What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 178 added, 81 removed, 536 unchanged (33% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2023 December 31,

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Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized at June 30, 2023 and December 31, 2022;

no shares issued and outstanding at June 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value, 400,000,000 shares authorized at June 30, 2023 and December 31, 2022;

33,240,000 and 29,718,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

10,000,000 shares authorized at September 30, 2023 and December 31, 2022;

no shares issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value, 400,000,000 shares authorized at September 30, 2023 and December 31, 2022;

35,349,000 and 29,718,000 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 656,406,000 599,234,000

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Selling, general and administrative 24,896,000 21,216,000 77,809,000 63,275,000

Goodwill impairment

77,280,000 — 77,280,000 —

Total operating expenses 115,961,000 33,958,000 197,420,000 98,311,000

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Balance at June 30, 2022 29,006,000 $ 3,000 $ 564,878,000 $ ( 278,229,000 ) $ ( 1,918,000 ) $ 284,734,000

Stock option exercises 13,000 — 111,000 — — $ 111,000

Stock-based compensation expense — — 6,059,000 — — $ 6,059,000

Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes 7,000 — — — — $ —

Issue common stock, net of issuance costs 664,000 — 22,550,000 — — $ 22,550,000

Issue stock for employee stock purchase plan — — — — $ —

Net loss — — — ( 31,809,000 ) — $ ( 31,809,000 )

Other comprehensive income (loss) — — — — 96,000 $ 96,000

Balance at September 30, 2022

29,690,000 3,000 593,598,000 ( 310,038,000 ) ( 1,822,000 ) 281,741,000

Balance at January 1, 2023 29,718,000 $ 3,000 $ 599,234,000 $ ( 348,715,000 ) $ ( 1,124,000 ) $ 249,398,000

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Balance at June 30, 2023 33,240,000 $ 3,000 $ 639,814,000 $ ( 424,751,000 ) $ ( 310,000 ) $ 214,756,000

Stock option exercises — — — — — —

Stock-based compensation expense — — 3,992,000 — — 3,992,000

Issue common stock, net of issuance costs 2,109,000 — 12,661,000 — — 12,661,000

Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes — — ( 61,000 ) — — ( 61,000 )

Net loss — — — ( 112,566,000 ) — ( 112,566,000 )

Other comprehensive income (loss) — — — 217,000 217,000

Balance at September 30, 2023

35,349,000 $ 3,000 $ 656,406,000 $ ( 537,317,000 ) $ ( 93,000 ) $ 118,999,000

See accompanying notes to the unaudited condensed consolidated financial statements

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Condensed Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

Net loss $ ( 188,602,000 ) $ ( 93,919,000 )

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

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

Depreciation and amortization expense 10,112,000 6,855,000

Goodwill impairment

Amortization of financing lease right-of-use asset 153,000 168,000

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Investing Activities:

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

Purigen acquisition, return of purchase consideration from escrow 96,000 —

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The Company has experienced recurring net losses from operations, negative cash flows from operating activities, and accumulated deficit since its inception and expects to continue to incur net losses into the foreseeable future.

As of June 30, 2023, the Company had approximately $ 14.9 million in cash and cash equivalents, $ 62.2 million in short term investments, and working capital of $ 89.1 million.

The Company has an accumulated deficit of $ 424.8 million as of June 30, 2023.

During the six months ended June 30, 2023, the Company used $ 69.1 million cash in operations.

As of September 30, 2023, the Company had approximately $ 34.6 million in cash and cash equivalents and $ 29.0 million in short term investments.

The Company has an accumulated deficit of $ 537.3 million as of September 30, 2023.

During the nine months ended September 30, 2023, the Company used $ 95.4 million cash in operations.

Management expects operating losses and negative cash flows to continue for at least the next year as the Company continues to incur costs related to research and commercialization efforts.

Management has prepared cash flows forecasts which indicate that based on the Company’s expected operating losses and negative cash flows, there is substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2023, are issued.

Management’s ability to continue as a going concern is dependent upon its ability to raise additional funding.

Management’s plans to raise additional capital to fulfill its operating and

capital requirements for at least 12 months include public or private equity or debt financings.

Management’s plans to raise additional capital to fulfill its operating and capital requirements for at least 12 months include public or private equity or debt financings.

However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all.

See Note 5 to our

unaudited condensed consolidated financial statements for a discussion of our recent debt financing included elsewhere in this Quarterly Report on Form 10-Q for more information.

Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders.

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Significant Accounting Policies

During the three and six months ended June 30, 2023, 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, 2022.

During the three and nine months ended September 30, 2023, there were no material 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, 2022.

Restructuring

On October 9, 2023, the Company committed to a series of cost saving initiatives including a reduction in force (the “Workforce Reduction”) and, as a result of reducing facility costs and discretionary spending unrelated to headcount and combined with the cost savings from the reduction in force the Company initiated in May 2023, such plan is intended to decrease expenses and maintain a streamlined organization to support its business.

In connection with the Workforce Reduction, the Company currently estimates it will incur approximately $ 0.7 million of severance costs for impacted employees, consisting primarily of cash, which the Company expects to recognize in the fourth quarter of 2023.

The Company expects to substantially complete the Workforce Reduction by December 31, 2023.

The estimates of costs and expenses that the Company expects to incur in connection with the Workforce Reduction are subject to a number of assumptions and actual results may differ materially.

The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the Workforce Reduction.

Goodwill arises when the purchase price of an acquired business exceeds the fair value of the identifiable net assets acquired, with such excess recorded as goodwill on the balance sheet.

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An impairment charge for goodwill is recognized for the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the total goodwill allocated to the reporting unit.

As of June 30, 2023, we performed a qualitative assessment of goodwill impairment which included an evaluation of changes in industry, market and macroeconomic conditions as well as consideration of our financial performance and any significant trends.

Our qualitative assessment indicated that it was not more likely than not that goodwill is impaired as of June 30, 2023.

If we experience a sustained decline in our stock price or other material changes in the significant assumptions that affect the determination of the fair value of the Company’s single reporting unit, it may result in a goodwill impairment charge in future periods, and such charge may be material.

As of September 30, 2023, we performed a qualitative assessment of goodwill impairment which included an evaluation of changes in industry, market and macroeconomic conditions as well as consideration of our financial performance and any significant trends, including a sustained decline in our stock price.

Our qualitative assessment indicated that it is more likely than not that the fair value of the reporting unit is less than its carrying value as of September 30, 2023;

therefore, we performed a quantitative impairment analysis.

The Company determined the fair value of its reporting unit using a combination of the income and market approaches.

The Company placed a 50 % weighting on the market and income approach methods.

The determination of fair value using a market approach requires management to make significant assumptions related to the determination of an appropriate group of peer companies, and market revenue multiples from within the selected group of peer companies.

Under the income approach, the Company uses a discounted cash flow method, or DCF, to estimate the fair value of a reporting unit.

In applying the DCF method, an identified level of future cash flow is estimated.

The cash flow projections are based on ten-year financial forecasts developed by management that include purchasing volume, collections forecasts, capital spending trends, and cost assumptions to support anticipated growth, which are updated annually and reviewed by management.

Annual estimated cash flows and a terminal value are then discounted to their present value at an appropriate discount rate to obtain an indication of fair value.

The discount rate utilized reflects estimates of required rates of return for investments that are seen as similar to an investment in the reporting unit.

Because DCF analyses are based on management’s long-term financial projections and require significant estimates and judgments, the market approach is conducted in addition to the income approach in estimating the fair value of a reporting unit.

Under the market approach, the Company uses both a Guideline Public Company Method and Guideline Transactions Method to estimate the fair value of equity and the business enterprise value of a reporting unit.

The Guideline Public Company approach uses financial metrics from similar public traded companies to estimate fair value.

The Guideline Transaction Method calculates fair value by analyzing the actual prices paid for recent mergers and

acquisitions in the industry.

The Company believes that the current methodology used in determining the fair value at its reporting unit represent its best estimates.

In addition, the Company compares the aggregate fair value of the reporting unit to its overall market capitalization, including an estimated control premium based upon control premiums observed in comparable market transactions and other factors.

As of September 30, 2023, the carrying value of equity of the Company’s reporting unit exceeded its enterprise wide fair value of equity and the Company recognized a goodwill impairment charge, impairing goodwill of $ 77.3 million on the consolidated statements of operations and comprehensive loss for the quarter ended September 30, 2023.

No impairments were recorded for the same period in 2022.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment when the Company determines a triggering event has occurred.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or an asset group may not be recoverable.

When a triggering event has occurred, each impairment test is based on a comparison of the future expected undiscounted cash flow to the recorded value of the asset.

