What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 109 added, 265 removed, 376 unchanged (50% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(In thousands)

2021 December 31,

11 unchanged sentences

Goodwill 4,511 —

Other assets 31,542 26,678

Other non-current assets 30,841 26,678

Total assets $ 977,579 $ 929,341

14 unchanged sentences

Stockholders’ equity:

Preferred stock, $ 0.00001 par value;

100,000,000 shares authorized, no shares issued or outstanding as of March 31, 2021 and December 31, 2020

Common stock, $ 0.00001 par value;

1,100,000,000 shares authorized, 109,588,527 and 108,485,909 shares issued and outstanding as of March 31, 2021 and December 31, 2020

Preferred stock — —

Common stock 2 2

Additional paid-in capital 1,612,227 1,544,218

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Revenue $ 115,842 $ 42,905 $ 221,663 $ 114,810

10 unchanged sentences

Interest expense ( 209 ) ( 306 ) ( 430 ) ( 968 )

Other expense, net ( 729 ) ( 96 )

Other income (expense), net 521 ( 144 ) ( 208 ) ( 240 )

Loss on extinguishment of debt — — — ( 1,521 )

Total other expense ( 900 ) ( 961 )

Total other income (expense) 370 ( 325 ) ( 530 ) ( 1,286 )

Loss before provision for income taxes ( 9,958 ) ( 39,745 ) ( 21,074 ) ( 60,590 )

10 unchanged sentences

(In thousands, except share data)

Three Months Ended March 31, 2021

Common Stock Additional Paid-in

12 unchanged sentences

Balance as of March 31, 2021 109,588,527 2 1,569,059 ( 816,649 ) 48 752,460

Three Months Ended March 31, 2020

Issuance of Class A common stock upon exercise of stock options 1,151,392 — 16,194 — — 16,194

Vesting of shares subject to repurchase, including early exercised options — — 42 — — 42

Stock-based compensation — — 26,932 — — 26,932

Net loss — — — ( 11,052 ) — ( 11,052 )

Other comprehensive income — — — — 10 10

Balance as of June 30, 2021 110,739,919 $ 2 $ 1,612,227 $ ( 827,701 ) $ 58 $ 784,586

Common Stock Additional Paid-in

11 unchanged sentences

Balance as of March 31, 2020 98,145,208 2 692,617 ( 283,510 ) ( 41 ) 409,068

Issuance of Class A common stock upon exercise of stock options 2,113,974 — 8,051 — — 8,051

Vesting of shares subject to repurchase, including early exercised options — — 42 — — 42

Stock-based compensation — — 13,920 — — 13,920

Net loss — — — ( 40,167 ) — ( 40,167 )

Other comprehensive income — — — — 355 355

Balance as of June 30, 2020 100,259,182 $ 2 $ 714,630 $ ( 323,677 ) $ 314 $ 391,269

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities:

39 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Noncash investing and financing activities:

9 unchanged sentences

(the “Company”) was incorporated in the state of Delaware on July 2, 2012 and is a life sciences technology company focused on building innovative products and solutions to interrogate, understand and master biological systems at resolution and scale that matches the complexity of biology.

The Company’s integrated solutions include the Company’s Chromium and Chromium Connect instruments, which the Company refers to as “instruments,” and the Company’s proprietary microfluidic chips, slides, reagents and other consumables for both the Company’s Visium and Chromium solutions, which the Company refers to as “consumables.” The Company bundles its software with these products to guide customers through the workflow, from sample preparation through analysis and visualization.

The Company’s integrated solutions include the Company’s Chromium Controller, Chromium Connect and Chromium X Series instruments, which the Company refers to as “instruments,” and the Company’s proprietary microfluidic chips, slides, reagents and other consumables for both the Company’s Visium and Chromium solutions, which the Company refers to as “consumables.” The Company bundles its software with these products to guide customers through the workflow, from sample preparation through analysis and visualization.

The Company began commercial and manufacturing operations and selling its instruments and consumables in 2015.

The Company is headquartered in Pleasanton, California and has wholly-owned subsidiaries in China, Germany, Netherlands, Singapore, Sweden and the United Kingdom.

The Company is headquartered in Pleasanton, California and has wholly-owned subsidiaries in Canada, China, Denmark, Germany, Netherlands, Singapore, Sweden, the United States and the United Kingdom.

Basis of Presentation

12 unchanged sentences

Cash and cash equivalents are comprised of money market funds and cash which are classified as Level 1 in the fair value hierarchy.

Money market funds are highly liquid investments which are actively traded.

The pricing information for the Company’s money market funds are readily available and can be independently validated as of the measurement date.

This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

As of March 31, 2021 and December 31, 2020, the Company held $ 547.8 million and $ 600.9 million in money market funds, respectively, with no unrealized gains or losses.

As of June 30, 2021 and December 31, 2020, the Company held $ 547.9 million and $ 600.9 million in money market funds, respectively, with no unrealized gains or losses.

Revenue Recognition

The Company generates revenue from sales of products and services.

The Company’s products consist of instruments and consumables.

The Company began shipping its Chromium Connect instrument during the first quarter of 2020.

The Company recognizes revenue when control of the products and services is transferred to its customers in an amount that reflects the consideration it expects to receive from its customers in exchange for those products and services.

This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract and recognizing revenue when

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

the performance obligations have been satisfied.

A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract.

The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service.

The Company generates revenue from sales of products and services and its products consist of instruments and consumables.

Revenue from product sales is recognized when control of the product is transferred, which is generally upon shipment to the customer.

