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Item 7. Management’s Discussion and Analysis

2023-03-06 compared with 2022-03-01 · 198 added, 160 removed, 271 unchanged (57% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

See “Special Note Regarding Forward-Looking Statements.” Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors.” Results of operations for the fiscal year ended December 31, 2019 can be referenced on our 2020 Annual Report on Form 10-K filed with the SEC on March 5, 2021.

We are a life sciences company that has developed next generation, ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics.

The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of Quanterix Corporation for the years ended December 31, 2022, and 2021.

For a full understanding of our financial condition and results of operations, this discussion should be read in conjunction with our consolidated financial statements and accompanying notes included in Item 8.

Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

For additional information on our financial condition as of December 31, 2021 and results of operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020, refer to Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021 .

We are a life sciences company that has developed next-generation, ultra-sensitive digital immunoassay platforms that advance life sciences research and diagnostics.

Our platforms are based on our proprietary digital “Simoa” detection technology.

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As the installed base of the Simoa instruments increases, total consumables revenue overall is expected to increase.

We believe that consumables revenue should be subject to less period-to-period fluctuation than our instrument sales revenue, and will become an increasingly important contributor to our overall revenue.

We commercially launched our first immunoassay platform, the Simoa HD-1, in January 2014.

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The HD-X has been designed to deliver significant productivity and operational efficiency improvements, as well as greater user flexibility.

We began shipping and installing HD-X instruments at customer locations in 2019, and by the end of 2021, approximately 68% of the HD instrument installed base was HD-X instruments.

On January 30, 2018, we acquired Aushon for $3.2 million in cash, with an additional payment of $0.8 million made in July 2018, six months after the acquisition date.

With the acquisition of Aushon, we acquired a CLIA certified laboratory, as well as Aushon’s proprietary sensitive planar array detection technology.

Leveraging our proprietary sophisticated Simoa image analysis and data analysis algorithms, we further refined this planar array technology to develop the SP-X instrument to provide the same Simoa sensitivity found in our Simoa bead-based platform.

We initiated an early-access program for the SP-X instrument in January 2019, with the full commercial launch commenced in April 2019.

On August 1, 2019, we completed our acquisition of Uman for an aggregate purchase price of $21.2 million, comprised of (i) $15.7 million in cash plus (ii) 191,152 shares of our common stock (representing $5.5 million based on the closing prices of our common stock on the Nasdaq Global Market on July 1, 2019 and August 1, 2019, the dates of issuance).

Uman supplies neurofilament light (Nf-L) antibodies and ELISA kits, which are widely recognized by

researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions.

We began shipping and installing HD-X instruments at customer locations in 2019, and by the end of 2022, approximately 79% of the HD instrument installed base were HD-X instruments.

With our acquisition of Aushon in 2018, we acquired a CLIA certified laboratory, as well as their proprietary sensitive planar array detection technology.

Leveraging our proprietary sophisticated Simoa image analysis and data analysis algorithms, we further refined the planar array technology to develop the SP-X instrument to provide sensitivity similar to that found in our Simoa bead-based platform.

We commercially launched the SP-X instrument in April 2019.

Our wholly owned subsidiary UmanDiagnostics AB (Uman), a Swedish company located in Umeå, Sweden, supplies neurofilament light (Nf-L) antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions.

We also provide contract research services for customers through our CLIA-certified Accelerator Laboratory.

The Accelerator Laboratory provides customers with access to Simoa technology, and supports multiple projects and services, including sample testing, homebrew assay development and custom assay development.

To date, we have completed over 1,700 projects for approximately 400 customers from all over the world using our Simoa platforms.

We sell our instruments, consumables and services to the life science, pharmaceutical and diagnostics industries through a direct sales force and support organizations in North America and Europe, and through distributors or sales agents in other select markets, including Australia, Brazil, China, Czech Republic, India, Hong Kong, Israel, Japan, New Zealand, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan, and UAE.

To date, we have completed over 1,900 projects for more than 400 customers from all over the world using our Simoa platforms.

We sell our instruments, consumables and services to the life science, pharmaceutical and diagnostics industries through a direct sales force and support organizations in North America and Europe, and through distributors or sales agents in select markets, including Australia, Brazil, China, Czech Republic, India, Hong Kong, Israel, Japan, New Zealand, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan, and UAE.

In addition, Uman sells Nf-L antibodies and Nf-L ELISA kits directly, and in conjunction with us and another distributor worldwide.

We have an extensive base of customers in world class academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies.

On September 29, 2020, we entered the Abbott License Agreement with Abbott.

Pursuant to the terms of the Abbott License Agreement, we granted Abbott a non-exclusive, worldwide, royalty-bearing license, without the right to sublicense, under our bead-based single molecule detection patents in the field of IVD.

Abbott paid an initial license fee of $10.0 million in connection with the execution of the Abbott License Agreement, which was recognized as license revenue for the year ended December 31, 2020.

Abbott has also agreed to pay us milestone fees subject to the achievement by Abbott of certain development, regulatory and commercialization milestones and low single digit royalties on net sales of licensed products.

We are subject to ongoing uncertainty concerning the COVID-19 pandemic, including its length and severity and its effect on our business.

During the first and second quarters of 2020, we implemented a resiliency plan focused on the health and safety of our employees and maintaining continuity of our operations.

We saw an impact on instrument revenue due to limitations on our ability to access certain customer sites and complete instrument installations, as well as an impact on consumables revenue from interruptions in certain customer laboratories through the first quarter of 2021.

As customers began returning to normal operations in the second quarter of 2021, we have seen less of an impact related to COVID-19 related shutdowns.

However, we expect COVID-19 related challenges to continue for the foreseeable future and potentially increase if variants result in new shutdowns.

In view of the COVID-19 pandemic, in 2020, we adjusted our operations to expand capacity in our Accelerator Laboratory to support customers whose operations have been disrupted and to sustain clinical trials.

