What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 286 added, 203 removed, 494 unchanged (50% of the section changed)

9 unchanged sentences

Prepaid expenses and other current assets 4,889,000 6,019,000

Restricted cash

Restricted investments

24,446,000 35,117,000

Total current assets 60,568,000 140,118,000

Restricted cash 400,000 400,000

Restricted cash, net of current portion

400,000 400,000

Property and equipment, net 24,863,000 23,345,000

23 unchanged sentences

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized at March 31, 2024 and December 31, 2023;

no shares issued and outstanding at March 31, 2024 and December 31, 2023

Common stock, $ 0.0001 par value, 400,000,000 shares authorized at March 31, 2024 and December 31, 2023;

57,539,000 and 45,752,000 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

10,000,000 shares authorized at June 30, 2024 and December 31, 2023;

no shares issued and outstanding at June 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value, 400,000,000 shares authorized at June 30, 2024 and December 31, 2023;

70,776,000 and 45,752,000 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 709,187,000 677,337,000

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Product revenue $ 6,510,000 $ 6,609,000 $ 13,338,000 $ 12,056,000

9 unchanged sentences

Restructuring costs

1,215,000 — 5,847,000 —

Total operating expenses 19,603,000 41,546,000 53,547,000 81,460,000

2 unchanged sentences

Interest income 457,000 689,000 1,500,000 1,392,000

Interest expense ( 122,000 ) ( 76,000 )

Other income (expense)

363,000 ( 330,000 ) ( 998,000 ) ( 288,000 )

Total other income (expense) 820,000 359,000 502,000 1,104,000

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

$ ( 16,224,000 ) $ ( 38,912,000 ) $ ( 47,646,000 ) $ ( 76,038,000 )

Other comprehensive income (loss):

19 unchanged sentences

Balance at March 31, 2023 30,679,000 $ 3,000 $ 617,987,000 $ ( 385,839,000 ) $ ( 665,000 ) $ 231,486,000

Stock option exercises — — 1,000 — — 1,000

Stock-based compensation expense — — 3,932,000 — — 3,932,000

Issue common stock, net of issuance costs 2,552,000 — 17,802,000 — — 17,802,000

Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes ( 6,000 ) — — — — —

Issue stock for employee stock purchase plan

15,000 — 92,000 — — 92,000

Net loss — — — ( 38,912,000 ) — ( 38,912,000 )

Other comprehensive income (loss) — — — — 355,000 355,000

Balance at June 30, 2023

33,240,000 $ 3,000 $ 639,814,000 $ ( 424,751,000 ) $ ( 310,000 ) $ 214,756,000

Balance at January 1, 2024

7 unchanged sentences

57,539,000 $ 6,000 $ 695,411,000 $ ( 612,630,000 ) $ ( 16,000 ) $ 82,771,000

Stock-based compensation expense — — 2,583,000 — — 2,583,000

Issue common stock, net of issuance costs 11,025,000 1,000 11,181,000 — — 11,182,000

Issue stock for warrant exercises 2,197,000 — 2,000 — — 2,000

Issue stock for employee stock purchase plan 15,000 — 10,000 — — 10,000

Net loss — — — ( 16,224,000 ) — ( 16,224,000 )

Other comprehensive income (loss) — — — — 13,000 13,000

Balance at June 30, 2024

70,776,000 $ 7,000 $ 709,187,000 $ ( 628,854,000 ) $ ( 3,000 ) $ 80,337,000

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

Operating activities:

9 unchanged sentences

Change in fair value of contingent consideration ( 5,116,000 ) 2,218,000

Change in fair value of convertible notes payable and option liability ( 7,534,000 ) —

Change in fair value of convertible debentures, convertible notes payable and option liability

( 7,084,000 ) —

Loss on issuance of convertible debentures

Gain on High Trail extinguishment ( 3,965,000 ) —

Loss on intangible asset impairment 448,000 —

10 unchanged sentences

Investing Activities:

Purigen acquisition, return of purchase consideration from escrow

Purchases of property and equipment ( 103,000 ) ( 839,000 )

1 unchanged sentence

Sale and maturity of available for sale securities 227,905,000 46,879,000

Construction in progress

Net cash provided by investing activities 76,217,000 46,104,000

1 unchanged sentence

Principal payments on financing lease liability ( 28,000 ) ( 22,000 )

Proceeds from sale of common stock 15,445,000 15,229,000

Offering expenses on sale of common stock ( 386,000 ) ( 380,000 )

Payments on convertible notes payable

Proceeds from sale of common stock and warrants

27,602,000 33,487,000

Offering expenses on sale of common stock and warrants

( 1,362,000 ) ( 837,000 )

Proceeds from sale of common stock under employee stock purchase plan 10,000 92,000

Proceeds from warrant and option exercises 2,000 23,000

Proceeds from issuance of convertible debentures

Payments on High Trail Notes

( 61,001,000 ) —

Debt issuance costs on sale of convertible debentures

( 1,444,000 ) —

Payments of retirement fees for redemption of High Trail Notes

( 5,375,000 ) —

Net cash (used in)/provided by financing activities

14 unchanged sentences

Property and equipment included in accounts payable $ — $ 104,000

Notes payable issuance costs in accounts payable $ 44,000 $ —

Construction in progress included in accounts payable $ — $ 65,000

See accompanying notes to the unaudited condensed consolidated financial statements.

6 unchanged sentences

The Company offers optical genome mapping (“OGM”) solutions for applications across basic, translational and clinical research, and for other applications including bioprocessing.

The Company offers a platform-agnostic software solution, which integrates next-generation sequencing, microarray and OGM 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.

The Company also offers nucleic acid extraction and purification solutions using proprietary isotachophoresis (“ITP”) technology.

Through its Lineagen, Inc.

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

Through its BioDiscovery, LLC (“BioDiscovery”) business, the Company also offers 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.

Through our Purigen Biosystems Inc.

(“Purigen”) business, we offer nucleic acid extraction and purification solutions using proprietary isotachophoresis (“ITP”) technology.

(doing business as Bionano Laboratories, “Bionano Laboratories”) business, the Company also provides OGM-based diagnostic testing services.

Reverse Stock Split

11 unchanged sentences

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 March 31, 2024, the Company had approximately $ 15.8 million in cash and cash equivalents, $ 12.6 million in short term investments and $ 24.8 million in restricted cash and cash equivalents and restricted short-term investments.

The amount we are required to hold as restricted cash and cash investments and restricted short-term investments is reduced as the outstanding principal amount of the Notes is paid.

The Company has an accumulated deficit of $ 612.6 million as of March 31, 2024.

During the three months ended March 31, 2024, the Company used $ 28.1 million cash in operations.

As of March 31, 2024, the Company reported $ 29.1 million of Notes as defined in Note 5 (High Trail Agreement) at fair value, which are classified as current.

