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
or
過渡期從___________到_____________
委託文件編號：001-39866
(根據其章程規定的註冊人準確名稱)
| ||
（國家或其他管轄區的 | （納稅人識別號碼） | |
(主要行政辦公室地址) | (郵政編碼) |
(
公司註冊電話號碼，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 |
請勾選適用的選項：
(1) 在過去的12個月內（或註冊人要求提交這些報告的較短期間內），已按照證券交易法第13或第15(d)條的規定提交了所有要求提交的報告；並
(2) 在過去90天內一直履行了這些提交要求。
請按複選標記指示是否在過去的12個月內（或註冊人需要提交此類文件的較短期間）每次提交自Rule 405條款和Regulation S-t（本章第232.405條）規定的互動數據文件。
勾選以下選框，指示申報人是大型加速評估提交人、加速評估提交人、非加速評估提交人、小型報告公司或新興成長型公司。關於「大型加速評估提交人」、「加速評估提交人」、「小型報告公司」和「新興成長型公司」的定義，請參見《交易所法規》第120億.2條。
大型加速文件者☐ | 加速器文件☐ |
較小的報告公司 | |
新興成長公司 |
如果屬於新興成長型企業，請在複選框中標記，以表示公司已選擇不使用根據交易所法第13(a)條規定爲遵守任何新的或修訂的財務會計準則所提供的延長過渡期。
請按複選標記指示是否爲殼公司（根據該法規第120億.2條款定義）。 是
2024年11月11日，登記公司普通股的流通股數：
Akoya Biosciences，Inc。
關於前瞻性聲明的特別說明
本報告包含基於管理層信念和假設以及當前管理層可獲得信息的前瞻性聲明。本報告中除歷史事實聲明之外的所有聲明均爲前瞻性聲明，包括關於我們開發、商業化以及實現我們當前和計劃產品及服務的市場接受能力、我們的研究和開發努力以及有關我們業務戰略、資本使用、經營業績和財務狀況以及未來運營計劃和目標的其他事項的聲明。在某些情況下，您可以通過「可能」、「將」、「可以」、「將會」、「應該」、「期望」、「打算」、「計劃」、「預計」、「相信」、「估計」、「預測」、「項目」、「潛在」、「繼續」、「進行中」或這些術語的否定形式或其他可比較術語來識別前瞻性聲明，儘管並非所有前瞻性聲明都包含這些詞。這些聲明涉及的風險、不確定性和其他因素可能導致實際結果、活動水平、表現或成就與這些前瞻性聲明所表達或暗示的信息存在重大差異。這些風險、不確定性和其他因素在「風險因素」、「管理層關於財務狀況和經營業績的討論與分析」以及本報告中和我們不時提交給證券交易委員會（「SEC」）的其他文件中有所描述。我們提醒您，前瞻性聲明基於我們目前已知的事實和因素的組合以及我們對未來的預測，而我們無法確定這些預測。因此，前瞻性聲明可能並不準確。本報告中的前瞻性聲明代表我們截至本報告日期的觀點。我們不承擔更新任何前瞻性聲明的義務，除非法律要求。
除非另有說明或上下文另有指示，否則提及「Akoya」、「我們」、「我們」、「我們的」以及類似引用是指Akoya Biosciences, Inc.及其合併子公司。
本報告中包含了我們商標以及其他實體商標的引用。爲了方便，提及的商標和商號，包括標誌、藝術作品和其他視覺蘋果-顯示屏，可能沒有附帶®或™符號，但這樣的引用並不是目的在於表明其各自的所有者不會在適用法律的最大範圍內主張對此的權利。我們並不打算通過使用或展示其他公司的商號或商標來暗示與任何其他公司有關係，或者受到其他公司的認可或贊助。
1
AKOYA BIOSCIENCES，INC.及其子公司
合併資產負債表
(以千計，除分享和每分享數據外)
| 2024年9月30日 |
| 2023年12月31日 | |||
(未經審計) | ||||||
資產 |
|
|
|
| ||
流動資產 |
|
|
|
| ||
現金及現金等價物 | $ | | $ | | ||
可交易證券 | | — | ||||
應收賬款，淨額 |
| |
| | ||
淨存貨 |
| |
| | ||
預付費用及其他流動資產 |
| |
| | ||
總流動資產 |
| |
| | ||
物業和設備，淨值 |
| |
| | ||
有市場價值的證券，扣除當前部分 | | — | ||||
受限現金 |
| |
| | ||
演示庫存淨額 |
| |
| | ||
無形資產-淨額 |
| |
| | ||
商譽 |
| |
| | ||
租賃權使用資產淨額 | | | ||||
租賃權資產的融資租賃淨資產 | | | ||||
其他資產 |
| |
| | ||
總資產 | $ | | $ | | ||
負債和股東權益 |
|
|
|
| ||
流動負債 |
|
|
|
| ||
應付賬款 | $ | | $ | | ||
應計費用和其他流動負債 |
| |
| | ||
經營租賃負債流動部分 | | | ||||
融資租賃負債目前部分 | | | ||||
遞延收入 |
| |
| | ||
總流動負債 |
| |
| | ||
遞延收入，減去當前部分淨額 |
| |
| | ||
長期債務，減債務折扣 |
| |
| | ||
遞延所得稅負債，淨額 |
| |
| | ||
經營租賃負債，淨值超過流動資產 | | | ||||
Financing lease liabilities, net of current portion | | | ||||
Contingent consideration liability, net of current portion |
| |
| | ||
其他負債 | | — | ||||
總負債 |
| |
| | ||
股東權益: |
|
|
|
| ||
優先股，$ | ||||||
普通股票$ |
| |
| | ||
股票認購應收款項。 |
| |
| | ||
累積赤字 |
| ( |
| ( | ||
累計其他綜合收益 | | — | ||||
股東權益總額 |
| |
| | ||
總負債和股東權益 | $ | | $ | | ||
有關合並財務報表的附註請參閱。
2
AKOYA BIOSCIENCES公司及其子公司
合併營業收入表（未經審計）
(單位: 千元，除每股數據外)
截至三個月的時間結束 |
| 截至九個月 | ||||||||||
九月30日 | 九月30日 |
| 九月30日 | 九月30日 | ||||||||
| 2024 |
| 2023 | 2024 |
| 2023 | ||||||
收入： |
|
|
|
|
|
|
| |||||
產品收入 | $ | | $ | | $ | | $ | | ||||
服務和其他營業收入 |
| |
| |
| |
| | ||||
總營業收入 |
| |
| |
| |
| | ||||
營業成本: |
|
|
|
|
|
|
|
| ||||
產品營業成本 | | | | | ||||||||
服務和其他收益成本 | | | | | ||||||||
營業成本合計 | | | | | ||||||||
毛利潤 | | | | | ||||||||
運營費用： |
|
|
|
|
|
|
|
| ||||
銷售、一般及行政費用 |
| |
| |
| |
| | ||||
研發 |
| |
| |
| |
| | ||||
或有對價公允價值變動 |
| ( |
| |
| ( |
| | ||||
減值 |
| — |
| — |
| |
| — | ||||
重組 | | — | | — | ||||||||
總營業費用 |
| |
| |
| |
| | ||||
營業損失 |
| ( |
| ( |
| ( |
| ( | ||||
其他收入（費用）： |
|
|
|
|
|
|
|
| ||||
利息支出 |
| ( |
| ( |
| ( |
| ( | ||||
利息收入 | | | | | ||||||||
其他費用，淨額 |
| ( |
| ( |
| ( |
| ( | ||||
稅前虧損 | ( | ( | ( | ( | ||||||||
所得稅準備金 |
| ( |
| ( |
| ( |
| ( | ||||
淨虧損 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
每股普通股股東淨虧損，基本與稀釋後 | ( | ( | ( | ( | ||||||||
基本和攤薄加權平均股本 |
| |
| |
| |
| | ||||
有關合並財務報表的附註請參閱。
3
4
AKOYA BIOSCIENCES，INC.及其子公司
合併報表
股東權益（未經審計）
（以千爲單位，除股票數據外）
累計 | |||||||||||||||||
額外的 | 其他 | 總計 | |||||||||||||||
普通股 | 實繳 | 累計 | 綜合 | 股東權益 | |||||||||||||
| 股份 |
| 金額 |
| 資本 |
| 虧損 |
| （損失）收益 |
| 股權 | ||||||
2023年12月31日餘額 |
| | $ | |
| $ | | $ | ( | $ | — | $ | | ||||
行使股票期權 |
| | — |
|
| |
| — |
| — |
| | |||||
限制性股票單位的認股權發放 | | — | ( | — | — | ( | |||||||||||
淨虧損 | — | — | — | ( | — | ( | |||||||||||
其他綜合損失 |
| — | — |
|
| — |
| — |
| ( |
| ( | |||||
基於股票的補償 |
| — | — |
|
| |
| — |
| — |
| | |||||
2024年3月31日結存餘額 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
行使股票期權 |
| | — |
|
| |
| — |
| — |
| | |||||
限制性股票單位的認股權發放 | | — | ( | — | — | ( | |||||||||||
淨虧損 | — | — | — | ( | — | ( | |||||||||||
其他綜合收益 |
| — | — |
|
| — |
| — |
| |
| | |||||
基於股票的補償 |
| — | — |
|
| |
| — |
| — |
| | |||||
2024年6月30日餘額 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
行使股票期權 |
| | — |
|
| |
| — |
| — |
| | |||||
限制性股票單位的認股權發放 | | — | — | — | — | — | |||||||||||
淨虧損 | — | — | — | ( | — | ( | |||||||||||
其他綜合收益 |
| — | — |
|
| — |
| — |
| |
| | |||||
基於股票的補償 |
| — | — |
|
| |
| — |
| — |
| | |||||
2024年9月30日的結餘 | | $ | | $ | | $ | ( | $ | | $ | | ||||||
累計 | |||||||||||||||||
額外的 | 其他 | 總計 | |||||||||||||||
普通股 | 實繳 | 累計 | 綜合 | 股東權益 | |||||||||||||
股份 |
| 金額 |
| 資本 |
| 虧損 |
| （損失）收益 |
| 股權 | |||||||
2022年12月31日餘額 |
| | $ | |
| $ | | $ | ( | $ | ( | $ | | ||||
行使股票期權 |
| | — |
|
| |
| — |
| — |
| | |||||
限制性股票單位的認股權發放 | | — | ( | — | — | ( | |||||||||||
淨虧損 |
| — | — |
|
| — |
| ( |
| — |
| ( | |||||
其他綜合收益 | — | — | — | — | | | |||||||||||
基於股票的補償 |
| — | — |
|
| |
| — |
| — |
| | |||||
2023年3月31日的餘額 | | $ | | $ | | $ | ( | $ | — | $ | | ||||||
行使股票期權 |
| | — |
|
| |
| — |
| — |
| | |||||
限制性股票單位的認股權發放 | | — | — | — | — | — | |||||||||||
公開發行普通股銷售，扣除成本後 | | — | | — | — | | |||||||||||
淨虧損 |
| — | — |
|
| — |
| ( |
| — |
| ( | |||||
基於股票的補償 |
| — | — |
|
| |
| — |
| — |
| | |||||
2023年6月30日的餘額 | | $ | | $ | | $ | ( | $ | — | $ | | ||||||
行使股票期權 |
| | — |
|
| |
| — |
| — |
| | |||||
限制性股票單位的認股權發放 | | — | — | — | — | — | |||||||||||
淨虧損 |
| — | — |
|
| — |
| ( |
| — |
| ( | |||||
基於股票的補償 |
| — | — |
|
| |
| — |
| — |
| | |||||
2023年9月30日餘額 | | $ | | $ | | $ | ( | $ | — | $ | | ||||||
有關合並財務報表的附註請參閱。
5
AKOYA BIOSCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Nine months ended | ||||||
September 30, | September 30, | |||||
| 2024 |
| 2023 | |||
Operating activities |
|
|
|
| ||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
| ||
Depreciation and amortization |
| |
| | ||
Non-cash interest expense |
| |
| | ||
Stock-based compensation expense |
| |
| | ||
Deferred taxes |
| |
| — | ||
Change in fair value of contingent consideration |
| ( |
| | ||
Credit losses on accounts receivable | | — | ||||
Net accretion of marketable securities | ( | ( | ||||
Operating lease right of use assets | | | ||||
Provision for excess and obsolete inventories | | | ||||
Impairment | | — | ||||
Changes in operating assets and liabilities: |
|
| ||||
Accounts receivable, net |
| |
| ( | ||
Prepaid expenses and other assets |
| |
| | ||
Inventories, net |
| ( |
| ( | ||
Accounts payable |
| ( |
| | ||
Accrued expenses and other liabilities |
| ( |
| ( | ||
Operating lease liabilities | ( | ( | ||||
Deferred revenue |
| ( |
| | ||
Net cash used in operating activities |
| ( |
| ( | ||
Investing activities |
|
|
|
| ||
Purchases of property and equipment |
| ( |
| ( | ||
Purchases of marketable securities | ( | — | ||||
Sales of marketable securities | | — | ||||
Maturities of marketable securities | | | ||||
Net cash (used in) provided by investing activities |
| ( |
| | ||
Financing activities |
|
|
|
| ||
Sale of common stock in underwritten offering, net of costs | — | | ||||
Proceeds from stock option exercises |
| |
| | ||
Settlement of restricted stock units for tax withholding obligations | ( | ( | ||||
Principal payments on financing leases | ( | ( | ||||
Payments of debt issuance costs | — | ( | ||||
Payments of deferred offering costs |
| ( |
| ( | ||
Payments of contingent consideration | ( | ( | ||||
Net cash (used in) provided by financing activities |
| ( |
| | ||
Net (decrease) 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 |
|
|
|
| ||
Cash paid for interest | $ | | $ | | ||
Cash paid for income taxes | $ | — | $ | | ||
Supplemental disclosures of non-cash activities |
|
|
|
| ||
Right-of-use asset obtained in exchange for lease liabilities | $ | | $ | | ||
Unpaid offering costs related to sale of common stock in underwritten offering | $ | — | $ | | ||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | | $ | | ||
See accompanying notes to consolidated financial statements.
