SEC Filing - Rapid Micro Biosystems, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

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

For the quarterly period ended September 30, 2021

☐

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

For the transition period from to

Commission File Number: 001-40592

Rapid Micro Biosystems, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-8121647

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

1001 Pawtucket Boulevard West, Suite 280

Lowell, MA 01854

(Address of Principal Executive Offices)

(978) 349-3200

(Registrant’s telephone number)

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

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

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


Large accelerated filer	◻	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

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

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

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


Title of Each Class	Trading symbol	Name of Exchange on which registered
Class A common stock, $0.01 par value per share	RPID	The Nasdaq Global Select Market

As of November 1, 2021, there were 34,449,144 of the registrant’s Class A common stock, par value $0.01, outstanding.

As of November 1, 2021, there were 6,903,379 of the registrant’s Class B common stock, par value $0.01, outstanding.

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TABLE OF CONTENTS


		Page

Part I	Financial Information

Item 1.	Financial Statements	6

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (Unaudited)	6

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	7

	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	8

	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	9

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (Unaudited)	11

	Notes to Condensed Consolidated Financial Statements (Unaudited)	13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	55

Item 4.	Controls and Procedures	55

Part II	Other Information

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	94

Item 3.	Defaults Upon Senior Securities	95

Item 4.	Mine Safety Disclosures	95

Item 5.	Other Information	95

Item 6.	Exhibits	95

Exhibit Index

Signatures

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. These forward-looking statements are often, but not always, made through the use of words or phrases such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed in Part II, Item 1A, “Risk Factors”, in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

This Quarterly Report on Form 10-Q and the documents that we have filed as exhibits should be read with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we assume no obligation to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

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SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. Investors should carefully consider these risks and uncertainties when investing in our Class A common stock. The principal risks and uncertainties affecting our business include the following:

●

The COVID-19 pandemic has impacted, and may continue to impact, our operations and may materially and adversely affect our business and financial results;

●

We have incurred significant losses since inception, we expect to incur losses in the future and we may not be able to generate sufficient revenue to achieve and maintain profitability;

●

We may need to raise additional capital to fund our existing operations, improve our platform or develop and commercialize new products or expand our operations;

●

To date, our revenue has been primarily generated from sales of our Growth Direct system, laboratory information management system, or LIMS, connection software, and validation services. The generation of our recurring revenue, comprised of sales of our proprietary consumables and service contracts, is dependent upon the sale, delivery and installation of a system as well as the completion of validation services. As a result, we require a substantial period of time to generate recurring revenue;

●

We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy;

●

We have limited experience in marketing and sales, and if we are unable to expand our marketing and sales organization to adequately address our customers’ needs or to expand our customer base, our business may be adversely affected;

●

We must develop new products, adapt to rapid and significant technological change and respond to introductions of new products by competitors to remain competitive;

●

The continued success of our business relies heavily on establishing and maintaining our position in the market as a leading provider of automated microbial quality control, or MQC, testing;

●

If our sole manufacturing and development facility becomes damaged or inoperable or we are required to vacate our existing facility, our ability to conduct and pursue our manufacturing and development efforts will be jeopardized;

●

Our manufacturing operations are dependent upon third-party suppliers, including single-source suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business;

●

If we lose key management, cannot recruit qualified employees, directors, officers or other significant personnel or experience increases in our compensation costs, our business may be materially harmed;

●

We may acquire businesses or form joint ventures or make investments in other companies or technologies that could negatively affect our operating results, dilute our stockholders’ ownership, incur debt or cause us to incur significant expense;

●

Our customers use our Growth Direct platform as part of their quality-control workflow, which is subject to regulation by the U.S. Food and Drug Administration, or FDA, and other comparable regulatory authorities;

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●

If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect investor confidence in our company;

●

If we are unable to obtain and maintain sufficient intellectual property protection for our technology, including the Growth Direct platform, 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;

●

Because we do not anticipate paying any cash dividends on our Class A common stock in the foreseeable future, capital appreciation, if any, would be a stockholder’s sole source of gain;

●

Provisions in our restated certificate of incorporation and amended and restated bylaws and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management;

●

The market price of our Class A common stock may be volatile and fluctuate substantially, which could result in substantial losses for our stockholders; and

●

Sales of a substantial number of shares of our Class A common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Class A common stock.

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PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

RAPID MICRO BIOSYSTEMS, INC.

