Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36156 | |
Entity Registrant Name | VERACYTE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-5455398 | |
Entity Address, Address Line One | 6000 Shoreline Court | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | South San Francisco | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94080 | |
City Area Code | 650 | |
Local Phone Number | 243-6300 | |
Title of 12(b) Security | Common Stock, par value, $0.001 per share | |
Trading Symbol | VCYT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 50,053,437 | |
Entity Central Index Key | 0001384101 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 153,132 | $ 159,317 |
Accounts receivable | 19,091 | 19,329 |
Supplies | 6,094 | 6,806 |
Prepaid expenses and other current assets | 3,045 | 2,235 |
Total current assets | 181,362 | 187,687 |
Property and equipment, net | 8,788 | 8,933 |
Right-of-use assets - operating lease | 8,576 | 8,808 |
Finite-lived intangible assets, net | 63,744 | 65,019 |
Goodwill | 2,725 | 2,725 |
Restricted cash | 603 | 603 |
Other assets | 1,302 | 1,437 |
Total assets | 267,100 | 275,212 |
Current liabilities: | ||
Accounts payable | 7,665 | 2,328 |
Accrued liabilities | 10,079 | 13,734 |
Operating Lease, Liability, Current | 1,450 | 1,407 |
Total current liabilities | 19,194 | 17,469 |
Long-term debt | 748 | 694 |
Acquisition-related contingent consideration | 5,604 | 6,088 |
Operating Lease, Liability, Noncurrent | 11,132 | 11,506 |
Total liabilities | 36,678 | 35,757 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding as of March 31, 2020 and December 31, 2019 | 0 | 0 |
Common stock, $0.001 par value; 125,000,000 shares authorized, 49,999,923 and 49,625,341 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | 50 | 50 |
Additional paid-in capital | 488,773 | 486,090 |
Accumulated deficit | (258,401) | (246,685) |
Total stockholders’ equity | 230,422 | 239,455 |
Total liabilities and stockholders’ equity | $ 267,100 | $ 275,212 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 125,000,000 | 125,000,000 |
Common stock, issued (in shares) | 49,999,923 | 49,625,341 |
Common stock, outstanding (in shares) | 49,999,923 | 49,625,341 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total Revenue | $ 31,122 | $ 29,529 |
Operating expenses: | ||
Cost of testing revenue | 8,513 | |
Research and development | 4,407 | 3,435 |
Selling and marketing | 17,584 | 12,477 |
General and administrative | 7,813 | 6,904 |
Intangible asset amortization | 1,275 | 267 |
Total operating expenses | 43,322 | 31,596 |
Loss from operations | (12,200) | (2,067) |
Interest expense | (55) | (303) |
Other income, net | 539 | 453 |
Net loss and comprehensive loss | (11,716) | (1,917) |
Comprehensive loss | $ (11,716) | $ (1,917) |
Net loss per common share, basic and diluted (in usd per share) | $ (0.24) | $ (0.05) |
Shares used to compute net loss per common share, basic and diluted (in shares) | 49,792,631 | 41,168,593 |
Testing | ||
Total Revenue | $ 26,991 | $ 25,389 |
Operating expenses: | ||
Cost of testing revenue | 10,568 | 8,513 |
Product | ||
Total Revenue | 3,409 | 0 |
Operating expenses: | ||
Cost of testing revenue | 1,559 | 0 |
Biopharmaceutical | ||
Total Revenue | 722 | 4,140 |
Operating expenses: | ||
Cost of testing revenue | $ 116 | $ 0 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Balance at Dec. 31, 2018 | $ 79,755 | $ 41 | $ 313,800 | $ (234,086) |
Balance (in shares) at Dec. 31, 2018 | 40,863 | |||
Increase (Decrease) in Stockholders' Equity [Rollforward] | ||||
Issuance of common stock on exercise of stock options and vesting of restricted stock units | 4,240 | $ 1 | 4,239 | |
Issuance of common stock on exercise of stock options and vesting of restricted stock units (in shares) | 566 | |||
Issuance of common stock under employee stock purchase plan (ESPP) | 491 | 491 | ||
Issuance of common stock under ESPP (in shares) | 80 | |||
Tax portion of vested restricted stock units | (556) | (556) | ||
Stock-based compensation expense (employee) | 1,598 | 1,598 | ||
Stock-based compensation expense (non-employee) | 20 | 20 | ||
Stock-based compensation expense (ESPP) | 141 | 141 | ||
Net loss | (1,917) | |||
Comprehensive loss | (1,917) | (1,917) | ||
Balance at Mar. 31, 2019 | 83,772 | $ 42 | 319,733 | (236,003) |
Balance (in shares) at Mar. 31, 2019 | 41,509 | |||
Balance at Dec. 31, 2019 | 239,455 | $ 50 | 486,090 | (246,685) |
Balance (in shares) at Dec. 31, 2019 | 49,625 | |||
Increase (Decrease) in Stockholders' Equity [Rollforward] | ||||
Issuance of common stock on exercise of stock options and vesting of restricted stock units | 981 | 981 | ||
Issuance of common stock on exercise of stock options and vesting of restricted stock units (in shares) | 314 | |||
Issuance of common stock under employee stock purchase plan (ESPP) | 1,101 | 1,101 | ||
Issuance of common stock under ESPP (in shares) | 61 | |||
Tax portion of vested restricted stock units | (2,304) | (2,304) | ||
Stock-based compensation expense (employee) | 2,551 | 2,551 | ||
Stock-based compensation expense (ESPP) | 354 | 354 | ||
Net loss | (11,716) | |||
Comprehensive loss | (11,716) | (11,716) | ||
Balance at Mar. 31, 2020 | $ 230,422 | $ 50 | $ 488,773 | $ (258,401) |
Balance (in shares) at Mar. 31, 2020 | 50,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities | ||
Net loss | $ (11,716) | $ (1,917) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,972 | 945 |
Gain on disposal of property and equipment | 0 | (16) |
Stock-based compensation | 2,905 | 1,759 |
Amortization of debt issuance costs | 0 | 8 |
Interest on end-of-term debt obligation | 54 | 64 |
Write-down of excess supplies | 1,088 | 0 |
Noncash lease expense | 232 | 212 |
Revaluation of acquisition-related contingent consideration | (484) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 238 | (3,447) |
Supplies | (376) | (366) |
Prepaid expenses and other current assets | (818) | (11) |
Operating lease liability | (331) | (292) |
Other assets | 135 | 37 |
Accounts payable | 5,450 | 1,726 |
Accrued liabilities | (3,650) | 287 |
Net cash used in operating activities | (5,301) | (1,011) |
Investing activities | ||
Purchases of property and equipment | (665) | (765) |
Proceeds from disposal of property and equipment | 0 | 16 |
Net cash used in investing activities | (665) | (749) |
Financing activities | ||
Payment of long-term debt | 0 | (12,500) |
Payment of finance lease liability | 0 | (75) |
Payment of taxes on vested restricted stock units | (2,304) | (556) |
Proceeds from the exercise of common stock options and employee stock purchases | 2,085 | 4,737 |
Net cash used in financing activities | (219) | (8,394) |
Net decrease in cash, cash equivalents and restricted cash | (6,185) | (10,154) |
Cash, cash equivalents and restricted cash at beginning of period | 159,920 | 78,598 |
Cash, cash equivalents and restricted cash at end of period | 153,735 | 68,444 |
Supplementary cash flow information: | ||
Purchases of property and equipment included in accounts payable and accrued liability | 113 | 95 |
Interest paid on debt | 1 | 228 |
Total cash, cash equivalents and restricted cash | $ 159,920 | $ 68,444 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Organization and Description of Business Veracyte, Inc., or Veracyte, or the Company, is a global genomic diagnostics company that improves patient care by providing answers to clinical questions to inform diagnosis and treatment decisions throughout the patient journey in cancer and other diseases. The Company’s growing menu of genomic tests leverage advances in genomic science and technology to change care for patients, enabling them to avoid risky, costly procedures and quicken time to appropriate treatment. With Veracyte’s exclusive global access to a best-in-class diagnostics instrument platform, the Company is positioned to deliver its tests to patients worldwide through laboratories and hospitals that can perform the tests locally. Veracyte was incorporated in the state of Delaware on August 15, 2006 as Calderome, Inc. Calderome operated as an incubator until early 2008. On March 4, 2008, the Company changed its name to Veracyte, Inc. The Company’s operations are based in South San Francisco, California and Austin, Texas, and it operates in one segment. The Company performs its genomic tests for thyroid cancer, lung cancer and idiopathic pulmonary fibrosis, or IPF, in its CLIA-certified laboratory in South San Francisco, California. In December 2019, the Company announced the exclusive global diagnostics license to the NanoString nCounter FLEX Analysis System, and the acquisition of the Prosigna breast cancer prognostic gene signature assay, which is commercially available, and the LymphMark lymphoma subtyping assay, which is in development. Both tests are designed for use on the nCounter system. The Company offers genomic tests in four disease areas: thyroid cancer; lung cancer; IPF and breast cancer. Thyroid Cancer - Afirma Genomic Sequencing Classifier and Xpression Atlas. The Company's Afirma offerings comprise the Afirma GSC and Xpression Atlas, which help guide next steps for patients with potentially cancerous thyroid nodules. The offerings are intended to provide physicians with clinically actionable results from a single fine needle aspiration, or FNA biopsy. The Afirma GSC was developed with RNA whole-transcriptome sequencing and machine learning, and is used to identify patients with benign thyroid nodules among those with indeterminate cytopathology results in order to rule out unnecessary thyroid surgery. The Afirma Xpression Atlas complements the Afirma GSC by providing genomic alteration content from the same FNA samples used in Afirma GSC testing to help physicians decide with greater confidence on the surgical or therapeutic pathway for their patients. The Company commercially launched the Afirma Xpression Atlas in 2018 and in April 2020 introduced an expanded version of the test, which includes significantly more genomic content. Lung