PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

Previous wording

Our products and technology, which primarily consist of our HiFi long-read sequencing systems, address a broad set of applications including human germline sequencing, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications.

Current wording

Our products and technology, which consist of our HiFi long-read sequencing systems, address a broad set of applications including human germline sequencing, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications.

Previous wording

Key highlights of the six months ended June 30, 2026 consolidated financial results include the following:

Current wording

Key highlights of the nine months ended September 30, 2026 consolidated financial results include the following:

Previous wording

•Revenue was comprised of $22.6 million in instrument revenue, $41.9 million in consumables revenue and $11.7 million in service and other revenue during the six months ended June 30, 2026. Revenue was comprised of $25.2 million in instrument revenue, $39.0 million in consumables revenue and $12.7 million in service and other revenue during the six months ended June 30, 2025. Lower Vega unit sales and a decrease in service and other revenue were partially offset by an increase in consumables revenue and higher Revio unit sales.

Current wording

•Revenue was comprised of $35.7 million in instrument revenue, $62.7 million in consumables revenue and $18.3 million in service and other revenue during the nine months ended September 30, 2026. Revenue was comprised of $36.5 million in instrument revenue, $60.3 million in consumables revenue and $18.6 million in service and other revenue during the nine months ended September 30, 2025. Higher Revio unit sales and higher consumables revenue were partially offset by lower average selling prices, lower Vega unit sales, and a slight decrease in service and other revenue.

Previous wording

•We recorded a gross profit of $25.5 million during the six months ended June 30, 2026 compared to $13.3 million during the same period of 2025. We recorded approximately $12.4 million of restructuring charges during the six months ended June 30, 2025. See Note 5. Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, product promotions, future product launches, changes to inventory reserves, costs of raw materials, increased computing component costs, specifically memory, and tariffs.

Current wording

•We recorded a gross profit of $38.9 million during the nine months ended September 30, 2026 compared to $29.2 million during the same period of 2025. The nine months ended September 30, 2025 included approximately $12.4 million of restructuring-related charges. See Note 5. Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. Gross profit may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, product promotions, future product launches, changes to inventory reserves, costs of raw materials, increased computing component costs, specifically memory, and tariffs.

Previous wording

•Loss from operations decreased $420.8 million during the six months ended June 30, 2026, compared with the same period of 2025, primarily due to a $408.7 million decrease in operating expenses. Operating expenses of $78.4 million for the six months ended June 30, 2026 included litigation settlement expenses of $15.4 million. Operating expenses were partially offset by a $45.8 million gain on disposal of assets to Illumina Cambridge Limited due to the Asset Sale. See Note 2. Financial Instruments in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information. Operating expenses of $487.1 million during the six months ended June 30, 2025 included $382.4 million of costs incurred in connection with the restructuring and strategic shift, which primarily included $359.3 million of accelerated amortization of acquired intangibles, $15.0 million of impairment charges, and $4.8 million of employee separation costs, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration.

Current wording

•Loss from operations decreased $422.7 million during the nine months ended September 30, 2026, compared with the same period of 2025, primarily due to a $413.0 million decrease in operating expenses. Operating expenses of $128.9 million for the nine months ended September 30, 2026 included litigation settlement expenses of $15.4 million. Operating expenses were partially offset by a $45.8 million gain on disposal of assets to Illumina Cambridge Limited due to the Asset Sale. See Note 2. Financial Instruments in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information. Operating expenses of $541.9 million during the nine months ended September 30, 2025 included $382.4 million of costs incurred in connection with the restructuring and strategic shift, which primarily included $359.3 million of accelerated amortization of acquired intangibles, $15.0 million of impairment charges, and $4.8 million of employee separation costs, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration.

Previous wording

•Cash, cash equivalents, and investments were $236.9 million at June 30, 2026, which represents a 15% decrease compared to the balance at December 31, 2025. During the six months ended June 30, 2026 we received net cash proceeds of approximately $48.1 million in conjunction with the gain on disposal of assets discussed above. We also paid $8.0 million related to the settlement agreement with Personal Genomics of Taiwan, Inc. (“PGI”). See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details regarding the settlement with PGI.

