Sera Prognostics, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This annual filing does not provide standalone fourth-quarter financial results.
Business context
Sera is a women’s health diagnostics company developing blood-based biomarker tests using proteomics and bioinformatics. Its sole commercial product is PreTRM, a test intended to assess spontaneous preterm-birth risk in singleton pregnancies at weeks 18–20. The company remains early in commercialization and relies on Elevance Health for a significant commercial collaboration; substantially all near-term revenue is expected to come from PreTRM.
Key financial results
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $0.268 million | $0.082 million |
| Cost of revenue | $0.193 million | $0.037 million |
| Operating expenses | $45.920 million | $35.477 million |
| Operating loss | $45.652 million | $35.395 million |
| Net loss | $44.186 million | $35.009 million |
| Net loss per share, basic and diluted | $1.43 | $2.33 |
| Cash used in operating activities | $34.610 million | $31.636 million |
Revenue rose by $0.186 million from a very low base. Cost of revenue was also low; gross margin was approximately 28% in 2022 versus 55% in 2021, but is not representative of a scaled business at current revenue levels. Net loss widened by $9.177 million. Research and development increased to $14.244 million, selling and marketing to $14.699 million, and general and administrative to $16.784 million.
At December 31, 2022, cash and cash equivalents were $29.878 million and marketable securities were $74.155 million, for total cash, cash equivalents and securities of $104.033 million, down from $139.963 million a year earlier. Current assets were $90.125 million and current liabilities were $15.538 million. The company reported no outstanding debt; finance lease liabilities totaled $1.090 million, with operating lease liabilities also recorded. Accumulated deficit was $210.654 million. Unrealized losses on available-for-sale securities were $0.798 million for the year.
Changes, outlook and notable items
- Operating expenses rose $10.443 million year over year. The company attributed higher R&D primarily to clinical-study and research/bioinformatics spending; higher commercial costs included personnel, marketing, travel and sales-support systems.
- Management expects R&D expense to increase in 2023, selling and marketing expense to decrease as the sales team and strategy are refocused, and general and administrative expense to remain relatively consistent. These are expense expectations, not revenue or earnings guidance.
- Management stated that existing financial resources were expected to fund operations for at least 12 months from the financial-statement issuance date. It also expects continued losses and negative operating cash flows and may need additional capital; no credit facility or committed capital source was in place.
- Elevance Health-related deferred revenue was $9.082 million at year-end, and $6.0 million of other receivables related to 2022 minimum payments was collected in January 2023. The filing reports no material revenue recognized under the commercial collaboration agreement in 2022 or 2021; revenue is recognized as test results are delivered.
- After year-end, Sera announced that both co-primary endpoints in the AVERT PRETERM TRIAL were met with statistically significant improvements. Detailed results were being prepared for peer-reviewed publication. The PRIME randomized study remained ongoing; the company expected an interim analysis in 2023.
- Key risks include continued losses and financing needs, limited payer coverage and reimbursement, Elevance/customer concentration, uncertain adoption of PreTRM, evolving FDA oversight of laboratory-developed tests, clinical-study and product-performance uncertainty, and reliance on a single CLIA-certified laboratory. The company reported no material litigation.
Important facts for investors to verify
- Whether AVERT’s full, peer-reviewed results support the announced topline findings, and whether PRIME’s interim analysis demonstrates clinical and economic benefit.
- How much of the Elevance collaboration’s minimum payments converts into delivered tests and recognized revenue, and whether additional payer contracts are secured.
- Revenue growth, realized reimbursement per test, collections and cash burn; the company’s $104.033 million of cash and securities declined by about $35.9 million year over year.
- Whether operating-expense plans and available liquidity remain consistent with the stated runway, or additional financing becomes necessary.
- Progress toward coverage beyond Elevance and development timelines for pipeline tests; management described the next commercial product as years away, not months.