Seer(SEER) - 2020 Q4 - Annual Report

PART I. Item 1. Business Seer, Inc. commercializes transformative proteomics products, leveraging proprietary nanoparticle technology for unbiased, deep, and large-scale proteome access Overview Seer's Proteograph Product Suite utilizes proprietary nanoparticle technology for unbiased, deep, and large-scale proteomic analysis, targeting a $32 billion market - Seer's Proteograph Product Suite uses proprietary engineered nanoparticle (NP) technology for unbiased, deep, rapid, and large-scale proteomic analysis, aiming to make proteomic profiling accessible for thousands of samples[20] - The proteomics market was estimated at $32 billion in 2019, and the genomics market at $21 billion in 2019, both of which Seer aims to address by providing functional context to genomic variants[22] - The commercialization plan involves an initial collaboration phase with key opinion leaders, followed by an early access limited release in 2021, and broad commercial availability in early 2022, focusing on research use only (RUO)[24] The Importance of Proteomics Proteins serve as dynamic indicators of health and disease, yet the human proteome remains largely unexplored compared to the genome - Proteins are dynamic indicators of health, disease progression, and therapeutic response, contrasting with DNA as a static health risk indicator[25] - Despite their central role, the human proteome is relatively unexplored compared to the genome, with vast genomic information lacking functional context at the protein level[26] Challenges of Accessing the Proteome The proteome's high dynamism and complexity, with millions of protein variants, pose significant challenges for rapid and scalable measurement - The human proteome is highly dynamic, complex, and diverse, with an estimated 1,000,000 or more protein variants arising from approximately 20,000 genes due to processes like transcription, translation, and post-translational modifications (PTMs)[28] - Existing proteomics methods struggle to measure the breadth and depth of this complexity rapidly and at scale[28] Limitations of Biased Approaches to Proteomics Biased proteomics approaches, like antibody-based methods, are limited by small epitope binding and lack of protein amplification, hindering comprehensive analysis - Biased approaches, such as using analyte-specific reagents (ASRs) like antibodies, are limited in interrogating the entire protein structure and differentiating protein variants due to small epitope binding sites[30] - Unlike DNA, proteins lack a direct amplification mechanism, posing technological challenges for detecting low-concentration proteins[30] Limitations of Current Unbiased Approaches to Proteomics Current unbiased proteomics methods, primarily mass spectrometry, face scalability issues due to vast protein concentration differences and complex, costly sample preparation - Current unbiased approaches, often using mass spectrometry (MS), are limited by lack of scalability due to vast protein concentration differences (e.g., 10 orders of magnitude in plasma) and require complex, lengthy, and expensive sample preparation workflows[31][33] - These methods typically involve depletion of abundant proteins and fractionation, limiting their application to small studies and requiring significant processing expertise[33] Background of Massively Parallel Sampling Massively parallel sampling, like NGS in genomics, revolutionized biological analysis, creating a similar opportunity for unbiased, scalable proteome access - Massively parallel sampling, exemplified by Next-Generation Sequencing (NGS) in genomics, transformed biological analysis by enabling large-scale, unbiased studies previously impossible[35] - Seer believes a similar, if not greater, market opportunity exists for providing unbiased, deep, rapid, and scalable access to the proteome, given proteins' utility in measuring function, health, and disease[36] Our Proprietary Engineered Nanoparticle Technology Seer's proprietary engineered nanoparticle technology enables unbiased, massively parallel sampling of intact proteins, capturing molecular information at variant and PPI levels - Seer's proprietary engineered nanoparticle (NP) technology enables unbiased, massively parallel sampling of intact proteins, capturing molecular information at the protein variant and protein-protein interaction (PPI) levels[37] - NPs selectively capture proteins, forming a 'protein corona,' driven by affinity, concentration, and PPIs. Different NPs can be combined into panels for thorough sampling across the proteome's dynamic range[38][39] - The NP technology eliminates complex biofluid processing, samples across a wide dynamic range in various biological samples, identifies protein variants and PPIs, uses machine learning for NP design, and is compatible with broad laboratory workflows[41] Our Proteograph Product Suite The Proteograph Product Suite is an integrated solution of consumables, automation instrument, and software for unbiased, deep proteomic analysis at scale - The Proteograph Product Suite is an integrated solution of consumables, an automation instrument (SP100), and software, designed for unbiased, deep proteomic analysis at scale within hours[42] - The system is detector-agnostic, compatible with existing mass spectrometry (MS) instruments (estimated 16,000 worldwide), and includes a data analytics software suite for interpretation[44] Consumables The Proteograph assay utilizes a panel of five proprietary engineered nanoparticles and reagents, processing up to 16 samples in approximately seven hours - The first Proteograph assay uses a panel of five proprietary engineered nanoparticles (NPs), along with buffers and reagents for protein lysis, digestion, purification, and quantification[45] - The system can process up to 16 samples in parallel on a 96-well plate in approximately seven hours, including integrated quality control samples[45] Automation Instrument The SP100 automation instrument is a custom liquid handling workstation designed for robust, reproducible, and highly parallel proteomic sampling - The SP100 automation instrument is a custom-configured liquid handling workstation designed for robust, reproducible, and highly parallel proteomic sampling of hundreds to thousands of biosamples[48] - The assay protocol is fully automated after a 30-minute setup, running for about six and a half hours, producing peptides ready for mass spectrometry (MS) analysis[49] Software