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Pacific Biosciences Announces Fourth Quarter and Annual 2019 Financial Results

Thursday, February 6, 2020

Annual Revenue Increase of 16% Year Over Year

MENLO PARK, Calif., Feb. 06, 2020 (GLOBE NEWSWIRE) — Pacific Biosciences of California, Inc. (NASDAQ: PACB) today announced financial results for its fourth quarter and year ended December 31, 2019, as attached.

Product, service and other revenue for the year ended December 31, 2019 increased by 16% to $90.9 million, compared to $78.6 million for 2018. Product, service and other revenue for the fourth quarter of 2019 increased by 43% to $27.9 million, compared to $19.5 million for the fourth quarter of 2018.

Gross profit for the year ended December 31, 2019 was $34.6 million, resulting in a gross margin of 38%, compared to a gross profit of $25.1 million, resulting in a gross margin of 32% for 2018. Gross profit for the fourth quarter of 2019 was $12.9 million, resulting in a gross margin of 46%, compared to a gross profit of $5.7 million, resulting in a gross margin of 29% for the same period in 2018.

Operating expenses totaled $135.1 million for the year ended December 31, 2019, compared to $126.1 million for 2018. Operating expenses for the year ended December 31, 2019 and 2018 included non-cash stock-based compensation of $14.5 million and $20.0 million, respectively; and legal and professional fees related to the proposed merger with Illumina of $14.1 million and $4.7 million, respectively. Operating expenses totaled $30.8 million for the fourth quarter of 2019, compared to $36.4 million for the fourth quarter of 2018. Operating expenses for the fourth quarters of 2019 and 2018 included non-cash stock-based compensation of $3.4 million and $6.3 million, respectively; and legal and professional fees related to the proposed merger with Illumina of $1.2 million and $4.7 million, respectively.

The net loss for the year ended December 31, 2019 was $84.1 million, compared to a net loss of $102.6 million for 2018. The net loss for the fourth quarter of 2019 was $0.1 million, compared to a net loss of $30.8 million for the fourth quarter of 2018. In accordance with the terms of the Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Illumina Inc. (“Illumina”) and FC Ops Corp. (“Merger Subsidiary”), during the fourth quarter of 2019, Pacific Biosciences received cash payments totaling $18.0 million from Illumina (“Continuation Advances”), which are reflected as other income for the fourth quarter as well as for the year ended December 31, 2019.

Cash, cash equivalents and investments, excluding restricted cash, at December 31, 2019 totaled $49.1 million, compared to $102.4 million at December 31, 2018. 

Subsequent Events

As previously announced, on January 2, 2020, we and Illumina mutually agreed to terminate the Merger Agreement. As part of our agreement to terminate the Merger Agreement, Illumina subsequently paid us a $98 million reverse termination fee, from which we expect to pay our financial advisor associated fees of approximately $10 million. In addition, as previously agreed to pursuant to the terms of the Merger Agreement, Illumina paid us Continuation Advances of $6 million in January 2020 and $22 million in February 2020 and is scheduled to make one last Continuation Advance to us of $6 million in March 2020. Our Cash and Investments balance as of December 31, 2019 do not reflect the receipt of the reverse termination fee or the Continuation Advances, as such payments were received in the first quarter of 2020.

In February 2020, upon the maturity of the debt agreement that we entered into in February 2013, we repaid the remaining outstanding principal of $16.0 million.

Quarterly Conference Call Information

Management will host a quarterly conference call to discuss its fourth quarter and year ended December 31, 2019 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 # 7968618. The call will be webcast live and will be available for replay at Pacific Biosciences’ website at http://investor.pacificbiosciences.com/ .

About Pacific Biosciences

Pacific Biosciences of California, Inc. (NASDAQ: PACB) offers sequencing systems to help scientists resolve genetically complex problems. Based on its novel SMRT® Technology, Pacific Biosciences’ products enable: de novo genome assembly to finish genomes in order to more fully identify, annotate and decipher genomic structures; full-length transcript analysis to improve annotations in reference genomes, characterize alternatively spliced isoforms in important gene families, and find novel genes; targeted sequencing to more comprehensively characterize genetic variations; and real-time kinetic information for epigenome characterization. Pacific Biosciences’ technology provides high accuracy, ultra-long reads, uniform coverage, and the ability to simultaneously detect epigenetic changes. PacBio® sequencing systems, including consumables and software, provide a simple, fast, end-to-end workflow for SMRT Sequencing.

Forward-Looking Statements
All statements in this press release that are not historical are forward-looking statements, including, among other things, statements relating to cash payments to be received from Illumina and the use and the sufficiency of such payments, the timeline for Pacific Biosciences’ potential development and commercialization of products, future uses, quality or performance of, or benefits of using, products or technologies, the performance of the Sequel II System, 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’ Annual Report on Form 10-K when filed with the Securities and Exchange Commission.

Contact: Trevin Rard650.521.8450
ir@pacificbiosciences.com

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

 
 
    Three Months Ended December 31,     Twelve Months Ended December 31,
    2019      2018     2019     2018
Revenue:                      
Product revenue $  24,551     $  16,438     $  77,742     $  66,355  
Service and other revenue    3,379        3,088        13,149        12,271  
Total revenue    27,930        19,526        90,891        78,626  
Cost of Revenue:                      
Cost of product revenue    11,985        10,926        44,771        42,053  
Cost of service and other revenue    3,013        2,854        11,544        11,477  
Total cost of revenue    14,998        13,780        56,315        53,530  
Gross profit    12,932        5,746        34,576        25,096  
Operating Expense:                      
Research and development    14,273        16,263        59,630        62,594  
Sales, general and administrative    16,576        20,106        75,491        63,489  
Total operating expense    30,849        36,369        135,121        126,083  
Operating loss    (17,917 )      (30,623 )      (100,545 )      (100,987 )
Continuation Advances    18,000        —        18,000        —  
Interest expense    (678 )      (628 )      (2,611 )      (2,423 )
Other income, net    504        452        1,022        848  
Net loss $  (91 )   $  (30,799 )   $  (84,134 )   $  (102,562 )
Basic and diluted net loss per share $ (0.00 )   $  (0.21 )   $  (0.55 )   $  (0.76 )
Shares used in computing basic and diluted net loss per share    153,051        149,314        152,527        135,094  

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

           
           
  December 31,   December 31,
  2019   2018
Assets      
Cash and investments $  49,099   $  102,354
Accounts receivable    15,266      8,595
Inventory    13,312      17,878
Prepaid and other current assets    3,369      2,832
Property and equipment, net    30,070      34,073
Operating lease right-of-use assets, net    32,827      —
Long-term restricted cash    4,000      4,500
Other long-term assets    42      43
Total Assets $  147,985   $  170,275
           
Liabilities and Stockholders’ Equity          
Accounts payable $  8,368   $  6,736
Accrued expenses    13,242      12,823
Deferred revenue    9,561      7,427
Operating lease liabilities    45,801      —
Notes payable    15,871      14,659
Deferred rent    —      13,765
Other liabilities    225      788
Financing derivative    —      16
Stockholders’ equity    54,917      114,061
Total Liabilities and Stockholders’ Equity $  147,985   $  170,275
           

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Source: Pacific Biosciences of California, Inc.