Company: PACB
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001299130-25-000168
Chunk: 18

Company: PACIFIC BIOSCIENCES OF CALIFORNIA, INC.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 18
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 emphasizing HiFi sequencing and discontinuing short-read platform development, and concluded there was no impairment.We completed our annual goodwill impairment assessment on April 1, 2025 and noted no impairment.Changes in our future operating results, cash flows, share price, market capitalization or discount rates used when conducting future goodwill impairment tests could affect the implied fair value of goodwill and may result in additional impairment charges in the future.Intangible AssetsIntangible assets include developed technology, customer relationships, and acquired in-process research and development ("IPR&D"). In connection with the Apton acquisition in August 2023, we allocated $55.0 million of the purchase price to IPR&D. This asset is considered indefinite-lived until the associated research and development activities are either completed or abandoned, and it is tested for impairment annually and more 

Q3 Fiscal 2025 Form 10-Q12

frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.We recognized a $40.0 million impairment charge in the fourth quarter of 2024 as a result of a quantitative interim impairment test.Based on our decision to cease development of the high-throughput short-read sequencing platform, which would utilize the IPR&D, and the resulting changes to the expected future cash flows, among other factors, we concluded that it was more likely than not that the fair value of the IPR&D was less than its carrying amount, requiring an interim impairment assessment. Using a discounted cash flow model under the income approach, we determined the fair value was below carrying value and recorded a $15.0 million impairment charge. The decline in the fair value of the IPR&D below its carrying amount as of March 31, 2025 resulted primarily from changes in the timing of expected future cash flows as compared to the fair value as of December 31, 2024, driven by the restructuring initiatives that prioritize the adoption of HiFi sequencing. The impairment charge is included in our consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2025. Significant estimates and assumptions used in the income approach include timing of future cash flows, revenue growth assumptions, a selected discount rate of 14.0%, and a selected obsolescence factor of 11 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. The assessment is a level 3 measurement due to its reliance on certain unobservable inputs and