Business Overview and History

Seer Inc (SEER) is a pioneering life sciences company that is revolutionizing the field of proteomics with its disruptive Proteograph Product Suite. This integrated solution, comprising proprietary engineered nanoparticles, automation instrumentation, and advanced software, is enabling researchers to unlock the immense potential of the human proteome like never before.

Seer was incorporated in Delaware on March 16, 2017, with its headquarters established in Redwood City, California. The company was founded with a clear mission: to imagine and pioneer new ways to decode the biology of the proteome and improve human health. Since its inception, Seer has devoted substantially all of its resources to research and development activities, focusing on the development of its Proteograph Product Suite.

In the early years, Seer concentrated on developing its proprietary engineered nanoparticle technology and the integrated Proteograph solution. As the company transitioned from primarily focusing on development to commercialization, it began building out its sales, marketing, support, and product distribution capabilities, both in the United States and internationally. This expansion included establishing direct sales channels in the US and utilizing both direct and distributor sales channels in regions outside the US.

Throughout its history, Seer has faced challenges common to early-stage life sciences technology companies. These include incurring significant losses, experiencing negative cash flows from operations, and needing to raise capital to fund its operations and commercialization efforts. The company has also navigated the complex process of developing novel technologies, obtaining necessary intellectual property protections, and driving scientific and commercial market acceptance of its products.

Despite these challenges, Seer has made progress in commercializing the Proteograph Product Suite and expanding access to its technology. One notable initiative in this regard is the establishment of the Seer Technology Access Center, which aims to broaden the reach and adoption of its innovative proteomic solutions.

The Proteograph's unique value proposition lies in its ability to provide researchers with unprecedented access to the proteome. By leveraging Seer's proprietary engineered nanoparticles, the system can capture and analyze thousands of proteins from biological samples, revealing insights that were previously difficult or impossible to obtain. This technology has the potential to transform the way researchers approach a wide range of applications, from basic biology and drug discovery to diagnostics and precision medicine.

Financial Performance and Ratios

Seer's financial performance has been marked by significant investments in research and development, as well as the ongoing commercialization of its Proteograph Product Suite. As the company transitions from a predominantly R&D-focused organization to a commercial entity, its financial metrics have been evolving.

For the fiscal year ended December 31, 2023, Seer reported total revenue of $15.18 million, a 3.35% increase from the previous year's $14.69 million. However, the company's net income remained in the red, with a net loss of $86.28 million, compared to a net loss of $92.97 million in the prior fiscal year. Operating cash flow (OCF) for 2023 was -$59.07 million, while free cash flow (FCF) stood at -$66.37 million.

Seer's gross profit margin for 2023 was 46.5%, up from 42.8% in 2022, indicating improvements in the company's cost structure and product mix. The current ratio, a measure of short-term liquidity, stood at 18.36 as of December 31, 2023, suggesting a strong ability to meet its near-term obligations. The quick ratio, another measure of liquidity, was 17.88, further confirming the company's solid short-term financial position.

Moreover, Seer ended the 2023 fiscal year with a cash and investments balance of $316.22 million, providing ample resources to fund its ongoing operations and future growth initiatives.

Quarterly Performance and Guidance

In the most recent quarter, Q3 2024, Seer reported revenue of $4.03 million, a slight decrease of 3% compared to the $4.16 million generated in the same period the previous year. The company's gross profit margin for the quarter was 48%, down from 52% in Q3 2023, primarily due to the lower proportion of grant revenue, which typically carries a higher gross margin.

Seer's net loss for Q3 2024 was $21.33 million, compared to a net loss of $21.09 million in the same quarter of 2023. The company's operating cash flow for the quarter was -$14.13 million, with free cash flow at -$16.32 million. Seer's cash and investments position remained strong at $312 million as of September 30, 2024, consisting of $37.62 million in cash and cash equivalents, $209.98 million in short-term investments, and $64.89 million in long-term investments.

For the full year 2024, Seer has provided guidance, expecting revenue to be in the range of $13 million to $15 million. This range reflects the company's ongoing focus on driving broader adoption of the Proteograph Product Suite and the challenges posed by the current macroeconomic environment, which has impacted capital expenditure budgets in the life sciences industry. The company also estimates that its 2024 free cash flow loss will be less than its 2023 free cash flow loss, with the first nine months of 2024 showing a free cash flow loss of approximately $39 million.

