What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 265 added, 236 removed, 260 unchanged (66% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2022 December 31,

2 unchanged sentences

Investments 192,420,000 226,041,000

Accounts receivable, net of allowance for doubtful accounts of, 2,015,000 and 2,119,000 as of September 30, 2021 and December 31, 2020, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 463,000 and $ 690,000 as of March 31, 2022 and December 31, 2021, respectively

5,514,000 4,934,000

Inventory, net 9,020,000 3,316,000

Inventory 16,268,000 12,387,000

Prepaid expenses and other current assets 4,110,000 4,481,000

1 unchanged sentence

Property and equipment, net 12,661,000 10,318,000

Operating lease right-of-use assets 6,817,000 6,691,000

Finance lease right-of-use assets, related party 3,897,000 3,926,000

Intangible assets, net 25,424,000 26,842,000

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Contract liabilities 1,107,000 684,000

Operating lease liability 1,730,000 1,467,000

Finance lease liability, related party 296,000 299,000

Total current liabilities 18,659,000 21,840,000

Long-term debt — 16,326,000

Operating lease liability, net of current portion 5,451,000 5,288,000

Finance lease liability, net of current portion, related party 3,638,000 3,642,000

Contingent consideration 9,145,000 9,066,000

Long-term contract liabilities 133,000 146,000

Other non-current liabilities 232,000 —

Total liabilities 37,026,000 39,982,000

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Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized and no shares issued or outstanding as of September 30, 2021 and December 31, 2020

Common stock, $ 0.0001 par value, 400,000,000 shares authorized at September 30, 2021 and December 31, 2020;

281,441,000 and 189,953,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

10,000,000 shares authorized and no shares issued or outstanding as of March 31, 2022 and December 31, 2021

Common stock, $ 0.0001 par value, 400,000,000 shares authorized at March 31, 2022 and December 31, 2021;

289,688,000 and 289,602,000 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

29,000 29,000

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Product revenue $ 3,116,000 $ 2,049,000

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Other income (expense):

Interest income (expense) 27,000 ( 589,000 ) ( 721,000 ) ( 1,911,000 )

Interest income 110,000 65,000

Interest expense ( 77,000 ) ( 603,000 )

Gain on forgiveness of Paycheck Protection Program loan — 1,775,000

Loss on debt extinguishment — — ( 2,076,000 ) —

Other income (expense) ( 33,000 ) ( 15,000 )

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Loss before income taxes ( 29,943,000 ) ( 9,941,000 )

Provision for income taxes ( 35,000 ) ( 30,000 ) ( 50,000 ) ( 40,000 )

Benefit (provision) for income taxes ( 9,000 ) ( 6,000 )

Net loss $ ( 29,952,000 ) $ ( 9,947,000 )

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Weighted-average common shares outstanding basic and diluted 284,613,000 263,939,000

280,173,000 132,942,000 274,392,000 86,632,000

See accompanying notes to the unaudited condensed consolidated financial statements.

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Three Months Ended

September 30, Nine Months Ended

September 30,

$ ( 29,952,000 ) $ ( 9,947,000 )

$ ( 20,753,000 ) $ ( 10,792,000 ) $ ( 49,486,000 ) $ ( 29,376,000 )

Unrealized (loss) on investment securities

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Balance at January 1, 2021 189,953,000 $ 19,000 $ 178,747,000 $ ( 143,684,000 ) $ — $ 35,082,000

Stock-based compensation expense — — 328,000 — — 328,000

Issue stock for warrant exercises 3,478,000 — 2,355,000 — — 2,355,000

Net loss — — — ( 10,510,000 ) — ( 10,510,000 )

Balance at March 31, 2020 37,752,000 $ 3,000 $ 108,871,000 $ ( 113,087,000 ) $ — $ ( 4,213,000 )

Stock-based compensation expense — — 328,000 — — 328,000

Issue common stock, net of issuance costs 16,896,000 2,000 16,364,000 — — 16,366,000

Issue stock for employee stock purchase plan 44,000 — 21,000 — — 21,000

Issue stock for covenant waiver 873,000 — 300,000 — — 300,000

Issue stock for warrant exercises 36,410,000 4,000 1,105,000 — — 1,109,000

Net loss — — — ( 8,074,000 ) — ( 8,074,000 )

Balance at June 30, 2020 91,975,000 $ 9,000 $ 126,989,000 $ ( 121,161,000 ) $ — $ 5,837,000

Stock-based compensation expense — — 447,000 — — 447,000

Issue stock for warrant exercises 50,205,000 5,000 15,078,000 — — 15,083,000

Issue stock for acquisition 6,168,000 1,000 4,100,000 — — 4,101,000

Net loss — — — ( 10,792,000 ) — ( 10,792,000 )

Balance at September 30, 2020 148,348,000 $ 15,000 $ 146,614,000 $ ( 131,953,000 ) $ — $ 14,676,000

Balance at January 1, 2021 189,953,000 19,000 178,747,000 ( 143,684,000 ) $ — $ 35,082,000

Stock option exercises 102,000 — 333,000 — — 333,000

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Balance at March 31, 2021 278,794,000 $ 28,000 $ 516,321,000 $ ( 153,631,000 ) $ — $ 362,718,000

Stock option exercises 60,000 — 89,000 — — 89,000

Stock-based compensation expense — — 1,758,000 — — 1,758,000

Issue stock for warrant exercises 50,000 — 22,000 — — 22,000

Issue stock for employee stock purchase plan 150,000 — 65,000 — — 65,000

Net loss — — — ( 18,786,000 ) — ( 18,786,000 )

Balance at June 30, 2021 279,054,000 $ 28,000 $ 518,255,000 $ ( 172,417,000 ) $ — $ 345,866,000

Balance at January 1, 2022 289,602,000 $ 29,000 $ 553,747,000 $ ( 216,119,000 ) $ ( 539,000 ) $ 337,118,000

