10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

 

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: 001-38943

 

https://cdn.kscope.io/814bf9bcc723b66d1309c716e4971f7b-img79143280_0.jpg 

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 ☒

The number of shares of registrant’s Common Stock outstanding as of October 27, 2022 was 45,971,355.

 

 


 

PERSONALIS, INC.

 

Form 10-Q

For the Quarterly Period Ended September 30, 2022

 

TABLE OF CONTENTS

 

 

 

Page

 

Special Note Regarding Forward-Looking Statements

3

 

 

 

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Comprehensive Loss

6

 

Condensed Consolidated Statements of Stockholders’ Equity

7

 

Condensed Consolidated Statements of Cash Flows

9

 

Index to Notes

10

 

Notes to Unaudited Condensed Consolidated Financial Statements

11

Item 2.

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

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

 

 

 

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

74

Item 3.

Defaults Upon Senior Securities

74

Item 4.

Mine Safety Disclosures

74

Item 5.

Other Information

74

Item 6.

Exhibits

75

 

Signatures

76

 

2


Table of Contents

 

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 and products;
estimates of our total addressable market, future revenue and the timing thereof, expenses, capital requirements, and our needs for additional financing;
future reimbursement and reimbursement rulings;
our ability to enter into and compete in new markets;
the impact that key opinion leaders may have on the broader use of our platform in the future;
the potential impacts of inflation, macroeconomic conditions, and geopolitical conflicts on our business and operations;
the impact of the ongoing 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 services and products to new customers;
our ability to establish and maintain intellectual property protection for our services and 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 when needed;
our belief that approval of personalized cancer therapies by the Food and Drug Administration may drive benefits to our business;
our future business with the U.S. Department of Veterans Affairs’ Million Veteran Program ("VA MVP"), including the outcome of the protest of our contract with the VA MVP; and
our ability to maintain proper and effective internal controls.

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


Table of Contents

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PERSONALIS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share and per share data)

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

83,522

 

 

$

105,585

 

Short-term investments

 

 

109,234

 

 

 

181,479

 

Accounts receivable, net

 

 

13,592

 

 

 

18,468

 

Inventory and other deferred costs

 

 

7,543

 

 

 

5,610

 

Prepaid expenses and other current assets

 

 

8,017

 

 

 

7,089

 

Total current assets

 

 

221,908

 

 

 

318,231

 

Property and equipment, net

 

 

61,219

 

 

 

19,650

 

Operating lease right-of-use assets

 

 

30,045

 

 

 

53,822

 

Other long-term assets

 

 

4,689

 

 

 

4,825

 

Total assets

 

$

317,861

 

 

$

396,528

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

10,784

 

 

$

9,221

 

Accrued and other current liabilities

 

 

22,658

 

 

 

18,110

 

Contract liabilities

 

 

297

 

 

 

3,982

 

Total current liabilities

 

 

33,739

 

 

 

31,313

 

Long-term operating lease liabilities

 

 

41,349

 

 

 

52,797

 

Other long-term liabilities

 

 

374

 

 

 

2,117

 

Total liabilities

 

 

75,462

 

 

 

86,227

 

Commitments and Contingencies (Note 9)

 

 

 

 

 

 

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; 45,955,866 and 44,904,512 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

5

 

 

 

4

 

Additional paid-in capital

 

 

573,158

 

 

 

557,558

 

Accumulated other comprehensive loss

 

 

(1,422

)

 

 

(166

)

Accumulated deficit

 

 

(329,342

)

 

 

(247,095

)

Total stockholders’ equity

 

 

242,399

 

 

 

310,301

 

Total liabilities and stockholders’ equity

 

$

317,861

 

 

$

396,528

 

 

See notes to condensed consolidated financial statements.

4


Table of Contents

 

PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

14,858

 

 

$

22,261

 

 

$

48,325

 

 

$

64,812

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

12,379

 

 

 

14,195

 

 

 

37,287

 

 

 

41,151

 

Research and development

 

 

14,957

 

 

 

13,617

 

 

 

48,343

 

 

 

34,800

 

Selling, general and administrative

 

 

14,781

 

 

 

12,140

 

 

 

46,141

 

 

 

33,989

 

Total costs and expenses

 

 

42,117

 

 

 

39,952

 

 

 

131,771

 

 

 

109,940

 

Loss from operations

 

 

(27,259

)

 

 

(17,691

)

 

 

(83,446

)

 

 

(45,128

)

Interest income

 

 

743

 

 

 

88

 

 

 

1,236

 

 

 

286

 

Interest expense

 

 

(45

)

 

 

(60

)

 

 

(154

)

 

 

