[Part I](index=5&type=section&id=PART%20I) [Business](index=5&type=section&id=Item%201.%20Business) Singular Genomics develops NGS and multiomics technologies, launching G4 in 2021 and developing PX - The company's mission is to accelerate genomics for the advancement of science and medicine by developing powerful, fast, flexible, and accurate sequencing products[18](index=18&type=chunk) - The company's foundational technology is a proprietary Sequencing Engine, which forms the basis for its two main products: the G4 for the NGS market and the PX for the multiomics market[21](index=21&type=chunk)[22](index=22&type=chunk) - The G4 sequencer was commercially launched in December 2021, with shipments expected to begin in the second quarter of 2022. The PX multiomics platform is anticipated to launch commercially in 2023[23](index=23&type=chunk)[24](index=24&type=chunk) - As of December 31, 2021, the company had **221 full-time employees**, with **134 in research and development**[42](index=42&type=chunk)[48](index=48&type=chunk) [Our Products](index=6&type=section&id=1.1%20Our%20Products) The company offers the G4 NGS sequencer and is developing the PX multiomics platform for high-throughput analysis - The G4 sequencer is designed with four flow cells, providing flexibility and high throughput. It achieves cycle times of **2.5 minutes** and **Q30 or higher accuracy** on **75%-90% of base calls**[29](index=29&type=chunk) - Specialized kits for the G4 are planned for Q4 2022, including HD-Seq for high-accuracy rare variant detection (**Q50**) and XR-Seq for long reads up to **3,000 base pairs**, targeting applications in oncology and immunology[31](index=31&type=chunk)[33](index=33&type=chunk) - The PX platform is designed for high-throughput multiomics, processing **1 million to 10 million cells per run** and up to **96 tissue samples**, a significant increase over current technologies[37](index=37&type=chunk) [Commercialization and Market Strategy](index=9&type=section&id=1.2%20Commercialization%20and%20Market%20Strategy) The strategy focuses on G4 and PX instrument adoption for recurring consumable revenue, initially in North America - The business model is centered on placing instruments (G4 and PX) to drive a recurring revenue stream from the sale of consumables[43](index=43&type=chunk) - The commercial strategy for the G4 involved a three-step process: beta pilot tests (completed 2021), an early access program (substantially complete), and a broad market launch (December 2021)[44](index=44&type=chunk)[45](index=45&type=chunk) - Initial commercial efforts are focused on North America via a direct sales organization, with future expansion planned for Europe and Asia Pacific through direct sales and distributors[47](index=47&type=chunk) [Intellectual Property](index=10&type=section&id=1.3%20Intellectual%20Property) The company protects its technology with 9 issued US patents and licenses from Columbia University - As of February 1, 2022, the company owns or exclusively licenses **9 issued U.S. patents**, with many more applications pending globally. Owned patents are expected to expire between **2038 and 2042**[52](index=52&type=chunk) - The company has an exclusive license agreement with Columbia University for patents related to sequencing compositions and methods. This agreement includes annual fees, potential royalties, and up to **$3.9 million in milestone payments**[55](index=55&type=chunk)[58](index=58&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) Significant risks include limited operating history, net losses, competition, and product commercialization challenges - The company is a pre-revenue entity with a history of significant losses (**$98.8 million in 2021**) and expects to incur future losses, making it difficult to evaluate its prospects[84](index=84&type=chunk)[85](index=85&type=chunk) - The life sciences market is highly competitive, with rivals like Illumina, 10x Genomics, and Thermo Fisher having greater resources, brand recognition, and established customer relationships[88](index=88&type=chunk)[89](index=89&type=chunk) - The business is highly dependent on the successful commercialization of the G4 and development of the PX. Failure to achieve market acceptance or meet performance metrics would substantially harm the business[91](index=91&type=chunk)[92](index=92&type=chunk) - The company faces significant intellectual property risks, including potential infringement lawsuits from competitors and the challenge of protecting its own patents and trade secrets[160](index=160&type=chunk)[161](index=161&type=chunk) - Regulatory risks include potential changes to the FDA's oversight of Research Use Only (RUO) products and Laboratory Developed Tests (LDTs), which could subject the company's products to more stringent and costly regulations[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Properties](index=50&type=section&id=Item%202.%20Properties) The company leases 83,515 sq ft in California and secured new leases for over 205,000 sq ft for HQ - As of year-end 2021, the company leased **83,515 sq. ft.** in La Jolla and San Diego[242](index=242&type=chunk) - In January 2022, the company leased two new buildings to be constructed in La Jolla, comprising **113,094 sq. ft.** and **92,572 sq. ft.