
% |
|
|
57,814 |
|
|
|
74 |
% |
|
|
13 |
% |
Service revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lab services |
|
|
18,247 |
|
|
|
41 |
% |
|
|
114 |
|
|
|
0 |
% |
|
N/A |
|
|
|
40,780 |
|
|
|
32 |
% |
|
|
564 |
|
|
|
1 |
% |
|
N/A |
|
||
Field services |
|
|
6,191 |
|
|
|
14 |
% |
|
|
6,452 |
|
|
|
25 |
% |
|
|
(4 |
)% |
|
|
18,738 |
|
|
|
15 |
% |
|
|
18,704 |
|
|
|
24 |
% |
|
|
0 |
% |
Total service revenue |
|
|
24,438 |
|
|
|
54 |
% |
|
|
6,566 |
|
|
|
26 |
% |
|
|
272 |
% |
|
|
59,518 |
|
|
|
47 |
% |
|
|
19,268 |
|
|
|
25 |
% |
|
|
209 |
% |
Product and service revenue |
|
|
44,031 |
|
|
|
98 |
% |
|
|
25,277 |
|
|
|
100 |
% |
|
|
74 |
% |
|
|
124,866 |
|
|
|
98 |
% |
|
|
77,082 |
|
|
|
99 |
% |
|
|
62 |
% |
Collaboration and other revenue |
|
|
938 |
|
|
|
2 |
% |
|
|
90 |
|
|
|
0 |
% |
|
|
942 |
% |
|
|
2,848 |
|
|
|
2 |
% |
|
|
1,070 |
|
|
|
1 |
% |
|
|
166 |
% |
Total revenue |
|
$ |
44,969 |
|
|
|
100 |
% |
|
$ |
25,367 |
|
|
|
100 |
% |
|
|
77 |
% |
|
$ |
127,714 |
|
|
|
100 |
% |
|
$ |
78,152 |
|
|
|
100 |
% |
|
|
63 |
% |
Total revenue grew 77% to $45.0 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and grew 63% to $127.7 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Due to the acquisition of SomaLogic, revenue increased by $22.9 million and $61.5 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. These increases were offset by decreases of $3.3 million and $12.0 million in revenues from our legacy business for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.
Revenue by segment and as a percentage of total revenue were as follows ($ in thousands):
|
|
Three Months Ended September 30, |
|
|
Year-over- |
|
|
Nine Months Ended September 30, |
|
|
Year-over- |
|
||||||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
||||||||||||||||||||||
Proteomics revenue |
|
$ |
34,565 |
|
|
|
77 |
% |
|
$ |
14,008 |
|
|
|
55 |
% |
|
|
147 |
% |
|
$ |
98,954 |
|
|
|
77 |
% |
|
$ |
47,296 |
|
|
|
61 |
% |
|
|
109 |
% |
Genomics revenue |
|
|
10,404 |
|
|
|
23 |
% |
|
|
11,359 |
|
|
|
45 |
% |
|
|
(8 |
)% |
|
|
28,760 |
|
|
|
23 |
% |
|
|
30,856 |
|
|
|
39 |
% |
|
|
(7 |
)% |
Total revenue |
|
$ |
44,969 |
|
|
|
100 |
% |
|
$ |
25,367 |
|
|
|
100 |
% |
|
|
77 |
% |
|
$ |
127,714 |
|
|
|
100 |
% |
|
$ |
78,152 |
|
|
|
100 |
% |
|
|
63 |
% |
Total proteomics revenue grew 147% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and grew 109% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Our growth in proteomics was driven by the acquisition of SomaLogic, which expanded our proteomics capabilities, products and services.
Total genomics revenue decreased 8% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and decreased 7% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The continued decline in the genomics segment was anticipated, and is a driver of our continued focus on growing the OEM business and managing this segment to sustainable positive contribution margin in the near-term.
