10q10k10q10k.net

What changed in Seer, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Seer, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+484 added−504 removedSource: 10-K (2025-03-03) vs 10-K (2023-12-31)

Top changes in Seer, Inc.'s 2024 10-K

484 paragraphs added · 504 removed · 382 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

145 edited+57 added−83 removed144 unchanged
Biggest changeUnless earlier terminated, the agreement continues until the expiration of the last to expire patent right licensed under the agreement. Subject to an applicable cure period, BWH may terminate the agreement if we fail to comply with applicable payments or diligence obligations or upon a breach of our obligation under the agreement, or for certain insolvency-related events.
Biggest changeSubject to an applicable cure period, BWH may terminate the agreement if we fail to comply with applicable payments or diligence obligations or upon a breach of our obligation under the agreement, or for certain insolvency-related events. 33 Table of Contents PrognomiQ In August 2020, we entered into an intellectual property transfer and license agreement and, in October 2020, we entered into an intellectual property sublicense agreement, in each case with PrognomiQ in connection with the spin-out of PrognomiQ.
We believe that identifying protein variants, including those resulting from PTMs such as glycosylation and phosphorylation, can significantly transform the life sciences field. In January 2024, we launched the Protein Discovery Catalog on our website with the goals to remove barriers to access, empower researchers, and drive new lead generation.
We believe that identifying protein variants, including those resulting from PTMs such as glycosylation and phosphorylation, can significantly transform the life sciences field. In 2024, we launched the Protein Discovery Catalog on our website with the goals to remove barriers to access, empower researchers, and drive new lead generation.
To accommodate varying customer needs, we have designed the PAS to be cloud-based and, in the future, to be available via more localized solutions that accommodate different customer types and geographies. The PAS offers a predefined workflow for data management and analysis, leveraging publicly available MS data analysis tools as well as our own proprietary analysis tools.
To accommodate varying customer needs and scalability, we have designed the PAS to be cloud-based and, in the future, to be available via more localized solutions that accommodate different customer types and geographies. The PAS offers a predefined workflow for data management and analysis, leveraging publicly available MS data analysis tools as well as our own proprietary analysis tools.
The true abundance of a large number of proteins at the protein variant level at scale is not independently possible, so we use the ratio of abundances in two samples to demonstrate the accuracy of protein abundance measurement.
The measurement of the true abundance of a large number of proteins at the protein variant level at scale is not possible, so we use the ratio of abundances in two samples to demonstrate the accuracy of protein abundance measurement.
For further discussion of the risks relating to intellectual property, see the section titled “Risk factors—Risks Related to our Intellectual Property.” Collaboration and License Agreements The Brigham and Women’s Hospital In December 2017, we entered into an exclusive patent license agreement with BWH, pursuant to which we obtained an exclusive, royalty-bearing, sub-licensable (with approval from BWH) license to certain U.S. and foreign patents and patent applications in one patent family related to methods for identifying a biological state using nanoparticle and biosensor compositions and other nanoparticle compositions to develop, manufacture, use and commercialize products and processes in all fields, including but not limited to therapeutic, diagnostic, or other uses, on a worldwide basis.
For further discussion of the risks relating to intellectual property, see the section titled “Risk factors—Risks Related to our Intellectual Property.” 32 Table of Contents Collaboration and License Agreements The Brigham and Women’s Hospital In December 2017, we entered into an exclusive patent license agreement with BWH, pursuant to which we obtained an exclusive, royalty-bearing, sub-licensable (with approval from BWH) license to certain U.S. and foreign patents and patent applications in one patent family related to methods for identifying a biological state using nanoparticle and biosensor compositions and other nanoparticle compositions to develop, manufacture, use and commercialize products and processes in all fields, including but not limited to therapeutic, diagnostic, or other uses, on a worldwide basis.
The Proteograph Product Suite The Proteograph Product Suite is an integrated solution consisting of consumables, an automation instrument, and software to perform unbiased, deep proteomic analysis at scale in a matter of hours.
The Proteograph Product Suite The Proteograph Product Suite is an integrated solution consisting of consumables, an automation instrument, and data analysis software to perform unbiased, deep proteomic analysis at scale in a matter of hours.
The Proteograph Product Suite is an integrated solution that includes consumables, an automation instrument and software, and was designed to deliver ease-of-use, efficiency, robustness and reproducibility of results and to complement existing laboratory infrastructure. Its simple and integrated workflow enables the customer to use their own MS instrument or leverage a widely available installed base of MS instruments.
The Proteograph Product Suite is an integrated solution that includes consumables, an automation instrument and data analysis software, and was designed to deliver ease-of-use, efficiency, robustness and reproducibility of results and to complement existing laboratory infrastructure. Its simple and integrated workflow enables the customer to use their own MS instrument or leverage a widely available installed base of MS instruments.
Figure 15: Sources of variation. Left panel is a graphical summary of factors contributing to variation in the affinity-based discovery of the plasma proteome. Right panel schematically describes reasons for differences in binding profile of aptamer and antibody-based proteomic profiling (PAV protein altering variant; SNV single-nucleotide variant). Adapted from Pietzner et al.
Figure 16: Sources of variation. Left panel is a graphical summary of factors contributing to variation in the affinity-based discovery of the plasma proteome. Right panel schematically describes reasons for differences in binding profile of aptamer and antibody-based proteomic profiling (PAV protein altering variant; SNV single-nucleotide variant). Adapted from Pietzner et al.
Researchers identified eight such significant proteins and are now investigating how these results may be advanced to develop a score indicating the likelihood of cognitive decline in a particular timeframe. One such example is shown in Figure 13 below. Higher abundance of this protein is associated with greater probability of cognitive decline.
Researchers identified eight such significant proteins and are now investigating how these results may be advanced to develop a score indicating the likelihood of cognitive decline in a particular timeframe. One such example is shown in Figure 14 below. Higher abundance of this protein is associated with greater probability of cognitive decline.
Panels of ligands used for protein interrogation have several shortcomings, including: (i) they 20 Table of Contents do not recognize differences in protein structure outside of the epitope binding site, so that all variants appear the same and cannot be differentiated from one another, (ii) conformational changes of the protein can affect epitope and ligand binding; for example, those induced by protein-protein interactions or post-translational modifications, and (iii) certain protein isoforms may exclude entire protein domains and remove the epitope binding site, yielding false negative results.
Panels of ligands used for protein interrogation have several shortcomings, including: (i) they do not recognize differences in protein structure outside of the epitope binding site, so that all variants appear the same and cannot be differentiated from one another, (ii) conformational changes of the protein can affect epitope and ligand binding; for example, those induced by protein-protein interactions or post-translational modifications, and (iii) certain protein isoforms may exclude entire protein domains and remove the epitope binding site, yielding false negative results.
We conduct vendor and component qualification for components provided by third-party suppliers and quality control tests on our NPs. 27 Table of Contents Automation Instrument We designed the SP100 automation instrument and have outsourced its manufacturing to Hamilton Company, a leading manufacturer of automated liquid handling workstations.
We conduct vendor and component qualification for components provided by third-party suppliers and quality control tests on our NPs. 25 Table of Contents Automation Instrument We designed the SP100 automation instrument and have outsourced its manufacturing to Hamilton Company, a leading manufacturer of automated liquid handling workstations.
Our diverse and expanding library of NP surfaces can support the development of new products catering to various applications and customer needs.
Our diverse library of NP surfaces can support the development of new products catering to various applications and customer needs.
Our in-licensed patents and patent applications, if issued, are expected to expire between 2027 and 2037, in each case without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
Our in-licensed patents and patent applications, if issued, are expected to expire between 2034 and 2037, in each case without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
Our unique NPs capture significantly more proteins than current methods of unbiased proteomic analysis. 9 Table of Contents In a head-to-head experiment, Thermo Scientific TM directly compared the breadth of the Proteograph Product Suite to other unbiased proteomics methods using the same biological sample.
Our unique NPs capture significantly more proteins than current methods of unbiased proteomic analysis. 10 Table of Contents In a head-to-head experiment, Thermo Scientific TM directly compared the breadth of the Proteograph Product Suite to other unbiased proteomics methods using the same biological sample.
We anticipate that researchers will use the Proteograph solution to catalog 15 Table of Contents protein variants in a manner similar to the cataloging of genetic variants over the past 15 years, providing functional context at a scale that is not currently accessible with other proteomics methods.
We anticipate that researchers will use the Proteograph solution to catalog protein variants in a manner similar to the cataloging of genetic variants over the past 15 years, providing functional context at a scale that is not currently accessible with other proteomics methods.
The CV across individual components of the workflow, including the Proteograph instrument and the mass spectrometry instrument, aggregate to form the overall CV% of the workflow (Figure 12; left panel). The typical CV% of MS instrumentation, derived by running the same peptide mixture in consecutive MS injections, is approximately 10%.
The CV across individual components of the workflow, including the Proteograph instrument and the MS instrument, aggregate to form the overall CV% of the workflow (Figure 12; left panel). The typical CV% of MS instrumentation, derived by running the same peptide mixture in consecutive MS injections, is approximately 10%.
Therefore, we believe that direct analysis of the proteome via at-scale proteomics studies will provide unique biological insights for research, discovery and clinical applications. Limitations of Affinity-Based Approaches to Proteomics Proteins are highly variable in structure, chemistry, and concentration, presenting technological challenges for their identification at low concentration levels.
Therefore, we believe that direct analysis of the proteome via at-scale proteomics studies will provide unique biological insights for research, discovery and clinical applications. 20 Table of Contents Limitations of Affinity-Based Approaches to Proteomics Proteins are highly variable in structure, chemistry, and concentration, presenting technological challenges for their identification at low concentration levels.
For example, in a state-of-the-art deep unbiased plasma proteomics study in 2017 prior to commercial availability of the Proteograph Product Suite, Keshishian et al. depleted the most abundant proteins with immuno-affinity columns and then separated remaining peptides by multiple and complex chromatographic steps and mass spectrometer injections.
For example, in a state-of-the-art deep unbiased plasma proteomics study in 2017 prior to commercial availability of the Proteograph Product Suite, Keshishian et al. depleted the most abundant proteins with immuno-affinity columns and then separated remaining peptides by multiple and complex chromatographic steps and MS injections.
The workflow has been configured to process one full 96-well plate at a time, in just eight hours, processing 40 samples in parallel. The output of the Proteograph workflow consists of peptides that are quantified, dried, and can be reconstituted when ready for injection into a mass spectrometer.
The workflow has been configured to process one full 96-well plate at a time, in just eight hours, processing 40 samples in parallel. The output of the Proteograph workflow consists of peptides that are quantified, dried, and can be reconstituted when ready for injection into a MS.
All clinical studies of investigational medical devices to determine safety and effectiveness must be conducted in accordance with FDA’s 29 Table of Contents investigational device exemption (IDE) regulations, including the requirement for the study sponsor to submit an IDE application to FDA, unless exempt, which must become effective prior to commencing human clinical studies.
All clinical studies of investigational medical devices to determine safety and effectiveness must be conducted in accordance with FDA’s investigational device exemption (IDE) regulations, including the requirement for the study sponsor to submit an IDE application to FDA, unless exempt, which must become effective prior to commencing human clinical studies.
MS provides quantitative unbiased detection, either on an instrument provided by the user, or sent out for MS analysis to a third-party provider. Software The Proteograph Analysis Suite (PAS) is designed for ease-of-use and efficiency to help users arrive at insights quickly.
MS provides quantitative unbiased detection, either on an instrument provided by the user, or sent out for MS analysis to a third-party provider. 9 Table of Contents Software The Proteograph Analysis Suite (PAS) is designed for ease-of-use and efficiency to help users arrive at insights quickly.
This highlights the importance of generating data at the peptide level, which is made possible by the Proteograph Product Suite. Figure 5: Identification of peptide-level variants of BMP1 enabled by an unbiased approach.
This highlights the importance of generating data at the peptide level, which is made possible by the Proteograph Product Suite. Figure 3: Identification of peptide-level variants of BMP1 enabled by an unbiased approach.
Our engineered NPs capture intact proteins across the dynamic range without requiring prior knowledge of proteome composition or designing the assay for specific protein targets. In combination with an unbiased mass spectrometry readout, they reveal molecular information at the peptide level revealing protein variants.
Our engineered NPs capture intact proteins across the dynamic range without requiring prior knowledge of proteome composition or designing the assay for specific protein targets. In combination with an unbiased MS readout, they reveal molecular information at the peptide level revealing protein variants.
Importantly, the Proteograph protein data is obtained using an MS detector, which is the gold standard for proteomics, and data is conventionally reported with a one percent False Discovery Rate (FDR). This means that the reported proteins are identified with 99% confidence. • Depth of coverage .
Importantly, the Proteograph protein data is obtained using an MS detector, which is the gold standard for proteomics, and data is conventionally reported with a less than one percent False Discovery Rate (FDR). This means that the reported proteins are identified with over 99% confidence. • Depth of coverage .
The Applications of the Proteograph Product Suite We believe the ability to generate unbiased, deep, proteomic data at scale, with rich content at the protein variant level, will have a wide range of applications in proteomics, including basic research and discovery, translational research, diagnostics and applied markets.
The Applications of the Proteograph Product Suite We believe the ability to generate unbiased, deep, proteomic data at scale, with rich content at the protein variant level, has a wide range of applications in proteomics, including basic research and discovery, translational research, diagnostics and applied markets.
Our products are not intended or promoted for use in clinical practice in the diagnosis of disease or other conditions, and they are labeled for research use only, not for use in diagnostic procedures. Accordingly, we 28 Table of Contents believe our products, as we intend to market them, are not subject to regulation by FDA.
Our products are not intended or promoted for use in clinical practice in the diagnosis of disease or other conditions, and they are labeled for research use only, not for use in diagnostic procedures. Accordingly, we believe our products, as we intend to market them, are not subject to regulation by FDA.
The human proteome is far less characterized, but has a much higher utility as a dynamic indicator of health status. Complexity of the Proteome The human proteome is dynamic, diverse and complex, with approximately 23,000 genes giving rise to over one million protein variants.
The human proteome is far less characterized, but has a much higher utility as a dynamic indicator of health status. 2 Table of Contents Complexity of the Proteome The human proteome is dynamic, diverse and complex, with approximately 23,000 genes giving rise to over one million protein variants.
