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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           .

Commission File Number: 001-38319

QUANTERIX CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

20-8957988

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

900 Middlesex Turnpike

Billerica, MA

01821

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 301-9400

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class:

    

Trading Symbol(s)

    

Name of each exchange on which registered:

Common Stock, $0.001 par value per share

QTRX

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   No

As of November 1, 2022, the registrant had 37,054,705 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

TTABLE OF CONTENTS

Page

Special Note Regarding Forward-Looking Statements

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

4

Condensed Consolidated Balance Sheets at September 30, 2022 and December 31, 2021

4

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021

5

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021

6

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021

7

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021

8

Notes to Condensed Consolidated Financial Statements

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

32

Item 4. Controls and Procedures

32

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

33

Item 1A. Risk Factors

33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 3. Defaults Upon Senior Securities

34

Item 4. Mine Safety Disclosures

34

Item 5. Other Information

34

Item 6. Exhibits

35

Signatures

36

2

Table of Contents

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about our financial performance, including anticipated benefits and costs associated with our plan of restructuring announced in August 2022, and are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A , “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 or other filings that we make with the Securities and Exchange Commission, or SEC. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, events or circumstances reflected in the forward-looking statements will be achieved or occur. You should read this Quarterly Report on Form 10-Q, and the documents that we reference herein and have filed with the SEC, with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to new information, actual results or to changes in our expectations, except as required by law.

Unless the context otherwise requires, the terms “Quanterix,” the “Company,” “we,” “us” and “our” in this Quarterly Report on Form 10-Q refer to Quanterix Corporation and its subsidiaries. “Quanterix,” “Simoa,” “Simoa HD-X,” “Simoa HD-1,” “SR-X,” “SP-X,” “HD-X Analyzer,” “HD-1 Analyzer” and our logo are our trademarks. All other service marks, trademarks and trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

3

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Quanterix Corporation

Condensed Consolidated Balance Sheets

(amounts in thousands, except share and per share data)

September 30, 2022

    

December 31, 2021

Assets

Current assets:

 

  

Cash and cash equivalents

$

343,743

$

396,465

Accounts receivable (less allowance for credit losses of $521 and $419 as of September 30, 2022 and December 31, 2021, respectively)

 

18,330

 

23,786

Inventory

 

18,236

 

22,190

Prepaid expenses and other current assets

 

6,475

 

6,514

Total current assets

386,784

 

448,955

Restricted cash

 

2,596

 

2,577

Property and equipment, net

 

21,441

 

17,960

Intangible assets, net

 

7,511

 

10,534

Goodwill

 

 

9,632

Right-of-use assets

27,165

11,491

Other non-current assets

 

1,200

 

378

Total assets

$

446,697

$

501,527

Liabilities and stockholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

2,106

$

9,209

Accrued compensation and benefits

 

10,503

 

13,252

Other accrued expenses

 

5,951

 

6,486

Deferred revenue

 

8,976

 

6,361

Short-term lease liabilities

767

1,428

Other current liabilities

268

241

Total current liabilities

 

28,571

 

36,977

Deferred revenue, net of current portion

 

1,591

 

1,099

Long-term lease liabilities

42,196

20,464

Other non-current liabilities

 

1,570

 

2,035

Total liabilities

73,928

60,575

Commitments and contingencies (Note 14)

Stockholders’ equity:

 

  

 

  

Common stock, $0.001 par value:

 

 

Authorized shares: 120,000,000 at September 30, 2022 and December 31, 2021, respectively; Issued and outstanding: 37,093,601 shares and 36,768,035 shares at September 30, 2022 and December 31, 2021, respectively

 

37

 

37

Additional paid-in capital

 

759,312

 

745,936

Accumulated other comprehensive (loss) income

(2,999)

441

Accumulated deficit

 

(383,581)

 

(305,462)

Total stockholders’ equity

 

372,769

 

440,952

Total liabilities and stockholders’ equity

$

446,697

$

501,527

See accompanying notes

4

Table of Contents

Quanterix Corporation

Condensed Consolidated Statements of Operations

(amounts in thousands, except share and per share data)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2022

    

2021

2022

    

2021

Product revenue

$

17,693

$

20,662

$

53,134

$

57,586

Service and other revenue

 

8,370

 

5,898

 

25,728

 

17,955

Collaboration revenue

 

