Nautilus Biotechnology, Inc. (NASDAQ:NAUT) Q4 2023 Earnings Call Transcript
Nautilus Biotechnology, Inc. (NASDAQ:NAUT) Q4 2023 Earnings Call Transcript February 28, 2024
Nautilus Biotechnology, Inc. beats earnings expectations. Reported EPS is $0.14, expectations were $-0.16. NAUT isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and thank you for standing by. Welcome to Nautilus Q4 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Carrie Mendivil, Investor Relations. Please go ahead.
Carrie Mendivil: Thank you. Earlier today, Nautilus released financial results for the quarter and full year ended December 31, 2023. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to Investor Relations at investorrelations@nautilus.bio. Joining me today from Nautilus are Sujal Patel, Co-Founder and CEO; Parag Mallick, Co-Founder and Chief Scientist; and Anna Mowry, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking within the meaning of the federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and uncertainties appears in the section entitled forward-looking in the press release Nautilus issued today. Except as required by law, Nautilus disclaims any intention or obligation to update or revise any financial or product pipeline projections or other forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, February 28, 2024. With that, I'll turn the call over to Sujal.
Sujal Patel: Thanks, Carrie. Good morning, and thank you to everyone for joining us today. This morning, we'll share our results for the fourth quarter and full year 2023 and provide an update on recent activities. But first, I want to thank our employees, our partners and our investors, creating a platform capable of enabling researchers to explore the mysteries and the potential of the proteome is very much a team effort. It requires strong alignment up and down the organization, vision, persistence and an unwavering commitment to our goal of improving human health. I'm grateful for the extraordinary work the entire team did in 2023 and for how they've kicked off 2024 stronger than ever. We recognize that we're tackling a big hard problem that has never been successfully addressed.
And armed with the learnings of last year and years prior, we now have greater clarity about what remains to be done to deliver what we believe will be a game-changing platform to the market. We enter 2024 more energized than ever focused on the good that we anticipate our platform can do and confident in our ability to get there. When I reflect on 2023, I see it as a year of accomplishment and a foundational progress. Progress that will continue to build momentum for Nautilus as we move through 2024 and towards the planned launch of our proteome analysis platform in 2025. You'll hear more details about specific R&D progress from Parag in just a few minutes and more context from me around the revised launch time frame a little later. But first, I want to reflect on what we continue to hear from potential customers and what I sense as I look across the market landscape.
At a high level, I'm encouraged by a growing awareness among researchers about the role that proteomic data can play is easily and cost effectively generated in augmenting other high-value biological data set. More specifically, we continue to receive enthusiastic feedback from the researchers and partners with whom we've directly engaged. They recognize the inherent limitations of both traditional analysis methods and of emerging affinity-based and peptide sequencing methods. They clearly understand how critically important single molecule intact protein analysis, which only Nautilus is designed to deliver will be to their expanded explorations of the proteome. We and they envision a day when their ability to explore the entire proteome more thoroughly will net fundamental advances in basic biological research, enabling researchers to make a substantial impact on the efficiency and cost-effectiveness of biomarker discovery and drug development.
While the desire on the part of researchers to finally have a breakthrough in the availability and cost, the valuable proteomic data is not new. What is new is the potential of actually delivering on that dream. That is fueling the imagination of researchers to think beyond what has been possible and towards the idea of what could be possible. This is a truly exciting time to be on the front line of proteomic innovation. With that, let me now turn the call over to Parag for an update on our progress on the R&D front. Parag?
Parag Mallick: Thanks, Sujal. Overall, we made solid progress against our core goals in 2023. Our major focus last year was on development activities, i.e., increasing scale, stability and reproducibility across our entire ecosystem, but especially our consumables. We additionally made significant progress in reducing the cost and complexity of producing our consumables. This progress goes hand-in-hand with advancing the reliability, quality and customer readiness of our instrument and software. Some examples of this progress include significantly increasing the development pace for our affinity reagents. This increase was a result of optimizing the yield and throughput of our reagent development pipeline. We also transitioned many of those new reagents into common experimental use.
