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seer-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 001-39747

SEER, INC.

(Exact name of Registrant as specified in its charter)


Delaware						82-1153150
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

3800 Bridge Parkway, Suite 102

Redwood City, California 94065

650-453-0000

(Address, including zip code and telephone number, including area code, of Registrant’s principal executive offices)

Securities registered pursuant to section 12(b) of the Act:

Copies to:

Title of each class

Trading Symbol(s)

Name of Exchange on which registered

Common Stock, par value $0.00001

SEER

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Smaller reporting company

☐

Non-accelerated filer

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2022, the registrant had 58,396,964 shares of Class A common stock, $0.00001 par value per share, and 4,044,969 shares of Class B common stock, $0.00001 par value per share, outstanding.

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
Signatures

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, commercial activities and costs, research and development costs, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•estimates of our addressable market, market growth, key performance indicators, capital requirements and our needs for additional financing;

•our expectations regarding our financial performance, including among others, revenue, cost of revenue, gross profit, operating expenses, loss from operations and net losses;

•our ability to successfully implement our three phase commercialization plan, including our ability to attract customers during the broad release phase;

•the implementation of our business model, strategic plans and expected pricing for the Proteograph™ Product Suite;

•our expectations regarding the rate and degree of market acceptance of the Proteograph Product Suite;

•the impact of the Proteograph Product Suite on the field of proteomics and the size and growth of the addressable proteomics market;

•competitive companies and technologies and our industry;

•our ability to manage and grow our business;

•our ability to develop and commercialize new products;

•our ability to establish and maintain intellectual property protection for our products or avoid or defend claims of infringement;

•the performance of third-party manufacturers and suppliers;

•the potential effects of government regulation;

•our ability to hire and retain key personnel and to manage our future growth effectively;

•the volatility of the trading price of our Class A common stock;

•the benefits of the PrognomIQ, Inc. transaction;

•the impact of local, regional, and national and international economic conditions and events;

•the impact of COVID-19 on our business; and

•our expectations about market trends.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements contained herein to reflect events or circumstances after the date of this Quarterly Report, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

SEER, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)


	March 31,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	225,334	$	232,813
Short-term investments	219,892		167,261
Accounts receivable, net	2,793		2,495
Related party receivables	1,126		1,283
Other receivables	540		366
Inventory	3,550		4,145
Prepaid expenses and other current assets	4,221		3,336
Total current assets	457,456		411,699
Long-term investments	26,550		93,186
Operating lease right-of-use assets	28,411		20,142
Property and equipment, net	13,654		13,087
Restricted cash	524		524
Other assets	490		501
Total assets	$	527,085	$	539,139
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,291	$	3,789
Accrued expenses	6,377		8,394
Deferred revenue	394		376
Operating lease liabilities, current	1,090		864
Total current liabilities	11,152		13,423
Operating lease liabilities, net of current portion	29,134		22,459
Other noncurrent liabilities	341		341
Total liabilities	40,627		36,223
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.00001 par value; 5,000,000 shares authorized as of March 31, 2022 and December 31, 2021; zero shares issued and outstanding as of March 31, 2022 and December 31, 2021	—		—
Class A common stock, $0.00001 par value; 94,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 58,237,703 and 57,493,005 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	1		1
Class B common stock, $0.00001 par value; 6,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 4,055,190 and 4,522,478 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	638,860		629,981
Accumulated other comprehensive loss	(2,227)		(536)
Accumulated deficit	(150,176)		(126,530)
Total stockholders’ equity	486,458		502,916
Total liabilities and stockholders’ equity	$	527,085	$	539,139

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SEER, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended March 31,
	2022		2021

Revenue:

Product	$	2,149	$	—
Service	79		—
Related party	1,070		—
Grant and other	14		62
Total revenue	3,312		62
Cost of revenue:
Product	1,660		—
Service	14		—
Related party	394		—
Total cost of revenue	2,068		—
Gross profit	1,244		62
Operating expenses:
Research and development	10,732		6,227
Selling, general and administrative	14,298		10,333
Total operating expenses	25,030		16,560
Loss from operations	(23,786)		(16,498)
Other income (expense):
Interest income	144		69

Other expense	(4)		—
Total other income	140		69
Net loss	$	(23,646)	$	(16,429)
Other comprehensive loss:
Unrealized loss on available-for-sale securities	(1,691)		(26)
Comprehensive loss	$	(25,337)	$	(16,455)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.38)	$	(0.27)
Weighted-average common shares outstanding, basic and diluted	62,003,504		59,887,842

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SEER, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)


	Class A and Class B Common Stock			Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance at December 31, 2021	62,015,483	$	1	$	629,981	$	(126,530)	$	(536)	$	502,916
Issuance of Class A common stock from exercise of options and release of restricted stock units	283,251	—		773		—		—		773
Repurchase of Class A common stock	(5,841)	—		—		—		—		—
Vesting of early exercised stock options and restricted common stock	—	—		44		—		—		44
Stock-based compensation	—	—		8,062		—		—		8,062
Other comprehensive loss	—	—		—		—		(1,691)		(1,691)
Net loss	—	—		—		(23,646)		—		(23,646)
Balance at March 31, 2022	62,292,893	$	1	$	638,860	$	(150,176)	$	(2,227)	$	486,458

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SEER, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)


	Class A and Class B Common Stock			Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at December 31, 2020	59,261,051	$	1	$	486,915	$	(55,361)	$	54	$	431,609
Issuance of Class A common stock from exercise of options	399,174	—		171		—		—		171
Repurchase of Class A common stock	(876)	—		—		—		—		—
Vesting of early exercised stock options and restricted common stock	—	—		44		—		—		44
Issuance of Class A common stock upon follow-on offering, net of issuance costs of $7,591	1,650,000	—		102,959		—		—		102,959
Return of profit	—	—		11,403		—		—		11,403
Stock-based compensation	—	—		6,039		—		—		6,039
Other comprehensive loss	—	—		—		—		(26)		(26)
Net loss	—	—		—		(16,429)		—		(16,429)
Balance at March 31, 2021	61,309,349	$	1	$	607,531	$	(71,790)	$	28	$	535,770

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SEER, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)



	Three Months Ended March 31,
	2022		2021

OPERATING ACTIVITIES
Net loss	$	(23,646)	$	(16,429)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	8,062		6,039
Depreciation and amortization	875		482
Net amortization of premium on available-for-sale securities	314		152
Non-cash operating lease expense	551		78
Changes in operating assets and liabilities:
Accounts receivable, net	(298)		—
Related party receivables	157		(2)
Other receivables	(174)		(249)
Prepaid expenses and other current assets	(2,850)		(2,589)
Inventory	300		(990)
Other assets	11		30
Accounts payable	(479)		(234)
Deferred revenue	18		6
Accrued expenses	(2,038)		(990)
Operating lease liabilities	46		(93)
Other noncurrent liabilities	—		(83)
Net cash used in operating activities	(19,151)		(14,872)
INVESTING ACTIVITIES
Purchases of property and equipment	(1,080)		(838)
Purchase of available-for-sale securities	—		(30,279)
Proceeds from maturities of available-for-sale securities	12,000		43,000
Net cash provided by investing activities	10,920		11,883
FINANCING ACTIVITIES
Proceeds from issuance of common stock upon follow-on public offering, net of issuance costs	—		103,595
Proceeds from return of profit	—		11,403
Repurchase of Class A common stock	(21)		(2)
Proceeds from exercise of Class A common stock options including early exercised options	773		171
Net cash provided by financing activities	752		115,167
Net increase (decrease) in cash, cash equivalents and restricted cash	(7,479)		112,178
Cash, cash equivalents and restricted cash, beginning of period	233,337		333,928
Cash, cash equivalents and restricted cash, end of period	$	225,858	$	446,106

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Property and equipment purchases included in accounts payable	$	204	$	9
Property and equipment purchases included in accrued expenses	$	183	$	49
Lease liability obtained in exchange for right-of-use assets	$	6,855	$	7,823
Offering costs in accounts payable	$	—	$	158
Offering costs in accrued expenses	$	—	$	478

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

1.ORGANIZATION AND DESCRIPTION OF THE BUSINESS

Seer, Inc. (the Company) was incorporated in Delaware on March 16, 2017, and is headquartered in Redwood City, California. In December 2020, the Company formed the wholly-owned subsidiary, Seer Securities Corporation, located in Massachusetts. The Company is a life sciences company focused on capturing deep molecular insights from the proteome to enable novel insights and breakthroughs in the understanding of biology and disease. Since inception, the Company has devoted its efforts principally to research, development and commercialization of its technology and products, recruiting management and technical staff, acquiring operating assets, and raising capital.

The Company is subject to a number of risks, similar to other early-stage life science companies, including, but not limited to, development and commercialization of its products, market acceptance of its products, development by its competitors of new technological innovations, protection of its intellectual property, and raising additional capital.

Public Offering

On February 1, 2021, the Company completed an underwritten public offering of 1,650,000 shares of its Class A common stock at a public offering price of $67.00 per share. The Company received net proceeds of $103.0 million after deducting offering costs, underwriting discounts, and commissions of $7.6 million.

Liquidity

As of March 31, 2022, the Company has incurred significant losses and has had negative cash flows from operations. As of March 31, 2022, the Company had cash, cash equivalents and investments of $471.8 million and an accumulated deficit of $150.2 million. Management expects to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term while the Company makes investments to support its anticipated growth. The Company believes that its cash and cash equivalents balance as of March 31, 2022 provides sufficient capital resources to continue its operations for at least 12 months from the issuance date of the accompanying unaudited condensed consolidated financial statements.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company has issued shares of Class A common stock, herein referred to as “Class A common stock” or “Class A,” and Class B common stock, herein referred to as “Class B common stock” or “Class B,” and collectively as “common stock.” The unaudited condensed consolidated financial statements include the accounts of Seer, Inc. and its wholly-owned subsidiary. All intercompany transactions and balances have been eliminated.

The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements of the Company at that date. Certain information and footnote disclosures typically included in the Company’s audited consolidated financial statements have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated for any future annual or interim period.

The accompanying unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2021 included in our Annual Report on Form 10-K filed with the SEC on March 1, 2022.

The Company has also made certain presentation changes to retroactively adjust for the effects of Accounting Standards Codification No. 842, Leases (“ASC 842”), the adoption of which was disclosed in our Annual Report on

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Form 10-K filed on March 1, 2022, with an adoption effective date of January 1, 2021, using the modified retrospective method. The following table shows the affected line items within the unaudited condensed consolidated statements of cash flows (in thousands):


	Three Months Ended March 31, 2021
	As Previously Reported		Adjustments		As Adjusted

Cash flows from operating activities:
Non-cash operating lease expense	$	—	$	78	$	78
Deferred rent	(15)		15		—
Operating lease liabilities	—		(93)		(93)
Net cash used in operating activities	$	(14,872)	$	—	$	(14,872)

Supplemental disclosure of non-cash activities:
Lease liability obtained in exchange for right-of-use assets	$	—	$	7,823	$	7,823

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including, but not limited to, those related to the determination of stand-alone selling price for revenue recognition, the fair value of common stock, stock-based compensation, accrued research and development expenses, allowance for credit losses, inventory valuation, useful lives and valuation of property and equipment, income tax uncertainties, and tax valuation allowances.

Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates.

Impact of the COVID-19 Pandemic

As a result of the COVID-19 pandemic (COVID-19), the Company’s operations experienced disruptions and restrictions on employees’ ability to work and on the hiring of additional personnel, particularly as it relates to the Company’s phased commercial release. The Company’s personnel has experienced delays in accessing customers in certain countries with strict COVID-19 policies to provide installation and training services. Continued disruptions from COVID-19 could harm the Company’s operations and the Company cannot anticipate all the ways in which it could be adversely impacted by health epidemics such as COVID-19. The Company continues to monitor and assess the effects of the COVID-19 pandemic on its business, financial condition, results of operations and cash flows.

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. As of March 31, 2022 and December 31, 2021, all amounts recorded as cash and cash equivalents consist of money market funds and are stated at fair value.

Restricted cash as of March 31, 2022 and December 31, 2021 represents cash held by a financial institution as security for a letter of credit issued to the lessor for one of the Company’s operating leases and is classified as noncurrent.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the unaudited condensed consolidated balance sheets that sum to the total of the same amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands):


	March 31,		December 31,
	2022		2021

Cash and cash equivalents	$	225,334	$	232,813
Restricted cash	524		524
Total cash and cash equivalents and restricted cash	$	225,858	$	233,337

Accounts Receivable, Net

Accounts receivable consist of amounts due from customers for the sales of products and services, net of any allowance for credit losses. The Company’s expected loss allowance methodology for receivables is developed using its historical collection experience, current and future economic market conditions and a review of the current aging status and financial condition of its customers. Specific allowance amounts are established to record the appropriate allowance for customers that have an identified risk of default. General allowance amounts are established based upon an assessment of expected credit losses for the Company’s receivables by aging category. Balances are written off when they are ultimately determined to be uncollectible. There was no allowance for credit losses related to accounts receivable as of March 31, 2022 and December 31, 2021.

As of March 31, 2022, there were two customers that represented 29% and 18% of the total accounts receivable balance, including related party receivables. As of December 31, 2021, there were three customers that represented 34%, 23%, and 19% of the total accounts receivable balance, including related party receivables.

Revenue Recognition

The Company generates revenue from sales of products and services. The Company’s product, the Proteograph Product Suite, consists of an instrument with embedded software essential to the instrument's functionality, and consumables as well as platform evaluation agreements. The Company began recognizing revenue from shipments of its Proteograph Product Suite during the second quarter of 2021. The service revenue primarily consists of revenue received from the generation and analysis of proteomic data on behalf of the customer and revenue is recognized upon delivery of the reports.

The Company recognizes revenue when control of the products and services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to receive from its customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is distinct within the context of the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to direct the use and obtain substantially all the economic benefits from the good or service.

In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue is recorded net of discounts and sales taxes collected on behalf of governmental authorities. Customers are invoiced generally upon shipment, or upon order for services, and payment is typically due within 30 or 60 days. Cash received from customers in advance of product shipment or providing services is recorded as a contract liability. The Company’s contracts with its customers generally do not include rights of return or a significant financing component.

The Company elected the practical expedient to account for shipping and handling activities that occur after the customer has obtained control as a fulfillment activity and not a separate performance obligation. The Company

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

expenses the incremental costs of obtaining a contract as and when incurred if the expected amortization period is one year or less or the amount is immaterial. The Company excludes from the transaction price all taxes assessed by a governmental authority on revenue-producing transactions that are collected by the Company from a customer.

The Company regularly enters into contracts that include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. The transaction price is allocated to each performance obligation in proportion to its standalone selling price. The Company determines the standalone selling price using average selling prices with consideration of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, the Company relies upon prices set by management, adjusted for applicable discounts.

Grant and Other Revenue

Grant revenue represents funding under cost reimbursement programs from federal foundation sources for qualified research and development activities performed by the Company and are not based on estimates that are subject to change. Grants received are assessed to determine if the agreement should be accounted for as an exchange transaction or a contribution. An agreement is accounted for as a contribution if the resource provider does not receive commensurate value in return for the assets transferred. Such amounts are recorded as revenue as grant-funded activities are performed up to the amount of expenses incurred. Any advance funding payments are recorded as deferred revenue until the activities are performed.

The Company recognizes revenue for research and development services contracts when control is transferred, which is upon completion of the services and when results of the services have been transferred to the customer. Upfront payments and fees received are recorded as deferred revenue until the Company performs its obligations under its arrangements. Amounts payable to the Company are recorded as other receivables when its right to consideration is unconditional.

Income Taxes

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures in the period incurred and requires amortization over five years or fifteen years pursuant to Internal Revenue Code Section 174. Although Congress is considering legislation that would defer the amortization requirement to later years, there is no assurance that the requirement to amortize will be repealed or otherwise modified. The Company is currently assessing the impact of this provision but does not expect it to have a material impact on its financial position, results of operations or cash flows in 2022.