6
AKOYA BIOSCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
(1) The company and basis of presentation
Description of business
Akoya Biosciences, Inc. (“Akoya” or the “Company”) is a life sciences technology company, founded on November 13, 2015 as a Delaware corporation with operations based in Marlborough, Massachusetts, delivering spatial biology solutions focused on transforming discovery, clinical research and diagnostics. Spatial biology refers to a rapidly evolving technology that enables academic and biopharma scientists to detect and map the distribution of cell types and biomarkers across whole tissue samples at single-cell resolution, enabling advancements in their understanding of disease progression and patient response to therapy. Through Akoya’s PhenoCycler (formerly CODEX) and PhenoImager (formerly Phenoptics) platforms, reagents, software and services, the Company offers end-to-end solutions to perform tissue analysis and spatial phenotyping across the full continuum from discovery through translational and clinical research and diagnostics.
On September 28, 2018, the Company acquired the commercial Quantitative Pathology Solutions (“QPS”) division of Perkin Elmer, Inc. (“PKI”), subsequently known as Revvity, Inc. (“Revvity”), for multiplex immunofluorescence, with the aim of providing consumers with a full suite of end-to-end solutions for high parameter tissue analysis. The QPS technology offers pathology solutions for cancer immunology and immunotherapy research, including advanced multiplex immunochemistry staining kits, multispectral imaging and whole side scanning instruments, and image analysis software. The Company’s combined portfolio of complementary technologies aims to fuel groundbreaking advancements in cancer immunology, immunotherapy, neurology and a wide range of other applications. The Company sells into
Principles of consolidation
The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Akoya Biosciences UK Ltd. (“Akoya UK”). All intercompany balances and transactions have been eliminated in consolidation.
Unaudited interim financial information
The accompanying consolidated balance sheet as of September 30, 2024, the consolidated statements of operations, the consolidated statements of comprehensive loss and the consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2024, the results of its 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 financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2024 and 2023 are also unaudited. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. The consolidated balance sheet as of December 31, 2023 included herein was derived from the audited consolidated financial statements as of that date. These unaudited consolidated financial statements should be read in
7
conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2024.
Liquidity and going concern
The Company is subject to a number of risks similar to other newly commercial life sciences companies, including, but not limited to, its ability to develop and achieve market acceptance of its products and potential products, successfully compete with its competitors, protect its proprietary technology, and raise additional capital when and as needed.
At September 30, 2024, the Company had cash, cash equivalents, and marketable securities of $
The Company’s debt financing with Midcap Financial Trust (the “Midcap Trust Term Loan”) is subject to minimum financial covenants. Based on the Company’s current operating plan, the Company cannot be certain that it will be able to maintain compliance with these financial covenants for at least the next twelve months from the issuance of these financials, which could result in additional cash resources being required if the Company’s Midcap Trust Term Loan becomes due. The Company intends to seek a waiver, refinance the outstanding borrowings or otherwise mitigate these concerns with Midcap Financial Trust or another lender. There can be no assurance that a waiver will be granted or that the Company will be able to refinance the amounts outstanding and in such an event, the lender may exercise any and all of its rights and remedies provided for under the Midcap Trust Term loan.
As a result of these uncertainties, there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months following the date that these consolidated financial statements are issued. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
(2) Summary of significant accounting policies
Significant accounting policies
The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC and have not materially changed during the nine months ended September 30, 2024.
Reclassifications
Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation.
Revenue recognition
The Company follows ASC 606, Revenue from Contracts with Customers (“ASC 606”).
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The Company generates revenue from the sale and installation of instruments, related warranty services, reagents, software (both company-owned and with third parties), and laboratory services. Pursuant to ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these goods and services.
To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606, the Company performs the following five steps: (i) identification of the customer contract; (ii) identification of the performance obligations; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer.
The Company evaluates all promised goods and services within a customer contract and determines which of those are separate performance obligations. This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract. Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract.
Most of the Company’s contracts with customers contain multiple performance obligations (i.e., sale of an instrument and warranty services). For these contracts, the Company accounts for individual performance obligations separately if they are distinct (i.e. capable of being distinct and separable from other promises in the contract). The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Excluded from the transaction price are sales tax and other similar taxes which are presented on a net basis.
In order to determine the stand-alone selling price, the Company conducts a periodic analysis to determine whether various goods or services have an observable stand-alone selling price as well as to identify significant changes to current stand-alone selling prices. If the Company does not have an observable stand-alone selling price for a particular good or service, then the stand-alone selling price for that particular good or service is estimated using an approach that maximizes the use of observable inputs. The Company’s process for determining stand-alone selling price requires judgment and considers multiple factors that are reasonably available and maximizes the use of observable inputs that may vary over time depending upon the unique facts and circumstances related to each performance obligation. The Company believes that this method results in an estimate that represents the price the Company would charge for the product offerings if they were sold separately.
Taxes, such as sales, value-added and other taxes, collected from customers concurrent with revenue generating activities and remitted to governmental authorities are not included in revenue. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in cost of sales.
Product Revenue
Product revenue is generated by the sale of instruments and consumable reagents predominantly through the Company’s direct sales force in the United States and in geographic regions outside the United States. The Company generally does not offer product return or exchange rights (other than those relating to defective goods under warranty) or price protection allowances to its customers. When an instrument is purchased by a customer, the Company recognizes revenue when the related performance obligation is satisfied (i.e. when the control of an instrument has passed to the customer). Revenue from the sale of consumables is recognized upon shipment to the customer. The Company’s perpetual software licenses generally have significant stand-alone functionality to the customer upon delivery and are considered to be functional intellectual property. The Company’s perpetual software licenses are considered distinct performance obligations, and revenue allocated to the software license is typically recognized upon provision of the license/software code to the customer (i.e., when the software is available for access and download by the customer).
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Service and Other Revenue
Product sales of instruments include a service-based warranty typically for following the installation of the purchased instrument, with an extended warranty for an additional year sold in many cases. These are separate performance obligations as they are service-based warranties and are recognized on a straight-line basis over the service delivery period. After completion of the service period, customers have an option to renew or extend the warranty services, typically for additional periods in exchange for additional consideration. The extended warranties are also service-based warranties that represent separate purchasing decisions. The Company recognizes revenue allocated to the extended warranty performance obligation on a straight-line basis over the service delivery period. Revenue from separately charged installation services is recognized upon completion of the installation process. Additionally, the Company provides laboratory services, in which revenue is recognized as services are performed. For laboratory services, the Company generally uses the output method to measure the extent of progress towards completion of the performance obligation. For companion diagnostic development, the Company generally uses the cost-to-cost approach to measure the extent of progress towards completion of the performance obligation because the Company believes it best depicts the transfer of assets to the customer. Under the output method, the extent of progress towards completion is measured based on the value of the services transferred to date relative to the remaining services promised under the contract. Under the cost-to-cost measure approach, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. The Company records shipping and handling billed to customers as service and other revenue and the related costs in cost of service and other revenue in the consolidated statements of operations.
In June 2022, the Company entered into a Companion Diagnostic Agreement with Acrivon Therapeutics, Inc. (the “Acrivon Agreement”) to co-develop, validate, and commercialize Acrivon’s OncoSignature® test. On December 4, 2023, the Company amended the Acrivon Agreement, which expanded the scope of work and increased total development milestone payments to an aggregate of $
The Acrivon Agreement is in the scope of ASC 606, Revenue from Contracts with Customers. The Company concluded that the Acrivon Agreement contains one performance obligation for certain development services, since the underlying elements are inputs to a single development service and are not distinct within the context of the contract. Additional development services in the Acrivon Agreement were deemed to be an option, due to certain contingencies with significant uncertainty. The Company will recognize revenue over time for the transaction price in an amount proportional to the expenses incurred and the total estimated expenses to satisfy its performance obligation.