We advanced our fabrication and assembly processes for our nano pattern chip and flow cell. This refinement enabled both improvements in scale and reproducibility. We additionally qualified our external patterning and assembly partners. After refining our nano particle scaffolds, we more than 10x the throughput and scale of manufacturing for both our labeled probes and our nano particle scaffolds. 2023 also saw a continued focus on advancing our commercial instrument, especially the integration of the hardware, software and wetware elements, taking an instrument from concept to commercial readiness is complex and requires close coordination between teams across the company. I'm pleased with the progress I saw last year in this regard with the instrument becoming a true workhorse.
The combination of advances in our consumable production scale, reliability and reproducibility, the increased stability of our multicycle assays and the expansion and available number of commercial form factor instruments enabled us to successfully perform substantially greater numbers of longer-cycle experiments in the past quarter than we did in the prior several years combined. That work continues to accelerate in 2024. The deluge of data from these more numerous and larger scale experiments also drove advances in the software and bioinformatics aspects of our platform. In particular, like with the instrument, we have switched over from prototype software tools to the integrated and automated pipelines that will be used by our customers.
In the past, these analyses might take weeks of hands-on time to execute, and now analyses can be achieved with minutes of hands-on time. As we reported in Q2, the increasing experimental scale and assay robustness has enabled us to increase the set of model proteins that can be successfully decoded. We have diversified our models to include mixes of multiple proteins across a range of concentrations and are excited about further increasing the complexity of our model systems. These efforts are essential to the path towards verification and validation required for launch. Coming out of 2023 and into 2024, we remain focused on addressing the foundational elements required to launch our platform, ranging from how to mobilize single protein molecules on our nano pattern flow cell, how to detect diverse epitopes within proteins at single molecule resolution, the ability to run large-scale experiments involving a large number of probes across large numbers of cycles and an instrument ready to transition into broader use.
In an ongoing demonstration of our commitment to transparency and openness, we continue to reach out to the broader proteomics community with the objective of sharing the scientific underpinnings of our platform. These conversations frequently lead to suggestions of exciting and creative applications of our platform that we had not previously envisioned. The next major opportunity for data sharing and application ideation comes in two weeks at the US HUPO conference in Portland, Oregon. I am incredibly excited by the opportunities we'll have at the event where we'll be publicly presenting on the following topics, additional progress on the experimental implementation of PrIsM, further detail on our multi-affinity Pro pipeline and on computational methods to estimate false discovery rate Overall, we continue to listen to the proteomics community, our future customers to ensure that we are sharing with them ongoing updates on our progress towards specific technical areas.
One of the areas that I'm most excited about is the additional data we'll be sharing resulting from the targeted proteoform studies of Tau and EGFR that we've been pursuing in partnership with Genentech and Amgen. All the advances that we've made towards advancing our platform for broad scale studies have synergistically and simultaneously advanced our platform for targeted proteoform studies. We continue to hear from the community how important proteoforms, as defined by combinations of splice variants and post-translational modifications, ARC [ph] disease biology and the excitement about our platform is uniquely suited to measure the molecular heterogeneity of proteoforms at single molecule resolution. As Sujal mentioned earlier, we come into this year clear eye about what work remains to be done and confident that we have a solid foundational understanding of what is required to get our platform into the hands of users, where it can have a profound impact.
With that, I'll turn the call back to Sujal.
Sujal Patel: Thanks for the update, Parag. On another HUPO related note, at the event, Parag will be honored as the 2024 recipient of the Gilbert S. Omenn Computational Proteomics Award. This prestigious award recognizes Parag's career achievements and long-standing leadership role in the development of bioinformatic analyses and the computational methods widely used by the proteomics community. Needless to say, we are very grateful to have him on our team. During past calls, we've spoken about the well-understood reality that shipping the first version of any truly groundbreaking product can be slower and more challenging than initially anticipated. As one of our board members is fond of saying, these delays are often based on encountering and knocking down one by one, what she refers to as FIW problems, challenges associated with being first in the world.
