UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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:
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of Principal Executive Offices)
(
(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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ◻ |
| Accelerated filer | ☐ |
| ||
☒ | Smaller reporting company | 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
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading symbol |
| Name of Exchange on which registered |
As of November 1, 2021, there were
As of November 1, 2021, there were
TABLE OF CONTENTS
2
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.
3
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; |
4
● | 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. |
5
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 |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Short-term investments |
| — |
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Accounts receivable |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Other long-term assets |
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Restricted cash |
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Total assets | $ | | $ | | ||
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
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Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued expenses and other current liabilities |
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Deferred revenue |
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Total current liabilities |
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Preferred stock warrant liability |
| — |
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Notes payable, net of unamortized discount |
| — |
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Deferred rent, long term |
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Other long-term liabilities | | — | ||||
Total liabilities |
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Commitments and contingencies (Note 16) |
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Redeemable convertible preferred stock (Series A1, B1, C1, C2, D1, and D2), $ |
| — |
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Stockholders’ equity (deficit): |
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Class A common stock, $ |
| |
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Class B common stock, $ | | — | ||||
Preferred stock, $ | ||||||
Additional paid-in capital |
| |
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Accumulated deficit |
| ( |
| ( | ||
Accumulated other comprehensive income |
| — |
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Total stockholders’ equity (deficit) |
| |
| ( | ||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
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: |
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Product revenue | $ | | $ | | $ | | $ | | ||||
Service revenue |
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Non-commercial revenue |
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Total revenue |
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Costs and operating expenses: |
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Cost of product revenue |
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Cost of service revenue |
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Cost of non-commercial revenue |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total costs and operating expenses |
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Loss from operations |
| ( |
| ( |
| ( |
| ( | ||||
Other income (expense): |
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Interest expense |
| ( |
| ( |
| ( |
| ( | ||||
Change in fair value of preferred stock warrant liability |
| ( |
| — |
| ( |
| | ||||
Loss on extinguishment of debt |
| ( |
| — |
| ( |
| ( | ||||
Other income (expense) |
| ( |
| |
| ( |
| | ||||
Total other income (expense), net |
| ( |
| ( |
| ( |
| ( | ||||
Loss before income taxes |
| ( |
| ( |
| ( |
| ( | ||||
Income tax expense |
| |
| |
| |
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Net loss |
| ( |
| ( |
| ( |
| ( | ||||
Accretion of redeemable convertible preferred stock to redemption value |
| |
| ( |
| ( |
| ( | ||||
Cumulative redeemable convertible preferred stock dividends |
| ( |
| ( |
| ( |
| ( | ||||
Net loss attributable to common stockholders — basic and diluted | ( | ( | ( | ( | ||||||||
Net loss per share attributable to Class A and Class B common stockholders — basic and diluted | ( | ( | ( | ( | ||||||||
Weighted average common shares outstanding — basic and diluted |
| |
| |
| |
| |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
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 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income: |
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Unrealized loss on short-term investments, net of tax |
| — |
| — |
| ( |
| — | ||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
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 | | $ | | | $ | | — | $ | — |
| $ | | $ | ( | $ | | $ | ( | ||||||||||
Issuance of Series D1 redeemable convertible preferred stock, net of issuance costs of $ |
| |
|
| |
| — |
|
| — | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — | ||
Issuance of Series D2 redeemable convertible preferred stock, net of issuance costs of $ |
| |
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| |
| — |
|
| — | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — | ||
Accretion of redeemable convertible preferred stock to redemption value |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — |
|
| ( | ||
Cumulative redeemable convertible preferred stock dividends |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — |
|
| ( | ||
Issuance of common stock upon exercise of stock options |
| — |
|
| — |
| |
|
| | — |
|
| — |
|
| |
|
| — |
|
| — |
|
| | ||
Issuance of restricted common stock awards | — | — | | | — | — | ( | — | ||||||||||||||||||||
Stock-based compensation expense |
| — |
|
| — |
| — |
|
| — | — |
|
| — |
|
| |
|
| — |
|
| — |
|
| | ||