The costs incurred by the Company under this arrangement are included as research and development expenses in the Company’s consolidated statements of operations as these costs are related to the development of new services and technology to be owned and offered by the Company.
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Disaggregation of Revenue
The Company disaggregates revenue from contracts with customers by type of products, and between instrument warranty and service and other revenue, as it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The following table disaggregates the Company’s revenue by major source:
Three months ended | Nine months ended | |||||||||||
| September 30, 2024 |
| September 30, 2023 |
| September 30, 2024 |
| September 30, 2023 | |||||
Revenue |
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Product revenue |
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Instruments | $ | | $ | | $ | | $ | | ||||
Consumables |
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Standalone software products |
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Total product revenue | $ | | $ | | $ | | $ | | ||||
Service and other revenue | ||||||||||||
Service and other revenue | $ | | $ | | $ | | $ | | ||||
Instrument warranty | | | | | ||||||||
Total service and other revenue | $ | | $ | | $ | | $ | | ||||
Total revenue | $ | | $ | | $ | | $ | | ||||
Significant Judgments
The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment. Once the Company determines the performance obligations, the Company determines the transaction price, which includes estimating the amount of variable consideration, based on the most likely amount, to be included in the transaction price, if any. The Company then allocates the transaction price to each performance obligation in the contract based on a relative standalone selling price method. The corresponding revenue is recognized as the related performance obligations are satisfied as discussed in the revenue categories above.
Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company determines standalone selling price based on the price at which the performance obligation in the contract (i.e. instrument, service warranty, installation) would be sold separately. As the first-year warranty for each instrument is embedded in the instrument price, the amount allocated to the first-year warranty has been determined based on the separately identifiable price of the Company’s extended warranty offering when it is sold on a renewal basis.
If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and the expected costs and margin related to the performance obligations. Contracts in which only one performance obligation is identified (i.e., consumables and standalone software products) do not require allocation of the transaction price.
Contract Assets and Liabilities
The Company’s contract assets consist of revenues recognized, but not yet invoiced to customers for lab services, companion diagnostic development, and instruments. The Company classifies contract assets in accounts receivable. Contract assets are classified as current or noncurrent based on timing of when the Company expects to invoice the customer. The Company recorded $
The Company’s contract liabilities consist of upfront payments for service-based warranties on instrument sales, as well as lab services. The Company classifies contract liabilities associated with service based warranties in deferred revenue, and contract liabilities associated with lab services in accrued expenses. Contract liabilities are classified as
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current or noncurrent based on the timing of when the Company expects to service the warranty, or complete the lab services contract.
Cost to Obtain and Fulfill a Contract
Under ASC 606, the Company is required to capitalize certain costs to obtain customer contracts and costs to fulfill customer contracts. These costs are required to be amortized to expense on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates, compared to previously being expensed as incurred. As a practical expedient, the Company recognizes any incremental costs to obtain a contract as an expense when incurred if the amortization period of the asset is
Stock-based compensation
The Company records stock-based compensation for awards granted to employees, non-employees, and to members of the Board of Directors of the Company (the “Board”) for their services on the Board based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period, which is generally
The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The use of the Black-Scholes-Merton option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company-specific historical and implied volatility, the Company bases its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded, in combination with the Company’s historical volatility. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the Company’s and the selected companies’ shares during the equivalent period of the calculated expected term of its stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding volatility of its own stock price becomes available. The risk-free interest rate is determined by reference to the U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of common stock; therefore, the expected dividend yield is assumed to be
For restricted stock units (“RSUs”) issued under the Company’s stock-based compensation plans, the fair value of each grant is calculated based on the Company’s stock price on the date of grant.
The Company has elected to account for forfeitures as they occur; any compensation cost previously recognized for an award that is forfeited because of a failure to satisfy a service or performance condition will be reversed in the period of the forfeiture.
Refer to Note 11 for further details on the Company’s stock-based compensation plans.
Net loss per share attributable to common stockholders
Basic and diluted net loss per common share outstanding is determined by dividing net loss by the weighted average common shares outstanding during the period. For purposes of the diluted net loss per share calculations, stock options, and unvested restricted stock units, are considered to be potentially dilutive securities, but are excluded from the diluted net loss per share because their effect would be anti-dilutive and therefore basic and diluted net loss per share were the same for all periods presented.
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Comprehensive income (loss)
Components of comprehensive income (loss), including net loss, are reported in the financial statements in the period in which they are recognized. Other comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Net loss and other comprehensive income (loss) are reported net of any related tax effect to arrive at comprehensive income (loss). Comprehensive income (loss) includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders which for the three and nine months ended September 30, 2024 and 2023 consist of unrealized gain (loss) on marketable securities.
Marketable securities
Marketable securities represent holdings of available-for-sale marketable debt securities in accordance with the Company’s investment policy. Short-term marketable securities mature within one year from the balance sheet date while long-term marketable securities mature after one year. Investments in marketable securities are recorded at fair value, with any unrealized gains and losses reported within accumulated other comprehensive income (loss) as a separate component of stockholders’ equity until realized or until a determination is made that an other-than-temporary decline in market value has occurred. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are reflected as a component of interest income. Interest on securities sold is determined based on the specific identification method and reflected as interest income. Any realized gains or losses on the sale of investment are reflected as realized (loss) gain on investments.
Recent accounting standards
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. The Company is considered to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (Jobs Act). The Jobs Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of this extended transition period and, as a result, the Company will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.
Recently issued but not yet adopted accounting standards
In November 2023, the FASB issued ASC Update No. 2023-07, Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures. This update enhances reportable segment disclosure requirements by requiring public entities to provide disclosures of significant segment expenses and other segment items, as well as disclosures about a reportable segment’s profit or loss and assets that are currently required annually in interim periods. The new standard will be effective for the Company’s annual financial statements for the period beginning on January 1, 2024. The Company is currently evaluating the impact that the standard will have on its Consolidated Financial Statements.
In December 2023, the FASB issued ASC Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update enhances income tax disclosure requirements by requiring public entities to provide additional information in its tax rate reconciliation and additional disclosures about income taxes paid. The update is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance and the amendments in this update should be applied prospectively, but entities have the option to apply it retrospectively. The Company is currently evaluating the impact that the standard will have on its Consolidated Financial Statements.
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(3) Significant risks and uncertainties including business and credit concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, marketable securities, and receivables. The Company’s cash equivalents are held by large, credit worthy financial institutions. Marketable securities consist of short-term investments. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. Deposits in these banks generally exceed federally insured limits. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents.
The Company controls credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Accounts receivable are recorded net of an allowance for credit losses. The allowance for credit losses is developed using historical collection experience, current and future economic and market conditions, and a review of the status of customers’ accounts receivable. The Company had an allowance for credit losses of $
For the three and nine months ended September 30, 2024 and 2023,
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(4) Fair value of financial instruments
The Company measures the following financial liabilities at fair value on a recurring basis. There were
The following tables set forth the Company’s financial assets and liabilities carried at fair value categorized using the lowest level of input applicable to each financial instrument as of September 30, 2024 and December 31, 2023:
Quoted Prices | ||||||||||||
in Active | Significant | |||||||||||
Markets for | Other | Significant | ||||||||||
Balance at | Identical | Observable | Unobservable | |||||||||
September 30, | Assets | Inputs | Inputs | |||||||||
| 2024 |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||||
Assets: | ||||||||||||
Cash equivalents | $ | | $ | | $ | | $ | — | ||||
U.S Treasury securities | | | | — | ||||||||
U.S. Government agency bonds | | | | — | ||||||||
Commercial paper | | | | — | ||||||||
Total Assets | $ | | $ | | $ | | $ | — | ||||
Liabilities: |
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Contingent consideration – Short term portion | $ | | $ | | $ | | $ | | ||||
Contingent consideration – Long term portion | | | | | ||||||||
Total Liabilities | $ | | $ | | $ | | $ | | ||||
Quoted Prices | ||||||||||||
in Active | Significant | |||||||||||
Markets for | Other | Significant | ||||||||||
Balance at | Identical | Observable | Unobservable | |||||||||
| December 31, |
| Assets |
| Inputs |
| Inputs | |||||
| 2023 |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||||
Assets: | ||||||||||||
Cash equivalents | $ | | $ | | $ | | $ | — | ||||
Total Assets | $ | | $ | | $ | | $ | — | ||||
Liabilities: |
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Contingent consideration – Short term portion | $ | | $ | | $ | | $ | | ||||
Contingent consideration – Long term portion | | | | | ||||||||
Total Liabilities | $ | | $ | | $ | | $ | | ||||
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The following is a summary of cash equivalents and marketable securities as of September 30, 2024 and December 31, 2023:
September 30, 2024 | ||||||||||||
Gross | Gross | |||||||||||
Unrealized | Unrealized | Estimated | ||||||||||
| Cost |
| Gains |
| Losses |
| Fair Value | |||||
Cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Marketable securities (due in one year or less): | ||||||||||||
U.S Treasury securities | | | ( | | ||||||||
Commercial paper | | — | — | | ||||||||
Total marketable securities due in one year or less | | | ( | | ||||||||
Marketable securities (due in one to two years): | ||||||||||||
U.S. Government agency bonds | | — | ( | | ||||||||
Total marketable securities due in one to two years | | — | ( | | ||||||||
Total cash equivalents and marketable securities | $ | | $ | | $ | ( | $ | | ||||
December 31, 2023 | ||||||||||||
Gross | Gross | |||||||||||
Unrealized | Unrealized | Estimated | ||||||||||
| Cost |
| Gains |
| Losses |
| Fair Value | |||||
Cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Total cash equivalents | $ | | $ | — | $ | — | $ | | ||||
The Company held four debt securities at September 30, 2024 classified as marketable securities with original maturity dates greater than three months that were in an unrealized loss position for less than twelve months. The fair market value of these securities was $
The Company had no material realized gains or losses on its available-for-sale securities for the three and nine months ended September 30, 2024 and 2023.
The Company’s recurring fair value measurements using Level 3 inputs relate to the Company’s contingent consideration liability. In those circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments the Company expects to make as of the acquisition date. The Company re-measures this liability each reporting period and records changes in the fair value through changes in fair value of contingent consideration on the Company’s consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount rates, periods, timing and amount of projected revenue.