In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met.

Instrument service agreements, which relate to extended warranties, are typically entered into for one-year terms, following the expiration of the standard one-year warranty period.

4 unchanged sentences

The Company’s contracts with its customers generally do not include rights of return or a significant financing component.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company regularly enters into contracts that include various combinations of products and services which are generally distinct and accounted for as separate performance obligations.

7 unchanged sentences

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, adjusted for outstanding shares that are subject to repurchase.

For the calculation of diluted net loss per share, basic net loss per share is adjusted by the effect of dilutive securities, including convertible preferred stock, awards under the Company’s equity compensation plan and common stock warrants.

For the calculation of diluted net loss per share, basic net loss per share is adjusted by the effect of dilutive securities, including convertible preferred stock and awards under the Company’s equity compensation plans.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding.

3 unchanged sentences

Tetramer Shop is a life sciences technology company which develops and provides reagents for precise monitoring of antigen-specific T-cells in research and development.

The Company acquired Tetramer Shop for its expertise in building empty, loadable major histocompatability complex molecules that will accelerate the development of T-cell receptor-based therapeutics and diagnostics.

The Company acquired Tetramer Shop for its expertise in building empty, loadable major histocompatibility complex (MHC) molecules.

The acquisition was accounted for using the acquisition method of accounting, with Tetramer Shop treated as the acquiree.

The acquired assets and liabilities were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Our condensed consolidated statements of income include the financial results of Tetramer Shop subsequent to the acquisition date.

2 unchanged sentences

The fair values assigned to assets acquired and liabilities assumed were based on management’s assumptions as of the reporting date.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The estimated fair value of assets acquired, including goodwill and intangibles, and liabilities assumed as of the acquisition date were as follows (in thousands):

25 unchanged sentences

The goodwill attributable to the acquisition was recorded as a non-current asset and is not amortized but is subject to an annual review for impairment.

Other Financial Statement Information

Inventory was comprised of the following (in thousands):

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Other Financial Statement Information

Inventory was comprised of the following as of the dates indicated (in thousands):

2021 December 31,

17 unchanged sentences

Intangible assets, net, which are recorded within other assets in the condensed consolidated balance sheets, consisted of the following (dollars in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Remaining Useful Life in Years Gross

10 unchanged sentences

Total intangible assets, net $ 30,281 $ ( 3,588 ) $ 26,693 $ 24,641 $ ( 2,287 ) $ 22,354

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The estimated annual amortization of intangible assets for the next five years is shown below (in thousands):

2021 (excluding the three months ended March 31, 2021) $ 1,946

2021 (excluding the six months ended June 30, 2021) $ 1,297

Thereafter 15,763

Total $ 26,693

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures and asset impairments, among other factors.

25 unchanged sentences

Accrued expenses and other current liabilities $ 36,157 $ 43,453

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Product Warranties

6 unchanged sentences

Revenue and Deferred Revenue

As of March 31, 2021, the aggregate amount of remaining performance obligations related to separately sold extended warranty service agreements, or allocated amounts for extended warranty service agreements bundled with sales of Chromium instruments, was $ 6.1 million, of which approximately 70 % is expected to be recognized to revenue in the next 12 months, with the remainder thereafter.

The contract liabilities of $ 6.1 million and $ 6.2 million as of March 31, 2021 and December 31, 2020, respectively, consisted of deferred revenue related to extended warranty service agreements, and as of March 31, 2021, the short-term portion was $ 4.3 million.

Revenue recorded during the three months ended March 31, 2021 included $ 1.4 million of previously deferred revenue that was included in contract liabilities as of December 31, 2020.

As of June 30, 2021, the aggregate amount of remaining performance obligations related to separately sold extended warranty service agreements, or allocated amounts for extended warranty service agreements bundled with sales of Chromium

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Notes to Unaudited Condensed Consolidated Financial Statements

instruments, was $ 6.9 million, of which approximately 73 % is expected to be recognized to revenue in the next 12 months, with the remainder thereafter.

The contract liabilities of $ 6.9 million and $ 6.2 million as of June 30, 2021 and December 31, 2020, respectively, consisted of deferred revenue related to extended warranty service agreements, and as of June 30, 2021, the short-term portion was $ 5.1 million.

Revenue recorded during the three and six months ended June 30, 2021 included $ 1.1 million and $ 2.5 million, respectively, of previously deferred revenue that was included in contract liabilities as of December 31, 2020.

The following table represents revenue by source for the periods indicated (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Instruments $ 16,877 $ 7,291 $ 28,002 $ 16,432

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

North America $ 65,765 $ 20,261 $ 117,572 $ 59,993

3 unchanged sentences

Total revenue $ 115,842 $ 42,905 $ 221,663 $ 114,810

Revenue for the United States, which is included in North America in the table above, was 48 % and 53 % of consolidated revenue for the three months ended March 31, 2021 and 2020 .

Revenue for the United States, which is included in North America in the table above, was 52 % and 45 % of consolidated revenue for the three months ended June 30, 2021 and 2020, respectively, and 55 % and 50 % of consolidated revenue for the six months ended June 30, 2021 and 2020, respectively.

In September 2016, the Company entered into a Second Amended and Restated Loan and Security Agreement with Silicon Valley Bank (as amended and restated in February 2018 and as further amended, restated or supplemented from time to time, the “Loan and Security Agreement”), which included a term loan and revolving line of credit.

