Seer, Inc. (NASDAQ:SEER) Q1 2023 Results Conference Call May 9, 2023 4:30 PM ET Company Participants Carrie Mendivil - IR Omid Farokhzad - CEO, President and Chair David Horn - CFO Conference Call Participants Gabby Shaw - Morgan Stanley Kyle Boucher - TD Cowen Operator Good day. And thank you for standing by. Welcome to the Seer First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would like to hand the conference over to your speake ...

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This Quarterly Report contains forward-looking statements about future results, financial position, business strategy, and operational plans, which involve known and unknown risks and uncertainties that may cause actual results to differ materially - This Quarterly Report contains forward-looking statements regarding future results, financial position, business strategy, and operational plans, which involve known and unknown risks and uncertainties that may cause actual results to differ materially[9](index=9&type=chunk)[11](index=11&type=chunk) - Forward-looking statements cover estimates of market, financial performance, commercialization strategy, market acceptance of the Proteograph™ Product Suite, competitive landscape, ability to manage growth, intellectual property, and impacts of macroeconomic factors like pandemics and inflation[10](index=10&type=chunk) [Part I. Financial Information](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Seer, Inc.'s unaudited condensed consolidated financial statements, management's discussion and analysis of financial condition, market risk disclosures, and internal controls and procedures [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Seer, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2023, including balance sheets, statements of operations and comprehensive loss, statements of changes in stockholders' equity, and statements of cash flows, along with detailed notes on accounting policies and financial data [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of Seer, Inc.'s financial position, detailing assets, liabilities, and stockholders' equity as of March 31, 2023, and December 31, 2022 Balance Sheet Data (in thousands) | ASSETS (in thousands) | March 31, 2023 | December 31, 2022 | | :---------------------- | :------------- | :---------------- | | Cash and cash equivalents | $48,386 | $53,208 | | Short-term investments | 303,708 | 360,000 | | Total current assets | 367,375 | 430,000 | | Total assets | $472,787 | $480,000 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | 11,754 | 10,000 | | Total liabilities | 39,798 | 40,000 | | Total stockholders' equity | 432,989 | 440,000 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details Seer, Inc.'s financial performance, including revenue, cost of revenue, operating expenses, and net loss for the three months ended March 31, 2023, and 2022 Statements of Operations Data (in thousands, except per share) | (in thousands, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $4,053 | $3,312 | | Total cost of revenue | 1,985 | 2,068 | | Gross profit | 2,068 | 1,244 | | Total operating expenses | 29,513 | 25,030 | | Loss from operations | (27,445) | (23,786) | | Total other income | 3,486 | 140 | | Net loss | $(23,959) | $(23,646) | | Net loss per share, basic and diluted | $(0.38) | $(0.38) | - Total revenue increased by **22% year-over-year**, from **$3.312 million** in Q1 2022 to **$4.053 million** in Q1 2023[17](index=17&type=chunk) - Gross profit increased by **66% year-over-year**, from **$1.244 million** in Q1 2022 to **$2.068 million** in Q1 2023[17](index=17&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section outlines changes in Seer, Inc.'s stockholders' equity, reflecting impacts from stock issuance, compensation, comprehensive gain, and net loss for the period Stockholders' Equity Changes (in thousands, except share amounts) | (in thousands, except share amounts) | Balance at Dec 31, 2022 | Issuance of Class A common stock | Stock-based compensation | Other comprehensive gain | Net loss | Balance at Mar 31, 2023 | | :----------------------------------- | :---------------------- | :------------------------------- | :----------------------- | :----------------------- | :------- | :---------------------- | | Total Stockholders' Equity | $446,993 | $30 | $8,724 | $1,158 | $(23,959) | $432,989 | - The accumulated deficit increased from **$(219.496) million** at December 31, 2022, to **$(243.455) million** at March 31, 2023, primarily due to the net loss incurred[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents Seer, Inc.'s cash flow activities, detailing cash used in operations, provided by investing, and provided by financing for the three months ended March 31, 2023, and 2022 Cash Flow Activities (in thousands) | (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(19,331) | $(19,151) | | Net cash provided by investing activities | 14,479 | 10,920 | | Net cash provided by financing activities | 30 | 752 | | Net decrease in cash, cash equivalents and restricted cash | $(4,822) | $(7,479) | | Cash, cash equivalents and restricted cash, end of period | $48,910 | $225,858 | - Cash used in operating activities remained consistent year-over-year, at approximately **$19.3 million** in Q1 2023[26](index=26&type=chunk) - Net cash provided by investing activities increased by **32.6% year-over-year**, from **$10.920 million** in Q1 2022 to **$14.479 million** in Q1 2023[26](index=26&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements, covering accounting policies, fair value measurements, and other financial information [1. Organization and Description of the Business](index=10&type=section&id=1.%20Organization%20and%20Description%20of%20the%20Business) Seer, Inc. is a life sciences company focused on proteome insights, incorporated in Delaware in 2017. The company has primarily invested in R&D for its Proteograph Product Suite and commercial infrastructure, resulting in significant losses and negative cash flows. As of March 31, 2023, it had $352.1 million in cash and investments and an accumulated deficit of $243.5 million, with sufficient capital for at least 12 months - Seer, Inc. is a life sciences company focused on capturing deep molecular insights from the proteome to enable breakthroughs in biology and disease understanding[28](index=28&type=chunk) - Since inception, the company has devoted substantially all resources to research and development activities, including the Proteograph Product Suite, building commercial infrastructure, and establishing intellectual property[28](index=28&type=chunk) Key Financial Metrics (as of March 31, 2023) | Financial Metric (as of March 31, 2023) | Amount (in millions) | | :------------------------------------- | :------------------- | | Cash and cash equivalents and short-term investments | $352.1 | | Accumulated deficit | $(243.5) | [2. Summary of Significant Accounting Policies and Basis of Presentation](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies%20and%20Basis%20of%20Presentation) This note outlines Seer, Inc.'s accounting policies, including U.S. GAAP basis, reliance on management estimates, and details on credit risk. It highlights that related party revenue constituted 32% of total revenue for Q1 2023 and Q1 2022, and international revenue was 22% and 25% respectively. The company also discusses the impact of COVID-19 and its revenue recognition policies for products, services, and grants - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include Seer, Inc. and its wholly-owned subsidiaries, with all intercompany transactions eliminated[31](index=31&type=chunk) - Management makes estimates and assumptions for revenue recognition, fair value of common stock, stock-based compensation, accrued R&D, credit losses, inventory valuation, property and equipment, and income tax uncertainties[32](index=32&type=chunk) Revenue Concentration | Revenue Concentration | Q1 2023 | Q1 2022 | | :-------------------- | :------ | :------ | | Related party revenue | 32% | 32% | | International revenue | 22% | 25% | - The company recognizes revenue when control of products (Proteograph Product Suite, consumables) and services (proteomic data generation/analysis) is transferred to customers, and grant revenue as activities are performed[46](index=46&type=chunk)[47](index=47&type=chunk)[52](index=52&type=chunk) [3. Fair Value Measurements and Fair Value of Financial Instruments](index=13&type=section&id=3.%20Fair%20Value%20Measurements%20and%20Fair%20Value%20of%20Financial%20Instruments) This note details the fair value of Seer, Inc.'s financial assets, primarily cash equivalents and investments, categorized by the fair value hierarchy. As of March 31, 2023, total assets measured at fair value were $410.5 million, with most investments classified as Level 2. The company reported total unrealized losses of $(387) thousand, which are considered temporary and not credit-risk related Assets Measured at Fair Value (in thousands) | Assets Measured at Fair Value (in thousands) | March 31, 2023 | December 31, 2022 | | :----------------------------------------- | :------------- | :---------------- | | Total assets measured at fair value | $410,510 | $426,396 | | Level 1 (Money market funds) | $41,906 | $53,208 | | Level 2 (Investments) | $368,604 | $373,188 | Unrealized Gains and Losses (in thousands) | Unrealized Gains and Losses (in thousands) | March 31, 2023 | December 31, 2022 | | :--------------------------------------- | :------------- | :---------------- | | Total Unrealized Gains | $292 | $40 | | Total Unrealized Losses | $(387) | $(1,291) | - Unrealized losses on available-for-sale investments are not attributable to credit risk and are considered temporary. Approximately **$0.1 million** of investments have been in a continuous unrealized loss position for 12 months or longer[65](index=65&type=chunk) [4. Other Financial Statement Information](index=15&type=section&id=4.%20Other%20Financial%20Statement%20Information) This note provides a breakdown of Seer, Inc.'s inventory, property and equipment (net), and accrued expenses. Total inventory decreased to $3.7 million as of March 31, 2023, from $4.6 million at year-end 2022. Net property and equipment also slightly decreased, while depreciation and amortization expense increased to $1.2 million for Q1 2023 Inventory (in thousands) | Inventory (in thousands) | March 31, 2023 | December 31, 2022 | | :----------------------- | :------------- | :---------------- | | Raw materials | $1,592 | $2,129 | | Work-in-progress | 205 | 271 | | Finished goods | 1,921 | 2,227 | | Total inventory | $3,718 | $4,627 | Property and Equipment, Net (in thousands) | Property and Equipment, Net (in thousands) | March 31, 2023 | December 31, 2022 | | :--------------------------------------- | :------------- | :---------------- | | Total property and equipment, net | $18,675 | $19,408 | | Depreciation and amortization expense (Q1) | $1,200 | $900 | Accrued Expenses (in thousands) | Accrued Expenses (in thousands) | March 31, 2023 | December 31, 2022 | | :------------------------------ | :------------- | :---------------- | | Accrued compensation | $3,806 | $6,139 | | Total accrued expenses | $7,175 | $8,298 | [5. Revenue and Deferred Revenue](index=16&type=section&id=5.