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 June 30, 2023

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/d899596cb449d10c2399930f5c2c1cdd-img80063918_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.)

 

 

6600 Dumbarton Circle

Fremont, California

94555

(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 August 1, 2023 was 48,518,901.

 

 


 

PERSONALIS, INC.

 

Form 10-Q

For the Quarterly Period Ended June 30, 2023

 

TABLE OF CONTENTS

 

Page

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

8

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

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

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


Table of Contents

 

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,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “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, use of cash and other resources, cost savings, 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 our collaboration agreements and 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 benefits of our products and services, including their ability to increase the probability of clinical trial success;
our ability to compete effectively with existing competitors and new market entrants;
our business strategies, including our aim to focus on certain indications and the timing thereof;
our planned closure of our operations in China and the timing thereof;
our ability to benefit from the scaling of our infrastructure and new facility in Fremont;
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;
our success in defending and enforcing our intellectual property rights, including patents;
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 U.S. 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"), Natera, Inc., and other collaboration partners and customers; 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)

 

 

 

June 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

97,195

 

 

$

89,128

 

Short-term investments

 

 

40,012

 

 

 

78,530

 

Accounts receivable, net

 

 

10,132

 

 

 

16,642

 

Inventory and other deferred costs

 

 

8,140

 

 

 

8,591

 

Prepaid expenses and other current assets

 

 

5,476

 

 

 

6,808

 

Total current assets

 

 

160,955

 

 

 

199,699

 

Property and equipment, net

 

 

59,486

 

 

 

61,935

 

Operating lease right-of-use assets

 

 

24,660

 

 

 

26,480

 

Other long-term assets

 

 

3,937

 

 

 

4,586

 

Total assets

 

$

249,038

 

 

$

292,700

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

8,847

 

 

$

12,854

 

Accrued and other current liabilities

 

 

16,408

 

 

 

19,013

 

Contract liabilities

 

 

3,337

 

 

 

1,264

 

Total current liabilities

 

 

28,592

 

 

 

33,131

 

Long-term operating lease liabilities

 

 

40,326

 

 

 

41,041

 

Other long-term liabilities

 

 

4,034

 

 

 

389

 

Total liabilities

 

 

72,952

 

 

 

74,561

 

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; 48,507,101 and 46,707,084 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

589,418

 

 

 

579,456

 

Accumulated other comprehensive loss

 

 

(313

)

 

 

(912

)

Accumulated deficit

 

 

(413,024

)

 

 

(360,410

)

Total stockholders’ equity

 

 

176,086

 

 

 

218,139

 

Total liabilities and stockholders’ equity

 

$

249,038

 

 

$

292,700

 

 

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

16,699

 

 

$

18,240

 

 

$

35,559

 

 

$

33,467

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

11,907

 

 

 

13,959

 

 

 

26,037

 

 

 

24,908

 

Research and development

 

 

17,852

 

 

 

16,288

 

 

 

34,425

 

 

 

33,386

 

Selling, general and administrative

 

 

12,134

 

 

 

15,874

 

 

 

26,231

 

 

 

31,360

 

Restructuring and other charges

 

 

152

 

 

 

 

 

 

4,037

 

 

 

 

Total costs and expenses

 

 

42,045

 

 

 

46,121

 

 

 

90,730

 

 

 

89,654

 

Loss from operations

 

 

(25,346

)

 

 

(27,881

)

 

 

(55,171

)

 

 

(56,187

)

Interest income

 

 

1,465

 

 

 

349

 

 

 

2,718

 

 

 

493

 

Interest expense

 

 

(39

)

 

 

(50

)

 

 

(86

)

 

 

(109

)

Other income (expense), net

 

 

1

 

 

 

50

 

 

 

(25

)

 

 

69

 

Loss before income taxes

 

 

(23,919

)

 

 

(27,532

)

 

 

(52,564

)

 

 

(55,734

)

Provision for income taxes

 

 

36

 

 

 

14

 

 

 

50

 

 

 

21

 

Net loss

 

$

(23,955

)

 

$

(27,546

)

 

$

(52,614

)

 

$

(55,755

)

Net loss per share, basic and diluted

 

$

(0.50

)

 

$

(0.60

)

