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Share Name | Share Symbol | Market | Type |
---|---|---|---|
GenMark Diagnostics Inc | NASDAQ:GNMK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 24.05 | 23.92 | 24.39 | 0 | 01:00:00 |
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(Mark One)
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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27-2053069
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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5964 La Place Court, Carlsbad, California
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92008-8829
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(Address of principal executive offices)
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(Zip code)
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Title of Each Class:
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Name of Each Exchange on which Registered:
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Common Stock, par value $0.0001 per share
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The NASDAQ Stock Market LLC
(NASDAQ Global Market)
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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Item 1.
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BUSINESS
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•
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Successfully Commercialize our ePlex System
.
We believe the ePlex system is an attractive solution for a broad range of hospitals and laboratories that lack the technical or economic resources to perform molecular diagnostic testing with existing products and technology. We believe the ePlex system will expand our current potential user base from approximately 1,000 domestic customers to approximately 12,000 potential customers globally.
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•
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Expand our Menu of Clinical Diagnostic Products
.
We intend to develop a broad menu of molecular diagnostic tests for our ePlex system that we believe will satisfy important medical needs and present attractive commercial opportunities. For example, in June 2016 we obtained CE Mark of our ePlex instrument and RP Panel, and in December 2016 we submitted 510(k) applications to the United States Food and Drug Administration, or the FDA, for our ePlex instrument and RP Panel. During 2017, we intend to complete the development of, CE Mark, and submit 510(k) applications to the FDA our ePlex blood culture identification (BCID) family of panels, which include a gram-positive (GP), a gram-negative (GN), and a fungal pathogen panel. In addition, we are actively evaluating the development of additional assay panels that we believe will meet important, unmet clinical needs, which our ePlex system is uniquely positioned to address.
|
•
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Grow our Installed Base of Customers
.
We have identified those laboratories and hospitals that we believe will benefit from our product portfolio. We intend to leverage our commercial organization to drive placements of our ePlex system both domestically and internationally. We anticipate that the expansion of our installed base of customers will drive sales of our test cartridges, from which we anticipate generating the majority of our revenues for the foreseeable future.
|
•
|
Increase Test Utilization
.
We intend to increase the use of our diagnostic tests by developing and offering tools and support tailored to our products such as education programs and seminars, product training for our customers, and reimbursement support. These activities are designed to aid in establishing the clinical and health economic utility of multiplex molecular diagnostic tests, which we believe will increase adoption of our products.
|
Key Features & Benefits
|
Description
|
Broad Test Menu
|
We obtained CE Mark for our ePlex system and RP Panel in June 2016, and filed 510(k) applications with the FDA for the ePlex instrument and RP Panel in December 2016. During 2017, we intend to complete the development of, CE Mark, and submit 510(k) applications to the FDA our ePlex blood culture identification (BCID) family of panels, which include a gram-positive (GP), a gram-negative (GN), and a fungal pathogen panel. In addition, we are actively evaluating the development of additional assay panels that we believe will meet important, unmet clinical needs, which our ePlex system is uniquely positioned to address.
|
Ease of Use
|
Minimal manual processing steps, intuitive touch-screen interface and clear result reports.
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True Sample-to-Answer
|
The user simply adds a raw or minimally prepared sample to the test cartridge and inserts the cartridge into the instrument.
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Fast Turnaround
|
Results are capable of being produced in approximately 1-2 hours from sample input.
|
Random Access
|
Each of up to 24 test cartridge modules can be accessed independently resulting in a highly flexible workflow.
|
Minimal Routine Maintenance
|
Minimal maintenance or calibration is required.
|
Multiplex Capability
|
Detects numerous distinct biomarkers in a single sample reducing the need for reflex testing.
|
Positive Patient Identification (PosID)
|
Incorporates patented positive patient identification technology to reduce sample reporting errors.
|
IT Integration
|
Multiple design features to improve operational efficiency, such as bi-directional laboratory information system (LIS) connectivity and remote access capability to reduce downtime and service costs.
|
•
|
On Market Product Support.
A role of our R&D team is to assist our manufacturing and quality assurance teams in ensuring high product quality and thorough complaint handling and investigation. This team also supports improvements in quality control methods and metrics and are active participants in the continuous improvement processes utilized by our product manufacturing teams.
|
•
|
Improving the Clinical and Practical Utility of our Tests.
Our R&D organization also supports the clinical utility and value of our molecular diagnostic tests. We have previously and intend to continue to partner with academic and reference laboratories to perform validation and clinical studies on our tests. Key aspects of our efforts are aimed at improving workflow in the laboratory setting, positively comparing our tests to historical or “gold standard” tests, and demonstrating that our tests can help improve patient care and lower diagnostic and medical treatment costs. We intend to publish the results from these clinical studies in peer-reviewed or trade journals, submit them to regulatory bodies and present them at industry conferences in support of our commercialization strategy.
|
•
|
Capital Purchase:
The instrument is paid for upfront and in its entirety by the customer. Customers are also eligible to receive structured pricing incentives if they enter into an optional annual minimum cartridge purchase commitment.
|
•
|
Reagent Rental:
A reagent rental agreement requires that a customer commit to purchase a minimum number of test cartridges over the term of the agreement, and a portion of the charge for each cartridge is attributable to a usage fee for the instrument.
|
Item 1A.
|
RISK FACTORS
|
•
|
reliance on third parties for regulatory compliance and quality assurance;
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•
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possible breaches of manufacturing agreements by the third parties because of factors beyond our control;
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•
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possible regulatory violations or manufacturing problems experienced by our suppliers;
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•
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possible termination or non-renewal of agreements by third parties, based on their own business priorities, at times that are costly or inconvenient for us;
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•
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the potential obsolescence and/or inability of our suppliers to obtain required components;
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•
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the potential delays and expenses of seeking alternate sources of supply or manufacturing services;
|
•
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the inability to qualify alternate sources without impacting performance claims of our products;
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•
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reduced control over pricing, quality and timely delivery due to the difficulties in switching to alternate suppliers or assemblers;
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•
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the potential for financial hardship or other detrimental circumstances at key suppliers that may impact our ability to source key materials or services required for the manufacturing of our products; and
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•
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increases in prices of raw materials and key components.
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•
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the relative convenience, ease of use, accuracy, reliability, scalability, cost, and time-to-result of our diagnostic products over competing products;
|
•
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the introduction of new technologies and competing products that may make our technologies and products a less attractive solution for our target customers;
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•
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the breadth and relevance of our menu of available diagnostic tests relative to our competitors;
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•
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our success in training our customers in the proper use of our products;
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•
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the acceptance in the medical community and key opinion leaders of our molecular diagnostic technology and products;
|
•
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the extent and success of our marketing and sales efforts; and
|
•
|
general economic conditions.
|
•
|
companies developing and marketing multiplex molecular diagnostics systems, including: Luminex; Nanosphere, Inc. (which was acquired by Luminex in June 2016); bioMerieux (which acquired BioFire Diagnostics, Inc.); Abbott Molecular Diagnostics; Hologic, Inc.; Seegene and Cepheid (which was acquired by Danaher Corporation);
|
•
|
large hospital-based laboratories and reference laboratories who provide large-scale testing using their own proprietary testing methods, including Quest Diagnostics Incorporated and Laboratory Corporation of America; and
|
•
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companies that manufacture laboratory-based tests and analyzers, including: Cepheid; Siemens; Hologic, Inc.; Qiagen NV; bioMérieux; Roche Diagnostics; and Abbott Molecular Diagnostics.