%20Revenue%20and%20Deferred%20Revenue) This note details Seer, Inc.'s revenue streams, including product, service, related party, and grant revenue. Product revenue for non-related customers was $2.3 million in Q1 2023, up from $2.1 million in Q1 2022. Grant revenue significantly increased to $0.3 million in Q1 2023 from $14 thousand in Q1 2022. Deferred revenue at period-end was $306 thousand, with $3.1 million in remaining performance obligations expected to be recognized Revenue by Type (non-related customers, in thousands) | Revenue Type (non-related customers, in thousands) | Q1 2023 | Q1 2022 | | :----------------------------------------------- | :------ | :------ | | Product revenue | $2,343 | $2,149 | | Service revenue | $69 | $79 | | Grant revenue | $335 | $14 | Deferred Revenue (in thousands) | Deferred Revenue (in thousands) | March 31, 2023 | December 31, 2022 | | :------------------------------ | :------------- | :---------------- | | Balance, end of period | $306 | $133 | - As of March 31, 2023, **$3.1 million** of revenue is expected to be recognized from remaining performance obligations, with **77%** anticipated within 12 months[75](index=75&type=chunk) [6. Capital Stock and Stockholders' Equity](index=17&type=section&id=6.%20Capital%20Stock%20and%20Stockholders%27%20Equity) This note outlines Seer, Inc.'s capital structure, including authorized shares of Class A common stock (94 million), Class B common stock (6 million), and preferred stock (5 million). As of March 31, 2023, 59.7 million Class A and 4.0 million Class B shares were outstanding. Class A holders have one vote per share, while Class B holders have ten votes per share, with Class B convertible to Class A. No dividends have been declared to date Common Stock Issued and Outstanding | Common Stock Issued and Outstanding | March 31, 2023 | December 31, 2022 | | :---------------------------------- | :------------- | :---------------- | | Class A common stock | 59,694,350 | 59,366,077 | | Class B common stock | 4,044,969 | 4,044,969 | | Total common stock | 63,739,319 | 63,411,046 | - Holders of Class A common stock are entitled to one vote per share, and holders of Class B common stock are entitled to **10 votes per share**. Class B common shares are convertible to Class A common shares on a one-for-one basis[78](index=78&type=chunk) - No dividends have been declared to date[80](index=80&type=chunk) [7. Equity Incentive Plans](index=18&type=section&id=7.%20Equity%20Incentive%20Plans) This note details Seer, Inc.'s equity incentive plans, including the 2020 Equity Incentive Plan with 14.6 million Class A shares reserved. During Q1 2023, 2.2 million options were granted, and 1.8 million Market Condition Options were issued to executives, with vesting tied to a $6.885 stock price milestone. Total stock-based compensation for Q1 2023 was $8.7 million, including $2.0 million from a 2022 option repricing - **14,570,948 shares** of Class A common stock are reserved for issuance under the 2020 Equity Incentive Plan, with **4,581,459 shares** available for future awards[81](index=81&type=chunk) Stock Option Activity (Q1 2023) | Stock Option Activity (Q1 2023) | Options Outstanding | Weighted Average Exercise Price | | :------------------------------ | :------------------ | :------------------------------ | | Balance at December 31, 2022 | 10,214,430 | $13.9 | | Options granted | 2,247,900 | $4.6 | | Options exercised | (13,595) | $2.2 | | Options forfeited | (101,825) | $12.7 | | Balance at March 31, 2023 | 12,346,910 | $12.2 | - During Q1 2023, **1,794,000 Market Condition Options** were granted to executives, with vesting contingent on the Class A common stock reaching a Market Price Milestone of **$6.885 per share** within seven years. The grant date fair value was approximately **$5.2 million**[83](index=83&type=chunk)[84](index=84&type=chunk) Stock-Based Compensation (in thousands) | Stock-Based Compensation (in thousands) | Q1 2023 | Q1 2022 | | :------------------------------------ | :------ | :------ | | Cost of revenue | $328 | $208 | | Research and development | $2,549 | $2,001 | | Selling, general and administrative | $5,847 | $5,853 | | Total stock-based compensation | $8,724 | $8,062 | - The company recorded **$2.0 million** in stock-based compensation expense for Q1 2023 due to the June 2022 option repricing, with **$1.6 million** in unrecognized compensation remaining[95](index=95&type=chunk) [8. Leases](index=20&type=section&id=8.%20Leases) Seer, Inc. leases approximately 51,000 sq ft of office and laboratory space in Redwood City, CA (lease ends 2032) and 6,000 sq ft in San Diego, CA (lease ends 2024). As of March 31, 2023, the weighted-average lease term was 9.4 years with a 6.2% incremental borrowing rate. Total lease costs for Q1 2023 were $1.2 million, and future minimum commitments are $39.9 million - The company leases approximately **51,000 square feet** of office and laboratory space in Redwood City, California, with a lease term ending September 30, 2032, and an option to renew for an additional five-year term[96](index=96&type=chunk) - As of March 31, 2023, the remaining weighted-average lease term was **9.4 years**, and the weighted-average incremental borrowing rate was **6.2%**[97](index=97&type=chunk) Lease Costs (in thousands) | Lease Costs (in thousands) | Q1 2023 | Q1 2022 | | :------------------------- | :------ | :------ | | Operating lease costs | $1,038 | $813 | | Variable lease costs | $161 | $194 | | Short-term lease costs | $10 | $69 | | Total lease costs | $1,209 | $1,076 | Future Minimum Lease Commitments (in thousands) | Future Minimum Lease Commitments (in thousands) | | :---------------------------------------------- | | Total undiscounted future minimum lease payments | $39,870 | | Total operating lease liabilities | $29,870 | [9. Commitments and Contingencies](index=21&type=section&id=9.%20Commitments%20and%20Contingencies) This note outlines Seer, Inc.'s purchase commitments, guarantees, and legal contingencies. As of March 31, 2023, the company had $4.3 million in outstanding purchase commitments with manufacturing suppliers. It also enters into general indemnification agreements but has not recorded any material claims. The company is not currently a party to any material legal proceedings Purchase Commitments (in thousands) | Purchase Commitments (in thousands) | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Outstanding commitments | $4,300 | $5,700 | - The company enters into agreements with general indemnification provisions but has not paid any claims or recorded related liabilities as of March 31, 2023, or December 31, 2022[102](index=102&type=chunk) - Seer, Inc. is not currently a party to any material legal proceedings[103](index=103&type=chunk) [10. Related Party Transactions](index=21&type=section&id=10.%20Related%20Party%20Transactions) This note details Seer, Inc.'s related party transactions, primarily with PrognomiQ, Inc., which is accounted for using the equity method. PrognomiQ contributed $1.3 million in related party revenue for Q1 2023 and represented $1.4 million in related party receivables as of March 31, 2023. The company's investment in PrognomiQ was reduced to nil in 2022 due to net losses - PrognomiQ, Inc. was formed in August 2020, with Seer transferring human diagnostics assets in exchange for equity. Seer accounts for its investment in PrognomiQ using the equity method, and the carrying value was reduced to nil in 2022[104](index=104&type=chunk)[105](index=105&type=chunk) Related Party Financials (in thousands) | Related Party Financials (in thousands) | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Related party receivables | $1,383 | $1,500 | | Related party revenue (Q1) | $1,306 | $1,070 | - A board member served as an executive officer at another customer, from which Seer had **$0.2 million** in lease receivables as of March 31, 2023, but recognized no revenue in Q1 2023 or Q1 2022[108](index=108&type=chunk) [11. Net Loss Per Share Attributable to Common Stockholders](index=22&type=section&id=11.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) This note presents the computation of basic and diluted net loss per share for Seer, Inc. For Q1 2023 and Q1 2022, the net loss per share was $(0.38). The weighted-average common shares outstanding for Q1 2023 were 63.5 million. Potentially dilutive securities, totaling 15.8 million in Q1 2023, were excluded from diluted EPS as their inclusion would have been anti-dilutive Net Loss Per Share Data | Net Loss Per Share Data | Q1 2023 | Q1 2022 | | :---------------------- | :------ | :------ | | Net loss attributable to common stockholders (in thousands) | $(23,959) | $(23,646) | | Weighted-average common shares outstanding | 63,543,094 | 62,003,504 | | Net loss per share, basic and diluted | $(0.38) | $(0.38) | Potentially Dilutive Securities Excluded (in shares) | Potentially Dilutive Securities Excluded (in shares) | March 31, 2023 | March 31, 2022 | | :------------------------------------------------- | :------------- | :------------- | | Class A common stock options | 12,346,910 | 11,560,004 | | Restricted common stock | 65,251 | 125,231 | | Restricted stock units | 3,429,150 | 1,959,042 | | Total | 15,841,311 | 13,644,277 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Seer, Inc.'s financial condition and operational results, discussing the company's mission, commercialization strategy for the Proteograph Product Suite, manufacturing processes, and the financial performance for the three months ended March 31, 2023, compared to 2022. It also covers liquidity, capital resources, and cash flow analysis [Overview](index=23&type=section&id=Overview) Seer, Inc. is an early-stage life sciences company focused on decoding the proteome with its Proteograph Product Suite, an integrated solution of consumables, automation instrument (SP100), and software. The company is in early commercialization, aiming for broad adoption and increased consumable sales, and expects continued losses due to significant R&D and commercial infrastructure investments - Seer's mission is to decode the secrets of the proteome to improve human health, utilizing its Proteograph Product Suite, which leverages proprietary engineered nanoparticle (NP) technology[111](index=111&type=chunk) - The Proteograph Product Suite is an integrated solution comprising consumables, an SP100 automation instrument, and software, commercialized through direct sales in the U.S. and direct/distributor channels internationally[113](index=113&type=chunk)[114](index=114&type=chunk) - The company expects to continue incurring significant losses and negative cash flows due to ongoing investments in commercialization, R&D, manufacturing capabilities, and public company infrastructure[119](index=119&type=chunk)[120](index=120&type=chunk) [Components of Results of Operations](index=24&type=section&id=Components%20of%20Results%20of%20Operations) This section defines Seer, Inc.'s revenue sources (product, service, related party, grant, lease) and cost of revenue