Cancer - Percepta Genomic Sequencing Classifier. The Percepta classifier improves lung cancer diagnosis when diagnostic bronchoscopy results are inconclusive. This second-generation test was developed using the Company's RNA whole-transcriptome sequencing and machine learning platform and was commercially introduced in June 2019. The Percepta classifier identifies patients with lung nodules who are at low risk of cancer and may avoid further, invasive procedures as well as patients at high risk of cancer so they may obtain faster diagnosis and treatment. The test is built upon foundational "field of injury" science - through which genomic changes associated with lung cancer in current and former smokers can be identified with a simple brushing of a person's airway - without the need to sample the often hard-to-reach nodule directly. IPF - Envisia Genomic Classifier. The Envisia classifier improves diagnosis of IPF by helping physicians better differentiate IPF from other interstitial lung diseases, or ILDs, without the need for surgery. The test identifies the genomic pattern of usual interstitial pneumonia, or UIP, a hallmark of IPF, with high accuracy on patient samples that are obtained through transbronchial biopsy, a nonsurgical procedure that is commonly used in lung evaluation. Breast Cancer - Prosigna Breast Cancer Prognostic Gene Signature Assay. The Prosigna test, acquired in December 2019 through the Company's strategic transaction with NanoString, uses advanced genomic technology to inform next steps for patients with early-stage breast cancer, based on the genomic make-up of their disease. The test uses a set of 50 genes known as the PAM50 gene signature and can provide a breast cancer patient and physician with prognostic score that indicates the probability of cancer recurrence over ten years. Physicians use Prosigna to help guide therapeutic decisions so that patients receive a therapeutic intervention, such as chemotherapy, only if clinically warranted. Patient test results outside of the United States include intrinsic breast cancer subtypes to complement the risk-of-recurrence score. The Company’s approach also provides multiple opportunities for partnerships with biopharmaceutical companies. In developing its products, the Company has built or gained access to unique biorepositories, proprietary technology and bioinformatics that it believes are important to the development of new targeted therapies, determining clinical trial eligibility and guiding treatment selection. The Company's testing services are performed in its clinical reference laboratories located in South San Francisco, California and Austin, Texas. The Prosigna test kits and associated products are sold to laboratories and hospitals in global markets. Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of March 31, 2020, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2020 and 2019, the condensed consolidated statements of stockholders' equity for the three months ended March 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results, stockholders' equity and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2019 has been derived from audited financial statements. The results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full year or any other period. The accompanying interim period condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Reclassifications Certain prior period balances have been reclassified to conform to current period presentation of the Company’s condensed consolidated financial statements and accompanying notes. Such reclassifications have no effect on previously reported results of operations, retained earnings or consolidated balance sheet totals; however, for the period ended March 31, 2019, the Company reclassified $212,000 of changes in operating assets and liabilities to noncash lease expense in the statement of cash flows. Use of Estimates The preparation of unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Items subject to such estimates include: revenue recognition; write-down of supplies; the useful lives of property and equipment; the recoverability of long-lived assets; the incremental borrowing rate for leases; the estimation of the fair value of intangible assets and contingent consideration; stock options; income tax uncertainties, including a valuation allowance for deferred tax assets; and contingencies. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. Issuance of Common Stock in a Public Offering On May 7, 2019, the Company issued and sold 6,325,000 shares of common stock in a registered public offering, including 825,000 shares issued and sold upon the underwriters’ exercise in full of their option to purchase additional shares, at a price to the public of $23.25 per share. The Company's net proceeds from the offering were approximately $137.8 million, after deducting underwriting discounts and commissions and offering expenses of $9.2 million. Cash and Cash Equivalents The Company considers demand deposits in a bank, money market funds and highly liquid investments with an original maturity of 90 days or less to be cash equivalents. Cash equivalents include overnight reverse repurchase agreements which are tri-party repurchase agreements and have maturities of three months or less at the time of investment and are collateralized by U.S. treasury and agency securities of at least 102% of the principal amount. In a tri-party repurchase agreement, a third-party custodian bank functions as an independent intermediary to facilitate transfer of cash and holding the collateral on behalf of the underlying investor for the term of the agreement thereby minimizing risk and exposure to both parties. These overnight reverse repurchase agreements are included within cash equivalents due to their high liquidity and relatively low risk. There were no overnight reverse repurchase agreements at March 31, 2020. Concentrations of Credit Risk and Other Risks and Uncertainties The worldwide spread of coronavirus, or COVID-19, has created significant uncertainty in the global economy. There have been no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of COVID-19 and the extent to which COVID-19 impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict. If the financial markets or the overall economy are impacted for an extended period, the Company’s liquidity, revenues, supplies, goodwill and intangibles may be adversely affected The majority of the Company’s cash and cash equivalents are deposited with one major financial institution in the United States. Deposits in this institution may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Several of the components of the Company’s sample collection kit and test reagents, and its nCounter FLEX Analysis System and related test kits are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, it could suffer delays in being able to deliver its diagnostic solutions, a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results. The Company is also subject to credit risk from its accounts receivable related to its sales. Credit risk for accounts receivable from testing revenue is incorporated in testing revenue accrual rates as the Company assesses historical collection rates and current developments to determine accrual rates and amounts the Company will ultimately collect. The Company generally does not perform evaluations of customers’ financial condition for testing revenue and generally does not require collateral. The Company assesses credit risk and the amount of accounts receivable the Company will ultimately collect for product, biopharmaceutical and collaboration revenue based on collection history, current developments and credit worthiness of the customer. The estimate of credit losses is not material at March 31, 2020. Through March 31, 2020, most of the Company’s revenue has been derived from the sale of Afirma. To date, Afirma has been delivered primarily to physicians in the United States. The Company’s third-party payers and other customers in excess of 10% of total revenue and their related revenue as a percentage of total revenue were as follows: Three Months Ended March 31, 2020 2019 Medicare 25 % 21 % Johnson and Johnson Services, Inc. * 13 % UnitedHealthcare 11 % 11 % 36 % 45 % *Less than 10% The Company’s third-party payers and other customers in excess of 10% of accounts receivable and their related accounts receivable balance as a percentage of total accounts receivable were as follows at the following dates: March 31, December 31, 2019 Johnson and Johnson Services, Inc. * 10 % Medicare 14 % 15 % *Less than 10% Restricted Cash The Company had deposits of $603,000 included in long-term assets as of March 31, 2020 and December 31, 2019, restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the Company’s South San Francisco facility. Revenue Recognition Testing Revenue The Company recognizes testing revenue in accordance with the provisions of ASC 606, Revenue from Contracts with Customers, or ASC 606. Most of the Company’s revenue is generated from the provision of testing services. These services are completed upon the delivery of test results to the prescribing physician, at which time the Company bills for the services. The Company recognizes revenue related to billings based on estimates of the amount that will ultimately be realized. In determining the amount to accrue for a delivered test, the Company considers factors such as payment history, payer coverage, whether there is a reimbursement contract between the payer and the Company, payment as a percentage of agreed upon rate (if applicable), amount paid per test and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management. For the three months ended March 31, 2019, the Company changed its testing revenue estimates due to actual and anticipated cash collections for tests delivered in 2018 or prior years and recognized additional revenue of $0.6 million, which resulted in a decrease in the Company's loss from operations of $0.6 million and a decrease in loss per share of $0.02 for the three months ended March 31, 2019. The change in testing revenue estimates for the three months ended March 31, 2020 was not material. Product Revenue The Company began recognizing product revenue in December 2019, when the Company executed an agreement with NanoString for the exclusive global license to the nCounter platform and acquisition of products for diagnostic use. More details on this agreement are in Note 4 - Business Combination. Product revenue from instruments, consumables and in vitro diagnostic kits is recognized generally upon shipment or when the instrument is ready for use by the end customer, which is when title of the product has been transferred to the customer. 