The Proteograph Analysis Suite offers user-friendly, cloud-based data management and analysis workflows, accelerating adoption for non-proteomic experts - The Proteograph Analysis Suite is designed for ease-of-use, offering cloud-based (and future on-premise) deployment with predefined workflows for data management and analysis, leveraging public MS data analysis tools[50] - It includes integrated quality control (QC) reporting, visualization, primary data analysis, and statistical tools, aiming to accelerate adoption among non-proteomic experts and accommodate large data volumes[52][53] From Sample to Data Using our Proteograph Product Suite The Proteograph workflow comprises five primary steps, enabling processing of 48 samples in a 24-hour period, significantly faster than conventional methods - The Proteograph workflow involves five primary steps: Particle-Matrix Association, Protein Corona Wash, Peptide Preparation, Mass Spectrometry, and Data Analysis[54] - The system can process 48 samples in a 24-hour period, significantly faster than conventional methods that take days to weeks for equivalent proteomic coverage[55] Proteograph Product Suite Performance The Proteograph Product Suite demonstrates superior performance in protein sampling breadth, depth, accuracy, precision, and rapid throughput compared to existing methods - The Proteograph Product Suite demonstrates superior performance in breadth of protein sampling, depth of coverage, accuracy, precision, and rapid throughput compared to existing unbiased proteomics methods[56][64] - It detected 1,656 proteins in plasma, a major expansion over other methods (neat plasma: 312, depletion/fractionation: 670), and achieved a median precision of 16.9 CV% across peptides while sampling more proteins[58][62] Proteograph Product Suite Performance Comparison | Metric | Proteograph Solution | Average Published Unbiased Studies (2016-2019) | | :----------------------- | :------------------- | :------------------------------------------------ | | Protein Coverage | 2,094 | 1,960 | | Throughput (proteins/minute) | 14.2 | 1.5 | | Study Size (samples) | 141 | 15 | Markets The Proteograph Product Suite targets the proteomics and genomics markets, valued at $32 billion and $21 billion respectively in 2019, with potential for new applications - The primary near-term markets for the Proteograph Product Suite are the proteomics market ($32 billion in 2019) and the genomics market ($21 billion in 2019), with potential applications spanning basic research, translational research, diagnostics, and applied fields[66] - Seer aims to capture spending from both markets by offering a scalable, unbiased, and deep proteomic solution that complements genomics technologies, especially for linking genotype to phenotype[66][70] - The company anticipates creating entirely new applications and market opportunities, similar to NGS in genomics, including early disease detection through its spin-out, PrognomIQ[66][71] Proteomics The global proteomics market, valued at $32 billion in 2019, is projected to reach $64 billion by 2024, with 60% in life sciences research - The global proteomics market was $32 billion in 2019, projected to grow to $64 billion by 2024 (15% CAGR), with 60% focused on life sciences research[68] - Seer believes its Proteograph's unique capabilities will appeal to researchers as a complement or substitute for current biased/unscalable unbiased approaches, leveraging an installed base of ~16,000 MS instruments worldwide[68] Genomics The global genomics market, valued at $21 billion in 2019, is projected to reach $38 billion by 2024, providing functional context to genomic variants - The global genomics market was $21 billion in 2019, expected to reach $38 billion by 2024 (13% CAGR)[69] - Large-scale proteomics can provide crucial functional context to genomic variants, as fewer than 0.2% of identified genetic variants have a cataloged relationship with phenotype[69] New Markets The Proteograph Product Suite is expected to enable novel applications and insights, creating new end-markets similar to NGS's impact on diagnostics - The Proteograph Product Suite is expected to enable novel applications and insights, leading to new end-markets, similar to NGS's impact on non-invasive prenatal testing and precision oncology[71] - PrognomIQ, a spin-out, aims to develop and commercialize novel diagnostic tests for early disease detection by combining Proteograph data with genomics and metabolomics[71] The Advantages of Our Proteograph Product Suite The Proteograph Product Suite offers unbiased, deep, rapid, and large-scale proteome access in an integrated, easy-to-use workflow, providing significant operational leverage - The Proteograph Product Suite is positioned as the first commercially available solution offering unbiased, deep, rapid, and large-scale access to the proteome in an integrated, easy-to-use workflow[72] - It provides insights into protein variation and protein-protein interactions (PPIs) at a depth and scale unattainable by other existing approaches, enabling functional context for genomic variations[73] - The proprietary engineered NP technology offers significant operational leverage in R&D, manufacturing, and commercialization, allowing for rapid development of new products and applications[74] Our Strategy Seer's strategy focuses on phased commercial launch, market development, continuous innovation, and building global commercial and manufacturing infrastructure - Seer's strategy includes driving adoption of the Proteograph Product Suite through a phased commercial launch, investing in market development to increase awareness of large-scale proteomic data, and continuous innovation for new products and applications[75] - The company plans to rapidly build commercial infrastructure and NP manufacturing capabilities in the US, EU, UK, and Asia Pacific, and foster an ecosystem of customers and partners[75] - Long-term, Seer intends to expand its NP technology to analyze biomolecules beyond proteins, such as nucleic acids, metabolites, and small molecules[76] The Applications of our Proteograph Product Suite The Proteograph Product Suite's unbiased, deep, and scalable proteomic data generation has broad applications across basic research, translational, diagnostic, and applied markets - The Proteograph Product Suite's ability to generate unbiased, deep proteomic data at scale has broad applications in basic research, translational research, diagnostics, and