QUANTERIX CORPORATION You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , filed with theSecurities and Exchange Commission (SEC). In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results, performance or experience could differ materially from what is indicated by any forward-looking statement due to various important factors, risks and uncertainties, including, but not limited to, those set forth under "Special Note Regarding Forward-Looking Statements" included elsewhere in this quarterly report or under "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K for the year endedDecember 31, 2020 as may be updated by "Part II, Item 1A, Risk Factors" of our subsequently filed Quarterly Reports on Form 10-Q.
Overview
We are a life sciences company that has developed next generation, ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics. Our platforms are based on our proprietary digital "Simoa" detection technology. Our 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 our 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. We believe this greater insight will enable the development of novel therapies and diagnostics and facilitate a paradigm shift in healthcare from an emphasis on treatment to a focus on earlier detection, monitoring, prognosis and, ultimately, prevention. We are currently focusing on protein detection, which we believe is an area of significant unmet need and where we have significant competitive advantages. However, in addition to enabling new applications and insights in protein analysis, our Simoa platforms have also demonstrated applicability across other testing applications, including detection of nucleic acids and small molecules. We currently sell most of our products for life science research, primarily to laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies, through a direct sales force and support organizations inNorth America andEurope , and through distributors or sales agents in other select markets, includingAustralia ,China ,Czech Republic ,India ,Israel ,Japan ,Lebanon ,Mexico ,Qatar ,Saudi Arabia ,Singapore ,South Korea , andTaiwan . Our instruments are designed to be used either with assays fully developed by us, including all antibodies and supplies required to run the tests, or with "homebrew" kits where we supply some of the components required for testing, and the customer supplies the remaining required elements. Accordingly, our installed instruments generate a recurring revenue stream. We believe that our recurring consumable revenue is driven by our customers' ability to extract more valuable data using our platform and to process a large number of samples quickly with little hands-on preparation. We commercially launched our first immunoassay platform, the Simoa HD-1 (HD-1), inJanuary 2014 . The HD-1 is based on our bead-based technology, and assays run on the HD-1 are fully automated. We initiated commercial launch of the SR-X instrument inDecember 2017 . The SR-X utilizes the same Simoa bead-based technology and assay kits as the HD-1 in a compact benchtop form with a lower price point, more flexible assay preparation, and a wider range of applications. InJuly 2019 , we launched the Simoa HD-X, an upgraded version of the 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. We began shipping and installing HD-X instruments at customer locations in the third quarter of 2019. As the installed base of the Simoa instruments increases, total consumables revenue overall is expected to 24
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increase. We believe that consumables revenue should be subject to less period-to-period fluctuation than our instrument sales revenue and will become an increasingly important contributor to our overall revenue.
OnJanuary 30, 2018 , we acquiredAushon Biosystems, Inc. (Aushon) for$3.2 million in cash, with an additional payment of$0.8 million made inJuly 2018 , six months after the acquisition date. With the acquisition of Aushon, we acquired a CLIA certified laboratory, as well as Aushon's proprietary sensitive planar array detection technology. Leveraging our proprietary sophisticated Simoa image analysis and data analysis algorithms, we further refined this planar array technology to develop the SP-X instrument to provide the same Simoa sensitivity found in our Simoa bead-based platform. We initiated an early-access program for the SP-X instrument inJanuary 2019 , with the full commercial launch commenced inApril 2019 . OnAugust 1, 2019 , we completed our acquisition ofUmanDiagnostics AB (Uman) for an aggregate purchase price of$21.2 million , comprised