x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 27-2053069 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
5964 La Place Court Carlsbad, California | 92008-8829 |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer | ¨ | Accelerated filer | x | |
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Page | ||
PART I. FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. |
September 30, 2017 | December 31, 2016 | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 27,161 | $ | 15,959 | |||
Marketable securities | 59,756 | 25,607 | |||||
Accounts receivable, net of allowances of $2,792 and $2,740, respectively | 7,800 | 9,048 | |||||
Inventories | 7,109 | 6,633 | |||||
Prepaid expenses and other current assets | 1,971 | 1,202 | |||||
Total current assets | 103,797 | 58,449 | |||||
Property and equipment, net | 21,586 | 18,268 | |||||
Intangible assets, net | 2,772 | 2,670 | |||||
Restricted cash | 758 | 758 | |||||
Other long-term assets | 194 | 179 | |||||
Total assets | $ | 129,107 | $ | 80,324 | |||
Current liabilities | |||||||
Accounts payable | $ | 7,242 | $ | 8,703 | |||
Accrued compensation | 5,227 | 5,650 | |||||
Loan payable | 19,548 | 7,935 | |||||
Other current liabilities | 2,923 | 4,133 | |||||
Total current liabilities | 34,940 | 26,421 | |||||
Long-term liabilities | |||||||
Deferred rent | 3,225 | 3,652 | |||||
Long-term debt | 9,918 | 11,880 | |||||
Other non-current liabilities | 387 | 220 | |||||
Total liabilities | 48,470 | 42,173 | |||||
Stockholders’ equity | |||||||
Preferred stock, $0.0001 par value; 5,000 authorized, none issued | — | — | |||||
Common stock, $0.0001 par value; 100,000 authorized; 54,792 and 46,554 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 5 | 4 | |||||
Additional paid-in capital | 483,242 | 393,322 | |||||
Accumulated deficit | (402,584) | (355,270) | |||||
Accumulated other comprehensive income | (26) | 95 | |||||
Total stockholders’ equity | 80,637 | 38,151 | |||||
Total liabilities and stockholders’ equity | $ | 129,107 | $ | 80,324 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | |||||||||||||||
Product revenue | $ | 11,552 | $ | 10,727 | $ | 36,313 | $ | 34,111 | |||||||
License and other revenue | 51 | 86 | 184 | 278 | |||||||||||
Total revenue | 11,603 | 10,813 | 36,497 | 34,389 | |||||||||||
Cost of revenue | 7,400 | 4,362 | 21,227 | 13,457 | |||||||||||
Gross profit | 4,203 | 6,451 | 15,270 | 20,932 | |||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 5,121 | 3,223 | 14,974 | 10,232 | |||||||||||
General and administrative | 3,565 | 3,227 | 11,553 | 10,522 | |||||||||||
Research and development | 10,248 | 11,628 | 34,297 | 37,100 | |||||||||||
Total operating expenses | 18,934 | 18,078 | 60,824 | 57,854 | |||||||||||
Loss from operations | (14,731 | ) | (11,627 | ) | (45,554 | ) | (36,922 | ) | |||||||
Other income (expense) | |||||||||||||||
Interest income | 247 | 43 | 353 | 98 | |||||||||||
Interest expense | (1,009 | ) | (476 | ) | (2,270 | ) | (1,061 | ) | |||||||
Other income | 76 | 16 | 227 | 7 | |||||||||||
Total other income (expense) | (686 | ) | (417 | ) | (1,690 | ) | (956 | ) | |||||||
Loss before provision for income taxes | (15,417 | ) | (12,044 | ) | (47,244 | ) | (37,878 | ) | |||||||
Income tax expense (benefit) | (9 | ) | 14 | 68 | 45 | ||||||||||
Net loss | $ | (15,408 | ) | $ | (12,058 | ) | $ | (47,312 | ) | $ | (37,923 | ) | |||
Net loss per share, basic and diluted | $ | (0.28 | ) | $ | (0.27 | ) | $ | (0.95 | ) | $ | (0.88 | ) | |||
Weighted average number of shares outstanding, basic and diluted | 54,726 | 44,377 | 49,908 | 43,308 | |||||||||||
Other comprehensive loss | |||||||||||||||
Net loss | $ | (15,408 | ) | $ | (12,058 | ) | $ | (47,312 | ) | $ | (37,923 | ) | |||
Foreign currency translation adjustments | 51 | (4 | ) | 145 | 9 | ||||||||||
Net unrealized gains (losses) on marketable securities, net of tax | (9 | ) | 20 | (24 | ) | (2 | ) | ||||||||
Comprehensive loss | $ | (15,366 | ) | $ | (12,042 | ) | $ | (47,191 | ) | $ | (37,916 | ) |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Operating activities | |||||||
Net loss | $ | (47,312 | ) | $ | (37,923 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 3,811 | 2,739 | |||||
Amortization of premiums on investments | 4 | 61 | |||||
Amortization of deferred debt issuance costs | 891 | 277 | |||||
Gain on sale of investment in preferred stock | — | (9 | ) | ||||
Stock-based compensation | 8,386 | 6,788 | |||||
Provision for bad debt | 51 | 13 | |||||
Non-cash inventory adjustments | 911 | 120 | |||||
Other non-cash adjustments | (190 | ) | 20 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 1,272 | 1,719 | |||||
Inventories | (4,813 | ) | (1,048 | ) | |||
Prepaid expenses and other assets | (767 | ) | (596 | ) | |||
Other long-term assets | (16 | ) | — | ||||
Accounts payable | (1,468 | ) | 916 | ||||
Accrued compensation | (452 | ) | 1,731 | ||||
Other liabilities | (913 | ) | 33 | ||||
Net cash used in operating activities | (40,605 | ) | (25,159 | ) | |||
Investing activities | |||||||
Payments for intellectual property licenses | (500 | ) | (800 | ) | |||
Purchases of property and equipment | (3,816 | ) | (5,105 | ) | |||
Purchases of marketable securities | (56,525 | ) | (32,895 | ) | |||
Proceeds from sales of marketable securities | 13,896 | 9 | |||||
Maturities of marketable securities | 8,500 | 8,050 | |||||
Net cash used in investing activities | (38,445 | ) | (30,741 | ) | |||
Financing activities | |||||||
Proceeds from issuance of common stock | 86,835 | 30,448 | |||||
Costs incurred in conjunction with stock issuance | (5,469 | ) | (1,091 | ) | |||
Principal repayment of borrowings | (6,123 | ) | (28 | ) | |||
Proceeds from borrowings | 15,000 | 10,000 | |||||
Costs associated with debt issuance | (187 | ) | (30 | ) | |||
Proceeds from stock option exercises | 213 | 507 | |||||
Net cash provided by financing activities | 90,269 | 39,806 | |||||
Effect of exchange rate changes on cash | (17 | ) | 2 | ||||
Net increase (decrease) in cash and cash equivalents | 11,202 | (16,092 | ) | ||||
Cash and cash equivalents at beginning of period | 15,959 | 35,385 | |||||
Cash and cash equivalents at end of period | $ | 27,161 | $ | 19,293 | |||
Non-cash investing and financing activities | |||||||
Transfer of instruments from (to) property and equipment to (from) inventory | $ | (3,438 | ) | $ | 234 | ||
Property and equipment costs included in accounts payable | $ | 330 | $ | 1,040 | |||
Intellectual property acquisitions included in other current liabilities | $ | — | $ | 700 | |||
Supplemental cash flow disclosures | |||||||
Cash paid for income taxes, net | $ | 58 | $ | 38 | |||
Cash received for interest | $ | 367 | $ | 58 | |||
Cash paid for interest | $ | 1,143 | $ | 761 |
Machinery and laboratory equipment | 3 - 5 years |
Instruments | 4 - 5 years |
Office equipment | 3 - 7 years |
Leasehold improvements | over the shorter of the remaining life of the lease or the useful economic life of the asset |
Number of Shares | Weighted Average Exercise Price | |||||
Outstanding at December 31, 2016 | 2,569,550 | $ | 9.53 | |||
Granted | — | $ | — | |||
Exercised | (28,966 | ) | $ | 7.36 | ||
Cancelled | (14,427 | ) | $ | 10.04 | ||
Outstanding at September 30, 2017 | 2,526,157 | $ | 9.56 | |||
Vested and expected to vest at September 30, 2017 | 2,500,450 | $ | 9.52 | |||
Exercisable at September 30, 2017 | 2,167,970 | $ | 9.18 |
Restricted Stock Awards | Restricted Stock Units | ||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at December 31, 2016 | 156 | $ | 11.19 | 1,766,123 | $ | 7.18 | |||||||
Granted | — | $ | — | 1,164,250 | $ | 10.90 | |||||||
Vested | (156 | ) | $ | 11.19 | (614,457 | ) | $ | 6.80 | |||||
Cancelled | — | $ | — | (165,501 | ) | $ | 8.99 | ||||||
Unvested at September 30, 2017 | — | $ | — | 2,150,415 | $ | 9.16 |
Market-Based Stock Units | ||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Unvested at December 31, 2016 | 150,871 | $ | 11.10 | |||
Units granted | 166,434 | $ | 13.82 | |||
Vested | — | $ | — | |||
Cancelled | (12,762 | ) | $ | 11.90 | ||
Unvested at September 30, 2017 | 304,543 | $ | 12.55 |
Nine Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Expected volatility | 54 | % | 49 | % | |||
Risk-free interest rate | 1.50 | % | 0.90 | % | |||
Expected dividend | — | % | — | % | |||
Weighted average fair value | $ | 13.82 | $ | 4.94 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Options outstanding to purchase common stock | 2,526 | 2,611 | 2,526 | 2,611 | |||
Other unvested equity awards | 2,466 | 2,057 | 2,466 | 2,057 | |||
