Company: PACB
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001299130-25-000061
Chunk: 797

Company: PACIFIC BIOSCIENCES OF CALIFORNIA, INC.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 3
Chunk 797
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 million of the purchase price to IPR&D. As of December 31, 2024, the research and development project had not been completed or abandoned and, therefore, the IPR&D is not currently subject to amortization. During the year ended December 31, 2023, acquired IPR&D of $400.0 million as a result of the Omniome acquisition in September 2021 was completed and became subject to amortization.IPR&D is reviewed for impairment at least annually, or more frequently if an event occurs indicating the potential for impairment. Based on the interim impairment test of goodwill in the second quarter of 2024 and our annual IPR&D impairment assessment in the third quarter of 2024, no impairment of IPR&D was identified.As of the end of the fourth quarter of 2024, we concluded that due to significant macroeconomic uncertainties and the related changes in the timing and amount of expected future cash flows, among other factors, it was more likely than not that the fair value of the IPR&D was less than its carrying amount that required an interim impairment test be performed on IPR&D. We performed our impairment test by comparing the carrying value of the IPR&D to its estimated fair value, which was determined by the income approach, using a discounted cash flow model. Significant estimates and assumptions used in the income approach, which represent a Level 3 fair value measurement, include revenue growth assumptions, a selected discount rate of 14.0%, and a selected obsolescence factor of 13 years. The discount rate was based primarily on the weighted average cost of capital, determined using market, peer company, industry data, and related risk factors. Based on our analysis, the carrying value of the IPR&D exceeded its estimated fair value, and we recorded an impairment of $40.0 million in the fourth quarter of 2024. The impairment charge is included on our consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.The assumptions used were inherently subject to uncertainty and small changes in these assumptions could have had a significant impact on the concluded value. An increase of 100 basis points to the discount rate used in our analysis would have resulted in additional IPR&D impairment of approximately $5 million. A decrease of one year to the obsolescence factor used in our analysis would have resulted in additional IPR&D impairment of approximately $5 million. We also performed a recoverability test for the definite-lived asset group, which includes developed technology,