applied markets[77] Basic Research and Discovery Applications The Proteograph solution enables large-scale basic research applications, including cataloging protein diversity, proteogenomics, and interactome exploration - The Proteograph solution enables large-scale basic research applications like cataloging protein diversity, proteogenomics, and exploring the interactome, overcoming scale limitations of current methods[78] - It can identify a range of peptides for proteins in plasma samples, revealing distinct protein variants (e.g., BMP1 short form in cancer patients) and post-translational modifications (PTMs) like phosphorylation, linking them to disease states[80][82][84] - In proteogenomics, it facilitates mapping protein variants to genomic variants, providing functional context and refining gene expression models, with an average of ~70 predicted and confirmed peptide variations per sample in a study[85] - For interactome studies, it enables analysis of protein-protein interaction networks, identifying functional changes between health and disease states (e.g., Golgi vesicle transport in NSCLC)[87] Translational Research Applications The Proteograph solution supports translational research through large-scale, unbiased proteomics for biomarker discovery, target identification, and clinical trials - The Proteograph solution supports translational research by enabling large-scale, unbiased, and deep proteomics studies for biomarker discovery, target identification, and clinical trial applications[90] - In a lung cancer study, it quantified ~2,000 proteins across 141 subjects, achieving a mean Area Under the Curve (AUC) of 0.91 for machine-learning-based classifiers, identifying both known and novel biomarker candidates[92] - It can aid in discovering personalized drug targets and refining patient selection in clinical trials, particularly for complex diseases beyond cancer and rare genetic diseases[93][95] Diagnostic Applications The Proteograph Product Suite offers significant opportunities for diagnostic development, fostering multi-omics based diagnostics in complex disease areas - The Proteograph Product Suite offers significant opportunities for diagnostic development, potentially creating ecosystems for proteomics and multi-omics based diagnostics in complex disease areas[96] - PrognomIQ, a spin-out, will leverage the Proteograph Product Suite to develop multi-omics tests for health and disease, serving as a customer and driving adoption[96] Applied Applications in Agriculture, Environmental and Food Safety Beyond human health, the Proteograph solution has potential in agriculture, environmental monitoring, and food safety applications - Beyond human health, the Proteograph solution has potential in agriculture (e.g., plant proteomics for agronomic traits), environmental monitoring (e.g., pathogen monitoring), and food safety (e.g., tracking contamination and spoilage)[97][98][99] PrognomIQ Seer spun out PrognomIQ in August 2020, retaining ~19% equity, to focus on proteomics solutions while PrognomIQ develops multi-omics diagnostic tests - In August 2020, Seer transferred disease testing assets to PrognomIQ, a wholly-owned subsidiary, then distributed most shares to stockholders, retaining ~19% equity after a $55.0 million financing[100] - This spin-out allows Seer to focus on being a provider of proteomics solutions, avoiding competition with customers, while PrognomIQ combines Proteograph data with other -omics for multi-omics health and disease testing[101] - Seer granted PrognomIQ a non-exclusive license to its core technology patents for human diagnostics, with a low single-digit royalty on net sales of sublicensed products[104] Commercial Seer's commercial strategy focuses on growing the Proteograph installed base, driving applications, and increasing consumable utilization across key research sectors - Seer's commercial strategy focuses on growing the installed base of Proteograph, driving applications, and increasing utilization of consumables, targeting academic institutions, translational research groups, and biopharmaceutical companies[105][106] - The company plans to price its SP100 automation instrument comparably to other automated fluid handling systems and consumables similarly to other deep and unbiased -omic information products[106] - Broad accessibility of ~16,000 mass spectrometry (MS) instruments worldwide is expected to simplify Proteograph adoption, as customers can use their own MS or outsource the analysis[107] Commercial Strategy Seer's commercial strategy aims to simplify proteomics workflows, reduce costs, and deliver robust performance, focusing on growing installed base and consumable utilization - Seer's commercial strategy aims to simplify and accelerate proteomics workflow, reduce labor and capital, and deliver robust performance, focusing on growing the installed base and increasing utilization of consumables[105] - Direct sales and marketing will target principal investigators, researchers, and directors in academic, translational, and biopharmaceutical sectors, with pricing designed for direct purchasing decisions[106] - Market awareness will be driven by publications, scientific presentations, online training, and certifying 'Centers of Excellence' globally to promote the Proteograph solution[108] Proteograph Product Suite Commercial Launch Plan The three-phase launch plan includes collaboration, early access (2021), and broad commercial availability (early 2022), aiming for measured product introduction and scalable operations - The three-phase launch plan includes a collaboration phase (started Q3 2020 with key opinion leaders, offering discounted instruments/consumables), an early access limited release phase (2021, targeting 6-10 additional customers at list price with volume discounts), and broad commercial availability (early 2022)[110][112] - This phased approach aims to introduce the product measuredly, demonstrate clear use-cases, ensure scalable operations, and build a customer pipeline[110] Commercial Organization Seer is building a direct commercial organization with marketing, sales, and support functions, initially targeting North America, EU, and UK markets - Seer is building a direct commercial organization with marketing, sales, customer success, and technical support functions, initially targeting North America, the European Union, and the United Kingdom[111][112] - The sales model is expected to be highly efficient due to the