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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">1.</em> Organization, Description of Business and Summary of Significant Accounting Policies</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Veracyte, Inc., or Veracyte, or the Company, is a global genomic diagnostics company that improves patient care by providing answers to clinical questions to inform diagnosis and treatment decisions throughout the patient journey in cancer and other diseases. The Company’s growing menu of genomic tests leverage advances in genomic science and technology to change care for patients, enabling them to avoid risky, costly procedures and quicken time to appropriate treatment. With Veracyte’s exclusive global access to a best-in-class diagnostics instrument platform, the Company is positioned to deliver its tests to patients worldwide through laboratories and hospitals that can perform the tests locally.</p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Veracyte was incorporated in the state of Delaware on <em style="font: inherit;"> August </em><em style="font: inherit;">15,</em> <em style="font: inherit;">2006</em> as Calderome, Inc. Calderome operated as an incubator until early <em style="font: inherit;">2008.</em> On <em style="font: inherit;"> March </em><em style="font: inherit;">4,</em> <em style="font: inherit;">2008,</em> the Company changed its name to Veracyte, Inc. The Company’s operations are based in South San Francisco, California and Austin, Texas, and it operates in <span style="-sec-ix-hidden:c63180472">one</span> segment.</p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company performs its genomic tests for thyroid cancer, lung cancer and idiopathic pulmonary fibrosis, or IPF, in its CLIA-certified laboratory in South San Francisco, California. In <em style="font: inherit;"> December 2019, </em>the Company announced the exclusive global diagnostics license to the NanoString nCounter Analysis System, and the acquisition of the Prosigna breast cancer prognostic gene signature assay, which is commercially available, and the LymphMark lymphoma subtyping assay, which is in development. Both tests are designed for use on the nCounter system.</p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">The Company offers genomic tests in <span style="-sec-ix-hidden:c63180475">four</span> disease areas: thyroid cancer; lung cancer; IPF and breast cancer.</p>
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<p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 54pt; text-align: justify;"><i><b>Thyroid Cancer - Afirma Genomic Sequencing Classifier and Xpression Atlas.</b></i> The Company's Afirma offerings comprise the Afirma GSC and Xpression Atlas, which help guide next steps for patients with potentially cancerous thyroid nodules. The offerings are intended to provide physicians with clinically actionable results from a single fine needle aspiration, or FNA biopsy. The Afirma GSC was developed with RNA whole-transcriptome sequencing and machine learning, and is used to identify patients with benign thyroid nodules among those with indeterminate cytopathology results in order to rule out unnecessary thyroid surgery.</p>
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<p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 54pt; text-align: justify;">The Afirma Xpression Atlas complements the Afirma GSC by providing genomic alteration content from the same FNA samples used in Afirma GSC testing to help physicians decide with greater confidence on the surgical or therapeutic pathway for their patients. The Company commercially launched the Afirma Xpression Atlas in <em style="font: inherit;">2018</em> and in <em style="font: inherit;"> April 2020 </em>introduced an expanded version of the test, which includes significantly more genomic content.</p>
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<p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 54pt; text-align: justify;"><i><b>Lung Cancer - Percepta Genomic Sequencing Classifier.</b></i> The Percepta classifier improves lung cancer diagnosis when diagnostic bronchoscopy results are inconclusive. This <em style="font: inherit;">second</em>-generation test was developed using the Company's RNA whole-transcriptome sequencing and machine learning platform and was commercially introduced in <em style="font: inherit;"> June 2019. </em>The Percepta classifier identifies patients with lung nodules who are at low risk of cancer and <em style="font: inherit;"> may </em>avoid further, invasive procedures as well as patients at high risk of cancer so they <em style="font: inherit;"> may </em>obtain faster diagnosis and treatment. The test is built upon foundational "field of injury" science - through which genomic changes associated with lung cancer in current and former smokers can be identified with a simple brushing of a person's airway - without the need to sample the often hard-to-reach nodule directly.</p>
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<p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 54pt; text-align: justify;"><i><b>IPF - Envisia Genomic Classifier.</b></i> The Envisia classifier improves diagnosis of IPF by helping physicians better differentiate IPF from other interstitial lung diseases, or ILDs, without the need for surgery. The test identifies the genomic pattern of usual interstitial pneumonia, or UIP, a hallmark of IPF, with high accuracy on patient samples that are obtained through transbronchial biopsy, a nonsurgical procedure that is commonly used in lung evaluation.</p>
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<p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 54pt; text-align: justify;"><i><b>Breast Cancer - Prosigna Breast Cancer Prognostic Gene Signature Assay.</b></i> The Prosigna test, acquired in <em style="font: inherit;"> December 2019 </em>through the Company's strategic transaction with NanoString Technologies, Inc., or NanoString, uses advanced genomic technology to inform next steps for patients with early-stage breast cancer, based on the genomic make-up of their disease. The test uses a set of <em style="font: inherit;">50</em> genes known as the <em style="font: inherit;">PAM50</em> gene signature and can provide a breast cancer patient and physician with prognostic score that indicates the probability of cancer recurrence over <em style="font: inherit;">ten</em> years. Physicians use Prosigna to help guide therapeutic decisions so that patients receive a therapeutic intervention, such as chemotherapy, only if clinically warranted. Patient test results outside of the United States include intrinsic breast cancer subtypes to complement the risk-of-recurrence score.</p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company’s approach also provides multiple opportunities for partnerships with biopharmaceutical and diagnostic testing companies. In developing its products, the Company has built or gained access to unique biorepositories, proprietary technology and bioinformatics that it believes are important to the development of new targeted therapies, determining clinical trial eligibility and guiding treatment selection. Additionally, the Company believes that the nCounter system, with its ability to simultaneously analyze RNA, DNA or protein targets in up to <em style="font: inherit;">800</em> genes; its ease of use, and its need for minimal hands-on time, provides an attractive distributed platform for other diagnostic companies seeking to make their genomic tests available to international markets.</p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company's testing services are performed in its clinical reference laboratories located in South San Francisco, California and Austin, Texas. The Prosigna test kits and associated products are sold to laboratories and hospitals in global markets.</p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Basis of Presentation</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of <em style="font: inherit;"> June 30, 2020</em>, the condensed consolidated statements of operations and comprehensive loss for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em>, the condensed consolidated statements of stockholders' equity for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em>, and the condensed consolidated statements of cash flows for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em> are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results, stockholders' equity and cash flows for the periods presented. The condensed consolidated balance sheet at <em style="font: inherit;"> December 31, 2019</em> has been derived from audited financial statements. The results for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em> are <em style="font: inherit;">not</em> necessarily indicative of the results expected for the full year or any other period.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The accompanying interim period condensed consolidated financial statements and related financial information included in this Quarterly Report on Form <em style="font: inherit;">10</em>-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form <em style="font: inherit;">10</em>-K for the year ended <em style="font: inherit;"> December 31, 2019</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Reclassifications</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Certain prior period balances have been reclassified to conform to current period presentation of the Company’s condensed consolidated financial statements and accompanying notes. Such reclassifications have <em style="font: inherit;">no</em> effect on previously reported results of operations, retained earnings or consolidated balance sheet totals; however, for the period ended <em style="font: inherit;"> June 30, 2019</em>, the Company reclassified $431,000 of changes in operating assets and liabilities to noncash lease expense in the statement of cash flows.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Use of Estimates</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The preparation of unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Items subject to such estimates include: revenue recognition; write-down of supplies; the useful lives of property and equipment; the recoverability of long-lived assets; the incremental borrowing rate for leases; the estimation of the fair value of intangible assets and contingent consideration; stock options; income tax uncertainties, including a valuation allowance for deferred tax assets; reserve on accounts receivable and contingencies. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are <em style="font: inherit;">not</em> readily apparent from other sources. Actual results could differ from those estimates and assumptions.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Issuance of Common Stock in a Public Offering</b></i></p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On <em style="font: inherit;"> May 7, 2019, </em>the Company issued and sold 6,325,000 shares of common stock in a registered public offering, including 825,000 shares issued and sold upon the underwriters’ exercise in full of their option to purchase additional shares, at a price to the public of $23.25 per share. The Company's net proceeds from the offering were approximately $137.8 million, after deducting underwriting discounts and commissions and offering expenses of $9.2 million.</p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Cash and Cash Equivalents</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company considers demand deposits in a bank, money market funds and highly liquid investments with an original maturity of <em style="font: inherit;">90</em> days or less to be cash equivalents. Cash equivalents include overnight reverse repurchase agreements which are tri-party repurchase agreements and have maturities of <em style="font: inherit;">three</em> months or less at the time of investment and are collateralized by U.S. treasury and agency securities of at least 102% of the principal amount. In a tri-party repurchase agreement, a <em style="font: inherit;">third</em>-party custodian bank functions as an independent intermediary to facilitate transfer of cash and holding the collateral on behalf of the underlying investor for the term of the agreement thereby minimizing risk and exposure to both parties. These overnight reverse repurchase agreements are included within cash equivalents due to their high liquidity and relatively low risk. There were <span style="-sec-ix-hidden:c63180523">no</span> overnight reverse repurchase agreements at <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Concentrations of Credit Risk and Other Risks and Uncertainties</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The worldwide spread of coronavirus, or COVID-<em style="font: inherit;">19,</em> has created significant uncertainty in the global economy. There have been <em style="font: inherit;">no</em> comparable recent events that provide guidance as to the effect the spread of COVID-<em style="font: inherit;">19</em> as a global pandemic <em style="font: inherit;"> may </em>have, and, as a result, the ultimate impact of COVID-<em style="font: inherit;">19</em> and the extent to which COVID-<em style="font: inherit;">19</em> impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict. If the financial markets or the overall economy are impacted for an extended period, the Company’s liquidity, revenues, supplies, goodwill and intangibles <em style="font: inherit;"> may </em>be adversely affected</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The majority of the Company’s cash and cash equivalents are deposited with <em style="font: inherit;">one</em> major financial institution in the United States. Deposits in this institution <em style="font: inherit;"> may </em>exceed the amount of insurance provided on such deposits. The Company has <em style="font: inherit;">not</em> experienced any losses on its deposits of cash and cash equivalents.