3 unchanged sentences

The non-accreted portion of the end of term payment, unamortized discounts and early termination fees were included in the calculation of the loss on extinguishment of debt.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The revolving line of credit and the Loan and Security Agreement was terminated at the election of the Company on June 18, 2020.

Upon termination, the Company incurred termination fees of $ 0.3 million.

As of June 18, 2020, there were no balances outstanding under the revolving line of credit.

Commitments and Contingencies

4 unchanged sentences

The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities.

For the three months ended March 31, 2021 and 2020, the Company incurred $ 2.7 million and $ 1.9 million, respectively, of operating lease costs.

The Company also incurred $ 0.1 million and $ 0.1 million, respectively, of variable lease costs for the three months ended March 31, 2021 and 2020.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three and six months ended June 30, 2021, the Company incurred $ 2.6 million and $ 5.2 million, respectively, of operating lease costs and $ 0.3 million and $ 0.4 million, respectively, of variable lease costs.

For the three and six months ended June 30, 2020, the Company incurred $ 2.1 million and $ 4.0 million, respectively, of operating lease costs and $ 0.1 million and $ 0.2 million, respectively, of variable lease costs.

The variable lease cost is comprised primarily of the Company’s proportionate share of operating expenses, property taxes and insurance and is classified as lease cost due to the Company’s election to not separate lease and non-lease components.

Cash paid for amounts included in the measurement of operating lease liabilities for the three months ended March 31, 2021 and 2020 was $ 2.5 million and $ 1.3 million and were included in net cash used in operating activities in the Company’s condensed consolidated statements of cash flows.

Future lease payments related to the Company’s operating lease liabilities as of March 31, 2021 is as follows (in thousands):

Cash paid for amounts included in the measurement of operating lease liabilities for the six months ended June 30, 2021 and 2020 was $ 4.7 million and $ 3.1 million and were included in net cash used in operating activities in the Company’s condensed consolidated statements of cash flows.

Future lease payments related to the Company’s operating lease liabilities as of June 30, 2021 is as follows (in thousands):

Operating Leases

2021 (excluding the three months ended March 31, 2021) $ 3,845

2021 (excluding the six months ended June 30, 2021) $ 1,262

Thereafter 48,771

4 unchanged sentences

Operating lease liabilities, noncurrent $ 65,917

The following table summarizes additional information related to operating leases as of March 31, 2021:

March 31, 2021 December 31, 2020

Weighted-average remaining lease term:

Operating leases 8.8 years 8.4 years

The following table summarizes additional information related to operating leases as of June 30, 2021:

June 30, 2021 December 31, 2020

Weighted-average remaining lease term 8.7 years 8.4 years

Weighted-average discount rate 5.3 % 4.5 %

Operating leases 5.3 % 4.5 %

On November 6, 2020, the Company entered into a Master Lease Agreement ("MLA") to lease additional office building space near the Company's Pleasanton, California headquarters.

The Company intends to utilize the leased space of approximately 145,000 square feet to accommodate its future growth requirements.

The MLA consists of various lease components expected to commence on various dates between 2021 and 2023 and is expected to terminate on June 30, 2033 with total lease payments over the lease term expected to amount to approximately $ 60.8 million, net of a tenant improvement allowance of approximately $ 10.0 million to be received in 2021.

None of this tenant improvement allowance has been received as of March 31, 2021.

Certain lease components of the MLA commenced on January 1, 2021.

The tables above do not include payments, lease term, or discount rates relating to lease components that have not yet commenced as of March 31, 2021.

The Company will determine the

The total undiscounted lease payments for the lease components commencing during the remaining portion of fiscal year 2021 is $ 15.5 million with a weighted average lease term of 12 years.

Total undiscounted payments for leases commencing in fiscal years 2022 and 2023 will be $ 21.0 million and $ 14.0 million, respectively, with weighted-average expected lease terms of 12 years for 2022 and 11 years for 2023.

On April 30, 2021, the Company entered into a lease agreement to lease office building space of approximately 22,000 square feet in Stockholm, Sweden to accommodate its future growth requirements.

The Company expects the lease term to commence in January 2022 for a five-year term and expects total lease payments over the lease term to amount to approximately $ 5.6 million.

The tables above do not include payments, lease term, or discount rates relating to any leases or lease components that have not yet commenced as of June 30, 2021.

The Company will determine the classification for each lease component at the individual component's commencement date.

All leases and lease components that have not yet commenced are expected to be classified as operating leases.

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Notes to Unaudited Condensed Consolidated Financial Statements

classification for each lease component at the individual component's commencement date.

All lease components are expected to be classified as operating leases.

Lease payments for leases not yet Commenced

2021 (excluding the three months ended March 31, 2021) $ —

2021 (excluding the six months ended June 30, 2021) $ —

Thereafter 39,309

1 unchanged sentence

The Company is regularly subject to lawsuits, claims, arbitration proceedings, administrative actions and other legal and regulatory proceedings involving intellectual property disputes, commercial disputes, competition and other matters, and the Company may become subject to additional types of lawsuits, claims, arbitration proceedings, administrative actions, government investigations and legal and regulatory proceedings in the future.

Amongst other matters, the Company is currently a defendant in the lawsuits and proceedings described below.

In these matters, the plaintiffs are seeking damages and injunctions of sales of the Company's products amongst other remedies.

Other than with respect to the 2015 Delaware Action, losses are not probable or estimable for the lawsuits and proceedings described below.

The 2015 Delaware Action

In February 2015, Raindance Technologies, Inc.

(“Raindance”) and the University of Chicago filed suit against the Company in the U.S.