(125

)

Other income (expense), net

 

 

80

 

 

 

5

 

 

 

149

 

 

 

(43

)

Loss before income taxes

 

 

(26,481

)

 

 

(17,658

)

 

 

(82,215

)

 

 

(45,010

)

Provision for income taxes

 

 

11

 

 

 

12

 

 

 

32

 

 

 

17

 

Net loss

 

$

(26,492

)

 

$

(17,670

)

 

$

(82,247

)

 

$

(45,027

)

Net loss per share, basic and diluted

 

$

(0.58

)

 

$

(0.40

)

 

$

(1.81

)

 

$

(1.03

)

Weighted-average shares outstanding, basic and diluted

 

 

45,921,411

 

 

 

44,511,534

 

 

 

45,518,334

 

 

 

43,579,308

 

 

See notes to condensed consolidated financial statements.

5


Table of Contents

 

PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

(in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(26,492

)

 

$

(17,670

)

 

$

(82,247

)

 

$

(45,027

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(215

)

 

 

(9

)

 

 

(417

)

 

 

12

 

Change in unrealized gain (loss) on available-for-sale debt securities

 

 

57

 

 

 

3

 

 

 

(839

)

 

 

(22

)

Comprehensive loss

 

$

(26,650

)

 

$

(17,676

)

 

$

(83,503

)

 

$

(45,037

)

 

See notes to condensed consolidated financial statements.

6


Table of Contents

 

PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the Three Months Ended September 30, 2022 and 2021

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance—June 30, 2022

 

 

45,891,458

 

 

$

5

 

 

$

568,741

 

 

$

(1,264

)

 

$

(302,850

)

 

$

264,632

 

Proceeds from exercise of stock options

 

 

643

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Restricted stock units vested

 

 

63,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,415

 

 

 

 

 

 

 

 

 

4,415

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(215

)

 

 

 

 

 

(215

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

57

 

 

 

 

 

 

57

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,492

)

 

 

(26,492

)

Balance—September 30, 2022

 

 

45,955,866

 

 

$

5

 

 

$

573,158

 

 

$

(1,422

)

 

$

(329,342

)

 

$

242,399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance—June 30, 2021

 

 

44,209,968

 

 

$

4

 

 

$

547,951

 

 

$

18

 

 

$

(209,226

)

 

$

338,747

 

Proceeds from exercise of stock options

 

 

448,738

 

 

 

 

 

 

536

 

 

 

 

 

 

 

 

 

536

 

Restricted stock units vested

 

 

47,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,689

 

 

 

 

 

 

 

 

 

3,689

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

 

 

 

(9

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,670

)

 

 

(17,670

)

Balance—September 30, 2021

 

 

44,706,263

 

 

$

4

 

 

$

552,176

 

 

$

12

 

 

$

(226,896

)

 

$

325,296

 

 

See notes to condensed consolidated financial statements.

 

7


Table of Contents

 

PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the Nine Months Ended September 30, 2022 and 2021

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance—December 31, 2021

 

 

44,904,512

 

 

$

4

 

 

$

557,558

 

 

$

(166

)

 

$

(247,095

)

 

$

310,301

 

Proceeds from exercise of stock options

 

 

475,687

 

 

 

1

 

 

 

980

 

 

 

 

 

 

 

 

 

981

 

Proceeds from ESPP purchases

 

 

204,775

 

 

 

 

 

 

974

 

 

 

 

 

 

 

 

 

974

 

Restricted stock units vested

 

 

370,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

13,646

 

 

 

 

 

 

 

 

 

13,646

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(417

)

 

 

 

 

 

(417

)

Unrealized loss on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

(839

)

 

 

 

 

 

(839

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(82,247

)

 

 

(82,247

)

Balance—September 30, 2022

 

 

45,955,866

 

 

$

5

 

 

$

573,158

 

 

$

(1,422

)

 

$

(329,342

)

 

$

242,399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance—December 31, 2020

 

 

39,105,548

 

 

$

4

 

 

$

376,788

 

 

$

22

 

 

$

(181,869

)

 

$

194,945

 

Proceeds from follow-on equity offering, net of offering costs

 

 

4,542,500

 

 

 

 

 

 

161,916

 

 

 

 

 

 

 

 

 

161,916

 

Proceeds from exercise of stock options

 

 

833,676

 

 

 

 

 

 

1,935

 

 

 

 

 

 

 

 

 

1,935

 

Proceeds from ESPP purchases

 

 

57,001

 

 

 

 

 

 

1,191

 

 

 

 

 

 

 

 

 

1,191

 

Restricted stock units vested

 

 

167,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation