10-Q
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Table of Contents

 

 

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, 2022

 

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

For the transition period from to .


Commission File Number: 001-40443

Singular Genomics Systems, Inc.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

81-2948451

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification Number)

 

 

3010 Science Park Road
San Diego, California 92121

(858) 333-7830

(Registrant’s address of principal executive offices

and telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

OMIC

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

There were 71,396,110 shares of common stock, $0.0001 par value, outstanding as of October 31, 2022.

 


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 timely and successfully complete the development and implement our commercialization plan for the G4 and planned PX;
the implementation of our business model and strategic plans for the G4 and planned PX;
our expectations regarding the rate and degree of market acceptance of the G4 and planned PX;
our ability to compete with competitive companies and technologies in our industry;
our ability to manage and grow our business and commercialize the G4 and planned PX;
our ability to develop and commercialize new products and product enhancements;
the impact of the COVID-19 pandemic and recent 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;
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.

 

2


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 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 the G4 and planned PX, and any delay or failure by us to successfully develop and commercialize the G4 or PX could have a substantial adverse effect on our business and results of operations.
The COVID-19 pandemic and efforts to reduce its spread have adversely impacted and may materially and adversely impact our business and operations in the future; recent macroeconomic pressures could also materially and adversely impact our business and 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 commercially launch our planned PX or other products as planned.
The G4 is sold as a research-use-only product; changes in the regulatory landscape could affect the market for such a product.
If we are unable to obtain and maintain sufficient intellectual property protection for our products and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired.
We may require substantial additional funding, which may not be available to us on acceptable terms, or at all, and, if not available, may require us to delay, scale back or cease our product development programs or operations.

3


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 Statement of Stockholders’ Equity (Deficit)

5

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

6

Condensed Statements of Cash Flows

7

Notes to Condensed Financial Statements

8

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

24

Item 3. Quantitative and Qualitative Disclosures about Market Risk

35

Item 4. Controls and Procedures

35

Part II. Other Information

36

Item 1. Legal Proceedings

36

Item 1A. Risk Factors

37

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

71

Item 3. Defaults Upon Senior Securities

71

Item 4. Mine Safety Disclosures

71

Item 5. Other Information

71

Item 6. Exhibits

72

Signatures

73

 

4


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,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,262

 

 

$

201,049

 

Short-term investments

 

 

170,578

 

 

 

138,174

 

Inventory

 

 

16,700

 

 

 

3,011

 

Prepaid expenses and other current assets

 

 

5,574

 

 

 

5,526

 

Total current assets

 

 

286,114

 

 

 

347,760

 

Right-of-use lease assets

 

 

46,895

 

 

 

-

 

Property and equipment, net

 

 

9,589

 

 

 

6,072

 

Restricted cash

 

 

1,711

 

 

 

687

 

Other noncurrent assets

 

 

1,166

 

 

 

1,129

 

Total assets

 

$

345,475

 

 

$

355,648

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,975

 

 

$

2,348

 

Accrued expenses

 

 

5,480

 

 

 

4,278

 

Lease liabilities, current

 

 

5,703

 

 

 

-

 

Other current liabilities

 

 

20

 

 

 

118

 

Total current liabilities

 

 

14,178

 

 

 

6,744

 

Lease liabilities, noncurrent

 

 

43,323

 

 

 

-

 

Long-term debt, net of issuance costs

 

 

10,026

 

 

 

9,904

 

Other noncurrent liabilities

 

 

1,023

 

 

 

2,827

 

Total liabilities

 

 

68,550

 

 

 

19,475

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Series A Common Stock Equivalent Convertible Preferred Stock, $0.0001 par value; 7,000 shares authorized, 2,500 and 0 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; 400,000,000 shares authorized, 71,306,526 and 72,438,742 shares outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

500,010

 

 

 

488,200

 

Accumulated other comprehensive loss

 

 

(1,418

)

 

 

(138

)

Accumulated deficit

 

 

(221,674

)

 

 

(151,896

)

Total stockholders’ equity

 

 

276,925

 

 

 

336,173

 

Total liabilities and stockholders’ equity

 

$

345,475

 

 

$

355,648

 

 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

12,732

 

 

$

8,910

 

 

$

35,439

 

 

$

23,200

 

Selling, general and administrative

 

11,962

 

 

 

8,551

 

 

 

35,518

 

 

 

18,406

 

Total operating expenses

 

24,694

 

 

 

17,461

 

 

 

70,957

 

 

 

41,606

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(24,694

)

 

 

(17,461

)

 

 

(70,957

)

 