 

$

(1.11

)

 

$

(1.23

)

Weighted-average shares outstanding, basic and diluted

 

 

47,669,513

 

 

 

45,637,838

 

 

 

47,204,891

 

 

 

45,316,795

 

 

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(23,955

)

 

$

(27,546

)

 

$

(52,614

)

 

$

(55,755

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(37

)

 

 

(194

)

 

 

(9

)

 

 

(202

)

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

 

 

179

 

 

 

(195

)

 

 

608

 

 

 

(896

)

Comprehensive loss

 

$

(23,813

)

 

$

(27,935

)

 

$

(52,015

)

 

$

(56,853

)

 

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 June 30, 2023 and 2022

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance—March 31, 2023

 

 

46,774,490

 

 

$

5

 

 

$

583,151

 

 

$

(455

)

 

$

(389,069

)

 

$

193,632

 

Proceeds from sales of common stock under ATM facility, net of commissions

 

 

900,000

 

 

 

 

 

 

1,873

 

 

 

 

 

 

 

 

 

1,873

 

Proceeds from exercise of stock options

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from ESPP

 

 

468,643

 

 

 

 

 

 

909

 

 

 

 

 

 

 

 

 

909

 

Restricted stock units vested

 

 

363,960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,485

 

 

 

 

 

 

 

 

 

3,485

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

 

 

 

(37

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

179

 

 

 

 

 

 

179

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,955

)

 

 

(23,955

)

Balance—June 30, 2023

 

 

48,507,101

 

 

$

5

 

 

$

589,418

 

 

$

(313

)

 

$

(413,024

)

 

$

176,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance—March 31, 2022

 

 

45,250,087

 

 

$

5

 

 

$

562,889

 

 

$

(875

)

 

$

(275,304

)

 

$

286,715

 

Proceeds from exercise of stock options

 

 

195,839

 

 

 

 

 

 

463

 

 

 

 

 

 

 

 

 

463

 

Proceeds from ESPP

 

 

204,775

 

 

 

 

 

 

974

 

 

 

 

 

 

 

 

 

974

 

Restricted stock units vested

 

 

240,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,415

 

 

 

 

 

 

 

 

 

4,415

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(194

)

 

 

 

 

 

(194

)

Unrealized loss on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

(195

)

 

 

 

 

 

(195

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,546

)

 

 

(27,546

)

Balance—June 30, 2022

 

 

45,891,458

 

 

$

5

 

 

$

568,741

 

 

$

(1,264

)

 

$

(302,850

)

 

$

264,632

 

 

See notes to condensed consolidated financial statements.

7


Table of Contents

 

PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the Six Months Ended June 30, 2023 and 2022

(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, 2022

 

 

46,707,084

 

 

$

5

 

 

$

579,456

 

 

$

(912

)

 

$

(360,410

)

 

$

218,139

 

Proceeds from sales of common stock under ATM facility, net of commissions

 

 

900,000

 

 

 

 

 

 

1,873

 

 

 

 

 

 

 

 

 

1,873

 

Proceeds from exercise of stock options

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from ESPP

 

 

468,643

 

 

 

 

 

 

909

 

 

 

 

 

 

 

 

 

909

 

Restricted stock units vested

 

 

431,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,180

 

 

 

 

 

 

 

 

 

7,180

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

 

 

 

(9

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

608

 

 

 

 

 

 

608

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52,614

)

 

 

(52,614

)

Balance—June 30, 2023

 

 

48,507,101

 

 

$

5

 

 

$

589,418

 

 

$

(313

)

 

$

(413,024

)

 

$

176,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance—December 31, 2021

 

 

44,904,512

 

 

$

4

 

 

$

557,558

 

 

$

(166

)

 

$

(247,095

)

 

$

310,301

 

Proceeds from exercise of stock options

 

 

475,044

 

 

 

1

 

 

 

978

 

 

 

 

 

 

 

 

 

979

 

Proceeds from ESPP

 

 

204,775

 

 

 

 

 

 

974

 

 

 

 

 

 

 

 

 

974

 

Restricted stock units vested

 

 

307,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

9,231

 

 

 

 

 

 

 

 

 

9,231

 

Foreign currency translation adjustment