Stock option exercises 21,000 — 15,000 — — 15,000

Stock-based compensation expense — — 5,102,000 — — 5,102,000

Issue common stock, net of issuance costs 2,178,000 — 13,537,000 — — 13,537,000

Issue stock for warrant exercises — — 1,000 — — 1,000

Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes 65,000 — — — — —

Net loss — — — ( 29,952,000 ) — ( 29,952,000 )

Comprehensive Loss — ( 116,000 ) ( 116,000 )

Balance at September 30, 2021 281,441,000 $ 28,000 $ 534,823,000 $ ( 193,170,000 ) $ ( 116,000 ) $ 341,565,000

Other comprehensive loss — — $ — — ( 1,098,000 ) ( 1,098,000 )

Balance at March 31, 2022 289,688,000 $ 29,000 $ 558,864,000 $ ( 246,071,000 ) $ ( 1,637,000 ) $ 311,185,000

See accompanying notes to the unaudited condensed consolidated financial statements

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Condensed Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

$ ( 49,486,000 ) $ ( 29,376,000 )

Net loss $ ( 29,952,000 ) $ ( 9,947,000 )

Adjustments to reconcile net loss to net cash used by operating activities:

Depreciation and amortization expense 2,210,000 448,000

1,490,000 909,000

Non-cash interest

178,000 952,000

Amortization of financing lease right-of-use asset 29,000 —

Amortization of interest on securities 299,000 —

Non-cash lease expense 299,000 —

Non-cash interest expense — 315,000

Stock-based compensation 5,102,000 371,000

4,917,000 1,103,000

Provision for bad debt expense — 1,334,000

Change in fair value of contingent consideration 79,000 —

Gain on forgiveness of PPP Loan — ( 1,775,000 )

Loss on debt extinguishment 2,076,000 —

Changes in operating assets and liabilities:

Accounts receivable ( 640,000 ) 783,000

( 336,000 ) 1,709,000

( 10,346,000 ) ( 3,612,000 )

Inventory ( 5,938,000 ) ( 961,000 )

Prepaid expenses and other current assets ( 371,000 ) ( 1,049,000 )

( 2,072,000 ) ( 566,000 )

Accounts payable ( 3,168,000 ) ( 1,045,000 )

4,945,000 925,000

Accrued expenses and contract liabilities ( 443,000 ) ( 1,044,000 )

4,104,000 412,000

Net cash used in operating activities ( 32,494,000 ) ( 13,904,000 )

( 46,305,000 ) ( 26,210,000 )

Investing Activities:

Lineagen acquisition, net of cash acquired — ( 2,450,000 )

BioDiscovery acquisition, return of purchase consideration from escrow 694,000 —

Purchases of property and equipment ( 150,000 ) ( 24,000 )

( 344,000 ) —

Purchase of available for sale securities ( 14,954,000 ) —

Sale of available for sale securities 20,000,000 —

Sale and maturity of available for sale securities 47,179,000 —

Construction in progress ( 832,000 ) —

Sale of property and equipment 27,000 —

Net cash used in investing activities ( 185,552,000 ) ( 2,450,000 )

Net cash provided by / (used in) investing activities 31,964,000 ( 24,000 )

Financing activities:

Repayment of term-loan debt

( 17,010,000 ) ( 5,000,000 )

Proceeds from PPP Loan — 1,775,000

Proceeds from borrowing from line of credit

Repayments of borrowing from line of credit

— ( 2,258,000 )

Principal payments of financing lease liability ( 8,000 ) —

Proceeds from sale of common stock — 328,635,000

Offering expenses on sale of common stock — ( 825,000 )

Proceeds from sale of common stock under employee stock purchase plan 65,000 21,000

Proceeds from warrant and option exercises 15,000 9,726,000

10,081,000 18,551,000

Net cash provided by financing activities 7,000 337,536,000

1 unchanged sentence

Cash and cash equivalents at beginning of period 24,571,000 38,449,000

38,449,000 17,311,000

Cash and cash equivalents at end of period $ 24,048,000 $ 362,057,000

$ 140,736,000 $ 18,867,000

Supplemental cash flow disclosures:

Cash paid for interest $ 70,000 $ 287,000

$ 490,000 $ 991,000

Cash paid for operating lease liabilities $ 217,000 $ 206,000

Supplemental disclosure of non-cash investing and financing activities:

Fair value of common stock issued related to Lineagen acquisition $ — $ 4,100,000

Transfer of instruments and servers from property and equipment into inventory $ 544,000 $ 134,000

Transfer of instruments and servers from inventory to property and equipment $ 5,074,000 $ 2,618,000

Transfer of instruments and servers from inventory to property and equipment, net $ 2,056,000 $ 1,240,000

Operating Lease Liabilities resulting from obtaining right-of-use assets $ 513,000 $ 2,013,000

Forgiveness of PPP Loan $ — $ 1,775,000

Stock issued for services $ 15,000 $ —

Issue stock for covenant waiver $ 116,000 $ 300,000

Offering costs in accounts payable $ — $ 324,000

Warrant exercise pursuant to cashless exercise $ — $ 129,000

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BIONANO GENOMICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Organization and Basis of Presentation

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(“Lineagen”) business, the Company also provides diagnostic testing for patients with clinical presentations consistent with autism spectrum disorder and other neurodevelopmental disabilities.

Through its BioDiscovery, Inc.

Through its BioDiscovery, LLC.

(“BioDiscovery”) business, the Company also offers an industry-leading, platform-agnostic software solution, which integrates next-generation sequencing and microarray data designed to provide analysis, visualization, interpretation and reporting of copy number variants, single-nucleotide variants and absence of heterozygosity across the genome in one consolidated view.

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These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

As of September 30, 2021, the Company had approximately $ 140.7 million in cash and cash equivalents, $ 185.3 million in available-for-sale investment securities, and working capital of $ 324.3 million as a result of common stock offerings executed in the quarters ended December 31, 2020, March 31, 2021, and September 30, 2021.

In February 2021, we applied for forgiveness of our Paycheck Protection Program Loan of approximately $ 1.8 million (“the PPP Loan”) , and in March 2021, the PPP Loan, including all accrued interest, was forgiven in full.