At binding equilibrium, which occurs within minutes after our NPs encounter a biosample, the selective sampling of proteins by our NPs is robust and highly reproducible. 6 Table of Contents Figure 6: Nanoparticles allow unbiased interrogation of proteoform diversity. Our nanoparticle technology leverages engineered physicochemical properties to reproducibly bind to proteins without prior knowledge, forming a protein corona.
At binding equilibrium, which occurs within minutes after our NPs encounter a biosample, the selective sampling of proteins by our NPs is robust and highly reproducible. Figure 5: Nanoparticles allow unbiased interrogation of proteoform diversity. Our nanoparticle technology leverages engineered physicochemical properties to reproducibly bind to proteins without prior knowledge, forming a protein corona.
We believe these features will facilitate broad adoption of the Proteograph solution across a variety of laboratories and institutions in both decentralized and centralized settings. 14 Table of Contents • Offers a core technology with the potential for development of a range of products, applications and platforms.
We believe these features will facilitate broad adoption of the Proteograph solution across a variety of laboratories and institutions in both decentralized and centralized settings. • Offers a core technology with the potential for development of a range of products, applications and platforms.
This period may be extended by two further months. Furthermore, following the expiration of the specified period, there will be 32 Table of Contents increasing scope for divergence in application, interpretation and enforcement of the data protection law as between the United Kingdom and EEA.
This period may be extended by two further months. Furthermore, following the expiration of the specified period, there will be increasing scope for divergence in application, interpretation and enforcement of the data protection law as between the United Kingdom and EEA.
We use a variety of intellectual property protection strategies, including patents, trademarks, trade secrets and other methods of protecting proprietary information. As of December 31, 2023, we owned or exclusively licensed over 160 issued patents and patent applications worldwide. Our intellectual property portfolio includes patents and patent applications directed to proteomic assays, nanoparticle chemistry, data analysis and automation instruments.
We use a variety of intellectual property protection strategies, including patents, trademarks, trade secrets and other methods of protecting proprietary information. As of December 31, 2024, we owned or exclusively licensed over 200 issued patents and patent applications worldwide. Our intellectual property portfolio includes patents and patent applications directed to proteomic assays, nanoparticle chemistry, data analysis and automation instruments.
The remaining 94 represent putative biomarkers of AD, potentially highlighting new biological insight. Researchers used clinical information to identify the point of significant cognitive decline and determined proteins that separated the population into fast and slow decliners.
The remaining 94 represent putative biomarkers of AD, potentially highlighting new biological insight. 17 Table of Contents Researchers used clinical information to identify the point of significant cognitive decline and determined proteins that separated the population into fast and slow decliners.
Basic Research and Discovery Applications We believe that the Proteograph will be a valuable tool for researchers across a wide range of basic research and discovery applications, including cataloging protein diversity, proteogenomics and exploring the interactome.
Basic Research and Discovery Applications We believe that the Proteograph is a valuable tool for researchers across a wide range of basic research and discovery applications, including cataloging protein diversity, proteogenomics and exploring the interactome.
Utilizing a $2 million SBIR grant to the Company and Massachusetts General Hospital (MGH) from the National Institute on Aging (NIA), researchers from the Company and MGH conducted a study that analyzed 1,800 plasma samples comprising both controls and individuals diagnosed with cognitive decline, including Alzheimer’s Disease (AD) (Lacar et al.) .
Utilizing a $2 million Small Business Innovation Research grant to the Company and Massachusetts General Hospital (MGH) from the National Institute on Aging (NIA), researchers from the Company and MGH conducted a study that analyzed 1,800 plasma samples comprising both controls and individuals diagnosed with cognitive decline, including Alzheimer’s Disease (AD) (Lacar et al.) .
Applied Applications in Agriculture, Animal Health, Environmental Monitoring and Food Safety We see significant opportunities for the Proteograph solution to be applied in areas beyond human health, including areas where broad-scale genomics is being widely applied today, and applications where proteomics can uniquely enable the creation of end-markets.
Applied Applications in Agriculture, Animal Health, and Bioprocessing We see significant opportunities for the Proteograph solution to be applied in areas beyond human health, including areas where broad-scale genomics is being widely applied today, and applications where proteomics can uniquely enable the creation of end-markets.
Current companies that provide proteomics products include Agilent Technologies, Bruker Corporation, Danaher, DiaSorin and Thermo Fisher Scientific. There are also a number of companies that provide proteomic analysis services. In addition, multiple emerging growth companies have developed, or are developing, proteomics products, services and solutions, such as Nautilus Biotechnology, Olink Proteomics, Quanterix, Quantum-Si and Standard BioTools.
Current companies that provide proteomics products include Agilent Technologies, Bio-Techne, Bruker, Danaher, DiaSorin and Thermo Fisher Scientific. There are also a number of companies that provide proteomic analysis services. In addition, multiple emerging growth companies have developed, or are developing, proteomics products, services and solutions, such as Alamar Biosciences, Nautilus Biotechnology, Quanterix, Quantum-Si and Standard BioTools.
In addition to our reliance on patent protection for our inventions, products and technologies, we also rely on trade secrets, know-how, confidentiality agreements and continuing technological innovation to develop and maintain our 33 Table of Contents competitive position.
In addition to our reliance on patent protection for our inventions, products and technologies, we also rely on trade secrets, know-how, confidentiality agreements and continuing technological innovation to develop and maintain our competitive position.
We are using machine-learning techniques and conducting large-scale analyses to understand relationships between NP surfaces and protein binding in order to design our future products. • Provides core technology with significant operational leverage in research and development, manufacturing and commercialization. NP-based products are efficient to design, develop and manufacture.
We are using machine-learning techniques and conducting large-scale analyses to understand relationships between NP surfaces and protein binding to design future products. 15 Table of Contents • Provides core technology with significant operational leverage in research and development, manufacturing and commercialization. NP-based products are efficient to design, develop and manufacture.
We believe that unbiased, deep and large-scale proteomic information, which can be enabled by the Proteograph, can complement and extend the value of genomics, transcriptomics and metabolomics information in fields such as agriculture, animal health, environmental monitoring and food safety.
We believe that unbiased, deep and large-scale proteomic information, which can be enabled by the Proteograph, can complement and extend the value of genomics, transcriptomics and metabolomics information in fields such as agriculture, animal health and bioprocessing.
Biomarker Discovery Currently, de novo biomarker discovery research is limited by the size of unbiased studies or is targeted in nature. These approaches have yet to uncover the large number of potential single biomarkers or combinations of markers for a range of clinical applications.
Biomarker Discovery Currently, de novo biomarker discovery research is limited by the size of unbiased studies or is targeted in nature. These approaches have yet to uncover the large number of potential single biomarkers or combinations of markers for a range of clinical applications. The Proteograph is enabling the discovery of biomarkers through large-scale, unbiased and deep proteomics studies.
The Protein Discovery Catalog is a fully-accessible, searchable catalog with over 10,000 proteins across 1,900 expression pathways. This catalog is our first published index of the unprecedented depth of empirically observed proteins captured by the Proteograph to date.
The Protein Discovery Catalog is a fully-accessible, searchable catalog with over 36,000 proteins across multiple species and over 10,000 human proteins across 1,900 Reactome biological pathways. This catalog is our first published index of the unprecedented depth of empirically observed proteins captured by the Proteograph to date.
These limitations underscore the importance of studying proteins with peptide-level resolution using a technology that is quantitatively robust in identifying protein variants. 21 Table of Contents Figure 16: Distribution of correlation coefficients across 937 mapping aptamer–antibody pairs (n = 871 unique protein targets). Adapted from Pietzner et al. Affinity-based approaches have limitations when used for pQTL analysis.
These limitations underscore the importance of studying proteins with peptide-level resolution using a technology that is quantitatively robust in identifying protein variants. 21 Table of Contents Figure 17: Distribution of correlation coefficients across 937 mapping aptamer–antibody pairs (n = 871 unique protein targets). Adapted from Pietzner et al.
We believe such studies are uniquely made possible using deep, unbiased proteomics at scale using the Proteograph Product Suite because 55% of these 138 proteins are not present on a commercially available high-plex affinity based panel and there is no other practical way to do a deep unbiased proteomics study on 1,800 plasma samples other than leveraging the Proteograph Product Suite. 17 Table of Contents Figure 13: Shows the probability of no decline as a function of follow up time.
We believe such studies are uniquely made possible using deep, unbiased proteomics at scale using the Proteograph Product Suite because 55% of these 138 proteins are not present on a commercially available high-plex affinity based panel and there is no other practical way to do a deep unbiased proteomics study on 1,800 plasma samples other than leveraging the Proteograph Product Suite.
We believe that coupling an exceptional customer experience with a transformative product will allow us to deliver substantial value to our customers, build long-term customer loyalty, enhance our competitive differentiation and, importantly, use our customer relationships to gain insights that inform our product development to grow our offerings in ways that will benefit our customers.
We believe these efforts will allow us to deliver substantial value to our customers, build long-term customer loyalty, enhance our competitive differentiation and, importantly, use our customer relationships to gain insights that inform our product development to grow our offerings in ways that will benefit our customers.
In the future, to the extent we or our partners develop any medical devices subject to FDA regulation, failure to comply with applicable regulatory requirements can result in enforcement action by FDA, which may include warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; withdrawal, administrative detention, refunds, recall or seizure of products; operating restrictions, partial suspension or total shutdown of production; refusing or delaying requests for 510(k) clearance, de novo authorization, or PMA approval of new products or modified products; withdrawing 510(k) clearance, de novo authorization, or PMA approvals already granted; refusal to grant export approvals; or criminal prosecution.
Although there is a trend towards harmonization of quality system, standards and regulations in each country may vary substantially which can affect timelines of introduction. 29 Table of Contents In the future, to the extent we or our partners develop any medical devices subject to FDA regulation, failure to comply with applicable regulatory requirements can result in enforcement action by FDA, which may include warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; withdrawal, administrative detention, refunds, recall or seizure of products; operating restrictions, partial suspension or total shutdown of production; refusing or delaying requests for 510(k) clearance, de novo authorization, or PMA approval of new products or modified products; withdrawing 510(k) clearance, de novo authorization, or PMA approvals already granted; refusal to grant export approvals; or criminal prosecution.
Prior to the commercial availability of the Proteograph Product Suite, we believe the critical unmet need in proteomic analysis was how to collect unbiased proteomic data on thousands of proteins in a sample spanning more than ten orders of magnitude in concentration (dynamic range) and to repeat this across thousands of samples in a reasonable amount of time and cost.
The study identified 4,500 different proteins across 16 samples but took months to complete. 22 Table of Contents Prior to the commercial availability of the Proteograph Product Suite, we believe the critical unmet need in proteomic analysis was how to collect unbiased proteomic data on thousands of proteins in a sample spanning more than ten orders of magnitude in concentration (dynamic range) and to repeat this across thousands of samples in a reasonable amount of time and cost.
Our SP100 instrument is designed to enable studies of hundreds to thousands of samples, with an automated workflow that allows for rapid, highly-parallel sample processing with approximately 30 minutes of set-up time.
Our SP100 instrument is designed to enable studies of hundreds to thousands of samples, with an automated workflow that allows for rapid, highly-parallel sample processing with approximately 30 minutes of set-up time. The Proteograph workflow is driven by the Instrument Control Software (ICS) on the SP100 automation instrument.
Item 1. Busi ness Overview Our mission is to imagine and pioneer new ways to decode the biology of the proteome to improve human health. Our product, the Proteograph TM Product Suite (Proteograph), leverages our proprietary engineered nanoparticle (NP) technology to provide unbiased, deep, rapid and large-scale access to the proteome.
Item 1. Busi ness Overview Our mission is to imagine and pioneer new ways to decode the biology of the proteome to improve human health. Through our product, the Proteograph TM Product Suite (Proteograph), we provide researchers with unbiased, deep, rapid and large-scale access to the proteome.
As leaders in NGS have demonstrated, our sustainable advantage will come from continual development and commercialization of new products and applications based on our technology. We will drive innovation through both internal R&D projects and from collaborations with customers and partners. • Build our commercial infrastructure and manufacturing capabilities to enable expansion of our global customer base.
As leaders in NGS have demonstrated, our sustainable advantage will come from continual development and commercialization of new products and applications based on our technology. We will drive innovation through both internal R&D projects and from collaborations with customers and partners.
Competition The life sciences technology industry is highly dynamic, marked by rapidly advancing technologies, intense competition and a strong focus on intellectual property. In the proteomics market, companies offer a range of analytical instruments, such as chromatography and MS instruments, and associated reagents.
Hamilton has represented to us that it maintains ISO 9001 and ISO 13485 certification. Competition The life sciences technology industry is highly dynamic, marked by rapidly advancing technologies, intense competition and a strong focus on intellectual property. In the proteomics market, companies offer a range of analytical instruments, such as chromatography and MS instruments, and associated reagents.
In October 2023, the FDA published a proposed rule that proposes to phase out its enforcement discretion for most laboratory-developed tests (LDTs) and to amend the FDA’s regulations to make explicit that in vitro diagnostics are medical devices under the Federal Food, Drug, and Cosmetic Act, including when the manufacturer of the diagnostic product is a laboratory.
In May 2024, the FDA issued a final rule that phases out its enforcement discretion for most laboratory-developed tests (LDTs) and amends the FDA’s regulations to make explicit that in vitro diagnostics are medical devices under the Federal Food, Drug, and Cosmetic Act, including when the manufacturer of the diagnostic product is a laboratory.
The Proteograph Analysis Suite, a data analytics software suite, provides quality control and allows researchers to analyze and interpret the output from the system to gain insights from their data. Figure 7: Proteograph Product Suite comprises consumables, an automation instrument, and software.
The Proteograph Analysis Suite, a data analytics software suite, provides quality control and allows researchers to analyze and interpret the output from the system to gain insights from their data.
For further discussion of the risks we face relating to regulation, see the section titled “Risk factors—Risks related to our business and industry.” 31 Table of Contents The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), and their implementing regulations, which impose obligations, including mandatory contractual terms, with respect to safeguarding the transmission, security and privacy of protected health information by covered entities subject to HIPAA, such as health plans, health care clearinghouses and healthcare providers, and their respective business associates that access protected health information.
The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH), and their implementing regulations, which impose obligations, including mandatory contractual terms, with respect to safeguarding the transmission, security and privacy of protected health information by covered entities subject to HIPAA, such as health plans, health care clearinghouses and healthcare providers, and their respective business associates that access protected health information.
