Pacific Biosciences of California, Inc. (NASDAQ: PACB) today
announced financial results for its first quarter ended March 31,
2020.
As previously announced, in January 2020, we and Illumina
mutually agreed to terminate the Agreement and Plan of Merger (as
amended, the “Merger Agreement”). As part of our agreement to
terminate the Merger Agreement, Illumina paid us a $98.0 million
reverse termination fee in January 2020, from which we paid our
financial advisor associated fees of $6.0 million in April 2020,
which is less than the amount we initially expected. The $98.0
million in cash we received from Illumina was recorded as a
short-term liability for the quarter ended March 31, 2020 and is
expected to be subsequently recorded as other income after
September 30, 2020 when all contingency clauses are expected to
lapse. In addition, during the first quarter ended March 31, 2020,
as previously agreed to pursuant to the terms of the Merger
Agreement, Illumina paid us cash payments (“Continuation Advances”)
of $34.0 million, which resulted in a gain of $34.0 million for the
quarter ended March 31, 2020.
Total revenue for the first quarter of 2020 was $15.6 million,
compared with $16.4 million for the first quarter of 2019.
Instrument revenue for the first quarter of 2020 was $4.0 million,
compared with $5.6M for the first quarter of 2019.
Consumables revenue for the first quarter of 2020 was $8.3 million
compared with $7.8 million for the first quarter of 2019.
Service and other revenue for the first quarter of 2020 was $3.3
million compared with $3.0 million for the first quarter of
2019.
Gross profit for the first quarter of 2020 was $7.5 million,
resulting in a gross margin of 48.0%. Gross profit for the first
quarter of 2019 was $5.1 million, resulting in a gross margin of
31.2%.
Operating expenses for the first quarter of 2020 totaled $40.2
million, compared to $35.3 million for the first quarter of 2019.
Operating expenses for the first quarter of 2020 included the $6.0
million financial advisor associated fees mentioned above.
Operating expenses for the first quarter of 2020 and 2019 included
non-cash stock-based compensation of $3.5 million and $3.9 million,
respectively.
Net income for the first quarter of 2020 was $1.3 million,
driven by the Continuation Advances of $34.0 million we received
from Illumina, compared to a net loss of $30.3 million for the
first quarter of 2019. Basic and diluted net income per share for
the first quarter of 2020 was $0.01 per share as compared to basic
and diluted net loss per share for the first quarter of 2019 of
$0.20 per share.
In February 2020, upon the maturity of the debt, we repaid the
remaining outstanding principal of $16.0 million and interest to
Deerfield. Cash, cash equivalents and investments, excluding
restricted cash, at March 31, 2020 totaled $142.6 million, compared
to $49.1 million at December 31, 2019.
Impact of COVID-19 Pandemic
We have implemented various measures to help protect our
employees while continuing to support our customers. In
accordance with local and state guidelines, a large number of our
Menlo Park-based employees are working remotely from their
homes. Additionally, we have implemented health and safety
practices in accordance with evolving government and public health
agency guidelines. However, as Pacific Biosciences is a
designated essential business, we continue to provide direct
support to our customers, including those customers working on
COVID-19 related research, testing, treatment, and
prevention. This support includes consumable and instrument
shipments, field support, and limited wet-lab activities.
Financial results for the first quarter of 2020 were negatively
impacted as our customers in multiple regions around the world shut
down most of their operations in efforts to curb the spread of the
COVID-19 pandemic. In particular, multiple customers postponed
deliveries of systems they had previously ordered from us,
resulting in lower instrument revenues for the first quarter of
2020 compared to the first quarter of 2019. Due to the uncertain
scope and duration of the pandemic, we cannot reasonably estimate
the future impact to our operations and financial results.
As noted above, there were provisions in the Merger Agreement to
provide us with significant funding in the event that the merger
did not close. As a result, we ended the first quarter of 2020 with
$142.6 million in Cash and Investments. However, we will continue
to monitor our operating expenses and cash flows in response to the
evolving market conditions.
Quarterly Conference Call Information
Management will host a quarterly conference call to discuss its
first quarter ended March 31, 2020 results today at 4:30 p.m.
Eastern Time. Investors may listen to the call by dialing
1.888.366.7247, or if outside the U.S., by dialing +1.707.287.9330,
using Conference ID # 5453089. The call will be webcast live and
will be available for replay at Pacific Biosciences’ website at
https://investor.pacificbiosciences.com/.
About Pacific Biosciences
Pacific Biosciences of California, Inc. (NASDAQ: PACB) offers
sequencing systems to help scientists resolve genetically complex
problems. Based on its novel Single Molecule, Real-Time (SMRT®)
sequencing technology, Pacific Biosciences’ products enable: de
novo genome assembly to finish genomes in order to more fully
identify, annotate and decipher genomic structures; full-length
transcript analysis to improve annotations in reference genomes,
characterize alternatively spliced isoforms in important gene
families, and find novel genes; targeted sequencing to more
comprehensively characterize genetic variations; and real-time
kinetic information for epigenome characterization. Pacific
Biosciences’ technology provides high accuracy, ultra-long reads,
uniform coverage, and the ability to simultaneously detect
epigenetic changes. PacBio® sequencing systems, including
consumables and software, provide a simple, fast, end-to-end
workflow for SMRT® Sequencing.