If the recorded value of the asset is more than the undiscounted cash flow, the asset is written down to its estimated fair value.

No impairments were recorded as of September 30, 2023 or for the same period in 2022.

The Company reviews its inventories for classification purposes.

The value of inventories not expected to be realized in cash, sold or consumed during the next 12 months are classified as non-current within Other long-term assets.

As of September 30, 2023, $ 7.1 million of inventories were included in Other long term assets.

Recently Adopted Accounting Pronouncements

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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 because all potentially dilutive securities were anti-dilutive.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding because all potentially dilutive securities were anti-dilutive.

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):

2023 June 30,

September 30,

2023 September 30,

Stock options 3,527,000 2,459,000

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Total 3,862,000 3,282,000

R evenue Recognition

Revenue Recognition

Revenue by Source

Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

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Total revenue $ 9,318,000 $ 7,221,000 $ 25,395,000 $ 19,587,000

The Company has revised the classification of its revenue between the categories in the table above for the June 30, 2022 statement of operations.

In the June 30, 2022 statement of operations, “software” was included in “service and other.”

The Company has revised the classification of its revenue between the categories in the table above for the September 30, 2022 statement of operations.

In the September 30, 2022 statement of operations, “software” was included in “service and other.”

Revenue by Geographic Location

Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

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The impact of this change on prior period disclosures is immaterial.

For the three months ended June 30, 2023 and 2022, the United States represented 39.1 % and 37.4 % of total revenue, respectively.

For the six months ended June 30, 2023 and 2022, the United States represented 40.1 % and 40.9 % of total revenue, respectively.

For the three and six months ended June 30, 2023, China represented 15.0 % and 10.2 % of total revenue, respectively.

For the three and six months ended June 30, 2022, China represented 19.3 % and 12.9 % of total revenue, respectively.

No other countries represented greater than 10% of revenue during the three and six months ended June 30, 2023 and 2022.

For the three months ended September 30, 2023 and 2022, the United States represented 51.2 % and 41.8 % of total revenue, respectively.

For the nine months ended September 30, 2023 and 2022, the United States represented 44.2 % and 41.3 % of total revenue, respectively.

For the nine months ended September 30, 2023, China represented 10.3 % of total revenue.

For the three and nine months ended September 30, 2022, China represented 13.4 % and 13.1 % of total revenue, respectively.

No other countries represented greater than 10% of revenue during the three and nine months ended September 30, 2023 and 2022.

Remaining Performance Obligations

As of June 30, 2023, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $ 1.2 million.

As of September 30, 2023, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $ 1.0 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 approximately $ 0.4 million and $ 0.2 million during the three months ended June 30, 2023 and 2022, respectively, which was included in the contract liability balance at the end of the previous year, and revenue of approximately $ 1.1 million and $ 0.5 million during the six months ended June 30, 2023 and 2022, respectively, which was included in the contract liability balance at the end of the previous year.

The Company recognized revenue of approximately $ 0.2 million and $ 0.1 million during the three months ended September 30, 2023 and 2022, respectively, which was included in the contract liability balance at the end of the previous year, and revenue of approximately $ 1.3 million and $ 0.6 million during the nine months ended September 30, 2023 and 2022, respectively, which was included in the contract liability balance at the end of the previous year.

Balance Sheet Account Details

Accounts Receivable and Allowance for Credit Losses

September 30,

2023 December 31,

2022 December 31,

Accounts receivable, net:

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$ 8,669,000 $ 7,022,000 $ 4,934,000

Changes to the allowance for credit losses during the six months ended June 30, 2023 were as follows:

Changes to the allowance for credit losses during the nine months ended September 30, 2023 were as follows:

Allowance for Credit Losses

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Provision for expected credit loss ( 98,000 )

Write-offs and payments 36,000

Balance as of June 30, 2023

Balance as of September 30, 2023

$ ( 354,000 )

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The components of inventories are as follows:

September 30,

2023 December 31,

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$ 33,514,000 $ 29,761,000

Inventories current

$ 26,429,000 $ 29,761,000

Inventories non-current (included in other long-term assets)

$ 7,085,000 $ —

Intangible Assets

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

June 30, 2023

September 30, 2023

December 31, 2022

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Intangibles, net $ 48,380,000 $ ( 12,716,000 ) $ 35,664,000 $ 48,380,000 $ ( 7,339,000 ) $ 41,041,000

Intangible assets not subject to amortization totaled $ 0.1 million at June 30, 2023 and December 31, 2022, and related to the Company’s domain name.