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The recurring Level 3 fair value measurements of the Company’s contingent consideration liability include the following significant unobservable inputs:
Fair Value | Fair Value |
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as of | as of | ||||||||
September 30, | December 31, | Valuation | Unobservable | ||||||
Contingent Consideration Liability |
| 2024 |
| 2023 | Technique |
| Inputs | ||
Revenue-based Payments | $ | |
| $ | | Discounted Cash Flow Analysis under the Income Approach |
| Revenue discount factor, discount rate | |
(5) Property and equipment, net
Property and equipment consists of the following:
Estimated Useful | September 30, | December 31, | ||||||
| Life (Years) |
| 2024 |
| 2023 | |||
Furniture and fixtures |
| $ | | $ | | |||
Computers, laptop and peripherals |
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Laboratory equipment |
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Leasehold improvements |
| Shorter of the lease life or |
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Total property and equipment |
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Less: Accumulated depreciation |
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| ( |
| ( | ||
Property and equipment, net |
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For the three months ended March 31, 2024, the Company recorded $
Depreciation expense relating to property and equipment charged to operations was $
Demo inventory consists of the following:
Estimated | September 30, | December 31, | ||||||
| Life (Years) |
| 2024 |
| 2023 | |||
Demo inventory – gross |
| $ | | $ | | |||
Less: Accumulated depreciation |
|
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| ( |
| ( | ||
Demo inventory, net |
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| $ | | $ | | ||
Depreciation expense relating to demo equipment charged to operations was $
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(6) Allowance for credit losses
The Company is exposed to credit losses primarily through sales of products and services. The Company’s expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of customers’ trade accounts receivable. Due to the short-term nature of such receivables, the estimated accounts receivable that may not be collected is based on aging of the accounts receivable balances.
The Company evaluates contract terms and conditions, country, and political risk, and may require prepayment to mitigate risk of loss. Specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company monitors changes to the receivables balance on a timely basis, and balances are written off as they are determined to be uncollectable after all collection efforts have been exhausted.
As of September 30, 2024, the Company’s accounts receivable balance was $
Balance at January 1, 2024 | $ | | |
Change in provision | | ||
Balance at September 30, 2024 | $ | |
(7) Intangible assets
Intangible assets as of September 30, 2024 are summarized as follows:
Accumulated | Useful Life | ||||||||
| Cost |
| Amortization |
| Net |
| (in years) | ||
Customer relationships | $ | | $ | ( | $ | |
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Developed technology | |
| ( |
| |
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Licenses | |
| ( |
| |
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Trade names and trademarks | |
| ( |
| |
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Capitalized software | |
| ( |
| |
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Total intangible assets | $ | | $ | ( | $ | |
|
| |
Intangible assets as of December 31, 2023 are summarized as follows:
Accumulated | Useful Life | ||||||||
| Cost |
| Amortization |
| Net |
| (in years) | ||
Customer relationships | $ | | $ | ( | $ | |
| ||
Developed technology | |
| ( |
| |
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Licenses | |
| ( |
| |
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Trade names and trademarks | |
| ( |
| |
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Capitalized software | |
| ( |
| |
| |||
Total intangible assets | $ | | $ | ( | $ | |
|
| |
Total amortization expense was $
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As of September 30, 2024 the amortization expense related to identifiable intangible assets in future periods is expected to be as follows:
2024 remaining |
| $ | |
2025 |
| | |
2026 |
| | |
2027 |
| | |
2028 | | ||
Thereafter |
| | |
Total | $ | |
(8) Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following:
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Payroll and compensation | $ | | $ | | ||
Current portion of contingent consideration |
| |
| | ||
Inventory purchases |
| |
| | ||
Customer deposits | | | ||||
Accrued interest | | | ||||
Other accrued expenses |
| |
| | ||
Total accrued expenses and other current liabilities | $ | | $ | | ||
(9) Debt
Term Loan Agreements
In October 2020, the Company entered into the Midcap Trust Term Loan with Midcap Financial Trust, for a $
The Midcap Trust Term Loan initially provided for an interest only term for
On March 21, 2022, the Company entered into Amendment No. 1 to the Midcap Trust Term Loan, which amended certain provisions to permit certain additional debt and capital leases.
On June 1, 2022, the Company entered into Amendment No. 2 (“Amendment No. 2”) to the Midcap Trust Term Loan, which permitted the draw of a second tranche of $
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commitment fee as well as a
On November 7, 2022, the Company entered into Amendment No. 3 (“Amendment No. 3”) to the Midcap Trust Term Loan, which permitted the draw of two additional tranches, each totaling $
In July 2024, the Company entered into Amendment No. 4 (“Amendment No. 4”) to the Midcap Trust Term Loan, which amended certain affirmative financial covenants.
In November 2024, the Company entered into Amendment No. 5 (“Amendment No. 5”) to the Midcap Trust Term Loan, effective as of September 30, 2024, which amended certain affirmative financial covenants. Amendment No. 5 also extends the interest only period from December 1, 2025 until March 1, 2026 (subject to further extension upon certain conditions), at which point the Company must repay the principal amounts in equal monthly installments until the maturity date of November 1, 2027. Finally, Amendment No. 5 increases the exit fee from
The interest rate was
Debt consists of the following:
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Midcap Trust Term Loan |
| $ | |
| $ | |
Unamortized debt discount |
| ( |
| ( | ||
Accretion of final fee |
| |
| | ||
Total long-term debt, net | $ | | $ | | ||
As of September 30, 2024, future principal payments due under the Midcap Trust Term Loan, excluding the $
Midcap Trust | |||
Year ended: |
| Term Loan | |
December 31, 2024 | $ | — | |
December 31, 2025 | | ||
December 31, 2026 | | ||
December 31, 2027 | | ||
Total minimum principal payments | $ | | |
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(10) Stockholder’s equity
The Company’s Amended and Restated Certificate of Incorporation authorizes it to issue
On November 7, 2022, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Piper Sandler & Co. (“Piper Sandler”) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $
Issuance costs incurred related to the Equity Distribution Agreement are classified as long-term assets on the balance sheet at September 30, 2024 and December 31, 2023.
On June 7, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co. LLC and Piper Sandler (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell up to
On June 8, 2023, the Underwriters exercised their option to purchase the Optional Shares in full.
The Company received approximately $
(11) Stock compensation plans
2021 Equity Incentive Plan
On March 24, 2021, the Board, and on April 8, 2021, the Company’s stockholders, approved and adopted the 2021 Equity Incentive Award Plan (the “2021 Plan”). The 2021 Plan became effective immediately prior to the closing of the IPO. Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company. A total of
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repurchased by the Company were added to the shares reserved under the 2021 Plan. In addition, the number of shares of common stock available for issuance under the 2021 Plan will be automatically increased on the first day of each calendar year during the term of the 2021 Plan, beginning with January 1, 2022 and ending with January 1, 2030, by an amount equal to
2015 Equity Incentive Plan
The 2015 Plan was established for granting stock incentive awards to directors, officers, employees and consultants to the Company. The 2015 Plan provided for the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock units as determined by the Board. Under the 2015 Plan, stock options were generally granted with exercise prices equal to or greater than the fair value of the common stock as determined by the Board, expired no later than
Stock Options
During the nine months ended September 30, 2024 and 2023, the Company granted options with an aggregate fair value of $
During the nine months ended September 30, 2024, the Company granted options to purchase
Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||
September 30, | September 30, | September 30, | September 30, | |||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
Weighted-average risk-free interest rate | | % | | % | | % | | % | ||
Expected dividend yield | % | % | % | % | ||||||
Expected volatility | | % | | % | | % | | % | ||
Expected term |
|
|
|
|
Restricted Stock Units
During the nine months ended September 30, 2024 and 2023, the Company granted RSUs with an aggregate fair value of $
22
Stock-Based Compensation
Stock-based compensation related to the Company’s stock-based awards was recorded as an expense and allocated as follows:
Three months ended | Nine months ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Cost of goods sold | $ | | $ | | $ | | $ | | ||||
Selling, general and administrative |
| |
| |
| |
| | ||||
Research and development |
| |
| |
| |
| | ||||
Total stock-based compensation | $ | | $ | | $ | | $ | | ||||
As of September 30, 2024, there was $
As of September 30, 2024, there was $
(12) Employee stock purchase plan
On March 24, 2021, the Board and on April 8, 2021, the Company’s stockholders approved and adopted the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective in connection with the closing of the Company’s IPO. The ESPP permits participants to purchase common stock through payroll deductions of up to
(13) Income taxes
During the three months ended September 30, 2024 and 2023, the Company recorded a tax provision of $
(14) Commitments and contingencies
License Agreements
In September 2018, in connection with the acquisition of the QPS division of PKI (subsequently known as Revvity), the Company entered into a License Agreement with PKI, pursuant to which PKI granted the Company an exclusive, nontransferable, sublicensable license under certain patent rights to make, use, import and commercialize QPS products and services. The Company is required to pay royalties on net sales of products and services that are covered by patent rights under the agreement at a rate ranging from
23
2024, and actual net sales in 2023, as of September 30, 2024 and December 31, 2023, respectively. Such amounts are payable in the first quarter of 2025 and 2024, respectively.
Changes in the fair value of the Company’s long-term portion of the contingent consideration liability During the nine months ended September 30, 2024 and 2023 were as follows:
Balance as of December 31, 2023 |
| $ | |
Reclassification of FY 2024 payment to accrued expenses |
| ( | |
| ( | ||
Balance as of September 30, 2024 | $ | |
Balance as of December 31, 2022 |
| $ | |
Reclassification of FY 2023 payment to accrued expenses |
| ( | |
| | ||
Balance as of September 30, 2023 | $ | |
(15) Net loss per share attributable to common stockholders
Potentially issuable shares of common stock include shares issuable upon the exercise of outstanding employee stock option awards. Awards granted with performance conditions are excluded from the shares used to compute diluted earnings per share until the performance conditions associated with the awards are met.
The following table sets forth the computation of basic and diluted earnings per common share:
Three months ended | Nine months ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted average common shares used in net loss per share attributable to common stockholders, basic and diluted |
| |
| |
| |
| | ||||
Basic and diluted net loss per common share outstanding | $ | ( | $ | ( | $ | ( | $ | ( | ||||
The Company’s potential dilutive securities, which include stock options, and unvested restricted stock units, have been excluded from the computation of diluted net loss per share attributable to common stockholders whenever the effect of including them would be to reduce the net loss per share. In periods where there is a net loss, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
September 30, | ||||
| 2024 |
| 2023 | |
Outstanding stock options |
| |
| |
Unvested restricted stock units | | | ||
Total |
| |
| |
(16) Segments
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company’s chief operating decision-maker, the Company’s chief executive officer, views the Company’s operations and manages its business as a single operating segment. Accordingly, the Company has a single
24
reportable segment structure. The Company’s principal operations and decision-making functions are located in the United States.
The following table provides the Company’s revenues by geographical market based on the location where the services were provided or to which product was shipped:
Three months ended | Nine months ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
North America | $ | | $ | | $ | | $ | | ||||
APAC |
| |
| | |
| | |||||
EMEA |
| |
| | |
| | |||||
Total Revenue | $ | | $ | | $ | | $ | | ||||
Three months ended |
| Nine months ended |
| |||||||
September 30, |
| September 30, |
| |||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||
North America |
| | % | | % | | % | | % | |
APAC |
| | % | | % | | % | | % | |
EMEA |
| | % | | % | | % | | % | |
Total Revenue |
| | % | | % | | % | | % | |
North America includes the United States and related territories, as well as Canada. APAC also includes Australia. For the three and nine months ended September 30, 2024, the Company had
As of September 30, 2024 and December 31, 2023, substantially all of the Company’s long-lived assets are located in the United States.