of (i)$15.7 million in cash plus (ii) 191,152 shares of our common stock (representing$5.5 million based on the closing prices of our common stock on the Nasdaq Global Market onJuly 1, 2019 andAugust 1, 2019 , the dates of issuance). The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman onJuly 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman onAugust 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. OnSeptember 29, 2020 , we entered into a Non-exclusive License Agreement (the Abbott License Agreement) with Abbott Laboratories (Abbott ). Pursuant to the terms of the Abbott License Agreement, we grantedAbbott a non-exclusive, worldwide, royalty-bearing license, without the right to sublicense, under our bead-based single molecule detection patents in the field of in vitro diagnostics.Abbott has paid us an initial license fee of$10.0 million in connection with the execution of the Abbott License Agreement, which was recognized as collaboration and license revenue for the three months endedSeptember 30, 2020 . In addition, during the three months endedSeptember 30, 2020 , we recognized as collaboration and license revenue approximately$1.2 million of previously deferred revenue upon entering into the Abbott License Agreement.Abbott has also agreed to pay us milestone fees subject to the achievement byAbbott of certain development, regulatory and commercialization milestones and low single digit royalties on net sales of licensed products. We are subject to ongoing uncertainty concerning the SARS-CoV-2 (COVID-19) pandemic, including its length and severity and its effect on our business. During the first and second quarters of 2020, we implemented a resiliency plan focused on the health and safety of our employees and maintaining continuity of our operations. We saw an impact on instrument revenue due to limitations on our ability to access certain customer sites and complete instrument installations, as well as an impact on consumables revenue from interruptions in certain customer laboratories through the first quarter of 2021. As customers began returning to normal operations in the second quarter of 2021, we have seen less of an impact related to COVID-19 related shutdowns. However, we expect COVID-19 related challenges to continue for the foreseeable future and potentially increase if variants result in new shutdowns. In view of the COVID-19 pandemic, we have adjusted our operations to expand capacity in ourAccelerator Laboratory to support customers whose operations have been disrupted and to sustain clinical trials. We also determined that our cytokine assay technology provides researchers with important and differentiated tools to study disease progression, cytokine release syndrome, and patient-treatment response in the fight against COVID-19, and began developing a SARS- CoV-2 semi-quantitative IgG assay and a SARS-CoV-2 antigen detection assay, and prototyping a high-definition multiplex SARS-CoV-2 serology assay. InDecember 2020 , theUnited States Food and Drug Administration (FDA) issued an Emergency Use Authorization (EUA) for our Simoa Semi-Quantitative SARS-CoV-2 IgG Antibody Test, and inJanuary 2021 , the FDA issued an EUA for our Simoa SARS-CoV-2 N Protein Antigen Test, each of which is run on our HD-X instrument. InSeptember 2021 , the FDA expanded the EUA for our Simoa SARS-CoV-2 N Protein Antigen Test to include testing with nasal swabs and saliva and for asymptomatic serial testing with nasal swab samples. We are exploring extending the test to home-based sample collection and pooling to enable larger scale testing. 25 Table of Contents InSeptember 2020 , we entered into a workplan 2 award (WP2) with theNational Institute of Health (NIH) under the Rapid Acceleration of Diagnostics (RADx) program. This contract, which has a total award value of$18.2 million , is intended to accelerate the continued development, scale-up and deployment of our novel SARS-CoV-2 antigen test. Initial early feasibility of this test was funded in part through the workplan 1 award (WP1) we were granted inJune 2020 . WP2 supports clinical validation of the test in support of the EUA submissions with the FDA and provides funding to expand assay kit manufacturing capacity and commercial deployment readiness. Contract funding is subject to achievement of pre-defined milestones and the contract period runs throughMarch 2022 . The COVID-19 situation remains dynamic and there still remains significant uncertainty as to the length and severity of the pandemic, the actions that may be taken by government authorities, the impact to the business of