During the previous quarter ended June 30, 2021, the outstanding term loan with Innovatus (as defined below) was paid in full, including all accrued interest, an end of term fee, and a prepayment fee for a total of $ 17.0 million.

The Company believes its available cash balance will be sufficient to fund operations, obligations as they become due and capital investments for at least the next twelve months.

As of March 31, 2022, the Company had approximately $ 24.0 million in cash and cash equivalents, $ 192.4 million in available for sale investment securities, and working capital of $ 223.7 million as a result of common stock offerings executed in the quarters ended December 31, 2020, March 31, 2021, and September 30, 2021.

In February 2021, the Company applied for forgiveness of its Paycheck Protection Program Loan of approximately $ 1.8 million (the “PPP Loan”), and in March 2021, the PPP Loan, including all accrued interest, was forgiven in full.

The Company believes its available cash, cash equivalents, and available for sale securities will be sufficient to fund operations, obligations as they become due and capital investments for at least the next 12 months.

However, the Company expects to continue to incur net losses for the foreseeable future.

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The Company closely monitors and complies with various applicable guidelines and legal requirements in the jurisdictions in which it operates, which may continue to result in reduced business operations in response to new or existing stay-at-home orders, travel restrictions and other social distancing measures.

The Company’s manufacturing partners, suppliers, and customers, have implemented similar operational restrictions.

Despite reporting an increase in revenue for the three and nine months ended September 30, 2021 when compared to the same period in 2020, the Company believes travel restrictions and overall reduced activity had a continued negative impact on the Company’s third quarter 2021 financial results.

If restrictions related to COVID-19 persist, the Company could see additional supply chain disruptions that impact its ability to produce its products and may cause the Company to make strategic determinations regarding, among other things, the cost and quality of the components and supplies it acquires.

The Company may also see negative effects on study enrollment in its ongoing or future studies.

At various times throughout the pandemic, the Company has been unable to visit certain customer sites to support installation or service of its OGM systems.

The Company’s manufacturing partners, suppliers, and customers, have implemented similar operational reductions.

Despite reporting an increase in revenue for the three months ended March 31, 2022 when compared to the same period in 2021, the Company experienced supply chain constraints that negatively impacted the Company’s first quarter 2022 financial results.

Given the continued evolution of the COVID-19 pandemic and the related complexities and uncertainties associated with the additional variants, the future effects of COVID-19 are unknown and the Company’s financial results may continue to be negatively affected in the future.

During the three months ended March 31, 2022, the Company experienced supply chain challenges, which it largely attributes to the COVID-19 pandemic.

While the COVID-19 pandemic did not prevent the Company from operating its business during the three months ended March 31, 2022, it experienced increased cost to secure certain component parts in its products and to produce its products at its contract manufacturers.

There may be long-term negative effects of the COVID-19 pandemic, even after it has subsided.

Specifically, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, reduction in consumer confidence, or any similar negative economic condition.

Further, the travel restrictions on the Company’s business have limited its ability to support its global and domestic operations, including providing installation and training and customer service, which has and may continue to slow the pace of its commercial strategy, sales and marketing efforts.

These negative effects could have a material impact on the Company’s operations, business, earnings, and liquidity.

Significant Accounting Policies

During the three and nine months ended September 30, 2021, there were no changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, other than the accounting policy indicated below.

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis.

Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date.

ASC 820, “Fair Value Measurements and Disclosures”, defines and establishes a framework for measuring fair value and expands disclosures about fair value measurements.

In accordance with ASC 820, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date.

Level 2 – Assets and liabilities whose values are based on quoted prices for similar attributes in active markets;

quoted prices in markets where trading occurs infrequently;

and inputs other than quoted prices that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Investment Securities

All investments have been classified as “available-for-sale” and are carried at fair value as determined based upon quoted market prices or pricing models for similar securities at period end.

Investments with contractual maturities less than 12 months at the balance sheet date are considered short-term investments.

Investments with contractual maturities beyond one year are also classified as short-term due to the Company’s ability to liquidate the investment for use in operations within the next 12 months.

Realized gains and losses on investment securities are included in earnings and are derived using the specific identification method for determining the cost of securities sold.

The Company has not realized any significant gains or losses on sales of available-for-sale investment securities during any of the periods presented.

As all the Company’s investment holdings are in the form of debt securities, unrealized gains and losses that are determined to be temporary in nature are reported as a component of accumulated other comprehensive income (loss).

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security.

Interest income is recognized when earned, as are the amortization of purchase premiums and accretion of purchase discounts on investment securities.

During the three months ended March 31, 2022, there were no changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Recently Issued But Not Yet Adopted Accounting Pronouncements

In February 2015, the FASB issued Accounting Standards Update (“ASU”) 2016-2, Leases (Topic 842) , which amends the accounting guidance for leases and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements.

ASU 2016-2 initially mandated a modified retrospective transition method, however, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842):

Targeted Improvements, which amends ASU 2016-2, permitting entities the option to adopt this standard prospectively with a cumulative-effect adjustment to opening equity in the year of adoption and include required disclosures for prior periods but will not restate prior periods.

The Company anticipates implementing the accounting guidance for leases using the alternative method beginning with the annual reporting period ending December 31, 2021 and interim reporting periods in 2022.

The Company is in the process of evaluating the impact of adoption of the lease accounting guidance on the consolidated financial statements.

In June 2016, the FASB issued ASU No.

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The Company is currently evaluating the expected impact of ASU 2016-13 on its financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02, “Leases (Topic 842)” (“ASC 842”) which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements.

ASC 842 establishes a right-of-use model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

ASC 842 also requires disclosures to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The standard was adopted on January 1, 2021, as the Company lost its status as an Emerging Growth Company effective December 31, 2021, and therefore was required to adopt the standard for the year ending December 31, 2021, using the modified retrospective method.

Under this transition method, the Company recognized and measured leases that existed at the adoption date in the consolidated balance sheet as of January 1, 2021.

In connection with the adoption of ASC 842, the Company elected the package of practical expedients requiring no reassessment of whether any expired or existing contracts contain leases, the lease classification of any expired or existing leases, or initial direct costs for any existing leases.

