GlobeNewswire Inc | Aug 3, 2020 04:02PM EDT

August 03, 2020

MENLO PARK, Calif., Aug. 03, 2020 (GLOBE NEWSWIRE) -- Pacific Biosciences of California, Inc. (NASDAQ: PACB) today announced financial results for its second quarter ended June 30, 2020.

Total revenue for the second quarter of 2020 was $17.1 million, compared with $24.6 million for the same period of 2019. Instrument revenue for the second quarter of 2020 was $8.9 million, compared with $12.7 million for the same period of 2019. Consumables revenue for the second quarter of 2020 was $4.8 million compared with $8.6 million for the same period of 2019. Service and other revenue for the second quarter of 2020 was $3.3 million compared with $3.4 million for the same period of 2019.

Gross profit for the second quarter of 2020 was $6.6 million, resulting in a gross margin of 38.7%. Gross profit for the second quarter of 2019 was $9.6 million, resulting in a gross margin of 39.0%.

Operating expenses for the second quarter of 2020 totaled $30.1 million, compared to $34.0 million for the same period of 2019. Operating expenses for the second quarter of 2020 and 2019 included non-cash stock-based compensation of $2.8 million and $3.6 million, respectively.

Net loss for the second quarter of 2020 was $23.1 million, compared to $24.6 million for the same period of 2019.

Cash, cash equivalents and investments, excluding restricted cash, at June 30, 2020 totaled $120.0 million, compared to $49.1 million at December 31, 2019.

As previously announced, in January 2020, we and Illumina mutually agreed to terminate the Agreement and Plan of Merger (as amended, the Merger Agreement). As part of our agreement to terminate the Merger Agreement, Illumina paid us a $98.0 million reverse termination fee in January 2020, from which we paid our financial advisor associated fees of $6.0 million in April 2020, which is less than the amount we initially expected. The $98.0 million in cash we received from Illumina is recorded as a short-term liability and is expected to be subsequently recorded as other income after September 30, 2020 when all contingency clauses are expected to lapse. In addition, during the first quarter ended March 31, 2020, as previously agreed to pursuant to the terms of the Merger Agreement, Illumina paid us cash payments (Continuation Advances) of $34.0 million, which resulted in a gain of $34.0 million for the quarter ended March 31, 2020 and six months ended June 30, 2020.

Impact of COVID-19 Pandemic

We have implemented various measures to help protect our employees while continuing to support our customers. In accordance with local and state guidelines, a large number of our Menlo Park-based employees are working remotely from their homes. Additionally, we have implemented health and safety practices in accordance with evolving government and public health agency guidelines. However, as Pacific Biosciences is a designated essential business, we continue to provide direct support to our customers, including those customers working on COVID-19 related research, testing, treatment, and prevention. This support includes consumable and instrument shipments, field support, and limited wet-lab activities.

Financial results for the first six months of 2020 were negatively impacted as many of our customers in multiple regions around the world shut down operations for various periods of time in efforts to curb the spread of the COVID-19 pandemic. This resulted in lower product revenues for the first six months of 2020 compared to the same period of 2019. Due to the uncertain scope and duration of the pandemic, we cannot reasonably estimate the future impact to our operations and financial results.

As noted above, there were provisions in the Merger Agreement to provide us with significant funding in the event that the merger did not close. As a result, we ended the second quarter of 2020 with $120.0 million in Cash and Investments. However, we will continue to monitor our operating expenses and cash flows in response to the evolving market conditions.

Quarterly Conference Call Information

Management will host a quarterly conference call to discuss its second quarter ended June 30, 2020 results today at 4:30 p.m. Eastern Time. Investors may listen to the call by dialing 1.888.366.7247, or if outside the U.S., by dialing +1.707.287.9330, using Conference ID # 7079947. The call will be webcast live and will be available for replay at Pacific Biosciences website at https://investor.pacificbiosciences.com/.

