Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Guardant Health, Inc. | |
Entity Central Index Key | 0001576280 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 93,905,925 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Current assets: | |||
Cash and cash equivalents | $ 147,188 | $ 140,544 | |
Short-term marketable securities | 375,768 | 278,417 | |
Accounts receivable | 39,689 | 35,690 | |
Inventory | 14,760 | 9,136 | |
Prepaid expenses and other current assets | 5,657 | 5,204 | |
Total current assets | 583,062 | 468,991 | |
Long-term marketable securities | 302,624 | 77,563 | |
Property and equipment, net | 40,759 | 31,003 | |
Intangible assets | 8,755 | 0 | |
Goodwill | 2,928 | 0 | |
Capitalized license fees | 7,133 | 7,800 | |
Other assets | 3,073 | 2,046 | |
Total Assets | [1] | 948,334 | 587,403 |
Current liabilities: | |||
Accounts payable | 12,054 | 10,642 | |
Accrued compensation | 24,604 | 12,986 | |
Accrued expenses | 17,239 | 7,081 | |
Capital lease, current | 80 | 97 | |
Deferred rent, current | 745 | 0 | |
Deferred revenue | 13,095 | 16,138 | |
Total current liabilities | 67,817 | 46,944 | |
Capital lease, net of current portion | 57 | 119 | |
Deferred rent, net of current portion | 10,564 | 7,844 | |
Obligation related to royalty | 6,780 | 7,338 | |
Other long-term liabilities | 1,220 | 206 | |
Total Liabilities | [1] | 86,438 | 62,451 |
Commitments and contingencies (Note 8) | |||
Redeemable noncontrolling interest | 46,500 | 41,800 | |
Stockholders’ equity: | |||
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 93,853,390 and 85,832,454 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 1 | 1 | |
Additional paid-in capital | 1,141,885 | 764,033 | |
Accumulated other comprehensive loss | 1,109 | (83) | |
Accumulated deficit | (327,599) | (280,799) | |
Total Stockholders’ Equity | 815,396 | 483,152 | |
Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity | $ 948,334 | $ 587,403 | |
[1] | As of September 30, 2019 and December 31, 2018, includes $45.1 million and $48.3 million of assets, respectively, that can be used only to settle obligations of the consolidated variable interest entity (“VIE”) and VIE’s subsidiaries, and $3.0 million and $1.2 million of liabilities of the consolidated VIE and VIE’s subsidiaries, respectively, for which their creditors do not have recourse to the general credit of the Company. See Note 3. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.00 | $ 0.00 |
Common stock, shares authorized (shares) | 350,000,000 | 350,000,000 |
Common stock, shares outstanding (shares) | 93,853,390 | 85,832,454 |
Common stock, shares issued (shares) | 93,853,390 | 85,832,454 |
Variable interest entity, assets | $ 45.1 | $ 48.3 |
Variable interest entity, liabilities | $ 3 | $ 1.2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue: | ||||
Precision oncology testing | $ 52,147 | $ 18,298 | $ 123,048 | $ 50,311 |
Development services | 8,701 | 3,394 | 28,430 | 7,455 |
Total revenue | 60,848 | 21,692 | 151,478 | 57,766 |
Costs and operating expenses: | ||||
Cost of precision oncology testing | 16,578 | 9,671 | 42,251 | 27,222 |
Cost of development services | 1,936 | 380 | 6,631 | 2,041 |
Research and development expense | 24,569 | 14,253 | 60,417 | 34,062 |
Sales and marketing expense | 18,802 | 13,464 | 56,048 | 36,351 |
General and administrative expense | 16,440 | 8,129 | 42,540 | 23,645 |
Total costs and operating expenses | 78,325 | 45,897 | 207,887 | 123,321 |
Loss from operations | (17,477) | (24,205) | (56,409) | (65,555) |
Interest income | 4,286 | 958 | 9,870 | 2,932 |
Interest expense | (280) | (304) | (860) | (952) |
Other income (expense), net | 179 | 43 | 275 | 4,587 |
Loss before provision for (benefit from) income taxes | (13,292) | (23,508) | (47,124) | (58,988) |
Provision for (benefit from) income taxes | (202) | 0 | (1,383) | 3 |
Net loss | (13,090) | (23,508) | (45,741) | (58,991) |
Fair value adjustment of redeemable noncontrolling interest | 300 | (950) | (4,700) | (950) |
Net loss attributable to Guardant Health, Inc. common stockholders | $ (12,790) | $ (24,458) | $ (50,441) | $ (59,941) |
Net loss per share attributable to common stockholders, basic and diluted (in usd per share) | $ (0.14) | $ (1.94) | $ (0.56) | $ (4.87) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) | 93,303 | 12,582 | 89,452 | 12,300 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (13,090) | $ (23,508) | $ (45,741) | $ (58,991) |
Other comprehensive income (loss), net of tax impact: | ||||
Unrealized gain (loss) on available-for-sale securities | (282) | 188 | 1,055 | 28 |
Foreign currency translation adjustments | 47 | (27) | 137 | (27) |
Other comprehensive income (loss) | (235) | 161 | 1,192 | 1 |
Comprehensive loss | (13,325) | (23,347) | (44,549) | (58,990) |
Comprehensive gain (loss) attributable to redeemable noncontrolling interest | 300 | (950) | (4,700) | (950) |
Comprehensive loss attributable to Guardant Health, Inc. | $ (13,025) | $ (24,297) | $ (49,249) | $ (59,940) |
Consolidated Statements of Rede
Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity (unaudited) - USD ($) $ in Thousands | Total | Redeemable Noncontrolling Interest | Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Beginning balance at Dec. 31, 2017 | $ 0 | ||||||
Ending balance at Mar. 31, 2018 | 0 | ||||||
Beginning balance, shares at Dec. 31, 2017 | 78,627,369 | 11,896,882 | |||||
Beginning balance at Dec. 31, 2017 | $ 308,606 | $ 499,974 | $ 0 | $ 4,900 | $ (532) | $ (195,736) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon exercise of stock options, shares | 421,264 | ||||||
Issuance of common stock upon exercise of stock options | 1,103 | 1,103 | |||||
Stock-based compensation | 1,277 | 1,277 | |||||
Issuance of common stock upon early exercise of stock options, shares | 44,268 | ||||||
Issuance of common stock upon exercise of warrants, shares | 31,713 | ||||||
Issuance of common stock upon exercise of warrants | (4) | (4) | |||||
Other comprehensive gain (loss), net of tax impact | (298) | (298) | |||||
Net loss | (13,844) | (13,844) | |||||
Ending balance, shares at Mar. 31, 2018 | 78,627,369 | 12,394,127 | |||||
Ending balance at Mar. 31, 2018 | 296,848 | $ 499,974 | $ 0 | 7,284 | (830) | (209,580) | |
Beginning balance at Dec. 31, 2017 | 0 | ||||||
Ending balance at Sep. 30, 2018 | 41,950 | ||||||
Beginning balance, shares at Dec. 31, 2017 | 78,627,369 | 11,896,882 | |||||
Beginning balance at Dec. 31, 2017 | 308,606 | $ 499,974 | $ 0 | 4,900 | (532) | (195,736) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Other comprehensive gain (loss), net of tax impact | 1 | ||||||
Net loss | (58,991) | ||||||
Ending balance, shares at Sep. 30, 2018 | 78,627,369 | 13,002,822 | |||||
Ending balance at Sep. 30, 2018 | 255,187 | $ 499,974 | $ 0 | 11,421 | (531) | (255,677) | |
Beginning balance at Mar. 31, 2018 | 0 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Fair value adjustment of redeemable noncontrolling interest | 41,000 | ||||||
Ending balance at Jun. 30, 2018 | 41,000 | ||||||
Beginning balance, shares at Mar. 31, 2018 | 78,627,369 | 12,394,127 | |||||
Beginning balance at Mar. 31, 2018 | 296,848 | $ 499,974 | $ 0 | 7,284 | (830) | (209,580) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon exercise of stock options, shares | 148,230 | ||||||
Issuance of common stock upon exercise of stock options | 424 | 424 | |||||
Stock-based compensation | 1,180 | 1,180 | |||||
Issuance of common stock upon exercise of warrants, shares | 11,922 | ||||||
Issuance of common stock upon exercise of warrants | (2) | (2) | |||||
Repurchase of common stock, shares | (31,681) | ||||||
Repurchase of common stock | (172) | (172) | |||||
Other comprehensive gain (loss), net of tax impact | 138 | 138 | |||||
Net loss | (21,639) | (21,639) | |||||
Ending balance, shares at Jun. 30, 2018 | 78,627,369 | 12,522,598 | |||||
Ending balance at Jun. 30, 2018 | 276,781 | $ 499,974 | $ 0 | 8,718 | (692) | (231,219) | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Fair value adjustment of redeemable noncontrolling interest | (950) | 950 | (950) | ||||
Ending balance at Sep. 30, 2018 | 41,950 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon exercise of stock options, shares | 250,656 | ||||||
Issuance of common stock upon exercise of stock options | 839 | 839 | |||||
Stock-based compensation | 1,831 | 1,831 | |||||
Issuance of common stock upon exercise of warrants, shares | 229,568 | ||||||
Issuance of common stock upon exercise of warrants | (33) | (33) | |||||
Other comprehensive gain (loss), net of tax impact | 161 | 161 | |||||
Net loss | (23,508) | (23,508) | |||||
Ending balance, shares at Sep. 30, 2018 | 78,627,369 | 13,002,822 | |||||
Ending balance at Sep. 30, 2018 | 255,187 | $ 499,974 | $ 0 | 11,421 | (531) | (255,677) | |
Beginning balance at Dec. 31, 2018 | 41,800 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Fair value adjustment of redeemable noncontrolling interest | (4,700) | 4,700 | (4,700) | ||||
Ending balance at Mar. 31, 2019 | 46,500 | ||||||
Beginning balance, shares at Dec. 31, 2018 | 85,832,454 | ||||||
Beginning balance at Dec. 31, 2018 | 483,152 | $ 1 | 764,033 | (83) | (280,799) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon exercise of stock options, shares | 146,318 | ||||||
Issuance of common stock upon exercise of stock options | 538 | 538 | |||||
Vesting of common stock exercised early | 56 | 56 | |||||
Common stock issued under employee stock purchase plan (in shares) | 119,702 | ||||||
Common stock issued under employee stock purchase plan | 1,933 | 1,933 | |||||
Stock-based compensation | 3,183 | 3,183 | |||||
Other comprehensive gain (loss), net of tax impact | 416 | 416 | |||||
Net loss | (21,351) | (21,351) | |||||
Ending balance, shares at Mar. 31, 2019 | 86,098,474 | ||||||
Ending balance at Mar. 31, 2019 | 468,134 | $ 1 | 771,009 | 333 | (303,209) | ||
Beginning balance at Dec. 31, 2018 | 41,800 | ||||||
Ending balance at Sep. 30, 2019 | 46,500 | ||||||
Beginning balance, shares at Dec. 31, 2018 | 85,832,454 | ||||||
Beginning balance at Dec. 31, 2018 | $ 483,152 | $ 1 | 764,033 | (83) | (280,799) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon exercise of stock options, shares | 2,627,486 | ||||||
Other comprehensive gain (loss), net of tax impact | $ 1,192 | ||||||
Net loss | (45,741) | ||||||
Ending balance, shares at Sep. 30, 2019 | 93,853,390 | ||||||
Ending balance at Sep. 30, 2019 | 815,396 | $ 1 | 1,141,885 | 1,109 | (327,599) | ||
Beginning balance at Mar. 31, 2019 | 46,500 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Fair value adjustment of redeemable noncontrolling interest | (300) | 300 | (300) | ||||
Ending balance at Jun. 30, 2019 | 46,800 | ||||||
Beginning balance, shares at Mar. 31, 2019 | 86,098,474 | ||||||
Beginning balance at Mar. 31, 2019 | 468,134 | $ 1 | 771,009 | 333 | (303,209) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon follow-on offering, net of offering costs of $723 | 349,709 | ||||||
Issuance of common stock upon exercise of stock options, shares | 1,531,672 | ||||||
Issuance of common stock upon exercise of stock options | 4,992 | 4,992 | |||||
Vesting of restricted stock units (in shares) | 1,106 | ||||||
Vesting of common stock exercised early | 13 | 13 | |||||
Stock-based compensation | 3,215 | 3,215 | |||||
Other comprehensive gain (loss), net of tax impact | 1,011 | 1,011 | |||||
Net loss | (11,300) | (11,300) | |||||
Ending balance, shares at Jun. 30, 2019 | 92,806,252 | ||||||
Ending balance at Jun. 30, 2019 | 815,474 | $ 1 | 1,128,938 | 1,344 | (314,809) | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Fair value adjustment of redeemable noncontrolling interest | 300 | (300) | 300 | ||||
Ending balance at Sep. 30, 2019 | $ 46,500 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon follow-on offering, (in shares) | 949,496 | ||||||
Issuance of common stock upon follow-on offering, net of offering costs of $723 | 4,265 | ||||||
Issuance of common stock upon exercise of stock options | 4,265 | ||||||
Vesting of restricted stock units (in shares) | 4,439 | ||||||
Vesting of common stock exercised early | 13 | 13 | |||||
Common stock issued under employee stock purchase plan (in shares) | 93,203 | ||||||
Common stock issued under employee stock purchase plan | 3,185 | 3,185 | |||||
Stock-based compensation | 5,484 | 5,484 | |||||
Other comprehensive gain (loss), net of tax impact | (235) | (235) | |||||
Net loss | (13,090) | (13,090) | |||||
Ending balance, shares at Sep. 30, 2019 | 93,853,390 | ||||||
Ending balance at Sep. 30, 2019 | $ 815,396 | $ 1 | $ 1,141,885 | $ 1,109 | $ (327,599) |
Consolidated Statements of Re_2
Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity (unaudited) (Parenthetical) $ in Thousands | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Stock offering costs | $ 723 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (45,741) | $ (58,991) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 7,963 | 4,967 |
Unrealized translation gains on obligation related to royalty | (330) | (251) |
Non-cash stock-based compensation | 11,882 | 4,288 |
Non-cash interest expense | 0 | (10) |
Amortization of discounts on marketable securities | (1,953) | 41 |
Benefit from income taxes | (1,235) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 908 | (1,853) |
Inventory | (5,624) | 212 |
Prepaid expenses and other current assets | (453) | (2,483) |
Other assets | (1,043) | 97 |
Accounts payable | 426 | 3,348 |
Accrued compensation | 11,618 | 2,519 |
Accrued expenses and other liabilities | 6,368 | 541 |
Deferred rent | 3,465 | 1,086 |
Deferred revenue | (3,043) | 842 |
Net cash used in operating activities | (16,792) | (45,647) |
INVESTING ACTIVITIES: | ||
Purchases of marketable securities | (542,468) | (48,693) |
Maturity of marketable securities | 223,064 | 110,625 |
Business acquisition, net of cash acquired | (7,328) | 0 |
Purchases of property and equipment | (11,628) | (17,272) |
Purchases of intangible assets and capitalized license obligations | (2,568) | 0 |
Net cash (used in) provided by investing activities | (340,928) | 44,660 |
FINANCING ACTIVITIES: | ||
Payments made on royalty obligations | (228) | 0 |
Payments made on capital lease obligations | (79) | (420) |
Proceeds from issuance of common stock upon exercise of stock options | 9,795 | 2,572 |
Proceeds from issuance of common stock upon the exercise of warrants | 0 | 38 |
Repurchase of common stock | 0 | (172) |
Proceeds from issuances of common stock under employee stock purchase plan | 5,118 | 0 |
Proceeds from follow-on offering, net of underwriting discounts and commissions | 350,432 | 0 |
Payment of offering costs related to initial public offering and follow-on offering | (811) | (221) |
Net proceeds from issuance of equity interests in redeemable noncontrolling interest | 0 | 41,000 |
Net cash provided by financing activities | 364,227 | 42,797 |
Net effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | 137 | (27) |
Net increase in cash, cash equivalents and restricted cash | 6,644 | 41,783 |
Cash, cash equivalents and restricted cash - Beginning of period | 140,544 | 72,596 |
Cash, cash equivalents and restricted cash - End of period | 147,188 | 114,379 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | 860 | 67 |
Cash paid for income taxes | 298 | 0 |
Supplemental Disclosures of Noncash Investing and Financing Activities: | ||
Purchases of property and equipment included in accounts payable and accrued expenses | 6,418 | 1,859 |
Deferred offering costs included in accounts payable and accrued expenses | 0 | 4,036 |
Initial fair value of contingent consideration at acquisition date | $ 1,065 | $ 0 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Guardant Health, Inc. (the “Company”) is a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary blood tests, vast data sets and advanced analytics. The key to conquering cancer is unprecedented access to its molecular information throughout all stages of the disease, which the Company enables by a routine blood draw, or liquid biopsy. The Guardant Health Oncology Platform is designed to leverage the Company’s capabilities in technology, clinical development, regulatory, reimbursement and commercial adoption to improve patient clinical outcomes, lower healthcare costs and accelerate biopharmaceutical drug development. In pursuit of its goal to manage cancer across all stages of the disease, it has launched its Guardant360 and GuardantOMNI liquid biopsy-based tests for advanced stage cancer patients, and is developing tests from its LUNAR early detection program to address the needs of early stage cancer patients with adjuvant treatment selection, cancer survivors with surveillance, and asymptomatic individuals with screening. The Company was incorporated in Delaware in December 2011 and is headquartered in Redwood City, California. In April 2018, the Company established Guardant Health AMEA, Inc. (the “Joint Venture”) in the United States with an entity affiliated with SoftBank. Under the terms of the joint venture agreement, the Company held a 50% ownership interest in the Joint Venture. As of September 30, 2019 , the Joint Venture has subsidiaries in Singapore and Japan (see Note 3). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements include the accounts of Guardant Health, Inc. and its consolidated Joint Venture. Other stockholders’ interests in the Joint Venture are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. All significant intercompany balances and transactions have been eliminated in consolidation. The Company believes that its existing cash and cash equivalents and marketable securities as of September 30, 2019 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year after the date the accompanying condensed consolidated financial statements are issued. As the Company continues to incur losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost structure. If the Company’s transition to profitability is not consistent with its current operating plan, the Company may have to seek additional capital. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Estimates are used in several areas including, but not limited to, estimation of variable consideration, standalone selling price allocation included in contracts with multiple performance obligations, estimation of potential credit losses on accounts receivable, the valuation of inventory, the fair value of assets acquired and liabilities assumed for business combinations, goodwill and identifiable intangible assets, stock-based compensation, contingencies, certain inputs into the provision for (benefit from) income taxes, including related reserves, valuation of redeemable noncontrolling interest, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates. Unaudited Interim Condensed Financial Statements The accompanying condensed consolidated balance sheet as of September 30, 2019 , the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018 , and cash flows for the nine months ended September 30, 2019 and 2018 , and the related interim condensed consolidated disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring accruals that the Company believes are necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with GAAP. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . JOBS Act Accounting Election The Company is an “emerging growth company” within the meaning of the Jumpstart Our Business Act of 2012 (the “JOBS Act”). Section 107(b) of the JOBS Act provides that an emerging growth company can leverage the extended transition period, provided in Section 102(b) of the JOBS Act, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. The Company has elected to use this extended transition period and, as a result, the consolidated financial statements may not be comparable to companies that comply with public company effective dates. The Company also intends to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. As the market value of the Company’s common stock that was held by non-affiliates exceeded $700 million as of June 30, 2019, the Company expects to be classified as a large accelerated filer and cease being an emerging growth company as of December 31, 2019. Foreign Currency Translation The functional currency of the subsidiaries of the consolidated Joint Venture is the local currency. The assets and liabilities of the subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date, with the resulting translation adjustments recorded to a separate component of accumulated other comprehensive loss within stockholders’ equity. Income and expense accounts are translated at average exchange rates during the period. Foreign currency transaction gains and losses resulting from transactions denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. For the three and nine months ended September 30, 2019 , foreign currency translation adjustment was immaterial. Cash and Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid investments with original maturities at the time of purchase of three months or less. Cash equivalents include bank demand deposits and money market accounts that invest primarily in U.S. government-backed securities and treasuries. Cash equivalents are carried at cost, which approximates their fair value. Restricted cash consists of deposits related to the Company’s corporate credit card. Restricted cash balance was included in other assets in the accompanying condensed consolidated balance sheet, and was immaterial as of September 30, 2019 and December 31, 2018 . Concentration of Risk The Company is subject to credit risk from its portfolio of cash equivalents held at one commercial bank and investments in marketable securities. The Company limits its exposure to credit losses by investing in money market funds through a U.S. bank with high credit ratings. The Company’s cash may consist of deposits held with banks that may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the condensed consolidated balance sheets. The Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of credit exposure. The Company also invests in investment‑grade debt instruments and has policy limits for the amount it can invest in any one type of security, except for securities issued or guaranteed by the U.S. government. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, investment type and issuer, as a result, the Company is not exposed to any significant concentrations of credit risk from these financial instruments. The Company is also subject to credit risk from its accounts receivable. The majority of the Company’s accounts receivable arises from the provision of precision oncology services in the United States and are primarily with biopharmaceutical companies with high credit ratings. The Company has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Accounts receivable are recorded at the invoiced amount and do not bear interest. Significant customers are those which represent more than 10% of the Company’s total revenue or accounts receivable balance at each respective condensed consolidated balance sheet date. For each significant customer, revenue as a percentage of revenue and accounts receivable as a percentage of accounts receivable are as follows: Revenue Accounts Receivable Three Months Ended September 30, Nine Months Ended September 30, September 30, 2019 December 31, 2018 2019 2018 2019 2018 (unaudited) (unaudited) Customer A * * * 10 % * * Customer B 21 % 18 % 27 % 14 % 28 % 65 % Customer C 19 % * 15 % * * * Customer D * * * * 10 % * * less than 10% Accounts Receivable Accounts receivable represent valid claims against biopharmaceutical companies, research institutes and international distributors. The Company evaluates the collectability of its accounts receivable and provides for an allowance for potential credit losses based on management’s best estimate of the amount of probable credit losses. Accounts receivable are written off when management determines a balance is uncollectible and no longer intends to actively pursue collection of the receivable. For the three and nine months ended September 30, 2019 and 2018 , the Company did not write off any material accounts receivable. Upon the adoption of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2019, contract assets are reported as part of accounts receivable on the condensed consolidated balance sheets and are discussed in “unbilled receivables” below. Revenue Recognition The Company derives revenue from the provision of precision oncology testing services provided to its ordering physicians and biopharmaceutical customers, as well as from biopharmaceutical research and development services provided to its biopharmaceutical customers. Precision oncology services include genomic profiling and the delivery of other genomic information derived from the Company’s platform. Development services include the development of new platforms and information solutions, including companion diagnostic development and laboratory services. The Company currently receives payments from third-party commercial and governmental payers, certain hospitals and oncology centers and individual patients, as well as biopharmaceutical companies and research institutes. Effective January 1, 2019, the Company began recognizing revenue in accordance with ASC 606. Revenues are recognized when control of services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. ASC 606 provides for a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Precision oncology testing The Company recognizes revenue from the sale of its precision oncology tests for clinical customers, including certain hospitals, cancer centers, other institutions and patients, at the time results of the test are reported to physicians. Most precision oncology tests requested by clinical customers are sold without a written agreement; however, the Company determines an implied contract exists with its clinical patients. The Company identifies each sale of its liquid biopsy test to clinical customer as a single performance obligation. With the exception of certain limited contracted arrangements with insurance carriers and other institutions where the transaction price is fixed, a stated contract price does not exist and the transaction price for each implied contract with clinical customers represents variable consideration. The Company estimates the variable consideration under the portfolio approach and considers the historical reimbursement data from third-party commercial and governmental payers and patients, as well as known or anticipated reimbursement trends not reflected in the historical data. The Company monitors the estimated amount to be collected in the portfolio at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain uncertainty and require the use of judgment in the estimation of the variable consideration and application of the constraint for such variable consideration. Revenue from sales of precision oncology tests to biopharmaceutical customers are based on a negotiated price per test or on the basis of an agreement to provide certain testing volume over a defined period. The Company identifies its promise to transfer a series of distinct liquid biopsy tests to biopharmaceutical customers as a single performance obligation. Precision oncology tests to biopharmaceutical customers are generally billed at a fixed price for each test performed. For agreements involving testing volume to be satisfied over a defined period, revenue is recognized over time based on the number of tests performed as the performance obligation is satisfied over time. The Company’s precision oncology information services are delivered electronically, and as such there are no shipping or handling fees incurred by the Company or billed to customers. Development services The Company performs development services for its biopharmaceutical customers utilizing its precision oncology information platform. Development services typically represent a single performance obligation as the Company performs a significant integration service, such as analytical validation and regulatory submissions. The individual promises are not separately identifiable from other promises in the contracts and, therefore, are not distinct. However, in certain contracts, a biopharmaceutical customer may engage the Company for multiple distinct development services which are both capable of being distinct and separately identifiable from other promises in the contracts and, therefore, distinct performance obligations. The Company collaborates with pharmaceutical companies in the development of new drugs. As part of these collaborations, the Company provides services related to regulatory filings with the FDA to support companion diagnostic device submissions for the Company’s liquid biopsy panels. Under these collaborations, the Company generates revenue from achievement of milestones, as well as provision of on-going support. For development services performed, the Company is compensated through a combination of an upfront fee and performance-based, non-refundable regulatory and other developmental milestone payments. The transaction price of the Company's development services contracts typically represents variable consideration. Application of the constraint for variable consideration to milestone payments is an area that requires significant judgment. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be managed to achieve the respective milestone and the level of effort and investment required to achieve the respective milestone. In making this assessment, the Company considers its historical experience with similar milestones, the degree of complexity and uncertainty associated with each milestone, and whether achievement of the milestone is dependent on parties other than the Company. The constraint for variable consideration is applied such that it is probable a significant reversal of revenue will not occur when the uncertainty associated with the contingency is resolved. Application of the constraint for variable consideration is updated at each reporting period as a revision to the estimated transaction price. The Company recognizes development services revenue over the period in which biopharmaceutical research and development services are provided. Specifically, the Company recognizes revenue using an input method to measure progress, utilizing costs incurred to-date relative to total expected costs as its measure of progress. For development of new products or services under these arrangements, costs incurred before technological feasibility is reached are included as research and development expenses in the Company’s condensed consolidated statements of operations, while costs incurred thereafter are recorded as cost of development services. Contracts with multiple performance obligations Contracts with biopharmaceutical customers may include multiple distinct performance obligations, such as provision of precision oncology testing, biopharmaceutical research and development services, and clinical trial enrollment assistance, among others. The Company evaluates the terms and conditions included within its contracts with biopharmaceutical customers to ensure appropriate revenue recognition, including whether services are considered distinct performance obligations that should be accounted for separately versus together. The Company first identifies material promises, in contrast to immaterial promises or administrative tasks, under the contract, and then evaluates whether these promises are both capable of being distinct and distinct within the context of the contract. In assessing whether a promised service is capable of being distinct, the Company considers whether the customer could benefit from the service either on its own or together with other resources that are readily available to the customer, including factors such as the research, development, and commercialization capabilities of a third party as well as the availability of the associated expertise in the general marketplace. In assessing whether a promised service is distinct within the context of the contract, the Company considers whether it provides a significant integration of the services, whether the services significantly modify or customize one another, or whether the services are highly interdependent or interrelated. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines standalone selling price by considering the historical selling price of these performance obligations in similar transactions as well as other factors, including, but not limited to, the price that customers in the market would be willing to pay, competitive pricing of other vendors, industry publications and current pricing practices, and expected costs of satisfying each performance obligation plus appropriate margin. Unbilled receivables Unbilled receivables, which is a contract asset, consists primarily of: i) precision oncology testing revenues to clinical customers that are recognized upon delivery of the test results prior to cash collection; and ii) development services revenues to biopharmaceutical customers that are recognized upon the achievement of performance-based milestones but prior to the establishment of billing rights. Contract assets are relieved when the Company receives payments from clinical customers, or when it invoices the biopharmaceutical customers when milestones are achieved, thereby reclassifying the balances from contract assets to accounts receivable. Unbilled receivables are presented under accounts receivable on the Company’s consolidated balance sheets. As of September 30, 2019 , the Company had unbilled receivables of $5.7 million as compared to $4.9 million as of January 1, 2019. The Company did not record unbilled receivables for its contract assets prior to the adoption of ASC 606 on January 1, 2019. Deferred revenue Deferred revenue, which is a contract liability, consists primarily of payments received in advance of revenue recognition from contracts with customers. For example, development services contracts with biopharmaceutical customers often contain upfront payments which results in the recording of deferred revenue to the extent cash is received prior to the Company's performance of the related services. Contract liabilities are relieved as the Company performs its obligations under the contract and revenue is consequently recognized. As of September 30, 2019 and December 31, 2018 , the deferred revenue balance was $13.1 million and $16.1 million , respectively, which included $5.2 million and $10.5 million , respectively, related to collaboration development efforts with two pharmaceutical companies to be recognized as the Company performs research and development services in the future periods. Revenue recognized in the nine months ended September 30, 2019 that was included in the deferred revenue balance as of January 1, 2019 was $14.8 million , which represented primarily revenue from provision of development services under the collaboration agreement with a biopharmaceutical company. Transaction price allocated to the remaining performance obligations Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenues in future periods. The Company applied the practical expedient in accordance with Topic 606 to forego disclosures related to the allocation of consideration to the remaining performance obligations and the timing in which revenues will be recognized from such performance obligations. Costs of Precision Oncology Testing Cost of precision oncology testing generally consists of cost of materials, direct labor including bonus, benefit and stock-based compensation, equipment and infrastructure expenses associated with processing liquid biopsy test samples (including sample accessioning, library preparation, sequencing, quality control analyses and shipping charges to transport blood samples), freight, curation of test results for physicians and license fees due to third parties. Infrastructure expenses include depreciation of laboratory equipment, rent costs, amortization of leasehold improvements and information technology costs. Costs associated with performing the Company’s tests are recorded as the tests are performed regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of revenues generated using the associated technology are recorded as expense at the time the related revenues are recognized. One-time royalty payments related to signing of license agreements or other milestones, such as issuance of new patents, are amortized to expense over the expected useful life of the applicable patent rights. Cost of Development Services Cost of development service includes costs incurred for the performance of development services requested by the Company’s customers. For development of new products, costs incurred before technological feasibility has been achieved are reported as research and development expenses, while costs incurred thereafter are reported as cost of development services. Intangible Assets Purchased intangible assets with finite lives are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets. Acquisition-related in-process research and development (“IPR&D”) represents the fair value of incomplete research and development projects that have not reached technological feasibility as of the date of acquisition. Initially, these assets are not subject to amortization. Assets related to projects that have been completed are transferred to developed technology, which are subject to amortization. Impairment of Goodwill, Intangible Assets, and Other Long-Lived Assets Goodwill is evaluated for impairment on an annual basis during the fourth quarter of the Company’s fiscal year, and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company has elected to first assess qualitative factors to determine whether it is more likely than not that the fair value of single reporting unit is less than its carrying amount, including goodwill. If it is more likely than not that the fair value of single reporting unit is less than its carrying amount, then the quantitative impairment test will be performed. Under the quantitative impairment test, if the carrying amount of single reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, but limited to the total amount of goodwill. The Company evaluates long-lived assets, including property and equipment and purchased intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. As of September 30, 2019 , the Company has not recognized any impairment losses on its goodwill, intangible assets, or other long-loved assets. Stock‑Based Compensation Stock‑based compensation related to stock options granted to the Company’s employees and directors is measured at the grant date based on the fair value of the award. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective awards. In 2018, the Company accounted for stock options issued to nonemployees consultants based on the estimated fair value at the grant date and re-measured at each reporting period. Starting January 1, 2019, upon adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, the fair value of stock options issued to nonemployee consultants is determined as of the grant date, and compensation expense is being recognized over the period that the related services are rendered. The Company uses the Black‑Scholes option‑pricing model to estimate the fair value of its stock options. The Black-Scholes option-pricing model requires assumptions to be made related to expected term of an award, expected volatility, risk-free rate and expected dividend yield. Starting January 1, 2017, forfeitures are accounted for as they occur. Net Loss Per Share Attributable to Common Stockholders The Company calculates basic net loss per share attributable to common stockholders by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, convertible preferred stock, common stock warrants, stock options, restricted stock units, shares issuable pursuant to the employee stock purchase plan, shares subject to repurchase from early exercised options and contingently issuable shares are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive. Prior to the closing of the Company’s initial public offering (the “IPO”) in October 2018 and the conversion of its convertible preferred stock into common stock, the Company calculated its basic and diluted net loss per share attributable to common stockholders of the Company in conformity with the two-class method required for companies with participating securities. The Company considered its convertible preferred stock to be participating securities. In the event a dividend had been declared or paid on the Company’s common stock, holders of convertible preferred stock were entitled to a share of such dividend in proportion to the holders of common stock on an as-if converted basis. Under the two-class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common and preferred stockholders. The net loss attributable to common stockholders was not allocated to the convertible preferred stock under the two-class method as the convertible preferred stock did not have a contractual obligation to share in the Company’s losses. Recent Adopted Accounting Pronouncements The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all related amendments (collectively “ASC 606”) on January 1, 2019 utilizing the modified retrospective method. The cumulative effect of applying the standard to all contracts that were not completed as of the date of initial application was recognized to beginning accumulated deficit as of January 1, 2019. The Company identified certain differences in accounting for revenue recognition as a result of the adoption of ASC 606 which have impacted its financial position and results of operations. These differences are discussed below. For precision oncology testing revenue with certain clinical customers, the Company historically deferred revenue recognition until cash receipt when the price pursuant to the underlying customer arrangement became fixed and determinable and collectability became reasonably assured. Under the new standard, this is considered variable consideration and revenue is recognized at the estimated transaction price upon delivery. This results in earlier revenue recognition under the new standard as compared to previous revenue recognition. For development services revenue with certain biopharmaceutical customers, the Company historically limited revenue recognition based on the right to invoice the customer. Under the new standard, for these arrangements, the Company constrains revenue such that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For arrangements with regulatory and other developmental milestone payments, this results in a change to the timing and pattern of revenue recognition under the new standard as compared to previous revenue recognition. Effective January 1, 2019, the Company recognizes revenue in accordance with ASC 606. Comparative information from prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of changes made to the condensed consolidated balance sheet as of January 1, 2019 related to the adoption of ASC 606 were as follows: Balance as of December 31, 2018 Adjustments Due to ASC 606 Balance as of January 1, 2019 (in thousands) Assets: Accounts receivable $ 35,690 $ 4,907 $ 40,597 Equity: Accumulated deficit $ (280,799 ) $ 4,907 $ (275,892 ) In accordance with ASC 606 requirements under the modified retrospective method of adoption, the disclosure of the impact of adoption on the Company’s condensed consolidated statement of operations and condensed consolidated balance sheet was as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 (in thousands) Revenue: Precision |
Investment in Joint Venture
Investment in Joint Venture | 9 Months Ended |
Sep. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Joint Venture | Investment in Joint Venture Variable Interest Entity (“VIE”) In May 2018, the Company and SoftBank formed and capitalized Guardant Health AMEA, Inc. (the “Joint Venture”) for the sale, marketing and distribution of the Company’s tests in all areas worldwide, outside of North America, Central America, South America, the United Kingdom, all other member states of the European Union as of May 2017, Iceland, Norway, Switzerland and Turkey. The Company expects to rely on the Joint Venture to accelerate commercialization of its products in Asia, the Middle East and Africa, with an initial focus on Japan. Under the terms of the joint venture agreement, the Company paid $9.0 million for 40,000 shares of common stock, or 50% ownership interest, of the Joint Venture, and the affiliate of SoftBank contributed $41.0 million for 40,000 shares of common stock, or the other 50% ownership interest, of the Joint Venture. Neither party has the obligation to provide additional financial support to the Joint Venture. The Joint Venture is deemed to be a variable interest entity (“VIE”) and the Company has been identified as the VIE’s primary beneficiary. As the primary beneficiary, the Company has consolidated the financial position, results of operations and cash flows of the Joint Venture in its financial statements and all intercompany balances have been eliminated in consolidation. As of September 30, 2019 and December 31, 2018 , the Joint Venture had total assets of approximately $45.1 million and $48.3 million , respectively, which were primarily comprised of cash, property and equipment and security deposits. Although the Company consolidates the Joint Venture, the legal structure of the Joint Venture limits the recourse that its creditors will have over the Company’s general credit or assets. Similarly, the assets held in the Joint Venture can be used only to settle obligations of the Joint Venture. As of September 30, 2019 and December 31, 2018 , the Company has not provided financial or other support to the Joint Venture that was not previously contracted or required. Put-call arrangements The joint venture agreement includes a put-call arrangement with respect to the shares of the Joint Venture held by SoftBank and its affiliates. Under certain specified circumstances and on terms specified in the joint venture agreement, including timely written notice, SoftBank has the right to cause the Company to purchase all shares of the Joint Venture held by SoftBank and its affiliates (the “put right”), and the Company has a right to purchase all such shares (the “call right”). Each of the Company and SoftBank may exercise its respective put-call rights for the Company to purchase all shares of the Joint Venture held by SoftBank in the event of (i) certain material disagreement relating to the Joint Venture or its business that may seriously affect the ability of the Joint Venture to perform its obligations under the joint venture agreement or may otherwise seriously impair the ability of the Joint Venture to conduct its business in an effective matter, other than one relating to the Joint Venture’s business plan or to factual matters that may be capable of expert determination; (ii) the effectiveness of the Company’s initial public offering, a change in control of the Company, the seventh anniversary of the formation of the Joint Venture, or each subsequent anniversary of each of the foregoing events; or (iii) a material breach of the joint venture agreement by the other party that goes unremedied within 20 business days. The purchase price per share of the Joint Venture in these situations will be equal to the average closing price of the shares for the 20 trading days ending on the business day immediately preceding the date of the put or call notice, if the shares of the Joint Venture are publicly traded and listed on a national exchange; or determined by a third-party valuation firm on the assumption that the sale is on an arm’s-length basis on the date of the put or call notice. The third-party valuation firm may evaluate a range of factors and employ assumptions that are subjective in nature, which could result in the fair value of SoftBank’s interest in the Joint Venture being determined to be materially different from what has been recorded in the Company’s condensed consolidated financial statements. In the event the Company exercises its call right, the fair value of the Joint Venture will be deemed to be no less than an amount that yields a 20% internal rate of return on each tranche of capital invested by SoftBank and its affiliates in the Joint Venture, taking into account all proceeds received by SoftBank and its affiliates arising from their shares through such date. In the event SoftBank exercises its put right and the fair value of the Joint Venture is determined to be greater than 40% of the fair value of the Company, the Company will only be required to purchase the number of shares of the Joint Venture held by SoftBank and its affiliates having an aggregate value equal to the product of 40% of the Company's fair value and the pro rata portion of the outstanding shares of the Joint Venture held by SoftBank and its affiliates. The Company may pay the purchase price for the shares of the Joint Venture in cash, in shares of its common stock, or in a combination thereof. In the event the Company exercises the call right, SoftBank will choose the form of consideration. In the event SoftBank exercises the put right, the Company will choose the form of consideration. The noncontrolling interest held by SoftBank contains embedded put-call redemption features that are not solely within the Company’s control and has been classified outside of permanent equity in the consolidated balance sheets. The put-call feature embedded in the redeemable noncontrolling interest do not currently require bifurcation as it does not meet the definition of a derivative and is considered to be clearly and closely related to the redeemable noncontrolling interest. The noncontrolling interest is considered probable of becoming redeemable as SoftBank has the option to exercise its put right to sell its equity ownership in the Joint Venture to the Company on or after the seventh anniversary of the formation of the Joint Venture, on each subsequent anniversary of the IPO and under certain other circumstances. The Company elected to recognize the change in redemption value immediately as they occur as if the put-call redemption feature were exercisable at the end of the reporting period. As of September 30, 2019 and December 31, 2018 , the fair value of the redeemable noncontrolling interest held by SoftBank was determined to approximate $46.5 million and $41.8 million , respectively. For the three and nine months ended September 30, 2019 , the Company recorded a fair value adjustment of redeemable noncontrolling interest of a gain of $300,000 and a loss of $4.7 million , respectively, in its condensed consolidated statements of operations. As of September 30, 2019 , the fair value of the redeemable noncontrolling interest held by SoftBank was determined using the combination of the income approach and the market approach. Determining the fair value of the redeemable noncontrolling interest requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include future revenue growth rates, gross profit margins, EBITDA margins, future capital expenditures, weighted average costs of capital and future market conditions, among others. The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy. |
Condensed Consolidated Balanc_3
Condensed Consolidated Balance Sheet Components | 9 Months Ended |
Sep. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Condensed Consolidated Balance Sheet Components | Condensed Consolidated Balance Sheet Components Property and Equipment, Net Property and equipment, net consisted of the following: September 30, 2019 December 31, 2018 (unaudited) (in thousands) Machinery and equipment $ 27,590 $ 23,440 Computer hardware 6,279 4,949 Leasehold improvements 17,910 13,965 Furniture and fixtures 1,701 1,522 Computer software 797 643 Construction in progress 7,312 3,118 Property and equipment, gross 61,589 47,637 Less: accumulated depreciation and amortization (20,830 ) (16,634 ) Property and equipment, net $ 40,759 $ 31,003 Depreciation and amortization expense related to property and equipment was $2.5 million and $1.7 million for the three months ended September 30, 2019 and 2018 , respectively, and $6.8 million and $4.2 million for the nine months ended September 30, 2019 and 2018 , respectively. As of September 30, 2019 and December 31, 2018 , total property and equipment financed under capital leases was $346,000 and $504,000 , net of accumulated amortization of $209,000 and $294,000 , respectively. Amortization expense related to total property and equipment financed under capital leases was $22,000 and $30,000 for the three months ended September 30, 2019 and 2018 , respectively, and $73,000 and $135,000 for the nine months ended September 30, 2019 and 2018 , respectively. Accrued Expenses Accrued expenses consisted of the following: September 30, 2019 December 31, 2018 (unaudited) (in thousands) Accrued royalty obligations $ 1,622 $ 707 Accrued legal expenses 2,005 814 Accrued tax liabilities 1,884 1,470 Accrued professional services 2,991 1,791 Accrued clinical trials and studies 1,546 236 Purchases of property and equipment included in accrued expenses 4,210 343 Other 2,981 1,720 Total accrued expenses $ 17,239 $ 7,081 |
Fair Value Measurements. Cash E
Fair Value Measurements. Cash Equivalents and Marketable Securities | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements. Cash Equivalents and Marketable Securities | Fair Value Measurements, Cash Equivalents and Marketable Securities Financial instruments consist of cash equivalents, marketable securities, prepaid expenses and other current assets, accounts payable, accrued expenses and other long-term liabilities. Cash equivalents and marketable securities are stated at fair value. Prepaid expenses and other current assets, accounts payable and accrued expenses are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. Fair value is defined as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels 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 for similar assets or liabilities; quoted prices 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. 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. The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows: September 30, 2019 Fair Value Level 1 Level 2 Level 3 (unaudited) (in thousands) Financial Assets: Money market funds $ 8,066 $ 8,066 $ — $ — Total cash equivalents 8,066 8,066 — — Corporate bonds 23,029 — 23,029 — U.S. government debt securities 352,739 — 352,739 — Total short-term marketable securities 375,768 — 375,768 — U.S. government debt securities 302,624 — 302,624 — Total long-term marketable securities 302,624 — 302,624 — Total $ 686,458 $ 8,066 $ 678,392 $ — Financial Liabilities: Acquisition-related contingent consideration $ — $ — $ 1,065 $ — Total $ — $ — $ 1,065 $ — December 31, 2018 Fair Value Level 1 Level 2 Level 3 (in thousands) Financial Assets: Money market funds $ 25,796 $ 25,796 $ — $ — Total cash equivalents 25,796 25,796 — — Corporate bonds 38,397 — 38,397 — U.S. government debt securities 235,016 — 235,016 — U.S. government agency bonds 5,004 — 5,004 — Total short-term marketable securities 278,417 — 278,417 — Corporate bonds 3,805 — 3,805 — U.S. government debt securities 73,758 — 73,758 — Total long-term marketable securities 77,563 — 77,563 — Total $ 381,776 $ 25,796 $ 355,980 $ — The Company measures the fair value of money market funds based on quoted prices in active markets for identical securities. Corporate bonds, U.S. government debt securities and U.S. government agency bonds are valued taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs. The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration liability include the estimated amount and timing of projected cash flows, and the risk-adjusted discount rate used to present value the cash flows. The use of different inputs in the valuation of the contingent consideration liability could result in materially different fair value estimates. There were no transfers between Level 1, Level 2 and Level 3 during the periods presented. Cash Equivalents and Marketable Securities The following tables summarizes the Company’s cash equivalents and marketable securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category: September 30, 2019 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value (unaudited) (in thousands) Money market fund $ 8,066 $ — $ — $ 8,066 Corporate bond 22,985 44 — 23,029 U.S. government debt securities 654,230 1,244 (111 ) 655,363 Total $ 685,281 $ 1,288 $ (111 ) $ 686,458 December 31, 2018 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value (in thousands) Money market fund $ 25,796 $ — $ — $ 25,796 Corporate bond 42,273 — (71 ) 42,202 U.S. government debt securities 308,775 235 (236 ) 308,774 U.S. government agency bonds 5,014 — (10 ) 5,004 Total $ 381,858 $ 235 $ (317 ) $ 381,776 There have been no material realized gains or losses on marketable securities for the periods presented. None of the Company’s investments in marketable securities has been in an unrealized loss position for more than one year. The Company determined that it did have the ability and intent to hold all marketable securities that have been in a continuous loss position until maturity or recovery, thus there has been no recognition of any other-than-temporary impairment in the three and nine months ended September 30, 2019 and 2018 , respectively. The maturities of the Company’s long-term marketable securities range from 1.0 year to 1.8 years as of September 30, 2019 . |
Acquisition of Bellwether Bio
