qtrx_Current_Folio_10Q_Taxonomy2018

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, 2019

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 October 31, 2019, the registrant had 28,014,764 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

Table of Contents

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

Special Note Regarding Forward-Looking Statements 

 

 

PART I — FINANCIAL INFORMATION 

 

 

 

Item 1. Financial Statements 

4

Unaudited Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 

4

Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 

5

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2019 and 2018 

6

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 

7

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018 

9

Notes to Condensed Consolidated Financial Statements 

10

 

 

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

25

 

 

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 

33

 

 

Item 3. Defaults Upon Senior Securities 

33

 

 

Item 4. Mine Safety Disclosures 

33

 

 

Item 5. Other Information 

33

 

 

Item 6. Exhibits 

34

 

 

Signatures 

35

 

 

2

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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, and are subject to a number of risks, uncertainties and assumptions, including those described in this Quarterly Report on Form 10-Q and in “Part I, Item 1A, Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018 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-1,” “SR-X,” “HD-1 Analyzer,” “SP-X” 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

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Quanterix Corporation

Condensed Consolidated Balance Sheets

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

 

 

 

 

 

 

 

 

 

    

(Unaudited)

    

 

 

    

September 30, 2019

    

December 31, 2018

Assets

 

 

 

 

 

 

Current assets:

 

 

  

 

 

  

Cash and cash equivalents

 

$

113,327

 

$

44,429

Accounts receivable (less reserve for doubtful accounts of $98 and $36 as of September 30, 2019 and December 31, 2018, respectively; including $321 and $48 from related parties as of September 30, 2019 and December 31, 2018, respectively)

 

 

11,914

 

 

6,792

Inventory

 

 

11,161

 

 

5,945

Prepaid expenses and other current assets

 

 

2,297

 

 

2,330

Total current assets

 

 

138,699

 

 

59,496

Restricted cash

 

 

1,026

 

 

1,000

Property and equipment, net

 

 

12,064

 

 

2,923

Intangible assets, net

 

 

14,221

 

 

2,348

Goodwill

 

 

8,961

 

 

1,308

Other non-current assets

 

 

574

 

 

536

Total assets

 

$

175,545

 

$

67,611

Liabilities and stockholders’ equity

 

 

  

 

 

  

Current liabilities:

 

 

  

 

 

  

Accounts payable (including $0 and $36 to related parties as of September 30, 2019 and December 31, 2018, respectively)

 

$

4,245

 

$

5,110

Accrued compensation and benefits

 

 

5,251

 

 

4,449

Other accrued expenses (including $258 and $226 to related parties as of September 30, 2019 and December 31, 2018, respectively)

 

 

3,539

 

 

3,129

Deferred revenue (including $62 and $33 with related parties as of September 30, 2019 and December 31, 2018, respectively)

 

 

4,909

 

 

5,437

Current portion of long term debt

 

 

75

 

 

 —

Other current liabilities

 

 

204

 

 

 —

Total current liabilities

 

 

18,223

 

 

18,125

Deferred revenue, net of current portion

 

 

357

 

 

520

Long term debt, net of current portion

 

 

7,565

 

 

7,623

Other non-current liabilities

 

 

13,165

 

 

278

Total liabilities

 

 

39,310

 

 

26,546

Commitments and contingencies (Note 10)

 

 

  

 

 

  

Stockholders’ equity:

 

 

  

 

 

  

Common stock, $0.001 par value:

 

 

  

 

 

  

Authorized—120,000,000 shares as of September 30, 2019 and December 31, 2018; issued and outstanding — 27,967,713 and 22,369,036 shares as of September 30, 2019 and December 31, 2018, respectively

 

 

28

 

 

22

Additional paid-in capital

 

 

342,628

 

 

216,931

Accumulated other comprehensive loss

 

 

(1,135)

 

 

 —

Accumulated deficit

 

 

(205,286)

 

 

(175,888)

Total stockholders’ equity

 