our customers and suppliers, the long-term economic implications and other factors identified in "Part I, Item 1A, Risk Factors" of our Annual Report on Form 10-K for the year endedDecember 31, 2020 as may be updated by "Part II, Item 1A, Risk Factors" of our subsequently filed Quarterly Reports on Form 10-Q. We will continue to evaluate the nature and extent of the impact to our business, financial condition, and operating results. As ofSeptember 30, 2021 , we had cash and cash equivalents of$410.7 million . Other than the third quarter of 2020, since inception, we have incurred net losses. Our net loss was$15.7 million and$37.7 million for the three and nine months endedSeptember 30, 2021 , respectively. As ofSeptember 30, 2021 , we had an accumulated deficit of$285.4 million and stockholders' equity of$455.5 million . We expect to continue to incur significant expenses and operating losses at least through the next 24 months. We expect our expenses will increase substantially as we:
? expand our sales and marketing efforts to further commercialize our products;
? strategically acquire companies or technologies that may be complementary to
our business;
expand our research and development efforts to improve our existing products
? and develop and launch new products, particularly if any of our products are
deemed by the FDA, to be medical devices or otherwise subject to additional
regulation by the FDA;
seek premarket approval (PMA) 510(k) clearance, or EUA, from the FDA for our
? existing products or new products if or when we decide to market products for
use in the prevention, diagnosis or treatment of a disease or other condition;
? hire additional personnel and continue to grow our employee headcount;
? enter into collaboration arrangements, if any, or in-license other products and
technologies;
? expand assay kit manufacturing capacity and commercial development readiness in
connection with WP2;
? add operational, financial and management information systems; and
? continue to incur increased costs as a result of operating as a public company.
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Results of Operations
Comparison of the Three Months Ended September 30, 2021 and September 30, 2020
(dollars in thousands):
Three Months Ended Three Months Ended
September 30, % of September 30, % of $ %
2021 revenue 2020 revenue change change
Product revenue $ 20,662 75 % $ 11,662 38 % $ 9,000 77 %
Service and other revenue 5,898 21 % 6,552 21 % (654) (10) %
Collaboration and license
revenue 120 - % 11,246 36 % (11,126) (99) %
Grant revenue 1,009 4 % 1,929 6 % (920) (48) %
Total revenue 27,689 100 % 31,389 100 % (3,700) (12) %
Cost of goods sold:
Cost of product revenue 8,639 31 % 6,387 20 % 2,252 35 %
Cost of service revenue 3,806 14 % 2,896 9 % 910 31 %
Cost of collaboration and
license revenue - - % 1,000 3 % (1,000) (100) %
Total costs of goods sold,
services, and licenses 12,445 45 % 10,283 33 % 2,162 21 %
Gross profit 15,244 55 % 21,106 67 % (5,862) (28) %
Operating expenses:Research and development 6,807 25 % 5,377 17 % 1,430 27 % Selling, general, and administrative 23,670 85 % 13,451 43 % 10,219 76 % Total operating expenses 30,477 110 % 18,828 60 % 11,649 62 % (Loss) income from operations (15,233) (55) % 2,278 7 % (17,511) (769) % Interest expense, net (90) - % (160) (1) % ` 70 44 % Other expense, net (305) (1) % (26) - % (279) (1,073) % (Loss) income before income taxes (15,628) (56) % 2,092 7 % (17,720) (847) % Income tax (expense) benefit (33) (1) % 111 - % (144) (130) % Net (loss) income $ (15,661) (57) % $
2,203 7 % $ (17,864) (811) %
Revenue
Total revenue decreased by $3.7 million , or 12%, to $27.7 million for the three
months ended September 30, 2021 as compared to $31.4 million for the three
months ended September 30, 2020 . Product revenue consisted of sales of
instruments totaling $6.5 million and sales of consumables and other products of
$14.2 million for the three months ended September 30, 2021 . Product revenue
consisted primarily of sales of instruments totaling $4.5 million and sales of
consumables and other products of $7.2 million for the three months ended
September 30, 2020 . The increase in product revenue of $9.0 million was
primarily due to the increased ability to install instruments as customer sites
reopened from COVID-19 related shutdowns that impacted results from operations
during the three months ended September 30, 2020 . In addition, as the installed
base of instruments increased from September 30, 2020 to September 30, 2021 , the
consumable sales increased as customers opened from COVID-19 related shutdowns.