Total | 4,992 | 4,668 | 4,992 | 4,668 |
September 30, 2017 | December 31, 2016 | ||||||
Raw materials | $ | 2,795 | $ | 2,171 | |||
Work-in-process | 2,709 | 1,488 | |||||
Finished goods | 1,605 | 2,974 | |||||
Total inventories | $ | 7,109 | $ | 6,633 |
September 30, 2017 | December 31, 2016 | ||||||
Property and equipment — at cost: | |||||||
Machinery and laboratory equipment | $ | 12,607 | $ | 10,145 | |||
Instruments | 13,203 | 9,869 | |||||
Office equipment | 1,970 | 1,714 | |||||
Leasehold improvements | 10,497 | 10,100 | |||||
Total property and equipment — at cost | 38,277 | 31,828 | |||||
Less: accumulated depreciation | (16,691 | ) | (13,560 | ) | |||
Property and equipment, net | $ | 21,586 | $ | 18,268 |
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Licensed intellectual property | $ | 4,750 | $ | (1,978 | ) | $ | 2,772 | $ | 4,250 | $ | (1,580 | ) | $ | 2,670 |
Fiscal Years Ending | Future Amortization Expense | |||
Remaining in 2017 | $ | 148 | ||
2018 | 593 | |||
2019 | 593 | |||
2020 | 593 | |||
2021 | 593 | |||
Thereafter | 252 | |||
Total | $ | 2,772 |
September 30, 2017 | December 31, 2016 | |||||||
Term Loans | ||||||||
Term Loan A - 6.9% principal | $ | 10,000 | $ | 10,000 | ||||
Term Loan B - 6.9% principal | 10,000 | 10,000 | ||||||
Term Loan C - 7.4% principal | 15,000 | — | ||||||
Final fee obligation | 1,537 | 400 | ||||||
Repayment of principal | (6,060 | ) | — | |||||
Unamortized issuance costs | (1,011 | ) | (585 | ) | ||||
Total debt, net | 29,466 | 19,815 | ||||||
Current portion of long-term debt | (19,548 | ) | (7,935 | ) | ||||
Long-term debt | $ | 9,918 | $ | 11,880 |
Fiscal Years Ending | Future Minimum Lease Payments | |||
Remaining in 2017 | $ | 447 | ||
2018 | 1,868 | |||
2019 | 1,989 | |||
2020 | 1,997 | |||
2021 | 1,372 | |||
Thereafter | 1,366 | |||
Total | $ | 9,039 |
September 30, 2017 | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Cash equivalents | |||||||||||||||
Money market funds | $ | 9,129 | $ | — | $ | — | $ | 9,129 | |||||||
Corporate notes and bonds | — | 4,000 | — | 4,000 | |||||||||||
Marketable securities | |||||||||||||||
Corporate notes and bonds | — | 41,787 | — | 41,787 | |||||||||||
U.S. government and agency securities | — | 13,984 | — | 13,984 | |||||||||||
Commercial paper | — | 3,985 | — | 3,985 | |||||||||||
Total | $ | 9,129 | $ | 63,756 | $ | — | $ | 72,885 | |||||||
December 31, 2016 | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Cash equivalents | |||||||||||||||
Money market funds | $ | 556 | $ | — | $ | — | $ | 556 | |||||||
Marketable securities | |||||||||||||||
Corporate notes and bonds | — | 18,821 | — | 18,821 | |||||||||||
U.S. government and agency securities | — | 3,503 | — | 3,503 | |||||||||||
Commercial paper | — | 3,283 | — | 3,283 | |||||||||||
Total | $ | 556 | $ | 25,607 | $ | — | $ | 26,163 |
September 30, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Corporate notes and bonds | $ | 41,793 | $ | 1 | $ | (7 | ) | $ | 41,787 | |||||||
U.S. government and agency securities | 13,982 | 2 | — | 13,984 | ||||||||||||
Commercial paper | 3,985 | — | — | 3,985 | ||||||||||||
Total | $ | 59,760 | $ | 3 | $ | (7 | ) | $ | 59,756 | |||||||
December 31, 2016 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Corporate notes and bonds | $ | 18,846 | $ | — | $ | (25 | ) | $ | 18,821 | |||||||
U.S. government and agency securities | 3,506 | — | (3 | ) | 3,503 | |||||||||||
Commercial paper | 3,283 | — | — | 3,283 | ||||||||||||
Total | $ | 25,635 | $ | — | $ | (28 | ) | $ | 25,607 |
Amortized Cost | Estimated Fair Value | ||||||
Due in one year or less | $ | 59,760 | $ | 59,756 | |||
Due after one year through two years | — | — | |||||
Total | $ | 59,760 | $ | 59,756 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Revenue | $ | 11,603 | $ | 10,813 | $ | 790 | 7 | % | $ | 36,497 | $ | 34,389 | $ | 2,108 | 6 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Cost of Revenue | $ | 7,400 | $ | 4,362 | $ | 3,038 | 70 | % | $ | 21,227 | $ | 13,457 | $ | 7,770 | 58 | % | |||||||||||||
Gross Profit | $ | 4,203 | $ | 6,451 | $ | (2,248 | ) | (35 | )% | $ | 15,270 | $ | 20,932 | $ | (5,662 | ) | (27 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Sales and Marketing | $ | 5,121 | $ | 3,223 | $ | 1,898 | 59 | % | $ | 14,974 | $ | 10,232 | $ | 4,742 | 46 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
General and Administrative | $ | 3,565 | $ | 3,227 | $ | 338 | 10 | % | $ | 11,553 | $ | 10,522 | $ | 1,031 | 10 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Research and Development | $ | 10,248 | $ | 11,628 | $ | (1,380 | ) | (12 | )% | $ | 34,297 | $ | 37,100 | $ | (2,803 | ) | (8 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Other Income (Expense) | $ | (686 | ) | $ | (417 | ) | $ | (269 | ) | 65 | % | $ | (1,690 | ) | $ | (956 | ) | $ | (734 | ) | 77 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||
Income tax expense (benefit) | $ | (9 | ) | $ | 14 | $ | (23 | ) | (164 | )% | $ | 68 | $ | 45 | $ | 23 | 51 | % |
September 30, | |||||||
Nine months ended (in thousands): | 2017 | 2016 | |||||
Net cash used in operating activities | $ | (40,605 | ) | $ | (25,159 | ) | |
Net cash used in investing activities | (38,445 | ) | (30,741 | ) | |||
Net cash provided by financing activities | 90,269 | 39,806 | |||||
Effect of exchange rate on cash | (17 | ) | 2 | ||||
Net increase (decrease) in cash and cash equivalents | $ | 11,202 | $ | (16,092 | ) |
• | our ability to manage the risks associated with scaling our manufacturing operations; |
• | our and our supplier's ability to consistently manufacture highly complex products that deliver valid and accurate results at the level required for large-scale market adoption; |
• | product reliability; |
• | overall market acceptance; |
• | our ability to offer a broad and clinically relevant test menu at a competitive price; |
• | the effective management of purchase and supply commitments and inventory levels in line with anticipated product demand; |
• | the availability of products in appropriate quantities and at expected costs to meet anticipated demand and drive market adoption; and |
• | increased repair or re-engineering costs due to product returns or warranty claims. |
• | the relative convenience, ease of use, accuracy, reliability, scalability, cost, and time-to-result of our diagnostic products over competing products; |
• | the introduction of new technologies and competing products that may make our technologies and products a less attractive solution for our target customers; |
• | the breadth and relevance of our menu of available diagnostic tests relative to our competitors; |
• | our success in training our customers in the proper use of our products; |
• | the acceptance in the medical community and key opinion leaders of our molecular diagnostic technology and products; |
• | the extent and success of our marketing and sales efforts; and |
• | general economic conditions. |
• | companies developing and marketing multiplex molecular diagnostics systems, including: Luminex; Nanosphere, Inc. (which was acquired by Luminex in June 2016); bioMerieux (which acquired BioFire Diagnostics, Inc.); Abbott Molecular Diagnostics; Hologic, Inc.; Seegene and Cepheid (which was acquired by Danaher Corporation); |
• | large hospital-based laboratories and reference laboratories who provide large-scale testing using their own proprietary testing methods, including Quest Diagnostics Incorporated and Laboratory Corporation of America; and |
• | companies that manufacture laboratory-based tests and analyzers, including: Cepheid; Siemens; Hologic, Inc.; Qiagen NV; bioMérieux; Roche Diagnostics; and Abbott Molecular Diagnostics. |
• | our ability to attract and retain the skilled support team, marketing staff and sales force necessary to commercialize and gain market acceptance for our technology and our products; |
• | the ability of our sales and marketing team to identify and penetrate the potential customer base, including hospitals and national and regional reference laboratories; and |
• | the difficulty of establishing brand recognition and loyalty for our products. |
• | reliance on third parties for regulatory compliance and quality assurance; |
• | possible breaches of manufacturing agreements by the third parties because of factors beyond our control; |
• | possible regulatory violations or manufacturing problems experienced by our suppliers; |
• | possible termination or non-renewal of agreements by third parties, based on their own business priorities, at times that are costly or inconvenient for us; |