The Company also made accounting policy elections not to apply the recognition requirements under ASC 842 to any short-term leases and to account for each separate lease and associated non-lease components as a single lease component for all the Company’s leases.

The adoption of this new accounting standard resulted in increased qualitative and quantitative disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases.

For further details, see Note 7, Commitments and Contingencies.

The adoption of the new standard did not materially impact the Company’s consolidated results of operations.

In May 2021, the FASB issued ASU No.

2021-04, Issuer’s Accounting for Certain Modifications or Exchanges for Freestanding Equity-Classified Written Call Options to clarify the accounting for modifications or exchanges of equity-

classified warrants.The standard is effective for fiscal years beginning after December 15, 2021.

2021-04, Issuer’s Accounting for Certain Modifications or Exchanges for Freestanding Equity-Classified Written Call Options to clarify the accounting for modifications or exchanges of equity-classified warrants.

The standard is effective for fiscal years beginning after December 15, 2021.

Early adoption is permitted.

The Company is in the process of evaluating the expected impact of ASU 2021-04 on its financial statements.

The Company’s adoption of this accounting standard on January 1, 2022, did not have a material impact on the Company’s consolidated financial statements and related disclosures .

Net Loss Per Share

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Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common share equivalents outstanding for the period.

Common stock equivalents are only included when their effect is dilutive.

The Company’s potentially dilutive securities which include warrants, outstanding stock options, and Restricted Stock Units (“RSUs”) under the Company’s equity incentive plan have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding.

Common share equivalents are only included when their effect is dilutive.

Pre-funded warrants from the Company’s follow-on offering have been treated as if they were common shares outstanding on the date of issuance.

The Company’s potentially dilutive securities which include outstanding warrants to purchase stock and outstanding stock options under the Company’s equity incentive plans have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share.

Restricted stock is treated as outstanding for accounting purposes.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

September 30,

2021 September 30,

2022 March 31,

Stock options 21,531,000 5,126,000

Unvested restricted stock 4,257,000

Warrants 4,356,000 4,411,000

RSUs 296,000 —

PSUs 290,000 —

Total 30,730,000 9,537,000

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Revenue by Source

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Instruments $ 1,596,000 $ 882,000

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Revenue by Geographic Location

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

$ % $ % $ % $ %

North America $ 2,557,000 55 % $ 874,000 40 % $ 6,419,000 55 % $ 2,388,000 53 %

Three Months Ended March 31,

Americas $ 3,328,000 58 % $ 1,498,000 47 %

EMEIA 1,739,000 31 % 1,587,000 50 %

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The table above provides revenue from contracts with customers by source and geographic region (based on the customer’s billing address) on a disaggregated basis.

North America consists of the United States and Canada.

Americas consists of North America and South America.

EMEIA consists of Europe, the Middle East, India and Africa.

Asia Pacific includes China, Japan, South Korea, Singapore and Australia.

For the three months ended September 30, 2021 and 2020, the United States represented 44.2 % and 40.0 % of total revenue, respectively.

Additionally, for the three months ended September 30, 2021, China and Canada represented 17.9 % and 10.8 % of total revenue, respectively.

For the three months ended September 30, 2020, no countries other than the United States represented greater than 10% of revenue.

For the nine months ended September 30, 2021 and 2020, the United States represented 50.0 % and 51.0 % of total revenue, respectively.

No other countries represented greater than 10% of revenue during the nine months ended September 30, 2021 and 2020.

For the three months ended March 31, 2022 and 2021, the United States represented 45.0 % and 44.8 % of total revenue, respectively.

No other countries represented greater than 10% of revenue during the three months ended March 31, 2022 and 2021.

Remaining Performance Obligations

As of September 30, 2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was $ 569,000 .

As of March 31, 2022, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $ 1.2 million.

These remaining performance obligations primarily relate to extended warranty and support and maintenance obligations.

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Warranty revenue is included in service and other revenue.

The Company recognized revenue of $ 79,000 and $ 66,000 during the three months ended September 30, 2021 and 2020, respectively, and revenue of $ 326,000 and $ 299,000 during the nine months ended September 30, 2021 and 2020, respectively, which was included in the contract liability balance at the end of the previous year.

The Company recognized revenue of approximately $ 0.3 million and $ 0.2 million during the three months ended March 31, 2022 and 2021, respectively, which was included in the contract liability balance at the end of the previous year.

Balance Sheet Account Details

Accounts Receivable

September 30,

2022 December 31,

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$ 5,514,000 $ 4,934,000

The Company extends credit to its customers in the normal course of business.

For diagnostic testing services, receivables are based on either contractual rates with third-party payors, plus the amounts expected to be collected for any patient-responsibility portion, or for non-contracted arrangements, using the amounts expected to be collected from third-party payors and/or the patient-customer based on historical collection experience.

The Company does not perform credit evaluations and therefore subsequent adjustments to the amount expected to be collected are recorded to revenue.

The balance of our Lineagen accounts receivable balance as of September 30, 2021 was $ 680,000 .

For optical genome mapping (“OGM”) products and services, credit is extended based upon an evaluation of each customer’s credit history, financial condition, and other factors.

Estimates of allowances for doubtful accounts are determined by evaluating individual customer circumstances, historical payment patterns, length of time past due, and economic and other factors.

Bad debt expense is recorded as necessary to maintain an appropriate level of allowance for doubtful accounts in selling, general and administrative expense.

During the three and nine months ended September 30, 2021, the Company recorded a recovery of bad debt expense of $( 10,000 ) and $( 50,000 ), respectively, which is included in selling, general and administrative expenses.

Amounts are charged to the allowance for doubtful accounts when collection efforts have been exhausted and are deemed uncollectible.

Concentrations

Accounts receivable is subject to concentration risk whenever a customer has a balance that meets or exceeds 10.0% of the Company’s total accounts receivable balance.

As of September 30, 2021, no customers met or exceeded 10% of the Company’s total accounts receivable balance.

As of December 31, 2020, two customer balances represented 27.4 % of the Company’s total accounts receivable balance.