Seer's management remains optimistic about the long-term prospects of its technology and the growing body of evidence demonstrating the Proteograph's ability to unlock new insights in the field of proteomics. The company's strategic initiatives, such as the recent co-marketing and sales agreement with Thermo Fisher Scientific, are expected to enhance the accessibility and global reach of its innovative solutions.

Product Segments and Revenue Streams

Seer operates in two main product segments: the Proteograph Product Suite and related services.

The Proteograph Product Suite is Seer's primary revenue-generating product. It is an integrated solution comprising the SP100 automation instrument with embedded software, proprietary engineered nanoparticles (NPs), consumables, and the Proteograph Analysis Suite software. This suite is designed to provide unbiased, deep, rapid, and large-scale access to the proteome, which Seer believes is essential for understanding the complexity and dynamic nature of the proteome and accelerating biological insights.

For the three and nine months ended September 30, 2024, product revenue, which consists primarily of sales of the Proteograph Product Suite, was $2.92 million and $6.34 million, respectively. This represents an increase of 58% and 9% compared to the same periods in the prior year, driven by higher instrument sales.

In addition to product sales, Seer also generates service revenue, which primarily consists of revenue received from the generation and analysis of proteomic data on behalf of customers. For the three and nine months ended September 30, 2024, service revenue was $661,000 and $1.75 million, respectively, representing an increase of 23% and 63% compared to the same periods in the prior year.

Seer also recognizes related party revenue, which is comprised of both product sales and services performed for PrognomiQ, Inc., a related party. For the three and nine months ended September 30, 2024, related party revenue was $366,000 and $1.90 million, respectively, representing 14% and 20% of total revenue for those periods.

Geographic Performance

While Seer does not provide a detailed breakdown of performance by geographic markets, the company reported that 29% and 30% of total revenue was generated outside of the United States for the three months ended September 30, 2024 and 2023, respectively. This international revenue primarily came from countries in Asia and Europe, indicating Seer's growing global presence in the proteomics market.

Competitive Landscape and Risks

The proteomics market is rapidly evolving, with Seer facing competition from both established life sciences companies and emerging startups. Firms such as Agilent Technologies, Bruker Corporation, and Thermo Fisher Scientific offer a range of proteomics products and services, while newer players like Nautilus Biotechnology and Olink Proteomics are also vying for market share.

Seer's ability to maintain its technological edge and continue driving adoption of the Proteograph Product Suite will be crucial to its long-term success. The company's reliance on a single contract manufacturer for its automation instruments and its exposure to potential supply chain disruptions pose risks that must be carefully managed.

Additionally, Seer operates in a highly regulated industry, and any changes in government policies or regulatory requirements could have a significant impact on the company's operations and financial performance.

Liquidity and Capital Resources

Seer's financial position remains strong, with no outstanding debt as of September 30, 2024, resulting in a debt-to-equity ratio of 0. The company's current ratio of 18.36 and quick ratio of 17.88 indicate a robust ability to meet short-term obligations.

As of September 30, 2024, Seer had $37.62 million in cash and cash equivalents, $209.98 million in short-term investments, and $64.89 million in long-term investments, totaling $312.49 million in liquid assets. This strong cash position provides Seer with significant financial flexibility to fund its ongoing operations, research and development efforts, and potential strategic initiatives.

Conclusion

Seer Inc (SEER) is at the forefront of a transformative shift in the world of proteomics. Its Proteograph Product Suite has the potential to unlock a new era of biological insights, enabling researchers to explore the complexities of the human proteome like never before. As the company continues to navigate the challenges of commercialization and market adoption, its strong financial position, innovative technology, and strategic partnerships position it well to capitalize on the growing demand for advanced proteomics solutions.

While Seer faces challenges in the current macroeconomic environment, which has impacted capital expenditure budgets in the life sciences industry, the company's focus on driving broader adoption of the Proteograph Product Suite and expanding its global reach through partnerships and distributor networks demonstrates a clear strategy for long-term growth. As Seer continues to execute on its commercialization efforts and expand its customer base, investors and industry observers will be closely watching the company's progress in translating its innovative technology into sustainable financial performance.