UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from to .
Commission File Number:
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of |
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(I.R.S. Employer |
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(Registrant’s address of principal executive offices
and telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This filing contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, future revenue, business strategy, prospects, products, research and development costs, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “anticipate,” “believe,” contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these terms or other similar expressions are intended to identify forward-looking statements. Forward-looking statements contained in this report include, but are not limited to, statements about:
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” elsewhere in this report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, advancements, discoveries, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.
You should read this report and the documents that we reference in this report and have filed with the SEC as exhibits to this report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
2
Summary of Material Risks Associated with Our Business
Our business is subject to a number of risks that if realized could materially affect our business, prospects, operating results and financial condition. These risks are discussed more fully in the “Risk Factors” section of this Quarterly Report on Form 10-Q. These risks include the following:
3
TABLE OF CONTENTS
4
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SINGULAR GENOMICS SYSTEMS, INC.
Condensed Balance Sheets
(In thousands, except share and par value amounts)
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March 31, |
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December 31, |
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2022 |
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2021 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Right-of-use lease assets |
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Property and equipment, net |
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Restricted cash |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Lease liabilities, current |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, net of issuance costs |
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Lease liabilities, noncurrent |
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Other noncurrent liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Series A Common Stock Equivalent Convertible Preferred Stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to these unaudited condensed financial statements.
2
SINGULAR GENOMICS SYSTEMS, INC.
Condensed Statements of Operations
(Unaudited)
(In thousands, except share and per share amounts)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Operating expenses: |
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Research and development |
$ |
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$ |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Interest and other income |
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Interest expense |
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( |
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( |
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Change in fair value of convertible promissory notes |
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( |
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Change in fair value of warrant liability |
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( |
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Net loss |
$ |
( |
) |
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$ |
( |
) |
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Net loss per share: |
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Basic and diluted net loss per share |
$ |
( |
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$ |
( |
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Weighted-average shares used to compute basic and diluted net loss per share |
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See accompanying notes to these unaudited condensed financial statements.
3
SINGULAR GENOMICS SYSTEMS, INC.
Condensed Statements of Comprehensive Loss
(Unaudited)
(In thousands)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Net loss |
$ |
( |
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$ |
( |
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Other comprehensive loss: |
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Unrealized loss on available-for-sale securities |
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( |
) |
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( |
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Comprehensive loss |
$ |
( |
) |
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$ |
( |
) |
See accompanying notes to these unaudited condensed financial statements.
4
Condensed Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
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Preferred Stock |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance at December 31, 2021 |
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- |
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$ |
- |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Exchange of common stock for Series A Common Stock Equivalent |
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- |
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( |
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- |
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- |
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- |
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- |
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- |
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Vesting of common stock issued for early exercise |
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- |
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- |
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- |
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- |
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- |
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Issuance of common stock in connection with exercise |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Unrealized loss on available- for-sale marketable |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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( |
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Net loss |
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- |
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- |
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( |
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( |
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Balance at March 31, 2022 |
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$ |
- |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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See accompanying notes to these unaudited condensed financial statements.
5
SINGULAR GENOMICS SYSTEMS, INC.
Condensed Statements of Preferred Stock and Stockholders’ Equity (Deficit)
(Unaudited)
(In thousands, except share data)
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Series Seed |
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Series A |
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Series B |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Gain (Loss) |
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Deficit |
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Deficit |
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Balance at December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Vesting of common stock issued for early exercise |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Issuance of common stock in connection with exercise |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Unrealized loss on available- for-sale marketable |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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( |
) |
Net loss |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Balance at March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
See accompanying notes to these unaudited condensed financial statements.
6
SINGULAR GENOMICS SYSTEMS, INC.