District Court for the District of Delaware (the “Delaware Court”), accusing the Company’s legacy GEM products of infringing certain U.S.

patents owned by or exclusively licensed to Raindance (the “2015 Delaware Action”).

In May 2017, Bio-Rad Laboratories, Inc.

(“Bio-Rad”) was substituted as the plaintiff following its acquisition of Raindance.

A jury trial was held in November 2018.

The jury found that the accused legacy GEM products infringed U.S.

8,304,193, 8,329,407 and 8,889,083.

The jury also concluded that the Company's infringement was willful and awarded Bio-Rad approximately $ 24 million in damages through June 30, 2018.

The Company appealed the jury verdict.

Post-trial, Bio-Rad moved for a permanent injunction, treble damages for willful infringement, attorneys’ fees, supplemental damages for the period from the second quarter of 2018 through the end of the trial as well as pre- and post-judgment interest.

In response to the jury award, the Company established an accrual of $ 30.6 million as of December 31, 2018, which was recorded as an operating expense on the condensed consolidated statement of operations for the year ended December 31, 2018.

Additionally, beginning in the fourth quarter of 2018, the Company also began recording an accrual for estimated royalties to Bio-Rad as a cost of revenue on the condensed consolidated statements of operations based on an estimated royalty rate of 15 % of sales of the Company’s Chromium instruments operating its legacy GEM microfluidic chips and associated consumables.

As a result, the Company recorded $ 7.4 million of royalties for the fourth quarter of 2018.

As of December 31, 2018, the Company recorded a total accrual of $ 38.0 million related to this matter which represented the jury award plus the Company’s estimate of additional damages for the period from June 30, 2018 to the trial date in November 2018 and the royalties accrued in the fourth quarter of 2018.

In July 2019, the Court awarded supplemental damages for the period from June 30, 2018 through the end of the trial in November 2018 and established the interest rates for pre- and post-judgment interest, which when combined with the original award, resulted in a $ 35 million preliminary judgment in favor of Bio-Rad for damages through November 2018 and interest.

During the three months ended March 31, 2021 and 2020, the Company recorded royalties of $ 0.5 million and $ 4.4 million, respectively, as a cost of revenue and an additional $ 0.2 million and $ 0.3 million, respectively, during the three months ended March 31, 2021 and 2020, as an operating expense for estimated pre- and post-judgment interest.

The Company’s accrual of $ 44.8 million as of March 31, 2021 includes estimates of additional royalties and interest for the period from November 2018 through March 31, 2021.

The Company’s accrual of $ 68.7 million as of December 31, 2019 was comprised of the preliminary judgment, along with the Company’s estimate of additional royalties and interest for the period from November 2018 through December 31,

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

In July 2019, the Court denied Bio-Rad’s other post-trial requests such as attorneys’ fees and enhanced damages for willful infringement.

In July 2019, the Court also granted Bio-Rad a permanent injunction against the Company’s legacy GEM microfluidic chips and associated consumables that were found to infringe the Bio-Rad patents, which historically constituted a significant amount of the Company’s product sales.

However, under the injunction, the Company is permitted to continue to sell its legacy GEM microfluidic chips and associated consumables for use with its historical installed base of instruments provided that the Company pay into escrow a royalty of 15 % of the Company’s net revenue related to such sales occurring after August 28, 2019.

The amounts will be held in escrow until after the conclusion of the Company’s Federal Circuit appeal and the Delaware Court addresses anticipated motions regarding post-judgment royalties.

In August 2019, the Court ordered that the Company may post a bond in the amount of $ 52 million in lieu of payment of the final judgment.

Bio-Rad subsequently asked the Court to increase the amount of the bond to approximately $ 61 million.

The Company also asked the Court to reconsider its ruling and decrease the potential bond to approximately $ 35 million.

On September 13, 2019, the Company posted a $ 52 million bond (the “Bond”) in lieu of payment of the judgment pending the Company’s ongoing appeal.

In connection with the Bond, the Company deposited $ 45 million as collateral in a segregated cash account.

On October 10, 2019, the Court denied the Company’s motion to decrease the bond amount, and, without addressing Bio-Rad’s request to increase the bond amount, stayed any execution or enforcement of the judgment until the completion of appeal, and for thirty days thereafter.

The Company appealed the Court's judgment including the injunction to the Federal Circuit.

In August 2020, the Federal Circuit issued its opinion in the Company's appeal of the 2015 Delaware Action.

The Federal Circuit (1) affirmed the judgment of the lower Court with respect to infringement of the '083 patent by the Company's legacy GEM products and (2) vacated the judgment with respect to infringement of the '193 and '407 patents, which are remanded to the lower Court for a new trial on infringement.

The Federal Circuit affirmed the damages award including the 15 % royalty with respect to the Company's legacy GEM products.

The Federal Circuit vacated the injunction with respect to the Company's Single Cell CNV and Linked-Read products but affirmed the injunction with respect to the Company's other legacy GEM products.

In October 2020, the Company filed a petition for en banc rehearing with the Federal Circuit.

The Federal Circuit denied the Company's petition for en banc rehearing on November 4, 2020.

The Company paid the $ 34.5 million judgment, plus approximately $ 0.8 million in post-judgment interest, to Bio-Rad on December 17, 2020.

The case was remanded to the Delaware Court for a determination of post-judgment royalties or other amounts, which the Company expects in the second half of 2021.

The Company has accrued $ 44.8 million as of March 31, 2021 related to this matter which is classified within current liabilities in its condensed consolidated balance sheets as of this date.