components (product, instrument, consumables, distribution, stock-based compensation, overhead, inventory write-downs). It also outlines the primary drivers of research and development and selling, general, and administrative expenses, anticipating increases in both as the company scales - Revenue is generated from product sales (Proteograph Product Suite, consumables, platform evaluation), services, related party sales, grant revenue for R&D, and lease arrangements[121](index=121&type=chunk)[122](index=122&type=chunk) - Cost of revenue includes components of the Proteograph Product Suite (SP100 instrument, consumables), distribution expenses, stock-based compensation, employee benefits, allocated overhead, and inventory write-downs[123](index=123&type=chunk) - Research and Development (R&D) and Selling, General and Administrative (SG&A) expenses are expected to increase in absolute dollars due to investments in product development, personnel, commercial operations, and public company costs[125](index=125&type=chunk)[127](index=127&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Seer, Inc. reported a 22% increase in total revenue to $4.1 million for Q1 2023, driven by higher consumable kit sales and grant revenue. Gross profit significantly increased by 66% to $2.1 million, while operating expenses rose by 18%. Net loss remained stable at approximately $24.0 million, and total other income saw a substantial increase due to higher interest rates Key Financial Metrics (in thousands) | Financial Metric (in thousands) | Q1 2023 | Q1 2022 | Change Amount | Change % | | :------------------------------ | :------ | :------ | :------------ | :------- | | Total Revenue | $4,053 | $3,312 | $741 | 22 % | | Gross Profit | $2,068 | $1,244 | $824 | 66 % | | Total Operating Expenses | $29,513 | $25,030 | $4,483 | 18 % | | Net Loss | $(23,959) | $(23,646) | $(313) | 1 % | | Total Other Income | $3,486 | $140 | $3,346 | 2390 % | - Revenue increase was primarily due to increased consumable kit sales related to the Proteograph Product Suite and a **$0.3 million** increase in grant-funded activities[130](index=130&type=chunk) - Research and development expenses increased by **$3.7 million (35%)** to **$14.5 million**, driven by product development efforts, employee compensation, stock-based compensation, and allocated facility expenses[132](index=132&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Seer, Inc. has historically funded operations through equity sales and expects continued net losses and negative cash flows. As of March 31, 2023, the company believes its $410.5 million in cash and investments provide sufficient liquidity for over 12 months. Future capital needs depend on revenue growth, commercialization efforts, R&D, and potential acquisitions - Operations have been funded primarily through equity securities sales, and the company anticipates continued net losses and negative cash flows from operations for the foreseeable future[136](index=136&type=chunk) - As of March 31, 2023, cash and cash equivalents and investments totaled **$410.5 million**, which management believes will provide sufficient capital resources for at least 12 months[119](index=119&type=chunk)[141](index=141&type=chunk) - Future capital requirements depend on revenue growth, commercialization investments, acquisitions, capital expenditures, and R&D programs[140](index=140&type=chunk) - Outstanding purchase commitments related to inventory management amounted to **$4.3 million** as of March 31, 2023[139](index=139&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) Seer, Inc. reported net cash used in operating activities of $19.3 million in Q1 2023, primarily due to net loss and changes in operating assets/liabilities, partially offset by non-cash charges. Investing activities provided $14.5 million, mainly from maturities of available-for-sale securities, while financing activities provided $30 thousand from stock option exercises Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Q1 2023 | Q1 2022 | | :-------------------------------- | :------ | :------ | | Net cash used in operating activities | $(19,331) | $(19,151) | | Net cash provided by investing activities | $14,479 | $10,920 | | Net cash provided by financing activities | $30 | $752 | | Net decrease in cash, cash equivalents and restricted cash | $(4,822) | $(7,479) | - Cash used in operating activities for Q1 2023 was **$19.3 million**, driven by a **$24.0 million** net loss and a **$3.4 million** change in operating assets and liabilities, partially offset by **$8.1 million** in non-cash charges[143](index=143&type=chunk) - Cash provided by investing activities for Q1 2023 was **$14.5 million**, primarily from **$146.1 million** in maturities and **$3.0 million** in sales of available-for-sale securities, offset by **$134.5 million** in purchases[145](index=145&type=chunk) [Critical Accounting Policies, Significant Judgments and Use of Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%2C%20Significant%20Judgments%20and%20Use%20of%20Estimates) This section emphasizes that Seer, Inc.'s financial statements rely on management's estimates and assumptions, particularly for revenue recognition, fair value, stock-based compensation, and inventory valuation. It notes no significant changes in critical accounting policies since the 2022 Annual Report on Form 10-K - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, based on historical experience and reasonable assumptions[148](index=148&type=chunk) - Key areas of estimates include revenue recognition, fair value of common stock, stock-based compensation, accrued R&D expenses, allowance for credit losses, inventory valuation, and income tax uncertainties[32](index=32&type=chunk)[148](index=148&type=chunk) - There have been no significant changes in critical accounting policies and estimates compared to the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[149](index=149&type=chunk) [Recent Accounting Pronouncements](index=30&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 of the unaudited condensed consolidated financial statements for information on recent accounting pronouncements, their adoption timing, and the company's assessment of their potential impact - For information about recent accounting pronouncements, their adoption timing, and the company's assessment of their potential impact, refer to Note 2 to the unaudited condensed consolidated financial statements[151](index=151&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Seer, Inc. is exposed to interest rate risk related to its cash, cash equivalents, and investments. However, due to the short-term nature of these assets and the company's investment policy focused on liquidity and capital preservation, management believes there is no material exposure to changes in their fair value from interest rate fluctuations - The company has exposure to interest rate risk related to its cash, cash equivalents, and investments (money market funds, U.S. Treasury securities, commercial paper, and corporate securities)[152](index=152&type=chunk) - Due to the short-term nature of these assets, the company believes it does not have any material exposure to changes in their fair value as a result of changes in interest rates[152](index=152&type=chunk) - The goals of the company's investment policy are liquidity and capital preservation[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Seer, Inc.'s management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective as of March 31, 2023, providing reasonable assurance for timely and accurate SEC reporting. The company acknowledges inherent limitations in control systems and reported no material changes in internal control over financial reporting during the quarter - As of March 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective in ensuring information required for SEC reports is recorded, processed, summarized, and reported timely[153](index=153&type=chunk) - Management acknowledges that control systems provide only reasonable assurance and can be subject to inherent limitations, such as faulty judgments, simple errors, or circumvention by individual acts or collusion[154](index=154&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[157](index=157&type=chunk) [Part II. Other Information](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, comprehensive risk factors, equity sales, defaults, mine safety, other disclosures, and a list of exhibits filed with the Quarterly Report [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Seer, Inc. is not currently a party to any material legal proceedings. However, the company acknowledges that future involvement in legal actions could negatively impact its reputation, business, and financial condition, and divert management's attention - The company is not currently a party to any material legal proceedings[160](index=160&type=chunk) - Future involvement in legal proceedings or investigations could adversely impact the company's reputation, business, financial condition, and divert management's attention[160](index=160&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section details the significant risks associated with investing in Seer, Inc., covering its early-stage nature, operational challenges, market acceptance, competition, financial reporting, regulatory compliance, intellectual property, and stock ownership. These risks could materially affect the company's business, financial condition, results of operations, and stock price [Summary Risk Factor](index=32&type=section&id=Summary%20Risk%20Factor) Investing in Seer, Inc. carries high risk due to its early-stage nature, history of losses, limited operating history, fluctuating results, potential for smaller-than-estimated markets, and challenges in commercializing the Proteograph Product Suite. Other risks include the need for continuous product improvement, impact of health crises, intellectual property protection, talent retention, and internal control effectiveness - The company is an early-stage life sciences technology company with a history of net losses, which are expected to continue, and may not achieve sustained profitability[163](index=163&type=chunk)[164](index=164&type=chunk) - Commercialization success depends on broad scientific and market acceptance of the Proteograph Product Suite, which may be difficult to achieve, and failure to improve products or introduce new ones could harm revenues[163](index=163&type=chunk) - Key risks include the impact of health epidemics (like COVID-19), inability to obtain and maintain sufficient intellectual property protection, challenges in recruiting and retaining qualified employees, and failure to maintain effective internal controls[163](index=163&type=chunk)[167](index=167&type=chunk) [Risks Related to Our Business and Industry](index=33&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Seer, Inc. faces significant business and industry risks, including its early-stage status, history of net losses, and limited operating history, making future performance uncertain. The company's commercialization success depends on market acceptance of its Proteograph Product Suite, which