Inventory is stated at the lower of cost or net realizable value, on a first-in, first-out basis.

Inventory includes raw materials and finished goods that may be used in the research and development process and such items are expensed as consumed or expired.

Provisions for slow-moving, excess, and obsolete inventories are estimated based on product life cycles, historical experience, and usage forecasts.

The components of inventories are as follows:

September 30,

2022 December 31,

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$ 16,268,000 $ 12,387,000

Intangible Assets

Intangible assets that are subject to amortization consisted of the following for the periods presented:

March 31, 2022

December 31, 2021

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Trade name $ 1,630,000 $ ( 290,000 ) $ 1,340,000 $ 1,630,000 $ ( 210,000 ) $ 1,420,000

Customer relationships 3,950,000 ( 576,000 ) 3,374,000 3,950,000 ( 378,000 ) 3,572,000

Developed technology 22,800,000 ( 2,090,000 ) 20,710,000 22,800,000 ( 950,000 ) 21,850,000

Intangibles, net $ 28,380,000 $ ( 2,956,000 ) $ 25,424,000 $ 28,380,000 $ ( 1,538,000 ) $ 26,842,000

Accrued Expenses

Accrued expenses consist of the following:

2022 December 31,

Compensation expenses $ 3,946,000 $ 4,529,000

Goods received not invoiced 1,238,000 1,073,000

Customer deposits 979,000 826,000

Taxes payable 685,000 677,000

Insurance 389,000 1,011,000

Professional fees and royalties 218,000 288,000

Warranty liabilities 175,000 175,000

Other 1,306,000 1,115,000

Total $ 8,936,000 $ 9,694,000

Paycheck Protection Program

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Small Business Administration (the “SBA”).

The PPP Loan accrued interest at a rate of 1.00% per annum, and is subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act.

In February 2021, the Company applied for forgiveness of the PPP Loan, and in March 2021, the PPP Loan, including all accrued interest, was forgiven in full.

A gain on forgiveness of Paycheck Protection Program loan of $ 1.8 million was recognized during the nine months ended September 30, 2021.

Innovatus LSA

In March 2019, the Company entered into a Loan and Security Agreement (the “LSA”) by and among Innovatus Life Sciences Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent and the lenders listed on Schedule 1.1 thereto, including East West Bank.

The LSA provided a first term loan of $ 17.5 million, a second term loan of $ 2.5 million and a third term loan of $ 5.0 million (collectively, the “Term Loans”) if the Company satisfied certain funding conditions.

Interest on the Term Loans is due on the first of each month at a rate of 10.25 % per annum in cash or a discounted rate of 7.25 % in cash with 3.0 % of the 10.25 % per annum rate added to the principal of the loan and subject to accruing interest through the end of the interest only payment period, which ends March 1, 2022.

At inception, the Company elected to pay interest in cash at a rate of 7.25 % per annum and have 3.0 % per annum of the interest added back to the outstanding principal.

As of May 14, 2021 (the effective date of the loan payoff), the effective interest rate, including debt issuance costs, for the Term Loans was 16.7 %.

The LSA provided for prepayment fees of 3.0 % of the outstanding balance of the loan if the loan is repaid on or prior to March 14, 2020, 2.0 % of the amount prepaid if the prepayment occurs after March 14, 2020 but prior to March 14, 2021, 1.0 % of the amount prepaid after March 14, 2021 but prior to March 14, 2022 and 0 % of the amount prepaid if the prepayment occurs thereafter.

In addition, upon the final repayment of the total amounts borrowed, the Company is required to pay an end of term fee of $ 0.8 million.

This end of term fee was being recognized as interest expense over the term of the LSA.

As of September 30, 2021, the outstanding term loan with Innovatus was paid in full, including all accrued interest, the end of term fee, and a prepayment fee for a total of $ 17.0 million.

The LSA also provides for a revolving line of credit in an amount not to exceed $ 5.0 million (the “Revolver”), which was terminated effectively upon payment in full of the above term loan.

Summary of Debt Obligations

The Company had no debt as of September 30, 2021.

The carrying value of the Company’s debt as of December 31, 2020 was as follows:

Term Loans $ 15,981,000

PPP Loan 1,775,000

Total principal 17,756,000

Less unamortized debt issuance costs ( 1,430,000 )

Total carrying value of debt $ 16,326,000

A gain on forgiveness of Paycheck Protection Program loan of $ 1.8 million was recognized during the three months ended March 31, 2021.

Innovatus Loan and Security Agreement

In May 2021, the outstanding term loan with Innovatus (“Innovatus LSA”) was paid in full, including all accrued interest, the end of term fee, and a prepayment fee for a total of approximately $ 17.0 million.

Interest expense recognized during the three months ended March 31, 2021 totaled approximately $ 0.6 million.

Stockholders’ Equity and Stock-Based Compensation

Follow-on Public Offerings

On January 12, 2021, the Company completed an underwritten public offering of 33,368,851 shares of common stock, including 4,352,458 shares of common stock sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares.

The price to the public in the offering was $ 3.05 per share and the underwriters purchased the shares from the Company pursuant to the underwriting agreement at a price of $ 2.867 per share.

The gross proceeds were approximately $ 101.8 million before deducting underwriting discounts and commissions and other offering expenses of $ 293,000 .

On January 25, 2021, the Company completed an underwritten public offering of 38,333,352 shares of common stock, including 5,000,002 shares of common stock sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares.

The price to the public in the offering was $ 6.00 per share and the underwriters purchased the shares from the

Company pursuant to the underwriting agreement at a price of $ 5.64 per share.

The gross proceeds were approximately $ 230.0 million before deducting underwriting discounts and commissions and other offering expenses of $ 435,000 .

On January 12, 2021 and January 25, 2021, the Company completed an underwritten public offering of 33.4 million and 38.3 million shares of common stock, respectively.

The price to the public in the offerings on January 12, 2021 and January 15,

2021 was $ 3.05 and $ 6.00 per share, respectively.

The net proceeds to the Company from the offerings, after deducting the underwriting discounts and commissions and other offering expenses, were $ 101.5 million and $ 229.6 million, respectively.