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Several of the components of the Company’s sample collection kits and test reagents, and its nCounter Analysis System and related diagnostic kits are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, it could suffer delays in being able to deliver its diagnostic solutions, a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company is also subject to credit risk from its accounts receivable related to its sales. Credit risk for accounts receivable from testing revenue is incorporated in testing revenue accrual rates as the Company assesses historical collection rates and current developments to determine accrual rates and amounts the Company will ultimately collect. The Company generally does <em style="font: inherit;">not</em> perform evaluations of customers’ financial condition for testing revenue and generally does <em style="font: inherit;">not</em> require collateral. The Company assesses credit risk and the amount of accounts receivable the Company will ultimately collect for product, biopharmaceutical and collaboration revenue based on collection history, current developments and credit worthiness of the customer. The estimate of credit losses is <em style="font: inherit;">not</em> material at <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Through <em style="font: inherit;"> June 30, 2020</em>, most of the Company’s revenue has been derived from the sale of Afirma. To date, Afirma has been delivered primarily to physicians in the United States. The Company’s <em style="font: inherit;">third</em>-party payers and other customers in excess of <em style="font: inherit;">10%</em> of total revenue and their related revenue as a percentage of total revenue were as follows:</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Three Months Ended June 30,</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Six Months Ended June 30,</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2020</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2020</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 52%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Medicare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">18</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">26</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">23</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">24</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Johnson and Johnson Services, Inc.</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">12</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">UnitedHealthcare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">28</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">48</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">33</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">47</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td></tr>
</tbody></table>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><sup style="vertical-align:top;line-height:120%;font-size:pt">*Less than <em style="font: inherit;">10%</em></sup></p> </td></tr>
</tbody></table> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company’s <em style="font: inherit;">third</em>-party payers and other customers in excess of <em style="font: inherit;">10%</em> of accounts receivable and their related accounts receivable balance as a percentage of total accounts receivable were as follows at the following dates:</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">Johnson and Johnson Services, Inc.</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">%</td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Medicare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">*Less than 10%</p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"/>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b/></i></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Restricted Cash</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company had deposits of $603,000 included in long-term assets as of <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>, restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the Company’s South San Francisco facility.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b/></i></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Revenue Recognition</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"><b>Testing Revenue</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company recognizes testing revenue in accordance with the provisions of ASC <em style="font: inherit;">606,</em> Revenue from Contracts with Customers, or ASC <em style="font: inherit;">606.</em> Most of the Company’s revenue is generated from the provision of testing services. These services are completed upon the delivery of test results to the prescribing physician, at which time the Company bills for the services. The Company recognizes revenue related to billings based on estimates of the amount that will ultimately be realized. In determining the amount to accrue for a delivered test, the Company considers factors such as payment history, payer coverage, whether there is a reimbursement contract between the payer and the Company, payment as a percentage of agreed upon rate (if applicable), amount paid per test and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the <em style="font: inherit;">first</em> half of <em style="font: inherit;">2020,</em> the Company changed its revenue estimates due to actual and anticipated cash collections for tests delivered in prior quarters and recognized additional revenue of $0.9 million and $0.7 million for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020, </em>respectively. These adjustments resulted in decreases in the Company's loss from operations of $0.9 million and $0.7 million and a decrease in basic and diluted net loss per share of $0.02 and $0.01 for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020, </em>respectively.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">During the <em style="font: inherit;">first</em> half of <em style="font: inherit;">2019,</em> the Company changed its revenue estimates due to actual and anticipated cash collections for tests delivered in prior quarters and recognized additional revenue of $0.1 million and $0.8 million for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2019, </em>respectively. These adjustments resulted in decreases in the Company's loss from operations of $0.1 million and $0.8 million and a decrease in basic and diluted net loss per share of $0.01 and $0.02 for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2019, </em>respectively.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;"><b>Product Revenue</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company began recognizing product revenue in <em style="font: inherit;"> December 2019, </em>when the Company executed an agreement with NanoString for the exclusive global license to the nCounter platform and acquisition of products for diagnostic use. More details on this agreement are in Note <em style="font: inherit;">4</em> - Business Combination.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Product revenue from instruments and diagnostic kits is recognized generally upon shipment or when the instrument is ready for use by the end customer, which is when title of the product has been transferred to the customer. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. Performance obligations are considered satisfied once the Company has transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. The Company recognizes product revenue for satisfied performance obligations only when there are <em style="font: inherit;">no</em> uncertainties regarding payment terms or transfer of control. Shipping and handling costs incurred for product shipments are charged to the Company's customers and included in product revenue. Revenues are presented net of the taxes that are collected from customers and remitted to governmental authorities.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"><b>Biopharmaceutical and Collaboration Revenue</b></p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">From time to time, the Company enters into arrangements for research and development and/or laboratory services. Such arrangements <em style="font: inherit;"> may </em>require the Company to deliver various rights, services and/or samples, including intellectual property rights/licenses, R&D services, and/or laboratory services. The underlying terms of these arrangements generally provide for consideration to the Company in the form of nonrefundable upfront license fees, development and commercial performance milestone payments, royalty payments, and/or profit sharing.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In arrangements involving more than <em style="font: inherit;">one</em> performance obligation, each required performance obligation is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects the Company's best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis or using an adjusted market assessment approach if selling price on a stand-alone basis is <em style="font: inherit;">not</em> available.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The consideration allocated to each distinct performance obligation is recognized as revenue when control of the related goods is transferred or services are performed. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will <em style="font: inherit;">not</em> occur. Should there be royalties, the Company utilizes the sales and usage-based royalty exception in arrangements that resulted from the license of intellectual property, recognizing revenues generated from royalties or profit sharing as the underlying sales occur.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"><b>Collaborative Arrangements</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company enters into collaborative arrangements with partners that fall under the scope of ASC Topic <em style="font: inherit;">808,</em> Collaborative Arrangements, or ASC <em style="font: inherit;">808.</em> While these arrangements are in the scope of ASC <em style="font: inherit;">808,</em> the Company <em style="font: inherit;"> may </em>analogize to ASC <em style="font: inherit;">606</em> for some aspects of these arrangements. The Company analogizes to ASC <em style="font: inherit;">606</em> for certain activities within the collaborative arrangement for the delivery of a good or service (i.e., a unit of account) that is part of its ongoing major or central operations.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The terms of the Company’s collaborative arrangements typically include <em style="font: inherit;">one</em> or more of the following: (i) up-front fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; and (iii) royalties on net sales of licensed products. Each of these payments <em style="font: inherit;"> may </em>result in collaboration revenues or an offset against research and development expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Net sales of data or other services to our customers are classified under biopharmaceutical revenue, and all other non-customer revenue are classified under collaboration revenue in our consolidated statements of operations and comprehensive loss. There was no collaboration revenue in the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. Generally, the estimation of the stand-alone selling price <em style="font: inherit;"> may </em>include such estimates as independent evidence of market price, forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and it measures the services delivered to the collaborative partner which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Up-front Fees: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Milestone Payments: At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would <em style="font: inherit;">not</em> occur, the associated milestone value is included in the transaction price. Milestone payments that are <em style="font: inherit;">not</em> within the Company’s or the collaborative partner’s control, such as non-operational developmental and regulatory approvals, are generally <em style="font: inherit;">not</em> considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or the collaborative partner’s control, such as operational developmental milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price <em style="font: inherit;"> may </em>also result in negative collaboration revenues and earnings in the period of adjustment.