At the holder’s option, as of March 31, 2024, the Company may be required to redeem the $ 24.3 million outstanding principal amount of the Notes at a redemption price of 115 % of the principal amount (the “Repayment Price”) or $ 28.0 million in 2024.

Additionally, the Company will be required to pay a retirement fee to the holder based on amounts redeemed when the outstanding balance is paid in full, which as of March 31, 2024, was estimated at $ 2.2 million assuming full redemption and no further conversions.

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 product development 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 months ended March 31, 2024, are issued.

Management’s ability to continue as a

going concern is dependent upon its ability to raise additional funding.

As of June 30, 2024, the Company had approximately $ 10.4 million in cash and cash equivalents, $ 8.5 million in short-term investments and $ 11.4 million in restricted cash.

The amount we are required to hold as restricted cash is equal to the lesser of (a) $ 11.0 million and (b) the then outstanding principal balance of the Debentures (as defined in Note 5 (Debt) below).

The Company has an accumulated deficit of $ 628.9 million as of June 30, 2024.

During the six months ended June 30, 2024, the Company used $ 49.1 million cash in operations.

On March 1, 2024, the Company redeemed $ 27.7 million aggregate principal amount of the convertible notes previously issued to High Trail Special Situations LLC (“High Trail”) pursuant to that certain securities purchase agreement in October 2023 (the “High Trail Notes”), at a redemption price of 115 % of the outstanding principal (the “Repayment Price”) or $ 31.8 million, and for the period January 1, 2024, through May 1, 2024, redeemed an additional $ 18.0 million aggregate principal amount of the High Trail Notes at the holders’ option at the Repayment Price for an aggregate of $ 20.7 million.

On May 23, 2024, in connection with the Debentures offering discussed below, the Company fully redeemed the outstanding aggregate principal amount of $ 15.3 million under the High Trail Notes at the Repayment Price for an aggregate of $ 17.6 million, and the High Trail Notes were cancelled.

In addition, the Company paid High Trail aggregate retirement fees of $ 5.4 million related to the Notes’ redemptions.

See Note 5 (Debt) for additional information.

On May 24, 2024, the Company issued $ 20.0 million of Debentures for $ 18.0 million in gross proceeds and paid debt costs of $ 1.4 million.

Through June 30, 2024, the Company paid $ 0.2 million in interest and no principal amounts on the Debentures.

As of June 30, 2024, the Company may be required to redeem up to $ 6.0 million of principal and expects to pay an additional $ 1.4 million in interest on the Debentures in 2024.

See Note 5 (Debt) for additional information.

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 product development and commercialization efforts.

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.

3 unchanged sentences

Significant Accounting Policies

During the three months ended March 31, 2024, 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, 2023.

During the three and six months ended June 30, 2024, 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, 2023.

Restructuring

The Company’s restructuring expense consists primarily of actions taken in May and October 2023 and March 2024 in order to reduce costs and improve operations and manufacturing efficiency.

The Company’s restructuring expense consists primarily of actions taken in May and October 2023 (the “2023 Workforce Reduction”) and March 2024 in order to reduce costs and improve operations and manufacturing efficiency.

Severance-related costs were accounted for as a one-time termination benefit communicated by period end without an additional service component, so the charge represents the total amount expected to be incurred.

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 and October 2023 and March 2024, such plans are intended to decrease expenses and maintain a streamlined organization to support its business.

In connection with the Company’s restructuring initiatives, the Company entered into a lease termination agreement on February 28, 2024 with the landlord for the facility in Salt Lake City that will result in a one-time termination fee in the third quarter of 2024.

The Company will continue to lease the property through June 2024.

The Company accounted for the lease amendment as a lease modification as of March 31, 2024.

See Note 7 (Commitments and Contingencies) for additional information.

On March 1, 2024, the Board of Directors approved a cost savings plan, including a reduction in force, that it expects to reduce its annualized operating expenses.

This cost savings plan is incremental to the reductions in force in May and October 2023 (the “2023 Workforce Reduction”).

As part of the plan, the Company plans to reduce its overall headcount by approximately 120 employees.

The Company expects to substantially complete the reduction in force by June 30, 2024.

As a result of reducing facility costs and discretionary spending unrelated to headcount and combined with the cost savings from the 2023 Workforce Reduction and March 2024, such plans are intended to decrease expenses and maintain a streamlined organization to support its business.

The Company continued to lease the property through June 2024.

The Company accounted for the lease amendment as a lease modification and recorded a gain of $ 0.1 million during the three months ended March 31, 2024.

On March 1, 2024, the Company’s board of directors approved a cost savings plan, including a reduction in force, that it expects to reduce its annualized operating expenses.

This cost savings plan is incremental to the 2023 Workforce Reduction.

As part of the plan, the Company reduced its overall headcount by approximately 120 employees.

The Company has substantially completed the reduction in force as of June 30, 2024.

In addition, Bionano Laboratories will phase out over time the offering of certain testing services related to neurodevelopmental disorders, including autism spectrum disorders, and other disorders of childhood development.

As of the issuance date of these unaudited condensed consolidated financial statements the Company has not yet ceased offering the above referenced services.

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

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A long-lived asset (other than goodwill) is not recoverable when the undiscounted cash flows expected to be generated by the asset (or asset group) are less than the asset’s carrying amount.

Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense.

During the quarter ended March 31, 2024, the Company experienced a triggering event as a result of the restructuring initiatives that required an evaluation of our non-OGM Bionano Laboratories asset group for impairment.

The Company performed a recoverability test and concluded that the long-lived assets were not recoverable;

therefore, the Company measured the impairment loss and fully impaired the intangible assets acquired through the acquisition of Lineagen, consisting of its trade

name and customer relationship intangible assets.

The Company recognized an impairment loss of $ 0.4 million as of March 31, 2024.

No impairment losses were recorded during the same period in 2023.

Any required impairment loss would be measured as the amount

by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense.

During the six months ended June 30, 2024, the Company experienced a triggering event as a result of the restructuring initiatives that required an evaluation of our non-OGM Bionano Laboratories asset group for impairment.

The Company performed a recoverability test and concluded that the non-OGM Bionano Laboratories long-lived assets were not recoverable;

therefore, the Company measured the impairment loss and fully impaired the intangible assets acquired through the acquisition of Lineagen, consisting of its trade name and customer relationship intangible assets.

The Company recognized an impairment loss of $ 0.4 million during the six months ended June 30, 2024.

No impairment losses were recorded for the three months ended June 30, 2024 or during the three or six months ended June 30, 2023.

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 March 31, 2024, $ 4.2 million of inventories were included in Other long term assets.

As of June 30, 2024, $ 3.7 million of inventories were included in other long-term assets.

Change in depreciable lives of property and equipment

9 unchanged sentences

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period.