Shelf Registration Statements;

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acting as sales agent (the “Ladenburg ATM”).

During October through December 2020, the Company sold 27,025,384 shares of common stock under the Ladenburg ATM at an average share price of $ 0.82 , and received gross proceeds of approximately $ 22.1 million before deducting offering costs of $ 573,000 .

In January 2021, the Company sold an additional 6,298,152 shares of common stock under the ATM at an average share price of $ 2.68 , and received gross proceeds of approximately $ 16.9 million before deducting offering costs of $ 422,000 .

During October 2020 through January 2021, the Company sold approximately 27.0 million shares of common stock under the Ladenburg ATM and received net proceeds of $ 38.0 million after deducting aggregate offering costs.

The Company terminated the Ladenburg ATM in March 2021.

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The Company agreed to pay Cowen a commission of up to 3.0 % of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Cowen with customary indemnification and contribution rights.

In August and September 2021, the Company sold 2,256,000 shares of common stock under the Cowen ATM at an average share price of $ 6.15 per share, and received gross proceeds of approximately $ 13.9 million before deducting offering costs of $ 0.6 million.

In August and September 2021, the Company sold approximately 2.3 million shares of common stock under the Cowen ATM at an average share price of $ 6.15 per share, and received gross proceeds of approximately $ 13.9 million before deducting offering costs of $ 0.6 million.

There were no sales of common stock under the Cowen ATM from January 1, 2022 to March 31, 2022 .

Stock Warrants

A summary of the Company’s warrant activity during the nine months ended September 30, 2021 was as follows:

A summary of the Company’s warrant activity during the three months ended March 31, 2022 was as follows:

Shares of Stock under Warrants Weighted-

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Outstanding at January 1, 2022 4,356,000 $ 5.96 1.76 $ 785,000

Granted — — — —

Exercised — — — —

Canceled — — — —

Outstanding at September 30, 2021

Outstanding at March 31, 2022

4,356,000 $ 5.96 1.76 $ 785,000

Stock Options

A summary of the Company’s stock option activity during the nine months ended September 30, 2021 was as follows:

A summary of the Company’s stock option activity during the three months ended March 31, 2022 was as follows:

Shares of Stock under Stock Options Weighted-

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Canceled ( 904,000 ) 5.73 — —

Outstanding at September 30, 2021

Outstanding at March 31, 2022

21,531,000 $ 3.69 9.11 $ 10,131,000

Vested and exercisable at September 30, 2021

Vested and exercisable at March 31, 2022

4,018,000 $ 3.66 7.88 $ 3,972,000

For the three months ended September 30, 2021 and 2020, the weighted-average grant date fair value of stock options granted was $ 3.64 and $ 0.35 per share, respectively.

For the nine months ended September 30, 2021 and 2020, the weighted-average grant date fair value of stock options granted was $ 4.78 and $ 0.43 per share, respectively.

For the three months ended March 31, 2022, the weighted-average grant date fair value of stock options granted was $ 1.39 per share.

Stock-Based Compensation

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Research and development $ 3,328,000 $ 81,000

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Risk-free interest rate 1.9 % 0.7 %

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Expected dividend yield 0.0 % 0.0 %

Restricted Stock Units

On May 12, 2021, the compensation committee of the Company’s board of directors granted 580,000 RSUs to R.

Erik Holmlin, Ph.D., the Company’s President and Chief Executive Officer (the “Holmlin Grant”), and 240,000 RSUs to Mark Oldakowski, the Company’s Chief Operating Officer (the “Oldakowski Grant”), in each case with an effective grant date and vesting commencement date of May 12, 2021.

290,000 RSUs under the Holmlin Grant are subject to time-based vesting, with 50 % of the shares vesting on each of the first and second anniversaries of the vesting commencement date, subject to continued service through the vesting date, and 18 months vesting acceleration upon a termination without cause or resignation with good reason.

290,000 RSUs under the Holmlin Grant are subject to vesting upon the satisfaction of certain specified revenue targets within four years following the vesting commencement date.

Holmlin’s employment with the Company is terminated without cause or he resigns with good reason, then the shares will continue to be eligible for vesting upon satisfaction of the revenue targets within a period that is the shorter of 18 months following termination or four years following the vesting commencement date.

The RSUs comprising the Oldakowski Grant are subject to time-based vesting, with 50 % of the shares vesting on each of the first and second anniversaries of the vesting commencement date, subject to continued service through the vesting date.

Restricted Stock

A restricted stock award in the amount of 5.0 million shares with a grant date fair value of $ 5.20 a share was granted as part of the acquisition of BioDiscovery.

One-third of the Restricted Shares will vest on October 18, 2022 and one-twelfth of the Restricted Shares shall vest every three months following October 18, 2022, subject to continuous service of a key employee.

The weighted average remaining contractual term for the restricted stock is 2.6 years as of March 31, 2022.

The fair value of the restricted stock award is based on the market value of common stock as of the date of grant and is amortized to expense over the respective vesting period or the service period.

Restricted Stock Units and Performance Stock Units

The following table summarizes restricted share unit (“RSU”) activity during the three months ended March 31, 2022:

Stock Units Weighted- Average Grant Date Fair Value per Share

Outstanding at January 1, 2022 361,000 $ 4.74

Released ( 65,000 ) 4.74

Forfeited — —

Outstanding at March 31, 2022

296,000 $ 4.74

The total intrinsic value of the RSUs that vested was $ 0.3 million during the three months ended March 31, 2022, determined as of the date of vesting.

The weighted average remaining contractual term for the RSUs is 1.1 years as of March 31, 2022.

The following table summarizes performance share unit (“PSU”) activity during the quarter ended March 31, 2022:

Stock Units Weighted- Average Grant Date Fair Value per Share

Outstanding at January 1, 2021 290,000 $ 4.74

Forfeited — —

Outstanding at March 31, 2022

290,000 $ 4.74

The weighted average remaining contractual term for the PSUs is 3.1 years as of March 31, 2022.

