Singular Genomics Systems(OMIC) - 2021 Q3 - Quarterly Report

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