• | the potential obsolescence and/or inability of our suppliers to obtain required components; |
• | the potential delays and expenses of seeking alternate sources of supply or manufacturing services; |
• | the inability to qualify alternate sources without impacting performance claims of our products; |
• | reduced control over pricing, quality and timely delivery due to the difficulties in switching to alternate suppliers or assemblers; |
• | the potential for financial hardship or other detrimental circumstances at key suppliers that may impact our ability to source key materials or services required for the manufacturing of our products; and |
• | increases in prices of raw materials and key components. |
• | the time and resources required to develop, and conduct clinical studies and obtain regulatory clearances for, our diagnostic tests; |
• | the expenses we incur for research and development required to maintain and improve our technology, including developing our ePlex test menu; |
• | the costs of preparing, filing, prosecuting, defending and enforcing patent claims and other patent related costs, including litigation costs and the results of such litigation; |
• | the expenses we incur in connection with commercialization activities, including product marketing, sales, and distribution expenses; |
• | the expenses we incur in licensing technologies from third parties to expand the menu of diagnostics tests we plan to offer; |
• | our sales strategy and whether the revenues from sales of our test cartridges or systems will be sufficient to offset our expenses; |
• | the costs to attract and retain personnel with the skills required for effective operations; and |
• | the costs associated with being a public company. |
• | administrative or judicially imposed sanctions; |
• | injunctions or the imposition of civil penalties; |
• | recall or seizure of our products; |
• | total or partial suspension of production or distribution; |
• | withdrawal or suspension of marketing clearances or approvals; |
• | clinical holds; |
• | warning letters; |
• | refusal to permit the import or export of our products; and |
• | criminal prosecution. |
• | incur additional indebtedness or issue certain preferred shares; |
• | pay dividends on, repurchase or make distributions in respect of, our capital stock or make other restricted payments; |
• | make certain investments or acquisitions; |
• | sell certain assets; |
• | create liens; or |
• | enter into certain transactions with our affiliates. |
• | allow the authorized number of directors to be changed only by resolution of our Board of Directors; |
• | provide that our stockholders may remove our directors only for cause; |
• | establish a classified board of directors, such that not all members of the Board of Directors may be elected at one time; |
• | authorize our Board of Directors to issue without stockholder approval up to 100,000,000 shares of common stock, that, if issued, would dilute our stock ownership and could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board of Directors; |
• | authorize our Board of Directors to issue without stockholder approval up to 5,000,000 shares of preferred stock, the rights of which will be determined at the discretion of the Board of Directors that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board of Directors; |
• | require that stockholder actions must be effected at a duly called stockholder meeting or by unanimous written consent; |
• | establish advance notice requirements for stockholder nominations to our Board of Directors or for stockholder proposals that can be acted on at stockholder meetings; |
• | limit who may call stockholder meetings; and |
• | require the approval of the holders of 80% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our certificate of incorporation and bylaws. |
Exhibit | Description |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
GENMARK DIAGNOSTICS, INC. | |||
Date: | 11/2/2017 | By: | /s/ HANY MASSARANY |
Hany Massarany | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: | 11/2/2017 | By: | /s/ SCOTT MENDEL |
Scott Mendel | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) | |||
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 of GenMark Diagnostics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | 11/2/2017 | By: | /s/ Hany Massarany |
Hany Massarany | |||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 of GenMark Diagnostics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | 11/2/2017 | By: | /s/ Scott Mendel |
Scott Mendel | |||
Chief Financial Officer |
(i) | the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(ii) | the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | 11/2/2017 | By: | /s/ Hany Massarany |
Hany Massarany | |||
President and Chief Executive Officer | |||
Date: | 11/2/2017 | By: | /s/ Scott Mendel |
Scott Mendel | |||
Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 27, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | GenMark Diagnostics, Inc. | |
Entity Central Index Key | 0001487371 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 54,795,061 |
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 2,792 | $ 2,740 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 54,665,000 | 46,554,000 |
Common stock, outstanding | 54,665,000 | 46,554,000 |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Revenue | ||||
Product revenue | $ 11,552,000 | $ 10,727,000 | $ 36,313,000 | $ 34,111,000 |
License and other revenue | 51,000 | 86,000 | 184,000 | 278,000 |
Total revenue | 11,603,000 | 10,813,000 | 36,497,000 | 34,389,000 |
Cost of revenue | 7,400,000 | 4,362,000 | 21,227,000 | 13,457,000 |
Gross profit | 4,203,000 | 6,451,000 | 15,270,000 | 20,932,000 |
Operating expenses | ||||
Sales and marketing | 5,121,000 | 3,223,000 | 14,974,000 | 10,232,000 |
General and administrative | 3,565,000 | 3,227,000 | 11,553,000 | 10,522,000 |
Research and development | 10,248,000 | 11,628,000 | 34,297,000 | 37,100,000 |
Total operating expenses | 18,934,000 | 18,078,000 | 60,824,000 | 57,854,000 |
Loss from operations | (14,731,000) | (11,627,000) | (45,554,000) | (36,922,000) |
Other income (expense) | ||||
Interest income | 247,000 | 43,000 | 353,000 | 98,000 |
Interest expense | 1,009,000 | 476,000 | 2,270,000 | 1,061,000 |
Other income | 76,000 | 16,000 | 227,000 | 7,000 |
Total other income (expense) | (686,000) | (417,000) | (1,690,000) | (956,000) |
Loss before provision for income taxes | (15,417,000) | (12,044,000) | (47,244,000) | (37,878,000) |
Income tax expense (benefit) | (9,000) | 14,000 | 68,000 | 45,000 |
Net loss | $ (15,408,000) | $ (12,058,000) | $ (47,312,000) | $ (37,923,000) |
Net loss per share, basic and diluted | $ (0.28) | $ (0.27) | $ (0.95) | $ (0.88) |
Weighted average number of shares outstanding, basic and diluted | 54,726,000 | 44,377,000 | 49,908,000 | 43,308,000 |
Other comprehensive loss | ||||
Net loss | $ 15,408,000 | $ 12,058,000 | $ 47,312,000 | $ 37,923,000 |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax | 51,000 | (4,000) | 145,000 | 9,000 |
Net unrealized gains (losses) on marketable securities, net of tax | (9,000) | 20,000 | (24,000) | (2,000) |
Comprehensive loss | $ (15,366,000) | $ (12,042,000) | $ (47,191,000) | $ (37,916,000) |
Organization and Basis of Presentation |
9 Months Ended | ||||||||||||
