Singular Genomics Systems, Inc. [OMIC] Filings

10-Q 1 omic-20220331.htm 10-Q 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-40443

SINGULAR GENOMICS SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)


Delaware		81-2948451
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

3010 Science Park Road
San Diego, California 92121

(858) 333-7830

(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
Common Stock, $0.0001 par value per share	OMIC	Nasdaq Global Select Market

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. Yes ☒ No ☐

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).

Yes ☒ No ☐

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	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		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 ☒

70,585,264 shares of common stock, $0.0001 par value, outstanding as of April 30, 2022.

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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:

•

estimates of our addressable market, market growth, future revenue, expenses, capital requirements and our needs for additional financing;

•

our ability to timely and successfully implement our commercialization plan for the G4 and planned PX;

•

the implementation of our business model and strategic plans for the G4 and planned PX;

•

our expectations regarding the rate and degree of market acceptance of the G4 and planned PX;

•

our ability to compete with competitive companies and technologies in our industry;

•

our ability to manage and grow our business and commercialize the G4 and planned PX;

•

our ability to develop and commercialize new products and product enhancements;

•

the impact of the COVID-19 pandemic on our business;

•

our ability to establish and maintain intellectual property protection for our products or avoid or defend claims of infringement;

•

our ability to fulfill our contractual commitments;

•

the performance of third-party manufacturers and suppliers;

•

our ability to effectively manufacture our products;

•

the potential effects of government regulation;

•

our ability to hire and retain key personnel and to manage our future growth effectively;

•

our ability to obtain additional financing on favorable terms to us or at all;

•

our expectations regarding use of proceeds from our initial public offering;

•

the impact of local, regional, national and international economic conditions and events;

•

our expectations about market trends; and

•

our expectations regarding the period during which we will qualify as an emerging growth company under the JOBS Act.

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.

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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:

•

Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.

•

We have incurred significant losses since inception, we expect to incur significant losses in the future and we may not be able to generate sufficient revenue to achieve and maintain profitability.

•

We are a pre-revenue life science technology company in the development stage and have very limited history commercializing our products or technology, which makes it difficult to evaluate our prospects and predict our future performance.

•

The life sciences technology market is highly competitive. If we fail to compete effectively, our business and operating results will suffer.

•

If we are sued for infringing, misappropriating or otherwise violating intellectual property rights of third parties, such litigation could be costly and time-consuming and could prevent or delay us from developing or commercializing our product candidates.

•

We could have disputes with contractual counterparties regarding our or their performance under those contracts, we could be unable to fulfill such contractual commitments, or our contractual obligations may exceed our current expectations.

•

If our products fail to achieve early customer and scientific acceptance, we may not be able to achieve broader market acceptance for our products, and our revenues and prospects may be harmed.

•

We expect to be highly dependent upon revenue generated from the sale of the G4, and any delay or failure by us to finalize the development and to successfully commercialize the G4 could have a substantial adverse effect on our business and results of operations.

•

The COVID-19 pandemic and efforts to reduce its spread have adversely impacted and may materially and adversely impact our business and operations in the future.

•

Our business will depend significantly on research and development spending by academic institutions and other research institutions, and any reduction in spending could limit demand for our products and adversely affect our business, results of operations, financial condition and prospects.

•

Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.

•

We have only launched one commercial product, the G4, and we may not be able to successfully commercially launch our planned PX or other products as planned.

•

The G4 is sold as a research-use-only product; changes in the regulatory landscape could affect the market for such a product.

•

If we are unable to obtain and maintain sufficient intellectual property protection for our products and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired.

•

We may require substantial additional funding, which may not be available to us on acceptable terms, or at all, and, if not available, may require us to delay, scale back, or cease our product development programs or operations.

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TABLE OF CONTENTS


Part I. Financial Information	2
Item 1. Financial Statements (Unaudited)	2
Condensed Balance Sheets	2
Condensed Statements of Operations	3
Condensed Statements of Comprehensive Loss	4
Condensed Statement of Stockholders’ Equity (Deficit)	5
Condensed Statement of Preferred Stock and Stockholders’ Equity (Deficit)	6
Condensed Statements of Cash Flows	7
Notes to Condensed Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures about Market Risk	29
Item 4. Controls and Procedures	29
Part II. Other Information	31
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3. Defaults Upon Senior Securities	63
Item 4. Mine Safety Disclosures	63
Item 5. Other Information	64
Item 6. Exhibits	65
Signatures	66

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SINGULAR GENOMICS SYSTEMS, INC.

