Pacific Biosciences of California (PACB) 10-Q 3 Nov 20 2020 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Oct. 31, 2020
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Current Fiscal Year End Date	--12-31
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Transition Report	false
Entity File Number	001-34899
Entity Registrant Name	Pacific Biosciences of California, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	16-1590339
Entity Address, Address Line One	1305 O’Brien Drive
Entity Address, City or Town	Menlo Park
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94025
City Area Code	650
Local Phone Number	521-8000
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	PACB
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock Shares Outstanding		180,212,604
Amendment Flag	false
Entity Central Index Key	0001299130
Document Fiscal Period Focus	Q3

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 69,028	$ 29,627
Investments	139,522	19,472
Accounts receivable	11,806	15,266
Inventory	15,940	13,312
Prepaid expenses and other current assets	3,212	3,369
Total current assets	239,508	81,046
Property and equipment, net	26,568	30,070
Operating lease right-of-use assets, net	30,700	32,827
Long-term restricted cash	3,500	4,000
Other long-term assets	42	42
Total assets	300,318	147,985
Current liabilities
Accounts payable	5,406	8,368
Accrued expenses	15,079	13,242
Deferred revenue, current	6,982	7,610
Operating lease liabilities, current	4,217	3,837
Notes payable, current		15,871
Deferred gain from Reverse Termination Fee	98,000
Other liabilities, current	584	225
Total current liabilities	130,268	49,153
Deferred revenue, non-current	1,761	1,951
Operating lease liabilities, non-current	38,793	41,964
Total liabilities	170,822	93,068
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.001 par value: Authorized 50,000 shares; No shares issued or outstanding
Common stock, $0.001 par value: Authorized 1,000,000 shares; issued and outstanding 179,937 shares and 153,119 shares at September 30, 2020 and December 31, 2019, respectively	180	153
Additional paid-in capital	1,241,002	1,120,999
Accumulated other comprehensive income	118	5
Accumulated deficit	(1,111,804)	(1,066,240)
Total stockholders' equity	129,496	54,917
Total liabilities and stockholders' equity	$ 300,318	$ 147,985

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Condensed Consolidated Balance Sheets [Abstract]
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	50,000,000	50,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	1,000,000,000	1,000,000,000
Common Stock, shares issued	179,937,000	153,119,000
Common Stock, shares outstanding	179,937,000	153,119,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue:
Total revenue	$ 19,082	$ 21,915	$ 51,757	$ 62,961
Cost of revenue:
Total cost of revenue	12,018	15,001	30,592	41,317
Gross profit	7,064	6,914	21,165	21,644
Operating expense:
Research and development	16,467	14,962	46,727	45,357
Sales, general and administrative	14,772	20,066	54,846	58,915
Total operating expense	31,239	35,028	101,573	104,272
Operating loss	(24,175)	(28,114)	(80,408)	(82,628)
Gain from Continuation Advances			34,000
Interest expense		(664)	(267)	(1,933)
Other income (expense), net	467	(345)	1,143	518
Net loss	(23,708)	(29,123)	(45,532)	(84,043)
Other comprehensive income (loss):
Unrealized income (loss) on investments	(125)	(6)	113	47
Comprehensive loss	$ (23,833)	$ (29,129)	$ (45,419)	$ (83,996)
Net loss per share:
Basic and diluted net loss per share	$ (0.14)	$ (0.19)	$ (0.29)	$ (0.55)
Shares used in computing basic and diluted net loss per share	166,862	152,983	158,195	152,351
Product [Member]
Revenue:
Total revenue	$ 15,749	$ 18,484	$ 41,798	$ 53,191
Cost of revenue:
Total cost of revenue	9,228	12,188	22,874	32,786
Service and Other [Member]
Revenue:
Total revenue	3,333	3,431	9,959	9,770
Cost of revenue:
Total cost of revenue	$ 2,790	$ 2,813	$ 7,718	$ 8,531

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]Revision of Prior Period, Accounting Standards Update, Adjustment [Member]	Accumulated Deficit [Member]	Revision of Prior Period, Accounting Standards Update, Adjustment [Member]	Total
Balance at Dec. 31, 2018	$ 150	$ 1,096,053	$ (36)		$ (982,106)		$ 114,061
Balance, shares at Dec. 31, 2018	150,244
Net loss					(84,043)		(84,043)
Other comprehensive income (loss)			47				47
Issuance of common stock in conjunction with equity plans	$ 3	8,414					8,417
Issuance of common stock in conjunction with equity plans, shares	2,787
Stock-based compensation expense		12,532					12,532
Balance at Sep. 30, 2019	$ 153	1,116,999	11		(1,066,149)		51,014
Balance, shares at Sep. 30, 2019	153,031
Balance at Jun. 30, 2019	$ 153	1,112,610	17		(1,037,026)		75,754
Balance, shares at Jun. 30, 2019	152,959
Net loss					(29,123)		(29,123)
Other comprehensive income (loss)			(6)				(6)
Issuance of common stock in conjunction with equity plans		327					327
Issuance of common stock in conjunction with equity plans, shares	72
Stock-based compensation expense		4,062					4,062
Balance at Sep. 30, 2019	$ 153	1,116,999	11		(1,066,149)		51,014
Balance, shares at Sep. 30, 2019	153,031
Balance at Dec. 31, 2019	$ 153	1,120,999	5	$ (32)	(1,066,240)	$ (32)	$ 54,917
Balance, shares at Dec. 31, 2019	153,119						153,119
Net loss					(45,532)		$ (45,532)
Other comprehensive income (loss)			113				113
Issuance of common stock in conjunction with equity plans	$ 4	14,170					14,174
Issuance of common stock in conjunction with equity plans, shares	4,473
Issuance of common stock from Underwritten Public Equity Offering, net of issuance costs	$ 23	93,575					93,598
Issuance of common stock from Underwritten Public Equity Offering, net of issuance costs, shares	22,345
Stock-based compensation expense		12,258					12,258
Balance at Sep. 30, 2020	$ 180	1,241,002	118		(1,111,804)		$ 129,496
Balance, shares at Sep. 30, 2020	179,937						179,937
Balance at Jun. 30, 2020	$ 154	1,129,091	243		(1,088,096)		$ 41,392
Balance, shares at Jun. 30, 2020	154,318
Net loss					(23,708)		(23,708)
Other comprehensive income (loss)			(125)				(125)
Issuance of common stock in conjunction with equity plans	$ 3	13,344					13,347
Issuance of common stock in conjunction with equity plans, shares	3,274
Issuance of common stock from Underwritten Public Equity Offering, net of issuance costs	$ 23	93,575					93,598
Issuance of common stock from Underwritten Public Equity Offering, net of issuance costs, shares	22,345
Stock-based compensation expense		4,992					4,992
Balance at Sep. 30, 2020	$ 180	$ 1,241,002	$ 118		$ (1,111,804)		$ 129,496
Balance, shares at Sep. 30, 2020	179,937						179,937

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended				6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Mar. 31, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Cash flows from operating activities
Net loss	$ (23,708)			$ (29,123)		$ (45,532)	$ (84,043)
Adjustments to reconcile net loss to net cash used in operating activities
Gain from Continuation Advances		$ (34,000)				(34,000)		$ (18,000)
Depreciation						4,827	5,483
Amortization of operating lease right-of-use assets						2,127	1,954
Amortization of debt discount and financing costs						129	887
Gain on derivative							(16)
Stock-based compensation						12,258	12,532
Amortization (accretion) from investment premium (discount)						(141)	(821)
Loss on disposition of equipment							144
Changes in assets and liabilities
Accounts receivable						3,428	(1,371)
Inventory						(2,988)	2,255
Prepaid expenses and other assets						216	238
Accounts payable						(2,955)	1,454
Accrued expenses						1,646	4,914
Deferred revenue						(818)	387
Operating lease liabilities						(2,791)	(2,537)
Other liabilities						360	(1,592)
Deferred gain from Reverse Termination fee						98,000
Net cash provided by (used in) operating activities						33,766	(60,132)
Cash flows from investing activities
Purchase of property and equipment						(972)	(2,695)
Purchase of investments						(234,555)	(42,710)
Sales of investments							1,500
Maturities of investments						114,700	109,360
Net cash provided by (used in) investing activities						(120,827)	65,455
Cash flows from financing activities
Continuation Advances		34,000	$ 18,000		$ 52,000	34,000
Notes payable principal payoff						(16,000)
Proceeds from issuance of common stock from underwritten public equity offering, net of issuance costs						93,788
Proceeds from issuance of common stock from equity plans						14,174	8,417
Net cash provided by financing activities						125,962	8,417
Net increase in cash and cash equivalents and restricted cash						38,901	13,740
Cash and cash equivalents and restricted cash at beginning of period		$ 33,627	37,084		$ 37,084	33,627	23,344	23,344
Cash and cash equivalents and restricted cash at end of period	72,528		33,627	37,084		72,528	37,084	33,627
Cash and cash equivalents at end of period	69,028		$ 29,627	33,084		69,028	33,084	$ 29,627
Restricted cash at end of period	$ 3,500			$ 4,000		3,500	4,000
Supplemental disclosure of non-cash operating activities
Inventory transferred to property and equipment						541	1,784
Inventory transferred from property and equipment						$ 181	$ 1,228

Overview

Overview	9 Months Ended
	Sep. 30, 2020
Overview [Abstract]
Overview	NOTE 1. OVERVIEW We design, develop and manufacture sequencing systems to help scientists resolve genetically complex problems. Based on our novel Single Molecule, Real-Time (SMRT®) sequencing technology, our products enable: de novo genome assembly to finish genomes in order to more fully identify, annotate and decipher genomic structures; full-length transcript analysis to improve annotations in reference genomes, characterize alternatively spliced isoforms in important gene families, and find novel genes; targeted sequencing to more comprehensively characterize genetic variations; and real-time kinetic information for epigenome characterization. Our technology provides high accuracy, ultra-long reads, uniform coverage and the ability to simultaneously detect epigenetic changes. PacBio® sequencing systems, including consumables and software, provide a simple and fast end-to-end workflow for SMRT sequencing. Our current products include the Sequel II instrument and SMRT Cell 8M, which together are capable of sequencing up to approximately eight million DNA molecules simultaneously, and the previous generation Sequel instrument and Sequel SMRT Cell 1M, which together are capable of sequencing up to approximately one million DNA molecules simultaneously. In October 2020, we launched the Sequel IIe System, which has increased computational capacity, and is designed to enable customers to generate PacBio HiFi reads more efficiently. Our customers and our scientific collaborators have published numerous peer-reviewed articles in journals including Nature, Science, Cell, PNAS and The New England Journal of Medicine highlighting the power and applications of SMRT sequencing in projects such as finishing genomes, structural variation discovery, isoform transcriptome characterization, rare mutation discovery and the identification of chemical modifications of DNA related to virulence and pathogenicity. Our research and development efforts are focused on developing new products and further improving our existing products including continuing chemistry and sample preparation improvements to increase throughput and expand our supported applications. By providing access to genetic information that was previously inaccessible, we enable scientists to confidently increase their understanding of biological systems. The names “Pacific Biosciences,” “PacBio,” “SMRT,” “SMRTbell,” “Sequel” and our logo are our trademarks.