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Sep. 30, 2017 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Organization and Basis of Presentation | Organization and Basis of Presentation GenMark Diagnostics, Inc., the Company or GenMark, was formed by Osmetech plc as a Delaware corporation in February 2010, and had no operations prior to its initial public offering, which was completed in June 2010. The Company is a leading provider of multiplex molecular solutions designed to enhance patient care, improve key quality metrics, and reduce the total cost-of-care. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, and applicable regulations of the U.S. Securities and Exchange Commission, or the SEC, and should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on February 28, 2017. These unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for the full year or any future period. The Company has experienced net losses and negative cash flows from operating activities since its inception and had an accumulated deficit of $402,584,000 as of September 30, 2017. The Company's ability to transition to profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure through expanding its product offerings and consequently increasing its product revenues. As of September 30, 2017, the Company had available cash, cash equivalents, and marketable securities of $86,917,000 and working capital of $68,857,000 available to fund future operations. The Company has prepared cash flow forecasts which indicate, based on the Company's current cash resources available and working capital, that the Company will have sufficient resources to fund its operations for at least one year after the date the financial statements are issued. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes thereto. The Company’s significant estimates included in the preparation of the financial statements are related to accounts receivable, inventories, property and equipment, intangible assets, employee-related compensation accruals, warranty liabilities, tax valuation accounts and stock-based compensation. Actual results could differ from those estimates. Segment Information The Company currently operates in one reportable business segment, which encompasses the development, manufacturing, sales and support of instruments and molecular tests based on its proprietary eSensor® detection technology. Substantially all of the Company’s operations and assets are in the United States of America. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that the Company adopts as of the specified effective date. In November 2016, the FASB issued Accounting Standards Update, or ASU, 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents to be included in the cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-08 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method for each period presented. Early adoption is permitted. The Company will adopt ASU 2016-18 in the first quarter of 2018 and anticipates the impact of adoption will result in a beginning and ending cash balance increase of approximately $758,000. The Company does not anticipate a material impact in the cash flow resulting from fluctuations in the restricted cash balance. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This guidance simplifies how several aspects of share-based payments are accounted for and presented in the financial statements and is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company's adoption of this guidance in the first quarter of 2017 resulted in excess tax benefits for which a benefit could not be previously recognized of approximately $1,979,000. Upon adoption, the balance of the unrecognized excess tax benefits was reversed with the impact recorded to retained earnings, including a corresponding change to the valuation allowance. Due to the full valuation allowance on the Company's U.S. deferred tax assets, there was no impact to the unaudited condensed consolidated financial statements as a result of adoption. The Company continues to record stock-based compensation expense net of estimated forfeitures. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new guidance must be adopted using the modified retrospective approach and will be effective for the Company starting in the first quarter of 2019, with early adoption permitted. The Company believes that adoption will modify its analysis and disclosures of lease agreements as operating agreements are a significant portion of the Company's total lease commitments. The Company is in the process of determining the effects adoption of this guidance will have on its consolidated financial statements, as well as whether to adopt this guidance early. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, an updated standard on revenue recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported by companies while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards or U.S. GAAP. The main purpose of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures of revenue, provide guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of the new revenue standard from periods beginning after December 15, 2016 to December l5, 2017, with early adoption permitted but not earlier than the original effective date. Accordingly, the updated standard is effective for the Company in the first quarter of 2018. The Company performed a preliminary assessment of the impact of ASU 2014-09 on its consolidated financial statements, and considered all items outlined in the standard. In assessing the impact, the Company has outlined all revenue generating activities, mapped those activities to deliverables and traced those deliverables to the standard. The Company is now assessing what impact the change in standard will have on those deliverables. The Company will continue to evaluate the future impact and method of adoption of ASU 2014-09 and related amendments on its consolidated financial statements and related disclosures during the remainder of 2017. The Company believes the adoption of this guidance will modify the manner in which the Company analyzes its revenue generating contracts. The Company will adopt the new standard beginning January 2018. Cash, Cash Equivalents and Marketable Securities Cash and cash equivalents consist of cash on deposit with banks, money market instruments and certificates of deposit with original maturities of three months or less at the date of purchase. Marketable securities consist of certificates of deposits that mature in greater than three months. Marketable securities are accounted for as "available-for-sale" with the carrying amounts reported in the balance sheets stated at cost, which approximates their fair market value, with unrealized gains and losses, if any, reported as a separate component of stockholders' equity and included in comprehensive loss. Restricted Cash Restricted cash represents amounts designated for uses other than current operations and included $758,000 as of September 30, 2017, held as security for the Company’s letter of credit with Banc of California. Receivables Accounts receivable consist of amounts due to the Company for sales to customers and are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is determined based on an assessment of the collectability of specific customer accounts, the aging of accounts receivable, and a reserve for unknown items based upon the Company’s historical experience. Product Warranties The Company generally offers a one-year warranty for its instruments sold to customers and typically up to a 60 day warranty for consumables. Factors that affect the Company’s warranty reserves include the number of units sold, historical and anticipated rates of warranty repairs, and the cost per repair. The Company periodically assesses the adequacy of its warranty reserve and adjusts the amount as appropriate. Intangible Assets Intangible assets comprise licenses or sublicenses to technology covered by patents owned by third parties, and are amortized on a straight-line basis over the expected useful lives of these assets, which is generally 10 years. Amortization of licenses typically begins upon the Company obtaining access to the licensed technology and is recorded in cost of revenues for licenses supporting commercialized products. The amortization of licenses to technology supporting products in development is recorded in research and development expenses. Impairment of Long-Lived Assets The Company assesses the recoverability of long-lived assets, including intangible assets, by periodically evaluating the carrying value whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If impairment is indicated, the Company writes down the carrying value of the asset to its estimated fair value. This fair value is primarily determined based on estimated discounted future cash flows. Inventories Inventories are stated at the lower of cost (first-in, first-out) or net realizable value and include direct labor, materials, and manufacturing overhead. The Company periodically reviews inventory for evidence of slow-moving or obsolete parts, and writes inventory down to net realizable value, as needed. This write-down is based on management’s review of inventories on hand, compared to estimated future usage and sales, shelf-life assumptions, and assumptions about the likelihood of obsolescence. If actual market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Inventory impairment charges establish a new cost basis for inventory and charges are not reversed subsequently to income, even if circumstances later suggest that increased carrying amounts are recoverable. Property and Equipment, net Property, equipment and leasehold improvements are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which are identified below. Repair and maintenance costs are expensed as incurred.