Proteograph's lower capital expenditure, leverage of existing MS instruments, and complementarity with large-scale genomics data[113] Suppliers and Manufacturing Seer's manufacturing strategy prioritizes continuity, quality, and margin enhancement, with in-house NP production and outsourced instrument manufacturing - Seer's manufacturing strategy focuses on continuity, quality, and margin enhancement, with potential for in-sourcing or outsourcing functions[114] Consumables Nanoparticles are formulated and manufactured in-house at Seer's Redwood City facility, with components sourced from third-party suppliers - NPs are formulated and manufactured at Seer's Redwood City facility using well-established unit operations, with certain components and raw materials procured from third-party suppliers[115] - The company is scaling its pilot manufacturing line towards broad commercial availability and conducts vendor/component qualification and quality control tests[115] Automation Instrument SP100 automation instrument manufacturing is outsourced to Hamilton Company under a non-exclusive, three-year agreement with fixed tiered pricing - Manufacturing of the SP100 automation instrument is outsourced to Hamilton Company under a non-exclusive agreement with an initial three-year term post-commercial launch, with fixed tiered pricing[116] Competition The life sciences technology industry is highly competitive, with established and emerging companies, but no direct competitors offer comparable unbiased deep proteomics - The life sciences technology industry is highly competitive, characterized by rapid technological advancements and a strong emphasis on intellectual property[117] - Seer competes with established companies like Agilent Technologies, Bio-Rad Laboratories, Danaher, Luminex, Merck, and Thermo Fisher Scientific, as well as emerging growth companies such as Nautilus Biotechnology, Olink Proteomics, Quanterix, and SomaLogic[118] - Currently, no commercially available products offer unbiased, deep proteomics studies at the same scale and throughput as the Proteograph Product Suite[117] Government Regulation Seer intends to sell products for research use only (RUO) to avoid FDA medical device regulation, but regulatory changes could impact business - Seer intends to label and sell its products for research use only (RUO), thus not subjecting them to FDA regulation as medical devices for diagnostic or clinical purposes[120] - If the FDA determines RUO products are intended for diagnostic use, they would require premarket clearance (510(k)) or approval (PMA), which is expensive, time-consuming, and uncertain[121][125] - Changes in regulatory frameworks, such as those for Laboratory Developed Tests (LDTs) or the EU IVD Medical Device Regulation (IVDR), could impact product sales, compliance costs, and business models[128][130] Intellectual Property Seer protects its proprietary products and technology through patents, trademarks, trade secrets, and confidentiality agreements, including licensed patents from BWH - Seer relies on patents, trademarks, trade secrets, and confidentiality agreements to protect its proprietary products and technology[137] - As of December 31, 2020, Seer's owned patents and applications are expected to expire between 2023 and 2041, covering methods for proteome sampling, protein pathways, biological state classification, and biomarker discovery[138] - Seer exclusively licenses patents and applications from The Brigham and Women's Hospital, Inc. (BWH) related to nanoparticle and biosensor compositions for identifying biological states, expiring between 2027 and 2037[138] Collaboration and License Agreements Seer holds an exclusive license from BWH for nanoparticle patents and granted PrognomIQ a non-exclusive license for human diagnostics with royalties - Seer has an exclusive, royalty-bearing license agreement with BWH for patents related to nanoparticle and biosensor compositions for identifying biological states, with annual fees and potential milestone payments[141][142] - Seer granted PrognomIQ a non-exclusive license and sublicense to its owned and BWH-licensed patents for human diagnostics, with PrognomIQ paying a low single-digit royalty on sublicensed product sales[145][146] Collaborators Seer collaborates with OHSU for oncology proteomic profiling and The Broad Institute for analyzing protein signatures, with Discovery Life Sciences joining in 2021 - Seer collaborates with Oregon Health & Science University (OHSU) for proteomic profiling in oncology and The Broad Institute of MIT and Harvard for analyzing protein signatures in diseased vs. non-diseased samples[149] - Discovery Life Sciences also became a collaborator in January 2021[150] Scientific Advisory Board Seer maintains a highly qualified scientific advisory board with expertise spanning nanotechnology, proteomics, genomics, medicine, and data science - Seer maintains a highly qualified scientific advisory board with expertise in nanotechnology, proteomics, genomics, medicine, regulatory compliance, and data science[151] Employees and Human Capital As of December 31, 2020, Seer had 60 employees, primarily in R&D, with human capital objectives focused on recruiting, retaining, and incentivizing talent - As of December 31, 2020, Seer had 60 employees, with 45 in R&D and 15 in SG&A, many holding doctorate degrees[152] - Human capital objectives include identifying, recruiting, retaining, incentivizing, and integrating employees, advisors, and consultants, using equity and cash incentive plans[153] Corporate Information and History Seer, Inc. was incorporated in Delaware on March 16, 2017, initially as Seer Biosciences, Inc., and changed its name on July 16, 2018 - Seer, Inc. was incorporated in Delaware on March 16, 2017, initially as Seer Biosciences, Inc., and changed its name on July 16, 2018[154] Implications of Being an Emerging Growth Company As an 'emerging growth company' under the JOBS Act, Seer benefits from reduced reporting requirements and an extended accounting standards transition period - Seer is an 'emerging growth company' under the JOBS Act, allowing it to take advantage of reduced reporting requirements, including exemptions from auditor attestation for internal controls and reduced executive compensation disclosures[156][157] - The company has elected to use the extended transition period for complying with new or revised accounting standards, which may make its financial statements not comparable to