Termination of Merger with Illu

Termination of Merger with Illumina	9 Months Ended
	Sep. 30, 2020
Termination of Merger with Illumina [Abstract]
Termination of Merger with Illumina	NOTE 2 TERMINATION OF MERGER WITH ILLUMINA On November 1, 2018, we entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Illumina, Inc. (“Illumina”) and FC Ops Corp., a wholly owned subsidiary of Illumina (“Merger Subsidiary”). On January 2, 2020, we, Illumina and Merger Subsidiary, entered into an agreement to terminate the Merger Agreement (the “Termination Agreement”). As part of the Termination Agreement, Illumina paid us a $ 98.0 million termination fee (the “Reverse Termination Fee”), from which we paid our financial advisor associated fees of $ 6.0 million in April 2020. In addition, Illumina paid us cash payments (“Continuation Advances”) of $ 18.0 million during the fourth quarter of 2019 and $ 34.0 million during the first quarter of 2020. However, pursuant to the Termination Agreement, in the event that, on or prior to September 30, 2020, we entered into a definitive agreement providing for, or consummated, a Change of Control Transaction (as defined in the Termination Agreement) (“Change of Control Transaction”), then we may have been required to repay the Reverse Termination Fee (without interest) to Illumina in connection with the consummation of such Change of Control Transaction. No such definitive agreement was entered into nor was a Change of Control Transaction consummated as of September 30, 2020. Please refer to “Note 5. Balance Sheet Components” for the accounting treatment of the Reverse Termination Fee. In addition, up to the full $ 52.0 million of Continuation Advances paid to us are repayable without interest to Illumina if, within two years of March 31, 2020, we enter into, or consummate a Change of Control Transaction or raise at least $ 100 million in a single equity or debt financing (that may have multiple closings), with the amount repayable dependent on the amount raised by us. Please refer to “Note 3. Summary of Significant Accounting Policies” for the accounting treatment of the Continuation Advances.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation In the opinion of management, our accompanying unaudited condensed consolidated financial statements (“Financial Statements”) have been prepared on a consistent basis with our December 31, 2019 audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, as permitted by such rules and regulations, omit certain information and footnote disclosures necessary to present the statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the entire year or any future periods. The condensed consolidated financial statements include the accounts of Pacific Biosciences and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. COVID-19 We are subject to risks and uncertainties as a result of the novel coronavirus pandemic (COVID-19). The extent of the impact of the COVID-19 pandemic on our business is highly uncertain as responses to the pandemic can change quickly and information is rapidly evolving. We considered the impact of COVID-19 on the assumptions and estimates used to determine the results reported and asset valuations as of September 30, 2020. Use of Estimates The preparation of financial statements in conformity with U.S. 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, the determination of stand-alone selling prices for revenue recognition, the valuation of a financing derivative and long-term notes, the probability of repaying the Continuation Advances and Reverse Termination Fee to Illumina, the valuation and recognition of share-based compensation, the expected renewal period for service contracts to derive the amortization period for capitalized commissions, the useful lives assigned to long-lived assets, the computation of provisions for income taxes and the determination of the internal borrowing rate used in calculating the operating lease right-of-use assets and operating lease liabilities. Actual results could differ materially from these estimates. Fair Value of Financial Instruments The carrying amount of our accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other liabilities, current, approximate fair value due to their short maturities. The fair value hierarchy established under U.S. GAAP requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:  Level 1: quoted prices in active markets for identical assets or liabilities;  Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and  Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider an active market as one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, we view an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our non-performance risk, or that of our counterparty, is considered in determining the fair values of liabilities and assets, respectively. We classify our cash deposits and money market funds within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. We classify our investments as Level 2 instruments based on market pricing and other observable inputs. We did not classify any of our investments within Level 3 of the fair value hierarchy. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability. 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 September 30, 2020 and December 31, 2019 respectively: September 30, 2020 December 31, 2019 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents: Cash and money market funds $ 41,784 $ — $ — $ 41,784 $ 18,644 $ — $ — $ 18,644 Commercial paper — 24,244 — 24,244 — 10,983 — 10,983 U.S. Treasury security — 3,000 — 3,000 — — — — Total cash and cash equivalents 41,784 27,244 — 69,028 18,644 10,983 — 29,627 Investments: Commercial paper — 105,380 — 105,380 — 16,971 — 16,971 Corporate debt securities — 21,195 — 21,195 — 2,501 — 2,501 U.S. government & agency securities — 10,097 — 10,097 — — — — U.S. Treasury security — 2,850 — 2,850 — — — — Total investments — 139,522 — 139,522 — 19,472 — 19,472 Long-term restricted cash: Cash 3,500 — — 3,500 4,000 — — 4,000 Total assets measured at fair value $ 45,284 $ 166,766 $ — $ 212,050 $ 22,644 $ 30,455 $ — $ 53,099 Liabilities Financing Derivative $ — $ — $ — $ — $ — $ — $ — $ — Continuation Advances — — — — — — — — Total liabilities measured at fair value $ — $ — $ — $ — $ — $ — $ — $ — Estimated fair value of the Financing Derivative liability The estimated fair value of the Financing Derivative liability (as defined in the “Notes payable, current” section in “Note 5. Balance Sheet Components”) was determined using Level 3 inputs, or significant unobservable inputs. Changes to the estimated fair value of the Financing Derivative are recorded in “Other income, net” in the consolidated statements of operations and comprehensive loss. The estimated fair value of the Financing Derivative was determined by comparing the difference between the fair value of the Notes from the debt facility that we entered into during the first quarter of 2013 (the “Notes”) with and without the Financing Derivative by calculating the respective present values from future cash flows using a 6.5 % discount rate at December 31, 2019. The estimated fair value of the Financing Derivative as of December 31, 2019 was $ 0 . In February 2020, upon maturity of the Notes, the Financing Derivative was extinguished. Refer to the “Notes payable, current” section in “Note 5. Balance Sheet Components” for a detailed description and valuation approach. Estimated fair value of the Continuation Advances liability In accordance with the terms of the Merger Agreement, we received Continuation Advances of $ 18.0 million and $ 34.0 million from Illumina during the fourth quarter of 2019 and the first quarter of 2020, respectively. We determined that the Continuation Advances, which are subject to repayment under certain circumstances as discussed below, constitute a financial liability. The fair value option was elected for the financial liability because management believes that among all measurement methods allowed by Accounting Standards Codification, or ASC, 825, Financial Instruments , the fair value option would most fairly represent the value of such a financial liability. Management applied the income approach to estimate the fair value of this financial liability. The estimated fair value of the liability related to the Continuation Advances was determined using Level 3 inputs, or significant unobservable inputs. Management estimated that there would be no future cash outflows associated with this financial instrument because the probabilities of either of the following events occurring and requiring repayment to Illumina were evaluated as being remote as of September 30, 2020 and December 31, 2019:  we enter into a Change of Control Transaction within two years following March 31, 2020; or  we raise $ 100 million or more in a single equity or debt financing (that may have multiple closings) within two years following March 31, 2020. As a result, the estimated fair value of the liability associated with the contingent repayment of the Continuation Advances received in the first quarter of 2020 was assessed to be zero as of March 31, 2020, June 30, 2020 and September 30, 2020, respectively, with a resulting non-operating gain of $ 34.0 million recorded as “Gain from Continuation Advances from Illumina” for the quarter ended March 31, 2020. We recorded a similar gain of $ 18.0 million in 2019 for the Continuation Advances received during the fourth quarter of 2019. For the quarter ended September 30, 2020, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis and our valuation techniques did not change compared to the prior year. Net Loss per Share The following outstanding common stock options, restricted stock units (“RSUs”), with time-based vesting and RSUs with performance-based vesting, were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. See Note 7. Stockholders’ Equity for detailed information on RSUs with time-based vesting and RSUs with performance-based vesting. Nine Months Ended September 30, (in thousands) 2020 2019 Options to purchase common stock 19,921 23,048 RSUs with time-based vesting 5,971 1,094 RSUs with performance-based vesting 94 138 Concentration and Other Risks For the three and nine months ended September 30, 2020, Gene Company Limited accounted for approximately 18 % and 14 %, respectively, of our total revenue during the period with no other customer exceeding 10% during those periods. For the three and nine months ended September 30, 2019, Gene Company Limited accounted for approximately 14 % and 18 % of our total revenue, respectively, with no other customer exceeding 10% during those periods. Gene Company Limited is our primary distributor in China. Recent Accounting Pronouncements Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”), which replaces existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost. We adopted Topic 326 on January 1, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment to the opening balance of retained earnings/accumulated deficit to be recognized on the date of adoption with prior periods not restated. The cumulative-effect adjustment recorded on January 1, 2020, is shown below (in thousands): Balance Sheets Balance at December 31, 2019 Adjustments Due to Topic 326 Balance at January 1, 2020 Assets Accounts receivable $ 15,266 $ ( 32 ) $ 15,234 Liabilities and Stockholders' Equity Accumulated deficit ( 1,066,240 ) ( 32 ) ( 1,066,272 ) The adoption of Topic 326 did not have a material impact on our financial statements and our bad debt expense was immaterial as of September 30, 2020. Please see the description of our “Credit Losses” accounting policy in the “Significant Accounting Policies” section below. Significant Accounting Policies With the exception of the change for the accounting of credit losses as a result of the adoption of Topic 326, there have been no new or material changes to the significant accounting policies discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, that are of significance, or potential significance, to us. Credit Losses Trade accounts receivable. The allowance for doubtful accounts is based on our assessment of the collectability of customer accounts. We regularly review the allowance by considering factors such as the age of the accounts receivable balances, customer creditworthiness, customer industry, and current and forecasted economic conditions that may affect a customer’s ability to pay. Available-for-sale debt securities. Our investment portfolio at any point in time contains investments in cash deposits, money market funds, commercial paper, corporate debt securities and US government and agency securities. We regularly review the securities in an unrealized loss position and evaluate the current expected credit loss by considering factors such as significance of loss, historical experience, market data, issuer-specific factors, and current economic conditions and concluded that an allowance for credit losses was not required as of September 30 2020. Although we have historically not experienced significant credit losses, our exposure to credit losses may increase if our customers are adversely affected by changes in economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current COVID-19 pandemic, or other customer-specific factors.