Condensed Balance Sheets

(In thousands, except share and par value amounts)


	March 31,			December 31,
	2022			2021
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	188,572		$	201,049
Short-term investments		127,402			138,174
Inventory		6,329			3,011
Prepaid expenses and other current assets		3,486			5,526
Total current assets		325,789			347,760
Right-of-use lease assets		5,749			-
Property and equipment, net		6,714			6,072
Restricted cash		1,734			687
Other noncurrent assets		2,125			1,129
Total assets	$	342,111		$	355,648

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,525		$	2,348
Accrued expenses		2,911			4,278
Lease liabilities, current		2,646			-
Other current liabilities		-			118
Total current liabilities		9,082			6,744
Long-term debt, net of issuance costs		9,941			9,904
Lease liabilities, noncurrent		3,878			-
Other noncurrent liabilities		1,728			2,827
Total liabilities		24,629			19,475
Commitments and contingencies (Note 9)
Stockholders’ equity:
Series A Common Stock Equivalent Convertible Preferred Stock, $0.0001 par value; 7,000 shares authorized, 2,500 and 0 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		-			-
Common stock, $0.0001 par value; 400,000,000 shares authorized, 70,509,463 and 72,438,742 shares outstanding at March 31, 2022 and December 31, 2021, respectively		7			7
Additional paid-in capital		492,144			488,200
Accumulated other comprehensive loss		(767	)		(138	)
Accumulated deficit		(173,902	)		(151,896	)
Total stockholders’ equity		317,482			336,173
Total liabilities and stockholders’ equity	$	342,111		$	355,648

See accompanying notes to these unaudited condensed financial statements.

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SINGULAR GENOMICS SYSTEMS, INC.

Condensed Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended March 31,
	2022			2021
Operating expenses:
Research and development	$	10,645		$	6,608
Selling, general and administrative		11,375			3,654
Total operating expenses		22,020			10,262

Loss from operations		(22,020	)		(10,262	)

Other income (expense):
Interest and other income		156			131
Interest expense		(142	)		(188	)
Change in fair value of convertible promissory notes		-			(11,400	)
Change in fair value of warrant liability		-			(2,202	)
Net loss	$	(22,006	)	$	(23,921	)

Net loss per share:
Basic and diluted net loss per share	$	(0.31	)	$	(2.05	)
Weighted-average shares used to compute basic and diluted net loss per share		71,011,041			11,652,998

See accompanying notes to these unaudited condensed financial statements.

SINGULAR GENOMICS SYSTEMS, INC.

Condensed Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2022			2021
Net loss	$	(22,006	)	$	(23,921	)
Other comprehensive loss:
Unrealized loss on available-for-sale securities		(629	)		(49	)
Comprehensive loss	$	(22,635	)	$	(23,970	)

See accompanying notes to these unaudited condensed financial statements.

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SINGULAR GENOMICS SYSTEMS, INC.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)


	Preferred Stock				Common Stock					Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Loss			Deficit			Equity
Balance at December 31, 2021		-	$	-		72,438,742		$	7	$	488,200	$	(138	)	$	(151,896	)	$	336,173
Exchange of common stock for Series A Common Stock Equivalent		2,500		-		(2,500,000	)		-		-		-			-			-
Vesting of common stock issued for early exercise of stock options		-		-		505,322			-		344		-			-			344
Issuance of common stock in connection with exercise of stock options		-		-		65,399			-		34		-			-			34
Stock-based compensation		-		-		-			-		3,566		-			-			3,566
Unrealized loss on available- for-sale marketable securities		-		-		-			-		-		(629	)		-			(629	)
Net loss		-		-												(22,006	)		(22,006	)
Balance at March 31, 2022		2,500	$	-		70,509,463		$	7	$	492,144	$	(767	)	$	(173,902	)	$	317,482

See accompanying notes to these unaudited condensed financial statements.

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SINGULAR GENOMICS SYSTEMS, INC.

Condensed Statements of Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

(In thousands, except share data)


	Series Seed Convertible Preferred Stock				Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Gain (Loss)			Deficit			Deficit
Balance at December 31, 2020		6,520,790	$	4,486		12,932,429	$	19,908		19,373,169	$	44,790		10,816,937	$	1	$	1,552	$	17		$	(53,125	)	$	(51,555	)
Vesting of common stock issued for early exercise of stock options		-		-		-		-		-		-		151,343		-		92		-			-			92
Issuance of common stock in connection with exercise of stock options		-		-		-		-		-		-		1,855,904		-		995		-			-			995
Stock-based compensation		-		-		-		-		-		-		-		-		1,096		-			-			1,096
Unrealized loss on available- for-sale marketable securities		-		-		-		-		-		-		-		-		-		(49	)		-			(49	)
Net loss		-		-		-		-		-		-											(23,921	)		(23,921	)
Balance at March 31, 2021		6,520,790	$	4,486		12,932,429	$	19,908		19,373,169	$	44,790		12,824,184	$	1	$	3,735	$	(32	)	$	(77,046	)	$	(73,342	)

See accompanying notes to these unaudited condensed financial statements.

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SINGULAR GENOMICS SYSTEMS, INC.

