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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See “Special Note Regarding Forward-Looking Statements.” Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors.”

Overview

We are a life sciences company that has developed next generation, ultra-sensitive digital immunoassay platforms that advance precision health for life sciences research and diagnostics. Our platforms are based on our proprietary digital “Simoa” detection technology. Our Simoa bead-based and planar array platforms enable customers to reliably detect protein biomarkers in extremely low concentrations in blood, serum and other fluids that, in many cases, are undetectable using conventional, analog immunoassay technologies, and also allow researchers to define and validate the function of novel protein biomarkers that are only present in very low concentrations and have been discovered using technologies such as mass spectrometry. These capabilities provide our customers with insight into the role of protein biomarkers in human health that has not been possible with other existing technologies and enable researchers to unlock unique insights into the continuum between health and disease. We believe this greater insight will enable the development of novel therapies and diagnostics and facilitate a paradigm shift in healthcare from an emphasis on treatment to a focus on earlier detection, monitoring, prognosis and, ultimately, prevention. We are currently focusing on protein detection, which we believe is an area of significant unmet need and where we have significant competitive advantages. However, in addition to enabling new applications and insights in protein analysis, our Simoa platforms have also demonstrated applicability across other testing applications, including detection of nucleic acids and small molecules.

We currently sell most of our products for life science research, primarily to laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies, through a direct sales force and support organizations in North America and Europe, and through distributors or sales agents in other select markets, including Australia, Brazil, China, Czech Republic, India, Israel, Japan, Lebanon, Mexico, Qatar, Saudi Arabia, Singapore, South Korea and Taiwan.

Our instruments are designed to be used either with assays fully developed by us, including all antibodies and supplies required to run the tests, or with “homebrew” kits where we supply some of the components required for testing, and the customer supplies the remaining required elements. Accordingly, our installed instruments generate a recurring revenue stream. We believe that our recurring consumable revenue is driven by our customers’ ability to extract more valuable data using our platform and to process a large number of samples quickly with little hands-on preparation.

We commercially launched our first immunoassay platform, the Simoa HD-1, in January 2014. The HD-1 is based on our bead-based technology, and assays run on the HD-1 are fully automated. We initiated commercial launch of the SR-X instrument in December 2017. The SR-X utilizes the same Simoa bead-based technology and assay kits as the HD-1 in a compact benchtop form with a lower price point, more flexible assay preparation, and a wider range of applications. In July 2019, we launched the Simoa HD-X, an upgraded version of the Simoa HD-1, which replaces the HD-1. The HD-X has been designed to deliver significant productivity and operational efficiency improvements, as well as greater user flexibility. We began shipping and installing HD-X instruments at customer locations in 2019. As the installed base of the Simoa instruments increases, total consumables revenue overall is expected to increase. We believe that consumables revenue should be subject to less period-to-period fluctuation than our instrument sales revenue, and will become an increasingly important contributor to our overall revenue.

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On January 30, 2018, we acquired Aushon for $3.2 million in cash, with an additional payment of $0.8 million made in July 2018, six months after the acquisition date. With the acquisition of Aushon, we acquired a CLIA certified laboratory, as well as Aushon’s proprietary sensitive planar array detection technology. Leveraging our proprietary sophisticated Simoa image analysis and data analysis algorithms, we further refined this planar array technology to develop the SP-X instrument to provide the same Simoa sensitivity found in our Simoa bead-based platform. We initiated an early-access program for the SP-X instrument in January 2019, with the full commercial launch commenced in April 2019.

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On August 1, 2019, we completed our acquisition of Uman for an aggregate purchase price of $21.2 million, comprised of (i) $15.7 million in cash plus (ii) 191,152 shares of our common stock (representing $5.5 million based on the closing prices of our common stock on the Nasdaq Global Market on July 1, 2019 and August 1, 2019, the dates of issuance). The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019. Uman supplies neurofilament light (Nf-L) antibodies and ELISA kits, which are widely recognized by researchers and biopharmaceutical and diagnostics companies world-wide as the premier solution for the detection of Nf-L to advance the development of therapeutics and diagnostics for neurodegenerative conditions.

On September 29, 2020, we entered the Abbott License Agreement with Abbott. Pursuant to the terms of the Abbott License Agreement, we granted Abbott a non-exclusive, worldwide, royalty-bearing license, without the right to sublicense, under our bead-based single molecule detection patents in the field of IVD. Abbott paid an initial license fee of $10.0 million in connection with the execution of the Abbott License Agreement, which was recognized as license revenue for the year ended December 31, 2020. Abbott has also agreed to pay us milestone fees subject to the achievement by Abbott of certain development, regulatory and commercialization milestones and low single digit royalties on net sales of licensed products.

We are subject to ongoing uncertainty concerning the COVID-19 pandemic, including its length and severity and its effect on our business. During the first and second quarters of 2020, we implemented a resiliency plan focused on the health and safety of our employees and maintaining continuity of our operations. We have seen an impact on instrument revenue due to limitations on our ability to access certain customer sites and complete instrument installations, as well as an impact on consumables revenue from interruptions in certain customer laboratories. We expect these COVID-19 related challenges to continue until these customers return to normal operations.

In view of the pandemic, we have adjusted our operations to expand capacity in our Accelerator Laboratory to support customers whose operations have been disrupted and to sustain clinical trials. We also determined that our cytokine assay technology provides researchers with important and differentiated tools to study disease progression, cytokine release syndrome, and patient-treatment response in the fight against COVID-19, and began developing a SARS- CoV-2 semi-quantitative IgG assay and a SARS-CoV-2 antigen detection assay, and prototyping a high-definition multiplex SARS-CoV-2 serology assay. In December 2020, the FDA issued an EUA for our Simoa Semi-Quantitative SARS-CoV-2 IgG Antibody Test, and in January 2021, the FDA issued an EUA for our Simoa SARS-CoV-2 N Protein Antigen Test, each of which is run on our HD-X instrument. We currently intend to pursue authorization for additional sample types, including nasal swabs, saliva, and capillary dried blood obtained from a fingerstick. Preliminary clinical research studies suggest the viral antigen may be readily detectable in asymptomatic and pre-symptomatic patients, and we are exploring extending the test to screening applications, home-based sample collection and pooling to enable larger scale testing.

In September 2020, we entered into WP2 with the NIH under the RADx program. This contract, which has a total award value of $18.2 million, is intended to accelerate the continued development, scale-up and deployment of our novel SARS-CoV-2 antigen test. Initial early feasibility of this test was funded in part through WP1 we were granted in June 2020. WP2 supports clinical validation of the test in support of the EUA submissions with the FDA, and provides funding to expand assay kit manufacturing capacity and commercial deployment readiness. Contract funding is subject to achievement of pre-defined milestones and the contract period runs through September 2021.

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The COVID-19 situation remains dynamic and there remains significant uncertainty as to the length and severity of the pandemic, the actions that may be taken by government authorities, the impact to the business of our customers and suppliers, the long-term economic implications and other factors identified in “Part I, Item 1A, Risk Factors” of this Annual Report on Form 10-K. We will continue to evaluate the nature and extent of the impact to our business, financial condition, and operating results.