301

 

120

 

479

 

486

Grant revenue

282

1,009

357

4,242

Total revenue

 

26,646

 

27,689

 

79,698

 

80,269

Costs of goods sold:

 

  

 

  

 

  

 

  

Cost of product revenue

 

10,511

 

8,639

 

31,178

 

24,233

Cost of service and other revenue

 

5,191

 

3,806

 

14,306

 

10,569

Total costs of goods sold and services

 

15,702

 

12,445

 

45,484

 

34,802

Gross profit

10,944

15,244

34,214

45,467

Operating expenses:

 

  

 

  

 

  

 

  

Research and development

 

6,631

 

6,807

 

20,290

 

20,244

Selling, general and administrative

 

19,966

 

23,670

 

72,723

 

63,913

Other lease costs

609

609

Restructuring

3,426

3,426

Goodwill impairment

8,220

8,220

Impairment expense

8,695

8,695

Total operating expenses

 

47,547

 

30,477

 

113,963

 

84,157

Loss from operations

 

(36,603)

 

(15,233)

 

(79,749)

 

(38,690)

Interest income (expense), net

 

1,712

 

(90)

 

2,316

 

(418)

Other (expense) income, net

 

(101)

 

(305)

 

(676)

 

1,478

Loss before income taxes

(34,992)

(15,628)

(78,109)

(37,630)

Income tax provision

72

33

10

32

Net loss

$

(35,064)

$

(15,661)

$

(78,119)

$

(37,662)

Net loss per share, basic and diluted

$

(0.95)

$

(0.43)

$

(2.12)

$

(1.05)

Weighted-average common shares outstanding, basic and diluted

 

37,004,596

 

36,518,177

 

36,926,549

 

35,774,455

See accompanying notes

5

Table of Contents

Quanterix Corporation

Condensed Consolidated Statements of Comprehensive Loss

(amounts in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2022

    

2021

2022

    

2021

Net loss

$

(35,064)

$

(15,661)

$

(78,119)

$

(37,662)

Other comprehensive loss:

Foreign currency translation adjustment

(796)

(527)

(3,440)

(1,383)

Total other comprehensive loss

(796)

(527)

(3,440)

(1,383)

Comprehensive loss

$

(35,860)

$

(16,188)

$

(81,559)

$

(39,045)

See accompanying notes

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Quanterix Corporation

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

Nine Months Ended September 30, 

2022

    

2021

Operating activities

 

  

 

  

Net loss

$

(78,119)

$

(37,662)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

  

Depreciation and amortization expense

 

4,186

 

3,566

Credit loss expense on accounts receivable

102

286

Inventory step-up amortization

275

Non-cash operating lease expense

1,099

364

Stock-based compensation expense

 

11,779

 

11,044

Goodwill impairment

8,220

Impairment expense

8,695

Other non-cash items

39

65

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

5,045

 

(1,556)

Inventory

 

3,919

 

(8,431)

Prepaid expenses and other assets

 

(262)

 

(1,395)

Other non-current assets

 

(859)

 

(3)

Accounts payable

 

(7,085)

 

(972)

Accrued compensation and benefits, other accrued expenses and other current liabilities

 

(3,021)

 

(2,860)

Deferred revenue

 

3,108

 

674

Operating lease liabilities

(1,156)

(902)

Other non-current liabilities

128

(108)

Net cash used in operating activities

(44,182)

(37,615)

Investing activities

 

  

 

  

Purchases of property and equipment

 

(10,131)

 

(11,163)

Proceeds from RADx grant on assets purchased

520

7,019

Net cash used in investing activities

(9,611)

(4,144)

Financing activities

 

  

 

  

Proceeds from stock options exercised

 

716

 

6,607

Sale of common stock in underwritten public offering, net

269,718

Proceeds from ESPP purchase

 

881

 

1,065

Payments on notes payable

(5,744)

Net cash provided by financing activities

1,597

271,646

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(52,196)

 

229,887

Effect of foreign currency exchange rate on cash

(507)

(66)

Cash, cash equivalents and restricted stock at beginning of period

 

399,042

 

182,584

Cash, cash equivalents and restricted stock at end of period

$

346,339

$

412,405

Supplemental disclosure of cash flow information:

 

  

 

  

Cash paid for income taxes

$

263

$

320

Noncash transactions:

