Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___ to___

Commission File Number: 001-40674

MaxCyte, Inc.

(Exact name of registrant as specified in its charter)


Delaware		52-2210438
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9713 Key West Avenue, Suite 400

Rockville, Maryland 20850

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (301) 944-1700

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	MXCT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒
Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2024, the registrant had 105,482,558 shares of common stock, $0.01 par value per share, issued and outstanding.

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Table of Contents

		Page No
PART I. FINANCIAL INFORMATION		3
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II. OTHER INFORMATION		31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

MaxCyte, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)


	September 30,		December 31,
	2024		2023
		(Unaudited)		(See Note 2)
Assets
Current assets:
Cash and cash equivalents	$	36,958	$	46,506
Short-term investments, at amortized cost		116,874		121,782
Accounts receivable, net		4,560		5,778
Inventory		10,393		12,229
Prepaid expenses and other current assets		4,124		3,899
Total current assets		172,909		190,194

Investments, non-current, at amortized cost		42,797		42,938
Property and equipment, net		20,967		23,513
Right-of-use asset - operating leases		10,888		11,241
Other assets		1,051		388
Total assets	$	248,612	$	268,274

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,865	$	743
Accrued expenses and other		8,196		11,269
Operating lease liability, current		907		774
Deferred revenue, current portion		6,653		5,069
Total current liabilities		17,621		17,855

Operating lease liability, net of current portion		17,412		17,969
Other liabilities		277		283
Total liabilities		35,310		36,107

Commitments and contingencies (Note 7)
Stockholders’ equity
Preferred stock, $0.01 par value; 5,000,000 shares authorized and no shares issued and outstanding at September 30, 2024 and December 31, 2023		—		—
Common stock, $0.01 par value; 400,000,000 shares authorized, 105,300,380 and 103,961,670 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		1,053		1,040
Additional paid-in capital		418,505		406,925
Accumulated deficit		(206,256)		(175,798)
Total stockholders’ equity		213,302		232,167
Total liabilities and stockholders’ equity	$	248,612	$	268,274

See accompanying notes to unaudited condensed consolidated financial statements.

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MaxCyte, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	8,164	$	8,004	$	29,934	$	25,623
Cost of goods sold		1,928		793		4,819		3,169
Gross profit		6,236		7,211		25,115		22,454

Operating expenses:
Research and development		5,316		6,264		17,613		17,975
Sales and marketing		6,207		7,046		20,188		19,778
General and administrative		7,745		6,820		22,487		21,982
Depreciation and amortization		1,021		1,033		3,123		2,922
Total operating expenses		20,289		21,163		63,411		62,657
Operating loss		(14,053)		(13,952)		(38,296)		(40,203)

Other income:
Interest income		2,496		2,701		7,838		7,558
Total other income		2,496		2,701		7,838		7,558
Loss before income taxes		(11,557)		(11,251)		(30,458)		(32,645)
Provision for income taxes		—		—		—		—
Net loss	$	(11,557)	$	(11,251)	$	(30,458)	$	(32,645)
Basic and diluted net loss per share	$	(0.11)	$	(0.11)	$	(0.29)	$	(0.32)
Weighted-average shares outstanding, basic and diluted		105,109,603		103,449,715		104,614,679		103,121,997

See accompanying notes to unaudited condensed consolidated financial statements.

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MaxCyte, Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share amounts)


								Total
	Common Stock			Additional		Accumulated		Stockholders’
	Shares	Amount		Paid-in Capital		Deficit		Equity
Balance at January 1, 2023	102,397,913	$	1,024	$	390,819	$	(137,875)	$	253,968
Stock-based compensation expense	—		—		3,277		—		3,277
Exercise of stock options	506,832		5		1,451		—		1,456
Net loss	—		—		—		(10,882)		(10,882)
Balance at March 31, 2023	102,904,745		1,029		395,547		(148,757)		247,819
Stock-based compensation expense	—		—		3,519		—		3,519
Exercise of stock options	229,840		2		155		—		157
Net loss	—		—		—		(10,512)		(10,512)
Balance at June 30, 2023	103,134,585		1,031		399,221		(159,269)		240,983
Stock-based compensation expense	—		—		3,609		—		3,609
Exercise of stock options	155,458		2		35		—		37
Vesting of restricted stock units	258,900		3		(3)		—		—
Net loss	—		—		—		(11,251)		(11,251)
Balance at September 30, 2023	103,548,943	$	1,036	$	402,862	$	(170,520)	$	233,378


								Total
	Common Stock			Additional		Accumulated		Stockholders’
	Shares	Amount		Paid-in Capital		Deficit		Equity
Balance at January 1, 2024	103,961,670	$	1,040	$	406,925	$	(175,798)	$	232,167
Stock-based compensation expense	—		—		3,015		—		3,015
Exercise of stock options	272,640		3		700		—		703
Vesting of restricted stock units	170,801		1		(1)		—		—
Net loss	—		—		—		(9,526)		(9,526)
Balance at March 31, 2024	104,405,111		1,044		410,639		(185,324)		226,359
Stock-based compensation expense	—		—		3,564		—		3,564
Exercise of stock options	335,837		3		445		—		448
Vesting of restricted stock units	13,966		—		—		—		—
Issuance of common stock under employee stock purchase plan	69,210		1		264		—		265
Net loss	—		—		—		(9,375)		(9,375)
Balance at June 30, 2024	104,824,124		1,048		414,912		(194,699)		221,261
Stock-based compensation expense	—		—		3,370		—		3,370
Vesting of restricted stock units	195,944		2		(2)		—		—
Exercise of stock options	280,312		3		225		—		228
Net loss	—		—		—		(11,557)		(11,557)
Balance at September 30, 2024	105,300,380	$	1,053	$	418,505	$	(206,256)	$	213,302

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

MaxCyte, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(30,458)	$	(32,645)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,258		3,069
Non-cash lease expense		353		286
Net book value of consigned equipment sold		35		80
Loss on disposal of fixed assets		462		2
Stock-based compensation		9,949		10,405
Credit loss (recovery) expense		(130)		221
Change in excess/obsolete inventory reserve		834		—
Amortization of discounts on investments		(5,052)		(5,123)

Changes in operating assets and liabilities:
Accounts receivable		1,348		3,571
Accounts receivable - TIA		—		1,912
Inventory		835		(4,088)
Prepaid expense and other current assets		(225)		(924)
Other assets		(732)		190
Accounts payable, accrued expenses and other		(1,420)		1,520
Operating lease liability		(424)		(13)
Deferred revenue		1,584		(1,127)
Other liabilities		(6)		(3)
Net cash used in operating activities		(19,789)		(22,667)

Cash flows from investing activities:
Purchases of investments		(118,339)		(185,621)
Maturities of investments		128,440		247,520
Purchases of property and equipment		(1,504)		(2,785)
Proceeds from sale of equipment		—		9
Net cash provided by investing activities		8,597		59,123

Cash flows from financing activities:
Proceeds from exercise of stock options		1,379		1,650
Proceeds from issuance of common stock under employee stock purchase plan		265		—
Net cash provided by financing activities		1,644		1,650
Net (decrease) increase in cash and cash equivalents		(9,548)		38,106
Cash and cash equivalents, beginning of period		46,506		11,064
Cash and cash equivalents, end of period	$	36,958	$	49,170

Supplemental disclosure of non-cash investing and financing activities:
Property and equipment purchases included in accounts payable and accrued expenses	$	35	$	287

See accompanying notes to unaudited condensed consolidated financial statements.

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MaxCyte, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except par value, share and per share amounts)

1. Organization and Description of Business

MaxCyte, Inc. (the “Company” or “MaxCyte”) was incorporated as a majority-owned subsidiary of EntreMed, Inc. (“EntreMed”) on July 31, 1998, under the laws and provisions of the State of Delaware and commenced operations on July 1, 1999. In November 2002, MaxCyte was recapitalized, and EntreMed was no longer deemed to control the Company.

MaxCyte is a global life sciences company focused on advancing the discovery, development, and commercialization of next-generation cell therapies. MaxCyte leverages its proprietary cell engineering technology platform to enable the programs of its biotechnology and pharmaceutical company customers who are engaged in cell therapy, including gene editing and immuno-oncology, as well as in drug discovery and development and biomanufacturing. The Company licenses and sells its instruments and technology and sells its consumables to developers of cell therapies and pharmaceutical and biotechnology companies for use in drug discovery and development and biomanufacturing.