Acquisition of Bellwether Bio | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition of Bellwether Bio | Acquisition of Bellwether Bio In April 2019, the Company purchased of all of the outstanding shares of Bellwether Bio, Inc. (“Bellwether Bio”), a privately-held company developing a method for early blood-based cancer detection. The Company accounted for the acquisition as a business combination. The total purchase consideration was $8.7 million , which consisted of i) $7.6 million in cash paid upon closing; and ii) future contingent consideration liability with a fair value of $1.1 million on the acquisition date. The contingent consideration is subject to the achievement of certain commercialization milestones with a maximum payout amount of $10.0 million . The Company will also pay additional earn-out consideration of up to $10.0 million subject to the achievement of certain commercialization milestones and the continued provision of services to the Company by certain former employees and consultants of Bellwether Bio. The contingent consideration and earn-out consideration may be paid, at the Company’s election, in cash or in the Company’s common stock. As of September 30, 2019 , the Company did not believe the earn-out consideration is probable to be achieved, and therefore, did not record any compensation expense. The excess purchase consideration over the fair value of assets acquired and liabilities assumed was recorded as goodwill. Goodwill is attributable to future revenue opportunities that we expect to achieve from leveraging Bellwether Bio’s existing license and IPR&D, as well as the assembled workforce. The valuation of the intangible assets acquired was determined using currently available information and reasonable assumptions. The purchase price allocation is preliminary as the Company is still in the process of collecting additional information for the valuation of intangible assets, contingent consideration and unrecognized tax benefits. The following table summarizes the preliminary allocation of the total consideration to the estimated fair values of assets acquired and liabilities assumed: Amount (unaudited) (in thousands) Cash $ 521 Identified intangible assets 6,700 Goodwill 2,928 Net liabilities assumed (1,441 ) Total $ 8,708 The following table presents details of the identified intangible assets acquired from the Bellwether Bio acquisition: Fair Value Estimated Useful Life (in thousands) Acquired license $ 5,100 10 years IPR&D 1,600 * Total $ 6,700 * IPR&D assets are not subject to amortization. In connection with the acquisition of Bellwether Bio, the Company also entered into non-compete agreements with certain key individuals based on their experience and importance to the operation of Bellwether Bio. The Company accounted for the covenants not to compete as purchases of intangible assets separate from the business combination as these non-compete agreements were initiated by the Company to protect its interests. The fair value of acquired covenants not to compete is estimated to be $2.5 million , which is recorded within intangible assets on the condensed consolidated balance sheet and will be amortized over an estimated useful life of 6 years using the straight-line method. Acquisition-related contingent consideration is measured at fair value on a quarterly basis based on additional information as it becomes available and change in estimated contingent consideration to be paid will be included in other income (expense), net in the consolidated statements of operations. The fair value of acquisition-related contingent consideration is estimated using a multiple-outcome discounted cash flow valuation technique. Contingent consideration is classified within Level 3 of the fair value hierarchy, as it is based on a probability that includes significant unobservable inputs. The significant unobservable inputs include a probability-weighted estimate of achievement of certain commercialization milestones, continued services from certain former employees and consultants, resulting contingent payments, and discount rate to present value the expected payments. A significant change in any of these input factors in isolation could have a material impact to fair value measurement. For the three and nine months ended September 30, 2019 , no change in estimated contingent consideration liability was recorded as the information available at period end is similar to those used to estimate the fair value of contingent consideration on the acquisition date. As of September 30, 2019 , the acquisition-related contingent consideration liability of $1.1 million was recorded within other long-term liabilities on the condensed consolidated balance sheet. For the nine months ended September 30, 2019 , the Company incurred acquisition-related transaction costs of $422,000 , which were included in general and administrative expenses in the condensed consolidated statements of operations. |
Patent License Agreement
Patent License Agreement | 9 Months Ended |
Sep. 30, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Patent License Agreement | Patent License Agreement In January 2017, the Company entered into a patent license agreement with a biotechnology company for an exclusive, non-transferable right to use proprietary technology related to high-throughput screening and identification of mutations in targeted gene sequences. The transaction was treated as an acquisition of an asset and the Company capitalized a total of $9.7 million under the arrangement. As of September 30, 2019 and December 31, 2018 , unamortized capitalized license fees were $7.1 million and $7.8 million , respectively, which will be amortized over the remaining useful life of 7.3 and 8.0 years , respectively. Amortization of capitalized license fees totaled $249,000 and $266,000 for the three months ended September 30, 2019 and 2018 , respectively, and $735,000 and $694,000 for the nine months ended September 30, 2019 and 2018 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases As of September 30, 2019 , future minimum payments under the non-cancelable operating lease were as follows: Year Ending December 31, (unaudited) (in thousands) Remainder of 2019 $ 1,467 2020 7,292 2021 8,143 2022 8,392 2023 9,022 2024 and thereafter 26,076 Total $ 60,392 Rent expense for the facility leases was $1.7 million and $1.2 million for the three months ended September 30, 2019 and 2018 , respectively, and $4.6 million and $3.4 million for the nine months ended September 30, 2019 and 2018 , respectively. Capital Leases As of September 30, 2019 , future minimum capital lease payments were as follows: Year Ending December 31, (unaudited) (in thousands) Remainder of 2019 $ 27 2020 108 2021 36 Total minimum capital lease payments 171 Less: amount representing interest (34 ) Present value of net minimum capital lease payments 137 Less: current installments of obligations under capital lease (80 ) Obligations under capital lease, excluding current installments $ 57 The Company has no minimum capital lease payments in 2022 and thereafter. Patent License Agreements The Company has agreements with four different parties to in-license patent rights. Under these agreements, the Company has made one-time upfront and milestone payments, which it has capitalized and is amortizing to expense ratably over the useful life of the underlying patent right(s). Under some of these agreements, the Company is obligated to pay low single-digit percentage running royalties on net sales where the licensed patent right(s) are used in the product or service sold, subject to minimum annual royalties or fees in certain agreements. Royalty expenses were included in cost of precision oncology testing on the accompanying condensed consolidated statements of operations. The Company recognized royalty expenses of $1.4 million and $319,000 , or 3% and 2% of precision oncology testing revenue in each period, for the three months ended September 30, 2019 and 2018 , respectively, and $3.1 million and $936,000 , or 3% and 2% of precision oncology testing revenue in each period, for the nine months ended September 30, 2019 and 2018 , respectively. As of September 30, 2019 , future minimum royalty payments were due as follows regardless of sales amounts: Year Ending December 31, (unaudited) (in thousands) Remainder of 2019 $ 341 2020 1,365 2021 1,365 2022 1,637 2023 1,637 2024 and thereafter 5,458 Total future minimum royalty payments 11,803 Less: amount representing interest (5,023 ) Present value of future minimum royalty payments $ 6,780 Indemnification Agreements The Company has entered into indemnification agreements with certain directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. To date, no such matters have arisen and the Company does not believe that the outcome of any claims under indemnification arrangements will have a material adverse effect on its financial positions, results of operations or cash flows. Accordingly, the Company has not recorded a liability related to such indemnifications as of September 30, 2019 . Security Incidents In July 2018, the Company experienced security incidents involving an unauthorized actor obtaining access to its email system and sending phishing messages. The Company has implemented and continues to implement additional security measures to help prevent future unauthorized access to its systems and the data it maintains, including promptly engaging an independent cybersecurity firm to support its investigation, assess its systems and bolster security thereof. The Company provided timely notices to the U.S. Department of Health and Human Services (“HHS”), certain state regulators and certain credit agencies, as applicable, as well as to the individuals affected. Following such security incidents, the Company received a request for information in January 2019 regarding the incidents from the HHS Office for Civil Rights (“OCR”). The Company responded to that request, and in August 2019, OCR informed the Company that OCR has closed the matter without further action. In connection with an unrelated security incident involving few patients, the Company received additional OCR requests for information in August 2019, to which the Company has responded in October 2019. The Company currently cannot predict the ultimate resolution of the OCR inquiry and cannot estimate the amounts or ranges of potential loss that could result therefrom. The Company has insurance coverage in place for certain potential claims, liabilities and costs relating to the security incidents, but this coverage is limited in amount and may not be adequate to protect against all claims, liabilities and costs arising from such incidents, including fines and penalties. Legal Proceedings The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. Patent Disputes In November 2017, the Company filed separate lawsuits against Foundation Medicine, Inc. (“Foundation Medicine”) and Personal Genome Diagnostics, Inc. (“Personal Genome Diagnostics”) in the United States District Court for the District of Delaware. The Company has alleged that each of the two companies has infringed four of the Company’s digital sequencing technology patents. The two companies have each asserted counterclaims of patent invalidity, unenforceability under the doctrine of inequitable conduct, and non-infringement. Personal Genome Diagnostics has also alleged antitrust violations related to the enforcement of the Company’s patent rights. In each lawsuit, the parties are seeking damages, injunctive relief and attorneys’ fees. In March 2018, Personal Genome Diagnostics filed two petitions for post-grant review with the Patent Trial and Appeal Board (“PTAB”) at the United States Patent and Trademark Office, challenging the patentability of two of the patents asserted by the Company. The two post-grant review petitions were dismissed with prejudice in July 2018. Subsequently, Foundation Medicine filed six petitions for inter partes review with the PTAB, challenging the patentability of all four of the patents asserted by the Company. The PTAB denied institution of inter partes review for four of the six petitions filed by Foundation Medicine and instituted inter partes review for the remaining two petitions. The Company plans to vigorously defend its patent rights during such PTAB actions. At this time, the Company cannot reasonably ascertain the likelihood that any of the remaining challenged patents will be found to be invalid or unenforceable. License Dispute In November 2018, the Company filed a request for arbitration to the International Chamber of Commerce claiming that KeyGene N.V. (“Licensor”) has breached its patent license agreement with the Company. Licensor counterclaimed that the Company has breached the agreement. The parties are seeking damages, declaratory relief and recovery of costs and fees, among other remedies. At this time, the Company cannot reasonably ascertain the likelihood that any of its claims or Licensor’s counterclaims will succeed on the merits. Other Disputes In the first quarter of 2018, the Company settled a commercial dispute. In connection with the settlement, the Company received a payment of $4.25 million , which was reported as other income in the condensed consolidated statements of operations for the three months ended March 31, 2018. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Common Stock | Common Stock Common stockholders are entitled to dividends if and when declared by the Company’s Board of Directors (the “Board of Directors”). As of September 30, 2019 and December 31, 2018 , no dividends on common stock had been declared by the Board of Directors. Common stock has been reserved for the following potential future issuances: September 30, 2019 December 31, 2018 (unaudited) Shares underlying outstanding stock options 4,915,418 7,588,405 Shares underlying unvested restricted stock units 443,267 — Shares available for issuance under the 2018 Incentive Award Plan 2,806,659 3,556,507 Shares available for issuance under the 2018 Employee Stock Purchase Plan 709,345 922,250 Total 8,874,689 12,067,162 Reverse Stock Split In September 2018, the Company’s Board of Directors and its stockholders approved a 0.7378 -for-one reverse stock split of the Company’s common stock. The reverse stock split became effective on September 19, 2018. The par value of the common stock was not adjusted as a result of the reverse stock split. Adjustments corresponding to the reverse stock split were made to the ratio at which the convertible preferred stock was convertible into common stock immediately prior to the closing of the IPO. All share and per share amounts in the accompanying condensed consolidated financial statements have been retroactively adjusted for all periods presented to give effect to this reverse stock split. Initial Public Offering On October 9, 2018, the Company completed the IPO, in which it issued and sold 14,375,000 shares of its common stock at a price of $19.00 per share. The Company received net proceeds of $249.5 million after deducting underwriting discounts and commissions and offering expenses payable by the Company. All then-outstanding warrants to purchase the Company’s common stock were exercised prior to the completion of the IPO. In addition, in connection with the IPO, all shares of the Company’s then-outstanding convertible preferred stock were automatically converted into 58,264,577 shares of its common stock, and all then-outstanding warrants to purchase the Company’s convertible preferred stock were automatically converted into warrants to purchase 7,636 shares of the Company’s common stock. Follow-on Offering In May 2019, the Company completed an underwritten public offering, in which it issued and sold 5,175,000 shares of its common stock (including the exercise in full of the underwriters’ over-allotment option to purchase 675,000 additional shares) at a price of $71.00 per share. The Company received net proceeds of $349.7 million after deducting underwriting discounts and commissions and offering expenses payable by the Company. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2012 Stock Plan and 2018 Incentive Award Plan In June 2012 and September 2018, the Board of Directors adopted and its stockholders approved the Company’s 2012 Stock Plan (as amended and restated, the “2012 Plan”) and the Company’s 2018 Incentive Award Plan (the “2018 Plan”), respectively, under which the Company may grant cash and equity incentive awards such as stock options, restricted shares, stock units and stock appreciation rights to its employees and nonemployees. Stock options granted may be either incentive stock options or non-statutory stock options. Shares issued under the 2018 Plan may be authorized but unissued shares, or shares purchased in the open market or treasury shares. Upon effectiveness of the 2018 Plan in connection with the IPO in October 2018, the 2012 Plan was terminated and the 508,847 shares remaining available for future grant under the 2012 Plan were not made available for grant under the 2012 Plan or the 2018 Plan. Any outstanding awards granted under the 2012 Plan remained outstanding, subject to the terms of the 2012 Plan and applicable award agreement; and if any of those awards are forfeited or cancelled without payment therefor, the shares covered by those awards will not become available for future grant or issuance under the 2012 Plan or the 2018 Plan. No further grants will be made under the 2012 Plan. As of September 30, 2019 , 3,658,602 shares were approved and reserved for issuance under the 2018 Plan. Stock Option Activity A summary of the Company’s stock option activity under the 2012 Plan and the 2018 Plan and related information is as follows: Options Outstanding Shares Available for Grant Shares Subject to Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2018 3,556,507 7,588,405 $ 4.58 8.3 $ 250,495 Granted (306,958 ) 306,958 89.37 Exercised — (2,627,486 ) 3.72 Canceled 5,922 (352,459 ) 6.17 Restricted stock units granted (484,952 ) — — Restricted stock units canceled 36,140 — — Balance as of September 30, 2019 2,806,659 4,915,418 $ 10.23 8.0 $ 271,740 Vested and Exercisable as of September 30, 2019 1,851,781 $ 4.52 7.4 $ 109,974 Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised was $75.3 million and $2.2 million for the three months ended September 30, 2019 and 2018 , respectively, and $191.7 million and $3.9 million for the nine months ended September 30, 2019 and 2018 , respectively. Starting January 1, 2019, the Company adopted ASU 2018-07 which aligns the accounting treatment of nonemployee awards with employee awards, and the fair value of stock options issued to employees and nonemployee consultants are both determined as of the grant date. The weighted-average grant date fair value of options granted was $55.16 and $5.45 per share for the three months ended September 30, 2019 and 2018 , respectively, and $53.02 and $4.65 per share for the nine months ended September 30, 2019 and 2018 , respectively. Future stock-based compensation for unvested options as of September 30, 2019 and December 31, 2018 was $26.0 million and $17.5 million , respectively, which is expected to be recognized over a weighted-average period of 3.0 years and 2.7 years , respectively. Restricted Stock Units A summary of the Company’s restricted stock unit activity under the 2012 Plan and the 2018 Plan and related information is as follows: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Unvested balance as of December 31, 2018 — $ — Granted 484,952 79.68 Vested (5,545 ) 53.20 Canceled (36,140 ) 48.83 Unvested balance as of September 30, 2019 443,267 $ 82.52 Future stock-based compensation for unvested restricted stock units as of September 30, 2019 was $34.1 million , which is expected to be recognized over a weighted-average period of 3.7 years . Stock‑Based Compensation Expense The following table presents the effect of employee and non‑employee related stock‑based compensation expense: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands) Cost of precision oncology testing $ 266 $ 112 $ 562 $ 254 Research and development expense 2,066 617 4,704 1,035 Sales and marketing expense 1,458 428 2,930 1,061 General and administrative expense 1,694 674 3,686 1,938 Total stock-based compensation expense $ 5,484 $ 1,831 $ 11,882 $ 4,288 Valuation of Stock Options The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (unaudited) Expected term (in years) 6.03 – 6.08 5.87 – 6.09 5.50 – 6.22 5.01 – 10.00 Expected volatility 63.2% – 64.6% 69.7% – 70.2% 63.2% – 68.3% 69.7% – 86.5% Risk-free interest rate 1.6% – 1.9% 2.7% – 2.9% 1.6% – 2.7% 2.5% – 2.9% Expected dividend yield —% —% —% —% The determination of the fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of the Company’s common stock, as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine. The valuation assumptions were determined as follows : Expected Term The expected term represents the period that the options granted are expected to be outstanding. After the adoption of ASU 2018-07 on January 1, 2019, the expected term of stock options issued to employees and nonemployee consultants is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term. Prior to the adoption of ASU 2018-07, the expected term of stock options issued to employees was determined using the simplified method, and the expected term of stock options issued to nonemployee consultants was based on the contractual term of the award. Expected Volatility Prior to the commencement of trading of the Company’s common stock on the Nasdaq Global Select Market on October 4, 2018 in connection with the IPO, there was no active trading market for the Company's common stock. The Company derived the expected volatility from the average historical volatilities over a period approximately equal to the expected term of comparable publicly traded companies within its peer group that were deemed to be representative of future stock price trends as the Company has limited trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Risk-Free Interest Rate The risk-free interest rate is based on the U.S. Treasury rate, with maturities similar to the expected term of the stock options. Expected Dividend Yield The Company does not anticipate paying any dividends in the foreseeable future and, therefore, uses an expected dividend yield of zero . 