**, to serve as its future headquarters[243](index=243&type=chunk) [Legal Proceedings](index=50&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[245](index=245&type=chunk) [Part II](index=51&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock trades on Nasdaq (OMIC); no dividends paid; May 2021 IPO raised $237.2 million - The company's common stock trades on the Nasdaq Global Select Market under the symbol **"OMIC"**[249](index=249&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[250](index=250&type=chunk) - The IPO in May 2021 generated net proceeds of approximately **$237.2 million**, and the planned use of these proceeds has not materially changed[254](index=254&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Pre-revenue company with $98.8 million net loss in 2021 due to increased R&D and SG&A expenses [Results of Operations](index=58&type=section&id=7.1%20Results%20of%20Operations) Net loss increased to $98.8 million in 2021, driven by higher R&D, SG&A, and non-cash charges Results of Operations (2021 vs. 2020) | | Twelve Months Ended December 31, | | Change | | :--- | :--- | :--- | :--- | | **(in thousands)** | **2021** | **2020** | **$** | | Research and development | $32,655 | $21,247 | $11,408 | | Selling, general and administrative | $28,624 | $6,287 | $22,337 | | **Loss from operations** | **($61,279)** | **($27,534)** | **($33,745)** | | Change in fair value of convertible promissory notes | ($35,199) | - | ($35,199) | | **Net loss** | **($98,771)** | **($27,945)** | **($70,826)** | - R&D expenses increased by **$11.4 million (54%)** in 2021, primarily due to a **$7.6 million** increase in employee compensation costs to support the G4 and PX development efforts[285](index=285&type=chunk) - SG&A expenses increased by **$22.3 million (355%)** in 2021, mainly from a **$13.9 million** rise in employee compensation and a **$6.0 million** increase in professional fees related to becoming a public company[286](index=286&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) Financed by IPO, the company holds $339.2 million in cash, sufficient for 12 months of operations - As of December 31, 2021, the company had cash, cash equivalents, and short-term investments of **$339.2 million** and an accumulated deficit of **$151.9 million**[290](index=290&type=chunk) Cash Flow Summary (2021 vs. 2020) | | Year Ended December 31, | | | :--- | :--- | :--- | | **(in thousands)** | **2021** | **2020** | | Net cash used in Operating activities | $(51,701) | $(24,873) | | Net cash (used in) provided by Investing activities | $(130,861) | $24,005 | | Net cash provided by Financing activities | $372,128 | $7,515 | - In September 2021, the company refinanced its debt with Silicon Valley Bank, securing a new loan agreement for up to **$35.5 million**. The proceeds of the first tranche (**$10.5 million**) were used to repay the prior loan[302](index=302&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate sensitivity on investments; inflation has no material effect - The company's market risk is primarily limited to interest rate sensitivity on its cash and investment portfolio[324](index=324&type=chunk) - The company does not believe that inflation has had a material effect on its business or financial condition[325](index=325&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Includes audited financial statements for 2021 and 2020, reflecting pre-revenue status and liquidity [Balance Sheets](index=69&type=section&id=8.1%20Balance%20Sheets) Balance sheet shows increased assets and equity to $355.6 million due to IPO proceeds Balance Sheet Highlights (As of Dec 31) | | 2021 | 2020 | | :--- | :--- | :--- | | **(in thousands)** | | | | Cash, cash equivalents & short-term investments | $339,223 | $26,919 | | Total Assets | $355,648 | $30,502 | | Total Liabilities | $19,475 | $12,873 | | Total Stockholders' Equity (Deficit) | $336,173 | $(51,555) | [Statements of Operations](index=70&type=section&id=8.2%20Statements%20of%20Operations) Net loss reached $98.8 million in 2021, driven by higher operating expenses and non-cash charges Statement of Operations Highlights (Year Ended Dec 31) | | 2021 | 2020 | | :--- | :--- | :--- | | **(in thousands, except per share data)** | | | | Loss from operations | $(61,279) | $(27,534) | | Net loss | $(98,771) | $(27,945) | | Net loss per share, basic and diluted | $(2.10) | $(2.64) | [Statements of Cash Flows](index=73&type=section&id=8.3%20Statements%20of%20Cash%20Flows) Cash flows show $51.7 million used in operations, offset by $372.1 million from financing activities Statement of Cash Flows Highlights (Year Ended Dec 31) | | 2021 | 2020 | | :--- | :--- | :--- | | **(in thousands)** | | | | Net cash used in operating activities | $(51,701) | $(24,873) | | Net cash (used in) provided by investing activities | $(130,861) | $24,005 | | Net cash provided by financing activities | $372,128 | $7,515 | [Controls and Procedures](index=90&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were effective; new ERP system implemented in Q4 2021, modifying internal controls - Management concluded that disclosure controls and procedures were effective as of December 31, 2021[448](index=448&type=chunk) - The company is exempt from providing a management assessment on internal control over financial reporting due to its status as a newly public company[450](index=450&type=chunk) - A new enterprise resource planning (ERP) system was implemented in Q4 2021, resulting in changes to internal controls[451](index=451&type=chunk) [Part III](index=92&type=section&id=PART%20III) [Directors, Executive Officers, Corporate Governance, Executive Compensation, and Other Matters](index=92&type=section&id=Items%2010-14) Information for Items 10-14 is incorporated by reference from the 2022 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the definitive Proxy Statement for the 2022 Annual Meeting of Stockholders[456](index=456&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk) [Part IV](index=93&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=93&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) Lists financial statements and all exhibits filed or incorporated by reference into the annual report - This section lists all exhibits filed with the Form 10-K, including the Certificate of Incorporation, Bylaws, material contracts such as lease agreements and the license agreement with Columbia University, and executive compensation plans[466](index=466&type=chunk)

Singular Genomics Systems, Inc. (NASDAQ:OMIC) Q4 2021 Earnings Conference Call March 2, 2022 4:30 PM ET Company Participants Philip Taylor - IR Drew Spaventa - Founder and CEO Dalen Meeter - Head of Finance Dave Daly - President and COO Eli Glezer - Founder and Chief Scientific Officer Conference Call Participants Tycho Peterson - JPMorgan Matt Sykes - Goldman Sachs John Sourbeer - UBS Dan Brennan - Cowen Operator Good day, and thank you for standing by. Welcome to the Singular Genomics Fourth Quarter Resul ...

S I N G G U L A R GENOMICS JP Morgan 40th Annual Healthcare Conference 2022 Drew Spaventa | Chairman and CEO FORWARD-LOOKING STATEMENTS All statements in this presentation and the associated discussion that are not statements of historical facts constitute forwardlooking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding: (i) our ability to successfully complete the development of our G4 and ...

Financial Data and Key Metrics Changes - Operating expenses for Q3 2021 totaled $17.5 million, up from $7.8 million in Q3 2020, primarily due to headcount growth and investments for the G4 launch [29] - Net loss for Q3 2021 was $17.6 million or $0.25 per share, compared to a net loss of $7.9 million or $0.74 per share in Q3 2020 [30] - Ending cash and short-term investments totaled $357 million as of September 30, 2021, compared to $26.9 million as of December 31, 2020 [30] Business Line Data and Key Metrics Changes - The G4 integrated solution is set to address challenges in the NGS market, with a focus on speed, flexibility, and scale [12][14] - The G4 instrument is designed to enable run times ranging from five to 16 hours, significantly faster than current market offerings [14] - The G4 can sequence four human genomes in less than 16 hours, with a target data output of up to 600 gigabases per day [15] Market Data and Key Metrics Changes - The global NGS market represents an annual opportunity of $7 billion, growing at a 16% CAGR [10] - The multiomics market is estimated to be $2 billion today, with a CAGR of 21% [11] - The company aims to fill the gap in the market for competitive genomic tools and technologies [7][9] Company Strategy and Development Direction - The company is focused on launching the G4 integrated solution and developing the PX integrated solution for multiomics [23][25] - The commercial launch of the G4 is on track for the end of 2021, with plans to accept orders and ship instruments in the first half of 2022 [21][26] - The company is building a premium customer experience to enhance competitive positioning [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for the G4 system, noting strong feedback from early access partners [37][38] - The company is well-capitalized heading into 2022 and is excited about the synergies between the G4 and PX systems [31] - Management emphasized the importance of providing best-in-class service and support as part of their commercial strategy [39][70] Other Important Information - The company has completed the buildout of a state-of-the-art manufacturing facility and is scaling up production [26] - The early access program has shown promising results, with high accuracy and read counts reported from partner labs [20] Q&A Session Summary Question: How are early results from the access program affecting customer feedback and demand? - Management noted strong results from early access partners, validating technology and indicating high demand for alternatives [37][38] Question: What is the expected split between R&D and SG&A expenses as commercialization ramps up? - The company plans to grow both R&D and commercial teams, with a focus on building out operations in anticipation of the G4 launch [40] Question: What is the timeline for initial shipments after accepting orders? - Initial shipments are expected in Q2 2022, with revenue recognition likely occurring upon shipment after customer acceptance [43][45] Question: What enhancements have been made to the G4 based on early access program feedback? - Improvements have come from reagent formulations and ongoing optimizations, with a focus on maintaining high performance [72][74] Question: What areas is the commercial team focusing on as the G4 launch approaches? - The focus is on hiring field application scientists and building a service and support infrastructure to ensure a differentiated customer experience [67][70]

Part I. [Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed financial statements, showing a net loss of **$79.0 million** and increased cash and equity from the June 2021 IPO Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $239,263 | $11,688 | | Total current assets | $364,227 | $27,571 | | Total assets | $370,831 | $30,502 | | Total liabilities | $18,763 | $12,873 | | Total stockholders' equity (deficit) | $352,068 | $(51,555) | Condensed Statement of Operations Highlights (in thousands) | Account | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Research and development | $23,200 | $15,431 | | Selling, general and administrative | $18,406 | $4,518 | | Loss from operations | $(41,606) | $(19,949) | | Change in fair value of convertible promissory notes | $(35,199) | $0 | | Net loss | $(79,011) | $(20,033) | | Net loss per share | $(2.05) | $(1.91) | - In June 2021, the company closed its IPO, selling **11,730,000** shares of common stock and receiving net proceeds of approximately **$237.2 million**[37](index=37&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) - As of September 30, 2021, the company had cash, cash equivalents, and short-term investments of **$357.0 million** and believes these funds are sufficient to fund operations for at least 12 months[38](index=38&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's pre-revenue status, anticipated G4 solution launch, increased operating expenses, and strong liquidity post-IPO with **$357.0 million** in cash and investments - The company is a pre-revenue life science technology company developing two integrated solutions: the G4 Integrated Solution for the NGS market (commercial launch anticipated by end of 2021) and the PX Integrated Solution for the multiomics market (commercial launch anticipated in 2023)[123](index=123&type=chunk) Comparison of Operating Expenses (in thousands) | Expense Category | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $23,200 | $15,431 | $7,769 | 50% | | Selling, general and administrative | $18,406 | $4,518 | $13,888 | 307% | - The increase in R&D expense was primarily due to a **$5.2 million** increase in employee compensation costs[168](index=168&type=chunk) - The increase in SG&A expense was primarily due to a **$9.1 million** increase in employee compensation costs and **$2.8 million** in professional fees associated with being a public company[171](index=171&type=chunk) - Net cash used in operating activities was **$36.0 million** for the nine months ended September 30, 2021[178](index=178&type=chunk) - Net cash provided by financing activities was **$371.3 million**, primarily from the IPO (**$237.2 million** net) and issuance of convertible notes (**$130.5 million**)[179](index=179&type=chunk)[183](index=183&type=chunk) - On September 30, 2021, the company refinanced its loan with Silicon Valley Bank, entering into a new agreement for up to **$35.5 million**, with initial proceeds of **$10.5 million** used to repay existing debt[186](index=186&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's market risk exposures, primarily interest rate, foreign currency, and inflation, none of which are currently considered material - The company's primary market risks are identified as interest rate, foreign currency, and inflation risk[197](index=197&type=chunk) - Interest rate risk is considered immaterial due to the short-term nature of cash and investments (**$357.0 million**), and the variable rate on the **$10.5 million** SVB loan is not expected to have a material impact[197](index=197&type=chunk) - Foreign currency risk is not material as all operations are currently located in the United States and transactions are denominated in U.S. dollars[198](index=198&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report (September 30, 2021)[200](index=200&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[202](index=202&type=chunk) Part II. [Other Information](index=50&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings as of the filing date, while acknowledging the possibility of future litigation - As of the filing date, the company is not a party to any material legal proceedings[206](index=206&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks, including limited operating history, significant losses, intense competition, dependence on G4/PX solution commercialization, manufacturing issues, single-source supplier reliance, intellectual property litigation, potential FDA regulation, and cybersecurity threats - The company's limited operating history, significant losses since inception (**$132.1 million** accumulated deficit as of Sep 30, 2021), and pre-revenue status make it difficult to evaluate future prospects[208](index=208&type=chunk)[209](index=209&type=chunk) - The life sciences technology market is highly competitive, with major competitors including Illumina, Thermo Fisher Scientific, and Pacific Biosciences, who have greater resources and established customer relationships[213](index=213&type=chunk)[214](index=214&type=chunk) - The business is highly dependent on the successful finalization, commercial launch, and market acceptance of its G4 Integrated Solution[217](index=217&type=chunk) - The company faces risks of litigation for infringing on third-party intellectual property rights, which could be costly and prevent or delay