 

136,235

 

 

41,065

Total liabilities and stockholders’ equity

 

$

175,545

 

$

67,611

 

See accompanying notes

4

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Quanterix Corporation

Condensed Consolidated Statements of Operations

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

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

 

    

2019

    

2018

    

2019

    

2018

 

Product revenue (including related party activity of $321 and $43 for the three months ended September 30, 2019 and 2018, respectively, and $526 and $179 for the nine months ended September 30, 2019 and 2018, respectively)

 

$

10,737

 

$

5,962

 

$

29,059

 

$

15,907

 

Service and other revenue (including related party activity of $31 and $34 for the three months ended September 30, 2019 and 2018, respectively, and $73 and $100 for the nine months ended September 30, 2019 and 2018, respectively)

 

 

4,207

 

 

3,017

 

 

11,757

 

 

8,699

 

Collaboration and license revenue (including related party activity of $0 and $1,612 for the three months ended September 30, 2019 and 2018, respectively, and $0 and $2,149 for the nine months ended September 30, 2019 and 2018, respectively)

 

 

 —

 

 

1,612

 

 

 —

 

 

2,149

 

Total revenue

 

 

14,944

 

 

10,591

 

 

40,816

 

 

26,755

 

Costs of goods sold:

 

 

 

 

 

 

 

 

 

 

 

  

 

Cost of product revenue (including related party activity of $80 and $36 for the three months ended September 30, 2019 and 2018, respectively, and $150 and $158 for the nine months ended September 30, 2019 and 2018, respectively; including stock compensation of $31 and $20 for the three months ended September 30, 2019 and 2018, respectively, and $75 and $49 for the nine months ended September 30, 2019 and 2018, respectively)

 

 

5,513

 

 

3,277

 

 

14,217

 

 

8,995

 

Cost of services and other revenue (including stock compensation of $58 and $38 for the three months ended September 30, 2019 and 2018, respectively, and $175 and $121 for the nine months ended September 30, 2019 and 2018, respectively)

 

 

2,398

 

 

1,719

 

 

6,630

 

 

5,021

 

Total costs of goods sold and services

 

 

7,911

 

 

4,996

 

 

20,847

 

 

14,016

 

Gross profit

 

 

7,033

 

 

5,595

 

 

19,969

 

 

12,739

 

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

  

 

Research and development (including stock compensation of $175 and $152 for the three months ended September 30, 2019 and 2018, respectively, and $523 and $361 for the nine months ended September 30, 2019 and 2018, respectively)

 

 

3,924

 

 

4,411

 

 

11,792

 

 

11,759

 

Selling, general and administrative (including stock compensation of $1,564 and $1,657 for the three months ended September 30, 2019 and 2018, respectively, and $3,940 and $2,862 for the nine months ended September 30, 2019 and 2018, respectively)

 

 

13,352

 

 

8,846

 

 

38,293

 

 

23,117

 

Total operating expenses

 

 

17,276

 

 

13,257

 

 

50,085

 

 

34,876

 

Loss from operations

 

 

(10,243)

 

 

(7,662)

 

 

(30,116)

 

 

(22,137)

 

Interest income (expense), net

 

 

282

 

 

30

 

 

346

 

 

21

 

Other income (expense), net

 

 

(34)

 

 

(25)

 

 

(149)

 

 

(86)

 

Loss before income tax

 

 

(9,995)

 

 

(7,657)

 

 

(29,919)

 

 

(22,202)

 

Income tax benefit

 

 

(125)

 

 

 —

 

 

(81)

 

 

 —

 

Net loss

 

$

(9,870)

 

$

(7,657)

 

$

(29,838)

 

$

(22,202)

 

Net loss per share, basic and diluted

 

$

(0.37)

 

$

(0.35)

 

$

(1.24)

 

$

(1.01)

 

Weighted-average common shares outstanding, basic and diluted

 

 

26,627,831

 

 

