10-Q 1 omic-20240331.htm 10-Q 10-Q
0001850906--12-31Q1falseP0Y0001850906us-gaap:RestrictedStockMember2024-01-012024-03-310001850906us-gaap:GeneralAndAdministrativeExpenseMemberus-gaap:EmployeeSeveranceMember2024-03-142024-03-140001850906us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906omic:TwoThousandTwentyOneSiliconValleyBankLoanMember2024-03-310001850906omic:SecondTrancheMember2021-09-300001850906us-gaap:AdditionalPaidInCapitalMember2023-03-3100018509062023-12-310001850906us-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:CommonStockMember2023-03-310001850906omic:TwoThousandTwentyOnePlanMembersrt:MinimumMember2024-01-012024-03-310001850906us-gaap:EmployeeStockMember2023-01-012023-03-310001850906omic:SeriesAConvertiblePreferredStockMember2024-03-310001850906us-gaap:PreferredStockMember2022-12-310001850906us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:FurnitureAndFixturesMember2023-12-310001850906omic:TwoThousandTwentyOneSiliconValleyBankLoanMember2022-09-012022-09-300001850906omic:LeaseMember2024-03-310001850906omic:InstrumentsAtCustomerSiteMember2023-12-310001850906us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-03-310001850906us-gaap:CustomerConcentrationRiskMemberomic:ThreeCustomersMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001850906us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906srt:MaximumMember2023-01-012023-03-310001850906us-gaap:PreferredStockMember2023-12-310001850906omic:TwoThousandTwentyOnePlanMember2024-03-310001850906omic:CommonStockSubjectToTheCompanysRightOfRepurchaseMember2023-01-012023-03-310001850906omic:PayrollAndRelatedExpensesMemberus-gaap:CashMemberus-gaap:EmployeeSeveranceMemberus-gaap:SubsequentEventMember2024-04-012024-06-300001850906us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310001850906us-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:EmployeeSeveranceMember2024-03-142024-03-140001850906omic:LicenseAgreementMember2024-03-310001850906omic:TwoThousandTwentyOneEmployeeStockPurchasePlanMemberomic:AuthorizedForIssuanceUnderTheEsppPlanMember2024-03-310001850906omic:SiliconValleyBankWarrantMember2021-09-300001850906omic:InstrumentsAtCustomerSiteMember2024-01-012024-03-310001850906us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001850906us-gaap:EmployeeStockMember2024-01-012024-03-310001850906us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001850906us-gaap:USTreasurySecuritiesMember2023-12-310001850906omic:FirstTranchesMember2021-09-300001850906omic:LoanAndSecurityAgreementMember2021-09-300001850906us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001850906omic:CommonStockSubjectToTheCompanysRightOfRepurchaseMember2024-01-012024-03-310001850906omic:TwoThousandSixteenPlanMember2024-03-310001850906us-gaap:LeaseholdImprovementsMember2024-01-012024-03-310001850906us-gaap:AdditionalPaidInCapitalMember2022-12-310001850906omic:LicenseAgreementMember2024-01-012024-03-310001850906omic:TwoThousandTwentyOneEmployeeStockPurchasePlanMember2023-01-012023-09-300001850906us-gaap:ConvertiblePreferredStockMember2023-01-012023-03-310001850906us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2023-12-310001850906us-gaap:CorporateDebtSecuritiesMember2023-12-310001850906us-gaap:CommonStockMember2023-01-012023-03-310001850906us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2024-03-310001850906us-gaap:CommonStockMember2024-03-310001850906srt:MinimumMember2023-01-012023-03-310001850906us-gaap:EmployeeSeveranceMemberus-gaap:SubsequentEventMember2024-04-012024-06-300001850906omic:TwoBuildingsMember2022-01-012022-03-310001850906us-gaap:RestrictedStockMember2023-12-310001850906us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001850906omic:LeaseAgreementMember2020-06-012020-06-300001850906omic:DeerfieldHolderMemberus-gaap:ConvertiblePreferredStockMember2022-01-310001850906us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-03-310001850906us-gaap:PreferredStockMember2024-03-3100018509062022-12-310001850906us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906omic:TwoBuildingsMember2022-01-310001850906us-gaap:CommonStockMember2022-12-310001850906us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:RetainedEarningsMember2022-12-310001850906us-gaap:RetainedEarningsMember2023-01-012023-03-310001850906omic:SiliconValleyBankWarrantMemberomic:LoanAndSecurityAgreementMember2020-03-310001850906us-gaap:EmployeeStockOptionMember2024-03-310001850906omic:ConsumablesProductsMember2024-01-012024-03-3100018509062024-01-012024-03-310001850906us-gaap:AdditionalPaidInCapitalMember2023-12-310001850906omic:DeerfieldHolderMemberomic:SeriesAConvertiblePreferredStockMember2022-01-310001850906us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906omic:TwoThousandTwentyOneEmployeeStockPurchasePlanMember2021-05-310001850906us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001850906us-gaap:EquipmentMember2024-03-310001850906us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2023-12-310001850906omic:TwoThousandTwentyOneSiliconValleyBankLoanMember2022-09-3000018509062022-01-012022-01-3100018509062023-03-310001850906omic:TwoThousandNineteenSiliconValleyBankLoanMember2024-01-012024-03-310001850906omic:LoanAndSecurityAgreementMember2019-11-300001850906us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:RetainedEarningsMember2024-01-012024-03-310001850906us-gaap:EquipmentMember2023-12-310001850906us-gaap:AssetBackedSecuritiesMember2023-12-310001850906us-gaap:ConvertiblePreferredStockMember2022-01-310001850906omic:AuthorizeForFutureOptionsGrantsMemberomic:TwoThousandTwentyOnePlanMember2024-03-310001850906us-gaap:FurnitureAndFixturesMember2024-03-310001850906us-gaap:RestrictedStockMember2024-03-3100018509062024-03-310001850906us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001850906us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-03-310001850906us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001850906us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906omic:ComputersAndSoftwareMember2024-03-310001850906us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906us-gaap:USTreasurySecuritiesMember2024-03-310001850906us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001850906us-gaap:CommonStockMember2024-01-012024-03-310001850906us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310001850906us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906omic:InstrumentsAtCustomerSiteMember2024-03-3100018509062024-04-300001850906omic:DeerfieldHolderMember2022-01-012022-01-3100018509062023-01-012023-12-310001850906us-gaap:CorporateDebtSecuritiesMember2024-03-310001850906omic:LeaseMember2019-11-012019-11-300001850906us-gaap:LeaseholdImprovementsMember2023-12-310001850906us-gaap:CashMemberus-gaap:EmployeeSeveranceMember2024-01-012024-03-310001850906us-gaap:EmployeeSeveranceMember2024-03-142024-03-140001850906us-gaap:RetainedEarningsMember2024-03-3100018509062022-01-310001850906us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310001850906us-gaap:FurnitureAndFixturesMember2024-01-012024-03-310001850906us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-03-310001850906us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001850906us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-03-310001850906us-gaap:PreferredStockMember2023-03-310001850906us-gaap:ConvertiblePreferredStockMember2024-01-012024-03-310001850906us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-3100018509062023-01-012023-03-310001850906us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:RetainedEarningsMember2023-03-310001850906us-gaap:AdditionalPaidInCapitalMember2024-03-310001850906omic:ComputersAndSoftwareMember2023-12-310001850906omic:ConsumablesAndServiceMember2024-01-012024-03-310001850906us-gaap:LeaseholdImprovementsMember2024-03-310001850906omic:LicenseAgreementMember2023-01-012023-03-310001850906us-gaap:CommonStockMember2023-12-310001850906us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310001850906omic:SeriesAConvertiblePreferredStockMember2023-12-310001850906omic:TwoThousandTwentyOneEmployeeStockPurchasePlanMember2024-03-310001850906us-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2024-03-310001850906us-gaap:RetainedEarningsMember2023-12-310001850906us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001850906us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001850906omic:TwoThousandNineteenSiliconValleyBankLoanMember2019-11-012019-11-300001850906us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310001850906us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-31xbrli:pureiso4217:USDxbrli:sharesxbrli:sharesomic:Segmentiso4217:USD

 

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, 2024

 

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 Capital 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

 

There were 74,092,970 shares of common stock, $0.0001 par value, outstanding as of April 30, 2024.

 


 

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 complete the development and implement our commercialization plans for the G4X, spatial biology services, and our product pipeline;
the implementation of our business model and strategic plans for the G4X, our spatial biology service offerings, and our product pipeline;
our expectations regarding the rate and degree of market acceptance of the G4X, our spatial biology service offerings, and our product pipeline;
our ability to compete with competitive companies and technologies in our industry;
our ability to manage and grow our business and commercialize the G4X, our spatial biology service offerings, and our product pipeline;
our ability to develop and commercialize new products and product enhancements;
the impact of downward macroeconomic pressures 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;
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 Securities and Exchange Commission 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 elsewhere in this report. 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 have only recently generated revenue and have very limited history in developing and 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 products.
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 G4 consumables, the G4X, our spatial biology service offerings, and future products, and any delay or failure by us to successfully develop and commercialize the G4X, our spatial biology service offerings, or other future products could have a substantial adverse effect on our business and results of operations.
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 develop or commercially launch the G4X, our spatial biology service offerings, or any other products as planned.
The G4 is, and the G4X and any associated spatial biology services will be, sold as a research-use-only product or services, as applicable; changes in the regulatory landscape could affect the market for such products and services.
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.

Trademarks and Trade Names

Singular Genomics®, G4®, G4X and our other logos and trademarks are the property of Singular Genomics Systems, Inc. All other brand names or trademarks appearing in this report are the property of their respective holders. Our use or display of other parties’ trademarks, trade dress or products in this report does not imply that we have a relationship with, or the endorsement or sponsorship of, the trademark or trade dress owners.

3


 

TABLE OF CONTENTS

 

Part I. Financial Information

2

Item 1. Financial Statements (Unaudited)

2

Balance Sheets

2

Statements of Operations

3

Statements of Comprehensive Loss

4

Statement of Preferred Stock and Stockholders’ Equity

5

Statements of Cash Flows

6

Notes to Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3. Quantitative and Qualitative Disclosures about Market Risk

29

Item 4. Controls and Procedures

29

Part II. Other Information

30

Item 1. Legal Proceedings

30

Item 1A. Risk Factors

31

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

66

Item 3. Defaults Upon Senior Securities

66

Item 4. Mine Safety Disclosures

66

Item 5. Other Information

66

Item 6. Exhibits

67

Signatures

68

 

4


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Singular Genomics Systems, Inc.

Balance Sheets

(In thousands, except share and par value amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,109

 

 

$

16,233

 

Short-term investments

 

 

126,629

 

 

 

157,708

 

Accounts receivable

 

 

137

 

 

 

565

 

Inventory, net

 

 

13,081

 

 

 

13,572

 

Prepaid expenses and other current assets

 

 

2,519

 

 

 

4,150

 

Total current assets

 

 

166,475

 

 

 

192,228

 

Right-of-use lease assets

 

 

57,094

 

 

 

57,797

 

Property and equipment, net

 

 

13,854

 

 

 

13,692

 

Restricted cash

 

 

600

 

 

 

600

 

Other noncurrent assets

 

 

1,078

 

 

 

1,150

 

Total assets

 

$

239,101

 

 

$

265,467

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,012

 

 

$

2,587

 

Accrued expenses

 

 

3,265

 

 

 

6,079

 

Lease liabilities, current

 

 

7,822

 

 

 

7,764

 

Other current liabilities

 

 

2,980

 

 

 

1,857

 

Total current liabilities

 

 

16,079

 

 

 

18,287

 

Lease liabilities, noncurrent

 

 

58,092

 

 

 

58,623

 

Long-term debt, net of issuance costs

 

 

7,627

 

 

 

8,901

 

Other noncurrent liabilities

 

 

605

 

 

 

650

 

Total liabilities

 

 

82,403

 

 

 

86,461

 

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 shares issued and outstanding at March 31, 2024 and December 31, 2023

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; 400,000,000 shares authorized, 74,067,366 and 73,823,161 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

519,361

 

 

 

516,439

 

Accumulated other comprehensive gain (loss)

 

 

(51

)

 

 

155

 

Accumulated deficit

 

 

(362,619

)

 

 

(337,595

)

Total stockholders’ equity

 

 

156,698

 

 

 

179,006

 

Total liabilities and stockholders’ equity

 

$

239,101

 

 

$

265,467

 

 

See accompanying notes to these unaudited financial statements.