In genomics, unbiased sequencing of the genome enabled discovery of novel content, creating new end-market opportunities in basic research and discovery, translational research and clinical applications, including early cancer detection, recurrence monitoring and non-invasive prenatal testing.
In genomics, unbiased sequencing of the genome enabled discovery of novel content, creating new end-market opportunities in basic research and discovery, translational research and clinical applications, including early cancer detection, recurrence monitoring and non-invasive prenatal testing. Similar to genomics, we believe that peptide-level resolution is crucial to the discovery of novel content and new biological insights.
Neat plasma, which represents the simplest form of unbiased proteomic analysis requiring minimal processing time using another method, resulted in a depth of coverage of 767 proteins. Using the Proteograph Product Suite, Thermo Scientific TM detected 6,033 proteins in plasma, representing 7.5x expansion in depth of protein coverage. Across a set of 2,428 plasma samples, we identified over 10,600 proteins.
Neat plasma, which represents the simplest form of unbiased proteomic analysis requiring minimal processing time using another method, resulted in a depth of coverage of 767 proteins. Using the Proteograph Product Suite, Thermo Scientific TM detected 6,033 proteins in plasma, representing 8.0x expansion in depth of protein coverage.
In an amendment to the intellectual property transfer and license agreement, we agreed to extend this negotiation period to August 21, 2024. Neither party may assign the intellectual property transfer and license agreement nor any rights or obligations under the agreement without the other party’s prior written consent, other than to an affiliate or pursuant to an acquisition.
Neither party may assign the intellectual property transfer and license agreement nor any rights or obligations under the agreement without the other party’s prior written consent, other than to an affiliate or pursuant to an acquisition.
Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices, or those deemed not substantially equivalent to a legally marketed predicate device, are placed in class III. Class III devices typically require PMA approval.
The de novo classification route is generally less burdensome than the PMA approval process. 27 Table of Contents Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices, or those deemed not substantially equivalent to a legally marketed predicate device, are placed in class III. Class III devices typically require PMA approval.
The Proteograph Product Suite is detector 7 Table of Contents agnostic and, we believe, will be adaptable to other protein detection instruments in the future. The MS component of the Proteograph workflow is either provided by the researcher’s laboratory or can be outsourced to a third-party provider.
The Proteograph Product Suite is detector agnostic and, we believe, will be adaptable to other protein detection instruments in the future. The MS component of the Proteograph workflow is either provided by the researcher’s laboratory, can be outsourced to a third-party provider, or be run through the Seer Technology Access Center (STAC), which is our in-house service program.
To grant such a reclassification, FDA must determine that the FDC Act’s general controls alone, or general controls and special controls together, are sufficient to provide a reasonable assurance of the device’s safety and effectiveness. The de novo classification route is generally less burdensome than the PMA approval process.
To grant such a reclassification, FDA must determine that the FDC Act’s general controls alone, or general controls and special controls together, are sufficient to provide a reasonable assurance of the device’s safety and effectiveness.
Diagnostic Applications We believe that the Proteograph Product Suite also holds significant diagnostic potential. The unbiased, deep and scalable proteomic data generated by the Proteograph has the potential to create ecosystems, similar to the way in which NGS enabled genomics-based diagnostics for cancer and rare genetic diseases.
The unbiased, deep and scalable proteomic data generated by the Proteograph has the potential to create ecosystems, similar to the way in which next-generation sequencing (NGS) enabled genomics-based diagnostics for cancer and rare genetic diseases.
We exclusively license U.S. patents and patent applications, as well as ex-U.S. patents and pending patent applications from The Brigham and Women’s Hospital (BWH). These patents and patent applications are directed to methods for identifying a biological state, including classification and early detection of cancers and other diseases, using nanoparticle and biosensor compositions, as well as other nanoparticle compositions.
These patents and patent applications are directed to methods for identifying a biological state, including classification and early detection of cancers and other diseases, using nanoparticle and biosensor compositions, as well as other nanoparticle compositions.
The ready availability of non-particle reagents, combined with our ability to efficiently design and fabricate different NPs with different chemical properties, greatly facilitates the development and production of future iterations or additional versions of the Proteograph assays to address potential customer needs, such as expanded protein coverage or specialized assays, including potential assays that can be used with clinical products.
The ready availability of non-particle reagents, combined with our ability to efficiently design and fabricate different NPs with different physicochemical properties, greatly facilitates the development and production of future iterations or additional versions of the Proteograph assays to address potential customer needs, such as expanded protein coverage or specialized assays, including potential assays that can be used with clinical products. 8 Table of Contents In the first quarter of 2025, we announced a new supported application on Proteograph XT for cell lysate proteomics, bringing the power of the Proteograph to intracellular proteomics.
Furthermore, we rigorously measure and evaluate each of these technical attributes, as we describe below. • Breadth of protein sampling . This capability refers to conducting unbiased, highly parallel sampling of the proteome.
We believe that our integrated solution is the only product in the market that combines all these technical and operational capabilities. Furthermore, we rigorously measure and evaluate each of these technical attributes, as we describe below. • Breadth of protein sampling . This capability refers to conducting unbiased, highly parallel sampling of the proteome.
If we account for additional spliceforms at the population level, arising from genetic variants and somatic variants including those responsible for cancers (which affect RNA processing), the number is much larger.
If we account for additional spliceforms at the population level, arising from genetic variants and somatic variants including those responsible for cancers (which affect RNA processing), the number is much larger. Affinity-based approaches generally cannot differentiate between spliceforms, whereas unbiased MS-based approaches survey proteins at the peptide level, enabling differentiation between spliceforms.
Our owned or exclusively licensed patents and patent applications, if issued, are expected to expire between 2024 and 2044, in each case without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees.
Our owned or exclusively licensed patents and patent applications, if issued, are expected to expire between 2023 and 2045, in each case without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees. 31 Table of Contents We exclusively license U.S. patents and patent applications, as well as ex-U.S. patents and pending patent applications from The Brigham and Women’s Hospital (BWH).
These studies are not a part of this prospectus and are not incorporated by reference in this Annual Report. Backman, J.D. et al . Exome sequencing and analysis of 454,787 UK Biobank participants. Nature 599, 628–634 (2021) Bludau, I. et al . Proteomic and interactomic insights into the molecular basis of cell functional diversity.
These studies are not a part of this prospectus and are not incorporated by reference in this Annual Report. Backman, J.D. et al . Exome sequencing and analysis of 454,787 UK Biobank participants. Nature 599, 628–634 (2021). Beimers W, Overmyer K, et al . A Technical Evaluation of Plasma Proteomics Technologies. (bioRxiv). Bludau, I. et al .
While we currently perform some filling and packaging of the Proteograph assay and the related consumables, we may eventually have our filling and packaging outsourced to a third party.
While some of these reagents and components are currently sourced from a single supplier, these products are readily available from numerous suppliers. While we currently perform some filling and packaging of the Proteograph assay and the related consumables, we may eventually have our filling and packaging outsourced to a third party.
A variety of materials and methods are used to create different nanoparticles with distinct physicochemical properties, which generate a unique protein corona pattern and a unique proteomic fingerprint. As the amount of proteomic data increases, we will continue to refine the unique physicochemical properties of our NPs with advanced machine learning.
A variety of materials and methods are used to create different nanoparticles with distinct physicochemical properties, which generate a unique protein corona pattern and a unique proteomic fingerprint.
The majority of human genes can produce more than one protein spliceform and, according to the Ensembl genome database project, as many as 70,000 protein spliceforms are generated by more than 23,000 human genes through alternative splicing.
One example is alternative protein isoforms arising from the same gene locus. At the transcriptome level, these alternative transcripts are known as spliceforms. Most human genes can produce more than one protein spliceform and, according to the Ensembl genome database project, as many as 70,000 protein spliceforms are generated by more than 23,000 human genes through alternative splicing.
Given the robustness of the Proteograph Product Suite and the ability of its core NP technology to work across species, we believe there is significant interest and an attractive market opportunity for implementation of the Proteograph Product Suite in model organisms and the animal health markets to pursue opportunities in diagnostic and therapeutic development.
Given the robustness of the Proteograph Product Suite and its ability to work across species, we have seen significant interest and customer adoption of the Proteograph Product Suite for use in model organisms for research and the animal health markets to pursue opportunities in diagnostic and therapeutic development.
Using data from that paper, we identified several biomarkers at the peptide level that would have been missed if we had only focused on overall protein expression, including bone morphogenic protein 1 (BMP1).
Peptide-level resolution is critical for identifying biologically important novel cancer biomarkers, as we demonstrated in our Nature Communications paper (Blume et al. ). Using data from that paper, we identified several biomarkers at the peptide level that would have been missed if we had only focused on overall protein expression, including bone morphogenic protein 1 (BMP1).
We believe they are analogous to microarrays in genomics, where a specific DNA fragment is used in a targeted or biased manner to confirm the presence of a specific mutation or a single nucleotide polymorphism (SNP). The fundamental limitation of affinity-based approaches is their inability to differentiate between protein variants and accurately survey the complexity of the proteome.
Affinity-based approaches are effective when a known target and a specific epitope measurement is desired but cannot cover the vast complexity of the proteome. We believe they are analogous to microarrays in genomics, where a specific DNA fragment is used in a targeted or biased manner to confirm the presence of a specific mutation or a single nucleotide polymorphism (SNP).
Peptide-level identification reveals individual BMP1 variants, showing an opposite pattern of differential expression in the short vs. long variants of BMP1 in individuals with non-small-cell lung cancer (NSCLC) compared to normal controls.
Peptide-level identification reveals individual BMP1 variants, showing an opposite pattern of differential expression in the short vs. long variants of BMP1 in individuals with non-small-cell lung cancer (NSCLC) compared to normal controls. 4 Table of Contents Peptide-level resolution is especially important in proteogenomic analyses, where the presence of allelic variants within proteins confounds affinity-based proteomics methods.
Moreover, the Proteograph allows for pQTL analysis at the peptide level, thus enabling the association of genomic variants with specific protein variants. 2 Table of Contents Figure 1: Utility of genomic vs. proteomic information. Over one million human genomes have been highly characterized with over one billion variants, but they have low utility and represent a static indicator of risk.
Figure 1: Utility of genomic vs. proteomic information. Over one million human genomes have been highly characterized with over 1.1 billion variants, but they have low utility and represent a static indicator of risk.
Figure 3: Summary of genetic variation across a population of approximately 455,000 participants of the UK Biobank (Backman et al. ) 4 Table of Contents The Importance of Unbiased, Peptide-level Resolution Proteomics Importance of an Unbiased Approach in the Discovery of Novel Content The ability to perform unbiased sampling at scale has transformed biological analysis.
Modified from Bludau et al . 3 Table of Contents The Importance of Unbiased, Peptide-level Resolution Proteomics Importance of an Unbiased Approach in the Discovery of Novel Content The ability to perform unbiased sampling at scale has transformed biological analysis.
Proteograph Product Suite Performance The Proteograph Product Suite provides five essential capabilities: (i) broad protein sampling with peptide-level resolution; (ii) deep coverage; (iii) accurate and precise measurement; (iv) reproducibility and (v) scalability for high-throughput studies. We believe that our integrated solution is the only product in the market that combines all these technical and operational capabilities.
As we continue to improve and extend our product portfolio, we expect to continue to expand the capabilities and features in the PAS as well. Proteograph Product Suite Performance The Proteograph Product Suite provides five essential capabilities: (i) broad protein sampling with peptide-level resolution; (ii) deep coverage; (iii) accurate and precise measurement; (iv) reproducibility and (v) scalability for high-throughput studies.
Widespread Expansion of Protein Interaction Capabilities by Alternative Splicing. Cell. 164(4):805-17 (2016). Available Information We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, available free of charge at our website as soon as reasonably practicable after they have been filed with the SEC.
Available Information We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, available free of charge at our website as soon as reasonably practicable after they have been filed with the SEC. Our website address is http://seer.bio. Information on our website is not part of this report.
Nearly all functions of an organism require the interaction of one or more proteins with each other and with other biological molecules. Proteins serve as dynamic indicators of health status, disease progression and therapeutic response. As depicted in Figure 1 below, the genome is a static indicator of an individual’s baseline physiology, while the proteome reveals the current physiological state.
Proteins serve as dynamic indicators of health status, disease progression and therapeutic response. As depicted in Figure 1 below, the genome is a static indicator of an individual’s baseline physiology, while the proteome reveals the current physiological state. Despite its importance, the human proteome is relatively unexplored compared to the human genome.
Recently, the European Parliament voted to extend the transition timelines for IVDR. Outside of the EU, regulatory approval needs to be sought on a country-by-country basis in order to market medical devices. Although there is a trend towards harmonization of quality system, standards and regulations in each country may vary substantially which can affect timelines of introduction.
Recently, the European Parliament voted to extend the transition timelines for IVDR. Outside of the EU, regulatory approval needs to be sought on a country-by-country basis in order to market medical devices.
If our products become subject to FDA regulation as medical devices, we would need to invest 30 Table of Contents significant time and resources to ensure ongoing compliance with FDA quality system regulations and other post-market regulatory requirements.
If our products become subject to FDA regulation as medical devices, we would need to invest significant time and resources to ensure ongoing compliance with FDA quality system regulations and other post-market regulatory requirements. It is unclear how future legislation by federal and state governments and FDA regulation will impact the industry, including our business and that of our customers.

… 205 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

173 edited+30 added−29 removed395 unchanged
Biggest changeBribery Act of 2010 and other anti-corruption laws, regulations relating to the use of certain hazardous substances or chemicals in commercial products, and to the collection, reuse, and recycling of waste from products we manufacture; • required compliance with U.S. laws such as the Foreign Corrupt Practices Act, and other U.S. federal laws and regulations, including with respect to not doing business with sanctioned parties, as prohibited by the office of Foreign Asset Control; • export requirements and import or trade restrictions, including, without limitation, trade retaliation laws; • laws and business practices favoring local companies; • risks associated with transactions or payments denominated in foreign currency, longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • changes in social, economic, political and climate conditions or in laws, regulations and policies governing foreign trade, manufacturing, research and development, investment, and climate control both domestically 52 Table of Contents as well as in the other countries and jurisdictions in which we operate and into which we may sell our products, including as a result of the separation of the United Kingdom from the European Union (Brexit); • potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements, and other trade barriers; • difficulties and costs of staffing and managing foreign operations; and • difficulties protecting, maintaining, enforcing or procuring intellectual property rights.