Current wording

•Cash, cash equivalents, and investments were $199.4 million at September 30, 2026, which represents a 29% decrease compared to the balance at December 31, 2025. During the nine months ended September 30, 2026 we received net cash proceeds of approximately $48.1 million in conjunction with the gain on disposal of assets discussed above. We also paid $8.0 million related to the settlement agreement with Personal Genomics of Taiwan, Inc. (“PGI”). See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details regarding the settlement with PGI.

Previous wording

We believe that demand for our instruments (particularly Vega) remains constrained due to, among other reasons, the funding environment in the United States, contributing to elongated sales cycles, or in certain cases, customers not placing instrument orders. Additionally, sales cycles have been and continue to be impacted by, among other reasons, continued capital funding constraints in academic and research markets, procurement timing considerations, and longer adoption cycles among new customers, which have affected the timing of certain instrument orders. However, we believe that revenues will be greater in the second half of 2026, which we expect will be driven by continued clinical adoption, SPRQ-Nx consumable growth, and revenue associated with the Basecamp Research program.

Current wording

We believe that demand for our instruments (particularly Vega) remains constrained due to, among other reasons, the funding environment in the United States, contributing to elongated sales cycles, or in certain cases, customers not placing instrument orders. Additionally, sales cycles have been and continue to be impacted by, among other reasons, continued capital funding constraints in academic and research markets,

Previous wording

Macroeconomic dynamics that have impacted and could continue to impact the Company include rising inflation, higher computing component costs, specifically memory, which has resulted in material cost pressures and supply constraints, geopolitical tensions, including recent conflicts in the Middle East (including Iran), volatile capital markets, tariffs, uncertainty in the United States related to NIH and academic funding, and fluctuating exchange rates. These factors could continue to impact our revenues and results of operations in future periods; however, the magnitude and duration of these impacts is highly uncertain and inherently unpredictable.

Current wording

Macroeconomic dynamics that have impacted and could continue to impact the Company include rising inflation; higher computing component costs, particularly for memory, which have resulted in material cost pressures and supply constraints; geopolitical tensions, including recent conflicts in the Middle East (including Iran); volatile capital markets; tariffs; uncertainty in the United States related to NIH and academic funding; and fluctuating exchange rates. These factors could continue to impact our revenues and results of operations in future periods; however, the magnitude and duration of these impacts is highly uncertain and inherently unpredictable. In addition, our business and results of operations could be adversely affected by disruptions to our information technology systems or those of our third-party service providers, including as a result of cybersecurity incidents.

Previous wording

On an ongoing basis, we evaluate our significant estimates, including those related to the valuation of goodwill, indefinite-lived and finite-lived assets. However, these estimates could change in future periods based on events or changes in circumstances, which could result in material future impairment charges. We recorded $15.0 million of impairment charges during the six months ended June 30, 2025. See additional discussion below in Results of Operations, as well as Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Additionally, refer to the Critical Accounting Policies and Estimates section of our 2025 Annual Report for further discussion on the Company's asset impairment assessments.

Current wording

On an ongoing basis, we evaluate our significant estimates, including those related to the valuation of goodwill, indefinite-lived and finite-lived assets. However, these estimates could change in future periods based on events or changes in circumstances, which could result in material future impairment charges. We recorded $15.0 million of impairment charges during the nine months ended September 30, 2025. See additional discussion below in Results of Operations, as well as Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Additionally, refer to the Critical Accounting Policies and Estimates section of our 2025 Annual Report for further discussion on the Company's asset impairment assessments.

Previous wording

Product revenue increased $0.3 million primarily due to an increase of $2.9 million, or 7%, in consumable revenue partially offset by a decrease of $2.6 million, or 10%, in instrument revenue.

Current wording

Product revenue increased $1.4 million primarily due to an increase of $1.9 million, or 16%, in instrument revenue partially offset by a decrease of $0.5 million, or 2%, in consumables revenue.

Previous wording

The increase in consumables revenue for the second quarter of 2026 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base. We also launched SPRQ-Nx during the second quarter of 2026.

Current wording

The increase in Revio consumables revenue reflects the continued expansion of the Revio instrument installed base. We also launched SPRQ-Nx on Revio during the second quarter of 2026.

Previous wording

Instrument revenue decreased for the second quarter of 2026 reflecting lower Revio average selling prices associated with strategic multi-system customer placements. Instrument revenue was also impacted byvariability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions.