2


Singular Genomics Systems, Inc.

Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Revenue

$

442

 

 

$

863

 

Cost of revenue

 

861

 

 

 

807

 

Gross margin

 

(419

)

 

 

56

 

Operating expenses:

 

 

 

 

 

Research and development

 

11,494

 

 

 

12,230

 

Selling, general and administrative

 

14,935

 

 

 

13,204

 

Total operating expenses

 

26,429

 

 

 

25,434

 

Loss from operations

 

(26,848

)

 

 

(25,378

)

Other income (expense):

 

 

 

 

 

Interest income

 

2,108

 

 

 

2,004

 

Interest expense

 

(284

)

 

 

(259

)

Total other income

 

1,824

 

 

 

1,745

 

Net loss

$

(25,024

)

 

$

(23,633

)

Net loss per share:

 

 

 

 

 

Basic and diluted net loss per share

$

(0.34

)

 

$

(0.33

)

Weighted-average shares used to compute basic and diluted net loss per share

 

73,925,966

 

 

 

71,926,412

 

 

See accompanying notes to these unaudited financial statements.

3


Singular Genomics Systems, Inc.

Statements of Comprehensive Loss

(Unaudited)

(In thousands)

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Net loss

$

(25,024

)

 

$

(23,633

)

Other comprehensive loss:

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

(206

)

 

 

446

 

Comprehensive loss

$

(25,230

)

 

$

(23,187

)

 

See accompanying notes to these unaudited financial statements.

4


Singular Genomics Systems, Inc.

Statements of Preferred Stock and Stockholders’ Equity

(Unaudited)

(In thousands, except share data)


See accompanying notes to these unaudited financial statements.

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

Shares

 

Amount

 

 

Shares

 

Amount

 

 

Capital

 

 

Gain (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2023

 

2,500

 

$

-

 

 

 

73,823,161

 

$

7

 

 

$

516,439

 

 

$

155

 

 

$

(337,595

)

 

 

179,006

 

Vesting of common stock issued for early exercise of stock options

 

-

 

 

-

 

 

 

16,255

 

 

-

 

 

 

26

 

 

 

-

 

 

 

-

 

 

 

26

 

Issuance of common stock in connection with vesting of restricted stock units

 

-

 

 

-

 

 

 

227,950

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

2,896

 

 

 

-

 

 

 

-

 

 

 

2,896

 

Unrealized loss on available-for-sale marketable securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(206

)

 

 

-

 

 

 

(206

)

Net loss

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(25,024

)

 

 

(25,024

)

Balance at March 31, 2024

 

2,500

 

$

-

 

 

 

74,067,366

 

$

7

 

 

$

519,361

 

 

$

(51

)

 

$

(362,619

)

 

$

156,698

 

 

 

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, 2022

 

2,500

 

$

-

 

 

 

71,854,688

 

$

7

 

 

$

503,926

 

 

$

(837

)

 

$

(242,775

)

 

$

260,321

 

Vesting of common stock issued for early exercise of stock options

 

-

 

 

-

 

 

 

121,799

 

 

-

 

 

 

97

 

 

 

-

 

 

 

-

 

 

 

97

 

Issuance of common stock in connection with exercise of stock options

 

-

 

 

-

 

 

 

19,479

 

 

-

 

 

 

13

 

 

 

-

 

 

 

-

 

 

 

13

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

3,081

 

 

 

-

 

 

 

-

 

 

 

3,081

 

Unrealized gain on available-for-sale marketable securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

446

 

 

 

-

 

 

 

446

 

Net loss

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(23,633

)

 

 

(23,633

)

Balance at March 31, 2023

 

2,500

 

$

-

 

 

 

71,995,966

 

$

7

 

 

$

507,117

 

 

$

(391

)

 

$

(266,408

)

 

$

240,325

 

 

5


Singular Genomics Systems, Inc.

Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

Net loss

$

(25,024

)

 

$

(23,633

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Stock-based compensation

 

2,896

 

 

 

3,081

 

Amortization of right-of-use lease assets

 

703

 

 

 

1,024

 

Depreciation

 

1,019

 

 

 

793

 

Accretion of debt issuance costs

 

39

 

 

 

38

 

Amortization of premium (accretion of discount) on short-term investments

 

(751

)

 

 

1,327

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

428

 

 

 

899

 

Inventory, net

 

(1,320

)

 

 

831

 

Prepaid expenses and other current assets

 

1,651

 

 

 

1,031

 

Other noncurrent assets

 

72

 

 

 

-

 

Accounts payable

 

(28

)

 

 

(1,781

)

Accrued expenses

 

(2,706

)

 

 

(1,447

)

Other current liabilities

 

(190

)

 

 

92

 

Lease liabilities

 

(473

)

 

 

(276

)

Other noncurrent liabilities

 

(19

)

 

 

87

 

Net cash used in operating activities

 

(23,703

)

 

 

(17,934

)

Investing activities

 

 

 

 

 

Purchases of short-term investments

 

(19,184

)

 

 

(7,018

)

Maturities of short-term investments

 

50,619

 

 

 

72,144

 

Sales of short-term investments

 

169

 

 

 

7,981

 

Purchases of property and equipment

 

(25

)

 

 

(162

)

Net cash provided (used) by investing activities

 

31,579

 

 

 

72,945

 

Financing activities

 

 

 

 

 

Proceeds from issuance of common stock under equity incentive plans

 

-

 

 

 

13

 

Repurchases of common stock under equity incentive plans

 

-

 

 

 

(7

)

Net cash provided by financing activities

 

-

 

 

 

6

 

Net increase in cash and cash equivalents and restricted cash

 

7,876

 

 

 

55,017

 

Cash and cash equivalents and restricted cash, beginning of year

 

16,833

 

 

 

75,977

 

Cash and cash equivalents and restricted cash, end of year

$

24,709

 

 

$

130,994

 

 

 

 

 

 

Supplemental disclosure for cash activities

 

 

 

 

 

Interest paid

$

246

 

 

$

216

 

Supplemental disclosure for non-cash activities

 

 

 

 

 

Inventory transferred to property and equipment

$

1,180

 

 

$

1,009

 

Purchases of inventory included in accounts payable

$

594

 

 

$

562

 

Purchases of inventory included in accrued expenses

$

59

 

 

$

217

 

Vesting of common stock issued for early exercise of stock options

$

26

 

 

$

97

 

Purchases of property and equipment included in accounts payable

$

-

 

 

$

97

 

 

See accompanying notes to these unaudited financial statements.

6


Singular Genomics Systems, Inc.

Notes to Financial Statements

(Unaudited)

1. Business

Description of Business

Singular Genomics Systems, Inc. (the “Company”) is a life science technology company that develops next-generation sequencing and multiomics technologies. The commercially available G4 Sequencing Platform is a powerful, highly versatile benchtop genomic sequencer designed to produce fast and accurate results. In addition, the Company is currently developing the G4X Spatial Sequencer, which will leverage the Company’s proprietary sequencing technology, applying it as an in situ readout for transcriptomics, proteomics and fluorescent H&E in tissue, with spatial context and on the same platform as the G4. The Company’s mission is to empower researchers and clinicians to advance science and medicine.

The Company was incorporated in the state of Delaware in June 2016 and has its principal operations in San Diego, California.

Liquidity and Capital Resources

The Company has incurred net losses since inception and, as of March 31, 2024 and December 31, 2023, had an accumulated deficit of $362.6 million and $337.6 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, 2024, substantially all of the Company’s operations have been funded by the sales of equity securities and issuances of debt. As of March 31, 2024, the Company had cash, cash equivalents and short-term investments of $150.7 million. The Company believes that its cash, cash equivalents and short-term investments as of March 31, 2024 are sufficient to fund its operations for at least 12 months from the issuance date of the accompanying unaudited financial statements.

 

7


2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited 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 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 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, 2023, significant estimates and assumptions include the value of lease liabilities and right-of-use lease assets. There were no changes to the Company's significant estimates and assumptions subsequent to December 31, 2023.

Summary of Significant Accounting Policies

During the three months ended March 31, 2024, 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, 2023.

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,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Cash and cash equivalents

 

$

24,109

 

 

$

16,233

 

Restricted cash

 

 

600

 

 

 

600

 

Total

 

$

24,709

 

 

$

16,833

 

Short-term Investments

Short-term investments primarily consisted of treasury securities, corporate debt securities and asset-backed 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 by the Company at March 31, 2024 and December 31, 2023 (in thousands):

 

 

March 31, 2024

 

 

Amortized
Cost

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair Value

 

U.S. treasury securities

$

125,507

 

 

$

(51

)

 

$

125,456

 

Corporate debt securities

 

1,173

 

 

 

-

 

 

 

1,173

 

Total

$

126,680

 

 

$

(51

)

 

$

126,629

 

 

 

December 31, 2023

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains (Losses)

 

 

Estimated
Fair Value

 

U.S. treasury securities

$

149,129

 

 

$

158

 

 

$

149,287

 

Corporate debt securities

 

8,255

 

 

 

(3

)

 

 

8,252

 

Asset-backed securities

$

169

 

 

$

-

 

 

$

169

 

Total

$

157,553

 

 

$

155

 

 

$

157,708

 

 

 

8


The following table summarizes the estimated fair value of contractual maturities of available-for-sale securities held by the Company at March 31, 2024 and December 31, 2023 (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Due within one year

 

$

126,629

 

 

$

157,540

 

Due after one but within five years

 

 

-

 

 

 

168

 

Total

 

$

126,629

 

 

$

157,708

 

 

As of March 31, 2024, the Company considered the nature and number of available-for-sale debt securities in an unrealized loss position. The Company reviews its portfolio of available-for-sale debt securities at least quarterly to determine if any investment is impaired, whether due to changes in credit risk or other potential valuation concerns. Unrealized losses on available-for-sale debt securities at March 31, 2024 were primarily due to increases in market interest rates. The Company does not intend to sell the available-for-sale debt securities that are in an unrealized loss position, and it is not more-likely-than-not that the Company will be required to sell these debt securities before recovery of their amortized cost bases, which may be at maturity. Based on the credit quality of the available-for-sale debt securities in an unrealized loss position, and the Company’s estimates of future cash flows to be collected from those securities, the Company believes the unrealized losses are not credit losses. Accordingly, the Company did not record an allowance for credit losses related to its available-for-sale debt securities at March 31, 2024.

Revenue Recognition

The Company generates revenue from sales of its products, which currently consist of the G4 instrument, related consumable flow cell kits and services. Revenue from instrument sales is recognized generally upon customer acceptance. Revenue from consumables sales is recognized generally upon shipment to the customer. Revenue from services, which are primarily comprised of assurance-type services, is recognized over the applicable service period.

Revenue is recorded net of discounts and sales taxes. The Company invoices its customers for instruments generally upon acceptance, for consumables generally on delivery, and for services generally in advance of the service period. Invoice terms are generally net 30 days. Cash received from customers in advance of revenue recognition is recorded as a contract liability. The Company’s contracts with its customers generally do not include rights of return or a significant financing component.

