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 September 30, 2021

 

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)

 

 

10931 N. Torrey Pines Road, Suite #100
La Jolla, California 92037

(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

 

72,058,523 shares of common stock, $0.0001 par value, outstanding as of October 31, 2021.

 


Table of Contents

 

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 successfully implement our commercialization plan for our G4 Integrated Solution and planned PX Integrated Solution;
the implementation of our business model and strategic plans for our G4 Integrated Solution and planned PX Integrated Solution;
our expectations regarding the rate and degree of market acceptance of our G4 Integrated Solution and planned PX Integrated Solution;
our ability to compete with competitive companies and technologies in our industry;
our ability to manage and grow our business and commercialize our G4 Integrated Solution and planned PX Integrated Solution;
our ability to develop and commercialize new products and development 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;
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.

 


Table of Contents

 

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 no 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.
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 on revenue generated from the sale of our G4 Integrated Solution, and any delay or failure by us to finalize the development and to begin to commercialize our G4 Integrated Solution will 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 not commercially launched any products, and we may not be able to successfully commercially launch our G4 Integrated Solution or planned PX Integrated Solution as planned.
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.

 


Table of Contents

 

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 Statements of Preferred Stock and Stockholders’ Equity (Deficit)

5

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

32

Item 4. Controls and Procedures

32

Part II. Other Information

34

Item 1. Legal Proceedings

34

Item 1A. Risk Factors

35

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

68

Item 3. Defaults Upon Senior Securities

68

Item 4. Mine Safety Disclosures

68

Item 5. Other Information

68

Item 6. Exhibits

69

Signatures

70

 

 


Table of Contents

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SINGULAR GENOMICS SYSTEMS, INC.

Condensed Balance Sheets

(In thousands, except share and par value amounts)

 

 

 

 September 30,

 

 

 December 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

239,263

 

 

$

11,688

 

Short-term investments

 

 

117,750

 

 

 

15,231

 

Prepaid expenses and other current assets

 

 

7,214

 

 

 

652

 

Total current assets

 

 

364,227

 

 

 

27,571

 

Property and equipment, net

 

 

4,917

 

 

 

2,368

 

Restricted cash

 

 

687

 

 

 

482

 

Other noncurrent assets

 

 

1,000

 

 

 

81

 

Total assets

 

$

370,831

 

 

$

30,502

 

 

 

 

 

 

 

 

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,390

 

 

$

427

 

Accrued expenses

 

 

3,443

 

 

 

1,592

 

Current portion of long-term debt, net of issuance costs

 

 

-

 

 

 

926

 

Warrant liability

 

 

-

 

 

 

451

 

Other current liabilities

 

 

158

 

 

 

294

 

Total current liabilities

 

 

5,991

 

 

 

3,690

 

Long-term debt, net of issuance costs

 

 

9,868

 

 

 

8,469

 

Other noncurrent liabilities

 

 

2,904

 

 

 

714

 

Total liabilities

 

 

18,763

 

 

 

12,873

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value:

 

 

 

 

 

 

Series Seed, 6,520,790 shares authorized, 0 and 6,520,790 issued and outstanding at September 30, 2021 and December 31, 2020, respectively; liquidation preference of $0 and $4,499,998 at September 30, 2021 and December 31, 2020, respectively

 

 

-

 

 

 

4,486

 

Series A, 12,932,429 shares authorized, 0 and 12,932,429 issued and outstanding at September 30, 2021 and December 31, 2020, respectively; liquidation preference of $0 and $20,000,002 at September 30, 2021 and December 31, 2020, respectively

 

 

-

 

 

 

19,908

 

Series B, 19,566,903 shares authorized, 0 and 19,373,169 issued and outstanding at September 30, 2021 and December 31, 2020, respectively; liquidation preference of $0 and $44,999,997 at September 30, 2021 and December 31, 2020, respectively

 

 

-

 

 

 

44,790

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Common stock, $0.0001 par value; 400,000,000 and 60,272,685 shares authorized, 71,934,170 and 10,816,937 of shares outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

7

 

 

 

1

 

Additional paid-in capital

 

 

484,202

 

 

 

1,552

 

Accumulated other comprehensive (loss) gain

 

 

(5

)

 

 

17

 

Accumulated deficit

 

 

(132,136

)

 

 

(53,125

)

Total stockholders’ equity (deficit)

 

 

352,068

 

 

 

(51,555

)

Total liabilities, convertible preferred stock and stockholders’ equity

 

$

370,831

 

 

$

30,502

 

 

See accompanying notes to these unaudited condensed financial statements.

 

2


Table of Contents

 

SINGULAR GENOMICS SYSTEMS, INC.