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As of December 31, 2020, we had cash and cash equivalents of $181.6 million. Since inception, we have incurred annual net losses. Our net loss was $31.5 million, $40.8 million, and $31.5 million for the years ended December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020, we had an accumulated deficit of $247.8 million and stockholders' equity of $206.1 million. We expect to continue to incur significant expenses and operating losses at least through the next 24 months. We expect our expenses will increase substantially as we:

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● expand our sales and marketing efforts to further commercialize our products;

● hire additional personnel and continue to grow our employee headcount;

● add operational, financial and management information systems; and

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Financial Operations Overview

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Revenue

UnderFinancial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606 - Revenue from Contracts with Customers (ASC 606), an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

Once a contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. We assess if these options provide a material right to the customer and if so, they are considered performance obligations. The identification of material rights requires judgments related to the determination of the value of the underlying license relative to the option exercise price, including assumptions about technical feasibility and the probability of developing a candidate that would be subject to the option rights. The exercise of a material right is accounted for as a contract modification for accounting purposes.

The transaction price is then determined and allocated to the identified performance obligations in proportion to their standalone selling prices (SSP) on a relative SSP basis. SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. In developing the SSP for a performance obligation, we consider applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. We validate the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations.

We generate product revenue primarily from sales of our HD-X, HD-1, SR-X, and SP-X instruments and related reagents and other consumables. We currently sell our products for RUO applications and our customers are primarily laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies. Sales of our consumables have consistently increased due to an increasing number of instruments being installed in the field, all of which require certain of our consumables to run customers’ specific tests. Consumable revenue consists of sales of complete assays which are developed internally by us, plus sales of “homebrew” kits which contain all the elements necessary to run tests with the exception of the specific antibodies utilized which are separately provided by the customer.

Service and other revenue consists of testing services provided by us in our Accelerator Laboratory on behalf of certain research customers, in addition to warranty and other service-based revenue. Services provided in our Accelerator Laboratory include sample testing, homebrew assay development and custom assay development.

Collaboration and license revenue consists of revenue associated with licensing our technology to third parties and for related services.

Grants received by us that do not require the transfer of goods or services to a customer are accounted for by analogy to International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance (IAS 20). Under IAS 20, we recognize revenue as the matching expense or asset is incurred or capitalized.

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Cost of Products, Services and Collaboration Revenue

Cost of goods sold for products consists of HD-X, HD-1, and SR-X instrument costs from the manufacturer. Cost of goods sold for SP-X consists of costs based on the internal assembly of this item. Raw material part costs, associated freight, shipping and handling costs, contract manufacturer costs, salaries, personnel costs, royalties, stock-based compensation, overhead and other direct costs related to those sales are classified as cost of goods sold for products.

Cost of goods sold for services consists of salaries and other personnel costs, royalties, stock-based compensation and facility costs associated with operating the Accelerator Laboratory on behalf of customers, in addition to costs related to warranties and other costs of servicing equipment at customer sites. Additionally, we incur costs related to cost of goods sold under the NIH RADx program.

Cost of collaboration revenue consists of royalty expense due to third parties from revenue generated by collaboration or license deals.

Research and Development Expenses

Research and development expenses consist of salaries and other personnel costs, stock-based compensation, research supplies, third-party development costs for new products, materials for prototypes, and allocated overhead costs that include facility and other overhead costs. We have made substantial investments in research and development since our inception, and plan to continue to make substantial investments in the future. Our research and development efforts have focused primarily on the tasks required to support development and commercialization of new and existing products. We believe that our continued investment in research and development is essential to our long-term competitive position and expect these expenses to increase in future periods. Additionally, costs incurred related to grant revenue are recorded as research and development expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal and accounting services. We expect selling, general and administrative expenses to increase in future periods as the number of sales, technical support and marketing and administrative personnel grows and we continue to introduce new products, broaden our customer base and grow our business. We also expect to incur additional expenses as a public company, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq Stock Market, additional insurance expenses, and expenses related to investor relations activities and other administrative and professional services.

Critical Accounting Policies, Significant Judgments and Estimates

Our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in accounting estimates may occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe that the following critical accounting policies involve a greater degree of judgment and complexity than our other significant accounting policies. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations. Our significant accounting

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policies are more fully described in “Significant Accounting Policies” (Note 2) in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Revenue Recognition

We recognize revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects consideration that we expect to be entitled to receive in exchange for these goods and services, incentives and taxes collected from customers, that are subsequently remitted to governmental authorities.

We adopted ASC 606 on January 1, 2019, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2020 and 2019 reflect the application of ASC 606 guidance.

Product Revenue

Our products are composed of analyzer instruments, assay kits and other consumables such as reagents. Products are sold directly to biopharmaceutical and academic research organizations or are sold through distributors in EMEA and Asia Pacific regions. The sales of instruments are generally accompanied by an initial year of implied service-type warranties and may be bundled with assays and other consumables and may also include other items such as training and installation of the instrument and/or an extended service warranty. Revenues from the sale of products are recognized at a point in time when we transfer control of the product to the customer, which is upon installation for instruments sold to direct customers, and based upon shipping terms for assay kits and other consumables. Revenue for instruments sold to distributors is generally recognized based upon shipping terms (either upon shipment or delivery).

Service and Other Revenue

Service revenues are composed of contract research services, initial implied one-year service-type warranties, extended services contracts and other services such as training. Contract research services are provided through our Accelerator Laboratory and generally consist of fixed fee contracts. Revenues from contract research services are recognized at a point in time when we complete and deliver our research report on each individually completed study, or over time if the contractual provisions allow for the collection of transaction consideration for costs incurred plus a reasonable margin through the period of performance of the services. Revenues from service-type warranties are recognized ratably over the contract service period. Revenues from other services are immaterial.

Collaboration and License Revenue

We may enter into agreements to license the intellectual property and know-how associated with its instruments in exchange for license fees and future royalties (as described below). The license agreements provide the licensee with a right to use the intellectual property with the license fee revenues recognized at a point in time as the underlying license is considered functional intellectual property. We have recognized revenues from a sales- or usage based royalties related to our licensing technology and intellectual property.

Payment Terms

Our payment terms vary by the type and location of customer and the products or services offered. Payment from customers is generally required in a term ranging from 30 to 45 days from date of shipment or satisfaction of the performance obligation with no discounts for early payment. Occasionally we do provide extended payment terms or financing arrangements to customers.

Disaggregated Revenue

When disaggregating revenue, we considered all of the economic factors that may affect revenues. The following tables disaggregate our revenue from contracts with customers by revenue type:

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended

(in thousands) NA EMEA Asia Pacific Total

Product revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Service and other revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Collaboration and license revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Collaboration and license revenue ​ $ 11,685 ​ $ 124 ​ $ — ​ $ 11,809

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended

(in thousands) NA EMEA Asia Pacific Total

Product revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Service and other revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Collaboration and license revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Collaboration and license revenue ​ $ 167 ​ $ 17 ​ $ — ​ $ 184

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Our contracts with customers may include promises to transfer multiple products and services to a customer. In accordance with ASC 606, we combine any performance obligations that are immaterial with one or more other performance obligations that are material to the contract. For arrangements with multiple performance obligations, we allocate the contract transaction price, including discounts, to each performance obligation based on its relative standalone selling price. Judgment is required to determine the standalone selling price for each distinct performance obligation. We determine standalone selling prices based on prices charged to customers in observable transactions, and use a range of amounts to estimate standalone selling prices for each performance obligation. We may have more than one range of standalone selling price for certain products and services based on the pricing for different customer classes.

