Quantum-Si Incorporated — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the supplied text does not provide standalone fourth-quarter financial results. Amounts below are in U.S. dollars.
Business context
Quantum-Si is an early-stage life sciences technology company developing single-molecule protein sequencing. Its Platinum instrument, analysis software and consumables are currently marketed for research use only (RUO). The company began limited commercial shipments in January 2023 after opening orders in December 2022.
In October 2023, Quantum-Si paused development of the Carbon sample-preparation instrument, concluding it was not the best use of R&D resources. It is concentrating on Platinum, related reagents and semiconductor chips, and analysis software.
Financial performance and position
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $1.082 million | None |
| Cost of revenue / gross profit | $0.594 million / $0.488 million | None / None |
| Gross margin | 45.1% | Not applicable |
| Research and development expense | $67.025 million | $72.062 million |
| Selling, general and administrative expense | $44.634 million | $42.296 million |
| Operating loss | $111.171 million | $123.841 million |
| Net loss | $95.960 million | $132.442 million |
| Net loss per share, diluted | $0.68 | $0.95 |
Revenue comprised $1.031 million of product sales and $0.051 million of service revenue. Revenue was generated for the first time in 2023. Net loss narrowed 27.5% year over year, while operating loss narrowed 10.2%. The net-loss comparison also reflects a $5.6 million gain on marketable securities in 2023 versus a $20.6 million loss in 2022, and the absence of 2022’s $9.5 million goodwill impairment. Interest and dividend income and investment valuation changes materially affected reported results.
R&D expense declined 7.0%, partly due to lower fabrication, outsourced-service and payroll costs; SG&A rose 5.5%, including higher consulting and commercial staffing costs. A $3.4 million inventory charge for parts without alternative future use was recorded in R&D after the manufacturing transition required minimum purchases from the former supplier.
Cash and liquidity: Cash and cash equivalents were $133.9 million and marketable securities were $123.9 million at year-end, totaling $257.7 million. Current assets were $266.3 million and current liabilities $11.6 million. Management said available cash and investments should fund operations for at least the next 12 months, while noting that access to funds could be affected by market or banking conditions.
Operating cash use was $94.0 million, compared with $90.6 million in 2022. Capital expenditures were $4.5 million. Investing activities provided $143.4 million, primarily reflecting $272.5 million of marketable-security sales, partly offset by purchases of $123.8 million and property and equipment spending. The resulting $49.5 million increase in cash should therefore not be interpreted as cash generated by operations.
The balance sheet reports no borrowings. It includes $15.3 million of operating lease liabilities and $1.3 million of warrant liabilities. Undiscounted future lease payments were $31.1 million. Stockholders’ equity was $271.6 million; accumulated deficit was $495.6 million.
Material changes and notable items
- The company moved from pre-commercial activity to limited shipments and recorded its first revenue, but revenue remained small relative to operating expenses.
- Two 2023 restructurings reduced the workforce by approximately 12% and 16%, respectively. The company recorded $4.5 million of restructuring charges and expected about $0.1 million of additional charges, with completion anticipated in the first quarter of 2024.
- Quantum-Si began transitioning Platinum instrument manufacturing to a new provider in November 2023, targeting completion in 2024. It also is transitioning wafer photonics processing; a sustainable process was targeted for mid-2024 and optimization for the first half of 2025.
- The company filed a shelf registration and established a $75 million at-the-market equity program in 2023. No shares had been sold under the program as of the filing.
- The financial statements received an unqualified audit opinion. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2023; the auditor was not engaged to attest to internal-control effectiveness.
Outlook, risks and contingencies
Management anticipated a full commercial launch in early 2024 and planned to build the installed base, expand sales and support, and develop product enhancements and broader applications. The filing gives no quantified revenue, margin or cash-burn guidance. The company expects negative operating cash flows for the foreseeable future and says additional financing may be needed; any equity financing could dilute stockholders.
Key execution risks include uncertain adoption and performance across customer workflows, limited commercial and manufacturing experience, competition, and dependence on academic and research-institution spending. Supply-chain risks are elevated by single- or limited-source components and the ongoing manufacturer and chip-process transitions. Products remain RUO; clinical or diagnostic use would require applicable regulatory authorization, and changes to oversight of laboratory-developed tests could affect customers and demand.
A former contract manufacturer sued over the termination of its relationship, alleging breach of contract and seeking economic damages and attorney costs. The case was withdrawn in Texas and refiled in Minnesota in January 2024. Quantum-Si says it has a meritorious defense, but the potential exposure is not estimable at this stage.
The company also disclosed litigation with its New Haven landlord over reimbursement of up to $9.1 million in leasehold-improvement costs. It believes it is contractually entitled to the incentives but cannot determine the likely outcome or impact on carrying values. Other notable risks include cybersecurity and privacy exposure, intellectual-property disputes, and governance concentration: founder Jonathan Rothberg and affiliates held 79.9% of voting power as of February 20, 2024 through the dual-class structure.
Most important facts for investors to verify
- Whether Platinum is gaining customers and repeat consumables and service revenue, and whether instrument performance, accuracy and customer workflows support adoption.
- Whether commercial gross margins and revenue growth can improve enough to narrow the substantial operating cash burn; assess the stated 12-month liquidity outlook against actual spending and financing needs.
- Whether the instrument-manufacturing and semiconductor-process transitions meet their disclosed timelines and achieve reliable supply, yield and cost targets.
- Developments and potential financial effects of the former-manufacturer dispute and the landlord reimbursement litigation.
- Potential dilution from the $75 million ATM facility, equity awards and warrants, alongside the implications of Rothberg’s voting control.