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, 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/3ae150f3e5b71cf6099e70de0792a7bd-img80066801_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 October 30, 2023 was 49,031,396.

 

 


 

PERSONALIS, INC.

 

Form 10-Q

For the Quarterly Period Ended September 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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

71

Item 3.

Defaults Upon Senior Securities

71

Item 4.

Mine Safety Disclosures

71

Item 5.

Other Information

71

Item 6.

Exhibits

72

Signatures

73

 

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;
our ability to obtain financing when needed;
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 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 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;
the liquidation and dissolution of our subsidiary in China and the timing thereof; 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. and our subsidiaries, Personalis (UK) Ltd. and Personalis (Shanghai) Ltd.

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, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

72,192

 

 

$

89,128

 

Short-term investments

 

 

48,471

 

 

 

78,530

 

Accounts receivable, net

 

 

13,666

 

 

 

16,642

 

Inventory and other deferred costs

 

 

8,225

 

 

 

8,591

 

Prepaid expenses and other current assets

 

 

5,661

 

 

 

6,808

 

Total current assets

 

 

148,215

 

 

 

199,699

 

Property and equipment, net

 

 

56,751

 

 

 

61,935

 

Operating lease right-of-use assets

 

 

18,167

 

 

 

26,480

 

Other long-term assets

 

 

3,503

 

 

 

4,586

 

Total assets

 

$

226,636

 

 

$

292,700

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

8,963

 

 

$

12,854

 

Accrued and other current liabilities

 

 

19,821

 

 

 

19,013

 

Contract liabilities

 

 

3,694

 

 

 

1,264

 

Total current liabilities

 

 

32,478

 

 

 

33,131

 

Long-term operating lease liabilities

 

 

39,166

 

 

 

41,041

 

Other long-term liabilities

 

 

3,786

 

 

 

389

 

Total liabilities

 

 

75,430

 

 

 

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; 49,013,483 and 46,707,084 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

593,625

 

 

 

579,456

 

Accumulated other comprehensive loss

 

 

(302

)

 

 

(912

)

Accumulated deficit

 

 

(442,122

)

 

 

(360,410

)

Total stockholders’ equity

 

 

151,206

 

 

 

218,139

 

Total liabilities and stockholders’ equity

 

$

226,636

 

 

$

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

18,247

 

 

$

14,858

 

 

$

53,806

 

 

$

48,325

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

14,766

 

 

 

12,379

 

 

 

40,803

 

 

 

37,287

 

Research and development

 

 

16,738

 

 

 

14,957

 

 

 

51,163

 

 

 

48,343

 

Selling, general and administrative

 

 

11,971

 

 

 

14,781

 

 

 

38,202

 

 

 

46,141

 

Lease impairment

 

 

5,565

 

 

 

 

 

 

5,565

 

 

 

 

Restructuring and other charges

 

 

 

 

 

 

 

 

4,037

 

 

 

 

Total costs and expenses

 

 

49,040

 

 

 

42,117

 

 

 

139,770

 

 

 

131,771

 

Loss from operations

 

 

(30,793

)

 

 

(27,259

)

 

 

(85,964

)

 

 

(83,446

)

Interest income

 

 

1,706

 

 

 

743

 

 

 

4,424

 

 

 

1,236

 

Interest expense

 

 

(15

)

 

 

(45

)

 

 

(101

)

 

 

(154

)

Other income, net

 

 

32

 

 

 

80

 

 

 

7

 

 

 

149

 

Loss before income taxes

 

 

(29,070

)

 

 

(26,481

)

 

 

(81,634

)

 

 

(82,215

)

Provision for income taxes

 

 

28

 

 

 

11

 

 

 

78

 

 

 

32

 

Net loss

 

$

(29,098

)

 

$

(26,492

)

 

$

(81,712

)

 

$

(82,247

)

Net loss per share, basic and diluted

 

$

(0.60

)

 

$

(0.58

)

 

$

(1.71

)

 

$

(1.81

)

Weighted-average shares outstanding, basic and diluted

 

 

48,694,324

 

 

 

45,921,411

 

 

 

47,701,369

 

 

 

45,518,334

 

 

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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(29,098

