SEC Filing | Seer, Inc.

View:

seer-20220930

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 September 30, 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 November 4, 2022, the registrant had 58,596,598 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	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities	72
Item 3.	Defaults Upon Senior Securities	72
Item 4.	Mine Safety Disclosure	72
Item 5.	Other Information	72
Item 6.	Exhibits	73
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 execute our broad release commercialization plan, including our ability to attract customers;

•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)


	September 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	68,069	$	232,813
Short-term investments	367,995		167,261
Accounts receivable, net	4,537		2,495
Related party receivables	829		1,283
Other receivables	1,012		366
Inventory	5,916		4,145
Prepaid expenses and other current assets	2,113		3,336
Total current assets	450,471		411,699
Long-term investments	4,873		93,186
Operating lease right-of-use assets	27,465		20,142
Property and equipment, net	16,084		13,087
Restricted cash	524		524
Other assets	795		501
Total assets	$	500,212	$	539,139
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,975	$	3,789
Accrued expenses	7,821		8,394
Deferred revenue	325		376
Operating lease liabilities, current	1,314		864
Other current liabilities	181		—
Total current liabilities	13,616		13,423
Operating lease liabilities, net of current portion	28,509		22,459
Other noncurrent liabilities	319		341
Total liabilities	42,444		36,223
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.00001 par value; 5,000,000 shares authorized as of September 30, 2022 and December 31, 2021; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021	—		—
Class A common stock, $0.00001 par value; 94,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 58,591,785 and 57,493,005 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	1		1
Class B common stock, $0.00001 par value; 6,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 4,044,969 and 4,522,478 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	657,431		629,981
Accumulated other comprehensive loss	(2,693)		(536)
Accumulated deficit	(196,971)		(126,530)
Total stockholders’ equity	457,768		502,916
Total liabilities and stockholders’ equity	$	500,212	$	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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue:

Product	$	2,571	$	858	$	7,126	$	1,695
Service	68		500		204		500
Related party	1,316		787		3,494		1,167
Grant and other	—		10		64		189
Total revenue	3,955		2,155		10,888		3,551
Cost of revenue:
Product	1,371		574		4,674		1,078
Service	21		42		50		42
Related party	618		370		1,366		452
Total cost of revenue	2,010		986		6,090		1,572
Gross profit	1,945		1,169		4,798		1,979
Operating expenses:
Research and development	11,564		7,745		33,167		20,906
Selling, general and administrative	15,447		11,855		43,917		32,672
Total operating expenses	27,011		19,600		77,084		53,578
Loss from operations	(25,066)		(18,431)		(72,286)		(51,599)
Other income (expense):
Interest income	1,285		46		2,105		169
Other expense	(199)		—		(260)		—
Total other income	1,086		46		1,845		169
Net loss	$	(23,980)	$	(18,385)	$	(70,441)	$	(51,430)
Other comprehensive loss:
Unrealized gain (loss) on available-for-sale securities	420		26		(2,157)		(62)
Comprehensive loss	$	(23,560)	$	(18,359)	$	(72,598)	$	(51,492)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.38)	$	(0.30)	$	(1.13)	$	(0.85)
Weighted-average common shares outstanding, basic and diluted	62,538,983		61,133,518		62,308,314		60,625,601

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, 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
Issuance of Class A common stock from exercise of options and release of restricted stock units	260,533	—		445		—		—		445
Issuance of common stock in connection with employee stock purchase plan	56,753	—		420		—		—		420
Vesting of early exercised stock options and restricted common stock	—	—		43		—		—		43
Stock-based compensation	—	—		8,378		—		—		8,378
Other comprehensive loss	—	—		—		—		(886)		(886)
Net loss	—	—		—		(22,815)		—		(22,815)
Balance at June 30, 2022	62,610,179	1		648,146		(172,991)		(3,113)		472,043
Issuance of Class A common stock from exercise of options and release of restricted stock units	26,575	—		169		—		—		169
Vesting of early exercised stock options and restricted common stock	—	—		43		—		—		43
Stock-based compensation	—	—		9,073		—		—		9,073
Other comprehensive income	—	—		—		—		420		420
Net loss	—	—		—		(23,980)		—		(23,980)
Balance at September 30, 2022	62,636,754	$	1	$	657,431	$	(196,971)	$	(2,693)	$	457,768

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
Issuance of Class A common stock from exercise of options and release of restricted stock units	132,766	—		236		—		—		236
Repurchase of Class A common stock	(18,852)	—		—		—		—		—
Vesting of early exercised stock options and restricted common stock	—	—		285		—		—		285
Stock-based compensation	—	—		6,431		—		—		6,431
Other comprehensive loss	—	—		—		—		(62)		(62)
Net loss	—	—		—		(16,616)		—		(16,616)
Balance at June 30, 2021	61,423,263	1		614,483		(88,406)		(34)		526,044
Issuance of Class A common stock from exercise of options and release of restricted stock units	230,635	—		631		—		—		631
Vesting of early exercised stock options and restricted common stock	—	—		94		—		—		94
Stock-based compensation	—	—		6,786		—		—		6,786
Other comprehensive income	—	—		—		—		26		26
Net loss	—	—		—		(18,385)		—		(18,385)
Balance at September 30, 2021	61,653,898	$	1	$	621,994	$	(106,791)	$	(8)	$	515,196