Investors, analysts, customers and others with whom we speak acknowledge that building a game-changing proteomic analysis platform, especially the first of its kind product like ours is hard and simply takes time. Since we recognize how significant an impact will be created by the data that our platform is expected to produce, we are committed to ensuring that our company is fully ready to introduce, support and rapidly innovate on what is designed to be an incredibly high-quality, high-value product. The world of biology deserves our best and we have set an exceedingly high bar for ourselves. During recent calls, we've shared our thoughts on the experimental and related work that's required to enable us to maintain a 2024 commercial launch time frame with the V1 product specifications that we believe will be transformative to our market.
Despite strong progress towards these goals and in the name of ensuring that we launch a product that meets our very high bar for quality and performance, we now plan to launch our Proteome analysis platform, instruments, reagents and software in 2025. We remain singularly focused on driving our scientific and development efforts forward in the most efficient, cost-effective way possible. I want to emphasize that we are not currently focused on creating short-term revenue opportunities. By choosing to focus intently on our development objectives, we believe we are positioning ourselves to create the best platform possible and make the maximum positive impact on the marketplace, biological science and long-term shareholder value. As you'll hear from Anna in just a moment, we continue to operate in a very capital-efficient manner.
Our burn rate and cash balance are a significant advantage for us and to strike the right balance between maximizing our cash runway into 2026 while making the investments that are necessary to drive our scientific progress forward. For more on that and other things, let me hand the call over to Anna for a look at our Q4 and full year 2023 financials. Anna?
Anna Mowry: Thanks, Sujal. Total operating expenses for the fourth quarter of 2023 were $20.0 million, up $3.7 million compared to the fourth quarter of 2022 and $0.9 million above last quarter. This modest increase in operating expenses year-over-year was driven primarily by an increase in headcount to support the ongoing development of our products. Research and development expenses in the fourth quarter of 2023 were $12.5 million compared to $9.6 million in the prior year period. General and administrative expenses were $7.5 million in the fourth quarter of 2023 compared to $6.7 million in the prior year period. Overall net loss for the fourth quarter of 2023 was $17.0 million compared to $13.4 million in the prior year period.
For fiscal year 2023, operating expenses were $76.2 million, an increase of $12.5 million or 20% from $63.6 million in fiscal year 2022. This increase was driven primarily by an increase in headcount to support the ongoing development of our products. Net loss for the full year was $63.7 million compared to $57.9 million in fiscal year 2022, an increase of 10% year-over-year. Turning to our balance sheet. We ended the year with approximately $264 million in cash, cash equivalents and investments compared to $276 million at the end of last quarter. Over the past year, we have hired additional leadership count, particularly in R&D and increase the throughput of our development and production pipeline. Importantly, we have achieved improved efficiencies with operational spend, beating our internal expectations.
We entered 2024 with a lower burn rate and a strong cash balance, extending our cash runway into the second half of 2026. We remain committed to responsible financial stewardship to ensure flexibility ahead of our commercial launch. Today, we filed a shelf registration statement on Form S-3 as well as a prospectus supplement regarding a potential at-the-market offering of up to $125 million, which has not yet been declared effective. We view this filing as strictly good corporate housekeeping designed to allow us the flexibility to strategically and efficiently raise capital in the future. In 2024, we expect growth in spend to steadily increase as we continue to prepare for our commercial launch. This year, we expect our overall operating expenses to grow by approximately 25% from 2023 levels.
We are confident that we remain well positioned to execute on our strategy to launch a transformational platform in proteomics. With that, I'll turn it back to Sujal.
Sujal Patel: Thanks, Anna. Anna's report clearly demonstrates our steadfast commitment to responsible financial stewardship of this business as we move towards commercial availability in 2025. We're excited about and energized by what lies ahead for Nautilus and the difference we believe our platform can make in biological science. Our mission to positively impact the health and lives of people around the world remains our guiding light and the high standard to which we hold ourselves. I'm grateful to our team, our investors, our strategic partners and our research collaborators for joining us on this journey to revolutionize proteomic and empower the scientific community in ways never thought possible. We made excellent progress in 2023 and look forward to building on those successes as we move through 2024 on our way to a commercial launch in 2025 and beyond. With that, I'll turn the call back to the operator. Operator?
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