(17) Related party transactions
Argonaut Manufacturing Services Inc. (“AMS”) is a portfolio company of Telegraph Hill Partners, which holds greater than
One of the Company’s officers is a member of the board of directors of a software-as-a-service provider, who provides software development services to the Company, which are utilized for research purposes. During the three months ended September 30, 2024 and 2023, the Company incurred research and development expenses of approximately $
(18) Leases
In the first quarter of 2024, the Company ceased use of its leased facility in Menlo Park, California with the intention to either sublease or exit the vacant space to recover a portion of the total lease costs. The Company’s cease use of its leased facilities required an impairment assessment and the related right-of-use (“ROU”) assets and property and
25
equipment became their own asset group. The impairment analysis evaluated the present value of net cash flows under the original lease and the estimated cash flows under estimated subleases to identify any potential impairment amount. The impairment assessment considered all industry and economic factors such as rental rates, interest rates, and recent real estate activities to estimate the net cash flows analysis and impairment amount.
The above assessments resulted in the Company recording an impairment charge of $
In June 2024, the Company signed a thirty-five month sublease agreement for a portion of its leased facility in Menlo Park, California. In connection with this agreement, the Company received a security deposit totaling $
There were
The Company is a lessee under operating leases of offices, warehouse space, laboratory space, and auto leases, and financing leases of computer equipment, staining equipment, and furniture.
Some leases include an option to renew, with renewal terms that can extend the lease term by five years. The exercise of lease renewal options is at the Company’s sole discretion. None of these options to renew are recognized as part of the Company’s right-of-use asset or lease liability as of September 30, 2024, as renewal was determined to not be reasonably assured.
The table below summarizes the Company’s lease costs for the three and nine months ended September 30, 2024 and 2023:
Three months ended September 30, | Nine months ended September 30, | |||||||||||||
Lease Costs |
| Classification |
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||
Finance lease cost: | ||||||||||||||
Amortization of right-of-use assets | Cost of service and other revenue | $ | $ | $ | $ | |||||||||
Amortization of right-of-use assets | Selling, general and administrative | |||||||||||||
Amortization of right-of-use assets | Research and development | — | ||||||||||||
Interest on lease liabilities | Interest expense, net | |||||||||||||
Operating lease cost: | ||||||||||||||
Sublease income | Selling, general and administrative | ( | — | ( | — | |||||||||
Rent expense | Cost of product revenue | | | |||||||||||
Rent expense | Selling, general and administrative | | | |||||||||||
Total lease cost | $ | | $ | $ | | $ | ||||||||
26
As of September 30, 2024, future minimum commitments under ASC 842 under the Company’s operating leases were as follows:
Maturity of operating lease liabilities |
| As of September 30, 2024 | |
2024 remaining | $ | ||
2025 | |||
2026 | |||
2027 | |||
2028 | |||
Thereafter | |||
Total lease payments | $ | | |
Less: discount to lease payments | ( | ||
Total operating lease liabilities | $ | | |
As of September 30, 2024, future minimum commitments under ASC 842 under the Company’s financing leases were as follows:
Maturity of financing lease liabilities |
| As of September 30, 2024 | |
2024 remaining | $ | | |
2025 | | ||
2026 | | ||
2027 | | ||
2028 | | ||
Total lease payments | $ | | |
Less: discount to lease payments | ( | ||
Total financing lease liabilities | $ | | |
The table below summarizes the weighted-average remaining lease term (in years), the weighted-average incremental borrowing rate (in percentages), as well as supplemental cash flow information related to leases for the nine months ended September 30, 2024 and 2023:
Nine months ended September 30, | ||||||||
Lease Term, Discount Rates, and Other |
| 2024 |
| 2023 | ||||
Weighted average remaining lease term | ||||||||
Operating leases | years | years | ||||||
Financing leases | years | years | ||||||
Weighted average incremental borrowing rate | ||||||||
Operating leases | % | % | ||||||
Financing leases | | % | | % | ||||
Cash payments of amounts included in lease liabilities | ||||||||
Operating cash flows from operating leases | $ | | $ | | ||||
Operating cash flows from finance leases | | | ||||||
Financing cash flows from finance leases | | | ||||||
(19) Reductions in force
In January of 2024, the Company initiated a workforce reduction in connection with certain operating expense cost savings initiatives implemented by the Company, including the consolidation of its facilities and the exit of its Menlo Park, California leased facility as discussed in Note 18 – Leases. This workforce reduction was substantially completed by the end of the first quarter of 2024.
During the three months ended March 31, 2024, the Company recorded $
27
respectively, which were recorded in restructuring on the consolidated statements of operations. As of September 30, 2024, none of these workforce reduction charges remain unpaid.
In July 2024, the Company initiated a workforce reduction in connection with certain operating expense cost savings initiatives. This workforce reduction was substantially completed by the end of the third quarter of 2024.
During the three months ended September 30, 2024, the Company recorded $
(20) Subsequent events
The Company has evaluated subsequent events from the consolidated balance sheet date through November 14, 2024, which is the date the consolidated financial statements were issued.
On October 25, 2024, the Company entered into the Fourth Amendment to the Acrivon Agreement with Acrivon Therapeutics, Inc., which added additional milestone payments totaling $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2023 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 5, 2024. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described in our Annual Report on Form 10-K for the year ended December 31, 2023, as referred to in the section titled “Risk Factors” under Part II, Item 1A below. Please also see the section titled “Special note regarding forward looking statements.”
Overview
We are an innovative life sciences technology company delivering spatial biology solutions focused on transforming discovery, clinical research and diagnostics. Our mission is to bring context to the world of biology and human health through the power of spatial phenotyping. Spatial phenotyping refers to a rapidly evolving technology that enables academic and biopharma scientists to detect and map the distribution of cell types and biomarkers across whole tissue samples at single-cell resolution, enabling advancements in their understanding of disease progression and patient response to therapy. Through our PhenoCycler and PhenoImager platforms, reagents, software and services, we offer end-to-end solutions to perform tissue analysis and spatial phenotyping across the full continuum from discovery through translational and clinical research and diagnostics.
Our spatial biology solutions measure cells and proteins by providing biomarker data in its spatial context while preserving tissue integrity. Biomarkers are objective measures that capture what is happening in a cell or tissue at a given moment. Current genomic and proteomic methods, such as next-generation sequencing (“NGS”), single-cell analysis, flow cytometry and mass spectrometry, are providing meaningful data but require the destruction of the tissue sample for analysis. While valuable and broadly adopted, these approaches allow scientists to analyze the biomarkers and cells that comprise the tissue but do not provide the fundamental information about tissue structure, cellular interactions and the localized measurements of key biomarkers. Furthermore, current non-destructive tissue analysis and histological methods provide some limited spatial information, but they only measure a minimal number of biomarkers at a time and require expert pathologist interpretation. Our platforms address these limitations by providing end-to-end solutions that enable researchers to quantitatively interrogate a large number of biomarkers and cell types across a tissue section at single-cell resolution. The result is a detailed and computable map of the tissue sample that thoroughly captures the underlying tissue dynamics and interactions between key cell types and biomarkers, a process now referred to as spatial phenotyping. We believe that we are the only business with the breadth of platform capabilities that enable
28
researchers to do a deep exploratory and discovery study, and then further advance and scale their research through the translational and clinical phases, leading to a better understanding of human biology, disease progression and response to therapy. We also believe that we are the only spatial biology business that is capable of delivering a menu of clinical in vitro diagnostics (“IVD”) tests on our platform for routine diagnostic testing.
We offer complete end-to-end solutions for spatial phenotyping, designed to serve the unique needs of our customers in the discovery, translational and clinical markets. The PhenoCycler is an ultra-high parameter and cost-effective platform ideally suited for discovery high-plex research. The PhenoImager platforms, which includes the Fusion instrument and HT instrument, provide high-throughput scalable solutions with the automation and robustness needed for translational and clinical applications. Furthermore, the PhenoCycler and the PhenoImager Fusion can be integrated into a combined system, the PhenoCycler-Fusion, to enable spatial discovery at scale by providing significant improvements in the speed of the workflow. Our portfolio of products offer seamless and integrated workflow solutions for our customers, including important benefits such as flexible sample types, automated sample processing, scalability, comprehensive data analysis and software solutions and dedicated field and applications support. With these platforms, our customers are performing spatial phenotyping to further advance their understanding of diseases such as cancer, neurological and autoimmune disorders, and many other therapeutic areas.
For the three months ended September 30, 2024 and 2023, revenue from North America accounted for approximately 56% and 65% of our revenue, respectively. For the nine months ended September 30, 2024 and 2023, revenue from North America accounted for approximately 58% and 60% of our revenue, respectively.
We generally outsource our production manufacturing and distribution of our instruments and some of our reagents. Design work and prototyping are performed in-house before pilot manufacturing and production are outsourced to third-party contract manufacturers. We use one contract manufacturer to produce our PhenoImager and PhenoCycler instruments, and a second to produce some of our reagent kits. Additionally, we have made investments in our infrastructure and manufacturing facilities to support strategic in-house manufacturing as it relates to our critical and high-complexity proprietary reagents. The contract manufacturers of our systems and reagent kits are located in the United States and Asia. Certain of our suppliers of components and materials are single source suppliers.
As of the date of this Quarterly Report on Form 10-Q, we have financed our operations primarily from the issuance and sale of our equity securities, borrowings under our long-term debt agreement, and revenue from our commercial operations. We have incurred net losses in each period since our inception in 2015. Our net losses were $10.5 million and $12.9 million for the three months ended September 30, 2024 and 2023, respectively. Our net losses were $47.2 million and $52.5 million for the nine months ended September 30, 2024 and 2023, respectively. We expect to continue to incur operating losses for the foreseeable future. However, we plan to continue to grow our business while improving results of operations in an effort to achieve cash flow positivity, as we:
| ● | attract, hire and retain qualified personnel, including in connection with our investments in our infrastructure to support in-house manufacturing; |
| ● | market and sell new and existing solutions and services; |
| ● | invest in processes and infrastructure to scale our business; |
| ● | support research and development to introduce new solutions; |
| ● | expand, protect and defend our intellectual property; and |
| ● | acquire complementary businesses or technologies to support the growth of our business. |
29
Key factors affecting our results of operations and future performance
There are a number of factors that have impacted, and we believe will continue to impact, our business, results of operations and growth. Our ability to successfully address these factors is subject to various risks and uncertainties, including those described under the heading “Risk Factors.”
Our ability to expand our installed base
We are focused on increasing sales of our PhenoCycler and PhenoImager platforms (Fusion and HT) to new and existing customers. Our financial performance has historically been driven by, and will continue to be impacted by, the volume of instrument sales. Additionally, instrument sales are a leading indicator of future recurring revenue from consumables and services. Our operating results and growth prospects will be dependent in part on our ability to increase our instrument installed base as we further penetrate existing markets and expand into, or offer new features and solutions that appeal to, new markets.