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)



	Nine Months Ended September 30,
	2022		2021

OPERATING ACTIVITIES
Net loss	$	(70,441)	$	(51,430)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	25,513		19,256
Depreciation and amortization	2,839		1,722
Loss on disposal of property and equipment	261		—
Net amortization of premium and unrealized loss on available-for-sale securities	307		819
Non-cash operating lease expense	1,497		764
Changes in operating assets and liabilities:
Accounts receivable, net	(2,042)		(1,165)
Related party receivables	454		(604)
Other receivables	(646)		(513)
Prepaid expenses and other current assets	(742)		(1,959)
Inventory	(2,372)		(2,006)
Other assets	(294)		(52)
Accounts payable	(443)		302
Deferred revenue	(51)		(139)
Accrued expenses	(190)		1,150
Operating lease liabilities	(355)		(49)
Other current liabilities	181		—
Other noncurrent liabilities	—		(74)
Net cash used in operating activities	(46,524)		(33,978)
INVESTING ACTIVITIES
Purchases of property and equipment	(5,292)		(5,588)
Proceeds from disposal of property and equipment	170		—
Purchase of available-for-sale securities	(202,748)		(169,801)
Proceeds from maturities of available-for-sale securities	87,863		92,000
Net cash used in investing activities	(120,007)		(83,389)
FINANCING ACTIVITIES
Proceeds from issuance of common stock upon follow-on public offering, net of issuance costs	—		102,959
Proceeds from return of profit	—		11,403
Repurchase of Class A common stock	(20)		(35)
Proceeds from exercise of Class A common stock options including early exercised options	1,387		1,038
Proceeds from issuance of common stock in connection with employee stock purchase plan	420		—
Net cash provided by financing activities	1,787		115,365
Net decrease in cash, cash equivalents and restricted cash	(164,744)		(2,002)
Cash, cash equivalents and restricted cash, beginning of period	233,337		333,928
Cash, cash equivalents and restricted cash, end of period	$	68,593	$	331,926

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Property and equipment purchases included in accounts payable	$	814	$	183
Property and equipment purchases included in accrued expenses	$	14	$	271
Lease liability obtained in exchange for right-of-use assets	$	6,855	$	23,232

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, with wholly-owned subsidiaries in Massachusetts and the United Kingdom. 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.

On May 25, 2022, the Company incorporated Seer Bio UK Limited, a wholly owned subsidiary under the laws of United Kingdom.

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 September 30, 2022, the Company has incurred significant losses and has had negative cash flows from operations. As of September 30, 2022, the Company had cash and cash equivalents and short-term investments of $436.1 million and an accumulated deficit of $197.0 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 and investments as of September 30, 2022 provide 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 subsidiaries. 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.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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 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):


	Nine Months Ended September 30, 2021
	As Previously Reported		Adjustments		As Adjusted

Cash flows from operating activities:
Non-cash operating lease expense	$	—	$	764	$	764
Prepaid expenses and other current assets	(2,114)		155		(1,959)
Deferred rent	870		(870)		—
Operating lease liabilities	—		(49)		(49)
Net cash used in operating activities	$	(33,978)	$	—	$	(33,978)

Supplemental disclosure of non-cash activities:
Lease liability obtained in exchange for right-of-use assets	$	—	$	23,232	$	23,232

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. Cash and cash equivalents are stated at fair value.

Restricted cash as of September 30, 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):


	September 30,		December 31,
	2022		2021

Cash and cash equivalents	$	68,069	$	232,813
Restricted cash	524		524
Total cash and cash equivalents and restricted cash	$	68,593	$	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 September 30, 2022 and December 31, 2021.

As of September 30, 2022, there were three customers that represented 18%, 15%, and 13% 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.

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.

At times, the Company may enter into arrangements with payment terms which exceed one year from the transfer of control of the product or service. In such cases, the Company assesses whether the arrangement contains a significant financing component. If a significant financing component exists, the transaction price is adjusted for

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

the financing portion of the arrangement, which is recorded as interest income over the payment term using the effective interest method. The Company does not assess whether a significant financing component exists when, at contract inception, the period between the transfer of control to a customer and final payment is one year or less.

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 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.

Prior Period Reclassification

The Company included accrued research and development within accrued expenses for the prior period in order to conform to current year presentation for the Company’s condensed consolidated balance sheets. This reclassification had no effect on the Company’s previously reported financial position.

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).