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•
|
the time and resources required to develop, and conduct clinical studies and obtain regulatory clearances for, our diagnostic tests;
|
•
|
the expenses we incur for research and development required to maintain and improve our technology, including developing our ePlex test menu;
|
•
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the costs of preparing, filing, prosecuting, defending and enforcing patent claims and other patent related costs, including litigation costs and the results of such litigation;
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•
|
the expenses we incur in connection with commercialization activities, including product marketing, sales, and distribution expenses;
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•
|
the expenses we incur in licensing technologies from third parties to expand the menu of diagnostics tests we plan to offer;
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•
|
our sales strategy and whether the revenues from sales of our test cartridges or systems will be sufficient to offset our expenses;
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•
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the costs to attract and retain personnel with the skills required for effective operations; and
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•
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the costs associated with being a public company.
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•
|
incur additional indebtedness or issue certain preferred shares;
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•
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pay dividends on, repurchase or make distributions in respect of, our capital stock or make other restricted payments;
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•
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make certain investments or acquisitions;
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•
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sell certain assets;
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•
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create liens; or
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•
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enter into certain transactions with our affiliates.
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•
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administrative or judicially imposed sanctions;
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•
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injunctions or the imposition of civil penalties;
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•
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recall or seizure of our products;
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•
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total or partial suspension of production or distribution;
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•
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withdrawal or suspension of marketing clearances or approvals;
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•
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clinical holds;
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•
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warning letters;
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•
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refusal to permit the import or export of our products; and
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•
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criminal prosecution.
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•
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our ability to attract and retain the skilled support team, marketing staff and sales force necessary to commercialize and gain market acceptance for our technology and our products;
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•
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the ability of our sales and marketing team to identify and penetrate the potential customer base, including hospitals and national and regional reference laboratories; and
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•
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the difficulty of establishing brand recognition and loyalty for our products.
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•
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allow the authorized number of directors to be changed only by resolution of our Board of Directors;
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•
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provide that our stockholders may remove our directors only for cause;
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•
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establish a classified board of directors, such that not all members of the Board of Directors may be elected at one time;
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•
|
authorize our Board of Directors to issue without stockholder approval up to 100,000,000 shares of common stock, that, if issued, would dilute our stock ownership and could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board of Directors;
|
•
|
authorize our Board of Directors to issue without stockholder approval up to 5,000,000 shares of preferred stock, the rights of which will be determined at the discretion of the Board of Directors that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board of Directors;
|
•
|
require that stockholder actions must be effected at a duly called stockholder meeting or by unanimous written consent;
|
•
|
establish advance notice requirements for stockholder nominations to our Board of Directors or for stockholder proposals that can be acted on at stockholder meetings;
|
•
|
limit who may call stockholder meetings; and
|
•
|
require the approval of the holders of 80% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our certificate of incorporation and bylaws.
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS
|
Item 2.
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PROPERTIES
|
Item 3.
|
LEGAL PROCEEDINGS
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2016
|
|
|
|
||||
First Quarter
|
$
|
7.73
|
|
|
$
|
4.20
|
|
Second Quarter
|
$
|
9.48
|
|
|
$
|
5.13
|
|
Third Quarter
|
$
|
12.17
|
|
|
$
|
8.03
|
|
Fourth Quarter
|
$
|
13.29
|
|
|
$
|
10.01
|
|
Year Ended December 31, 2015
|
|
|
|
||||
First Quarter
|
$
|
14.40
|
|
|
$
|
11.67
|
|
Second Quarter
|
$
|
13.04
|
|
|
$
|
8.81
|
|
Third Quarter
|
$
|
10.55
|
|
|
$
|
7.22
|
|
Fourth Quarter
|
$
|
9.74
|
|
|
$
|
4.63
|
|
Item 6.
|
SELECTED CONSOLIDATED FINANCIAL DATA
|
FIVE YEAR SELECTED FINANCIAL DATA
|
|||||||||||||||||||
|
Years ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated Statements of Net Loss Data:
|
(In thousands, except per share data)
|
||||||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
||||||||||
Product revenue
|
$
|
48,914
|
|
|
$
|
39,029
|
|
|
$
|
30,328
|
|
|
$
|
27,204
|
|
|
$
|
20,211
|
|
License and other revenue
|
360
|
|
|
382
|
|
|
266
|
|
|
200
|
|
|
258
|
|
|||||
Total revenue
|
49,274
|
|
|
39,411
|
|
|
30,594
|
|
|
27,404
|
|
|
20,469
|
|
|||||
Cost of revenue
|
19,700
|
|
|
15,317
|
|
|
13,127
|
|
|
15,570
|
|
|
11,640
|
|
|||||
Gross profit
|
29,574
|
|
|
24,094
|
|
|
17,467
|
|
|
11,834
|
|
|
8,829
|
|
|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales and marketing
|
14,734
|
|
|
14,385
|
|
|
12,629
|
|
|
12,818
|
|
|
6,378
|
|
|||||
General and administrative
|
14,363
|
|
|
13,772
|
|
|
12,069
|
|
|
11,836
|
|
|
10,806
|
|
|||||
Research and development
|
49,458
|
|
|
37,472
|
|
|
31,823
|
|
|
22,060
|
|
|
13,536
|
|
|||||
Total operating expenses
|
78,555
|
|
|
65,629
|
|
|
56,521
|
|
|
46,714
|
|
|
30,720
|
|
|||||
Loss from operations
|
(48,981
|
)
|
|
(41,535
|
)
|
|
(39,054
|
)
|
|
(34,880
|
)
|
|
(21,891
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income (expense), net
|
(1,360
|
)
|
|
(755
|
)
|
|
224
|
|
|
384
|
|
|
(48
|
)
|
|||||
Other income (expense)
|
(160
|
)
|
|
133
|
|
|
(6
|
)
|
|
897
|
|
|
(16
|
)
|
|||||
Total other income (expense)
|
(1,520
|
)
|
|
(622
|
)
|
|
218
|
|
|
1,281
|
|
|
(64
|
)
|
|||||
Loss before income taxes
|
(50,501
|
)
|
|
(42,157
|
)
|
|
(38,836
|
)
|
|
(33,599
|
)
|
|
(21,955
|
)
|
|||||
Income tax expense (benefit)
|
100
|
|
|
40
|
|
|
(573
|
)
|
|
44
|
|
|
148
|
|
|||||
Net loss
|
$
|
(50,601
|
)
|
|
$
|
(42,197
|
)
|
|
$
|
(38,263
|
)
|
|
$
|
(33,643
|
)
|
|
$
|
(22,103
|
)
|
Net loss per share, basic and diluted
|
$
|
(1.15
|
)
|
|
$
|
(1.00
|
)
|
|
$
|
(0.93
|
)
|
|
$
|
(0.95
|
)
|
|
$
|
(0.84
|
)
|
Weighted average number of shares outstanding, basic and diluted
|
44,100
|
|
|
42,157
|
|
|
41,346
|
|
|
35,253
|
|
|
26,215
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents and marketable securities(1)(2)(3)
|
$
|
41,566
|
|
|
$
|
45,465
|
|
|
$
|
70,506
|
|
|
$
|
105,589
|
|
|
$
|
51,250
|
|
Total assets
|
80,324
|
|
|
70,667
|
|
|
91,970
|
|
|
121,754
|
|
|
68,016
|
|
|||||
Long-term liabilities
|
15,752
|
|
|
11,481
|
|
|
1,653
|
|
|
2,349
|
|
|
2,392
|
|
|||||
Total liabilities
|
42,173
|
|
|
22,070
|
|
|
13,946
|
|
|
12,586
|
|
|
11,566
|
|
|||||
Accumulated deficit
|
(355,270
|
)
|
|
(304,669
|
)
|
|
(262,472
|
)
|
|
(224,209
|
)
|
|
(190,566
|
)
|
|||||
Total stockholders’ equity (1)(2)(3)
|
38,151
|
|
|
48,597
|
|
|
78,024
|
|
|
109,168
|
|
|
56,450
|
|
(1)
|
In August and September 2016, we issued approximately 8.3 million shares of common stock at an average price of $9.04 per share. We raised approximately
$29.1 million
in net proceeds.