Biggest changeForeign Corrupt Practices Act (FCPA), and other U.S. federal laws and regulations, including with respect to not doing business with sanctioned parties, as prohibited by the office of Foreign Asset Control; • export requirements and import or trade restrictions, including, without limitation, with respect to biological samples, and trade retaliation laws; • restrictions on both inbound and outbound cross-border investment, including enhanced oversight by the Committee on Foreign Investment in the United States (CFIUS) and substantial restrictions on investment from China; • laws and business practices favoring local companies; • risks associated with transactions or payments denominated in foreign currency, longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; 52 Table of Contents • changes in social, economic, political and climate conditions or in laws, regulations and policies governing foreign trade, manufacturing, research and development, investment, and climate control both domestically as well as in the other countries and jurisdictions in which we operate and into which we may sell our products, including as a result of the separation of the United Kingdom from the European Union (Brexit); • potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements, and other trade barriers; • difficulties and costs of staffing and managing foreign operations; and • difficulties protecting, maintaining, enforcing or procuring intellectual property rights.
Any of the foregoing could harm our business, and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our ability to raise capital, business, results of operations, financial condition, and cause the stock price of our Class A Common Stock to decline.
Any of the foregoing could harm our business, and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our ability to raise capital, business, results of operations, and financial condition, and cause the stock price of our Class A common stock to decline.
Our future success depends upon our ability to recruit, train, retain and motivate key personnel. Our senior management team, including Omid Farokhzad, one of our founders and our Chief Executive Officer, and David Horn, our Chief Financial Officer and President, are critical to our vision, strategic direction, product development and commercialization efforts.
Our future success depends upon our ability to recruit, train, retain and motivate key personnel. Our senior management team, including Omid Farokhzad, one of our founders and our Chief Executive Officer, and David Horn, our President and Chief Financial Officer, are critical to our vision, strategic direction, product development and commercialization efforts.
We have employed and expect to employ individuals, and engaged consultants and expect to engage consultants, who were previously employed, or consulted, at academic institutions and other companies and entities, including our competitors or potential competitors.
We have employed and expect to employ individuals, and engaged and expect to engage consultants, who were previously employed, or consulted, at academic institutions and other companies and entities, including our competitors or potential competitors.
In the future, it may be more expensive or more difficult for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
In the future, it may be more expensive or more difficult for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage and/or incur substantially higher costs to obtain coverage.
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; • our ability to offer high-quality customer service: • 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, the quantity of our products they elect to hold in inventory, and their ability to promote and sell our products; • the prices at which we will be able to sell the Proteograph Product Suite and related services; • 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 and unpredictable nature of the sales cycle; • the lead time needed to procure SP100 automation instruments from our third-party contract manufacturer; • the success of our sales force, which if less than anticipated, could significantly impair our ability to generate revenue; • the failure of customers to exercise Proteograph purchase options; • the effective and efficient use of our financial and other resources, including 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 and the ability to collect on the accounts receivable of our customers; • the timing of when we recognize revenue; 40 Table of Contents • future accounting pronouncements, changes in accounting rules and regulations, or modifications to 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 health epidemics on the economy, investment in life sciences and research industries, our business operations, and resources and operations of our customers, suppliers, and distributors; • global supply chain interruptions; and • general industry, economic and market conditions such as inflation, rising interest rates, bank failures and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
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; • our ability to offer high-quality services, including customer service; • 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, the quantity of our products they elect to hold in inventory, and their ability to promote and sell our products; • the prices at which we will be able to sell the Proteograph Product Suite and related services; • 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 and unpredictable nature of the sales cycle; • the lead time needed to procure SP100 automation instruments from our third-party contract manufacturer; • the success of our sales force, which if less than anticipated, could significantly impair our ability to generate revenue; • the failure of customers to exercise Proteograph purchase options; • the effective and efficient use of our financial and other resources, including 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 and the ability to collect on the accounts receivable of our customers; • the timing of when we recognize revenue; 39 Table of Contents • future accounting pronouncements, changes in accounting rules and regulations, or modifications to 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 health epidemics on the economy, investment in life sciences and research industries, our business operations, and resources and operations of our customers, suppliers, and distributors; • global supply chain interruptions; and • general industry, economic and market conditions such as inflation, interest rates, bank failures and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
In addition, our restated certificate of incorporation and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • any transaction that would result in a change in control of our company requires the approval of a majority of our outstanding Class B common stock voting as a separate class; • our multi-class common stock structure provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • certain amendments to our amended and restated certificate of incorporation require the approval of stockholders holding two-thirds of the voting power of our then outstanding capital stock; • any stockholder-proposed amendment to our amended and restated bylaws require the approval of stockholders holding two-thirds of the voting power of our then outstanding capital stock; • our stockholders may only be able to take action at a meeting of stockholders and may not be able to take action by written consent for any matter; • our stockholders are able to act by written consent only if the action is first recommended or approved by the board of directors; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; • only the chair of the board of directors, chief executive officer or a majority of the board of directors are authorized to call a special meeting of stockholders; • certain litigation against us can only be brought in Delaware; 80 Table of Contents • our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
In addition, our restated certificate of incorporation and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • any transaction that would result in a change in control of our company requires the approval of a majority of our outstanding Class B common stock voting as a separate class; • our multi-class common stock structure provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • certain amendments to our amended and restated certificate of incorporation require the approval of stockholders holding two-thirds of the voting power of our then outstanding capital stock; • any stockholder-proposed amendment to our amended and restated bylaws require the approval of stockholders holding two-thirds of the voting power of our then outstanding capital stock; • our stockholders may only be able to take action at a meeting of stockholders and may not be able to take action by written consent for any matter; • our stockholders are able to act by written consent only if the action is first recommended or approved by the board of directors; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; • only the chair of the board of directors, chief executive officer or a majority of the board of directors are authorized to call a special meeting of stockholders; • certain litigation against us can only be brought in Delaware; 83 Table of Contents • our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
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.
While we have generated product and service 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.
Moreover, due to the inherent features and technical limitations of information technology systems and infrastructure, our products and services may be impacted by cyberattacks or other disruptions, including efforts to penetrate our customers’ network security, sabotage or otherwise disable our instruments and services, including instruments at our customers’ sites, misappropriate our customers’ proprietary information, or cause interruptions of our or our customers’ internal operations, systems and services.
Moreover, due to the inherent features and technical limitations of information technology systems and infrastructure, our products and services may be impacted by technical errors, cyberattacks or other disruptions, including efforts to penetrate our customers’ network security, sabotage or otherwise disable our instruments and services, including instruments at our customers’ sites, misappropriate our customers’ proprietary information, or cause interruptions of our or our customers’ internal operations, systems and services.
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.
In addition, sales of new products and services 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.
In addition, we cannot assure that our competitors do not have or will not develop products or technologies that currently or in the future will enable them to produce competitive products with greater capabilities or at lower costs than ours or that are able to run comparable experiments at a lower total experiment cost.
In addition, we cannot assure you that our competitors do not have or will not develop products or technologies that currently or in the future will enable them to produce competitive products with greater capabilities or at lower costs than ours or that are able to run comparable experiments at a lower total experiment cost.
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.
As a result, the sizes of the annual total addressable market for new markets and new products and services 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.
If one or more customers, including PrognomiQ, Inc., terminate all or any portion of their agreements, delay installations or fail to order the anticipated amount of consumables or services, there could be a material adverse effect on our business, financial condition and results of operations.
If one or more customers, including PrognomiQ, terminate all or any portion of their agreements, delay installations or fail to order the anticipated amount of consumables or services, there could be a material adverse effect on our business, financial condition and results of operations.
For example: • others may be able to make products or services that are similar to products and technologies we may develop or utilize similar technology that are not covered by the claims of the patents that we own or license now or in the future; • we, or our licensor(s), might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or may own in the future; • we, or our licensor(s), might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our owned or licensed intellectual property rights; • it is possible that our pending patent applications, and our licensed pending patent applications, or those that we may own or license in the future, will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we, and our licensor(s), may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and 75 Table of Contents • we may choose not to file a patent for certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
For example: • others may be able to make products or services that are similar to products and technologies we may develop or utilize similar technology that are not covered by the claims of the patents that we own or license now or in the future; • we, or our licensor(s), might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or may own in the future; • we, or our licensor(s), might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our owned or licensed intellectual property rights; • it is possible that our pending patent applications, and our licensed pending patent applications, or those that we may own or license in the future, will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we, and our licensor(s), may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file a patent for certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws also provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. 79 Table of Contents Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws also provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. 82 Table of Contents Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.
As a result, the demand for the Proteograph Product Suite and related services depends upon the research and development budgets of these customers, which are impacted by factors beyond our control, such as: • decreases in government funding of research and development; • changes to programs that provide funding to research laboratories and institutions, including changes in the amount of funds allocated to different areas of research or changes that have the effect of increasing the length of the funding process; • changes in strategy and funding by commercial companies in their efforts around therapeutic and diagnostic product development and their adoption and use of the Proteograph Product Suite; • macroeconomic conditions; • opinions in the scientific community, including researchers’ opinions of the utility of the Proteograph solution; • citation of the Proteograph Product Suite in published research; • potential changes in the regulatory environment; • differences in budgetary cycles, especially government- or grant-funded customers, whose cycles often coincide with government fiscal year ends; • competitor product or service offerings or pricing; • market-driven pressures to consolidate operations and reduce costs; and • market acceptance of relatively new technologies, such as the Proteograph Product Suite.
As a result, the demand for the Proteograph Product Suite and related services depends upon the research and development budgets of these customers, which are impacted by factors beyond our control, such as: • decreases in government funding of research and development; • changes to programs that provide funding to research laboratories and institutions, including changes in the amount of funds allocated to different areas of research or changes that have the effect of increasing the length of the funding process; 47 Table of Contents • changes in strategy and funding by commercial companies in their efforts around therapeutic and diagnostic product development and their adoption and use of the Proteograph Product Suite; • macroeconomic conditions; • opinions in the scientific community, including researchers’ opinions of the utility of the Proteograph solution; • citation of the Proteograph Product Suite in published research; • potential changes in the regulatory environment; • differences in budgetary cycles, especially government- or grant-funded customers, whose cycles often coincide with government fiscal year ends; • competitor product or service offerings or pricing; • market-driven pressures to consolidate operations and reduce costs; and • market acceptance of relatively new technologies, such as the Proteograph Product Suite.
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.
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 and services.
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. 39 Table of Contents 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 of investors or security analysts or any guidance we may provide, and which may cause the price of our Class A common stock to fluctuate or decline substantially.
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. 38 Table of Contents 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 of investors or security analysts or any guidance we may provide, and which may cause the price of our Class A common stock to fluctuate or decline substantially.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
Furthermore, because of the substantial amount of discovery that may be required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
Our employees, consultants, advisors or independent contractors may have wrongfully used or disclosed, or may in the future wrongfully use or disclose, confidential information or alleged trade secrets of ours, third parties or former employers.
Our employees, consultants, advisors or independent contractors may have wrongfully used or disclosed, or may in the future wrongfully use or disclose, confidential information or alleged trade secrets of ours, third parties or former employers of theirs.
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 our current business and the prospects for our future viability, and to 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 are in the early stages of our commercialization plan, and we may not be able to commercialize the Proteograph Product Suite as planned; • our commercialization success depends on broad scientific and market acceptance of the Proteograph, which we may fail to achieve; • even if the Proteograph Product Suite is successfully commercialized and achieves broad scientific and market acceptance, if we fail to improve it or introduce compelling new products or services, our revenues and our prospects could be harmed; • health epidemics such as the COVID-19 pandemic could 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; 38 Table of Contents • 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, 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.
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 our current business and the prospects for our future viability, and to 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 are in the early stages of our commercialization plan, and we may not be able to commercialize the Proteograph Product Suite as planned; • our commercialization success depends on broad scientific and market acceptance of the Proteograph, which we may fail to achieve; • even if the Proteograph Product Suite is successfully commercialized and achieves broad scientific and market acceptance, if we fail to improve it or introduce compelling new products or services, our revenues and our prospects could be harmed; • health epidemics could 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; 37 Table of Contents • 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, 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.
If our security measures, or those of our vendors, partners and customers, are compromised due to any cybersecurity attacks or data security breaches, including as a result of third-party action, employee or customer error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business and reputation may be harmed, we could become subject to litigation and we could incur significant liability.
If our security measures, or those of our vendors, partners and customers, are compromised due to any technical errors, cybersecurity attacks or data security breaches, including as a result of third-party action, employee or customer error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business and reputation may be harmed, we could become subject to litigation and we could incur significant liability.
Any of the foregoing events could have a material adverse effect on our business, financial condition and results of operations. 62 Table of Contents The U.S. law relating to the patentability of certain inventions in the life sciences technology industry is uncertain and rapidly changing, which may adversely impact our existing patents or our ability to obtain patents in the future.
Any of the foregoing events could have a material adverse effect on our business, financial condition and results of operations. 63 Table of Contents The U.S. law relating to the patentability of certain inventions in the life sciences technology industry is uncertain and rapidly changing, which may adversely impact our existing patents or our ability to obtain patents in the future.
It is unknown whether we will be successful in obtaining patents with sufficient claim scope in certain jurisdictions to block third parties, in a cost effective or in a timely manner, and if we are unable to do so it could have a material adverse effect on our business, financial condition, results of operation and prospects in various geographies.
It is unknown whether we will be successful in obtaining patents with sufficient claim scope in certain jurisdictions to block third parties, in a cost effective or in a timely manner, and if we are unable to do so it could have a material adverse effect on our business, financial condition, results of operations and prospects in various geographies.
Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive, in which case third parties, including our competitors, could use the same licensed intellectual property to compete with us. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operation or prospects.
Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive, in which case third parties, including our competitors, could use the same licensed intellectual property to compete with us. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations or prospects.
Our instruments are manufactured at our third-party manufacturer’s facilities in Nevada, and our consumables are manufactured at various locations in the United States and internationally. 82 Table of Contents Our facilities in Redwood City and those of our third-party manufacturers are vulnerable to natural disasters, public health crises, including the impact of health epidemics such as the COVID-19 pandemic, climate change and catastrophic events.
Our instruments are manufactured at our third-party manufacturer’s facilities in Nevada, and our consumables are manufactured at various locations in the United States and internationally. 85 Table of Contents Our facilities in Redwood City and those of our third-party manufacturers are vulnerable to natural disasters, public health crises, including the impact of health epidemics such as the COVID-19 pandemic, climate change and catastrophic events.