Variable consideration in our contracts primarily relates to (i) sales- and usage-based royalties related to the license of intellectual property in collaboration and license contracts and (ii) certain non-fixed fee research services contracts. ASC 606 provides for an exception to estimating the variable consideration for sales- and usage-based royalties related to the license of intellectual property, such that the sales- or usage-based royalty will be recognized in the period the underlying transaction occurs. We have recorded sales- or usage-based royalty revenue for the year ended December 31, 2020 and 2019 related to the intellectual property licensed by Uman. We recognize revenues from sales-

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or usage based royalty revenue at the later of when the sales or usage occurs; and the satisfaction or partial satisfaction of the performance obligation to which the royalty has been allocated.

The aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied or are partially satisfied as of December 31, 2020 is $6.0 million. Of the performance obligations not yet satisfied or are partially satisfied, $5.4 million is expected to be recognized as revenue in the next 12 months, with the remainder to be recognized within the 24 months thereafter. The $5.4 million principally consists of amounts billed for undelivered services related to initial and extended service-type warranties and research services, as well as $0.5 million related to undelivered licenses of intellectual property for a diagnostics company. During the year ended December 31, 2020, we recognized $1.2 million of previously deferred revenue as a result of entering into a license agreement with a diagnostics company (see Note 13).

We have classified the balance of capitalized costs to obtain a contract as a component of prepaid expenses and other current assets as of December 31, 2020 and classified the expense as a component of cost of goods sold and selling, general and administrative expense over the estimated life of the contract. We consider potential impairment in these amounts each period.

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ASC 606 provides entities with certain practical expedients and accounting policy elections to minimize the cost and burden of adoption.

We exclude from the transaction price any amounts collected from customers related to sales and other similar taxes.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. We do not assess whether a significant financing component exists if the period between when we perform our obligations under the contract and when the customer pays is one year or less. None of our contracts contained a significant financing component for the years ended December 31, 2020 and 2019.

We have elected to account for the shipping and handling as an activity to fulfill the promise to transfer the product, and therefore will not evaluate whether shipping and handling activities are promised services to its customers.

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Grant Revenue

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We recognize grant revenue as we perform services under the arrangement when the funding is committed. Revenues and related research and development expenses are presented gross in the consolidated statements of operations as we have determined we are the primary obligor under the arrangement relative to the research and development services.

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Accounting for grants does not fall under ASC 606, as the grantor will not benefit directly from our expansion or product development. As there is no authoritative guidance under U.S. GAAP on accounting for grants to for-profit business entities, we have accounted for grants by analogy to IAS 20.

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Our grants contain both monetary amounts granted related to assets and monetary amounts granted related to income, which are grants other than those related to assets. The grants related to assets are for the expansion and increase of manufacturing capacity. The grants related to income are for additional research and development, as well as other non-asset related scale up costs. We determined it was appropriate to account for each monetary grant amount under the appropriate accounting treatment outlined in IAS 20.

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Under IAS 20, grants related to assets shall be presented in the consolidated balance sheets either by recognizing the grant as deferred income (which is recognized in the consolidated statements of operations on a systematic basis over the useful life of the asset), or by deducting the grant in calculating the carrying amount of the asset (which is recognized in the consolidated statements of operations over the life of the depreciable asset as a reduced

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depreciation expense). Both methods are acceptable under IAS 20. We have elected to record grants related to assets as a deduction in calculating the carrying value of the asset.

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Under IAS 20, grants related to income are presented as part of the consolidated statements of operations, either separately or under a general heading. Both methods are acceptable under IAS 20. We have elected to record grants related to income separately on the consolidated statements of operations as grant revenue. The related expenses are recorded within operating expenses and not deducted.

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On June 22, 2020, we entered into WP1 under the NIH’s RADx program to assess the feasibility of a novel SARS-CoV-2 antigen detection test using our Simoa technology. During the year ended December 31, 2020 we recognized $2.0 million of grant revenue and incurred $1.0 million in research and development expense related to WP1. WP1 is complete as of December 31, 2020.

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On September 29, 2020, we entered into WP2 with the NIH under its RADx program. The contract, which has a total award value of $18.2 million, accelerates the continued development, scale-up, and deployment of the novel SARS-CoV-2 antigen detection test using our Simoa technology. The contract provides funding to expand assay kit manufacturing capacity and commercial deployment readiness. Release of the $18.2 million of funding under WP2 is based on the achievement of certain milestones, and there is no assurance that we can meet all the milestones on a timely basis, if at all. If we do not meet all the milestones, we will not be able access the full $18.2 million in funding under the contract. During the year ended December 31, 2020 we recognized $4.4 million in grant revenue and incurred $2.6 million in research and development expense related to WP2.

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The following table summarizes the activity under WP2 as of December 31, 2020 (in thousands):

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Total grant revenue from research and development activities $ 4,362

Total proceeds used for assets ​ 826

Total deferred proceeds for assets ​ 2,478

Total deferred grant revenue ​ 304

Total recognized $ 7,970

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Total recognized $ 7,970

Total amount accrued ​ (2,968)

Total cash received $ 5,002

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Total proceeds received $ 5,002

Total proceeds reasonably assured ​ 13,198

Total WP2 grant amount $ 18,200

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Stock-Based Compensation

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We account for stock-based compensation awards in accordance with ASC 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Stock-based compensation awards have historically consisted of stock options and restricted stock. Prior to the adoption of Accounting Standards Update (ASU) No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07), the measurement date for non-employee awards was generally the date the services were completed, resulting in financial reporting period adjustments to stock-based compensation during the vesting period for changes in the fair value of the awards. We adopted ASU 2018-07 on January 1, 2020. After the adoption of ASU 2018-07, the measurement date for non-employee awards is the date of grant without changes in the fair value of the award. Stock-based compensation costs for non-employees are recognized as expense over the vesting period on a straight-line basis. There were no material non-employee awards outstanding during the years ended December 31, 2020, 2019, and 2018.

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We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

The fair value of stock options granted to employees and non-employees is estimated on the grant date using the Black-Scholes option-pricing model, based on the assumptions noted in the following table:

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​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Expected dividend yield None ​ None ​ None

Expected term (in years) 6.0 ​ 6.0 ​ 5.9

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Using the Black-Scholes option-pricing model, the weighted-average grant date fair value of options granted for the years ended December 31, 2020, 2019, and 2018 was $12.66, $9.09, and $7.19 per share, respectively. Expected volatility was calculated based on proportional weighting of reported volatility data for a representative group of guideline publicly traded companies for which historical information was available, as well as our stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, commensurate with the expected life assumption. We estimate the expected life of options granted to employees utilizing the simplified method which calculates the expected life of an option as the average of the time to vesting and contractual life of the options. The expected life is applied to the stock option grant group as a whole, as we do not expect substantially different exercise or post-vesting termination behavior among our employee population. We use the simplified method due to the lack of historical exercise data and the plain nature of the stock options. We use the remaining contractual term for the expected life of non-employee awards. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on common stock.

For the years ended December 31, 2020, 2019, and 2018 stock-based compensation expense was $10.1 million, $6.4 million, and $4.9 million, respectively.