Income Taxes Current income tax expense is the amount of income taxes expected to be payable for the current year. A deferred income tax liability or asset is established for the expected future tax consequences resulting from the differences in financial reporting and tax bases of assets and liabilities. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized. A full valuation allowance has been recorded against the Company’s net deferred tax assets due to the uncertainty surrounding the Company’s ability to utilize these assets in the future. The Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards prescribed by the authoritative guidance on income taxes. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. The Company recognizes accrued interest related to uncertain tax positions as a component of income tax expense. A tax position that is more likely than not to be realized is measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the taxing authority that has full knowledge of all relevant information. Measurement of a tax position that meets the more-likely-than-not threshold considers the amounts and probabilities of the outcomes that could be realized upon settlement using the facts, circumstances and information available at the reporting date. |
Stock-Based Compensation |
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Compensation Related Costs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Company recognizes stock-based compensation expense related to stock options, restricted stock awards, restricted stock units, and market-based stock units granted to employees and directors in exchange for services under the Company's 2010 Equity Incentive Plan, or the 2010 Plan, and employee stock purchases under the Company's 2013 Employee Stock Purchase Plan, or the ESPP. Employee participation in the 2010 Plan is at the discretion of the Compensation Committee of the Board of Directors of the Company. Each equity award grant under the 2010 Plan reduces the number of shares available for grant thereunder. Stock-based compensation expense is based on the fair value of the applicable award utilizing various assumptions regarding the underlying attributes of the award. Stock-based compensation expense is recorded in cost of sales, sales and marketing, research and development, and/or general and administrative expenses based on the employee's respective function. During the nine months ended September 30, 2017 and 2016, aggregate stock-based compensation expense was $8,386,000 and $6,788,000, respectively. The estimated fair value, net of forfeitures expected to occur during the vesting period, is amortized as compensation expense that approximates straight-line expense to reflect vesting as it occurs. The stock option expense is derived from the Black-Scholes Option Pricing Model that uses several judgment-based variables to calculate the expense. The market-based stock unit expense is derived from the Monte Carlo Simulation Valuation. The inputs utilized in the valuation of the stock-based awards include the following factors: • Expected Term. Expected term represents the period that the stock-based awards are expected to be outstanding and is determined by using the simplified method. • Expected Volatility. Expected volatility represents the estimated volatility in the Company’s stock price over the expected term of the option or market-based award and is determined by review of the Company’s and similar companies’ historical experience. • Expected Dividend. The valuation methods require a single expected dividend yield as an input. The Company assumed no dividends as it has never paid dividends and has no current plans to do so. • Risk-Free Interest Rate. The risk-free interest rate used in the Black-Scholes Option Pricing Model is based on published U.S. Treasury rates in effect at the time of grant for periods corresponding with the expected term of the option or market-based award. All stock options granted under the 2010 Plan are exercisable at a per share price equal to the closing quoted market price of a share of the Company’s common stock on the NASDAQ Global Market on the grant date and generally vest over a period of between one and four years. Stock options are generally exercisable for a period of up to 10 years after grant and are typically forfeited if employment is terminated before the options vest. The following table summarizes stock option activity during the nine months ended September 30, 2017:
Options that were exercisable as of September 30, 2017 had a remaining weighted average contractual term of 5.11 years, and an aggregate intrinsic value of $6,478,000. As of September 30, 2017, there were 2,526,157 stock options outstanding, which had a remaining weighted average contractual term of 5.42 years and an aggregate intrinsic value of $6,783,000. No stock options were granted during the nine months ended September 30, 2017. Restricted stock awards or units may be granted in connection with the hiring or retention of personnel and are subject to certain conditions. In March 2013, the Company transitioned to granting restricted stock units under the 2010 Plan in lieu of granting restricted stock awards. The compensation expense related to the restricted stock awards or units is calculated as the fair market value of the Company's stock on the grant date and is adjusted for estimated forfeitures. The Company’s restricted stock award and restricted stock unit activity for the nine months ended September 30, 2017 was as follows:
As of September 30, 2017, all compensation expense related to restricted stock awards has been recognized. The total fair value of restricted stock awards that vested during the nine months ended September 30, 2017 and 2016 was $2,000 and $152,000, respectively. As of September 30, 2017, there was $13,142,000 of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted average period of 2.76 years. The total fair value of restricted stock units that vested during the nine months ended September 30, 2017 and 2016 was $4,181,000 and $4,526,000, respectively. The Company issued market-based stock units in February 2017 and February 2016, which may in each case result in the recipient receiving shares of stock equal to 200% of the target number of units granted. The vesting and issuance of Company stock pursuant to these awards depends on the Company's stock performance as compared to the NASDAQ Composite Index over a three-year period following the grant, subject to continued service with the Company. As of September 30, 2017, there was $1,502,000 of unrecognized stock-based compensation expense related to these awards, which is expected to be recognized over a weighted average period of 1.59 years. The Company’s market-based stock unit activity for the nine months ended September 30, 2017 was as follows:
The fair value of these market-based stock units was estimated on the grant date using the Monte Carlo Simulation Valuation Model, which estimates the potential outcome of achieving the market condition based on simulated future stock prices, with the following assumptions for the nine months ended September 30, 2017:
The Company issued 43,200 performance-based restricted stock units in March 2014 with a grant date fair value of $12.30 per share. The vesting and issuance of Company stock pursuant to these awards depends on obtaining regulatory clearance of various products within a defined time. Stock-based compensation expense for performance-based awards is recognized when it is probable that the applicable performance criteria will be satisfied. The probability of achieving the relevant performance criteria is evaluated on a quarterly basis. As of September 30, 2017, there was $133,000 of unrecognized stock-based compensation expense related to these awards. Employee Stock Purchase Plan The Company's stockholders approved the ESPP in May 2013. A total of 650,000 shares of the Company’s common stock were originally reserved for issuance under the ESPP, which permits eligible employees to purchase common stock at a discount through payroll deductions. The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the Company's common stock on the first or the last day of the offering period, whichever is lower. Generally, each offering under the ESPP will be for a period of six months as determined by the Company's Board of Directors; provided that no offering period may exceed 27 months. Employees may invest up to 10% of their qualifying gross compensation through payroll deductions. In no event may an employee purchase more than 1,500 shares of common stock during any six-month offering period. As of September 30, 2017, there were 207,183 shares of common stock available for issuance under the ESPP. The ESPP is a compensatory plan as defined by the authoritative guidance for stock compensation; therefore, stock-based compensation expense related to the ESPP has been recorded during the nine months ended September 30, 2017. |
Net Loss per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Common Share | Net Loss per Common Share Basic net loss per share is calculated by dividing loss available to stockholders of the Company's common stock (the numerator) by the weighted average number of shares of the Company's common stock outstanding during the period (the denominator). Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. Diluted loss per share is calculated in a similar way to basic loss per share except that the denominator is increased to include the number of additional shares that would have been outstanding if the dilutive potential shares had been issued, unless the effect would be anti-dilutive. The computations of diluted net loss per share for the three and nine month periods ended September 30, 2017 and 2016 did not include the effects of the following stock options and other equity awards which were outstanding as of the end of each period because the inclusion of these securities would have been anti-dilutive (in thousands):
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Inventories |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventory on hand as of September 30, 2017 and December 31, 2016 comprised the following (in thousands):
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Property and Equipment, net |
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Property, Plant and Equipment, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, net | Property and Equipment, net Property and equipment as of September 30, 2017 and December 31, 2016 comprised the following (in thousands):
Depreciation expense was $1,206,000 and $854,000 for the three months ended September 30, 2017 and 2016, respectively, and was $3,413,000 and $2,458,000 for the nine months ended September 30, 2017 and 2016, respectively. |
Intangible Assets, net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, net | Intangible Assets, net Intangible assets as of September 30, 2017 and December 31, 2016 comprised the following (in thousands):
In July 2012, the Company entered into a development collaboration and license agreement with Advanced Liquid Logic, Inc., or ALL, which was acquired by Illumina, Inc. in July 2013. Under the terms of the agreement, the Company established a collaborative program to develop in-vitro diagnostic products incorporating ALL’s proprietary electro-wetting technology in conjunction with the Company’s electrochemical detection technology. During the nine months ended September 30, 2017, the Company satisfied certain commercial milestones under this agreement requiring the payment of $500,000, which was recorded as licensed intellectual property. Intellectual property licenses had a weighted average remaining amortization period of 4.68 years as of September 30, 2017. Amortization expense for these licenses was $151,000 and $94,000 for the three months ended September 30, 2017 and 2016, respectively, and was $398,000 and $281,000 for the nine months ended September 30, 2017 and 2016, respectively. Estimated future amortization expense for these licenses is as follows (in thousands):
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Loan Payable |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt [Text Block] | Loan Payable As of September 30, 2017 and December 31, 2016, long-term debt comprised the following (in thousands):
Term Loans In January 2015, the Company entered into a Loan and Security Agreement, or the LSA, with Solar Capital Partners (as successor-in-interest to General Electric Capital Corporation), and certain other financial institutions party thereto, as lenders, pursuant to which the Company obtained up to $35,000,000 in a series of term loans and a revolving loan in the maximum amount of $5,000,000. As of June 2017, the Company had borrowed all $35,000,000 under the term loans as provided in the LSA. The term loans accrue interest at a rate equal to, (a) the greater of 1.00% or the 3-year treasury rate in effect at the time of funding, plus (b) an applicable margin between 4.95% and 5.90% per annum. The Company was only required to make interest payments on amounts borrowed pursuant to the Term Loans from the applicable funding date until June 15, 2017, or the Interest Only Period. Following the Interest Only Period, monthly installments of principal and interest under the Term Loans will be due until the original principal amount and applicable interest is fully repaid by January 12, 2019, or the Maturity Date. Under the LSA, the Company is required to comply with certain affirmative and negative covenants, including, without limitation, delivering reports and notices relating to the Company’s financial condition and certain regulatory events and intellectual property matters, as well as limiting the creation of liens, the incurrence of indebtedness, and the making of certain investments, dividends, payments and acquisitions, other than as specifically permitted by the LSA. As of September 30, 2017, the Company was in compliance with all covenants under the LSA. Revolving Loan Pursuant to the LSA, the Company may borrow up to $5,000,000 under a revolving loan facility. Borrowings under the revolving loan would accrue interest at a rate equal to (a) the greater of 1.25% per annum or a base rate as determined by a three-month LIBOR-based formula, plus (b) an applicable margin between 2.95% and 3.95% based on certain criteria as set forth in the LSA. All principal and interest outstanding under the revolving loan is due and payable on the Maturity Date. The Company is required to pay a commitment fee equal to 0.75% per annum of the amounts made available but unborrowed under the revolving loan. As of September 30, 2017, the Company had not borrowed any of the $5,000,000 available under the revolving loan. Debt Issuance Costs As of September 30, 2017 and December 31, 2016, the Company had $1,011,000 and $585,000, respectively, of unamortized debt issuance discount, which is offset against borrowings in long-term and short-term debt. Amortization of debt issuance costs was $398,000 and $108,000, for the three months ended September 30, 2017 and 2016, respectively, and was $891,000 and $277,000 for the nine months ended September 30, 2017 and 2016, respectively. Amortization of debt issuance costs is included as interest expense in the Company's unaudited condensed consolidated statements of comprehensive loss for the periods presented. Letter of Credit In September 2012, the Company provided a $758,000 letter of credit issued by Banc of California to the landlord of its executive office facility in Carlsbad, California. This letter of credit was secured with $758,000 of restricted cash as of September 30, 2017. |
Leases |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company has operating and capital lease agreements for its office, manufacturing, warehousing and laboratory space and for office equipment. Rent and operating expenses charged under these arrangements was $399,000 and $476,000 for the three months ended September 30, 2017 and 2016, respectively, and was $1,211,000 and $1,460,000 for the nine months ended September 30, 2017 and 2016, respectively. Pursuant to the Company's lease agreements, a portion of the monthly rent has been deferred. The balance of deferred rent as of September 30, 2017 and December 31, 2016 was $3,781,000 and $4,097,000, respectively. As of September 30, 2017, the future minimum lease payments required over the next five years under the Company's lease arrangements are as follows (in thousands):
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of financial instruments, such as cash equivalents, restricted cash, accounts receivable, and accounts payable approximate the related fair values due to the short-term maturities of these instruments. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table presents the financial instruments measured at fair value on a recurring basis and the valuation approach applied to each class of financial instruments as of September 30, 2017 and December 31, 2016 (in thousands):
Level 2 marketable securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. |
Marketable Securities (Notes) |
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Marketable Securities | Marketable Securities The following table summarizes the Company’s marketable securities as of September 30, 2017 and December 31, 2016 (in thousands):
The following table summarizes the maturities of the Company’s marketable securities as of September 30, 2017 (in thousands):
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Income Taxes |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. As of September 30, 2017, the Company recorded a full valuation allowance against all of its net deferred tax assets due to the uncertainty surrounding the Company’s ability to utilize these assets in the future. Due to the Company's losses, it only records a tax provision or benefit related to uncertain tax positions and related interest and minimum tax payments or refunds. The Company recorded an income tax benefit of $9,000 for the three months ended September 30, 2017 and income tax expense of $14,000 for the three months ended September 30, 2016, and income tax expense of $68,000 and $45,000 for the nine months ended September 30, 2017 and 2016, respectively. The Company is subject to taxation in the United States and in various state and foreign jurisdictions. The Company's federal and state returns since inception are subject to examination due to the carryover of net operating losses. As of September 30, 2017, the Company’s tax years from 2011 through 2012 are subject to examination by the United Kingdom tax authorities related to its legacy operations. The statute of limitations for the assessment and collection of income taxes related to other foreign tax returns varies by country. In the foreign countries where the Company has operations, these time periods generally range from three to five years after the year for which the tax return is due or the tax is assessed. |