Net loss | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Balances at March 31, 2021 |
| |
| $ | |
| |
| $ | | — |
| $ | — |
| $ | |
| $ | ( |
| $ | |
| $ | ( | ||
Series D1 issuance costs |
| — |
|
| ( |
| — |
|
| — | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — | ||
Series D2 issuance costs | — | ( | — | — | — | — | — | — | — | — | ||||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — |
|
| ( | ||
Cumulative redeemable convertible preferred stock dividends |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — |
|
| ( | ||
Issuance of common stock upon exercise of stock options |
| — |
|
| — |
| |
|
| | — |
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| — |
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| |
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| — |
|
| — |
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Stock-based compensation expense |
| — |
|
| — |
| — |
|
| — | — |
|
| — |
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| |
|
| — |
|
| — |
|
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Net loss | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Other comprehensive income |
| — |
|
| — |
| — |
|
| — | — |
|
| — |
|
| — |
|
| — |
|
| ( |
|
| ( | ||
Balances at June 30, 2021 |
| |
| $ | |
| |
| $ | | — |
| $ | — |
| $ | |
| $ | ( |
| $ | — |
| $ | ( | ||
Accretion of redeemable convertible preferred stock to redemption value | — |
|
| ( |
| — |
|
| — | — |
|
| — |
|
| |
|
| — |
|
| — | | |||||
Cumulative redeemable convertible preferred stock dividends | — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — | ( | |||||
Conversion of preferred stock to common stock |
| ( |
|
| ( |
| |
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| | |
|
| |
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| |
|
| — |
|
| — |
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Conversion of preferred stock warrants to class A common stock warrants | — | — | — | — | — | — | | — | — | | ||||||||||||||||||
Issuance of class A common stock in initial public offering, net of issuance costs of $ | — | — | | | — | — | | — | — | | ||||||||||||||||||
RSA liability accretion |
| — |
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| — |
| — |
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| — | — |
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| — |
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| — |
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| — |
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Issuance of common stock upon exercise of common stock warrants |
| — |
|
| — |
| |
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| | — |
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| — |
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| — |
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| — |
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Issuance of common stock upon exercise of stock options |
| — |
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| — |
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| — | — |
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| — |
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| — |
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| — |
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Stock-based compensation expense |
| — |
|
| — |
| — |
|
| — | — |
|
| — |
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| |
|
| — |
|
| — |
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Net loss | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Balances at September 30, 2021 |
| — |
| $ | — |
| |
| $ | | |
| $ | |
| $ | |
| $ | ( |
| $ | — |
| $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
RAPID MICRO BIOSYSTEMS, INC.
Condensed consolidated statements of redeemable convertible preferred stock and stockholders’ deficit
(Unaudited), continued
(In thousands, except share amounts)
|
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| Accumulated |
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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 |
| |
| $ | |
| |
| $ | | — |
| $ | — |
| $ | |
| $ | ( |
| $ | — |
| $ | ( | ||
Accretion of redeemable convertible preferred stock to redemption value |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — |
|
| ( | ||
Cumulative redeemable convertible preferred stock dividends |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — |
|
| ( | ||
Stock-based compensation expense |
| — |
|
| — |
| — |
|
| — | — |
|
| — |
|
| |
|
| — |
|
| — |
|
| | ||
Net loss | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Balances at March 31, 2020 |
| |
|
| |
| | $ | | — | $ | — |
| $ | |
| $ | ( |
| $ | — |
| $ | ( | ||||
Issuance of Series C1 redeemable convertible preferred stock, net of issuance costs of $ |
| |
|
| |
| — |
|
| — | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — | ||
Issuance of Series C2 redeemable convertible preferred stock, net of issuance costs of $ |
| |
|
| |
| — |
|
| — | — |
|
| — |
|
| — |
|
| — |
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| — |
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| — | ||
Conversion of bridge notes to C1 redeemable convertible preferred stock |
| |
|
| |
| — |
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| — | — |
|
| — |
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| — |
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| — |
|
| — |
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| — | ||
Accretion of redeemable convertible preferred stock to redemption value |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
|
| — |
|
| ( | ||
Cumulative redeemable convertible preferred stock dividends |
| — |
|
| |
| — |
|
| — | — |
|
| — |
|
| ( |
|
| — |
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| — |
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| ( | ||
Stock-based compensation expense |
| — |
|
| — |
| — |
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| — | — |
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| — |
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| — |
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| — |
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Net loss | — |