Executive Option Grants

On February 15, 2022, the compensation committee of the Company’s board of directors granted various executive officers stock options to purchase an aggregate of 4.3 million shares of common stock at an exercise price of $ 2.18 a share, in each case with an effective grant date and vesting commencement date of February 15, 2022 (the “Grant Date”).

These stock option grants were issued from the 2018 Stock Plan.

The shares subject to the option shall vest monthly over 48 months beginning on the one-month anniversary of the Grant Date, such that the option shall be fully vested and exercisable on the four-year anniversary of the Grant Date.

Commitments and Contingencies

The Company discounts its lease payments using its incremental borrowing rate as of the commencement of the lease.

The Company has determined a weighted-average discount rate of 7.1 % as of March 31, 2022 and December 31, 2021.

The operating lease right-of-use asset and operating lease liability as of March 31, 2022 and December 31, 2021 are as follows:

March 31, 2022 December 31, 2021

Operating lease right-of-use assets $ 6,817,000 $ 6,691,000

Operating lease liability

Current 1,730,000 1,467,000

Non-current 5,451,000 5,288,000

Total operating lease liability $ 7,181,000 $ 6,755,000

For the three months ended March 31, 2022, the Company recorded $ 0.5 million in expense related to operating leases, including amortized tenant improvement allowances.

For the three months ended March 31, 2021, the Company recorded $ 0.2 million in expense related to operating leases, including amortized tenant improvement allowances.

The finance lease right-of-use asset and finance lease liability as of March 31, 2022 and December 31, 2021 are as follows:

March 31, 2022 December 31, 2021

Finance lease right-of-use assets $ 3,897,000 $ 3,926,000

Finance lease liability

Current 296,000 299,000

Non-current 3,638,000 3,642,000

Total finance lease liability $ 3,934,000 $ 3,941,000

For the three months ended March 31, 2022, the Company recorded $ 0.1 million in expense related to its finance lease.

The Company did not hold a finance lease as of March 31, 2021.

The future minimum payments under non-cancellable operating and finance leases as of March 31, 2022, are as follows:

Operating Leases Finance Lease

Remainder of 2022 $ 1,538,000 $ 236,000

2023 2,149,000 322,000

2024 2,219,000 330,000

2025 2,305,000 338,000

2026 232,000 347,000

Thereafter — 5,949,000

Total future lease payments 8,443,000 7,522,000

imputed interest ( 1,262,000 ) ( 3,588,000 )

Total lease liabilities $ 7,181,000 $ 3,934,000

From time to time, the Company may be subject to potential liabilities under various claims and legal actions that are pending or may be asserted.

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Based on the Company’s assessment, it currently does not have any material loss exposure as it is not a defendant in any claims or legal actions.

The Company is subject to taxation in the United States, United Kingdom and various state jurisdictions.

The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter.

The primary difference between the effective tax rate and the federal statutory tax rate relates to the full valuation allowance on the Company’s U.S.

net operating losses.

Acquisition of Lineagen

On August 21, 2020, the Company, Alta Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), Lineagen, a Delaware corporation, and Michael S.

Paul, Ph.D., solely in his capacity as exclusive agent and attorney-in-fact of the security-holders of Lineagen, entered into an Agreement and Plan of Merger (the “Merger Agreement”).

Pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into Lineagen whereupon the separate corporate existence of Merger Sub ceased, with Lineagen continuing as the surviving corporation of the Merger as a wholly owned subsidiary of the Company.

Lineagen’s expertise in development, commercialization and reimbursement of laboratory-developed tests provides a platform for accelerating sales growth for the Company’s Saphyr system.

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Lineagen as if the companies had been combined as of January 1, 2019.

The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of January 1, 2019.

Three Months Ended September 30,

(Unaudited) Nine Months Ended September 30,

Contingent Consideration

See Note 9 to our condensed consolidated financial statements for a discussion of the contingent consideration liability.

BioDiscovery Acquisition

In October 2021, the Company completed the acquisition of BioDiscovery, LLC, for a combination of approximately $ 52.3 million in cash, $ 40.0 million in shares of Company common stock, and $ 10.0 million in cash payable based on the achievement of certain milestones.

Of the $ 40.0 million in shares of Company common stock, approximately $ 26.0 million is subject to vesting based on continuous service.

See Note 6 to our condensed consolidated financial statements for a discussion of the restricted stock vesting terms and accounting treatment.

The purchase price allocation for the acquisition of BioDiscovery is preliminary and subject to revision as additional information about the fair value of assets and liabilities becomes available.

As permitted under ASC 805, the Company is allowed a measurement period, which may not exceed one year, in which to complete its accounting for the acquisition.

During the first quarter of 2022, the Company recorded an increase to the value of acquired contract liabilities in the amount of $ 94,000 , with the offset recorded to goodwill.

The purchase price is still subject to adjustment for the final determination of deferred and current tax assets and liabilities.

The following is the purchase price for the acquisition of BioDiscovery:

Cash $ 52,291,000

Estimated fair value of milestone consideration $ 9,000,000

Return of cash to buyer from escrow $ ( 694,000 )

Shares of common stock issued as consideration 2,723,000

Stock price per share on closing date $ 5.20

Value of estimated common stock consideration $ 14,159,000

Total purchase price $ 74,756,000

The total purchase price was allocated to BioDiscovery’s tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded as goodwill, as follows:

Cash and cash equivalents $ 3,205,000

Accounts receivable 1,782,000

Right-of-use assets 3,987,000

Other assets 213,000

Intangible assets 26,800,000

Goodwill 49,081,000

Accounts payable and other accrued liabilities ( 193,000 )

Right-of-use liabilities (short-term and long-term) ( 3,987,000 )

Deferred tax liability ( 5,777,000 )

Contract liabilities ( 355,000 )

Net assets acquired $ 74,756,000

The acquisition date fair values of identifiable intangible assets acquired are as follows:

Customer relationships $ 3,000,000

Developed technology 22,800,000

Tradename 1,000,000

Fair value of identifiable intangible assets $ 26,800,000

The Company uses the income approach to derive the fair value of the identified intangible assets acquired.