Cash, Cash Equivalents and Inve

Cash, Cash Equivalents and Investments	9 Months Ended
	Sep. 30, 2020
Cash, Cash Equivalents and Investments [Abstract]
Cash, Cash Equivalents and Investments	NOTE 4. CASH, CASH EQUIVALENTS AND INVESTMENTS The following tables summarize our cash, cash equivalents and investments as of September 30, 2020 and December 31, 2019 (in thousands): As of September 30, 2020 Gross Gross Amortized unrealized unrealized Fair Cost gains losses Value Cash and cash equivalents: Cash and money market funds $ 41,784 $ — $ — $ 41,784 Commercial paper 24,243 1 — 24,244 U.S. Treasury security 3,000 — — 3,000 Total cash and cash equivalents 69,027 1 — 69,028 Investments: Commercial paper 105,377 12 ( 9 ) 105,380 Corporate debt securities 21,081 119 ( 5 ) 21,195 U.S. government & agency securities 10,097 1 ( 1 ) 10,097 U.S. Treasury security 2,850 — — 2,850 Total investments 139,405 132 ( 15 ) 139,522 Total cash, cash equivalents and investments $ 208,432 $ 133 $ ( 15 ) $ 208,550 Long-term restricted cash: Cash $ 3,500 $ — $ — $ 3,500 As of December 31, 2019 Gross Gross Amortized unrealized unrealized Fair Cost gains losses Value Cash and cash equivalents: Cash and money market funds $ 18,644 $ — $ — $ 18,644 Commercial paper 10,983 — — 10,983 Total cash and cash equivalents 29,627 — — 29,627 Investments: Commercial paper 16,971 1 ( 1 ) 16,971 Corporate debt securities 2,496 5 — 2,501 Total investments 19,467 6 ( 1 ) 19,472 Total cash, cash equivalents and investments $ 49,094 $ 6 $ ( 1 ) $ 49,099 Long-term restricted cash: Cash $ 4,000 $ — $ — $ 4,000 The following table summarizes the contractual maturities of our cash equivalents and available-for-sale investments, excluding money market funds, as of September 30, 2020 (in thousands): Fair Value Due in one year or less $ 152,858 Due after one year through 5 years 13,908 Total investments $ 166,766 Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