The Company regularly enters into contracts that include a combination of products and services, which are distinct within the context of the contract and are accounted for as separate performance obligations. The transaction price is allocated to each performance obligation in proportion to its standalone selling price. Until the Company has sufficient volume of historical sales data for each performance obligation, the Company determines the standalone selling price using observable prices when available and with consideration of current market conditions, which is primarily based on prices set by management, adjusted for applicable discounts. The Company then recognizes revenue for each performance obligation as that performance obligations is satisfied, as discussed above.

The Company has entered into instrument arrangements with certain customers, under which the Company provides the G4 instrument at no cost to the customer, other than shipping, and the customer pays for consumables at list price, or at list price plus a mark-up, as consumables are ordered, shipped and invoiced. Revenue is recognized as consumables are shipped to the customer and disclosed within consumables revenue below. The G4 instrument provided to the customer is recorded on the balance sheet as property and equipment and disclosed as instruments at customer sites under Note 6 to these financial statements. Depreciation expense for these instruments is included in cost of revenue. Revenue associated with any lease elements of these arrangements was not material during the three months ended March 31, 2024 and 2023.

During the three months ended March 31, 2024, the Company recognized $0.2 million of revenue for G4 instruments and $0.2 million of revenue for G4 consumables and services. Contract liabilities, which consists of deferred revenue, as of March 31, 2024 and December 31, 2023 were $0.2 million and $0.3 million, respectively. As of March 31, 2024, $0.2 million of this balance was classified as current. Deferred revenue represents the value of performance obligations that have been invoiced but for which revenue has not yet been earned.

For the three months ended March 31, 2024, all of the Company’s revenue was generated within the United States. During the period, the Company generated approximately 59% of revenue from its top three customers.

9


Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable securities. The Company invests its cash equivalents in highly rated money market funds. The Company’s marketable securities consist of short-term investments in a variety of interest-bearing instruments, which have included U.S. government and agency securities, high-grade U.S. corporate bonds and asset-backed securities. Deposits may exceed federally insured limits, and the Company is exposed to credit risk on deposits with financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). During the periods presented, the Company has not experienced any losses on its cash, restricted cash, cash equivalents or marketable securities.

Long-lived Asset Impairment

Long-lived assets consist primarily of right-of-use lease assets and property and equipment. During the year ended December 31, 2023, the Company identified an indicator of impairment of its long-lived assets due to a sustained decline in the trading price of the Company’s common stock over the preceding year, resulting in the Company’s market capitalization being below its net asset value. Although the Company is confident in the utility of its long-lived assets, and there have been no changes in their intended use, the implied cash flows based on the market capitalization of the Company indicated its long-lived assets may not be recoverable. In determining the fair value of its long-lived assets, the Company used a combination of discounted cash flows and observable market data. As a result of its fair value analysis, the Company recorded a $1.9 million impairment charge on its property and equipment as selling, general and administrative expense in the statement of operations during the year ended December 31, 2023. The above indicator of impairment continued to exist as of March 31, 2024. The Company updated its fair value analysis as of March 31, 2024 and recorded no additional impairment. No impairment loss was recorded during the three months ended March 31, 2024 or March 31, 2023.

Recent Accounting Pronouncements

There were no additions to the new accounting pronouncements not yet adopted as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Other amendments to GAAP that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.

3. Fair Value Measurements

For accounting purposes, fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3: Unobservable inputs where there is little or no market data, which require the reporting entity to develop its own assumptions.

When quoted market prices are available in active markets, the fair value of assets and liabilities is estimated within Level 1 of the valuation hierarchy. If quoted prices are not available, then fair values are estimated by using pricing models, quoted prices of assets and liabilities with similar characteristics, or discounted cash flows, within Level 2 of the valuation hierarchy. In cases where Level 1 or Level 2 inputs are not available, the fair values are estimated by using inputs within Level 3 of the hierarchy.

None of the Company’s assets or liabilities are recorded at fair value on a recurring basis other than cash, cash equivalents and short-term investments. No transfers between levels occurred during the periods presented. The fair value of short-term investments is based on market prices quoted on the last day of the fiscal period or other observable market inputs.

The following tables summarize the Company’s assets measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 (in thousands):

 

10


 

 

March 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

18,215

 

 

$

-

 

 

$

-

 

 

$

18,215

 

Money market funds

 

 

5,894

 

 

 

-

 

 

 

-

 

 

 

5,894

 

Total cash and cash equivalents

 

 

24,109

 

 

 

-

 

 

 

-

 

 

 

24,109

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

125,456

 

 

-

 

 

-

 

 

125,456

 

Corporate debt securities

 

 

-

 

 

 

1,173

 

 

 

-

 

 

 

1,173

 

Total short-term investments

 

 

125,456

 

 

 

1,173

 

 

 

-

 

 

 

126,629

 

Total cash and cash equivalents and short-term investments

 

$

149,565

 

 

$

1,173

 

 

$

-

 

 

$

150,738

 

 

 

 

December 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

16,184

 

 

$

-

 

 

$

-

 

 

$

16,184

 

Money market funds

 

 

49

 

 

 

-

 

 

 

-

 

 

 

49

 

Total cash and cash equivalents

 

 

16,233

 

 

 

-

 

 

 

-

 

 

 

16,233

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

149,286

 

 

-

 

 

-

 

 

149,286

 

Corporate debt securities

 

 

-

 

 

 

8,253

 

 

 

-

 

 

 

8,253

 

Asset-backed securities

 

 

-

 

 

 

169

 

 

 

-

 

 

 

169

 

Total short-term investments

 

 

149,286

 

 

 

8,422

 

 

 

-

 

 

 

157,708

 

Total cash and cash equivalents and short-term investments

 

$

165,519

 

 

$

8,422

 

 

$

-

 

 

$

173,941

 

 

4. Inventory

Inventory consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Raw materials

 