This approach calculates fair value by estimating future cash flows attributable to the assets and then discounting these cash flows to a present value using a risk-adjusted discount rate.

The developed technology, customer relationships and trade name intangibles are both being amortized on a straight-line basis over their estimated useful lives of five years .

Straight-line amortization was determined to be materially consistent with the pattern of expected use of the intangible assets.

As the Company began integrating BioDiscovery’s operations with its existing operations during the fourth quarter of 2021, it is not practical or meaningful to distinguish BioDiscovery’s expenses or net income or loss from that of the combined operations.

Pro forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and BioDiscovery as if the companies had been combined as of the beginning of the year prior to the acquisition.

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of BioDiscovery to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied at the beginning of the year prior to the acquisition.

The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisitions had taken place as of January 1, 2020.

Three Months Ended March 31,

Revenue $ 4,154,000

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Basic and diluted net loss per share

$ ( 0.07 ) $ ( 0.33 )

Acquisition of BioDiscovery

On October 8, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which the Company agreed to acquire BioDiscovery, Inc (“Biodiscovery”).

Under the terms of the Merger Agreement,, Bionano purchased 100 % of the outstanding shares of BioDiscovery on October 18, 2021.

Pursuant to the Merger Agreement, the Company paid upfront consideration consisting of a combination of approximately $ 50 million in cash and $ 40 million in shares of Company common stock.

The upfront consideration is subject to adjustment for, among other things, cash, unpaid indebtedness, unpaid transaction expenses and working capital relative to a target.

Approximately $ 27 million worth of shares of Company common stock issued as upfront consideration pursuant to the Merger Agreement are subject to vesting based on continued service, subject to the terms and conditions of a stock restriction agreement.

Under the Merger Agreement, the Company has also agreed to pay a milestone payment of $ 10 million in cash based on the achievement of certain commercial milestones.

The Merger Agreement has a customary post-closing purchase price adjustment mechanism.

Fair Value Measurements

Investments and Fair Value Measurements

The Company holds investment securities that consist of highly liquid, investment grade debt securities.

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Such valuations may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curves, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, and broker and dealer quotes, as well as other relevant economic measures.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis in the Unaudited Consolidated Balance Sheets:

September 30, 2021

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021:

March 31, 2022

Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category

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Money Market Funds $ 7,700,000 $ 7,700,000 $ — $ —

Contingent consideration $ 9,145,000 $ — $ — $ 9,145,000

December 31, 2021

Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category

Level 1 Level 2 Level 3

Commercial Paper $ 100,860,000 $ — $ 100,860,000 $ —

Corporate Notes/Bonds 125,181,000 — 125,181,000 —

Total Investments:

$ 226,041,000 $ — $ 226,041,000 $ —

Money Market Funds $ 11,126,000 $ 11,126,000 $ — $ —

Contingent consideration $ 9,066,000 $ 9,066,000

Money Market Funds are classified as cash equivalents on the balance sheet.

The Company did not hold any investments as of December 31, 2020.

As of September 30, 2021, the Company held 44 securities in an unrealized loss position.

None of the Company’s available-for-sale investment securities were in a material unrealized loss position at September 30, 2021.

As of March 31, 2022 and December 31, 2021, the Company held 51 and 57 securities in an unrealized loss position, respectively.

None of the Company’s available for sale investment securities were in a material unrealized loss position at March 31, 2022 or December 31, 2021.

As such, the Company has not recognized any impairment in its financial statements related to its available for sale investment securities.

As of September 30, 2021, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities:

The fair value of the contingent consideration liability is reassessed on a quarterly basis using the income approach.

Assumptions used to estimate the acquisition date fair value of the contingent consideration include the probability of achieving certain milestones and a discount rate of 3 %.

The fair value measurement of the contingent consideration is based on significant inputs not observed in the market (Level 3 inputs).

The Company determined the fair value of the milestone consideration using a scenario-based technique, as the trigger for payment is event driven.

The outcome of the milestone consideration is binary, meaning the milestone is either achieved or not achieved, and the only other variable factor is the timing of when the milestone is achieved.

The Company determined it is highly likely that the milestone will be achieved and therefore used a 95% probability factor which is applied to the $ 10.0 million milestone consideration.

The change in fair value of the contingent consideration during the three month period ended March 31, 2022 was due to the passage of time.

Changes in estimated fair value of contingent consideration liability in the three months ended March 31, 2022 is as follows:

Consideration

Balance as of January 1, 2021 $ 9,066,000

Liability recorded as a result of current period acquisition —

Change in estimated fair value, recorded in selling, general and administrative expenses 79,000.00

Cash payments —

Balance as of March 31, 2022

As of March 31, 2022, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities:

Commercial Paper Corporate Notes/Bonds

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Total $ 75,922,000 $ ( 280,000 ) $ 118,135,000 $ ( 1,357,000 )

Included in interest income for the three-month period ended September 30, 2021 was interest income related to the Company’s available for sale securities of $ 13,000 .

All interest income related to the available for sale securities in 2021 related to three-month period ended September 30, 2021.

As of December 31, 2021, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities:

Commercial Paper Corporate Notes/Bonds

Amortized Cost

Unrealized loss

Amortized Cost

Unrealized loss

Less than 1 year $ 100,929,000 $ ( 69,000 ) $ 41,173,000 $ ( 61,000 )

Due after one year through five years — — 84,478,000 ( 409,000 )

Total $ 100,929,000 $ ( 69,000 ) $ 125,651,000 $ ( 470,000 )

Included in interest income for the three-month period ended March 31, 2022 was interest income related to the Company’s available for sale securities of $ 0.1 million.

All available for sale securities are classified as current assets, even if the maturity when acquired by the Company is greater than one year due to the ability to liquidate within the next 12 months.

Related Party Transactions

Through the acquisition of BioDiscovery in October 2021, the Company inherited a building lease with a landlord owned by BioDiscovery’s former Director and Chief Executive Officer, who is now the Company’s Chief Informatics Officer.

The Company recorded $ 0.1 million in finance lease costs related to this lease for the three-month period ended March 31, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements