Stockholders' Equity	9 Months Ended
Sep. 30, 2021
Stockholders' Equity [Abstract]
Stockholders' Equity	NOTE 10. STOCKHOLDERS’ EQUITY Equity Plans At March 31, 2020, we had three active equity compensation plans: the 2010 Equity Incentive Plan (“2010 Plan”), the 2010 Outside Director Equity Incentive Plan (“2010 Director Plan”) and the 2010 Employee Stock Purchase Plan (“ESPP”). Our 2010 Plan and 2010 Director Plan expired on July 29, 2020.On August 4, 2020, stockholders approved our new 2020 Equity Incentive Plan (the “2020 Plan”) and reserved 11,000,000 shares of our common stock for issuance pursuant to equity awards granted under the 2020 Plan.On December 2, 2020, the Board of Directors (the “Board”) adopted the 2020 Inducement Equity Incentive Plan (the “Inducement Plan”) and reserved 2,500,000 shares of our common stock for issuance pursuant to equity awards granted under the Inducement Plan. On April 18, 2021, the Board amended the Inducement Plan to reserve an additional 750,000 shares of our common stock for issuance pursuant to equity awards granted under the Inducement Plan.On September 20, 2021, in connection with the acquisition of Omniome, we adopted the Omniome Equity Incentive Plan of Pacific Biosciences of California, Inc. (the “Omniome Plan”). Under the Omniome Merger Agreement, each unvested option to purchase Omniome common stock, granted under the Omniome Plan held by employees continuing with us, were assumed by PacBio and converted into an option to purchase shares of our common stock. The terms and conditions of the converted options are substantially the same (including vesting and exercisability), except that (A) the assumed options cover shares of PacBio’s common stock; (B) the number of shares of our common stock subject to the assumed option is equal to the product of (i) the number of shares of Omniome common stock subject to the corresponding unvested option, multiplied by (ii) the exchange ratio (as defined below), with any resulting fractional share rounded down to the nearest whole share; and (C) the exercise price per share of the assumed options is equal to the quotient of (i) the exercise price per share of the corresponding unvested option to purchase shares of Omniome common stock, divided by (ii) the exchange ratio (as defined below), with any resulting fractional cent rounded up to the nearest whole cent. The exchange ratio was equal to 0.259204639. We reserved 2,494,128 shares of our common stock for issuance pursuant to equity awards under the Omniome Plan. Stock OptionsTime-based stock optionsThe following table summarizes stock option activity for time-based awards under all our stock option plans for the nine months ended September 30, 2021 (in thousands, except per share amounts): Stock Options Outstanding Weighted Number average of shares Exercise price exercise priceOutstanding at December 31, 2020 14,638 $ 1.16 – 20.90 $ 5.53Granted 2,329 23.39 – 46.37 34.40Assumed Omniome options 339 2.05 – 4.90 4.43Exercised (4,406) 1.16 – 15.98 5.37Canceled (501) 2.54 – 46.37 5.28Outstanding at September 30, 2021 12,399 $1.16 – 46.37 $ 10.99 Performance-based stock optionsThe following table summarizes stock option activity for performance-based awards under all our stock option plans for the nine months ended September 30, 2021 (in thousands, except per share amounts): Stock Options Outstanding Weighted Number average of shares Exercise price exercise priceOutstanding at December 31, 2020 — $ — $ —Granted — — —Assumed Omniome options 304 4.71 - 4.90 4.71Exercised — — —Canceled — — —Outstanding at September 30, 2021 304 $4.71 - 4.90 $ 4.71 For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $23.0 million and $29.0 million, respectively, related to options. Restricted Stock Units (“RSUs”) Time-based RSUs The following table summarizes the time-based RSUs activity for the nine months ended September 30, 2021 (in thousands, except per share amounts): Weighted average Number grant date of shares fair valueOutstanding at December 31, 2020 5,919 $ 5.25Granted 3,030 37.92Released (1,759) 4.83Forfeited (355) 14.05Outstanding at September 30, 2021 6,835 $ 19.39 For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $7.7 million and $19.6 million, respectively, for time-based RSUs. Performance-based RSUs The following table summarizes the performance-based RSUs (“PSUs”) activity for the nine months ended September 30, 2021 (in thousands, except per share amounts): Weighted average Number grant date of shares fair valueOutstanding at December 31, 2020 94 $ 2.63Granted — —Released — —Forfeited (94) 2.63Outstanding at September 30, 2021 — $ — For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $0 for the performance-based RSUs. As of September 30, 2021, we had a total of 7.1 million shares of common stock available for future issuance under the 2020 Plan, the Inducement Plan and the