Moreover, disputes may also arise between us and our licensor regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • our financial or other obligations under the license agreement; • whether, and the extent to which, our products, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; 72 Table of Contents • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensor(s); and • the priority of invention of patented technology.
Moreover, disputes may also arise between us and our licensor regarding intellectual property subject to a license agreement, including: • the scope of rights granted under the license agreement and other interpretation-related issues; • our financial or other obligations under the license agreement; • whether, and the extent to which, our products, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensor(s); and • the priority of invention of patented technology.
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.
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 and related products and services, including sales and marketing, manufacturing and operations costs, and research and development efforts for products and services. These efforts may prove more costly than we currently anticipate.
We have only recently initiated the broad commercialization of 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 in the sales cycle 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 budgetary or other 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 health epidemics on the economy and research industries, our business operations, and resources and the operations of our customers, suppliers and supply chain, and distributors.
We have only recently initiated the broad commercialization of the Proteograph Product Suite and related products and services, 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 in the sales cycle to establish customer contacts, complete responsive presentations including platform evaluations tailored to specific requests, and move expeditiously 41 Table of Contents from quote to order to revenue to receipt of payment due to budgetary or other 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 health epidemics on the economy and research industries, our business operations, and resources and the operations of our customers, suppliers and supply chain, and distributors.
Further, in such proceedings, the defendant could counterclaim that our intellectual property is invalid or unenforceable and the court may agree, in which case we could lose valuable intellectual property rights, which could allow third parties to commercialize technology, services or products similar to ours and compete directly with us, without payment to us, or could require us to obtain license rights from the prevailing party in order to be able to manufacture or commercialize our products without infringing such party’s intellectual property rights, and if we unable to obtain such a license, we may be required to cease commercialization of our products, services and technologies, any of which could have a material adverse effect 69 Table of Contents on our business, financial condition, results of operations and prospects.
Further, in such proceedings, the defendant could counterclaim that our intellectual property is invalid or unenforceable and the court may agree, in which case we could lose valuable intellectual property rights, which could allow third parties to commercialize technology, services or products similar to ours and compete directly with us, without payment to us, or could require us to obtain license rights from the prevailing party in order to be able to manufacture or commercialize our products without infringing such party’s intellectual property rights, and if we are unable to obtain such a license, we may be required to cease commercialization of our products, services and technologies, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
If one or more of these analysts cease to cover our Class A common stock, we could lose visibility in the market for our Class A common stock, which in turn could cause the price of our Class A common stock to decline. 78 Table of Contents Sales of a substantial number of shares of our Class A common stock by our existing stockholders could cause the price of our Class A common stock to decline.
If one or more of these analysts cease to cover our Class A common stock, we could lose visibility in the market for our Class A common stock, which in turn could cause the price of our Class A common stock to decline. 80 Table of Contents Sales of a substantial number of shares of our Class A common stock by our existing stockholders could cause the price of our Class A common stock to decline.
If our assumptions underlying our estimates and judgments relating to our critical accounting policies change or if actual circumstances differ from our assumptions, estimates or judgments, or if accounting rules, regulations, standards or practices change, our compensation practices may need to change or our financial statements may need to be restated, and our operating results may be adversely 58 Table of Contents affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock.
If our assumptions underlying our estimates and judgments relating to our critical accounting policies change or if actual circumstances differ from our assumptions, estimates or judgments, or if accounting rules, regulations, standards or practices change, our compensation practices may need to change or our financial statements may need to be restated, and our operating results may be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock.
The departure of one or more of our executive officers, senior management team members, or other key employees could be disruptive to our business until we are able to hire qualified successors. We do not maintain “key man” life insurance on our senior management team.
The departure of one or more of our executive officers, senior management team members, or other key employees could be disruptive to our business until we are able to hire qualified successors. We do not maintain “key person” life insurance on our senior management team.
Although we try to ensure that our employees, consultants, advisors and independent contractors do not use confidential or proprietary information or know-how of others in their work for us, we may be subject to claims that our employees, advisors, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other confidential or proprietary 70 Table of Contents information of their former employers or other third parties, or to claims that we have improperly used or obtained such trade secrets.
Although we try to ensure that our employees, consultants, advisors and independent contractors do not use confidential or proprietary information or know-how of others in their work for us, we may be subject to claims that our employees, advisors, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other confidential or proprietary information of their former employers or other third parties, or to claims that we have improperly used or obtained such trade secrets.
The Class B common stock will also automatically convert into Class A common stock on December 8, 2025. The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those individual holders of Class B common stock who retain their shares over the long term.
The Class B common stock will also automatically convert into Class A common stock on December 9, 2025. The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those individual holders of Class B common stock who retain their shares over the long term.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license intellectual property, or develop or commercialize current or future products. We may not be aware of all third-party intellectual property rights potentially relating to our products or services.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license intellectual property, or develop or commercialize current or future products. 66 Table of Contents We may not be aware of all third-party intellectual property rights potentially relating to our products or services.
If our relationships with these third-party distributors cannot be established or deteriorate, or if these third-party distributors fail to sell our products, or engage in activities that harm our reputation, our results of operation and business may be negatively affected.
If our relationships with these third-party distributors cannot be established or deteriorate, or if these third-party distributors fail to sell our products, or engage in activities that harm our reputation, our results of operations and business may be negatively affected.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and 67 Table of Contents diversion of resources. Any of the foregoing events could have a material adverse effect on our business, financial condition and results of operations.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources. Any of the foregoing events could have a material adverse effect on our business, financial condition and results of operations.
The CPA, CDPA, UCPA, and CTDPA share similarities with and differences from the CPRA and legislation proposed in other states. Aspects of these state privacy statutes remain unclear, resulting in 84 Table of Contents further uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.
The CPA, CDPA, UCPA, and CTDPA share similarities with and differences from the CPRA and legislation proposed in other states. Aspects of these state privacy statutes remain unclear, resulting in further uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.
General Risks Environmental, social, and governance (ESG) matters are subject to increasing scrutiny and evolving expectations from customers, regulators, investors and other stakeholders and may expose us to reputational, cost and other risks. Companies across all industries are subject to increasing scrutiny and evolving expectations regarding ESG matters.
General Risks Environmental, social, and governance (ESG) matters are subject to evolving expectations from customers, regulators, investors and other stakeholders and may expose us to reputational, cost and other risks. Companies across all industries are subject to evolving expectations regarding ESG matters.
If we are unable to enter or maintain such distribution arrangements on acceptable terms, or at all, we may not be able to successfully commercialize our products in certain countries. Furthermore, distributors can choose the level of effort that they apply to selling our products relative to others in their portfolio.
If we are unable to enter or maintain such distribution arrangements on acceptable terms, or at all, we may not be able to successfully commercialize our products in certain countries. 53 Table of Contents Furthermore, distributors can choose the level of effort that they apply to selling our products relative to others in their portfolio.
In addition, if an acquired business fails to meet our expectations, our operating results, business and financial condition may suffer. We also may make investments in early-stage companies that we believe are advancing or developing new technologies applicable to our businesses. These investments are generally illiquid at the time of investment.
In addition, if an acquired business fails to meet our expectations, our operating results, business and financial condition may suffer. 56 Table of Contents We also may make investments in early-stage companies that we believe are advancing or developing new technologies applicable to our businesses. These investments are generally illiquid at the time of investment.
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. 42 Table of Contents 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.
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.
Any failure or perceived failure by us or our third-party vendors, collaborators, contractors and consultants to comply with any applicable federal, state or similar foreign laws and regulations relating to data privacy and security, including GDPR, could result in damage to our reputation, as well as proceedings or litigation by governmental agencies or other third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, penalties or judgments, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. 86 Table of Contents Item 1B.
Any failure or perceived failure by us or our third-party vendors, collaborators, contractors and consultants to comply with any applicable federal, state or similar foreign laws and regulations relating to data privacy and security, including GDPR, could result in damage to our reputation, as well as proceedings or litigation by governmental agencies or other third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, penalties or judgments, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. We may not be able to protect and enforce our trademarks and trade names, or build name recognition in our markets of interest thereby harming our competitive position.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. 68 Table of Contents We may not be able to protect and enforce our trademarks and trade names, or build name recognition in our markets of interest thereby harming our competitive position.
Despite any of our current or future efforts to protect against cybersecurity attacks and data security breaches, there is no guarantee that our efforts are adequate to safeguard against all such attacks and breaches.
Despite any of our current or future efforts to protect against technical errors, cybersecurity attacks and data security breaches, there is no guarantee that our efforts are adequate to safeguard against all such errors, attacks and breaches.
Given the complexity of this automation instrumentation, individual units may occasionally require additional installation and service time prior to becoming available for customer use. 49 Table of Contents We leverage well-established unit operations to formulate and manufacture our NPs at our facilities in Redwood City, California.
Given the complexity of this automation instrumentation, individual units may occasionally require additional installation and service time prior to becoming available for customer use. We leverage well-established unit operations to formulate and manufacture our NPs at our facilities in Redwood City, California.
We are also aware of an issued 68 Table of Contents patent and pending patent application in Europe owned by a third party directed to a method of identifying biomarkers in biofluids using nanoparticles, which is projected to expire in 2037 without taking into account any possible patent term extensions.
We are also aware of an issued patent and pending patent application in Europe owned by a third party directed to a method of identifying biomarkers in biofluids using nanoparticles, which is projected to expire in 2037 without taking into account any possible patent term extensions.
In addition, we have not finalized our information technology and data security procedures and therefore, our information technology systems may be more susceptible to cybersecurity attacks than if such security procedures were finalized.
In addition, we have not finalized our information technology and data security procedures and therefore, our information technology systems may be more susceptible to technical errors and cybersecurity attacks than if such security procedures were finalized.
If we do not successfully manage our growth or financial resources, our business, results of operations, financial condition and prospects will be harmed. We depend on our key personnel and other highly qualified personnel, and if we are unable to recruit, train and retain our personnel, we may not achieve our goals.
If we do not successfully manage our growth or financial resources, our business, results of operations, financial condition and prospects will be harmed. 45 Table of Contents We depend on our key personnel and other highly qualified personnel, and if we are unable to recruit, train and retain our personnel, we may not achieve our goals.
The lengthy and unpredictable premarket clearance or approval process, as well as the unpredictability of the results of any required clinical studies, may result in our failing 59 Table of Contents to obtain regulatory clearance or approval to market such products, which would significantly harm our business, results of operations, reputation, and prospects.
The lengthy and unpredictable premarket clearance or approval process, as well as the unpredictability of the results of any required clinical studies, may result in our failing to obtain regulatory clearance or approval to market such products, which would significantly harm our business, results of operations, reputation, and prospects.
As we increase the commercial scale, formulation and manufacture of our products using, handling, storing and transporting biological samples, hazardous materials and substances or chemicals such as reagents, or if we are unable to repeatably produce our products or perform our services, in compliance with applicable health and safety, and environmental laws, rules and regulations, our operations, including our sales, could be negatively affected.
As we increase the commercial scale, formulation and manufacture of our products using, handling, storing, importing, exporting, and transferring biological samples, hazardous materials and substances or chemicals such as reagents, or if we are unable to repeatably produce our products or perform our services, in compliance with applicable health and safety, and environmental laws, rules and regulations, our operations, including our sales, could be negatively affected.
For instance, under our license agreement with BWH, we currently in-license a patent family which includes methods used in the 71 Table of Contents Proteograph Product Suite and related services, and to the extent any additional intellectual property developed by BWH that are not included in such licensed patent families are necessary or useful for the Proteograph Product Suite or any other product, services or technology, we would need to negotiate for additional licenses to such additional intellectual property.
For instance, under our license agreement with BWH, we currently in-license a patent family which includes methods used in the Proteograph Product Suite and related services, and to the extent any additional intellectual property developed by BWH that are not included in such licensed patent families are necessary or useful for the Proteograph Product Suite or any other product, services or technology, we would need to negotiate for additional licenses to such additional intellectual property.
Should any of these events occur, they could materially adversely affect our business, financial condition, results of operations and prospects. Risks Related to Ownership of Our Class A Common Stock An active trading market for our Class A common stock may not be sustained.
Should any of these events occur, they could materially adversely affect our business, financial condition, results of operations and prospects. 77 Table of Contents Risks Related to Ownership of Our Class A Common Stock An active trading market for our Class A common stock may not be sustained.
Our operating results may fluctuate 48 Table of Contents substantially due to any such reductions and delays. Any decrease in our customers’ budgets or expenditures, or in the size, scope or frequency of their capital or operating expenditures, could materially and adversely affect our business, results of operations, financial condition and prospects.
Our operating results may fluctuate substantially due to any such reductions and delays. Any decrease in our customers’ budgets or expenditures, or in the size, scope or frequency of their capital or operating expenditures, could materially and adversely affect our business, results of operations, financial condition and prospects.
Certain state laws may be more stringent or broader in 85 Table of Contents scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts.
Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts.
If we fail to obtain, maintain, enforce and protect our intellectual property, third parties may be able to 61 Table of Contents compete more effectively against us. In addition, we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.
If we fail to obtain, maintain, enforce and protect our intellectual property, third parties may be able to compete more effectively against us. In addition, we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.
Failure to remedy any 57 Table of Contents material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
In return for the use of a third party’s technology, we may agree to pay the licensor royalties based on sales of our products or services. Royalties are a component of cost of 73 Table of Contents products or technologies and affect the margins on our products.
In return for the use of a third party’s technology, we may agree to pay the licensor royalties based on sales of our products or services. Royalties are a component of cost of products or technologies and affect the margins on our products.
We may not realize the potential benefits of forming PrognomiQ for a variety of reasons, including: • PrognomiQ may be unable to successfully develop viable testing products; • PrognomiQ’s business may not help demonstrate the value of the Proteograph; • an inability to reach agreement with PrognomiQ on future commercial arrangements; 56 Table of Contents • although PrognomiQ accounted for 28% of our revenue during the year ended December 31, 2023, it may not continue to be a meaningful customer of ours; • PrognomiQ may need to raise additional funding in the future and be unable to do so; and • the formation of PrognomiQ and our continuing equity position in PrognomiQ may add complexities to our business from a finance, tax and accounting perspective.