Recently Adopted Accounting Pronouncements

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (ASC Topic 832): Disclosures by Business Entities about Government Assistance. This standard requires annual disclosures that increase the transparency of transactions involving government grants, including the type of transactions, the accounting for those transactions and the effect of those transactions on an entity’s financial statements. The Company adopted this standard as of January 1, 2022, which did not have a material impact on its financial statements as of the adoption date.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

3.FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables set forth the fair value of the Company’s financial assets that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands).


		March 31, 2022
		Level 1		Level 2		Level 3		Total
Assets:	Classification:
Money market funds	Cash and cash equivalents	$	225,334	$	—	$	—	$	225,334
U.S. Treasury securities	Investments	—		246,442		—		246,442
Total assets measured at fair value		$	225,334	$	246,442	$	—	$	471,776


		December 31, 2021
		Level 1		Level 2		Level 3		Total
Assets:	Classification:
Money market funds	Cash and cash equivalents	$	232,813	$	—	$	—	$	232,813
U.S. Treasury securities	Investments	—		260,447		—		260,447
Total assets measured at fair value		$	232,813	$	260,447	$	—	$	493,260

There were no financial liabilities measured at fair value. The Company classifies money market funds within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company classifies its investments in U.S. Treasury securities (Treasury bills, Treasury notes, and Treasury bonds) as Level 2 instruments and obtains fair value from an independent pricing service, which may use quoted market prices for identical or comparable instruments or model-driven valuations using observable market data or inputs corroborated by observable market data.

The carrying amount of the Company’s accounts receivable, other receivables, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate fair value due to their short maturities.

The following is a summary of the Company’s cash equivalents and investments and the gross unrealized holding gains and losses (in thousands):


	March 31, 2022
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Assets:
Money market funds	$	225,334	$	—	$	—	$	225,334
U.S. Treasury securities	248,669		—		(2,227)		246,442
Total	$	474,003	$	—	$	(2,227)	$	471,776


	December 31, 2021
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Assets:
Money market funds	$	232,813	$	—	$	—	$	232,813
U.S. Treasury securities	260,983		—		(536)		260,447
Total	$	493,796	$	—	$	(536)	$	493,260

As of March 31, 2022 and December 31, 2021, unrealized losses on available-for-sale investments are not attributable to credit risk and are considered to be temporary. No investments have been in a continuous unrealized loss position for 12 months or longer. The Company believes it is more likely than not that investments in an

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value. As of March 31, 2022, $26.6 million of available-for-sale investments had remaining maturities between one and two years. The remainder of the available-for-sale investments have a remaining maturity of one year or less. As of March 31, 2022 and December 31, 2021, the Company recorded $0.5 million and $0.3 million of accrued interest, respectively, related to its available-for-sale investments as a component of other receivables on the condensed consolidated balance sheets.

4.OTHER FINANCIAL STATEMENT INFORMATION

Inventory

Inventory consists of the following (in thousands):


	March 31,		December 31,
	2022		2021
Raw materials	$	1,866	$	1,836
Work-in-progress	360		221
Finished goods	1,324		2,088
Total inventory	$	3,550	$	4,145

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):


	March 31,		December 31,
	2022		2021
Laboratory equipment	$	14,788	$	13,823
Computer equipment and software	554		461
Furniture and fixtures	572		478
Leasehold improvements	3,122		2,449
Construction-in-progress	259		784
Property and equipment	19,295		17,995
Less: accumulated depreciation and amortization	(5,641)		(4,908)
Total property and equipment, net	$	13,654	$	13,087

Depreciation and amortization expense related to property and equipment was $0.9 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively.

Accrued Expenses

Accrued expenses consist of the following (in thousands):


	March 31,		December 31,
	2022		2021
Accrued compensation	$	3,045	$	4,730
Accrued professional services	398		388
Other	2,934		3,276
Total accrued expenses	$	6,377	$	8,394

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

5.REVENUE AND DEFERRED REVENUE

Product revenue consists of an instrument with embedded software essential to the instrument’s functionality, consumables and platform evaluation agreements. Service revenue primarily consists of revenue received from the generation and analysis of proteomic data on behalf of the customer. Related party revenue is comprised of both the sale of products and services performed for PrognomIQ, as further discussed in Note 9. Grant revenues consist of services performed specifically for the reimbursement of research-related expenses.

Product Revenue

For the three months ended March 31, 2022 and 2021, the Company recognized $2.1 million and $0 of product revenue to non-related customers. As of March 31, 2022 and December 31, 2021, the Company recorded $0.4 million and $0.4 million of deferred revenue related to product sales.

Service Revenue

For the three months ended March 31, 2022 and 2021, the Company recognized $0.1 million and $0 of service revenue to non-related customers. As of March 31, 2022, there was $0 of deferred service revenue.

Deferred revenue activity for the period ended March 31, 2022 and December 31, 2021 are as follows (in thousands):


	March 31,		December 31,
	2022		2021
Balance, beginning of period	$	376	$	250
Additions	167		376
Revenue recognized	(149)		(250)
Balance, end of period	$	394	$	376

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenues in future periods. The Company expects to recognize substantially all of the remaining transaction price in the next 12 months.

As of March 31, 2022, 25% of our total revenue was generated outside of the United States, primarily from countries in Asia. As of March 31, 2021, no revenues were generated outside of the United States.

For the three months ended March 31, 2022, one customer accounted for 32% of the Company’s total revenue. For the three months ended March 31, 2021, total revenue was immaterial.

Grant and Other Revenue

In August 2019, the Company received a notice of a Small Business Innovation Research grant award from the National Institutes of Health, which will provide funding of approximately $1.1 million to the Company for its development of research applications. In June 2020, the Company received a notice that additional grant consideration of $0.9 million would be awarded. During the three months ended March 31, 2022 and 2021, the Company recognized grant revenue of $14,000 and $62,000, respectively, with respect to the award.

6.CAPITAL STOCK AND STOCKHOLDERS’ EQUITY

As of March 31, 2022, the Company is authorized to issue 105,000,000 shares of capital stock consisting of 94,000,000 shares of Class A common stock, 6,000,000 shares of Class B common stock, and 5,000,000 shares of preferred stock.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Common Stock

Common stock issued and outstanding is as follows:


	March 31,	December 31,
	2022	2021

Class A common stock	58,237,703	57,493,005
Class B common stock	4,055,190	4,522,478
Total common stock issued and outstanding	62,292,893	62,015,483

Class A and Class B common stock have a par value of $0.00001 per share. Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to 10 votes per share. Class B common shares are convertible to Class A common shares at any time at the option of the holder on a one-for-one basis. Holders of common stock are entitled to dividends as declared by the Board of Directors, subject to rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date.

Common stock issued and outstanding on the condensed consolidated balance sheets and condensed consolidated statements of changes in stockholders' equity includes shares related to early exercised options and restricted stock that are subject to repurchase.

In the first quarter of 2021, the Company received $11.4 million related to the return of short-swing profits from one of its beneficial owners. These proceeds are recognized as a capital contribution from stockholders as an increase to additional paid-in capital on the condensed consolidated statements of changes in stockholders’ equity and as cash provided by financing activities on the condensed consolidated statements of cash flows.

7.EQUITY INCENTIVE PLANS

As of March 31, 2022, there are 11,400,396 shares of Class A common stock reserved for issuance under the 2020 Equity Incentive Plan, of which 5,009,917 shares are available for issuance in connection with grants of future awards.