The Company’s registration statement on Form S-1 related to its initial public offering of common stock (the “IPO”) in the United States of America (the “U.S.”) was declared effective on July 29, 2021, and the Company’s common stock began trading on the Nasdaq Global Select Market on July 30, 2021. On August 3, 2021, the Company sold 15,525,000 shares of common stock in the IPO at a price to the public of $13.00 per share, inclusive of 2,025,000 shares issued pursuant to the full exercise of the underwriters’ option to purchase additional shares. The IPO generated gross proceeds to the Company of $201,825. The Company received aggregate net proceeds of $184,268 from the IPO after deducting aggregate underwriting commissions and offering costs of $17,557.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”). In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows as of and for the periods presented. The condensed consolidated balance sheet at December 31, 2023 has been derived from audited consolidated financial statements as of that date. The unaudited condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year or any other future year or period. Certain information and notes disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2024 (the “2023 Form 10-K”).

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the notes to its audited consolidated financial statements for the year ended December 31, 2023 included in the 2023 Form 10-K and have not materially changed during the three and nine months ended September 30, 2024.

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Basis of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, CCTI, Inc. All significant intercompany balances have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to prior years’ financial statements to conform to current year presentation. These reclassifications had no effect on previously reported results of operations or accumulated deficit.

Concentration of Risk

The Company maintains its cash and cash equivalents with three financial institutions that management believes to be of high credit quality. At times, the Company’s cash balances may exceed federally insured limits and cash may also be deposited in foreign bank accounts that are not covered by federal deposit insurance. The Company does not believe that this results in any significant credit risk beyond the normal credit risk associated with commercial banking relationships.

Significant customers are those that accounted for 10% or more of the Company’s total revenue for the period or accounts receivable as of the end of a reporting period. During the three months ended September 30, 2024, one customer represented 30% of revenue. During the nine months ended September 30, 2024, two customers represented an aggregate of 32% of revenue. During the three and nine months ended September 30, 2023, two customers represented an aggregate of 27% and 26% of revenue, respectively. As of September 30, 2024, two customers accounted for an aggregate of 40% of accounts receivable. As of December 31, 2023, three customers accounted for an aggregate of 38% of accounts receivable.

Certain components included in the Company’s products are obtained from a single source or a limited group of suppliers. During the three and nine months ended September 30, 2024, 20% and 18%, respectively, of the Company’s additions to inventory were from one supplier. During the three and nine months ended September 30, 2023, the Company purchased 75% and 55%, respectively, of its inventory from three and one suppliers, respectively. As of September 30, 2024, one supplier accounted for 11% of the Company’s total accounts payable. As of December 31, 2023, no supplier accounted for 10% or more of the Company’s total accounts payable.

Accounts Receivable

Accounts receivable are reduced by an allowance for credit losses, if needed. The Company maintains an allowance for credit losses of an amount equal to anticipated future write-offs. The Company determined that no allowance was necessary as of September 30, 2024. The Company recorded an allowance for expected credit losses of $130 as of December 31, 2023.

Foreign Currency

The Company’s functional currency is the U.S. dollar; transactions denominated in foreign currencies are subject to currency risk. The Company recognized $2 and $36 in foreign currency transaction losses for the three months ended September 30, 2024 and 2023, respectively. The Company recognized $62 and $66 in foreign currency transaction losses for the nine months ended September 30, 2024 and 2023, respectively.

Leases

For transactions in which the Company is the lessee, at the inception of a contract, the Company determines if the arrangement is, or contains, a lease. See Note 7 for additional details about leases under which the Company is the lessee.

All transactions in which the Company is the lessor are short-term (one year or less) and have been classified as operating leases. All leases require upfront payments covering the full period of the lease and thus, there are no future payments expected to be received from existing leases. See Note 3 for details on revenue recognition related to lease agreements.

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Comprehensive Loss

For the three and nine months ended September 30, 2024 and 2023, comprehensive loss equaled net loss; therefore, a separate statement of comprehensive loss is not included in the accompanying condensed consolidated financial statements.

Loss Per Share

Basic loss per share is computed by dividing net loss available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options, restricted stock units, performance stock units and shares under employee stock purchase plans using the treasury stock method.

For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive. The number of anti-dilutive shares excluded from the computation of diluted loss per share, consisting of shares underlying stock options, restricted stock units, performance stock units, and shares under employee stock purchase plans was 17.0 million for the three and nine months ended September 30, 2024 and 17.1 million for the three and nine months ended September 30, 2023.

Recent Accounting Pronouncements

The Company has evaluated all issued and unadopted Accounting Standards Updates and believes the adoption of these standards will not have a material impact on its condensed financial statements.

3. Revenue

Revenue is principally from the sale of instruments and processing assemblies, extended warranties, and the lease of instruments, which lease agreements also include customer-specific milestone payments. In some arrangements, products and services have been sold together representing distinct performance obligations. In these arrangements, the Company allocates the sale price to the various performance obligations in the arrangement on a relative selling price basis. Under this basis, the Company determines the estimated selling price of each performance obligation in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis.

Revenue is recognized at the time control is transferred to the customer and the performance obligation is satisfied. Revenue from the sale of instruments and processing assemblies is generally recognized at the time of shipment to the customer, provided that no significant vendor obligations remain and collectability is reasonably assured. Revenue from equipment leases is recognized ratably over the contractual term of the lease agreement and when specific milestones are achieved by a customer. Licensing fee revenue is recognized ratably over the license period. Revenue from fees for research services is recognized when services have been provided.

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Disaggregation of Revenue

The following table depicts the disaggregation of revenue by type of contract:


	Three months ended September 30, 2024						Nine months ended September 30, 2024
	Revenue from		Revenue
	Contracts		from				Revenue from		Revenue
	with		Lease		Total		Contracts with		from Lease		Total
	Customers		Elements		Revenue		Customers		Elements		Revenue
Product sales	$	5,196	$	—	$	5,196	$	15,292	$	—	$	15,292
Lease elements		—		2,552		2,552		—		13,774		13,774
Other		416		—		416		868		—		868
Total	$	5,612	$	2,552	$	8,164	$	16,160	$	13,774	$	29,934


	Three months ended September 30, 2023						Nine months ended September 30, 2023
	Revenue from		Revenue
	Contracts		from				Revenue from		Revenue
	with		Lease		Total		Contracts with		from Lease		Total
	Customers		Elements		Revenue		Customers		Elements		Revenue
Product sales	$	3,898	$	—	$	3,898	$	14,107	$	—	$	14,107
Lease elements		—		3,848		3,848		—		10,882		10,882
Other		258		—		258		634		—		634
Total	$	4,156	$	3,848	$	8,004	$	14,741	$	10,882	$	25,623

Additional Disclosures Relating to Revenue from Contracts with Customers

Deferred revenue represents payments received for performance obligations not yet satisfied and is presented as current or long-term in the accompanying condensed consolidated balance sheets based on the expected timing and satisfaction of the underlying goods or services. Deferred revenue was $6,930 and $5,352 as of September 30, 2024 and December 31, 2023, respectively. During the three and nine months ended September 30, 2024, the Company recognized $1,464 and $4,689 of revenue, respectively, that was included in deferred revenue at the beginning of such periods. During the three and nine months ended September 30, 2023, the Company recognized $1,968 and $5,741 of revenue, respectively, that was included in deferred revenue at the beginning of such periods.

Remaining contract consideration for which revenue has not been recognized due to unsatisfied performance obligations with a duration greater than one year as of September 30, 2024 was $364, of which the Company expects to recognize $87 in one year or less, $87 in one to two years, $34 in two to three years, and $156 thereafter.

For the three and nine months ended September 30, 2024 and 2023, the Company did not incur, and therefore did not defer, any material incremental costs to obtain contracts or costs to fulfill contracts.

4. Stockholders’ Equity

Common Stock

During the nine months ended September 30, 2024, the Company issued 888,789 shares of common stock as a result of stock option exercises, receiving gross proceeds of $1,379, issued 380,711 shares from the vesting of restricted stock units, and issued 69,210 shares to employees pursuant to the MaxCyte, Inc. 2021 Employee Stock Purchase Plan, (the “ESPP”) receiving gross proceeds of $265.

Preferred Stock

The Company’s certificate of incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock, par value $0.01 per share. As of September 30, 2024 and December 31, 2023, no shares of preferred stock were issued or outstanding.

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Stock Incentive Plans

The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan (the “2016 Plan”) in January 2016 to provide for the awarding of (i) stock options, (ii) restricted stock, (iii) incentive shares, and (iv) performance awards, in each case, to employees, officers, and directors of the Company and to other individuals as determined by the Board of Directors.

In December 2021, the Company adopted the MaxCyte, Inc. 2021 Inducement Plan (the “Inducement Plan”) to provide for the awarding of (i) non-qualified stock options; (ii) stock appreciation rights; (iii) restricted stock awards; (iv) restricted stock unit awards; (v) performance awards; and (vi) other awards, in each case, only to persons eligible to receive grants of awards who satisfy the standards for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) or 5635(c)(3), if applicable, and the related guidance under Nasdaq IM 5635-1. The Board of Directors reserved 2,500,000 shares for issuance under the Inducement Plan.