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;"><i><b>Services Agreement with Loxo Oncology</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> April 9, 2018, </em>the Company entered into an agreement with Loxo Oncology, Inc., or Loxo, whereby the Company agreed to provide certain tissue samples and other services in exchange for agreed-upon fees. The agreement has a term of <span style="-sec-ix-hidden:c63180588">one</span> year with an automatic renewal of <span style="-sec-ix-hidden:c63180589">one</span> year and Loxo <em style="font: inherit;"> may </em>terminate the agreement at any time with at least 90 days' notice. As of <em style="font: inherit;"> June 30, 2020</em>, the agreement has <em style="font: inherit;">not</em> been terminated. The Company evaluated the accounting for this agreement under ASC <em style="font: inherit;">606</em> and concluded the performance obligations thereunder are the delivery of tissue samples and performance of services, both of which are distinct. For the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> March 31, 2019, </em>the Company recognized revenue of $90,000 for the delivery of tissue samples. There were no deliveries of tissue samples for the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2019</em> or for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em>. The Company recognized revenue of $250,000 and $500,000 for the performance of services for each of the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months <em style="font: inherit;"> June 30, 2020</em>, respectively. The cost of revenue associated with revenue recognized under the agreement with Loxo is <em style="font: inherit;">not</em> significant. There was no deferred revenue related to this agreement at either <em style="font: inherit;"> June 30, 2020</em> or <em style="font: inherit;"> December 31, 2019</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"><i><b>Diagnostic Development Agreement with Johnson & Johnson</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:22.5pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> December 28, 2018, </em>the Company entered into a diagnostics development agreement with Johnson and Johnson Services, Inc., or JJSI, (i) to cooperate on a program to enable the Company to use JJSI samples and clinical data to develop a next generation bronchial genomic classifier diagnostic for lung cancer diagnosis, or Percepta <em style="font: inherit;">v.2,</em> and a nasal genomic classifier diagnostic for lung cancer and (ii) for JJSI to use Veracyte data generated in <em style="font: inherit;">two</em> Veracyte development programs for therapeutic purposes and for purposes of developing a companion diagnostic product used in conjunction with a JJSI therapeutic. The Company granted a license to JJSI with the right to use data and under the Company's intellectual property rights for JJSI's therapeutic purposes, including the development and commercialization of a companion diagnostic for its products, from the Percepta <em style="font: inherit;">v.2</em> and Nasal programs. The license granted to JJSI is <em style="font: inherit;">not</em> distinct from other performance obligations as JJSI receives benefit only when other performance obligations are met.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">Under the terms of the agreement, the Company will provide data from its RNA whole-transcriptome sequencing platform to JJSI in exchange for $7.0 million in payments from JJSI. The Company is also entitled to additional payments from JJSI of up to $13.0 million, conditioned upon the achievement of certain milestones relating to the development and reimbursement of the Percepta <em style="font: inherit;">v.2</em> and Nasal tests. For a period of <span style="-sec-ix-hidden:c63180614">ten</span> years commencing with the <em style="font: inherit;">first</em> commercial sale of the Percepta <em style="font: inherit;">v.2</em> and Nasal tests, respectively, the Company will make payments to JJSI of <span style="-sec-ix-hidden:c63180617">one</span> percent of net cash collections for Percepta <em style="font: inherit;">v.2</em> and in the low-single digits of net cash collections for the Nasal test, depending on the number and timing of JJSI samples and associated clinical data the Company receives from JJSI. On <em style="font: inherit;"> December 18, 2019, </em>this agreement was amended for the Company to provide further data in exchange for additional consideration, most of which the Company provided during the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and recognized $1.3 million of revenue.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">The JJSI agreement is considered to be within the scope of ASC <em style="font: inherit;">808,</em> as the parties are active participants and exposed to the risks and rewards of the collaborative activity. The Company evaluated the terms of the JJSI agreement and has analogized to ASC <em style="font: inherit;">606</em> for the delivery of RNA whole-transcriptome sequencing data to JJSI under the collaborative arrangement, which the Company believes is a distinct service for which JJSI meets the definition of a customer. Using the concepts of ASC <em style="font: inherit;">606,</em> the Company has identified the delivery of data as its only performance obligation. The Company further determined that the transaction price under the arrangement was the <em style="font: inherit;">$7.0</em> million in payments which was allocated to the obligation to deliver data. The <em style="font: inherit;">$13.0</em> million in future potential payments is considered variable consideration because the Company determined that the potential payments are contingent upon regulatory and commercialization milestones that are uncertain to occur and, as such, were <em style="font: inherit;">not</em> included in the transaction price, and will be recognized accordingly as each potential payment becomes probable.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">The Company recognized revenue of $1.3 million for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>for the provision of data relating to the Nasal program. For the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2019</em>, the Company recognized revenue of $1.2 million and $5.0 million, respectively, for the provision of data relating to Percepta <em style="font: inherit;">v.2,</em> classified under biopharmaceutical revenue in the condensed consolidated statement of operations and comprehensive loss. In addition, the Company recognized revenue of $2.0 million for fulfillment of obligations relating to Percepta <em style="font: inherit;">v.2</em> development milestones during the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2019. </em>Accounts receivable from JJSI was $0.5 million at <em style="font: inherit;"> June 30, 2020</em> and $2.0 million at <em style="font: inherit;"> December 31, 2019</em>. There was no deferred revenue related to this agreement at <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;"><i><b>Collaboration Agreement with AstraZeneca Group</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> December 23, 2019, </em>the Company entered into an agreement with Acerta Pharma B.V., or Acerta, a member of AstraZeneca Group whereby the Company agreed to provide genomic information that will support Acerta’s development of oncology therapeutics. Acerta will pay the Company for certain development activities and pay milestones to the Company for the achievement of development milestones. For the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months <em style="font: inherit;"> June 30, 2020</em>, the Company recognized $0.2 million and $0.4 million, respectively, of revenue for certain development activities. For the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2020, </em>the Company recognized $1.0 million for the achievement of development milestones. Accounts receivable from Acerta was $1.4 million at <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;"><i><b>Commercial Development Agreement with CareDx</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:22.5pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> May 13, 2020, </em>the Company entered into a commercial development agreement with CareDx, Inc., or CareDx, under which the Company provided to CareDx the right to develop and commercialize solid organ transplant-rejection tests on the Company's nCounter platform in exchange for a $1.0 million upfront payment, and is entitled to additional payments from CareDx of up to $4.5 million, conditioned upon the achievement of commercial milestones. The Company will also provide certain development support services to CareDx in exchange for $0.5 million. For the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2020, </em>the Company recognized the $1.0 million upfront payment as biopharmaceutical revenue as the Company has no remaining performance obligations. There was no accounts receivable from CareDx at <em style="font: inherit;"> June 30, 2020. </em></p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Cost of Testing Revenue</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The components of our cost of testing services are laboratory expenses, sample collection expenses, compensation expense, license fees and royalties, depreciation and amortization, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are expensed as the test is processed regardless of whether and when revenue is recognized with respect to that test. Cost of testing revenue for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em> included a $1.1 million write-down of supplies for the potential expiration of reagents due to an anticipated decline in volumes resulting from the COVID-<em style="font: inherit;">19</em> pandemic.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Cost of Product Revenue </b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Cost of product revenue consists primarily of costs of purchasing instruments and diagnostic kits from <em style="font: inherit;">third</em>-party contract manufacturers, installation, service and packaging and delivery costs. In addition, cost of product includes royalty costs for licensed technologies included in the Company’s products and labor expenses. Cost of product revenue for instruments and diagnostic kits is recognized in the period the related revenue is recognized. Shipping and handling costs incurred for product shipments are included in cost of product in the condensed consolidated statements of operations and comprehensive loss.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Cost of Biopharmaceutical Revenue </b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Cost of biopharmaceutical revenue consists of costs of performing activities under arrangements that require the Company to perform research and development services on behalf of a customer pursuant to a biopharmaceutical service agreement.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b/></i></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Recent Accounting Pronouncements</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In <em style="font: inherit;"> June 2016, </em>the FASB issued ASU <em style="font: inherit;">No.</em> <em style="font: inherit;">2016</em>-<em style="font: inherit;">13,</em> <i>Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments</i>. This ASU requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings and report credit losses using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit risks. This guidance became effective for the Company beginning <em style="font: inherit;"> January 1, 2020. </em>Based on the composition of its trade receivables, investment portfolio and other financial assets, current economic conditions and historical credit loss activity, the adoption of this standard did <em style="font: inherit;">not</em> have a material impact on the Company's condensed consolidated financial statements and related disclosures.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"/> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In <em style="font: inherit;"> November 2018, </em>the FASB issued ASU <em style="font: inherit;">No.</em> <em style="font: inherit;">2018</em>-<em style="font: inherit;">18,</em> <i>Collaborative Arrangements (Topic <em style="font: inherit;">808</em>). </i>Under this ASU, transactions in collaborative arrangements are to be accounted for under ASC <em style="font: inherit;">606</em> if the counterparty is a customer for a good or service (or bundle of goods and services) that is a distinct unit of account. Also, entities are precluded from presenting consideration from transactions with a counterparty that is <em style="font: inherit;">not</em> a customer together with revenue recognized from ASC <em style="font: inherit;">606.</em> This ASU is effective for all interim and annual reporting periods beginning on or after <em style="font: inherit;"> December 15, 2019, </em>with early adoption permitted. The Company adopted this ASU in <em style="font: inherit;">2019</em> with <em style="font: inherit;">no</em> cumulative-effect adjustments or retrospective impact.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In <em style="font: inherit;"> August 2018 </em>the FASB issued ASU <em style="font: inherit;">No.</em> <em style="font: inherit;">2018</em>-<em style="font: inherit;">15,</em> <i>Intangibles—Goodwill and Other—Internal-Use Software (Subtopic <em style="font: inherit;">350</em>-<em style="font: inherit;">40</em>): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract</i>. This standard clarifies the accounting for implementation costs in cloud computing arrangements. This standard became effective for the Company on <em style="font: inherit;"> January 1, 2020, </em>and was adopted on a prospective basis with <em style="font: inherit;">no</em> material impact on the Company's condensed consolidated financial statements.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Basis of Presentation</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of <em style="font: inherit;"> June 30, 2020</em>, the condensed consolidated statements of operations and comprehensive loss for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em>, the condensed consolidated statements of stockholders' equity for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em>, and the condensed consolidated statements of cash flows for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em> are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results, stockholders' equity and cash flows for the periods presented. The condensed consolidated balance sheet at <em style="font: inherit;"> December 31, 2019</em> has been derived from audited financial statements. The results for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em> are <em style="font: inherit;">not</em> necessarily indicative of the results expected for the full year or any other period.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The accompanying interim period condensed consolidated financial statements and related financial information included in this Quarterly Report on Form <em style="font: inherit;">10</em>-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form <em style="font: inherit;">10</em>-K for the year ended <em style="font: inherit;"> December 31, 2019</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Reclassifications</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Certain prior period balances have been reclassified to conform to current period presentation of the Company’s condensed consolidated financial statements and accompanying notes. Such reclassifications have <em style="font: inherit;">no</em> effect on previously reported results of operations, retained earnings or consolidated balance sheet totals; however, for the period ended <em style="font: inherit;"> June 30, 2019</em>, the Company reclassified $431,000 of changes in operating assets and liabilities to noncash lease expense in the statement of cash flows.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
