SEER - Seer Grows Revenue But Losses Increase

Summary

• Seer went public in December 2020, raising approximately $175 million in a U.S. IPO.
• The firm is commercializing a proteomics analysis platform.
• SEER has produced growing revenue from a tiny base and faces a potentially slowing market ahead due to macroeconomic uncertainties.
• I'm on Hold for SEER for now, but the stock merits watch listing for interested life science investors.

A Quick Take On Seer

Seer ( SEER ) went public in December 2020, raising approximately $175 million in gross proceeds in an IPO that was priced at $19.00 per share.

The firm is commercializing an integrated solution for proteomics analysis at scale.

I’m on Hold for SEER, but the stock merits watching for interested life science investors.

Seer Overview

Redwood City, California-based Seer was founded to develop instruments to analyze proteins for basic research and discovery.

Management is headed by co-founder and CEO Omid Farokhzad, M.D., who was previously Professor at Harvard Medical School and co-founded BIND Therapeutics, Selecta Biosciences and Tarveda Therapeutics.

The firm is commercializing what it calls the Proteograph Product Suite, 'which will leverage our proprietary engineered nanoparticle [NP] technology to provide unbiased, deep, rapid and large-scale access across the proteome.’

Seer’s Market & Competition

According to a 2016 market research report by Grand View Research, the global market for proteomics was valued at nearly $12 billion in 2015.

The market comprises three segments; Instruments, Reagents and Services.

The reagents segment has been the largest and fastest-growing segment of the market.

The graphic below shows the historical and projected U.S. proteomics research market by segment:

Key elements driving this expected growth are continued advancements in research and development efforts as well as more favorable regulations and government policies to support research activities.

Also, the fastest-growing application of proteomics research is its use in clinical diagnosis, while North America has represented the largest market by region, with its value expected to reach $9 billion by 2024.

The Asia Pacific region is expected to see strong growth of more than 12% CAGR through 2024.

Major competitive vendors that provide or are developing related treatments include:

• Roche Diagnostics ( RHHBY )

• Bio-Rad Laboratories ( BIO )

• Thermo Fisher Scientific ( TMO )

• GE Healthcare ( GE )

• Sygnis

Seer’s Recent Financial Performance

• Total revenue by quarter has grown from a tiny base:

• Gross profit margin by quarter has trended lower in recent quarters:

• Selling, G&A expenses as a percentage of total revenue by quarter have trended lower but remain several multiples of total revenue:

• Operating losses by quarter have worsened materially in recent quarters:

• Earnings per share (Diluted) have remained heavily negative, per the chart below:

(All data in the above charts is GAAP)

In the past 12 months, SEER’s stock price has fallen 71.8% vs. that of the Nasdaq 100 Index’s drop of 14.7%, as the chart indicates below:

Valuation And Other Metrics For Seer

Below is a table of relevant capitalization and valuation figures for the company:

(Source - Seeking Alpha)

Commentary On Seer

In its last earnings call (Source - Seeking Alpha ), covering Q3 2022’s results, management highlighted the ‘growing enthusiasm for the Proteograph Product Suite.’

Leadership believes that its system will be able to provide customers with additional benefits related to the Human Proteome Project, ‘because of [its] ability to deeply interrogate the proteome in a scalable way.’

The company is working hard to bring its centers of excellence online, working with partners, big pharma and academic entities to provide further education.

As to its financial results, revenue rose 84% year-over-year to $4 million due to growing sales of its Proteograph Product Suite and related products.

The firm also had an SBIR grant from the NIH renewed in Q3 2022.

Gross margin improved sequentially but dropped significantly year-over-year.

GAAP operating losses and EPS worsened materially, as the firm recorded much higher SG&A and R&D expenses.

For the balance sheet, the firm ended the quarter with $436.1 million in cash, equivalents and short-term investments and no debt.

Over the trailing twelve months, free cash used was $65.5 million, of which capital expenditures accounted for $6.6 million. The company paid a hefty $32.2 million in stock-based compensation in the last four quarters.

Looking ahead, management expects 2023 revenue to be around $15 million at the midpoint of the range and said it is concerned that the slowing macroeconomic environment ‘may impact the timing and scope of customer purchasing decisions.’

Regarding valuation, the market is valuing Seer at a Price/Sales multiple of 17.4x.

The primary risk to the company’s outlook is the slowing economic outlook which may lengthen sales cycles and reduce its revenue growth trajectory.

It is still early days in the firm’s commercialization efforts.

While I’m on Hold for SEER, the stock bears watching for interested life science investors.

For further details see: