XML 27 R8.htm IDEA: XBRL DOCUMENT

FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2025

Investments, All Other Investments [Abstract]


NOTE 2. FINANCIAL INSTRUMENTS


Fair Value of Financial Instruments

Fair value is the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value hierarchy established under U.S. GAAP requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:

•Level 1: quoted prices in active markets for identical assets or liabilities;

•Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We consider an active market as one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, we view an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our non-performance risk, or that of our counterparty, is considered in determining the fair values of liabilities and assets, respectively.

We classify our cash deposits and money market funds within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. We classify our investments as Level 2 instruments based on market pricing and other observable inputs. We did not classify any of our investments within Level 3 of the fair value hierarchy.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability.

The carrying amount of our accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other liabilities, current, approximate fair value due to their short maturities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis:


	September 30, 2025								December 31, 2024
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents	$	52,483	$	3,984	$	—	$	56,467	$	55,370	$	—	$	—	$	55,370
Investments:

Corporate debt securities	—		23,420		—		23,420		—		46,905		—		46,905
U.S. government & agency securities	—		218,767		—		218,767		—		287,656		—		287,656
Total investments	—		242,187		—		242,187		—		334,561		—		334,561

Short-term restricted cash	300		—		—		300		690		—		—		690
Long-term restricted cash	1,532		—		—		1,532		1,532		—		—		1,532
Total assets measured at fair value	$	54,315	$	246,171	$	—	$	300,486	$	57,592	$	334,561	$	—	$	392,153

Liabilities
Contingent consideration	$	—	$	—	$	—	$	—	$	—	$	—	$	18,700	$	18,700
Total liabilities measured at fair value	$	—	$	—	$	—	$	—	$	—	$	—	$	18,700	$	18,700

During the nine months ended September 30, 2025, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis, and our valuation techniques did not change compared to the prior year.

Contingent Consideration

In connection with the August 2023 Apton Biosystems, Inc. (“Apton”) acquisition, contingent consideration of $25.0 million, which we may elect to pay in cash, shares of our common stock or a combination of cash and shares of our common stock, is due upon the achievement of a milestone, defined as the achievement of $50.0 million in revenue associated with Apton's technology, provided that the milestone event occurs prior to the five-year anniversary of the closing date of the acquisition. The number of shares, if any, to be issued in connection with the achievement of the specified milestone is not known and will be calculated based on the daily volume-weighted average price of our common stock for the twenty trading days ending on and including the fifth trading day immediately prior to the occurrence of the specified milestone. Upon achievement of the milestone, we may pay cash in lieu of our common stock to ensure that the issuance of our common stock does not exceed 19.9% of our outstanding shares of common stock then outstanding.

The contingent consideration is accounted for as a liability at fair value, with changes during each reporting period recognized in our condensed consolidated statements of operations and comprehensive loss. The fair value of the contingent consideration liability was calculated using a Monte Carlo Simulation to estimate the volatility and systematic relative risk of revenues subject to sales milestone payments and discounting the associated cash payment amounts to their present values using a credit-risk-adjusted interest rate.

We classify contingent consideration within Level 3, as factors used to develop the estimate of fair value include unobservable inputs that are not supported by market activity and are significant to the fair value. Estimates and assumptions used in the Monte Carlo simulation include risk-adjusted forecasted revenues for products and services leveraging Apton's technology and an estimated credit spread.

We estimate the fair value of the contingent consideration liability based on the simulated revenue of the Company through the five-year anniversary of the closing date of the acquisition. The key input used in the determination of the fair value included projected revenues of the high-throughput short-read products and services leveraging Apton's technology. Primarily due to management's decision to cease development of the high-throughput short-read system, and the resulting changes in the expected future revenues, among other factors, and as the milestone event must occur prior to the five-year anniversary of the closing date of the acquisition, the estimated fair value of the contingent consideration liability is $0. An increase in the fair value of the liability may result from an acceleration in the timing of or increase in projected revenues and from a

decrease in discount rates, including the risk-free rate and estimated subordinated credit spread for a CCC credit rating.

Changes in the estimated fair value of the contingent consideration liability during the nine months ended September 30, 2025 were as follows:


(In thousands)	Level 3
Beginning balance as of December 31, 2024	$	18,700

Change in estimated fair value	(18,700)

Ending balance as of September 30, 2025	$	—

Changes to the fair value are recorded as change in fair value of contingent consideration in the condensed consolidated statements of operations and comprehensive loss.


Cash, Cash Equivalents, Restricted Cash, and Investments

The following tables summarize our cash, cash equivalents, restricted cash, and investments:


	As of September 30, 2025
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses		Fair Value
Cash and cash equivalents	$	56,467	$	—	$	—	$	56,467
Investments:

Corporate debt securities	23,298		123		(1)		23,420
U.S. government & agency securities	218,475		309		(17)		218,767
Total investments	241,773		432		(18)		242,187
Total cash, cash equivalents and investments	$	298,240	$	432	$	(18)	$	298,654

Short-term restricted cash	$	300	$	—	$	—	$	300
Long-term restricted cash	$	1,532	$	—	$	—	$	1,532

	As of December 31, 2024
(In thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses		Fair Value
Cash and cash equivalents	$	55,370	$	—	$	—	$	55,370
Investments:

Corporate debt securities	46,746		184		(25)		46,905
U.S. government & agency securities	287,393		418		(155)		287,656
Total investments	334,139		602		(180)		334,561
Total cash, cash equivalents and investments	$	389,509	$	602	$	(180)	$	389,931

Short-term restricted cash	$	690	$	—	$	—	$	690
Long-term restricted cash	$	1,532	$	—	$	—	$	1,532

The following table summarizes the contractual maturities of our cash equivalents and available-for-sale investments, excluding money market funds, as of September 30, 2025:


(In thousands)	Fair Value
Due in one year or less	$	181,705
Due after one year through five years	64,466
Total	$	246,171

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

Investment income included in other income, net on the condensed consolidated statements of operations and comprehensive loss was $3.1 million and $10.4 million for the three and nine months ended September 30, 2025, respectively, and $6.0 million and $19.8 million for the three and nine months ended September 30, 2024, respectively.