Restricted cash of $ 17.6 million , classified within current assets in the Company's condensed consolidated balance sheets as of March 31, 2021 serves as collateral for a bond and royalties in connection with the Bio-Rad litigation and would be used to partially satisfy this payment.

The ITC 1068 Action

On July 31, 2017, Bio-Rad and Lawrence Livermore National Security, LLC filed a complaint against the Company in the U.S.

International Trade Commission (“ITC”) pursuant to Section 337 of the Tariff Act of 1930, accusing substantially all of the Company’s Chromium products of infringing certain asserted patents (the “ITC 1068 Action”).

In September 2018, the judge found that the Company’s legacy GEM microfluidic chips infringe certain of the asserted patents, but also that the Company’s gel bead manufacturing microfluidic chip and Next GEM microfluidic chip do not infringe any claim asserted against them (the “Initial Determination”).

The judge recommended entry of an exclusion order preventing the Company from importing its legacy GEM microfluidic chips and a cease and desist order that would prevent the Company from selling such imported chips.

On December 18, 2019, the ITC issued its final determination in the ITC 1068 Action (the “Final Determination”).

The Final Determination affirmed the Initial Determination that the Company’s Next GEM microfluidic chips and gel bead manufacturing microfluidic chips do not infringe any of the claims asserted against them.

The Final Determination also affirmed the ruling that the Company’s legacy GEM microfluidic chips infringe the ‘664, ‘682 and ‘635 patents but not the ‘160 patent.

The ITC issued (1) a limited exclusion order prohibiting the unlicensed importation of the legacy GEM microfluidic chips into the United States and (2) a cease and desist order preventing the Company from selling such imported legacy GEM microfluidic chips in the United States.

The ITC expressly allowed the importation and sale of the legacy GEM microfluidic chips for use by researchers who were using such chips as of December 18, 2019, and who have a documented need to continue receiving such chips for a specific current ongoing research project for which that need cannot be met by any alternative product.

The Final Determination was subject to a 60-day presidential review period.

During the presidential review period, the Company was

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

permitted to continue importation and sales of the legacy GEM microfluidic chips subject to payment of a bond of three ( 3 ) percent of the entered value of the accused microfluidic chips.

The Company and Bio-Rad have appealed the Final Determination to the Court of Appeals for the Federal Circuit.

Bio-Rad has appealed the Final Determination with respect to non-infringement of the Company's gel bead manufacturing chips, but not with respect to non-infringement of the Company's Next GEM microfluidic chips.

The Company has appealed the Final Determination with respect to infringement of the Company's legacy GEM microfluidic chips.

Oral argument was held on April 7, 2021.

The Company expects a decision around the fourth quarter of 2021.

The Northern District of California Action

On July 31, 2017, Bio-Rad and Lawrence Livermore National Security, LLC also filed suit against the Company in the U.S.

District Court for the Northern District of California, alleging that the Company’s legacy GEM products infringe certain patents in addition to the patents asserted in the ITC 1068 Action.

The complaint seeks injunctive relief, unspecified monetary damages, costs and attorneys’ fees.

This litigation has been stayed pending resolution of the Federal Circuit appeal of the ITC 1068 Action.

In July 2020, Bio-Rad moved to lift the stay with respect to the '059 patent and consolidate the '059 patent with the '115 patent transferred from the District of Massachusetts which is being asserted against the Company's Next GEM products.

In August 2020, the Court denied Bio-Rad's motion to lift the stay with respect to both the '059 and '115 patents.

In October 2020, we filed two petitions for inter partes review (“IPR”) challenging the validity of the ‘115 patent.

We expect the Patent Trials and Appeals Board (“PTAB”) to issue a decision on institution of these IPR petitions in the second quarter of 2021.

The Company believes that this lawsuit is without merit and intends to vigorously defend itself.

The Germany Action

On July 31, 2017, Bio-Rad filed suit against the Company in Germany in the Munich Region Court alleging that the Company infringed a European patent.

Bio-Rad dismissed this action in August 2018.

On February 13, 2018, Bio-Rad filed suit against the Company in Germany in the Munich Region Court alleging that its Chromium instruments, legacy GEM microfluidic chips and certain accessories infringe a German utility model.

Bio-Rad seeks unspecified damages and an injunction prohibiting sales of these products in Germany and requiring the Company to recall these products sold in Germany subsequent to February 11, 2018.

An initial hearing was held on November 27, 2018, and a subsequent hearing was held on May 15, 2019.

The Court issued a ruling on November 20, 2019.

The Court ruled that the Company’s legacy GEM microfluidic chips, as well as certain Chromium instruments and accessories used with legacy GEM microfluidic chips, infringed the German Utility Model.

The Court issued an injunction with respect to such legacy GEM microfluidic chips, Chromium instruments and accessories used with such systems, prohibiting among other things the sale of these products in Germany and the importation of such products into Germany.

The Court found that the Company is obligated to compensate Bio-Rad for unspecified damages and required that these products be recalled from distribution channels in Germany.

The Court further found that the Company has to bear the statutory costs of the legal dispute in a minimum amount of at least 61,000 Euros.

The Company has accrued the 61,000 Euros for statutory costs in the condensed consolidated balance sheet as of March 31, 2021.

The Company is unable to estimate any additional potential exposure related to the matter beyond the statutory costs that have been accrued.

The Court’s ruling did not address the Company’s Next GEM products, which were not accused in this action and which constitute substantially all of the Company’s Chromium sales in Germany.

The Company appealed the Court’s ruling.