|
(2)
|
In August 2013, we issued approximately 8.7 million shares of common stock at a price of $9.84 per share. We raised approximately
$81.0 million
in net proceeds.
|
(3)
|
In June 2012, we issued approximately 11.5 million shares of common stock at a price of $4.20 per share. We raised approximately
$45.1 million
in net proceeds.
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Machinery and laboratory equipment
|
3 - 5 years
|
Instruments
|
4 - 5 years
|
Office equipment
|
3 - 7 years
|
Leasehold improvements
|
over the shorter of the remaining life of the lease or the useful economic life of the asset
|
•
|
Expected Term.
The expected term represents the period that our stock-based awards are expected to be outstanding and is determined by using the simplified method.
|
•
|
Expected Volatility
. Expected volatility represents the expected volatility in our stock price over the expected term of the stock option or award.
|
•
|
Expected Dividend
. The pricing models require a single expected dividend yield as an input. We assumed no dividends as we have never paid dividends and have no plans to do so.
|
•
|
Risk-Free Interest Rate
. The risk-free interest rates used in the models is based on published government rates in effect at the time of grant for periods corresponding with the expected term of the option or award.
|
|
Years ended December 31,
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Revenue
|
$
|
49,274
|
|
|
$
|
39,411
|
|
|
$
|
30,594
|
|
|
$
|
9,863
|
|
|
25
|
%
|
|
$
|
8,817
|
|
|
29
|
%
|
|
Years ended December 31,
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Cost of Revenue
|
$
|
19,700
|
|
|
$
|
15,317
|
|
|
$
|
13,127
|
|
|
$
|
4,383
|
|
|
29
|
%
|
|
$
|
2,190
|
|
|
17
|
%
|
Gross Profit
|
$
|
29,574
|
|
|
$
|
24,094
|
|
|
$
|
17,467
|
|
|
$
|
5,480
|
|
|
23
|
%
|
|
$
|
6,627
|
|
|
38
|
%
|
|
Years ended December 31,
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Sales and Marketing
|
$
|
14,734
|
|
|
$
|
14,385
|
|
|
$
|
12,629
|
|
|
$
|
349
|
|
|
2
|
%
|
|
$
|
1,756
|
|
|
14
|
%
|
|
Years ended December 31,
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
General and Administrative
|
$
|
14,363
|
|
|
$
|
13,772
|
|
|
$
|
12,069
|
|
|
$
|
591
|
|
|
4
|
%
|
|
$
|
1,703
|
|
|
14
|
%
|
|
Years ended December 31,
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Research and Development
|
$
|
49,458
|
|
|
$
|
37,472
|
|
|
$
|
31,823
|
|
|
$
|
11,986
|
|
|
32
|
%
|
|
$
|
5,649
|
|
|
18
|
%
|
|
Years ended December 31,
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Other Income (Expense)
|
$
|
(1,520
|
)
|
|
$
|
(622
|
)
|
|
$
|
218
|
|
|
$
|
(898
|
)
|
|
144
|
%
|
|
$
|
(840
|
)
|
|
(385
|
)%
|
|
Years ended December 31,
|
|
2016 vs 2015
|
|
2015 vs 2014
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Income Tax Expense (Benefit)
|
$
|
100
|
|
|
$
|
40
|
|
|
$
|
(573
|
)
|
|
$
|
60
|
|
|
150
|
%
|
|
$
|
613
|
|
|
107
|
%
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash used in operating activities
|
$
|
(35,637
|
)
|
|
$
|
(31,915
|
)
|
|
$
|
(29,572
|
)
|
Cash provided by (used in) investing activities
|
(24,123
|
)
|
|
19,321
|
|
|
29,417
|
|
|||
Cash provided by financing activities
|
40,359
|
|
|
11,133
|
|
|
1,287
|
|
|||
Effect of exchange rate changes on cash
|
(25
|
)
|
|
(9
|
)
|
|
—
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(19,426
|
)
|
|
$
|
(1,470
|
)
|
|
$
|
1,132
|
|
•
|
the level of revenues and the rate of our revenue growth;
|
•
|
change in demand from our customers;
|
•
|
the level of expenses required to expand our commercial (sales and marketing) and manufacturing activities;
|
•
|
the level of research and development investment required to develop our diagnostic systems and test menu;
|
•
|
our need to acquire or license complementary technologies;
|
•
|
the costs of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights;
|
•
|
competing technological and market developments; and
|
•
|
changes in regulatory policies or laws that affect our operations.
|
•
|
$10,000,000 (Term Loan A) on or before March 31, 2015, which we borrowed in March 2015;
|
•
|
an additional $10,000,000 (Term Loan B), subject to our satisfaction of regulatory requirements necessary to CE Mark our ePlex system in Europe by a specified date, which we borrowed in June 2016;
|
•
|
an additional $15,000,000 (Term Loan C), subject to our satisfaction of FDA 510(k) market clearance for the sale of our ePlex system in the United States by a specified date; and
|
•
|
up to $5,000,000 in the form of a revolving loan, which is subject to a defined borrowing base as set forth in the LSA.
|
|
Payments due by period
|
||||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3
Years
|
|
4-5
Years
|
|
After 5
Years
|
||||||||||
Lease obligations (1)
|
$
|
10,058
|
|
|
$
|
1,644
|
|
|
$
|
5,677
|
|
|
$
|
2,143
|
|
|
$
|
594
|
|
Licensing payment obligations
|
1,750
|
|
|
1,494
|
|
|
181
|
|
|
75
|
|
|
—
|
|
|||||
Instrument purchase obligations
|
1,278
|
|
|
1,309
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total obligations
|
$
|
13,086
|
|
|
$
|
4,447
|
|
|
$
|
5,858
|
|
|
$
|
2,218
|
|
|
$
|
594
|
|
(1)
|
We enter into leases in the ordinary course of business with respect to facilities. Our lease agreements have fixed payment terms based on the passage of time. Certain facility leases require payment of maintenance and real estate taxes. Our future operating lease obligations could change if we terminate certain contracts or if we enter into additional leases.