Stock Options

Stock option activity for the three months ended March 31, 2022 is as follows:


	Options Outstanding	Weighted Average Exercise Price
Balance at December 31, 2021	9,832,924	$	12.49
Options granted	1,947,230	16.90
Options exercised	(194,207)	3.98
Options cancelled and forfeited	(25,943)	29.94
Balance at March 31, 2022	11,560,004	$	13.34
Vested and exercisable, March 31, 2022	3,732,802	$	8.43

Restricted Stock Awards

Certain stock options granted provide stock option holders the right to exercise unvested stock options in exchange for restricted shares of Class A common stock. The Company has also issued restricted shares of Class A common stock to employees and directors. There were 125,231 shares and 174,300 shares of restricted stock that were unvested and subject to repurchase as of March 31, 2022 and December 31, 2021, respectively.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Restricted Stock Units

RSU activity for the three months ended March 31, 2022 is as follows:


	Restricted Stock Units	Weighted-Average Grant Date Fair Value
Balance at December 31, 2021	740,366	$	26.49
Granted	1,310,465	16.55
Vested	(89,044)	38.40
Cancelled	(2,745)	28.54
Balance at March 31, 2022	1,959,042	$	19.30

Employee Stock Purchase Plan

A total of 1,195,327 shares of Class A common stock are reserved for issuance under the 2020 Employee Stock Purchase Plan (ESPP) as of March 31, 2022. During the three months ended March 31, 2022 and 2021, no shares of Class A common stock were issued under the ESPP.

Stock-Based Compensation

The following table summarizes the components of stock-based compensation recognized in the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
	2022		2021
Cost of revenue	$	208	$	—
Research and development	2,001		1,492
Selling, general and administrative	5,853		4,547
Total stock-based compensation	$	8,062	$	6,039

In February 2022, in connection with a leave of absence taken by one of our executives, a total of 1,330,892 share-based awards were modified to extend the overall term and change the timing of the vesting of the awards. The total incremental stock-based compensation associated with the modification is $0.9 million, which will be recognized over the next eight years.

8.COMMITMENTS AND CONTINGENCIES

Facility Lease Agreement

The Company leases office and laboratory space in Redwood City, California with a lease term that is set to end on September 30, 2032. The Company has an option to renew for an additional five-year term at then-current market rates, which is not reasonably certain of being exercised. The lease of additional office and laboratory space pursuant to an amendment entered into in June 2020 commenced in February 2022 and the Company recorded a right-of-use asset of $8.8 million and lease liability of $6.9 million as of the commencement of the lease. This lease liability is based on the present value of lease payments over the lease term, which was estimated using an incremental borrowing rate of 7.4% based on information available at the commencement date. In connection with the leased space, the Company maintains a letter of credit issued to the lessor in the amount of $0.5 million as of March 31, 2022 and December 31, 2021, respectively, which is secured by restricted cash that is classified as noncurrent at each date based on the term of the underlying lease.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

During the period from June 2020 through May 2021, the Company was provided with temporary space. The Company was not required to pay additional rent for the temporary space, but was required to pay property taxes, insurance and normal maintenance costs with respect to the temporary space.

As of March 31, 2022, the remaining weighted-average lease term was 10.5 years and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 6.2%.

The components of lease costs related to the Company’s operating leases were as follows (in thousands):


	Three Months Ended March 31,
	2022		2021
Operating lease costs	$	813	$	185
Variable lease costs	194		133
Short-term lease costs	69		3
Total lease costs	$	1,076	$	321

Variable lease costs are primarily comprised of common area maintenance and include costs associated with the temporary space.

As of March 31, 2022, future minimum commitments under the Company’s non-cancelable facility operating lease are as follows:


Years ending December 31,	(in thousands)
2022 (remaining nine months)	$	2,005
2023	3,633
2024	3,738
2025	3,846
2026	3,957
Thereafter	25,137
Total undiscounted future minimum lease payments	42,316
Present value adjustment for minimum lease commitments	(11,836)
Tenant improvement receivable	(256)
Total operating lease liabilities	$	30,224

Purchase Commitments and Obligations

The Company has certain purchase commitments related to its inventory management with certain manufacturing suppliers wherein the Company is required to purchase the amounts forecasted in a blanket purchase order within a certain time period. The contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude orders for goods and services entered into in the normal course of business that are not enforceable or subject to change. These outstanding commitments amounted to $5.7 million and $5.5 million as of March 31, 2022 and December 31, 2021, respectively.

Guarantees and Indemnifications

In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. The Company has entered into indemnification agreements with certain directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of the status or service as directors or officers. To date, the

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of March 31, 2022 and December 31, 2021, the Company does not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities.

Contingencies

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not currently a party to any material legal proceedings.

9.PROGNOMIQ, INC.

In August 2020, the Company formed a new entity, PrognomIQ, Inc. (PrognomIQ), and entered into a stock purchase agreement with PrognomIQ, pursuant to which the Company transferred to PrognomIQ certain assets that comprise the Company’s human diagnostics activities in exchange for all the outstanding equity interests of PrognomIQ. The Company subsequently completed a pro-rata distribution to its stockholders of most of the shares of capital stock of PrognomIQ.

The Company has concluded that PrognomIQ is a VIE due to its reliance on future financing and insufficient equity investment at risk. However, the Company is not the primary beneficiary of the VIE as it does not have the power to direct the activities that most significantly impact the economic performance of PrognomIQ and does not have control over the PrognomIQ board of directors. The Company has determined that it has the ability to exercise significant influence over PrognomIQ and therefore has accounted for its investment in PrognomIQ using the equity method.

PrognomIQ constitutes a related party and, as of March 31, 2022 and December 31, 2021, the Company recorded $1.1 million and $1.3 million in related party receivables, respectively, on the condensed consolidated balance sheets representing amounts due from product sales and services and for general transition services and support provided. Revenue received from PrognomIQ is recorded as related party revenue on the condensed consolidated statements of operations and comprehensive loss and is comprised of the sale of instruments and consumables, and services performed.

10.NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

The following table shows the computation of basic and diluted net loss per share (in thousands, except share and per share data):


	Three Months Ended March 31,
	2022		2021
Numerator:
Net loss attributable to common stockholders	$	(23,646)	$	(16,429)
Denominator:
Weighted-average common shares used in computing net loss per share attributable to common stockholders, basic and diluted	62,003,504		59,887,842
Net loss per share attributable to common stockholders, basic and diluted	$	(0.38)	$	(0.27)

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis):


	March 31,
	2022	2021
Class A common stock options issued and outstanding	11,560,004	9,839,354
Restricted common stock subject to future vesting	125,231	652,418
Restricted stock units	1,959,042	689,484
Total	13,644,277	11,181,256

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties, including those described in the section titled “Special Note Regarding Forward Looking Statements.” Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section titled “Risk Factors.”

Overview

Our mission is to imagine and pioneer new ways to decode the secrets of the proteome to improve human health. Our initial product, the Proteograph Product Suite (Proteograph), leverages our proprietary engineered nanoparticle (NP) technology to provide unbiased, deep, rapid and large-scale access to the proteome. The Proteograph Product Suite is an integrated solution that is comprised of consumables, an automation instrument and software.

We believe that characterizing and understanding the full complexity of the proteome is foundational for accelerating biological insights and will lead to broad potential end-markets for proteomics, encompassing basic research and discovery, translational research, diagnostics and applied applications. This full understanding of the complexity of the proteome and its dynamic nature requires large-scale, unbiased and deep interrogation of thousands of samples across time, which we believe is unavailable with the proteomic approaches available today. We believe that the Proteograph Product Suite has the potential to enable researchers to perform these proteomics studies at scale.

Since we were incorporated in 2017, we have devoted substantially all of our resources to research and development activities, including with respect to the Proteograph Product Suite, building our commercial infrastructure including manufacturing, operations, sales and marketing and service and support functions, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital, becoming a publicly-traded company, and providing general and administrative support for these activities.

Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful commercialization of the Proteograph Product Suite. We are commercializing the Proteograph Product Suite as an integrated solution comprised of consumables, our SP100 automation instrument and software. Our commercial strategy is focused on growing adoption by the research community of the Proteograph, expanding the installed base and increasing utilization to generate revenue from the purchase of the Proteograph consumables. We expect a highly efficient sales model because our workflow integrates with most existing proteomics laboratories’ workflows and also complements large-scale genomics research.

We are broadly commercializing the Proteograph Product Suite through a direct sales channel in the United States, and through both direct and distributor sales channels in regions outside the United States. Given our recent launch of broad release commercialization, we have built, and will continue to build, sales, marketing, support and product distribution capabilities. We will continue to build the necessary infrastructure for these activities in the United States, European Union, the United Kingdom, and other countries and regions, including Asia-Pacific, as we execute on our broad release commercialization strategy for the Proteograph.

We leverage well-established unit operations to formulate and manufacture our NPs at our facilities in Redwood City, California. We procure certain components of our consumables from third-party manufacturers, which includes the commonly-available raw materials needed for manufacturing our proprietary engineered NPs. We are currently manufacturing using our pilot line and building out our manufacturing capabilities as we enter the broad release phase of commercialization. We obtain some of the reagents and components used in the Proteograph workflow from third-party suppliers. While some of these reagents and components are sourced from a single supplier, these products are readily available from numerous suppliers. While we perform some filling and packaging of the Proteograph assay and the related consumables, in the future, we may have our filling and packaging outsourced to a

third-party. We conduct vendor and component qualification for components provided by third-party suppliers and quality control tests on our NPs.

We have designed our SP100 automation instrument and have outsourced the manufacturing of our SP100 to Hamilton Company, a leading manufacturer of automated liquid handling workstations. We have entered into a non-exclusive agreement with Hamilton that covers the manufacturing of our SP100 automation instrument and its continued supply on a purchase order basis. The agreement has an initial term that runs three years following our commercial launch. Pricing for the supply of our SP100 automation instrument is on a fixed schedule during the initial term of the agreement, with tiered pricing dependent upon the number of units purchased in a twelve-month period.

During the three months ended March 31, 2022 and 2021, we incurred a net loss of $23.6 million and $16.4 million, respectively, and used $19.2 million and $14.9 million of cash in operations, respectively. As of March 31, 2022, we had an accumulated deficit of $150.2 million and cash and cash equivalents, and investments of $471.8 million. We expect to continue to incur significant and increasing losses and do not expect positive cash flows from operations for the foreseeable future.

We expect our expenses to increase significantly in connection with our ongoing activities, as we:

•broadly commercialize the Proteograph Product Suite;

•attract, hire and retain qualified personnel;

•continue to build our sales, marketing, service, support and distribution infrastructure as part of our broad commercialization efforts;

•build-out and expand our in-house NP manufacturing capabilities;

•continue to engage in research and development of other products and enhancements to the Proteograph Product Suite;

•implement operational, financial and management information systems;

•obtain, maintain, expand, and protect our intellectual property portfolio; and

•build the infrastructure to operate and scale as a public company.

COVID-19 Pandemic

As a result of the COVID-19 pandemic, we could experience disruptions that could severely impact our business. For example, we have experienced longer lead times from Hamilton for orders of our SP100 automation instruments and may experience delays and longer lead times from our other suppliers of critical hardware, instrumentation and consumables used for product development, manufacturing and commercial operations. Pandemic precautions and preventative measures may also impact our commercialization plans due to restrictions on our customers’ ability to access laboratories, causing delays in the delivery and installation of the Proteograph products, training such customers on our products, and their ability to conduct research. We have experienced delays in our ability to access customers in certain countries with strict COVID-19 policies to provide installation and training services. Furthermore, COVID-19 has adversely affected the broader economy and financial markets, resulting in an economic downturn that could curtail the research and development budgets of our customers, our ability to hire additional personnel and our financing prospects. Any of the foregoing could harm our operations and we cannot anticipate all the ways in which it could be adversely impacted by health epidemics such as COVID-19.

For additional details, see the section titled “Risk Factors.”

Components of Results of Operations

Revenue

We generate revenue from product sales, including sales of the Proteograph Product Suite, which consists of an instrument with embedded software essential to the instrument’s functionality and associated consumables as well as our platform evaluation agreements. In addition, we may at times generate revenue from performing services and the receipt of grant revenue for the reimbursement of research-related expenses. Our revenue is primarily generated domestically. We intend to focus our commercial efforts in the United States and expect to grow our international presence. A portion of our revenue is generated by sales to a related party and we anticipate a portion of our revenue to continue to be generated by sales to such related party. Our grant-funded activities are expected to decrease as a percentage of total revenue as we decrease grant-funded activities and continue to ramp up commercialization of the Proteograph Product Suite.

Cost of Revenue

We utilize third-party manufacturers for production of our SP100 instrument and we manufacture our NPs and assemble our assay kits internally. Cost of goods sold consists primarily of costs of the components of Proteograph Product Suite, including the SP100 instrument with embedded software essential to the instrument’s functionality, and consumables, and distribution-related expenses such as logistics and shipping costs. In addition, cost of revenue includes stock-based compensation and related employee benefits and allocated overhead.

Research and Development Expenses

Research and development, or R&D, expenses include cost associated with performing services under research and development service contracts and research and development of our technology and product candidates. R&D expenses consist primarily of employee compensation, including stock-based compensation, and related employee benefits, laboratory supplies used for in-house research, consulting costs and allocated overhead, including rent, depreciation, information technology and utilities.

We plan to increase our investment in our R&D efforts related to the Proteograph Product Suite, our product development pipeline and our proprietary engineered NP and other technologies. Therefore, we expect R&D expenses will increase in absolute dollars in future periods as we incur expenses associated with hiring additional personnel, purchasing supplies and materials, and the allocation of facility expense associated with the build-out of our expansion facilities to support our R&D efforts.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of employee compensation, including stock-based compensation, and related benefits for executive management, sales and marketing, service and support, finance, administration and human resources, legal, allocated overhead, professional service fees and other general overhead costs to support our operations.

We expect to incur additional selling, general and administrative expenses as we continue to invest in our personnel as we grow our commercial operations and with the additional costs incurred as a result of operating as a public company, including accounting, human resources, legal, insurance and investor relations costs. As a result, we expect selling, general and administrative expenses to increase in absolute dollars in future periods.

Interest Income

Interest income consists of interest earned on cash and cash equivalents and investments.

Results of Operations

Comparisons of the Three Months Ended March 31, 2022 and 2021

The following table summarizes our results of operations for the periods presented:


	Three Months Ended March 31,				Change
	2022		2021		Amount		%
	(dollars in thousands)
Revenue:
Product	$	2,149	$	—	$	2,149	*
Service	79		—		79		*
Related party	1,070		—		1,070		*
Grant and other	14		62		(48)		(77)	%
Total revenue	3,312		62		3,250		5242	%
Cost of revenue:
Product	1,660		—		1,660		*
Service	14		—		14		*
Related party	394		—		394		*
Total cost of revenue	2,068		—		2,068		*
Gross profit	1,244		62		1,182		1906	%
Operating expenses:
Research and development	10,732		6,227		4,505		72	%
Selling, general and administrative	14,298		10,333		3,965		38	%
Total operating expenses	25,030		16,560		8,470		51	%
Loss from operations	(23,786)		(16,498)		(7,288)		44	%
Other income (expense):
Interest income	144		69		75		109	%
Interest expense	—		—		—		*
Other expense	(4)		—		(4)		*
Total other income	140		69		71		103	%
Net loss	$	(23,646)	$	(16,429)	$	(7,217)	44	%

* Not meaningful

Revenue


	Three Months Ended March 31,				Change
	2022		2021		Amount		%
	(dollars in thousands)
Revenue	$	3,312	$	62	$	3,250	5242	%

Revenue increased by $3.3 million, or 5242%, from $0.1 million during the three months ended March 31, 2021 to $3.3 million during the three months ended March 31, 2022, due to sales of products related to the Proteograph Product Suite in the three months ended March 31, 2022. Revenue recognized primarily consisted of sales of the Proteograph SP100 instrument, consumable kits and platform evaluations, of which $1.1 million was attributed to related parties. Revenue related to our grant-funded activities related to our Small Business Innovation Research (SBIR) grant from the National Institutes of Health Grant (NIH) decreased between the two periods by $48,000.

Cost of Revenue


	Three Months Ended March 31,				Change
	2022		2021		Amount		%
	(dollars in thousands)
Cost of revenue	$	2,068	$	—	$	2,068	*

Cost of revenue for the three months ended March 31, 2022 was $2.1 million compared to $0 for the three months ended March 31, 2021, primarily due to sales of the Proteograph Product Suite. Cost of revenue related to the Proteograph Product Suite consist of costs of the SP100 instrument, consumable kits and other related costs, including labor and overhead.