Omniome Plan. Employee Stock Purchase Plan (“ESPP”)Shares issued under our ESPP were 1,913,968 and 834,677 during the nine months ended September 30, 2021 and 2020, respectively. In January 2021, an additional 3.8 million shares were reserved under the ESPP. As of September 30, 2021, 7,810,673 shares of our common stock remain available for issuance under our ESPP.For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $5.1 million and $13.1 million, respectively, for the ESPP. Stock-Based CompensationThe following table summarizes stock-based compensation expense (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of revenue$ 1,837 $ 735 $ 4,734 $ 1,714 Research and development 5,162 2,105 12,519 5,297 Sales, general and administrative 9,897 2,152 25,613 5,247 Merger-related expenses - stock-settled 6,349 — 6,349 — Merger-related expenses - milestone 5,202 — 5,202 —Stock-based compensation 28,447 4,992 54,417 12,258 Merger-related expenses - cash-settled 7,373 — 7,373 —Total stock-based compensation$ 35,820 $ 4,992 $ 61,790 $ 12,258 We estimate the fair value of employee stock options on the grant date using the Black-Scholes option pricing model. The estimated fair value of employee stock options is amortized on a straight-line basis over the requisite service period of the awards. The assumptions used for the specified periods and the resulting estimates of weighted-average fair value per share for shares to be issued upon exercise of our stock options were as follows: Three Months Ended September 30, Nine Months Ended September 30, Stock Option 2021 2020 2021 2020Expected term in years 2.1 - 4.6 5.1 2.1 - 4.6 5.1Expected volatility 67% - 80% 71% 67% - 80% 57% - 71%Risk-free interest rate 0.05% – 0.71% 0.30% 0.05% – 0.74% 0.3% - 1.2%Dividend yield — — — — Weighted average grant date fair value per share$5.97 $3.85 $15.63 $3.82 We estimate the value of employee stock purchase rights on the grant date using the Black-Scholes option pricing model. The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock to be issued under the ESPP were as follows: Three Months Ended September 30, Nine Months Ended September 30, ESPP 2021 2020 2021 2020Expected term in years 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0Expected volatility 67% 71% 67% - 68% 57% - 71%Risk-free interest rate 0.06% - 0.20% 0.1% 0.06% - 0.20% 0.1% - 1.0%Dividend yield — — — — Weighted average fair value per share$16.73 $3.13 $25.07 $1.87

Stockholders' Equity

9 Months Ended

Sep. 30, 2021

NOTE 10. STOCKHOLDERS’ EQUITY Equity Plans At March 31, 2020, we had three active equity compensation plans: the 2010 Equity Incentive Plan (“2010 Plan”), the 2010 Outside Director Equity Incentive Plan (“2010 Director Plan”) and the 2010 Employee Stock Purchase Plan (“ESPP”). Our 2010 Plan and 2010 Director Plan expired on July 29, 2020.On August 4, 2020, stockholders approved our new 2020 Equity Incentive Plan (the “2020 Plan”) and reserved 11,000,000 shares of our common stock for issuance pursuant to equity awards granted under the 2020 Plan.On December 2, 2020, the Board of Directors (the “Board”) adopted the 2020 Inducement Equity Incentive Plan (the “Inducement Plan”) and reserved 2,500,000 shares of our common stock for issuance pursuant to equity awards granted under the Inducement Plan. On April 18, 2021, the Board amended the Inducement Plan to reserve an additional 750,000 shares of our common stock for issuance pursuant to equity awards granted under the Inducement Plan.On September 20, 2021, in connection with the acquisition of Omniome, we adopted the Omniome Equity Incentive Plan of Pacific Biosciences of California, Inc. (the “Omniome Plan”). Under the Omniome Merger Agreement, each unvested option to purchase Omniome common stock, granted under the Omniome Plan held by employees continuing with us, were assumed by PacBio and converted into an option to purchase shares of our common stock. The terms and conditions of the converted options are substantially the same (including vesting and exercisability), except that (A) the assumed options cover shares of PacBio’s common stock; (B) the number of shares of our common stock subject to the assumed option is equal to the product of (i) the number of shares of Omniome common stock subject to the corresponding unvested option, multiplied by (ii) the exchange ratio (as defined below), with any resulting fractional share rounded down to the nearest whole share; and (C) the exercise price per share of the assumed options is equal to the quotient of (i) the exercise price per share of the corresponding unvested option to purchase shares of Omniome common stock, divided by (ii) the exchange ratio (as defined below), with any resulting fractional cent rounded up to the nearest whole cent. The exchange ratio was equal to 0.259204639. We reserved 2,494,128 shares of our common stock for issuance pursuant