Purchases of property and equipment included in accounts payable and accrued expenses

$

198

$

306

Right-of-use asset obtained in exchange for lease liabilities

$

22,239

$

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

$

343,743

$

410,747

Restricted cash

2,596

1,658

Total cash, cash equivalents, and restricted cash

$

346,339

$

412,405

See accompanying notes

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Quanterix Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(amounts in thousands, except share data)

Three Months Ended September 30,

Common stock

Shares

    

Value

    

Additional paid-in capital

    

Accumulated other comprehensive income (loss)

    

Accumulated deficit

    

Total stockholders' equity

Balance at June 30, 2022

36,974,827

$

37

$

756,139

$

(2,203)

$

(348,517)

 

$

405,456

Issuance of capital shares:

Exercised stock options

33,450

120

 

120

−Restricted units converted

45,519

ESPP stock purchase

37,036

287

 

287

−Issuance of common stock

2,769

Stock-based compensation expense

2,766

2,766

Cumulative translation adjustment

(796)

(796)

Net loss

(35,064)

(35,064)

Balance at September 30, 2022

37,093,601

 

$

37

 

$

759,312

 

$

(2,999)

$

(383,581)

 

$

372,769

Balance at June 30, 2021

36,454,369

$

37

$

734,170

$

1,578

$

(269,775)

 

$

466,010

Issuance of capital shares:

Exercised stock options

63,097

1,138

 

1,138

−Restricted units converted

43,902

ESPP stock purchase

11,812

546

546

−Issuance of common stock

952

Stock-based compensation expense

4,008

4,008

Cumulative translation adjustment

(527)

(527)

Net loss

(15,661)

(15,661)

Balance at September 30, 2021

36,574,132

 

$

37

 

$

739,862

 

$

1,051

$

(285,436)

 

$

455,514

Nine Months Ended September 30,

Common stock

Shares

    

Value

    

Additional paid-in capital

    

Accumulated other comprehensive income (loss)

    

Accumulated deficit

    

Total stockholders' equity

Balance at December 31, 2021

36,768,035

$

37

$

745,936

$

441

$

(305,462)

 

$

440,952

Issuance of capital shares:

Exercised stock options

117,986

716

 

716

−Restricted units converted

144,553

ESPP stock purchase

57,485

881

 

881

−Issuance of common stock

5,542

Stock-based compensation expense

11,779

11,779

Cumulative translation adjustment

(3,440)

(3,440)

Net loss

(78,119)

(78,119)

Balance at September 30, 2022

37,093,601

 

$

37

 

$

759,312

 

$

(2,999)

$

(383,581)

 

$

372,769

Balance at December 31, 2020

31,796,544

$

32

$

451,433

$

2,434

$

(247,774)

 

$

206,125

Issuance of capital shares:

Exercised warrants

7,347

Exercised stock options

455,476

1

6,606

 

6,607

−Restricted units converted

175,526

ESPP stock purchase

29,037

1,065

 

1,065

−Issuance of common stock

3,060

Sale of common stock in underwritten public offering, net

4,107,142

4

269,714

269,718

Stock-based compensation expense

11,044

11,044

Cumulative translation adjustment

(1,383)

(1,383)

Net loss

(37,662)

(37,662)

Balance at September 30, 2021

36,574,132

 

$

37

 

$

739,862

 

$

1,051

$

(285,436)

 

$

455,514

See accompanying notes

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Quanterix Corporation

Notes to condensed consolidated financial statements

1. Organization and operations

Quanterix Corporation (Nasdaq: QTRX) (the Company) is a life sciences company that has developed next generation, ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics. The Company's platforms are based on its proprietary digital “Simoa” detection technology. The Company's Simoa bead-based and planar array platforms enable customers to reliably detect protein biomarkers in extremely low concentrations in blood, serum and other fluids that, in many cases, are undetectable using conventional, analog immunoassay technologies, and also allow researchers to define and validate the function of novel protein biomarkers that are only present in very low concentrations. These capabilities provide the Company's customers with insight into the role of protein biomarkers in human health that has not been possible with other existing technologies and enable researchers to unlock unique insights into the continuum between health and disease. The Company is currently focusing on protein detection, which it believes is an area of significant unmet need and where it has significant competitive advantages. In addition to enabling new applications and insights in protein analysis, the Company’s Simoa platforms have also demonstrated applicability across other testing applications, including detection of nucleic acids and small molecules.