Research and Development


	Three Months Ended March 31,				Change
	2022		2021		Amount		%
	(dollars in thousands)
Research and development	$	10,732	$	6,227	$	4,505	72	%

R&D expenses increased by $4.5 million, or 72%, from $6.2 million during the three months ended March 31, 2021 to $10.7 million during the three months ended March 31, 2022. The increase was primarily due to an increase in product development efforts related to the Proteograph Product Suite, including $2.6 million in employee compensation costs and other related expenses, including stock-based compensation, due to growth in research and development personnel and $1.9 million related to the expansion of facilities and maintenance and depreciation of laboratory equipment.

Selling, General and Administrative


	Three Months Ended March 31,				Change
	2022		2021		Amount		%
	(dollars in thousands)
Selling, general and administrative	$	14,298	$	10,333	$	3,965	38	%

Selling, general and administrative expenses increased by $4.0 million, or 38%, from $10.3 million during the three months ended March 31, 2021 to $14.3 million during the three months ended March 31, 2022, primarily due to a $1.1 million increase in employee compensation and other related expenses, and a $1.3 million stock-based compensation increase. Other increases are attributable to costs related to being a publicly traded company, including a $1.5 million increase in professional and consulting fees related to accounting and audit services, and a $0.2 million increase in travel expenses.

Total Other Income


	Three Months Ended March 31,				Change
	2022		2021		Amount		%
	(dollars in thousands)
Total other income	$	140	$	69	$	71	103	%

Total other income increased by $0.1 million, or 103%, from $0.1 million during the three months ended March 31, 2021 to $0.1 million during the three months ended March 31, 2022. The increase was due to higher amounts of cash invested in money market funds and U.S. Treasury securities during the three months ended March 31, 2022.

Liquidity and Capital Resources

Since the date of our incorporation, we have not generated significant revenue from product sales and have incurred significant operating losses and negative cash flows from operations. Our operations have been funded primarily through the sale and issuance of equity securities since inception. We anticipate that we will continue to incur net losses and do not expect positive cash flows from operations for the foreseeable future.

We enter into agreements as a part of normal course of business with various vendors, which are generally cancellable without material penalty upon written notice. Payments associated with these agreements are not included in this discussion of contractual obligations.

Our operating lease obligations reflect our lease obligations for our headquarters facility in Redwood City, California. In June 2020, we amended the lease agreement for this facility to expand the office and laboratory space covered by the lease, extend the lease through September 2032, and increase the annual base rent for the expanded premises. Upon occupancy of the expansion facility, which occurred in the first quarter of 2022, the annual base rent will be $0.9 million in the first twelve months of the lease term (subject to an abatement period of nine months), and increases on an annual basis to $1.2 million in the final twelve months of the lease term. The amendment also provides for tenant incentives in the amount of $2.4 million.

In April 2021, we entered into a lease amendment for this facility to further expand the office and laboratory space for an approximate term of eleven years. Payments associated with this operating lease agreement will result in additional operating lease obligations not included in the above paragraph of approximately $293,000 per month plus operating expenses.

We have certain purchase commitments related to our inventory management with certain manufacturing suppliers wherein we are required to purchase the amounts forecasted in a blanket purchase order within a certain time period. The contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude orders for goods and services entered into in the normal course of business that are not enforceable or subject to change. These outstanding commitments amounted to $5.7 million as of March 31, 2022.

We take a long-term view in growing and scaling our business and regularly review opportunities that meet our long-term growth objectives. Our future capital requirements will depend on many factors including our revenue growth rate, investments in continued commercialization efforts, acquisitions of complementary or enhancing technologies or businesses, including intellectual property rights, the impacts of the COVID-19 pandemic, the timing and extent of additional capital expenditures to invest in existing and new facilities, the expansion of sales and marketing and international activities and the extent and magnitude of our ongoing research and development programs.

We believe that our existing cash and cash equivalents and investments will be sufficient to meet our anticipated cash requirements for more than 12 months from the date of this Quarterly Report on Form 10-Q. If our available cash and cash equivalents and investments and anticipated cash flows from operations are insufficient to satisfy our liquidity requirements, we may consider raising additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons.

Cash Flows

The following table summarizes our cash flows for the periods indicated:


	Three Months Ended March 31,
	2022		2021
	(in thousands)
Net cash used in operating activities	$	(19,151)	$	(14,872)
Net cash provided by investing activities	10,920		11,883
Net cash provided by financing activities	752		115,167
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(7,479)	$	112,178

Operating Activities

During the three months ended March 31, 2022, cash used in operating activities was $19.2 million, which was attributable to a net loss of ($23.6) million and a net change in our net operating assets and liabilities of ($5.3) million, partially offset by non-cash charges of $9.8 million. Non-cash charges primarily consisted of $8.1 million in stock-based compensation, $0.9 million of depreciation, amortization and $0.3 million of net amortization of premiums on available-for-sales securities and $0.5 million of non-cash operating lease expense.The change in our net operating assets and liabilities was primarily due to an increase in accounts receivable of $0.3 million, an increase in prepaid expenses and other current assets of $2.9 million, and an increase of ($2.0) million in accrued expenses related to employee compensation.

During the three months ended March 31, 2021, cash used in operating activities was $14.9 million. which was attributable to a net loss of ($16.4) million and a net change in our net operating assets and liabilities of ($5.1) million, partially offset by non-cash charges of $6.7 million. Non-cash charges primarily consisted of $6.0 million in stock-based compensation, $0.5 million of depreciation and amortization and $0.2 million of net amortization of premiums on available-for-sales securities. The change in our net operating assets and liabilities was primarily due to a decrease in accrued liabilities related to employee compensation of $1.0 million, increases in inventory levels of $1.0 million and increases of $2.6 million in prepaid expenses related to being a publicly traded company, such as insurance.

Investing Activities

During the three months ended March 31, 2022, cash provided by investing activities was $10.9 million, which related to purchases of available-for-sale securities, net of proceeds from maturities of $12.0 million, offset by ($1.1) million in payments primarily for laboratory equipment.

During the three months ended March 31, 2021, cash provided by investing activities was $11.9 million, which related to purchases of available-for-sale securities, net of proceeds from maturities of $12.7 million, offset by ($0.8) million in payments primarily for laboratory equipment.

Financing Activities

During the three months ended March 31, 2022, cash provided by financing activities was $773,000. This was attributable to net proceeds from the exercise of stock options.

During the three months ended March 31, 2021, cash provided by financing activities was $115.2 million. This was attributable to net proceeds of $103.0 million from issuance of common stock upon our follow-on offering, net of issuance costs of $7.6 million, in addition to $11.4 million in short-swing profits from a beneficial owner.

Critical Accounting Policies, Significant Judgments and Use of Estimates

The discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with United States generally

accepted accounting principles. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as revenue and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled “Management’s Discussion and Analysis of Financial Condition and Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We have exposure to interest rate risk that relates to our cash, cash equivalents, and investments held in money market funds and U.S. Treasury securities. The goals of our investment policy are liquidity and capital preservation. We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents and investments.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer (CEO), and Chief Financial Officer (CFO), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the CEO and the CFO, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our CEO and CFO have concluded, as of March 31, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings. From time to time we may be involved in legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.

Item 1A. Risk Factors

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this Quarterly Report, including our unaudited condensed consolidated financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report, before deciding whether to invest in our Class A common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and prospects. In such an event, the market price of our Class A common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and the market price of our Class A common stock.