Balance Sheet Components

Balance Sheet Components	9 Months Ended
	Sep. 30, 2020
Balance Sheet Components [Abstract]
Balance Sheet Components	NOTE 5. BALANCE SHEET COMPONENTS Inventory As of September 30, 2020 and December 31, 2019, our inventory consisted of the following components: September 30, December 31, (in thousands) 2020 2019 Purchased materials $ 5,198 $ 3,966 Work in process 5,439 4,594 Finished goods 5,303 4,752 Inventory $ 15,940 $ 13,312 Long-term restricted cash For our facility located at 1305 O’Brien Drive, Menlo Park, California (the “O’Brien Lease”), we were required to establish a letter of credit for the benefit of the landlord and to submit $ 4.5 million as a deposit for the letter of credit in October 2015. Subsequently, pursuant to the terms of the O’Brien Lease, on May 1, 2019, the amount of the letter of credit was reduced from $ 4.5 million to $ 4.0 million. As such, $ 4.0 million was recorded in “Long-term restricted cash” in the condensed consolidated balance sheet as of December 31, 2019. Pursuant to the terms of the O’Brien Lease, the letter of credit balance of $ 4.0 million was reduced again in May 2020 by $ 500,000 . As such, $ 3.5 million was recorded in “Long-term restricted cash” in the condensed consolidated balance sheet as of September 30, 2020. Deferred gain from Reverse Termination Fee As part of the Termination Agreement, Illumina paid us a Reverse Termination Fee of $ 98.0 million, from which we owed our financial advisor associated fees of $ 6.0 million. We recorded the $ 6.0 million of associated fees owed to our financial advisor in the “Sales, general and administrative” expense line in the condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020. Pursuant to the Termination Agreement, in the event that, on or prior to September 30, 2020, we entered into a definitive agreement providing for, or consummated, a Change of Control Transaction, then we may have been required to repay the Reverse Termination Fee (without interest) to Illumina in connection with the consummation of such Change of Control Transaction. If such Change of Control Transaction was not consummated by the two year anniversary of the execution of the definitive agreement for such Change of Control Transaction, then we would not have been required to repay the Reverse Termination Fee. As indicated in ASC 450, Contingencies , a gain contingency usually is not recognized in the financial statements until the period in which all contingencies are resolved and the gain is realizable. As such, we deferred the gain from the Reverse Termination Fee from Illumina until the date when the associated contingency was resolved and accordingly, we recorded the $ 98.0 million as “Deferred Gain from Reverse Termination Fee” in the condensed consolidated balance sheet as of September 30, 2020. Subsequently, on October 1, 2020, the contingency clauses lapsed. Notes payable, current As of December 31, 2019, a balance of $ 16.0 million aggregate principal amount of debt remained outstanding under the debt agreement with Deerfield entered into in February 2013 (the “Facility Agreement”) and was presented as “Notes payable, current” on the condensed consolidated balance sheet as of December 31, 2019. In February 2020, upon the maturity of the Facility Agreement, we repaid the remaining outstanding principal of $ 16.0 million and interest. Financing Derivative A number of features embedded in the Notes required accounting for them as a derivative, including the indemnification of certain withholding taxes and the acceleration of debt upon (i) a qualified financing, (ii) an event of default, (iii) a Major Transaction (as such term is defined in the Facility Agreement), and (iv) the exercise of the warrant via offset to the debt principal. These features represent a single derivative (the “Financing Derivative”) that was bifurcated from the debt instrument and accounted for as a liability at fair value, with changes in fair value between reporting periods recorded in other income (expense), net. The estimated fair value of the Financing Derivative 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 6.5 % discount rate at December 31, 2019. The estimated fair value of the Financing Derivative as of December 31, 2019 was $ 0 . In February 2020, after we repaid the remaining outstanding principal of $ 16.0 million and interest to Deerfield, the related Financing Derivative expired. Deferred revenue As of September 30, 2020, we had a total of $ 8.7 million of deferred revenue from our service contracts, $ 6.9 million of which was recorded as “Deferred revenue, current” to be recognized over the next year and the remaining $ 1.8 million was recorded as “Deferred revenue, non-current” to be recognized in the next 3 years. Revenue recorded in the three and nine months ended September 30, 2020 includes $ 1.6 million and $ 6.5 million, respectively, of previously deferred revenue that was included in “Deferred revenue, current” as of December 31, 2019. Contract assets as of September 30, 2020 and December 31, 2019 were not material. As of September 30, 2020, we had a total of $ 0.6 million of deferred commissions included in “Prepaid expenses and other current assets” which is recognized as the related revenue is recognized. Additionally, as a practical expedient, we expense costs to obtain a contract as incurred if the amortization period would have been a year or less.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2020
Commitments and Contingencies [Abstract]
Commitments and Contingencies	NOTE 6. COMMITMENTS AND CONTINGENCIES Leases On July 22, 2015, we entered into a lease agreement with respect to our facility located at 1305 O’Brien Drive, Menlo Park, California. The term of the O’Brien Lease is one hundred thirty-two ( 132 ) months. In December 2016, we entered into an amendment to the O’Brien Lease which defined the commencement date of the lease to be October 25, 2016, notwithstanding that such substantial completion did not occur until the first quarter of 2017. Base monthly rent was abated for the first six (6) months of the lease term and thereafter was $ 540,000 per month during the first year of the lease term, with specified annual increases thereafter until reaching $ 711,000 per month during the last twelve (12) months of the lease term. If the rent is not received within five days of the due date, there will be an additional sum equal to 5 % of the amount overdue as a late charge. Any amount not paid within 10 days after receipt of landlord’s written notice will bear interest from the date due until paid, at the lesser rate of (1) the prime rate of interest as published in the Wall Street Journal, plus 2 % or (2) the maximum rate allowed by law, in addition to the late payment charge. We were required to establish a letter of credit for the benefits of the landlord and to submit $ 4.5 million as a deposit for the letter of credit in October 2015. Subsequently pursuant to the terms of the O’Brien Lease, on May 1, 2019 the $ 4.5 million in restricted cash was reduced to $ 4.0 million and on May 1, 2020 the $ 4.0 million in restricted cash was reduced to $ 3.5 million. All of our leases are operating leases. Operating lease assets and liabilities are reflected within “Operating lease right-of-use assets, net”, “Operating lease liabilities, current” and “Operating lease liabilities, non-current” on the condensed consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining minimum lease payments over the lease term using our estimated secured incremental borrowing rates at the effective date of January 1, 2019. Lease payments included in the measurement of the lease liability comprise the base rent per the term of the Lease. Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments, such as common area maintenance fees, recognized in the period those payments are incurred. We often have options to renew lease terms for buildings. For the O’Brien Lease, the renewal option is 5 years and the rent will be based on fair market value at the time of renewal and was not included in the lease term. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of September 30, 2020 was 7.1 years. The discount rate implicit within our leases is generally not determinable and therefore we determine the discount rate based on our incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rate used to measure our operating lease liabilities as of September 30, 2020 was 7.9 %. The following table presents information as to the amount and timing of cash flows arising from our operating leases as of September 30, 2020: Maturity of Lease Liabilities Amount Years ending December 31, (in thousands) Remaining of 2020 $ 1,818 2021 7,328 2022 7,502 2023 7,704 2024 7,920 Thereafter 23,598 Total undiscounted operating lease payments 55,870 Less: imputed interest ( 12,860 ) Present value of operating lease liabilities 43,010 Balance Sheet Classification Operating lease liabilities, current 4,217 Operating lease liabilities, non-current 38,793 Total operating lease liabilities 43,010 Cash Flows Cash paid for amounts included in the present value of operating lease liabilities was $ 1.8 million and $ 5.4 million, respectively, for the three and nine months ended September 30, 2020 and included in operating cash flow. Operating Lease Costs Operating lease costs were $ 1.6 million and $ 4.7 million for the three and nine months ended September 30, 2020, respectively. Operating lease costs were $ 1.6 million and $ 4.7 million for the three and nine months ended September 30, 2019, respectively. For both 2020 and 2019 the operating lease costs primarily related to our operating leases, but also included immaterial amounts for variable leases. Contingencies We may become involved in legal proceedings, claims and assessments from time to time in the ordinary course of business. We accrue liabilities for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Legal U.S. District Court Proceedings On March 15, 2017, we filed a complaint in the U.S. District Court for the District of Delaware against ONT Inc. for patent infringement (C.A. No. 17-cv-275 (“275 Action”)). The complaint is based on our U.S. Patent No. 9,546,400 (the “’400 Patent”) which covers novel methods for nanopore sequencing of nucleic acid molecules using the signals from multiple monomeric units. We are seeking remedies including injunctive relief, damages and costs. On August 23, 2018, we filed an amended complaint, adding allegations of willful infringement and adding ONT Ltd. as a defendant in the 275 Action, which was granted on August 15, 2019. On September 25, 2017, we filed a second complaint in the U.S. District Court for the District of Delaware against ONT Inc. for patent infringement (C.A. No. 17-cv-1353 (“1353 Action”)). The complaint is based on our U.S. Patent No. 9,678,056 (the “’056 Patent”) and U.S. Patent No. 9,738,929. We are seeking remedies including injunctive relief, damages and costs. On March 28, 2018, we added a claim for infringement of our U.S. Patent No. 9,772,323 (the “’323 Patent”). On August 23, 2018 we filed an amended complaint, adding allegations of willful infringement and adding ONT Ltd. as a defendant in the 1353 Action, which was granted on August 15, 2019. A trial for the U.S. District Court matters was held from March 9 through March 18, 2020. The jury determined that ONT Inc. and ONT Ltd. infringed the ‘056 Patent, the ‘400 Patent, and the ‘323 Patent, but the jury declined to find these patents valid based on enablement and, in the case of claim one of the ’056 Patent, written description and indefiniteness. The jury declined to find valid or infringed U.S. Patent No. 9,738,929. We are pursuing an appeal of the decision at the U.S. Court of Appeals for the Federal Circuit. Unrelated to the preceding matters, on September 26, 2019, Personal Genomics of Taiwan, Inc. (“PGI”) filed a complaint in the U.S. District Court for the District of Delaware against us for patent infringement (C.A. No. 19-cv-1810). The complaint (the “PGI District Court complaint”) is based on PGI’s U.S. Patent No. 7,767,441 (the “‘441 Patent”). We plan to vigorously defend in this matter. On November 20, 2019, we filed our answer to the complaint, denying infringement and seeking a declaratory judgement of invalidity of the ‘441 Patent. A trial for this matter is scheduled to begin on March 14, 2022. On June 22, 2020, we filed a petition requesting institution of an inter-partes review (IPR) to the Patent Trial and Appeals Board (the “Board”) at the United States Patent Office requesting the Board to find a set of claims in the ‘441 invalid. On June 27, 2020, we filed a second petition requesting institution of an IPR requesting the Board to find another set of claims in the ‘441 invalid. The two petitions (the “PacBio IPR petitions”) requesting IPRs assert that all of the claims relevant to the PGI complaint are invalid. On August 19, 2020, the court ordered a stay of the PGI District Court complaint based on a joint stipulation by the parties. The matter is stayed pending the decision by the Patent Trial and Appeals Board on institution of the PacBio IPR petitions expected January 2021. If both IPR petitions are instituted, the stay will extend until the final written decision on the IPRs. On May 19, 2020, PGI filed a complaint in the Wuhan People’s Court alleging infringement of one or more claims of China patent No. CN101743321B, which is related to the ‘441 Patent. We have not received service. We plan to vigorously defend in this matter. Other Proceedings From time to time, we may also be involved in a variety of other claims, lawsuits, investigations and proceedings relating to securities laws, product liability, patent infringement, contract disputes, employment and other matters that arise in the normal course of our business. In addition, third parties may, from time to time, assert claims against us in the form of letters and other communications. We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We currently do not believe that the ultimate outcome of any of the matters described above is probable or reasonably estimable, or that these matters will have a material adverse effect on our business; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of litigation and settlement costs, diversion of management resources and other factors. Indemnification Pursuant to Delaware law and agreements entered into with each of our directors and officers, we may have obligations, under certain circumstances, to hold harmless and indemnify each of our directors and officers against losses suffered or incurred by the indemnified party in connection with their service to us, and judgements, fines, settlements and expenses related to claims arising against such directors and officers to the fullest extent permitted under Delaware law, our bylaws and certificate of incorporation. We also enter and have entered into indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law. In addition, we may have obligations to hold harmless and indemnify third parties involved with our fundraising efforts and their respective affiliates, directors, officers, employees, agents or other representatives against any and all losses, claims, damages and liabilities related to claims arising against such parties pursuant to the terms of agreements entered into between such third parties and us in connection with such fundraising efforts. To the extent that any such indemnification obligations apply to the lawsuits described above, any associated expenses incurred are included within the related accrued litigation expense amounts. No additional liability associated with such indemnification obligations has been recorded as of September 30, 2020.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2020
Stockholders' Equity [Abstract]
Stockholders' Equity	NOTE 7. STOCKHOLDERS’ EQUITY Underwritten Public Equity Offering In June 2020, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we may, from time to time, sell up to an aggregate of $ 250.0 million of our common stock, preferred stock, depository shares, warrants, units or debt securities. On July 14, 2020, the registration statement was declared effective by the SEC, which allows us to access the capital markets for the three year period following this effective date. In August 2020, we entered into an underwriting agreement, relating to the public offering of 19,430,000 shares of our common stock, $ 0.001 par value per share, at a price to the public of $ 4.47 per share. Under the terms of the underwriting agreement, we also granted the underwriters a 30 -day option to purchase up to an additional 2,914,500 shares of our common stock, which was subsequently exercised in full, and the offering including the sale of shares of common stock subject to the underwriters’ option, closed in August 2020. In total, we sold 22.3 million shares of our common stock. We paid a commission equal to 6 % of the gross proceeds from the sale of shares of our common stock. The total net proceeds to us from the offering after deducting the underwriting discount were approximately $ 93.9 million, excluding approximately $ 0.3 million of offering expenses, $ 0.2 million of which was unpaid as of September 30, 2020. The Termination Agreement currently limits our ability to issue additional securities or incur indebtedness as up to the $ 52.0 million of the Continuation Advances paid to us are repayable without interest to Illumina if, within two years of March 31, 2020, we enter into, or consummate a Change of Control Transaction or raise at least $ 100 million in a single equity or debt financing (that may have multiple closings), with the amount repayable dependent on the amount raised by us. Equity Plans At June 30, 2020, in total, we had three active equity compensation plans: the 2010 Equity Incentive Plan (“2010 Plan”), the 2010 Outside Director Equity Incentive Plan (“2010 Director Plan”) and the 2010 Employee Stock Purchase Plan (“ESPP”). Our 2010 Plan and 2010 Director Plan expired on July 29, 2020. On August 4, 2020, stockholders approved our new 2020 Equity Incentive Plan. A description of the 2020 Equity Incentive Plan can be found in our Proxy Statement for the 2020 Annual Meeting of Stockholders, dated June 24, 2020. Pursuant to the terms of the then-in-process Merger Agreement with Illumina, offerings under our ESPP were suspended after the completion of the purchase period ended March 1, 2019. After the merger with Illumina was terminated in January 2020, we began offerings under the ESPP again starting with the offering period beginning March 1, 2020. Stock Options The following table summarizes stock option activity for all our stock option plans for the nine months ended September 30, 2020 (in thousands, except per share amounts): Stock Options Outstanding Weighted Number average of shares Exercise price exercise price Balances, December 31, 2019 22,697 $ 1.16 – 16.00 $ 5.57 Options granted 2,717 2.45 – 9.6 6.61 Options exercised ( 2,763 ) 1.16 – 6.98 4.25 Options canceled ( 2,730 ) 1.16 – 15.77 7.61 Balances, September 30, 2020 19,921 $ 1.16 – 16.00 $ 5.62 For the three and nine months ended September 30, 2020, we recognized stock-based compensation expense of $ 1.4 million and $ 4.2 million, respectively, related to options. RSUs Time-based RSUs The following table summarizes the time-based RSUs activity for the nine months ended September 30, 2020 (in thousands, except per share amounts): Weighted average Number grant date of shares fair value RSUs outstanding at December 31, 2019 1,086 $ 6.12 RSUs granted 6,395 4.84 RSUs released ( 876 ) 6.76 RSUs forfeited ( 634 ) 4.40 Unvested RSUs outstanding at September 30, 2020 5,971 $ 4.84 For the three and nine months ended September 30, 2020, we recognized stock-based compensation expense of $ 1.7 million and $ 5.5 million, respectively, related to time-based RSUs. Performance-based RSUs The following table summarizes the performance-based RSUs (“PSUs”) activity for the nine months ended September 30, 2020 (in thousands, except per share amounts): Weighted average Number grant date of shares fair value PSUs outstanding at December 31, 2019 138 $ 2.63 PSUs granted — — PSUs released — — PSUs forfeited ( 44 ) 2.63 Unvested PSUs outstanding at September 30, 2020 94 $ 2.63 For the three and nine months ended September 30, 2020, we recognized stock-based compensation expense of $ 0 related to the performance-based RSUs. In January 2020, an additional 7.7 million shares and 1.5 million shares, respectively, were reserved under the 2010 Plan and the 2010 Director Plan. The 2010 Plan and the 2010 Director Plan expired on July 29, 2020. On August 4, 2020, stockholders at the 2020 Annual Meeting approved a new 2020 Equity Incentive Plan with 11,000,000 shares available for issuance and the 2010 Plan and 2010 Director Plan were terminated. As of September 30, 2020, we had 7.9 million shares of common stock available for future issuance. ESPP shares Shares issued under our ESPP were 834,677 and 1,306,329 during the nine months ended September 30, 2020 and 2019, respectively. In January 2020, an additional 3.1 million shares were reserved under the ESPP. As of September 30, 2020, 5,878,770 shares of our common stock remain available for issuance under our ESPP. For the three and nine months ended September 30, 2020, we recognized stock-based compensation expense of $ 1.8 million and $ 2.3 million, respectively, related to the ESPP shares. Stock-Based Compensation The following table summarizes the stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019, respectively (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Cost of revenue $ 735 $ 450 $ 1,714 $ 1,406 Research and development 2,105 1,906 5,297 5,836 Sales, general and administrative 2,152 1,706 5,247 5,290 Total stock-based compensation expense $ 4,992 $ 4,062 $ 12,258 $ 12,532 W e estimated the fair value of employee stock options on the grant date using the Black-Scholes option pricing model. The estimated fair value of employee stock options is amortized on a straight-line basis over the requisite service period of the awards. We did no t grant any stock options for the year ended December 31, 2019 due to the then-in-process merger with Illumina. The fair value of shares to be purchased under our stock option was estimated using the following assumptions: Three Months Ended September 30, Nine Months Ended September 30, Stock Option 2020 2019 2020 2019 Expected term in years 5.1 — 5.1 — Expected volatility 71 % — 57 % - 71 % — Risk-free interest rate 0.3 % — 0.3 % - 1.2 % — Dividend yield — — — — We estimate the value of employee stock purchase rights on the grant date using the Black-Scholes option pricing model. Pursuant to the terms of the then-in-process merger with Illumina, the ESPP was terminated after the completion of the purchase period ended March 1, 2019 and there were no offerings after March 1, 2019. As such there were no new Black-Scholes calculations performed to calculate the fair value of new purchase rights granted for the year ended December 31, 2019. After the merger with Illumina was terminated in January 2020, we began offerings under the ESPP again starting with the offering period on March 1, 2020. The fair value of shares to be purchased under our ESPP was estimated using the following assumptions: Three Months Ended September 30, Nine Months Ended September 30, ESPP 2020 2019 2020 2019 Expected term in years 0.5 - 2.0 — 0.5 - 2.0 — Expected volatility 71 % — 57 % - 71 % — Risk-free interest rate 0.1 % — 0.1 % - 1.0 % — Dividend yield — — — —

