Nautilus Biotechnology, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. The unaudited statements are prepared under U.S. GAAP. Nautilus is a development-stage proteomics company; it has no products available for commercial sale and has generated no revenue.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $12.0 million | $9.6 million | $34.8 million | $28.1 million |
| General and administrative expense | $7.1 million | $6.2 million | $21.4 million | $19.2 million |
| Total operating expenses | $19.1 million | $15.8 million | $56.2 million | $47.3 million |
| Interest income | $3.2 million | $1.9 million | $9.5 million | $2.9 million |
| Net loss | $15.9 million | $14.1 million | $46.7 million | $44.5 million |
| Net loss per share | $0.13 | $0.11 | $0.37 | $0.36 |
Margins: Not meaningful because the company reports no revenue. Cash flow: Operating cash use was $37.8 million for the first nine months of 2023, versus $35.4 million in 2022. Investing activities used $2.7 million, while financing activities provided $0.1 million. Cash, cash equivalents and restricted cash fell by $40.4 million to $75.1 million.
Liquidity and obligations: At September 30, 2023, cash and cash equivalents were $74.1 million, short-term investments $109.2 million, and long-term investments $92.4 million. Cash, cash equivalents and investments totaled $275.7 million; cash, cash equivalents and short-term investments totaled $183.3 million. Total assets were $318.3 million and stockholders’ equity was $277.3 million. The filing reports no borrowings; operating lease liabilities were $35.6 million, including $3.5 million current. Management believes available cash, cash equivalents and short-term investments will fund planned operations for at least 12 months from issuance of the statements.
Material changes versus the prior period
- Q3 operating expenses increased 21% year over year; nine-month expenses increased 19%. R&D expense rose 25% in Q3 and 24% for the nine-month period, chiefly from higher personnel, facilities, and laboratory costs, partly offset by lower external development costs.
- Net loss increased 13% in Q3 and 5% for the nine-month period. Higher interest income, primarily reflecting higher interest rates, partly offset higher operating costs.
- Nine-month operating cash use increased by $2.4 million year over year. Cash and cash equivalents declined from $114.5 million at year-end 2022, while the investment portfolio shifted across short- and long-term classifications.
- Operating lease right-of-use assets increased to $33.7 million from $28.9 million at year-end 2022. The company reported $48.2 million of future minimum lease payments before $12.5 million of imputed interest.
Outlook, commentary and risks
- Management expects significant losses and cash outflows to continue and anticipates increasing costs for development, commercialization preparation, staffing, manufacturing setup, and public-company operations. No profitability or revenue guidance is provided.
- The company is in the collaboration phase of its planned three-phase launch. It anticipates early-access engagements and associated revenue in 2024, followed by a broader commercialization and launch in 2024; it does not expect material revenue from current collaboration activities.
- Based on customer feedback, Nautilus is refining initial product specifications, including sample input and proteome coverage, to balance time to market with customer requirements. Management expects subsequent consumable releases to enable the platform to meet or exceed previously announced specifications.
- Key risks include successful technical validation and commercialization, market adoption, manufacturing scale-up, reliance on single-source suppliers and third parties, competition, intellectual-property challenges, and the possibility that additional financing may be needed on unacceptable terms or unavailable. The company says it has experienced some development-partner delivery difficulties and past supply disruptions.
- Open purchase commitments were $1.4 million, with $1.2 million expected to be received within 12 months. Management reported no pending legal matter expected to have a material adverse effect. A hypothetical 100-basis-point interest-rate change would alter the fair value of marketable debt securities by about $1.7 million if sold before maturity.
- Disclosure controls and procedures were assessed as effective at the reasonable-assurance level; no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Progress against the 2024 early-access and broader-launch expectations, including whether refining product specifications affects timelines or performance.
- Technical validation, customer feedback, collaboration outcomes, and evidence of repeatable platform performance.
- Cash burn, investment liquidity and duration, and whether management’s at-least-12-month funding estimate remains supportable as spending and commercialization costs evolve.
- Supplier and manufacturing readiness, particularly for specialized components, reagents, and antibodies.
- Potential dilution from equity financing and stock-based awards; 14.6 million options were outstanding at September 30, 2023, in addition to other shares reserved for future issuance.