The table below summarizes the stock-based compensation expense recognized in our statements of operations by classification (in thousands):

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​ ​ Year Ended December 31,

Cost of product revenue ​ $ 189 ​ $ 86 ​ $ 55

Cost of service and other revenue ​ 311 ​ 238 ​ 173

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As of December 31, 2020, we had $21.3 million of total unrecognized stock-based compensation costs which we expect to recognize over a weighted-average period of 4.7 years.

Prior to our initial public offering (IPO) in December 2017, the fair value of our common stock underlying our stock options was estimated on each grant date by our board of directors. In order to determine the fair value of our common stock underlying granted stock options, our board of directors considered, among other things, the most recent valuations of our common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Given the absence of a public trading market for our common stock, our board of directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair value of our common stock, including (1) our business, financial condition and results of operations, including related industry

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trends affecting our operations; (2) our forecasted operating performance and projected future cash flows discounted to present value using our estimated weighted average cost of capital; (3) the illiquid nature of our common stock; (4) liquidation preferences and other rights and privileges of our preferred stock over our common stock; (5) likeliness and estimated timing of the potential option to have our stock become publicly traded; (6) market multiples of our most comparable public peers; (7) recently completed equity financing transactions; and (8) market conditions affecting our industry.

Since the completion of our IPO, we have determined the fair value of each common share underlying share-based awards based on the closing price of our common shares as reported by Nasdaq on the date of grant.

Results of Operations

Comparison of the Years Ended December 31, 2020 and December 31, 2019 (dollars in thousands):

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​ ​ Year Ended ​ Year Ended ​ ​ ​

​ ​ December 31, ​ % of ​ December 31, ​ % of ​ $ ​ %

​ 2020 ​ revenue ​ 2019 ​ revenue ​ change ​ change

Cost of goods sold: ​ ​ ​ ​

Operating expenses: ​ ​ ​ ​ ​

Interest income (expense), net ​ (273) — % 627 1 % ` (900) (144) %

Other expense, net ​ (49) — % (10) — % (39) (390) %

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Revenue

Revenue increased by $29.6 million, or 52%, to $86.4 million for the year ended December 31, 2020 as compared to $56.7 million for the year ended December 31, 2019. Product revenue consisted of sales of instruments totaling $16.6 million and sales of consumables and other products of $27.4 million for the year ended December 31, 2020. Product revenue consisted of sales of instruments totaling $14.9 million and sales of consumables and other products totaling $25.6 million for the year ended December 31, 2019. Average sales prices of instruments and consumables did not change materially for the year ended December 31, 2020 as compared with the year ended December 31, 2019. The increase in product revenue of $3.5 million was due to the sale of more instruments for the year ended December 31, 2020 and increased sales of consumables. The installed base of instruments increased from December 31, 2019 to December 31, 2020, and as these additional instruments were used by customers, the consumables sales increased. The increase in service and other revenue of $8.1 million was primarily due to increased services performed in our Accelerator Laboratory; more customers use these services, and existing customers use these services more frequently. In addition, an increase in purchased warranties contributed to the service and other revenue increase. Collaboration and license revenue for the year ended December 31, 2020 of $11.8 million was related to entering into

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the Abbott License Agreement, and from existing contracts related to licensing technology and intellectual property. Collaboration and license revenue for the year ended December 31, 2019 of $0.2 million was related to licensing technology and intellectual property. Grant revenue of $6.4 million for the year ended December 31, 2020 consisted of revenue related to WP1 and WP2. We did not have any grant revenue during the year ended December 31, 2019.

Cost of Goods Sold and Services

Cost of product revenue increased by $5.1 million, or 24%, to $26.0 million for the year ended December 31, 2020 as compared to $20.9 million for the year ended December 31, 2019. The increase was primarily due to our product revenue increase, as well as a full year of costs incurred from the amortization of the Uman acquisition-related inventory valuation adjustment and acquired intangibles for the year ended December 31, 2020, as compared to only six months of these costs during the year ended December 31, 2019. Cost of service revenue increased to $11.2 million for the year ended December 31, 2020 from $9.0 million for the year ended December 31, 2019. The increase was primarily due to higher utilization of the Accelerator Laboratory, plus increased personnel costs from the build out of our field service and Accelerator organization. Cost of collaboration and license revenue of $1.0 million resulted from the licensing of certain technology and intellectual property to Abbott during the year ended December 31, 2020. No cost of collaboration and license revenue was incurred during the year ended December 31, 2019. Overall cost of goods sold and services as a percentage of revenue decreased to 44% of total revenue for the year ended December 31, 2020 as compared to 53% for the year ended December 31, 2019, primarily as a result of the significant increase in collaboration and license revenue.

Research and Development Expense

Research and development expense increased by $4.0 million, or 25%, to $20.2 million for the year ended December 31, 2020 as compared to $16.2 million for the year ended December 31, 2019. The increase was primarily due to compensation, development, materials, and other expenses related to work under WP1 and WP2 incurred during the year ended December 31, 2020.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $7.3 million, or 14%, to $59.6 million for the year ended December 31, 2020 as compared to $52.2 million for the year ended December 31, 2019. The increase was primarily due to headcount additions in various departments as we build out our organization to support growth.

Interest Income (Expense), Net and Other Expense, Net

Interest income (expense), net and other expense, net decreased by $0.9 million for the year ended December 31, 2020 as compared to the same period in 2019, primarily due to the unfavorable impact of COVID-19 on the interest rates of our cash equivalents during the year ended December 31, 2020.

Income Tax Benefit

Income tax benefit was $0.4 million for the year ended December 31, 2020 as compared to $0.2 million for the same period in 2019. The change is primarily due to the increase in the tax benefit recorded on the operating results of our foreign subsidiaries.

​

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Comparison of the Years Ended December 31, 2019 and December 31, 2018 (dollars in thousands):

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​ Year Ended ​ ​ ​

​ ​ December 31, ​ % of ​ December 31, ​ % of ​ $ ​ %

​ 2019 ​ revenue ​ 2018 ​ revenue ​ change ​ change

Grant revenue ​ ​ — ​ — % ​ ​ — ​ — % ​ ​ — ​ — %

Cost of goods sold: ​ ​ ​ ​ ​

Operating expenses: ​ ​ ​ ​ ​ ​ ​

Other expense, net ​ (10) — % (7) — % (3) (43) %

Income tax benefit (provision) ​ 187 — % (25) — % 212 848 %

​

Revenue

Revenue increased by $19.1 million, or 51%, to $56.7 million for the year ended December 31, 2019 as compared to $37.6 million for the year ended December 31, 2018. Product revenue consisted of sales of instruments totaling $14.9 million and sales of consumables and other products of $25.6 million for the year ended December 31, 2019. Product revenue consisted of sales of instruments totaling $9.6 million and sales of consumables and other products totaling $13.8 million for the year ended December 31, 2018. Average sales prices of instruments and consumables did not change materially for the year ended December 31, 2019 as compared with the year ended December 31, 2018. The increase in product revenue of $17.1 million was primarily due to the sale of more instruments for the year ended December 31, 2019 and increased sales of consumables. The installed base of instruments increased from December 31, 2018 to December 31, 2019, and as these additional instruments were used by customers, the consumables sales increased. The increase in service and other revenue of $3.9 million was primarily due to increased services performed in our Accelerator Laboratory; more customers use these services, and existing customers use these services more frequently. In addition, an increase in purchased warranties contributed to the service and other revenue increase. Collaboration and license revenue for the year ended December 31, 2019 of $0.2 million was related to licensing technology and intellectual property. Collaboration and license revenue for the year ended December 31, 2018 of $2.2 million was related to the termination of the collaboration arrangement with bioMérieux.