2018 Employee Stock Purchase Plan In September 2018, the Board of Directors adopted and its stockholders approved the 2018 Employee Stock Purchase Plan (the “ESPP”). A total of 922,250 shares of Company’s common stock were initially reserved for issuance under the ESPP. The number of shares may be increased in accordance with the terms of the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 10% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the Company’s common stock on the first or last day of the offering period, whichever is lower. The initial offering period ran from October 2, 2018 to January 31, 2019, the second offering period ran from February 1, 2019 to July 31, 2019, and the third offering period began on August 1, 2019 and will run to November 14, 2019. On a going forward basis, the ESPP will provide for separate six-month offering periods beginning on May 15 and November 15 of each year. For the three and nine months ended September 30, 2019 , 93,203 and 212,905 shares of common stock were purchased under the ESPP. The total compensation expense related to the ESPP for the three and nine months ended September 30, 2019 was $775,000 and $1,781,000 . As of September 30, 2019 , the unrecognized stock-based compensation expense related to the ESPP was $225,000 , which is expected to be recognized over the remaining term of the offering period of 0.1 years . The fair value of the stock purchase right granted under the ESPP was estimated on the first day of each offering period using the Black-Scholes option pricing model. The valuation assumptions used were substantially consistent with the assumption used to value stock options with the exception of the expected term which was based on the term of each purchase period. The grant date fair value of the stock purchase right granted under the ESPP was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (unaudited) Expected term (in years) 0.29 0.29 – 0.50 Expected volatility 60.3% 60.2% – 60.3% Risk-free interest rate 2.1% 2.1% – 2.5% Expected dividend yield —% —% Liabilities for Early Exercise of Employee Options The Company allowed certain stock option holders to exercise unvested options to purchase shares of the Company’s common stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s employment termination, at the original issuance price, until the options are fully vested. As of September 30, 2019 and December 31, 2018 , 26,747 and 44,268 shares of common stock were subject to repurchase at weighted-average prices of $4.66 and $4.66 per share, respectively. As of September 30, 2019 and December 31, 2018 , the cash proceeds received for unvested shares of common stock of $125,000 and $206,000 , respectively, were recorded within other long-term liabilities on the condensed consolidated balance sheet. The shares issued pursuant to unvested options have been included in shares issued and outstanding on the condensed consolidated balance sheet and condensed consolidated statement of redeemable noncontrolling interest and stockholders’ equity as such shares are considered legally outstanding. |
Net Loss Per Share Attributable
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders | Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders The following table sets forth the computation of the basic and diluted net loss per share attributable to Guardant Health, Inc. common stockholders: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands, except per share data) Net loss $ (13,090 ) $ (23,508 ) $ (45,741 ) $ (58,991 ) Fair value adjustment of redeemable noncontrolling interest 300 (950 ) (4,700 ) (950 ) Net loss attributable to Guardant Health, Inc. common stockholders, basic and diluted $ (12,790 ) $ (24,458 ) $ (50,441 ) $ (59,941 ) Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted $ (0.14 ) $ (1.94 ) $ (0.56 ) $ (4.87 ) Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted 93,303 12,582 89,452 12,300 Since the Company was in a loss position for all periods presented, basic net loss per share attributable to Guardant Health, Inc. common stockholders is the same as diluted net loss per share attributable to Guardant Health, Inc. common stockholders, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. The following weighted-average common stock equivalents were excluded from the calculation of diluted net loss per share attributable to Guardant Health, Inc. common stockholders for the periods presented as they had an anti-dilutive effect: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands) Convertible preferred stock (on an as if converted basis) — 58,265 — 58,265 Stock options issued and outstanding 5,353 7,675 6,390 7,460 Unvested restricted stock units 338 — 179 — ESPP obligation 42 — 62 — Preferred stock warrants (on an as if converted basis) — 8 — 8 Common stock warrants — 203 — 237 Common stock subject to repurchase 28 54 33 43 Total 5,761 66,205 6,664 66,013 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective income tax rate for the nine months ended September 30, 2019 was 3% . The income tax expense for the nine months ended September 30, 2019 was determined based upon estimates of the Company’s effective income tax rates in various jurisdictions. The difference between the Company’s effective income tax rate and the U.S. federal statutory rate is primarily attributable to state income taxes, foreign income taxes, the effect of certain permanent differences, the acquisition of Bellwether Bio, and full valuation allowance against net deferred tax assets. The benefit from income taxes for the nine months ended September 30, 2019 relates primarily to the release of a valuation allowance of $1.2 million associated with nondeductible intangible assets recorded as part of the Bellwether Bio acquisition and the utilization of tax losses from continuing operations against other comprehensive income gains resulting in a tax benefit of $205,000 in accordance with intra-period tax allocation under FASB ASC Topic 740, Income Taxes (“ASC 740”), partially offset by state minimum income tax and income tax on the Company’s earnings in foreign jurisdictions. In connection with the acquisition of Bellwether Bio, a deferred tax liability was established for the book-tax basis differences related to the non-goodwill intangible assets. The net deferred tax liability from this acquisition creates an additional source of income to offset the Company’s deferred tax assets. As such, the impact on the acquiring company’s deferred tax assets and liabilities caused by an acquisition are recorded in the acquiring company’s consolidated financial statements outside of acquisition accounting. The income tax expense for the nine months ended September 30, 2018 relates primarily to state minimum income tax. The benefit from income taxes for the three months ended September 30, 2019 relates primarily to the utilization of tax losses from continuing operations against other comprehensive income gains resulting in a tax benefit of $205,000 in accordance with intra-period tax allocation under ASC 740, partially offset by state minimum income tax and income tax on the Company’s earnings in foreign jurisdictions. The benefit from income taxes for the three months ended September 30, 2018 relates primarily to state minimum income tax. |
Segment and Geographic Informat
Segment and Geographic Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The following table sets forth the Company’s revenue by geographic areas based on the customers’ locations: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands) United States $ 54,675 $ 17,932 $ 134,917 $ 47,389 International(1) 6,173 3,760 16,561 10,377 Total revenue $ 60,848 $ 21,692 $ 151,478 $ 57,766 (1) No single country outside of the United States accounted for more than 10% of total revenue during the three and nine months ended September 30, 2019 and 2018 , respectively, except for Germany which accounted for 10% of total revenue during the three months ended September 30, 2018 . As of September 30, 2019 and December 31, 2018 , substantially all of the Company’s long-lived assets are located in the United States. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As discussed in Note 3, in connection with Softbank’s purchase of its Series E convertible preferred stock in 2017, the Company entered into a joint venture agreement with an entity affiliated with SoftBank. In May 2018, the Company and SoftBank formed and capitalized the Joint Venture to accelerate commercialization of its products in Asia, the Middle East and Africa. The Company has consolidated the financial position, results of operations and cash flows of the Joint Venture in its financial statements and all intercompany balances have been eliminated in consolidation. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements include the accounts of Guardant Health, Inc. and its consolidated Joint Venture. Other stockholders’ interests in the Joint Venture are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. All significant intercompany balances and transactions have been eliminated in consolidation. The Company believes that its existing cash and cash equivalents and marketable securities as of September 30, 2019 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year after the date the accompanying condensed consolidated financial statements are issued. As the Company continues to incur losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost structure. If the Company’s transition to profitability is not consistent with its current operating plan, the Company may have to seek additional capital. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Estimates are used in several areas including, but not limited to, estimation of variable consideration, standalone selling price allocation included in contracts with multiple performance obligations, estimation of potential credit losses on accounts receivable, the valuation of inventory, the fair value of assets acquired and liabilities assumed for business combinations, goodwill and identifiable intangible assets, stock-based compensation, contingencies, certain inputs into the provision for (benefit from) income taxes, including related reserves, valuation of redeemable noncontrolling interest, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates. |
Unaudited Interim Condensed Financial Statements | Unaudited Interim Condensed Financial Statements The accompanying condensed consolidated balance sheet as of September 30, 2019 , the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018 , and cash flows for the nine months ended September 30, 2019 and 2018 , and the related interim condensed consolidated disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring accruals that the Company believes are necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with GAAP. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . |
JOBS Act Accounting Election | JOBS Act Accounting Election The Company is an “emerging growth company” within the meaning of the Jumpstart Our Business Act of 2012 (the “JOBS Act”). Section 107(b) of the JOBS Act provides that an emerging growth company can leverage the extended transition period, provided in Section 102(b) of the JOBS Act, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. The Company has elected to use this extended transition period and, as a result, the consolidated financial statements may not be comparable to companies that comply with public company effective dates. The Company also intends to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. |
Foreign Currency Translations | Foreign Currency Translation The functional currency of the subsidiaries of the consolidated Joint Venture is the local currency. The assets and liabilities of the subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date, with the resulting translation adjustments recorded to a separate component of accumulated other comprehensive loss within stockholders’ equity. Income and expense accounts are translated at average exchange rates during the period. Foreign currency transaction gains and losses resulting from transactions denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. For the three and nine months ended September 30, 2019 , foreign currency translation adjustment was immaterial. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid investments with original maturities at the time of purchase of three months or less. Cash equivalents include bank demand deposits and money market accounts that invest primarily in U.S. government-backed securities and treasuries. Cash equivalents are carried at cost, which approximates their fair value. Restricted cash consists of deposits related to the Company’s corporate credit card. |
Concentration of Risk | Concentration of Risk The Company is subject to credit risk from its portfolio of cash equivalents held at one commercial bank and investments in marketable securities. The Company limits its exposure to credit losses by investing in money market funds through a U.S. bank with high credit ratings. The Company’s cash may consist of deposits held with banks that may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the condensed consolidated balance sheets. The Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of credit exposure. The Company also invests in investment‑grade debt instruments and has policy limits for the amount it can invest in any one type of security, except for securities issued or guaranteed by the U.S. government. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, investment type and issuer, as a result, the Company is not exposed to any significant concentrations of credit risk from these financial instruments. The Company is also subject to credit risk from its accounts receivable. The majority of the Company’s accounts receivable arises from the provision of precision oncology services in the United States and are primarily with biopharmaceutical companies with high credit ratings. The Company has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Accounts receivable are recorded at the invoiced amount and do not bear interest. |
Accounts Receivable | Accounts Receivable Accounts receivable represent valid claims against biopharmaceutical companies, research institutes and international distributors. The Company evaluates the collectability of its accounts receivable and provides for an allowance for potential credit losses based on management’s best estimate of the amount of probable credit losses. Accounts receivable are written off when management determines a balance is uncollectible and no longer intends to actively pursue collection of the receivable. For the three and nine months ended September 30, 2019 and 2018 , the Company did not write off any material accounts receivable. Upon the adoption of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2019, contract assets are reported as part of accounts receivable on the condensed consolidated balance sheets and are discussed in “unbilled receivables” below. |