We may not realize the potential benefits of forming PrognomiQ for a variety of reasons, including: • PrognomiQ may be unable to successfully develop viable testing products; • PrognomiQ’s business may not help demonstrate the value of the Proteograph; • an inability to reach agreement with PrognomiQ on future commercial arrangements; • although PrognomiQ accounted for 17% of our revenue during the year ended December 31, 2024, it may not continue to be a meaningful customer of ours; • PrognomiQ may need to raise additional funding in the future and be unable to do so; and • the formation of PrognomiQ and our continuing equity position in PrognomiQ may add complexities to our business from a finance, tax and accounting perspective.
The future impact of the COVID-19 pandemic and any other health epidemic is highly uncertain and subject to sudden change, including changes in FDA and other regulatory policies that can materially impact our business or that of our customers and partners.
The future impact of any health epidemic is highly uncertain and subject to sudden change, including changes in FDA and other regulatory policies that can materially impact our business or that of our customers and partners.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and we and our licensor may encounter difficulties in protecting and defending such rights in foreign 63 Table of Contents jurisdictions.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and we and our licensor may encounter difficulties in protecting and defending such rights in foreign jurisdictions.
These considerations are impacted by factors beyond our control, such as: • reductions in capacity or shutdowns of laboratories and other institutions as well as reduced or delayed spending on instruments and consumables as a result of shutdowns and delays; • decreases in government funding of research and development; and • changes to programs that provide funding to research laboratories and institutions, including changes in the amount of funds allocated to different areas of research, changes that have the effect of increasing the length of the funding process or the impact of the COVID-19 pandemic on our customers and potential customers and their funding sources.
These considerations are impacted by factors beyond our control, such as: • reductions in capacity or shutdowns of laboratories and other institutions as well as reduced or delayed spending on instruments and consumables as a result of shutdowns and delays; • decreases in government funding of research and development; and • changes to programs that provide funding to research laboratories and institutions, including changes in the amount of funds allocated to different areas of research, changes that have the effect of increasing the length of the funding process or the impact of any health epidemic on our customers and potential customers and their funding sources.
Any of these occurrences, and any new epidemics, could significantly harm our business, results of operations and financial condition. Unfavorable U.S. or global economic conditions could adversely affect our ability to raise capital and our business, results of operations and financial condition.
Any of these occurrences, and any new epidemics, could significantly harm our business, results of operations and financial condition. 44 Table of Contents Unfavorable U.S. or global economic conditions could adversely affect our ability to raise capital and our business, results of operations and financial condition.
As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty of any patent litigation in Europe.
As the UPC is a new court system, there is limited precedent for the court, increasing the uncertainty of any patent litigation in Europe.
Any such breach could compromise our customers’ networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
Any such incidents could compromise our customers’ networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
They may experience their 53 Table of Contents own financial difficulties, or distribution relationships may be terminated or allowed to expire, which could increase the cost of or impede commercialization of our products in applicable countries.
They may experience their own financial difficulties, or distribution relationships may be terminated or allowed to expire, which could increase the cost of or impede commercialization of our products in applicable countries.
In addition, the Proteograph Product Suite may not impact the field of proteomics in the same manner or degree, or 41 Table of Contents within the same time frame, that NGS technologies have impacted the field of genomics, or at all.
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.
We may rely heavily on trade secrets and confidentiality agreements to protect our unpatented know-how, technology and other proprietary and confidential information, including parts of the Proteograph Product Suite and related services, and to maintain our competitive position. However, trade secrets and know-how can be difficult to protect.
We have relied and expect to rely heavily on trade secrets and confidentiality agreements to protect our unpatented know-how, technology and other proprietary and confidential information, including parts of the Proteograph Product Suite and related services, and to maintain our competitive position. However, trade secrets and know-how can be difficult to protect.
(BWH), for patents, for example, relating to methods of using nanoparticles to measure the proteome, including the methods used in the Proteograph Product Suite and may in the future rely on licenses from other third parties with respect to our products, including the Proteograph Product Suite, or other technology.
Currently, we rely on an in-license from BWH, for patents, for example, relating to methods of using nanoparticles to measure the proteome, including the methods used in the Proteograph Product Suite and may in the future rely on licenses from other third parties with respect to our products, including the Proteograph Product Suite, or other technology.
If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or 81 Table of Contents governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.
If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.
Some of the factors that may cause the market price of our Class A common stock to fluctuate include, but are not limited to: • the degree to which our launch and commercialization of our products meets the expectations of securities analysts and investors; • actual or anticipated fluctuations in our operating results, including fluctuations in our quarterly and annual results; • revenue being less than anticipated or operating expenses being more than anticipated; • the failure or discontinuation of any of our product development and research programs; 76 Table of Contents • changes in the structure or funding of research at academic and research laboratories and institutions, including changes that would affect their ability to purchase our instruments or consumables; • the success of existing or new competitive businesses or technologies; • announcements about new research programs or products of our competitors; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • litigation and governmental investigations involving us, our industry or both; • regulatory or legal developments in the United States and other countries; • volatility and variations in market conditions in the life sciences technology sector generally, or the proteomics or genomics sectors specifically, including volatility in the stock prices of publicly held companies in our industry; • investor perceptions of us or our industry; • the level of expenses related to any of our research and development programs or products; • actual or anticipated changes in our estimates as to our financial results or development timelines, variations in our financial results or those of companies that are perceived to be similar to us or changes in estimates or recommendations by securities analysts, if any, that cover our Class A common stock or companies that are perceived to be similar to us; • whether our financial results meet the expectations of securities analysts or investors; • short-selling strategies that may drive down the price of our Class A common stock; • the announcement or expectation of additional financing efforts; • sales of our Class A common stock by us or sales of our Class A common stock or Class B common stock by our insiders or other stockholders, or future stock issuances; • the perceived solvency of financial institutions with which we have financial deposits or investments in excess of insurance limits; • general economic, industry and market conditions; and • health epidemics such as the COVID-19 pandemic, natural disasters or major catastrophic events.
Some of the factors that may cause the market price of our Class A common stock to fluctuate include, but are not limited to: • the degree to which our launch and commercialization of our products meets the expectations of securities analysts and investors; • actual or anticipated fluctuations in our operating results, including fluctuations in our quarterly and annual results; • revenue being less than anticipated or operating expenses being more than anticipated; 78 Table of Contents • the failure or discontinuation of any of our product development and research programs; • changes in the structure or funding of research at academic and research laboratories and institutions, including changes that would affect their ability to purchase our instruments or consumables; • the success of existing or new competitive businesses or technologies; • announcements about new research programs or products of our competitors; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • litigation and governmental investigations involving us, our industry or both; • regulatory or legal developments in the United States and other countries; • volatility and variations in market conditions in the life sciences technology sector generally, or the proteomics or genomics sectors specifically, including volatility in the stock prices of publicly held companies in our industry; • investor perceptions of us or our industry; • the level of expenses related to any of our research and development programs or products; • actual or anticipated changes in our estimates as to our financial results or development timelines, variations in our financial results or those of companies that are perceived to be similar to us or changes in estimates or recommendations by securities analysts, if any, that cover our Class A common stock or companies that are perceived to be similar to us; • whether our financial results meet the expectations of securities analysts or investors; • short-selling strategies that may drive down the price of our Class A common stock; • the announcement or expectation of additional financing efforts; • sales of our Class A common stock by us or sales of our Class A common stock or Class B common stock by our insiders or other stockholders, or future stock issuances; • the perceived solvency of financial institutions with which we have financial deposits or investments in excess of insurance limits; • general economic, industry and market conditions; and • health epidemics such as the COVID-19 pandemic, natural disasters or major catastrophic events. 79 Table of Contents Stock markets in general, and the market for life sciences technology companies in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance, financial condition, or tangible asset value of the companies whose stock is experiencing those price and volume fluctuations.
If we are unable to successfully develop new products and services, 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. Health epidemics such as the COVID-19 pandemic could adversely impact our business and operations.
If we are unable to successfully develop new products and services, 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. Health epidemics could adversely impact our business and operations.
We may be subject to suits by third parties claiming ownership of 74 Table of Contents what we believe to be open source software, or claiming non-compliance with the applicable open source licensing terms.
We may be subject to suits by third parties claiming ownership of what we believe to be open source software, or claiming non-compliance with the applicable open source licensing terms.
Shipment of consumables that effectively expire early or shipment of defective instruments or consumables to customers may result in recalls and warranty replacements, which would increase our costs, and depending upon current inventory levels and the availability and lead time for additional inventory, could lead to availability issues.
Shipment of defective instruments or consumables to customers may result in recalls and warranty replacements, which would increase our costs, and depending upon current inventory levels and the availability and lead time for additional inventory, could lead to availability issues.
FDA will begin to enforce the QMSR requirements upon the effective date, February 2, 2026. In January 2024, FDA announced its plans to reclassify certain high-risk in vitro diagnostics, including companion diagnostics, as Class II devices.
FDA will begin to enforce the QMSR requirements upon the effective date, February 2, 2026. 59 Table of Contents In January 2024, FDA announced its plans to reclassify certain high-risk in vitro diagnostics, including companion diagnostics, as Class II devices.
Our information technology systems and those of our vendors, partners and customers are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses or other disruptive events, including, but not limited to, natural disasters and catastrophes.
Our information technology systems and those of our vendors, partners and customers are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses or other disruptive events, including, but not limited to, software bugs and technical errors, and natural disasters and catastrophes.
A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws.
A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. We have previously undergone multiple ownership changes.
If we raise funds through collaborations or licensing 55 Table of Contents arrangements, we might be required to relinquish significant rights to our technologies or products or grant licenses on terms that are not favorable to us.
If we raise funds through collaborations or licensing arrangements, we might be required to relinquish significant rights to our technologies or products or grant licenses on terms that are not favorable to us.
We are in the early stages of our commercialization plan and our revenues have been concentrated in a relatively small number of customers, including a related party, PrognomiQ, Inc. For the years ended December 31, 2023 and 2022, PrognomiQ, Inc. accounted for 28% and 32% of our revenue, respectively.
We are in the early stages of our commercialization plan and our revenues have been concentrated in a relatively small number of customers, including a related party, PrognomiQ. For the years ended December 31, 2024 and 2023, PrognomiQ accounted for 17% and 28% of our revenue, respectively.

… 152 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

11 edited+2 added−0 removed3 unchanged
Biggest changeThe Audit Committee receives regular reports from our dedicated Chief Information Security Officer (CISO) on our cybersecurity risks. In addition, our CISO updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser potential impact.
Biggest changeIn addition, our VP of Information Technology updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser potential impact. 91 Table of Contents We have established an internal cross-functional Steering Committee and a leadership committee with the objective of overseeing the cyber security program, incidents, risks and initiatives.
Item 1C. Cy bersecurity Cybersecurity Risk Management and Strategy We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
Item 1C. Cy bersecurity Cybersecurity Risk Management and Strategy We recognize the importance of identifying, assessing, and managing material risks associated with cybersecurity threats. We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
Our cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology (IT) environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; • cybersecurity awareness training for our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
Our cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology (IT) environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; • cybersecurity awareness training for our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for managing the risk inherent to engaging with external service providers, suppliers, and vendors.
The Audit Committee oversees management’s implementation of the cybersecurity risk management program. The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives periodic briefings from the Audit Committe on our cybersecurity risk management program.
The Audit Committee oversees management’s implementation of the cybersecurity risk management program. The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives periodic briefings from the Audit Committee on our cybersecurity risk management program.
See “Risk Factors - If we, or our vendors, partners or customers, experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected.” 87 Table of Contents Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity and other information technology risks to the Audit Committee.
See “Risk Factors - If we, or our vendors, partners or customers, experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity and other information technology risks to the Audit Committee.
We regularly assess risks from cybersecurity threats; monitor our information systems for potential vulnerabilities; and test those systems pursuant to our cybersecurity policies, processes, and practices, which are integrated into our overall risk management program. Our cybersecurity risk management program includes a cybersecurity incident response plan.
We regularly assess risks from cybersecurity threats; monitor our information systems for potential vulnerabilities; and test those systems pursuant to our cybersecurity policies, processes, and practices, which are integrated into our overall risk management program.
The IT management team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our CISO has over 20 years of experience managing global IT operations, including strategy, applications, infrastructure, information security, support and execution and holds a Certified Information Systems Security Professional certification.
The IT management team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our VP of Information Technology has over 20 years of experience managing global IT operations, including strategy, information security, applications, infrastructure, support and execution.
This committee oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the information technology environment.
The Steering Committee oversees the cybersecurity program relevance and effectiveness through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the information technology environment.
We use these cybersecurity frameworks and information security standards as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
In 2024, our cybersecurity systems and processes achieved ISO 27001 certification. We use these cybersecurity frameworks and information security standards as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
We design and assess our program based on various cybersecurity frameworks, such as the National Institute of Standards and Technology and the Center for Internet Security, as well as information security standards issued by the International Organization for Standardization, including ISO 27001. In 2023, our cybersecurity systems and processes achieved ISO 27001 certification.
Our cybersecurity risk management program includes a cybersecurity incident response plan. 90 Table of Contents We design and assess our program based on recommendations from trusted sources, such as the National Institute of Standards and Technology and the Center for Internet Security, as well as information security standards issued by the International Organization for Standardization, including ISO 27001.
We have established an internal cross-functional leadership committee with the objective of overseeing the cyber security program, incidents, risks and initiatives. The committee is chaired by our CISO and is comprised of the President and Chief Financial Officer, Chief Legal Officer, Chief People Officer, Chief Data Officer, Chief Operations and Product Development Officer and the SVP of Product.
Updates from the Steering Committee are provided quarterly to an executive leadership committee, which is chaired by our VP of Information Technology and is comprised of the President and Chief Financial Officer, Chief People Officer, Chief Data Officer, Chief Operations and Product Development Officer and the SVP of Product Development.
Added
The Audit Committee receives regular reports from our VP of Information Technology on our cybersecurity risks.
Added
The Steering Committee is chaired by our VP of Information Technology and is comprised of leaders from Software Development, Research and Development and Data teams.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeIn addition, we lease approximately 6,000 square of office space in San Diego, California under a lease that runs through September 2024.
Biggest changeIn addition, we lease approximately 3,500 square feet of office space in San Diego, California under a lease that runs through July 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeMine S afety Disclosures Not applicable. 88 Table of Contents PART II.
Biggest changeMine S afety Disclosures Not applicable. 92 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−0 removed3 unchanged
Biggest changePayment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements and contractual restrictions of then-existing debt instruments and other factors that our board of directors deems relevant. Unregistered Sales of Equity Securities None.