The Pre-Funded Warrants (as defined below) issued in the April 2024 Registered Direct Offering (as defined below) were exercised in full and included in the weighted-average number of common shares outstanding (See Note 6 (Stockholder’s Equity and Stock-Based Compensation) for further information).

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 share equivalents are only included when their effect is dilutive.

The Company’s potentially dilutive securities which include outstanding warrants to purchase stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), 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.

The Company’s potentially dilutive securities which include outstanding common warrants to purchase common stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), 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.

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):

2024 March 31,

2024 June 30,

Stock options 4,361,000 3,346,000

6 unchanged sentences

Revenue by Source

Three Months Ended March 31,

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

2024 2023 2024 2023

Instruments $ 2,260,000 $ 2,450,000 $ 3,874,000 $ 4,346,000

5 unchanged sentences

Revenue by Geographic Location

Three Months Ended March 31,

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

2024 2023 2024 2023

$ % $ % $ % $ %

Americas $ 3,386,000 44 % $ 4,313,000 50 % $ 8,076,000 49 % $ 7,757,000 48 %

6 unchanged sentences

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

For the three months ended March 31, 2024 and 2023, the United States represented 42.6 % and 41.2 % of total revenue, respectively.

No other countries represented greater than 10% of revenue during the three months ended March 31, 2024 and 2023.

For the three months ended June 30, 2024 and 2023, the United States represented 38.6 % and 39.1 % of total revenue, respectively.

For the six months ended June 30, 2024 and 2023, the United States represented 40.7 % and 40.1 % 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.

No other countries represented greater than 10% of revenue during the three and six months ended June 30, 2024 and 2023.

Remaining Performance Obligations

As of March 31, 2024, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $ 1.2 million.

As of June 30, 2024, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $ 1.4 million.

These remaining performance obligations primarily relate to extended warranty, support and maintenance obligations, as well as obligations related to software under hosting arrangements.

1 unchanged sentence

Warranty revenue is included in service and other revenue.

The Company recognized revenue of approximately $ 0.6 million and $ 0.7 million during the three months ended March 31, 2024 and 2023, respectively, which was included in the contract liability balance at the end of the previous year.

The Company recognized revenue of approximately $ 0.4 million and $ 0.4 million during the three months ended June 30, 2024 and 2023, respectively, which was included in the contract liability balance at the end of the year preceding each period, and revenue of approximately $ 1.0 million and $ 1.1 million during the six months ended June 30, 2024 and 2023, respectively, which was included in the contract liability balance at the end of the year preceding each period.

Balance Sheet Account Details

6 unchanged sentences

$ 6,255,000 $ 9,319,000 $ 7,022,000

Changes to the allowance for credit losses during the three months ended March 31, 2024 and 2023 were as follows:

Changes to the allowance for credit losses during the six months ended June 30, 2024 and 2023 were as follows:

Allowance for Credit Losses

1 unchanged sentence

Provision for expected credit loss ( 5,000 )

Balance as of March 31, 2023

Balance as of June 30, 2023

$ ( 262,000 )

2 unchanged sentences

Provision for expected credit loss ( 9,000 )

Balance as of March 31, 2024

Balance as of June 30, 2024

$ ( 438,000 )

The Company’s adoption of ASU No.

2016-13, Financial Instruments - Credit Losses, included an assessment of our aged trade receivables balances and their underlying credit risk characteristics.

The Company’s analysis included an assessment of our aged trade receivables balances and their underlying credit risk characteristics.

Our evaluation of past events, current conditions, and reasonable and supportable forecasts about the future resulted in an expectation of immaterial credit losses.

12 unchanged sentences

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

March 31, 2024

June 30, 2024

December 31, 2023

4 unchanged sentences

Intangibles, net $ 46,800,000 $ ( 16,881,000 ) $ 29,919,000 $ 48,380,000 $ ( 14,508,000 ) $ 33,872,000

Intangible assets not subject to amortization totaled $ 0.1 million at March 31, 2024 and December 31, 2023, and related to the Company’s domain name.

Intangible assets not subject to amortization totaled $ 0.1 million at June 30, 2024 and December 31, 2023, and related to the Company’s domain name.

Accrued Expenses

11 unchanged sentences

Total $ 5,530,000 $ 8,089,000

*Compensation expenses include restructuring costs of $ 3.9 million incurred during the quarter ended March 31, 2024.

*Compensation expenses include restructuring costs of $ 0.4 million as of June 30, 2024.

Refer to Note 7 (Commitments and Contingencies).

High Trail Agreement

As of March 31, 2024, the Company had aggregate principal outstanding under the Notes of $ 24.3 million, reported at fair value of $ 29.1 million (refer to Note 8 (Investments and Fair Value Measurements), for fair value measurements and additional discussion) and broken out as follows:

Principal balance, December 31, 2023

Partial redemption payments of principal

Redemption payment of principal in connection with modification

Notes principal balance, March 31, 2024

On January 1, 2024, and February 1, 2024, the holders redeemed an aggregate of $ 9.0 million of principal, at the Repayment Price of $ 10.4 million.

As of March 31, 2024, at the holder’s option, the Company may be required to make future aggregate redemptions at the repayment price of 115 % as follows (unless earlier converted per the terms):

As of March 31, 2024, and assuming no future conversions, the Company would be required to pay a remaining retirement fee of $ 2.2 million, based on full redemption of principal.

Debt Financing Amendment

On February 27, 2024, the Company entered into a letter agreement (the “Letter Agreement”) and an Amendment to the Registered Note (the “Amendment”), with the purchaser of the senior secured convertible notes payable due 2025 (the “Registered Notes”) which provided for, among other things, the following:

• Reduction (i) of the minimum liquidity covenant from $ 50.0 million, and (ii) of the restricted cash covenant from $ 35.0 million, in both cases, to the amount equal to the sum of (iii) the outstanding principal amount of the Registered Notes plus (iv) approximately $ 0.7 million, which will be further reduced as the remaining principal on the Registered Notes are retired;

• Cancellation of the March 2024 partial redemption payment and delay of the April 2024 partial redemption payment to April 20, 2024;

• Redemption of the outstanding $ 17.0 million balance of the senior secured convertible notes payable due 2025 initially issued in a concurrent private placement to the purchaser (the “Private Placement Notes” and together with the Registered Notes, the “Notes”) at a redemption price of 115 % for a total redemption payment of approximately $ 19.6 million;

• Redemption of approximately $ 10.7 million of the Registered Notes at a redemption price of 115 % for a total redemption payment of approximately $ 12.3 million;

• Increase of $ 1.0 million to the Retirement Fee (as defined in the Notes) of the Private Placement Notes to $ 3.2 million paid concurrently with redemptions of the initial private placement note, which was recorded in other income (expense).

The Company accounted for the Amendment as a modification and therefore recorded no gain or loss.

