10x Genomics, Inc. Form 8-K Summary
Business Context and Reporting Period
Filed December 19, 2019, regarding the ITC’s final determination issued December 18, 2019, in the patent dispute with Bio-Rad Laboratories, Inc. and Lawrence Livermore National Security, LLC. The matter concerns 10x Genomics’ legacy GEM microfluidic chips, Next GEM microfluidic chips, and gel bead manufacturing microfluidic chips.
Financial and Operating Metrics
The filing does not provide revenue, profit, cash flow, margins, debt, liquidity, or other quantitative financial results.
The company stated that its U.S. manufacturing facilities began volume production of certain legacy GEM microfluidic chips in the third quarter of 2019. Those chips represented the majority of U.S. consumable revenue during that period. The company also stated that substantially all Chromium instruments sold since August 28, 2019 operate exclusively with Next GEM solutions.
Material Changes Versus the Prior Comparable Period
- The ITC affirmed that Next GEM and gel bead manufacturing microfluidic chips do not infringe any asserted claims.
- The ITC affirmed that legacy GEM microfluidic chips infringe three patents, but not a fourth asserted patent.
- The ITC issued a limited exclusion order and cease-and-desist order covering unlicensed imports and sales of legacy GEM microfluidic chips in the United States.
- The ITC reduced the required bond during the 60-day presidential review period from the previously recommended 100% of entered value to 3% of entered value, or approximately $0.21 per chip based on the stated approximate $7 entered value.
Outlook, Risks, Contingencies, and Unusual Items
The exclusion and cease-and-desist orders are subject to a 60-day presidential review period. During that period, the company may continue importing and selling legacy GEM microfluidic chips subject to the 3% bond requirement.
The ITC created an exception allowing continued importation and sale of legacy GEM chips to researchers using the chips as of December 18, 2019, where a documented need exists for an ongoing research project and no alternative product can meet that need.
Management believes that Chromium products using Next GEM chips will constitute substantially all of Chromium consumables sales by the end of 2020. This is a forward-looking statement and depends on adoption, manufacturing execution, regulatory developments, litigation-related outcomes, and other business risks.
Most Important Facts to Verify
- Whether the presidential review changes, affirms, or delays the ITC orders.
- The practical scope of the researcher exception and the company’s ability to document qualifying customers.
- The effect of the legacy GEM restrictions on U.S. consumable revenue, inventory, manufacturing, and customer relationships.
- The pace of customer conversion from legacy GEM to Next GEM products and whether Next GEM sales reach the company’s stated 2020 expectation.
- Any related financial impacts or contingencies disclosed in subsequent Forms 10-K, 10-Q, or other SEC filings.