The Company launched its first immunoassay platform, the Simoa HD-1 (HD-1), in 2014. The HD-1 is a fully automated immunoassay bead-based platform with multiplexing and custom assay capability, and related assay test kits and consumable materials. In the fourth quarter of 2017, the Company launched a second bead-based immunoassay platform (SR-X) with a more compact footprint than the HD-1 and less automation designed for lower volume requirements while still allowing multiplexing and custom assay capability. The Company initiated an early-access program for its third instrument (SP-X) on the new Simoa planar array platform in January 2019, with the full commercial launch commencing in April 2019. In July 2019, the Company launched the Simoa HD-X, an upgraded version of the HD-1 and phased out the HD-1. The HD-X has been designed to deliver significant productivity and operational efficiency improvements, as well as greater user flexibility. The Company began shipping and installing HD-X instruments at customer locations in the third quarter of 2019. The Company also performs research services on behalf of customers to apply the Simoa technology to specific customer needs. The Company's customers are primarily in the research use only market, which includes academic and governmental research institutions, the research and development laboratories of pharmaceutical manufacturers, contract research organizations, and specialty research laboratories.

Basis of presentation

The interim condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements reflect, in the opinion of the Company’s management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, comprehensive loss and cash flows for each period presented and have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022.

Reclassifications

Certain amounts in the prior years’ consolidated financial statements have been reclassified to conform to the current year’s presentation.

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2. Significant accounting policies

The significant accounting policies and estimates used in the preparation of the accompanying consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022. Except as noted below, there have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2022.

Goodwill

Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable net assets assumed in a business combination. Goodwill is assessed for impairment at least annually, on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. Reporting units are one level below the business segment level but can be combined when reporting units within the same segment have similar economic characteristics. The Company operates within a single operating segment with one reporting unit. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. If the book value of a reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded in an amount equal to that excess. See Note 9 regarding assessment of the Company’s goodwill in the three months ended September 30, 2022.

Long-lived assets

The Company accounts for long-lived assets including property and equipment and long-lived amortizable intangible assets in accordance with ASC Topic No. 360, Property, Plant and Equipment, (ASC 360). ASC 360 requires companies to assess whether indicators of impairment are present on a periodic basis. If such indicators are present, ASC 360 prescribes a two-step impairment test: (i) if the carrying amount of a long-lived asset is not recoverable based on its undiscounted future cash flows, then (ii) the impairment loss is measured as the difference between the carrying amount and the fair value of the asset based on the forecasted discounted cash flows of the asset. See Note 12 for details regarding an impairment assessment of the Company’s long-lived assets, including right-of-use-assets, in the three months ended September 30, 2022.

Restructuring

The Company records charges associated with approved restructuring plans to reorganize operations, to improve the efficiency of business processes, or to remove redundant headcount. Restructuring charges can include severance costs to eliminate a specific number of employees, associated legal fees and contract cancellation costs. The Company records restructuring charges when they are probable and estimable. The Company accrues for severance and other employee separation costs under these plans when employees accept the separation offers, and the amounts can be reasonably estimated. The Company implemented a restructuring plan (as defined herein) during the three months ended September 30, 2022 details of which are discussed in Note 17.

Other lease costs 

As part of the Restructuring Plan, the Company is not utilizing the office and laboratory space leased in Bedford, Massachusetts, and is evaluating alternatives uses for the facilities, including terminating the lease or sub-leasing the facilities. Other lease costs on the consolidated statements of operations includes lease expenses and other facilities costs associated with these facilities for the periods after the determination the facilities would not be utilized.  

3. Revenue recognition

The Company recognizes revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects consideration that the Company expects to be entitled to receive in exchange for these

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goods and services, incentives and taxes collected from customers that are subsequently remitted to governmental authorities.

Customers

The Company’s customers primarily consist of entities engaged in the life sciences research market that pursue the discovery and development of new drugs for a variety of neurologic, cardiovascular, oncologic and other protein biomarkers associated with diseases. The Company’s customer base includes several of the largest biopharmaceutical companies, academic research organizations and distributors who serve certain geographic markets.