The terms of the new debt permitted the Company to prepay the debt in the same amount as the partial redemption payments at 115 % of principal.

There was no modification made to the option to purchase additional convertible notes (“Purchase Option”) or Purchase Warrants (as defined in Note 6 (Stockholders’ Equity and Stock-Based Compensation)) issued in connection with the Notes.

On April 20, 2024, and May 1, 2024, the holders redeemed an aggregate of $ 9.0 million of principal, at the Repayment Price of $ 10.4 million.

JGB Debentures

On May 24, 2024, the Company entered into a securities purchase agreement with certain accredited investors (the “Holders”) and JGB Collateral LLC, as collateral agent for the Holders, for the sale by the Company in a private placement (the “JGB Debentures Offering”) of:

• 2.25 million shares (the “Shares”) of the Company’s common stock, par value $ 0.0001 per share (“Common Stock”), and

• Senior Secured Convertible Debentures in the aggregate principal amount of $ 20.0 million (the “Debentures”), for an aggregate purchase price of $ 18.0 million.

The closing of the JGB Debentures Offering occurred on May 24, 2024.

In connection with the closing of the JGB Debentures Offering, the Company received net proceeds of approximately $ 16.6 million, after payment of placement agent fees, and other offering expenses.

The Company used the proceeds received to fully redeem the outstanding balance due under the High Trail Note of approximately $ 17.6 million, as amended (see “High Trail Agreement & Amendment” below).

The Debentures have an aggregate face value of $ 20.0 million and were issued with an original issue discount of $ 2.0 million.

The Debentures mature on May 24, 2026, and have an interest rate of 11 % per annum payable monthly on the last business day of each calendar month.

As of June 30, 2024, the Company has paid the Holders $ 0.2 million in interest, which is included in the change in fair value within other income (expense), net.

The Company recorded the Debentures at their fair value at issuance of $ 19.9 million, per the fair value option under ASC 825 (refer to Note 8 (Investments and Fair Value Measurements)) and they will be measured on a recurring basis and adjusted through other income and expense, net.

The Shares were recorded at $ 0 in common stock and additional paid in capital, which represents the residual amount after allocation of proceeds to the Debentures at fair value.

The Company recognized an initial loss on the issuance of the Debentures of $ 1.9 million for the difference between the fair value of the Debentures and proceeds from the transaction, which is recorded in other income (expense) on the unaudited condensed consolidated statement of operations.

The Company incurred debt issuance costs of $ 1.4 million related to the JGB Debentures Offering, which was charged to interest expense and recorded in other income (expense) on the unaudited condensed consolidated statement of operations.

On July 24, 2024, the Holders of the Debentures requested that the Company redeem up to $ 1.0 million per calendar month of its Debentures.

The table below shows the amount of potential redemptions each year until the maturity of the Debentures.

The Company may redeem the Debentures, subject to certain Equity Conditions (as defined in the Debentures), at any time by paying an amount equal to the entire outstanding principal amount of the Debenture, plus all accrued and unpaid interest, plus the applicable Company Redemption Premium (as defined in the Debentures, the “Premium”) plus any other amounts due and payable under the Debentures.

The Premium is an amount equal to 112 % of the principal amount of the Debenture if the redemption is prior to the first anniversary of the original issue date, or 106 % of the principal amount of the Debenture if the redemption is on or after the first anniversary of the original issue date.

No partial redemptions by the Company are permitted.

At the election of the holder, each Debenture is convertible, in whole or in part, at any time and from time to time at a conversion price of $ 2.00 per share of common stock.

The conversion price is subject to adjustment for stock dividends, stock splits, and certain other corporate events.

Notwithstanding the foregoing, the Company will not effect any conversion under the Debentures to the extent that such conversion would cause the holder’s beneficial ownership of the Company’s common stock to exceed 4.99 % (or 9.99 % at the election of the holder) of the Company’s issued and outstanding common stock.

Under the Debentures, the Company must at all times maintain a cash balance equal to the lesser of (a) $ 11.0 million and (b) the then outstanding principal balance of the Debentures, in a blocked account.

In addition, for as long as any portion of the Debentures remain outstanding, the Company is generally restricted from:

incurring indebtedness;

granting or suffering liens on any of its property or assets;

amending its organizational documents;

repurchasing any of its securities;

paying dividends;

selling, disposing, licensing or leasing its assets other than in the ordinary course;

and other customary restrictive covenants.

The Debentures also set forth certain customary events of default after which the Debentures may be declared immediately due

and payable, including certain types of bankruptcy or insolvency events of default involving the Company and its subsidiaries, and in the event of a change of control or fundamental transaction as defined in the Debentures.

As of June 30, 2024 the Company had $ 20.0 million of principal outstanding under the Debentures reported at fair value of $ 19.4 million (refer to Note 8 (Investments and Fair Value Measurements), for fair value measurements and additional discussion) and activity broken out as follows:

Principal balance, January 1, 2024

Issuance of convertible debentures

Redemption payments of principal

Notes principal balance, June 30, 2024

High Trail Agreement & Amendment

On February 27, 2024, the Company entered into a letter agreement with High Trail and an amendment to the Registered Note (the “High Trail Amendment”) which provided for, among other things, the following:

• Reduction of the minimum available liquidity covenant from $ 50.0 million to $ 25.0 million;

• Reduction of the restricted cash covenant from $ 35.0 million to the amount equal to the sum of (i) the outstanding principal amount of the senior secured convertible notes payable due 2025 (the “High Trail Registered Notes”) plus (ii) approximately $ 0.7 million, which will be further reduced as the remaining principal on the High Trail Registered Notes are retired;

• Cancellation of the March 2024 partial redemption payment and delay of the April 2024 partial redemption payment;

• Redemption of the outstanding $ 17.0 million balance of the privately placed senior secured convertible notes payable due 2025 (the “High Trail Private Placement Notes”) at a redemption price of 115 % for a total redemption payment of approximately $ 19.6 million;

• Redemption of approximately $ 10.7 million of the High Trail Registered Notes at a redemption price of 115 % for a total redemption payment of approximately $ 12.3 million;

• Increase of $ 1.0 million to the Retirement Fee (as defined in the Notes) of the High Trail Private Placement Notes to $ 3.2 million payable concurrently with redemptions of the Initial Private Placement Note.

Immediately following the redemptions above, there was approximately $ 24.3 million in aggregate principal amount of the High Trail Registered Notes outstanding.

High Trail Redemption Agreement

On May 23, 2024, in connection with the JGB Debentures Offering, the Company entered into a redemption agreement with High Trail (the “HT Agreement”).

Pursuant to the HT Agreement, the Company agreed to redeem the entire outstanding principal amount of $ 15.3 million under the High Trail Note at a redemption price of 115 % for a total redemption payment of $ 17.6 million (the “Redemption Payment”).