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 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. Performance obligations are considered satisfied once the Company has transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. The Company recognizes product revenue for satisfied performance obligations only when there are no uncertainties regarding payment terms or transfer of control. Shipping and handling costs incurred for product shipments are charged to the Company's customers and included in product revenue. Revenues are presented net of the taxes that are collected from customers and remitted to governmental authorities. Biopharmaceutical and Collaboration Revenue From time to time, the Company enters into arrangements for research and development and/or laboratory services. Such arrangements may require the Company to deliver various rights, services and/or samples, including intellectual property rights/licenses, R&D services, and/or laboratory services. The underlying terms of these arrangements generally provide for consideration to the Company in the form of nonrefundable upfront license fees, development and commercial performance milestone payments, royalty payments, and/or profit sharing. In arrangements involving more than one performance obligation, each required performance obligation is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects the Company's best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis or using an adjusted market assessment approach if selling price on a stand-alone basis is not available. The consideration allocated to each distinct performance obligation is recognized as revenue when control of the related goods is transferred or services are performed. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. Should there be royalties, the Company utilizes the sales and usage-based royalty exception in arrangements that resulted from the license of intellectual property, recognizing revenues generated from royalties or profit sharing as the underlying sales occur. Collaborative Arrangements The Company enters into collaborative arrangements with partners that fall under the scope of ASC Topic 808, Collaborative Arrangements, or ASC 808. While these arrangements are in the scope of ASC 808, the Company may analogize to ASC 606 for some aspects of these arrangements. The Company analogizes to ASC 606 for certain activities within the collaborative arrangement for the delivery of a good or service (i.e., a unit of account) that is part of its ongoing major or central operations. The terms of the Company’s collaborative arrangements typically include one or more of the following: (i) up-front fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; and (iii) royalties on net sales of licensed products. Each of these payments may result in collaboration revenues or an offset against research and development expense. Net sales of data or other services to our customers are classified under biopharmaceutical revenue, and all other non-customer revenue, such as milestones, are classified under collaboration revenue in our consolidated statements of operations and comprehensive loss. There was no collaboration revenue in the three months ended March 31, 2020 and 2019. As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. Generally, the estimation of the stand-alone selling price may include such estimates as independent evidence of market price, forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and it measures the services delivered to the collaborative partner which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price. Up-front Fees: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time. Milestone Payments: At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or the collaborative partner’s control, such as non-operational developmental and regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or the collaborative partner’s control, such as operational developmental milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price may also result in negative collaboration revenues and earnings in the period of adjustment. Services Agreement with Loxo Oncology On April 9, 2018, the Company entered into an agreement with Loxo Oncology, Inc., or Loxo, whereby the Company agreed to provide certain tissue samples and other services in exchange for agreed-upon fees. The agreement has a term of one one Diagnostic Development Agreement with Johnson & Johnson On December 28, 2018, the Company entered into a diagnostics development agreement with Johnson and Johnson Services, Inc., or JJSI, (i) to cooperate on a program to enable the Company to use JJSI samples and clinical data to develop a next generation bronchial genomic classifier diagnostic for lung cancer diagnosis, or Percepta v.2, and a nasal genomic classifier diagnostic for lung cancer and (ii) for JJSI to use Veracyte data generated in two Veracyte development programs for therapeutic purposes and for purposes of developing a companion diagnostic product used in conjunction with a JJSI therapeutic. The Company granted a license to JJSI with the right to use data and under the Company's intellectual property rights for JJSI's therapeutic purposes, including the development and commercialization of a companion diagnostic for its products, from the Percepta v.2 and Nasal programs. The license granted to JJSI is not distinct from other performance obligations as JJSI receives benefit only when other performance obligations are met. Under the terms of the agreement, the Company will provide data from its RNA whole-transcriptome sequencing platform to JJSI in exchange for $7.0 million in payments from JJSI. The Company is also entitled to additional payments from JJSI of up to $13.0 million, conditioned upon the achievement of certain milestones relating to the development and reimbursement of the Percepta v.2 and Nasal tests. For a period of ten years commencing with the first commercial sale of the Percepta v.2 and Nasal tests, respectively, the Company will make payments to JJSI of one percent of net cash collections for Percepta v.2 and in the low-single digits of net cash collections for the Nasal test, depending on the number and timing of JJSI samples and associated clinical data the Company receives from JJSI. The JJSI agreement is considered to be within the scope of ASC 808, as the parties are active participants and exposed to the risks and rewards of the collaborative activity. The Company evaluated the terms of the JJSI agreement and has analogized to ASC 606 for the delivery of RNA whole-transcriptome sequencing data to JJSI under the collaborative arrangement, which the Company believes is a distinct service for which JJSI meets the definition of a customer. Using the concepts of ASC 606, the Company has identified the delivery of data as its only performance obligation. The Company further determined that the transaction price under the arrangement was the $7.0 million in payments which was allocated to the obligation to deliver data. The $13.0 million in future potential payments is considered variable consideration because the Company determined that the potential payments are contingent upon regulatory and commercialization milestones that are uncertain to occur and, as such, were not included in the transaction price, and will be recognized accordingly as each potential payment becomes probable. The Company recognized revenue of $7.0 million and $4.0 million during 2019 for the provision of data and fulfillment of obligations relating to Percepta v.2 and Nasal program development milestones, respectively. There was no revenue for the three months ended March 31, 2020. For the three months ended March 31, 2019, the Company recognized revenue of $3.8 million for the provision of data relating to Percepta v.2, classified under biopharmaceutical revenue in the consolidated statement of operations and comprehensive loss. There was no accounts receivable from JJSI at March 31, 2020 and accounts receivable from JJSI was $2.0 million at December 31, 2019. There was no deferred revenue related to this agreement at March 31, 2020 and December 31, 2019. Collaboration Agreement with AstraZeneca Group On December 23, 2019, the Company entered into an agreement with Acerta Pharma B.V., or Acerta, a member of AstraZeneca Group whereby the Company agreed to provide genomic information that will support Acerta’s development of oncology therapeutics. Acerta will pay the Company for certain development activities and pay milestones to the Company for the achievement of development milestones. For the three months ended March 31, 2020, the Company recognized $0.1 million of revenue for certain development costs activities and accounts receivable from Acerta was $0.1 million at March 31, 2020. The agreement will be accounted for in accordance with the policy on collaborative arrangements, as mentioned in this footnote. Biopharmaceutical Services Agreement During the quarter ended March 31, 2020, the Company entered into an agreement to provide research and development services of $0.5 million for which the Company recognized $0.3 million of biopharmaceutical revenue for the three months ended March 31, 2020. Cost of Testing Revenue The components of our cost of testing services are laboratory expenses, sample collection expenses, compensation expense, license fees and royalties, depreciation and amortization, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are expensed as the test is processed regardless of whether and when revenue is recognized with respect to that test. Cost of testing revenue for the three months ended March 31, 2020 included $1.1 million write-down of supplies for the potential expiration of reagents due to an anticipated decline in volumes resulting from the COVID-19 pandemic. Cost of Product Revenue Cost of product revenue consists primarily of costs of purchasing instruments and consumables from third-party contract manufacturers, installation, warranty, service and packaging and delivery costs. In addition, cost of product includes royalty costs for licensed technologies included in the Company’s products and labor expenses. Cost of product revenue for instruments and consumables is recognized in the period the related revenue is recognized. Shipping and handling costs incurred for product shipments are included in cost of product in the consolidated statements of operations. Cost of Biopharmaceutical Revenue Cost of biopharmaceutical revenue consists of costs of performing activities under arrangements that require the Company to perform research and development services on behalf of a customer pursuant to a biopharmaceutical service agreement. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments . This ASU requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings and report credit losses using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808). |
Net Loss Per Common Share
Net Loss Per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. The following outstanding common stock equivalents have been excluded from diluted net loss per common share because their inclusion would be anti-dilutive: Three Months Ended March 31, 2020 2019 Shares of common stock subject to outstanding options 4,760,128 5,670,819 Employee stock purchase plan 19,857 25,672 Restricted stock units 936,524 538,759 Total common stock equivalents 5,716,509 6,235,250 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following (in thousands of dollars): March 31, December 31, Accrued compensation expenses $ 7,497 $ 10,100 Accrued other 2,582 3,634 Total accrued liabilities $ 10,079 $ 13,734 |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination On December 3, 2019, the Company executed an agreement with NanoString for the exclusive global diagnostics license to the nCounter FLEX Analysis System, and the acquisition of the Prosigna breast cancer prognostic gene signature assay, and the LymphMark lymphoma subtyping assay. The strategic transaction positions the Company to expand its genomic diagnostics business globally, with the ability to deliver its advanced genomic tests to physicians and their patients via hospital and clinical laboratories throughout the European Union and other parts of the world. The Company has accounted for this agreement under Accounting Standards Codification 805, Business Combinations. Pursuant to the terms of the agreement, Veracyte paid NanoString $40.0 million in cash and $10.0 million in Veracyte common stock, and may pay up to an additional $10.0 million in cash, contingent upon the commercial launch of Veracyte diagnostic tests for use on the platform. This contingency was valued at $6.1 million as of the acquisition date and as of December 31, 2019, recorded as a liability, and will be remeasured to fair value at each reporting date until the contingent consideration is settled. As of March 31, 2020, this contingency was remeasured to $5.6 million with the corresponding change included in general and administrative expense in the Company's condensed consolidated statements of operations and comprehensive loss. Assets acquired are recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company. While the Company believes that its estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and the resulting amount of goodwill. The following table summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands): Prosigna product technology $ 4,120 Prosigna customer relationships 2,430 nCounter FLEX Dx license 46,880 LymphMark product technology 990 Total identifiable intangible assets acquired 54,420 Goodwill 1,668 Net assets acquired $ 56,088 Identifiable acquisition-related intangibles included in the above table are finite-lived and are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized, as follows: Estimated Useful life (In Years) Prosigna product technology 15 Prosigna customer relationships 5 nCounter FLEX Dx license 15 LymphMark product technology 7 Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. This acquisition includes $1.7 million of goodwill which the Company believes consists principally of the organized workforce that will help the Company execute its strategic plans in relation to the assets acquired. In accordance with ASC 350, goodwill will not be amortized but will be tested for impairment at least annually. As of March 31, 2020, goodwill is not deductible for tax purposes, however, if contingent consideration is paid at a future date, the portions of contingent consideration paid and allocated to the intangible assets for tax purposes will be tax deductible. The accounting for this acquisition is preliminary and will be finalized upon completion of the analysis of certain contracts acquired and executed as part of this acquisition along with the impact on goodwill, should there be any. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company records its financial assets and liabilities at fair value. The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: • Level I: Inputs which include quoted prices in active markets for identical assets and liabilities; • Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value of the Company’s financial assets includes money market funds, overnight reverse repurchase agreements and a deposit for the lease of the Company's South San Francisco facility. Money market funds, included in cash and cash equivalents in the accompanying condensed consolidated balance sheets, were $150.7 million and $57.6 million as of March 31, 2020 and December 31, 2019, respectively, and are Level I assets as described above. Overnight reverse repurchase agreements, included in cash and cash equivalents in the accompanying condensed consolidated balance sheets, were zero and $100.0 million as of March 31, 2020 and December 31, 2019, respectively, and are Level II assets as described above. There were no unrealized gains or losses from overnight reverse repurchase agreements at March 31, 2020 and December 31, 2019. The deposit for the lease, included in restricted cash in the accompanying condensed consolidated balance sheets, was $603,000 as of March 31, 2020 and December 31, 2019, and is a Level I asset as described above. The contingent consideration in Note 4, Business Combination, associated with the agreement with NanoString on December 3, 2019, is a Level III financial liability. The estimation of the fair value of the contingent consideration is based on the present value of the expected payments calculated by assessing the likelihood of when the related milestones would be achieved, discounted using the Company's estimated borrowing rate. These estimates form the basis for making judgments about the carrying value of the contingent consideration that are not readily apparent from other sources. Changes to the forecasts for the achievement of the milestones and the estimates of the borrowing rate can significantly affect the estimated fair value of the contingent consideration. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company leases its headquarters and laboratory facilities in South San Francisco, California under a non-cancelable lease agreement for approximately 59,000 square feet. The lease began in June 2015 and ends in March 2026 and contains extension of lease term and expansion options. The Company had deposits of $603,000 included in long-term assets as of March 31, 2020 and December 31, 2019, restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the South San Francisco facility. The Company also leases laboratory and office space in Austin, Texas under a lease that expires in January 2029 and includes options for expansion and early termination in 2025. The Company provided a cash security deposit for this lease of $139,000, included in other assets in the Company’s condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019. Future minimum lease payments under non-cancelable operating leases as of March 31, 2020 are as follows (in thousands of dollars): Year Ending December 31, Remainder of 2020 $ 1,760 2021 2,401 2022 2,472 2023 2,543 2024 2,614 Thereafter 4,227 Total future minimum lease payments 16,017 Less: amount representing interest 3,435 Present value of future lease payments 12,582 Less: short-term lease liabilities 1,450 Long-term lease liabilities $ 11,132 The Company recognizes operating lease expense on a straight-line basis over the non-cancelable lease period. Operating lease expense was $474,000 and $476,000 for the three months ended March 31, 2020 and 2019, respectively. Contingencies From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its condensed consolidated financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company believes there is no legal proceeding pending that could have, either individually or in the aggregate, a material adverse effect on the Company’s condensed consolidated financial statements. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Loan and Security Agreement On November 3, 2017, the Company entered into a loan and security agreement, or Loan and Security Agreement, with Silicon Valley Bank. The Loan and Security Agreement allows the Company to borrow up to $35.0 million, with a $25.0 million advance term loan, or Term Loan Advance, and a revolving line of credit of up to $10.0 million, or Revolving Line of Credit. The Term Loan Advance was advanced upon the closing of the Loan and Security Agreement and was used to pay the outstanding balance of the Company’s existing long-term debt, which was canceled at that date. The Company had not drawn on the Revolving Line of Credit as of March 31, 2020. Borrowings under the Loan and Security Agreement mature on October 1, 2022. Amounts may be borrowed and repaid under the Revolving Line of Credit up until the earliest of full repayment or maturity of the Loan and Security Agreement, termination of the Loan and Security Agreement, or October 1, 2022. The Term Loan Advance bears interest at a variable rate equal to (i) the thirty-day U.S. London Interbank Offer Rate, or LIBOR, plus (ii) 4.20%, with a minimum rate of 5.43% per annum. Principal amounts outstanding under the Revolving Line of Credit bear interest at a variable rate equal to (i) LIBOR plus (ii) 3.50%, with a minimum rate of 4.70% per annum. The average Term Loan Advance interest rate for the three months ended March 31, 2020 was 5.8%. The Company may prepay the outstanding principal amount under the Term Loan Advance plus accrued and unpaid interest and, if the Term Loan Advance is repaid in full, a prepayment premium. The prepayment premium will be (i) $750,000 if prepayment is made prior to November 3, 2018, (ii) $500,000 if the prepayment is made after November 3, 2018 but on or before November 3, 2019, or (iii) $250,000 if the prepayment is made after November 3, 2019. In January 2019 and May 2019, the Company prepaid $12.5 million and $12.4 million, respectively, of the principal amount of the Term Loan Advance. These prepayments did not trigger any prepayment premium because they were partial, not full, repayments of the principal amount. In addition, a final payment on the Term Loan Advance in the amount of $1.2 million is due upon the earlier of the maturity date of the Term Loan Advance or its payment in full. The Loan and Security Agreement contains customary representations, warranties, and events of default such as a material adverse change in the Company's business, operations or financial condition, as well as affirmative and negative covenants. The negative covenants include, among other provisions, covenants that limit or restrict the Company's ability to incur liens, make investments, incur indebtedness, merge with or acquire other entities, dispose of assets, make dividends or other distributions to holders of its equity interests, engage in any new line of business, or enter into certain transactions with affiliates, in each case subject to certain exceptions. The Company’s obligations under the Loan and Security Agreement are secured by substantially all of its assets (excluding intellectual property), subject to certain customary exceptions. The Loan and Security Agreement also requires the Company to achieve certain revenue levels tested quarterly on a trailing twelve-month basis. However, failure to maintain the revenue levels will not be considered a default if the sum of the Company’s unrestricted cash and cash equivalents maintained with Silicon Valley Bank and amount available under the Revolving Line of Credit is at least $40.0 million. As of March 31, 2020, the Company was in compliance with the loan covenants. The net debt obligation for borrowings made under the Loan and Security Agreement was as follows (in thousands of dollars): March 31, 2020 December 31, 2019 Debt principal $ 100 $ 100 End-of-term debt obligation 648 594 Net debt obligation $ 748 $ 694 Future principal and end-of-term debt obligation payments under the Loan and Security Agreement are $1.3 million and due in 2022. The end-of-term debt obligation accretes over the term of the Loan and Security Agreement until maturity and is included in interest expense in the Company's condensed consolidated statements of operations and comprehensive loss. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The Company had reserved shares of common stock for issuance as follows: March 31, December 31, 2019 Stock options and restricted stock units issued and outstanding 5,988,461 5,562,484 Stock options and restricted stock units available for grant under stock option plans 3,200,200 1,954,804 Common stock available for the Employee Stock Purchase Plan 112,226 173,168 Total 9,300,887 7,690,456 |
Thyroid Cytopathology Partners
Thyroid Cytopathology Partners | 3 Months Ended |
Mar. 31, 2020 | |
Thyroid Cytopathology Partners | |
Thyroid Cytopathology Partners | Thyroid Cytopathology Partners The Company has an agreement with a specialized pathology practice, Thyroid Cytopathology Partners, ("TCP"), to provide testing services to the Company, or TCP Agreement. The TCP Agreement is effective through October 31, 2022, and thereafter automatically renews every year unless either party provides notice of intent not to renew at least 12 months prior to the end of the then-current term. Under the TCP Agreement, the Company pays TCP based on a fixed price per test schedule which is reviewed periodically for changes in market pricing, and the TCP Agreement included a clause allowing TCP to sublease a portion of the Company's facility in Austin, Texas. The Company does not have an ownership interest in or provide any form of financial or other support to TCP. The Company previously concluded that TCP represented a variable interest entity as a result of the facility arrangement clause, but that the Company was not the primary beneficiary as it did not have the ability to direct the activities that most significantly impacted TCP's economic performance, and therefore did not consolidate TCP. On February 14, 2019, the TCP Agreement was amended to remove the facility clause. Accordingly, the Company believes TCP was no longer a variable interest entity as of that date. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company did not record a provision or benefit for income taxes during the three months ended March 31, 2020 and 2019. The Company continues to maintain a full valuation allowance against its net deferred tax assets. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The Company does not expect the provisions of the legislation to have a significant impact on the effective tax rate of the Company. |
Organization and Description _2
Organization and Description of Business (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of March 31, 2020, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2020 and 2019, the condensed consolidated statements of stockholders' equity for the three months ended March 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results, stockholders' equity and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2019 has been derived from audited financial statements. The results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full year or any other period. The accompanying interim period condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. |
Use of Estimates | Use of Estimates The preparation of unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Items subject to such estimates include: revenue recognition; write-down of supplies; the useful lives of property and equipment; the recoverability of long-lived assets; the incremental borrowing rate for leases; the estimation of the fair value of intangible assets and contingent consideration; stock options; income tax uncertainties, including a valuation allowance for deferred tax assets; and contingencies. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. |
Concentrations of Credit Risk and Other Risks and Uncertainties | Concentrations of Credit Risk and Other Risks and Uncertainties The worldwide spread of coronavirus, or COVID-19, has created significant uncertainty in the global economy. There have been no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of COVID-19 and the extent to which COVID-19 impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict. If the financial markets or the overall economy are impacted for an extended period, the Company’s liquidity, revenues, supplies, goodwill and intangibles may be adversely affected The majority of the Company’s cash and cash equivalents are deposited with one major financial institution in the United States. Deposits in this institution may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Several of the components of the Company’s sample collection kit and test reagents, and its nCounter FLEX Analysis System and related test kits are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, it could suffer delays in being able to deliver its diagnostic solutions, a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results. The Company is also subject to credit risk from its accounts receivable related to its sales. Credit risk for accounts receivable from testing revenue is incorporated in testing revenue accrual rates as the Company assesses historical collection rates and current developments to determine accrual rates and amounts the Company will ultimately collect. The Company generally does not perform evaluations of customers’ financial condition for testing revenue and generally does not require collateral. The Company assesses credit risk and the amount of accounts receivable the Company will ultimately collect for product, biopharmaceutical and collaboration revenue based on collection history, current developments and credit worthiness of the customer. The estimate of credit losses is not material at March 31, 2020. |