$

10,596

 

 

$

11,627

 

Work in process

 

 

2,046

 

 

 

1,276

 

Finished goods

 

 

439

 

 

 

669

 

Total inventory

 

$

13,081

 

 

$

13,572

 

 

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Prepaid expenses

 

$

1,116

 

 

$

1,672

 

Interest receivable

 

 

1,039

 

 

 

1,019

 

Current deposits and other current assets

 

 

364

 

 

 

1,459

 

Total prepaid expenses and other current assets

 

$

2,519

 

 

$

4,150

 

 

11


6. Property and Equipment, Net

Property and equipment, net, consisted of the following (in thousands):

 

 

 

 

March 31,

 

 

December 31,

 

 

Useful Life

 

2024

 

 

2023

 

Equipment

5 years

 

$

12,837

 

 

$

12,837

 

Computers and software

3 years

 

 

3,445

 

 

 

3,445

 

Leasehold improvements

14 years or less

 

 

2,244

 

 

 

2,244

 

Furniture and fixtures

5 years or less

 

 

660

 

 

 

660

 

Instruments at customer sites

5 years

 

 

3,707

 

 

 

2,527

 

Total property and equipment, gross

 

 

 

22,893

 

 

 

21,713

 

Less: accumulated depreciation

 

 

 

(9,039

)

 

 

(8,021

)

Total property and equipment, net

 

 

$

13,854

 

 

$

13,692

 

 

Transfers of assets from inventory to property and equipment are transferred at standard cost and recognized at carrying value.

7. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Accrued compensation and other employee benefits

 

$

1,982

 

 

$

5,229

 

Accrued research and development expenses

 

 

278

 

 

 

264

 

Accrued professional services

 

 

361

 

 

 

178

 

Accrued other expenses

 

 

644

 

 

 

408

 

Total accrued expenses

 

$

3,265

 

 

$

6,079

 

 

12


8. Long-term Debt

Silicon Valley Bank Loan

In November 2019, the Company entered into a loan and security agreement with SVB pursuant to which SVB agreed to lend to the Company up to $15.0 million in a series of term loans (the “2019 SVB Loan”). Contemporaneously, the Company borrowed $2.5 million in the first of three draw-downs available under the 2019 SVB Loan. In March 2020, the Company borrowed an additional $7.5 million as a second draw. The 2019 SVB Loan was to mature on September 1, 2023 and bore interest at an annual rate equal to the greater of (i) 0.65% above the prime rate or (ii) 5.90%. Payment on the 2019 SVB Loan was for interest only through September 30, 2021. In addition, a final payment equal to the original principal amount of each advance multiplied by 5.50% was to be due on the maturity date.

On September 30, 2021, the Company refinanced its 2019 SVB Loan. In connection with the refinancing, the Company entered into an amended and restated loan and security agreement (the “2021 SVB Loan,” together with the 2022 SVB Loan Amendment (defined below), the “SVB Loan”) with SVB. The 2021 SVB Loan provided for term loans in an aggregate principal amount of up to $35.5 million to be delivered in three tranches. The tranches consisted of: (i) a term loan advance to the Company in an aggregate principal amount of $10.5 million on the loan closing date (the “First Tranche”); (ii) an additional term loan advance available to the Company through September 30, 2022 in an aggregate principal amount of $15.0 million (the “Second Tranche”); and (iii) subject to SVB’s approval, a right of the Company to request that SVB make an additional term loan advance in an aggregate principal amount of $10.0 million. The proceeds from the First Tranche were used to repay in full the then-existing indebtedness under the 2019 SVB Loan. The SVB Loan matures on September 1, 2026 and bears interest at an annual rate equal to the greater of (i) 0.75% plus the prime rate as reported in The Wall Street Journal and (ii) 4.00%. As of March 31, 2024, the SVB Loan bears interest at an annual rate of 9.25%. The SVB Loan has an initial interest-only period of 36 months, or until September 2024, from which point the Company is required to make interest and principal payments through the maturity date. In addition, a final payment (the “Final Payment Fee”) equal to the original principal amount of each advance multiplied by 4.00% will be due on the maturity date. The Final Payment Fee is recorded in other noncurrent liabilities on the balance sheet.

On September 30, 2022, the Company entered into an amendment to the 2021 SVB Loan (the “2022 SVB Loan Amendment”). The 2022 SVB Loan Amendment extended the period to draw down the additional tranches totaling $25.0 million from September 30, 2022 to March 31, 2024, provided that in order for the Company to access the Second Tranche availability the Company must achieve a six-month trailing revenue hurdle. The draw period for the additional tranches of up to $25.0 million under the SVB Loan have expired without being drawn.

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, and all of SVB’s deposits and substantially all of SVB’s assets were transferred into a new entity, Silicon Valley Bridge Bank, N.A. (“SVBB”). On March 12, 2023, the Department of the Treasury, the Federal Reserve and the FDIC jointly released a statement indicating that SVBB had assumed the obligations and commitments of former SVB. On March 27, 2023, First-Citizens Bank & Trust Company (“First Citizens Bank”) assumed all of SVBB’s obligations and commitments, and SVBB began operating as Silicon Valley Bank, a division of First Citizens Bank.

As of March 31, 2024 and December 31, 2023, the unamortized debt issuance costs related to the SVB Loan were $0.2 million and $0.4 million, respectively. The debt issuance costs are amortized to interest expense over the term of the loan using the effective interest method.

As of March 31, 2024, the current portion of the SVB Loan of $2.6 million, which consists of principal payments due in the next 12 months, is included in other current liabilities on the balance sheet, and the remaining noncurrent amount is recorded in long-term debt, net of issuance costs.