other public companies[157] Available Information Seer makes its Annual, Quarterly, and Current Reports, along with amendments, available free of charge on its website and through the SEC's website - Seer makes its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments available free of charge on its website and through the SEC's website[159] Item 1A. Risk Factors Investing in Seer's Class A common stock involves significant risks due to its early-stage nature, history of losses, and uncertainties in commercial success and market acceptance - Seer is an early-stage life sciences technology company with a history of net losses ($32.8 million in 2020, $16.0 million in 2019) and expects to continue incurring losses, making future profitability uncertain[161][162] - The success of the Proteograph Product Suite depends on broad scientific and market acceptance, which is uncertain given its innovative nature and the evolving proteomics market[175][176] - The COVID-19 pandemic has adversely impacted operations, supply chains (e.g., longer lead times for SP100 instruments), and customer research activities, with its ultimate impact remaining highly uncertain[181][184][185] - Seer relies on a single contract manufacturer (Hamilton Company) for its instruments and faces risks if this manufacturer fails or cannot meet demand, and has limited experience in large-scale product manufacturing[197][201] - Material weaknesses in internal control over financial reporting were identified (insufficient accounting personnel, lack of formalized processes for reconciliations, insufficient U.S. GAAP expertise), which could affect financial reporting accuracy and investor confidence[216][218][221] Summary Risk Factor Key risks include Seer's early-stage nature, history of losses, limited operating history, and challenges in commercial launch and market acceptance - Key risks include Seer's early-stage nature, history of net losses, limited operating history, potential market size smaller than estimated, and challenges in successful commercial launch and market acceptance of its Proteograph Product Suite[161] - Other significant risks involve the impact of the COVID-19 pandemic, inability to obtain/maintain sufficient intellectual property protection, and identified material weaknesses in internal control over financial reporting[161] Risks Related to Our Business and Industry Seer faces significant business and industry risks, including limited operating history, revenue uncertainty, market acceptance challenges, and supply chain dependencies - Seer has a limited operating history, no product revenue to date, and faces significant uncertainties in achieving market acceptance, scaling operations, and establishing a sales model[163] - Operating results may fluctuate significantly due to factors like commercialization timeline, demand for products, pricing, sales mix, R&D investment, and the impact of the COVID-19 pandemic[165][166] - The estimated market size for Proteograph may be smaller than anticipated, and new market opportunities may not develop as quickly as expected, limiting growth[169][170] - Delays in commercial launch, inability to establish sales and marketing capabilities, or failure to continuously improve products could harm revenue and prospects[173][178][179] - Dependence on R&D spending by academic and research institutions, which are influenced by government funding, poses a risk if spending is reduced or delayed[194][196] - Reliance on a single contract manufacturer (Hamilton Company) for instruments and limited/sole suppliers for components creates supply chain risks, exacerbated by events like the COVID-19 pandemic[197][199] - Product defects or errors in the novel and complex Proteograph Product Suite could lead to market rejection, increased costs, and legal claims[206][208] - Failure to successfully develop and deploy the Proteograph Analysis Suite, or any enhancements, could hinder commercialization efforts[209][211] - International business expansion exposes Seer to various risks, including regulatory compliance, political instability, and difficulties in protecting intellectual property[212] - The life sciences technology market is highly competitive, with larger, more established competitors having significant advantages[213][214] - Seer may need to raise additional capital to fund commercialization and R&D, which could result in dilution, debt, or unfavorable licensing terms[242][244] - Acquisitions or investments in other companies/technologies could divert management attention, dilute stockholders, and disrupt operations[246][247] - The benefits of spinning out PrognomIQ may not be fully realized, and PrognomIQ's actions as a separate entity could diverge from Seer's interests[248][249] Risks Related to our Intellectual Property Risks related to intellectual property include inadequate protection, patentability uncertainties, global enforcement challenges, and potential infringement claims - Inadequate intellectual property protection (patents, trademarks, trade secrets) could allow competitors to develop similar products, impairing Seer's commercialization efforts and competitive advantage[251][252] - The patentability of life sciences technology is uncertain and rapidly changing due to court decisions and legislative changes (e.g., America Invents Act), potentially impacting existing patents or future patentability[255][257] - Protecting IP rights globally is expensive and challenging, as foreign laws may offer less protection, and enforcement can be difficult, allowing competitors to use technologies in other jurisdictions[259][260][262] - Issued patents could be found invalid or unenforceable if challenged in litigation or administrative proceedings, leading to loss of patent protection and increased competition[264] - Failure to protect trade secrets through confidentiality agreements or due to independent development by third parties could materially adversely affect the value of Seer's technology[267][268][271] - Seer may face claims challenging inventorship or ownership of its intellectual property, potentially leading to loss of rights, need for licenses, or costly litigation[272][273] - Inability to protect and enforce trademarks and trade names could harm brand recognition and competitive position[274][275] - Patent terms may be insufficient to protect competitive position, especially if products require extended development and regulatory review[276] - Seer may become involved in