Condensed Statements of Cash Flows

(Unaudited)

(In thousands)


	Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
Operating activities
Net loss	$	(22,006	)	$	(23,921	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		461			211
Stock-based compensation		3,566			1,096
Change in fair value of convertible promissory notes		-			11,400
Change in fair value of warrant liability		-			2,202
Amortization of premium on short-term investments		1,174			72
Amortization of right-of-use lease assets		641			-
Accretion of debt issuance costs		37			78
Changes in operating assets and liabilities:
Inventory		(3,318	)		-
Prepaid expenses and other current assets		1,648			(264	)
Other noncurrent assets		(1,111	)		(804	)
Accounts payable		1,013			144
Accrued expenses		(1,367	)		585
Other current liabilities		-			(58	)
Lease liabilities		(550	)		-
Other noncurrent liabilities		(27	)		74
Net cash used in operating activities		(19,839	)		(9,185	)

Investing activities
Purchases of short-term investments		(35,193	)		(101,608	)
Sales of short-term investments		10,334			8,838
Maturities of short-term investments		34,184			2,816
Purchases of property and equipment		(939	)		(507	)
Net cash provided by (used in) investing activities		8,386			(90,461	)

Financing activities
Proceeds from issuance of common stock, net of repurchases		23			2,984
Proceeds from issuance of convertible promissory notes		-			130,500
Net cash provided by financing activities		23			133,484

Net (decrease) increase in cash and cash equivalents and restricted cash		(11,430	)		33,838
Cash and cash equivalents and restricted cash, beginning of year		201,736			12,170
Cash and cash equivalents and restricted cash, end of period	$	190,306		$	46,008

Supplemental disclosure for cash activities
Interest paid	$	105		$	148
Supplemental disclosure for non-cash activities
Initial lease liability recognized upon adoption of ASC 842	$	7,074		$	-
Vesting of restricted stock	$	344		$	92
Deferred offering costs in accrued expenses	$	-		$	804
Purchase of property and equipment included in accounts payable	$	164		$	86

See accompanying notes to these unaudited condensed financial statements.

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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 11,730,000 shares of common stock (which included 1,530,000 shares that were sold pursuant to the full exercise of the IPO underwriters’ option to purchase additional shares) at a public offering price of $22.00 per share. The Company received net proceeds of approximately $237.2 million after deducting offering costs, underwriting discounts and commissions of $20.9 million.

Concurrent with the closing of the IPO:

•

38,826,388 outstanding shares of convertible preferred stock converted into an equivalent number of shares of common stock;

•

outstanding principal and interest amount of convertible promissory notes (the “2021 Convertible Notes”) converted into 7,531,777 shares of common stock; and

•

a warrant to purchase 129,156 shares of convertible preferred stock (the “SVB Warrant”) was automatically adjusted to become a warrant to purchase an equivalent number of shares of common stock.

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 $173.9 million and $151.9 million, respectively. The Company has a limited operating history, and the revenue and income potential of the Company’s business are unproven. From incorporation in June 2016 through March 31, 2022, substantially all of the Company’s operations have been funded by the sales of equity securities and issuances of debt. As of March 31, 2022, the Company had cash, cash equivalents and short-term investments of $316.0 million. The Company believes that its cash, cash equivalents and short-term investments as of March 31, 2022 are sufficient to fund its operations for at least 12 months from the issuance date of the accompanying unaudited condensed financial statements.

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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):


	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	188,572	$	201,049
Restricted cash		1,734		687
Total	$	190,306	$	201,736

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. The following tables summarize the short-term investments held at March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022
	Amortized Cost		Gross Unrealized Losses			Estimated Fair Value
U.S. treasury securities	$	6,486	$	(3	)	$	6,483
Asset-backed securities		10,770		(47	)		10,723
Corporate debt securities		110,913		(717	)		110,196
Total	$	128,169	$	(767	)	$	127,402


	December 31, 2021
	Amortized Cost		Gross Unrealized Losses			Estimated Fair Value
Asset-backed securities	$	21,172	$	(25	)	$	21,147
Corporate debt securities		117,140		(113	)		117,027
Total	$	138,312	$	(138	)	$	138,174

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The following table summarizes contractual maturities of available-for-sale securities held at March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022		December 31, 2021
	Estimated Fair Value		Estimated Fair Value
Due within one year	$	99,110	$	94,085
After one but within five years		28,292		44,089
Total	$	127,402	$	138,174

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 $7.1 million, ROU lease assets of $6.4 million, and derecognized deferred rent of $0.7 million. The additional disclosures required by the standard have been included in the section above titled “Leases” and in Note 9. Prior comparative periods have not been adjusted and continue to be reported under ASC 840.

Recent Accounting Pronouncements—Not Yet Adopted

Singular Genomics Systems, Inc. [OMIC] Filings
10-Q	[2022-05-10]
10-K	[2022-03-14]
10-Q	[2021-11-09]
10-Q	[2021-08-03]
S-1	[2021-05-07]