Cost of Revenue
Cost of revenue, gross profit, and gross margin were as follows ($ in thousands):
|
|
Three Months Ended September 30, |
|
|
Year-over- |
|
|
Nine Months Ended September 30, |
|
|
Year-over- |
|
||||||||||||
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
||||||
Cost of product revenue |
|
$ |
8,159 |
|
|
$ |
11,403 |
|
|
|
(28 |
)% |
|
$ |
33,142 |
|
|
$ |
33,276 |
|
|
|
(0 |
)% |
Cost of service revenue |
|
|
13,536 |
|
|
|
2,810 |
|
|
|
382 |
% |
|
|
32,115 |
|
|
|
7,783 |
|
|
|
313 |
% |
Cost of collaboration and other revenue |
|
|
13 |
|
|
|
— |
|
|
NM |
|
|
|
100 |
|
|
|
— |
|
|
NM |
|
||
Total cost of revenue |
|
$ |
21,708 |
|
|
$ |
14,213 |
|
|
|
53 |
% |
|
$ |
65,357 |
|
|
$ |
41,059 |
|
|
|
59 |
% |
Gross profit |
|
$ |
23,261 |
|
|
$ |
11,154 |
|
|
|
109 |
% |
|
$ |
62,357 |
|
|
$ |
37,093 |
|
|
|
68 |
% |
Gross margin |
|
|
51.7 |
% |
|
|
44.0 |
% |
|
|
7.8 |
% |
|
|
48.8 |
% |
|
|
47.5 |
% |
|
|
1.4 |
% |
33
Gross profit increased by $12.1 million, or 109%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and increased by $25.3 million, or 68%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in gross profit during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily attributable to the impact from the Merger which resulted in increased revenue.
Operating Expenses
Operating expenses were as follows ($ in thousands):
|
|
Three Months Ended September 30, |
|
|
Year-over- |
|
|
Nine Months Ended September 30, |
|
|
Year-over- |
|
||||||||||||
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
||||||
Research and development |
|
$ |
13,156 |
|
|
$ |
6,370 |
|
|
|
107 |
% |
|
$ |
48,358 |
|
|
$ |
19,039 |
|
|
|
154 |
% |
Selling, general and administrative |
|
|
34,403 |
|
|
|
22,292 |
|
|
|
54 |
% |
|
|
119,020 |
|
|
|
66,187 |
|
|
|
80 |
% |
Restructuring and related charges |
|
|
2,341 |
|
|
|
1,998 |
|
|
|
17 |
% |
|
|
12,374 |
|
|
|
5,415 |
|
|
|
129 |
% |
Transaction and integration expenses |
|
|
5,079 |
|
|
|
1,666 |
|
|
|
205 |
% |
|
|
25,024 |
|
|
|
1,666 |
|
|
|
1402 |
% |
Total operating expenses |
|
$ |
54,979 |
|
|
$ |
32,326 |
|
|
|
70 |
% |
|
$ |
204,776 |
|
|
$ |
92,307 |
|
|
|
122 |
% |
Research and Development
R&D expense increased by $6.8 million, or 107%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and increased by $29.3 million, or 154%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to the impact of the Merger in the first quarter of 2024, which included increased salaries and benefits expense and stock-based compensation expense due to the expanded global workforce headcount.
Selling, General and Administrative
SG&A expense increased by $12.1 million, or 54%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and increased by $52.8 million, or 80%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily attributable to the impact of the Merger in the first quarter of 2024, which included increased salaries and benefits expense and stock-based compensation expense due to the expanded global workforce headcount.
Restructuring and Related Charges
Restructuring and related charges consisted of the following (in thousands):
|
|
Three Months Ended September 30, |
|
|
Year-over- |
|
|
Nine Months Ended September 30, |
|
|
Year-over- |
|
||||||||||||
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
|
2024 |
|
|
2023 |
|
|
Year Change |
|
||||||
Severance and other termination benefits |
|
$ |
1,511 |
|
|
$ |
546 |
|
|
|
177 |
% |
|
$ |
9,522 |
|
|
$ |
1,892 |
|
|
|
403 |
% |
Facilities and other |
|
|
830 |
|
|
|
1,452 |
|
|
|
(43 |
)% |
|
|
2,852 |
|
|
|
3,523 |
|
|
|
(19 |
)% |
Total restructuring and related charges |
|
$ |
2,341 |
|
|
$ |
1,998 |
|
|
|
17 |
% |
|
$ |
12,374 |
|
|
$ |
5,415 |
|
|
|
129 |
% |
Restructuring and related charges increased by $0.3 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and increased by $7.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by increased severance and termination benefits in connection with reductions in headcount following the Merger.