431000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Use of Estimates</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The preparation of unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Items subject to such estimates include: revenue recognition; write-down of supplies; the useful lives of property and equipment; the recoverability of long-lived assets; the incremental borrowing rate for leases; the estimation of the fair value of intangible assets and contingent consideration; stock options; income tax uncertainties, including a valuation allowance for deferred tax assets; reserve on accounts receivable and contingencies. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are <em style="font: inherit;">not</em> readily apparent from other sources. Actual results could differ from those estimates and assumptions.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
6325000
825000
23.25
137800000
9200000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Cash and Cash Equivalents</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company considers demand deposits in a bank, money market funds and highly liquid investments with an original maturity of <em style="font: inherit;">90</em> days or less to be cash equivalents. Cash equivalents include overnight reverse repurchase agreements which are tri-party repurchase agreements and have maturities of <em style="font: inherit;">three</em> months or less at the time of investment and are collateralized by U.S. treasury and agency securities of at least 102% of the principal amount. In a tri-party repurchase agreement, a <em style="font: inherit;">third</em>-party custodian bank functions as an independent intermediary to facilitate transfer of cash and holding the collateral on behalf of the underlying investor for the term of the agreement thereby minimizing risk and exposure to both parties. These overnight reverse repurchase agreements are included within cash equivalents due to their high liquidity and relatively low risk. There were <span style="-sec-ix-hidden:c63180523">no</span> overnight reverse repurchase agreements at <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
1.02
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Concentrations of Credit Risk and Other Risks and Uncertainties</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The worldwide spread of coronavirus, or COVID-<em style="font: inherit;">19,</em> has created significant uncertainty in the global economy. There have been <em style="font: inherit;">no</em> comparable recent events that provide guidance as to the effect the spread of COVID-<em style="font: inherit;">19</em> as a global pandemic <em style="font: inherit;"> may </em>have, and, as a result, the ultimate impact of COVID-<em style="font: inherit;">19</em> and the extent to which COVID-<em style="font: inherit;">19</em> impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict. If the financial markets or the overall economy are impacted for an extended period, the Company’s liquidity, revenues, supplies, goodwill and intangibles <em style="font: inherit;"> may </em>be adversely affected</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The majority of the Company’s cash and cash equivalents are deposited with <em style="font: inherit;">one</em> major financial institution in the United States. Deposits in this institution <em style="font: inherit;"> may </em>exceed the amount of insurance provided on such deposits. The Company has <em style="font: inherit;">not</em> experienced any losses on its deposits of cash and cash equivalents.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Several of the components of the Company’s sample collection kits and test reagents, and its nCounter Analysis System and related diagnostic kits are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, it could suffer delays in being able to deliver its diagnostic solutions, a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company is also subject to credit risk from its accounts receivable related to its sales. Credit risk for accounts receivable from testing revenue is incorporated in testing revenue accrual rates as the Company assesses historical collection rates and current developments to determine accrual rates and amounts the Company will ultimately collect. The Company generally does <em style="font: inherit;">not</em> perform evaluations of customers’ financial condition for testing revenue and generally does <em style="font: inherit;">not</em> require collateral. The Company assesses credit risk and the amount of accounts receivable the Company will ultimately collect for product, biopharmaceutical and collaboration revenue based on collection history, current developments and credit worthiness of the customer. The estimate of credit losses is <em style="font: inherit;">not</em> material at <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Through <em style="font: inherit;"> June 30, 2020</em>, most of the Company’s revenue has been derived from the sale of Afirma. To date, Afirma has been delivered primarily to physicians in the United States. The Company’s <em style="font: inherit;">third</em>-party payers and other customers in excess of <em style="font: inherit;">10%</em> of total revenue and their related revenue as a percentage of total revenue were as follows:</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Three Months Ended June 30,</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Six Months Ended June 30,</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2020</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2020</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 52%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Medicare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">18</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">26</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">23</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">24</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Johnson and Johnson Services, Inc.</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">12</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">UnitedHealthcare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">28</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">48</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">33</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">47</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td></tr>
</tbody></table>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><sup style="vertical-align:top;line-height:120%;font-size:pt">*Less than <em style="font: inherit;">10%</em></sup></p> </td></tr>
</tbody></table> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company’s <em style="font: inherit;">third</em>-party payers and other customers in excess of <em style="font: inherit;">10%</em> of accounts receivable and their related accounts receivable balance as a percentage of total accounts receivable were as follows at the following dates:</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">Johnson and Johnson Services, Inc.</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">%</td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Medicare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">*Less than 10%</p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Three Months Ended June 30,</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Six Months Ended June 30,</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="vertical-align: bottom;"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2020</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2020</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 52%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Medicare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">18</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">26</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">23</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">24</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Johnson and Johnson Services, Inc.</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">12</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">UnitedHealthcare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">28</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">48</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">33</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">47</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td></tr>
</tbody></table>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">Johnson and Johnson Services, Inc.</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"><em style="font: inherit;">*</em></td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">10</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0; margin: 0">%</td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Medicare</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">11</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">%</td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">*Less than 10%</p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td></tr>
</tbody></table>
0.18
0.26
0.23
0.24
0.11
0.12
0.10
0.11
0.10
0.11
0.28
0.48
0.33
0.47
0.10
0.11
0.15
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Restricted Cash</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company had deposits of $603,000 included in long-term assets as of <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>, restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the Company’s South San Francisco facility.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>
603000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Revenue Recognition</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"><b>Testing Revenue</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company recognizes testing revenue in accordance with the provisions of ASC <em style="font: inherit;">606,</em> Revenue from Contracts with Customers, or ASC <em style="font: inherit;">606.</em> Most of the Company’s revenue is generated from the provision of testing services. These services are completed upon the delivery of test results to the prescribing physician, at which time the Company bills for the services. The Company recognizes revenue related to billings based on estimates of the amount that will ultimately be realized. In determining the amount to accrue for a delivered test, the Company considers factors such as payment history, payer coverage, whether there is a reimbursement contract between the payer and the Company, payment as a percentage of agreed upon rate (if applicable), amount paid per test and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the <em style="font: inherit;">first</em> half of <em style="font: inherit;">2020,</em> the Company changed its revenue estimates due to actual and anticipated cash collections for tests delivered in prior quarters and recognized additional revenue of $0.9 million and $0.7 million for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020, </em>respectively. These adjustments resulted in decreases in the Company's loss from operations of $0.9 million and $0.7 million and a decrease in basic and diluted net loss per share of $0.02 and $0.01 for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020, </em>respectively.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">During the <em style="font: inherit;">first</em> half of <em style="font: inherit;">2019,</em> the Company changed its revenue estimates due to actual and anticipated cash collections for tests delivered in prior quarters and recognized additional revenue of $0.1 million and $0.8 million for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2019, </em>respectively. These adjustments resulted in decreases in the Company's loss from operations of $0.1 million and $0.8 million and a decrease in basic and diluted net loss per share of $0.01 and $0.02 for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2019, </em>respectively.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;"><b>Product Revenue</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company began recognizing product revenue in <em style="font: inherit;"> December 2019, </em>when the Company executed an agreement with NanoString for the exclusive global license to the nCounter platform and acquisition of products for diagnostic use. More details on this agreement are in Note <em style="font: inherit;">4</em> - Business Combination.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Product revenue from instruments and diagnostic kits is recognized generally upon shipment or when the instrument is ready for use by the end customer, which is when title of the product has been transferred to the customer. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. Performance obligations are considered satisfied once the Company has transferred control of a product to the customer, meaning the customer has the ability to use and obtain the benefit of the product. The Company recognizes product revenue for satisfied performance obligations only when there are <em style="font: inherit;">no</em> uncertainties regarding payment terms or transfer of control. Shipping and handling costs incurred for product shipments are charged to the Company's customers and included in product revenue. Revenues are presented net of the taxes that are collected from customers and remitted to governmental authorities.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"><b>Biopharmaceutical and Collaboration Revenue</b></p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">From time to time, the Company enters into arrangements for research and development and/or laboratory services. Such arrangements <em style="font: inherit;"> may </em>require the Company to deliver various rights, services and/or samples, including intellectual property rights/licenses, R&D services, and/or laboratory services. The underlying terms of these arrangements generally provide for consideration to the Company in the form of nonrefundable upfront license fees, development and commercial performance milestone payments, royalty payments, and/or profit sharing.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In arrangements involving more than <em style="font: inherit;">one</em> performance obligation, each required performance obligation is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects the Company's best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis or using an adjusted market assessment approach if selling price on a stand-alone basis is <em style="font: inherit;">not</em> available.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The consideration allocated to each distinct performance obligation is recognized as revenue when control of the related goods is transferred or services are performed. Consideration associated with at-risk substantive performance milestones is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will <em style="font: inherit;">not</em> occur. Should there be royalties, the Company utilizes the sales and usage-based royalty exception in arrangements that resulted from the license of intellectual property, recognizing revenues generated from royalties or profit sharing as the underlying sales occur.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;"><b>Collaborative Arrangements</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company enters into collaborative arrangements with partners that fall under the scope of ASC Topic <em style="font: inherit;">808,</em> Collaborative Arrangements, or ASC <em style="font: inherit;">808.</em> While these arrangements are in the scope of ASC <em style="font: inherit;">808,</em> the Company <em style="font: inherit;"> may </em>analogize to ASC <em style="font: inherit;">606</em> for some aspects of these arrangements. The Company analogizes to ASC <em style="font: inherit;">606</em> for certain activities within the collaborative arrangement for the delivery of a good or service (i.e., a unit of account) that is part of its ongoing major or central operations.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The terms of the Company’s collaborative arrangements typically include <em style="font: inherit;">one</em> or more of the following: (i) up-front fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; and (iii) royalties on net sales of licensed products. Each of these payments <em style="font: inherit;"> may </em>result in collaboration revenues or an offset against research and development expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Net sales of data or other services to our customers are classified under biopharmaceutical revenue, and all other non-customer revenue are classified under collaboration revenue in our consolidated statements of operations and comprehensive loss. There was no collaboration revenue in the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. Generally, the estimation of the stand-alone selling price <em style="font: inherit;"> may </em>include such estimates as independent evidence of market price, forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and it measures the services delivered to the collaborative partner which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Up-front Fees: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Milestone Payments: At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would <em style="font: inherit;">not</em> occur, the associated milestone value is included in the transaction price. Milestone payments that are <em style="font: inherit;">not</em> within the Company’s or the collaborative partner’s control, such as non-operational developmental and regulatory approvals, are generally <em style="font: inherit;">not</em> considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or the collaborative partner’s control, such as operational developmental milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price <em style="font: inherit;"> may </em>also result in negative collaboration revenues and earnings in the period of adjustment.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;"><i><b>Services Agreement with Loxo Oncology</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> April 9, 2018, </em>the Company entered into an agreement with Loxo Oncology, Inc., or Loxo, whereby the Company agreed to provide certain tissue samples and other services in exchange for agreed-upon fees. The agreement has a term of <span style="-sec-ix-hidden:c63180588">one</span> year with an automatic renewal of <span style="-sec-ix-hidden:c63180589">one</span> year and Loxo <em style="font: inherit;"> may </em>terminate the agreement at any time with at least 90 days' notice. As of <em style="font: inherit;"> June 30, 2020</em>, the agreement has <em style="font: inherit;">not</em> been terminated. The Company evaluated the accounting for this agreement under ASC <em style="font: inherit;">606</em> and concluded the performance obligations thereunder are the delivery of tissue samples and performance of services, both of which are distinct. For the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> March 31, 2019, </em>the Company recognized revenue of $90,000 for the delivery of tissue samples. There were no deliveries of tissue samples for the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2019</em> or for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em>. The Company recognized revenue of $250,000 and $500,000 for the performance of services for each of the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months <em style="font: inherit;"> June 30, 2020</em>, respectively. The cost of revenue associated with revenue recognized under the agreement with Loxo is <em style="font: inherit;">not</em> significant. There was no deferred revenue related to this agreement at either <em style="font: inherit;"> June 30, 2020</em> or <em style="font: inherit;"> December 31, 2019</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"><i><b>Diagnostic Development Agreement with Johnson & Johnson</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:22.5pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> December 28, 2018, </em>the Company entered into a diagnostics development agreement with Johnson and Johnson Services, Inc., or JJSI, (i) to cooperate on a program to enable the Company to use JJSI samples and clinical data to develop a next generation bronchial genomic classifier diagnostic for lung cancer diagnosis, or Percepta <em style="font: inherit;">v.2,</em> and a nasal genomic classifier diagnostic for lung cancer and (ii) for JJSI to use Veracyte data generated in <em style="font: inherit;">two</em> Veracyte development programs for therapeutic purposes and for purposes of developing a companion diagnostic product used in conjunction with a JJSI therapeutic. The Company granted a license to JJSI with the right to use data and under the Company's intellectual property rights for JJSI's therapeutic purposes, including the development and commercialization of a companion diagnostic for its products, from the Percepta <em style="font: inherit;">v.2</em> and Nasal programs. The license granted to JJSI is <em style="font: inherit;">not</em> distinct from other performance obligations as JJSI receives benefit only when other performance obligations are met.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">Under the terms of the agreement, the Company will provide data from its RNA whole-transcriptome sequencing platform to JJSI in exchange for $7.0 million in payments from JJSI. The Company is also entitled to additional payments from JJSI of up to $13.0 million, conditioned upon the achievement of certain milestones relating to the development and reimbursement of the Percepta <em style="font: inherit;">v.2</em> and Nasal tests. For a period of <span style="-sec-ix-hidden:c63180614">ten</span> years commencing with the <em style="font: inherit;">first</em> commercial sale of the Percepta <em style="font: inherit;">v.2</em> and Nasal tests, respectively, the Company will make payments to JJSI of <span style="-sec-ix-hidden:c63180617">one</span> percent of net cash collections for Percepta <em style="font: inherit;">v.2</em> and in the low-single digits of net cash collections for the Nasal test, depending on the number and timing of JJSI samples and associated clinical data the Company receives from JJSI. On <em style="font: inherit;"> December 18, 2019, </em>this agreement was amended for the Company to provide further data in exchange for additional consideration, most of which the Company provided during the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and recognized $1.3 million of revenue.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">The JJSI agreement is considered to be within the scope of ASC <em style="font: inherit;">808,</em> as the parties are active participants and exposed to the risks and rewards of the collaborative activity. The Company evaluated the terms of the JJSI agreement and has analogized to ASC <em style="font: inherit;">606</em> for the delivery of RNA whole-transcriptome sequencing data to JJSI under the collaborative arrangement, which the Company believes is a distinct service for which JJSI meets the definition of a customer. Using the concepts of ASC <em style="font: inherit;">606,</em> the Company has identified the delivery of data as its only performance obligation. The Company further determined that the transaction price under the arrangement was the <em style="font: inherit;">$7.0</em> million in payments which was allocated to the obligation to deliver data. The <em style="font: inherit;">$13.0</em> million in future potential payments is considered variable consideration because the Company determined that the potential payments are contingent upon regulatory and commercialization milestones that are uncertain to occur and, as such, were <em style="font: inherit;">not</em> included in the transaction price, and will be recognized accordingly as each potential payment becomes probable.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">The Company recognized revenue of $1.3 million for the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>for the provision of data relating to the Nasal program. For the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2019</em>, the Company recognized revenue of $1.2 million and $5.0 million, respectively, for the provision of data relating to Percepta <em style="font: inherit;">v.2,</em> classified under biopharmaceutical revenue in the condensed consolidated statement of operations and comprehensive loss. In addition, the Company recognized revenue of $2.0 million for fulfillment of obligations relating to Percepta <em style="font: inherit;">v.2</em> development milestones during the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2019. </em>Accounts receivable from JJSI was $0.5 million at <em style="font: inherit;"> June 30, 2020</em> and $2.0 million at <em style="font: inherit;"> December 31, 2019</em>. There was no deferred revenue related to this agreement at <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;"><i><b>Collaboration Agreement with AstraZeneca Group</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> December 23, 2019, </em>the Company entered into an agreement with Acerta Pharma B.V., or Acerta, a member of AstraZeneca Group whereby the Company agreed to provide genomic information that will support Acerta’s development of oncology therapeutics. Acerta will pay the Company for certain development activities and pay milestones to the Company for the achievement of development milestones. For the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months <em style="font: inherit;"> June 30, 2020</em>, the Company recognized $0.2 million and $0.4 million, respectively, of revenue for certain development activities. For the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2020, </em>the Company recognized $1.0 million for the achievement of development milestones. Accounts receivable from Acerta was $1.4 million at <em style="font: inherit;"> June 30, 2020</em>.