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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2021
or
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-39334
Progenity, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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27-3950390 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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4330 La Jolla Village Drive, Suite 200, San Diego, CA |
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92122 |
(Address of principal executive offices) |
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(Zip Code) |
(855) 293-2639
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Stock, par value $0.001 per share |
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PROG |
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The Nasdaq Global Market |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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Accelerated filer |
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Non-accelerated filer |
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☒ |
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Smaller reporting company |
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Emerging growth company |
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☒ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 4, 2021, the registrant had 163,749,556 shares of common stock, par value $0.001 per share, outstanding.
Progenity, Inc.
INDEX
TRADEMARKS AND CERTAIN TERMS
In this Quarterly Report on Form 10-Q, “Progenity,” “we,” “us” and “our” refer to Progenity, Inc., and our wholly-owned subsidiaries on a consolidated basis, unless the context otherwise provides.
Progenity® is a registered service mark of Progenity. Any other brand names or trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PROGENITY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
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September 30, 2021 |
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December 31, 2020 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
54,136 |
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$ |
91,520 |
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Accounts receivable, net |
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1,917 |
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6,634 |
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Prepaid expenses and other current assets |
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10,372 |
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8,107 |
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Current assets of disposal group held for sale |
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26,545 |
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20,077 |
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Total current assets |
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92,970 |
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126,338 |
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Property and equipment, net |
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4,564 |
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8,106 |
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Other assets |
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147 |
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169 |
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Long-term assets of disposal group held for sale |
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— |
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19,827 |
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Total assets |
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$ |
97,681 |
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$ |
154,440 |
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Liabilities and Stockholders' Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
7,989 |
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|
$ |
12,657 |
|
Accrued expenses and other current liabilities |
|
|
40,850 |
|
|
|
51,206 |
|
Warrant liability |
|
|
42,402 |
|
|
|
— |
|
Current portion of mortgages payable |
|
|
75 |
|
|
|
72 |
|
Current portion of capital lease obligations |
|
|
35 |
|
|
|
266 |
|
Current liabilities of disposal group held for sale |
|
|
11,922 |
|
|
|
8,469 |
|
Total current liabilities |
|
|
103,273 |
|
|
|
72,670 |
|
Capital lease obligations, net of current portion |
|
|
— |
|
|
|
42 |
|
Mortgages payable, net of current portion |
|
|
1,219 |
|
|
|
1,275 |
|
Convertible notes, net of unamortized discount of $8,255 and $9,614 as of September 30, 2021 and December 31, 2020, respectively |
|
|
156,045 |
|
|
|
158,886 |
|
Embedded derivative liability |
|
|
— |
|
|
|
18,370 |
|
Other long-term liabilities |
|
|
14,110 |
|
|
|
8,239 |
|
Long-term liabilities of disposal group held for sale |
|
|
— |
|
|
|
1,952 |
|
Total liabilities |
|
$ |
274,647 |
|
|
$ |
261,434 |
|
Commitments and contingencies |
|
|
|
|
|
|
Stockholders' deficit: |
|
|
|
|
|
|
Common stock – $0.001 par value. 350,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 123,279,683 and 59,287,331 shares issued as of September 30, 2021 and December 31, 2020, respectively; 119,567,684 and 55,772,303 shares outstanding as of September 30, 2021 and December 31, 2020, respectively |
|
|
83 |
|
|
|
59 |
|
Additional paid-in capital |
|
|
537,548 |
|
|
|
452,992 |
|
Accumulated deficit |
|
|
(695,813 |
) |
|
|
(541,274 |
) |
Treasury stock – at cost; 3,711,999 and 3,515,028 shares of common stock as of September 30, 2021 and December 31, 2020, respectively |
|
|
(18,784 |
) |
|
|
(18,771 |
) |
Total stockholders' deficit |
|
|
(176,966 |
) |
|
|
(106,994 |
) |
Total liabilities and stockholders' deficit |
|
$ |
97,681 |
|
|
$ |
154,440 |
|
See accompanying notes to unaudited condensed consolidated financial statements.
