Singular Genomics Systems(OMIC) - 2024 Q3 - Quarterly Report

Financial Performance and Losses - The company incurred a net loss of $63.1 million and used $61.5 million of cash in operations during the nine months ended September 30, 2024[60] - As of September 30, 2024, the company had an accumulated deficit of $400.7 million[60] - Revenue for the three months ended September 30, 2024 decreased by $56,000 (12%) to $406,000 compared to $462,000 in the same period in 2023[65] - Gross margin for the three months ended September 30, 2024 was $(301,000), a 363% decrease compared to $(65,000) in the same period in 2023[65] - Revenue for the nine months ended September 30, 2024 decreased by $244,000 (13%) to $1.6 million compared to $1.8 million in the same period in 2023[65] - Gross margin for the nine months ended September 30, 2024 was $(897,000), a 788% decrease compared to $(101,000) in the same period in 2023[65] - The company recognized $0.4 million of revenue for sales of consumables and services and no revenue for sales of instruments during the three months ended September 30, 2024[66] - The company recognized $1.6 million of revenue, consisting of $0.5 million for instrument sales and $1.1 million for sales of consumables and services during the nine months ended September 30, 2024[68] - The company expects to continue incurring significant losses and does not anticipate positive cash flows from operations in the foreseeable future[81] Cash Flow and Financing Activities - The company raised aggregate net proceeds of approximately $447.4 million, including $237.2 million from its IPO and $130.5 million from convertible promissory notes[60] - The company had cash, cash equivalents, and short-term investments of $113.8 million as of September 30, 2024[60] - Cash provided by investing activities was $97.8 million for the nine months ended September 30, 2024, primarily from proceeds of maturities and sales of available-for-sale securities[86] - Cash used in operating activities was $61.5 million for the nine months ended September 30, 2024, driven by a net loss of $63.1 million and changes in working capital[85] - Cash provided by financing activities was less than $0.1 million for the nine months ended September 30, 2024, primarily from employee stock purchase plan proceeds[87] - The company has a shelf registration statement allowing it to offer up to $250 million of securities, with a sales agreement for up to $100 million of common stock, subject to limitations[82] Product Development and Commercialization - The G4 Sequencing Platform was commercially launched in December 2021, with revenue recognition starting in Q4 2022[59] - The G4X Spatial Sequencer is expected to offer up to 40 cm² of flexible imaging area and single-day run times, with initial customer delivery planned by the end of 2024[59] - The company expects operating expenses to increase in the longer term due to continued development of the G4X and related products, as well as investments in commercial infrastructure[61] Expenses and Cost Management - Research and development expense decreased by $1.7 million (15%) for the three months ended September 30, 2024 compared to the same period in 2023[71] - Selling, general and administrative expenses decreased by $5.1 million (38%) for the three months ended September 30, 2024 compared to the same period in 2023[65] - Research and development expense decreased by $4.3 million (12%) for the nine months ended September 30, 2024 compared to the same period in 2023[72] - Selling, general and administrative expenses decreased by $10.6 million (14%) for the nine months ended September 30, 2024 compared to the same period in 2023[65] - Selling, general and administrative expenses decreased by $5.1 million (38%) for the three months ended September 30, 2024, compared to the same period in 2023, primarily due to reduced headcount and a $1.6 million gain from lease modification[76] - Selling, general and administrative expenses decreased by $6.3 million (15%) for the nine months ended September 30, 2024, compared to the same period in 2023, driven by reduced employee compensation and impairment expenses[77] Interest and Investment Income - Interest income decreased by $0.9 million (37%) for the three months ended September 30, 2024, and by $1.3 million (19%) for the nine months ended September 30, 2024, due to reduced cash available for investments[79][80] Debt and Loan Agreements - The company refinanced its 2019 SVB Loan, entering into a 2021 SVB Loan with a total principal amount of up to $35.5 million, divided into three tranches: $10.5 million (First Tranche), $15.0 million (Second Tranche), and $10.0 million (subject to approval)[89] - The 2021 SVB Loan has an interest rate of 8.75% as of September 30, 2024, with an initial interest-only period of 36 months, and principal payments began in October 2024[89] - The 2022 SVB Loan Amendment extended the drawdown period for the additional tranches totaling $25.0 million from September 30, 2022, to March 31, 2024, but the draw period expired without being utilized[89] - The company is subject to customary covenants under the SVB Loan, with obligations secured by a first priority security interest in substantially all current and future assets, excluding intellectual property[89] Royalties and Licensing Agreements - Under the Columbia License Agreement, the company is required to pay royalties ranging from low to mid-single digits on net sales of Patent Products and low single-digit royalty rates on Other Products[62] Market and Macroeconomic Risks - The company faces risks from macroeconomic factors, including downward market pressure, extreme volatility, and disruptions in capital and credit markets[63] - There were no substantial changes to the company's market risks during the quarter ended September 30, 2024, compared to the disclosures in the Annual Report for the year ended December 31, 2023[96] Capital Obligations and Lease Commitments - The company has capital obligations including minimum lease payments of $1.4 million for the remainder of 2024, $4.8 million in 2025, and $68.3 million thereafter, along with SVB Loan payments[81] Regulatory and Reporting Status - The company remains an "emerging growth company" under the JOBS Act, with exemptions from certain reporting requirements until the earliest of: $1.235 billion in annual gross revenue, $700 million in equity securities held by non-affiliates, $1.0 billion in non-convertible debt issuance, or December 31, 2026[94] - The company has elected to delay the adoption of new or revised accounting standards until they apply to private companies, as permitted under the JOBS Act[94]