Biggest changePayment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements and contractual restrictions of then-existing debt instruments and other factors that our board of directors deems relevant.
Item 6. [Res erved] 89 Table of Contents
Item 6. [Res erved] 93 Table of Contents
Our Class B common stock is not listed or traded on any stock exchange. Holders of Common Stock As of March 1, 2024, there were 26 holders of record of our Class A common stock and 6 holders of record of our Class B common stock.
Our Class B common stock is not listed or traded on any stock exchange. Holders of Common Stock As of February 26, 2025, there were 21 holders of record of our Class A common stock and 11 holders of record of our Class B common stock.
Added
Issuer Purchases of Equity Securities The following table represents a month-to-month summary of information with respect to purchases of common stock made during the three months ended December 31, 2024: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) Approximate Dollar Value (in thousands) of Shares that May Yet Be Purchased Under the Plans or Programs (3) October 1 - October 31 730,493 $ 1.95 730,493 $ 13,249 November 1 - November 30 — $ — — $ 13,249 December 1 - December 31 — $ — — $ 13,249 Total 730,493 $ 1.95 730,493 (1) All shares of common stock were retired upon repurchase.
Added
(2) Average price paid per share is calculated on a settlement basis and excludes broker commissions and excise tax. (3) On May 3, 2024, the Company’s Board of Directors approved the Share Repurchase Program under which the Company is authorized to purchase up to $25.0 million of its issued and outstanding Class A common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

48 edited+11 added−10 removed31 unchanged
Biggest changeInterest Income Interest income consists of interest earned on cash, cash equivalents and investments. 92 Table of Contents Results of Operations Comparisons of the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations for the periods presented: Year ended December 31, Change 2023 2022 Amount % (dollars in thousands) Revenue: Product $ 8,506 $ 8,557 $ (51 ) (1 )% Service 2,016 913 1,103 121 % Related party 4,660 5,215 (555 ) (11 )% Grant and other 1,479 808 671 83 % Total revenue 16,661 15,493 1,168 8 % Cost of revenue: Product 5,398 5,459 (61 ) (1 )% Service 685 495 190 38 % Related party 1,430 1,989 (559 ) (28 )% Grant and other 642 457 185 40 % Total cost of revenue 8,155 8,400 (245 ) (3 )% Gross profit 8,506 7,093 1,413 20 % Operating expenses: Research and development 53,019 45,797 7,222 16 % Selling, general and administrative 58,950 58,531 419 1 % Total operating expenses 111,969 104,328 7,641 7 % Loss from operations (103,463 ) (97,235 ) (6,228 ) 6 % Other income (expense): Interest income 17,764 4,602 13,162 286 % Other expense (578 ) (333 ) (245 ) 74 % Total other income 17,186 4,269 12,917 303 % Net loss $ (86,277 ) $ (92,966 ) $ 6,689 (7 )% Revenue Year ended December 31, Change 2023 2022 Amount % (dollars in thousands) Revenue $ 16,661 $ 15,493 $ 1,168 8 % Revenue increased by $1.2 million, or 8%, from $15.5 million in 2022 to $16.7 million in 2023, primarily due to an increase in service revenue.
Biggest changeWe maintain a full valuation allowance on our domestic deferred tax assets as we have concluded that it is more likely than not that the deferred assets will not be realized. 96 Table of Contents Results of Operations Comparisons of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the periods presented: Year ended December 31, Change 2024 2023 Amount % (dollars in thousands) Revenue: Product $ 8,695 $ 8,506 $ 189 2 % Service 2,960 2,016 944 47 % Related party 2,292 4,660 (2,368 ) (51 )% Grant and other 223 1,479 (1,256 ) (85 )% Total revenue 14,170 16,661 (2,491 ) (15 )% Cost of revenue: Product 4,402 5,398 (996 ) (18 )% Service 1,465 685 780 114 % Related party 712 1,430 (718 ) (50 )% Grant and other 536 642 (106 ) (17 )% Total cost of revenue 7,115 8,155 (1,040 ) (13 )% Gross profit 7,055 8,506 (1,451 ) (17 )% Operating expenses: Research and development 50,585 53,019 (2,434 ) (5 )% Selling, general and administrative 56,571 58,950 (2,379 ) (4 )% Total operating expenses 107,156 111,969 (4,813 ) (4 )% Loss from operations (100,101 ) (103,463 ) 3,362 (3 )% Other income (expense): Interest income 16,666 17,764 (1,098 ) (6 )% Loss on equity method investment (2,649 ) — (2,649 ) 100 % Other expense (417 ) (578 ) 161 (28 )% Total other income 13,600 17,186 (3,586 ) (21 )% Loss before provision for income taxes (86,501 ) (86,277 ) (224 ) 0 % Provision for income taxes 98 — 98 100 % Net loss $ (86,599 ) $ (86,277 ) $ (322 ) 0 % Revenue Year ended December 31, Change 2024 2023 Amount % (dollars in thousands) Revenue $ 14,170 $ 16,661 $ (2,491 ) (15 )% Revenue in fiscal year 2024 decreased by $2.5 million, or 15% as compared to the prior year.
Investing Activities In 2023, cash provided by investing activities was $37.9 million, which related to the proceeds from maturities of available-for-sale securities of $445.3 million and proceeds from sale of available-for-sale securities of $3.0 million. This was offset by the purchases of available-for-sale securities of $403.1 million and purchases of property and equipment, primarily for laboratory equipment, of $7.3 million.
In 2023, cash provided by investing activities was $37.9 million, which related to the proceeds from maturities of available-for-sale securities of $445.3 million and proceeds from sale of available-for-sale securities of $3.0 million. This was offset by the purchases of available-for-sale securities of $403.1 million and purchases of property and equipment, primarily for laboratory equipment, of $7.3 million.
We estimate the fair value of stock options with service conditions and stock purchase rights under our ESPP on the grant date using the Black-Scholes option-pricing valuation model. We use the straight-line method to allocate compensation cost to reporting periods over the requisite service period in which the awards are expected to vest.
We estimate the fair value of stock options with service conditions and stock purchase rights under our ESPP on the grant date using the Black-Scholes option pricing model. We use the straight-line method to allocate compensation cost to reporting periods over the requisite service period in which the awards are expected to vest.
Stock-Based Compensation Stock-based compensation expense relates to stock options with service-based vesting conditions, stock options with performance and market-based vesting conditions, stock purchase rights under our employee stock purchase plan (ESPP), restricted common stock awards (RSAs) and restricted stock units (RSUs). All awards are measured at fair value on grant date and forfeitures are recognized as they occur.
Stock-Based Compensation Stock-based compensation expense relates to stock options with service-based vesting conditions, stock options with market-based vesting conditions, stock purchase rights under our employee stock purchase plan (ESPP), restricted common stock awards (RSAs) and restricted stock units (RSUs). All awards are measured at fair value on grant date and forfeitures are recognized as they occur.
For stock options with performance and market-based vesting conditions, stock-based compensation expense is recognized using an accelerated attribution method based on the derived service periods and not reversed if the achievement of the market condition does not occur. The fair value of these stock options is estimated using the Monte Carlo simulation model.
For stock options with market-based vesting conditions, stock-based compensation expense is recognized using an accelerated attribution method based on the derived service periods and not reversed if the achievement of the market condition does not occur. The fair value of these stock options is estimated using the Monte Carlo simulation model.
Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of employee compensation, including stock-based compensation, and benefits for executive management, sales and marketing, customer support, finance, administrative, human resources, legal functions, allocated costs, professional service fees and other general overhead costs to support our operations.
Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of employee compensation, including stock-based compensation, and benefits for executive management, sales and marketing, customer support, finance, administrative, human resources, legal functions, allocated costs, including depreciation, professional service fees and other general overhead costs to support our operations.
Standalone lease arrangements are outside the scope of Accounting Standards Codification (ASC) 606, Revenue Contracts with Customer and are therefore accounted for in accordance with ASC 842, Leases . The total consideration in a lease arrangement is allocated between lease and non-lease components on their relative stand-alone selling prices.
Standalone lease arrangements are outside the scope of Accounting Standards Codification (ASC) 606, Revenue Contracts with Customer and are therefore accounted for in accordance with ASC 842, Leases . The total consideration in a lease arrangement is allocated between lease and non-lease components on their relative standalone selling prices.
While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results. 96 Table of Contents Revenue Recognition Our revenue is generated primarily from sales of products and services.
While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results. 100 Table of Contents Revenue Recognition Our revenue is generated primarily from sales of products and services.
We maintain a letter of credit issued to the lessor in the amount of $0.5 million as of each of December 31, 2023 and 2022, which is secured by restricted cash and is presented as noncurrent at each date based on the term of the underlying lease.
We maintain a letter of credit issued to the lessor in the amount of $0.5 million as of each of December 31, 2024 and 2023, which is secured by restricted cash and is presented as noncurrent at each date based on the term of the underlying lease.
We value RSAs based on the difference between the fair value of the underlying stock at the measurement date and the purchase price. We value RSUs based on the fair value of the underlying stock at the measurement date.
We value RSAs based on the difference between the fair value of the underlying stock at the measurement date and the purchase price.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual 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. 98 Table of Contents
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual 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.
If our available cash, cash equivalents and investments and anticipated cash flows from operations are insufficient to satisfy our liquidity requirements, we may consider raising additional 94 Table of Contents capital to expand our business, pursue strategic investments, take advantage of financing opportunities or for other reasons.
If our available cash, 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, pursue strategic investments, take advantage of financing opportunities or for other reasons.
Financing Activities In 2023, cash provided by financing activities was $0.5 million, which was primarily attributable to proceeds of $0.4 million from the issuance of Class A common stock in connection with our employee stock purchase plan and net proceeds of $0.1 million from the exercise of stock options. In 2022, cash provided by financing activities was $3.9 million.
In 2023, cash provided by financing activities was $0.5 million, which was primarily attributable to proceeds of $0.4 million from the issuance of Class A common stock in connection with our employee stock purchase plan and net proceeds of $0.1 million from the exercise of stock options.
Our ability to generate product and service 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 ability to generate product and service revenue sufficient to achieve profitability, if ever, will depend on the successful commercialization of the Proteograph Product Suite and related products and services. We are commercializing the Proteograph Product Suite as an integrated solution comprised of consumables, our SP100 automation instrument and software.
In addition, 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 commercialization strategy for the Proteograph. We leverage well-established unit operations to formulate and manufacture our NPs at our facilities in Redwood City, California.
In addition, 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 commercialization strategy for the Proteograph. 94 Table of Contents We leverage well-established unit operations to formulate and manufacture our NPs at our facilities in Redwood City, California.
We intend to focus our commercial efforts in the United States and expect to grow our international presence. 91 Table of Contents 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.
We intend to focus our commercial efforts in the United States and expect to grow our international presence. 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.
If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by management, adjusted for applicable discounts. A portion of our revenue relates to lease arrangements.
If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by management, adjusted for applicable discounts. 101 Table of Contents A portion of our revenue relates to lease arrangements.
We obtain some of the reagents and components used in the 90 Table of Contents Proteograph workflow from third-party suppliers. While some of these reagents and components are currently sourced from a single supplier, these products are readily available from numerous suppliers.
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 currently sourced from a single supplier, these products are readily available from numerous suppliers.
We lease approximately 6,000 square feet of office space in San Diego, California that runs through September 2024. 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.
We lease approximately 3,500 square feet of office space in San Diego, California under a lease that runs through July 2025. 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.
Research and Development Expenses Research and development (R&D) expenses include costs associated with R&D of our technology and product candidates. R&D expenses consist primarily of employee compensation, including stock-based compensation and employee benefits, laboratory supplies used for in-house research, consulting costs, and allocated costs, including rent, depreciation, information technology and utilities.
R&D expenses consist primarily of employee compensation, including stock-based compensation and employee benefits, laboratory supplies used for in-house research, consulting costs, and allocated costs, including rent, depreciation, information technology and utilities.
The stand-alone selling price is based on the price we 97 Table of Contents would separately sell that promised good or service to a customer. If a stand-alone price is not available for a component, it is estimated using the best information available.
The standalone selling price is based on the price we would separately sell that promised good or service to a customer. If a standalone price is not available for a component, it is estimated using the best information available.
If a significant financing component exists, the transaction price is adjusted for the financing portion of the arrangement, which is recorded as interest income over the payment term using the effective interest method.
In such cases, we assess whether the arrangement contains a significant financing component. If a significant financing component exists, the transaction price is adjusted for the financing portion of the arrangement, which is recorded as interest income over the payment term using the effective interest method.
We expect our expenses to increase 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 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.
Our expenses may increase 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 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. 95 Table of Contents Components of Results of Operations Revenue Our product revenue consists of an instrument with embedded software essential to the instrument’s functionality and consumables.
The increase was due to higher rates of interest earned on cash invested in money market funds, U.S. Treasury securities, commercial paper, corporate securities and government agency debt in 2023. Liquidity and Capital Resources Since the date of our incorporation, we have incurred significant operating losses and negative cash flows from operations.
The decrease was primarily due to the loss in the equity method investment and lower rates of interest earned on cash invested in money market funds, U.S. Treasury securities, commercial paper, and corporate debt securities. Liquidity and Capital Resources Since the date of our incorporation, we have incurred significant operating losses and negative cash flows from operations.
The change in our net operating assets and liabilities was primarily due to an increase in inventory levels of $1.9 million for anticipated revenue growth and a $1.3 million increase in prepaid expenses and other current assets, which was partially offset by a decrease in accounts receivable of $0.3 million. 95 Table of Contents In 2022, cash used in operating activities was $60.8 million, attributable to a net loss of $93.0 million, partially offset by a net change in our net operating assets and liabilities of $7.1 million and non-cash charges of $39.3 million.
The change in our net operating assets and liabilities was primarily due to an increase in inventory levels of $1.9 million for anticipated revenue growth and a $1.3 million increase in prepaid expenses and other current assets, which was partially offset by a decrease in accounts receivable of $0.3 million.
We enter into agreements as a part of the 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.