We also determined that our cytokine assay technology could provide researchers with important and differentiated tools to study disease progression, cytokine release syndrome, and patient-treatment response in the fight against COVID-19, and began developing a SARS-CoV-2 semi-quantitative IgG assay and a SARS-CoV-2 antigen detection assay, and prototyping a high-definition multiplex SARS-CoV-2 serology assay.

In December 2020, the FDA issued an EUA for our Simoa Semi-Quantitative SARS-CoV-2 IgG Antibody Test, and in January 2021, the FDA issued an EUA for our Simoa SARS-CoV-2 N Protein Antigen Test, each of which is run on our HD-X instrument.

extensive base of customers in world class academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies.

Although the COVID-19 pandemic negatively affected revenues in 2020 and the first part of 2021, we have seen less of an impact related to COVID-19 as customers began returning to normal operations beginning in mid-2021.

However, we expect COVID-19 related challenges may continue for the foreseeable future and potentially increase if variants result in new shutdowns.

During the COVID-19 pandemic, we determined that our cytokine assay technology could provide researchers with important and differentiated tools to study disease progression, cytokine release syndrome, and patient-treatment response in the fight against COVID-19 and developed a SARS antibody test and SARS antigen test, each of which was run on our HD-X instrument.

In December 2020, the FDA issued an EUA for our Simoa Semi-Quantitative SARS-CoV-2 IgG Antibody Test, and in January 2021, the FDA issued an EUA for our Simoa SARS-CoV-2 N Protein Antigen Test.

In September 2021, the FDA expanded the EUA for our Simoa SARS-CoV-2 N Protein Antigen Test to include testing with nasal swabs and saliva and for asymptomatic serial testing with nasal swab samples.

We are exploring extending the test to home-based sample collection and pooling to enable larger scale testing.

In September 2020, we entered into WP2 with the NIH under the RADx program.

This contract, which has a total award value of up to $18.2 million, is intended to accelerate the continued development, scale-up and deployment of our novel SARS-CoV-2 antigen test.

Initial early feasibility of this test was funded in part through the RADx WP1 award we were granted in June 2020.

WP2 supports clinical validation of the test in support of the EUA submissions with the FDA, and provides funding to expand assay kit manufacturing capacity and commercial deployment readiness.

Contract funding was subject to the achievement of pre-defined milestones and the contract period ran through September 2021, with one milestone extended to March 31, 2022.

As of December 31, 2021, we had received $17.7 million out of the full $18.2 million under WP2.

The COVID-19 situation remains dynamic, and there remains significant uncertainty as to the length and severity of the pandemic, the actions that may be taken by government authorities, the impact to the business of our customers and suppliers, the long-term economic implications and other factors identified in “Part I, Item 1A, Risk Factors” of this Annual Report on Form 10-K.

We will continue to evaluate the nature and extent of the impact to our business, financial condition, and operating results.

In 2022, we voluntarily withdrew the EUA for these tests.

Restructuring and Strategic Re-Alignment

Following a strategic review and assessment of our operations and cost structure, on August 8, 2022, we announced a plan of restructuring and strategic re-alignment (the Restructuring Plan).

As part of this plan, we began an assay redevelopment program with the ultimate objective of improving our ability to manufacture and deliver high-quality assays at scale.

The plan aligns our investments to best serve the needs of customers, focuses innovation efforts on key platforms and provides the foundation for our entry into translational pharma and clinical markets, which we believe will be required to access new growth categories.

The Restructuring Plan included the elimination of 119 positions and other cost-saving measures.

The workforce reduction was substantially completed by the end of the third quarter of 2022.

As part of the Restructuring Plan, we are also reviewing alternative uses of the additional facility space that we currently lease in Bedford, Massachusetts.

These alternatives may include termination of the lease, or sub-leasing all, or a portion, of the Bedford facilities.

During the year ended December 31, 2022, we recorded an impairment expense of $16.3 million on our long-lived assets related to the Bedford facilities, as well as a $1.1 million impairment expense related to software projects.

Overall, as a result of the Restructuring Plan, we expect to realize estimated annualized operating expense savings of approximately $25 million.

As of December 31, 2022, we had cash and cash equivalents of $338.7 million.

Since inception, we have incurred annual net losses.

Our net loss was $57.7 million, $31.5 million, and $40.8 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Our net loss was $96.7 million and $57.7 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of $402.2 million and stockholders' equity of $358.9 million.

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● expand our sales and marketing efforts to further commercialize our products;

● strategically acquire companies or technologies that may be complementary to our business;

● strategically acquire and integrate companies or technologies that may be complementary to our business;

● expand our research and development efforts to improve our existing products and develop and launch new products, particularly if any of our products are deemed by the FDA to be medical devices or otherwise subject to additional regulation by the FDA;

● seek PMA or 510(k) clearance from the FDA for our existing products or new products if or when we decide to market products for use in the prevention, diagnosis or treatment of a disease or other condition;

● hire additional personnel and continue to grow our employee headcount;

● hire additional personnel and grow our employee headcount;

● enter into collaboration arrangements, if any, or in-license other products and technologies;

● add operational, financial and management information systems.

● continue to incur increased costs as a result of operating as a public company.

Financial Operations Overview

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We validate the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations.

We generate product revenue primarily from sales of our HD-X, HD-1, SR-X, and SP-X instruments and related reagents and other consumables.

We generate product revenue primarily from sales of our HD-X, SR-X, and SP-X instruments and related reagents and other consumables.

We currently sell our products for RUO applications and our customers are primarily laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies.

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Cost of Products, Services and Collaboration Revenue

Cost of goods sold for products consists of HD-X, HD-1, and SR-X instrument costs from the manufacturer.

Cost of goods sold for products consists of HD-X, HD-1, and SR-X instrument costs from the manufacturer and related reagents and other consumables.

Cost of goods sold for SP-X consists of costs based on the internal assembly of this item.

Raw material part costs, associated freight, shipping and handling costs, contract manufacturer costs, salaries, personnel costs, royalties, stock-based compensation, overhead and other direct costs related to those sales are classified as cost of goods sold for products.

