Quantum-Si Incorporated — FY2022 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2022; it is not a standalone fourth-quarter report. Quantum-Si is an early-stage life sciences technology company developing a semiconductor-based, single-molecule protein sequencing platform. It launched its Platinum instrument for research use only (RUO) in December 2022, began taking orders then, and reported commercial shipments beginning in January 2023. The company reported no product revenue through year-end.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | No product revenue reported | No product revenue reported |
| Research and development expense | $72.1 million | $46.6 million |
| Selling, general and administrative expense | $42.3 million | $50.3 million |
| Total operating expenses | $123.8 million | $96.9 million |
| Operating loss | $123.8 million | $96.9 million |
| Net loss | $132.4 million | $95.0 million |
| Net loss per share, basic and diluted | $0.95 | $1.19 |
| Net cash used in operating activities | $90.6 million | $66.8 million |
Balance sheet and funding. At December 31, 2022, cash and cash equivalents were $84.3 million and marketable securities were $267.0 million, totaling $351.3 million. Current assets were $358.2 million; current liabilities were $15.7 million. Total assets were $391.5 million and total liabilities were $32.8 million. The company reported no outstanding borrowing debt; its PPP loan was repaid in 2021. Lease liabilities were $17.4 million, and undiscounted future lease payments were $35.1 million. Management said available cash and investments were expected to fund operations for at least 12 months.
Margins and cash flow. Product sales had not begun by year-end, so meaningful product margins were not reported. Operating cash use rose by $23.7 million year over year. Investing activities provided $137.2 million, primarily from sales of marketable securities; financing activities provided $1.9 million, mainly from stock-option exercises, net of acquisition-related payments.
Material changes and unusual items
- Net loss increased 39.4% year over year. R&D expense rose 54.7%, primarily from product development and higher personnel costs; SG&A fell 16.0%, partly because 2021 included substantial business-combination-related and stock-based compensation costs.
- A $9.5 million goodwill impairment fully wrote off goodwill from the 2021 Majelac acquisition.
- Other expense, net was $20.1 million, mainly reflecting realized and unrealized losses on marketable securities, versus $5.0 million in 2021. The company also recorded $5.3 million of dividend income and a $6.2 million non-cash gain from the change in fair value of warrant liabilities.
- Operating costs and cash use reflect continued product development and commercialization investment. Adjusted EBITDA, a non-GAAP measure, was a loss of $100.6 million, compared with a loss of $64.0 million in 2021.
Outlook, management commentary, and risks
- Management planned to launch the Carbon sample-preparation instrument in 2023 and expected to build the Platinum installed base and generate recurring consumables revenue. No quantitative revenue or earnings guidance was provided.
- In January 2023, the company announced a restructuring affecting approximately 12% of its workforce, with estimated costs of up to $1.0 million, expected substantially to be completed in Q1 2023.
- Jeffrey Hawkins became CEO in October 2022 following the departure of the prior CEO and a period with the founder serving as interim CEO. Management identified leadership transition and restructuring execution as risks.
- Commercial success depends on product performance, scientific and customer adoption, manufacturing scale-up, and development of the cloud analytics service. The company relies on a limited number of contract manufacturers and some single-source suppliers; it has limited commercial and manufacturing history.
- The products are intended for RUO, not clinical diagnosis. Clinical or diagnostic marketing would require applicable regulatory authorization; the filing also notes risk that regulators could challenge RUO status or future regulation of laboratory-developed tests could affect customers and demand.
- Management said COVID-19, inflation, interest-rate increases, supply-chain disruption, and the Russia-Ukraine conflict had not materially affected operations to date, but could raise costs or disrupt supply and research spending.
- The company disclosed that Silicon Valley Bank was placed into FDIC receivership on March 10, 2023 and warned that banking-system stress could affect access to cash or investments. Substantially all marketable securities were held at one financial institution, and some operating balances exceeded insured limits.
- A lawsuit concerning the landlord’s reimbursement and approval of improvements at the New Haven facility remained unresolved; the company said it could not estimate the likely outcome or impact. Separately, the company reported no material legal proceedings as of year-end.
- Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2022, and said previously identified material weaknesses had been remediated. The auditor issued an unmodified opinion on the financial statements but did not attest to internal-control effectiveness.
Important facts for investors to verify
- Whether Platinum shipments, customer adoption, and recurring consumables sales develop as planned, and how performance compares with the company’s technical claims.
- Cash burn and the assumptions behind management’s estimate that cash and investments will fund operations for at least 12 months, including liquidity concentration and access to funds after the SVB event.
- The actual financial and operational effects of the workforce reduction, and progress on Carbon’s planned launch and commercial infrastructure.
- The outcome and financial implications of the New Haven lease-improvement dispute, including recovery of the stated lease incentives.
- How the company addresses single-source supply, manufacturing scale-up, RUO regulatory compliance, and any future clinical-use authorization requirements.
- Potential dilution and governance implications: the filing reported 19.4 million options outstanding and 4.0 million warrants outstanding at year-end; the founder and affiliates held 80.2% of voting power as of March 1, 2023 through the dual-class structure.