22,070,786

 

 

24,102,887

 

 

21,917,823

 

 

See accompanying notes

5

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Quanterix Corporation

Condensed Consolidated Statements of Comprehensive Loss

(amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

 

2019

    

2018

    

2019

    

2018

Net loss

 

$

(9,870)

 

$

(7,657)

 

$

(29,838)

 

$

(22,202)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation adjustment

 

 

(1,135)

 

 

 -

 

 

(1,135)

 

 

 -

Total other comprehensive loss

 

 

(1,135)

 

 

 -

 

 

(1,135)

 

 

 -

Comprehensive loss

 

$

(11,005)

 

$

(7,657)

 

$

(30,973)

 

$

(22,202)

 

 

 

6

Table of Contents

 

Quanterix Corporation

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 

 

 

2019

    

2018

Operating activities

 

 

  

 

 

  

Net loss

 

$

(29,838)

 

$

(22,202)

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

 

 

 

 

 

  

Depreciation and amortization expense

 

 

2,188

 

 

1,020

Stock-based compensation expense

 

 

4,713

 

 

3,393

Non-cash interest expense

 

 

68

 

 

133

Loss on disposal of fixed assets

 

 

24

 

 

 —

Change in fair value of preferred stock warrants

 

 

 —

 

 

 1

Changes in operating assets and liabilities:

 

 

 

 

 

  

Accounts receivable

 

 

(4,474)

 

 

1,160

Prepaid expenses and other assets

 

 

(104)

 

 

(753)

Inventory

 

 

(3,943)

 

 

(976)

Other non-current assets

 

 

(21)

 

 

(33)

Accounts payable

 

 

(835)

 

 

152

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

 

 

573

 

 

(55)

Contract acquisition costs

 

 

533

 

 

 —

Other non-current liabilities

 

 

10,068

 

 

 —

Deferred revenue

 

 

(604)

 

 

(2,453)

Net cash used in operating activities

 

 

(21,652)

 

 

(20,613)

Investing activities

 

 

  

 

 

  

Purchases of property and equipment

 

 

(10,303)

 

 

(1,397)

Purchase of investments

 

 

 —

 

 

(150)

Acquisitions, net of cash acquired

 

 

(14,529)

 

 

(3,800)

Net cash used in investing activities

 

 

(24,832)

 

 

(5,347)

Financing activities

 

 

  

 

 

  

Proceeds from sale of common stock, net of issuance costs

 

 

 —

 

 

(53)

Proceeds from stock options exercised

 

 

2,176

 

 

684

Net proceeds from at-the-market offering

 

 

48,019

 

 

 —

Net proceeds from underwritten public offering

 

 

64,529

 

 

 —

Proceeds from ESPP purchase

 

 

799

 

 

 —

Payments on notes payable

 

 

(50)

 

 

(1,930)

Net cash provided by (used in) financing activities

 

 

115,473

 

 

(1,299)

Net increase (decrease) in cash and cash equivalents

 

 

68,989

 

 

(27,259)

Effect of foreign currency exchange rate on cash

 

 

(65)

 

 

 —

Cash, restricted cash, and cash equivalents at beginning of period

 

 

45,429

 

 

79,682

Cash, restricted cash, and cash equivalents at end of period

 

$

114,353

 

$

52,423

Supplemental cash flow information

 

 

  

 

 

  

Cash paid for interest

 

$

478

 

$

506

Purchases of property and equipment included in accounts payable

 

$

45

 

$

 —

191,152 shares of common stock issued in connection with the acquisition of Uman

 

$

5,467

 

$

 —

Purchases of property and equipment included in other non-current liabilities

 

$

7,750

 

$

 —

Reconciliation of cash, cash equivalents, and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

113,327

 

$

51,423

Restricted cash

 

$

1,026

 

$

1,000

Total cash, cash equivalents, and restricted cash

 

$

114,353

 