Cost of goods sold for services consists of salaries and other personnel costs, royalties, stock-based compensation and facility costs associated with operating the Accelerator Laboratory on behalf of customers, in addition to costs related to warranties and other costs of servicing equipment at customer sites.

Raw material part costs;

inbound freight, shipping and handling costs associated with purchased goods;

contract manufacturer costs;

personnel costs;

overhead and other direct costs related to those sales are classified as cost of goods sold for products.

Cost of goods sold for services consists of raw materials, personnel costs, royalties as well as overhead and other direct costs associated with operating the Accelerator Laboratory on behalf of customers, in addition to costs related to warranties and other costs of servicing equipment at customer sites.

Cost of collaboration revenue consists of royalty expense due to third parties from revenue generated by collaboration or license deals.

Research and Development Expenses

Research and development expenses consist of salaries and other personnel costs, stock-based compensation, research supplies, third-party development costs for new products, materials for prototypes, and allocated overhead costs that include facility and other overhead costs.

Research and development expenses consist of personnel costs, research supplies, third-party development costs for new products, materials for prototypes, and allocated overhead costs that include facility and other overhead costs.

We have made substantial investments in research and development since our inception, and plan to continue to make substantial investments in the future.

Our research and development efforts have focused primarily on the tasks required to support development and commercialization of new and existing products.

We believe that our continued investment in research and development is essential to our long-term

competitive position and expect these expenses to increase in future periods.

Our research and development efforts have focused primarily on the tasks required to support development and commercialization of new and existing products and improved product quality.

We believe that our continued investment in research and development is essential to our long-term competitive position and expect these expenses to increase in future periods.

Additionally, costs incurred related to grant revenue are recorded as research and development expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal and accounting services.

We expect selling, general and administrative expenses to increase in future periods as the number of sales, technical support and marketing and administrative personnel grows and we continue to introduce new products, broaden our customer base and grow our business.

We also expect to incur additional public company expenses, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq Stock Market, additional insurance expenses, and expenses related to investor relations activities and other administrative and professional services.

Selling, general and administrative expenses consist primarily of personnel costs for our sales and marketing, finance, legal, human resources and general management, costs associated with shipping and handling for product sales, other general and administrative costs, as well as professional services costs, such as marketing, advertising, legal and accounting services in addition to allocated overhead costs that include facility and other overhead costs.

The classification of shipping and handling costs for product sales varies from company to company with some companies recording these as selling, general, and administrative expenses and others recording such expenses within costs of goods sold for products.

To the extent the classification of these shipping and handling costs differs from the classification used by other companies, our gross margins may not be comparable with those reported by such other companies.

Shipping and handling costs for product sales included within selling, general and administrative expenses were $7.2 million and $6.9 million for the years ended December 31, 2022 and 2021, respectively, and our gross margin was 44.4% and 55.8% for the years ended December 31, 2022 and 2021, respectively.

If these shipping and handling costs had been included in cost of goods sold for products, our non-GAAP gross margin would have been 37.5% and 49.6% for the years ended December 31, 2022 and 2021, respectively.

See “Non-GAAP Financial Measures” below.

We expect, but cannot guarantee, that annual selling, general and administrative expenses will not increase significantly over the next 12 to 14 months.

Non-GAAP Financial Measures

To supplement our financial statements presented on a GAAP basis, we present non-GAAP gross profit and non-GAAP gross margin, which are calculated by including shipping and handling costs for product sales within cost of goods sold instead of within selling, general and administrative expenses.

Management uses these non-GAAP measures to evaluate our operating performance in a manner that allows for meaningful period-to-period comparison and analysis of trends in our business and our competitors.

Management believes that presentation of non-GAAP gross margin provides useful information to investors in assessing our operating performance within our industry and in order to allow

comparability to the presentation of other companies in our industry where shipping and handling costs are included in cost of goods sold for products.

Management also uses non-GAAP gross margin as a factor in assessing the Company’s progress against the Restructuring Plan.

The non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for, the financial information presented in accordance with GAAP.

Set forth below is a reconciliation of non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating expenses to their most directly comparable GAAP financial measures.

Reconciliation of Non-GAAP Financial Measures:

Year Ended December 31,

GAAP gross profit

Shipping and handling costs

Non-GAAP gross profit

GAAP Gross margin (gross profit as % of revenue)

Non-GAAP gross margin (non-GAAP gross profit as % of revenue)

GAAP total operating expenses

Shipping and handling costs

Non-GAAP total operating expenses

GAAP loss from operations

Non-GAAP loss from operations

Goodwill, Intangibles and Long-Lived Assets Impairment Expenses

Goodwill, intangibles and long-lived assets impairment expense consists primarily of impairment charges recorded due to an impairment event.

We perform an impairment assessment annually, or whenever events or circumstances indicate that the carrying amount of the asset (asset group) may not be recoverable, of goodwill, intangibles and long-lived assets under the guidance of US GAAP accounting standards ASC 350 - Intangibles – Goodwill and Other (ASC 350) and ASC 360 - Property, Plant and Equipment (ASC 360).

If impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset.

Fair value is generally determined using a discounted future cash flow analysis.

During the year ended December 31, 2022, the Company recorded a goodwill impairment charge of $8.2 million and impairment expense of $17.4 million for other long-lived assets due to impairment indicators identified.

As of December 31, 2022, there was no remaining goodwill.

There were no impairment charges recorded for the year ended December 31, 2021.

Critical Accounting Policies, Significant Judgments and Estimates

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Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations.

Our significant accounting policies are more fully described in “Significant Accounting Policies” (Note 2) in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Our significant accounting policies are more fully described in “Significant Accounting Policies” in Note 2 in the notes to our consolidated financial statements.

Revenue Recognition

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Contract research services are provided through our Accelerator Laboratory and generally consist of fixed fee contracts.

Revenues from contract research services are

recognized at a point in time when we complete and deliver our research report on each individually completed study, or over time if the contractual provisions allow for the collection of transaction consideration for costs incurred plus a reasonable margin through the period of performance of the services.