On April 6, 2020, the Munich Higher Regional Court (the “Higher Court”) issued a ruling staying enforcement of the ruling of the lower Court, including the injunction, subject to the payment of a bond by the Company.

The Higher Court found that the lower Court’s claim construction was not justifiable and that the facts did not provide a basis for a finding of infringement.

On April 16, 2020, the Company paid a 2.8 million Euro bond to the Higher Court to completely stay enforcement of the ruling.

The bond is refundable upon a favorable ruling on the merits by the Higher Court.

The Company expects the Higher Court to rule on the merits in 2021.

In August 2020, Bio-Rad filed its appeal response arguing for the first time that the Company's Next GEM microfluidic chips and certain accessories infringe the utility model.

In its appeal response, Bio-Rad also attempted to add infringement allegations with respect to a new patent, European Patent No.

3 132 844, against the Company's Chromium instruments and Next GEM microfluidic chips.

The Company believes it is procedurally improper to attempt to add these new claims at this stage, that the Company's Next GEM products are not covered by the lower court's judgment and are not admissible in the appeal, and that the newly asserted '844 patent is not admissible in the appeal.

The Higher Court is not expected to rule on whether Next GEM products or the '844 patent are admissible in the appeal until around the fourth quarter of 2021.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The 2018 Delaware Action

On October 25, 2018, Bio-Rad filed suit against the Company in the U.S.

District Court for the District of Delaware alleging that substantially all of the Company’s Chromium products, including our legacy GEM products and Next GEM products, infringe U.S.

9,562,837 and 9,896,722.

Bio-Rad seeks injunctive relief, unspecified monetary damages, costs and attorneys’ fees.

In October 2019, the Company filed four petitions for IPR challenging the validity of both asserted patents.

On April 27, 2020, the PTAB instituted review on all four of these petitions.

On April 26, 2021, the PTAB issued final written decisions on all four IPRs invalidating the majority of the asserted claims of the ‘837 and ‘722 patents but maintaining the validity of claim 8 of the '837 patent and claims 15-17 of the '722 patent.

The Company expects to seek rehearing of and/or appeal the decision with respect to the claims found to be valid.

In June 2020, the Court completely stayed the District of Delaware litigation pending resolution of the IPRs before the PTAB.

The Massachusetts Action

On September 11, 2019, Bio-Rad filed suit against the Company in the U.S.

District Court for the District of Delaware alleging that the Company’s Next GEM products infringe certain claims of U.S.

On November 5, 2019, Bio-Rad amended the complaint to additionally allege that the Company’s Next GEM products infringe certain claims of U.S.

9,919,277 and 10,190,115.

The ‘444 and ‘277 patents are exclusively licensed by Bio-Rad from Harvard University, which subsequently joined the suit as a party plaintiff.

Bio-Rad is seeking damages and an injunction against the Company's Next GEM products amongst other remedies.

The ‘444 and ‘277 patents are projected to expire in October 2024.

On December 18, 2019, Bio-Rad dismissed this action in the District of Delaware and refiled it in the U.S.

District Court for the District of Massachusetts.

The case was assigned to Judge William G.

On January 14, 2020, the Court consolidated this case with a separate action, Bio-Rad Laboratories Inc.

Stilla Technologies, Inc.

(“Stilla”), in which Bio-Rad is asserting the ‘444 patent (among other patents) against Stilla’s droplet digital PCR product.

On January 23, 2020, the Company filed a motion to dismiss the case and to transfer the ‘115 patent to the Northern District of California, where the related ‘059 patent is stayed.

On January 24, 2020, the Company filed antitrust counterclaims against Bio-Rad alleging violations of (a) Section 7 of the Clayton Act, (b) Section 2 of the Sherman Act and (c) California unfair competition laws, for illegally acquiring Raindance and illegally monopolizing or attempting to monopolize markets relating to droplet digital PCR products, droplet single cell products and droplet genetic analysis technology.

On February 19, 2020, Bio-Rad moved to dismiss, or alternatively to stay and sever, the Company’s antitrust claims.

On February 5, 2020, the Company filed additional counterclaims against Bio-Rad alleging that Bio-Rad’s single cell ATAC-seq products infringe U.S.

9,029,085 and 9,850,526 that are exclusively licensed to the Company from Harvard University.

On February 26, 2020, Bio-Rad moved to sever and stay the patent counterclaims.

On March 6, 2020, the Court denied the motion to stay and deferred the motion to sever until prior to trial.

On March 25, 2020, the Court held a hearing with respect to (a) the Company’s motion to dismiss Bio-Rad’s patent claims, (b) the Company’s motion to transfer the ‘115 patent and (c) Bio-Rad’s motion to dismiss the Company’s antitrust counterclaims.

On April 30, 2020, the Court denied the Company’s motion to dismiss with respect to Bio-Rad’s patent claims and granted the Company’s motion to transfer the ‘115 patent to the Northern District of California.

In August 2020, the Court granted Bio-Rad’s motion to dismiss (i) the Company's Sherman Act and Clayton Act counterclaims with respect to droplet single cell products and (ii) the Company's Sherman Act counterclaims with respect to droplet genetic analysis technology.

The Court denied Bio-Rad’s motion to dismiss (i) the Company's Clayton Act counterclaims with respect to droplet genetic analysis technology;

(ii) the Company's Sherman Act and Clayton Act counterclaims with respect to droplet digital PCR products;

and (iii) the Company's California unfair competition counterclaims.

Discovery is ongoing.

A Markman hearing was conducted in September 2020.