product commercialization[291](index=291&type=chunk) - Although products are intended for Research Use Only (RUO), the FDA could deem them medical devices, which would require expensive and time-consuming regulatory clearance or approval[331](index=331&type=chunk) - The company relies on single-source suppliers for some components, and the loss of any of these suppliers could disrupt manufacturing and harm the business[263](index=263&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=92&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms the IPO details, including the May 26, 2021, effective date, **$237.2 million** net proceeds, and no material change in the planned use of proceeds - The company's IPO was declared effective by the SEC on May 26, 2021[382](index=382&type=chunk) - The IPO resulted in net proceeds of approximately **$237.2 million** from the sale of **11,730,000** shares of common stock at **$22.00** per share[382](index=382&type=chunk) - There has been no material change in the planned use of proceeds from the IPO as described in the final prospectus[382](index=382&type=chunk) [Other Items and Signatures](index=92&type=section&id=Other%20Items%20and%20Signatures) This concluding section reports 'None' for several standard disclosure items and lists exhibits, with the report formally signed by the Principal Executive Officer and Principal Financial Officer on November 9, 2021 - The company reported 'None' for Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) - The report was signed on November 9, 2021, by Andrew Spaventa, Chief Executive Officer, and Dalen Meeter, Senior Vice President, Finance[392](index=392&type=chunk)

Part I [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed financial statements, highlighting a $61.4 million net loss for the first six months of 2021 and a significant increase in assets from the June 2021 IPO [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) The balance sheet as of June 30, 2021, reflects a significant strengthening of the company's financial position, with total assets increasing to $384.0 million and stockholders' equity turning positive due to IPO proceeds Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $257,268 | $11,688 | | Short-term investments | $114,400 | $15,231 | | **Total Assets** | **$383,980** | **$30,502** | | Total Liabilities | $17,402 | $12,873 | | Total stockholders' equity (deficit) | $366,578 | $(51,555) | [Condensed Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company, in a pre-revenue stage, reported a net loss of $61.4 million for the six months ended June 30, 2021, primarily due to increased operating expenses and a non-cash charge for convertible notes Statement of Operations Summary (in thousands) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Research and development | $14,289 | $9,351 | | General and administrative | $9,855 | $2,820 | | **Loss from operations** | **$(24,144)** | **$(12,171)** | | Change in fair value of convertible promissory notes | $(35,199) | - | | **Net loss** | **$(61,400)** | **$(12,100)** | | **Net loss per share** | **$(2.83)** | **$(1.17)** | [Condensed Statements of Cash Flows](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operations was $25.0 million, while financing activities provided $372.6 million, primarily from IPO proceeds, significantly increasing the company's cash position Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(25,026) | $(11,222) | | Net cash (used in) / provided by investing activities | $(101,827) | $9,803 | | Net cash provided by financing activities | $372,638 | $7,510 | | **Increase in cash, cash equivalents and restricted cash** | **$245,785** | **$6,091** | [Notes to Condensed Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) These notes provide detailed context for the financial statements, covering the June 2021 IPO, conversion of convertible notes, accounting policies, debt agreements, and commitments - The company completed its IPO on June 1, 2021, selling 11,730,000 shares of common stock and receiving net proceeds of approximately **$237.2 million**[32](index=32&type=chunk) - As of June 30, 2021, the company had an accumulated deficit of **$114.5 million** and believes its cash balance of **$371.7 million** is sufficient to fund operations for at least the next 12 months[33](index=33&type=chunk) - In February 2021, the company issued **$130.5 million** in convertible promissory notes, which accrued 6% interest and converted into common stock upon the IPO in June 2021[74](index=74&type=chunk)[89](index=89&type=chunk) - The company has a loan agreement with Silicon Valley Bank (SVB) with a **$10.0 million** outstanding balance as of June 30, 2021[81](index=81&type=chunk)[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's pre-revenue status, significant increase in operating expenses for the first half of 2021, and enhanced liquidity from the IPO and convertible note financing [Overview](index=33&type=section&id=Overview) The company is a life science technology firm developing NGS and multiomics products, with a business model focused on instrument sales and recurring consumable revenue - The company is developing two main products: the G4 Integrated Solution for NGS and the PX Integrated Solution for multiomics[123](index=123&type=chunk) - Commercialization plan for the G4 solution includes a beta pilot, an