Cash | Cash and Cash Equivalents The Company considers demand deposits in a bank, money market funds and highly liquid investments with an original maturity of 90 days or less to be cash equivalents. Cash equivalents include overnight reverse repurchase agreements which are tri-party repurchase agreements and have maturities of three months or less at the time of investment and are collateralized by U.S. treasury and agency securities of at least 102% of the principal amount. In a tri-party repurchase agreement, a third-party custodian bank functions as an independent intermediary to facilitate transfer of cash and holding the collateral on behalf of the underlying investor for the term of the agreement thereby minimizing risk and exposure to both parties. These overnight reverse repurchase agreements are included within cash equivalents due to their high liquidity and relatively low risk. There were no overnight reverse repurchase agreements at March 31, 2020. Restricted Cash The Company had deposits of $603,000 included in long-term assets as of March 31, 2020 and December 31, 2019, restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the Company’s South San Francisco facility. |
Revenue Recognition | Revenue Recognition Testing Revenue The Company recognizes testing revenue in accordance with the provisions of ASC 606, Revenue from Contracts with Customers, or ASC 606. Most of the Company’s revenue is generated from the provision of testing services. These services are completed upon the delivery of test results to the prescribing physician, at which time the Company bills for the services. The Company recognizes revenue related to billings based on estimates of the amount that will ultimately be realized. In determining the amount to accrue for a delivered test, the Company considers factors such as payment history, payer coverage, whether there is a reimbursement contract between the payer and the Company, payment as a percentage of agreed upon rate (if applicable), amount paid per test and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management. For the three months ended March 31, 2019, the Company changed its testing revenue estimates due to actual and anticipated cash collections for tests delivered in 2018 or prior years and recognized additional revenue of $0.6 million, which resulted in a decrease in the Company's loss from operations of $0.6 million and a decrease in loss per share of $0.02 for the three months ended March 31, 2019. The change in testing revenue estimates for the three months ended March 31, 2020 was not material. Product Revenue The Company began recognizing product revenue in December 2019, when the Company executed an agreement with NanoString for the exclusive global license to the nCounter platform and acquisition of products for diagnostic use. More details on this agreement are in Note 4 - Business Combination. Product revenue from instruments, consumables and in vitro diagnostic kits is recognized generally upon shipment or when the instrument is ready for use by the end customer, which is when title of the product has been transferred to the customer. 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 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. Performance obligations are considered satisfied once the Company has transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. The Company recognizes product revenue for satisfied performance obligations only when there are no uncertainties regarding payment terms or transfer of control. Shipping and handling costs incurred for product shipments are charged to the Company's customers and included in product revenue. Revenues are presented net of the taxes that are collected from customers and remitted to governmental authorities. Biopharmaceutical and Collaboration Revenue From time to time, the Company enters into arrangements for research and development and/or laboratory services. Such arrangements may require the Company to deliver various rights, services and/or samples, including intellectual property rights/licenses, R&D services, and/or laboratory services. The underlying terms of these arrangements generally provide for consideration to the Company in the form of nonrefundable upfront license fees, development and commercial performance milestone payments, royalty payments, and/or profit sharing. In arrangements involving more than one performance obligation, each required performance obligation is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects the Company's best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis or using an adjusted market assessment approach if selling price on a stand-alone basis is not available. The consideration allocated to each distinct performance obligation is recognized as revenue when control of the related goods is transferred or services are performed. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. Should there be royalties, the Company utilizes the sales and usage-based royalty exception in arrangements that resulted from the license of intellectual property, recognizing revenues generated from royalties or profit sharing as the underlying sales occur. Collaborative Arrangements The Company enters into collaborative arrangements with partners that fall under the scope of ASC Topic 808, Collaborative Arrangements, or ASC 808. While these arrangements are in the scope of ASC 808, the Company may analogize to ASC 606 for some aspects of these arrangements. The Company analogizes to ASC 606 for certain activities within the collaborative arrangement for the delivery of a good or service (i.e., a unit of account) that is part of its ongoing major or central operations. The terms of the Company’s collaborative arrangements typically include one or more of the following: (i) up-front fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; and (iii) royalties on net sales of licensed products. Each of these payments may result in collaboration revenues or an offset against research and development expense. Net sales of data or other services to our customers are classified under biopharmaceutical revenue, and all other non-customer revenue, such as milestones, are classified under collaboration revenue in our consolidated statements of operations and comprehensive loss. There was no collaboration revenue in the three months ended March 31, 2020 and 2019. As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. Generally, the estimation of the stand-alone selling price may include such estimates as independent evidence of market price, forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and it measures the services delivered to the collaborative partner which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price. Up-front Fees: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time. Milestone Payments: At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or the collaborative partner’s control, such as non-operational developmental and regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or the collaborative partner’s control, such as operational developmental milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price may also result in negative collaboration revenues and earnings in the period of adjustment. Services Agreement with Loxo Oncology On April 9, 2018, the Company entered into an agreement with Loxo Oncology, Inc., or Loxo, whereby the Company agreed to provide certain tissue samples and other services in exchange for agreed-upon fees. The agreement has a term of one one Diagnostic Development Agreement with Johnson & Johnson On December 28, 2018, the Company entered into a diagnostics development agreement with Johnson and Johnson Services, Inc., or JJSI, (i) to cooperate on a program to enable the Company to use JJSI samples and clinical data to develop a next generation bronchial genomic classifier diagnostic for lung cancer diagnosis, or Percepta v.2, and a nasal genomic classifier diagnostic for lung cancer and (ii) for JJSI to use Veracyte data generated in two Veracyte development programs for therapeutic purposes and for purposes of developing a companion diagnostic product used in conjunction with a JJSI therapeutic. The Company granted a license to JJSI with the right to use data and under the Company's intellectual property rights for JJSI's therapeutic purposes, including the development and commercialization of a companion diagnostic for its products, from the Percepta v.2 and Nasal programs. The license granted to JJSI is not distinct from other performance obligations as JJSI receives benefit only when other performance obligations are met. Under the terms of the agreement, the Company will provide data from its RNA whole-transcriptome sequencing platform to JJSI in exchange for $7.0 million in payments from JJSI. The Company is also entitled to additional payments from JJSI of up to $13.0 million, conditioned upon the achievement of certain milestones relating to the development and reimbursement of the Percepta v.2 and Nasal tests. For a period of ten years commencing with the first commercial sale of the Percepta v.2 and Nasal tests, respectively, the Company will make payments to JJSI of one percent of net cash collections for Percepta v.2 and in the low-single digits of net cash collections for the Nasal test, depending on the number and timing of JJSI samples and associated clinical data the Company receives from JJSI. The JJSI agreement is considered to be within the scope of ASC 808, as the parties are active participants and exposed to the risks and rewards of the collaborative activity. The Company evaluated the terms of the JJSI agreement and has analogized to ASC 606 for the delivery of RNA whole-transcriptome sequencing data to JJSI under the collaborative arrangement, which the Company believes is a distinct service for which JJSI meets the definition of a customer. Using the concepts of ASC 606, the Company has identified the delivery of data as its only performance obligation. The Company further determined that the transaction price under the arrangement was the $7.0 million in payments which was allocated to the obligation to deliver data. The $13.0 million in future potential payments is considered variable consideration because the Company determined that the potential payments are contingent upon regulatory and commercialization milestones that are uncertain to occur and, as such, were not included in the transaction price, and