NEW YORK – Nautilus Biotechnology is injecting a dose of caution into its commercial strategy as it prepares for what CEO Sujal Patel said will be hard economic times ahead.
During a conference call following the release of the Seattle-based proteomic company's Q3 2022 results, Patel said the economy is heading into "what undoubtedly is going to be a recession" and noted that Nautilus aims to control operating expenses aggressively even as it continued to work toward a planned mid-2024 launch of its proteome analysis platform.
"While I won't say there won't be any opportunity for us to accelerate, we are going into this very tight," he said. "We're being really, really hardcore about operating expenses."
The company is also feeling the impacts of inflation and labor and supply chain issues that are presenting challenges across the economy, Patel noted.
"Certainly we are seeing the impact of inflation across a wide range of supplies that we use," he said. "There isn't any material impact that isn't manageable, but it's certainly for us a watchlist item."
Supply chain challenges, meanwhile, "have implications both on the hardware side of things, both with respect to the parts that go into our instrument and… an impact on our experimental throughput because of the lead times and supply constraints of various reagents and inputs into our experiments."
Patel said that Nautilus has seen "just a little bit of loosening in terms of how tight the market is," adding that staff reductions at larger life science firms has presented opportunities for the company.
CFO Anna Mowry said on the call that Nautilus has grown its headcount 30 percent year over year, adding that the company has sought to offset increased personnel costs by reducing non-personnel spending, including by "bringing down the cost of our raw materials, increasing our production yield, and developing cheaper experimental methods."
During Nautilus' Q2 earnings call, the company pushed back the timeline for launch of its proteomic platform from 2023 to mid-2024. Nautilus' technology is an array-based protein analysis platform that combines machine learning and iterative rounds of probing with relatively nonspecific affinity reagents, analyzing the binding patterns of these multiple affinity reagents to identify the proteins present in a sample.
Securing these affinity reagents has proved a sticking point for the company, with the company missing several milestones related to their development. During Tuesday's Q3 call, Parag Mallick, the company's co-founder and chief scientist, said that it has in recent months "substantially accelerated the development" of these reagents, adding that the company is now able to "routinely perform experiments involving many dozens" of iterative probing cycles. Nautilus has projected that it will need a set of around 300 binders to analyze roughly 95 percent of the proteome.
For Q3 2022, Nautilus reported a net loss of $14.1 million, down 3 percent from a net loss of $14.5 million in the year-ago period. It did not post any revenues during the quarter ended Sept. 30.
Nautilus reported a loss per share of $.11 for Q3 2022, below the consensus Wall Street estimate of $.15 per share. The company posted a loss per share of $.12 in Q3 2021.
Nautilus's R&D spending in Q3 was $9.6 million, up 17 percent from $8.2 million a year ago, while general and administrative costs were down 2 percent to $6.2 million from $6.3 million.
Mowry said that expenses will increase in the second half of the year "as a result of continued hiring and from scaling our development pipeline."
Mowry noted that while Nautilus' "cash burn will certainly increase going forward," it expects its cash runway will extend into 2025.
The company ended the quarter with $188.9 million in cash and cash equivalents, and $69.0 million in short-term investments.
In Tuesday afternoon trading on the Nasdaq, Nautilus shares were down a fraction of a percent at $2.38.