Cost of Goods Sold and Services

Cost of product revenue increased by $8.2 million, or 64%, to $20.9 million for the year ended December 31, 2019 as compared to $12.7 million for the year ended December 31, 2018. The increase was primarily due to an increase in sales of consumables and instruments, along with costs incurred from the amortization of the Uman acquisition-related inventory valuation adjustment and acquired intangibles. Cost of service revenue increased to $9.0 million for the year ended December 31, 2019 from $7.0 million for the year ended December 31, 2018. The increase was primarily due to higher utilization of the Accelerator Laboratory, plus increased personnel costs from the build out of our field service and Accelerator organization. Overall cost of goods sold and services as a percentage of revenue increased slightly to 53% of total revenue for the year ended December 31, 2019 as compared to 52% for the year ended

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December 31, 2018, primarily as a result of the impact of the collaboration arrangement with bioMérieux during the year ended December 31, 2018 and the impact of the Uman acquisition-related charges during the year ended December 31, 2019.

Research and Development Expense

Research and development expense increased slightly by $0.4 million, or 2%, to $16.2 million for the year ended December 31, 2019 as compared to $15.8 million for the year ended December 31, 2018. The increase was primarily due to the development of the SP-X and HD-X and increased headcount in research and development.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $18.6 million, or 55%, to $52.2 million for the year ended December 31, 2019 as compared to $33.7 million for the year ended December 31, 2018. The increase was primarily due to headcount additions in various departments as we build out our organization to support future growth, public company costs, the lease for the new headquarters, and stock-based compensation expense. In addition, we incurred approximately $1.9 million in costs associated with the acquisition of Uman during the year ended December 31, 2019.

Interest Income, Net and Other Expense, Net

Interest income, net and other expense, net increased by $0.6 million for the year ended December 31, 2019 as compared to the same period in 2018, primarily due to the interest income earned on cash equivalents, which increased due to our “at-the-market” and underwritten public offerings completed during 2019.

Income Tax Benefit (Provision)

Income tax benefit was $0.2 million for the year ended December 31, 2019 as compared to a provision of less than $0.1 million for the same period in 2018. The increase is primarily due to certain state and international taxes in 2019, which we did not have in the prior year.

Liquidity and Capital Resources

Since our inception, we have incurred annual net losses and negative cash flows from operations. We incurred net losses of $31.5 million, $40.8 million and $31.5 million and used $23.4 million, $26.2 million and $28.7 million of cash from our operating activities for the years ended December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020, we had an accumulated deficit of $247.8 million.

As of December 2020, we had cash and cash equivalents of $181.6 million and no additional amounts were available to borrow under our debt facility.

On February 3, 2021, we received approximately $269.6 million in net proceeds related to an underwritten public offering.

Sources of Liquidity

To date, we have financed our operations principally through equity offerings, borrowings from credit facilities and revenue from our commercial operations.

Equity Offerings

In December 2017, we completed our IPO in which we sold 4,916,480 shares of common stock at an initial public offering price of $15.00 per share. The aggregate net proceeds received by us from the offering, net of

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underwriting discounts and commissions and offering expenses, were $65.6 million. Prior to the IPO, we had raised capital through the sale of redeemable convertible preferred stock in private placement transactions.

On March 19, 2019, we entered into a Sales Agreement for an “at-the-market offering” arrangement with Cowen and Company, LLC (Cowen), which allowed us to issue and sell shares of common stock pursuant to a shelf registration statement for total gross sales proceeds of up to $50.0 million from time to time through Cowen, acting as our agent. During the year ended December 31, 2019, we sold an aggregate of 2,186,163 shares of common stock pursuant to this agreement resulting in $49.7 million in gross proceeds and $48.0 million in net proceeds. On August 6, 2020, we delivered written notice to Cowen to terminate the Sales Agreement, which termination the parties agreed to make immediately effective.

On August 8, 2019, we entered into an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, or Leerink, as representatives of the several underwriters, relating to an underwritten public offering of 2,732,673 shares of common stock at a public offering price of $25.25 per share. We received $69.0 million in gross proceeds and $64.5 million in net proceeds.

On August 6, 2020, we entered into an underwriting agreement with Leerink and Cowen, as representatives of the several underwriters, relating to an underwritten public offering of 3,048,774 shares of common stock at a public offering price of $32.00 per share. We received $97.6 million in gross proceeds and $91.4 million in net proceeds.

On February 3, 2021, we entered into an underwriting agreement with Goldman Sachs & Co. LLC, Leerink and Cowen, as representatives of the several underwriters, relating to an underwritten public offering of 4,107,142 shares of common stock at a public offering price of $70.00 per share. We received $287.5 million in gross proceeds and approximately $269.6 million in net proceeds.

​

Loan Facility with Hercules

​

On April 14, 2014, we executed a Loan Agreement with Hercules, as subsequently amended, most recently in April 2019. The Loan Agreement provided a total debt facility of $10.0 million, which is secured by substantially all of our assets. At closing, we borrowed $5.0 million in principal and had the ability to draw the additional $5.0 million over the period from November 1, 2014 to March 31, 2015. The interest rate on this term loan was variable based on a calculation of 8% plus the prime rate less 5.25%, with a minimum interest rate of 8%. Interest was to be paid monthly beginning the month following the borrowing date. Principal payments were scheduled to begin on September 1, 2015, unless we achieved certain milestones which would have extended this date to December 1, 2015 or March 1, 2016. In connection with the execution of the Loan Agreement, we issued Hercules a warrant to purchase up to 173,428 shares of our Series C Preferred Stock at an exercise price of $3.3299 per share. Upon closing of the IPO, this warrant was automatically converted into a warrant to purchase up to 53,960 shares of our common stock at an exercise price of $10.70 per share.

In August 2018, we signed Amendment 5 to the Loan Agreement, which extended the interest only payment period through March 1, 2020 and also extended the loan maturity date to March 1, 2020. We accounted for the August 2018 amendment as a modification pursuant to ASC 470-50 and determined that no material change occurred as a result of the modification. In addition, the amendment deferred the payment of principal until the maturity date. We paid $0.1 million in end of term payments related to Amendment 5 during the year ended December 31, 2020.

In October 2018, we signed Amendment 6 to the Loan Agreement, which amended the Loan Agreement's collateral clause to exclude the $1 million certificate of deposit associated with the lease on our new headquarters in Billerica, Massachusetts. The Loan Agreement and amendments contain end of term payments and are recorded in the debt accounts. We paid $0.5 million in end of term payments related to Amendment 6 during the year ended December 31, 2018.

On April 15, 2019, we entered into Amendment 7 to the Loan Agreement, which extended the interest only payment period through July 1, 2021 and also extended the loan maturity date to October 1, 2021. We are required to

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pay the loan principal in five equal monthly installments starting July 1, 2021 with the final principal payment to be made on October 1, 2021.

On July 2, 2019, 66,041 warrants were exercised by Hercules on a net, non-cash, basis. Per the terms of the warrant agreement, we issued 45,690 shares of common stock as a result of the net exercise. The Loan Agreement and amendments contain end of term payments and are recorded in the debt accounts. No end of term payments were paid in the year ended December 31, 2019. We paid $0.1 million in end of term payments related to Amendment 5 during the year ended December 31, 2020.