Current wording

Instrument revenue increased for the third quarter of 2026 reflecting higher Revio and Vega unit sales and higher Revio average selling prices. Instrument revenue continues to be impacted byvariability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions.

Previous wording

Sales of Vega systems decreased for the second quarter of 2026. We sold 26 units compared to 38 units in the same quarter of 2025. Sales of Revio systems increased with 20 units sold compared to 15 units in the same quarter of 2025.

Current wording

Sales of Vega and Revio systems increased for the third quarter of 2026. We sold 35 Vega units compared to 32 units in the same quarter of 2025. We sold 15 Revio units compared to 13 units in the same quarter of 2025.

Previous wording

Total cost of revenue increased $1.3 million, or 5%, in the second quarter of 2026 compared to the same quarter of 2025. Total cost of revenue included share-based compensation expense of $0.7 million and $0.9 million during the second quarter of 2026 and 2025, respectively.

Current wording

Total cost of revenue increased $4.6 million, or 20%, in the third quarter of 2026 compared to the same quarter of 2025. Total cost of revenue included share-based compensation expense of $0.6 million and $0.9 million during the third quarter of 2026 and 2025, respectively.

Previous wording

Cost of product revenue increased $0.9 million, or 5%, in the second quarter of 2026 compared to the same quarter of 2025 primarily due to exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, and amortization of the patent license obtained through the legal settlement with PGI. These increases were partially offset by lower Instrument volumes and a shifting Consumables product mix.

Current wording

Cost of product revenue increased $2.6 million, or 13%, in the third quarter of 2026 compared to the same quarter of 2025 primarily due to exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, amortization of the patent license obtained through the legal settlement with PGI, and restructuring-related charges. These increases were partially offset by lower consumables volumes.

Previous wording

Gross profit decreased $2.0 million, or 14%, during the second quarter of 2026 compared to the same period of 2025. The decrease was driven primarily by slightly lower revenue and the increase in cost of revenue described above. While higher consumables mix and the introduction of SPRQ-Nx remain important drivers of margin expansion, rising computing component costs will temper the pace of margin improvement in the near term. Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and increased computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs.

Current wording

Gross profit decreased $2.4 million, or 15%, during the third quarter of 2026 compared to the same period of 2025. The decrease was primarily driven by the increase in cost of revenue described above partially offset by higher revenue. Rising computing component costs have impacted and will continue to impact gross profit in the near term. Gross profit may also be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and increased computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs.

Previous wording

Research and development expense decreased by $9.0 million, or 17%, during the six months ended June 30, 2026, compared to the same period of 2025. The decrease was primarily driven by lower personnel and related expenses, including share-based compensation expense, partially offset by an increase in product development costs associated with ongoing investments in future sequencing platform development. We also recorded $2.7 million of restructuring-related charges during the six months ended June 30, 2025. Research and development expense included share-based compensation expense of $1.6 million and $5.9 million during the six months ended June 30, 2026 and 2025, respectively. We anticipate research and development expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions.

Current wording

Research and development expense decreased by $2.6 million, or 11%, for the third quarter of 2026, compared to the same quarter of 2025. The decrease was primarily driven by lower personnel and related expenses, including share-based compensation expense, and lower product development costs, partially offset by an increase in restructuring charges. We recorded $0.6 million of restructuring-related charges during the three months ended September 30, 2026. Research and development expense included share-based compensation expense of $2.1 million and $3.1 million during the third quarter of 2026 and 2025, respectively.

Previous wording

Sales, general and administrative expense decreased by $2.8 million, or 8%, for the second quarter of 2026, compared to the same quarter of 2025. The decrease was primarily driven by lower personnel and related expenses, including share-based compensation. We also recorded $0.6 million of restructuring-related charges in the second quarter of 2025. Sales, general, and administrative expense included share-based compensation expense of $6.2 million and $7.7 million during the second quarter of 2026 and 2025, respectively. We anticipate sales, general, and administrative expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions.

Current wording

Sales, general and administrative expense decreased by $1.7 million, or 5%, for the third quarter of 2026, compared to the same quarter of 2025. The decrease was primarily driven by lower personnel and related expenses, including share-based compensation, partially offset by an increase in restructuring charges. We recorded $0.9 million of restructuring-related charges in the third quarter of 2026. Sales, general and administrative expense included share-based compensation expense of $5.9 million and $7.0 million during the third quarter of 2026 and 2025, respectively.

Previous wording

Amortization of acquired intangible assets included in operating expenses for the second quarter of 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.

Current wording

Amortization of acquired intangible assets included in operating expenses for the third quarter of 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.

Previous wording

Interest expense for the second quarter of 2026 and 2025 was primarily comprised of interest on the convertible senior notes. Interest expense for the second quarter of 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI.

Current wording

Interest expense for the third quarter of 2026 and 2025 was primarily comprised of interest on the convertible senior notes. Interest expense for the third quarter of 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI.

Previous wording

Other income, net for the second quarter of 2026 decreased compared to the same quarter of 2025 primarily driven by lower investment income due to lower cash and investment balances.

Current wording

Other income, net for the third quarter of 2026 decreased compared to the same quarter of 2025 primarily driven by lower investment income due to lower cash and investment balances.

Previous wording

Total revenue decreased $0.7 million, or 1%, during the six months ended June 30, 2026 compared with the same period of 2025.

Current wording

Total revenue increased $1.4 million, or 1%, during the nine months ended September 30, 2026 compared with the same period of 2025.

Previous wording

Product revenue decreased $0.1 million primarily due to a decrease of $1.3 million, or 9%, in instrument revenue partially offset by an increase of $1.2 million, or 6%, in consumable revenue.

Current wording

Product revenue increased $1.7 million primarily due to an increase of $2.4 million, or 4%, in consumables revenue partially offset by a decrease of $0.7 million, or 2%, in instrument revenue.

Previous wording

The increase in consumables revenue during the six months ended June 30, 2026 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base. We also launched SPRQ-Nx during the second quarter of 2026.

Current wording

The increase in Revio consumables revenue reflects the continued expansion of the Revio instrument installed base. We also launched SPRQ-Nx on Revio during the second quarter of 2026.

Previous wording

Instrument revenue decreased during the six months ended June 30, 2026 reflecting lower Revio average selling prices associated with strategic multi-system customer placements. Instrument revenue was also impacted by variability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions.

Current wording

Instrument revenue decreased during the nine months ended September 30, 2026 reflecting lower average selling prices associated with strategic multi-system customer placements, lower Vega unit sales, partially offset by an increase in Revio unit sales. Instrument revenue was also impacted by variability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions.

Previous wording

Sales of Vega systems decreased during the six months ended June 30, 2026. We sold 53 units compared to 66 units in the same period of 2025. Sales of Revio systems increased with 35 units sold compared to 27 units in the same period of 2025.

Current wording

Sales of Vega systems decreased during the nine months ended September 30, 2026. We sold 88 units compared to 98 units in the same period of 2025. Sales of Revio systems increased with 50 units sold compared to 40 units in the same period of 2025.

Previous wording

Total cost of revenue decreased $12.9 million, or 20%, during the six months ended June 30, 2026, compared to the same period of 2025 primarily due to decreases in cost of product revenue, amortization of acquired intangible assets, and share-based compensation expense. We recorded $12.4 million of restructuring-related costs during the six months ended June 30, 2025, which included $3.8 million relating to loss on purchase commitments which was based on an estimate of future excess inventory related to supply agreements for which we did not expect to have related sales. See Note 5. Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about restructuring activities. Total cost of revenue included share-based compensation expense of $1.3 million and $2.1 million during the six months ended June 30, 2026 and 2025, respectively.

Current wording

Total cost of revenue decreased $8.3 million, or 10%, during the nine months ended September 30, 2026, compared to the same period of 2025 primarily due to decreases in cost of product revenue, amortization of acquired intangible assets, and share-based compensation expense. We recorded $12.4 million of restructuring-related costs during the nine months ended September 30, 2025, which included $3.9 million relating to loss on purchase commitments which was based on an estimate of future excess inventory related to supply agreements for which we did not expect to have related sales. See Note 5. Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about restructuring activities. Total cost of revenue included share-based compensation expense of $1.9 million and $3.0 million during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Cost of product revenue decreased $5.4 million, or 12%, during the six months ended June 30, 2026, compared to the same period of 2025 primarily due to the restructuring-related costs that were recorded in the prior period, lower Instrument volumes, and a shifting Consumables product mix partially offset by exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, and amortization of the patent license obtained through the legal settlement with PGI.