Product revenue

The Company’s products are composed of analyzer instruments, assay kits and other consumables such as reagents. Products are sold directly to biopharmaceutical and academic research organizations or are sold through distributors in EMEA and Asia Pacific regions. The sales of instruments are generally accompanied by an initial year of implied service-type warranties and may be bundled with assays and other consumables and may also include other items such as training and installation of the instrument and/or an extended service warranty. Revenues from the sale of products are recognized at a point in time when the Company transfers control of the product to the customer, which is generally upon installation for instruments sold to direct customers, and based upon shipping terms for assay kits and other consumables. Revenue for instruments sold to distributors is generally recognized based upon shipping terms (either upon shipment or delivery).

Service and other revenue

Service revenues are composed of contract research services, initial implied one-year service-type warranties, extended services contracts and other services such as training. Contract research services are provided through the Company’s Accelerator Laboratory and generally consist of fixed fee contracts. Revenues from contract research services are recognized at a point in time when the Company completes and delivers its research report on each individually completed study, or over time if the contractual provisions allow for the collection of transaction consideration for costs incurred plus a reasonable margin through the period of performance of the services. Revenues from service-type warranties are recognized ratably over the contract service period. For contract research services recognized over time, the Company uses the output method to measure the progress toward the complete satisfaction of the performance obligations. Revenues from other services are immaterial.

During the first quarter of 2022, the Company entered into a Master Collaboration Agreement with Eli Lilly and Company (Lilly) establishing a framework for future projects focused on the development of Simoa immunoassays (the Lilly Collaboration Agreement). The Company also entered into a Statement of Work under the Lilly Collaboration Agreement to perform assay research and development services within the field of Alzheimer’s disease. In connection with the Lilly Collaboration Agreement, the Company received a non-refundable up-front payment of $5.0 million during the first quarter of 2022, and under the Statement of Work receives $1.5 million per calendar quarter during 2022, beginning with the first quarter of 2022. The revenue will be recognized over a one-year period.

Concurrent with the execution of the Lilly Collaboration Agreement, the Company entered into a Technology License Agreement (the Lilly License) under which Lilly granted to the Company a non-exclusive license to Lilly’s proprietary P-tau217 antibody technology for potential near-term use in research use only products and services and future in vitro diagnostics applications within the field of Alzheimer’s disease. In consideration of the license, the Company paid an upfront fee, is required to make milestone payments based on the achievement of predetermined regulatory and commercial events, and will pay a royalty on net sales of licensed products.

The Company concluded that the Lilly Collaboration Agreement (including the Statement of Work) and the Lilly License represented a single contract with a customer and is accounting for the agreements as service revenue recognized over time as the services are delivered. The transaction price for the Lilly Collaboration Agreement is $10.9 million. Contingent amounts due to Lilly represent variable consideration payable to a customer and will be recognized as reductions to service revenue up to the amount of the transaction price recognized, when probable. The Company is

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utilizing an input method to measure the delivery of services by calculating costs incurred at each period end relative to total costs expected to be incurred.

During the three and nine months ended September 30, 2022, the Company recognized approximately $2.7 million and $8.1 million, respectively, of revenue from the Lilly Collaboration Agreement.

Collaboration and license revenue

The Company may enter into agreements to license the intellectual property and know-how associated with its instruments and certain antibodies in exchange for license fees and future royalties (as described below). The license agreements provide the licensee with a right to use the intellectual property with the license fee revenues recognized at a point in time as the underlying license is considered functional intellectual property.

Payment terms

The Company’s payment terms vary by the type and location of the customer and the products or services offered. Payment from customers is generally required in a term ranging from 30 to 45 days from date of shipment or satisfaction of the performance obligation. The Company does not provide financing arrangements to its customers.

Disaggregated revenue

When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. The following tables disaggregate the Company’s revenue from contracts with customers by revenue type (in thousands):

Three Months Ended September 30, 2022

 

Three Months Ended September 30, 2021

North America

    

 EMEA

    

 Asia Pacific

    

 Total

North America

    

 EMEA

    

 Asia Pacific

    

 Total

Product revenues

Instruments

$

2,964

3,115

1,684

$

7,763

$

3,492

$

1,644

$

1,338

 

$

6,474

Consumable and other products

6,262

2,840

828

9,930

8,915

4,483

790

 

14,188

Total

$

9,226

5,955

2,512

$

17,693

$

12,407

 

$

6,127

 

$

2,128

 