The Loan Agreement contains negative covenants restricting our activities, including limitations on dispositions, mergers or acquisitions, incurring indebtedness or liens, paying dividends or making investments and certain other business transactions. There are no financial covenants associated with the Loan Agreement. The obligations under the Loan Agreement are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in our business, operations or financial or other condition, which is subjective in nature. We have determined that the risk of subjective acceleration under the material adverse events clause is not probable and therefore have classified the outstanding principal in current and long-term liabilities based on scheduled principal payments.

Debt principal repayments, including the end of term fees, due as of December 31, 2020 are (in thousands):

​

​ ​ ​ ​

Years ending December 31, ​

​

Uman Acquisition

​

In August 2019, we completed the acquisition of Uman, in which we paid $15.7 million in cash to the shareholders of Uman. We funded this payment through our existing cash balances. In addition, we issued $5.5 million in stock in connection with the purchase of Uman. The acquisition closed with respect to 95% of the outstanding shares of capital stock of Uman on July 1, 2019 and with respect to the remaining 5% of the outstanding shares of capital stock of Uman on August 1, 2019.

​

Cash Flows

The following table presents our cash flows for each period presented (in thousands):

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Net cash used in operating activities ​ $ (23,365) ​ $ (26,187) ​ $ (28,721)

Net cash used in investing activities ​ (626) ​ (25,376) ​ (5,454)

Net cash provided by (used in) financing activities ​ 96,236 ​ 116,197 ​ (78)

​

Net Cash Used in Operating Activities

We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support the growth of our business. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure and this may continue in the future.

Net cash used in operating activities was $23.4 million during the year ended December 31, 2020. Net cash used in operating activities primarily consisted of net loss of $31.5 million offset by non-cash charges of $10.1 million of stock-based compensation expense and $4.3 million of depreciation and amortization expense. Cash used as a result of changes in operating assets and liabilities of $7.5 million was primarily due to an increase in an increase in accounts

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receivable of $6.2 million, an increase in inventory of $5.1 million, and an increase in prepaid expenses and other assets of $3.9 million, offset by a decrease in accrued compensation and benefits and other accrued expenses of $6.2 million.

Net cash used in operating activities was $26.2 million during the year ended December 31, 2019. Net cash used in operating activities primarily consisted of net loss of $40.8 million offset by non-cash charges of $6.4 million of stock-based compensation expense, $3.0 million of depreciation and amortization expense, and $0.6 of inventory valuation adjustment amortization. Cash provided as a result of changes in operating assets and liabilities of $4.4 million was primarily due to a $9.8 million increase in other non-current liabilities related to our lease, offset by an increase in accounts receivable of $3.4 million, and an increase in inventory of $3.4 million.

Net cash used in operating activities was $28.7 million during the year ended December 31, 2018. Net cash used in operating activities primarily consisted of net loss of $31.5 million, a decrease of $1.9 million in deferred revenue and an increase of $1.6 million in inventory, primarily offset by non-cash stock compensation expense of $4.9 million and an increase of $1.3 million in accounts payable.

Net Cash Used in Investing Activities

Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure and work force. We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods.

We used $0.6 million of cash in investing activities during the year ended December 31, 2020 consisting of $3.9 million in additions to property and equipment, offset by $3.3 million in grant proceeds related to assets acquired under WP2.

We used $25.4 million of cash in investing activities during the year ended December 31, 2019. The significant increase was related to the cash portion of the Uman acquisition, as well as the leasehold improvements for our headquarters, which is a component of our lease agreement.

We used $5.5 million of cash in investing activities during the year ended December 31, 2018 consisting of cash paid in the acquisition of Aushon, net of cash acquired, and for purchases of capital equipment to support our infrastructure.

Net Cash Provided by (Used in) Financing Activities

Historically, we have financed our operations principally through private placements of our convertible preferred stock and borrowings from credit facilities, the sale of shares of our common stock in our IPO or other offerings and revenues from our commercial operations.

Financing activities provided $96.2 million of cash during the year ended December 31, 2020, primarily from net proceeds of our underwritten public offering during the third quarter of 2020.

Financing activities provided $116.2 million of cash during the year ended December 31, 2019, primarily from proceeds of our “at-the-market” offering during the second quarter of 2019 and our underwritten public offering during the third quarter of 2019.

We used $0.1 million cash in financing activities during the year ended December 31, 2018, which primarily was from payments on debt of $1.9 million offset by cash generated by the exercise of stock options.

Capital Resources

We have not achieved profitability on an annual basis since our inception, and we expect to continue to incur net losses in the future. We also expect that our operating expenses will increase as we continue to increase our marketing efforts to drive adoption of our commercial products. Additionally, as a public company, we have incurred

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and will continue to incur significant audit, legal and other expenses that we did not incur as a private company. Our liquidity requirements have historically consisted, and we expect that they will continue to consist, of sales and marketing expenses, research and development expenses, working capital, debt service and general corporate expenses.

We believe cash generated from commercial sales, our current cash and cash equivalents, and interest income we earn on these balances will be sufficient to meet our anticipated operating cash requirements for at least the next 12 months. In the future, we expect our operating and capital expenditures to increase as we increase headcount, expand our sales and marketing activities and grow our customer base. Our estimates of the period of time through which our financial resources will be adequate to support our operations and the costs to support research and development and our sales and marketing activities are forward-looking statements and involve risks and uncertainties and actual results could vary materially and negatively as a result of a number of factors, including the factors discussed in Item 1A, “Risk Factors” of this Annual Report on Form 10-K. We have based our estimates on assumptions that may prove to be wrong and we could utilize our available capital resources sooner than we currently expect. Our future funding requirements will depend on many factors, including:

● market acceptance of our products;

● the cost of our research and development activities;

● the effect of competing technological and market developments.

​

We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products. We also may have to reduce marketing, customer support or other resources devoted to our products or cease operations.

If the conditions for raising capital are favorable, we may seek to finance future cash needs through public or private equity or debt offerings or other financings. On November 6, 2020, we filed an automatically effective shelf registration statement with the SEC. Each issuance of securities under the shelf registration statement will require the filing of a prospectus supplement identifying the amount and terms of securities to be issued. The registration statement does not limit the amount of securities that may be issued thereunder. Our ability to issue securities is subject to market conditions and other factors. This registration statement will expire on November 6, 2023, three years after its date of effectiveness.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

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Contractual Obligations, Commitments and Contingencies

The following table summarizes our contractual obligations as of December 31, 2020 (in thousands):

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Payments due by period

​ ​ through through and ​ ​

Contractual Obligations:(1) ​ ​ ​ ​ ​

We also have ongoing obligations related to license agreements which contain immaterial minimum annual payments that are credited against the actual royalty expense.

​

Purchase orders or contracts for the purchase of supplies and other goods and services are not included in the table above. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current procurement or development needs and are fulfilled by our vendors within short time horizons.