Transaction and Integration Expenses
Transaction and integration expenses increased by $3.4 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and increased by $23.4 million for the nine months ended September 30, 2024, compared to the
34
same period in 2023. The increase was primarily due to legal, advisory, accounting costs, and integration expenses incurred in connection with the Merger. The Company expects to incur additional integration costs in the future.
Bargain purchase gain
Bargain purchase gain increased by $25.2 million for the nine months ended September 30, 2024, compared to the same period in 2023. The increase for the nine months ended September 30, 2024 was due to the consummation of the Merger in January 2024, which resulted in the fair value of assets acquired and liabilities assumed from the Merger exceeding the fair value of the consideration transferred due to a decline in our stock price following the announcement of the Merger Agreement.
Interest Income, net
The increase in other income, net of $3.6 million and $12.9 million for the three and nine months ended September 30, 2024, respectively, compared to the same period in 2023, was primarily due to the interest earned on increased balances of money market funds and short-term investments and higher interest rates, as well as a decrease in interest expense due to repayment of our term loan in March 2024. Money market funds balances and short-term investments increased as a result of the Merger with SomaLogic.
Income Tax Expense
We recorded income tax expense of $0.1 million in each of the three months ended September 30, 2024 and 2023, and income tax expense of $0.3 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in our tax provision reflects the effect of our foreign operations, which reported lower pre-tax income in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Our effective tax rates for both periods differ from the 21% U.S. Federal statutory tax rate primarily due to valuation allowances recorded against deferred tax assets on domestic losses and the tax rate differences between the United States and foreign countries.
Liquidity and Capital Resources
We have experienced operating losses since inception and have an accumulated deficit of $1,151.6 million as of September 30, 2024. To date, we have funded our operating losses primarily through equity offerings, term loans, convertible notes and redeemable preferred stock. Our ability to fund future operations and meet debt covenant requirements will depend upon our level of future revenue and operating cash flow and our ability to access additional funding through either equity offerings, issuances of debt instruments or both.
Our liquidity and capital requirements depend upon many factors, including market acceptance of our products and services; effectiveness of our business improvement initiatives and restructuring programs; costs of supporting sales growth, product quality, R&D and capital expenditures, including our ERP upgrade; and costs and timing of acquiring other businesses, assets or technologies.
We continually evaluate our liquidity requirements considering our operating needs, growth initiatives and capital resources. We expect that our existing liquidity and sources of capital will be sufficient to support our operations for at least the next 12 months from the filing date of this Quarterly Report on Form 10-Q.
Sources of Liquidity
Our principal sources of liquidity are cash, cash equivalents and short-term investments. Our collective balances of cash, cash equivalents, and short-term investments were $366.3 million at September 30, 2024 and $114.9 million at December 31, 2023.
Capital Resources and Commitments
We enter into arrangements that serve as sources of capital and the associated contractual agreements may result in firm or contingent obligations of us. In addition to our common stockholders’ equity, our sources of capital primarily include debt and operating leases. Our operating lease arrangements require cash repayment and our convertible debt that matures on December 1, 2024 contains rights that may result in their conversion to our common stock prior to maturity. On March 4, 2024, we fully repaid all outstanding indebtedness owed pursuant to the Term Loan Facility and terminated the agreement.
35
We also enter into contractual and legally binding commitments to purchase goods. Most of these contracts are cancellable with little or no notice or penalty. However, once a vendor has incurred costs to fulfill a contract with us, and which costs cannot be otherwise deployed, we are liable for those costs upon cancellation.