Organization and Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, and applicable regulations of the U.S. Securities and Exchange Commission, or the SEC, and should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on February 28, 2017. These unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for the full year or any future period. The Company has experienced net losses and negative cash flows from operating activities since its inception and had an accumulated deficit of $402,584,000 as of September 30, 2017. The Company's ability to transition to profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure through expanding its product offerings and consequently increasing its product revenues. As of September 30, 2017, the Company had available cash, cash equivalents, and marketable securities of $86,917,000 and working capital of $68,857,000 available to fund future operations. The Company has prepared cash flow forecasts which indicate, based on the Company's current cash resources available and working capital, that the Company will have sufficient resources to fund its operations for at least one year after the date the financial statements are issued. |
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Priniciples of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
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Segment Information | Segment Information The Company currently operates in one reportable business segment, which encompasses the development, manufacturing, sales and support of instruments and molecular tests based on its proprietary eSensor® detection technology. Substantially all of the Company’s operations and assets are in the United States of America. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that the Company adopts as of the specified effective date. In November 2016, the FASB issued Accounting Standards Update, or ASU, 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents to be included in the cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-08 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method for each period presented. Early adoption is permitted. The Company will adopt ASU 2016-18 in the first quarter of 2018 and anticipates the impact of adoption will result in a beginning and ending cash balance increase of approximately $758,000. The Company does not anticipate a material impact in the cash flow resulting from fluctuations in the restricted cash balance. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This guidance simplifies how several aspects of share-based payments are accounted for and presented in the financial statements and is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company's adoption of this guidance in the first quarter of 2017 resulted in excess tax benefits for which a benefit could not be previously recognized of approximately $1,979,000. Upon adoption, the balance of the unrecognized excess tax benefits was reversed with the impact recorded to retained earnings, including a corresponding change to the valuation allowance. Due to the full valuation allowance on the Company's U.S. deferred tax assets, there was no impact to the unaudited condensed consolidated financial statements as a result of adoption. The Company continues to record stock-based compensation expense net of estimated forfeitures. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new guidance must be adopted using the modified retrospective approach and will be effective for the Company starting in the first quarter of 2019, with early adoption permitted. The Company believes that adoption will modify its analysis and disclosures of lease agreements as operating agreements are a significant portion of the Company's total lease commitments. The Company is in the process of determining the effects adoption of this guidance will have on its consolidated financial statements, as well as whether to adopt this guidance early. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, an updated standard on revenue recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported by companies while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards or U.S. GAAP. The main purpose of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures of revenue, provide guidance for transactions that were not previously addressed comprehensively, and improves guidance for multiple-element arrangements. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of the new revenue standard from periods beginning after December 15, 2016 to December l5, 2017, with early adoption permitted but not earlier than the original effective date. Accordingly, the updated standard is effective for the Company in the first quarter of 2018. The Company performed a preliminary assessment of the impact of ASU 2014-09 on its consolidated financial statements, and considered all items outlined in the standard. In assessing the impact, the Company has outlined all revenue generating activities, mapped those activities to deliverables and traced those deliverables to the standard. The Company is now assessing what impact the change in standard will have on those deliverables. The Company will continue to evaluate the future impact and method of adoption of ASU 2014-09 and related amendments on its consolidated financial statements and related disclosures during the remainder of 2017. The Company believes the adoption of this guidance will modify the manner in which the Company analyzes its revenue generating contracts. The Company will adopt the new standard beginning January 2018. |
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Cash, Cash Equivalents and Marketable Securities | Cash, Cash Equivalents and Marketable Securities Cash and cash equivalents consist of cash on deposit with banks, money market instruments and certificates of deposit with original maturities of three months or less at the date of purchase. Marketable securities consist of certificates of deposits that mature in greater than three months. Marketable securities are accounted for as "available-for-sale" with the carrying amounts reported in the balance sheets stated at cost, which approximates their fair market value, with unrealized gains and losses, if any, reported as a separate component of stockholders' equity and included in comprehensive loss. |
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Receivables | Receivables Accounts receivable consist of amounts due to the Company for sales to customers and are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is determined based on an assessment of the collectability of specific customer accounts, the aging of accounts receivable, and a reserve for unknown items based upon the Company’s historical experience. |
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Restricted Cash | Restricted Cash Restricted cash represents amounts designated for uses other than current operations and included $758,000 as of September 30, 2017, held as security for the Company’s letter of credit with Banc of California. |
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Use of Estimates | Use of Estimates The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes thereto. The Company’s significant estimates included in the preparation of the financial statements are related to accounts receivable, inventories, property and equipment, intangible assets, employee-related compensation accruals, warranty liabilities, tax valuation accounts and stock-based compensation. Actual results could differ from those estimates. |
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Product Warranties | Product Warranties The Company generally offers a one-year warranty for its instruments sold to customers and typically up to a 60 day warranty for consumables. Factors that affect the Company’s warranty reserves include the number of units sold, historical and anticipated rates of warranty repairs, and the cost per repair. The Company periodically assesses the adequacy of its warranty reserve and adjusts the amount as appropriate. |
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Intangible Assets | Intangible Assets Intangible assets comprise licenses or sublicenses to technology covered by patents owned by third parties, and are amortized on a straight-line basis over the expected useful lives of these assets, which is generally 10 years. Amortization of licenses typically begins upon the Company obtaining access to the licensed technology and is recorded in cost of revenues for licenses supporting commercialized products. The amortization of licenses to technology supporting products in development is recorded in research and development expenses. |
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Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company assesses the recoverability of long-lived assets, including intangible assets, by periodically evaluating the carrying value whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If impairment is indicated, the Company writes down the carrying value of the asset to its estimated fair value. This fair value is primarily determined based on estimated discounted future cash flows. |
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Inventories | Inventories Inventories are stated at the lower of cost (first-in, first-out) or net realizable value and include direct labor, materials, and manufacturing overhead. The Company periodically reviews inventory for evidence of slow-moving or obsolete parts, and writes inventory down to net realizable value, as needed. This write-down is based on management’s review of inventories on hand, compared to estimated future usage and sales, shelf-life assumptions, and assumptions about the likelihood of obsolescence. If actual market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Inventory impairment charges establish a new cost basis for inventory and charges are not reversed subsequently to income, even if circumstances later suggest that increased carrying amounts are recoverable. |
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Property, Plant and Equipment, net | Property and Equipment, net Property, equipment and leasehold improvements are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which are identified below. Repair and maintenance costs are expensed as incurred.