early access program, and a full commercial launch anticipated by the end of 2021, with units shipping in the first half of 2022[125](index=125&type=chunk) - The PX Integrated Solution is expected to have an early access program in 2022 and a full commercial launch in 2023[126](index=126&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section analyzes operating results, showing R&D expenses rose by 52.8% to $14.3 million and G&A expenses surged by 249.5% to $9.9 million for the six months ended June 30, 2021 Operating Expenses Comparison (Six Months Ended June 30) | Expense Category | 2021 (in thousands) | 2020 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Research and development | $14,289 | $9,351 | 52.8% | | General and administrative | $9,855 | $2,820 | 249.5% | - The increase in R&D expenses was primarily due to a **$2.7 million** increase in employee compensation and related costs from higher headcount, along with increased spending on lab materials and facilities[164](index=164&type=chunk) - The increase in G&A expenses was driven by a **$4.9 million** rise in employee compensation and a **$1.1 million** increase in professional fees for insurance, accounting, and legal services[167](index=167&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2021, the company had $371.7 million in cash, cash equivalents, and short-term investments, primarily from the IPO and convertible notes, providing sufficient liquidity for the next twelve months - As of June 30, 2021, the company had cash, cash equivalents, and short-term investments totaling **$371.7 million**[169](index=169&type=chunk) - Financing activities in the first six months of 2021 provided **$372.6 million** in cash, primarily from the IPO (**$238.6 million** net) and convertible notes (**$130.5 million**)[177](index=177&type=chunk) - The company has an outstanding loan with Silicon Valley Bank for **$10.0 million**, with interest-only payments through September 2021, followed by principal and interest payments until maturity in September 2023[178](index=178&type=chunk)[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company discloses its exposure to market risks, including interest rate, foreign currency, and inflation, which management believes are not material due to short-term investments and U.S.-only operations - The company's primary market risks are identified as interest rate, foreign currency exchange, and inflation risk[193](index=193&type=chunk) - Management believes there is no material exposure to changes in interest rates due to the short-term nature of its cash and investments[193](index=193&type=chunk) - With all operations currently in the United States, the company states there was no material foreign currency risk for the period[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[196](index=196&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[197](index=197&type=chunk) Part II [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings[201](index=201&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks, including the company's limited operating history, substantial losses, pre-revenue status, intense competition, and dependence on the successful commercialization of its G4 Integrated Solution - The company's limited operating history, significant losses since inception (**$114.5 million** accumulated deficit), and pre-revenue status make it difficult to evaluate future prospects[203](index=203&type=chunk)[204](index=204&type=chunk) - The life sciences technology market is highly competitive, with large, well-resourced competitors like Illumina and Thermo Fisher Scientific[208](index=208&type=chunk) - The business is highly dependent on the successful final development and commercialization of the G4 Integrated Solution, which is anticipated by the end of 2021[212](index=212&type=chunk) - There is a risk of being sued for infringing on third-party intellectual property, which could be costly and delay or prevent product commercialization[286](index=286&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=93&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section discloses unregistered sales of equity securities, primarily stock option grants, and confirms the use of approximately $237.2 million net proceeds from the IPO aligns with the prospectus - Between March 31 and May 25, 2021, the company issued shares and granted options under its 2016 Plan in transactions exempt from registration[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) - The company closed its IPO on June 1, 2021, with net proceeds of approximately **$237.2 million**. There has been no material change in the planned use of these proceeds[380](index=380&type=chunk) [Other Required Disclosures (Items 3, 4, 5)](index=94&type=section&id=Other%20Required%20Disclosures) The company reported no defaults upon senior securities, no mine safety disclosures, and no other material information for the period - The company reported 'None' for Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk) [Item 6. Exhibits](index=95&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, equity plans, and officer certifications - Key exhibits filed include the Amended and Restated Certificate of Incorporation and Bylaws, the 2021 Equity Incentive Plan, lease agreements, and the Loan Agreement with Silicon Valley Bank[385](index=385&type=chunk)