Current wording

Cost of product revenue decreased $2.8 million, or 4%, during the nine months ended September 30, 2026, compared to the same period of 2025 primarily due to the restructuring-related costs that were recorded in the prior period and a shifting consumables product mix partially offset by exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, and amortization of the patent license obtained through the legal settlement with PGI.

Previous wording

Gross profit increased $12.2 million, or 91%, during the six months ended June 30, 2026, compared to the same period of 2025 in line with the decrease in total cost of revenue described above and relatively flat revenue. While higher consumables mix and the introduction of SPRQ-Nx remain important drivers of margin expansion, rising computing component costs will temper the pace of margin improvement in the near term. Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and increased computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs.

Current wording

Gross profit increased $9.7 million, or 33%, during the nine months ended September 30, 2026, compared to the same period of 2025. The increase was primarily driven by the decrease in total cost of revenue described above and relatively flat revenue. Rising computing component costs have impacted and will continue to impact gross profit in the near term. Gross profit may also be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and increased computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs.

Previous wording

Sales, general and administrative expense decreased by $11.8 million, or 15%, during the six months ended June 30, 2026, compared to the same period of 2025. The decrease was primarily due to a decrease in personnel and related expenses, including share-based compensation expense, and lower marketing expense, partially offset by legal expenses related to the settlement with PGI. We also recorded $5.4 million of restructuring-related charges during the six months ended June 30, 2025. Sales, general, and administrative expense included share-based compensation expense of $10.7 million and $13.1 million during the six months ended June 30, 2026 and 2025, respectively. We anticipate sales, general, and administrative expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions.

Current wording

Sales, general and administrative expense decreased by $13.5 million, or 13%, during the nine months ended September 30, 2026, compared to the same period of 2025. The decrease was primarily due to lower personnel and related expenses, including share-based compensation expense, lower marketing expense, and lower restructuring charges, partially offset by legal expenses related to the settlement with PGI. We recorded $0.9 million of restructuring-related charges during the nine months ended September 30, 2026 compared to $5.5 million for the same period of 2025. Sales, general and administrative expense included share-based compensation expense of $16.7 million and $20.1 million during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

We recorded impairment charges of $15.0 million during the six months ended June 30, 2025, related to in-process research and development (“IPR&D”). These charges resulted from an interim impairment assessment performed in response to identified indicators of impairment during the period. The impairment test concluded that the carrying amount of our IPR&D assets exceeded their estimated fair value. See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Current wording

We recorded impairment charges of $15.0 million during the nine months ended September 30, 2025, related to in-process research and development (“IPR&D”). These charges resulted from an interim impairment assessment performed in response to identified indicators of impairment during the period. The impairment test concluded that the carrying amount of our IPR&D assets exceeded their estimated fair value. See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Previous wording

Amortization of acquired intangible assets included in operating expenses for the six months ended June 30, 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.

Current wording

Amortization of acquired intangible assets included in operating expenses for the nine months ended September 30, 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.

Previous wording

Amortization of acquired intangible assets included in operating expenses during the six months ended June 30, 2025 included $359.3 million of accelerated amortization related to developed technology from the 2021 Omniome, Inc. acquisition, reflecting our revised estimate that the asset will no longer generate economic benefit beyond March 31, 2025.

Current wording

Amortization of acquired intangible assets included in operating expenses during the nine months ended September 30, 2025 included $359.3 million of accelerated amortization related to developed technology from the 2021 Omniome, Inc. acquisition, reflecting our revised estimate that the asset will no longer generate economic benefit beyond March 31, 2025.

Previous wording

Interest expense during the six months ended June 30, 2026 and 2025 was primarily comprised of interest on the convertible senior notes. Interest expense for the six months ended June 30, 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI.

Current wording

Interest expense during the nine months ended September 30, 2026 and 2025 was primarily comprised of interest on the convertible senior notes. Interest expense for the nine months ended September 30, 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI.

Previous wording

Other income, net during the six months ended June 30, 2026 decreased compared to the same period of 2025 primarily driven by lower investment income due to lower cash and investment balances.

Current wording

Other income, net during the nine months ended September 30, 2026 decreased compared to the same period of 2025 primarily driven by lower investment income due to lower cash and investment balances.