1
PROGENITY, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenues |
|
$ |
182 |
|
|
$ |
56 |
|
|
$ |
812 |
|
|
$ |
56 |
|
Cost of sales |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Gross profit |
|
|
182 |
|
|
|
56 |
|
|
|
812 |
|
|
|
56 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
12,226 |
|
|
|
13,043 |
|
|
|
37,300 |
|
|
|
36,519 |
|
Selling and marketing |
|
|
573 |
|
|
|
1,563 |
|
|
|
4,437 |
|
|
|
4,798 |
|
General and administrative |
|
|
17,944 |
|
|
|
16,116 |
|
|
|
56,753 |
|
|
|
40,537 |
|
Total operating expenses |
|
|
30,743 |
|
|
|
30,722 |
|
|
|
98,490 |
|
|
|
81,854 |
|
Loss from operations |
|
|
(30,561 |
) |
|
|
(30,666 |
) |
|
|
(97,678 |
) |
|
|
(81,798 |
) |
Interest expense |
|
|
(3,458 |
) |
|
|
(2,457 |
) |
|
|
(10,450 |
) |
|
|
(7,228 |
) |
Loss on warrant liability |
|
|
(3,322 |
) |
|
|
— |
|
|
|
(5,818 |
) |
|
|
— |
|
Interest and other income (expense), net |
|
|
467 |
|
|
|
(19 |
) |
|
|
18,211 |
|
|
|
(3,790 |
) |
Loss before income taxes |
|
|
(36,874 |
) |
|
|
(33,142 |
) |
|
|
(95,735 |
) |
|
|
(92,816 |
) |
Income tax benefit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(37,697 |
) |
Loss from continuing operations |
|
|
(36,874 |
) |
|
|
(33,142 |
) |
|
|
(95,735 |
) |
|
|
(55,119 |
) |
Loss from discontinued operations |
|
|
(6,870 |
) |
|
|
(13,923 |
) |
|
|
(58,804 |
) |
|
|
(61,881 |
) |
Net loss |
|
|
(43,744 |
) |
|
|
(47,065 |
) |
|
|
(154,539 |
) |
|
|
(117,000 |
) |
Dividend paid to preferred stockholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(268 |
) |
Net loss attributable to common stockholders |
|
$ |
(43,744 |
) |
|
$ |
(47,065 |
) |
|
$ |
(154,539 |
) |
|
$ |
(117,268 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share from continuing operations, basic and diluted |
|
$ |
(0.38 |
) |
|
$ |
(0.71 |
) |
|
$ |
(1.32 |
) |
|
$ |
(2.73 |
) |
Net loss per share from discontinued operations, basic and diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.81 |
) |
|
$ |
(3.06 |
) |
Net loss per share, basic and diluted |
|
$ |
(0.46 |
) |
|
$ |
(1.01 |
) |
|
$ |
(2.13 |
) |
|
$ |
(5.79 |
) |
Net loss per share attributable to common stockholders, basic and diluted |
|
$ |
(0.46 |
) |
|
$ |
(1.01 |
) |
|
$ |
(2.13 |
) |
|
$ |
(5.80 |
) |
Weighted average shares outstanding, basic and diluted |
|
|
95,846,672 |
|
|
|
46,632,043 |
|
|
|
72,590,873 |
|
|
|
20,201,325 |
|
See accompanying notes to unaudited condensed consolidated financial statements.
2
PROGENITY, INC.