)

 

$

(26,492

)

 

$

(81,712

)

 

$

(82,247

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(42

)

 

 

(215

)

 

 

(51

)

 

 

(417

)

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

 

 

53

 

 

 

57

 

 

 

661

 

 

 

(839

)

Comprehensive loss

 

$

(29,087

)

 

$

(26,650

)

 

$

(81,102

)

 

$

(83,503

)

 

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, 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—June 30, 2023

 

 

48,507,101

 

 

$

5

 

 

$

589,418

 

 

$

(313

)

 

$

(413,024

)

 

$

176,086

 

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

 

 

429,214

 

 

 

 

 

 

725

 

 

 

 

 

 

 

 

 

725

 

Restricted stock units vested

 

 

77,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,482

 

 

 

 

 

 

 

 

 

3,482

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

(42

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

53

 

 

 

 

 

 

53

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,098

)

 

 

(29,098

)

Balance—September 30, 2023

 

 

49,013,483

 

 

$

5

 

 

$

593,625

 

 

$

(302

)

 

$

(442,122

)

 

$

151,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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, 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

 

 

1,329,214

 

 

 

 

 

 

2,598

 

 

 

 

 

 

 

 

 

2,598

 

Proceeds from exercise of stock options

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from ESPP

 

 

468,643

 

 

 

 

 

 

909

 

 

 

 

 

 

 

 

 

909

 

Restricted stock units vested

 

 

508,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

10,662

 

 

 

 

 

 

 

 

 

10,662

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(51

)

 

 

 

 

 

(51

)

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

661

 

 

 

 

 

 

661

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(81,712

)

 

 

(81,712

)

Balance—September 30, 2023

 

 

49,013,483

 

 

$

5

 

 

$

593,625

 

 

$

(302

)

 

$

(442,122

)

 

$

151,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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

 

 

See notes to condensed consolidated financial statements.

8


Table of Contents

 

PERSONALIS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(81,712

)

 

$

(82,247

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

10,662

 

 

 

13,646

 

Depreciation and amortization

 

 

8,389

 

 

 

5,476

 

Noncash operating lease cost

 

 

2,681

 

 

 

3,612

 

Amortization of premium (discount) on short-term investments

 

 

(1,400

)

 

 

365

 

Noncash restructuring and other charges

 

 

476

 

 

 

 

Noncash lease impairment expense

 

 

5,565

 

 

 

 

Other

 

 

214

 

 

 

(23

)

Changes in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

2,976

 

 

 

4,876

 

Inventory and other deferred costs

 

 

201

 

 

 

(1,935

)

Prepaid expenses and other assets

 

 

2,080

 

 

 

(357

)

Accounts payable

 

 

(749

)

 

 

(1,073

)

Accrued and other current liabilities

 

 

1,018

 

 

 

(1,632

)

Contract liabilities

 

 

6,216

 

 

 

(3,685

)

Operating lease liabilities

 

 

553

 

 

 

9,928

 

Other long-term liabilities

 

 

(10

)

 

 

(422

)

Net cash used in operating activities

 

 

(42,840

)

 

 

(53,471

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of available-for-sale debt securities

 

 

(71,831

)

 

 

(111,179

)

Proceeds from maturities of available-for-sale debt securities

 

 

103,955

 

 

 

182,223

 

Purchases of property and equipment

 

 

(7,387

)

 

 

(40,358

)

Net cash provided by investing activities

 

 

24,737

 

 

 

30,686

 

Cash flows from financing activities:

 

 

 

 

 

 

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

 

 

2,598

 

 

 

 

Proceeds from loans

 

 

 

 

 

1,194

 

Repayments of loans

 

 

(2,292

)

 

 

(2,293

)

Proceeds from issuance of common stock under employee equity plans

 

 

909

 

 

 

1,954

 

Net cash provided by financing activities

 

 

1,215

 

 

 

855

 

Effect of exchange rates on cash, cash equivalents and restricted cash

 

 

(48

)

 

 

(133

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(16,936

)

 

 

(22,063

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

90,918

 

 

 

107,375

 

Cash, cash equivalents and restricted cash, end of period

 

$

73,982

 

 

$

85,312