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;"><i><b>Commercial Development Agreement with CareDx</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:22.5pt;"> </p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;">On <em style="font: inherit;"> May 13, 2020, </em>the Company entered into a commercial development agreement with CareDx, Inc., or CareDx, under which the Company provided to CareDx the right to develop and commercialize solid organ transplant-rejection tests on the Company's nCounter platform in exchange for a $1.0 million upfront payment, and is entitled to additional payments from CareDx of up to $4.5 million, conditioned upon the achievement of commercial milestones. The Company will also provide certain development support services to CareDx in exchange for $0.5 million. For the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2020, </em>the Company recognized the $1.0 million upfront payment as biopharmaceutical revenue as the Company has no remaining performance obligations. There was no accounts receivable from CareDx at <em style="font: inherit;"> June 30, 2020. </em></p> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Cost of Testing Revenue</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The components of our cost of testing services are laboratory expenses, sample collection expenses, compensation expense, license fees and royalties, depreciation and amortization, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are expensed as the test is processed regardless of whether and when revenue is recognized with respect to that test. Cost of testing revenue for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em> included a $1.1 million write-down of supplies for the potential expiration of reagents due to an anticipated decline in volumes resulting from the COVID-<em style="font: inherit;">19</em> pandemic.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Cost of Product Revenue </b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Cost of product revenue consists primarily of costs of purchasing instruments and diagnostic kits from <em style="font: inherit;">third</em>-party contract manufacturers, installation, service and packaging and delivery costs. In addition, cost of product includes royalty costs for licensed technologies included in the Company’s products and labor expenses. Cost of product revenue for instruments and diagnostic kits is recognized in the period the related revenue is recognized. Shipping and handling costs incurred for product shipments are included in cost of product in the condensed consolidated statements of operations and comprehensive loss.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Cost of Biopharmaceutical Revenue </b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Cost of biopharmaceutical revenue consists of costs of performing activities under arrangements that require the Company to perform research and development services on behalf of a customer pursuant to a biopharmaceutical service agreement.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Recent Accounting Pronouncements</b></i></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In <em style="font: inherit;"> June 2016, </em>the FASB issued ASU <em style="font: inherit;">No.</em> <em style="font: inherit;">2016</em>-<em style="font: inherit;">13,</em> <i>Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments</i>. This ASU requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings and report credit losses using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit risks. This guidance became effective for the Company beginning <em style="font: inherit;"> January 1, 2020. </em>Based on the composition of its trade receivables, investment portfolio and other financial assets, current economic conditions and historical credit loss activity, the adoption of this standard did <em style="font: inherit;">not</em> have a material impact on the Company's condensed consolidated financial statements and related disclosures.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"/> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In <em style="font: inherit;"> November 2018, </em>the FASB issued ASU <em style="font: inherit;">No.</em> <em style="font: inherit;">2018</em>-<em style="font: inherit;">18,</em> <i>Collaborative Arrangements (Topic <em style="font: inherit;">808</em>). </i>Under this ASU, transactions in collaborative arrangements are to be accounted for under ASC <em style="font: inherit;">606</em> if the counterparty is a customer for a good or service (or bundle of goods and services) that is a distinct unit of account. Also, entities are precluded from presenting consideration from transactions with a counterparty that is <em style="font: inherit;">not</em> a customer together with revenue recognized from ASC <em style="font: inherit;">606.</em> This ASU is effective for all interim and annual reporting periods beginning on or after <em style="font: inherit;"> December 15, 2019, </em>with early adoption permitted. The Company adopted this ASU in <em style="font: inherit;">2019</em> with <em style="font: inherit;">no</em> cumulative-effect adjustments or retrospective impact.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In <em style="font: inherit;"> August 2018 </em>the FASB issued ASU <em style="font: inherit;">No.</em> <em style="font: inherit;">2018</em>-<em style="font: inherit;">15,</em> <i>Intangibles—Goodwill and Other—Internal-Use Software (Subtopic <em style="font: inherit;">350</em>-<em style="font: inherit;">40</em>): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract</i>. This standard clarifies the accounting for implementation costs in cloud computing arrangements. This standard became effective for the Company on <em style="font: inherit;"> January 1, 2020, </em>and was adopted on a prospective basis with <em style="font: inherit;">no</em> material impact on the Company's condensed consolidated financial statements.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">2.</em> Net Loss Per Common Share</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. The following outstanding common stock equivalents have been excluded from diluted net loss per common share because their inclusion would be anti-dilutive:</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;"><em style="font: inherit;">Three Months Ended June 30,</em></em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;"><em style="font: inherit;">Six Months Ended June 30,</em></em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 52%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Shares of common stock subject to outstanding options</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">4,823,917</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,721,801</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">4,792,022</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,696,450</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Employee stock purchase plan</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">26,416</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">29,471</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">23,007</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">27,582</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Restricted stock units</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">945,325</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">752,607</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">941,776</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">646,274</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total common stock equivalents</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">5,795,658</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">6,503,879</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">5,756,805</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">6,370,306</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"/>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;"><em style="font: inherit;">Three Months Ended June 30,</em></em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;"><em style="font: inherit;">Six Months Ended June 30,</em></em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 52%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Shares of common stock subject to outstanding options</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">4,823,917</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,721,801</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">4,792,022</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,696,450</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Employee stock purchase plan</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">26,416</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">29,471</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">23,007</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">27,582</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Restricted stock units</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">945,325</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">752,607</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">941,776</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">646,274</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total common stock equivalents</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">5,795,658</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">6,503,879</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">5,756,805</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 9%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">6,370,306</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
4823917
5721801
4792022
5696450
26416
29471
23007
27582
945325
752607
941776
646274
5795658
6503879
5756805
6370306
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">3.</em> Accrued Liabilities</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Accrued liabilities consisted of the following (in thousands of dollars):</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Accrued compensation expenses</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">6,703</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">10,100</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Accrued other</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2,683</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">3,634</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Total accrued liabilities</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">9,386</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">13,734</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Accrued compensation expenses</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">6,703</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">10,100</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Accrued other</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2,683</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">3,634</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Total accrued liabilities</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">9,386</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">13,734</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
6703000
10100000
2683000
3634000
9386000
13734000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">4.</em> Business Combination</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On <em style="font: inherit;"> December 3, 2019, </em>the Company executed an agreement with NanoString for the exclusive global diagnostics license to the nCounter Analysis System, and the acquisition of the Prosigna breast cancer prognostic gene signature assay, and the LymphMark lymphoma subtyping assay. The strategic transaction positions the Company to expand its genomic diagnostics business globally, with the ability to deliver its advanced genomic tests to physicians and their patients via hospital and clinical laboratories throughout the European Union and other parts of the world. The Company has accounted for this agreement under Accounting Standards Codification <em style="font: inherit;">805,</em> Business Combinations. Pursuant to the terms of the agreement, Veracyte paid NanoString $40.0 million in cash and $10.0 million in Veracyte common stock, and <em style="font: inherit;"> may </em>pay up to an additional $10.0 million in cash, contingent upon the commercial launch of Veracyte diagnostic tests for use on the platform. This contingency was valued at $6.1 million as of the acquisition date and as of <em style="font: inherit;"> December 31, 2019</em>, recorded as a liability, and will be remeasured to fair value at each reporting date until the contingent consideration is settled. As of <em style="font: inherit;"> June 30, 2020</em>, this contingency was remeasured to $5.9 million with the corresponding change included in general and administrative expense in the Company's condensed consolidated statements of operations and comprehensive loss.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Assets acquired are recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company. While the Company believes that its estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and the resulting amount of goodwill. The following table summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands):</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;text-indent:36pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 85%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">4,120</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna customer relationships</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,430</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">nCounter Dx license</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">46,880</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">LymphMark product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">990</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total identifiable intangible assets acquired</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">54,420</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Goodwill</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1,668</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Net assets acquired</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">56,088</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Identifiable acquisition-related intangibles included in the above table are finite-lived and are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized, as follows:</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">Estimated Useful life (In Years)</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 85%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna customer relationships</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">nCounter Dx license</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">LymphMark product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">7</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. This acquisition includes $1.7 million of goodwill which the Company believes consists principally of the organized workforce that will help the Company execute its strategic plans in relation to the assets acquired. In accordance with ASC <em style="font: inherit;">350,</em> goodwill will <em style="font: inherit;">not</em> be amortized but will be tested for impairment at least annually. As of <em style="font: inherit;"> June 30, 2020</em>, goodwill is <em style="font: inherit;">not</em> deductible for tax purposes, however, if contingent consideration is paid at a future date, the portions of contingent consideration paid and allocated to the intangible assets for tax purposes will be tax deductible. The accounting for this acquisition is preliminary and will be finalized upon completion of the analysis of certain contracts acquired and executed as part of this acquisition along with the impact on goodwill, should there be any.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/>
