psnl-10q_20200630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 2020

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: 001-38943

 

Personalis, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

27-5411038

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

1330 O’Brien Drive

Menlo Park, California 94025

94025

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (650) 752-1300

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001

 

PSNL

 

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, 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 August 3, 2020, the registrant had 31,884,556 shares of common stock, $0.0001 par value per share, outstanding.

 


Table of Contents

 

 

 

Page

 

Special Note Regarding Forward-Looking Statements

3

PART I.

FINANCIAL INFORMATION

4

Item 1.

Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Comprehensive Loss

6

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

7

 

Condensed Consolidated Statements of Cash Flows

9

 

Notes to Unaudited Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

34

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

70

Item 4.

Mine Safety Disclosures

70

Item 5.

Other Information

70

Item 6.

Exhibits

71

Signatures

72

 

2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

 

the evolution of cancer therapies and market adoption of our services;

 

estimates of our total addressable market, future revenue, expenses, capital requirements, and our needs for additional financing;

 

the impact of the COVID-19 pandemic on our business, our customers’ and suppliers’ businesses and the general economy;

 

our ability to compete effectively with existing competitors and new market entrants;

 

our ability to scale our infrastructure;

 

our ability to manage and grow our business by expanding our sales to existing customers or introducing our products to new customers;

 

expectations regarding our relationship with the U.S. Department of Veterans Affairs’ Million Veteran Program;

 

our ability to establish and maintain intellectual property protection for our products or avoid claims of infringement;

 

potential effects of extensive government regulation;

 

our ability to hire and retain key personnel;

 

our ability to obtain financing in future offerings;

 

the volatility of the trading price of our common stock;

 

our belief that approval of personalized cancer therapies by the Food and Drug Administration may drive benefits to our business; and

 

our expectation regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act (the “JOBS Act”).

Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a highly competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “company,” “Personalis,” “we,” “us” and “our” refer to Personalis, Inc.

 

 

 

3


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PERSONALIS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share and per share data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

25,042

 

 

$

55,046

 

Short-term investments

 

 

80,191

 

 

 

73,243

 

Accounts receivable, net

 

 

5,375

 

 

 

3,300

 

Inventory and other deferred costs

 

 

6,524

 

 

 

4,606

 

Prepaid expenses and other current assets

 

 

2,989

 

 

 

3,383

 

Total current assets

 

 

120,121

 

 

 

139,578

 

Property and equipment, net

 

 

12,650

 

 

 

14,106

 

Operating lease right-of-use assets

 

 

10,991

 

 

 

1,845

 

Other long-term assets

 

 

1,760

 

 

 

1,762

 

Total assets

 

$

145,522

 

 

$

157,291

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,491

 

 

$

7,337

 

Accrued and other current liabilities

 

 

6,594

 

 

 

6,648

 

Contract liabilities

 

 

28,952

 

 

 

35,977

 

Total current liabilities

 

 

43,037

 

 

 

49,962

 

Long-term operating lease liabilities

 

 

9,233

 

 

 

639

 

Other long-term liabilities

 

 

129

 

 

 

 

Total liabilities

 

 

52,399

 

 

 

50,601

 

Commitments and Contingencies (Note 12)

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value — 10,000,000 shares authorized; none issued

 

 

 

 

 

 

Common stock, $0.0001 par value — 200,000,000 shares authorized; 31,872,122 and 31,243,029 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

251,997

 

 

 

247,282

 

Accumulated other comprehensive income (loss)

 

 

106

 

 

 

(6

)

Accumulated deficit

 

 

(158,983

)

 

 

(140,589

)

Total stockholders’ equity

 

 

93,123

 

 

 

106,690

 

Total liabilities and stockholders’ equity

 

$

145,522

 

 

$

157,291

 

 

See accompanying notes to condensed consolidated financial statements.