Revenue

Revenue	9 Months Ended
	Sep. 30, 2020
Revenue [Abstract]
Revenue	NOTE 8. REVENUE A summary of our revenue by geographic location for the three and nine months ended September 30, 2020 and 2019 is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 North America $ 8,971 $ 10,393 $ 25,189 $ 33,165 Europe (including the Middle East and Africa) 4,339 4,940 11,925 11,423 Asia Pacific 5,772 6,582 14,643 18,373 Total $ 19,082 $ 21,915 $ 51,757 $ 62,961 A summary of our revenue by category for the three and nine months ended September 30, 2020 and 2019 is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Instrument revenue $ 7,727 $ 11,583 $ 20,685 $ 29,870 Consumable revenue 8,022 6,901 21,113 23,321 Product revenue 15,749 18,484 41,798 53,191 Service and other revenue 3,333 3,431 9,959 9,770 Total revenue $ 19,082 $ 21,915 $ 51,757 $ 62,961

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policy)	9 Months Ended
	Sep. 30, 2020
Summary of Significant Accounting Policies [Abstract]
Basis of Presentation and Consolidation	Basis of Presentation and Consolidation In the opinion of management, our accompanying unaudited condensed consolidated financial statements (“Financial Statements”) have been prepared on a consistent basis with our December 31, 2019 audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, as permitted by such rules and regulations, omit certain information and footnote disclosures necessary to present the statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the entire year or any future periods. The condensed consolidated financial statements include the accounts of Pacific Biosciences and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.
COVID-19	COVID-19 We are subject to risks and uncertainties as a result of the novel coronavirus pandemic (COVID-19). The extent of the impact of the COVID-19 pandemic on our business is highly uncertain as responses to the pandemic can change quickly and information is rapidly evolving. We considered the impact of COVID-19 on the assumptions and estimates used to determine the results reported and asset valuations as of September 30, 2020.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. 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, the determination of stand-alone selling prices for revenue recognition, the valuation of a financing derivative and long-term notes, the probability of repaying the Continuation Advances and Reverse Termination Fee to Illumina, the valuation and recognition of share-based compensation, the expected renewal period for service contracts to derive the amortization period for capitalized commissions, the useful lives assigned to long-lived assets, the computation of provisions for income taxes and the determination of the internal borrowing rate used in calculating the operating lease right-of-use assets and operating lease liabilities. Actual results could differ materially from these estimates.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The carrying amount of our accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other liabilities, current, approximate fair value due to their short maturities. The fair value hierarchy established under U.S. GAAP requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:  Level 1: quoted prices in active markets for identical assets or liabilities;  Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and  Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider an active market as one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, we view an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our non-performance risk, or that of our counterparty, is considered in determining the fair values of liabilities and assets, respectively. We classify our cash deposits and money market funds within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. We classify our investments as Level 2 instruments based on market pricing and other observable inputs. We did not classify any of our investments within Level 3 of the fair value hierarchy. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability. 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 September 30, 2020 and December 31, 2019 respectively: September 30, 2020 December 31, 2019 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents: Cash and money market funds $ 41,784 $ — $ — $ 41,784 $ 18,644 $ — $ — $ 18,644 Commercial paper — 24,244 — 24,244 — 10,983 — 10,983 U.S. Treasury security — 3,000 — 3,000 — — — — Total cash and cash equivalents 41,784 27,244 — 69,028 18,644 10,983 — 29,627 Investments: Commercial paper — 105,380 — 105,380 — 16,971 — 16,971 Corporate debt securities — 21,195 — 21,195 — 2,501 — 2,501 U.S. government & agency securities — 10,097 — 10,097 — — — — U.S. Treasury security — 2,850 — 2,850 — — — — Total investments — 139,522 — 139,522 — 19,472 — 19,472 Long-term restricted cash: Cash 3,500 — — 3,500 4,000 — — 4,000 Total assets measured at fair value $ 45,284 $ 166,766 $ — $ 212,050 $ 22,644 $ 30,455 $ — $ 53,099 Liabilities Financing Derivative $ — $ — $ — $ — $ — $ — $ — $ — Continuation Advances — — — — — — — — Total liabilities measured at fair value $ — $ — $ — $ — $ — $ — $ — $ — Estimated fair value of the Financing Derivative liability The estimated fair value of the Financing Derivative liability (as defined in the “Notes payable, current” section in “Note 5. Balance Sheet Components”) was determined using Level 3 inputs, or significant unobservable inputs. Changes to the estimated fair value of the Financing Derivative are recorded in “Other income, net” in the consolidated statements of operations and comprehensive loss. The estimated fair value of the Financing Derivative was determined by comparing the difference between the fair value of the Notes from the debt facility that we entered into during the first quarter of 2013 (the “Notes”) with and without the Financing Derivative by calculating the respective present values from future cash flows using a 6.5 % discount rate at December 31, 2019. The estimated fair value of the Financing Derivative as of December 31, 2019 was $ 0 . In February 2020, upon maturity of the Notes, the Financing Derivative was extinguished. Refer to the “Notes payable, current” section in “Note 5. Balance Sheet Components” for a detailed description and valuation approach. Estimated fair value of the Continuation Advances liability In accordance with the terms of the Merger Agreement, we received Continuation Advances of $ 18.0 million and $ 34.0 million from Illumina during the fourth quarter of 2019 and the first quarter of 2020, respectively. We determined that the Continuation Advances, which are subject to repayment under certain circumstances as discussed below, constitute a financial liability. The fair value option was elected for the financial liability because management believes that among all measurement methods allowed by Accounting Standards Codification, or ASC, 825, Financial Instruments , the fair value option would most fairly represent the value of such a financial liability. Management applied the income approach to estimate the fair value of this financial liability. The estimated fair value of the liability related to the Continuation Advances was determined using Level 3 inputs, or significant unobservable inputs. Management estimated that there would be no future cash outflows associated with this financial instrument because the probabilities of either of the following events occurring and requiring repayment to Illumina were evaluated as being remote as of September 30, 2020 and December 31, 2019:  we enter into a Change of Control Transaction within two years following March 31, 2020; or  we raise $ 100 million or more in a single equity or debt financing (that may have multiple closings) within two years following March 31, 2020. As a result, the estimated fair value of the liability associated with the contingent repayment of the Continuation Advances received in the first quarter of 2020 was assessed to be zero as of March 31, 2020, June 30, 2020 and September 30, 2020, respectively, with a resulting non-operating gain of $ 34.0 million recorded as “Gain from Continuation Advances from Illumina” for the quarter ended March 31, 2020. We recorded a similar gain of $ 18.0 million in 2019 for the Continuation Advances received during the fourth quarter of 2019. For the quarter ended September 30, 2020, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis and our valuation techniques did not change compared to the prior year.
Net Loss per Share	Net Loss per Share The following outstanding common stock options, restricted stock units (“RSUs”), with time-based vesting and RSUs with performance-based vesting, were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. See Note 7. Stockholders’ Equity for detailed information on RSUs with time-based vesting and RSUs with performance-based vesting. Nine Months Ended September 30, (in thousands) 2020 2019 Options to purchase common stock 19,921 23,048 RSUs with time-based vesting 5,971 1,094 RSUs with performance-based vesting 94 138
Concentration and Other Risks	Concentration and Other Risks For the three and nine months ended September 30, 2020, Gene Company Limited accounted for approximately 18 % and 14 %, respectively, of our total revenue during the period with no other customer exceeding 10% during those periods. For the three and nine months ended September 30, 2019, Gene Company Limited accounted for approximately 14 % and 18 % of our total revenue, respectively, with no other customer exceeding 10% during those periods. Gene Company Limited is our primary distributor in China.
Recent Accounting Pronouncements	Recent Accounting Pronouncements Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”), which replaces existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost. We adopted Topic 326 on January 1, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment to the opening balance of retained earnings/accumulated deficit to be recognized on the date of adoption with prior periods not restated. The cumulative-effect adjustment recorded on January 1, 2020, is shown below (in thousands): Balance Sheets Balance at December 31, 2019 Adjustments Due to Topic 326 Balance at January 1, 2020 Assets Accounts receivable $ 15,266 $ ( 32 ) $ 15,234 Liabilities and Stockholders' Equity Accumulated deficit ( 1,066,240 ) ( 32 ) ( 1,066,272 ) The adoption of Topic 326 did not have a material impact on our financial statements and our bad debt expense was immaterial as of September 30, 2020. Please see the description of our “Credit Losses” accounting policy in the “Significant Accounting Policies” section below.
Significant Accounting Policies	Significant Accounting Policies With the exception of the change for the accounting of credit losses as a result of the adoption of Topic 326, there have been no new or material changes to the significant accounting policies discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, that are of significance, or potential significance, to us. Credit Losses Trade accounts receivable. The allowance for doubtful accounts is based on our assessment of the collectability of customer accounts. We regularly review the allowance by considering factors such as the age of the accounts receivable balances, customer creditworthiness, customer industry, and current and forecasted economic conditions that may affect a customer’s ability to pay. Available-for-sale debt securities. Our investment portfolio at any point in time contains investments in cash deposits, money market funds, commercial paper, corporate debt securities and US government and agency securities. We regularly review the securities in an unrealized loss position and evaluate the current expected credit loss by considering factors such as significance of loss, historical experience, market data, issuer-specific factors, and current economic conditions and concluded that an allowance for credit losses was not required as of September 30 2020. Although we have historically not experienced significant credit losses, our exposure to credit losses may increase if our customers are adversely affected by changes in economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current COVID-19 pandemic, or other customer-specific factors.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2020
Summary of Significant Accounting Policies [Abstract]
Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis	September 30, 2020 December 31, 2019 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents: Cash and money market funds $ 41,784 $ — $ — $ 41,784 $ 18,644 $ — $ — $ 18,644 Commercial paper — 24,244 — 24,244 — 10,983 — 10,983 U.S. Treasury security — 3,000 — 3,000 — — — — Total cash and cash equivalents 41,784 27,244 — 69,028 18,644 10,983 — 29,627 Investments: Commercial paper — 105,380 — 105,380 — 16,971 — 16,971 Corporate debt securities — 21,195 — 21,195 — 2,501 — 2,501 U.S. government & agency securities — 10,097 — 10,097 — — — — U.S. Treasury security — 2,850 — 2,850 — — — — Total investments — 139,522 — 139,522 — 19,472 — 19,472 Long-term restricted cash: Cash 3,500 — — 3,500 4,000 — — 4,000 Total assets measured at fair value $ 45,284 $ 166,766 $ — $ 212,050 $ 22,644 $ 30,455 $ — $ 53,099 Liabilities Financing Derivative $ — $ — $ — $ — $ — $ — $ — $ — Continuation Advances — — — — — — — — Total liabilities measured at fair value $ — $ — $ — $ — $ — $ — $ — $ —
Anti-dilutive Shares Excluded from Computation of Diluted Net Income (Loss) per Share	Nine Months Ended September 30, (in thousands) 2020 2019 Options to purchase common stock 19,921 23,048 RSUs with time-based vesting 5,971 1,094 RSUs with performance-based vesting 94 138
Schedule of Cumulative Effect on Consolidated Balance Sheet for Adoption of ASU 2016-13	Balance Sheets Balance at December 31, 2019 Adjustments Due to Topic 326 Balance at January 1, 2020 Assets Accounts receivable $ 15,266 $ ( 32 ) $ 15,234 Liabilities and Stockholders' Equity Accumulated deficit ( 1,066,240 ) ( 32 ) ( 1,066,272 )