Intangible assets not subject to amortization totaled $ 0.1 million at September 30, 2023 and December 31, 2022, and related to the Company’s domain name.

Accrued Expenses

Accrued expenses consist of the following:

September 30,

2023 December 31,

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Total $ 11,552,000 $ 10,552,000

Convertible Notes and Warrants

On October 11, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with High Trail Special Situations LLC (the “Purchaser”) pursuant to which the Company agreed to issue and sell, for an aggregate $ 80.0 million in gross proceeds:

(i) in a registered offering by the Company directly to the Purchaser (the “Offering”)

(a) $ 45.0 million aggregate principal amount of senior secured convertible notes due 2025 (the “Registered Notes”) initially convertible by the Purchaser at a price of $ 2.86 into 15.7 million shares of the Company’s common stock and

(b) warrants to purchase up to 21.7 million shares of the Company’s common stock at a price of $ 3.19 per share (the “Registered Warrants”), and

(ii) in a concurrent private placement (the “Private Placement”), $ 35.0 million aggregate principal amount of senior secured convertible notes due 2025 initially convertible at a price of $ 2.86 into 12.2 million shares of the Company’s common stock (the “Private Placement Notes” and together with the Registered Notes, the “Notes”).

The Company also granted the Purchaser an option to purchase up to an additional $ 25.0 million aggregate principal amount of Private Placement Notes initially convertible at a price of $ 2.86 into 8.7 million shares of the Company’s common stock (the “Subsequently Purchased Notes”) and warrants (the “Private Placement Warrants” and together with the Registered Warrants, the “Warrants”) to purchase up to 6.8 million shares of the Company’s common stock in a subsequent private placement on the same terms as the Notes and the Registered Warrants (any such subsequent private placement, a “Subsequent Private Placement”).

The $ 35.0 million proceeds of the Private Placement Notes was deposited into a restricted account subject to an account control agreement that only permits funds to be released once per calendar month upon the satisfaction of certain funding conditions specified in the Notes.

The Notes are secured by a first-priority lien, subject only to certain permitted liens, on substantially all of the Company’s and subsidiaries’ (other than certain foreign subsidiaries) tangible and intangible assets, whether now owned or hereafter acquired (other than certain excluded property).

The Offering and Private Placement closed on October 13, 2023.

The Company’s net proceeds from the sale of the Notes and the Registered Warrants were approximately $ 75.6 million, after deducting the estimated Offering and Private Placement expenses and placement agent fees.

Placement Agent Agreement

The Company retained Cowen and Company, LLC and Stifel, Nicolaus & Company, Incorporated to act as co-lead placement agents and BTIG, LLC as placement agent (together, the “Placement Agents”) for the sale of the Notes and the Warrants, and entered into a placement agent agreement, dated October 11, 2023.

The Company agreed to pay the Placement Agents a cash fee equal to $ 2.7 million at the closing of the Offering and a cash fee equal to 6.0 % of the gross proceeds from the sale of any Subsequent Private Placement.

The Placement Agent Agreement contains customary representations, warranties and agreements by the Company and indemnification obligations.

Senior Secured Convertible Notes

The Notes were sold at 100 % of their principal amount and will be repaid at 115 % of the principal amount (the “Repayment Price”).

The Notes do not bear regular interest and mature on September 1, 2025 (the “Maturity Date”), unless earlier repurchased, redeemed or converted.

The holders will have the option to partially redeem a portion of the Notes on the first day of each month beginning on November 1, 2023, at the Repayment Price.

The Company has the right to redeem all of the then outstanding principal amount of the Notes under certain circumstances, and the holders of the Notes may require the Company to redeem the Notes upon a fundamental change (as defined in the Notes) in each case for a redemption price set forth in the Notes.

The Notes subject the Company to various affirmative and negative covenants, events of default and other restrictions.

