NAUT - Nautilus Biotechnology: The Rubber Will Soon Meet The Road

2023-04-23 06:15:00 ET

Summary

• Today, we circle back on Nautilus Biotechnology, a promising small biotech company in the proteome development space.
• The company has collaboration partnerships with the likes of Amgen and Genentech and it is approaching commercial launch in mid-2024.
• The stock's market capitalization is not much over the company's net cash balance.  An investment analysis follows in the paragraphs below.

"Potential has a shelf life. "? Margaret Atwood, Cat's Eye

Nautilus Biotechnology ( NAUT ) goes in the spotlight today. The company has moved closer to its commercial launch date since we first wrote about this name more than a year ago. The company has some key partnerships and its platform is targeting large potential addressable markets. An updated analysis follows in the paragraphs below.

Company Overview:

Nautilus Biotechnology is based in Seattle, WA. The company is developing a platform technology for quantifying and unlocking the complexity of the proteome. It is doing so via its Nautilus Platform. This is a proteomics platform that includes end-to-end solution comprised of instruments, consumables, and software analysis.

Currently the stock trades just over $2.50 a share and sports an approximate market capitalization of $325 million.

As we highlighted in our initial article around Nautilus back in January of 2022:

The proteome is a constellation of proteins expressed in a cell, tissue, or organism, of which Nautilus endeavors to identify, quantify, and characterize its functionality in humans much in the same manner Illumina identified and commoditized the human genome. The vast majority (~95%) of FDA-approved therapies target proteins - as they are the functional basis of cellular operations - providing a significant commercial opportunity for a company that can comprehensively characterize the human proteome .'

The company has existing collaborations with Genentech, Amgen ( AMGN ) and MD Anderson.

The goals of the Nautilus platform in pursuit of finding new potential drug candidates for its partners are:

• Deliver unprecedented sensitivity.
• Produce robust, reproducible, and complete data.
• Have a run time of days, not weeks.
• Be fully integrated with an end-to-end workflow.
• Be easy to use.

The company is moving to a commercial launch of this platform in mid-2024, at which time (or slightly before) Nautilus will start to book revenues from supplying systems, software and consumables associated with this launch.

This platform is the result of innovations in computer science, engineering, and biochemistry whose vision is the development of this protein analysis platform of extreme sensitivity and scale. Each of these Proteomics Analysis Systems [PAS] that are part of the Nautilus Platform will sell for approximately $1 million and Nautilus will generate additional recurring revenue from consumables and software.

Analyst Commentary & Balance Sheet:

The analyst community has gone radio silent on Nautilus Biotechnology. The last rating I can find around the stock is from August 3rd of last year when Goldman Sachs reiterated their Hold rating and $2.00 a share price target.

Approximately one percent of the outstanding float in the shares are currently held short. Insiders have been quiet as well, as the last insider activity in the shares was back in September of last year. The company ended FY2022 with just over $310 million in cash and marketable securities on its balance sheet after posting a net loss of $57.6 million for the 2022 fiscal year.

The cash burn for FY2022 was $48.5 million and management has guided that current funding in place will carry it through well in 2025 even as expenses will ramp up into the mid-2024 commercial launch of its platform. The company should have approximately $30 million in incremental spend this year as its builds out its commercial facilities. Earlier this year, the company announced it had taken new office space in San Diego, which is a key hub in this sector.

Verdict:

The Nautilus platform has many potential addressable markets and users. Management believes it is building a ' best of breed ' and patent protected platform that will have great utilization.

However, it is next to impossible to model any sort of potential revenue stream trajectory around Nautilus' coming launch. Management has not made any projections of sales that I have seen. The consensus analyst firm consensus sales estimate for FY2024 is approximately $20 million. Nor has any Seeking Alpha author put out an article focused on this name since our last piece on the company.

The company is well-funded into launch and its platform does look potentially lucrative. However, an investor has to take a 'leap of faith' given the amount of unknowns on Nautilus Biotechnology until the rubber meets the road with the firm's upcoming commercial launch. Therefore, the stock only merits a small 'watch item' holding for the most aggressive of biotech investors.

All we are not stares back at what we are ."? W.H. Auden

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