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Income Taxes | Income Taxes Current income tax expense is the amount of income taxes expected to be payable for the current year. A deferred income tax liability or asset is established for the expected future tax consequences resulting from the differences in financial reporting and tax bases of assets and liabilities. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized. A full valuation allowance has been recorded against the Company’s net deferred tax assets due to the uncertainty surrounding the Company’s ability to utilize these assets in the future. The Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards prescribed by the authoritative guidance on income taxes. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. The Company recognizes accrued interest related to uncertain tax positions as a component of income tax expense. A tax position that is more likely than not to be realized is measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the taxing authority that has full knowledge of all relevant information. Measurement of a tax position that meets the more-likely-than-not threshold considers the amounts and probabilities of the outcomes that could be realized upon settlement using the facts, circumstances and information available at the reporting date. |
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation Related Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | The following table summarizes stock option activity during the nine months ended September 30, 2017:
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Summary of restricted stock award and restricted stock units activity | The Company’s restricted stock award and restricted stock unit activity for the nine months ended September 30, 2017 was as follows:
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Schedule of Market-Based Stock Units Activity | The Company’s market-based stock unit activity for the nine months ended September 30, 2017 was as follows:
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Market-Based Stock Units Valuation Assumptions | The fair value of these market-based stock units was estimated on the grant date using the Monte Carlo Simulation Valuation Model, which estimates the potential outcome of achieving the market condition based on simulated future stock prices, with the following assumptions for the nine months ended September 30, 2017:
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Net Loss per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | The computations of diluted net loss per share for the three and nine month periods ended September 30, 2017 and 2016 did not include the effects of the following stock options and other equity awards which were outstanding as of the end of each period because the inclusion of these securities would have been anti-dilutive (in thousands):
|
Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of inventory on hand | Inventory on hand as of September 30, 2017 and December 31, 2016 comprised the following (in thousands):
|
Property and Equipment, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net | Property and equipment as of September 30, 2017 and December 31, 2016 comprised the following (in thousands):
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Intangible Assets, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of intangible assets | Intangible assets as of September 30, 2017 and December 31, 2016 comprised the following (in thousands):
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Summary of estimated future amortization expense | Estimated future amortization expense for these licenses is as follows (in thousands):
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Loan Payable Tables (Tables) |
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] | As of September 30, 2017 and December 31, 2016, long-term debt comprised the following (in thousands):
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum lease payments | As of September 30, 2017, the future minimum lease payments required over the next five years under the Company's lease arrangements are as follows (in thousands):
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Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | The following table presents the financial instruments measured at fair value on a recurring basis and the valuation approach applied to each class of financial instruments as of September 30, 2017 and December 31, 2016 (in thousands):
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Marketable Securities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale Securities | The following table summarizes the Company’s marketable securities as of September 30, 2017 and December 31, 2016 (in thousands):
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Investments Classified by Contractual Maturity Date | The following table summarizes the maturities of the Company’s marketable securities as of September 30, 2017 (in thousands):
|
Organization and Basis of Presentation (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Machinery and laboratory equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Expected useful lives | 3 years |
Machinery and laboratory equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Expected useful lives | 5 years |
Instruments | Minimum | |
Property, Plant and Equipment [Line Items] | |
Expected useful lives | 4 years |
Instruments | Maximum | |
Property, Plant and Equipment [Line Items] | |
Expected useful lives | 5 years |
Office equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Expected useful lives | 3 years |
Office equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Expected useful lives | 7 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Expected useful lives | over the shorter of the remaining life of the lease or the useful economic life of the asset |
Organization and Basis of Presentation (Details Textual) |
9 Months Ended | |
---|---|---|
Sep. 30, 2017
USD ($)
Segment
|
Dec. 31, 2016
USD ($)
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Restricted cash | $ 758,000 | $ 758,000 |
Number of operating segment | Segment | 1 | |
Working Capital | $ 68,857,000 | |
Accumulated deficit | 402,584,000 | $ 355,270,000 |
Cash, Cash Equivalents, and Short-term Investments | 86,917,000 | |
Excess tax benefit, amount | $ 1,979,000 | |
Sufficient capital to fund its operations | for at least one year | |
Products Warranty Period - Reagents | 60 days | |
Product Warranty Period - Instruments | 1 year | |
Finite Lived Intangible Asset Amortization Period | 10 years |
Net Loss per Common Share (Details) - shares shares in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Computations of diluted net loss per share | ||
Antidilutive securities excluded from calculation | 4,992 | 4,668 |
Options [Member] | ||
Computations of diluted net loss per share | ||
Antidilutive securities excluded from calculation | 2,526 | 2,611 |
Unvested restricted stock [Member] | ||
Computations of diluted net loss per share | ||
Antidilutive securities excluded from calculation | 2,466 | 2,057 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Summary of inventory on hand | ||
Raw materials | $ 2,795 | $ 2,171 |
Work-in-process | 2,709 | 1,488 |
Finished goods | 1,605 | 2,974 |
Total | $ 7,109 | $ 6,633 |
Property and Equipment, net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Property and equipment-at cost: | |||||
Total property and equipment-at cost | $ 38,277 | $ 38,277 | $ 31,828 | ||
Less accumulated depreciation | (16,691) | (16,691) | (13,560) | ||
Property and equipment, net | 21,586 | 21,586 | 18,268 | ||
Depreciation expense | 1,206 | $ 854 | 3,413 | $ 2,458 | |
Machinery and laboratory equipment | |||||
Property and equipment-at cost: | |||||
Total property and equipment-at cost | 12,607 | 12,607 | 10,145 | ||
Instruments | |||||
Property and equipment-at cost: | |||||
Total property and equipment-at cost | 13,203 | 13,203 | 9,869 | ||
Office equipment | |||||
Property and equipment-at cost: | |||||
Total property and equipment-at cost | 1,970 | 1,970 | 1,714 | ||
Leasehold improvements | |||||
Property and equipment-at cost: | |||||
Total property and equipment-at cost | $ 10,497 | $ 10,497 | $ 10,100 |
Intangible Assets, net - Gross and Net Carrying Values (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Finite-Lived Intangible Assets, Gross | $ 4,750 | $ 4,250 |
Finite-Lived Intangible Assets, Accumulated Amortization | (1,978) | (1,580) |
Finite-Lived Intangible Assets, Net | $ 2,772 | $ 2,670 |
Intangible Assets, net - Future Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remaining in 2017 | $ 148 | |
2018 | 593 | |
2019 | 593 | |
2020 | 593 | |
2021 | 593 | |
Thereafter | 252 | |
Finite-Lived Intangible Assets, Net | $ 2,772 | $ 2,670 |
Intangible Assets, net - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Finite-lived Intangible Assets Acquired | $ 500,000 | |||
Amortization of Intangible Assets | $ 151,000 | $ 94,000 | $ 398,000 | $ 281,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years 8 months 6 days |
Loan Payable Revolving Credit Facility (Details) - Revolving Credit Facility [Member] $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000 |
Line of Credit Facility, Interest Rate Description | the greater of 1.25% per annum or a base rate as determined by a three-month LIBOR-based formula, plus (b) an applicable margin between 2.95% and 3.95% |
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.75% |
Minimum | |
Line of Credit Facility [Line Items] | |
Debt Instrument, Basis Spread on Variable Rate | 2.95% |
Maximum | |
Line of Credit Facility [Line Items] | |
Debt Instrument, Basis Spread on Variable Rate | 3.95% |
Loan Payable - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Debt Disclosure [Abstract] | |||||
Unamortized issuance costs | $ (1,011,000) | $ (1,011,000) | $ (585,000) | ||
Amortization of deferred debt issuance costs | 398,000 | $ 108,000 | 891,000 | $ 277,000 | |
Letters of Credit Outstanding, Amount | $ 758,000 | $ 758,000 |
Leases (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Schedule of future minimum lease payments | |
Remaining in 2017 | $ 447 |
2015 | 1,868 |
2016 | 1,989 |
2017 | 1,997 |
2018 | 1,372 |
Thereafter | 1,366 |
Total future minimum payments | $ 9,039 |
Leases (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Leases [Abstract] | |||||
Rent and operating expenses | $ 398,777 | $ 476,000 | $ 1,211,264 | $ 1,460,000 | |
Operating lease, deferred expense | $ 3,780,528 | $ 3,780,528 | $ 4,097,000 |
Marketable Securities - Gross unrealized gains/losses on marketable securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 59,760 | $ 25,635 |
Gross Unrealized Gains | 3 | 0 |
Gross Unrealized Losses | (7) | (28) |
Marketable securities, fair value | 59,756 | 25,607 |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 41,793 | 18,846 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | (7) | (25) |
Marketable securities, fair value | 41,788 | 18,821 |
U.S. government and agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 13,982 | 3,506 |
Gross Unrealized Gains | 2 | 0 |
Gross Unrealized Losses | 0 | (3) |
Marketable securities, fair value | 13,984 | 3,503 |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 3,985 | 3,283 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Marketable securities, fair value | $ 3,985 | $ 3,283 |
Marketable Securities - Contractual maturities of marketable securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 59,760 | $ 25,635 |
Marketable securities, fair value | 59,756 | $ 25,607 |
Due in one year or less [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 59,760 | |
Marketable securities, fair value | 59,756 | |
Due after one year through two years [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 0 | |
Marketable securities, fair value | $ 0 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ (9,000) | $ 14,000 | $ 68,000 | $ 45,000 |
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