Revenue Recognition | Revenue Recognition The Company derives revenue from the provision of precision oncology testing services provided to its ordering physicians and biopharmaceutical customers, as well as from biopharmaceutical research and development services provided to its biopharmaceutical customers. Precision oncology services include genomic profiling and the delivery of other genomic information derived from the Company’s platform. Development services include the development of new platforms and information solutions, including companion diagnostic development and laboratory services. The Company currently receives payments from third-party commercial and governmental payers, certain hospitals and oncology centers and individual patients, as well as biopharmaceutical companies and research institutes. Effective January 1, 2019, the Company began recognizing revenue in accordance with ASC 606. Revenues are recognized when control of services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. ASC 606 provides for a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Precision oncology testing The Company recognizes revenue from the sale of its precision oncology tests for clinical customers, including certain hospitals, cancer centers, other institutions and patients, at the time results of the test are reported to physicians. Most precision oncology tests requested by clinical customers are sold without a written agreement; however, the Company determines an implied contract exists with its clinical patients. The Company identifies each sale of its liquid biopsy test to clinical customer as a single performance obligation. With the exception of certain limited contracted arrangements with insurance carriers and other institutions where the transaction price is fixed, a stated contract price does not exist and the transaction price for each implied contract with clinical customers represents variable consideration. The Company estimates the variable consideration under the portfolio approach and considers the historical reimbursement data from third-party commercial and governmental payers and patients, as well as known or anticipated reimbursement trends not reflected in the historical data. The Company monitors the estimated amount to be collected in the portfolio at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain uncertainty and require the use of judgment in the estimation of the variable consideration and application of the constraint for such variable consideration. Revenue from sales of precision oncology tests to biopharmaceutical customers are based on a negotiated price per test or on the basis of an agreement to provide certain testing volume over a defined period. The Company identifies its promise to transfer a series of distinct liquid biopsy tests to biopharmaceutical customers as a single performance obligation. Precision oncology tests to biopharmaceutical customers are generally billed at a fixed price for each test performed. For agreements involving testing volume to be satisfied over a defined period, revenue is recognized over time based on the number of tests performed as the performance obligation is satisfied over time. The Company’s precision oncology information services are delivered electronically, and as such there are no shipping or handling fees incurred by the Company or billed to customers. Development services The Company performs development services for its biopharmaceutical customers utilizing its precision oncology information platform. Development services typically represent a single performance obligation as the Company performs a significant integration service, such as analytical validation and regulatory submissions. The individual promises are not separately identifiable from other promises in the contracts and, therefore, are not distinct. However, in certain contracts, a biopharmaceutical customer may engage the Company for multiple distinct development services which are both capable of being distinct and separately identifiable from other promises in the contracts and, therefore, distinct performance obligations. The Company collaborates with pharmaceutical companies in the development of new drugs. As part of these collaborations, the Company provides services related to regulatory filings with the FDA to support companion diagnostic device submissions for the Company’s liquid biopsy panels. Under these collaborations, the Company generates revenue from achievement of milestones, as well as provision of on-going support. For development services performed, the Company is compensated through a combination of an upfront fee and performance-based, non-refundable regulatory and other developmental milestone payments. The transaction price of the Company's development services contracts typically represents variable consideration. Application of the constraint for variable consideration to milestone payments is an area that requires significant judgment. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be managed to achieve the respective milestone and the level of effort and investment required to achieve the respective milestone. In making this assessment, the Company considers its historical experience with similar milestones, the degree of complexity and uncertainty associated with each milestone, and whether achievement of the milestone is dependent on parties other than the Company. The constraint for variable consideration is applied such that it is probable a significant reversal of revenue will not occur when the uncertainty associated with the contingency is resolved. Application of the constraint for variable consideration is updated at each reporting period as a revision to the estimated transaction price. The Company recognizes development services revenue over the period in which biopharmaceutical research and development services are provided. Specifically, the Company recognizes revenue using an input method to measure progress, utilizing costs incurred to-date relative to total expected costs as its measure of progress. For development of new products or services under these arrangements, costs incurred before technological feasibility is reached are included as research and development expenses in the Company’s condensed consolidated statements of operations, while costs incurred thereafter are recorded as cost of development services. Contracts with multiple performance obligations Contracts with biopharmaceutical customers may include multiple distinct performance obligations, such as provision of precision oncology testing, biopharmaceutical research and development services, and clinical trial enrollment assistance, among others. The Company evaluates the terms and conditions included within its contracts with biopharmaceutical customers to ensure appropriate revenue recognition, including whether services are considered distinct performance obligations that should be accounted for separately versus together. The Company first identifies material promises, in contrast to immaterial promises or administrative tasks, under the contract, and then evaluates whether these promises are both capable of being distinct and distinct within the context of the contract. In assessing whether a promised service is capable of being distinct, the Company considers whether the customer could benefit from the service either on its own or together with other resources that are readily available to the customer, including factors such as the research, development, and commercialization capabilities of a third party as well as the availability of the associated expertise in the general marketplace. In assessing whether a promised service is distinct within the context of the contract, the Company considers whether it provides a significant integration of the services, whether the services significantly modify or customize one another, or whether the services are highly interdependent or interrelated. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines standalone selling price by considering the historical selling price of these performance obligations in similar transactions as well as other factors, including, but not limited to, the price that customers in the market would be willing to pay, competitive pricing of other vendors, industry publications and current pricing practices, and expected costs of satisfying each performance obligation plus appropriate margin. Unbilled receivables Unbilled receivables, which is a contract asset, consists primarily of: i) precision oncology testing revenues to clinical customers that are recognized upon delivery of the test results prior to cash collection; and ii) development services revenues to biopharmaceutical customers that are recognized upon the achievement of performance-based milestones but prior to the establishment of billing rights. Contract assets are relieved when the Company receives payments from clinical customers, or when it invoices the biopharmaceutical customers when milestones are achieved, thereby reclassifying the balances from contract assets to accounts receivable. Unbilled receivables are presented under accounts receivable on the Company’s consolidated balance sheets. As of September 30, 2019 , the Company had unbilled receivables of $5.7 million as compared to $4.9 million as of January 1, 2019. The Company did not record unbilled receivables for its contract assets prior to the adoption of ASC 606 on January 1, 2019. Deferred revenue Deferred revenue, which is a contract liability, consists primarily of payments received in advance of revenue recognition from contracts with customers. For example, development services contracts with biopharmaceutical customers often contain upfront payments which results in the recording of deferred revenue to the extent cash is received prior to the Company's performance of the related services. Contract liabilities are relieved as the Company performs its obligations under the contract and revenue is consequently recognized. As of September 30, 2019 and December 31, 2018 , the deferred revenue balance was $13.1 million and $16.1 million , respectively, which included $5.2 million and $10.5 million , respectively, related to collaboration development efforts with two pharmaceutical companies to be recognized as the Company performs research and development services in the future periods. Revenue recognized in the nine months ended September 30, 2019 that was included in the deferred revenue balance as of January 1, 2019 was $14.8 million , which represented primarily revenue from provision of development services under the collaboration agreement with a biopharmaceutical company. Transaction price allocated to the remaining performance obligations Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenues in future periods. The Company applied the practical expedient in accordance with Topic 606 to forego disclosures related to the allocation of consideration to the remaining performance obligations and the timing in which revenues will be recognized from such performance obligations. |
Costs of Precision Oncology Testing | Costs of Precision Oncology Testing Cost of precision oncology testing generally consists of cost of materials, direct labor including bonus, benefit and stock-based compensation, equipment and infrastructure expenses associated with processing liquid biopsy test samples (including sample accessioning, library preparation, sequencing, quality control analyses and shipping charges to transport blood samples), freight, curation of test results for physicians and license fees due to third parties. Infrastructure expenses include depreciation of laboratory equipment, rent costs, amortization of leasehold improvements and information technology costs. Costs associated with performing the Company’s tests are recorded as the tests are performed regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of revenues generated using the associated technology are recorded as expense at the time the related revenues are recognized. One-time royalty payments related to signing of license agreements or other milestones, such as issuance of new patents, are amortized to expense over the expected useful life of the applicable patent rights. |
Cost of Development Services | Cost of Development Services Cost of development service includes costs incurred for the performance of development services requested by the Company’s customers. For development of new products, costs incurred before technological feasibility has been achieved are reported as research and development expenses, while costs incurred thereafter are reported as cost of development services. |
Goodwill and Intangible Assets | Intangible Assets Purchased intangible assets with finite lives are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets. Acquisition-related in-process research and development (“IPR&D”) represents the fair value of incomplete research and development projects that have not reached technological feasibility as of the date of acquisition. Initially, these assets are not subject to amortization. Assets related to projects that have been completed are transferred to developed technology, which are subject to amortization. Impairment of Goodwill, Intangible Assets, and Other Long-Lived Assets Goodwill is evaluated for impairment on an annual basis during the fourth quarter of the Company’s fiscal year, and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company has elected to first assess qualitative factors to determine whether it is more likely than not that the fair value of single reporting unit is less than its carrying amount, including goodwill. If it is more likely than not that the fair value of single reporting unit is less than its carrying amount, then the quantitative impairment test will be performed. Under the quantitative impairment test, if the carrying amount of single reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, but limited to the total amount of goodwill. The Company evaluates long-lived assets, including property and equipment and purchased intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. As of September 30, 2019 , the Company has not recognized any impairment losses on its goodwill, intangible assets, or other long-loved assets. |
Stock-Based Compensation | Stock‑Based Compensation Stock‑based compensation related to stock options granted to the Company’s employees and directors is measured at the grant date based on the fair value of the award. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective awards. In 2018, the Company accounted for stock options issued to nonemployees consultants based on the estimated fair value at the grant date and re-measured at each reporting period. Starting January 1, 2019, upon adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, the fair value of stock options issued to nonemployee consultants is determined as of the grant date, and compensation expense is being recognized over the period that the related services are rendered. The Company uses the Black‑Scholes option‑pricing model to estimate the fair value of its stock options. The Black-Scholes option-pricing model requires assumptions to be made related to expected term of an award, expected volatility, risk-free rate and expected dividend yield. Starting January 1, 2017, forfeitures are accounted for as they occur. |
Net Loss Per Share Attributable to Common Shareholders | Net Loss Per Share Attributable to Common Stockholders The Company calculates basic net loss per share attributable to common stockholders by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, convertible preferred stock, common stock warrants, stock options, restricted stock units, shares issuable pursuant to the employee stock purchase plan, shares subject to repurchase from early exercised options and contingently issuable shares are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive. Prior to the closing of the Company’s initial public offering (the “IPO”) in October 2018 and the conversion of its convertible preferred stock into common stock, the Company calculated its basic and diluted net loss per share attributable to common stockholders of the Company in conformity with the two-class method required for companies with participating securities. The Company considered its convertible preferred stock to be participating securities. In the event a dividend had been declared or paid on the Company’s common stock, holders of convertible preferred stock were entitled to a share of such dividend in proportion to the holders of common stock on an as-if converted basis. Under the two-class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common and preferred stockholders. The net loss attributable to common stockholders was not allocated to the convertible preferred stock under the two-class method as the convertible preferred stock did not have a contractual obligation to share in the Company’s losses. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Adopted Accounting Pronouncements The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all related amendments (collectively “ASC 606”) on January 1, 2019 utilizing the modified retrospective method. The cumulative effect of applying the standard to all contracts that were not completed as of the date of initial application was recognized to beginning accumulated deficit as of January 1, 2019. The Company identified certain differences in accounting for revenue recognition as a result of the adoption of ASC 606 which have impacted its financial position and results of operations. These differences are discussed below. For precision oncology testing revenue with certain clinical customers, the Company historically deferred revenue recognition until cash receipt when the price pursuant to the underlying customer arrangement became fixed and determinable and collectability became reasonably assured. Under the new standard, this is considered variable consideration and revenue is recognized at the estimated transaction price upon delivery. This results in earlier revenue recognition under the new standard as compared to previous revenue recognition. For development services revenue with certain biopharmaceutical customers, the Company historically limited revenue recognition based on the right to invoice the customer. Under the new standard, for these arrangements, the Company constrains revenue such that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For arrangements with regulatory and other developmental milestone payments, this results in a change to the timing and pattern of revenue recognition under the new standard as compared to previous revenue recognition. Effective January 1, 2019, the Company recognizes revenue in accordance with ASC 606. Comparative information from prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of changes made to the condensed consolidated balance sheet as of January 1, 2019 related to the adoption of ASC 606 were as follows: Balance as of December 31, 2018 Adjustments Due to ASC 606 Balance as of January 1, 2019 (in thousands) Assets: Accounts receivable $ 35,690 $ 4,907 $ 40,597 Equity: Accumulated deficit $ (280,799 ) $ 4,907 $ (275,892 ) In accordance with ASC 606 requirements under the modified retrospective method of adoption, the disclosure of the impact of adoption on the Company’s condensed consolidated statement of operations and condensed consolidated balance sheet was as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 (in thousands) Revenue: Precision oncology testing $ 52,147 $ (439 ) $ 51,708 $ 123,048 $ 1,578 $ 124,626 Development services 8,701 (717 ) 7,984 28,430 (2,079 ) 26,351 Total revenue 60,848 (1,156 ) 59,692 151,478 (501 ) 150,977 September 30, 2019 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 (in thousands) Assets: Accounts receivable $ 39,689 $ (501 ) $ 39,188 Equity: Accumulated deficit $ (327,599 ) $ (501 ) $ (328,100 ) ASC 606 did not have an aggregate impact on the Company’s net cash used in operating activities but resulted in offsetting changes in certain assets presented within net cash used in operating activities in the Company’s condensed consolidated statement of cash flows, as reflected in the above table. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees, with certain exceptions. The Company early adopted this new guidance effective January 1, 2019. In accordance with the transition guidance, the Company assessed its outstanding nonemployee awards for which a measurement date had not been established. These outstanding awards were re-measured to fair value as of the January 1, 2019 adoption date. For nonemployee awards that contain performance condition, the measurement is based on the outcome that is probable as opposed to the lowest aggregate fair value within a range of possible outcomes. The adoption of ASU 2018-07 provided administrative relief by fixing the measurement date of nonemployee awards and eliminating the requirement of quarterly re-measurement. The Company adopted this standard on a modified retrospective basis and recorded a cumulative-effect adjustment of $1.3 million as an increase to accumulated deficit and an equal increase to additional paid-in capital as of January 1, 2019. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. The new guidance will be effective for the Company beginning in 2020, at which time, the new guidance will be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and anticipates the recognition of additional assets and corresponding liabilities on its condensed consolidated balance sheet related to leases. The adoption of the new standard is also expected to materially impact the Company’s condensed consolidated financial statement disclosures related to leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments , which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available for sale debt securities. The new guidance is effective for the Company beginning in 2021, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements. |