$

52,423

See accompanying notes

7

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Quanterix Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(amounts in thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

other

 

 

 

 

Total

 

 

Common

 

Common

 

paid-in

 

comprehensive

 

Accumulated

 

stockholders’

 

    

stock shares

    

stock value

    

capital

    

loss

 

deficit

    

equity

Balance at June 30, 2019

 

24,894,019

 

$

25

 

$

270,136

 

$

 —

 

$

(195,416)

 

$

74,745

Exercise of common stock warrants

 

45,690

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Exercise of common stock options and vesting of restricted stock

 

87,476

 

 

 —

 

 

265

 

 

 —

 

 

 —

 

 

265

Sale of common stock in underwritten public offering, net

 

2,732,673

 

 

 3

 

 

64,526

 

 

 —

 

 

 —

 

 

64,529

Issuance of shares for acquisition of Uman

 

191,152

 

 

 —

 

 

5,467

 

 

 —

 

 

 —

 

 

5,467

ESPP stock purchase

 

16,703

 

 

 —

 

 

406

 

 

 —

 

 

 —

 

 

406

Stock-based compensation expense

 

 —

 

 

 —

 

 

1,828

 

 

 —

 

 

 —

 

 

1,828

Cumulative transition adjustment

 

 —

 

 

 —

 

 

 —

 

 

(1,135)

 

 

 —

 

 

(1,135)

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(9,870)

 

 

(9,870)

Balance at September 30, 2019

 

27,967,713

 

$

28

 

$

342,628

 

$

(1,135)

 

$

(205,286)

 

$

136,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

other

 

 

 

 

Total

 

 

Common

 

Common

 

paid-in

 

comprehensive

 

Accumulated

 

stockholders’

 

    

stock shares

    

stock value

    

capital

    

loss

 

deficit

    

equity

Balance at June 30, 2018

 

21,980,681

 

$

22

 

$

212,050

 

$

 —

 

$

(158,897)

 

$

53,175

Exercise of common stock options and vesting of restricted stock

 

170,729

 

 

 —

 

 

303

 

 

 —

 

 

 —

 

 

303

Stock-based compensation expense

 

 —

 

 

 —

 

 

1,867

 

 

 —

 

 

 —

 

 

1,867

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(7,657)

 

 

(7,657)

Balance at September 30, 2018

 

22,151,410

 

$

22

 

$

214,220

 

$

 —

 

$

(166,554)

 

$

47,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

other

 

 

 

 

Total

 

 

Common

 

Common 

 

paid-in

 

comprehensive

 

Accumulated

 

stockholders’

 

    

 stock shares

    

stock value

    

capital

    

loss

 

 deficit

    

equity

Balance at December 31, 2018

 

22,369,036

 

$

22

 

$

216,931

 

$

 —

 

$

(175,888)

 

$

41,065

Cumulative-effect adjustment for the adoption of ASC 606

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

440

 

 

440

Exercise of common stock warrants

 

45,690

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Exercise of common stock options and vesting of restricted stock

 

406,246

 

 

 1

 

 

2,175

 

 

 —

 

 

 —

 

 

2,176

Sale of common stock in at-the-market offering, net

 

2,186,163

 

 

 2

 

 

48,017

 

 

 —

 

 

 —

 

 

48,019

Sale of common stock in underwritten public offering, net

 

2,732,673

 

 

 3

 

 

64,526

 

 

 —

 

 

 —

 

 

64,529

Issuance of shares for acquisition of Uman

 

191,152

 

 

 —

 

 

5,467

 

 

 —

 

 

 —

 

 

5,467

ESPP stock purchase

 

36,753

 

 

 —

 

 

799

 

 

 —

 

 

 —

 

 

799

Stock-based compensation expense

 

 —

 

 

 —

 

 

4,713

 

 

 —

 

 

 —

 

 

4,713

Cumulative transition adjustment

 

 —

 

 

 —

 

 

 —

 

 

(1,135)

 

 