could be hindered by market size, competition, or external factors like health epidemics and economic conditions. Challenges also include managing growth, retaining key personnel, and reliance on single suppliers - The company has incurred significant losses since 2017, with net losses of **$24.0 million** in Q1 2023 and **$23.6 million** in Q1 2022, and an accumulated deficit of **$243.5 million** as of March 31, 2023[164](index=164&type=chunk) - Commercialization success of the Proteograph Product Suite depends on broad scientific and market acceptance, which is uncertain and influenced by factors like customer adoption, competitive offerings, and publication mentions[175](index=175&type=chunk)[176](index=176&type=chunk) - The company relies on a single contract manufacturer (Hamilton Company) for its SP100 instruments and limited/sole suppliers for certain components, posing risks of supply chain disruptions and inability to meet demand[203](index=203&type=chunk)[205](index=205&type=chunk) - Unfavorable economic conditions, including volatility in capital markets, inflation, rising interest rates, or bank failures, could adversely affect the company's ability to raise capital and impact customer budgets[187](index=187&type=chunk)[188](index=188&type=chunk) [Risks Related to Financial Reporting](index=49&type=section&id=Risks%20Related%20to%20Financial%20Reporting) Seer, Inc. faces risks related to financial reporting, including the challenge of maintaining effective internal controls over financial reporting (SOX Section 404(a) compliance). Deficiencies could lead to inaccurate reporting, investor distrust, increased costs, and potential delisting. The company also highlights the impact of evolving accounting rules and the reliance on management estimates, which could necessitate restatements or cause fluctuations in results - As a public company, Seer is required to evaluate the effectiveness of its internal control over financial reporting under Section 404(a) of the Sarbanes-Oxley Act[237](index=237&type=chunk) - Deficiencies or material weaknesses in internal controls could impede timely and accurate financial reporting, adversely affecting business, investor confidence, and stock price[238](index=238&type=chunk)[239](index=239&type=chunk) - Changes in financial accounting rules or interpretations, or differences between actual circumstances and management's estimates, could result in unfavorable accounting changes, restatements, or unexpected fluctuations in operating results[244](index=244&type=chunk) [Risks Related to Regulatory Compliance](index=50&type=section&id=Risks%20Related%20to%20Regulatory%20Compliance) Seer, Inc.'s products are currently labeled for Research Use Only (RUO). If the company chooses to market them as clinical diagnostics or medical devices, it would face significant FDA regulatory hurdles, including 510(k) clearance or PMA, which are costly, time-consuming, and uncertain. Even without seeking approval, the FDA could deem RUO products subject to regulation if used clinically by customers, potentially impacting sales and requiring business model changes - Seer's products are currently labeled and promoted as Research Use Only (RUO) and are not intended for diagnostic procedures, clinical diagnostic tests, or as medical devices[245](index=245&type=chunk) - If the company elects to market products for clinical diagnostics, it would require FDA premarket 510(k) clearance or premarket approval (PMA), a process that is expensive, time-consuming, and uncertain[248](index=248&type=chunk) - Even if products are labeled RUO, the FDA or comparable international agencies could disagree with this classification or deem marketing efforts inconsistent, potentially subjecting products to medical device regulations[252](index=252&type=chunk)[255](index=255&type=chunk) [Risks Related to our Intellectual Property](index=53&type=section&id=Risks%20Related%20to%20our%20Intellectual%20Property) Seer, Inc. relies on patents, trademarks, trade secrets, and contractual restrictions to protect its intellectual property, but faces significant risks. These include challenges to patent validity, enforceability, and scope, especially given the uncertain and changing U.S. patent law for life sciences. The company may struggle to protect IP globally, defend against infringement claims, or maintain licenses from third parties, all of which could harm its competitive position and operations - The company relies on patent protection, as well as trademark, copyright, trade secret, and other intellectual property rights, but these provide limited protection and may not adequately safeguard its competitive advantage[259](index=259&type=chunk) - The U.S. law regarding patentability in the life sciences technology industry is uncertain and rapidly changing, potentially impacting existing patents or the ability to obtain future patents[265](index=265&type=chunk)[268](index=268&type=chunk) - The company may become involved in lawsuits to defend against third-party claims of infringement or to protect its own intellectual property, which could be expensive, time-consuming, and unsuccessful, potentially delaying commercialization efforts[289](index=289&type=chunk)[296](index=296&type=chunk) - Seer relies on a license from The Brigham and Women's Hospital, Inc. (BWH) for certain patents; failure to comply with license obligations or loss of licenses could significantly harm its ability to develop and commercialize products[302](index=302&type=chunk)[305](index=305&type=chunk) [Risks Related to Ownership of Our Class A Common Stock](index=65&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) Ownership of Seer, Inc.'s Class A common stock carries risks including potential for an unsustainable active trading market and high price volatility due to various factors like operating results, competition, and market conditions. The multi-class stock structure concentrates voting control with founders and early investors, potentially depressing the Class A stock price. Sales by existing stockholders could also cause price declines, and the company does not expect to pay future dividends - The market price of Class A common stock has been and may continue to be volatile due to fluctuations in operating results, competitive developments, regulatory changes, and general economic conditions[323](index=323&type=chunk)[324](index=324&type=chunk) - The multi-class structure of common stock concentrates voting control with Class B stockholders (founders and early investors), who hold **40.4%** of the voting power as of May 5, 2023, potentially limiting influence of Class A holders and depressing its trading price[325](index=325&type=chunk)[326](index=326&type=chunk) - The company does not anticipate paying any dividends in the foreseeable future, meaning investors must rely on stock price appreciation for returns[331](index=331&type=chunk) - Anti-takeover provisions in Delaware law and the company's organizational documents could discourage, delay, or prevent a change in control, potentially limiting opportunities for stockholders to receive a premium for their shares[336](index=336&type=chunk)[338](index=338&type=chunk) [General Risks](index=71&type=section&id=General%20Risks) Seer, Inc. faces general business risks including increasing scrutiny on Environmental, Social, and Governance (ESG) matters, which could impact reputation and costs. Operational disruptions from natural disasters or public health crises at its facilities or third-party manufacturers could severely affect R&D and manufacturing. The company is also vulnerable to significant disruptions in IT systems and data security breaches, leading to potential litigation, financial losses, and reputational harm, compounded by evolving data privacy regulations - Increasing scrutiny and evolving expectations regarding Environmental, Social, and Governance (ESG) matters may expose the company to reputational, cost, and other risks[343](index=343&type=chunk) - Facilities and third-party manufacturers are vulnerable to natural disasters, public health crises (e.g., COVID-19), and catastrophic events, which could seriously impair business operations, R&D, and manufacturing[345](index=345&type=chunk)[346](index=346&type=chunk) - The company's information technology systems are vulnerable to disruption, cyberattacks, and data security breaches, which could damage reputation, lead to litigation, incur significant liability, and disrupt operations[347](index=347&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk) - Seer is subject to evolving international and U.S. federal and state data privacy laws (e.g., CCPA, CPRA, HIPAA), requiring significant compliance costs and posing risks of fines or litigation for non-compliance[351](index=351&type=chunk)[354](index=354&type=chunk)[358](index=358&type=chunk) [Item 2. Unregistered Sales of Equity Securities](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities) This section states that there were no unregistered sales of equity securities during the reporting period - No unregistered sales of equity securities occurred during the reporting period[359](index=359&type=chunk) [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - Defaults upon senior securities are not applicable for this reporting period[361](index=361&type=chunk) [Item 4. Mine Safety Disclosure](index=75&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This section states that mine safety disclosure is not applicable to the company - Mine safety disclosure is not applicable to the company[362](index=362&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205.%20Other%20Information) This section reports that Scott Thomas, the company's Chief Commercial Officer, will be transitioning out of the company in July 2023 - Scott Thomas, the company's Chief Commercial Officer, will be transitioning out of the company in July 2023[363](index=363&type=chunk) [Item 6. Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and XBRL instance documents - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1, 32.2) and XBRL Instance Document (101.INS) and related taxonomy extension documents[367](index=367&type=chunk) - Certifications 32.1 and 32.2 are furnished, not filed, and not incorporated by reference into other SEC filings[366](index=366&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or [ ] 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 001-39747 SEER, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdict ...