Loan Facility with Hercules

​

On April 14, 2014, we executed a Loan Agreement with Hercules, as subsequently amended, most recently in April 2019. The Loan Agreement provided a total debt facility of $10.0 million, which is secured by substantially all of our assets. At closing, we borrowed $5.0 million in principal and had the ability to draw the additional $5.0 million over the period from November 1, 2014 to March 31, 2015. The interest rate on this term loan was variable based on a calculation of 8% plus the prime rate less 5.25%, with a minimum interest rate of 8%. Interest was to be paid monthly beginning the month following the borrowing date. Principal payments were scheduled to begin on September 1, 2015, unless we achieved certain milestones which would have extended this date to December 1, 2015 or March 1, 2016. In connection with the execution of the Loan Agreement, we issued Hercules a warrant to purchase up to 173,428 shares of our Series C Preferred Stock at an exercise price of $3.3299 per share. Upon closing of the IPO, this warrant was automatically converted into a warrant to purchase up to 53,960 shares of our common stock at an exercise price of $10.70 per share.

Leases

On January 1, 2020, we adopted ASC Topic 842 – Leases (ASC 842) using the optional transition method allowing entities to recognize a cumulative effect adjustment to the opening balance sheet without restating comparative prior periods presented. ASC 842 requires a lessee to recognize assets and liabilities on the balance sheet for most leases and changes many key definitions, including the definition of a lease. Lessees will continue to differentiate between finance leases and operating, and classification will impact expense recognition.

We elected the following practical expedients for all lease asset classes, which must be elected as a package and applied consistently to all of its leases at the transition date: i) we did not reassess whether any expired or existing contracts are or contain leases; ii) we did not reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with ASC 840, Leases (ASC 840), are classified as operating leases); and iii) we did not reassess initial direct costs for any existing leases.

At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the

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balance sheet as right-of-use (ROU) assets and short-term and long-term lease liabilities, as applicable. We have elected the practical expedient not to recognize leases on the balance sheet with a term of twelve months or less. Our leases consist of office and lab space and office equipment. All of our leases are classified as operating, and options to renew a lease are only included in the lease term to the extent those options are reasonably certain to be exercised. Additionally, we elected to apply the practical expedient not to separate lease and nonlease components for all leases.

Operating lease liabilities and their corresponding ROU assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The rate implicit in lease contracts is typically not readily determinable and, as a result, we utilize its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments, for a similar term, in a similar economic environment. To estimate its incremental borrowing rate, a credit rating applicable to us is estimated using a synthetic credit rating analysis since we do not currently have a rating agency-based credit rating.

The adoption of ASC 842 resulted in the recognition of operating lease ROU assets and operating lease liabilities of $12.2 million and $22.8 million, respectively, on our consolidated balance sheet, with the difference between the ROU asset and lease liability primarily attributable to unamortized lease incentives and deferred rent related to the lease for our corporate headquarters at 900 Middlesex Turnpike in Billerica, Massachusetts (the 900 Middlesex Turnpike Lease).

We currently lease approximately 91,600 square feet of office, laboratory, and manufacturing space at our headquarters in Billerica, Massachusetts. The premises covered by this lease serves as our principal office and laboratory space effective the second quarter of 2019. The initial term of the lease is 11 years and five months beginning on April 1, 2019, and we have the option to extend the lease for two additional five-year periods.

We previously leased approximately 30,655 square feet of office, laboratory, and manufacturing space as our headquarters in Lexington, Massachusetts, which was to expire on June 30, 2020; however in November 2018, we agreed to terminate the lease with the lessor effective May 2019. The termination of the lease was connected to us signing the new lease in October 2018 for our new headquarters in Billerica. In addition, pursuant to our acquisition of Aushon in January 2018, we assumed a lease of approximately 21,500 square feet of office, laboratory, and manufacturing space in Billerica, Massachusetts, under a lease that was to expire on February 28, 2021; however, in August 2018, we exercised an option to terminate the lease effective as of September 1, 2019. We paid a termination fee of $75,000 in February 2019 in consideration for the early termination.

​

In addition, our subsidiary, Uman, leases a total of approximately 6,500 square feet of office, laboratory, manufacturing and storage space in Umeå, Sweden. These leases expire at various dates between May 31, 2020 and February 28, 2023.

​

Development and Supply Agreement

We do not have significant agreements, with the exception of the supply agreement with STRATEC for the purchase of supplies or other goods specifying minimum quantities or set prices that exceed our expected requirements for the next three to six months. STRATEC manufactured our HD-1 instrument and manufactures the HD-X that we commercialized in the second half of 2019. In 2013, we entered into the Supply Agreement with STRATEC which requires us to purchase a minimum number of commercial units over a seven-year period ending in May 2021. We could be obligated to pay a fee based on the shortfall of commercial units purchased compared to the required number. Based on the commercial units purchased as of December 31, 2020, we have satisfied our required minimum purchase amount per the supply agreement.

Also, if we terminate the Supply Agreement under certain circumstances and do not purchase up to a required number of commercial units, we would be required to issue warrants to purchase 93,341 shares of common stock at $0.003214 per share. We believe that we will not issue such warrants and therefore have not recorded any amounts related to the potential equity consideration.

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In August 2011, we entered into the Development Agreement with STRATEC, pursuant to which STRATEC undertook the development of the HD-1 for manufacture and sale to us or a partner whom we designate. During the year ended December 31, 2016, the Development Agreement was amended to modify the deliverables related to the final milestone, to agree on instrument design changes to be implemented, and to reduce the minimum purchase commitment in the Supply Agreement. Additionally, the parties agreed on additional development services for a total fee of $1.5 million, which was payable when development is completed and of which $0.9 million was paid in 2018 and $0.6 million was paid in 2019. The total amount included the final milestone payment that was due under the terms of the original agreement.

Backlog

We generally expect to ship all instrument and consumable orders received in a given period with the exception of orders received near the end of a fiscal quarter; and as a result, our backlog at the end of any period is typically insignificant.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We do not hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk

As we expand internationally our results of operations and cash flows will become increasingly subject to fluctuations due to changes in foreign currency exchange rates. Historically, the substantial majority of our revenue has been denominated in U.S. dollars. Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States, with a portion of expenses incurred in Canada, Europe, Japan and China. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. Fluctuations in currency exchange rates could harm our business in the future. The effect of a 10% adverse change in exchange rates on foreign denominated cash, receivables and payables as of December 31, 2020 would not have been material.

To date, we have not entered into any material foreign currency hedging contracts although we may do so in the future.

Interest Rate Sensitivity

We had cash and cash equivalents of $181.6 million as of December 31, 2020. These amounts were held primarily in cash on deposit with banks. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Declines in interest rates, however, will reduce future investment income. If overall interest rates had decreased by 10% during the periods presented, our interest income would not have been materially affected.

As of December 31, 2020, the principal amount of our term debt outstanding with Hercules was $7.7 million. If overall interest rates had increased by 10% during the periods presented, our interest expense would have increased by approximately $0.1 million on an annualized basis.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report on Form 10-K beginning on page F-1.

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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

Item 9A. CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures. Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-K, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in Internal Controls. There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during the fourth quarter of our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(c)Management’s Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under that framework, our management concluded that our internal controls over financial reporting were effective as of December 31, 2020.

(d)Attestation Report on Internal Control over Financial Reporting. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm on internal control over financial reporting due to the deferral allowed under the JOBS Act for emerging growth companies.

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Item 9B. OTHER INFORMATION

Not applicable.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 11. EXECUTIVE COMPENSATION

The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(1) Financial Statements

The consolidated financial statements are included beginning on page F-1 attached hereto and are filed as part of this Annual Report on Form 10-K.