Condensed consolidated balance sheets

(In thousands, except share and per share amounts)

(Unaudited)


	September 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	219,588	$	30,079
Short-term investments		—		14,998
Accounts receivable		5,006		4,988
Inventory		14,167		8,965
Prepaid expenses and other current assets		5,400		3,120
Total current assets		244,161		62,150
Property and equipment, net		8,633		7,052
Other long-term assets		1,348		695
Restricted cash		284		100
Total assets	$	254,426	$	69,997
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	2,251	$	4,468
Accrued expenses and other current liabilities		11,566		6,654
Deferred revenue		3,903		4,423
Total current liabilities		17,720		15,545
Preferred stock warrant liability		—		4,117
Notes payable, net of unamortized discount		—		24,810
Deferred rent, long term		728		705
Other long-term liabilities		1,233		—
Total liabilities		19,681		45,177
Commitments and contingencies (Note 16)
Redeemable convertible preferred stock (Series A1, B1, C1, C2, D1, and D2), $0.01 par value; zero shares and 161,455,689 shares authorized at September 30, 2021 and December 31, 2020, respectively; zero shares and 133,021,640 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively.		—		151,826
Stockholders’ equity (deficit):
Class A common stock, $0.01 par value; 210,000,000 shares and 35,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; 34,449,154 shares and 612,850 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		344		6
Class B common stock, $0.01 par value; 10,000,000 shares and zero shares authorized at September 30, 2021 and December 31, 2020, respectively; 6,903,379 shares and zero shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		69		—
Preferred stock, $0.01 par value: 10,000,000 shares and zero shares authorized at September 30, 2021 and December 31, 2020, respectively; zero shares issued and outstanding at September 30, 2021 and December 31, 2020		—		—
Additional paid-in capital		534,839		114,575
Accumulated deficit		(300,507)		(241,588)
Accumulated other comprehensive income		—		1
Total stockholders’ equity (deficit)		234,745		(127,006)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	254,426	$	69,997

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

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RAPID MICRO BIOSYSTEMS, INC.

Condensed consolidated statements of operations

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue:
Product revenue	$	4,824	$	4,069	$	12,630	$	6,921
Service revenue		1,479		895		4,152		2,060
Non-commercial revenue		596		283		1,242		1,858
Total revenue		6,899		5,247		18,024		10,839
Costs and operating expenses:
Cost of product revenue		6,298		5,441		17,900		11,544
Cost of service revenue		1,516		772		3,997		2,478
Cost of non-commercial revenue		396		399		1,282		1,732
Research and development		2,441		2,224		6,926		4,906
Sales and marketing		3,063		1,447		8,460		4,149
General and administrative		5,308		2,541		12,135		6,855
Total costs and operating expenses		19,022		12,824		50,700		31,664
Loss from operations		(12,123)		(7,577)		(32,676)		(20,825)
Other income (expense):
Interest expense		(775)		(886)		(2,631)		(2,463)
Change in fair value of preferred stock warrant liability		(8,160)		—		(19,643)		549
Loss on extinguishment of debt		(3,100)		—		(3,100)		(2,910)
Other income (expense)		(809)		18		(812)		24
Total other income (expense), net		(12,844)		(868)		(26,186)		(4,800)
Loss before income taxes		(24,967)		(8,445)		(58,862)		(25,625)
Income tax expense		20		20		57		114
Net loss		(24,987)		(8,465)		(58,919)		(25,739)
Accretion of redeemable convertible preferred stock to redemption value		210		(832)		(1,761)		(2,882)
Cumulative redeemable convertible preferred stock dividends		(451)		(1,412)		(2,747)		(2,987)
Net loss attributable to common stockholders — basic and diluted	$	(25,228)	$	(10,709)	$	(63,427)	$	(31,608)
Net loss per share attributable to Class A and Class B common stockholders — basic and diluted	$	(0.71)	$	(30.08)	$	(5.14)	$	(89.20)
Weighted average common shares outstanding — basic and diluted		35,316,099		356,074		12,344,619		354,341

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

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RAPID MICRO BIOSYSTEMS, INC.

Condensed consolidated statements of comprehensive loss

(Unaudited)

(In thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(24,987)	$	(8,465)	$	(58,919)	$	(25,739)
Other comprehensive income:
Unrealized loss on short-term investments, net of tax		—		—		(1)		—
Comprehensive loss	$	(24,987)	$	(8,465)	$	(58,920)	$	(25,739)

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

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RAPID MICRO BIOSYSTEMS, INC.

Condensed consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit)

(Unaudited)

(In thousands, except share amounts)