Condensed Consolidated Statements of Stockholders’ Deficit
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional Paid-In |
|
|
Accumulated |
|
|
Treasury Stock |
|
|
Total Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Shares |
|
|
Amount |
|
|
Deficit |
|
Balance at December 31, 2020 |
|
|
59,287,331 |
|
|
$ |
59 |
|
|
$ |
452,992 |
|
|
$ |
(541,274 |
) |
|
|
(3,515,028 |
) |
|
$ |
(18,771 |
) |
|
$ |
(106,994 |
) |
Issuance of common stock, net |
|
|
4,370,629 |
|
|
|
4 |
|
|
|
11,258 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,262 |
|
Issuance of common stock upon exercise of options |
|
|
71,284 |
|
|
|
— |
|
|
|
88 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
88 |
|
Issuance of common stock upon vesting of restricted stock unit awards |
|
|
174,730 |
|
|
|
— |
|
|
|
(228 |
) |
|
|
— |
|
|
|
(48,581 |
) |
|
|
(1 |
) |
|
|
(229 |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
2,630 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,630 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(32,264 |
) |
|
|
— |
|
|
|
— |
|
|
|
(32,264 |
) |
Balance at March 31, 2021 |
|
|
63,903,974 |
|
|
$ |
63 |
|
|
$ |
466,740 |
|
|
$ |
(573,538 |
) |
|
|
(3,563,609 |
) |
|
$ |
(18,772 |
) |
|
$ |
(125,507 |
) |
Issuance of common stock, net |
|
|
15,694,332 |
|
|
|
16 |
|
|
|
11,991 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,007 |
|
Issuance of common stock upon exercise of options |
|
|
25,498 |
|
|
|
— |
|
|
|
26 |
|
|
|
— |
|
|
|
(5,050 |
) |
|
|
(6 |
) |
|
|
20 |
|
Issuance of common stock under employee stock purchase plan |
|
|
254,832 |
|
|
|
1 |
|
|
|
560 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
561 |
|
Issuance of common stock upon vesting of restricted stock unit awards |
|
|
237,388 |
|
|
|
— |
|
|
|
(251 |
) |
|
|
— |
|
|
|
(79,442 |
) |
|
|
— |
|
|
|
(251 |
) |
Issuance of stock purchase warrant |
|
|
— |
|
|
|
— |
|
|
|
41,926 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41,926 |
|
Issuance of common stock upon conversion of debt, net |
|
|
611,616 |
|
|
|
1 |
|
|
|
2,068 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,069 |
|
Issuance of common stock upon conversion of interest, net |
|
|
1,268,116 |
|
|
|
1 |
|
|
|
3,626 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,627 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
4,470 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,470 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(78,531 |
) |
|
|
— |
|
|
|
— |
|
|
|
(78,531 |
) |
Balance at June 30, 2021 |
|
|
81,995,756 |
|
|
$ |
82 |
|
|
$ |
531,156 |
|
|
$ |
(652,069 |
) |
|
|
(3,648,101 |
) |
|
$ |
(18,778 |
) |
|
$ |
(139,609 |
) |
Issuance of common stock, net |
|
|
40,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock upon exercise of options |
|
|
7,087 |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
(4,442 |
) |
|
|
(6 |
) |
|
|
— |
|
Issuance of common stock upon vesting of restricted stock unit awards |
|
|
190,822 |
|
|
|
— |
|
|
|
(99 |
) |
|
|
— |
|
|
|
(59,456 |
) |
|
|
— |
|
|
|
(99 |
) |
Issuance of common stock upon exercise of warrants |
|
|
530,000 |
|
|
|
— |
|
|
|
30 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30 |
|
Issuance of stock purchase warrant |
|
|
— |
|
|
|
— |
|
|
|
938 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
938 |
|
Issuance of common stock upon conversion of debt, net |
|
|
556,018 |
|
|
|
1 |
|
|
|
1,645 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,646 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
3,872 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,872 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(43,744 |
) |
|
|
— |
|
|
|
— |
|
|
|
(43,744 |
) |
Balance at September 30, 2021 |
|
|
123,279,683 |
|
|
$ |
83 |
|
|
$ |
537,548 |
|
|
$ |
(695,813 |
) |
|
|
(3,711,999 |
) |
|
$ |
(18,784 |
) |
|
$ |
(176,966 |
) |
3
PROGENITY, INC.
Condensed Consolidated Statements of Stockholders’ Deficit
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Series A and A-1 Preferred Stock |
|
|
Series B Preferred Stock |
|
|
Additional Paid-In |
|
|
Accumulated |
|
|
Treasury Stock |
|
|
Total Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|