Seer, Inc. (NASDAQ:SEER) Q4 2022 Earnings Conference Call March 2, 2023 4:30 PM ET Company Participants Carrie Mendivil – Investor Relations Omid Farokhzad – Chair, President and Chief Executive Officer David Horn – Chief Financial Officer Conference Call Participants Derik De Bruin – Bank of America Kyle Boucher – Cowen Tejas Savant – Morgan Stanley Operator Thank you for standing by and welcome to the Seer Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $4 million, an increase of 84% compared to $2.2 million in Q3 2021, primarily due to increased sales of the Proteograph Product Suite [43][44] - Total gross profit was $1.9 million for Q3 2022, representing a gross margin of 49%, which improved sequentially due to higher consumable sales [45] - Net loss for Q3 2022 was $24 million, compared to $18.4 million in Q3 2021 [49] Business Line Data and Key Metrics Changes - Product revenue for Q3 2022 was $3.9 million, including related party revenue of $1.3 million from sales of SP100 instruments, consumable kits, and platform evaluations [44] - Research and development expenses for Q3 2022 were $11.6 million, an increase of 49% compared to $7.7 million in Q3 2021, driven by increased product development efforts related to the Proteograph Product Suite [47] - Selling, general, and administrative expenses for Q3 2022 were $15.4 million, an increase of 30% compared to $11.9 million in Q3 2021 [48] Market Data and Key Metrics Changes - The company is seeing strong interest across geographies, with a pipeline of qualified leads split equally between academic and commercial customers [30] - The macroeconomic environment is impacting biopharma spending, with constrained CapEx budgets and elongated purchasing decisions noted in various markets, including China and Europe [32][84] Company Strategy and Development Direction - The company aims to support customers in scaling their use of the Proteograph Product Suite, expand its global customer network, and enhance partnerships to facilitate technology adoption [15] - The strategic focus includes driving a product roadmap to enable more applications and increasing the resolution of proteomic studies through initiatives like the Human Proteome Project [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the growing enthusiasm for the Proteograph Product Suite and its potential to enable population-scale studies [8][41] - The company expects revenue for 2022 to be in the range of $14 million to $16 million, with enthusiasm for technology expected to drive revenues towards the upper half of this range despite macroeconomic challenges [50] Other Important Information - The company ended Q3 2022 with approximately $441 million in cash, cash equivalents, and investments, indicating a strong balance sheet to support strategic plans [49] - The company has renewed its SBIR grant from the NIH, expecting a resumption of revenue contributions from grant and research-related collaborations starting in Q4 2022 [44] Q&A Session Summary Question: Can you discuss the funnel and guidance for the full year? - Management noted significant interest from proteomics and genomics researchers, with a pipeline split 50/50 between commercial and academic customers, but elongated purchasing decisions due to macroeconomic factors [56][60] Question: What notable publications or studies should be expected? - Management highlighted that several manuscripts are expected to be submitted by the end of 2022 and into 2023, with a focus on high-impact studies demonstrating the capabilities of the Proteograph [64][67] Question: How should spending patterns be viewed for next year? - Management emphasized a prudent approach to spending, with a focus on maintaining free cash flow and being mindful of capital deployment [75][76] Question: Are larger scale proteomics studies expected to contribute meaningfully in 2023? - Management indicated visibility for multi-thousand sample studies in 2023 but not for studies involving tens of thousands of samples yet [78] Question: How do purchasing cycles differ by geography? - Management noted that purchasing decisions are elongated globally, with specific challenges in China and Europe due to economic conditions [84][86] Question: What is the outlook for the Proteogenomics Consortium? - Management expressed optimism about the partnership's potential to scale, with strong interest from genomics customers seeking access to data [90] Question: Can you elaborate on gross margin improvements? - Management attributed the increase in gross margin to higher consumable sales and discussed potential improvements in instrument and kit gross margins over time [94][96] Question: What is the scope of revenue from research customers? - Management clarified that grant revenue from the NIH will resume in Q4, historically ranging from tens of thousands to low hundreds of thousands per quarter [100] Question: Are there plans to work with liquid biopsy companies? - Management confirmed ongoing discussions with various companies to integrate proteomics into genomic analysis workflows [102]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or [ ] 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 001-39747 SEER, INC. (Exact name of Registrant as specified in its charter) (State or other ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2022 was $3.6 million, representing a 171% increase compared to $1.3 million in Q2 2021, primarily due to increased sales of the Proteograph Product Suite [42][48] - Total gross profit was $1.6 million for Q2 2022, with a gross margin of 44%, and long-term gross margins are targeted between 70% and 75% [44][48] - Net loss for Q2 2022 was $22.8 million, compared to $16.6 million in Q2 2021, with cash and equivalents at approximately $456.1 million [48] Business Line Data and Key Metrics Changes - Product-related revenue for Q2 2022 was $3.5 million, including $1.1 million from related-party revenue, which represents sales to PrognomIQ [43] - Research and development expenses increased by 57% to $10.9 million in Q2 2022, driven by product development efforts related to the Proteograph Product Suite [46] - Selling, general and administrative expenses rose by 35% to $14.2 million in Q2 2022, primarily due to increased employee compensation and professional services [47] Market Data and Key Metrics Changes - The company is seeing strong interest across geographies, with a balanced pipeline of qualified leads between academic and commercial customers [29] - Despite COVID-related risks and supply chain uncertainties, the installed base of the Proteograph Product Suite increased across North America, Europe, and Asia [30] Company Strategy and Development Direction - The company aims to support customers with an industry-leading experience, expand its global customer network, and drive product development for the Proteograph Product Suite [12] - The Proteogenomics Consortium partnership aims to enhance proteogenomic capabilities and expand customer access to deep unbiased proteomics [33] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about navigating complexities related to COVID and macroeconomic conditions but is encouraged by customer feedback and pipeline quality [49] - The company expects revenue for 2022 to be in the range of $14 million to $16 million, focusing on long-term business building and strategic objectives [50] Other Important Information - The Proteograph Product Suite is enabling new approaches to proteomics, allowing researchers to access low-abundance proteins and identify novel biomarkers [15][22] - The recent launch of the Proteograph Analysis Suite 2.0 (PAS 2.0) is expected to simplify workflows and enhance customer experience [37] Q&A Session Summary Question: What is the reorder time for customers after experiments? - The turnaround time varies by customer type, with initial small studies leading to larger sample studies, typically taking a quarter for completion [56][60] Question: Is the $1.1 million run rate from PrognomIQ sustainable? - PrognomIQ's related-party revenue has been consistent, and while it is expected to continue in the short term, it may trend down as the non-PrognomIQ customer base grows [64][66] Question: What were the number of units sold in the quarter? - The company does not disclose quarterly unit sales but will provide year-end figures [68] Question: Any early feedback on PAS 2.0 and its impact on sales cycles? - Early feedback on PAS 2.0 has been positive, but it is not expected to materially impact revenue for the current year [75] Question: Have there been any delays in customer purchases due to the economy? - There have been no material pushbacks in purchasing decisions, and the company has managed to execute well despite external challenges [80] Question: What key publications should be expected? - The company anticipates an increase in presentations and publications in the second half of 2022, which are expected to drive adoption [86][87]

[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)) Presents Seer, Inc.'s unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, and cash flows, with detailed notes for the specified periods [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Cash and cash equivalents | $79,023 | $232,813 | | Short-term investments | $372,167 | $260,447 | | Total current assets | $466,757 | $232,813 | | Total assets | $516,300 | $493,260 | | Total liabilities | $44,257 | $40,000 | | Total stockholders' equity | $472,043 | $502,916 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Financial Performance (Three Months Ended June 30, in thousands) | Metric (Three Months Ended June 30) | 2022 (in thousands) | 2021 (in thousands) | Change (%) | | :---------------------------------- | :------------------ | :------------------ | :--------- | | Total Revenue | $3,621 | $1,334 | 171% | | Product Revenue | $2,406 | $837 | 187% | | Related Party Revenue | $1,108 | $380 | 192% | | Total Cost of Revenue | $2,012 | $586 | 243% | | Gross Profit | $1,609 | $748 | 115% | | Research and Development | $10,871 | $6,935 | 57% | | Selling, General and Administrative | $14,172 | $10,484 | 35% | | Net Loss | $(22,815) | $(16,616) | 37% | | Net Loss per Share (Basic & Diluted) | $(0.37) | $(0.27) | 37% | Financial Performance (Six Months Ended June 30, in thousands) | Metric (Six Months Ended June 30) | 2022 (in thousands) | 2021 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Total Revenue | $6,934 | $1,396 | 397% | | Product Revenue | $4,555 | $837 | 444% | | Related Party Revenue | $2,178 | $380 | 473% | | Total Cost of Revenue | $4,080 | $586 | 596% | | Gross Profit | $2,854 | $810 | 252% | | Research and Development | $21,607 | $13,162 | 64% | | Selling, General and Administrative | $28,466 | $20,816 | 37% | | Net Loss | $(46,461) | $(33,045) | 41% | | Net Loss per Share (Basic & Diluted) | $(0.75) | $(0.55) | 36% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) - Total stockholders' equity decreased from **$502,916 thousand** at December 31, **2021**, to **$472,043 thousand** at June 30, **2022**, primarily due to net losses and other comprehensive losses, partially offset by stock-based compensation and common stock issuances[20](index=20&type=chunk)[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Activities (Six Months Ended June 30, in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2022 (in thousands) | 2021 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net cash used in operating activities | $(33,151) | $(25,222) | | Net cash used in investing activities | $(122,257) | $(52,263) | | Net cash provided by financing activities | $1,618 | $114,756 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(153,790) | $37,271 | | Cash, cash equivalents and restricted cash, end of period | $79,547 | $371,199 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS](index=10&type=section&id=Note%201.