Revenues from contract research services are recognized at a point in time when we complete and deliver our research report on each individually completed study, or over time if the contractual provisions allow for the collection of transaction consideration for costs incurred plus a reasonable margin through the period of performance of the services.

Revenues from service-type warranties are recognized ratably over the contract service period.

Revenues from other services are immaterial.

During the first quarter of 2022, we entered into a Master Collaboration Agreement with Eli Lilly and Company (Lilly) establishing a framework for future projects focused on the development of Simoa immunoassays (the Lilly Collaboration Agreement).

We also entered into a Statement of Work under the Lilly Collaboration Agreement to perform assay research and development services within the field of Alzheimer’s disease.

In connection with the Lilly Collaboration Agreement, we received a non-refundable up-front payment of $5.0 million during the first quarter of 2022, and under the Statement of Work received $1.5 million per calendar quarter during 2022, beginning with the first quarter of 2022.

The revenue was recognized over a one-year period.

The Lilly Collaboration Agreement automatically renews on a quarterly basis unless Lilly provides 100 days’ termination notice.

Concurrent with the execution of the Lilly Collaboration Agreement, we entered into a Technology License Agreement (the Lilly License) under which Lilly granted to the Company a non-exclusive license to Lilly’s proprietary P-tau217 antibody technology for potential near-term use in research use only products and services and future in vitro diagnostics applications within the field of Alzheimer’s disease.

In consideration of the license, we paid an upfront fee, are required to make milestone payments based on the achievement of predetermined regulatory and commercial events, and will pay a royalty on net sales of licensed products.

We concluded that the Lilly Collaboration Agreement (including the Statement of Work) and the Lilly License represented a single contract with a customer, and we are accounting for the agreements as service revenue recognized over time as the services are delivered.

The transaction price for the Lilly Collaboration Agreement was $10.9 million.

Contingent amounts due to Lilly, under the Lilly License, represent variable consideration payable to a customer and will be recognized as reductions to service revenue up to the amount of the transaction price recognized, when probable.

During the year ended December 31, 2022, we recognized approximately $10.9 million of revenue from the Lilly Collaboration Agreement.

Collaboration and License Revenue

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The license agreements provide the licensee with a right to use the intellectual property with the license fee revenues recognized at a point in time as the underlying license is considered functional intellectual property.

We have recognized revenues from a sales- or usage based royalties related to our licensing technology and intellectual property.

We have recognized royalty revenue based on sales or usage related to our licensing technology and intellectual property.

Payment Terms

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Disaggregated Revenue

When disaggregating revenue, we considered all of the economic factors that may affect revenues.

When disaggregating revenue, we consider all of the economic factors that may affect revenues.

The following tables disaggregate our revenue from contracts with customers based on their location by revenue type:

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(in thousands)

North America

Product revenues:

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(in thousands)

North America

Product revenues:

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We have recorded sales- or usage-based royalty revenue for the years ended December 31, 2022 and 2021 related to the intellectual property licensed by Uman.

We recognize revenues from sales- or usage based royalty revenue at the later of when the sales or usage occurs;

and the satisfaction or partial satisfaction of the performance obligation to which the royalty has been allocated.

We recognize revenues from sales- or usage-based royalty revenue at the later of when the sales or usage occurs and the satisfaction or partial satisfaction of the performance obligation to which the royalty has been allocated.

The aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied or are partially satisfied as of December 31, 2022 is $10.1 million.

Of the performance obligations not yet satisfied or that are partially satisfied, $8.6 million is expected to be recognized as revenue in the next 12 months, with the remainder to be recognized within the 24 months thereafter.

The $7.5 million principally consists of amounts billed for undelivered services related to initial and extended service-type warranties and research services, as well as $0.5 million related to undelivered licenses of intellectual property for a diagnostics company.

We have classified the balance of capitalized costs to obtain a contract as a component of prepaid expenses and other current assets as of December 31, 2021 and classified the expense as a component of cost of goods sold and selling, general and administrative expense over the estimated life of the contract.

The $10.1 million principally consists of $9.6 million billed for undelivered services related to initial and extended service-type warranties and research services, as well as $0.5 million related to undelivered licenses of intellectual property for a diagnostics company.

We have classified the balance of capitalized costs to obtain a contract as a component of prepaid expenses and other current assets as of December 31, 2022 and will amortize the expense as a component of cost of goods sold and selling, general and administrative expense over the estimated life of the contract.

We consider potential impairment in these amounts each period.

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The related expenses are recorded within operating expenses and not deducted.

On June 22, 2020, we entered into WP1 under the NIH’s RADx program to assess the feasibility of a novel SARS-CoV-2 antigen detection test using our Simoa technology.

During the year ended December 31, 2020 we recognized $2.0 million of grant revenue and incurred $1.0 million in research and development expense related to WP1.

WP1 was completed as of December 31, 2020.

On September 29, 2020, we entered into WP2 with the NIH under its RADx program.

The contract, which has a total award value of $18.2 million, accelerates the continued development, scale-up, and deployment of the novel SARS-CoV-2 antigen detection test using our Simoa technology.

The contract provides funding to expand assay kit manufacturing capacity and commercial deployment readiness.

Release of the $18.2 million of funding under WP2 is based on the achievement of certain milestones.

The contract, with a total award value of $18.2 million, accelerated the continued development, scale-up, and deployment of the novel SARS-CoV-2 antigen detection test using our Simoa technology.

The contract provided funding to expand assay kit manufacturing capacity and commercial deployment readiness.

Release of the $18.2 million of funding under WP2 was based on the achievement of certain milestones.

Contract funding was subject to achievement of these pre-defined milestones and the contract period ran through September 2021, with one milestone extended to March 31, 2022.

As of December 31, 2021, we had received $17.7 million out of the full $18.2 million under WP2 .

During the year ended December 31, 2021, we recognized $5.2 million in grant revenue and incurred $3.4 million in research and development expense related to WP2.

As of December 31, 2022, we received the full $18.2 million under WP2.