lawsuits defending against third-party infringement claims or enforcing its own IP, which are expensive, time-consuming, and could delay commercialization[277][279][282] - Compliance with patent agencies' procedures and fee payments is crucial; non-compliance could lead to loss of patent rights[285] - Claims that employees or consultants wrongfully used or disclosed third-party confidential information could lead to litigation, loss of IP rights, and increased competition[286] - Reliance on licenses from third parties (e.g., BWH) means termination or disputes over these licenses could harm Seer's ability to develop and commercialize products[290][292][294] - Inability to license necessary third-party technologies on reasonable terms could prevent commercialization of new products[296][298] - Government march-in rights on funded patents could limit Seer's exclusivity or allow third parties to use its licensed technology[299] - Use of third-party open source software components carries risks, including potential requirements to make proprietary source code public or claims of non-compliance with licenses[300][302] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report Item 2. Properties Seer's corporate headquarters, R&D, manufacturing, and distribution facilities are located in a 25,600 square foot leased facility in Redwood City, CA - Seer's primary facilities (corporate, R&D, manufacturing, distribution) are located at 3800 Bridge Parkway, Redwood City, CA, in a 25,600 square foot leased facility[345] - The lease for this facility runs through February 2032, and the company does not own any real property[345] Item 3. Legal Proceedings Seer is not currently involved in any material legal proceedings - Seer is not currently involved in any material legal proceedings[346] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to Seer, Inc PART II. Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Seer's Class A common stock began trading on Nasdaq in December 2020, with no dividends paid, and significant equity issuances including IPO proceeds of $183.9 million - Seer's Class A common stock began trading on the Nasdaq Global Select Market under the symbol 'SEER' on December 4, 2020[350] - As of March 15, 2021, there were 126 holders of record for Class A common stock and 16 for Class B common stock[351] - Seer has not paid dividends since inception and does not anticipate paying any in the foreseeable future, planning to retain earnings for operations and R&D[352] Net Proceeds from Public Offerings (2020-2021) | Offering | Date | Gross Proceeds | Underwriting Discounts & Commissions | Offering Expenses | Net Proceeds | | :-------------------------------- | :--------- | :------------- | :----------------------------------- | :---------------- | :------------- | | Initial Public Offering (IPO) | Dec 8, 2020 | $201.3 million | $14.1 million | $3.3 million | $183.9 million | | Concurrent Private Placement | Dec 9, 2020 | - | $4.7 million | - | $130.3 million | | Follow-On Public Offering | Feb 1, 2021 | - | $7.5 million | - | $103.1 million | Market Information Seer's Class A common stock began trading on the Nasdaq Global Select Market under 'SEER' on December 4, 2020 - Seer's Class A common stock has been listed on the Nasdaq Global Select Market under the symbol 'SEER' since December 4, 2020, marking its entry into the public trading market[350] Holders of Common Stock As of March 15, 2021, Seer had 126 Class A common stock holders and 16 Class B common stock holders of record - As of March 15, 2021, Seer had 126 holders of record for its Class A common stock and 16 for its Class B common stock[351] Dividend Policy Seer has not paid cash dividends since inception and plans to retain future earnings to finance operations and R&D - Seer has not declared or paid any cash dividends on its capital stock since inception and plans to retain future earnings to finance operations and R&D[352] Unregistered Sales of Equity Securities Seer issued various unregistered equity securities, including convertible preferred stock, stock options, and restricted stock units, prior to and concurrent with its IPO Unregistered Sales of Equity Securities (2018-2021) | Date | Security Type | Shares/Amount | Price per Share | Aggregate Proceeds/Value | | :------------------- | :-------------------------------- | :------------ | :-------------- | :----------------------- | | Mar 23, 2018 | Series B convertible preferred stock | 7,906,757 | $3.80 | ~$30,000,000 | | Mar 7, 2019 & Apr 12, 2019 | Series C convertible preferred stock | 3,271,023 | $5.35 | ~$17,500,000 | | May 7, 2019 | Convertible promissory notes | - | - | $400,000 | | Nov 15, 2019 & Dec 13, 2019 | Series D convertible preferred stock | 7,907,968 | $6.96 | ~$55,000,000 | | May 12, 2020 | Series D-1 convertible preferred stock | 6,853,571 | $8.03 | ~$55,000,000 | | Sep 20, 2017 - Jan 14, 2021 | Options to purchase Class A common stock | 10,781,124 | $0.02 - $7.96 | - | | Sep 20, 2017 - Jan 14, 2021 | Class A common stock from option exercise | 1,705,151 | $0.00002 - $3.47 | - | | Apr 1, 2020 - Nov 12, 2020 | Restricted Stock Units (RSUs) | 381,922 | - | - | | Dec 9, 2020 | Class A common stock (Private Placement) | 7,105,262 | $19.00 | $130.3 million (net) | Use of Proceeds from Public Offering of Common Stock Seer's December 2020 IPO generated $183.9 million in net proceeds, invested in interest-bearing securities with no material change in planned use - Seer's IPO on December 8, 2020, generated net proceeds of approximately $183.9 million from the sale of 10,592,106 shares of Class A common stock at $19.00 per share[356][357] - The proceeds were invested in short-term and long-term, interest-bearing investment-grade securities and government securities, with no material change in the planned use of proceeds[358] Item 6. Selected Financial Data This section is not applicable and contains no selected financial data Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Seer's financial condition and operational results, detailing its commercialization strategy, financing activities, and significant R&D investments leading to losses - Seer has incurred significant losses and negative cash flows from operations since its incorporation in 2017, with a net loss of $32.8 million in 2020 and $16.0 million in 2019[370] - The company's operations are funded primarily through equity issuances, including $183.9 million net proceeds from its December 2020 IPO and $130.3 million from a