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
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Three Months Ended |
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Three Months Ended |
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Operating activities |
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Net loss |
$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Stock-based compensation |
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Change in fair value of convertible promissory notes |
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Change in fair value of warrant liability |
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Amortization of premium on short-term investments |
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Amortization of right-of-use lease assets |
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Accretion of debt issuance costs |
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Changes in operating assets and liabilities: |
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Inventory |
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( |
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Prepaid expenses and other current assets |
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( |
) |
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Other noncurrent assets |
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( |
) |
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( |
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Accounts payable |
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Accrued expenses |
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( |
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Other current liabilities |
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( |
) |
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Lease liabilities |
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( |
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Other noncurrent liabilities |
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( |
) |
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Net cash used in operating activities |
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( |
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( |
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Investing activities |
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Purchases of short-term investments |
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( |
) |
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( |
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Sales of short-term investments |
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Maturities of short-term investments |
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Purchases of property and equipment |
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( |
) |
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( |
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Net cash provided by (used in) investing activities |
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( |
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Financing activities |
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Proceeds from issuance of common stock, net of repurchases |
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Proceeds from issuance of convertible promissory notes |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and cash equivalents and restricted cash |
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( |
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Cash and cash equivalents and restricted cash, beginning of year |
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Cash and cash equivalents and restricted cash, end of period |
$ |
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$ |
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Supplemental disclosure for cash activities |
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Interest paid |
$ |
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$ |
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Supplemental disclosure for non-cash activities |
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Initial lease liability recognized upon adoption of ASC 842 |
$ |
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$ |
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Vesting of restricted stock |
$ |
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$ |
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Deferred offering costs in accrued expenses |
$ |
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$ |
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Purchase of property and equipment included in accounts payable |
$ |
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$ |
|
See accompanying notes to these unaudited condensed financial statements.
7
SINGULAR GENOMICS SYSTEMS, INC.
Notes to Condensed Financial Statements
(Unaudited)
1. Business
Description of Business
Singular Genomics Systems, Inc. (the “Company”) is a life science technology company that is leveraging novel, next-generation sequencing (“NGS”) and multiomics technologies to empower researchers and clinicians. The Company developed a unique and proprietary NGS technology, which is referred to as its Sequencing Engine. The Sequencing Engine is the foundational platform technology that forms the basis of the Company’s products in development as well as its core product tenets: power, speed, flexibility and accuracy. The Company is developing two products that are purpose-built to target applications in which these core product tenets matter most. The first product, the G4, targets the NGS market. The G4 is a benchtop next-generation sequencer designed to produce fast and accurate genetic sequencing results. The integrated purpose-built kits that run on the G4 address specific applications in the oncology and immune profiling markets. The second product in development, the PX, combines single-cell analysis, spatial analysis, genomics and proteomics in one integrated instrument to offer a versatile multiomics solution.
The Company was incorporated in the state of Delaware in June 2016 and has its principal operations in San Diego, California.
Initial Public Offering
On June 1, 2021, the Company closed its initial public offering (“IPO”) in which it sold
Concurrent with the closing of the IPO:
Liquidity and Capital Resources
The Company has incurred net losses since inception and, as of March 31, 2022 and December 31, 2021, had an accumulated deficit of $
8
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures required by GAAP for annual financial statements have been omitted. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for fair presentation, have been included. Interim financial results are not necessarily indicative of results anticipated for the full year.
The preparation of the Company’s unaudited condensed financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s unaudited condensed financial statements and accompanying notes. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may significantly differ from these estimates and assumptions. For the year ended December 31, 2021, significant estimates and assumptions include the fair value of the 2021 Convertible Notes, the fair value of the liability for the SVB Warrant, the fair value of the Company’s preferred and common stock and stock-based compensation. After December 31, 2021, significant estimates and assumptions include stock-based compensation and the value of lease liabilities and right-of-use lease assets.
Summary of Significant Accounting Policies
During the three months ended March 31, 2022, other than the policies described below, there were no changes to the Company’s significant accounting policies as described in Note 2 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheets (in thousands):
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March 31, |
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December 31, |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Total |
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$ |
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$ |
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Short-term Investments
Short-term investments primarily consisted of corporate debt securities, asset-backed securities and treasury securities. The Company’s investments in securities are classified as current as they are available for use in current operations.