The decrease in service and other revenue of $0.7 million was primarily due to a
decrease in our research services revenue as customers were better able to
perform services themselves as their sites reopened from COVID-19 related
shutdowns, as well as open headcount within our services personnel. We had $0.1
million and $11.2 million in collaboration and license revenue during the three
months ended September 30, 2021 and 2020, respectively, related to licensing
technology and intellectual property. We had $11.2 million in collaboration and
license revenue during the three months ended September 30, 2020 primarily
related to entering into the Abbott License Agreement. Grant revenue of $1.0
million and $1.9 million consisted of revenue related to WP2 recognized during
the three months ended September 30, 2021 and revenue related to WP1 recognized
during the three months ended September 30, 2020 , respectively.
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Cost of Goods Sold, Services, and Licenses
Cost of product revenue increased by$2.3 million , or 35%, to$8.6 million for the three months endedSeptember 30, 2021 as compared to$6.4 million for the three months endedSeptember 30, 2020 . The increase was primarily due to our increase in volume of product revenue. Cost of service revenue increased to$3.8 million for the three months endedSeptember 30, 2021 from$2.9 million for the three months endedSeptember 30, 2020 . The increase was primarily due to increased personnel costs from the build out of our field service organization. Cost of collaboration and license revenue of$1.0 million resulted from the sublicensing of certain technology and intellectual property toAbbott during the three months endedSeptember 30, 2020 . Overall cost of goods sold as a percentage of revenue increased to 45% of total revenue for the three months endedSeptember 30, 2021 as compared to 33% for the three months endedSeptember 30, 2020 , primarily as a result of the$1.0 million in cost of collaboration and license revenue incurred during the three months endedSeptember 30, 2020 for royalties paid to Tufts related to the Abbott License Agreement.
Research and Development Expense
Research and development expense increased by$1.4 million , or 27%, primarily due to increased overall headcount in research and development as we build out our organization to support growth.
Selling, General, and Administrative Expense
Selling, general and administrative expense increased by$10.2 million for the three months endedSeptember 30, 2021 as compared to the same period in 2020, primarily due to headcount additions and other spending increases in various departments as we build out our organization to support growth.
Interest Expense, Net and Other Expense, Net
Interest expense, net and other expense, net was an expense of
Income Tax (Expense) Benefit
Income tax expense was less than
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Comparison of the Nine Months EndedSeptember 30, 2021 andSeptember 30, 2020 (dollars in thousands): Nine Months Ended Nine Months Ended September 30, % of September 30, % of $ % 2021 revenue 2020 revenue change change
Product revenue $ 57,586 72 % $ 28,285 47 %$ 29,301 104 % Service and other revenue 17,955 22 % 18,631 31 % (676) (4) % Collaboration and license revenue 486 1 % 11,401 19 % (10,915) (96) % Grant revenue 4,242 5 % 1,929 3 % 2,313 120 % Total revenue 80,269 100 % 60,246 100 % 20,023 33 % Cost of goods sold: Cost of product revenue 24,233 30 % 17,989 30 % 6,244 35 % Cost of service revenue 10,569 13 % 8,125 13 % 2,444 30 % Cost of collaboration and license revenue - - % 1,000 2 % (1,000) (100) % Total costs of goods sold, services, and licenses 34,802 43 % 27,114 45 % 7,688 28 % Gross profit 45,467 57 % 33,132 55 % 12,335 37 % Operating expenses:
Research and development 20,244 25 % 13,957 23 % 6,287 45 % Selling, general, and administrative 63,913 80 % 40,826 68 % 23,087 57 % Total operating expense 84,157 105 % 54,783 91 % 29,374 54 % Loss from operations (38,690) (48) % (21,651) (36) % (17,039) (79) % Interest expense, net (418) (1) % (107) - % ` (311) (291) % Other income (expense), net 1,478 2 % (204) - % 1,682 825 % Loss before income taxes (37,630) (47) % (21,962) (36) % (15,668) (71) % Income tax (expense) benefit (32) - %