Upon High Trail’s receipt of the Redemption Payment on May 24, 2024, the High Trail Note and related Option were cancelled.

In addition, the Company agreed to pay High Trail a retirement fee of $ 2.2 million and to reimburse High Trail for all of its reasonable and documented out-of-pocket expenses incurred with the release and termination of security interests relating to the High Trail Note.

The Company recognized a loss on the extinguishment of the High Trail Note of $ 1.1 million, and a gain on the extinguishment of the Purchase Option (as defined in Note 7 (Commitments and Contingencies) below) of $ 5.1 million, for a net gain of $ 4.0 million, which is recorded in other income (expense) on the unaudited condensed consolidated statement of operations.

As of June 30, 2024, the Company had no principal outstanding under the High Trail Note (refer to Note 8 (Investments and Fair Value Measurements), for fair value measurements and additional discussion) and activity broken out as follows:

Principal balance, January 1, 2024

Partial redemption of principal

Redemption payment of principal

In addition to redeeming $ 15.3 million and $ 27.7 million of the principal outstanding under the High Trail Note on May 24, 2024, and March 1, 2024, respectively, for an aggregate principal redemption of $ 43.0 million at the aggregate Redemption Price of $ 49.5 million, the Holders redeemed $ 4.5 million each of principal on January 1, 2024, February 1, 2024, April 20, 2024, and May 1, 2024, for an aggregate principal redemption of $ 18.0 million at an aggregate Repayment Price of $ 20.7 million.

Under the terms of the High Trail Notes, the Holders had the option to redeem a portion of the Notes not to exceed $ 4.5 million principal on the first day of each month beginning November 1, 2023, at the Repayment Price.

The April 2024 payment was delayed to April 20, 2024, under the High Trail Amendment as discussed above.

Other Income (Expense), Net

The following is a summary of the charges included within other income (expense), net on the unaudited condensed consolidated statement of operations:

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

2024 2023 2024 2023

Debt issuance costs on sale of convertible debenture

( 1,444,000 ) — ( 1,444,000 ) —

Other interest expense

( 74,000 ) ( 74,000 ) ( 195,000 ) ( 149,000 )

Changes in estimated fair value, interest and redemption payments on High Trail Notes and convertible debentures

298,000 — ( 855,000 ) —

Other expense

( 492,000 ) ( 256,000 ) ( 579,000 ) ( 139,000 )

Gain on High Trail extinguishment 3,965,000 — 3,965,000 —

Loss on issuance of convertible debentures

( 1,890,000 ) — ( 1,890,000 ) —

Total other income (expense) $ 363,000 $ ( 330,000 ) $ ( 998,000 ) $ ( 288,000 )

Stockholders’ Equity and Stock-Based Compensation

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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.

During the three months ended March 31, 2024, the Company sold approximately 11.8 million shares of common stock under the Cowen ATM at an average share price of $ 1.31 per share, and received gross proceeds of approximately $ 15.4 million before deducting offering costs of $ 0.4 million.

During the six months ended June 30, 2024, the Company sold approximately 14.0 million shares of common stock under the Cowen ATM at an average share price of $ 1.26 per share, and received gross proceeds of approximately $ 17.6 million before deducting offering costs of $ 0.4 million.

Stock Warrants

A summary of the Company’s warrant activity during the three months ended March 31, 2024 was as follows:

A summary of the Company’s warrant activity during the six months ended June 30, 2024 was as follows:

Shares of Stock under Warrants Weighted-

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Canceled — — — —

Outstanding at March 31, 2024

Outstanding at June 30, 2024

30,430,000 $ 3.41 4.43 $ —

Stock Options

A summary of the Company’s stock option activity during the three months ended March 31, 2024 was as follows:

A summary of the Company’s stock option activity during the six months ended June 30, 2024 was as follows:

Shares of Stock under Stock Options Weighted-

6 unchanged sentences

Canceled ( 570,000 ) 23.06 —

Outstanding and expected to vest at March 31, 2024

Outstanding and expected to vest at June 30, 2024

4,361,000 $ 15.92 8.23 $ —

Vested and exercisable at March 31, 2024

Vested and exercisable at June 30, 2024

1,701,000 $ 28.55 6.53 $ —

For the three months ended March 31, 2024, the weighted-average grant date fair value of stock options granted was $ 0.84 per share.

For the three months ended June 30, 2024, the weighted-average grant date fair value of stock options granted was $ 0.67 per share.

For the six months ended June 30, 2024, the weighted-average grant date fair value of stock options granted was $ 0.67 per share.

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Cost of product revenue $ 81,000 $ 154,000 $ 162,000 $ 256,000

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Risk-free interest rate 4.3 % 3.9 % 4.3 % 3.9 %

3 unchanged sentences

Restricted Stock Units and Performance Stock Units

The following table summarizes RSU activity during the three months ended March 31, 2024:

The following table summarizes RSU activity during the six months ended June 30, 2024:

Stock Units Weighted- Average Grant Date Fair Value per Share

1 unchanged sentence

239,000 $ 16.30

Granted 407,000 0.93

Released ( 48,000 ) 16.30

Forfeited ( 37,000 ) 16.13

Outstanding at March 31, 2024

Outstanding at June 30, 2024

561,000 $ 16.19

The total fair value of the RSUs that vested during the three months ended March 31, 2024 was $ 0.8 million, determined as of the date of vesting.

The weighted average remaining contractual term for the RSUs is 2.6 years as of March 31, 2024.

The following table summarizes PSU activity during the three months ended March 31, 2024:

The total fair value of the RSUs that vested during the six months ended June 30, 2024 was $ 0.8 million, determined as of the date of vesting.

The weighted average remaining contractual term for the RSUs is 3.5 years as of June 30, 2024.

The following table summarizes PSU activity during the six months ended June 30, 2024:

Stock Units Weighted- Average Grant Date Fair Value per Share

2 unchanged sentences

Forfeited — —

Outstanding at March 31, 2024

Outstanding at June 30, 2024

29,000 $ 47.40

2 unchanged sentences

expense was accelerated as of December 31, 2023.

As a result of the accelerated vesting terms, the weighted average remaining contractual term for the PSUs is 0 years as of March 31, 2024.

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 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.

The RSUs shall vest annually over four years beginning one year after the Grant Date, and the balance of the shares vest in a series of three successive equal annual installments measured from the first anniversary of the Grant Date, such that the RSU shall be fully vested on the four-year anniversary of the Grant Date.

Registered Direct Offering

On April 4, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “Registered Direct Offering”):

(i) an aggregate of 6.5 million shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to an aggregate of 2.2 million shares of common stock (the “Pre-Funded Warrants”), and (iii) warrants to purchase up to 8.7 million shares of common stock (the “Purchase Warrants”).