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
15,959
|
|
|
$
|
35,385
|
|
Marketable securities
|
25,607
|
|
|
10,080
|
|
||
Accounts receivable, net of allowances of $2,740 and $2,727, respectively
|
9,048
|
|
|
6,847
|
|
||
Inventories
|
6,633
|
|
|
3,054
|
|
||
Prepaid expenses and other current assets
|
1,202
|
|
|
591
|
|
||
Total current assets
|
58,449
|
|
|
55,957
|
|
||
Non-current assets
|
|
|
|
||||
Property and equipment, net
|
18,268
|
|
|
11,396
|
|
||
Intangible assets, net
|
2,670
|
|
|
2,376
|
|
||
Restricted cash
|
758
|
|
|
758
|
|
||
Other long-term assets
|
179
|
|
|
180
|
|
||
Total assets
|
$
|
80,324
|
|
|
$
|
70,667
|
|
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
8,703
|
|
|
$
|
4,376
|
|
Accrued compensation
|
5,650
|
|
|
3,861
|
|
||
Loan payable
|
7,935
|
|
|
(373
|
)
|
||
Other current liabilities
|
4,133
|
|
|
2,725
|
|
||
Total current liabilities
|
26,421
|
|
|
10,589
|
|
||
Long-term liabilities
|
|
|
|
||||
Deferred rent
|
3,652
|
|
|
1,257
|
|
||
Long-term debt
|
11,880
|
|
|
9,890
|
|
||
Other non-current liabilities
|
220
|
|
|
334
|
|
||
Total liabilities
|
42,173
|
|
|
22,070
|
|
||
Commitments and contingencies—See note 7
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, $0.0001 par value; 5,000 authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value; 100,000 authorized; 46,554 and 42,551 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
393,322
|
|
|
353,233
|
|
||
Accumulated deficit
|
(355,270
|
)
|
|
(304,669
|
)
|
||
Accumulated other comprehensive income (loss)
|
95
|
|
|
29
|
|
||
Total stockholders’ equity
|
38,151
|
|
|
48,597
|
|
||
Total liabilities and stockholders’ equity
|
$
|
80,324
|
|
|
$
|
70,667
|
|
|
Years ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
|
|
|
|
|
||||||
Product revenue
|
$
|
48,914
|
|
|
$
|
39,029
|
|
|
$
|
30,328
|
|
License and other revenue
|
360
|
|
|
382
|
|
|
266
|
|
|||
Total revenue
|
49,274
|
|
|
39,411
|
|
|
30,594
|
|
|||
Cost of revenue
|
19,700
|
|
|
15,317
|
|
|
13,127
|
|
|||
Gross profit
|
29,574
|
|
|
24,094
|
|
|
17,467
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Sales and marketing
|
14,734
|
|
|
14,385
|
|
|
12,629
|
|
|||
General and administrative
|
14,363
|
|
|
13,772
|
|
|
12,069
|
|
|||
Research and development
|
49,458
|
|
|
37,472
|
|
|
31,823
|
|
|||
Total operating expenses
|
78,555
|
|
|
65,629
|
|
|
56,521
|
|
|||
Loss from operations
|
(48,981
|
)
|
|
(41,535
|
)
|
|
(39,054
|
)
|
|||
Other income (expense)
|
|
|
|
|
|
||||||
Interest income
|
176
|
|
|
125
|
|
|
244
|
|
|||
Interest expense
|
(1,536
|
)
|
|
(880
|
)
|
|
(20
|
)
|
|||
Other income (expense)
|
(160
|
)
|
|
133
|
|
|
(6
|
)
|
|||
Total other income (expense)
|
(1,520
|
)
|
|
(622
|
)
|
|
218
|
|
|||
Loss before provision for income taxes
|
(50,501
|
)
|
|
(42,157
|
)
|
|
(38,836
|
)
|
|||
Income tax expense (benefit)
|
100
|
|
|
40
|
|
|
(573
|
)
|
|||
Net loss
|
$
|
(50,601
|
)
|
|
$
|
(42,197
|
)
|
|
$
|
(38,263
|
)
|
Net loss per share, basic and diluted
|
$
|
(1.15
|
)
|
|
$
|
(1.00
|
)
|
|
$
|
(0.93
|
)
|
Weighted average number of shares outstanding basic and diluted
|
44,100
|
|
|
42,157
|
|
|
41,346
|
|
|||
Other comprehensive loss
|
|
|
|
|
|
||||||
Net loss
|
$
|
(50,601
|
)
|
|
$
|
(42,197
|
)
|
|
$
|
(38,263
|
)
|
Foreign currency translation adjustments
|
77
|
|
|
36
|
|
|
—
|
|
|||
Net unrealized gains (losses) on marketable securities, net of tax
|
(11
|
)
|
|
3
|
|
|
(20
|
)
|
|||
Comprehensive loss
|
$
|
(50,535
|
)
|
|
$
|
(42,158
|
)
|
|
$
|
(38,283
|
)
|
|
Common Stock
|
|
Additional paid-in
capital
|
|
Accumulated other
comprehensive loss
|
|
Accumulated
deficit
|
|
Total stockholders' equity
|
|||||||||||||
|
Shares
|
|
Par Value
|
|
|
|
|
|||||||||||||||
Balance—December 31, 2013
|
41,520
|
|
|
$
|
4
|
|
|
$
|
333,363
|
|
|
$
|
10
|
|
|
$
|
(224,209
|
)
|
|
$
|
109,168
|
|
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
5,796
|
|
|
—
|
|
|
—
|
|
|
5,796
|
|
|||||
Issuance of employee stock purchase plan shares
|
89
|
|
|
—
|
|
|
812
|
|
|
—
|
|
|
—
|
|
|
812
|
|
|||||
Restricted stock awards issued, net of cancellations
|
149
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares issued under stock-based compensation plans
|
101
|
|
|
—
|
|
|
531
|
|
|
—
|
|
|
—
|
|
|
531
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,263
|
)
|
|
(38,263
|
)
|
|||||
Unrealized loss on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|||||
Balance—December 31, 2014
|
41,859
|
|
|
4
|
|
|
340,502
|
|
|
(10
|
)
|
|
(262,472
|
)
|
|
78,024
|
|
|||||
Issuance of stock in lieu of accrued bonuses
|
105
|
|
|
—
|
|
|
863
|
|
|
—
|
|
|
—
|
|
|
863
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
9,995
|
|
|
—
|
|
|
—
|
|
|
9,995
|
|
|||||
Issuance of employee stock purchase plan shares
|
122
|
|
|
—
|
|
|
884
|
|
|
—
|
|
|
—
|
|
|
884
|
|
|||||
Restricted stock awards issued, net of cancellations
|
284
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares issued under stock-based compensation plans
|
181
|
|
|
—
|
|
|
989
|
|
|
—
|
|
|
—
|
|
|
989
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,197
|
)
|
|
(42,197
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
|||||
Unrealized gain on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Balance—December 31, 2015
|
42,551
|
|
|
4
|
|
|
353,233
|
|
|
29
|
|
|
(304,669
|
)
|
|
48,597
|
|
|||||
Issuance of stock in lieu of accrued bonuses
|
28
|
|
|
—
|
|
|
364
|
|
|
—
|
|
|
—
|
|
|
364
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
9,236
|
|
|
—
|
|
|
—
|
|
|
9,236
|
|
|||||
Issuance of employee stock purchase plan shares
|
138
