Company: PACB
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001299130-25-000061
Chunk: 688

Company: PACIFIC BIOSCIENCES OF CALIFORNIA, INC.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 1A
Chunk 688
---
 2, or Level 3 assets or liabilities reported at fair value on a recurring basis and our valuation techniques did not change compared to the prior year.Contingent Consideration - AptonWe classify contingent consideration, which was incurred in connection with the acquisition of Apton, within Level 3 as factors used to develop the estimate of fair value include unobservable inputs that are not supported by market activity and are significant to the fair value. Estimates and assumptions used in the Monte Carlo simulation include risk-adjusted forecasted revenues for products and services leveraging Apton's technology and an estimated credit spread.We estimate the fair value of the contingent consideration liability based on the simulated revenue of the Company through the five-year anniversary of the closing date of the acquisition. As of December 31, 2024, the key input used in the determination of the fair value included projected revenues of the Company relating to the high-throughput short-read products and services leveraging Apton's technology. The assumptions used in our valuation are inherently subject to uncertainty. A decrease in the projected revenues would result in a decrease in the fair value of the liability. The discount rates used are the sum of the U.S. risk-free rate and the estimated subordinated credit spread for CCC+ credit rating, which ranges from 9.4% to 9.6%. Changes in our estimated subordinated credit spread can result in changes in the fair value of the contingent consideration liability, where a lower credit spread may result in an increased liability valuation.

Fiscal 2024 Form 10-K100

Changes in the estimated fair value of the contingent consideration liability related to the Apton acquisition for the year ended December 31, 2024 were as follows:(in thousands)Level 3Beginning balance as of December 31, 2023$19,550 Change in estimated fair value(850)Ending balance as of December 31, 2024$18,700 Changes to the fair value are recorded as the change in fair value of contingent consideration on our consolidated statement of operations and comprehensive loss.Contingent Consideration - OmniomeOn September 20, 2023, we achieved the commercial milestone in connection with the 2021 acquisition of Omniome. Consequently, former Omniome securityholders were entitled to receive as milestone consideration, among other things, an aggregate of approximately $100.9 million in cash and approximately 9.0 million shares of our common stock, representing $95.9 million divided by the volume-weighted average of the trading prices