Summary Of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2014 |
Summary Of Significant Accounting Policies [Abstract] | ' |
Summary Of Significant Accounting Policies | ' |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation |
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) of Pacific Biosciences of California, Inc. and its wholly-owned subsidiaries have been prepared on a consistent basis with the December 31, 2013 audited Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. Certain prior year amounts in the Financial Statements and notes thereto have been reclassified to conform to the current year’s presentation. The Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, omit certain information and footnote disclosures necessary to present the statements in accordance with U.S. generally accepted accounting principles (“GAAP”). These Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. The results of operations for the three-month period ended March 31, 2014 are not necessarily indicative of the results to be expected for the entire fiscal year or any future periods. |
Use of Estimates |
The preparation of Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying Notes to the Financial Statements. Our estimates include, but are not limited to, the valuation of inventory, financing derivative, long-term notes, and equity grants and related stock-based compensation, as well as the assumptions and estimates used to allocate proceeds received in revenue, debt and equity transactions which may affect revenue recognition and interest expense. Actual results could differ materially from these estimates. |
Reclassifications |
Certain prior period amounts in the condensed consolidated statements of operations and comprehensive loss have been reclassified to conform to current period presentation. We reclassified $0.3 million of Grant revenue to Service and other revenue for the three-month period ended March 31, 2013. Such reclassification did not impact our net loss or financial position. |
Fair Value of Financial Instruments |
Assets and liabilities measured at fair value on a recurring basis |
The following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis as of March 31, 2014 and December 31, 2013, respectively: |
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(in thousands) | 31-Mar-14 | | 31-Dec-13 |
| Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
Assets | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents: | | | | | | | | | | | | | | | | | | | | | | | |
Cash and money market funds | $ | 19,885 | | $ | — | | $ | — | | $ | 19,885 | | $ | 12,963 | | $ | — | | $ | — | | $ | 12,963 |
Commercial paper | | — | | | 21,376 | | | — | | | 21,376 | | | — | | | 13,399 | | | — | | | 13,399 |
Total cash and cash equivalents | | 19,885 | | | 21,376 | | | — | | | 41,261 | | | 12,963 | | | 13,399 | | | — | | | 26,362 |
Investments: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial paper | | — | | | 48,578 | | | — | | | 48,578 | | | — | | | 61,264 | | | — | | | 61,264 |
Corporate debt securities | | — | | | 8,599 | | | — | | | 8,599 | | | — | | | 8,629 | | | — | | | 8,629 |
Asset backed securities | | — | | | 20,298 | | | — | | | 20,298 | | | — | | | 16,273 | | | — | | | 16,273 |
Total investments | | — | | | 77,475 | | | — | | | 77,475 | | | — | | | 86,166 | | | — | | | 86,166 |
Total assets measured at fair value | $ | 19,885 | | $ | 98,851 | | $ | — | | $ | 118,736 | | $ | 12,963 | | $ | 99,565 | | $ | — | | $ | 112,528 |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | |
Financing derivative | $ | — | | $ | — | | $ | 549 | | $ | 549 | | $ | — | | $ | — | | $ | 549 | | $ | 549 |
Total liabilities measured at fair value | $ | — | | $ | — | | $ | 549 | | $ | 549 | | $ | — | | $ | — | | $ | 549 | | $ | 549 |
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All of our cash deposits and money market funds are classified within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. Our investments are classified as Level 2 instruments based on market pricing and other observable inputs. None of our investments are classified within Level 3 of the fair value hierarchy. |
During the three-month periods ended March 31, 2014 and 2013, realized gains and losses on the sale of investments were immaterial and there were no material impairments of our investments. |
The fair value of the Financing Derivative liability (as defined in Note 6. Debt) resulting from the debt facility we entered into during the first quarter of 2013 was determined using Level 3 inputs, or significant unobservable inputs. Please refer to Note 6. Debt for a detailed description on the valuation approach. Changes to the fair value of the Financing Derivative are recorded in “Other income (expense), net” in the condensed consolidated statements of operations and comprehensive loss. The fair value of the Finance Derivative was $0.5 million at December 31, 2013 and there was no change to the fair value of the Financial Derivative at March 31, 2014. |
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During the three-month period ended March 31, 2014 there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis and valuation techniques did not change compared to established practice. |
Financial assets and liabilities not measured at fair value on a recurring basis |
The carrying amount of our accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value due to their short maturities. The carrying value of our facility financing obligation approximates fair value due to the time to maturity and prevailing market rates. |
We determined the fair value of the Notes (as defined in Note 6. Debt) from the debt facility using Level 3 inputs, or significant unobservable inputs. The value of the Notes was determined by comparing the difference between the fair value of the Notes with and without the Financing Derivative by calculating the respective present values from future cash flows using a 20.4% weighted average market yield. The estimated fair value and carrying value of the Notes are as follows (in thousands): |
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| 31-Mar-14 | | 31-Dec-13 | | | | | | | | | | | | |
| Fair Value | | Carrying Value | | Fair Value | | Carrying Value | | | | | | | | | | | | |
Long-term notes payable | $ | 14,551 | | $ | 13,525 | | $ | 14,551 | | $ | 13,347 | | | | | | | | | | | | |
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Net Loss per Share |
The following table presents the computation of our basic and diluted net loss per share (in thousands, except per share amounts): |
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| Three-Month Periods Ended March 31, | | | | | | | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | | | | | | | |
Net loss per share | | | | | | | | | | | | | | | | | | | | | | | |
Numerator: | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | $ | -18,886 | | $ | -21,104 | | | | | | | | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares used in computation of basic and diluted net loss per share | | 67,861 | | | 57,372 | | | | | | | | | | | | | | | | | | |
Basic and diluted net loss per share | $ | -0.28 | | $ | -0.37 | | | | | | | | | | | | | | | | | | |
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The following were excluded from the computation of our diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect: |
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| March 31, | | | | | | | | | | | | | | | | | | | | |
(in thousands) | 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | |
Options outstanding | 15,714 | | 13,741 | | | | | | | | | | | | | | | | | | | | |
Warrants to purchase common stock | 5,500 | | 5,504 | | | | | | | | | | | | | | | | | | | | |
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