40000000.0
10000000.0
10000000.0
6100000
5900000
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 85%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">4,120</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna customer relationships</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,430</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">nCounter Dx license</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">46,880</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">LymphMark product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">990</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total identifiable intangible assets acquired</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">54,420</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Goodwill</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1,668</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Net assets acquired</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">56,088</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
4120000
2430000
46880000
990000
54420000
1668000
56088000
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">Estimated Useful life (In Years)</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 85%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Prosigna customer relationships</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">nCounter Dx license</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">LymphMark product technology</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">7</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
</tbody></table>
P15Y
P5Y
P15Y
P7Y
1700000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">5.</em> Fair Value Measurements</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company records its financial assets and liabilities at fair value. The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a <em style="font: inherit;">three</em>-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<table border="0" cellpadding="0" cellspacing="0" style="width: 100%; text-indent: 0px;"><tbody><tr style="vertical-align: top;"><td style="width: 36pt;"> </td><td style="width: 18pt;"> <p style="margin: 0pt; text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;">•</p> </td><td> <p style="margin: 0pt; text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;">Level I: Inputs which include quoted prices in active markets for identical assets and liabilities;</p> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:0pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" style="width: 100%; text-indent: 0px;"><tbody><tr style="vertical-align: top;"><td style="width: 36pt;"> </td><td style="width: 18pt;"> <p style="margin: 0pt; text-align: justify; font-family: "Times New Roman", Times, serif; font-size: 10pt;">•</p> </td><td> <p style="margin: 0pt; text-align: justify; font-family: "Times New Roman", Times, serif; font-size: 10pt;">Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are <em style="font: inherit;">not</em> 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</p> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:0pt;"> </p>
<table border="0" cellpadding="0" cellspacing="0" style="width: 100%; text-indent: 0px;"><tbody><tr style="vertical-align: top;"><td style="width: 36pt;"> </td><td style="width: 18pt;"> <p style="margin: 0pt; text-align: justify; font-family: "Times New Roman", Times, serif; font-size: 10pt;">•</p> </td><td> <p style="margin: 0pt; text-align: justify; font-family: "Times New Roman", Times, serif; font-size: 10pt;">Level III: Unobservable inputs that are supported by little or <em style="font: inherit;">no</em> market activity and that are significant to the fair value of the assets or liabilities.</p> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The fair value of the Company’s financial assets includes money market funds, overnight reverse repurchase agreements and a deposit for the lease of the Company's South San Francisco facility. Money market funds, included in cash and cash equivalents in the accompanying condensed consolidated balance sheets, were $144.7 million and $57.6 million as of <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>, respectively, and are Level I assets as described above. Overnight reverse repurchase agreements, included in cash and cash equivalents in the accompanying condensed consolidated balance sheets, were <span style="-sec-ix-hidden:c63180772">zero</span> and $100.0 million as of <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>, respectively, and are Level II assets as described above. There were <span style="-sec-ix-hidden:c63180774"><span style="-sec-ix-hidden:c63180778">no</span></span> unrealized gains or losses from overnight reverse repurchase agreements at <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>. The deposit for the lease, included in restricted cash in the accompanying condensed consolidated balance sheets, was $603,000 as of <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>, and is a Level I asset as described above.</p>
<p style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin: 0pt; text-align: left"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The contingent consideration in Note <em style="font: inherit;">4,</em> Business Combination, associated with the agreement with NanoString on <em style="font: inherit;"> December 3, 2019, </em>is a Level III financial liability. The estimation of the fair value of the contingent consideration is based on the present value of the expected payments calculated by assessing the likelihood of when the related milestones would be achieved, discounted using the Company's estimated borrowing rate. These estimates form the basis for making judgments about the carrying value of the contingent consideration that are <em style="font: inherit;">not</em> readily apparent from other sources. Changes to the forecasts for the achievement of the milestones and the estimates of the borrowing rate can significantly affect the estimated fair value of the contingent consideration.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>
144700000
57600000
100000000.0
603000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">6.</em> Commitments and Contingencies</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Operating Leases</b></i></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company leases its headquarters and laboratory facilities in South San Francisco, California under a non-cancelable lease agreement for approximately 59,000 square feet. The lease began in <em style="font: inherit;"> June </em><em style="font: inherit;">2015</em> and ends in <em style="font: inherit;"> March </em><em style="font: inherit;">2026</em> and contains extension of lease term and expansion options. The Company had deposits of $603,000 included in long-term assets as of <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>, restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the South San Francisco facility.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company also leases laboratory and office space in Austin, Texas under a lease that expires in <em style="font: inherit;"> January 2029 </em>and includes options for expansion and early termination in <em style="font: inherit;">2025.</em> The Company provided a cash security deposit for this lease of $139,000, included in other assets in the Company’s condensed consolidated balance sheets as of <em style="font: inherit;"> June 30, 2020</em> and <em style="font: inherit;"> December 31, 2019</em>.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<p style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin: 0pt; text-align: left"/>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Future minimum lease payments under non-cancelable operating leases as of <em style="font: inherit;"> June 30, 2020</em> are as follows (in thousands of dollars):</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 85%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><b><span style="text-decoration: underline; ">Year Ending December 31,</span></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"><b> </b></td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Remainder of 2020</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">1,175</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2021</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,401</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2022</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,472</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2023</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,543</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2024</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,614</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Thereafter</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">4,227</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Total future minimum lease payments</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15,432</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Less: amount representing interest</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">3,201</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Present value of future lease payments</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">12,231</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Less: short-term lease liabilities</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1,495</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Long-term lease liabilities</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">10,736</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company recognizes operating lease expense on a straight-line basis over the non-cancelable lease period. Operating lease expense was $0.5 million for each of the <em style="font: inherit;">three</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em> and $1.0 million for each of the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em>.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i><b>Contingencies</b></i></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">From time to time, the Company <em style="font: inherit;"> may </em>be involved in legal proceedings arising in the ordinary course of business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its condensed consolidated financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company believes there is <em style="font: inherit;">no</em> legal proceeding pending that could have, either individually or in the aggregate, a material adverse effect on the Company’s condensed consolidated financial statements.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>
59000
603000
139000
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 85%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><b><span style="text-decoration: underline; ">Year Ending December 31,</span></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"><b> </b></td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Remainder of 2020</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">1,175</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2021</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,401</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2022</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,472</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2023</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,543</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2024</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">2,614</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Thereafter</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">4,227</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Total future minimum lease payments</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">15,432</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Less: amount representing interest</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">3,201</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Present value of future lease payments</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">12,231</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Less: short-term lease liabilities</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1,495</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Long-term lease liabilities</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">10,736</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