The SVB Loan and unamortized discount balances as of March 31, 2024 and December 31, 2023 are as follows (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Total debt

 

$

10,500

 

 

$

10,500

 

Less: issuance costs

 

 

(248

)

 

 

(287

)

Total debt, net of issuance costs

 

$

10,252

 

 

$

10,213

 

Less: current portion of long-term debt

 

 

2,625

 

 

 

1,312

 

Total long-term debt

 

$

7,627

 

 

$

8,901

 

 

13


Future minimum payments of outstanding principal and interest at the rate in effect as of March 31, 2024 under the SVB Loan are as follows (in thousands):

 

As of March 31, 2024

 

 

 

2024 (9 months remaining)

 

$

2,122

 

2025

 

 

5,886

 

2026

 

 

4,510

 

Total future minimum payments

 

 

12,518

 

Less: interest, Final Payment fee

 

 

(2,018

)

Total debt

 

 

10,500

 

Less: issuance costs

 

 

(248

)

Total debt, net of issuance costs

 

$

10,252

 

 

The Company is subject to customary affirmative and restrictive covenants under the SVB Loan. The Company’s obligations under the SVB Loan are secured by a first priority security interest in substantially all of the Company’s current and future assets, other than intellectual property. The Company has agreed not to encumber its intellectual property assets, except as permitted by the SVB Loan.

The SVB Loan provides for events of default customary for term loan facilities of this type, including but not limited to: non-payment; breaches or defaults in the performance of covenants or representations and warranties; bankruptcy and other insolvency events of the Company; and the occurrence of a material adverse change as defined in the SVB Loan. After the occurrence of an event of default, SVB may, among other remedies, accelerate the payment of all outstanding obligations.

As of March 31, 2024 and December 31, 2023, the Company was in compliance with all covenants under the SVB Loan and there had been no events of default.

9. Commitments and Contingencies

Columbia License Agreement

In 2016, the Company entered into an Exclusive License Agreement (the “License Agreement”) with The Trustees of Columbia University (“Columbia”). Under the License Agreement, the Company acquired the exclusive right to use certain patents, materials and information. The License Agreement includes a number of diligence obligations that requires the Company to use commercially reasonable efforts to research, discover, develop and market Patent Products and/or Other Products (as defined in the License Agreement) by certain dates. Under the License Agreement, the Company pays an annual license fee that increases each year, until it reaches a low six-digit fee for the fifth year, and for each subsequent year, for so long as the License Agreement remains in force. The license fee was immaterial for all periods presented. For any products within the scope of the License Agreement that the Company commercializes, the Company is required to pay royalties ranging from low to mid-single digits on net sales of Patent Products and low single-digit royalty rates on net sales of Other Products. The Company can credit the yearly annual license fee against any yearly royalty fees payable to Columbia. Additionally, if the Company receives any income in connection with any sublicenses, the Company must pay Columbia a high single-digit percentage of that income. Finally, the License Agreement provides for payments to Columbia based on the Company’s achievement of certain development and commercialization milestones, which could total up to $3.9 million over the life of the License Agreement. As of March 31, 2024, the Company accrued $0.5 million related to these milestones. During the three months ended March 31, 2024 and 2023, the Company paid $0 and $0.1 million, respectively, to Columbia pursuant to the terms of the License Agreement.

Operating Leases

Overview of Operating Leases

In November 2019, the Company entered into a lease agreement for office and laboratory space in San Diego, California (the “3033 Lease”). The Company gained access to the leased space and began recognizing rent expense under the 3033 Lease in May 2020. The Company has since amended the 3033 Lease, most recently in September 2023, which extended the term of the lease and provided a tenant improvement allowance of approximately $1.0 million. The term of the 3033 Lease will end in October 2036. The Company provided a standby letter of credit in the amount of $0.2 million as a security deposit during the term of the lease. As of March 31, 2024, $0.2 million was pledged as collateral for the letter of credit and recorded as restricted cash.

14


In June 2020, the Company entered into a lease agreement for office and laboratory space in San Diego, California (the “3010 Lease”). The Company gained access to the leased space and began recognizing rent expense under the 3010 Lease in April 2022. The Company has since amended the 3010 Lease, most recently in September 2023, which extended the term of the lease. The term of the 3010 Lease will end in October 2036. The Company provided a standby letter of credit in the amount of $0.4 million as a security deposit during the term of the lease. As of March 31, 2024, $0.4 million was pledged as collateral for the letter of credit and recorded as restricted cash.

In April 2021, the Company entered into a lease agreement for office and manufacturing space in San Diego, California (the “MR Lease”). The Company gained access to the leased space and began recognizing rent expense under the MR Lease in June 2021. The term of the MR Lease will end in July 2026.

In January 2022, the Company entered into a lease agreement (the “OAS Lease”) with an affiliate of Alexandria Real Estate Equities, Inc. (“ARE”) to lease two buildings to be constructed in connection with One Alexandria Square in La Jolla, California. In July 2023, the Company entered into an agreement to terminate the OAS Lease. Pursuant to this agreement, the OAS Lease terminated, effective September 13, 2023. In connection with the lease termination, ARE agreed to pay the Company lease termination payments of (a) approximately $1.8 million, which the Company received in September 2023, and (b) an additional amount of approximately $1.0 million, which the Company received in January 2024. In addition, ARE refunded the Company approximately $1.1 million in prepaid base rent under the terms of the OAS Lease in September 2023 and returned to the Company a letter of credit in the amount of approximately $1.1 million, previously issued to ARE pursuant to the terms of the OAS Lease, in November 2023.

Accounting for Operating Leases

During the three months ended March 31, 2024, the Company incurred $2.9 million of lease costs, of which $0.8 million was related to variable lease payments, which primarily comprised common area maintenance, and $2.1 million related to straight-line operating lease cost. During the three months ended March 31, 2023, the Company incurred $3.0 million of lease costs, of which $0.9 million was related to variable lease payments, which primarily comprised common area maintenance, and $2.1 million related to straight-line operating lease cost.