The combined purchase price of each share of common stock and accompanying Warrant is $ 1.15 per share.

The combined purchase price of each Pre-Funded Warrant and accompanying Warrant is $ 1.14 (equal to the combined purchase price per share of common stock and accompanying Warrant, minus $ 0.001 ).

The gross proceeds to the Company from the Registered Direct Offering was $ 10.0 million.

As a result of the accelerated vesting terms, the weighted average remaining contractual term for the PSUs is 0 years as of June 30, 2024.

Registered Direct Offerings

On April 4, 2024, the Company entered into a securities purchase agreement (the “April 2024 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “April 2024 Registered Direct Offering”):

(i) an aggregate of 6.5 million shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to an aggregate of 2.2 million shares of common stock (the “April Pre-Funded Warrants”), and (iii) warrants to purchase up to 8.7 million shares of common stock (the “April Purchase Warrants”).

The combined purchase price of each share of common stock and accompanying April Purchase Warrant is $ 1.15 per share.

The combined purchase price of each April Pre-Funded Warrant and accompanying April Purchase Warrant is $ 1.14 (equal to the combined purchase price per share of common stock and accompanying April Purchase Warrant, minus $ 0.001 ).

The gross proceeds to the Company from the April 2024 Registered Direct Offering was $ 10.0 million.

The Company received net proceeds of $ 9.3 million after deducting placement agent fees and other offering expenses of $ 0.7 million payable by the Company.

Each Warrant is exercisable for one share of common stock at an exercise price of $ 1.02 per share.

Each April Purchase Warrant is exercisable for one share of common stock at an exercise price of $ 1.02 per share.

The Purchase Warrants are immediately exercisable as of the date of issuance of April 8, 2024, and will expire on the five-year anniversary of the date of issuance.

The Pre-Funded Warrants are offered in lieu of shares of common stock and provide that the holder may not exercise any portion of a Pre-Funded Warrant to the extent that immediately prior to or after giving effect to such exercise the holder would own more than 4.99 % (or, at the election of the holder, 9.99 %) of the Company’s outstanding common stock immediately following the consummation of the Registered Direct Offering.

Each Pre-Funded Warrant is exercisable for one share of common stock at an exercise price of $ 0.001 per share.

The Pre-Funded Warrants are immediately exercisable and were exercised in full at the time of closing.

The April Pre-Funded Warrants are offered in lieu of shares of common stock and provide that the holder may not exercise any portion of an April Pre-Funded Warrant to the extent that immediately prior to or after giving effect to such exercise the holder would own more than 4.99 % (or, at the election of the holder, 9.99 %) of the Company’s outstanding common stock immediately following the consummation of the April 2024 Registered Direct Offering.

Each April Pre-Funded Warrant is exercisable for one share of common stock at an exercise price of $ 0.001 per share.

The April Pre-Funded Warrants are immediately exercisable and were exercised in full at the time of closing.

On July 4, 2024, the Company entered into a securities purchase agreement (the “July 2024 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “July 2024 Registered Direct Offering”):

(a) an aggregate of 11.7 million shares of the Company’s common stock, , and (b) pre-funded warrants to purchase up to an aggregate of 5.8 million shares of common stock (the “July Pre-Funded Warrants”), and (ii) in a concurrent private placement (the “Private Placement” and together with the July 2024 Registered Direct Offering, the “July 2024 Offering”), Series A warrants to purchase up to an aggregate of 17.5 million shares of common stock (the “Series A Warrants”) and Series B warrants to purchase up to an aggregate of 17.5 million shares of common stock (the “Series B Warrants”, and together with the Series A Warrants, the “July Purchase Warrants”).

Each share of common stock and each July Pre-Funded Warrant sold pursuant to the Purchase Agreement will be accompanied by one Series A Warrant and one Series B Warrant.

The combined purchase price of each share of common stock and accompanying July Purchase Warrants is $ 0.571 per share.

The combined purchase price of each July Pre-Funded Warrant and accompanying July Purchase Warrants is $ 0.571 (equal to the combined purchase price per share of common stock and accompanying July Purchase Warrants, minus $ 0.001 ).

The gross proceeds to the Company from the July 2024 Offering was approximately $ 10.0 million (excluding up to $ 20.0 million of aggregate gross proceeds that may be received in the future upon the cash exercise of the July Purchase Warrants issued in the Private Placement), before deducting placement agent fees and other offering expenses payable by the Company.

The Company received net proceeds of $ 9.3 million after deducting placement agent fees and other offering expenses of $ 0.7 million payable by the Company.

Each July Purchase Warrant is exercisable for one share of common stock at an exercise price of $ 0.571 per share beginning on the effective date of stockholder approval of the issuance of the shares of common stock upon exercise of the July Purchase Warrants (the “Stockholder Approval”).

The Series A Warrants will expire on the earlier of (i) the 24-month anniversary of the Stockholder Approval and (ii) 60 days following the later of (a) the date of the public announcement of the occurrence of a medical administrative contractor (including, without limitation, Molecular Diagnostic Services), issuing a final local coverage determination for optical genome mapping for hematological malignancies and (b) the date of the Stockholder Approval.

The Series B Warrants will expire on the earlier of (i) the five-year anniversary of the Stockholder Approval and (ii) six months following the later of (a) the date of the public announcement of the occurrence of the Company receiving clearance from the U.S.

Food and Drug Administration for an optical genome mapping system for any indication and (b) the date of the Stockholder Approval.

Commitments and Contingencies

1 unchanged sentence

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, 2023 for information regarding the Company’s lease agreements.

The future minimum payments under non-cancellable operating and finance leases as of March 31, 2024, are as follows:

The future minimum payments under non-cancellable operating and finance leases as of June 30, 2024, are as follows:

Operating Leases Finance Lease

9 unchanged sentences

Restructuring

In October, 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.

The Company will continue to lease the property through June 2024.

The Company accounted for the lease amendment as a lease modification as of March 31, 2024 and recorded a gain of $ 0.1 million

On March 1, 2024, the Board of Directors approved a cost savings plan, including a reduction in force, that it expects to reduce its annualized operating expenses.

This cost savings plan is incremental to the 2023 Workforce Reduction.

As part of the plan, the Company plans to reduce its overall headcount by approximately 120 employees.

The Company expects to substantially complete the reduction in force by June 30, 2024.

As of the issuance date of these unaudited condensed consolidated financial statements we have not yet ceased offering the above-referenced services.

The estimates of costs and expenses that the Company expects to incur in connection with the reduction in force 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 reduction in force.

The workforce reduction resulted in total restructuring charges of approximately $ 3.9 million , comprised primarily of severance payments and wages for the 60-day notice period in accordance with the California Worked Adjustment and Retraining Notification (WARN) Act.