We believe our market is still evolving and relatively underpenetrated. As spatial biology is further validated through rapid acceleration of peer-reviewed publications and growing adoption by the life sciences research market, we believe we have an opportunity to significantly increase our installed base. We regularly solicit feedback from our customers in order to enhance our solutions and their applications for life sciences research, which we believe will drive increased adoption of our platforms as they better serve our customers’ needs.
Our ability to drive incremental pull through
We believe that expansion of our installed base to new and existing customers will drive an increase in our recurring reagent and instrument service revenue. In addition, as our research and development team identifies and launches new applications and biomarker targets, we expect to increase incremental pull through on our existing and new instrument installed base. Recurring revenue was 48% and 33% of total revenue for the three months ended September 30, 2024 and 2023, respectively. Recurring revenue was 48% and 35% of total revenue for the nine months ended September 30, 2024 and 2023, respectively. Our recurring revenue as a percentage of total product and service revenue will vary based upon new device placements in the period. As our installed base expands, we expect recurring revenue on an absolute basis to increase and become an increasingly important contributor to our revenue.
Our ability to improve revenue mix and gross margin
Our revenue is primarily derived from sales of our platforms, consumables, software, and services. Our revenue mix will fluctuate from period-to-period, particularly revenue generated from instrument sales. As our installed base grows, we expect consumables and instrument service revenue to constitute a larger percentage of total revenue.
Our margins are higher for those instruments and consumables that we sell directly to customers compared to those sold through distributors.
Future instrument and consumable selling prices and gross margins may fluctuate due to a variety of factors, including the introduction by others of competing products and solutions. We aim to mitigate downward pressure on our average selling prices by increasing the value proposition offered by our instruments and consumables, primarily by expanding the applications for our devices, optimizing the performance of our products, introducing feature enhancements and increasing the quantity and quality of data that can be obtained using our consumables.
Key Business Metrics
We regularly review the number of instrument placements and cumulative instrument placement as key metrics to evaluate our business, measure our performance, identify trends affecting our business, develop financial projections, and make strategic decisions. We believe that these metrics are representative of our current business; however, we anticipate these will change or may be substituted for additional or different metrics as our business grows.
30
During the three and nine months ended September 30, 2024 and 2023, our instrument placements were as follows:
Three months ended | Nine months ended | |||||||
September 30, | September 30, | |||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |
Instrument Placements: |
| 35 |
| 69 | 116 |
| 198 | |
Our instruments are sold globally to leading biopharma companies and top research institutions and medical centers. Our quarterly instrument placements fluctuate from period-to-period due to the type and size of our customers and their procurement and budgeting cycles. We expect continued fluctuations in our quarterly period-to-period number of instrument placements.
We believe our instrument placements is an important metric to measure our business because the number of new placements is driven by our ability to secure new customers and to increase adoption of our PhenoCycler and PhenoImager platforms and because it provides insights into anticipated recurring revenue for consumables and instrument services.
Components of results of operations
Revenue
Product Revenue
We generate product revenue from the sale of our instruments, consumables and software products. Instrument sales accounted for 47% and 67% of product revenue for the three months ended September 30, 2024 and 2023, respectively. Instrument sales accounted for 47% and 65% of product revenue for the nine months ended September 30, 2024 and 2023, respectively. Consumables revenue accounted for 51% and 32% of our product revenue for the three months ended September 30, 2024 and 2023, respectively. Consumables revenue accounted for 51% and 34% of our product revenue for the nine months ended September 30, 2024 and 2023, respectively.
Our current instrument offerings include our PhenoCycler and PhenoImager platforms. Our sales process with customers is often long and involves multiple levels of approvals. As a result, the revenue for our platforms can vary significantly from period-to-period and has been, and may continue to be, concentrated in a small number of customers in any given period.
We sell our instruments directly to customers and through distributors. Each of our instrument sales drives various streams of recurring revenue comprised of consumable product sales and instrument services.
Service and Other Revenue
We primarily generate service and other revenue from instrument service, which generally consists of sales of extended service contracts, in addition to installation and training, as well as from our laboratory services operations, where we provide sample testing services to customers utilizing our in-house lab operation, and revenue generated from companion diagnostic development.
We offer our customers extended warranty and service plans for our platforms. Our extended warranty and service plans are offered for periods beyond the standard one-year warranty that all customers receive. These extended warranty and service plans generally have fixed fees and terms ranging from one to four additional years. We recognize revenue from the sale of extended warranty and service plans over the respective coverage period, which approximates the service effort provided by us.
We record shipping and handling billed to customers as service and other revenue and the related costs in cost of service and other revenue in the consolidated statement of operations.
31
We sell our products globally. We sell directly to end customers in North America and we sell through third party distributors and dealers in the APAC region. We sell both directly and through third party distributors in EMEA.
Cost of Goods Sold, Gross Profit and Gross Margin
Product cost of revenue primarily consists of costs for finished goods (both instruments and reagents) produced by our contract manufacturers or in-house, and associated freight, shipping and handling costs for products shipped to customers, salaries and other personnel costs, and other direct costs related to those sales recognized as product revenue in the period. Cost of goods sold for services and other revenue primarily consists of salaries and other personnel costs, travel related to services provided, costs of servicing equipment at customer sites, and all personnel and related costs for our laboratory services operation.
We expect that our cost of goods sold will increase or decrease to the extent that our revenue increases and decreases and depending on the mix of revenue in any specific period.
Gross profit is calculated as revenue less cost of goods sold. Gross margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including market conditions that may impact our pricing, sales mix among instruments, sales mix changes among consumables, excess and obsolete inventories, costs we pay our contract manufacturers for their services, our cost structure for lab service operations relative to volume, product warranty obligations, and inflationary cost pressures. Our gross profit in future periods will also vary based upon our channel mix and may decrease based upon our distribution channels.
Gross profit was $11.7 million compared to $15.3 million for the three months ended September 30, 2024 and 2023, respectively. Gross profit was $33.5 million compared to $39.7 million for the nine months ended September 30, 2024 and 2023, respectively.
Operating expenses
Research and development. Research and development costs primarily consist of salaries, benefits, engineering/design costs, laboratory supplies, materials expenses for employees and third parties engaged in research and product development, and depreciation of property and equipment and amortization of intangibles. We expense all research and development costs in the period in which they are incurred.
We plan to continue to invest in our research and development efforts to enhance existing products and develop new products. We expect these expenses to vary from period to period as a percentage of revenue.
Selling, general and administrative. Our selling, general and administrative expenses primarily consist of salaries and benefits for employees in our executive, accounting and finance, sales and marketing, operations, legal and human resource functions, professional services fees, such as consulting, audit, tax and legal fees, legal expenses related to intellectual property, general corporate costs, commercial sales functions, marketing, travel expenses, facilities, and IT, as well as depreciation of property and equipment and amortization of intangibles. We expect these expenses to vary from period to period as a percentage of revenue.
Change in fair value of contingent consideration. On September 28, 2018, we acquired substantially all the assets of the QPS division of PKI (subsequently known as Revvity). As part of the acquisition, on September 28, 2018, we entered into a License Agreement with PKI. Under the terms of the License Agreement, we agreed to pay PKI certain royalties as a percentage of future net sales of products and services that are covered by patent rights under the agreement, in exchange for a perpetual license of the right to produce and sell QPS products. As of the acquisition date, we accounted for the future potential royalty payments as contingent consideration. This contingent consideration is subject to remeasurement.
Impairment. Impairment expense primarily consists of charges recorded as a result of exiting the Menlo Park, California facilities. As a result of exiting the facilities, we performed an impairment assessment of our long-lived assets, including operating lease right-of-use assets and property and equipment. A portion of our operating lease right-of-use
32
assets (including related property and equipment) were determined to be impaired as their carrying values exceeded their fair values, and corresponding impairment charges were recorded in the nine months ended September 30, 2024.
Restructuring. Restructuring expense primarily consists of charges recorded in connection with our workforce reductions executed in January and July of 2024.
Other income (expense)
Interest expense. Interest expense consists primarily of interest related to borrowings under our debt obligations.
Interest income. Interest income consists of interest earned on cash, cash equivalents, and marketable securities, and the accretion of discounts from the purchase of marketable securities.
Other expense, net. Other expense, net consists primarily of franchise tax and foreign currency exchange gains and losses.
Provision for income taxes
Our provision for income taxes consists primarily of foreign taxes and minimal state taxes in the United States. As we expand the scale and scope of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future.
33
Results of operations
The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in the Quarterly Report on Form 10-Q. The following tables set forth our results of operations for the periods presented:
Three months ended | Nine months ended | |||||||||||
September 30, | September 30, | |||||||||||
($ in thousands) |
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||
Product revenue | $ | 12,298 | $ | 18,048 | $ | 40,364 | $ | 50,719 | ||||
Service and other revenue |
| 6,516 |
| 7,167 |
| 19,964 |
| 19,427 | ||||
Total revenue |
| 18,814 |
| 25,215 |
| 60,328 |
| 70,146 | ||||
Cost of goods sold: |
|
|
|
|
|
|
|
| ||||
Cost of product revenue | 4,430 | 6,208 | 17,620 | 19,747 | ||||||||
Cost of service and other revenue |
| 2,660 |
| 3,731 |
| 9,219 |
| 10,714 | ||||
Total cost of goods sold |
| 7,090 |
| 9,939 |
| 26,839 |
| 30,461 | ||||
Gross profit |
| 11,724 |
| 15,276 |
| 33,489 |
| 39,685 | ||||
Operating expenses: |
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
| 14,672 |
| 20,251 |
| 53,629 |
| 67,281 | ||||
Research and development |
| 4,474 |
| 6,314 |
| 15,316 |
| 19,614 | ||||
Change in fair value of contingent consideration |
| (763) |
| 262 |
| (496) |
| 1,019 | ||||
Impairment |
| — |
| — |
| 2,971 |
| — | ||||
Restructuring | 1,690 | — | 3,087 | — | ||||||||
Total operating expenses |
| 20,073 |
| 26,827 |
| 74,507 |
| 87,914 | ||||
Loss from operations |
| (8,349) |
| (11,551) |
| (41,018) |
| (48,229) | ||||
Other income (expense): |
|
|
|
|
|
|
|
| ||||
Interest expense |
| (2,625) |
| (2,239) |
| (7,843) |
| (6,468) | ||||
Interest income | 521 | 1,074 | 2,126 | 2,576 | ||||||||
Other expense, net |
| (36) |
| (185) |
| (277) |
| (338) | ||||
Loss before provision for income taxes |
| (10,489) |
| (12,901) |
| (47,012) |
| (52,459) | ||||
Provision for income taxes |
| (44) |
| (15) |
| (154) |
| (62) | ||||
Net loss | $ | (10,533) | $ | (12,916) | $ | (47,166) | $ | (52,521) | ||||
Comparison of the three months ended September 30, 2024 and 2023
Revenue
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Product revenue | $ | 12,298 | $ | 18,048 |
| $ | (5,750) |
| (32) | % | ||
Service and other revenue |
| 6,516 |
| 7,167 |
|
| (651) |
| (9) | % | ||
Total revenue | $ | 18,814 | $ | 25,215 |
| $ | (6,401) |
| (25) | % | ||
Product revenue decreased by $5.8 million, or 32%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease was primarily driven by a $6.3 million decrease in instrument revenue resulting from 35 new system placements during the three months ended September 30, 2024, compared to 69 new system placements for the three months ended September 30, 2023, offset by a $0.6 million increase in consumable revenue resulting from a larger installed base of 1,299 systems as of September 30, 2024, as compared to 1,132 systems as of September 30, 2023.