to equity awards under the Omniome Plan. Stock OptionsTime-based stock optionsThe following table summarizes stock option activity for time-based awards under all our stock option plans for the nine months ended September 30, 2021 (in thousands, except per share amounts): Stock Options Outstanding Weighted Number average of shares Exercise price exercise priceOutstanding at December 31, 2020 14,638 $ 1.16 – 20.90 $ 5.53Granted 2,329 23.39 – 46.37 34.40Assumed Omniome options 339 2.05 – 4.90 4.43Exercised (4,406) 1.16 – 15.98 5.37Canceled (501) 2.54 – 46.37 5.28Outstanding at September 30, 2021 12,399 $1.16 – 46.37 $ 10.99 Performance-based stock optionsThe following table summarizes stock option activity for performance-based awards under all our stock option plans for the nine months ended September 30, 2021 (in thousands, except per share amounts): Stock Options Outstanding Weighted Number average of shares Exercise price exercise priceOutstanding at December 31, 2020 — $ — $ —Granted — — —Assumed Omniome options 304 4.71 - 4.90 4.71Exercised — — —Canceled — — —Outstanding at September 30, 2021 304 $4.71 - 4.90 $ 4.71 For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $23.0 million and $29.0 million, respectively, related to options. Restricted Stock Units (“RSUs”) Time-based RSUs The following table summarizes the time-based RSUs activity for the nine months ended September 30, 2021 (in thousands, except per share amounts): Weighted average Number grant date of shares fair valueOutstanding at December 31, 2020 5,919 $ 5.25Granted 3,030 37.92Released (1,759) 4.83Forfeited (355) 14.05Outstanding at September 30, 2021 6,835 $ 19.39 For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $7.7 million and $19.6 million, respectively, for time-based RSUs. Performance-based RSUs The following table summarizes the performance-based RSUs (“PSUs”) activity for the nine months ended September 30, 2021 (in thousands, except per share amounts): Weighted average Number grant date of shares fair valueOutstanding at December 31, 2020 94 $ 2.63Granted — —Released — —Forfeited (94) 2.63Outstanding at September 30, 2021 — $ — For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $0 for the performance-based RSUs. As of September 30, 2021, we had a total of 7.1 million shares of common stock available for future issuance under the 2020 Plan, the Inducement Plan and the Omniome Plan. Employee Stock Purchase Plan (“ESPP”)Shares issued under our ESPP were 1,913,968 and 834,677 during the nine months ended September 30, 2021 and 2020, respectively. In January 2021, an additional 3.8 million shares were reserved under the ESPP. As of September 30, 2021, 7,810,673 shares of our common stock remain available for issuance under our ESPP.For the three and nine months ended September 30, 2021, we recognized stock-based compensation expense of $5.1 million and $13.1 million, respectively, for the ESPP. Stock-Based CompensationThe following table summarizes stock-based compensation expense (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of revenue$ 1,837 $ 735 $ 4,734 $ 1,714 Research and development 5,162 2,105 12,519 5,297 Sales, general and administrative 9,897 2,152 25,613 5,247 Merger-related expenses - stock-settled 6,349 — 6,349 — Merger-related expenses - milestone 5,202 — 5,202 —Stock-based compensation 28,447 4,992 54,417 12,258 Merger-related expenses - cash-settled 7,373 — 7,373 —Total stock-based compensation$ 35,820 $ 4,992 $ 61,790 $ 12,258 We estimate the fair value of employee stock options on the grant date using the Black-Scholes option pricing model. The estimated fair value of employee stock options is amortized on a straight-line basis over the requisite service period of the awards. The assumptions used for the specified periods and the resulting estimates of weighted-average fair value per share for shares to be issued upon exercise of our stock options were as follows: Three Months Ended September 30, Nine Months Ended September 30, Stock Option 2021 2020 2021 2020Expected term in years 2.1 - 4.6 5.1 2.1 - 4.6 5.1Expected volatility 67% - 80% 71% 67% - 80% 57% - 71%Risk-free interest rate 0.05% – 0.71% 0.30% 0.05% – 0.74% 0.3% - 1.2%Dividend yield — — — — Weighted average grant date fair value per share$5.97 $3.85 $15.63 $3.82 We estimate the value of employee stock purchase rights on the grant date using the Black-Scholes option pricing model. The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock to be issued under the ESPP were as follows: Three Months Ended September 30, Nine Months Ended September 30, ESPP 2021 2020 2021 2020Expected term in years 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0Expected volatility 67% 71% 67% - 68% 57% - 71%Risk-free interest rate 0.06% - 0.20% 0.1% 0.06% - 0.20% 0.1% - 1.0%Dividend yield — — — — Weighted average fair value per share$16.73 $3.13 $25.07 $1.87