Fair Value Measurements | Financial instruments consist of cash equivalents, marketable securities, prepaid expenses and other current assets, accounts payable, accrued expenses and other long-term liabilities. Cash equivalents and marketable securities are stated at fair value. Prepaid expenses and other current assets, accounts payable and accrued expenses are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. Fair value is defined as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels 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 for similar assets or liabilities; quoted prices 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. 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedules of Concentration of Risk, by Risk Factor | For each significant customer, revenue as a percentage of revenue and accounts receivable as a percentage of accounts receivable are as follows: Revenue Accounts Receivable Three Months Ended September 30, Nine Months Ended September 30, September 30, 2019 December 31, 2018 2019 2018 2019 2018 (unaudited) (unaudited) Customer A * * * 10 % * * Customer B 21 % 18 % 27 % 14 % 28 % 65 % Customer C 19 % * 15 % * * * Customer D * * * * 10 % * * less than 10% |
Schedule of the Cumulative Effect on Financial Information Related to the Adoption of ACS 606 | The cumulative effect of changes made to the condensed consolidated balance sheet as of January 1, 2019 related to the adoption of ASC 606 were as follows: Balance as of December 31, 2018 Adjustments Due to ASC 606 Balance as of January 1, 2019 (in thousands) Assets: Accounts receivable $ 35,690 $ 4,907 $ 40,597 Equity: Accumulated deficit $ (280,799 ) $ 4,907 $ (275,892 ) In accordance with ASC 606 requirements under the modified retrospective method of adoption, the disclosure of the impact of adoption on the Company’s condensed consolidated statement of operations and condensed consolidated balance sheet was as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 (in thousands) Revenue: Precision oncology testing $ 52,147 $ (439 ) $ 51,708 $ 123,048 $ 1,578 $ 124,626 Development services 8,701 (717 ) 7,984 28,430 (2,079 ) 26,351 Total revenue 60,848 (1,156 ) 59,692 151,478 (501 ) 150,977 September 30, 2019 As Reported Under ASC 606 Effect of Change Balances Without Adoption of ASC606 (in thousands) Assets: Accounts receivable $ 39,689 $ (501 ) $ 39,188 Equity: Accumulated deficit $ (327,599 ) $ (501 ) $ (328,100 ) |
Condensed Consolidated Balanc_4
Condensed Consolidated Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Property, Plant and Equipment | Property and equipment, net consisted of the following: September 30, 2019 December 31, 2018 (unaudited) (in thousands) Machinery and equipment $ 27,590 $ 23,440 Computer hardware 6,279 4,949 Leasehold improvements 17,910 13,965 Furniture and fixtures 1,701 1,522 Computer software 797 643 Construction in progress 7,312 3,118 Property and equipment, gross 61,589 47,637 Less: accumulated depreciation and amortization (20,830 ) (16,634 ) Property and equipment, net $ 40,759 $ 31,003 |
Schedule of Accrued Liabilities | Accrued expenses consisted of the following: September 30, 2019 December 31, 2018 (unaudited) (in thousands) Accrued royalty obligations $ 1,622 $ 707 Accrued legal expenses 2,005 814 Accrued tax liabilities 1,884 1,470 Accrued professional services 2,991 1,791 Accrued clinical trials and studies 1,546 236 Purchases of property and equipment included in accrued expenses 4,210 343 Other 2,981 1,720 Total accrued expenses $ 17,239 $ 7,081 |
Fair Value Measurements. Cash_2
Fair Value Measurements. Cash Equivalents and Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows: September 30, 2019 Fair Value Level 1 Level 2 Level 3 (unaudited) (in thousands) Financial Assets: Money market funds $ 8,066 $ 8,066 $ — $ — Total cash equivalents 8,066 8,066 — — Corporate bonds 23,029 — 23,029 — U.S. government debt securities 352,739 — 352,739 — Total short-term marketable securities 375,768 — 375,768 — U.S. government debt securities 302,624 — 302,624 — Total long-term marketable securities 302,624 — 302,624 — Total $ 686,458 $ 8,066 $ 678,392 $ — Financial Liabilities: Acquisition-related contingent consideration $ — $ — $ 1,065 $ — Total $ — $ — $ 1,065 $ — December 31, 2018 Fair Value Level 1 Level 2 Level 3 (in thousands) Financial Assets: Money market funds $ 25,796 $ 25,796 $ — $ — Total cash equivalents 25,796 25,796 — — Corporate bonds 38,397 — 38,397 — U.S. government debt securities 235,016 — 235,016 — U.S. government agency bonds 5,004 — 5,004 — Total short-term marketable securities 278,417 — 278,417 — Corporate bonds 3,805 — 3,805 — U.S. government debt securities 73,758 — 73,758 — Total long-term marketable securities 77,563 — 77,563 — Total $ 381,776 $ 25,796 $ 355,980 $ — |
Debt Securities, Available-for-sale | The following tables summarizes the Company’s cash equivalents and marketable securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category: September 30, 2019 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value (unaudited) (in thousands) Money market fund $ 8,066 $ — $ — $ 8,066 Corporate bond 22,985 44 — 23,029 U.S. government debt securities 654,230 1,244 (111 ) 655,363 Total $ 685,281 $ 1,288 $ (111 ) $ 686,458 December 31, 2018 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value (in thousands) Money market fund $ 25,796 $ — $ — $ 25,796 Corporate bond 42,273 — (71 ) 42,202 U.S. government debt securities 308,775 235 (236 ) 308,774 U.S. government agency bonds 5,014 — (10 ) 5,004 Total $ 381,858 $ 235 $ (317 ) $ 381,776 |
Acquisition of Bellwether Bio (
Acquisition of Bellwether Bio (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary allocation of the total consideration to the estimated fair values of assets acquired and liabilities assumed: Amount (unaudited) (in thousands) Cash $ 521 Identified intangible assets 6,700 Goodwill 2,928 Net liabilities assumed (1,441 ) Total $ 8,708 |
Schedule of Intangible Assets Acquired | The following table presents details of the identified intangible assets acquired from the Bellwether Bio acquisition: Fair Value Estimated Useful Life (in thousands) Acquired license $ 5,100 10 years IPR&D 1,600 * Total $ 6,700 * IPR&D assets are not subject to amortization. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | As of September 30, 2019 , future minimum payments under the non-cancelable operating lease were as follows: Year Ending December 31, (unaudited) (in thousands) Remainder of 2019 $ 1,467 2020 7,292 2021 8,143 2022 8,392 2023 9,022 2024 and thereafter 26,076 Total $ 60,392 |
Schedule of Future Minimum Lease Payments for Capital Leases | As of September 30, 2019 , future minimum capital lease payments were as follows: Year Ending December 31, (unaudited) (in thousands) Remainder of 2019 $ 27 2020 108 2021 36 Total minimum capital lease payments 171 Less: amount representing interest (34 ) Present value of net minimum capital lease payments 137 Less: current installments of obligations under capital lease (80 ) Obligations under capital lease, excluding current installments $ 57 |
Schedule of Future Minimum Royalty Payments | As of September 30, 2019 , future minimum royalty payments were due as follows regardless of sales amounts: Year Ending December 31, (unaudited) (in thousands) Remainder of 2019 $ 341 2020 1,365 2021 1,365 2022 1,637 2023 1,637 2024 and thereafter 5,458 Total future minimum royalty payments 11,803 Less: amount representing interest (5,023 ) Present value of future minimum royalty payments $ 6,780 |
Common Stock (Tables)
Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of Stock by Class | Common stock has been reserved for the following potential future issuances: September 30, 2019 December 31, 2018 (unaudited) Shares underlying outstanding stock options 4,915,418 7,588,405 Shares underlying unvested restricted stock units 443,267 — Shares available for issuance under the 2018 Incentive Award Plan 2,806,659 3,556,507 Shares available for issuance under the 2018 Employee Stock Purchase Plan 709,345 922,250 Total 8,874,689 12,067,162 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation, Stock Options, Activity | A summary of the Company’s stock option activity under the 2012 Plan and the 2018 Plan and related information is as follows: Options Outstanding Shares Available for Grant Shares Subject to Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2018 3,556,507 7,588,405 $ 4.58 8.3 $ 250,495 Granted (306,958 ) 306,958 89.37 Exercised — (2,627,486 ) 3.72 Canceled 5,922 (352,459 ) 6.17 Restricted stock units granted (484,952 ) — — Restricted stock units canceled 36,140 — — Balance as of September 30, 2019 2,806,659 4,915,418 $ 10.23 8.0 $ 271,740 Vested and Exercisable as of September 30, 2019 1,851,781 $ 4.52 7.4 $ 109,974 |
Schedule of Restricted Stock Activity | A summary of the Company’s restricted stock unit activity under the 2012 Plan and the 2018 Plan and related information is as follows: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Unvested balance as of December 31, 2018 — $ — Granted 484,952 79.68 Vested (5,545 ) 53.20 Canceled (36,140 ) 48.83 Unvested balance as of September 30, 2019 443,267 $ 82.52 |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | The following table presents the effect of employee and non‑employee related stock‑based compensation expense: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands) Cost of precision oncology testing $ 266 $ 112 $ 562 $ 254 Research and development expense 2,066 617 4,704 1,035 Sales and marketing expense 1,458 428 2,930 1,061 General and administrative expense 1,694 674 3,686 1,938 Total stock-based compensation expense $ 5,484 $ 1,831 $ 11,882 $ 4,288 |
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (unaudited) Expected term (in years) 6.03 – 6.08 5.87 – 6.09 5.50 – 6.22 5.01 – 10.00 Expected volatility 63.2% – 64.6% 69.7% – 70.2% 63.2% – 68.3% 69.7% – 86.5% Risk-free interest rate 1.6% – 1.9% 2.7% – 2.9% 1.6% – 2.7% 2.5% – 2.9% Expected dividend yield —% —% —% —% The grant date fair value of the stock purchase right granted under the ESPP was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (unaudited) Expected term (in years) 0.29 0.29 – 0.50 Expected volatility 60.3% 60.2% – 60.3% Risk-free interest rate 2.1% 2.1% – 2.5% Expected dividend yield —% —% |
Net Loss Per Share Attributab_2
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of the basic and diluted net loss per share attributable to Guardant Health, Inc. common stockholders: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands, except per share data) Net loss $ (13,090 ) $ (23,508 ) $ (45,741 ) $ (58,991 ) Fair value adjustment of redeemable noncontrolling interest 300 (950 ) (4,700 ) (950 ) Net loss attributable to Guardant Health, Inc. common stockholders, basic and diluted $ (12,790 ) $ (24,458 ) $ (50,441 ) $ (59,941 ) Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted $ (0.14 ) $ (1.94 ) $ (0.56 ) $ (4.87 ) Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted 93,303 12,582 89,452 12,300 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following weighted-average common stock equivalents were excluded from the calculation of diluted net loss per share attributable to Guardant Health, Inc. common stockholders for the periods presented as they had an anti-dilutive effect: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands) Convertible preferred stock (on an as if converted basis) — 58,265 — 58,265 Stock options issued and outstanding 5,353 7,675 6,390 7,460 Unvested restricted stock units 338 — 179 — ESPP obligation 42 — 62 — Preferred stock warrants (on an as if converted basis) — 8 — 8 Common stock warrants — 203 — 237 Common stock subject to repurchase 28 54 33 43 Total 5,761 66,205 6,664 66,013 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table sets forth the Company’s revenue by geographic areas based on the customers’ locations: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (unaudited) (in thousands) United States $ 54,675 $ 17,932 $ 134,917 $ 47,389 International(1) 6,173 3,760 16,561 10,377 Total revenue $ 60,848 $ 21,692 $ 151,478 $ 57,766 (1) No single country outside of the United States accounted for more than 10% of total revenue during the three and nine months ended September 30, 2019 and 2018 , respectively, except for Germany which accounted for 10% of total revenue during the three months ended September 30, 2018 . |
Description of Business (Detail
Description of Business (Details) | May 31, 2018 | Apr. 30, 2018 |
Guardant Health AMEA, Inc | ||
Subsidiary, Sale of Stock [Line Items] | ||
Ownership interest in joint venture | 50.00% | 50.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Unbilled receivables | $ 5,700 | $ 4,900 | |
Deferred revenue | 13,100 | $ 16,100 | |
Deferred revenue recognized | 14,800 | ||
Collaborative Arrangement | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Deferred revenue | $ 5,200 | $ 10,500 | |
ASU 2018-07 adoption | Accumulated Deficit | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Cumulative effect adjustment for new ASU's | $ (1,266) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Concentration Risk (Details) - Credit Concentration Risk | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Customer A | Revenue | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 10.00% | |||||
Customer B | Revenue | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 21.00% | 18.00% | 27.00% | 14.00% | ||
Customer B | Accounts Receivable | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 28.00% | 65.00% | ||||
Customer C | Revenue | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 19.00% | 15.00% | ||||
Customer D | Accounts Receivable | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 10.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Adoption of ACS 606 (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Accounts receivable | $ 39,689 | $ 39,689 | $ 40,597 | $ 35,690 | ||
Accumulated deficit | (327,599) | (327,599) | (275,892) | $ (280,799) | ||
Precision oncology testing | 52,147 | $ 18,298 | 123,048 | $ 50,311 | ||
Development services | 8,701 | 3,394 | 28,430 | 7,455 | ||
Total revenue | 60,848 | $ 21,692 | 151,478 | $ 57,766 | ||
Topic 606 adoption | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Accounts receivable | 4,907 | |||||
Accumulated deficit | $ 4,907 | |||||
Effect of Change | Topic 606 adoption | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Accounts receivable | (501) | (501) | ||||
Accumulated deficit | (501) | (501) | ||||
Precision oncology testing | (439) | 1,578 | ||||
Development services | (717) | (2,079) | ||||
Total revenue | (1,156) | (501) | ||||
Balances Without Adoption of ASC606 | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Accounts receivable | 39,188 | 39,188 | ||||
Accumulated deficit | (328,100) | (328,100) | ||||
Precision oncology testing | 51,708 | 124,626 | ||||
Development services | 7,984 | 26,351 | ||||
Total revenue | $ 59,692 | $ 150,977 |
Investment in Joint Venture (De
Investment in Joint Venture (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
May 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Apr. 30, 2018 | |
Schedule of Equity Method Investments [Line Items] | |||||||
Variable interest entity, assets | $ 45,100 | $ 45,100 | $ 48,300 | ||||
Threshold percentage of fair value that is no less than internal rate of return | 20.00% | ||||||
Fair value of joint venture threshold | 40.00% | ||||||
Redeemable noncontrolling interest | 46,500 | $ 46,500 | $ 41,800 | ||||
Fair value adjustment of redeemable non-controlling interest | $ (300) | $ 950 | $ 4,700 | $ 950 | |||
Guardant Health AMEA, Inc | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Payments to acquire interest in joint venture | $ 9,000 | ||||||
Equity method investment, shares purchased | 40,000 | ||||||
Equity method investment, ownership percentage | 50.00% | 50.00% | |||||
SoftBank | Guardant Health AMEA, Inc | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investment, shares purchased | 40,000 | ||||||
Equity method investment, ownership percentage | 50.00% | ||||||
Redeemable noncontrolling interest, redemption value | $ 41,000 |
Condensed Consolidated Balanc_5
Condensed Consolidated Balance Sheet Components - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 61,589 | $ 47,637 |
Less: accumulated depreciation and amortization | (20,830) | (16,634) |
Property and equipment, net | 40,759 | 31,003 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 27,590 | 23,440 |
Computer hardware | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 6,279 | 4,949 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 17,910 | 13,965 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,701 | 1,522 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 797 | 643 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 7,312 | $ 3,118 |
Condensed Consolidated Balanc_6
Condensed Consolidated Balance Sheet Components - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |||||
Depreciation and amortization expense | $ 2,500 | $ 1,700 | $ 6,800 | $ 4,200 | |
Capital leases, balance sheet, assets, net | 346 | 346 | $ 504 | ||
Capital leases, balance sheet, assets, accumulated depreciation | 209 | 209 | $ 294 | ||
Amortization expense | $ 22 | $ 30 | $ 73 | $ 135 |
Condensed Consolidated Balanc_7
Condensed Consolidated Balance Sheet Components - Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Accrued royalty obligations | $ 1,622 | $ 707 |
Accrued legal expenses | 2,005 | 814 |
Accrued tax liabilities | 1,884 | 1,470 |
Accrued professional services | 2,991 | 1,791 |
Accrued clinical trials and studies | 1,546 | 236 |
Purchases of property and equipment included in accrued expenses | 4,210 | 343 |
Other | 2,981 | 1,720 |
Total accrued expenses | $ 17,239 | $ 7,081 |
Fair Value Measurements. Cash_3
Fair Value Measurements. Cash Equivalents and Marketable Securities - Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Initial fair value of contingent consideration at acquisition date | $ 1,065 | $ 0 | |
Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 8,066 | $ 25,796 | |
Debt securities, short-term | 375,768 | 278,417 | |
Debt securities, long-term | 302,624 | 77,563 | |
Total assets | 686,458 | 381,776 | |
Initial fair value of contingent consideration at acquisition date | 0 | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 0 | ||
Fair Value, Measurements, Recurring | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 8,066 | 25,796 | |
Debt securities, short-term | 0 | 0 | |
Debt securities, long-term | 0 | 0 | |
Total assets | 8,066 | 25,796 | |
Initial fair value of contingent consideration at acquisition date | 0 | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 0 | ||
Fair Value, Measurements, Recurring | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 0 | 0 | |
Debt securities, short-term | 375,768 | 278,417 | |
Debt securities, long-term | 302,624 | 77,563 | |
Total assets | 678,392 | 355,980 | |
Initial fair value of contingent consideration at acquisition date | 1,065 | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 1,065 | ||
Fair Value, Measurements, Recurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 0 | 0 | |
Debt securities, short-term | 0 | 0 | |
Debt securities, long-term | 0 | 0 | |
Total assets | 0 | 0 | |
Initial fair value of contingent consideration at acquisition date | 0 | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 0 | ||
Fair Value, Measurements, Recurring | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 23,029 | 38,397 | |
Debt securities, long-term | 3,805 | ||
Fair Value, Measurements, Recurring | Corporate bonds | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 0 | 0 | |
Debt securities, long-term | 0 | ||
Fair Value, Measurements, Recurring | Corporate bonds | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 23,029 | 38,397 | |
Debt securities, long-term | 3,805 | ||