253 - % (285) (113) %
Net loss $ (37,662) (47) % $ (21,709) (36) % $ (15,953) (73) %
Revenue
Total revenue increased by$20.0 million , or 33%, to$80.3 million for the nine months endedSeptember 30, 2021 as compared to$60.2 million for the nine months endedSeptember 30, 2020 . Product revenue consisted of sales of instruments totaling$19.3 million and sales of consumables and other products of$38.3 million for the nine months endedSeptember 30, 2021 . Product revenue consisted primarily of sales of instruments totaling$10.9 million and sales of consumables and other products of$17.3 million for the nine months endedSeptember 30, 2020 . The increase in product revenue of$29.3 million was primarily due to the increased ability to install instruments as customer sites reopened from COVID-19 related shutdowns that impacted results from operations during the nine months endedSeptember 30, 2020 . In addition, as the installed base of instruments increased fromSeptember 30, 2020 toSeptember 30, 2021 , the consumable sales increased as customers opened from COVID-19 related shutdowns. The decrease in service and other revenue of$0.7 million was primarily due to a decrease in our research services revenue as customers were better able to perform services themselves as their sites reopened from COVID-19 related shutdowns, as well as open headcount within our services personnel. We had$0.5 million and$11.4 million in collaboration and license revenue during the nine months endedSeptember 30, 2021 and 2020, respectively, related to licensing technology and intellectual property. We had$11.2 million in collaboration and license revenue during the nine months endedSeptember 30, 2020 primarily related to entering into the Abbott License Agreement. Grant revenue of$4.2 million and$1.9 million consisted of revenue related to WP2 recognized during the nine months endedSeptember 30, 2021 and revenue related to WP1 recognized during the nine months endedSeptember 30, 2020 , respectively.
Cost of Goods Sold, Services, and Licenses
Cost of product revenue increased by$6.2 million , or 35%, to$24.2 million for the nine months endedSeptember 30, 2021 as compared to$18.0 million for the nine months endedSeptember 30, 2020 . The increase was primarily due to our increase in volume of product revenue. Cost of service revenue increased to
$10.6 million for the 29 Table of Contents
nine months endedSeptember 30, 2021 from$8.1 million for the nine months endedSeptember 30, 2020 . The increase was primarily due to increased personnel costs from the build out of our field service organization. Cost of collaboration and license revenue of$1.0 million resulted from the licensing of certain technology and intellectual property toAbbott during the nine months endedSeptember 30, 2020 . Overall cost of goods sold as a percentage of revenue decreased to 43% of total revenue for the nine months endedSeptember 30, 2021 as compared to 45% for the nine months endedSeptember 30, 2020 , primarily as a result of the increase in grant revenue, increased manufacturing efficiencies, and an increase in average selling prices of our instruments.
Research and Development Expense
Research and development expense increased by$6.3 million , or 45%, to$20.2 million for the nine months endedSeptember 30, 2021 as compared to$14.0 million for the nine months endedSeptember 30, 2020 . The increase was primarily due to compensation, development, materials, and other expenses related to work under WP2 incurred during the nine months endedSeptember 30, 2021 , as well as increased overall headcount in research and development as we build out our organization to support growth.
Selling, General, and Administrative Expense
Selling, general and administrative expense increase by$23.1 million for the nine months endedSeptember 30, 2021 as compared to the same period in 2020, primarily due to headcount additions and other spending increases in various departments as we build out our organization to support growth.