Service and other revenue decreased by $0.7 million, or 9%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease was primarily due to a decrease relating to lab
34
services revenue, partially offset by increases in revenue generated from companion diagnostic development, and other immaterial changes.
Cost of Goods Sold, Gross Profit and Gross Margin
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Cost of product revenue | $ | 4,430 | $ | 6,208 | $ | (1,778) |
| (29) | % | |||
Cost of service and other revenue |
| 2,660 |
| 3,731 |
| (1,071) |
| (29) | % | |||
Total cost of goods sold | $ | 7,090 | $ | 9,939 | $ | (2,849) |
| (29) | % | |||
Gross profit | $ | 11,724 | $ | 15,276 | $ | (3,552) |
| (23) | % | |||
Gross margin |
| 62 | % |
| 61 | % |
|
|
|
| ||
Cost of product revenue decreased by $1.8 million, or 29%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease in cost of product revenue was primarily due to a decrease in costs associated with decreased instrument sales during the third quarter of 2024, partially offset by an increase in costs associated with increased reagents sales. Cost of service and other revenue decreased by $1.1 million, or 29%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease in cost of service and other revenue was primarily driven by the workforce reductions that we executed in January and July of 2024.
Gross profit decreased by $3.6 million, or 23%, and gross margin increased by 1% for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The decrease in gross profit was primarily due to decreased instrument sales during the third quarter of 2024, offset by increased reagents sales during the third quarter of 2024. The increase in gross margin was primarily due to a higher mix of consumables driven by a higher installed base as well as decreased instrument sales in the current quarter.
Operating Expenses
Selling, General and Administrative
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Selling, general and administrative | $ | 14,672 | $ | 20,251 | $ | (5,579) |
| (28) | % | |||
Selling, general and administrative expense decreased by $5.6 million, or 28%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease was primarily due to a $3.7 million decrease in personnel-related expenses, primarily due to the workforce reductions in January and July of 2024, a $0.2 million decrease in professional fees, and other related fees such as legal, consulting, and IT, and a $0.1 million decrease in recruiting, training, conferences, and travel and expenses.
Research and development
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Research and development | $ | 4,474 | $ | 6,314 | $ | (1,840) |
| (29) | % | |||
Research and development expense decreased by $1.8 million, or 29% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease was primarily due to a $1.4 million decrease in personnel-related expenses, primarily due to the workforce reductions in January and July of 2024, a $0.1 million decrease in lab supply consumption, and other immaterial changes.
35
Change in fair value of contingent consideration
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Change in fair value of contingent consideration | $ | (763) | $ | 262 | $ | (1,025) |
| (391) | % | |||
Change in fair value of contingent consideration was a $0.8 million gain for the three months ended September 30, 2024, compared to a $0.3 loss for the three months ended September 30, 2023. The decrease of $1.0 million, or 391%, was due to current period remeasurement.
Restructuring
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Restructuring | $ | 1,690 | $ | — | $ | 1,690 |
| 100 | % | |||
Restructuring increased by $1.7 million, or 100% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due to the workforce reduction that we executed in July of 2024.
Interest expense
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Interest expense | $ | 2,625 | $ | 2,239 | $ | 386 |
| 17 | % | |||
Interest expense increased by $0.4 million, or 17% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to increased debt levels as of September 30, 2024 as compared to September 30, 2023, as well as an increase in interest rates.
Interest income
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Interest income | $ | 521 | $ | 1,074 | $ | (553) |
| (51) | % | |||
Interest income decreased by $0.6 million, or 51% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023 due to decreased levels of cash, cash equivalents, and marketable securities as of September 30, 2024 as compared to September 30, 2023.
Other expense, net
Three months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Other expense, net | $ | 36 | $ | 185 | $ | (149) |
| (81) | % | |||
Other expense, net decreased by $0.1 million, or 81%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2024.
36
Comparison of the nine months ended September 30, 2024 and 2023
Revenue
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Product revenue | $ | 40,364 | $ | 50,719 |
| $ | (10,355) |
| (20) | % | ||
Service and other revenue |
| 19,964 |
| 19,427 |
|
| 537 |
| 3 | % | ||
Total revenue | $ | 60,328 | $ | 70,146 |
| $ | (9,818) |
| (14) | % | ||
Product revenue decreased by $10.4 million, or 20%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease was primarily driven by a $14.0 million decrease in instrument revenue resulting from 116 new system placements during the nine months ended September 30, 2024, compared to 198 new system placements for the nine months ended September 30, 2023, offset by a $3.4 million increase in consumable revenue resulting from a larger installed base of 1,299 systems as of September 30, 2024, as compared to 1,132 systems as of September 30, 2023.
Service and other revenue increased by $0.5 million, or 3%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due increases in revenue generated from companion diagnostic development, offset by decreases relating to lab services revenue, and other immaterial changes.
Cost of Goods Sold, Gross Profit and Gross Margin
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Cost of product revenue | $ | 17,620 | $ | 19,747 | $ | (2,127) |
| (11) | % | |||
Cost of service and other revenue |
| 9,219 |
| 10,714 |
| (1,495) |
| (14) | % | |||
Total cost of goods sold | $ | 26,839 | $ | 30,461 | $ | (3,622) |
| (12) | % | |||
Gross profit | $ | 33,489 | $ | 39,685 | $ | (6,196) |
| (16) | % | |||
Gross margin |
| 56 | % |
| 57 | % |
|
|
|
| ||
Cost of product revenue decreased by $2.1 million, or 11%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in cost of product revenue was primarily driven by a decrease in costs associated with decreased instrument sales, offset by costs associated with increased reagents sales. Cost of service and other revenue decreased by $1.5 million, or 14%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in cost of service and other revenue was primarily driven by the workforce reductions that we executed in January and July of 2024.
Gross profit decreased by $6.2 million, or 16%, and gross margin decreased by 1% for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The decrease in gross profit was primarily due to a decrease in instrument sales, offset by increased reagents sales. The decrease in gross margin was primarily driven by a $2.0 million charge related to obsolete inventory associated with the Mantra 2 Quantitative Pathology Workstation and the Vectra 3 Automated Quantitative Pathology Imaging System, a legacy product line which was discontinued in the first quarter of 2024, offset by the $2.0 million charge in the second quarter of 2023 for expired inventory and inventory expected to expire, as well as other immaterial changes.
37
Operating Expenses
Selling, General and Administrative
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Selling, general and administrative | $ | 53,629 | $ | 67,281 | $ | (13,652) |
| (20) | % | |||
Selling, general and administrative expense decreased by $13.7 million, or 20%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease was primarily due to a $9.5 million decrease in personnel-related expenses, primarily due to the workforce reductions in June of 2023, January of 2024, and July of 2024, a $2.0 million decrease in professional fees, and other related fees such as legal, consulting, and IT, and a $1.0 million decrease in recruiting, training, conferences, and travel and expenses, offset by a $0.9 million charge to our allowance for credit losses, and other immaterial changes.
Research and development
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Research and development | $ | 15,316 | $ | 19,614 | $ | (4,298) |
| (22) | % | |||
Research and development expense decreased by $4.3 million, or 22% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease was primarily due to a $3.7 million decrease in personnel-related expenses, primarily due to the workforce reductions in June of 2023, January of 2024, and July of 2024, and other immaterial changes.
Change in fair value of contingent consideration
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Change in fair value of contingent consideration | $ | (496) | $ | 1,019 | $ | (1,515) |
| (149) | % | |||
Change in fair value of contingent consideration was a $0.5 million gain for the nine months ended September 30, 2024, compared to a $1.0 million loss for the nine months ended September 30, 2023. The decrease of $1.5 million, or 149%, was due to current period remeasurement.
Impairment
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Impairment | $ | 2,971 | $ | — | $ | 2,971 |
| 100 | % | |||
Impairment increased by $3.0 million, or 100% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due to impairment charges to our right-of-use assets and property and equipment associated with exiting our Menlo Park, California facilities in the first quarter of 2024.
38
Restructuring
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Restructuring | $ | 3,087 | $ | — | $ | 3,087 |
| 100 | % | |||
Restructuring increased by $3.1 million, or 100% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily associated with our workforce reductions that we executed in January and July of 2024.
Interest expense
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Interest expense | $ | 7,843 | $ | 6,468 | $ | 1,375 |
| 21 | % | |||
Interest expense increased by $1.4 million, or 21% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to increased debt levels as of September 30, 2024 as compared to September 30, 2023, as well as an increase in interest rates.
Interest income
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Interest income | $ | 2,126 | $ | 2,576 | $ | (450) |
| (17) | % | |||
Interest income decreased by $0.5 million, or 17% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 due to decreased levels of cash, cash equivalents, and marketable securities as of September 30, 2024 as compared to September 30, 2023.
Other expense, net
Nine months ended |
| |||||||||||
September 30, | Change |
| ||||||||||
($ in thousands, except percentages) |
| 2024 |
| 2023 |
| Amount |
| % | ||||
Other expense, net | $ | 277 | $ | 338 | $ | (61) |
| (18) | % | |||
Other expense, net decreased by $0.1 million, or 18% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Liquidity and Capital Resources
As of September 30, 2024, we had approximately $39.3 million in cash, cash equivalents, and marketable securities.
Since our inception, we have experienced losses and negative cash flows from operations, and we incurred a consolidated net loss of $47.2 million for the nine months ended September 30, 2024 and had an accumulated deficit of $277.2 million as of September 30, 2024. We have historically relied on equity financings and borrowings under our credit facility to fund our operations to date. We may in the future sell shares of our common stock, including pursuant
39
to the Equity Distribution Agreement to help fund our operations. We expect to continue to incur operating losses in the foreseeable future. However, we plan to focus on improving results of operations in an effort to achieve cash flow positivity. There can be no assurance that additional financings will be available to us or that we will become profitable.
Our Midcap Trust Term Loan is subject to certain financial covenants. Based on our current operating plan, we cannot be certain that we will be able to maintain compliance with these financial covenants for at least the next twelve months from the issuance of these financials. We intend to seek a waiver, refinance the outstanding borrowings or otherwise mitigate these concerns with Midcap Financial Trust or another lender. However, we can provide no assurance that a waiver will be granted, or that we will be able to refinance the amounts outstanding and in such an event, the lender may exercise any and all of its rights and remedies provided for under the Midcap Trust Term Loan.