will be recognized accordingly as each potential payment becomes probable. The Company recognized revenue of $7.0 million and $4.0 million during 2019 for the provision of data and fulfillment of obligations relating to Percepta v.2 and Nasal program development milestones, respectively. There was no revenue for the three months ended March 31, 2020. For the three months ended March 31, 2019, the Company recognized revenue of $3.8 million for the provision of data relating to Percepta v.2, classified under biopharmaceutical revenue in the consolidated statement of operations and comprehensive loss. There was no accounts receivable from JJSI at March 31, 2020 and accounts receivable from JJSI was $2.0 million at December 31, 2019. There was no deferred revenue related to this agreement at March 31, 2020 and December 31, 2019. Collaboration Agreement with AstraZeneca Group On December 23, 2019, the Company entered into an agreement with Acerta Pharma B.V., or Acerta, a member of AstraZeneca Group whereby the Company agreed to provide genomic information that will support Acerta’s development of oncology therapeutics. Acerta will pay the Company for certain development activities and pay milestones to the Company for the achievement of development milestones. For the three months ended March 31, 2020, the Company recognized $0.1 million of revenue for certain development costs activities and accounts receivable from Acerta was $0.1 million at March 31, 2020. The agreement will be accounted for in accordance with the policy on collaborative arrangements, as mentioned in this footnote. Biopharmaceutical Services Agreement During the quarter ended March 31, 2020, the Company entered into an agreement to provide research and development services of $0.5 million for which the Company recognized $0.3 million of biopharmaceutical revenue for the three months ended March 31, 2020. Cost of Testing Revenue The components of our cost of testing services are laboratory expenses, sample collection expenses, compensation expense, license fees and royalties, depreciation and amortization, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are expensed as the test is processed regardless of whether and when revenue is recognized with respect to that test. Cost of testing revenue for the three months ended March 31, 2020 included $1.1 million write-down of supplies for the potential expiration of reagents due to an anticipated decline in volumes resulting from the COVID-19 pandemic. Cost of Product Revenue Cost of product revenue consists primarily of costs of purchasing instruments and consumables from third-party contract manufacturers, installation, warranty, service and packaging and delivery costs. In addition, cost of product includes royalty costs for licensed technologies included in the Company’s products and labor expenses. Cost of product revenue for instruments and consumables is recognized in the period the related revenue is recognized. Shipping and handling costs incurred for product shipments are included in cost of product in the consolidated statements of operations. Cost of Biopharmaceutical Revenue |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments . This ASU requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings and report credit losses using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808). |
Organization and Description _3
Organization and Description of Business (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of the Company's third-party payers as a percentage of total | The Company’s third-party payers and other customers in excess of 10% of total revenue and their related revenue as a percentage of total revenue were as follows: Three Months Ended March 31, 2020 2019 Medicare 25 % 21 % Johnson and Johnson Services, Inc. * 13 % UnitedHealthcare 11 % 11 % 36 % 45 % *Less than 10% The Company’s third-party payers and other customers in excess of 10% of accounts receivable and their related accounts receivable balance as a percentage of total accounts receivable were as follows at the following dates: March 31, December 31, 2019 Johnson and Johnson Services, Inc. * 10 % Medicare 14 % 15 % *Less than 10% |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | The following outstanding common stock equivalents have been excluded from diluted net loss per common share because their inclusion would be anti-dilutive: Three Months Ended March 31, 2020 2019 Shares of common stock subject to outstanding options 4,760,128 5,670,819 Employee stock purchase plan 19,857 25,672 Restricted stock units 936,524 538,759 Total common stock equivalents 5,716,509 6,235,250 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands of dollars): March 31, December 31, Accrued compensation expenses $ 7,497 $ 10,100 Accrued other 2,582 3,634 Total accrued liabilities $ 10,079 $ 13,734 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of fair value of assets acquired and liabilities assumed | The following table summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands): Prosigna product technology $ 4,120 Prosigna customer relationships 2,430 nCounter FLEX Dx license 46,880 LymphMark product technology 990 Total identifiable intangible assets acquired 54,420 Goodwill 1,668 Net assets acquired $ 56,088 |
Schedule of identifiable acquisition-related intangibles | Identifiable acquisition-related intangibles included in the above table are finite-lived and are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized, as follows: Estimated Useful life (In Years) Prosigna product technology 15 Prosigna customer relationships 5 nCounter FLEX Dx license 15 LymphMark product technology 7 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | Future minimum lease payments under non-cancelable operating leases as of March 31, 2020 are as follows (in thousands of dollars): Year Ending December 31, Remainder of 2020 $ 1,760 2021 2,401 2022 2,472 2023 2,543 2024 2,614 Thereafter 4,227 Total future minimum lease payments 16,017 Less: amount representing interest 3,435 Present value of future lease payments 12,582 Less: short-term lease liabilities 1,450 Long-term lease liabilities $ 11,132 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of debt obligation for borrowings | The net debt obligation for borrowings made under the Loan and Security Agreement was as follows (in thousands of dollars): March 31, 2020 December 31, 2019 Debt principal $ 100 $ 100 End-of-term debt obligation 648 594 Net debt obligation $ 748 $ 694 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of reserved shares of common stock for issuance | The Company had reserved shares of common stock for issuance as follows: March 31, December 31, 2019 Stock options and restricted stock units issued and outstanding 5,988,461 5,562,484 Stock options and restricted stock units available for grant under stock option plans 3,200,200 1,954,804 Common stock available for the Employee Stock Purchase Plan 112,226 173,168 Total 9,300,887 7,690,456 |
Organization and Description _4
Organization and Description of Business - Narrative (Details) $ / shares in Units, shares in Thousands | May 07, 2019USD ($)$ / sharesshares | Apr. 09, 2018 | Mar. 31, 2020USD ($)deliveryfinancial_institutiondiseaseAreassegment$ / shares | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($)$ / shares | Dec. 31, 2019USD ($) |
Cash and Cash Equivalents [Line Items] | |||||||
Number of operating segments | segment | 1 | ||||||
Number of disease areas with genomic testing | diseaseAreas | 4 | ||||||
Prior period reclassification adjustment | $ 212,000 | ||||||
Number of shares issued and sold (in shares) | shares | 6,325 | ||||||
Price per share (in usd per share) | $ / shares | $ 23.25 | ||||||
Proceeds from issuance of common stock | $ 137,800,000 | ||||||
Stock issuance costs | $ 9,200,000 | ||||||
Percent of principal amount needed to be collateralized by U.S. treasury and agency securities | 102.00% | ||||||
Number of major financial institutions with which the company's cash and cash equivalents are deposited (in financial institutions) | financial_institution | 1 | ||||||
Restricted cash | $ 603,000 | $ 603,000 | |||||
Loss from operations | $ (12,200,000) | $ (2,067,000) | |||||
Net income (loss) per common share, basic and diluted (in usd per share) | $ / shares | $ (0.24) | $ (0.05) | |||||
Number of tissue sample deliveries (in deliveries) | delivery | 0 | ||||||
Revenue | $ 31,122,000 | $ 29,529,000 | |||||
Right-of-use assets - operating lease | 8,576,000 | 8,808,000 | |||||
Operating lease, liability | 12,582,000 | ||||||
Headquarters and laboratory facilities, South San Francisco, lease signed April 2015 | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Restricted cash | 603,000 | 603,000 | |||||
Biopharmaceutical Company | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Deferred revenue | 0 | 0 | |||||
Tissue Samples | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Contract with customer, revenue recognized | 90,000 | ||||||
Contract agreement term | 1 year | ||||||
Automatic renewal period of contract agreement | 1 year | ||||||
Termination period | 90 days | ||||||
Revenue | 3,409,000 | 0 | |||||
Other Services | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Contract with customer, revenue recognized | $ 250,000 | $ 250,000 | 250,000 | ||||
Testing | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Revenue | 26,991,000 | 25,389,000 | |||||
Write-down of supplies | 1,100,000 | ||||||
Testing | Revenue recognition | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Loss from operations | $ 600,000 | ||||||
Net income (loss) per common share, basic and diluted (in usd per share) | $ / shares | $ 0.02 | ||||||
Revenue | $ 600,000 | ||||||
Biopharmaceutical | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Revenue | 722,000 | 4,140,000 | |||||
Johnson & Johnson | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Receivable from agreement | 7,000,000 | ||||||
Contractual proceeds | $ 13,000,000 | ||||||