4


PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

$

19,495

 

 

$

15,825

 

 

$

38,656

 

 

$

29,900

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs of revenues

 

 

14,823

 

 

 

9,923

 

 

 

29,945

 

 

 

20,014

 

Research and development

 

 

6,465

 

 

 

4,497

 

 

 

12,855

 

 

 

9,742

 

Selling, general and administrative

 

 

7,705

 

 

 

5,466

 

 

 

14,979

 

 

 

9,636

 

Total costs and expenses

 

 

28,993

 

 

 

19,886

 

 

 

57,779

 

 

 

39,392

 

Loss from operations

 

 

(9,498

)

 

 

(4,061

)

 

 

(19,123

)

 

 

(9,492

)

Interest income

 

 

246

 

 

 

200

 

 

 

756

 

 

 

284

 

Interest expense

 

 

 

 

 

(745

)

 

 

(2

)

 

 

(929

)

Other income (expense), net

 

 

1

 

 

 

(1,261

)

 

 

9

 

 

 

(1,413

)

Loss before income taxes

 

 

(9,251

)

 

 

(5,867

)

 

 

(18,360

)

 

 

(11,550

)

Provision for income taxes

 

 

(4

)

 

 

(2

)

 

 

(34

)

 

 

(4

)

Net loss

 

$

(9,255

)

 

$

(5,869

)

 

$

(18,394

)

 

$

(11,554

)

Net loss per share, basic and diluted

 

$

(0.29

)

 

$

(0.89

)

 

$

(0.58

)

 

$

(2.38

)

Weighted-average shares outstanding, basic and diluted

 

 

31,731,628

 

 

 

6,597,007

 

 

 

31,538,329

 

 

 

4,853,325

 

 

See accompanying notes to condensed consolidated financial statements.

5


PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

 

$

(9,255

)

 

$

(5,869

)

 

$

(18,394

)

 

$

(11,554

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(4

)

 

 

(15

)

 

 

(9

)

 

 

 

Change in unrealized gain on available-for-sale debt securities

 

 

37

 

 

 

 

 

 

121

 

 

 

 

Comprehensive loss

 

$

(9,222

)

 

$

(5,884

)

 

$

(18,282

)

 

$

(11,554

)

 

See accompanying notes to condensed consolidated financial statements.

 

6


PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (unaudited)

(in thousands, except share data)

 

 

 

Redeemable

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Total

 

 

 

Convertible

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Stockholders'

 

 

 

Preferred Stock

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

(Deficit)

 

Balance—March 31, 2019

 

 

18,474,742

 

 

$

89,404

 

 

 

 

3,166,316

 

 

$

1

 

 

$

10,666

 

 

$

-

 

 

$

(121,190

)

 

$

(110,523

)

Elimination of fractional shares upon reverse stock split (see Note 8)

 

 

(39

)

 

 

 

 

 

 

(34

)

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

 

 

 

Exercise of common stock warrants

 

 

 

 

 

 

 

 

 

207,712

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Conversion of Series A, B and C redeemable convertible preferred stock to common stock

 

 

(18,474,703

)

 

 

(89,404

)

 

 

 

18,474,703

 

 

 

2

 

 

 

89,402

 

 

 

 

 

 

 

 

 

89,404

 

Conversion of redeemable convertible preferred stock warrants to common stock warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,086

 

 

 

 

 

 

 

 

 

2,086

 

Proceeds from initial public offering, net of expenses

 

 

 

 

 

 

 

 

 

9,109,725

 

 

 

1

 

 

 

140,023

 

 

 

 

 

 

 

 

 

140,024

 

Proceeds from exercise of stock options

 

 

 

 

 

 

 

 

 

163,183

 

 

 

 

 

 

257

 

 

 

 

 

 

 

 

 

257

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,646

 

 

 

 

 

 

 

 

 

1,646

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,869

)

 

 

(5,869

)

Balance—June 30, 2019

 

 

 

 

$

 

 

 

 

31,121,605

 

 

$

3

 

 

$

244,089

 

 

$

(15

)

 

$

(127,059

)

 

$

117,018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance—March 31, 2020

 

 

 

 

$

 

 

 

 

31,530,443

 

 

$

3

 

 

$

248,854

 

 

$

73

 

 

$

(149,728

)

 

$

99,202

 

Proceeds from exercise of stock options

 

 

 

 

 

 

 

 

 