On the earlier to occur of (i) the date that no principal amount remains outstanding or (ii) the Maturity Date, the Company will be required to pay a retirement fee to the holders of the Notes equal to the product of (x) with respect to the Registered Notes, (a) 2.8 million multiplied by (b) a fraction, whose numerator is an amount equal to $ 45.0 million less the aggregate principal amount of such Registered Notes converted into shares of the Company’s common stock, and whose denominator is $ 45.0 million ;

(y) with respect to the Private Placement Notes, (a) $ 2.2 million multiplied by (b) a fraction, whose numerator is an amount equal to $ 35.0 million less the aggregate principal amount of such Private Placement Notes converted into shares of the Company’s common stock, and whose denominator is $ 35.0 million ;

and (z) with respect to any Subsequently Purchased Notes, an amount equal to 6.25 % of the initial principal amount of such Subsequently Purchased Notes multiplied by (b) a fraction, whose numerator is an amount equal to the initial principal amount of such Subsequently Purchased Notes less the aggregate principal amount of such Subsequently Purchased Notes converted into shares of the Company’s common stock, and whose denominator is an amount equal to the initial principal amount of such Subsequently Purchased Notes.

Each Warrant is immediately exercisable upon issuance for one share of the Company’s common stock with an exercise price of $ 3.19 per share.

The Warrants expire on the fifth anniversary of the date of issuance and provide for earlier redemption at the request of the holder in the event of a Change of Control, as defined.

The exercise price and number of Warrants is subject to adjustment in the event of subdivision or combination of the Company’s common stock, and the exercise price is subject to reduction at any time if deemed appropriate by the Company’s Board of Directors.

The holders of the Warrants have certain participatory rights upon any distributions of assets, including cash, stock or other property to the Company’s stockholders, per their terms.

The holders of the Warrants have certain purchase rights if at any time the Company grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the holders of common stock, per their terms.

The Warrants include provision for cashless exercise, at the holder’s election, if at the time of exercise there is no effective registration statement registering, or a prospectus is not available for the issuance of, the common stock to the holder.

The Holder’s ability to exercise the Warrants is limited if after such exercise the holder and its affiliates and attribution parties beneficially own an aggregate of 4.99 % of the Company’s common stock, which percentage may be changed at the holders’ election to a higher or lower percentage not in excess of 9.99 % upon 61 days’ notice subject to the terms of the Warrants.

Stockholders’ Equity and Stock-Based Compensation

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Cowen At-the-Market Facility

On March 23, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”) which provides for the sale, in the Company’s sole discretion, of shares of common stock having an aggregate offering price of up to $ 350.0 million through or to Cowen, acting as sales agent or principal, which was amended on March 9, 2023 to decrease the maximum aggregate offering price to $ 200.0 million for sales made on and after the date of the amendment (the “Cowen

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 2022, the Company sold approximately 0.7 million shares of common stock under the Cowen ATM at an average share price of $ 34.59 per share, and received gross proceeds of approximately $ 23.1 million before deducting offering costs of $ 0.6 million.

During the six months ended June 30, 2023, the Company sold approximately 3.5 million shares of common stock under the Cowen ATM at an average share price of $ 9.56 per share, and received gross proceeds of approximately $ 33.5 million before deducting offering costs of $ 0.8 million.

From July 1, 2023 through the date of the filing of this Quarterly Report on Form 10-Q, the Company has sold approximately 2.1 million shares of common stock under the Cowen ATM at an average share price of $ 6.16 per share, and received gross proceeds of approximately $ 13.0 million before deducting offering costs of $ 0.3 million.

During the nine months ended September 30, 2023, the Company sold approximately 5.6 million shares of common stock under the Cowen ATM at an average share price of $ 8.28 per share, and received gross proceeds of approximately $ 46.5 million before deducting offering costs of $ 1.2 million.

Stock Warrants

A summary of the Company’s warrant activity during the six months ended June 30, 2023 was as follows:

A summary of the Company’s warrant activity during the nine months ended September 30, 2023 was as follows:

Shares of Stock under Warrants Weighted-

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Canceled ( 396,000 ) — — —

Outstanding at June 30, 2023

Outstanding at September 30, 2023

40,000 $ 653.98 1.25 $ —

Stock Options

A summary of the Company’s stock option activity during the six months ended June 30, 2023 was as follows:

A summary of the Company’s stock option activity during the nine months ended September 30, 2023 was as follows:

Shares of Stock under Stock Options Weighted-

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Canceled ( 298,000 ) 28.85 —

Outstanding at June 30, 2023

Outstanding at September 30, 2023

3,527,000 $ 24.86 8.52 $ 6,000

Vested and exercisable at June 30, 2023

Vested and exercisable at September 30, 2023

1,308,000 $ 31.94 7.75 $ —

For the three months ended June 30, 2023, the weighted-average grant date fair value of stock options granted was $ 5.36 per share.