Interest Expense, Net and Other Income (Expense), Net
Interest expense, net and other income (expense), net was income of$1.1 million for the nine months endedSeptember 30, 2021 , as compared to expense of$0.3 million for the nine months endedSeptember 30, 2020 , primarily due to other income of$2.1 million recognized during the nine months endedSeptember 30, 2021 related to an employee retention tax credit established under the Coronavirus Aid, Relief, and Economic Securities Act.
Income Tax (Expense) Benefit
Income tax expense was less than$0.1 million for the nine months endedSeptember 30, 2021 , as compared a benefit of$0.3 million for the same period in 2020. The change is primarily due to the decrease in the tax benefit recorded on the operating results of our foreign subsidiaries.
Liquidity and Capital Resources
To date, we have financed our operations principally through equity offerings, borrowings from credit facilities and revenue from our commercial operations.
Equity Offerings
OnAugust 6, 2020 , we entered into an underwriting agreement withSVB Leerink, LLC (Leerink) andCowen and Company, LLC (Cowen), as representatives of the several underwriters, relating to an underwritten public offering of approximately 3.0 million shares of common stock, par value$0.001 per share. The underwritten public offering resulted in gross proceeds of$97.6 million . We incurred$6.2 million in issuance costs associated with the underwritten public offering, resulting in net proceeds of$91.4 million . OnFebruary 3, 2021 , we entered into an underwriting agreement withGoldman Sachs & Co. LLC , Leerink, and Cowen, as representatives of the several underwriters, relating to an underwritten public offering of 4,107,142 shares of common stock at a public offering price of$70.00 per share. We received$287.5 million in gross proceeds and approximately$269.7 million in net proceeds.
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Loan Facility with Hercules
OnApril 14, 2014 , we executed a loan agreement with Hercules Capital, Inc. (Hercules), as subsequently amended most recently inApril 2019 . As ofSeptember 30, 2021 andDecember 31, 2020 , our outstanding long term debt balance was$2.0 million and$7.7 million , respectively. The interest rate on this term loan was variable based on a calculation of 8% plus the prime rate less 5.25%, with a minimum interest rate of 8%. Interest was to be paid monthly beginning the month following the borrowing date. Under the amended agreement, we are required to pay the loan principal in four equal installments startingJuly 1, 2021 , with the final principal payment and end of term charge to be made onOctober 1, 2021 . OnOctober 1, 2021 , we made the final principal payment, including end of term fees, of$2.0 million related to the loan agreement.
Cash Flows
The following table presents our cash flows for each period presented (in
thousands):
Nine Months Ended September 30,
2021 2020
Net cash used in operating activities
(4,144) (2,149)
Net cash provided by financing activities 271,646
94,160
Net increase in cash and cash equivalents
63,992
We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support the growth of our business. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure and this may continue in the future. Net cash used in operating activities was$37.6 million during the nine months endedSeptember 30, 2021 . The net cash used in operating activities primarily consisted of the net loss of$37.7 million offset by non-cash charges of$11.0 million of stock-based compensation expense and$3.6 million of depreciation and amortization expense. Cash used as a result of changes in operating assets and liabilities of$15.6 million was primarily due to an increase in inventory of$8.4 million , a decrease in accrued compensation and benefits, other accrued expenses and other current liabilities of$2.7 million , and an increase in accounts receivable of$1.6 million . Net cash used in operating activities was$28.0 million during the nine months endedSeptember 30, 2020 . The net cash used in operating activities primarily consisted of the net loss of$21.7 million offset by non-cash charges of$7.0 million of stock-based compensation expense and$3.2 million of depreciation and amortization expense. Cash used as a result of changes in operating assets and liabilities of$17.5 million was primarily due to an increase in accounts receivable of$15.4 million , and an increase in inventory of$3.5 million .
Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure and work force. We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods.
We used
We used
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Net Cash Provided by Financing Activities
Historically, we have financed our operations principally through private placements of our stock, borrowings from credit facilities, and revenues from our commercial operations.