In May 2022, the Company’s Board of Directors adopted, and in June 2022, the Company’s stockholders approved, the MaxCyte, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) to provide for the awarding of (i) incentive stock options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards, (vi) performance awards, and (vii) other awards. Following the approval of the 2022 Plan, no additional awards can be granted under the 2016 Plan or the Inducement Plan, but all outstanding awards will continue to remain subject to the terms of the applicable plan.

Upon the effectiveness of the 2022 Plan, a total of 3,692,397 shares were initially reserved for issuance pursuant to future awards under the 2022 Plan, consisting of 1,928,000 new shares and 1,764,397 shares previously available under the 2016 Plan. If and to the extent that outstanding options under the 2016 Plan or the Inducement Plan are forfeited, the shares underlying such forfeited options will become available for issuance under the 2022 Plan. At the Company’s Annual Meeting of Stockholders held on June 22, 2023, the Company’s stockholders voted to reserve an additional 6,069,000 shares of issuance pursuant to future awards under the 2022 Plan. At the Company’s Annual Meeting of Stockholders held on June 11, 2024, the Company’s stockholders approved to increase by 2,300,000 the maximum number of shares of common stock authorized to be issued under the 2022 Plan.

At September 30, 2024 and December 31, 2023, there were 6,645,000 and 6,202,000 shares, respectively, available to be issued under the 2022 Plan.

The value of an equity award is recognized as expense on a straight-line basis over the requisite service period. At September 30, 2024, total unrecognized compensation expense was $20,699, which will be recognized over an estimated weighted-average period of 2.3 years.

Stock Options

The weighted-average fair value of the stock options granted during the three months ended September 30, 2024 and 2023 was estimated to be $2.14 and $1.91, per option share, respectively. The weighted-average fair value of the stock options granted during the nine months ended September 30, 2024 and 2023 was estimated to be $2.27 and $2.03, per option share, respectively.

Restricted Stock Units (“RSUs”)

The weighted-average fair value of the RSUs granted during the three months ended September 30, 2024 and 2023 was estimated to be $4.02 and $4.18 per RSU, respectively. The weighted-average fair value of the RSUs granted during the nine months ended September 30, 2024 and 2023 was estimated to be $4.39 and $4.29 per RSU, respectively.

Performance Stock Units (“PSUs”)

During the nine months ended September 30, 2024, 550,838 PSUs were awarded to certain members of management and executive officers. The PSU awards represent a number of shares of common stock to be earned if a target level of performance, as approved by the Board of Directors, is achieved. The performance period continues through December

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31, 2026. The actual number of shares of common stock underlying the PSUs to be earned will be between 0% and 125% of the target number of PSUs, depending on the level of achievement of such performance metrics. The weighted-average fair value of the PSUs granted during the nine months ended September 30, 2024 was estimated to be $4.31 per PSU. As of September 30, 2024, the Company determined that it was probable that the grants will vest at 100% of the target number of PSUs. Stock-based compensation expense for the service period since the grant date of $199 and $594 was recognized in the three and nine months ended September 30, 2024, respectively. The Company did not issue PSUs prior to January 2024.

Employee Stock Purchase Plan (“ESPP”)

In May 2023, the Company commenced the initial offering under the ESPP. The ESPP provides an offering period of 24 months, with four purchase periods that are generally six months long (each, a “Purchase Period”). The third Purchase Period began on May 20, 2024. The weighted-average fair value of the shares under the ESPP for the nine months ended September 30, 2024 was $1.38 per share, which the Company will expense over the Purchase Period.

Stock-based Compensation Expense

The Company recorded stock-based compensation expense in the following expense categories of its unaudited condensed consolidated statements of operations:


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
General and administrative	$	1,815	$	1,591	$	5,336	$	4,559
Sales and marketing		788		815		2,238		2,415
Research and development		767		1,203		2,375		3,431
Total	$	3,370	$	3,609	$	9,949	$	10,405

5. Consolidated Balance Sheet Components

Inventory

Inventory is carried at the lower of cost or net realizable value. The following tables show the components of inventory:


	September 30,		December 31,
	2024		2023
Raw materials inventory	$	5,559	$	5,694
Finished goods inventory		4,529		5,977
Work in progress		305		558
Total inventory	$	10,393	$	12,229

The Company reserved $865 and $697 in inventory allowance as of September 30, 2024 and December 31, 2023, respectively.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method. Leasehold improvements are amortized over the shorter of the estimated lease term or useful life.