%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20THE%20BUSINESS) - Seer, Inc. is a life sciences company focused on proteomics, incorporated in Delaware in **2017**, with a wholly-owned subsidiary established in the UK in May **2022**[28](index=28&type=chunk)[29](index=29&type=chunk) - The company has incurred significant losses and negative cash flows from operations since inception, with an accumulated deficit of **$173.0 million** as of June 30, **2022**[32](index=32&type=chunk) - Management believes existing cash and cash equivalents and investments (**$451.2 million** as of June 30, **2022**) provide sufficient capital for at least **12 months**[32](index=32&type=chunk) [Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION](index=10&type=section&id=Note%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20BASIS%20OF%20PRESENTATION) - Financial statements are prepared in accordance with U.S. GAAP, consolidating Seer, Inc. and its wholly-owned subsidiaries, and involve management estimates and assumptions[33](index=33&type=chunk)[38](index=38&type=chunk) - The COVID-19 pandemic has caused disruptions in operations, hiring, and customer access for installation/training, potentially harming business and financial condition[40](index=40&type=chunk) - The company adopted ASU No. 2021-10 (Government Assistance) as of January 1, **2022**, with no material impact on financial statements[57](index=57&type=chunk) [Note 3. FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS](index=14&type=section&id=Note%203.%20FAIR%20VALUE%20MEASUREMENTS%20AND%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Fair Value Measurements (in thousands) | Asset Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------- | :--------------------------- | :------------------------------- | | Money market funds (Level 1) | $56,320 | $232,813 | | Commercial paper (Level 2) | $9,486 | $0 | | Corporate debt securities (Level 2) | $7,014 | $0 | | U.S. Treasury securities (Level 2) | $262,605 | $260,447 | | Total assets measured at fair value | $449,902 | $493,260 | - Unrealized losses on available-for-sale investments (**$3.119 million** as of June 30, **2022**) are considered temporary and not attributable to credit risk[64](index=64&type=chunk) [Note 4. OTHER FINANCIAL STATEMENT INFORMATION](index=16&type=section&id=Note%204.%20OTHER%20FINANCIAL%20STATEMENT%20INFORMATION) Inventory (in thousands) | Inventory (in thousands) | June 30, 2022 | December 31, 2021 | | :--------------------- | :------------ | :---------------- | | Raw materials | $2,704 | $1,836 | | Work-in-progress | $341 | $221 | | Finished goods | $3,793 | $2,088 | | Total inventory | $6,838 | $4,145 | Property and Equipment, Net (in thousands) | Property and Equipment, Net (in thousands) | June 30, 2022 | December 31, 2021 | | :--------------------------------------- | :------------ | :---------------- | | Total property and equipment, net | $15,350 | $13,087 | Accrued Expenses (in thousands) | Accrued Expenses (in thousands) | June 30, 2022 | December 31, 2021 | | :------------------------------ | :------------ | :---------------- | | Accrued compensation | $4,381 | $4,730 | | Accrued property and equipment | $1,570 | $269 | | Total accrued expenses | $9,142 | $8,394 | [Note 5. REVENUE AND DEFERRED REVENUE](index=16&type=section&id=Note%205.%20REVENUE%20AND%20DEFERRED%20REVENUE) - Product revenue for non-related customers increased significantly to **$2.4 million** (Q2 **2022**) and **$4.6 million** (YTD Q2 **2022**) from **$0.8 million** (Q2 **2021** and YTD Q2 **2021**)[73](index=73&type=chunk) - Related party revenue (from PrognomIQ) increased to **$1.1 million** (Q2 **2022**) and **$2.2 million** (YTD Q2 **2022**) from **$0.4 million** (Q2 **2021** and YTD Q2 **2021**)[17](index=17&type=chunk)[72](index=72&type=chunk) - Grant revenue decreased to **$50,000** (Q2 **2022**) and **$64,000** (YTD Q2 **2022**) from **$0.1 million** and **$0.2 million**, respectively, as the SBIR grant award period ended in May **2022**[77](index=77&type=chunk)[79](index=79&type=chunk) - As of June 30, **2022**, **$5.2 million** of revenue is expected to be recognized from remaining performance obligations over the next **24 months**[74](index=74&type=chunk) - International revenue (primarily Asia) accounted for **33%** of total revenue for Q2 **2022** and **29%** for YTD Q2 **2022**[75](index=75&type=chunk) - Two customers accounted for **31%** and **12%** of total revenue for Q2 **2022**; one customer accounted for **31%** of total revenue for YTD Q2 **2022**[76](index=76&type=chunk) [Note 6. CAPITAL STOCK AND STOCKHOLDERS' EQUITY](index=18&type=section&id=Note%206.%20CAPITAL%20STOCK%20AND%20STOCKHOLDERS'%20EQUITY) Common Stock | Common Stock | June 30, 2022 | December 31, 2021 | | :----------- | :------------ | :---------------- | | Class A common stock | **58,565,210** | **57,493,005** | | Class B common stock | **4,044,969** | **4,522,478** | | Total common stock | **62,610,179** | **62,015,483** | - Class A common stock holders have **one vote per share**, while Class B common stock holders have **ten votes per share**. Class B shares are convertible to Class A on a one-for-one basis[81](index=81&type=chunk) - In Q1 **2021**, the company received **$11.4 million** from short-swing profits, recognized as a capital contribution[83](index=83&type=chunk) [Note 7. EQUITY INCENTIVE PLANS](index=18&type=section&id=Note%207.%20EQUITY%20INCENTIVE%20PLANS) Stock-Based Compensation (in thousands) | Stock-Based Compensation (in thousands) | Q2 2022 | Q2 2021 | YTD Q2 2022 | YTD Q2 2021 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Cost of revenue | $278 | $344 | $485 | $747 | | Research and development | $2,392 | $1,098 | $4,393 | $2,187 | | Selling, general and administrative | $5,708 | $4,989 | $11,562 | $9,535 | | Total stock-based compensation | $8,378 | $6,431 | $16,440 | $12,469 | - In June **2022**, the Board approved an option repricing for non-Section 16 employees, resulting in **$0.4 million** incremental compensation expense for Q2/YTD Q2 **2022** and **$2.3 million** total unrecognized incremental expense to be recognized over **three years**[94](index=94&type=chunk)[95](index=95&type=chunk) - As of June 30, **2022**, **11,741,948** stock options and **1,845,172** restricted stock units were outstanding[87](index=87&type=chunk)[89](index=89&type=chunk) [Note 8. COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=Note%208.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company leases office and laboratory space in Redwood City, California, with a lease term ending September 30, **2032**, and a remaining weighted-average lease term of **10.3 years**[96](index=96&type=chunk)[97](index=97&type=chunk) Future Minimum Lease Payments (in thousands) | Future Minimum Lease Payments (in thousands) | Amount | | :--------------------------------------- | :----- | | 2022 (remaining six months) | $1,330 | | 2023 | $3,630 | | 2024 | $3,730 | | 2025 | $3,840 | | 2026 | $3,950 | | Thereafter | $25,130 | | Total undiscounted future minimum lease payments | $41,640 | | Present value adjustment for minimum lease commitments | $(11,360) | | Tenant improvement receivable | $(250) | | Total operating lease liabilities | $30,020 | - Outstanding purchase commitments with manufacturing suppliers amounted to **$3.2 million** as of June 30, **2022**[101](index=101&type=chunk) [Note 9. PROGNOMIQ, INC.](index=22&type=section&id=Note%209.%20PROGNOMIQ,%20INC.) - Seer formed PrognomIQ, Inc. in August **2020**, transferring human diagnostics assets and distributing most shares to stockholders, retaining approximately **15%** ownership as of June 30, **2022**[105](index=105&type=chunk)[106](index=106&type=chunk)[237](index=237&type=chunk) - PrognomIQ is considered a related party and a significant customer, accounting for **$0.8 million** in related party receivables as of June 30, **2022**, and contributing **$1.1 million** (Q2 **2022**) and **$2.2 million** (YTD Q2 **2022**) to Seer's revenue[107](index=107&type=chunk)[17](index=17&type=chunk)[134](index=134&type=chunk) [Note 10. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS](index=22&type=section&id=Note%2010.%20NET%20LOSS%20PER%20SHARE%20ATTRIBUTABLE%20TO%20COMMON%20STOCKHOLDERS) Net Loss Per Share (Three Months Ended June 30) | Metric (Three Months Ended June 30) | 2022 | 2021 | | :---------------------------------- | :--- | :--- | | Net loss per share (basic and diluted) | $(0.37) | $(0.27) | | Weighted-average common shares outstanding | **62,376,571** | **60,841,657** | Net Loss Per Share (Six Months Ended June 30) | Metric (Six Months Ended June 30) | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Net loss per share (basic and diluted) | $(0.75) | $(0.55) | | Weighted-average common shares outstanding | **62,191,068** | **60,367,433** | - Potentially dilutive securities (stock options, restricted common stock, RSUs) were excluded from diluted EPS calculation as their inclusion would be anti-dilutive due to net losses[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Seer, Inc.'s financial condition and operations, highlighting its mission, Proteograph Product Suite commercialization, revenue, expenses, liquidity, and the impact of COVID-19 [Overview](index=23&type=section&id=Overview) - Seer's mission is to decode the proteome using its Proteograph Product Suite, which leverages proprietary engineered nanoparticle (NP) technology for unbiased, deep, rapid, and large-scale proteome access[110](index=110&type=chunk) - The Proteograph Product Suite is an integrated solution comprising consumables, the SP100 automation instrument, and software, with commercialization focused on direct sales in the US and direct/distributor channels internationally[113](index=113&type=chunk)[114](index=114&type=chunk) - The company incurred net losses of **$46.5 million** (YTD Q2 **2022**) and used **$33.2 million** cash in operations (YTD Q2 **2022**), expecting continued significant losses and negative cash flows due to investments in commercialization, R&D, and infrastructure[118](index=118&type=chunk)[120](index=120&type=chunk) - Manufacturing of NPs is internal, while the SP100 instrument manufacturing is outsourced to Hamilton Company under a non-exclusive agreement[115](index=115&type=chunk)[117](index=117&type=chunk) [Components of Results of Operations](index=25&type=section&id=Components%20of%20Results%20of%20Operations) - Revenue is generated from product sales (Proteograph Product Suite, consumables, platform evaluations), services, related party sales (PrognomIQ), and grants, with grant revenue expected to decrease as commercialization ramps up[121](index=121&type=chunk) - Cost of revenue includes components of the Proteograph Product Suite (SP100 instrument, consumables), distribution expenses, stock-based compensation, and allocated overhead[122](index=122&type=chunk) - R&D expenses, primarily employee compensation, lab supplies, and allocated overhead, are expected to increase with further investment in product development and personnel[123](index=123&type=chunk)[124](index=124&type=chunk) - SG&A expenses, including compensation, professional