 

(41,606

)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

1,115

 

 

 

84

 

 

 

1,699

 

 

 

628

 

Interest expense

 

(211

)

 

 

(234

)

 

 

(520

)

 

 

(654

)

Change in fair value of convertible promissory notes

 

-

 

 

 

-

 

 

 

-

 

 

 

(35,199

)

Change in fair value of warrant liability

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,180

)

Net loss

$

(23,790

)

 

$

(17,611

)

 

$

(69,778

)

 

$

(79,011

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share

$

(0.33

)

 

$

(0.25

)

 

$

(0.98

)

 

$

(2.05

)

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

 

71,216,292

 

 

 

71,721,861

 



 

71,001,441

 

 

 

38,553,685

 

 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

$

(23,790

)

 

$

(17,611

)

 

$

(69,778

)

 

$

(79,011

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

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

 

(405

)

 

 

(22

)

 

 

(1,280

)

 

 

(22

)

Comprehensive loss

$

(24,195

)

 

$

(17,633

)

 

$

(71,058

)

 

$

(79,033

)

 

See accompanying notes to these unaudited condensed financial statements.

4


Table of Contents

 

Singular Genomics Systems, Inc.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

Shares

 

Amount

 

 

Shares

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

-

 

$

-

 

 

 

72,438,742

 

$

7

 

 

$

488,200

 

 

$

(138

)

 

$

(151,896

)

 

$

336,173

 

Exchange of common stock for Series A Common Stock Equivalent

 

2,500

 

 

-

 

 

 

(2,500,000

)

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Vesting of common stock issued for early exercise
   of stock options

 

-

 

 

-

 

 

 

505,322

 

 

-

 

 

 

344

 

 

 

-

 

 

 

-

 

 

 

344

 

Issuance of common stock in connection with exercise
   of stock options

 

-

 

 

-

 

 

 

65,399

 

 

-

 

 

 

34

 

 

 

-

 

 

 

-

 

 

 

34

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

3,566

 

 

 

-

 

 

 

-

 

 

 

3,566

 

Unrealized loss on available- for-sale marketable
   securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(629

)

 

 

-

 

 

 

(629

)

Net loss

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,006

)

 

 

(22,006

)

Balance at March 31, 2022

 

2,500

 

$

-

 

 

 

70,509,463

 

$

7

 

 

$

492,144

 

 

$

(767

)

 

$

(173,902

)

 

$

317,482

 

Vesting of common stock issued for early exercise
   of stock options

 

-

 

 

-

 

 

 

219,743

 

 

-

 

 

 

151

 

 

 

-

 

 

 

-

 

 

 

151

 

Issuance of common stock
   in connection with exercise of stock options

 

-

 

 

-

 

 

 

162,644

 

 

-

 

 

 

62

 

 

 

-

 

 

 

-

 

 

 

62

 

Issuance of common stock in connection with Employee
   Stock Purchase Program

 

-

 

 

-

 

 

 

174,019

 

 

-

 

 

 

489

 

 

 

-

 

 

 

-

 

 

 

489

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

3,605

 

 

 

-

 

 

 

-

 

 

 

3,605

 

Unrealized loss on available- for-sale marketable
   securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(246

)

 

 

-

 

 

 

(246

)

Net loss

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(23,982

)

 

 

(23,982

)

Balance at June 30, 2022

 

2,500

 

$

-

 

 

 

71,065,869

 

$

7

 

 

$

496,451

 

 

$

(1,013

)

 

$

(197,884

)

 

$

297,561

 

Vesting of common stock issued for early exercise
   of stock options

 

-

 

 

-

 

 

 

156,397

 

 

-

 

 

 

109

 

 

 

-

 

 

 

-

 

 

 

109

 

Issuance of common stock in connection with exercise
   of stock options

 

-

 

 

-

 

 

 

84,260

 

 

-

 

 

 

51

 

 

 

-

 

 

 

-

 

 

 

51

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

3,399

 

 

 

-

 

 

 

-

 

 

 

3,399

 

Unrealized loss on available- for-sale marketable
   securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

 

(405

)

 

 

-

 

 

 

(405

)

Net loss

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,790

)

 

 

(23,790

)

Balance at September 30, 2022

 

2,500

 

$

-

 

 

 

71,306,526

 

$

7

 

 

$

500,010

 

 

$

(1,418

)

 

$

(221,674

)

 

$

276,925

 

 

See accompanying notes to these unaudited condensed financial statements.

 

5


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

 

 

(Deficit) / Equity

 

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

 

-

 

 

-

 

 

 

-