About Pacific BiosciencesPacific Biosciences of California, Inc. (NASDAQ:PACB),is empowering life scientists with highly accurate long-read sequencing. The companys innovative instruments arebased onSingle Molecule, Real-Time (SMRT) Sequencing technology, whichdeliversacomprehensiveview of genomes, transcriptomes, and epigenomes,enablingaccess to the full spectrum of genetic variation in any organism. Cited in thousands of peer-reviewed publications, PacBiosequencingsystems arein use by scientists aroundthe world to drive discovery in human biomedical research, plant and animal sciences, and microbiology.

Forward-Looking StatementsAll statements in this press release that are not historical are forward-looking statements, including, among other things, the accounting treatment of cash payments we received from Illumina, the impact of COVID-19 on our business including whether customers take delivery of our systems, Pacific Biosciences potential development and commercialization of products, future uses, quality or performance of, or benefits of using, products or technologies, and other future events. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, changes in circumstances and other factors that are, in some cases, beyond Pacific Biosciences control and could cause actual results to differ materially from the information expressed or implied by forward-looking statements made in this press release. Factors that could materially affect actual results can be found in Pacific Biosciences most recent filings with the Securities and Exchange Commission, including Pacific Biosciences most recent reports on Forms 8-K, 10-K and 10-Q, and include those listed under the caption Risk Factors. Pacific Biosciences undertakes no obligation to revise or update information in this press release to reflect events or circumstances in the future, even if new information becomes available.

The condensed consolidated financial statements that follow should be read in conjunction with the notes set forth in the Pacific Biosciences Quarterly Report on Form 10-Q when filed with the Securities and Exchange Commission.

Contact: Trevin Rard 650.521.8450ir@pacificbiosciences.com

Pacific Biosciences of California, Inc.Unaudited Condensed Consolidated Statement of Operations (amounts in thousands, except per share amounts)

Three Months Ended June Six Months Ended June 30, 30, 2020 2019 2020 2019Revenue: Product revenue $ 13,756 $ 21,250 $ 26,049 $ 34,707 Service and other revenue 3,321 3,371 6,626 6,339 Total revenue 17,077 24,621 32,675 41,046 Cost of Revenue: Cost of product revenue 8,225 11,980 13,646 20,598 Cost of service and other 2,239 3,028 4,928 5,718 revenueTotal cost of revenue 10,464 15,008 18,574 26,316 Gross profit 6,613 9,613 14,101 14,730 Operating Expense: Research and development 15,010 14,910 30,260 30,395 Sales, general and 15,127 19,083 40,074 38,849 administrativeTotal operating expense 30,137 33,993 70,334 69,244 Operating loss (23,524 ) (24,380 ) (56,233 ) (54,514 )Gain from Continuation ? ? 34,000 ? Advances from IlluminaInterest expense ? (644 ) (267 ) (1,269 )Other income, net 438 428 676 863 Net loss $ (23,086 ) $ (24,596 ) $ (21,824 ) $ (54,920 )Basic and diluted net $ (0.15 ) $ (0.16 ) $ (0.14 ) $ (0.36 )loss per shareShares used in computingbasic and diluted net 154,172 152,776 153,229 152,029 loss per share

Pacific Biosciences of California, Inc.Unaudited Condensed Consolidated Balance Sheets(amounts in thousands)

June 30, December 31, 2020 2019Assets Cash and investments $ 119,963 $ 49,099Accounts receivable 11,346 15,266Inventory 16,768 13,312Prepaid and other current assets 2,862 3,369Property and equipment, net 27,733 30,070Operating lease right-of-use assets, net 31,435 32,827Long-term restricted cash 3,500 4,000Other long-term assets 41 42Total Assets $ 213,648 $ 147,985 Liabilities and Stockholders' Equity Accounts payable $ 7,436 $ 8,368Accrued expenses 12,203 13,242Deferred gain from Reverse Termination Fee from 98,000 ?IlluminaDeferred revenue 8,463 9,561Operating lease liabilities 43,966 45,801Notes payable ? 15,871Other liabilities 2,188 225Stockholders' equity 41,392 54,917Total Liabilities and Stockholders' Equity $ 213,648 $ 147,985