Financing activities provided$271.6 million of cash during the nine months endedSeptember 30, 2021 , primarily from$269.7 million in net proceeds from our underwritten public offering during the first quarter of 2021, and$6.6 million in proceeds from common stock option exercises, offset by$5.7 million in payments on notes payable. Financing activities provided$94.2 million of cash during the nine months endedSeptember 30, 2020 , primarily from$91.4 million in net proceeds from our underwritten public offering during the third quarter of 2020, and$1.9 million in proceeds from common stock option exercises.
Capital Resources
Other than the third quarter of 2020, since inception, we have incurred net losses, and we also expect that our operating expenses will increase as we continue to increase our marketing efforts to drive adoption of our commercial products. Additionally, as a public company, we have incurred and will continue to incur significant audit, legal and other expenses that we did not incur as a private company. Our liquidity requirements have historically consisted, and we expect that they will continue to consist, of sales and marketing expenses, research and development expenses, working capital, debt service and general corporate expenses. We believe cash generated from commercial sales, our current cash and cash equivalents, and interest income we earn on these balances will be sufficient to meet our anticipated operating cash requirements for at least the next 12 months. In the future, we expect our operating and capital expenditures to increase as we increase headcount, expand our sales and marketing activities and grow our customer base. Our estimates of the period of time through which our financial resources will be adequate to support our operations and the costs to support research and development and our sales and marketing activities are forward-looking statements and involve risks and uncertainties and actual results could vary materially and negatively as a result of a number of factors, including the factors discussed in Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year endedDecember 31, 2020 . We have based our estimates on assumptions that may prove to be wrong and we could utilize our available capital resources sooner than we currently expect. Our future funding requirements will depend on many factors, including:
? market acceptance of our products, including our SP-X and HD-X instruments;
? the cost and timing of establishing additional sales, marketing and
distribution capabilities;
? the cost of our research and development activities;
? our ability to enter into collaborations in the future, and the success of any
such collaborations;
? the cost and timing of potential regulatory clearances or approvals that may be
required in the future for our products;
? the effects of the COVID-19 pandemic; and
? the effect of competing technological and market developments.
If the conditions for raising capital are favorable, we may seek to finance future cash needs through public or private equity or debt offerings or other financings. OnNovember 6, 2020 , we filed an automatically effective shelf registration statement with theSEC . Each issuance of securities under the shelf registration statement will require the filing of a prospectus supplement identifying the amount and terms of securities to be issued. The registration statement does not limit the amount of securities that may be issued thereunder. Our ability to issue securities is subject to market conditions and other factors. This registration statement will expire onNovember 6, 2023 , three years after its date of effectiveness. However, we cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to 32 Table of Contents relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products. We also may have to reduce marketing, customer support or other resources devoted to our products or cease operations.
Contractual Obligations and Commitments
As ofSeptember 30, 2021 , there have been no material changes to our contractual obligations and commitments from those described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 .
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under applicable
Critical Accounting Policies, Significant Judgments and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted inthe United States , orU.S. GAAP, requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of assets and liabilities in our financial statements and accompanying notes. The most significant assumptions used in the financial statements are the underlying assumptions used in revenue recognition, fair value of assets acquired and liabilities assumed in acquisitions, and valuation of inventory. We base estimates and assumptions on historical experience when available and on various factors that we determined to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies, Significant Judgments and Estimates" included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . We are considered to be an "emerging growth company" (EGC) as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). The JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Because the market value of our common stock that was held by non-affiliates exceeded$700 million as ofJune 30, 2021 , we will cease to be an EGC as ofDecember 31, 2021 . As a result, starting in 2022, we will 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.
There have been no material changes to our critical accounting policies and estimates as disclosed therein, with the exception of our adoption of recent accounting pronouncements, as discussed below.
Recent Accounting Pronouncements
Information concerning recently issued accounting pronouncements may be found in Note 2 to our unaudited condensed consolidated financial statements included in the quarterly report on Form 10-Q.
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