Summary Risk Factor

Our business is subject to numerous risks and uncertainties that you should consider before investing in our company, as more fully described below. The principal factors and uncertainties that make investing in our company risky include, among others:

•we are an early-stage life sciences technology company with a history of net losses, which we expect to continue, and we may not be able to generate meaningful revenues or achieve and sustain profitability in the future;

•we have a limited operating history, which may make it difficult to evaluate the prospects for our future viability and predict our future performance;

•our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide;

•the size of the markets for the Proteograph Product Suite may be smaller than estimated, and new market opportunities may not develop as quickly as we expect, or at all, limiting our ability to successfully sell our products;

•we have only recently commenced the broad commercial release of the Proteograph Product Suite, and we may not be able to successfully implement this release as planned;

•our commercial release success depends on broad scientific and market acceptance of the Proteograph, which we may fail to achieve;

•even if the Proteograph Product Suite is broadly commercialized and achieves broad scientific and market acceptance, if we fail to improve it or introduce compelling new products, our revenues and our prospects could be harmed;

•the COVID-19 pandemic and efforts to reduce its spread have adversely impacted, and are expected to continue to materially and adversely impact, our business and operations;

•if we are unable to obtain and maintain sufficient intellectual property protection for our products and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our

competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired;

•if we are unable to identify and recruit qualified employees, and retain or maintain our employee base, it may adversely impact our business and operations; and

•if we fail to maintain an effective system of internal controls, or otherwise fail to comply with the Sarbanes-Oxley Act of 2002 now that we are a large accelerated filer, we may not be able to accurately and timely report our financial results, which may adversely affect our business and investor confidence in us and, as a result, the value of our Class A common stock.

Risks Related to Our Business and Industry

We are an early-stage life sciences technology company with a history of net losses, which we expect to continue, and we may not be able to generate meaningful revenues or achieve and sustain profitability in the future.

We are an early-stage life sciences technology company, and we have incurred significant losses since we were formed in 2017, and expect to continue to incur losses in the future. We incurred net losses of $23.6 million and $16.4 million during the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, we had an accumulated deficit of $150.2 million. These losses and accumulated deficit were primarily due to the substantial investments we have made to develop and improve our technology and the Proteograph Product Suite. Over the next several years, we expect to continue to devote substantially all of our resources towards continuing development and commercialization of the Proteograph Product Suite, including sales and marketing, manufacturing and operations costs, and research and development efforts for products. These efforts may prove more costly than we currently anticipate. While we have generated product revenue, we may never generate revenue sufficient to offset our expenses. In addition, as a public company, we incur significant legal, accounting, administrative, insurance and other expenses. Accordingly, we cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.

We have a limited operating history, which may make it difficult to evaluate the prospects for our future viability and predict our future performance.

We have only recently broadly commercialized the Proteograph Product Suite. Our operations to date have been primarily focused on developing our technology and products. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. We have not yet achieved market acceptance for our products, produced our products at scale, established a sales model, or conducted sales and marketing activities necessary for successful broad product commercialization. Consequently, predictions about our future success or viability are highly uncertain and may not be as accurate as they could be if we had a longer operating history or a company history of successfully developing and commercializing products.

In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown obstacles. We will need to transition from a company with a focus on research and development to a company capable of supporting broad commercial activities as well, and we may not be successful in such a transition. We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in emerging and rapidly changing industries. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition and results of operations could be adversely affected.

Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.

Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:

•our ability to successfully commercialize the Proteograph Product Suite on our anticipated timeline;

•the timing and cost of, and level of investment in, research and development and commercialization activities relating to the Proteograph Product Suite, including our SP100 automation instrument, proprietary engineered nanoparticle (NP) technology and Proteograph Analysis Suite software, which may change from time to time;

•the level of demand for any products we are able to commercialize, particularly the Proteograph Product Suite, which may vary significantly from period to period;

•our ability to drive adoption of the Proteograph in our target markets and our ability to expand into any future target markets;

•our relationship with third-party distributorships, and their ability to promote and sell our products;

•the prices at which we will be able to sell the Proteograph Product Suite;

•the volume and mix of our sales between the Proteograph Product Suite and associated consumables, or changes in the manufacturing or sales costs related to our products;

•the length of time of the sales cycle for purchases of the Proteograph, including lead time needed to procure SP100 automation instruments from our third-party contract manufacturer;

•the timing and amount of expenditures that we may incur to develop, commercialize or acquire additional products and technologies or for other purposes, such as the expansion of our facilities;

•changes in governmental funding of life sciences research and development or changes that impact budgets and budget cycles;

•seasonal spending patterns of our customers;

•the timing of when we recognize any revenues;

•future accounting pronouncements or changes in our accounting policies;

•the outcome of any future litigation or governmental investigations involving us, our industry or both;

•higher than anticipated service, replacement and warranty costs;

•the impact of the COVID-19 pandemic on the economy, investment in life sciences and research industries, our business operations, and resources and operations of our customers, suppliers and supply chain, and distributors; and

•general industry, economic and market conditions such as inflation and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

The cumulative effects of the factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance.

This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If we are unable to commercialize products or generate revenue, or if

our operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts or investors, it could cause the market price of our Class A common stock to decline.

The size of the markets for the Proteograph Product Suite may be smaller than estimated, and new market opportunities may not develop as quickly as we expect, or at all, limiting our ability to successfully sell our products.

The market for proteomics and genomics technologies and products is evolving, making it difficult to predict with any accuracy the size of the markets for our current and future products, including the Proteograph Product Suite. Our estimates of the total addressable market for our current and future products are based on a number of internal and third-party estimates and assumptions. In particular, our estimates are based on our expectations that researchers in the market for certain life sciences research tools and technologies will view our products as competitive alternatives to, or better options than, existing tools and technologies. We also expect researchers will recognize the ability of our products to complement, enhance and enable new applications of their current tools and technologies. We expect them to recognize the value proposition offered by our products, enough to purchase our products in addition to the tools and technologies they already own. Underlying each of these expectations are a number of estimates and assumptions that may be incorrect, including the assumptions that government or other sources of funding will continue to be available to life sciences researchers at times and in amounts necessary to allow them to purchase our products and that researchers have sufficient samples and an unmet need for performing proteomics studies at scale across thousands of samples. In addition, sales of new products into new market opportunities may take years to develop and mature and we cannot be certain that these market opportunities will develop as we expect. New life sciences technology may not be adopted until the consistency and accuracy of such technology, method or device has been proven. As a result, the sizes of the annual total addressable market for new markets and new products are even more difficult to predict. Our product is an innovative new product, and while we draw comparisons between the evolution and growth of the genomics and proteomics markets, the proteomics market may develop more slowly or differently. In addition, the Proteograph Product Suite may not impact the field of proteomics in the same manner or degree, or within the same time frame, that NGS technologies have impacted the field of genomics, or at all. While we believe our assumptions and the data underlying our estimates of the total addressable market for our products are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates, or those underlying the third-party data we have used, may change at any time, thereby reducing the accuracy of our estimates. As a result, our estimates of the total addressable market for our products may be incorrect.

The future growth of the market for our current and future products depends on many factors beyond our control, including recognition and acceptance of our products by the scientific community and the growth, prevalence and costs of competing products and solutions. Such recognition and acceptance may not occur in the near term, or at all. If the markets for our current and future products are smaller than estimated or do not develop as we expect, our growth may be limited and our business, financial condition and operational results of operations could be adversely affected.

We have only recently commenced the broad release phase of our commercialization plan, and we may not be able to continue this release as planned.

We have only recently initiated the broad commercial release phase for the Proteograph Product Suite, and we may not be able to successfully execute on this phase as planned due to:

•the inability to establish the capabilities and value proposition of the Proteograph Product Suite with key opinion leaders and other customers in a timely fashion;

•delays or longer-than expected lead times to establish customer contacts, complete responsive presentations including platform evaluations tailored to specific requests, and move expeditiously from quote to order to revenue to receipt of payment due to the budgetary constraints of academic organizations, laboratories, biopharmaceutical companies and others;

•changing industry or market conditions, customer requirements or competitor offerings during broad commercialization;

•delays in continuing the build-out of our sales, customer support and marketing organization as needed for broad commercialization;

•delays in ramping up manufacturing, either internally or through our suppliers, to meet the expected demand for broad commercialization; and

•the impact of the COVID-19 pandemic on the economy and research industries, our business operations, and resources and the operations of our customers, suppliers and supply chain, and distributors.

To the extent our broad commercial release phase is delayed or unsuccessful, our financial results will be adversely impacted.