Cash, Cash Equivalents and In_2

Cash, Cash Equivalents and Investments (Tables)	9 Months Ended
	Sep. 30, 2020
Cash, Cash Equivalents and Investments [Abstract]
Summary of Cash, Cash Equivalents and Investments	As of September 30, 2020 Gross Gross Amortized unrealized unrealized Fair Cost gains losses Value Cash and cash equivalents: Cash and money market funds $ 41,784 $ — $ — $ 41,784 Commercial paper 24,243 1 — 24,244 U.S. Treasury security 3,000 — — 3,000 Total cash and cash equivalents 69,027 1 — 69,028 Investments: Commercial paper 105,377 12 ( 9 ) 105,380 Corporate debt securities 21,081 119 ( 5 ) 21,195 U.S. government & agency securities 10,097 1 ( 1 ) 10,097 U.S. Treasury security 2,850 — — 2,850 Total investments 139,405 132 ( 15 ) 139,522 Total cash, cash equivalents and investments $ 208,432 $ 133 $ ( 15 ) $ 208,550 Long-term restricted cash: Cash $ 3,500 $ — $ — $ 3,500 As of December 31, 2019 Gross Gross Amortized unrealized unrealized Fair Cost gains losses Value Cash and cash equivalents: Cash and money market funds $ 18,644 $ — $ — $ 18,644 Commercial paper 10,983 — — 10,983 Total cash and cash equivalents 29,627 — — 29,627 Investments: Commercial paper 16,971 1 ( 1 ) 16,971 Corporate debt securities 2,496 5 — 2,501 Total investments 19,467 6 ( 1 ) 19,472 Total cash, cash equivalents and investments $ 49,094 $ 6 $ ( 1 ) $ 49,099 Long-term restricted cash: Cash $ 4,000 $ — $ — $ 4,000
Summary of Contractual Maturities of Cash Equivalents and Available-for-Sale Investments	Fair Value Due in one year or less $ 152,858 Due after one year through 5 years 13,908 Total investments $ 166,766

Balance Sheet Components (Table

Balance Sheet Components (Tables)	9 Months Ended
	Sep. 30, 2020
Balance Sheet Components [Abstract]
Components of Inventory	September 30, December 31, (in thousands) 2020 2019 Purchased materials $ 5,198 $ 3,966 Work in process 5,439 4,594 Finished goods 5,303 4,752 Inventory $ 15,940 $ 13,312

Commitments and Contingencies (

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2020
Commitments and Contingencies [Abstract]
Schedule of Amount, Timing and Uncertainty of Cash Flows from Operating Leases	Maturity of Lease Liabilities Amount Years ending December 31, (in thousands) Remaining of 2020 $ 1,818 2021 7,328 2022 7,502 2023 7,704 2024 7,920 Thereafter 23,598 Total undiscounted operating lease payments 55,870 Less: imputed interest ( 12,860 ) Present value of operating lease liabilities 43,010 Balance Sheet Classification Operating lease liabilities, current 4,217 Operating lease liabilities, non-current 38,793 Total operating lease liabilities 43,010

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2020
Stockholders' Equity [Abstract]
Summary of Stock Option Activity	Stock Options Outstanding Weighted Number average of shares Exercise price exercise price Balances, December 31, 2019 22,697 $ 1.16 – 16.00 $ 5.57 Options granted 2,717 2.45 – 9.6 6.61 Options exercised ( 2,763 ) 1.16 – 6.98 4.25 Options canceled ( 2,730 ) 1.16 – 15.77 7.61 Balances, September 30, 2020 19,921 $ 1.16 – 16.00 $ 5.62
Summary of Time-Based RSUs Activity	Weighted average Number grant date of shares fair value RSUs outstanding at December 31, 2019 1,086 $ 6.12 RSUs granted 6,395 4.84 RSUs released ( 876 ) 6.76 RSUs forfeited ( 634 ) 4.40 Unvested RSUs outstanding at September 30, 2020 5,971 $ 4.84
Summary of Performance-Based RSUs Activity	Weighted average Number grant date of shares fair value PSUs outstanding at December 31, 2019 138 $ 2.63 PSUs granted — — PSUs released — — PSUs forfeited ( 44 ) 2.63 Unvested PSUs outstanding at September 30, 2020 94 $ 2.63
Schedule of Stock-Based Compensation Expense	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Cost of revenue $ 735 $ 450 $ 1,714 $ 1,406 Research and development 2,105 1,906 5,297 5,836 Sales, general and administrative 2,152 1,706 5,247 5,290 Total stock-based compensation expense $ 4,992 $ 4,062 $ 12,258 $ 12,532
Schedule of Fair Value of Employee Stock Options	Three Months Ended September 30, Nine Months Ended September 30, Stock Option 2020 2019 2020 2019 Expected term in years 5.1 — 5.1 — Expected volatility 71 % — 57 % - 71 % — Risk-free interest rate 0.3 % — 0.3 % - 1.2 % — Dividend yield — — — —
Schedule of Fair Value of Employee Stock Purchase Plan	Three Months Ended September 30, Nine Months Ended September 30, ESPP 2020 2019 2020 2019 Expected term in years 0.5 - 2.0 — 0.5 - 2.0 — Expected volatility 71 % — 57 % - 71 % — Risk-free interest rate 0.1 % — 0.1 % - 1.0 % — Dividend yield — — — —

Revenue (Tables)

Revenue (Tables)	9 Months Ended
	Sep. 30, 2020
Revenue [Abstract]
Schedule of Revenue by Geographic Location	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 North America $ 8,971 $ 10,393 $ 25,189 $ 33,165 Europe (including the Middle East and Africa) 4,339 4,940 11,925 11,423 Asia Pacific 5,772 6,582 14,643 18,373 Total $ 19,082 $ 21,915 $ 51,757 $ 62,961
Summary of Revenue by Category	Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2020 2019 2020 2019 Instrument revenue $ 7,727 $ 11,583 $ 20,685 $ 29,870 Consumable revenue 8,022 6,901 21,113 23,321 Product revenue 15,749 18,484 41,798 53,191 Service and other revenue 3,333 3,431 9,959 9,770 Total revenue $ 19,082 $ 21,915 $ 51,757 $ 62,961