As of March 31, 2024, future minimum payments under the Company’s non-cancelable operating leases are as follows (in thousands):

 

 

 

 

2024 (9 months remaining)

 

$

6,097

 

2025

 

 

5,716

 

2026

 

 

8,607

 

2027

 

 

8,580

 

2028

 

 

8,837

 

Thereafter

 

 

79,058

 

Future non-cancelable minimum lease payments

 

 

116,895

 

Less: present value discount

 

 

(50,981

)

Total lease liabilities

 

 

65,914

 

Less: current portion

 

 

7,822

 

Lease liabilities, noncurrent

 

$

58,092

 

Indemnification

As permitted under Delaware law and in accordance with the Company’s bylaws, the Company indemnifies its officers and directors for certain events or occurrences while the officers or directors are or were serving in such capacity. The Company is also party to indemnification agreements with its officers and directors. The Company considers the fair value of the indemnification rights and agreements as minimal. Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of March 31, 2024 or December 31, 2023.

Other Contingencies

We are not currently a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.

15


10. Preferred Stock

Series A Common Stock Equivalent Convertible Preferred Stock

In January 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with Deerfield Private Design Fund IV, L.P. (the “Deerfield Holder”), pursuant to which the Deerfield Holder exchanged an aggregate of 2,500,000 shares of the Company’s common stock held by the Deerfield Holder for 2,500 shares of a newly created class of non-voting preferred stock designated as Series A Common Stock Equivalent Convertible Preferred Stock. Additionally, in connection with the issuance of the Series A Common Stock Equivalent Convertible Preferred Stock, the Company filed a Certificate of Designation, Preferences and Rights of Series A Common Stock Equivalent Convertible Preferred Stock, par value $0.0001 per share, of the Company with the Secretary of State of the State of Delaware. Each outstanding share of Series A Common Stock Equivalent Convertible Preferred Stock is entitled to a de minimis liquidation preference of $0.0001 per share. The Series A Common Stock Equivalent Convertible Preferred Stock is convertible into 1,000 shares of common stock for each share of Series A Common Stock Equivalent Convertible Preferred Stock at the option of the holder. Additionally, the ability of a holder to convert non-voting Series A Common Stock Equivalent Convertible Preferred Stock into common stock is prohibited to the extent that, upon such conversion, such holder, its affiliates and other persons whose ownership of common stock would be aggregated with that of such holder for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, would exceed 4.9% of the total number of shares of common stock then outstanding.

The Company classifies Series A Common Stock Equivalent Convertible Preferred Stock as permanent equity on the balance sheet because it is not redeemable for cash or other assets of the Company and is not considered debt under ASC 480 Distinguishing Liabilities from Equity. There are no features of the Series A Common Stock Equivalent Convertible Preferred Stock that require bifurcation and separate accounting under ASC 815 Derivatives and Hedging. Series A Common Stock Equivalent Convertible Preferred Stock is considered a participating security for purposes of calculating earnings per share under ASC 260 Earnings Per Share because it participates in dividends ratably on an as-converted basis with common stock.

11. Stock Incentive Plans

2021 and 2016 Equity Incentive Plans

The Company’s Board of Directors and stockholders adopted and approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) in May 2021, which was amended in July 2022. The 2021 Plan replaced the Company’s 2016 Equity Incentive Plan adopted in September 2016 (the “2016 Plan”); however, awards outstanding under the 2016 Plan will continue to be governed by their existing terms. The number of shares of the Company’s common stock that were initially available for issuance under the 2021 Plan equaled the sum of 7,500,000 shares plus 585,720 shares that were then available for issuance under the 2016 Plan. The 2021 Plan provides for the following types of awards: incentive and nonqualified stock options, stock appreciation rights, restricted shares and restricted stock units. As of March 31, 2024, 6,318,044 shares of common stock remained available for future grants under the 2021 Plan.

The number of shares of common stock reserved for issuance under the 2021 Plan is increased automatically on the first day of each fiscal year, commencing in 2022 and ending in 2031, by a number equal to the lesser of: (i) 5% of the shares of common stock outstanding on the last day of the prior fiscal year; or (ii) the number of shares determined by the Company’s Board of Directors. In general, to the extent that any awards under the 2021 Plan are forfeited, terminated, expired or lapsed without the issuance of shares, or if the Company reacquires the shares subject to awards granted under the 2021 Plan, those shares will again become available for issuance under the 2021 Plan, as will shares applied to pay the exercise or purchase price of an award or to satisfy tax withholding obligations related to an award.

Stock-based awards are governed by agreements between the Company and the recipients. Incentive stock options and nonqualified stock options may be granted under the 2021 Plan (and previously the 2016 Plan) at an exercise price of not less than 100% of the fair market value of the Company’s common stock on the grant date. The grant date is the date the terms of the award are formally approved by the Company’s Board of Directors or its designee.

Common stock reserved for future issuance under equity incentive plans consisted of the following as of March 31, 2024:

 

Stock options and restricted stock units issued and outstanding under all Plans

 

 

16,780,427

 

Authorized for future grants under the 2021 Plan

 

 

6,318,044

 

Authorized for future purchases under the ESPP

 

 

1,278,910

 

Total as of March 31, 2024

 

 

24,377,381

 

 

16


The table above does not include 18,129 shares of common stock for early exercised stock options that remain subject to the Company’s repurchase right.

Stock Option Activity

The following table summarizes stock option activity during the three months ended March 31, 2024:

 

 

 

 

Number of Options

 

 

Weighted-Average
Exercise Price
(per Share)

 

 

Weighted-Average
Remaining
Contract Term
(in Years)

 

Aggregate Intrinsic Value
(in Thousands)

 

Outstanding at December 31, 2023

 

 

11,751,749

 

 

$

4.18

 

 

 

 

 

 

Exercisable at December 31, 2023

 

 

6,045,163

 

 

 

4.55

 

 

 

 

 

 

 

Canceled or forfeited

 

 

(641,110

)

 

 

4.01

 

 

 

 

 

 

Outstanding at March 31, 2024

 

 

11,110,639

 

 

$

4.20

 

 

 

7.7

 

$

127

 

Exercisable at March 31, 2024

 

 

6,453,705