Percentage of net cash collections, fee | 1.00% | ||||||
Accounts Receivable, after Allowance for Credit Loss | $ 0 | 2,000,000 | |||||
Johnson & Johnson | Percepta v.2 | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Revenue | 0 | $ 3,800,000 | 7,000,000 | ||||
Johnson & Johnson | NasaRISK | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Revenue | $ 4,000,000 | ||||||
AstraZeneca | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Revenue | 100,000 | ||||||
Accounts Receivable, after Allowance for Credit Loss | 100,000 | ||||||
Biopharmaceutical Company | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Contract agreement, amount | 500,000 | ||||||
Biopharmaceutical Company | Biopharmaceutical | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Revenue | $ 300,000 | ||||||
Over-Allotment Option | |||||||
Cash and Cash Equivalents [Line Items] | |||||||
Number of shares issued and sold (in shares) | shares | 825 |
Organization and Description _5
Organization and Description of Business - Credit Risk (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenue | Revenue concentration risk | |||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||
Concentrations of credit risk (as a percent) | 36.00% | 45.00% | |
Revenue | Revenue concentration risk | Medicare | |||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||
Concentrations of credit risk (as a percent) | 25.00% | 21.00% | |
Revenue | Revenue concentration risk | Johnson & Johnson | |||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||
Concentrations of credit risk (as a percent) | 13.00% | ||
Revenue | Revenue concentration risk | UnitedHealthcare | |||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||
Concentrations of credit risk (as a percent) | 11.00% | 11.00% | |
Accounts receivable | Gross receivables concentration risk | Medicare | |||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||
Concentrations of credit risk (as a percent) | 14.00% | 15.00% | |
Accounts receivable | Gross receivables concentration risk | Johnson & Johnson | |||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||
Concentrations of credit risk (as a percent) | 10.00% |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||
Total common stock equivalents (in shares) | 5,716,509 | 6,235,250 |
Shares of common stock subject to outstanding options | ||
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||
Total common stock equivalents (in shares) | 4,760,128 | 5,670,819 |
Employee stock purchase plan | ||
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||
Total common stock equivalents (in shares) | 19,857 | 25,672 |
Restricted stock units | ||
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||
Total common stock equivalents (in shares) | 936,524 | 538,759 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued compensation expenses | $ 7,497 | $ 10,100 |
Accrued other | 2,582 | 3,634 |
Total accrued liabilities | $ 10,079 | $ 13,734 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | Dec. 03, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Acquisition related contingent liability | $ 5,604 | $ 6,088 | |
Goodwill | 2,725 | 2,725 | |
NanoString | |||
Business Acquisition [Line Items] | |||
Cash paid in business acquisition | $ 40,000 | ||
Contingent consideration, maximum to be paid | 10,000 | ||
Acquisition related contingent liability | 6,100 | $ 5,600 | $ 6,100 |
Goodwill | 1,668 | ||
NanoString | Common Stock | |||
Business Acquisition [Line Items] | |||
Equity issued in business acquisition | $ 10,000 |
Business Combination - Acquisit
Business Combination - Acquisition (Details) - USD ($) $ in Thousands | Dec. 03, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 2,725 | $ 2,725 | |
Prosigna product technology | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 15 years | ||
Prosigna customer relationships | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 5 years | ||
nCounter FLEX Dx license | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 15 years | ||
LymphMark product technology | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 7 years | ||
NanoString | |||
Business Acquisition [Line Items] | |||
Total identifiable intangible assets acquired | $ 54,420 | ||
Goodwill | 1,668 | ||
Net assets acquired | 56,088 | ||
NanoString | Prosigna product technology | |||
Business Acquisition [Line Items] | |||
Total identifiable intangible assets acquired | 4,120 | ||
NanoString | Prosigna customer relationships | |||
Business Acquisition [Line Items] | |||
Total identifiable intangible assets acquired | 2,430 | ||
NanoString | nCounter FLEX Dx license | |||
Business Acquisition [Line Items] | |||
Total identifiable intangible assets acquired | 46,880 | ||
NanoString | LymphMark product technology | |||
Business Acquisition [Line Items] | |||
Total identifiable intangible assets acquired | $ 990 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 03, 2019 | |
Fair value measurements | ||||
Restricted cash | $ 603,000 | $ 603,000 | ||
NanoString | ||||
Fair value measurements | ||||
Contingent consideration, maximum to be paid | $ 10,000,000 | |||
Headquarters and laboratory facilities, South San Francisco, lease signed April 2015 | ||||
Fair value measurements | ||||
Restricted cash | 603,000 | 603,000 | ||
Level I | Headquarters and laboratory facilities, South San Francisco, lease signed April 2015 | ||||
Fair value measurements | ||||
Restricted cash | 603,000 | 603,000 | ||
Level I | Money market funds | ||||
Fair value measurements | ||||
Financial assets | 150,700,000 | 57,600,000 | ||
Overnight repurchase agreements | ||||
Fair value measurements | ||||
Unrealized Gain (Loss) on Investments | 0 | $ 0 | ||
Overnight repurchase agreements | Level II | ||||
Fair value measurements | ||||
Cash and and cash equivalents, fair value | $ 0 | $ 100,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Operating Lease (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)ft² | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Future minimum lease payments under non-cancelable operating leases | |||
Remainder of 2020 | $ 1,760 | ||
2020 | 2,401 | ||
2021 | 2,472 | ||
2022 | 2,543 | ||
2023 | 2,614 | ||
Thereafter | 4,227 | ||
Total future minimum lease payments | 16,017 | ||
Less: amount representing interest | 3,435 | ||
Present value of future lease payments | 12,582 | ||
Less: short-term lease liabilities | 1,450 | $ 1,407 | |
Long-term lease liabilities | 11,132 | 11,506 | |
Operating lease expense | $ 474 | $ 476 | |
Headquarters and laboratory facilities, South San Francisco, lease signed April 2015 | |||
Operating Leases | |||
Amount of space leased (in square feet) | ft² | 59 | ||
Security deposit | $ 603 | 603 | |
Other assets | Laboratory facilities, Austin, Texas | |||
Operating Leases | |||
Security deposit | $ 139 | $ 139 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
May 31, 2019 | Jan. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Nov. 03, 2017 | |
Debt Instrument [Line Items] | |||||
Repayments of long-term debt | $ 0 | $ 12,500,000 | |||
Line of credit | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 1,300,000 | ||||
Silicon Valley Bank | Line of credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 35,000,000 | ||||
Liquidity requirement, minimum | $ 40,000,000 | ||||
Secured debt | Silicon Valley Bank | Line of credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | 25,000,000 | ||||
Effective interest rate (as a percent) | 5.80% | ||||
Balloon payment to be paid | 1,200,000 | ||||
Secured debt | Silicon Valley Bank | Line of credit | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 4.20% | ||||
Secured debt | Silicon Valley Bank | Line of credit | London Interbank Offered Rate (LIBOR) | Minimum | |||||
Debt Instrument [Line Items] | |||||
Interest rate (as a percent) | 5.43% | ||||
Revolving credit facility | Silicon Valley Bank | Line of credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 10,000,000 | ||||
Repayments of long-term debt | $ 12,400,000 | $ 12,500,000 | |||
Revolving credit facility | Silicon Valley Bank | Line of credit | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.50% | ||||
Revolving credit facility | Silicon Valley Bank | Line of credit | London Interbank Offered Rate (LIBOR) | Minimum | |||||
Debt Instrument [Line Items] | |||||
Interest rate (as a percent) | 4.70% | ||||
Debt prepayment tranche one | Revolving credit facility | Silicon Valley Bank | Line of credit | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Prepayment premium | $ 750,000 | ||||
Debt prepayment tranche two | Revolving credit facility | Silicon Valley Bank | Line of credit | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Prepayment premium | 500,000 | ||||
Debt prepayment tranche three | Revolving credit facility | Silicon Valley Bank | Line of credit | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Prepayment premium | $ 250,000 |
Debt - Debt Obligation for Borr
Debt - Debt Obligation for Borrowings (Details) - Line of credit - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Debt principal | $ 100 | $ 100 |
End-of-term debt obligation | 648 | 594 |
Net debt obligation | $ 748 | $ 694 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - shares | Mar. 31, 2020 | Dec. 31, 2019 |
Common Stock | ||
Options issued and outstanding (in shares) | 5,988,461 | 5,562,484 |
Total number of shares reserved for issuance (in shares) | 9,300,887 | 7,690,456 |
Shares of common stock subject to outstanding options | ||
Common Stock | ||
Shares available for issuance (in shares) | 3,200,200 | 1,954,804 |
ESPP (in shares) | ||
Common Stock | ||
Shares available for issuance (in shares) | 112,226 | 173,168 |
Thyroid Cytopathology Partners
Thyroid Cytopathology Partners (Details) - Thyroid Cytopathology Partners - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Thyroid Cytopathology Partners | ||
Notice of intent not to renew period | 12 months | |
Reduction to rent expense for TCP's portion of costs for subleased space | $ 11 |