 —

 

 

(1,135)

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(29,838)

 

 

(29,838)

Balance at September 30, 2019

 

27,967,713

 

$

28

 

$

342,628

 

$

(1,135)

 

$

(205,286)

 

$

136,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

other

 

 

 

 

Total

 

 

Common

 

Common 

 

paid-in

 

comprehensive

 

Accumulated

 

stockholders’

 

    

stock shares

    

stock value

    

capital

    

loss

 

deficit

    

equity

Balance at December 31, 2017

 

21,707,041

 

$

22

 

$

210,196

 

$

 —

 

$

(144,352)

 

$

65,866

Exercise of common stock warrants

 

16,718

 

 

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Exercise of common stock options and vesting of restricted stock

 

427,651

 

 

 —

 

 

684

 

 

 —

 

 

 —

 

 

684

Sale of common stock in at-the-market offering, net

 

 

 

 

 

(53)

 

 

 

 

 

 

(53)

Stock-based compensation expense

 

 

 

 

 

3,393

 

 

 

 

 

 

3,393

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(22,202)

 

 

(22,202)

Balance at September 30, 2018

 

22,151,410

 

$

22

 

$

214,220

 

$

 —

 

$

(166,554)

 

$

47,688

 

See accompanying notes

 

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Quanterix Corporation

Notes to condensed consolidated financial statements

(Unaudited)

 

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 and have been discovered using technologies such as mass spectrometry. 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, but is also developing its bead-based technology to detect nucleic acids in biological samples.

The Company launched its first immunoassay platform, the Simoa 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. The Company launched a second bead-based immunoassay platform (SR-X) in the fourth quarter of 2017 with a more compact footprint than the Simoa 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 Simoa HD-1 which replaces 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, ahead of its original fourth quarter expectation.  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.

The Company acquired Aushon Biosystems, Inc. (Aushon) in January 2018. With the acquisition of Aushon, the Company acquired a CLIA certified laboratory, as well as Aushon's proprietary sensitive planar array detection technology. Leveraging its proprietary sophisticated Simoa image analysis and data analysis algorithms, the Company further refined this planar array technology to develop the SP-X instrument to provide the same Simoa sensitivity found in its bead-based platform.

The Company acquired of UmanDiagnostics AB, a Swedish company located in Umea, Sweden (Uman), in August 2019. The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019.  Uman supplies neurofilament light (Nf-L) antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions. With the acquisition of Uman, the Company has secured a long-term source of supply for a critical technology.

 

At-the-market offering

On March 19, 2019, the Company entered into a Sales Agreement (the Sales Agreement) with Cowen and Company, LLC (Cowen) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $50.0 million through Cowen as its sales agent. 

On June 5, 2019, the Company issued approximately 2.2 million shares of common stock at an average stock price of $22.73 per share pursuant to the terms of the Sales Agreement. The at-the-market offering resulted in gross proceeds of $49.7 million. The Company incurred $1.7 million in issuance costs associated with the at-the-market offering, resulting in net proceeds to the Company of $48.0 million.

Underwritten public offering

On August 8, 2019, the Company entered into an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters, relating to an underwritten public offering of approximately 2.7 million shares of the Company’s common stock, par value $0.001 per share. The underwritten public offering resulted in gross proceeds of $69.0 million. The Company incurred $4.5 million in issuance costs associated with the underwritten public offering, resulting in net proceeds to the Company of $64.5 million.

Basis of presentation

The interim condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements reflect, in the opinion of our 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 in accordance with United States generally accepted accounting principles (U.S. GAAP)

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Table of Contents

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 our Annual Report on Form 10‑K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on March 18, 2019 (the 2018 Annual Report on Form 10-K). The consolidated financial information as of December 31, 2018 has been derived from the audited 2018 consolidated financial statements included in the Company’s 2018 Annual Report on Form 10‑K.