Termination of Merger with Il_2

Termination of Merger with Illumina (Narrative) (Details) - USD ($) $ in Thousands	Jan. 02, 2020	Apr. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2020	Sep. 30, 2020
Termination of Merger with Illumina [Abstract]
Termination fee received	$ 98,000
Advisor fees paid		$ 6,000
Continuation Advances			$ 34,000	$ 18,000	$ 52,000	$ 34,000
Period in which company must repay continuation advances if change-of-control transaction is entered into with third party						2 years
Equity or debt financing that must be raised in a single transaction						$ 100,000

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Narrative) (Details)	3 Months Ended				6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2020USD ($)	Mar. 31, 2020USD ($)	Dec. 31, 2019USD ($)item	Sep. 30, 2019	Mar. 31, 2020USD ($)	Sep. 30, 2020USD ($)	Sep. 30, 2019	Dec. 31, 2019USD ($)item	Jun. 30, 2020USD ($)
Summary Of Significant Accounting Policies [Line Items]
Fair value of the financing derivative			$ 0					$ 0
Financing derivative
Continuation Advances		$ 34,000,000	$ 18,000,000		$ 52,000,000	$ 34,000,000
Period in which company must repay continuation advances if change-of-control transaction is entered into with third party						2 years
Equity or debt financing that must be raised in a single transaction						$ 100,000,000
Period in which company must raise equity or debt financing in a single transaction						2 years
Contingent repayment liability	$ 0	0			$ 0	$ 0			$ 0
Gain from Continuation Advances		$ 34,000,000				34,000,000		$ 18,000,000
Fair value assets/liabilities transfer between levels						$ 0
Measurement Input, Discount Rate [Member]
Summary Of Significant Accounting Policies [Line Items]
Derivative liability, measurement input | item			0.065					0.065
Sales Revenue, Net [Member] | Gene Company Limited [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration risk, percentage	18.00%			14.00%		14.00%	18.00%

Summary of Significant Accoun_5

Summary of Significant Accounting Policies (Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets
Total cash and cash equivalents	$ 69,028	$ 29,627
Total investments	139,522	19,472
Long-term restricted cash	3,500	4,000
Total assets measured at fair value	212,050	53,099
Liabilities
Financing derivative
Continuation Advances
Total liabilities measured at fair value
Cash and money market funds [Member]
Assets
Total cash and cash equivalents	41,784	18,644
Commercial paper [Member]
Assets
Total cash and cash equivalents	24,244	10,983
U.S. Treasury security [Member]
Assets
Total cash and cash equivalents	3,000
Commercial paper, not included with cash and cash equivalents [Member]
Assets
Total investments	105,380	16,971
Corporate debt securities [Member]
Assets
Total investments	21,195	2,501
U.S. government & agency securities, not included with cash and cash equivalents [Member]
Assets
Total investments	10,097
U.S. Treasury security, not included with cash and cash equivalents [Member]
Assets
Total investments	2,850
Level 1 [Member]
Assets
Total cash and cash equivalents	41,784	18,644
Long-term restricted cash	3,500	4,000
Total assets measured at fair value	45,284	22,644
Liabilities
Financing derivative
Continuation Advances
Total liabilities measured at fair value
Level 1 [Member] | Cash and money market funds [Member]
Assets
Total cash and cash equivalents	41,784	18,644
Level 2 [Member]
Assets
Total cash and cash equivalents	27,244	10,983
Total investments	139,522	19,472
Total assets measured at fair value	166,766	30,455
Liabilities
Financing derivative
Continuation Advances
Total liabilities measured at fair value
Level 2 [Member] | Commercial paper [Member]
Assets
Total cash and cash equivalents	24,244	10,983
Level 2 [Member] | U.S. Treasury security [Member]
Assets
Total cash and cash equivalents	3,000
Level 2 [Member] | Commercial paper, not included with cash and cash equivalents [Member]
Assets
Total investments	105,380	16,971
Level 2 [Member] | Corporate debt securities [Member]
Assets
Total investments	21,195	2,501
Level 2 [Member] | U.S. government & agency securities, not included with cash and cash equivalents [Member]
Assets
Total investments	10,097
Level 2 [Member] | U.S. Treasury security, not included with cash and cash equivalents [Member]
Assets
Total investments	2,850
Level 3 [Member]
Liabilities
Financing derivative
Continuation Advances
Total liabilities measured at fair value

Summary of Significant Accoun_6

Summary of Significant Accounting Policies (Anti-dilutive Shares Excluded from Computation of Diluted Net Income (Loss) per Share) (Details) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share	19,921	23,048
Time-Based Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share	5,971	1,094
Performance-Based Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share	94	138

Summary of Significant Accoun_7

Summary of Significant Accounting Policies (Schedule of Cumulative Effect on Consolidated Balance Sheet for Adoption of ASU 2016-13) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Assets
Accounts receivable	$ 11,806	$ 15,234	$ 15,266
Liabilities and Stockholders’ Equity
Accumulated deficit	$ (1,111,804)	$ (1,066,272)	(1,066,240)
Revision of Prior Period, Accounting Standards Update, Adjustment [Member]
Assets
Accounts receivable			(32)
Liabilities and Stockholders’ Equity
Accumulated deficit			$ (32)

Cash, Cash Equivalents and In_3

Cash, Cash Equivalents and Investments (Summary of Cash, Cash Equivalents and Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 208,432	$ 49,094
Gross unrealized gains	133	6
Gross unrealized losses	(15)	(1)
Fair value	208,550	49,099
Cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	69,027	29,627
Gross unrealized gains	1
Gross unrealized losses
Fair value	69,028	29,627
Cash and money market funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	41,784	18,644
Gross unrealized gains
Gross unrealized losses
Fair value	41,784	18,644
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	24,243	10,983
Gross unrealized gains	1
Gross unrealized losses
Fair value	24,244	10,983
U.S. government and agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	10,097
Gross unrealized gains	1
Gross unrealized losses	(1)
Fair value	10,097
U.S. Treasury security [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	3,000
Gross unrealized gains
Gross unrealized losses
Fair value	3,000
Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	139,405	19,467
Gross unrealized gains	132	6
Gross unrealized losses	(15)	(1)
Fair value	139,522	19,472
Commercial paper, not included with cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	105,377	16,971
Gross unrealized gains	12	1
Gross unrealized losses	(9)	(1)
Fair value	105,380	16,971
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	21,081	2,496
Gross unrealized gains	119	5
Gross unrealized losses	(5)
Fair value	21,195	2,501
U.S. Treasury security, not included with cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	2,850
Gross unrealized gains
Gross unrealized losses
Fair value	2,850
Long-term restricted cash [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	3,500	4,000
Gross unrealized gains
Gross unrealized losses
Fair value	$ 3,500	$ 4,000

Cash, Cash Equivalents and In_4

Cash, Cash Equivalents and Investments (Summary of Contractual Maturities of Cash Equivalents and Available-for-Sale Investments) (Details) $ in Thousands	Sep. 30, 2020USD ($)
Cash, Cash Equivalents and Investments [Abstract]
Due in one year or less	$ 152,858
Due after one year through 5 years	13,908
Total investments	$ 166,766

Balance Sheet Components (Narra

Balance Sheet Components (Narrative) (Details)	Jan. 02, 2020USD ($)	May 31, 2020USD ($)	Feb. 29, 2020USD ($)	Sep. 30, 2020USD ($)	Sep. 30, 2019USD ($)	Sep. 30, 2020USD ($)	Sep. 30, 2019USD ($)	May 01, 2020USD ($)	Dec. 31, 2019USD ($)item	May 01, 2019USD ($)	Mar. 31, 2019USD ($)	Oct. 31, 2015USD ($)
Balance Sheet Components [Line Items]
Long-term restricted cash				$ 3,500,000		$ 3,500,000		$ 3,500,000	$ 4,000,000	$ 4,000,000	$ 4,500,000	$ 4,500,000
Decrease in Long-term restricted cash		$ 500,000
Termination fee received	$ 98,000,000
Accrued advisor fees				6,000,000		6,000,000
Sales, general and administrative				14,772,000	$ 20,066,000	$ 54,846,000	$ 58,915,000
Period in which company must repay continuation advances if change-of-control transaction is entered into with third party						2 years
Deferred gain from Reverse Termination Fee				98,000,000		$ 98,000,000
Notes payable, current									16,000,000
Repayment of notes payable			$ 16,000,000			16,000,000
Fair value of the financing derivative									0
Financing derivative
Deferred revenue, current				6,982,000		6,982,000			7,610,000
Deferred revenue, non-current				1,761,000		1,761,000			1,951,000
Revenue				19,082,000	$ 21,915,000	51,757,000	$ 62,961,000
Prepaid expenses and other current assets				3,212,000		3,212,000			$ 3,369,000
Service [Member]
Balance Sheet Components [Line Items]
Deferred revenue				8,700,000		8,700,000
Deferred revenue, current				6,900,000		6,900,000
Deferred revenue, non-current				1,800,000		1,800,000
Revenue				1,600,000		6,500,000
Prepaid expenses and other current assets				$ 600,000		$ 600,000
Service [Member] | Minimum [Member]
Balance Sheet Components [Line Items]
Deferred service revenue, noncurrent, recognition period						3 years
Termination Agreement [Member]
Balance Sheet Components [Line Items]
Sales, general and administrative						$ 6,000,000
Measurement Input, Discount Rate [Member]
Balance Sheet Components [Line Items]
Derivative liability, measurement input | item									0.065

Balance Sheet Components (Compo

Balance Sheet Components (Components of Inventory) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Balance Sheet Components [Abstract]
Purchased materials	$ 5,198	$ 3,966
Work in process	5,439	4,594
Finished goods	5,303	4,752
Inventory	$ 15,940	$ 13,312