In December 2020, the Court ordered the parties to be ready for trial for Bio-Rad’s patent claims and our patent counterclaims in July 2021 and for our antitrust counterclaims in September 2021.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

In June 2020, the Company filed two petitions for IPR challenging the validity of the '444 patent.

In August 2020, the Company filed two petitions for IPR challenging the validity of the '277 patent.

On January 13, 2021, the PTAB denied institution of IPRs for the '444 patent.

On February 22, 2021, the PTAB denied institution of IPRs for the '277 patent.

2019 Becton Dickinson Settlement and Patent Cross License Agreement

On November 15, 2018, Becton, Dickinson and Company (“BD”) and Cellular Research, Inc.

filed suit against the Company in the U.S.

District Court for the District of Delaware, alleging that the Company infringed certain patents.

In September 2019, the Company filed counterclaims alleging that BD and Cellular Research, Inc.

(together, the “BD Entities”) infringed a number of the Company’s patents.

In October 2019, the Company entered into a settlement and patent cross license agreement (the “BD Agreement”) with the BD Entities.

The BD Agreement resolved all outstanding patent litigation between the parties (the “BD Litigation”), which was dismissed with prejudice on October 21, 2019.

Under the terms of the BD Agreement, the BD Entities granted the Company and its affiliates, and the Company granted BD and its affiliates, a worldwide, royalty-free, non-exclusive, fully paid-up license to certain patents and patent applications relating to molecular barcoding and single cell analysis, including to all the patents asserted in the BD Litigation.

The Company is required to make an aggregate payment of $ 25.0 million to BD in annual amounts of $ 6.25 million over four years beginning in January 2020 in connection with the BD Agreement.

Upon execution of the BD Agreement, the fair value of these payments was recognized as a liability and is classified as accrued expenses and other current liabilities and accrued license fee, noncurrent on the Company’s condensed consolidated balance sheet as of March 31, 2021.

As part of the BD Agreement, each party, on behalf of itself and its affiliates, has also entered into a covenant not to sue in certain fields related to each company’s products.

The companies have also agreed on behalf of themselves and their affiliates to refrain from challenging the patents and patent applications licensed under the BD Agreement.

The Company considers this matter closed.

For certain of the Company’s litigation matters, the Company is required to make milestone payments to the Company’s legal counsel based on certain litigation outcomes.

Based on the occurrence in the first quarter of 2020 of one such milestone in one of the Company’s litigation matters, a milestone payment to the Company’s legal counsel in the amount of $ 5 million was triggered in the first quarter of 2020.

The Company expects to trigger additional such milestone payments during the pendency of litigation, though the timing and amounts of such payments is uncertain.

The ITC 1100 Action

On January 11, 2018, we filed a complaint against Bio-Rad at the ITC pursuant to Section 337 of the Tariff Act of 1930 alleging that Bio-Rad infringes our U.S.

9,644,204, 9,689,024, 9,695,468 and 9,856,530 (the “ITC 1100 Action”).

The judge issued an Initial Determination on July 12, 2019 finding that Bio-Rad’s ddSEQ products infringe the ‘024, ‘468 and ‘530 patents.

The judge also found all of our asserted patents to be valid and rejected Bio-Rad’s claim of ownership in all of the asserted patents.

On February 12, 2020, the ITC issued its Final Determination affirming the judge’s findings with respect to Bio-Rad’s violation of the ‘024, ‘468 and ‘530 patents, including the judge’s findings for those patents with respect to infringement, validity and ownership.

The ITC issued an exclusion order prohibiting Bio-Rad from importing into the United States infringing microfluidic devices, components thereof and products containing same, including the ddSEQ products.

The ITC also issued a cease and desist order preventing Bio-Rad from selling such imported products in the United States.

The ITC’s remedial orders do not identify any ddSEQ assay as exempted from their potential scope.

The ITC orders do not prohibit the importation or sale of microfluidic consumables imported into the U.S.

for use by researchers who are using such consumables as of February 12, 2020, and who have a documented need to continue receiving such consumables for a specific current ongoing research project for which that need cannot be met by any alternative product.

On April 29, 2020, Bio-Rad appealed the Final Determination to the Court of Appeals for the Federal Circuit.

Oral argument was held on March 11, 2021.

On April 29, 2021, the Federal Circuit issued its decision completely affirming the Final Determination of the ITC, including its findings with respect to infringement, validity and ownership.

The 2021 Bio-Rad Settlement And Patent Cross License Agreement

Bio-Rad Laboratories, Inc.

(“Bio-Rad”) and the Company were previously engaged in litigation and other proceedings relating to substantially all of the Company’s Chromium products, including the Company’s legacy GEM products and Next GEM products and multiple Bio-Rad products, around the world (the "Bio-Rad Actions").

On July 26, 2021, the Company entered into a Settlement and Patent Cross License Agreement (the “Agreement”) with Bio-Rad resolving all outstanding litigation and other proceedings between the two companies across all jurisdictions around the world and dismissing all infringement claims with prejudice.

Pursuant to the terms of the Agreement, Bio-Rad and the Company granted each other a non-exclusive, worldwide, royalty-bearing license to develop products and services related to single cell analysis.

The cross license excludes spatial and In Situ products.

It also excludes digital PCR products in the case of 10x.

The term of the Agreement is for the life of the licensed patents.

The Company and Bio-Rad have agreed not to sue each other on licensed products and licensed services on other patents owned or exclusively licensed by each company.

The companies have agreed that each company’s patents are owned by each respective company.