														Accumulated
	Redeemable convertible			Class A			Class B			Additional				other
	preferred stock			Common stock			Common stock			paid-in		Accumulated		comprehensive
	Shares	Amount		Shares	Amount		Shares	Amount		capital		deficit		income		Total
Balances at December 31, 2020	133,021,640	$	151,826	612,850	$	6	—	$	—	$	114,575	$	(241,588)	$	1	$	(127,006)
Issuance of Series D1 redeemable convertible preferred stock, net of issuance costs of $2,627	22,086,725		78,338	—		—	—		—		—		—		—		—
Issuance of Series D2 redeemable convertible preferred stock, net of issuance costs of $18	413,268		1,470	—		—	—		—		—		—		—		—
Accretion of redeemable convertible preferred stock to redemption value	—		787	—		—	—		—		(787)		—		—		(787)
Cumulative redeemable convertible preferred stock dividends	—		1,411	—		—	—		—		(1,411)		—		—		(1,411)
Issuance of common stock upon exercise of stock options	—		—	67,418		1	—		—		66		—		—		67
Issuance of restricted common stock awards	—		—	248,903		2	—		—		(2)						—
Stock-based compensation expense	—		—	—		—	—		—		191		—		—		191
Net loss	—		—	—		—	—		—		—		(22,101)		—		(22,101)
Balances at March 31, 2021	155,521,633	$	233,832	929,171	$	9	—	$	—	$	112,632	$	(263,689)	$	1	$	(151,047)
Series D1 issuance costs	—		(64)	—		—	—		—		—		—		—		—
Series D2 issuance costs	—		(1)	—		—	—		—		—		—		—		—
Accretion of redeemable convertible preferred stock to redemption value	—		1,184	—		—	—		—		(1,184)		—		—		(1,184)
Cumulative redeemable convertible preferred stock dividends	—		885	—		—	—		—		(885)		—		—		(885)
Issuance of common stock upon exercise of stock options	—		—	37,146		1	—		—		31		—		—		32
Stock-based compensation expense	—		—	—		—	—		—		390		—		—		390
Net loss	—		—	—		—	—		—		—		(11,831)		—		(11,831)
Other comprehensive income	—		—	—		—	—		—		—		—		(1)		(1)
Balances at June 30, 2021	155,521,633	$	235,836	966,317	$	10	—	$	—	$	110,984	$	(275,520)	$	—	$	(164,526)
Accretion of redeemable convertible preferred stock to redemption value	—		(210)	—		—	—		—		210		—		—		210
Cumulative redeemable convertible preferred stock dividends	—		451	—		—	—		—		(451)		—		—		(451)
Conversion of preferred stock to common stock	(155,521,633)		(236,077)	24,200,920		242	6,903,379		69		235,766		—		—		236,077
Conversion of preferred stock warrants to class A common stock warrants	—		—	—		—	—		—		23,760		—		—		23,760
Issuance of class A common stock in initial public offering, net of issuance costs of $16,087	—		—	9,006,604		90	—		—		163,955		—		—		164,045
RSA liability accretion	—		—	—		—	—		—		5		—		—		5
Issuance of common stock upon exercise of common stock warrants	—		—	268,718		2	—		—		11		—		—		13
Issuance of common stock upon exercise of stock options	—		—	6,595		—	—		—		15		—		—		15
Stock-based compensation expense	—		—	—		—	—		—		584		—		—		584
Net loss	—		—	—		—	—		—		—		(24,987)		—		(24,987)
Balances at September 30, 2021	—	$	—	34,449,154	$	344	6,903,379	$	69	$	534,839	$	(300,507)	$	—	$	234,745

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

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RAPID MICRO BIOSYSTEMS, INC.

Condensed consolidated statements of redeemable convertible preferred stock and stockholders’ deficit

(Unaudited), continued

(In thousands, except share amounts)


														Accumulated
	Redeemable convertible			Class A			Class B			Additional				other
	preferred stock			Common stock			Common stock			paid-in		Accumulated		comprehensive
	Shares	Amount		Shares	Amount		Shares	Amount		capital		deficit		income		Total
Balances at December 31, 2019	78,757,540	$	81,850	353,465	$	4	—	$	—	$	121,931	$	(204,510)	$	—	$	(82,575)
Accretion of redeemable convertible preferred stock to redemption value	—		818	—		—	—		—		(818)		—		—		(818)
Cumulative redeemable convertible preferred stock dividends	—		788	—		—	—		—		(788)		—		—		(788)
Stock-based compensation expense	—		—	—		—	—		—		120		—		—		120
Net loss	—		—	—		—	—		—		—		(8,007)		—		(8,007)
Balances at March 31, 2020	78,757,540		83,456	353,465	$	4	—	$	—	$	120,445	$	(212,517)	$	—	$	(92,068)
Issuance of Series C1 redeemable convertible preferred stock, net of issuance costs of $261	23,611,208		26,891	—		—	—		—		—		—		—		—
Issuance of Series C2 redeemable convertible preferred stock, net of issuance costs of $303	20,301,829		23,044	—		—	—		—		—		—		—		—
Conversion of bridge notes to C1 redeemable convertible preferred stock	10,351,063		11,898	—		—	—		—		—		—		—		—
Accretion of redeemable convertible preferred stock to redemption value	—		1,232	—		—	—		—		(1,232)		—		—		(1,232)
Cumulative redeemable convertible preferred stock dividends	—		787	—		—	—		—		(787)		—		—		(787)
Stock-based compensation expense	—		—	—		—	—		—		126		—		—		126
Net loss	—