|
|
|
—
|
|
|
921
|
|
|
—
|
|
|
—
|
|
|
921
|
|
|||||
Restricted stock issued, net of cancellations
|
421
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares issued under stock-based compensation plans
|
99
|
|
|
—
|
|
|
712
|
|
|
—
|
|
|
—
|
|
|
712
|
|
|||||
Issuance of common stock, net of offering expenses
|
3,317
|
|
|
—
|
|
|
28,856
|
|
|
—
|
|
|
—
|
|
|
28,856
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50,601
|
)
|
|
(50,601
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
—
|
|
|
77
|
|
|||||
Unrealized loss on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||||
Balance—December 31, 2016
|
46,554
|
|
|
$
|
4
|
|
|
$
|
393,322
|
|
|
$
|
95
|
|
|
$
|
(355,270
|
)
|
|
$
|
38,151
|
|
|
Years ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(50,601
|
)
|
|
$
|
(42,197
|
)
|
|
$
|
(38,263
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
3,916
|
|
|
3,405
|
|
|
2,656
|
|
|||
Amortization of premiums on investments
|
89
|
|
|
180
|
|
|
702
|
|
|||
Amortization of deferred debt issuance costs
|
388
|
|
|
285
|
|
|
—
|
|
|||
Stock-based compensation
|
9,236
|
|
|
9,995
|
|
|
5,796
|
|
|||
Provision for bad debt
|
13
|
|
|
25
|
|
|
—
|
|
|||
Non-cash inventory adjustments
|
134
|
|
|
594
|
|
|
450
|
|
|||
Gain on sale of investment in preferred stock
|
(9
|
)
|
|
(223
|
)
|
|
—
|
|
|||
Other non-cash adjustments
|
145
|
|
|
186
|
|
|
185
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(2,250
|
)
|
|
(1,983
|
)
|
|
(2,030
|
)
|
|||
Inventories
|
(3,450
|
)
|
|
(1,286
|
)
|
|
(229
|
)
|
|||
Prepaid expenses and other assets
|
(613
|
)
|
|
(36
|
)
|
|
(184
|
)
|
|||
Accounts payable
|
4,105
|
|
|
(757
|
)
|
|
85
|
|
|||
Accrued compensation
|
2,172
|
|
|
(458
|
)
|
|
1,797
|
|
|||
Other liabilities
|
1,088
|
|
|
355
|
|
|
(537
|
)
|
|||
Net cash used in operating activities
|
(35,637
|
)
|
|
(31,915
|
)
|
|
(29,572
|
)
|
|||
Investing activities
|
|
|
|
|
|
||||||
Payments for intellectual property licenses
|
(1,500
|
)
|
|
(550
|
)
|
|
(350
|
)
|
|||
Purchases of property and equipment
|
(7,000
|
)
|
|
(3,756
|
)
|
|
(5,726
|
)
|
|||
Purchases of marketable securities
|
(33,688
|
)
|
|
(22,646
|
)
|
|
(28,054
|
)
|
|||
Proceeds from sales of marketable securities
|
8,015
|
|
|
223
|
|
|
7,497
|
|
|||
Maturities of marketable securities
|
10,050
|
|
|
46,050
|
|
|
56,050
|
|
|||
Net cash provided by (used in) investing activities
|
(24,123
|
)
|
|
19,321
|
|
|
29,417
|
|
|||
Financing activities
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
30,920
|
|
|
884
|
|
|
812
|
|
|||
Costs incurred in conjunction with public offering
|
(1,143
|
)
|
|
—
|
|
|
—
|
|
|||
Principal repayment of borrowings
|
(40
|
)
|
|
(22
|
)
|
|
(56
|
)
|
|||
Costs associated with debt issuance
|
(90
|
)
|
|
(718
|
)
|
|
—
|
|
|||
Proceeds from borrowings
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|||
Proceeds from stock option exercises
|
712
|
|
|
989
|
|
|
531
|
|
|||
Net cash provided by financing activities
|
40,359
|
|
|
11,133
|
|
|
1,287
|
|
|||
Effect of exchange rate changes on cash
|
(25
|
)
|
|
(9
|
)
|
|
—
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(19,426
|
)
|
|
(1,470
|
)
|
|
1,132
|
|
|||
Cash and cash equivalents at beginning of year
|
35,385
|
|
|
36,855
|
|
|
35,723
|
|
|||
Cash and cash equivalents at end of year
|
$
|
15,959
|
|
|
$
|
35,385
|
|
|
$
|
36,855
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Transfer of systems from property and equipment into inventory
|
$
|
263
|
|
|
$
|
225
|
|
|
$
|
256
|
|
Property and equipment costs incurred but not paid included in accounts payable
|
$
|
1,159
|
|
|
$
|
146
|
|
|
$
|
124
|
|
Intellectual property acquisition included in accrued expenses
|
$
|
—
|
|
|
$
|
800
|
|
|
$
|
550
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
1,130
|
|
|
$
|
572
|
|
|
$
|
20
|
|
Cash received for interest
|
$
|
266
|
|
|
$
|
305
|
|
|
$
|
244
|
|
Cash paid for income taxes, net
|
$
|
65
|
|
|
$
|
10
|
|
|
$
|
24
|
|
•
|
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.
|
|
Allowance for doubtful accounts
|
||
Balance December 31, 2014
|
$
|
2,702
|
|
Provision for doubtful accounts
|
25
|
|
|
Balance December 31, 2015
|
$
|
2,727
|
|
Provision for doubtful accounts
|
13
|
|
|
Balance December 31, 2016
|
$
|
2,740
|
|
Machinery and laboratory equipment
|
3 – 5 years
|
Instruments
|
4 – 5 years
|
Office equipment
|
3 – 7 years
|
Leasehold improvements
|
over the shorter of the remaining life of the lease or the useful economic life of the asset
|
|
2016
|
|
2015
|
|
2014
|
||||||
Beginning balance
|
$
|
118
|
|
|
$
|
195
|
|
|
$
|
226
|
|
Warranty expenses incurred
|
(421
|
)
|
|
(430
|
)
|
|
(608
|
)
|
|||
Provisions
|
522
|
|
|
353
|
|
|
577
|
|
|||
Ending balance
|
$
|
219
|
|
|
$
|
118
|
|
|
$
|
195
|
|
•
|
Expected Term.
Expected term represents the period that the stock-based awards are expected to be outstanding and is determined by using the simplified method.
|
•
|
Expected Volatility
. Expected volatility represents the expected volatility in the Company’s stock price over the expected term of the option or market-based award and is determined by review of the Company’s and similar companies’ historical experience.
|
•
|
Expected Dividend
. The valuation methods required a single expected dividend yield as an input. The Company assumed no dividends as it has never paid dividends and has no current plans to do so.
|
•
|
Risk-Free Interest Rate.
The risk-free interest rate is based on published U.S. Treasury rates in effect at the time of grant for periods corresponding with the expected term of the option or market-based award.