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March 31, 2022 |
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Amortized |
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Gross |
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Estimated |
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U.S. treasury securities |
$ |
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$ |
( |
) |
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$ |
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Asset-backed securities |
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( |
) |
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Corporate debt securities |
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( |
) |
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Total |
$ |
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|
$ |
( |
) |
|
$ |
|
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December 31, 2021 |
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Amortized |
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Gross |
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Estimated |
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Asset-backed securities |
$ |
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|
$ |
( |
) |
|
$ |
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Corporate debt securities |
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( |
) |
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Total |
$ |
|
|
$ |
( |
) |
|
$ |
|
9
The following table summarizes contractual maturities of available-for-sale securities held at March 31, 2022 and December 31, 2021 (in thousands):
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March 31, |
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December 31, |
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||
|
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Estimated |
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|
Estimated |
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||
Due within one year |
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$ |
|
|
$ |
|
||
After one but within five years |
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|
|
|
|
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||
Total |
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$ |
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|
$ |
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The Company determined there was no other-than-temporary impairment of any of its investments.
Inventory
Inventory includes raw materials, which are goods to be consumed directly or indirectly in production, work in process, which are goods in the course of production, and finished goods, which are goods awaiting sale. Inventory is recorded at the lower of cost or net realizable value. Costs are based on standard costs that are adjusted regularly to reflect current conditions so that at the balance-sheet date standard costs reasonably approximate costs under a first-in, first-out basis. Standard costs include acquisition and production costs. Raw materials include inventories that may be used in research and development activities, and such items are expensed as consumed or capitalized as property and equipment and depreciated.
Inventory in the prior year’s financial statements have been reclassified to conform to the current presentation on the condensed balance sheets and condensed statements of cash flows. No subtotals in the prior year financial statements were impacted as a result.
Leases
The Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), effective January 1, 2022. ASC 842 requires the Company to recognize on the balance sheet lease liabilities and corresponding right-of-use (“ROU”) lease assets for its operating leases where the Company is the lessee. The initial impact of the adoption is discussed below in the section titled “Recent Accounting Pronouncements—Adopted.”
The Company determines if an arrangement is or contains a lease at contract inception. Lease liabilities represent the Company’s obligation to make payments under its operating leases. ROU lease assets represent the Company’s right to use assets under its operating leases. The Company determines the value of lease liabilities and ROU lease assets on a lease-by-lease basis. A lease liability is recognized at the commencement date of an operating lease based on the present value of the future lease payments over the expected lease term. A corresponding ROU lease asset is recognized at the commencement date of an operating lease based on the value of the lease liability, adjusted for any lease incentives received, any initial direct costs incurred and any lease payments made at or before the lease commencement date. The Company made a policy election to not recognize lease liabilities and ROU lease assets for operating leases with an expected lease term of twelve months or less.
The Company calculates the present value of lease payments using the discount rate implicit in the lease, unless that rate cannot be readily determined. In that case, the Company uses its incremental borrowing rate based on information available at the date of lease commencement. The incremental borrowing rate is the estimated rate of interest that the Company would pay to borrow, on a collateralized basis, an amount equal to the lease payments over the expected lease term.
After lease commencement, the Company measures its operating leases as follows: (i) the lease liability based on the present value of the remaining lease payments using the incremental borrowing rate determined at lease commencement; and (ii) the ROU lease asset based on the remeasured lease liability, adjusted for any unamortized lease incentives received, any unamortized initial direct costs and the cumulative difference between lease expense and amounts paid under the lease. Lease expense is recognized on a straight-line basis over the expected lease term. Any lease incentives received and any initial direct costs are amortized on a straight-line basis over the expected lease term. Variable lease payments such as those related to property taxes, insurance and common area maintenance are recognized as expense when incurred.
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Recent Accounting Pronouncements—Adopted
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”), codified as ASC 842. ASC 842 requires the Company to recognize on the balance sheet lease liabilities and corresponding ROU lease assets for its operating leases where the Company is the lessee. The Company adopted this standard effective January 1, 2021 using the modified retrospective method by applying the new standard to all leases existing as of January 1, 2022 and not restating any prior comparative periods. The Company elected the practical expedients to carry forward its historical lease classification, not reassess whether any expired or existing contracts are or contain leases and not reassess initial direct costs for existing leases. On January 1, 2022, the Company recorded operating lease liabilities of $
Recent Accounting Pronouncements—Not Yet Adopted