1175000
2401000
2472000
2543000
2614000
4227000
15432000
3201000
12231000
1495000
10736000
500000
1000000.0
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">7.</em> Debt</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i>Loan and Security Agreement</i></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On <em style="font: inherit;"> November 3, 2017, </em>the Company entered into a loan and security agreement, or Loan and Security Agreement, with Silicon Valley Bank. The Loan and Security Agreement allows the Company to borrow up to $35.0 million, with a $25.0 million advance term loan, or Term Loan Advance, and a revolving line of credit of up to $10.0 million, or Revolving Line of Credit. The Term Loan Advance was advanced upon the closing of the Loan and Security Agreement and was used to pay the outstanding balance of the Company’s existing long-term debt, which was canceled at that date. The Company had <em style="font: inherit;">not</em> drawn on the Revolving Line of Credit as of <em style="font: inherit;"> June 30, 2020</em>. Borrowings under the Loan and Security Agreement mature on <em style="font: inherit;"> October 1, 2022. </em>Amounts <em style="font: inherit;"> may </em>be borrowed and repaid under the Revolving Line of Credit up until the earliest of full repayment or maturity of the Loan and Security Agreement, termination of the Loan and Security Agreement, or <em style="font: inherit;"> October 1, 2022.</em></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:22.5pt;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Term Loan Advance bears interest at a variable rate equal to (i) the <em style="font: inherit;">thirty</em>-day U.S. London Interbank Offer Rate, or LIBOR, plus (ii) 4.20%, with a minimum rate of 5.43% per annum. Principal amounts outstanding under the Revolving Line of Credit bear interest at a variable rate equal to (i) LIBOR plus (ii) 3.50%, with a minimum rate of 4.70% per annum. The average Term Loan Advance interest rate for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020</em> was 5.6%.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:22.5pt;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company <em style="font: inherit;"> may </em>prepay the outstanding principal amount under the Term Loan Advance plus accrued and unpaid interest and, if the Term Loan Advance is repaid in full, a prepayment premium. The prepayment premium will be (i) $750,000 if prepayment is made prior to <em style="font: inherit;"> November 3, 2018, (</em>ii) $500,000 if the prepayment is made after <em style="font: inherit;"> November 3, 2018 </em>but on or before <em style="font: inherit;"> November 3, 2019, </em>or (iii) $250,000 if the prepayment is made after <em style="font: inherit;"> November 3, 2019. </em>In <em style="font: inherit;"> January 2019 </em>and <em style="font: inherit;"> May 2019, </em>the Company prepaid $12.5 million and $12.4 million, respectively, of the principal amount of the Term Loan Advance. These prepayments did <em style="font: inherit;">not</em> trigger any prepayment premium because they were partial, <em style="font: inherit;">not</em> full, repayments of the principal amount.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In addition, a final payment on the Term Loan Advance in the amount of $1.2 million is due upon the earlier of the maturity date of the Term Loan Advance or its payment in full. The Loan and Security Agreement contains customary representations, warranties, and events of default such as a material adverse change in the Company's business, operations or financial condition, as well as affirmative and negative covenants. The negative covenants include, among other provisions, covenants that limit or restrict the Company's ability to incur liens, make investments, incur indebtedness, merge with or acquire other entities, dispose of assets, make dividends or other distributions to holders of its equity interests, engage in any new line of business, or enter into certain transactions with affiliates, in each case subject to certain exceptions. The Company’s obligations under the Loan and Security Agreement are secured by substantially all of its assets (excluding intellectual property), subject to certain customary exceptions. The Loan and Security Agreement also requires the Company to achieve certain revenue levels tested quarterly on a trailing <em style="font: inherit;">twelve</em>-month basis. However, failure to maintain the revenue levels will <em style="font: inherit;">not</em> be considered a default if the sum of the Company’s unrestricted cash and cash equivalents maintained with Silicon Valley Bank and amount available under the Revolving Line of Credit is at least $40.0 million. As of <em style="font: inherit;"> June 30, 2020</em>, the Company was in compliance with the loan covenants.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"/>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The debt obligation for borrowings made under the Loan and Security Agreement was as follows (in thousands of dollars):</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Debt principal</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">100</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">100</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">End-of-term debt obligation</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">701</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">594</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total debt obligation</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">801</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">694</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Future principal and end-of-term debt obligation payments under the Loan and Security Agreement are $1.3 million and due in <em style="font: inherit;">2022.</em> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The end-of-term debt obligation accretes over the term of the Loan and Security Agreement until maturity and is included in interest expense in the Company's condensed consolidated statements of operations and comprehensive loss.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>
35000000.0
25000000.0
10000000.0
0.0420
0.0543
0.0350
0.0470
0.056
750000
500000
250000
12500000
12400000
1200000
40000000.0
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Debt principal</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">100</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">100</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">End-of-term debt obligation</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">701</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">594</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total debt obligation</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">801</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">694</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
100000
100000
701000
594000
801000
694000
1300000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">8.</em> Stockholders’ Equity</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i><b>Common Stock</b></i></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">The Company had reserved shares of common stock for issuance as follows:</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Stock options and restricted stock units issued and outstanding</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,534,822</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,562,484</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Stock options and restricted stock units available for grant under stock option plans</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">3,207,661</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">1,954,804</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Common stock available for the Employee Stock Purchase Plan</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">112,226</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">173,168</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Total</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">8,854,709</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">7,690,456</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"/>
<table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px;"><tbody><tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">June 30, 2020</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><em style="font: inherit;">December 31, 2019</em></b></p> </td><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Stock options and restricted stock units issued and outstanding</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,534,822</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">5,562,484</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Stock options and restricted stock units available for grant under stock option plans</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">3,207,661</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">1,954,804</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(204, 238, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Common stock available for the Employee Stock Purchase Plan</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">112,226</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">173,168</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td></tr>
<tr style="background-color: rgb(255, 255, 255); vertical-align: bottom"><td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 9pt;"> <p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Total</p> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">8,854,709</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> </td><td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">7,690,456</td><td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td></tr>
</tbody></table>
5534822
5562484
3207661
1954804
112226
173168
8854709
7690456
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">9.</em> Thyroid Cytopathology Partners </b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company has an agreement with a specialized pathology practice, Thyroid Cytopathology Partners, or ("TCP"), to provide testing services to the Company, or TCP Agreement. The TCP Agreement is effective through <em style="font: inherit;"> October 31, 2022, </em>and thereafter automatically renews every year unless either party provides notice of intent <em style="font: inherit;">not</em> to renew at least <em style="font: inherit;">12</em> months prior to the end of the then-current term. Under the TCP Agreement, the Company pays TCP based on a fixed price per test schedule which is reviewed periodically for changes in market pricing, and the TCP Agreement included a clause allowing TCP to sublease a portion of the Company's facility in Austin, Texas. The Company does <em style="font: inherit;">not</em> have an ownership interest in or provide any form of financial or other support to TCP. The Company previously concluded that TCP represented a variable interest entity as a result of the facility arrangement clause, but that the Company was <em style="font: inherit;">not</em> the primary beneficiary as it did <em style="font: inherit;">not</em> have the ability to direct the activities that most significantly impacted TCP's economic performance, and therefore did <em style="font: inherit;">not</em> consolidate TCP. On <em style="font: inherit;"> February 14, 2019, </em>the TCP Agreement was amended to remove the facility clause. Accordingly, the Company believes TCP was <em style="font: inherit;">no</em> longer a variable interest entity as of that date.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
<p style="font-family: "Times New Roman", Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">TCP's portion of rent and related operating expenses reimbursed to the Company for the shared space at the Austin, Texas facility was $11,000 for the <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2019</em>, and is included in other income, net in the Company’s condensed consolidated statements of operations and comprehensive loss.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"/>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"/>
11000
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b><em style="font: inherit;">10.</em> Income Taxes</b></p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company did <span style="-sec-ix-hidden:c63180868"><span style="-sec-ix-hidden:c63180875"><span style="-sec-ix-hidden:c63180876"><span style="-sec-ix-hidden:c63180877">not</span></span></span></span> record a provision or benefit for income taxes during the <em style="font: inherit;">three</em> and <em style="font: inherit;">six</em> months ended <em style="font: inherit;"> June 30, 2020 </em>and <em style="font: inherit;">2019</em>. The Company continues to maintain a full valuation allowance against its net deferred tax assets.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"> </p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On <em style="font: inherit;"> March 27, 2020, </em>the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-<em style="font: inherit;">19</em> pandemic. The Company does <em style="font: inherit;">not</em> expect the provisions of the legislation to have a significant impact on the effective tax rate of the Company.</p>
<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;"/>