Commitments and Contingencies_2

Commitments and Contingencies (Narrative) (Details)	Jun. 22, 2020item	Jul. 22, 2015USD ($)	Sep. 30, 2020USD ($)	Sep. 30, 2019USD ($)	Sep. 30, 2020USD ($)	Sep. 30, 2019USD ($)	May 01, 2020USD ($)	Dec. 31, 2019USD ($)	May 01, 2019USD ($)	Mar. 31, 2019USD ($)	Oct. 31, 2015USD ($)
Commitments and Contingencies [Line Items]
Long-term restricted cash			$ 3,500,000		$ 3,500,000		$ 3,500,000	$ 4,000,000	$ 4,000,000	$ 4,500,000	$ 4,500,000
Rent payments			1,800,000		5,400,000
Operating lease cost			1,600,000	$ 1,600,000	4,700,000	$ 4,700,000
Additional liability associated with indemnification obligations			$ 0		$ 0
1305 O’Brien Drive, Menlo Park, California [Member]
Commitments and Contingencies [Line Items]
Renewal term			5 years		5 years
Weighted average remaining lease term			7 years 1 month 6 days		7 years 1 month 6 days
Weighted average discount rate			7.90%		7.90%
PacBio IPR Petitions [Member]
Commitments and Contingencies [Line Items]
Number of petitions | item	2
O’Brien Lease Agreement [Member]
Commitments and Contingencies [Line Items]
Lease term		132 months
Rent expense first twelve months		$ 540,000
Rent expense last twelve months		$ 711,000
Period in which payment must be received without incurring late charge		5 days
Late charge, percent		5.00%
Amount not paid after written notice, bear interest from date due until date paid, period		10 days
O’Brien Lease Agreement [Member] | Prime Rate [Member]
Commitments and Contingencies [Line Items]
Basis spread on variable rate		2.00%

Commitments and Contingencies_3

Commitments and Contingencies (Schedule of Amount, Timing and Uncertainty of Cash Flows from Operating Leases) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Maturity of Lease Liabilities
Remaining of 2020	$ 1,818
2021	7,328
2022	7,502
2023	7,704
2024	7,920
Thereafter	23,598
Total undiscounted operating lease payments	55,870
Less: imputed interest	(12,860)
Present value of operating lease liabilities	43,010
Balance Sheet Classification
Operating lease liabilities, current	4,217	$ 3,837
Operating lease liabilities, non-current	38,793	$ 41,964
Total operating lease liabilities	$ 43,010

Stockholders' Equity (Narrative

Stockholders' Equity (Narrative) (Details) $ / shares in Units, $ in Thousands	Jul. 14, 2020	Aug. 31, 2020USD ($)$ / sharesshares	Jan. 31, 2020shares	Sep. 30, 2020USD ($)item$ / sharesshares	Mar. 31, 2020USD ($)	Dec. 31, 2019USD ($)$ / shares	Mar. 31, 2020USD ($)	Sep. 30, 2020USD ($)item$ / sharesshares	Sep. 30, 2019USD ($)shares	Dec. 31, 2019$ / sharesshares	Sep. 30, 2020USD ($)item$ / sharesshares	Aug. 04, 2020shares	Jun. 30, 2020USD ($)
Stockholders' Equity [Line Items]
Common stock, par value | $ / shares				$ 0.001		$ 0.001		$ 0.001		$ 0.001	$ 0.001
Proceeds from issuance of common stock from underwritten public equity offering, net of issuance costs | $								$ 93,788
Continuation Advances | $					$ 34,000	$ 18,000	$ 52,000	$ 34,000
Period in which company must repay continuation advances if change-of-control transaction is entered into with third party								2 years
Equity or debt financing that must be raised in a single transaction | $								$ 100,000
Number of equity compensation plans | item				3				3			3
Stock-based compensation | $								$ 12,258	$ 12,532
Common Stock [Member]
Stockholders' Equity [Line Items]
Shares issued				22,345,000				22,345,000
2010 Plan [Member]
Stockholders' Equity [Line Items]
Additional common stock reserved for issuance			7,700,000
2010 Director Plan [Member]
Stockholders' Equity [Line Items]
Additional common stock reserved for issuance			1,500,000
ESPP [Member]
Stockholders' Equity [Line Items]
Shares issued								834,677	1,306,329
Additional common stock reserved for issuance			3,100,000
Common stock reserved for issuance				5,878,770				5,878,770			5,878,770
Stock-based compensation | $				$ 1,800				$ 2,300
Employee stock purchase rights offered											0
2020 Equity Incentive Plan [Member]
Stockholders' Equity [Line Items]
Shares authorized												11,000,000
Common stock reserved for issuance				7,900,000				7,900,000			7,900,000
Shelf Registration Statement [Member]
Stockholders' Equity [Line Items]
Amount of common stock, preferred stock, depositiry shares, warrants, units or debt securities available in future public offerings | $													$ 250,000
Access to capital makets, period	3 years
Underwriting Agreement [Member]
Stockholders' Equity [Line Items]
Public offering		19,430,000
Common stock, par value | $ / shares		$ 0.001
Common stock offering price per share | $ / shares		$ 4.47
Public offering, option to purchase additionl shares, period		30 days
Public offering, option to purchase additional shares, shares		2,914,500
Shares issued		22,300,000
Commissions, percentage of gross proceeds		6.00%
Proceeds from issuance of common stock from underwritten public equity offering, net of issuance costs | $		$ 93,900
Offering costs | $		$ 300		$ 200				$ 200			$ 200
Stock Options [Member]
Stockholders' Equity [Line Items]
Stock-based compensation | $				1,400				4,200
Options granted										0
Time-Based Restricted Stock Units (RSUs) [Member]
Stockholders' Equity [Line Items]
Stock-based compensation | $				1,700				5,500
Performance-Based Restricted Stock Units (RSUs) [Member]
Stockholders' Equity [Line Items]
Stock-based compensation | $				$ 0				$ 0

Stockholders' Equity (Summary o

Stockholders' Equity (Summary of Stock Option Activity) (Details) - Stock Options [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of shares, Options granted		0
$1.16 – 16.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of shares, Balances, December 31, 2019	22,697,000
Number of shares, Balances, September 30, 2020	19,921,000	22,697,000
Exercise price, lower range	$ 1.16	$ 1.16
Exercise price, upper range	16	16
Weighted average exercise price, Balances, December 31, 2019	5.57
Weighted average exercise price, Balances, September 30, 2020	$ 5.62	$ 5.57
$2.45 - 9.60 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of shares, Options granted	2,717,000
Exercise price, lower range	$ 2.45
Exercise price, upper range	9.6
Weighted average exercise price, Options granted	$ 6.61
$1.16 – 6.98 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of shares, Options exercised	(2,763,000)
Exercise price, lower range	$ 1.16
Exercise price, upper range	6.98
Weighted average exercise price, Options exercised	$ 4.25
$1.16 – 15.77 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of shares, Options canceled	(2,730,000)
Exercise price, lower range	$ 1.16
Exercise price, upper range	15.77
Weighted average exercise price, Options canceled	$ 7.61

Stockholders' Equity (Summary_2

Stockholders' Equity (Summary of Time-Based RSUs Activity) (Details) - Time-Based Restricted Stock Units (RSUs) [Member] shares in Thousands	9 Months Ended
	Sep. 30, 2020$ / sharesshares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, outstanding at December 31, 2019 | shares	1,086
Number of shares, granted | shares	6,395
Number of shares, released | shares	(876)
Number of shares, forfeited | shares	(634)
Number of shares, Unvested outstanding at September 30, 2020 | shares	5,971
Weighted average grant date fair value, outstanding at December 31, 2019 | $ / shares	$ 6.12
Weighted average grant date fair value, granted | $ / shares	4.84
Weighted average grant date fair value, released | $ / shares	6.76
Weighted average grant date fair value, forfeited | $ / shares	4.40
Weighted average grant date fair value, Unvested outstanding at September 30, 2020 | $ / shares	$ 4.84

Stockholders' Equity (Summary_3

Stockholders' Equity (Summary of Performance-Based RSUs Activity) (Details) - Performance-Based Restricted Stock Units (RSUs) [Member] shares in Thousands	9 Months Ended
	Sep. 30, 2020$ / sharesshares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, outstanding at December 31, 2019 | shares	138
Number of shares, granted | shares
Number of shares, released | shares
Number of shares, forfeited | shares	(44)
Number of shares, Unvested outstanding at September 30, 2020 | shares	94
Weighted average grant date fair value, outstanding at December 31, 2019 | $ / shares	$ 2.63
Weighted average grant date fair value, granted | $ / shares
Weighted average grant date fair value, released | $ / shares
Weighted average grant date fair value, forfeited | $ / shares	2.63
Weighted average grant date fair value, Unvested outstanding at September 30, 2020 | $ / shares	$ 2.63

Stockholders' Equity (Schedule

Stockholders' Equity (Schedule of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 4,992	$ 4,062	$ 12,258	$ 12,532
Cost of revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	735	450	1,714	1,406
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	2,105	1,906	5,297	5,836
Sales, general and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 2,152	$ 1,706	$ 5,247	$ 5,290

Stockholders' Equity (Schedul_2

Stockholders' Equity (Schedule of Fair Value of Employee Stock Options) (Details) - Stock Options [Member]	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term in years	5 years 1 month 6 days		5 years 1 month 6 days
Expected volatility	71.00%
Risk-free interest rate	0.30%
Risk-free interest rate, minimum			0.30%
Risk-free interest rate, maximum			1.20%
Dividend yield
Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected volatility			57.00%
Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected volatility			71.00%

Stockholders' Equity (Schedul_3

Stockholders' Equity (Schedule of Fair Value of Employee Stock Purchase Plan) (Details) - ESPP [Member]	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected volatility	71.00%
Risk-free interest rate
Risk-free interest rate, minimum	0.10%		0.10%
Risk-free interest rate, maximum			1.00%
Dividend yield
Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term in years	6 months		6 months
Expected volatility				57.00%
Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term in years	2 years		2 years
Expected volatility				71.00%

Revenue (Schedule of Revenue by

Revenue (Schedule of Revenue by Geographic Location) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 19,082	$ 21,915	$ 51,757	$ 62,961
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	8,971	10,393	25,189	33,165
Europe (including the Middle East and Africa) [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	4,339	4,940	11,925	11,423
Asia Pacific [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 5,772	$ 6,582	$ 14,643	$ 18,373

Revenue (Summary of Revenue by

Revenue (Summary of Revenue by Category) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Product Information [Line Items]
Total revenue	$ 19,082	$ 21,915	$ 51,757	$ 62,961
Product [Member]
Product Information [Line Items]
Total revenue	15,749	18,484	41,798	53,191
Instrument [Member]
Product Information [Line Items]
Total revenue	7,727	11,583	20,685	29,870
Consumable [Member]
Product Information [Line Items]
Total revenue	8,022	6,901	21,113	23,321
Service and Other [Member]
Product Information [Line Items]
Total revenue	$ 3,333	$ 3,431	$ 9,959	$ 9,770