During the year ended December 31, 2022, we recognized no grant revenue and incurred no research and development expense related to WP2.

During the year ended December 31, 2021, we recognized $5.2 million in grant revenue and incurred $3.4 million in research and development expense related to WP2.

The following table summarizes the cumulative activity under WP2 as of December 31, 2021 and 2020 (in thousands):

The following table summarizes the cumulative RADx activity as of December 31, 2022 and 2021 (in thousands):

December 31, 2022

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Total proceeds used for assets

Total deferred proceeds for assets

Total deferred grant revenue

Total recognized

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Total proceeds reasonably assured

Total WP2 grant amount

Total RADx Grant amount

On March 24, 2022, we entered into a contract with the Alzheimer’s Drug Discovery Foundation (ADDF) (the ADDF Grant).

ADDF is a charitable venture philanthropy entity that has granted us funding in support of certain activities for the development of an in vitro diagnostic (IVD) test for early detection of Alzheimer's disease.

The ADDF Grant, which has a total funding value of $2.3 million, restricts our use of the granted funds to be used solely for activities related to the Alzheimer’s diagnostic test development project.

Contract funding is subject to achievement of these pre-defined milestones and the contract period runs through June 2024.

We are recognizing revenue over time as the related services are performed.

As of December 31, 2022, we had received $1.3 million of the total funding value of $2.3 million under the ADDF Grant.

During the year ended December 31, 2022, we recognized $0.6 million in grant revenue and incurred $0.6 million in research and development expense related to the ADDF Grant.

Stock-Based Compensation

We account for stock-based compensation awards in accordance with ASC 718, Compensation—Stock Compensation (ASC 718).

ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values.

ASC 718 requires all stock-based payments to employees and non-employees, including grants of stock options, to be recognized in the statement of operations based on their fair values.

Stock-based compensation awards have historically consisted of stock options and restricted stock units.

Prior to the adoption of Accounting Standards Update (ASU) No.

2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07), the measurement date for non-employee awards was generally the date the services were completed, resulting in financial reporting period adjustments to stock-based compensation during the vesting period for changes in the fair value of the awards.

We adopted ASU 2018-07 on January 1, 2020.

After the adoption of ASU 2018-07, the measurement date for non-employee awards is the date of grant without changes in the fair value of the award.

Stock-based compensation costs for non-employees are recognized as expense over the vesting period on a straight-line basis.

There were no material non-employee awards outstanding during the years ended December 31, 2021, 2020, and 2019.

We recognize forfeitures as they occur.

We estimate the grant date fair value, and the resulting stock-based compensation expense, using a Black-Scholes option-pricing model.

The grant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

The grant date fair value of the stock-based awards for employees is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

The grant date fair value of stock-based awards for non-employees is recognized on a straight-line basis over the vesting period.

The fair value of stock options granted to employees and non-employees is estimated on the grant date using a Black-Scholes option-pricing model, based on the assumptions noted in the following table:

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Treasury yield curve in effect at the time of grant, commensurate with the expected life assumption.

We estimate the expected life of options granted to employees utilizing the simplified method which calculates the expected life of an option as the average of the time to vesting and

contractual life of the options.

We estimate the expected life of options granted to employees utilizing the simplified method which calculates the expected life of an option as the average of the time to vesting and contractual life of the options.

The expected life is applied to the stock option grant group as a whole, as we do not expect substantially different exercise or post-vesting termination behavior among our employee population.

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Service and other revenue

Collaboration and license revenue

Collaboration revenue

Grant revenue

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Cost of product revenue

Cost of service revenue

Cost of service and other revenue

Cost of collaboration and license revenue

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Operating expenses:

Research and development

Research and Development Expense

Selling, general and administrative

Other lease costs

Restructuring

Goodwill impairment

Impairment expense

Total operating expenses

Loss from operations

Interest expense, net

Other income (expense), net

Interest income (expense), net

Other (expense) income, net

Loss before income taxes

Income tax benefit

Revenue increased by $24.2 million, or 28%, to $110.6 million for the year ended December 31, 2021 as compared to $86.4 million for the year ended December 31, 2020.

Product revenue increased 84% to $81.1 million for the year ended December 31, 2021, as compared to $44.0 million in the same period in 2020.

Income tax (expense) benefit

Revenue decreased by $5.0 million, or 5%, to $105.5 million for the year ended December 31, 2022 as compared to $110.6 million for the year ended December 31, 2021.

Product revenue decreased by $11.3 million, or 14%, to $69.8 million for the year ended December 31, 2022, as compared to $81.1 million for the year ended December 31, 2021.

P roduct revenue consisted of sales of instruments totaling $25.0 million and sales of consumables and other products totaling $44.8 million for the year ended December 31, 2022.

Product revenue consisted of sales of instruments totaling $26.0 million and sales of consumables and other products of $55.1 million for the year ended December 31, 2021.

The increase in product revenue was primarily due to the increased ability to install instruments as customer sites reopened from COVID-19 related shutdowns that impacted results in the same period in 2020.

In addition, as the installed base of instruments increased year over year, consumable sales increased.

The decrease in service and other revenue of $0.5 million was primarily due to our open headcount within our services personnel.

We had $0.6 million and $11.8 million in collaboration and license revenue during the year ended December 31, 2021 and 2020, respectively, related to licensing technology and intellectual property.

We had $11.2 million in collaboration and license revenue during the year ended December 31, 2020, primarily related to entering into the Abbott License Agreement.

Grant revenue of $5.2 million and $6.4 million consisted of revenue related to WP2 recognized during the year ended December 31, 2021, and revenue related to WP2 and WP1 recognized during the year ended December 31, 2020, respectively.

The decrease in product revenue was primarily due to reducing our production levels of consumables to ensure quality as we address the issues affecting our consumables .

Service and other revenue increased by $10.9 million, or 46%, to $34.5 million for the year ended December 31, 2022, as compared to $23.6 million for the year ended December 31, 2021.

The increase in service and other revenue was primarily due to the revenue related to Lilly Collaboration Agreement recognized during the year-ended December 31, 2022.