Previous wording

As of June 30, 2026, we had cash, cash equivalents and investments of $236.9 million compared to $279.5 million as of December 31, 2025. We believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements beyond the next 12 months from the date of filing of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.

Current wording

As of September 30, 2026, we had cash, cash equivalents and investments of $199.4 million compared to $279.5 million as of December 31, 2025. We believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements beyond the next 12 months from the date of filing of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026.

Previous wording

Our primary sources of liquidity, other than our holdings of cash, cash equivalents, and investments, have primarily been through the issuance of debt or equity securities, together with cash flow from operating activities. We have historically incurred, and expect to continue to incur, operating losses and generate negative cash flows from operations on an annual basis, and as a result, we may require additional capital resources to execute our strategic initiatives to grow our business.

Current wording

Our primary sources of liquidity, other than our holdings of cash, cash equivalents, and investments, have primarily been through the issuance of debt or equity securities. We also receive cash from customers through sales of our products and services. However, our operating cash outflows have exceeded our operating cash inflows, resulting in negative cash flows from operating activities. We have historically incurred, and expect to continue to incur, operating losses and generate negative cash flows from operations on an annual basis, and as a result, we expect to require additional capital resources to execute our strategic initiatives to grow our business.

Previous wording

During the third quarter of 2026, we announced a restructuring plan to continue to better align our organizational structure and resources with our strategic initiatives. These restructuring actions are expected to result in a workforce reduction of approximately 40 employees, or approximately 8% of our workforce, as we align our organizational structure with our strategic priorities. Including the Reduction in Force and related non-headcount cost actions, we expect to reduce our annualized operating expenses by $30 million to $40 million by the end of 2027.

Current wording

During the third quarter of 2026, we announced a restructuring plan to continue to better align our organizational structure and resources with our strategic initiatives. These restructuring actions resulted in a workforce reduction of 40 employees, or approximately 8% of our workforce, as we aligned our organizational structure with our strategic priorities. Including the Reduction in Force and related non-headcount cost actions, we expect to reduce our annualized operating expenses by over $30 million when compared to operating expense prior to the restructuring.

Previous wording

We estimate that we will incur aggregate pre-tax charges of approximately $2.0 million in connection with the Reduction in Force, primarily consisting of severance payments, employee benefits, outplacement services and related costs. We expect that the Reduction in Force will be completed and that these charges will be incurred in the third quarter of 2026. We also approved and implemented certain efficiency and expense reduction initiatives during 2025 and 2024. These expense reduction initiatives included workforce reductions, facilities downsizing and a refined pipeline of development programs.

Current wording

In the third quarter of 2026 we incurred aggregate pre-tax charges of approximately $1.8 million in connection with the Reduction in Force, primarily consisting of severance payments, employee benefits, outplacement services and related costs. The Reduction in Force was completed and these charges were incurred and paid during the three months ended September 30, 2026. We also approved and implemented certain efficiency and expense reduction initiatives during 2025 and 2024. These expense reduction initiatives included workforce reductions, facilities downsizing and a refined pipeline of development programs.

Previous wording

If economic, financial, business, or other factors adversely affect our ability to fund our projected operating cash requirements, we may be required to obtain funding through traditional or alternative sources of financing. Raising additional funds may result in dilution to existing shareholders. We cannot be certain that funds will be available on favorable terms, or at all. If we are required and unable to raise additional capital when desired, our business, operating results, and financial condition may be adversely affected. See our risk factor captioned “We are not cash flow positive and may not have sufficient cash to make required payments under the terms of our debt or fund our long-term planned operations” in Part II, Item 1A of this Quarterly Report on Form 10-Q for more information.

Current wording

If economic, financial, business, or other factors adversely affect our ability to fund our projected operating cash requirements, we expect to require additional funding through traditional or alternative sources of financing. Raising additional funds may result in dilution to existing shareholders. We cannot be certain that funds will be available on favorable terms, or at all. If we are required and unable to raise additional capital when desired, our business, operating results, and financial condition may be adversely affected. See our risk factor captioned “We are not cash flow positive and may not have sufficient cash to make required payments under the terms of our debt or fund our long-term planned operations” in Part II, Item 1A of this Quarterly Report on Form 10-Q for more information.