Fair Value, Measurements, Recurring | Corporate bonds | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 0 | 0 | |
Debt securities, long-term | 0 | ||
Fair Value, Measurements, Recurring | U.S. government debt securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 352,739 | 235,016 | |
Debt securities, long-term | 302,624 | 73,758 | |
Fair Value, Measurements, Recurring | U.S. government debt securities | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 0 | 0 | |
Debt securities, long-term | 0 | 0 | |
Fair Value, Measurements, Recurring | U.S. government debt securities | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 352,739 | 235,016 | |
Debt securities, long-term | 302,624 | 73,758 | |
Fair Value, Measurements, Recurring | U.S. government debt securities | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 0 | 0 | |
Debt securities, long-term | 0 | 0 | |
Fair Value, Measurements, Recurring | U.S. government agency bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 5,004 | ||
Fair Value, Measurements, Recurring | U.S. government agency bonds | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 0 | ||
Fair Value, Measurements, Recurring | U.S. government agency bonds | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 5,004 | ||
Fair Value, Measurements, Recurring | U.S. government agency bonds | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, short-term | 0 | ||
Fair Value, Measurements, Recurring | Money market funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 8,066 | 25,796 | |
Fair Value, Measurements, Recurring | Money market funds | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 8,066 | 25,796 | |
Fair Value, Measurements, Recurring | Money market funds | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 0 | 0 | |
Fair Value, Measurements, Recurring | Money market funds | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurements. Cash_4
Fair Value Measurements. Cash Equivalents and Marketable Securities - Narrative (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Minimum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Maturity period (years) | 1 year |
Maximum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Maturity period (years) | 1 year 10 months |
Fair Value Measurements. Cash_5
Fair Value Measurements. Cash Equivalents and Marketable Securities - Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | $ 147,188 | $ 140,544 |
Amortized cost, cash and cash equivalents and debt securities available-for-sale | 685,281 | 381,858 |
Gross Unrealized Gain | 1,288 | 235 |
Gross Unrealized Loss | (111) | (317) |
Cash, cash equivalents and debt securities, fair value | 686,458 | 381,776 |
Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | 8,066 | 25,796 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Estimated fair value, cash and cash equivalents | 8,066 | 25,796 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, debt securities, available-for-sale | 22,985 | 42,273 |
Gross Unrealized Gain | 44 | 0 |
Gross Unrealized Loss | 0 | (71) |
Estimated fair value, debt securities | 23,029 | 42,202 |
U.S. government debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, debt securities, available-for-sale | 654,230 | 308,775 |
Gross Unrealized Gain | 1,244 | 235 |
Gross Unrealized Loss | (111) | (236) |
Estimated fair value, debt securities | $ 655,363 | 308,774 |
U.S. government agency bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, debt securities, available-for-sale | 5,014 | |
Gross Unrealized Gain | 0 | |
Gross Unrealized Loss | (10) | |
Estimated fair value, debt securities | $ 5,004 |
Acquisition of Bellwether Bio -
Acquisition of Bellwether Bio - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Apr. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Business Acquisition [Line Items] | |||
Contingent liability from business acquisition | $ 1,065 | $ 0 | |
Acquisition related costs | 422 | ||
Bellweather Bio, Inc. | |||
Business Acquisition [Line Items] | |||
Total purchase consideration | $ 8,700 | ||
Cash paid upon closing | 7,600 | ||
Contingent liability from business acquisition | 1,100 | ||
Identified intangible assets | 6,700 | ||
Commercialization Milestones | Bellweather Bio, Inc. | |||
Business Acquisition [Line Items] | |||
Maximum contingent liability | 10,000 | ||
Earn-Out Consideration | Bellweather Bio, Inc. | |||
Business Acquisition [Line Items] | |||
Maximum contingent liability | 10,000 | ||
Fair Value, Measurements, Recurring | |||
Business Acquisition [Line Items] | |||
Contingent liability from business acquisition | 0 | ||
Fair Value, Measurements, Recurring | Level 2 | |||
Business Acquisition [Line Items] | |||
Contingent liability from business acquisition | $ 1,065 | ||
Covenants Not To Compete | Bellweather Bio, Inc. | |||
Business Acquisition [Line Items] | |||
Identified intangible assets | $ 2,500 | ||
Estimated useful life | 6 years |
Acquisition of Bellwether Bio_2
Acquisition of Bellwether Bio - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Apr. 30, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 2,928 | $ 0 | |
Bellweather Bio, Inc. | |||
Business Acquisition [Line Items] | |||
Cash | $ 521 | ||
Identified intangible assets | 6,700 | ||
Goodwill | 2,928 | ||
Net liabilities assumed | (1,441) | ||
Total | $ 8,708 |
Acquisition of Bellwether Bio_3
Acquisition of Bellwether Bio - Intangible Assets Acquired (Details) - Bellweather Bio, Inc. $ in Thousands | 1 Months Ended |
Apr. 30, 2019USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identified intangible assets | $ 6,700 |
Acquired license | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identified intangible assets | $ 5,100 |
Estimated useful life | 10 years |
IPR&D | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Identified intangible assets | $ 1,600 |
Patent License Agreement (Detai
Patent License Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jan. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||||||
Payment in connection with patent licensing agreement | $ 9,700 | |||||
Capitalized license fees | $ 7,133 | $ 7,133 | $ 7,800 | |||
Useful life (years) | 7 years 3 months | 8 years | ||||
Amortization of intangible assets | $ 249 | $ 266 | $ 735 | $ 694 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Payments For Operating Leases (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2019 | $ 1,467 |
2020 | 7,292 |
2021 | 8,143 |
2022 | 8,392 |
2023 | 9,022 |
2024 and thereafter | 26,076 |
Total | $ 60,392 |
Commitments and Contingencies_2
Commitments and Contingencies - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2018patent | Nov. 30, 2017patent | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2019USD ($)party | Sep. 30, 2018USD ($) | |
Other Commitments [Line Items] | |||||||
Operating leases, rent expense | $ | $ 1,700 | $ 1,200 | $ 4,600 | $ 3,400 | |||
Number of parties with patent license agreement | party | 4 | ||||||
Royalty expense | $ | $ 1,400 | $ 319 | $ 3,100 | $ 936 | |||
Percentage of precision oncology testing revenue | 3.00% | 2.00% | 3.00% | 2.00% | |||
Personal Genome Diagnostics, Inc. and Foundation Medicine, Inc, vs. Guardant Health, Inc. Subsequent Filing | |||||||
Other Commitments [Line Items] | |||||||
Number of asserted patents | 4 | ||||||
Personal Genome Diagnostics, Inc. vs. Guardant Health, Inc. | |||||||
Other Commitments [Line Items] | |||||||
Number of asserted patents | 2 | ||||||
Number of petitions filed | 2 | ||||||
Personal Genome Diagnostics, Inc. vs. Guardant Health, Inc. Subsequent Filing | |||||||
Other Commitments [Line Items] | |||||||
Number of asserted patents | 4 | ||||||
Number of petitions filed | 6 | ||||||
Other Income | |||||||
Other Commitments [Line Items] | |||||||
Amount awarded from other party | $ | $ 4,250 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Future Minimum Payments For Capital Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of 2019 | $ 27 | |
2020 | 108 | |
2021 | 36 | |
Total minimum capital lease payments | 171 | |
Less: amount representing interest | (34) | |
Present value of net minimum capital lease payments | 137 | |
Less: current installments of obligations under capital lease | (80) | $ (97) |
Capital lease, net of current portion | $ 57 | $ 119 |
Commitments and Contingencies_4
Commitments and Contingencies - Schedule of Future Royalty Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2019 | $ 341 |
2020 | 1,365 |
2021 | 1,365 |
2022 | 1,637 |
2023 | 1,637 |
2024 and thereafter | 5,458 |
Total future minimum royalty payments | 11,803 |
Less: amount representing interest | (5,023) |
Present value of future minimum royalty payments | $ 6,780 |
Common Stock (Details)
Common Stock (Details) $ / shares in Units, $ in Thousands | Oct. 09, 2018USD ($)$ / sharesshares | May 31, 2019$ / sharesshares | Sep. 30, 2018 | Sep. 30, 2019shares | Jun. 30, 2019USD ($) | Dec. 31, 2018shares |
Class of Stock [Line Items] | ||||||
Common stock, shares reserved for future issuance (in shares) | 8,874,689 | 12,067,162 | ||||
Stock split conversion rate | 0.7378 | |||||
Proceeds from IPO | $ | $ 249,500 | |||||
Share price of stock issued (in usd per share) | $ / shares | $ 71 | |||||
Issuance of common stock upon follow-on offering, net of offering costs | $ | $ 349,709 | |||||
Stock options | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares reserved for future issuance (in shares) | 4,915,418 | 7,588,405 | ||||
Restricted stock units | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares reserved for future issuance (in shares) | 443,267 | 0 | ||||
2018 Incentive Award Plan | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares reserved for future issuance (in shares) | 2,806,659 | 3,556,507 | ||||
2018 Employee Stock Purchase Plan | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares reserved for future issuance (in shares) | 709,345 | 922,250 | ||||
Convertible Preferred Stock | ||||||
Class of Stock [Line Items] | ||||||
Stock issued, conversion of convertible securities (in shares) | 58,264,577 | |||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Issuance of common stock upon follow-on offering, shares | 5,175,000 | 949,496 | ||||
Stock issued, conversion of convertible securities (in shares) | 7,636 | |||||
IPO | ||||||
Class of Stock [Line Items] | ||||||
Issuance of common stock upon follow-on offering, shares | 14,375,000 | |||||
Sale of stock, price per share | $ / shares | $ 19 | |||||
Underwriters Over-Allotment Option | Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Issuance of common stock upon follow-on offering, shares | 675,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Oct. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares canceled (shares) | 508,847 | 5,922 | ||||
Weighted average grant date fair value, grants in period (in usd per share) | $ 55.16 | $ 5.45 | $ 53.02 | $ 4.65 | ||
Stock based compensation not recognized, options | $ 26,000 | $ 26,000 | $ 17,500 | |||
Stock based compensation not recognized, period for recognition (years) | 3 years 7 days | 2 years 8 months 21 days | ||||
Stock-based compensation | $ 5,484 | $ 1,831 | $ 11,882 | $ 4,288 | ||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares authorized (in shares) | 3,658,602 | 3,658,602 | ||||
Exercises in period, intrinsic value | $ 75,300 | $ 2,200 | $ 191,700 | $ 3,900 | ||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | ||
2018 Employee Stock Purchase Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares authorized (in shares) | 922,250 | 922,250 | ||||
Stock based compensation not recognized, period for recognition (years) | 1 month 14 days | |||||
Stock based compensation not recognized, other than options | $ 225 | $ 225 | ||||
Expected dividend yield | 0.00% | 0.00% | ||||
Maximum employee subscription rate, ESPP | 10.00% | 10.00% | ||||
ESPP purchase price of common stock (as a percent of the fair value of common stock) | 85.00% | |||||
Common stock issued under employee stock purchase plan (in shares) | 93,203 | 212,905 | ||||
Stock-based compensation | $ 775 | $ 1,781 | ||||
Weighted-average expected life | 3 months 15 days | |||||
Expected volatility | 60.30% | |||||
Risk-free interest rate | 2.10% | |||||
Restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock based compensation not recognized, period for recognition (years) | 3 years 8 months 7 days | |||||
Stock based compensation not recognized, other than options | $ 34,100 | $ 34,100 | ||||
Nonemployee stock option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock subject to repurchase (in shares) | 26,747 | 44,268 | ||||
Stock subject to repurchase, per share (in usd per share) | $ 4.66 | $ 4.66 | $ 4.66 | |||
Cash proceeds received for unvested shares | $ 125 | $ 125 | $ 206 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Oct. 31, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Shares Available for Grant | |||
Beginning number of shares, available for grant (shares) | 3,556,507 | ||
Granted (shares) | (306,958) | ||
Canceled (shares) | 508,847 | 5,922 | |
Ending number of shares, available for grant (shares) | 2,806,659 | 3,556,507 | |
Shares Subject to Options Outstanding | |||
Beginning number of shares, outstanding (shares) | 7,588,405 | ||
Granted (shares) | 306,958 | ||
Exercised (shares) | (2,627,486) | ||
Canceled (shares) | (352,459) | ||
Ending number of shares, outstanding (shares) | 4,915,418 | 7,588,405 | |
Options vested and exercisable, number of options (shares) | 1,851,781 | ||
Weighted-Average Exercise Price | |||
Beginning balance of options outstanding (in usd per share) | $ 4.58 | ||
Granted (unaudited) (in usd per share) | 89.37 | ||
Exercised (unaudited) (in usd per share) | 3.72 | ||
Canceled (unaudited) (in usd per share) | 6.17 | ||
Ending balance of options outstanding (in usd per share) | 10.23 | $ 4.58 | |
Options vested and exercisable, weighted average exercise price per share (in usd per share) | $ 4.52 | ||
Weighted-Average Remaining Contractual Life and Aggregate Intrinsic Value | |||
Options outstanding, Weighted average remaining contractual term (in years) | 7 years 11 months 15 days | 8 years 3 months 6 days | |
Options outstanding, Aggregate intrinsic value | $ 271,740 | $ 250,495 | |
Options vested and exercisable, Weighted average remaining contractual term (in years) | 7 years 5 months 12 days | ||
Options vested and exercisable, Aggregate intrinsic value | $ 109,974 | ||
Restricted Stock Units | |||
Shares Available for Grant | |||
Granted (shares) | (484,952) | ||
Canceled (shares) | 36,140 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Activity (Details) - Restricted stock units | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Restricted Stock Units Outstanding | |
Beginning unvested balance (shares) | shares | 0 |
Granted (shares) | shares | 484,952 |
Vested (shares) | shares | (5,545) |
Canceled (shares) | shares | (36,140) |
Ending unvested balance (shares) | shares | 443,267 |
Weighted-Average Grant Date Fair Value | |
Beginning balance of options outstanding (in usd per share) | $ / shares | $ 0 |
Granted (unaudited) (in usd per share) | $ / shares | 79.68 |
Vested (unaudited) (in usd per share) | $ / shares | 53.20 |
Canceled (unaudited) (in usd per share) | $ / shares | 48.83 |
Ending balance of options outstanding (in usd per share) | $ / shares | $ 82.52 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 5,484 | $ 1,831 | $ 11,882 | $ 4,288 |
Precision oncology testing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 266 | 112 | 562 | 254 |
Research and development expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 2,066 | 617 | 4,704 | 1,035 |
Sales and marketing expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 1,458 | 428 | 2,930 | 1,061 |
General and administrative expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1,694 | $ 674 | $ 3,686 | $ 1,938 |
Stock-Based Compensation - Valu
Stock-Based Compensation - Valuation of Stock Options (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
2018 Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 3 months 15 days | |||
Expected volatility | 60.30% | |||
Risk-free interest rate | 2.10% | |||
Expected dividend yield | 0.00% | 0.00% | ||
2018 Employee Stock Purchase Plan | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 3 months 15 days | |||
Expected volatility | 60.20% | |||
Risk-free interest rate | 2.10% | |||
2018 Employee Stock Purchase Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 6 months | |||
Expected volatility | 60.30% | |||
Risk-free interest rate | 2.50% | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Stock options | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 6 years 11 days | 5 years 10 months 13 days | 5 years 6 months | 5 years 4 days |
Expected volatility | 63.20% | 69.70% | 63.20% | 69.70% |
Risk-free interest rate | 1.60% | 2.70% | 1.60% | 2.50% |
Stock options | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 6 years 29 days | 6 years 1 month 2 days | 6 years 2 months 19 days | 10 years |
Expected volatility | 64.60% | 70.20% | 68.30% | 86.50% |
Risk-free interest rate | 1.90% | 2.90% | 2.70% | 2.90% |
Net Loss Per Share Attributab_3
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||||||
Net loss | $ (13,090) | $ (11,300) | $ (21,351) | $ (23,508) | $ (21,639) | $ (13,844) | $ (45,741) | $ (58,991) |
Fair value adjustment of redeemable noncontrolling interest | 300 | (950) | (4,700) | (950) | ||||
Net loss attributable to Guardant Health, Inc. common stockholders | $ (12,790) | $ (24,458) | $ (50,441) | $ (59,941) | ||||
Net loss per share attributable to common stockholders, basic and diluted (in usd per share) | $ (0.14) | $ (1.94) | $ (0.56) | $ (4.87) | ||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) | 93,303 | 12,582 | 89,452 | 12,300 |
Net Loss Per Share Attributab_4
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders - Schedule of Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 5,761 | 66,205 | 6,664 | 66,013 |
Convertible preferred stock (on an as if converted basis) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 58,265 | 0 | 58,265 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 5,353 | 7,675 | 6,390 | 7,460 |
Unvested restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 338 | 0 | 179 | 0 |
ESPP obligation | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 42 | 0 | 62 | 0 |
Stock warrants | Preferred Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 8 | 0 | 8 |
Stock warrants | Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 203 | 0 | 237 |
Common stock subject to repurchase | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 28 | 54 | 33 | 43 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 3.00% | |
Change in deferred tax assets valuation allowance | $ 1,200,000 | |
Tax benefit | $ 205,000 | $ 205,000 |
Segment and Geographic Inform_3
Segment and Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 60,848 | $ 21,692 | $ 151,478 | $ 57,766 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 54,675 | 17,932 | 134,917 | 47,389 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 6,173 | $ 3,760 | $ 16,561 | $ 10,377 |
Geographic Concentration Risk | Germany | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 10.00% |
Uncategorized Items - gh-201909
Label | Element | Value |
Additional Paid-in Capital [Member] | ||
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 349,709,000 |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 4,907,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 4,907,000 |
Accounting Standards Update 2018-07 [Member] | Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,266,000 |