We had $0.6 million and $0.6 million in collaboration revenue during the year ended December 31, 2022 and 2021, respectively, related to licensing technology and intellectual property.

We had grant revenue of $0.6 million related to the ADDF grant that was recognized during the year ended December 31, 2022, and grant revenue of $5.2 million related to our contract with WP2 was recognized during the year ended December 31, 2021.

Cost of Goods Sold, Services, and Licenses

Cost of product revenue increased by $6.7 million, or 20%, to $40.8 million for the year ended December 31, 2022, as compared to $34.1 million for the year ended December 31, 2021.

The increase was primarily due to our increase in volume of our product revenue.

Cost of service revenue increased by $3.4 million, or 31%, to $14.7 million for the year ended December 31, 2021, as compared to $11.2 million for the year ended December 31, 2020, primarily due to increased personnel costs from the build out of our field service organization.

Cost of collaboration and license revenue of $1.0 million for the year ended December 31, 2020 resulted from the licensing of certain technology and intellectual property to Abbott.

Overall cost of goods sold and services as a percentage of revenue was consistent at 44% of total revenue for the years ended December 31, 2021 and 2020, respectively.

The increase was primarily due to increased reserves for excess and discontinued products partially offset by lower volume.

Cost of service and other revenue increased by $3.2 million, or 22%, to $17.9 million for the year ended December 31, 2022, as compared to $14.7 million for the year ended December 31, 2021, primarily due to increased personnel costs from the build out of our field service organization as well as the increased efforts related to the Lilly Collaboration Agreement.

Total cost of goods sold, services, and licenses as a percentage of revenue increased to 56% of total revenue for the year ended December 31, 2022, from 44% for the year ended December 31, 2021, primarily due to increased reserves for excess and discontinued products, and changes in product mix, partially offset by decreased product revenues.

Research and Development Expense

Research and development expense increased by $7.8 million, or 39%, to $28.0 million for the year ended December 31, 2021, as compared to $20.2 million for the year ended December 31, 2020.

The increase was primarily due to increased headcount as we build our organization to support growth and invest in process improvements.

Research and development expense decreased by $2.1 million, or 7%, to $25.9 million for the year ended December 31, 2022, as compared to $28.0 million for the year ended December 31, 2021.

The decrease was mainly due to the reduction in headcount in connection with the implementation of the Restructuring Plan.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $32.7 million, or 55%, to $92.3 million for the year ended December 31, 2021 as compared to $59.6 million for the year ended December 31, 2020.

The increase was primarily due to higher personnel costs from increased headcount and other spending increases in various departments as we build out our organization to support growth and invest in process improvements.

Interest Expense

Interest expense, net decreased by $0.1 million for the year ended December 31, 2021 as compared to the same period in 2020, primarily due to the unfavorable impact of interest rates on our cash equivalents for the year ended December 31, 2021, as compared to the year ended December 31, 2020.

Other Income (Expense), Net

Other income (expense), net increased by $1.3 million for the year ended December 31, 2021 as compared to the same period in 2020, primarily due to other income of $2.1 million related to an employee retention tax credit established under the Coronavirus Aid, Relief and Economic Securities Act, offset by other expense due to unfavorable foreign currency exchange rates during the year ended December 31, 2021.

Income Tax Benefit

Income tax benefit was less than $0.1 million for the year ended December 31, 2021, as compared to $0.4 million tax for the same period in 2020.

The change is primarily due to the decrease in the tax benefit recorded on the operating results of our foreign subsidiaries.

Selling, general and administrative expense decreased by $0.3 million, to $92.0 million for the year ended December 31, 2022 as compared to $92.3 million for the year ended December 31, 2021.

This was primarily driven by the reduction in headcount in connection with the implementation of the Restructuring Plan, offset by the rent expense increase year over year due to the newly leased facilities in Bedford, Massachusetts.

Included within selling, general and administrative expense are shipping and handling costs for product sales of $7.2 million and $6.9 million for the years ended December 31, 2022 and 2021, respectively.

Other Lease Costs

During the year ended December 31, 2022, we incurred other lease costs of $1.3 million.

As part of the Restructuring Plan, we are not utilizing the office and laboratory space leased in Bedford, Massachusetts and are evaluating alternatives, including termination of the lease or sub-leasing the facilities.

Other lease costs represent the depreciation expense of the right-of-use asset and the accretion of the lease facility for periods after the impairment and the determination that the facilities would not be utilized.

There were no similar charges in the same period in 2021.

Restructuring, Goodwill Impairment, and Impairment Expense

During the year ended December 31, 2022, we incurred restructuring expense of $3.8 million, non-cash impairment expenses for long-lived assets of $17.4 million and non-cash impairment expenses for goodwill of $8.2 million.

Included in restructuring expense were costs for severance and one-time termination benefits in connection with the elimination of 119 positions across the Company, associated legal fees and contract cancellation costs due to the implementation of the Restructuring Plan.

Impairment expense of $17.4 million includes $16.3 million associated with the Bedford, Massachusetts facilities and $1.1 million associated with the impairment of software costs for projects that have been rationalized as part of the Restructuring Plan.

As part of the Restructuring Plan, we are not utilizing the Bedford, Massachusetts facilities and are evaluating alternatives, including terminating the lease or sub-leasing the

The entire goodwill balance was written off during the year ended December 31, 2022, following the assessment of our interim goodwill impairment test.

There were no similar charges in the same period in 2021.

Interest Income (Expense), Net

Interest income (expense), net increased by $5.5 million to $5.1 million of income for the year ended December 31, 2022, as compared to ($0.4) million of expense for the year ended December 31, 2021.

This increase was due to the favorable impact of higher interest rates earned on cash and cash equivalents as well as the settlement of our notes payable in the year ended December 31, 2021.

Other (Expense) Income, Net

Other (expense) income, net decreased by $1.4 million to ($0.1) million of expense for the year ended December 31, 2022, as compared to $1.3 million of income for the year ended December 31, 2021.