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Options outstanding to purchase common stock
|
2,570
|
|
|
3,004
|
|
|
2,479
|
|
Other unvested equity awards
|
2,000
|
|
|
1,267
|
|
|
948
|
|
Total
|
4,570
|
|
|
4,271
|
|
|
3,427
|
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||
Laboratory Corporation of America, Inc.
|
33
|
%
|
|
35
|
%
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
||||||||||||
Licensed intellectual property
|
$
|
4,250
|
|
|
$
|
(1,580
|
)
|
|
$
|
2,670
|
|
|
$
|
3,550
|
|
|
$
|
(1,174
|
)
|
|
$
|
2,376
|
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Expected volatility (%)
|
51
|
%
|
|
49
|
%
|
|
69
|
%
|
Expected life (years)
|
5.90
|
|
|
6.06
|
|
|
6.08
|
|
Risk free rate (%)
|
1.35
|
%
|
|
1.67
|
%
|
|
1.82
|
%
|
Expected dividend yield (%)
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Restricted Stock Awards
|
|
Restricted Stock Units
|
||||||||||
|
Number
of
shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Number
of
shares
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||
Unvested at December 31, 2015
|
32,837
|
|
|
$
|
5.00
|
|
|
934,977
|
|
|
$
|
12.66
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
1,580,273
|
|
|
$
|
5.80
|
|
Vested
|
(32,369
|
)
|
|
$
|
4.91
|
|
|
(444,365
|
)
|
|
$
|
11.79
|
|
Forfeitures
|
(312
|
)
|
|
$
|
11.19
|
|
|
(304,762
|
)
|
|
$
|
7.65
|
|
Unvested at December 31, 2016
|
156
|
|
|
$
|
11.19
|
|
|
1,766,123
|
|
|
$
|
7.18
|
|
|
Market-Based Stock Units
|
|||
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Unvested at December 31, 2015
|
136,730
|
|
|
18.07
|
Units granted
|
335,253
|
|
|
4.94
|
Vested
|
(192,941
|
)
|
|
8.01
|
Cancelled
|
(56,269)
|
|
|
9.81
|
Unvested at December 31, 2016
|
222,773
|
|
|
7.34
|
|
2016
|
|
2015
|
||||
Expected volatility
|
49
|
%
|
|
45
|
%
|
||
Risk-free interest rate
|
0.90
|
%
|
|
1.10
|
%
|
||
Expected dividend
|
—
|
%
|
|
—
|
%
|
||
Weighted average fair value
|
$
|
4.94
|
|
|
$
|
18.07
|
|
|
Year Ended December 31,
|
|||||
|
2016
|
2015
|
||||
Shares issued
|
138,058
|
|
122,245
|
|
||
Weighted average fair value of shares issued
|
$
|
6.67
|
|
$
|
7.22
|
|
Employee purchases
|
$
|
921
|
|
$
|
884
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of revenue
|
$
|
258
|
|
|
$
|
209
|
|
|
$
|
73
|
|
Sales and marketing
|
2,329
|
|
|
3,050
|
|
|
1,848
|
|
|||
Research and development
|
2,482
|
|
|
2,498
|
|
|
1,194
|
|
|||
General and administrative
|
4,167
|
|
|
4,238
|
|
|
2,681
|
|
|||
Stock-based compensation expense
|
$
|
9,236
|
|
|
$
|
9,995
|
|
|
$
|
5,796
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Domestic
|
$
|
(50,651
|
)
|
|
$
|
(42,221
|
)
|
|
$
|
(37,766
|
)
|
Foreign
|
150
|
|
|
64
|
|
|
(1,070
|
)
|
|||
Worldwide Income (Loss)
|
$
|
(50,501
|
)
|
|
$
|
(42,157
|
)
|
|
$
|
(38,836
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current expense:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
31
|
|
|
25
|
|
|
(573
|
)
|
|||
Foreign (non-U.S. entities)
|
70
|
|
|
20
|
|
|
—
|
|
|||
Total current expense (benefit)
|
$
|
91
|
|
|
$
|
45
|
|
|
$
|
(573
|
)
|
Deferred expense (benefit):
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
1
|
|
|
—
|
|
|
—
|
|
|||
Total deferred expense (benefit)
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred income tax assets:
|
|
|
|
||||
NOL and credit carryforwards
|
$
|
74,375
|
|
|
$
|
59,907
|
|
Compensation accruals
|
4,660
|
|
|
3,952
|
|
||
Accruals and reserves
|
3,437
|
|
|
2,201
|
|
||
State tax provision
|
8
|
|
|
8
|
|
||
Inventory adjustments
|
996
|
|
|
559
|
|
||
Intangible assets
|
645
|
|
|
361
|
|
||
Other
|
144
|
|
|
5
|
|
||
Subtotal: deferred tax assets
|
84,265
|
|
|
66,993
|
|
||
Valuation allowance
|
(82,481
|
)
|
|
(66,211
|
)
|
||
Total deferred tax assets
|
1,784
|
|
|
782
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Depreciation
|
(1,784
|
)
|
|
(782
|
)
|
||
Subtotal: deferred tax liabilities
|
(1,784
|
)
|
|
(782
|
)
|
||
Net deferred tax assets
|
$
|
—
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Beginning balance of unrecognized tax benefits
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
382
|
|
Lapses in the statute of limitations
|
—
|
|
|
—
|
|
|
(382
|
)
|
|||
Ending balance of unrecognized tax benefits
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Years Ending December 31,
|
Amount
|
||
2017
|
$
|
1,644
|
|
2018
|
1,792
|
|
|
2019
|
1,913
|
|
|
2020
|
1,972
|
|
|
2021
|
1,372
|
|
|
Thereafter
|
1,365
|
|
|
Total minimum lease payments
|
$
|
10,058
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Property and equipment—at cost:
|
|
|
|
||||
Plant and machinery
|
$
|
10,145
|
|
|
$
|
7,728
|
|
Instruments
|
9,869
|
|
|
8,195
|
|
||
Office equipment
|
1,714
|
|
|
1,526
|
|
||
Leasehold improvements
|
10,100
|
|
|
4,311
|
|
||
Total property and equipment—at cost
|
31,828
|
|
|
21,760
|
|
||
Less accumulated depreciation
|
(13,560
|
)
|
|
(10,364
|
)
|
||
Property and equipment, net
|
$
|
18,268
|
|
|
$
|
11,396
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Term Loans
|
|
|
|
|
||||
Term Loan A - 6.9% principal
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
Term Loan B - 6.9% principal
|
|
10,000
|
|
|
—
|
|
||
Final fee obligation
|
|
400
|
|
|
400
|
|
||
Unamortized issuance costs
|
|
(585
|
)
|
|
(883
|
)
|
||
Total debt, net
|
|
19,815
|
|
|
9,517
|
|
||
Current portion of long-term debt
|
|
(7,935
|
)
|
|
373
|
|
||
Long-term debt
|
|
$
|
11,880
|
|
|
$
|
9,890
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accrued royalties
|
$
|
949
|
|
|
$
|
1,608
|
|
Accrued warranties
|
219
|
|
|
118
|
|
||
Accrued tenant improvements
|
789
|
|
|
—
|
|
||
Deferred revenue
|
658
|
|
|
267
|
|
||
Other accrued liabilities
|
1,518
|
|
|
732
|
|
||
Total
|
$
|
4,133
|
|
|
$
|
2,725
|
|
|
December 31, 2016
|
||||||||||||||