Condensed Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

8,910

 

 

$

6,080

 

 

$

23,200

 

 

$

15,431

 

Selling, general and administrative

 

8,551

 

 

 

1,698

 

 

 

18,406

 

 

 

4,518

 

Total operating expenses

 

17,461

 

 

 

7,778

 

 

 

41,606

 

 

 

19,949

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(17,461

)

 

 

(7,778

)

 

 

(41,606

)

 

 

(19,949

)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

91

 

 

 

76

 

 

 

223

 

 

 

444

 

Interest expense

 

(234

)

 

 

(202

)

 

 

(654

)

 

 

(503

)

Change in fair value of convertible promissory notes

 

-

 

 

 

-

 

 

 

(35,199

)

 

 

-

 

Change in fair value of warrant liability

 

-

 

 

 

(49

)

 

 

(2,180

)

 

 

(49

)

Other (expense) income

 

(7

)

 

 

20

 

 

 

405

 

 

 

24

 

Net loss

$

(17,611

)

 

$

(7,933

)

 

$

(79,011

)

 

$

(20,033

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share

$

(0.25

)

 

$

(0.74

)

 

$

(2.05

)

 

$

(1.91

)

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

 

71,721,861

 

 

 

10,726,496

 

 

 

38,553,685

 

 

 

10,507,732

 

 

See accompanying notes to these unaudited condensed financial statements.

 

3


Table of Contents

 

SINGULAR GENOMICS SYSTEMS, INC.

Condensed Statements of Comprehensive Loss

(Unaudited)

(In thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

$

(17,611

)

 

$

(7,933

)

 

$

(79,011

)

 

$

(20,033

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

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

 

(22

)

 

 

(6

)

 

 

(22

)

 

 

24

 

Comprehensive loss

$

(17,633

)

 

$

(7,939

)

 

$

(79,033

)

 

$

(20,009

)

 

See accompanying notes to these unaudited condensed financial statements.

 

4


Table of Contents

 

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

 

 

 

Equity (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

)

Conversion of preferred stock into common stock

 

(6,520,790

)

 

(4,486

)

 

 

(12,932,429

)

 

(19,908

)

 

 

(19,373,169

)

 

(44,790

)

 

 

 

38,826,388

 

 

4

 

 

 

69,180

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

69,184

 

Conversion of the convertible promissory notes
   into common stock

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

7,531,777

 

 

1

 

 

 

165,698

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

165,699

 

Issuance of common stock upon initial public
   offering, net of issuance costs

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

11,730,000

 

 

1

 

 

 

237,198

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

237,199

 

Cashless exercise of common stock warrant

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

117,088

 

 

-

 

 

 

2,631

 

 

 

 

 

 

 

 

 

 

 

2,631

 

Vesting of common stock issued for early exercise
   of stock options

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

378,146

 

 

-

 

 

 

230

 

 

 

-

 

 

 

 

-

 

 

 

 

230

 

Issuance of common stock
   in connection with exercise of stock options

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

118,744

 

 

-

 

 

 

66

 

 

 

-

 

 

 

 

-

 

 

 

 

66

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

-

 

 

-

 

 

 

2,341

 

 

 

-

 

 

 

 

-

 

 

 

 

2,341

 

Unrealized gain on available- for-sale marketable
   securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

-

 

 

-

 

 

 

-

 

 

 

49

 

 

 

 

-

 

 

 

 

49

 

Net loss

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

(37,479

)

 

 

 

(37,479

)

Balance at June 30, 2021

 

-

 

$

-

 

 

 

-

 

$

-

 

 

 

-

 

$

-

 

 

 

 

71,526,327

 

$

7

 

 

$

481,079

 

 

$

17

 

 

 

$

(114,525

)

 

 

$

366,578

 

Vesting of common stock issued for early exercise
   of stock options

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

382,040

 

 

-

 

 

 

236

 

 

 

-

 

 

 

 

-

 

 

 

 

236

 

Issuance of common stock in connection with exercise
   of stock options

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

25,803

 

 

-

 

 

 

28

 

 

 

-

 

 

 

 

-

 

 

 

 

28

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

-

 

 

-

 

 

 

2,859

 

 

 

-

 

 

 

 

-

 

 

 

 

2,859

 

Unrealized loss on available- for-sale marketable
   securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(22

)

 

 

 

-

 

 

 

 

(22

)

Net loss

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,611

)

 

 

 

(17,611

)

Balance at September 30, 2021

 

-

 

$

-

 

 

 

-

 

$

-

 

 

 

-

 

$

-

 

 

 

 

71,934,170

 

$

7

 

 

$

484,202

 

 

$

(5

)

 

 

$

(132,136

)

 

 

$

352,068

 

 

 

5


Table of Contents

 

 

 

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

 

 

Equity (Deficit)

 

Balance at December 31, 2019

 

6,520,790