The decrease was primarily due to the recognition of a one-time employee retention tax credit of $2.2 million established under the Coronavirus Aid, Relief, and Economic Security Act in 2021.

Income Tax (Expense) Benefit, Net

Income tax (expense) benefit, net was less than ($0.1) million of expense for the year ended December 31, 2022, as compared to benefit of less than $0.1 million for the same period in 2021.

The change was primarily due to the decrease in the tax benefit recorded on the operating results of our foreign subsidiaries.

Liquidity and Capital Resources

Since our inception, we have incurred annual net losses and negative cash flows from operations.

We used $47.9 million, $23.4 million and $26.2 million of cash for our operating activities for the years ended December 31, 2021, 2020, and 2019, respectively.

The significant increase in our cash used for operating activities for the year ended December 31, 2021, as compared to December 31, 2020, was principally driven by our increased net loss for the 2021 period.

We used $48.3 million and $47.9 million of cash for our operating activities for the years ended December 31, 2022 and 2021, respectively.

The impact to our operating cash flows of an increase in net loss of $39.0 million for the year ended December 31, 2022, was primarily offset due to one-time non-cash expenses (i.e., goodwill and long-lived assets impairment), improved collection of receivables, and lower levels of inventory.

This resulted in no significant change in net cash used in operating activities during the years ended December 31, 2022, and 2021.

As of December 31, 2022, we had an accumulated deficit of $402.2 million.

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Equity Offerings

On March 19, 2019, we entered into a Sales Agreement for an “at-the-market offering” arrangement with Cowen and Company, LLC (Cowen), which allowed us to issue and sell shares of common stock pursuant to a shelf registration statement for total gross sales proceeds of up to $50.0 million from time to time through Cowen, acting as our agent.

During the year ended December 31, 2019, we sold an aggregate of 2,186,163 shares of common stock pursuant to this agreement resulting in $49.7 million in gross proceeds and $48.0 million in net proceeds.

On August 6, 2020, we delivered written notice to Cowen to terminate the Sales Agreement, which termination the parties agreed to make immediately effective.

On August 8, 2019, we entered into an underwriting agreement with J.P.

Morgan Securities LLC and SVB Leerink LLC, or Leerink, as representatives of the several underwriters, relating to an underwritten public offering of 2,732,673 shares of common stock at a public offering price of $25.25 per share.

We received $69.0 million in gross proceeds and $64.5 million in net proceeds.

On August 6, 2020, we entered into an underwriting agreement with Leerink and Cowen, as representatives of the several underwriters, relating to an underwritten public offering of 3,048,774 shares of common stock at a public offering price of $32.00 per share.

We received $97.6 million in gross proceeds and $91.4 million in net proceeds.

On February 3, 2021, we entered into an underwriting agreement with Goldman Sachs & Co.

LLC, Leerink and Cowen, as representatives of the several underwriters, relating to an underwritten public offering of 4,107,142 shares of common stock at a public offering price of $70.00 per share.

We received $287.5 million in gross proceeds and approximately $269.7 million in net proceeds.

In February 2021, we raised approximately $270 million of net proceeds through an underwritten public offering of approximately 4.1 million shares of our common stock at a public offering price of $70.00 per share.

There were no equity offerings during the year ended December 31, 2022.

Loan Facility with Hercules

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Under the amended agreement, we were required to pay the loan principal in four equal installments starting July 1, 2021, with the final principal payment and end of term charge to be made on October 1, 2021.

On October 1, 2021, we made the final principal payment, including end of term fees, of $2.0 million related to the loan agreement.

As of December 31, 2021, there were no additional amounts available to borrow under the loan facility.

Uman Acquisition

In August 2019, we completed the acquisition of Uman, in which we paid $15.7 million in cash to the shareholders of Uman.

We funded this payment through our existing cash balances.

In addition, we issued $5.5 million in stock in connection with the purchase of Uman.

The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019.

On October 1, 2021, we made the final principal payment, including end of term fees, of $2.0 million related to

the loan agreement.

There were no outstanding balances under the loan facility at any time during the year ended December 31, 2022.

The following table presents our cash flows for each period presented (in thousands):

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Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support the growth of our business.

We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure and this may continue in the future.

We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built out our infrastructure and this may continue in the future.

Net cash used in operating activities was $48.3 million during the year ended December 31, 2022.

Net cash used in operating activities primarily consisted of net loss of $57.7 million offset by non-cash charges of $16.0 million of stock-based compensation expense and $4.9 million of depreciation and amortization expense.

Cash used as a result of changes in operating assets and liabilities of $12.2 million was primarily due to an increase in inventory of $8.1 million and an increase in accounts receivable of $6.9 million, offset by an increase in accounts payable, accrued compensation and benefits and other accrued expenses of $3.5 million, all driven by growth and our investments in process improvements.

Net cash used in operating activities primarily consisted of net loss of $96.7 million offset by non-cash charges of $15.4 million of stock-based compensation expense, $5.3 million of depreciation and amortization expense, $8.2 million of goodwill impairment and $17.4 million of impairment of long-lived assets.

Net changes in operating assets and liabilities resulted in net cash inflows of $2.1 million, primarily due to a decrease in accounts receivable of $5.2 million, decrease in inventory of $5.4 million as well as an increase in deferred revenue of $2.6 million, offset by a decrease in payables of $5.4 million, decrease in compensation and payroll accruals of $4.1 million and an increase in prepaid expenses and other assets of $0.6 million.

Net cash used in operating activities was $47.9 million during the year ended December 31, 2021.

Net cash used in operating activities primarily consisted of net loss of $57.7 million offset by non-cash charges of $16.0 million of stock based compensation expense and $4.9 million of depreciation and amortization expense.

Cash used as a result of changes in operating assets and liabilities of $8.0 million was primarily due to an increase in an increase in accounts receivable of $6.7 million, an increase in inventory of $5.1 million, and an increase in prepaid expenses and other assets of $3.9 million, offset by a decrease in accrued compensation and benefits and other accrued expenses of $6.2 million.

Net Cash Used in Investing Activities

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We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods.