|
Quotes Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
Total
|
||||||||
Money market funds (cash equivalents)
|
$
|
556
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
556
|
|
Corporate notes and bonds
|
—
|
|
|
18,821
|
|
|
—
|
|
|
18,821
|
|
||||
U.S. government and agency securities
|
—
|
|
|
3,503
|
|
|
—
|
|
|
3,503
|
|
||||
Commercial paper
|
—
|
|
|
3,283
|
|
|
—
|
|
|
3,283
|
|
||||
|
$
|
556
|
|
|
$
|
25,607
|
|
|
$
|
—
|
|
|
$
|
26,163
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2015
|
||||||||||||||
|
Quotes Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
Total
|
||||||||
Money market funds (cash equivalents)
|
$
|
22,128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,128
|
|
Corporate notes and bonds
|
—
|
|
|
8,483
|
|
|
—
|
|
|
8,483
|
|
||||
U.S. government and agency securities
|
—
|
|
|
799
|
|
|
—
|
|
|
799
|
|
||||
Commercial paper
|
—
|
|
|
798
|
|
|
—
|
|
|
798
|
|
||||
|
$
|
22,128
|
|
|
$
|
10,080
|
|
|
$
|
—
|
|
|
$
|
32,208
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Corporate notes and bonds
|
$
|
18,846
|
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
18,821
|
|
U.S. government and agency securities
|
3,506
|
|
|
—
|
|
|
(3
|
)
|
|
3,503
|
|
||||
Commercial Paper
|
3,283
|
|
|
—
|
|
|
—
|
|
|
3,283
|
|
||||
Total
|
$
|
25,635
|
|
|
$
|
—
|
|
|
$
|
(28
|
)
|
|
$
|
25,607
|
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
Due in one year or less
|
$
|
25,635
|
|
|
$
|
25,607
|
|
Due after one year through two years
|
—
|
|
|
—
|
|
||
Total
|
$
|
25,635
|
|
|
$
|
25,607
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Total revenue
|
$
|
11,064
|
|
|
$
|
12,512
|
|
|
$
|
10,813
|
|
|
$
|
14,885
|
|
Gross profit
|
$
|
6,689
|
|
|
$
|
7,792
|
|
|
$
|
6,451
|
|
|
$
|
8,642
|
|
Loss from operations
|
$
|
(12,708
|
)
|
|
$
|
(12,588
|
)
|
|
$
|
(11,627
|
)
|
|
$
|
(12,058
|
)
|
Net loss
|
$
|
(12,958
|
)
|
|
$
|
(12,907
|
)
|
|
$
|
(12,058
|
)
|
|
$
|
(12,678
|
)
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Net loss per common share—basic and diluted
|
$
|
(0.30
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.27
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Year Ended December 31, 2015
|
||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Total revenue
|
$
|
10,107
|
|
|
$
|
7,646
|
|
|
$
|
8,472
|
|
|
$
|
13,186
|
|
Gross profit
|
$
|
6,116
|
|
|
$
|
4,360
|
|
|
$
|
5,120
|
|
|
$
|
8,498
|
|
Loss from operations
|
$
|
(10,027
|
)
|
|
$
|
(11,930
|
)
|
|
$
|
(11,117
|
)
|
|
$
|
(8,461
|
)
|
Net loss
|
$
|
(9,869
|
)
|
|
$
|
(12,152
|
)
|
|
$
|
(11,394
|
)
|
|
$
|
(8,782
|
)
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Net loss per common share—basic and diluted
|
$
|
(0.24
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.21
|
)
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Item 15.
|
EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES
|
(a)
|
Documents filed as part of this Annual Report.
|
1.
|
The following financial statements of GenMark Diagnostics, Inc. and Report of Independent Registered Public Accounting Firm, are included in this report:
|
2.
|
List of financial statement schedules. All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
|
4.
|
List of Exhibits required by Item 601 of Regulation S-K. See Item 15(b) below.
|
(b)
|
Exhibits.
|
Item 16.
|
FORM 10-K Summary
|
GENMARK DIAGNOSTICS, INC.
|
|
||
|
|
|
|
By:
|
|
/s/ H
ANY
M
ASSARANY
|
|
Name:
|
|
Hany Massarany
|
|
Title:
|
|
Chief Executive Officer, President and Director
(principal executive officer)
|
|
By:
|
|
/s/
SCOTT MENDEL
|
|
Name:
|
|
Scott Mendel
|
|
Title:
|
|
Chief Financial Officer
(principal financial and accounting officer)
|
|
Signature
|
Title
|
Date
|
|
|
|
/
S
/ H
ANY
M
ASSARANY
|
President, Chief Executive Officer and Director (principal executive officer)
|
2/28/2017
|
Hany Massarany
|
|
|
|
|
|
/S/ SCOTT MENDEL
|
Chief Financial Officer (principal financial and accounting officer)
|
2/28/2017
|
Scott Mendel
|
|
|
|
|
|
/
S
/ J
AMES
F
OX
|
Chairman of the Board
|
2/28/2017
|
James Fox
|
|
|
|
|
|
/
S
/ D
ARYL
J. F
AULKNER
|
Director
|
2/28/2017
|
Daryl J. Faulkner
|
|
|
|
|
|
/
S
/ K
EVIN
C. O’B
OYLE
|
Director
|
2/28/2017
|
Kevin C. O’Boyle
|
|
|
|
|
|
/
S
/
MICHAEL S. KAGNOFF
|
Director
|
2/28/2017
|
Michael S. Kagnoff
|
|
|
|
|
|
/s/ LISA M. GILES
|
Director
|
2/28/2017
|
Lisa M. Giles
|
|
|
Exhibit
|
Description
|
|
|
3.1
|
Certificate of Incorporation (incorporated by reference to our Registration Statement on Form S-1 (File No. 333-165562) filed with the Commission on March 19, 2010).
|
|
|
3.2
|
Amended and Restated By-Laws (incorporated by reference to our Current Report on 8-K filed on October 31, 2014).
|
|
|
10.1
|
Lease between The Campus Carlsbad, LLC and Clinical Micro Sensors, Inc. dba Osmetech Molecular Diagnostics, dated February 8, 2010 (incorporated by reference to our Registration Statement on Form S-1 (File No. 333-165562) filed with the Commission on March 19, 2010).
|
|
|
10.2
|
Settlement and Release Agreement and First Amendment to Lease between The Campus Carlsbad, LLC and Clinical Micro Sensors, Inc., dated July 1, 2010 (incorporated by reference herein form our Form 10-K as filed with the SEC on March 14, 2013).
|
|
|
10.3
|
Settlement and Release Agreement and Second Amendment to Lease, dated January 19, 2012, by and between the Campus Carlsbad, LLC and Clinical Micro Sensors, Inc. d.b.a. GenMark Diagnostics, Inc. (incorporated by reference to our Annual Report on Form 10-K filed with the Commission on March 21, 2012).
|
|
|
10.4
|
Third Amendment to Lease agreement dated August 28, 2012, by and between The Campus Carlsbad, LLC and Clinical Micro Sensors, Inc. dba GenMark Diagnostics, Inc. (incorporated by reference herein from our Form 10-Q as filed with the SEC on November 8, 2012).