$

20,662

Service and other revenues

Service-type warranties

$

1,454

$

703

$

125

$

2,282

$

1,112

$

556

$

66

 

$

1,734

Research services

5,246

305

44

 

5,595

2,998

604

50

 

3,652

Other services

315

142

36

493

465

47

 

512

Total

$

7,015

$

1,150

$

205

$

8,370

$

4,575

$

1,207

$

116

$

5,898

Collaboration and license revenue

Collaboration and license revenue

$

136

$

165

$

$

301

$

73

$

47

$

$

120

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Nine Months Ended September 30, 2022

 

Nine Months Ended September 30, 2021

North America

    

 EMEA

    

 Asia Pacific

    

 Total

North America

    

 EMEA

    

 Asia Pacific

    

 Total

Product revenues

Instruments

$

7,602

$

7,288

$

4,699

$

19,589

$

9,370

$

6,107

$

3,796

$

19,273

Consumable and other products

19,814

10,854

2,877

33,545

24,638

11,227

2,448

38,313

Total

$

27,416

 

$

18,142

 

$

7,576

 

$

53,134

$

34,008

 

$

17,334

 

$

6,244

 

$

57,586

Service and other revenues

Service-type warranties

$

4,057

$

2,050

$

341

$

6,448

$

3,181

$

1,452

$

179

$

4,812

Research services

16,853

752

65

 

17,670

9,285

2,095

89

 

11,469

Other services

916

590

104

1,610

1,271

403

1,674

Total

$

21,826

$

3,392

$

510

$

25,728

$

13,737

$

3,950

$

268

$

17,955

Collaboration and license revenue

Collaboration and license revenue

$

179

$

248

$

52

$

479

$

301

$

185

$

$

486

For the three and nine months ended September 30, 2022, two customers accounted for 14.1% and 11.1%, respectively, of the Company’s total revenue. At September 30, 2022, two customers individually accounted for 13.4% and 10.1%, respectively, of the Company’s gross accounts receivable.

The Company’s contracts with customers may include promises to transfer multiple products and services to a customer. The Company combines any performance obligations that are immaterial with one or more other performance obligations that are material to the contract. For arrangements with multiple performance obligations, the Company allocates the contract transaction price, including discounts, to each performance obligation based on its relative standalone selling price. Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company determines standalone selling prices based on prices charged to customers in observable transactions and uses a range of amounts to estimate standalone selling prices for each performance obligation. The Company may have more than one range of standalone selling price for certain products and services based on the pricing for different customer classes.

Variable consideration in the Company’s contracts primarily relates to (i) sales- and usage-based royalties related to the license of intellectual property in collaboration and license contracts and (ii) certain non-fixed fee research services contracts. Accounting Standard Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606) provides for an exception to estimating the variable consideration for sales- and usage-based royalties related to the license of intellectual property, such that the sales- and usage-based royalty will be recognized in the period the underlying transaction occurs. The Company recognizes revenue from sales- and usage-based royalty revenue at the later of when the sale or usage occurs and the satisfaction or partial satisfaction of the performance obligation to which the royalty has been allocated.

Changes in deferred revenue from contracts with customers were as follows (in thousands):

2022

2021

Balance at December 31

$

7,460

$

5,998

Deferral of revenue

 

9,559

 

5,486

Recognition of deferred revenue

 

(6,452)

 

(4,812)

Balance at September 30

$

10,567

$

6,672

As of September 30, 2022, of the performance obligations not yet satisfied or partially satisfied, $9.0 million is expected to be recognized as revenue in the next 12 months, with the remainder to be recognized within the 24 months thereafter. The $9.0 million at September 30, 2022 principally consists of amounts billed for undelivered services related

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to initial and extended service-type warranties and research services, as well as $0.5 million related to undelivered licenses of intellectual property for a diagnostics company (see Note 5).

Costs to obtain a contract

The Company’s sales commissions are generally based on bookings of the Company. The Company has determined that certain commissions paid under its sales incentive programs meet the requirements to be capitalized as they are incremental and would not have occurred absent a customer contract. The change in the balance of costs to obtain a contract are as follows (in thousands):

2022

2021

Balance at December 31

$

440

$

248

Deferral of costs to obtain a contract

 

1,182

 

558

Recognition of costs to obtain a contract

 

(914)

 

(435)

Balance at September 30

$

708

$

371

The Company has classified the balance of capitalized costs to obtain a contract as a component of prepaid expenses and other current assets and classifies the expense as a component of cost of goods sold and selling, general, and administrative expense over the estimated life of the contract. The Company considers potential impairment in these amounts each period.