(2) Financial Statement Schedules

Schedules have been omitted since they are either not required or not applicable or the information is otherwise included herein.

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(3) Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10-K:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

99

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

100

Table of Contents

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

101

Table of Contents

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

102

Table of Contents

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

21.1 ​ Subsidiaries of Registrant ​ X ​ ​ ​ ​ ​ ​

23.1 ​ Consent of Ernst & Young LLP ​ X ​ ​ ​ ​ ​ ​

101.INS ​ Inline XBRL Instance Document. ​ X ​ ​ ​ ​ ​ ​

101.SCH ​ Inline XBRL Taxonomy Extension Schema Document. ​ X ​ ​ ​ ​ ​ ​

101.DEF ​ Inline XBRL Taxonomy Extension Definition. ​ X ​ ​ ​ ​ ​ ​

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

101.PRE ​ Inline XBRL Taxonomy Presentation Linkbase Document. ​ X ​ ​ ​ ​ ​ ​

+ Management contract or compensatory plan or arrangement.

Item 16. FORM 10-K SUMMARY

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

QUANTERIX CORPORATION

​

Date: March 5, 2021 By: /s/ E. KEVIN HRUSOVSKY

​ ​ E. Kevin Hrusovsky

​ ​ Chairman, President and Chief Executive Officer

​

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

​

Signature Title Date

​ ​ ​ ​ ​

E. Kevin Hrusovsky

​ ​ ​ ​ ​

/s/ AMOL CHAUBAL ​ Chief Financial Officer ​ March 5, 2021

Amol Chaubal (principal financial officer and principal accounting officer)

​ ​ ​ ​ ​

/s/ KEITH L. CRANDELL ​ Director ​ March 5, 2021

Keith L. Crandell

​ ​ ​ ​ ​

/s/MARIJN DEKKERS ​ Director ​ March 5, 2021

Marijn Dekkers, Ph.D.

​ ​ ​ ​ ​

/s/ SARAH HLAVINKA ​ Director ​ March 5, 2021

Sarah Hlavinka ​ ​ ​ ​

​ ​ ​ ​ ​

/s/ MARTIN MADAUS, PH.D. ​ Director ​ March 5, 2021

Martin Madaus, Ph. D.

​ ​ ​ ​ ​

/s/ PAUL MEISTER ​ Director ​ March 5, 2021

Paul M. Meister

​ ​ ​ ​ ​

/s/ DAVID WALT, PH.D. ​ Director ​ March 5, 2021

David R. Walt, Ph.D.

​

​

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

QUANTERIX CORPORATION

Years ended December 31, 2020, 2019, and 2018

​

​

​ Page

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets F-3

Consolidated Statements of Operations F-4

Consolidated Statements of Comprehensive Loss F-5

Consolidated Statements of Cash Flows F-6

Consolidated Statements of Stockholders’ Equity F-7

Notes to Consolidated Financial Statements F-8

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​

​

F-1

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Report of Independent Registered Public Accounting Firm

​

To the Stockholders and the Board of Directors of Quanterix Corporation

​

Opinion on the Financial Statements

​

We have audited the accompanying consolidated balance sheets of Quanterix Corporation (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, and stockholders’ (deficit) equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

​

Adoption of ASU No. 2016-02

​

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in the year ended December 31, 2020 due to the adoption of Accounting Standards Update No. 2016-02, Leases, and the related amendments, using the modified retrospective method.

​

Basis for Opinion

​

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

​

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

​

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

​

/s/ Ernst & Young LLP

​

We have served as the Company’s auditor since 2008.

Boston, Massachusetts

March 5, 2021

​

​

​

F-2

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Quanterix Corporation

Consolidated Balance Sheets

(amounts in thousands, except share and per share data)

​

​ ​ ​ ​ ​ ​ ​

​ ​ ​

Assets ​ ​ ​ ​ ​ ​

Current assets: ​ ​ ​

Prepaid expenses and other current assets ​ 5,981 ​ 2,137

Right-of-use assets ​ ​ 11,995 ​ ​ —

Other non-current assets ​ 357 ​ 557

Liabilities and stockholders’ equity ​ ​

Current liabilities: ​ ​

Accrued compensation and benefits ​ 10,777 ​ 6,570

Current portion of long term debt ​ 7,673 ​ 75

Short term lease liabilities ​ ​ 1,234 ​ ​ —

Other current liabilities ​ ​ 3,054 ​ ​ 216

Deferred revenue, net of current portion ​ 577 ​ 466

Long term debt, net of current portion ​ — ​ 7,587

Long term lease liabilities ​ ​ 21,891 ​ ​ —

Other non-current liabilities ​ 2,649 ​ 13,407

Commitments and contingencies (Note 9) ​ ​

Stockholders’ equity: ​ ​

Common stock, $0.001 par value: ​ ​ ​ ​

Accumulated other comprehensive income (loss) ​ ​ 2,434 ​ ​ (153)

Total liabilities and stockholders’ equity ​ $ 271,045 ​ $ 169,951

​

​

See accompanying notes.

​

F-3

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Quanterix Corporation

Consolidated Statements of Operations

(amounts in thousands, except share and per share data)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Years Ended

​ ​ ​ December 31,

Grant revenue ​ ​ 6,422 ​ ​ — ​ ​ —

Costs of goods sold: ​ ​ ​

Total costs of goods sold, services, and licenses ​ 38,195 ​ 29,898 ​ 19,684

Operating expenses: ​ ​ ​

Interest income (expense), net ​ (273) ​ 627 ​ 46

Other expense, net ​ (49) ​ (10) ​ (7)

Income tax benefit (provision) ​ ​ 376 ​ ​ 187 ​ ​ (25)

Net loss per share, basic and diluted ​ $ (1.07) ​ $ (1.63) ​ $ (1.43)

​

See accompanying notes.

​

F-4

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​

​

​

Quanterix Corporation

Consolidated Statements of Comprehensive Loss

(amounts in thousands)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Years Ended December 31,

Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​

Cumulative translation adjustment ​ ​ 2,587 ​ ​ (153) ​ ​ —

Total other comprehensive income (loss) ​ ​ 2,587 ​ ​ (153) ​ ​ —

​

See accompanying notes.

​

​

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​

F-5

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Quanterix Corporation

Consolidated Statements of Cash Flows

(amounts in thousands)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ Year Ended December 31,

Operating activities ​ ​ ​

Depreciation and amortization expense ​ 4,312 ​ 3,009 ​ 1,352

Inventory step-up amortization ​ ​ 722 ​ ​ 611 ​ ​ —

Reduction in the carrying amounts of right-of-use assets ​ ​ 245 ​ ​ — ​ ​ —

Non-cash interest expense ​ 86 ​ 89 ​ 170

Loss (gain) on disposal of fixed assets ​ 171 ​ 140 ​ (14)

Changes in operating assets and liabilities: ​ ​ ​ ​ ​

Prepaid expenses and other assets ​ (3,927) ​ 289 ​ (1,828)

Other non-current assets ​ 198 ​ (21) ​ 267

Contract acquisition costs ​ ​ 87 ​ ​ 336 ​ ​ —

Operating lease liabilities ​ ​ 316 ​ ​ — ​ ​ —

Other non-current liabilities ​ ​ (488) ​ ​ 9,845 ​ ​ —