|
|
|
10.5
|
Second Amendment to License Agreement dated June 20, 2000 by and between California Institute of Technology and Clinical Micro Sensors, Inc. (incorporated by reference herein form our Form 10-K/A as filed with the SEC on April 18, 2013). †
|
|
|
10.6
|
Amended and Restated Chemically Modified Enzymes Kit Patent License Agreement by and between Roche Molecular Systems, Inc., F. Hoffman-La Roche Ltd., and Clinical Micro Sensors, Inc. dba Osmetech Molecular Diagnostics, dated February 27, 2008 (incorporated by reference to our Registration Statement on Form S-1 (File No. 333-165562) filed with the Commission on May 21, 2010). †
|
|
|
10.7
|
Non-Exclusive License Agreement by and between Clinical Micro Sensors, Inc. d.b.a. GenMark Diagnostics, Inc. and Caliper Life Sciences Inc. dated effective as of March 27, 2012 (incorporated by reference herein from our Form 10-Q as filed with the SEC on May 10, 2012). †
|
|
|
10.8
|
Development Collaboration and License Agreement, dated July 26, 2012, by and between Advanced Liquid Logic, Inc. and Clinical Micro Sensors, Inc. dba GenMark Diagnostics, Inc. (incorporated by reference herein from our Form 10-Q/A as filed with the SEC on March 22, 2013). †
|
|
|
10.9
|
Amendment Number One to Development Collaboration and License Agreement, effective as of January 18, 2016, by and among Clinical Micro Sensors, Inc. d.b.a. GenMark Diagnostics, Inc., Advanced Liquid Logic, Inc., and Illumina, Inc. (incorporated by reference herein from our Form 10-Q as filed with the SEC on May 3, 2016).†
|
|
|
10.10
|
Loan and Security Agreement dated as of January 12, 2015 by and among GenMark Diagnostics, Inc., as borrower, its domestic subsidiaries, as guarantors, General Electric Capital Corporation, and certain other financial institutions as lenders (incorporated by reference herein to our Form 10-Q filed with the SEC on May 5, 2015). †
|
|
|
10.11
|
Amendment to Loan and Security Agreement dated September 30, 2015 by and among GenMark Diagnostics, Inc., as borrower, General Electric Capital Corporation, as agent and lender, and the lenders signatory thereto (incorporated by reference herein to our Form 10-Q filed with the SEC on October 27, 2015). †
|
|
|
10.12
|
Letter agreement dated March 17, 2016 by and among GenMark Diagnostics, Inc., as borrower, Healthcare Financial Solutions, LLC, as agent and lender, and the lenders signatory thereto (incorporated by reference herein from our Form 10-Q as filed with the SEC on May 3, 2016).†
|
|
|
10.13
|
First Amendment to Loan and Security Agreement dated July 27, 2016 by and among GenMark Diagnostics, Inc., as borrower, its domestic subsidiaries, as guarantors, Solar Senior Capital Ltd., as administrative and collateral agent, and certain other financial institutions as lenders (incorporated by reference herein from our Form 10-Q as filed with the SEC on November 3, 2016).†
|
|
|
10.14
|
XT-8 Instrument Supply Agreement, dated August 3, 2012, by and between Leica Biosystems Melbourne Pty Ltd and Clinical Micro Sensors, Inc. dba GenMark Diagnostics, Inc. (incorporated by reference herein from our Form 10-Q/A as filed with the SEC on March 22, 2013).†
|
Exhibit
|
Description
|
|
|
10.15
|
Manufacturing and Supply Agreement, dated December 15, 2015, by and between Plexus Corp. and Clinical Micro Sensors, Inc. d.b.a GenMark Diagnostics, Inc. +
ü
|
|
|
10.16
|
Form of Market Stock Units Grant Notice and Award Agreement (incorporated by reference herein from our Form 10-Q filed with the SEC on May 5, 2015)*
|
|
|
10.17
|
The GenMark Diagnostics, Inc. 2015 Bonus Plan (incorporated by reference herein to our Form 8-K as filed with the SEC on February 25, 2015).*
|
|
|
10.18
|
The GenMark Diagnostics, Inc. 2016 Bonus Plan (incorporated by reference herein to our Form 8-K as filed with the SEC on February 24, 2016).*
|
|
|
10.19
|
GenMark Diagnostics, Inc. 2010 Equity Incentive Plan, as amended (incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed with the SEC on April 17, 2014).*
|
|
|
10.20
|
Form of Stock Option Agreement (incorporated by reference to our Registration Statement on Form S-1 (File No. 333-165562) filed with the Commission on April 20, 2010).*
|
|
|
10.21
|
Form of Restricted Stock Agreement (incorporated by reference herein to our Form 10-Q as filed with the SEC on November 9, 2010).*
|
|
|
10.22
|
Form of Restricted Stock Units Grant Notice and Agreement (incorporated by reference herein to our Form 8-K as filed with the SEC on March 12, 2013).*
|
|
|
10.23
|
Form of Amendment of Restricted Stock, Restricted Stock Unit and/or Stock Option Agreement(s). *
ü
|
|
|
10.24
|
GenMark Diagnostics, Inc. 2013 Employee Stock Purchase Plan (incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed with the Commission on April 5, 2013).*
|
|
|
10.25
|
Form of Director and Officer Indemnification Agreement (incorporated by reference to our Registration Statement on Form S-1 (File No. 333-165562) filed with the Commission on March 19, 2010).*
|
|
|
10.26
|
Executive Employment Agreement, dated as of April 5, 2011, by and between GenMark Diagnostics, Inc. and Hany Massarany (incorporated by reference herein from our Form 10-Q as filed with the SEC on May 13, 2011).*
|
|
|
10.27
|
Employment Offer Letter effective May 7, 2014 by and between GenMark Diagnostics, Inc. and Scott Mendel (incorporated by reference to our Current Report on Form 8-K filed with the SEC on May 12, 2014).*
|
|
|
10.28
|
GenMark Diagnostics, Inc. Non-Plan Stock Option Agreement with Scott Mendel (incorporated by reference to our Registration Statement on Form S-8 (File No. 333-195924) filed with the SEC on May 13, 2014).*
|
|
|
10.29
|
GenMark Diagnostics, Inc. Non-Plan Restricted Stock Units Agreement with Scott Mendel (incorporated by reference to our Registration Statement on Form S-8 (File No. 333-195924) filed with the SEC on May 13, 2014).*
|
|
|
10.30
|
Executive Employment Agreement dated April 13, 2010 by and between Osmetech Molecular Diagnostics and Jennifer Williams (incorporated by reference herein from our Form 10-K as filed with the SEC on March 14, 2013).*
|
|
|
10.31
|
Executive Employment Agreement dated October 12, 2012 by and between GenMark Diagnostics, Inc. and Eric Stier. *
ü
|
|
|
10.32
|
Equity Distribution Agreement dated June 14, 2016 by and between GenMark Diagnostics, Inc. and Canaccord Genuity Inc. (incorporated by reference herein from our Form 10-Q as filed with the SEC on July 28, 2016).
|
|
|
21.1
|
List of Subsidiaries (incorporated by reference to our Form 10-K as filed with the SEC on February 24, 2015).
|
|
|
23.1
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
ü
|
Exhibit
|
Description
|
|
|
24.1
|
Power of Attorney (included on the signature page hereto).
ü
|
|
|
31.1
|
Certification of principal executive officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
ü
|
|
|
31.2
|
Certification of principal financial officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
ü
|
|
|
32.1
|
Certification of the principal executive officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. section 1350.
ü
|
|
|
32.2
|
Certification of the principal financial officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. section 1350.
ü
|
|
|
101
|
XBRL Instance Document
|
|
|
101
|
XBRL Taxonomy Extension Schema Document
|
|
|
101
|
XBRL Taxonomy Calculation Document
|
|
|
101
|
XBRL Taxonomy Definition Linkbase Document
|
101
|
XBRL Taxonomy Label Linkbase Document
|
|
|
101
|
XBRL Taxonomy Presentation Linkbase Document
|
*
|
Indicates a management contract or compensatory plan or arrangement in which any director or named executive officer participates.
|
ü
|
Included in this filing.
|
†
|
Confidential treatment has been granted with respect to certain portions of this exhibit.
|
+
|
GenMark has requested confidential treatment with respect to certain portions of this exhibit.
|
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