concurrent private placement, and $103.1 million from a February 2021 public offering[369][394] - Seer expects expenses to increase significantly due to continued Proteograph Product Suite development and commercialization, hiring, sales/marketing infrastructure, NP manufacturing expansion, and public company operating costs[371] Overview Seer is an early-stage life sciences technology company focused on commercializing the Proteograph Product Suite for unbiased, deep, and large-scale proteomic analysis - Seer is an early-stage life sciences technology company focused on commercializing the Proteograph Product Suite for unbiased, deep, rapid, and large-scale proteomic analysis[361] - The company has devoted resources to R&D, IP, personnel, and commercial infrastructure, with nominal revenue from research collaborations and grants to date[362][363] - Commercialization will follow a three-phase plan (collaboration, early access, broad availability by early 2022) using a direct sales channel in the US and direct/distributor channels internationally[363][365] - NP manufacturing is in-house at Redwood City, CA, while SP100 automation instrument manufacturing is outsourced to Hamilton Company[367][368] PrognomIQ Seer spun out PrognomIQ in August 2020, retaining ~19% equity, to focus on proteomics solutions while PrognomIQ develops multi-omics diagnostic tests - In August 2020, Seer transferred disease testing assets to PrognomIQ, a new subsidiary, then distributed most shares to stockholders, retaining ~19% equity after a $55.0 million financing[372] - This transaction allows Seer to focus on being a provider of proteomics solutions, avoiding competition with customers, while PrognomIQ develops multi-omics health and disease tests using Proteograph data[373] - Seer granted PrognomIQ a non-exclusive license to its core technology patents for human diagnostics, with a low single-digit royalty on net sales of sublicensed products[375] COVID-19 Pandemic The COVID-19 pandemic has caused disruptions, including longer lead times for instruments and delays from suppliers, impacting commercialization plans - The COVID-19 pandemic has caused disruptions, including longer lead times for SP100 instruments from Hamilton and delays from other suppliers of critical hardware and consumables[376] - Commercialization plans are impacted by restrictions on customer laboratory access, delays in product delivery/installation, and training, as well as potential curtailment of R&D budgets[376] Components of Results of Operations Revenue is nominal, primarily from research collaborations and grants, with R&D and G&A expenses expected to increase significantly - Revenue to date is nominal, generated from research collaborations and grant-funded activities, with no product sales revenue yet[378] - Research and Development (R&D) expenses include employee compensation, lab supplies, consulting, clinical study costs, and allocated overhead, expected to increase with product development and personnel growth[379][380] - General and Administrative (G&A) expenses cover executive, finance, HR, legal, and professional fees, expected to increase due to growth and public company operating costs[381][382] - Interest income is from cash, cash equivalents, and investments, while interest expense relates to convertible promissory notes (converted in 2019). Other expense includes losses from equity method investments[383][384][385] Results of Operations Total revenue increased by $0.5 million (466%) in 2020, while R&D and G&A expenses significantly rose, leading to a $32.8 million net loss Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | Change Amount | Change % | | :-------------------------- | :---------------------- | :---------------------- | :------------ | :------- | | Research revenue | $292 | $58 | $234 | 403% | | Grant revenue | $364 | $58 | $306 | 528% | | Total revenue | $656 | $116 | $540 | 466% | | Research and development | $18,942 | $12,393 | $6,549 | 53% | | General and administrative | $15,363 | $4,606 | $10,757 | 234% | | Total operating expenses | $34,305 | $16,999 | $17,306 | 102% | | Loss from operations | $(33,649) | $(16,883) | $(16,766) | 99% | | Interest income | $883 | $850 | $33 | 4% | | Interest expense | $0 | $(5) | $5 | (100)% | | Other expense | $(9) | $0 | $(9) | * | | Net loss | $(32,775) | $(16,038) | $(16,737) | 104% | - Total revenue increased by $0.5 million (466%) in 2020, driven by a Small Business Innovation Research grant and a research collaboration study[387] - R&D expenses increased by $6.5 million (53%) in 2020, primarily due to higher employee compensation ($3.4M), facility expansion/equipment ($1.2M), lab materials ($1.5M), and consulting fees ($1.3M), partially offset by decreased clinical study fees ($0.9M)[388][390] - G&A expenses increased by $10.8 million (234%) in 2020, mainly due to increased employee compensation ($2.0M), stock-based compensation ($5.3M), professional/consulting fees ($0.7M), legal matters ($1.0M), and public company related costs[391] - Total other income remained consistent, with higher cash investments offsetting lower interest rate yields in 2020[392] Liquidity and Capital Resources Seer has incurred significant operating losses and negative cash flows, funded primarily by equity issuances, with $431.9 million in cash and investments as of December 31, 2020 - Seer has incurred significant operating losses and negative cash flows since inception, funded primarily by equity issuances[393] - As of December 31, 2020, Seer had $431.9 million in cash, cash equivalents, and investments, and an accumulated deficit of $55.4 million, believing it has adequate liquidity for at least 12 months[370][393] Cash Flows Summary (in thousands) | Activity | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :-------------------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(20,828) | $(13,073) | | Net cash used in investing activities | $(34,558) | $(72,383) | | Net cash provided by financing activities | $371,486 | $72,331 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $316,100 | $(13,125) | - Operating cash used increased to $20.8 million in 2020 (from $13.1 million in 2019), driven by net loss, partially offset by non-cash charges and changes in operating assets/liabilities[396][397] - Investing cash used decreased to $34.6 million in 2020 (from $72.4 million in 2019), primarily due to purchases of available-for-sale securities and laboratory equipment[398] - Financing cash