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	55,155	$	—	$	—	$	55,155
Commercial paper	—		3,976		—		3,976
Corporate debt securities	—		8,938		—		8,938
Total cash equivalents	55,155		12,914		—		68,069
Investments:
U.S. Treasury securities	—		237,571		—		237,571
Commercial paper	—		61,585		—		61,585
Corporate debt securities	—		73,712		—		73,712
Total investments	—		372,868		—		372,868
Total assets measured at fair value	$	55,155	$	385,782	$	—	$	440,937


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	232,813	$	—	$	—	$	232,813
Total cash equivalents	232,813		—		—		232,813
Investments:
U.S. Treasury securities	—		260,447		—		260,447
Total 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.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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


	September 30, 2022
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Assets:
Cash equivalents:
Money market funds	$	55,155	$	—	$	—	$	55,155
Commercial paper	3,979		—		(3)		3,976
Corporate debt securities	8,937		1		—		8,938
Total cash equivalents	68,071		1		(3)		68,069
Investments:
U.S. Treasury securities	239,702		3		(2,134)		237,571
Commercial paper	61,727		—		(142)		61,585
Corporate debt securities	74,129		6		(423)		73,712
Total investments	375,558		9		(2,699)		372,868
Total assets measured at fair value	$	443,629	$	10	$	(2,702)	$	440,937


	December 31, 2021
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
Assets:
Cash equivalents:
Money market funds	$	232,813	$	—	$	—	$	232,813
Total cash equivalents	232,813		—		—		232,813
Investments:
U.S. Treasury securities	260,983		—		(536)		260,447
Total investments	260,983		—		(536)		260,447
Total assets measured at fair value	$	493,796	$	—	$	(536)	$	493,260

As of September 30, 2022 and December 31, 2021, unrealized losses on available-for-sale investments are not attributable to credit risk and are considered to be temporary. Approximately $0.5 million of the Company’s 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 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 September 30, 2022, $4.9 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 September 30, 2022 and December 31, 2021, the Company recorded $0.9 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.

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

4.OTHER FINANCIAL STATEMENT INFORMATION

Inventory

Inventory consists of the following (in thousands):


	September 30,		December 31,
	2022		2021
Raw materials	$	3,075	$	1,836
Work-in-progress	209		221
Finished goods	2,632		2,088
Total inventory	$	5,916	$	4,145

Property and Equipment, Net

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


	September 30,		December 31,
	2022		2021
Laboratory equipment	$	17,957	$	13,823
Computer equipment and software	874		461
Furniture and fixtures	572		478
Leasehold improvements	3,235		2,449
Construction-in-progress	231		784
Property and equipment	22,869		17,995
Less: accumulated depreciation and amortization	(6,785)		(4,908)
Total property and equipment, net	$	16,084	$	13,087

Depreciation and amortization expense related to property and equipment was $1.0 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively. Depreciation and amortization expense related to property and equipment was $2.8 million and $1.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Accrued Expenses

Accrued expenses consist of the following (in thousands):


	September 30,		December 31,
	2022		2021
Accrued compensation	$	5,432	$	4,730
Accrued professional services	331		388

Accrued taxes	373		457
Other	1,685		2,819
Total accrued expenses	$	7,821	$	8,394

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

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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 and nine months ended September 30, 2022, the Company recognized $2.6 million and $7.1 million of product revenue to non-related customers, respectively. For the three and nine months ended September 30, 2021, the Company recognized $0.9 million and $1.7 million of product revenue to non-related customers, respectively.

As of September 30, 2022 and December 31, 2021, the Company recorded $0.1 million and $0.4 million of deferred revenue related to product sales, respectively.

Service Revenue

For the three and nine months ended September 30, 2022, the Company recognized $0.1 million and $0.2 million of service revenue to non-related customers, respectively.

As of September 30, 2022 and December 31, 2021, the Company recorded $0.2 million and $0 of deferred service revenue, respectively.

Deferred revenue activity for the period ended September 30, 2022 and December 31, 2021 are as follows (in thousands):


	September 30,		December 31,
	2022		2021
Balance, beginning of period	$	376	$	250
Additions	716		376
Revenue recognized	(767)		(250)
Balance, end of period	$	325	$	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. As of September 30, 2022, $3.3 million of revenue is expected to be recognized from the remaining performance obligations, of which 79% is expected to be recognized within 12 months and the remainder thereafter.

For the three and nine months ended September 30, 2022, 21% and 26% of the Company’s total revenue, respectively, was generated outside of the United States, primarily from countries in Asia. For the three and nine months ended September 30, 2021, 18% and 22% of the Company’s total revenue, respectively, was generated outside of the United States, primarily in Asia.

For the three months ended September 30, 2022, three customers accounted for 33%, 18%, and 11% of the Company’s total revenue. For the nine months ended September 30, 2022, two customers accounted for 32% and 11% of the Company’s total revenue. For the three months ended September 30, 2021, three customers accounted for 37%, 23%, and 17% of the Company’s total revenue. For the nine months ended September 30, 2021, four customers accounted for 33%, 14%, 11%, and 10% of the Company’s total revenue.

Grant and Other Revenue

In August 2019, the Company received a notice of a Small Business Innovation Research (SBIR) 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. In May 2022, the SBIR grant reached the end of the award period. During the three months ended September 30, 2022 and 2021, the Company recognized $0 and approximately

SEER, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

$10,000 of grant revenue, respectively, with respect to the award. During the nine months ended September 30, 2022 and 2021, the Company recognized $