Following the Merger, we assumed additional cash commitments, including a requirement under the agreement originally entered into by SomaLogic with Illumina Cambridge, Ltd. in December 2021, to engage with two contract manufacturing organizations in order to ensure manufacturing capacity. Specifically, we assumed minimum annual purchase commitments of $2.3 million with Integrated DNA Technologies, Inc. ("IDT") who is contracted to manufacture custom products. As the minimum contract term is three years, our total purchase commitment related to the agreement is $6.9 million. As of September 30, 2024, we have not yet began placing orders under the agreement with IDT.
The terms and provisions of our debt and leases are more fully discussed in Notes 6 and 7, respectively, in the unaudited condensed consolidated financial statements.
Cash Flow Activity
Our cash flow summary was as follows ($ in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash flow summary: |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
$ |
(129,395 |
) |
|
$ |
(29,226 |
) |
Net cash provided by investing activities |
|
|
337,448 |
|
|
|
33,354 |
|
Net cash used in financing activities |
|
|
(48,096 |
) |
|
|
(5,806 |
) |
Effect of foreign exchange rate fluctuations on cash |
|
|
(518 |
) |
|
|
(196 |
) |
Net increase in cash, cash equivalents and restricted cash |
|
$ |
159,439 |
|
|
$ |
(1,874 |
) |
We derive cash flows from operations primarily by collecting amounts due from sales of our products and services, and fees earned under our product development and license agreements. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses and working capital to support the business. We have historically experienced negative cash flows from operating activities as we have expanded our business and built our infrastructure, domestically and internationally.
In the nine months ended September 30, 2024, we used $62.4 million of net proceeds from the sales and maturities of short-term investments to help fund $129.4 million of net cash used in operating activities, $40.5 million of common stock repurchases, and $8.2 million of repayment of term loan and convertible notes.
In the nine months ended September 30, 2023, we used $36.1 million of net proceeds from the sales and maturities of short-term investments to help fund $29.2 million of net cash used in operating activities and $5.2 million of common stock repurchases.
Operating Activities
For the nine months ended September 30, 2024, our routine business operations resulted in net cash outflows of $69.5 million. Our other uses of cash included payments of $39.4 million for transaction and integration costs, and payments of $10.0 million for restructuring costs.
Net cash used in operating activities for the nine months ended September 30, 2024 increased by $100.2 million compared to the same period in 2023. The increase is primarily driven by the impact of the Merger, reflecting expanded global operations, as well as significant transaction, integration, and restructuring costs.
Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2024 was $337.4 million compared to $33.4 million used in the nine months ended September 30, 2023. The nine months ended September 30, 2024 primarily reflects $280.0 million of cash and restricted cash acquired in the Merger, and $62.4 million of proceeds from sales and maturities of short-term investments, net of purchases. The nine months ended September 30, 2023 primarily reflects $36.1 million of proceeds from sales and maturities of short-term investments, net of purchases.
36
Financing Activities
Net cash used in financing activities was $48.1 million for the nine months ended September 30, 2024 compared to $5.8 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our primary uses of cash in financing activities included common stock repurchases of $40.5 million, and payments of $8.2 million to settle our term loan and reduce the amount of our outstanding convertible notes. For the nine months ended September 30, 2023, our primary use of cash in financing activities included common stock repurchases of $5.2 million.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements and related notes, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires the use of estimates and assumptions to determine the value of the assets, liabilities, revenues and expenses reported on the condensed consolidated balance sheets and statements of operations. We develop these estimates after considering historical transactions, the current economic environment and various other assumptions considered reasonable under the circumstances. Actual results may differ materially from these estimates and judgments. Accounts that rely heavily on estimated information to determine their values include revenue, trade receivables, inventories, right-of-use assets, goodwill, long-lived intangible assets, lease liabilities, income tax liabilities (assets) and preferred equity. Refer to Item 7 in our Annual Report for additional information regarding our critical accounting policies and estimates.
There have been no significant changes to our significant accounting policies described in our Annual Report, other than as disclosed in Note 1 to our accompanying financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
From time to time, new accounting standards are issued by the Financial Accounting Standards Board or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer ("CEO") and our interim Chief Financial Officer ("CFO"), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
37
Limitations on the Effectiveness of Controls
Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.