provided significantly increased to $371.5 million in 2020 (from $72.3 million in 2019), mainly from IPO, private placement, and Series D-1 preferred stock issuances[399][400] Contractual Obligations as of December 31, 2020 (in thousands) | Obligation Type | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :------------------------ | :------ | :--------------- | :-------- | :-------- | :---------------- | | Operating lease obligations | $20,366 | $795 | $3,062 | $3,717 | $12,792 | - Seer has no off-balance sheet arrangements[403] Critical Accounting Policies, Significant Judgments and Use of Estimates Critical accounting policies involve significant management estimates for stock-based compensation and R&D expenses, with material weaknesses identified in internal controls - Critical accounting policies involve significant management estimates and assumptions, particularly for stock-based compensation, fair value of common stock, and accrued R&D expenses[404][405] - Stock-based compensation is measured at grant-date fair value using the Black-Scholes model, requiring subjective assumptions for expected term, volatility, and risk-free interest rate[406][407] - As an 'emerging growth company,' Seer utilizes exemptions for reduced reporting and an extended transition period for new accounting standards, which may affect comparability of financial statements[408][409] - Material weaknesses in internal control over financial reporting were identified, including insufficient accounting personnel, lack of formalized processes for account reconciliations, and inadequate U.S. GAAP technical expertise[413] - Remediation efforts include hiring finance personnel, documenting processes, building financial systems, and formalizing accounting policies, but success is not assured[414] Item 7A. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk Item 8. Financial Statements and Supplementary Data This section presents Seer's audited consolidated financial statements for 2020 and 2019, detailing significant net losses, negative cash flows, and the impact of financing activities - The financial statements were audited by Deloitte & Touche LLP, who issued an unqualified opinion, stating the financial statements present fairly in all material respects[422] Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2020 | December 31, 2019 | | :-------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $333,585 | $17,485 | | Investments | $98,278 | $68,535 | | Total current assets | $433,128 | $86,806 | | Total assets | $442,319 | $93,236 | | Total current liabilities | $8,094 | $3,815 | | Total liabilities | $10,710 | $5,557 | | Total stockholders' equity | $431,609 | $87,679 | | Accumulated deficit | $(55,361) | $(22,586) | Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands) | Metric | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :-------------------------------------- | :---------------------- | :---------------------- | | Total revenue | $656 | $116 | | Research and development expenses | $18,942 | $12,393 | | General and administrative expenses | $15,363 | $4,606 | | Net loss | $(32,775) | $(16,038) | | Comprehensive loss | $(32,745) | $(16,014) | | Net loss per share (basic and diluted) | $(2.48) | $(2.31) | | Weighted-average common shares outstanding | 13,216,657 | 6,952,419 | Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :-------------------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(20,828) | $(13,073) | | Net cash used in investing activities | $(34,558) | $(72,383) | | Net cash provided by financing activities | $371,486 | $72,331 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $316,100 | $(13,125) | | Cash, cash equivalents and restricted cash, end of period | $333,928 | $17,828 | - As of December 31, 2020, Seer had federal net operating loss carryforwards of $36.2 million (indefinite carryforward) and state NOLs of $33.0 million (expiring 2031), with a full valuation allowance recorded against net deferred tax assets[577][576] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure Item 9A. Controls and Procedures Management concluded disclosure controls were ineffective as of December 31, 2020, due to material weaknesses in internal control over financial reporting, with remediation efforts underway - Seer's management concluded that disclosure controls and procedures were not effective as of December 31, 2020, due to material weaknesses in internal control over financial reporting[590] - Identified material weaknesses include insufficient accounting personnel for segregation of duties, lack of formalized processes for account reconciliations, and insufficient U.S. GAAP technical expertise for complex transactions[592] - Remediation plans involve hiring finance department employees (including CFO and Controller), retaining accounting consultants, reviewing/documenting processes, building financial systems, and formalizing accounting policies[593][594] - As an 'emerging growth company,' Seer is not yet required to have its independent registered public accounting firm attest to the effectiveness of its internal controls over financial reporting[595] Item 9B. Other Information There is no other information to report in this section PART III. Item 10. Directors, Executive Officers and Corporate Governance Seer has adopted a written code of business conduct and ethics applicable to its directors, officers, and employees, with further details in the Proxy Statement - Seer has a written code of business conduct and ethics for its directors, officers, and employees, available on its website[601] - Further details are incorporated by reference from the definitive Proxy Statement relating to the 2021 Annual Meeting of Stockholders[602] Item 11. Executive Compensation Executive compensation information is incorporated by reference from Seer's definitive Proxy Statement - Executive compensation information is incorporated by reference from the Proxy Statement[603] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information for beneficial owners and management, along with related stockholder matters, is incorporated by reference from the Proxy Statement - Security ownership information for beneficial owners and management, along with related stockholder matters, is incorporated by reference from the Proxy Statement[604] Item 13. Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement[605] Item 14. Principal Accounting Fees and Services Principal accounting fees and services information