 

2. Significant accounting policies

Principles of consolidation

The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of Quanterix Corporation and its wholly‑owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. In making those estimates and assumptions, the Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. The Company’s significant estimates included in the preparation of the consolidated financial statements are related to revenue recognition, fair value of equity instruments and notes receivable, fair value of assets acquired and liabilities assumed in acquisitions, valuation allowances recorded against deferred tax assets, and stock‑based compensation. Actual results could differ from those estimates.

Foreign Currency

The Company translates assets and liabilities of its foreign subsidiaries at rates in effect at the end of the reporting period. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive loss.

Income taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

        

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, Income Taxes (ASC 740). When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of September 30, 2019 the Company did not have any significant uncertain tax positions.

 

During the three months ended September 30, 2019, the Company acquired Uman. The Company analyzed the transaction from an income tax perspective and adjusted the deferred tax assets and liabilities related to the Uman acquisition. Of the total goodwill recorded, less than $0.1 million is amortizable related to the historical tax basis that Uman had prior to the acquisition.

 

Business combinations

Under the acquisition method of accounting, the Company allocates the fair value of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions determined by management. The excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. These valuations require significant estimates and assumptions, especially with respect to intangible assets.

The Company typically uses the discounted cash flow method to value acquired intangible assets. This method requires significant management judgment to forecast future operating results and establish residual growth rates and discount factors. The estimates used to value and amortize intangible assets are consistent with the plans and estimates that are used to manage the business and are based on available historical information and industry estimates and averages. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, the Company could experience impairment charges. In addition, the Company has estimated the economic lives of certain acquired assets and these lives are used to calculate

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depreciation and amortization expense. If estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.

Restricted cash

Restricted cash primarily represents collateral for a letter of credit issued as security for the lease for the Company’s new headquarters. The restricted cash is long term in nature as the Company will not have access to the funds until more than one year from September 30, 2019.

Recent accounting pronouncements

The Company is considered to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of this extended transition period and, as a result, the Company will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies so long as the Company remains an emerging growth company.

On January 1, 2019, the Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), using the modified retrospective method.  Under ASC 606, revenue is recognized upon the transfer of control of goods or services to customers and reflects the amount of consideration to which an entity expects to be entitled in exchange for those goods or services.  The adoption of ASC 606 has been applied to customer contracts that were not completed as of January 1, 2019, and did not materially change the pattern of revenue recognition for its current customer contracts.  The Company's consolidated financial statements for the prior-year period have not been revised and are reflective of the revenue recognition requirements which were in effect for that period.

The Company recorded an adjustment to the accumulated deficit of $0.4 million as of January 1, 2019 for the cumulative effect primarily related to the deferral of sales commissions.

In accordance with the reporting requirements of ASC 606, the disclosure of the impact on the Company's consolidated balance sheet and statement of operations, as a result of adopting the provisions of ASC 606, was as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

adoption of

 

 

As

 

 

 

Adjusted under

 

As reported

 

 

 

ASC 606

 

 

reported

 

 

 

ASC 606

 

September 30, 

 

 

 

September 30, 

 

    

December 31, 2018

    

Adjustments

    

January 1, 2019

    

2019

    

Adjustments

     

2019

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

6,792

 

$

47

 

$

6,839

 

$

11,914

 

$

 —

 

$

11,914

Prepaid expenses and other current assets

 

 

2,330

 

 

288

 

 

2,618

 

 

2,297

 

 

290

 

 

2,007

Other non-current assets

 

 

536

 

 

19

 

 

555

 

 

574

 

 

18

 

 

592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

5,437

 

 

43

 

 

5,394

 

 

4,909

 

 

175

 

 

5,084

Deferred revenue, net of current portion

 

 

520

 

 

43

 

 

477

 

 

357

 

 

 9

 

 

366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated deficit

 

$

(175,888)

 

$

(440)

 

$

(175,448)

 

$

(205,286)

 

$

(492)

 

$

(205,778)