We used $6.3 million of cash during the year ended December 31, 2021, consisting of $13.6 million for the purchase of property and equipment, offset by $7.3 million in grant proceeds related to assets acquired under WP2.

We used $0.6 million of cash in investing activities during the year ended December 31, 2020, consisting of $3.9 million in additions to property and equipment, offset by $3.3 million in grant proceeds related to assets acquired under WP2.

On a net basis, we used $11.2 million of cash during the year ended December 31, 2022, consisting of $11.7 million for the purchase of property and equipment, offset by $0.5 million in grant proceeds related to assets acquired under RADx grant.

On a net basis, we used $6.3 million of cash during the year ended December 31, 2021, consisting of $13.6 million for the purchase of property and equipment, offset by $7.3 million in grant proceeds related to assets acquired under WP2.

Net Cash Provided by Financing Activities

Historically, we have financed our operations principally through private placements of our convertible preferred stock and borrowings from credit facilities, the sale of shares of our common stock in our IPO or other offerings and revenues from our commercial operations.

Historically, we have financed our operations principally through equity offerings, borrowings from credit facilities and revenue from our commercial operations.

Financing activities provided $2.3 million of cash during the year ended December 31, 2022, consisting of $1.4 million in net proceeds from the exercise of stock options and $0.9 million in net proceeds from purchases under our Employee Stock Purchase Plan.

Financing activities provided $270.8 million of cash during the year ended December 31, 2021, primarily from $269.7 million in net proceeds from our underwritten public offering during the first quarter of 2021.

Financing activities provided $96.2 million of cash during the year ended December 31, 2020, primarily from net proceeds of our underwritten public offering during the third quarter of 2020.

Capital Resources

We have not achieved profitability on an annual basis since our inception, and we expect to continue to incur net losses in the future.

We also expect that our operating expenses will increase as we continue to increase our marketing efforts to drive adoption of our commercial products.

We also expect that our operating expenses will increase as we continue to increase our marketing efforts to drive adoption of our commercial products as well as our investment in improving the quality of our products and services.

Our liquidity requirements have historically consisted, and we expect that they will continue to consist, of sales and marketing expenses, research and development expenses, working capital, debt service and general corporate expenses.

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Our future funding requirements will depend on many factors, including:

● market acceptance of our products and services;

● continued market acceptance of our products and services and the ability of our products to meet our customers’ expectations;

● the cost and timing of establishing additional sales, marketing and distribution capabilities;

● the extent to which we achieve intended cost savings, revenue improvement and related benefits from our Restructuring Plan;

● the extent to which we are able to successfully complete our assay improvement program to enhance product quality;

● the cost of our research and development activities;

● our ability to enter into collaborations in the future, and the success of any such collaborations;

● potential opportunities to strategically acquire and integrate companies or technologies that may be complementary to our business;

● the cost and timing of potential regulatory clearances or approvals that may be required in the future for our products;

● the effect of competing technological and market developments.

We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all.

We cannot guarantee that we will be able to obtain additional funds on acceptable terms, or at all.

If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution.

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If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us.

If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products.

If we do not have or are not

able to obtain sufficient funds, we may have to delay development or commercialization of our products.

We also may have to reduce marketing, customer support or other resources devoted to our products or cease operations.

If the conditions for raising capital are favorable, we may seek to finance future cash needs through public or private equity or debt offerings or other financings.

On November 6, 2020, we filed an automatically effective shelf registration statement with the SEC.

Each issuance of securities under the shelf registration statement will require the filing of a prospectus supplement identifying the amount and terms of securities to be issued.

The registration statement does not limit the amount of securities that may be issued thereunder.

Our ability to issue securities is subject to market

conditions and other factors.

This registration statement will expire on November 6, 2023, three years after its date of effectiveness.

Contractual Obligations, Commitments and Contingencies

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We currently lease approximately 91,600 square feet of office, laboratory, and manufacturing space at our headquarters in Billerica, Massachusetts.

In addition, in the first quarter of 2022, we executed a lease for 85,800 square feet of office and laboratory space in Bedford, Massachusetts.

The premises covered by these leases serves as our principal office and laboratory space effective the second quarter of 2019.

The premises covered by this lease serve as our principal office and laboratory space.

The initial term of the Billerica lease is eleven years and five months beginning on April 1, 2019, and we have the option to extend the lease for two additional five-year periods.

The initial term of the Bedford lease is eight years and nine months beginning on the earlier of our occupancy, or May 1, 2022.

In addition, our subsidiary, Uman, leases a total of approximately 6,500 square feet of office, laboratory, manufacturing and storage space in Umeå, Sweden.

These leases expire at various dates through February 28, 2023.

On January 28, 2022, we executed a lease for 85,800 square feet of office and laboratory space in Bedford, Massachusetts.

The lease commencement date was February 1, 2022, when we gained access to the underlying facilities.

The initial term of the lease’s payment schedule is eight years and nine months beginning on May 1, 2022.

We have the option to extend the lease for two additional five-year periods.

As part of the Restructuring Plan, we decided not to utilize these facilities as part of our own operations.

We are reviewing our alternatives with respect to this space.

These alternatives may include the termination of the lease or the sub-lease of all or a portion of the leased facilities.

Refer to Note 12 to the consolidated financial statements for further details related to the Bedford space.

In addition, our subsidiary, Uman, leases a total of approximately 6,500 square feet of office, laboratory, manufacturing and storage space in Umeå, Sweden through multiple leases that expire at various dates through June 30, 2025.

The following table summarizes our operating lease obligations (in thousands):

As of December 31, 2022

We generally expect to ship all instrument and consumable orders received in a given period with the exception of orders received near the end of a fiscal quarter;

and as a result, our backlog at the end of any period is typically insignificant.

We generally expect to ship all instrument and consumable orders in the same fiscal quarter in which they are received, with the exception of orders received near the end of a fiscal quarter.

As a result, our backlog at the end of any fiscal quarter is typically insignificant.

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-K

Item 7. Management’s Discussion and Analysis