38
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to certain legal proceedings is included in Note 8 to the Condensed Consolidated Financial Statements (Unaudited) in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves numerous uncertainties and risks. You should carefully consider the risk factors discussed in Part I Item 1A “Risk Factors” in our Annual Report, which could materially affect our business, financial condition or results of operations. The risks in our Annual Report are not the only ones we face. Our business is also subject to the risks that affect many other companies, such as employee relations, general economic conditions, global geopolitical events and international operations. Further, additional risks not currently known to us or that we currently believe are immaterial may in the future materially and adversely affect our business, operations, liquidity and stock price. If any of these risks occur, our business, results of operations or financial condition could suffer, the trading price of our securities could decline and you may lose all or part of your investment.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Issuer Purchases of Equity Securities
On February 6, 2024, our board of directors authorized a share repurchase program (the “2024 Share Repurchase Program”) pursuant to which we may repurchase up to $50.0 million of shares of our common stock in the open market, in one or more Rule 10b5-1 trading plans, or in negotiated transactions through March 1, 2026. The repurchases are contingent upon favorable market and business conditions and are funded by cash on hand. The program does not obligate us to acquire any specific number of shares. As of September 30, 2024, we have repurchased 13,603,617 shares of our common stock under the 2024 Share Repurchase Program.
The following table provides monthly information with respect to the shares of common stock repurchased by us during the three months ended September 30, 2024:
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid Per Share (1) |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program |
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program |
|||
July 1-31, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$14.0 million |
August 1-31, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$14.0 million |
September 1-30, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$14.0 million |
1 Average price paid per share includes commission fees.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
39
Item 5. Other Information
10b5-1 Trading Arrangements
From time to time, our officers (as defined in Rule 16a-1(f) of the Exchange Act) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of Regulation S-K). During the three months ended September 30, 2024, none of our officers or directors
40
Item 6. Exhibits
The documents listed in the Exhibit List, which follows below, are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).
EXHIBIT LIST
Exhibit Number |
|
Description |
|
Incorporated by Reference From Form |
|
Incorporated by Reference From Exhibit Number |
|
Date Filed |
3.1 |
|
|
10-K |
|
3.1 |
|
3/28/2011 |
|
|
|
|
|
|
|
|
|
|
3.2 |
|
|
S-8 |
|
4.8 |
|
4/1/2022 |
|
|
|
|
|
|
|
|
|
|
3.3 |
|
|
S-8 |
|
4.3 |
|
4/1/2022 |
|
|
|
|
|
|
|
|
|
|
3.4 |
|
|
8-K |
|
3.1 |
|
1/5/2024 |
|
|
|
|
|
|
|
|
|
|
10.1# |
|
Standard BioTools Inc. Amended and Restated 2011 Equity Incentive Plan, as Amended. |
|
8-K |
|
10.1 |
|
7/1/2024 |
|
|
|
|
|
|
|
|
|
10.2# |
|
2024 Change of Control and Severance Plan and Participation Agreement |
|
8-K |
|
10.1 |
|
8/30/2024 |
|
|
|
|
|
|
|
|
|
31.1 |
|
|
Filed herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
|
Filed herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1(1) |
|
|
Filed herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2(1) |
|
|
Filed herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
|
Filed herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
Filed herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
Cover page formatted as Inline XBRL and contained in Exhibit 101 |
|
Filed herewith |
|
|
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# Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.
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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.
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STANDARD BIOTOOLS INC. |
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Dated: November 6, 2024 |
By: |
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/s/ Michael Egholm, Ph.D. |
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Michael Egholm, Ph.D. |
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Chief Executive Officer and President |
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(Principal Executive Officer) |
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Dated: November 6, 2024 |
By: |
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/s/ Hanjoon Alex Kim |
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Hanjoon Alex Kim |
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Chief Operating Officer and Interim Chief Financial Officer |
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(Principal Accounting and Financial Officer) |
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