ASC 606 provides entities with certain practical expedients and accounting policy elections to minimize the cost and burden of adoption.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.

The Company will exclude from its transaction price any amounts collected from customers related to sales and other similar taxes.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. The Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of September 30, 2022 and 2021, respectively.

The Company has elected to account for the shipping and handling as an activity to fulfill the promise to transfer the product, and therefore will not evaluate whether shipping and handling activities are promised services to its customers.

Grant revenue

The Company recognizes grant revenue as the Company performs services under the arrangement when the funding is committed. Revenues and related research and development expenses are presented gross in the consolidated statements of operations as the Company has determined it is the primary obligor under the arrangement relative to the research and development services.

Accounting for grants does not fall under ASC 606, as the grantor will not benefit directly from the Company’s expansion or product development. As there is no authoritative guidance under U.S. GAAP on accounting for grants to for-profit business entities from government entities, the Company has accounted for grants obtained with the National Institute of Health (NIH) under its Rapid Acceleration of Diagnostics (RADx) program by analogy to International Accounting Standards Topic 20, Accounting for Government Grants and Disclosure of Government Assistance (IAS 20).

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The Company accounts for grants from the Alzheimer’s Drug Discovery Foundation (ADDF) under ASC Topic 958, Not-for-Profit Entities (ASC 958).

Under IAS 20, grants related to assets shall be presented in the consolidated balance sheets either by recognizing the grant as deferred income (which is recognized in the consolidated statements of operations on a systematic basis over the useful life of the asset), or by deducting the grant in calculating the carrying amount of the asset (which is recognized in the consolidated statements of operations over the life of the depreciable asset as a reduced depreciation expense). Both methods are acceptable under IAS 20. The Company has elected to record grants related to assets as a deduction in calculating the carrying value of the asset.

Under IAS 20, grants related to income are presented as part of the consolidated statements of operations, either separately or under a general heading. Both methods are acceptable under IAS 20. The Company has elected to record grants related to income separately on the consolidated statements of operations as grant revenue. The related expenses are recorded within operating expenses.

Under ASC 958, grants related to income are presented as part of the consolidated statements of operations, either separately or under a general heading. Both methods are acceptable under ASC 958. The Company has elected to record grants related to income separately on the consolidated statements of operations as grant revenue. The related expenses are recorded within operating expenses.

RADx grant

On September 29, 2020, the Company entered into a contract with RADx (the RADx Grant), which had a total award value of $18.2 million and accelerated the continued development, scale-up, and deployment of the novel SARS-CoV-2 antigen detection test using the Company’s Simoa technology. The RADx Grant provided funding to expand assay kit manufacturing capacity and commercial deployment readiness. Release of the $18.2 million of funding under the RADx Grant was based on the achievement of certain milestones. Contract funding was subject to achievement of these pre-defined milestones and the contract period ran through September 2021, with one milestone extending to May 31, 2022. The Company has received the full $18.2 million under the RADx Grant and the Company has no future obligations under the RADx Grant.

During the three and nine months ended September 30, 2022, the Company recognized no grant revenue and incurred no research and development expense related to the RADx Grant. During the three months ended September 30, 2021, the Company recognized $1.0 million in grant revenue and incurred $0.5 million in research and development expense related to the RADx grant. During the nine months ended September 30, 2021, the Company recognized $4.2 million in grant revenue and incurred $3.4 million in research and development expense related to the RADx Grant.

The RADx Grant contains both monetary amounts granted related to assets and monetary amounts granted related to income, which are grants other than those related to assets. The grants related to assets are for the expansion and increase of manufacturing capacity. The grants related to income are for additional research and development, as well as other non-asset related scale up costs.

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The following table summarizes the cumulative activity under the RADx Grant (in thousands):

September 30, 2022

    

December 31, 2021

Grant revenue from research and development activities

$

9,576

$

9,576

Proceeds used for assets

8,624

8,104

Deferred proceeds for assets

Deferred grant revenue

Total recognized

$

18,200

$

17,680

Recognized

$

18,200

$

17,680

Amount accrued

Total cash received

$

18,200

$