Even if we are able to execute on our broad commercial release phase as planned, our success depends on broad scientific and market acceptance of the Proteograph Product Suite, which we may fail to achieve.

Our ability to achieve and maintain scientific and commercial market acceptance of the Proteograph Product Suite will depend on a number of factors. We expect that the Proteograph will be subject to the market forces and adoption curves common to other new technologies. The market for proteomics and genomics technologies and products is in its early stages of development. If widespread adoption of the Proteograph takes longer than anticipated, or broad scientific and market acceptance does not occur, we will continue to experience operating losses.

The success of life sciences products is due, in large part, to acceptance by the scientific community and their adoption of certain products in the applicable field of research. The life sciences scientific community is often led by a small number of early adopters and key opinion leaders who significantly influence the rest of the community through publications, including peer-reviewed journals. In such journal publications, the researchers will describe not only their discoveries, but also the methods, and typically the products used, to fuel such discoveries. Mentions in publications, including peer-reviewed journal publications, are a driver for the general acceptance of life sciences products, such as the Proteograph Product Suite. We have and continue to collaborate with a small number of key opinion leaders who are highly skilled at evaluating novel technologies and whose feedback helped us solidify our commercialization plans and processes. Ensuring that early adopters and key opinion leaders publish research involving the use of our products is critical to ensuring our products gain widespread scientific acceptance. In addition, continuing collaborative relationships with key opinion leaders is vital to maintaining any market acceptance we achieve. If too few researchers describe the use of our products, too many researchers utilize or shift to a competing product and publish research outlining their use of that product or too many researchers negatively describe the use of our products in publications, it may drive customers away from our products and it may delay market acceptance and adoption of the Proteograph during broad commercialization.

Other factors in achieving commercial market acceptance, include:

•our ability to market and increase awareness of the capabilities of the Proteograph Product Suite;

•the ability of the Proteograph Product Suite to perform intended use applications broadly in the hands of customers;

•our customers’ willingness to adopt new products and workflows;

•the Proteograph’s ease of use and whether it reliably provides advantages over other alternative technologies;

•the rate of adoption of the Proteograph Product Suite by academic institutions, laboratories, biopharmaceutical companies and others;

•the prices we charge for the Proteograph Product Suite;

•our ability to develop new products and workflows and solutions for customers;

•if competitors develop and commercialize products that perform similar functions as the Proteograph; and

•the impact of our investments in product innovation and commercial growth.

We cannot assure you that we will be successful in addressing each of these criteria or other criteria that might affect the market acceptance of any products we commercialize, particularly the Proteograph Product Suite. If we are unsuccessful in achieving and maintaining market acceptance of the Proteograph, our business, financial condition and results of operations would be adversely affected.

If we are unable to establish sales and marketing capabilities, we may not be successful in commercializing the Proteograph Product Suite.

We have limited experience as a company in sales and marketing and our ability to successfully commercialize depends on our being able to attract customers for the Proteograph Product Suite. Although members of our management team have considerable industry experience, we need to expand our sales, marketing, distribution and customer service and support capabilities with the appropriate technical expertise during the broad commercial release of the Proteograph Product Suite. To perform sales, marketing, distribution, and customer service and support successfully, we will face a number of risks, including:

•our ability to attract, retain and manage the sales, marketing and customer service and support force necessary to commercialize and gain market acceptance for our technology;

•the time and cost of establishing a specialized sales, marketing and customer service and support force; and

•our sales, marketing and customer service and support force may be unable to initiate and execute successful commercialization activities.

We have enlisted and may seek to enlist additional third parties to assist with sales, distribution and customer service and support globally or in certain regions of the world. There is no guarantee that we have attracted or will be successful in attracting desirable or experienced sales or distribution partners or that we have entered or will be able to enter into such arrangements on favorable terms. If our sales and marketing efforts, or those of any third-party sales and distribution partners, are not successful, the Proteograph may not gain market acceptance, which could materially impact our business operations.

Even if the Proteograph Product Suite is broadly commercialized and achieves broad scientific and market acceptance, if we fail to improve it or introduce compelling new products, our revenues and our prospects could be harmed.

Even if we are able to broadly commercialize the Proteograph Product Suite and achieve broad scientific and market acceptance, our ability to attract new customers and increase revenue from existing customers will depend in large part on our ability to enhance and improve the Proteograph solution and to introduce compelling new products. The success of any enhancement to the Proteograph Product Suite or introduction of new products depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with existing technologies, appropriately timed and staged introduction and overall market acceptance. Any new product or enhancement to the Proteograph that we develop may not be introduced in a timely or cost-effective manner, may contain defects, errors, vulnerabilities or bugs, or may not achieve the market acceptance necessary to generate significant revenue.

The typical development cycle of new life sciences products can be lengthy and complicated, and may require new scientific discoveries or advancements, considerable resources and complex technology and engineering. Such developments may involve external suppliers and service providers, making the management of development projects complex and subject to risks and uncertainties regarding timing, timely delivery of required components or services and satisfactory technical performance of such components or assembled products. If we do not achieve the required technical specifications or successfully manage new product development processes, or if development work is not performed according to schedule, then such new technologies or products may be adversely impacted. If

we are unable to successfully develop new products, enhance the Proteograph Product Suite to meet customer requirements, compete with alternative products, or otherwise gain and maintain market acceptance, our business, results of operations and financial condition could be harmed.

The COVID-19 pandemic and efforts to reduce its spread have adversely impacted, and are expected to continue to materially and adversely impact, our business and operations.

The COVID-19 pandemic has had, and is expected to continue to have, an adverse impact on our operations, particularly as a result of preventive and precautionary measures that we, other businesses, and governments are taking. Governmental mandates related to COVID-19 or other infectious diseases, or public health crises, have impacted, and we expect them to continue to impact, our personnel and personnel at third-party manufacturing facilities in the United States and other countries, and the availability or cost of materials, which would disrupt or delay our receipt of instruments, components and supplies from the third parties we rely on to, among other things, produce our SP100 automation instrument and NPs. For instance, “stay-at-home” orders in California, and specifically San Mateo County where our headquarters is located, that require businesses to implement certain social distancing protocols and other written health and safety plans and measures and which could affect productivity and morale, could be reinstated. We have continued to operate within the rules applicable to our business; however, the imposition of new or extended governmental mandates could further impact our ability to operate effectively and conduct ongoing research and development or other activities. For onsite work in our Redwood City and San Diego offices, we continue to require proof of vaccination and adherence to our testing protocols, which may change from time to time. The COVID-19 pandemic and a skilled labor shortage in general have also had an effect on our ability to attract, recruit and interview candidates at the pace we would typically expect to support our rapidly expanding operations. To the extent that any governmental authority imposes additional regulatory requirements or changes existing laws, regulations, and policies that apply to our business and operations, such as additional workplace safety measures, our product development plans and our commercial plans may be delayed, and we may incur further costs in bringing our business and operations into compliance with changing or new laws, regulations, and policies.

In the near term, we expect that substantially all of our revenue will be derived from sales of the Proteograph Product Suite, including our instruments and associated consumables, to academic, research and commercial customers. We have moved into broad commercial release and, as a result, in the near term, our ability to drive the adoption of the Proteograph solution will depend on our ability to visit customer sites, the ability of our customers to access laboratories, and the ability to install and train on the Proteograph Product Suite and conduct research in light of the COVID-19 pandemic. For example, due to the pandemic, we have encountered delays permitting the travel of our U.S.-based employees to China. We also may encounter delays in other countries. Additionally, since we have moved into broad commercial release, the research and development budgets of these customers, the ability of such customers to receive funding for research, and the ability of such customers to receive instrument installations and visitors to their facilities and to travel to our facilities, other laboratories and industry events, has become increasingly important to the adoption of the Proteograph. All of these considerations are impacted by factors beyond our control, such as:

•reductions in capacity or shutdowns of laboratories and other institutions as well as other impacts stemming from the COVID-19 pandemic, such as reduced or delayed spending on instruments or consumables as a result of such shutdowns and delays before re-opened laboratories and institutions resume previous levels of research activities that require new purchases of our instruments or consumables;

•decreases in government funding of research and development; and

•