Nautilus Biotechnology, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Unaudited consolidated financial statements. 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 | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $9.7 million | $4.8 million; up 100% |
| General and administrative expense | $6.4 million | $3.6 million; up 78% |
| Total operating expenses | $16.0 million | $8.4 million; up 90% |
| Net loss | $15.8 million | $8.4 million; loss increased 87% |
| Net loss per share, basic and diluted | $0.13 | $0.25 loss per share |
| Net cash used in operating activities | $12.3 million | $6.3 million used |
Other income was $0.3 million, primarily reflecting income related to investments. Comprehensive loss was $16.1 million, including $0.4 million of unrealized losses on available-for-sale securities. With no revenue, a gross margin is not applicable. The lower loss per share versus 2021 reflects a substantially higher weighted-average share count after the 2021 business combination; net loss itself increased.
At March 31, 2022, cash and cash equivalents were $188.6 million, short-term investments $135.5 million, and long-term investments $24.9 million. Cash, cash equivalents and short-term investments totaled $324.1 million. Total assets were $384.7 million and stockholders’ equity was $349.7 million. Total liabilities were $35.0 million, primarily operating lease liabilities; the filing reports no financial borrowings. Operating lease liabilities totaled $30.1 million, including current and non-current amounts.
Cash and cash equivalents plus restricted cash increased $3.0 million during the quarter. Investing activities provided $15.2 million, principally from investment maturities, partly offset by purchases of investments and equipment. Financing activities provided $0.2 million from stock-option exercises. The company reported an accumulated deficit of $96.4 million.
Material changes and management commentary
- Research and development costs rose by $4.8 million, mainly due to higher personnel and stock-based compensation, laboratory supplies and equipment, development services, and facilities costs.
- General and administrative costs increased by $2.8 million, mainly due to higher personnel and stock-based compensation, insurance, and facilities costs.
- Operating cash use nearly doubled year over year, consistent with increased development spending and the company’s expanding operations.
- Management believes available cash, cash equivalents and short-term investments will fund planned operating expenses and capital expenditures for at least the next 12 months. The company nevertheless expects substantial losses and negative operating cash flows for the foreseeable future and may need additional financing.
Outlook, risks and contingencies
The Nautilus platform remains under development and requires further research, testing and scientific and technical validation. The company describes a three-phase commercialization plan: collaborations to validate performance, an early-access limited release, and broader commercialization. Management expected broader commercialization by the end of 2023 and stated that material revenue was not expected before the second half of 2023; these are forward-looking expectations, not assured outcomes.
- Key risks include platform development or validation delays, market adoption and competition, and the need to build manufacturing, sales and distribution capabilities.
- The company relies on third parties and single-source suppliers for certain components, reagents and antibodies. Supply interruptions, including COVID-19-related disruptions, could delay development or commercialization.
- COVID-19 had previously disrupted laboratory work and supply availability; its future effect on operations and timelines remained uncertain. The filing also cites potential supply-chain effects from global political tensions, including the situation in Ukraine.
- Future funding needs may be affected by development pace, commercialization spending and other operating costs. Additional equity could dilute stockholders; debt or commercial arrangements could impose restrictions or require rights to be shared.
- Open purchase commitments were $2.6 million, expected to be received over the next 12 months. Operating lease commitments totaled $44.4 million in future minimum payments before $14.3 million of imputed interest.
- Management reported no pending legal proceeding expected to have a material adverse effect. The company stated that disclosure controls were effective at the reasonable-assurance level as of March 31, 2022, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether technical validation, collaboration milestones and the stated commercialization timeline are progressing as planned.
- Quarterly cash burn and whether the $324.1 million of cash, cash equivalents and short-term investments remains sufficient relative to operating plans and financing needs.
- Spending growth, especially research and development and general and administrative expenses, and the extent to which stock-based compensation contributes to reported costs.
- Supplier concentration, manufacturing readiness, and the potential effects of supply disruptions on development and launch timing.
- Potential dilution from equity compensation and future financing; outstanding stock options were 10.0 million at quarter-end.