As a result of these uncertainties, there is substantial doubt about our ability to continue as a going concern for the next twelve months following the date that these consolidated financial statements are issued.
Our future capital requirements will depend on many factors, including, but not limited to our ability to successfully commercialize and launch products, and to achieve a level of sales adequate to support our cost structure. If we are unable to execute on our business plan and adequately fund operations, or if the business plan requires a level of spending in excess of cash resources, we will have to seek additional equity or debt financing. If additional financings are required from outside sources, we may not be able to raise capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, results of operations and prospects could be materially adversely affected.
Sources of Liquidity
Since our inception, we have financed our operations primarily from the issuance and sale of our equity securities, borrowings under long-term debt agreements, and revenue from our commercial operations. In April 2021, we raised $138.6 million in net proceeds through the sale of common stock from our IPO, after deducting the underwriter discounts and commissions and offering expenses of $12.8 million. As described further in Note 10 to our consolidated financial statements in this Quarterly Report on Form 10-Q, in June 2023, we completed a follow-on public offering of our common stock pursuant to which we raised approximately $47.8 million in net proceeds, after deducting the underwriting discounts and commissions and offering expenses.
Midcap Trust Term Loan
In October 2020, we entered into the Midcap Trust Term Loan for a $37.5 million credit facility, consisting of a senior, secured term loan. We received $32.5 million in aggregate proceeds as a result of the debt financing. On March 21, 2022, we entered into Amendment No. 1 to the Midcap Trust Term Loan, which amended certain provisions to permit certain additional debt and capital leases.
On June 1, 2022, we entered into Amendment No. 2, which permitted the draw of a second and third tranche of $10.0 million each, which were drawn on June 1, 2022, and September 30, 2022, respectively. Amendment No. 2 also delayed the amortization start dates for the outstanding loan amounts from November 1, 2023 until April 1, 2025, at which point we would be required to repay the principal amounts in seven equal monthly installments until the maturity date. Finally, Amendment No. 2 amended the interest rate payable on the term loan to apply an interest rate equal to the SOFR rate (with a floor of 1.61448%) plus 6.35%.
On November 7, 2022, we entered into Amendment No. 3 to the Midcap Trust Term Loan, which permitted the draw of two additional tranches, each totaling $11,250, which were drawn on November 7, 2022, and December 22, 2023, respectively. Amendment No. 3 also delayed the amortization start dates for the outstanding loan amounts from April 1, 2025 until December 1, 2025 (subject to further extension upon certain conditions), at which point we would be required to repay the principal amounts in equal monthly installments until the new maturity date of November 1, 2027. In addition, Amendment No. 3 amended the interest rate payable on the term loan to apply an interest rate equal to the SOFR rate (with a floor of 2.50%) plus 6.80%, and reset the call protection to begin as of November 7, 2025. Finally, Amendment No. 3 provided for a commitment fee of $74 that was paid on November 7, 2022 on the new tranche
40
amounts and an exit fee of 4.75%. Substantially all other terms and conditions, and covenants of the credit agreement remained unchanged.
In July 2024, we entered into Amendment No. 4 to the Midcap Trust Term Loan, which amended certain affirmative financial covenants.
In November 2024, we entered into Amendment No. 5 to the Midcap Trust Term Loan, effective as of September 30, 2024, which amended certain affirmative financial covenants. Amendment No. 5 also extends the interest only period from December 1, 2025 until March 1, 2026 (subject to further extension upon certain conditions), at which point we must repay the principal amounts in equal monthly installments until the maturity date of November 1, 2027. Finally, Amendment No. 5 increases the exit fee from 4.75% to 6.25%.
The Midcap Trust Term Loan is collateralized by substantially all of our assets. The agreement contains customary negative covenants that limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets and merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity. The agreement also contains customary affirmative covenants, including requirements to, among other things, deliver audited financial statements. If we default under the Midcap Trust Term Loan and if the default is not cured or waived, the lender could cause any amounts outstanding to be payable immediately. Under certain circumstances, the lender could also exercise its rights with respect to the collateral securing such loans. Moreover, any such default would limit our ability to obtain additional financing, which may have an adverse effect on our cash flow and liquidity.
We were in compliance with all covenants under the Midcap Trust Term Loan, as amended through Amendment No. 5, as of September 30, 2024.
At-the-Market Offering
On November 7, 2022, we entered into the Equity Distribution Agreement with Piper Sandler with respect to an ATM offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million through Piper Sandler as our sales agent. As of September 30, 2024, we have not sold any shares of common stock under the ATM program.
Cash flows
The following table summarizes our cash flows for the periods presented:
Nine months ended | ||||||
September 30, | ||||||
($ in thousands) |
| 2024 |
| 2023 | ||
Net cash (used in) provided by: |
|
|
|
| ||
Operating activities | $ | (41,121) | $ | (45,315) | ||
Investing activities |
| (26,744) |
| 3,941 | ||
Financing activities |
| (2,719) |
| 45,767 | ||
Net (decrease) increase in cash, cash equivalents, and restricted cash | $ | (70,584) | $ | 4,393 | ||
Operating activities
Net cash used in operating activities decreased by $4.2 million to $41.1 million in the nine months ended September 30, 2024 compared to $45.3 million in the nine months ended September 30, 2023.
Net cash used in operating activities during the nine months ended September 30, 2024 consisted of a net loss of $47.2 million and a change in our net operating assets and liabilities of $14.4 million, offset by non-cash charges of $20.4 million. The change in our net operating assets and liabilities was primarily due to increased inventory levels of $10.4 million, decreases in accounts payable, accrued expenses and other liabilities of $5.8 million, decreases in
41
operating lease liabilities of $1.7 million, and decreases in deferred revenue of $0.6 million, offset by decreases in accounts receivable of $3.3 million, and a $0.8 million decrease in prepaid expenses and other assets. Non-cash charges primarily consisted of $7.2 million of stock-based compensation expense, $5.8 million of depreciation and amortization, a $3.1 million provision for excess and obsolete inventories, $3.0 million of impairment expense, decreases in operating lease right of use assets of $1.6 million, $0.9 million in credit losses for accounts receivable, and $0.6 million of non-cash interest expense, offset by $1.4 million in accretion of marketable securities and a $0.5 million change in fair value of contingent consideration.
Net cash used in operating activities during the nine months ended September 30, 2023 consisted of a net loss of $52.5 million and a change in our net operating assets and liabilities of $13.4 million, offset by non-cash charges of $20.6 million. The change in our net operating assets and liabilities was due to increases in accounts receivable of $6.4 million, increased inventory levels of $7.0 million, decreases in operating lease liabilities of $1.7 million, and decreases in accounts payable, accrued expenses and other liabilities of $2.1 million, offset by decreases in prepaid expenses and other assets of $2.5 million, and increases in deferred revenue of $1.2 million. Non-cash charges primarily consisted of $7.9 million of stock-based compensation expense, $6.8 million of depreciation and amortization, a $2.6 million adjustment for excess and obsolete inventories, decreases in operating lease right of use assets of $1.8 million, a $1.0 million change in fair value of contingent consideration, and $0.5 million of non-cash interest expense.
Investing activities
Net cash used in investing activities was $26.7 million for the nine months ended September 30, 2024 compared to net cash provided by investing activities of $3.9 million during the nine months ended September 30, 2023.
Net cash used in investing activities for the nine months ended September 30, 2024 was driven by purchases of marketable securities of $87.3 million and purchases of property and equipment of $1.4 million, offset by $53.5 million in maturities of marketable securities and $8.5 million in sales of marketable securities.
Net cash provided by investing activities for the nine months ended September 30, 2023 was driven by maturities of marketable securities of $7.0 million, offset by purchases of property and equipment of $3.1 million.
Financing activities
Net cash used in financing activities was $2.7 million for the nine months ended September 30, 2024 compared to net cash provided by financing activities of $45.8 million for the nine months ended September 30, 2023.
Net cash used in financing activities for the nine months ended September 30, 2024 was primarily driven by $1.9 million in payments of contingent consideration, $0.5 million in principal payments on financing leases, $0.2 million in payments of deferred offering costs, and $0.2 million in settlement of restricted stock units for tax withholding obligations.
Net cash provided by financing activities for the nine months ended September 30, 2023 was primarily driven by $48.0 million in net proceeds received from our Offering, after deducting the underwriting discounts and commissions and offering expenses paid by the Company, and $0.3 million in proceeds from stock option exercises, offset by $1.7 million in payments of contingent consideration, $0.5 million in principal payments on financing leases, $0.2 million in payments of deferred offering costs, and $0.1 million in settlement of restricted stock units for tax withholding obligations.
Critical accounting policies and estimates
We have prepared our consolidated financial statements in accordance with GAAP. Our preparation of these consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and
42
liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.
There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled “Management’s Discussion and Analysis of Financial Condition and Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 5, 2024.
Recent accounting pronouncements
For information on recently issued accounting pronouncements, see Note 2 to our consolidated financial statements in this Quarterly Report on Form 10-Q.
JOBS Act accounting election
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to avail ourselves of this extended transition period, and, as a result, we will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
Smaller reporting company status
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700 million as of the last trading day of our second quarter and our annual revenue is less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million as of the last trading day of our second quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last trading day of our second quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. For example, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2024. There was not any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this report, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I, Item 1A under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 5, 2024. The risk factors may be important to understanding other statements in this report and should be read in conjunction with the unaudited financial statements and related notes in this report. The occurrence of any single risk or any combination of risks could materially and adversely affect our business, operations, product pipeline, operating results, financial condition or liquidity, and consequently, the value of our securities. Further, additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business, financial condition, operating results and prospects.
Other than as set forth below, there have been no material changes to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 5, 2024.
We have limited capital resources and will likely need additional funding before we are able to achieve profitability which raise substantial doubt regarding our ability to continue as a going concern. If we do not continue as a going concern, investors could lose their entire investment.
Our recurring operating losses, in addition to our accumulated deficit, has raised substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our becoming profitable in the future or to obtain the necessary capital to meet our obligations and repay our liabilities when they become due. If we are unable to execute on our business plan and adequately fund operations, or if the business plan requires a level of spending in excess of cash resources, we will have to seek additional equity or debt financing. If additional financings are required from outside sources, we may not be able to raise capital on terms acceptable to us or at all. Our determination of substantial doubt as going concern could materially limit our ability to raise additional funds through the issuance of equity securities or otherwise. There can be no assurance that we will ever become profitable or continue as a going concern.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the third quarter of 2024, no directors or officers
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Item 6. Exhibits
Incorporated by Reference | ||||||||||||
Exhibit |
| Exhibit Title |
| Form |
| File No. |
| Exhibit |
| Filing Date |
| Filed |
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | X | ||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents | X | ||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X | ||||||||||
*This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
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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.
Akoya Biosciences, Inc. | ||
|---|---|---|
Date: November 14, 2024 | By: | /s/ Brian McKelligon |
Brian McKelligon | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: November 14, 2024 | By: | /s/ Johnny Ek |
Johnny Ek | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
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