The following is a summary of restructuring charges associated with the reduction in force for the quarter ended March 31, 2024 including severance, impairment, and other exit related costs:

The workforce reduction described in Note 1 (Organization and Basis of Presentation) resulted in total restructuring charges of approximately $ 4.4 million , comprised primarily of severance payments and wages for the 60-day notice period in accordance with the California Worked Adjustment and Retraining Notification (WARN) Act.

The following is a summary of restructuring charges associated with the reduction in force for the three and six months ended June 30, 2024 including severance, impairment, and other exit related costs:

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

$ 552,000 $ 4,426,000

Lease related expenses

163,000 374,000

500,000 1,047,000

Total restructuring charges including in operating expenses

$ 1,215,000 $ 5,847,000

COGS restructuring

$ 7,000 $ 18,000

Total restructuring charges

The following restructuring liability activity was recorded in connection with the reduction in force for the quarter ended March 31, 2024 including within accrued expenses on the unaudited condensed consolidated financial statements:

Accrued restructuring as of December 31, 2023

$ 1,222,000 $ 5,865,000

The following restructuring liability activity was recorded in connection with the reduction in force for the six months ended June 30, 2024 including within accrued expenses on the unaudited condensed consolidated financial statements:

Accrued restructuring as of January 1, 2024

Restructuring charges incurred during the period

Cash payments

Accrued restructuring as of March 31, 2024

( 5,592,000 )

Accrued restructuring as of June 30, 2024

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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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 March 31, 2024 and December 31, 2023:

March 31, 2024

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

June 30, 2024

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

Level 1 Level 2 Level 3

Commercial paper $ 1,198,000 $ — $ 1,198,000 $ —

Corporate notes/bonds 6,374,000 — 6,374,000 —

8,516,000 — 8,516,000 —

1 unchanged sentence

$ 8,516,000 $ — $ 8,516,000 $ —

Money market funds $ 12,041,000 $ 12,041,000 $ — $ —

Commercial paper classified as restricted investments

2,646,000 — 2,646,000 —

treasuries classified as restricted investments

Money market funds classified as cash equivalents

$ 8,010,000 $ 8,010,000 $ — $ —

Total restricted investments:

Money market funds classified as restricted cash

$ 11,008,000 $ 11,008,000 $ — $ —

1 unchanged sentence

Convertible notes payable $ 19,359,000 $ — $ — $ 19,359,000

Purchase option liability $ 5,060,000 $ — $ — $ 5,060,000

December 31, 2023

5 unchanged sentences

$ 48,823,000 $ — $ 48,823,000 $ —

Money market funds $ 9,752,000 $ 9,752,000 $ — $ —

Money market funds classified as cash equivalents

$ 9,752,000 $ 9,752,000 $ — $ —

Commercial paper classified as restricted investments

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$ 8,534,000 $ — $ — $ 8,534,000

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

Contingent Consideration

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These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect the Company’s assumptions in measuring fair value.

The fair value of the BioDiscovery contingent consideration liability is reassessed on a quarterly basis using a probability weighted model.

Assumptions used to estimate the 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 of 3 %.

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

On October 2, 2023, the $ 10.0 million milestone consideration was paid in full.

Any change in fair value of the contingent consideration during the prior years was due to the passage of time.

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.

The BioDiscovery milestone consideration was paid in full in 2023.

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

The fair value of the Purigen milestones are reassessed on a quarterly basis using a probability weighted model and a Monte Carlo Simulation.

Assumptions used to estimate the fair value of the milestones using a probability weighted model include the probability of achieving independent milestones, anticipated payment date and a discount rate of 13.3 % and 13.2 % as of March 31, 2024 and December 31, 2023, respectively.

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

The Company determined the likelihood of each independent milestone and used probability factors ranging from 0 % to 49 % which were applied to the individual payments over the five year milestone term.

Assumptions used to estimate the fair value of the milestones using a probability weighted model include the probability of achieving independent milestones, anticipated payment date and a discount rate of 14.4 % and 13.2 % as of June 30, 2024 and December 31, 2023, respectively.

The Company determines the likelihood of each milestone payment which is then applied to the individual payments over the five-year milestone terms.

As of June 30, 2024, the Company assessed the probability of meeting the first milestone at 0 % which resulted in a reduction in the contingent consideration liability.

The probability factors as of December 31, 2023 ranged from 9 % to 49 %.

For one milestone, a Monte Carlo Simulation was performed to determine the likelihood that the milestone will be achieved to determine the milestone consideration payment.

Assumptions include the projected units, revenue discount rates of 8 % and 7 % and discount rates of 13.3 % and 13.2 % as of March 31, 2024 and December 31, 2023, respectively.

The fair value of the Purigen contingent consideration as of March 31, 2024 and December 31, 2023 were $ 10.3 million and $ 10.9 million, respectively.

Convertible notes payable and purchase option liability

March 31, 2024

For the second milestone, a Monte Carlo Simulation was performed to determine the likelihood that the milestone will be achieved to determine the milestone consideration payment.

Assumptions include the projected units, revenue discount rates of

8 % and 7 % and discount rates of 14.4 % and 13.2 % as of June 30, 2024 and December 31, 2023, respectively.

The fair value of the Purigen contingent consideration as of June 30, 2024 and December 31, 2023 was $ 5.8 million and $ 10.9 million, respectively.

Convertible debentures payable, convertible notes payable and purchase option liability

June 30, 2024

December 31, 2023

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4.78 % 4.92 %

The table above uses a weighted average of assumptions based on the fair value of the Notes.

The volatility is based on an analysis of the Company, the risk-free rate is based on US treasury yields, the equity discount rate is based on term-specific US treasury yields, and the debt discount rate is based on the Company’s credit rating.

In connection with the Notes, the Purchaser was granted an option which expires on the maturity date of the Notes to purchase up to an additional $ 25.0 million aggregate principal amount of private placement notes (the “Subsequently Purchased Notes”) and warrants (refer to Note 5 - High Trail Agreement).

The estimated fair value of the Purchase Option as of the valuation date was assessed as the difference in the aggregate indicated value of the Subsequently Purchased Notes and the consideration to be paid upon exercising the option which was estimated to be $ 5.1 million and $ 8.5 million at March 31, 2024 and December 31, 2023, respectively.

The terms used to estimate the fair value of the Subsequently Purchased Notes and warrant underlying the Purchase Option liability (the “Subsequently Purchased Warrants”) are as follows:

The June 30, 2024 assumptions in the table above reflect the convertible debentures payable, which were issued on May 24, 2024.

For December 31, 2023, the table reflects a weighted average of assumptions based on the fair value of the convertible notes payable from the High Trail Agreement (refer to Note 5 (Debt)).

The volatility is based on an analysis of the Company and its peers’ historical stock price, the risk-free rate is based on US treasury yields, the equity discount rate is based on term-specific US treasury yields, and the debt discount rate is based on the Company’s credit rating.