We enter into agreements as part of the normal course of business with various vendors, which are generally cancellable without material penalty upon written notice.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year ended December 31, 2023 2022 (in thousands) Net cash used in operating activities $ (59,065 ) $ (60,780 ) Net cash provided by (used in) investing activities 37,904 (122,718 ) Net cash provided by financing activities 452 3,893 Net decrease in cash, cash equivalents and restricted cash $ (20,709 ) $ (179,605 ) Operating Activities In 2023, cash used in operating activities was $59.1 million, attributable to a net loss of $86.3 million, partially offset by a net change in our net operating assets and liabilities of $2.7 million and non-cash charges of $29.9 million.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year ended December 31, 2024 2023 (in thousands) Net cash used in operating activities $ (46,109 ) $ (59,065 ) Net cash provided by investing activities 65,858 37,904 Net cash (used in) provided by financing activities (11,495 ) 452 Net increase (decrease) in cash, cash equivalents and restricted cash $ 8,254 $ (20,709 ) Operating Activities In 2024, cash used in operating activities was $46.1 million, attributable to a net loss of $86.6 million and a net change in our net operating assets and liabilities of $0.1 million, partially offset by non-cash charges of $40.6 million.
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 $6.3 million as of December 31, 2023.
The Company also has certain contractual obligations for third-party technology used as part of its normal operations. 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.
Our contracts with our customer generally do not include rights of return. At times, we may enter into arrangements with payment terms which exceed one year from the transfer of control of the product or service. In such cases, we assess whether the arrangement contains a significant financing component.
Cash received from customers in advance of product shipment or providing services is recorded as a contract liability. Our contracts with our customer generally do not include rights of return. At times, we may enter into arrangements with payment terms which exceed one year from the transfer of control of the product or service.
Since we are in the early stages of commercialization, we have built, and will continue to build our sales, marketing, support and product distribution capabilities.
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. Since we are in the early stages of commercialization, we have built, and will continue to build our sales, marketing, support and product distribution capabilities.
Revenue is recorded net of discounts and sales taxes collected on behalf of governmental authorities. Customers are invoiced generally upon shipment, or upon delivery of 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.
Revenue from services is recognized once the report is delivered to a customer, which is when the customer obtains benefit of the service. Revenue is recorded net of discounts and sales taxes collected on behalf of governmental authorities. Customers are invoiced generally upon shipment, or upon delivery of services, and payment is typically due within 30 or 60 days.
We take a long-term view in growing and scaling our business and regularly review opportunities that meet our long-term growth objectives.
These outstanding commitments amounted to $4.5 million as of December 31, 2024. We take a long-term view in growing and scaling our business and regularly review opportunities that meet our long-term growth objectives.
Shipping revenue is recognized when control of the product is transferred to the customer, and the related shipping and handling costs are included in the cost of revenue.
If any of these criteria were met, the lease was classified as a sales-type lease. If none of these criteria are met, the lease was classified as an operating lease. Shipping revenue is recognized when control of the product is transferred to the customer, and the related shipping and handling costs are included in the cost of revenue.
We will continue to use judgment in evaluating the expected volatility, expected terms, and interest rates utilized for our stock-based compensation calculations on a prospective basis. Assumptions we used in applying the Black-Scholes option-pricing model to determine the estimated fair value of our stock options granted involve inherent uncertainties and the application of significant judgment.
Assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our equity-based compensation could be materially different.
As of December 31, 2023, we had an accumulated deficit of $305.8 million and cash, cash equivalents, and investments of $373.1 million. We expect to continue to incur significant losses and do not expect positive cash flows from operations for the foreseeable future.
We expect to continue to incur significant losses and do not expect positive cash flows from operations for the foreseeable future.
The change in our net operating assets and liabilities was primarily due to an increase in inventory levels of $1.6 million for anticipated revenue growth, an increase in accounts receivable of $2.3 million from higher sales, an increase in prepaid expenses and other current assets of $0.7 million, an increase in other receivables of $0.5 million, an increase in other assets of $0.4 million and a decrease of $1.6 million in accounts payable.
The change in our net operating assets and liabilities was primarily due to an increase in inventory levels of $2.7 million, a decrease in accrued liabilities and other liabilities of $1.4 million, and an increase of $0.1 million in prepaid expenses and other assets, which was partially offset by an increase in accounts payable of $3.4 million, a decrease in accounts receivable of $0.5 million, and an increase in deferred revenue of $0.2 million. 99 Table of Contents In 2023, cash used in operating activities was $59.1 million, attributable to a net loss of $86.3 million, partially offset by a net change in our net operating assets and liabilities of $2.7 million and non-cash charges of $29.9 million.
Cost of revenue consists primarily of costs of the components of the Proteograph Product Suite, including the SP100 instrument and consumables and distribution-related expenses such as logistics and shipping costs. In addition, cost of revenue includes employee compensation, such as stock-based compensation and employee benefits, allocated overhead and charges related to inventory reserves.
Cost of revenue consists primarily of costs of the components of the Proteograph Product Suite, including the SP100 instrument and consumables, cost of services related to the generation and analysis of proteomic data on behalf of our customers, and distribution-related expenses such as logistics and shipping costs.
This was attributable to net proceeds from the exercise of stock options of $3.1 million and $0.8 million of proceeds from the issuance of Class A common stock in connection with our employee stock purchase plan.
Financing Activities In 2024, cash used in financing activities was $11.5 million, which was primarily attributable to the repurchases of Class A common stock under our share repurchase program of $11.8 million. This partially was offset by the proceeds of $0.3 million from the issuance of Class A common stock in connection with our employee stock purchase plan.
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 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 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 focused on removing barriers to access to the Proteograph, including through the STAC service offering.
Our operating lease obligations reflect our lease obligations for our office and laboratory space in Redwood City, California and office space in San Diego, California.
Payments associated with these agreements are not included in this discussion of contractual obligations. 98 Table of Contents Our operating lease obligations reflect our lease obligations for our office and laboratory space in Redwood City, California and office space in San Diego, California.
Research and Development Year ended December 31, Change 2023 2022 Amount % (dollars in thousands) Research and development $ 53,019 $ 45,797 $ 7,222 16 % Research and development expenses increased by $7.2 million, or 16%, from $45.8 million in 2022 to $53.0 million in 2023.
Research and Development Year ended December 31, Change 2024 2023 Amount % (dollars in thousands) Research and development $ 50,585 $ 53,019 $ (2,434 ) (5 )% Research and development expenses in fiscal year 2024 decreased by $2.4 million, or 5% as compared to the prior year.
Our grant and other revenue consists of research-related grants, lease arrangements, and shipping revenue. Our revenue is primarily generated domestically.
Our service revenue primarily consists of revenue received from the generation and analysis of proteomic data on behalf of customers. Our related party revenue is comprised of both product sales and services performed for related parties. Our grant and other revenue consists of research-related grants, lease arrangements, and shipping revenue. Our revenue is primarily generated domestically.
Hamilton has represented to us that it maintains ISO 9001 and ISO 13485 certifications. During the years ended December 31, 2023 and 2022, we incurred a net loss of $86.3 million and $93.0 million and used $59.1 million and $60.8 million of cash in operations, respectively.
During the years ended December 31, 2024 and 2023, we incurred a net loss of $86.6 million and $86.3 million and used $46.1 million and $59.1 million of cash in operations, respectively. As of December 31, 2024, we had an accumulated deficit of $392.4 million and cash, cash equivalents, and investments of $299.5 million.
The increase was primarily due to an increase in product development efforts related to the Proteograph Product Suite, including $2.4 million increase in employee compensation costs, a $0.6 million increase in stock-based compensation, due to growth in research and development personnel and a $2.2 million increase in allocated costs.
The decrease was primarily due to a $5.1 million decrease in stock-based compensation and a $2.3 million decrease in employee compensation costs. The decrease was offset by a $4.2 million increase in professional services and a $0.9 million increase in facility expenses.
The increase was offset by a $2.9 million decrease in professional services. Total Other Income Year ended December 31, Change 2023 2022 Amount % (dollars in thousands) Total other income $ 17,186 $ 4,269 $ 12,917 303 % Total other income increased by $12.9 million, or 303%, from $4.3 million in 2022 to $17.2 million in 2023.
Total Other Income Year ended December 31, Change 2024 2023 Amount % (dollars in thousands) Total other income $ 13,600 $ 17,186 $ (3,586 ) (21 )% Total other income in fiscal year 2024 decreased by $3.6 million, or 21% as compared to the prior year.
Selling, General and Administrative Year ended December 31, Change 2023 2022 Amount % (dollars in thousands) Selling, general and administrative $ 58,950 $ 58,531 $ 419 1 % Selling, general and administrative expenses increased by $0.4 million, or 1%, from $58.5 million in 2022 to $59.0 million in 2023, primarily due to a $3.3 million increase in employee compensation costs and a $0.1 million increase in travel expense.
Selling, General and Administrative Year ended December 31, Change 2024 2023 Amount % (dollars in thousands) Selling, general and administrative $ 56,571 $ 58,950 $ (2,379 ) (4 )% Selling, general and administrative expenses in fiscal year 2024 decreased by $2.4 million, or 4% as compared to the prior year.
In 2022, cash used in investing activities was $122.7 million, which related to purchases of available-for-sale securities, net of proceeds from maturities, of $112.6 million, in addition to $10.3 million in payments primarily for laboratory equipment.
Investing Activities In 2024, cash provided by investing activities was $65.9 million, which was attributable to the proceeds from maturities of available-for-sale securities of $342.0 million and proceeds from disposal of property and equipment of $0.3 million.
Non-cash charges primarily consisted of stock-based compensation of $33.7 million, $3.9 million of depreciation and amortization and $1.7 million of non-cash operating lease expense.
Non-cash charges primarily consisted of $28.2 million of stock-based compensation, $6.2 million of depreciation and amortization, $3.1 million of net amortization of premium on available-for-sale securities, $2.6 million of loss on equity method investment, and $0.3 million of loss on disposal of property and equipment.
Removed
We are focused on removing barriers to access to the Proteograph, including through our service offering. 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.
Added
Our commercial strategy is focused on growing adoption by the research community of the Proteograph, expanding the installed base, increasing utilization to generate revenue from the purchase of Proteograph consumables and growing our service offering through the STAC.
Removed
The agreement has an initial term that runs three years following our commercial launch. We have the option to extend the term of the agreement with Hamilton upon written notice at the end of the initial term; provided that prices are only fixed during the initial term of the agreement.
Added
Starting in January 2025, we renewed the agreement under an extended term through December 2027. Following this extended term, the agreement will automatically renew annually for a maximum of two one-year renewal periods. Hamilton has represented to us that it maintains ISO 9001 and ISO 13485 certifications.
Removed
Components of Results of Operations Revenue Our product revenue consists of an instrument with embedded software essential to the instrument’s functionality and consumables. Our service revenue primarily consists of revenue received from the generation and analysis of proteomic data on behalf of the customer. Our related party revenue consists primarily of product sales to related parties.
Added
In addition, cost of revenue includes employee compensation, such as stock-based compensation and employee benefits, amortization of capitalized internal-use software, allocated overhead, including depreciation, and charges related to inventory reserves. Research and Development Expenses Research and development (R&D) expenses include costs associated with R&D of our technology and product candidates.
Removed
Revenue recognized primarily consisted of sales of the Proteograph SP100 instrument, consumable kits, platform evaluations, instrument upgrades and service revenue, of which $4.7 million was attributed to related parties.
Added
Other Income (Expense) Other income (expense) consists primarily of interest income earned on cash, cash equivalents and investments, asset disposals, realized and unrealized gains and losses on foreign currency transactions, and loss in the equity method investment. Provision for Income Taxes Income tax expense results from our wholly-owned foreign subsidiaries.
Removed
Revenue from our grant-funded activities related to our Small Business Innovation Research (SBIR) grant from the National Institutes of Health Grant (NIH) increased between the two periods by $0.9 million and was partially offset by a decrease of $0.4 million in lease revenue.
Added
The decrease was primarily due to lower related party product sales and no grant revenue being recognized during the period. The decrease was partially offset by an increase in service revenue.
Removed
Cost of Revenue Year ended December 31, Change 2023 2022 Amount % (dollars in thousands) Cost of revenue $ 8,155 $ 8,400 $ (245 ) (3 )% 93 Table of Contents Cost of revenue decreased by $0.2 million, or 3%, from $8.4 million in 2022 to $8.2 million in 2023, primarily due to an increase in service revenue, which carries a lower cost of revenue, and lower product revenue from fewer instrument sales, which have a higher cost of revenue, offset by increased overhead expenses, warranty, and other costs of revenue.
Added
Cost of Revenue Year ended December 31, Change 2024 2023 Amount % (dollars in thousands) Cost of revenue $ 7,115 $ 8,155 $ (1,040 ) (13 )% 97 Table of Contents Cost of revenue in fiscal year 2024 decreased by $1.0 million, or 13% as compared to the prior year.
Removed
Cost of revenue consists of costs of the SP100 instrument, consumable kits, cost of services, and other related costs, including labor and overhead.
Added
The decrease was primarily due to lower product revenue from fewer instrument sales, which has a higher cost of revenue.
Removed
Other increases include costs related to general business expenses of $0.6 million and a $1.3 million increase in depreciation of laboratory equipment.
Added
The decrease was primarily due to lower headcount which resulted in a decrease in employee compensation costs of $2.3 million and a decrease of $1.2 million in stock-based compensation. The decrease was offset by a $1.1 million increase in laboratory expenses.
Removed
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 from services is recognized once the report is delivered to a customer, which is when the customer obtains benefit of the service.
Added
This was offset by the purchases of available-for-sale securities of $262.9 million, purchase of investment in equity security of $10.0 million, and purchases of property and equipment of $3.5 million, which was primarily for laboratory equipment.
Removed
As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our equity-based compensation could be materially different.
Added
In determining whether a transaction should be classified as a sales-type or operating lease, the Company considered the following criteria at lease commencement: (1) whether title of the instrument transfers automatically or for a nominal fee by the end of the lease term, (2) whether the present value of the minimum lease payments equals or exceeds substantially all of the fair value of the leased instrument, (3) whether the lease term is for the major part of the remaining economic life of the leased instrument, (4) whether the lease grants the lessee an option to purchase the leased instrument that the lessee is reasonably certain to exercise, and (5) whether the underlying instrument is of such a specialized nature that it is expected to have no alternative use to the Company at the end of the lease term.
Added
We value RSUs based on the fair value of the underlying stock at the measurement date. 102 Table of Contents We will continue to use judgment in evaluating the expected volatility, expected terms, and interest rates utilized for our stock-based compensation calculations on a prospective basis.

Other SEER 10-K year-over-year comparisons