Nautilus Biotechnology, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Unaudited interim results. Nautilus is a development-stage proteomics company; it had no products available for commercial sale and reported no revenue.
Key financial metrics
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $6.4 million | $2.8 million | $11.2 million | $5.2 million |
| General and administrative expense | $4.3 million | $0.6 million | $7.9 million | $1.2 million |
| Total operating expenses | $10.7 million | $3.4 million | $19.1 million | $6.4 million |
| Net loss | $10.7 million | $3.4 million | $19.1 million | $6.3 million |
| Net loss per share, basic and diluted | $0.19 | $0.12 | $0.43 | $0.23 |
Cash and liquidity: At June 30, 2021, cash and cash equivalents were $288.4 million, short-term investments $84.8 million, and long-term investments $15.3 million. Cash, cash equivalents, and short-term investments totaled $373.1 million; total cash and investments including long-term investments were $388.4 million. The company reported $14.5 million of cash used in operating activities and $61.0 million used in investing activities during the first half. Financing provided $327.4 million, principally from the business combination and PIPE financing.
Balance sheet: Total assets were $393.3 million and total liabilities $3.2 million at June 30. The filing reports no debt balance; liabilities included accounts payable, accrued liabilities, and operating lease obligations. Stockholders’ equity was $390.0 million. Operating and gross margins are not meaningful because the company had no revenue.
Material changes versus prior comparable periods
- Q2 net loss increased to $10.7 million from $3.4 million; first-half net loss rose to $19.1 million from $6.3 million.
- First-half R&D expense increased 115%, primarily due to higher personnel and stock-based compensation costs, laboratory supplies and equipment, and facilities expense.
- First-half G&A expense increased 572%, reflecting higher personnel and stock-based compensation, professional services, facilities, and marketing costs. Total first-half stock-based compensation was $3.2 million, versus $0.1 million in 2020.
- On June 9, 2021, the business combination and PIPE financing closed. The company received $335.4 million of net proceeds; legacy convertible preferred stock converted into common stock. Common shares outstanding were 124.1 million at June 30, versus 33.1 million at December 31, 2020, reflecting the transaction and share issuance.
- Cash used in operations increased to $14.5 million from $5.9 million in the first half, consistent with higher operating losses. Net loss per share also increased, although weighted-average shares changed substantially following the transaction.
Outlook, commentary, and risks
- Management expects available cash, cash equivalents, and short-term investments to fund planned operating expenses for at least the next 12 months. The company expects significant losses and negative operating cash flows to continue and may need additional capital; actual cash needs could exceed estimates.
- The Nautilus Platform remains under development and requires further scientific and technical validation. The company expects its collaboration phase to precede an early-access phase no earlier than the second half of 2022, with broader commercialization anticipated at the end of 2023 or beginning of 2024. It does not expect material revenue before the second half of 2023.
- Key execution risks include platform performance and market acceptance, scaling manufacturing, securing complex reagents and components from suppliers (some single-source), establishing sales and distribution capabilities, and protecting intellectual property. The company also cites competition, dependence on research budgets, and the possibility of delays or additional financing needs.
- COVID-19 had caused laboratory and supply-chain disruptions, including extended chip lead times and reduced reagent availability; future effects on development schedules and funding remain uncertain.
- Lease commitments require attention: a 10-year San Carlos lease with $42.1 million of minimum payments had not commenced by June 30 and was excluded from reported lease obligations. A subsequent July 2021 Seattle lease adds $4.5 million of payments over seven years. The company also disclosed $1.4 million of open purchase commitments as of June 30.
- No material legal proceedings were reported. Management stated disclosure controls were effective at a reasonable-assurance level as of June 30, 2021.
Investor facts to verify
- Whether technical validation, collaboration activity, and platform development meet the stated commercialization timeline.
- Quarterly cash burn and investment spending against the stated minimum 12-month runway, including whether additional financing becomes necessary.
- Progress on manufacturing readiness, supplier diversification, and availability and cost of required reagents and components.
- Full lease obligations as the San Carlos and Seattle leases commence, and related facility and purchase commitments.
- Share-count changes, equity-plan dilution, and the effect of stock-based compensation on future expenses.