services, and overhead, are anticipated to rise due to commercial growth and public company operating costs[125](index=125&type=chunk)[126](index=126&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) [Comparisons of the Three Months Ended June 30, 2022 and 2021](index=26&type=section&id=Comparisons%20of%20the%20Three%20Months%20Ended%20June%2030,%202022%20and%202021) Financial Performance (Three Months Ended June 30, in thousands) | Metric (Three Months Ended June 30) | 2022 (in thousands) | 2021 (in thousands) | Change ($) | Change (%) | | :---------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total Revenue | $3,621 | $1,334 | $2,287 | 171% | | Cost of Revenue | $2,012 | $586 | $1,426 | 243% | | Gross Profit | $1,609 | $748 | $861 | 115% | | Research and Development | $10,871 | $6,935 | $3,936 | 57% | | Selling, General and Administrative | $14,172 | $10,484 | $3,688 | 35% | | Net Loss | $(22,815) | $(16,616) | $(6,199) | 37% | - The increase in R&D expenses was primarily due to a **$2.6 million** increase in employee compensation and related expenses, and a **$0.8 million** increase in allocated overhead for expansion facilities[131](index=131&type=chunk) - SG&A expenses rose due to a **$1.4 million** increase in employee compensation, a **$0.7 million** increase in stock-based compensation, and a **$0.9 million** increase in professional service fees related to public company operations[132](index=132&type=chunk) [Comparisons of the Six Months Ended June 30, 2022 and 2021](index=28&type=section&id=Comparisons%20of%20the%20Six%20Months%20Ended%20June%2030,%202022%20and%202021) Financial Performance (Six Months Ended June 30, in thousands) | Metric (Six Months Ended June 30) | 2022 (in thousands) | 2021 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total Revenue | $6,934 | $1,396 | $5,538 | 397% | | Cost of Revenue | $4,080 | $586 | $3,494 | 596% | | Gross Profit | $2,854 | $810 | $2,044 | 252% | | Research and Development | $21,607 | $13,162 | $8,445 | 64% | | Selling, General and Administrative | $28,466 | $20,816 | $7,650 | 37% | | Net Loss | $(46,461) | $(33,045) | $(13,416) | 41% | - R&D expenses increased by **$8.4 million**, primarily due to a **$5.2 million** increase in employee compensation and related expenses, and a **$2.4 million** increase in allocated overhead and depreciation[136](index=136&type=chunk) - SG&A expenses increased by **$7.7 million**, driven by a **$2.3 million** increase in employee compensation, a **$2.0 million** increase in stock-based compensation, and a **$2.5 million** increase in professional services and consulting fees[137](index=137&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - Operations have been funded primarily through equity securities sales, with significant operating losses and negative cash flows expected to continue[139](index=139&type=chunk) - Existing cash, cash equivalents, and investments (**$456.1 million** as of June 30, **2022**) are believed to be sufficient for over **12 months**[118](index=118&type=chunk)[145](index=145&type=chunk) - Future capital requirements depend on revenue growth, commercialization efforts, potential acquisitions, R&D, and facility expansion. The company may raise additional capital through equity, debt, or collaborations[144](index=144&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) [Cash Flows](index=31&type=section&id=Cash%20Flows) Cash Flow Activities (Six Months Ended June 30, in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2022 (in thousands) | 2021 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net cash used in operating activities | $(33,151) | $(25,222) | | Net cash used in investing activities | $(122,257) | $(52,263) | | Net cash provided by financing activities | $1,618 | $114,756 | - Operating cash outflow in **2022** was driven by a net loss of **$46.5 million** and a **$6.3 million** change in net operating assets/liabilities, partially offset by **$19.7 million** in non-cash charges (e.g., stock-based compensation)[148](index=148&type=chunk) - Investing cash outflow in **2022** was primarily due to **$119.7 million** in net purchases of available-for-sale securities[150](index=150&type=chunk) - Financing cash inflow in **2022** was mainly from stock option exercises (**$1.2 million**) and ESPP (**$0.4 million**), a significant decrease from **2021** which included **$103.0 million** from a follow-on public offering[152](index=152&type=chunk)[153](index=153&type=chunk) [Critical Accounting Policies, Significant Judgments and Use of Estimates](index=32&type=section&id=Critical%20Accounting%20Policies,%20Significant%20Judgments%20and%20Use%20of%20Estimates) - Financial statements require management estimates and assumptions for areas like revenue recognition, fair value, stock-based compensation, and inventory valuation[154](index=154&type=chunk) - No significant changes in critical accounting policies and estimates were reported compared to the Annual Report on Form 10-K for December 31, **2021**[155](index=155&type=chunk) [Recent Accounting Pronouncements](index=32&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 for information on recent accounting pronouncements, including the adoption of ASU No. 2021-10 (Government Assistance) as of January 1, **2022**, which had no material impact[156](index=156&type=chunk)[57](index=57&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk from cash, cash equivalents, and short-term investments, which management deems not material due to their short-term nature - The company's primary market risk exposure is interest rate risk related to cash, cash equivalents, and investments in money market funds and U.S. Treasury securities[157](index=157&type=chunk) - Due to the short-term nature of these assets, the company believes its exposure to changes in fair value from interest rate fluctuations is not material[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2022, management concluded disclosure controls and procedures were effective for timely and accurate financial reporting, acknowledging inherent limitations and no material changes during the quarter - As of June 30, **2022**, the CEO and CFO concluded that disclosure controls and procedures were effective in providing reasonable assurance for timely and accurate reporting[158](index=158&type=chunk) - Control systems have inherent limitations, providing only reasonable assurance, and may not prevent or detect all errors or fraud[159](index=159&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, **2022**[160](index=160&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in material legal proceedings but acknowledges future actions could negatively impact its reputation, business, and financial condition - The company is not currently a party to any material legal proceedings[163](index=163&type=chunk) - Future legal proceedings or investigations could adversely impact reputation, business, financial condition, and divert management attention[163](index=163&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) Details significant risks of investing in Seer, Inc.'s Class A common stock, covering early-stage business, financial reporting, regulatory compliance, intellectual property, and stock ownership, with potential adverse impacts [Summary Risk Factor](index=34&type=section&id=Summary%20Risk%20Factor) - The company is an early-stage life sciences technology company with a history of net losses and expects to continue incurring losses, making future profitability uncertain[166](index=166&type=chunk)[167](index=167&type=chunk) - Key risks include the ability to successfully commercialize the Proteograph Product Suite, achieve broad market acceptance, manage the impact of the COVID-19 pandemic, protect intellectual property, and attract/retain qualified personnel[166](index=166&type=chunk) [Risks Related to Our Business and Industry](index=35&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) - The company has a limited operating history, having only recently broadly commercialized the Proteograph Product Suite, making future viability and performance difficult to predict[168](index=168&type=chunk)[169](index=169&type=chunk) - Operating results may fluctuate significantly due to factors like commercialization timeline, demand for products, market adoption, competition, and the impact of COVID-19[171](index=171&type=chunk)[173](index=173&type=chunk) - The market for proteomics technologies is evolving, and the estimated addressable market for the Proteograph Product Suite may be smaller than anticipated, limiting sales[175](index=175&type=chunk)[176](index=176&type=chunk) - Successful commercialization depends on broad scientific and market acceptance of the Proteograph Product Suite, which requires establishing capabilities with key opinion leaders and effective sales/marketing efforts[179](index=179&type=chunk)[180](index=180&type=chunk)[184](index=184&type=chunk) - The COVID-19 pandemic continues to adversely impact operations, causing longer lead times for instruments, delays in customer access for installation/training, and potential curtailment of R&D budgets[119](index=119&type=chunk)[190](index=190&type=chunk)[192](index=192&type=chunk) - The company relies on single suppliers for some components and a single contract manufacturer (Hamilton Company) for its SP100 instruments, posing risks of supply chain disruptions and inability to meet demand[207](index=207&type=chunk)[209](index=209&type=chunk) - Product defects or errors in the Proteograph Product Suite, which uses novel and complex technology, could lead to market adoption issues, increased costs, and damage to brand reputation[216](index=216&type=chunk)[219](index=219&type=chunk) - International commercialization exposes the company to various business, regulatory, legal, political, operational, financial, and economic risks, including compliance with foreign data protection laws[222](index=222&type=chunk) - The life sciences technology market is highly competitive, with larger, more established competitors having significant advantages in resources, brand recognition, and manufacturing capabilities[227](index=227&type=chunk)[228](index=228&type=chunk) [Risks Related to Financial Reporting](index=50&type=section&id=Risks%20Related%20to%20Financial%20Reporting) - As a public company, Seer must comply with SOX Section 404(b) for internal control over financial reporting, incurring significant costs and management attention[239](index=239&type=chunk)[240](index=240&type=chunk) - Previous material weaknesses in internal control over financial reporting were remediated as of December 31, **2021**, but future failures could adversely affect financial reporting and investor confidence[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - Financial statements rely on management's estimates and assumptions, and if these prove incorrect, operating results could fall below expectations, impacting stock price[248](index=248&type=chunk) [Risks Related to Regulatory Compliance](index=52&type=section&id=Risks%20Related%20to%20Regulatory%20Compliance) - Products are currently labeled and promoted as Research Use Only (RUO); marketing