236,578

 

 

 

 

 

 

690

 

 

 

 

 

 

 

 

 

690

 

Proceeds from Employee Stock Purchase Plan purchases

 

 

 

 

 

 

 

 

 

71,480

 

 

 

 

 

 

631

 

 

 

 

 

 

 

 

 

631

 

Restricted stock units released

 

 

 

 

 

 

 

 

 

33,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,822

 

 

 

 

 

 

 

 

 

1,822

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37

 

 

 

 

 

 

37

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,255

)

 

 

(9,255

)

Balance—June 30, 2020

 

 

 

 

$

 

 

 

 

31,872,122

 

 

$

3

 

 

$

251,997

 

 

$

106

 

 

$

(158,983

)

 

$

93,123

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

 

 

7


PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (unaudited)

(in thousands, except share data)

 

 

 

Redeemable

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Total

 

 

 

Convertible

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Stockholders'

 

 

 

Preferred Stock

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

(Deficit)

 

Balance—December 31, 2018

 

 

18,474,742

 

 

$

89,404

 

 

 

 

3,085,307

 

 

$

1

 

 

$

9,131

 

 

$

(15

)

 

$

(115,505

)

 

$

(106,388

)

Issuance of common stock warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

572

 

 

 

 

 

 

 

 

 

572

 

Elimination of fractional shares upon reverse stock split (see Note 8)

 

 

(39

)

 

 

 

 

 

 

(34

)

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

 

 

 

Exercise of common stock warrants

 

 

 

 

 

 

 

 

 

207,712

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Conversion of Series A, B and C redeemable convertible preferred stock to common stock

 

 

(18,474,703

)

 

 

(89,404

)

 

 

 

18,474,703

 

 

 

2

 

 

 

89,402

 

 

 

 

 

 

 

 

 

89,404

 

Conversion of redeemable convertible preferred stock warrants to common stock warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,086

 

 

 

 

 

 

 

 

 

2,086

 

Proceeds from initial public offering, net of expenses

 

 

 

 

 

 

 

 

 

9,109,725

 

 

 

1

 

 

 

140,023

 

 

 

 

 

 

 

 

 

140,024

 

Proceeds from exercise of stock options

 

 

 

 

 

 

 

 

 

244,192

 

 

 

 

 

 

611

 

 

 

 

 

 

 

 

 

611

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,255

 

 

 

 

 

 

 

 

 

2,255

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,554

)

 

 

(11,554

)

Balance—June 30, 2019

 

 

 

 

$

 

 

 

 

31,121,605

 

 

$

3

 

 

$

244,089

 

 

$

(15

)

 

$

(127,059

)

 

$

117,018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance—December 31, 2019

 

 

 

 

$

 

 

 

 

31,243,029

 

 

$

3

 

 

$

247,282

 

 

$

(6

)

 

$

(140,589

)

 

$

106,690

 

Proceeds from exercise of stock options

 

 

 

 

 

 

 

 

 

513,993

 

 

 

 

 

 

1,013

 

 

 

 

 

 

 

 

 

1,013

 

Proceeds from Employee Stock Purchase Plan purchases

 

 

 

 

 

 

 

 

 

71,480

 

 

 

 

 

 

631

 

 

 

 

 

 

 

 

 

631

 

Restricted stock units released

 

 

 

 

 

 

 

 

 

43,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,071

 

 

 

 

 

 

 

 

 

3,071

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

 

 

 

(9

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

121

 

 

 

 

 

 

121

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,394

)

 

 

(18,394

)

Balance—June 30, 2020

 

 

 

 

$

 

 

 

 

31,872,122

 

 

$

3

 

 

$

251,997

 

 

$

106

 

 

$

(158,983

)

 

$

93,123

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

8


PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(18,394

)

 

$

(11,554

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,815

 

 

 

2,192

 

Noncash operating lease cost

 

 

689

 

 

 

429

 

Stock-based compensation expense

 

 

3,071

 

 

 

2,255

 

Change in fair value of convertible preferred stock warrant liability

 

 

 

 

 

1,403

 

Accretion of noncash interest and debt reduction