Nautilus Biotechnology, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. The unaudited statements are for a development-stage proteomics company with no products available for commercial sale and no revenue to date. On June 9, 2021, the company completed its business combination and $200 million PIPE financing; comparisons with 2020 reflect Legacy Nautilus before the transaction.
Key financial metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $8.2m | $3.3m | $19.5m | $8.5m |
| General and administrative expense | $6.3m | $0.7m | $14.2m | $1.9m |
| Total operating expenses | $14.6m | $4.0m | $33.7m | $10.4m |
| Net loss | $14.5m | $4.0m | $33.6m | $10.3m |
| Basic and diluted loss per share | $0.12 | $0.13 | $0.47 | $0.36 |
| Net cash used in operating activities | — | — | $28.7m | $9.3m |
Gross and operating margins are not meaningful because the company reported no revenue. At September 30, cash and cash equivalents were $190.2m, short-term investments $157.1m, and long-term investments $26.6m. Management cited $347.3m of cash, cash equivalents and short-term investments. Total assets were $385.3m; total liabilities were $7.5m, including $3.6m of operating lease liabilities. No borrowings or other debt are reported.
Changes versus prior comparable periods
- Q3 operating expenses increased $10.5m, or 262%, and net loss increased $10.5m, or 265%, year over year. Nine-month operating expenses rose $23.3m, or 223%, and net loss increased $23.4m, or 228%.
- Management attributed higher research and development costs primarily to increased staffing, laboratory supplies and equipment, and development services. Higher general and administrative costs reflected staffing and stock compensation, professional services, and insurance, including costs associated with operating as a public company.
- Nine-month operating cash use increased to $28.7m from $9.3m. Financing provided $327.4m, primarily from the business combination and PIPE; investing used $145.0m, largely reflecting purchases of securities.
- The business combination converted preferred stock to common stock and substantially increased share count. The company reported 124.2m common shares outstanding at September 30, 2021.
Outlook, risks and contingencies
- Management said available cash, cash equivalents and short-term investments were expected to fund operations for at least 12 months from issuance of the financial statements. The company expects continued significant losses and negative operating cash flows and may need additional capital; actual runway depends on development spending and other factors.
- Commercialization remains contingent on scientific and technical validation, product development, manufacturing capacity, supply availability, collaborations, and market adoption. The stated plan was to remain in the collaboration phase, begin limited early access no earlier than the second half of 2022, and target broader commercialization at the end of 2023 or beginning of 2024. The company did not expect material revenue before the second half of 2023.
- Key disclosed risks include development or launch delays, single-source suppliers, manufacturing and product-quality challenges, competition, intellectual-property disputes, regulatory changes, recruitment and retention, and COVID-19-related disruption to research, suppliers, and customer activity.
- At September 30, open purchase commitments were $2.9m, expected within 12 months. Existing lease commitments totaled $4.4m in future minimum payments; separately, a 10-year San Carlos lease with $40.7m of minimum payments had not commenced and was excluded from that obligations table.
- The company reported no material pending legal proceedings, no off-balance-sheet arrangements, and no income tax expense or benefit for the periods presented. Stock-based compensation was $2.2m in Q3 and $5.4m for the nine months.
Important facts for investors to verify
- Track technical validation, collaboration progress, and whether the stated early-access and commercialization timelines remain achievable.
- Monitor quarterly cash burn and investment balances against management’s stated funding runway, as spending is expected to rise.
- Assess the effects of stock-based compensation, outstanding options, and future equity-plan grants on dilution.
- Review the commencement and cash-flow impact of the $40.7m San Carlos lease, alongside existing lease and purchase commitments.
- Check for updates on supplier concentration, COVID-19-related interruptions, regulatory exposure, and any material intellectual-property or legal developments.