For the six months ended June 30, 2023, the weighted-average grant date fair value of stock options granted was $ 9.47 per share.

For the three months ended September 30, 2023, the weighted-average grant date fair value of stock options granted was $ 2.32 per share.

For the nine months ended September 30, 2023, the weighted-average grant date fair value of stock options granted was $ 8.24 per share.

Stock-Based Compensation

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Restricted Stock

A restricted stock award in the amount of 0.5 million shares with a grant date fair value of $ 52.00 a share was granted as part of the acquisition of BioDiscovery.

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Restricted Stock Units and Performance Stock Units

The following table summarizes RSU activity during the six months ended June 30, 2023:

The following table summarizes RSU activity during the nine months ended September 30, 2023:

Stock Units Weighted- Average Grant Date Fair Value per Share

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Forfeited ( 21,000 ) 16.30

Outstanding at June 30, 2023

Outstanding at September 30, 2023

266,000 $ 16.30

The total intrinsic value of the RSUs that vested during the six months ended June 30, 2023 was $ 0.5 million, determined as of the date of vesting.

The weighted average remaining contractual term for the RSUs is 3.6 years as of June 30, 2023.

The following table summarizes PSU activity during the six months ended June 30, 2023:

The total intrinsic value of the RSUs that vested during the nine months ended September 30, 2023 was $ 0.5 million, determined as of the date of vesting.

The weighted average remaining contractual term for the RSUs is 3.2 years as of September 30, 2023.

The following table summarizes PSU activity during the nine months ended September 30, 2023:

Stock Units Weighted- Average Grant Date Fair Value per Share

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Forfeited — —

Outstanding at June 30, 2023

Outstanding at September 30, 2023

29,000 $ 47.4

The weighted average remaining contractual term for the PSUs is 0.5 years as of June 30, 2023.

The weighted average remaining contractual term for the PSUs is 0.3 years as of September 30, 2023.

Executive Option Grants and RSUs

On February 15, 2023, the compensation committee of the Company’s board of directors granted various executive officers stock options to purchase an aggregate of 0.3 million shares of common stock at an exercise price of $ 16.30 per share, and RSUs amounting to 0.1 million shares of common stock at a grant date fair value of $ 16.30 per share, in each case with an effective grant date and vesting commencement date of February 15, 2023 (the “Grant Date”).

These stock option grants and RSUs were issued from the 2018 Plan.

These stock option grants and RSUs were issued from the 2018 Equity Incentive 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.

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See Note 11 – Commitments and Contingencies, subsection titled “Leases”, in Part II, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2022 for information regarding the Company’s lease agreements.

The future minimum payments under non-cancellable operating and finance leases as of June 30, 2023, are as follows:

The future minimum payments under non-cancellable operating and finance leases as of September 30, 2023, are as follows:

Operating Leases Finance Lease

19 unchanged sentences

Cash of $ 1.2 million will be held in an escrow fund for purposes of satisfying any post-closing purchase price adjustments and indemnification claims under the Purigen Merger Agreement.

The acquisition was structured as a stock sale and therefore goodwill is non-tax deductible.

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

32 unchanged sentences

As the Company began integrating Purigen’s operations with its existing operations during the fourth quarter of 2022, it is not practical or meaningful to distinguish Purigen’s expenses or net income or loss from that of the combined operations.

The Company recognized approximately $ 1.8 million of acquisition-related transaction costs for the acquisitions of Purigen, including financial advisor fees, legal expenses and accounting fees for the year ended December 31, 2022.

These costs were included in the consolidated statement of operations in selling, general and administrative expense.

Pro forma Financial Information

2 unchanged sentences

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 acquisition had taken place as of January 1, 2021.

Three Months Ended June 30 Six Months Ended June 30,

Three Months Ended September 30

Nine Months Ended September 30,

Revenue $ 7,667,000 $ 21,119,000

5 unchanged sentences

The Company determines the fair value of its investment securities based upon one or more valuations reported by its investment accounting and reporting service provider.

The investment service provider values the securities using a hierarchical security pricing model that relies primarily on valuations provided by an industry-recognized valuation service.

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 as of June 30, 2023 and December 31, 2022:

June 30, 2023

The investment service provider values the securities using a hierarchical security pricing model

that relies primarily on valuations provided by an industry-recognized valuation service.