Property and equipment include capitalized costs to develop internal-use software. Applicable costs are capitalized during the development stage of the project and include direct internal costs, third-party costs and allocated interest expense as appropriate.

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Property and equipment consisted of the following:


	September 30,		December 31,
	2024		2023
Leasehold improvements	$	14,727	$	14,654
Furniture and equipment		11,981		12,288
Internal-use software		4,316		4,106
Instruments		2,026		2,441
Construction in process		536		310
Accumulated depreciation and amortization		(12,619)		(10,286)
Property and equipment, net	$	20,967	$	23,513

During the nine months ended September 30, 2024 and 2023, the Company transferred $167 and $136, respectively, of instruments previously classified as inventory to property and equipment leased to customers.

For the three and nine months ended September 30, 2024, the Company incurred depreciation and amortization expense of $1,066 and $3,258, respectively. For the three and nine months ended September 30, 2023, the Company incurred depreciation and amortization expense of $1,081 and $3,069, respectively.

6. Fair Value

The Company’s condensed consolidated balance sheets include various financial instruments (primarily cash and cash equivalents, accounts receivable and accounts payable) that are carried at cost, which approximates fair value due to the short-term nature of the instruments.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company had no financial assets or liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023.

Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Money market funds, U.S. Treasury securities and government agency bonds, commercial paper, and corporate debt instruments classified as held-to-maturity are measured at fair value on a non-recurring basis when they are deemed to be impaired on an other-than-temporary basis. The Company periodically reviews investments to assess for credit impairment. Based on its assessment, all unrecognized holding losses were due to factors other than credit loss, such as changes in interest rates. Therefore, no impairment was recognized during the three and nine months ended September 30, 2024 and 2023.

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The following table summarizes the Company’s financial instruments that were measured at fair value on a non-recurring basis as of September 30, 2024:


				Gross		Gross
		Amortized		unrecognized		unrecognized		Aggregate
Description	Classification	cost		holding gains		holding losses		fair value
Money market funds and cash equivalents	Cash equivalents	$	26,463	$	—	$	—	$	26,463
Commercial paper	Cash equivalents		4,950		2		—		4,952
Commercial paper	Short-term investments		55,690		66		—		55,756
U.S. Treasury securities and government agency bonds	Short-term investments		52,174		228		—		52,402
Corporate debt	Short-term investments		9,010		21		—		9,031
U.S. Treasury securities and government agency bonds	Long-term investments		39,866		322		(2)		40,186
Corporate debt	Long-term investments		2,931		34		—		2,965
Total cash equivalents, short-term investments and long-term investments		$	191,084	$	673	$	(2)	$	191,755

The following table summarizes the Company’s financial instruments that were measured at fair value on a non-recurring basis as of December 31, 2023:


				Gross		Gross
		Amortized		unrecognized		unrecognized		Aggregate
Description	Classification	cost		holding gains		holding losses		fair value
Money market funds and cash equivalents	Cash equivalents	$	22,693	$	—	$	—	$	22,693
U.S. Treasury securities and government agency bonds	Cash equivalents		20,986		3		—		20,989
Commercial paper	Short-term investments		107,131		100		(1)		107,230
U.S. Treasury securities and government agency bonds	Short‑term investments		14,651		28		(6)		14,673
U.S. Treasury securities and government agency bonds	Long-term investments		42,938		282		(2)		43,218
Total cash equivalents, short-term investments and long-term investments		$	208,399	$	413	$	(9)	$	208,803

Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company has no non-financial assets and liabilities that are measured at fair value on a recurring basis.

Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company measures its long-lived assets, including property and equipment, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be impaired. No impairment was recognized during the three and nine months ended September 30, 2024 and 2023.

7. Commitments and Contingencies

Operating Leases

In May 2021, the Company entered into a lease for its headquarters (the “Headquarters Lease”), consisting of an operating lease agreement, as amended, for new office, laboratory, manufacturing, and other space. The lease term expires on August 31, 2035. Under the Headquarters Lease, the Company has three five-year options to extend the term of the lease. However, the Company is not reasonably certain to exercise any of these options. During the three months ended September 30, 2024 and 2023, the Company paid $532 and $558 included in the measurement of lease liabilities, respectively. During the nine months ended September 30, 2024 and 2023, the Company paid $1,395 and $868 included in the measurement of lease liabilities, respectively.

The Company had no finance leases as of September 30, 2024 and December 31, 2023.

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The components of lease cost and supplemental balance sheet information for the Company’s lease portfolio were as follows:

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