In connection with the Notes, the purchaser was granted an option (the “Purchase Option”) which expired on the maturity date of the Notes to purchase up to an additional $ 25.0 million aggregate principal amount of private placement notes (the “Subsequently Purchased Notes”) and warrants (refer to Note 5 (Debt)).

The estimated fair value of the Purchase Option as of the valuation date was assessed as the difference in the aggregate indicated value of the Subsequently Purchased Notes and the consideration to be paid upon exercising the option which was estimated to be $ 0.0 million and $ 8.5 million at June 30, 2024 and December 31, 2023, respectively.

The outstanding amount of the High Trail Notes was redeemed on May 24, 2024, and the Purchase Option rights no longer exist.

The terms used to estimate the fair value of the Subsequently Purchased Notes and warrant underlying the Purchase Option liability (the “Subsequently Purchased Warrants”) as of December 31, 2023 are as follows:

Subsequently Purchased Notes

Subsequently Purchased

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

December 31, 2023 December 31, 2023

Expected volatility

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Term to maturity (years)

1.42 1.50 5.00 5.00

Dividend yield

— % — % — % — %

Exercise price

— — $ 3.19 $ 3.19

Debt discount rate

16.50 % 16.60 % — % — %

Equity discount rate

4.79 % 4.46 % — % — %

Changes in estimated fair value of contingent consideration liability, convertible notes payable and option liability in the three months ended March 31, 2024 are as follows:

Changes in estimated fair value of contingent consideration liability, convertible debentures payable, convertible notes payable and option liability in the six months ended June 30, 2024 are as follows:

Consideration

Debentures Payable (Level 3 Measurement)

Notes Payable (Level 3 Measurement)

2 unchanged sentences

$ 10,890,000 $ — $ 69,803,000 $ 8,534,000

Issuance of convertible notes payable and option

Issuance of convertible debentures payable, convertible notes payable and option

— 19,890,000 — —

Change in estimated fair value, recorded in selling, general and administrative expenses ( 5,116,000 ) — —

1 unchanged sentence

— ( 531,000 ) ( 4,524,000 ) ( 3,474,000 )

Change in instrument specific credit risk recorded in OCI

Conversions to common stock

Cash payments or redemptions

Cash payments

— ( 61,000,000 ) —

Balance as of March 31, 2024

Cash payments on redemptions

( 5,374,000 )

Changes in estimated fair value of contingent consideration liability in the three months ended March 31, 2023 is as follows:

(Gain)/loss on extinguishment of High Trail

1,095,000 ( 5,060,000 )

Balance as of June 30, 2024

$ 5,774,000 $ 19,359,000 $ — $ —

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

Consideration

Balance as of January 1, 2023

Liability recorded as a result of current period acquisition —

Change in estimated fair value, recorded in selling, general and administrative expenses 2,218,000

Cash payments —

Balance as of March 31, 2023

Balance as of June 30, 2023

Available for Sale Investments

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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 March 31, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023, the Company held 20 and 15 securities, respectively, which have been in an unrealized loss position for a period of less than 12 months.

As of March 31, 2024 and December 31, 2023, the Company held 0 and 2 securities, respectively, which have been in an unrealized loss position for a period of greater than 12 months.

As of June 30, 2024 and December 31, 2023, the Company held 4 and 15 securities, respectively, which have been in an unrealized loss position for a period of less than 12 months.

As of June 30, 2024 and December 31, 2023, the Company held 0 and 2 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.

During the quarter ended March 31, 2024, the Company sold 6 of its available for sale securities and received proceeds of $ 21.5 million.

During the quarter ended March 31, 2024, the Company recognized a loss of $ 0.001 million in other income relating to the maturity of its securities.

During the six months ended June 30, 2024, the Company sold 18 of its available for sale securities and received proceeds of $ 33.3 million.

During the six months ended June 30, 2024, the Company recognized a loss of $ 0.018 million in other income relating to the maturity of its securities.

Amounts are reclassified out of accumulated other comprehensive income into earnings using the specific identification method.

Interest receivable as of March 31, 2024 and December 31, 2023 was $ 0.2 million and $ 0.3 million, respectively, and is recorded as a component of prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets.

As of March 31, 2024, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities presented within investments:

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

Commercial paper Less than 1 $ 1,199,000 $ — $ ( 1,000 ) $ 1,198,000

Corporate notes/bonds Less than 1 6,374,000 — — 6,374,000

Less than 1 4,989,000 — — 4,989,000

Total maturity less than 1 year $ 12,562,000 $ — $ ( 1,000 ) $ 12,561,000

As of March 31, 2024, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities listed as restricted investments:

Interest receivable as of June 30, 2024 and December 31, 2023 was $ 0.1 million and $ 0.3 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, 2024, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities presented within investments:

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

Commercial paper Less than 1 $ 2,650,000 $ — $ ( 4,000 ) $ 2,646,000

Less than 1 8,519,000 — ( 3,000 ) 8,516,000

Total maturity less than 1 year $ 8,519,000 $ — $ ( 3,000 ) $ 8,516,000

As of June 30, 2024, the amortized cost and the unrealized gains (losses) of the available for sale securities listed as restricted investments was zero.

As of December 31, 2023, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities presented within investments:

8 unchanged sentences

Total maturity less than 1 year $ 35,117,000 $ 5,000 $ ( 5,000 ) $ 35,117,000

As of March 31, 2024, the following table summarizes available-for-sale securities in an unrealized loss position:

Less Than 12 Months 12 Months or Greater Total

Gross Unrealized Loss

Commercial paper $ 1,198,000 $ ( 1,000 ) $ — $ — $ 1,198,000 $ ( 1,000 )

Corporate Notes/Bonds 6,374,000 — — — 6,374,000 —

4,989,000 — — — 4,989,000 —

Total $ 12,561,000 $ ( 1,000 ) $ — $ — $ 12,561,000 $ ( 1,000 )

As of March 31, 2024, the following table summarizes available-for-sale securities listed as restricted investments in an unrealized loss position:

As of June 30, 2024, the following table summarizes available-for-sale securities in an unrealized loss position:

Less Than 12 Months 12 Months or Greater Total

2 unchanged sentences

Gross Unrealized Loss

Commercial paper $ 2,646,000 $ ( 4,000 ) $ — $ — $ 2,646,000 $ ( 4,000 )

8,516,000 ( 3,000 ) — — 8,516,000 ( 3,000 )

Total $ 8,516,000 $ ( 3,000 ) $ — $ — $ 8,516,000 $ ( 3,000 )

As of June 30, 2024, the available-for-sale securities listed as restricted investments in an unrealized loss position was zero .

As of December 31, 2023, the following table summarizes available-for-sale securities in an unrealized loss position:

14 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