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 as of September 30, 2023 and December 31, 2022:

September 30, 2023

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

25 unchanged sentences

Assumptions used to estimate the acquisition date fair value of the contingent consideration related to the acquisition of BioDiscovery include the probability of achieving, or changes in timing, of certain milestones, and a discount rate.

As of June 30, 2023 a discount rate of 3 % was used.

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

The Company determined it is highly likely that the milestone related to the BioDiscovery acquisition will be achieved and therefore used a 100 % probability factor which is applied to the $ 10.0 million milestone consideration.

The change in fair value of the contingent consideration during the six months ended June 30, 2023 was due to the passage of time, in addition to accreting the balance up to the full value of the milestone to be paid of $ 10.0 million for a total change of $ 0.6 million.

On October 2, 2023, the $ 10.0 million milestone consideration was paid in full which approximated the fair value recorded as of September 30, 2023.

Contingent consideration liabilities related to the Purigen milestones are related to the achievement of two independent milestones with aggregate possible milestone payments totaling $ 32.0 million.

4 unchanged sentences

A Monte Carlo Simulation was performed to determine the likelihood that the milestone will be achieved and was applied to the milestone consideration payment.

The change in fair value of the contingent consideration during the six months ended June 30, 2023 was $ 1.6 million

Changes in estimated fair value of contingent consideration liability in the six months ended June 30, 2023 is as follows:

The change in fair value of the contingent consideration during the nine months ended September 30, 2023 was $ 2.5 million.

Changes in estimated fair value of contingent consideration liability in the nine months ended September 30, 2023 is as follows:

Consideration

3 unchanged sentences

Cash payments —

Balance as of June 30, 2023

Changes in estimated fair value of contingent consideration liability in the six months ended June 30, 2022 is as follows:

Balance as of September 30, 2023

Changes in estimated fair value of contingent consideration liability in the nine months ended September 30, 2022 is as follows:

Consideration

3 unchanged sentences

Cash payments —

Balance as of June 30, 2022

Balance as of September 30, 2022

Available for Sale Investments

8 unchanged sentences

Moreover, the Company continues to receive payments of interest and principal as they become due, and our expectation is that those payments will continue to be received timely.

Based on this evaluation, as of June 30, 2023 and December 31, 2022, the Company determined that unrealized losses of the below securities were primarily attributable to changes in interest rates and non-credit related factors.

Based on this evaluation, as of September 30, 2023 and December 31, 2022, the Company determined that unrealized losses of the below securities were primarily attributable to changes in interest rates and non-credit related factors.

As such, no allowances for credit losses were recorded during these periods.

As of June 30, 2023 and December 31, 2022, the Company held 15 and 16 securities, respectively, which have been in an unrealized loss position for a period of less than 12 months.

As of June 30, 2023 and December 31, 2022, the Company held 11 and 24 securities, respectively, which have been in an unrealized loss position for a period of greater than 12 months.

As of September 30, 2023 and December 31, 2022, the Company held 6 and 16 securities, respectively, which have been in an unrealized loss position for a period of less than 12 months.

As of September 30, 2023 and December 31, 2022, the Company held 6 and 24 securities, respectively, which have been in an unrealized loss position for a period of greater than 12 months.

Realized gains and losses are calculated using the specific identification method and recorded in other income (expense) in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss.

The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months.

Interest receivable as of June 30, 2023 and December 31, 2022 was $ 0.4 million and $ 0.5 million, respectively, and is recorded as a component of prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets.

As of June 30, 2023, the following table summarizes the amortized cost and the unrealized gains/losses of the available for sale securities:

Interest receivable as of September 30, 2023 and December 31, 2022 was $ 0.3 million and $ 0.5 million, respectively, and is recorded as a component of prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets.

As of September 30, 2023, the following table summarizes the amortized cost and the unrealized gains/losses of the available for sale securities:

Remaining Contractual Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Aggregate Estimated Fair Value

13 unchanged sentences

Total $ 109,182,000 $ 1,000 $ ( 1,088,000 ) $ 108,095,000

As of June 30, 2023, the following table summarizes available-for-sale securities in an unrealized loss position with no credit losses reported:

As of September 30, 2023, the following table summarizes available-for-sale securities in an unrealized loss position with no credit losses reported:

Less Than 12 Months 12 Months or Greater Total

16 unchanged sentences

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