them as clinical diagnostics or medical devices would require costly and time-consuming FDA 510(k) clearance or premarket approval[249](index=249&type=chunk)[252](index=252&type=chunk) - Even if not seeking approval, FDA or other regulatory agencies could subject RUO products to medical device regulation if marketing or customer use suggests clinical diagnostic intent, impacting sales and business model[256](index=256&type=chunk)[257](index=257&type=chunk) - Changes in LDT regulation or new comprehensive federal data privacy laws could impact product sales and require business model changes[258](index=258&type=chunk) [Risks Related to our Intellectual Property](index=55&type=section&id=Risks%20Related%20to%20our%20Intellectual%20Property) - The company relies on patents, trademarks, copyrights, and trade secrets to protect its proprietary products and technologies, but obtaining and enforcing these rights is costly, time-consuming, and uncertain[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - The U.S. patent law for life sciences technology is uncertain and rapidly changing, potentially impacting existing patents or future patentability[267](index=267&type=chunk)[270](index=270&type=chunk) - Protecting IP rights globally is expensive and challenging, as foreign laws may offer less protection, and enforcement can be difficult, potentially allowing competitors to use technologies in other jurisdictions[271](index=271&type=chunk)[272](index=272&type=chunk)[275](index=275&type=chunk) - Issued patents could be found invalid or unenforceable if challenged, leading to increased competition and adverse effects on business[277](index=277&type=chunk)[278](index=278&type=chunk) - Reliance on trade secrets carries risks of disclosure or independent development by competitors, potentially harming competitive position[280](index=280&type=chunk)[281](index=281&type=chunk)[284](index=284&type=chunk) - The company may face claims challenging inventorship or ownership of its IP, potentially leading to loss of rights or the need for costly licenses[285](index=285&type=chunk)[286](index=286&type=chunk) - The company relies on a license from The Brigham and Women's Hospital, Inc. (BWH) for certain patents; loss of this or future licenses could significantly harm its ability to develop and commercialize products[304](index=304&type=chunk) - Products contain third-party open source software, and non-compliance with licenses could force public disclosure of proprietary code or restrict product sales[316](index=316&type=chunk)[317](index=317&type=chunk) [Risks Related to Ownership of Our Class A Common Stock](index=67&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) - The market price of Class A common stock has been and may continue to be volatile due to fluctuations in operating results, market conditions, competitor actions, and investor perceptions[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk) - The multi-class common stock structure (Class A: **1 vote/share**, Class B: **10 votes/share**) concentrates voting control with founders and early investors (**40.9%** as of Aug 4, **2022**), potentially limiting stockholder influence and depressing stock price[324](index=324&type=chunk)[325](index=325&type=chunk)[327](index=327&type=chunk) - Sales of a substantial number of shares by existing stockholders after lock-up expirations could cause the stock price to decline[329](index=329&type=chunk) - The company does not expect to pay dividends in the foreseeable future, meaning investor returns will rely solely on stock price appreciation[331](index=331&type=chunk) - Amended bylaws designate Delaware state/federal courts as exclusive forums for certain disputes, and federal district courts for Securities Act claims, potentially limiting stockholders' choice of forum[332](index=332&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - Delaware law and corporate provisions (e.g., classified board, supermajority voting for amendments) could discourage, delay, or prevent a change in control or management[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) - The ability to use net operating losses (NOLs) to offset future taxable income may be limited by Section 382 of the Internal Revenue Code due to potential ownership changes[339](index=339&type=chunk) [General Risks](index=72&type=section&id=General%20Risks) - ESG matters are subject to increasing scrutiny, and failure to adapt to evolving standards could negatively affect reputation, costs, and financial condition[343](index=343&type=chunk) - Facilities (Redwood City, third-party manufacturers) are vulnerable to natural disasters, public health crises (like COVID-19), and catastrophic events, which could disrupt R&D and manufacturing, leading to product delays and customer loss[344](index=344&type=chunk)[345](index=345&type=chunk)[348](index=348&type=chunk) - Information technology systems are vulnerable to disruptions, cyberattacks, and data security breaches, which could damage reputation, lead to litigation, incur significant liability, and expose sensitive data[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk)[353](index=353&type=chunk) - The company incurs significant increased legal, accounting, and compliance costs and management resources as a public company, diverting attention and potentially impacting financial performance[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk) - Compliance with evolving U.S. federal and state data privacy laws (e.g., CCPA, CPRA, CDPA, CPA, UCPA, HIPAA) imposes significant costs and may require changes to data processing practices[355](index=355&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk)[361](index=361&type=chunk) [Item 2. Unregistered Sales of Equity Securities](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities) No unregistered sales of equity securities occurred during the three months ended June 30, 2022 - No unregistered sales of equity securities occurred during the three months ended June 30, **2022**[362](index=362&type=chunk) [Item 3. Defaults Upon Senior Securities](index=76&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period, indicating no defaults upon senior securities - Not applicable[363](index=363&type=chunk) [Item 4. Mine Safety Disclosure](index=76&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company for the reporting period, as it does not engage in mining operations - Not applicable[364](index=364&type=chunk) [Item 5. Other Information](index=76&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item for the reporting period - None[365](index=365&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including certifications, XBRL documents for financial data, and the Outside Director Compensation Policy - The report includes certifications (**31.1, 31.2, 32.1, 32.2**), XBRL instance and taxonomy documents, and the Outside Director Compensation Policy (Exhibit **10.1**)[368](index=368&type=chunk)[369](index=369&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $3.3 million, a significant increase from $62,000 in Q1 2021, primarily due to increased sales of the Proteograph Product Suite [41] - Gross profit for Q1 2022 was $1.2 million, resulting in a gross margin of 38% [42] - Net loss for Q1 2022 was $23.6 million, compared to a net loss of $16.4 million in Q1 2021 [45] - The company ended the quarter with approximately $472 million in cash, cash equivalents, and investments [45] Business Line Data and Key Metrics Changes - Product-related revenue for Q1 2022 was $3.2 million, including $1.1 million from related party revenue, which consisted of sales of SP100 instruments, consumable kits, and platform evaluations [41] - Research and development expenses increased by 73% to $10.7 million in Q1 2022, driven by product development efforts related to the Proteograph Product Suite [44] - Selling, general, and administrative expenses rose by 39% to $14.3 million in Q1 2022, primarily due to increased employee compensation and costs related to being a publicly traded company [44] Market Data and Key Metrics Changes - The company has customers across North America, Europe, and Asia, including China, where COVID constraints are being navigated [25] - The demand funnel remains approximately 50-50 between academic and biopharma customers, with a heavier weighting toward commercial sales [52][54] Company Strategy and Development Direction - The company is focused on five key objectives for growth in 2022: enhancing customer onboarding, expanding the installed base, building commercial capabilities, driving product roadmap advancements, and expanding partnership efforts [12] - The company aims to achieve long-term gross margins between 70% and 75% despite anticipated short-term dampening due to a higher percentage of instrument sales [42] - The Proteograph Product Suite is positioned as a definitive tool leader in proteomics, with ongoing advancements expected to enhance its capabilities [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market opportunity for the Proteograph Product Suite, expecting revenue in the range of $14 million to $16 million for 2022, with a heavier weighting towards the back half of the year [46] - The company is focused on building market awareness and educating potential customers about the technology's capabilities [47] - Management emphasized the importance of third-party data in the sales process and expects the adoption curve to grow as more data becomes available [29] Other Important Information - The company has made significant progress in attracting top talent, expanding its team across key functions to support a diverse customer base [32] - A seminal paper published in the Proceedings of the National Academy of Sciences highlights the technology's ability to enhance protein sampling and coverage [35][37] Q&A Session Summary Question: Trends in commercial sales and biopharma customer cycles - Management confirmed that sales are more heavily weighted toward commercial customers and that this trend is expected to continue [52][53] Question: Demand funnel between academic and biopharma customers - Management indicated that the demand funnel remains approximately 50-50 between academic and biopharma customers [54] Question: Progress on product roadmap initiatives - Management stated that updates on increasing throughput and content will be provided in the second half of the year, with at least one new product expected [56] Question: Cash balance expectations for 2022 - The company ended Q1 2022 with $472 million in cash and feels confident about its cash position for the rest of the year [61][63] Question: Operating expenses pacing for the year - Management reiterated that operating expenses will increase alongside revenue, with a focus on prudent spending [66] Question: Go-to-market strategy and customer engagement - Management outlined a phased commercialization strategy and noted that customer acceptance of the technology has been positive [82]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or [ ] 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 001-39747 SEER, INC. (Exact name of Registrant as specified in its charter) (State or other juri ...