Each company shall pay to the other royalties from licensed products and licensed services through 2030.

The Company previously accrued $ 44.8 million in royalties and interest between November 14, 2018 and March 31, 2021 related to sales of the Company’s GEM products as a result of the litigation with Bio-Rad.

Pursuant to the Agreement, the Company shall pay Bio-Rad $ 29.4 million in royalties and interest related to the sales of such GEM products between November 14, 2018 and March 31, 2021.

As a result, in connection with the Agreement the Company reversed $ 15.4 million in accrued royalties and interest to the Company's financial statements in the second quarter of 2021.

The Nanostring Action

On May 6, 2021, we filed suit against Nanostring Technologies, Inc.

On May 6, 2021, the Company filed suit against Nanostring Technologies, Inc.

("Nanostring") in the U.S.

1 unchanged sentence

10,472,669, 10,662,467, 10,961,566, 10,983,113, and 10,996,219.

On May 19, 2021, the Company filed an amended complaint additionally alleging that the GeoMx products infringe U.S.

11,001,878 and 11,008,607.

On July 1, 2021, Nanostring filed a motion to dismiss.

Briefing is in progress and no hearing has been scheduled.

Discovery has not yet commenced and no case schedule has been set.

For further discussion of the risks relating to intellectual property and our pending litigation, see the section titled “Risk Factors—Risks related to litigation and our intellectual property” under Item 1A below.

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Capital Stock

As of March 31, 2021, the number of shares of Class A common stock and Class B common stock issued and outstanding was 87,057,062 and 22,531,465 , respectively.

During the three months ended March 31, 2021 and 2020, 150,000 and 31,774,013 shares of Class B common stock were converted to shares of Class A common stock upon the election of the holders of such shares.

As of June 30, 2021, the number of shares of Class A common stock and Class B common stock issued and outstanding was 90,458,454 and 20,281,465 , respectively.

During the three months ended June 30, 2021 and 2020, 2,250,000 and 13,630,921 , respectively, and during the six months ended June 30, 2021 and 2020, 2,400,000 and 45,404,934 , respectively, shares of Class B common stock, respectively, were converted to shares of Class A common stock upon the election of the holders of such shares.

Equity Incentive Plans

Amended and Restated 2012 Stock Plan

As of March 31, 2021, the number of shares of Class A common stock issuable under the Amended and Restated 2012 Stock Plan which includes shares issuable upon the exercise of outstanding awards was 8,573,143 .

Following the adoption of the 2019 Omnibus Incentive Plan in September 2019, any awards outstanding under the Amended and Restated 2012 Stock Plan continue to be governed by their existing terms but no further awards may be granted under the Amended and Restated 2012 Stock Plan.

2019 Omnibus Incentive Plan

As of March 31, 2021, the number of shares of Class A common stock available for issuance was 3,466,453 shares issuable in connection with outstanding awards and 13,234,261 shares reserved for issuance in connection with grants of future awards.

2019 Employee Stock Purchase Plan

2 unchanged sentences

Shares purchased under the ESPP are subject to a one-year holding period following the purchase date.

During the three months ended March 31, 2021 and 2020, no shares of Class A common stock were issued under the ESPP.

As of March 31, 2021, there were 2,921,132 shares available for issuance in connection under the ESPP.

During the three months ended June 30, 2021 and 2020, 30,868 and 118,218 shares of Class A common stock, respectively, were issued under the ESPP.

As of June 30, 2021, there were 2,890,264 shares available for issuance in connection under the ESPP.

Stock-based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Cost of revenue $ 841 $ 463 $ 1,305 $ 710

2 unchanged sentences

Total stock-based compensation expense $ 26,932 $ 13,855 $ 43,108 $ 20,573

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Restricted Stock Units

Restricted stock unit activity for the three months ended March 31, 2021 is as follows:

Restricted stock unit activity for the six months ended June 30, 2021 is as follows:

Restricted Stock

5 unchanged sentences

Cancelled ( 41,153 ) 108.34

Outstanding as of March 31, 2021 985,386 $ 103.51

Outstanding as of June 30, 2021 1,340,188 $ 135.24

10x Genomics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Stock Options

Stock option activity for the three months ended March 31, 2021 is as follows:

Stock option activity for the six months ended June 30, 2021 is as follows:

Stock Options Weighted-Average

4 unchanged sentences

Cancelled ( 114,418 ) 20.45

Outstanding as of March 31, 2021 11,054,573 $ 24.28

The Company’s provision for income taxes was $ 0.4 million and $ 0.3 million, respectively, for the three months ended March 31, 2021 and 2020.

The provision for income taxes for the three months ended March 31, 2021 consists primarily of foreign taxes.

Deferred tax assets generated from the Company’s domestic net operating losses are fully offset by a valuation allowance as the Company believes it is more likely than not that the benefit will not be realized.

Outstanding as of June 30, 2021 10,042,162 $ 26.15

Net Loss Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Stock-options to purchase common stock 10,042,162 13,507,230 10,042,162 13,507,230

4 unchanged sentences

Total 11,668,535 14,326,652 11,668,535 14,326,652

Subsequent Events

On July 26, 2021, the Company entered into a Settlement and Patent Cross License Agreement with Bio-Rad resolving all outstanding litigation and other proceedings between the two companies across all jurisdictions around the world and dismissing all infringement claims with prejudice.

See Note 6 to condensed consolidated financial statements, Commitments and Contingencies, The 2021 Bio-Rad Settlement And Patent Cross License Agreement, for further details.

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