Forward-Looking StatementsAll statements in
this press release that are not historical are forward-looking
statements, including, among other things, the accounting treatment
of cash payments we received from Illumina, the impact of COVID-19
on our business including whether customers take delivery of our
systems, Pacific Biosciences’ potential development and
commercialization of products, future uses, quality or performance
of, or benefits of using, products or technologies, and other
future events. You should not place undue reliance on
forward-looking statements because they involve known and unknown
risks, uncertainties, changes in circumstances and other factors
that are, in some cases, beyond Pacific Biosciences’ control and
could cause actual results to differ materially from the
information expressed or implied by forward-looking statements made
in this press release. Factors that could materially affect actual
results can be found in Pacific Biosciences’ most recent filings
with the Securities and Exchange Commission, including Pacific
Biosciences’ most recent reports on Forms 8-K, 10-K and 10-Q, and
include those listed under the caption “Risk Factors.” Pacific
Biosciences undertakes no obligation to revise or update
information in this press release to reflect events or
circumstances in the future, even if new information becomes
available.
The condensed consolidated financial statements that follow
should be read in conjunction with the notes set forth in the
Pacific Biosciences’ Quarterly Report on Form 10-Q when filed with
the Securities and Exchange Commission.
Contact: Trevin Rard
650.521.8450ir@pacificbiosciences.com
Pacific Biosciences of California,
Inc.Unaudited Condensed Consolidated Statement of
Operations (amounts in thousands, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2020 |
|
|
2019 |
|
Revenue: |
|
|
|
|
|
Product revenue |
$ |
12,293 |
|
|
$ |
13,457 |
|
Service and other revenue |
|
3,305 |
|
|
|
2,968 |
|
Total revenue |
|
15,598 |
|
|
|
16,425 |
|
Cost of Revenue: |
|
|
|
|
|
Cost of product revenue |
|
5,421 |
|
|
|
8,618 |
|
Cost of service and other revenue |
|
2,689 |
|
|
|
2,690 |
|
Total cost of revenue |
|
8,110 |
|
|
|
11,308 |
|
Gross profit |
|
7,488 |
|
|
|
5,117 |
|
Operating Expense: |
|
|
|
|
|
Research and development |
|
15,250 |
|
|
|
15,485 |
|
Sales, general and administrative |
|
24,947 |
|
|
|
19,766 |
|
Total operating expense |
|
40,197 |
|
|
|
35,251 |
|
Operating income (loss) |
|
(32,709 |
) |
|
|
(30,134 |
) |
Gain from Continuation Advances |
|
34,000 |
|
|
|
— |
|
Interest expense |
|
(267 |
) |
|
|
(625 |
) |
Other expense, net |
|
238 |
|
|
|
435 |
|
Net income (loss) |
$ |
1,262 |
|
|
$ |
(30,324 |
) |
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
(0.20 |
) |
Diluted |
$ |
0.01 |
|
|
$ |
(0.20 |
) |
|
|
|
|
|
|
Weighted average shares outstanding used in calculating net
income (loss) per share |
|
|
|
|
|
Basic |
|
153,453 |
|
|
|
151,274 |
|
Diluted |
|
155,855 |
|
|
|
151,274 |
|
|
|
|
|
|
|
|
|
Pacific Biosciences of California,
Inc.Unaudited Condensed Consolidated Balance
Sheets (amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, |
|
December
31, |
|
2020 |
|
2019 |
Assets |
|
|
|
Cash and investments |
$ |
142,591 |
|
$ |
49,099 |
Accounts receivable |
|
7,325 |
|
|
15,266 |
Inventory |
|
16,124 |
|
|
13,312 |
Prepaid and other current assets |
|
3,490 |
|
|
3,369 |
Property and equipment, net |
|
29,076 |
|
|
30,070 |
Operating lease right-of-use assets, net |
|
32,118 |
|
|
32,827 |
Long-term restricted cash |
|
4,000 |
|
|
4,000 |
Other long-term assets |
|
40 |
|
|
42 |
Total Assets |
$ |
234,764 |
|
$ |
147,985 |
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
Accounts payable |
$ |
4,223 |
|
$ |
8,368 |
Accrued expenses |
|
17,963 |
|
|
13,242 |
Deferred gain from Reverse Termination Fee |
|
98,000 |
|
|
— |
Deferred revenue |
|
8,591 |
|
|
9,561 |
Operating lease liabilities |
|
44,870 |
|
|
45,801 |
Notes payable |
|
— |
|
|
15,871 |
Other liabilities |
|
714 |
|
|
225 |
Stockholders' equity |
|
60,403 |
|
|
54,917 |
Total Liabilities and Stockholders' Equity |
$ |
234,764 |
|
$ |
147,985 |
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