nstg-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022 OR


☐			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 001-35980

NANOSTRING TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-0094687
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

530 Fairview Avenue North

Seattle, Washington 98109

(Address of principal executive offices)

(206) 378-6266

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	NSTG	The Nasdaq Stock Market LLC
		(The NASDAQ Global Market)

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 ý 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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:


Large accelerated filer	ý	Accelerated filer	☐
Non-accelerated filer	¨	Smaller reporting company	☐
Emerging growth company	☐

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 ý

As of May 3, 2022 there were 46,415,841 shares of registrant’s common stock outstanding.

Table of Contents

NANOSTRING TECHNOLOGIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED March 31, 2022

TABLE OF CONTENTS


		PAGE
PART I - FINANCIAL INFORMATION
ITEM 1:	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations — Three months ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Loss — Three months ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity — Three months ended March 31, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows — three months ended March 31, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3:	Quantitative and Qualitative Disclosures about Market Risk	24
ITEM 4:	Controls and Procedures	25
PART II - OTHER INFORMATION
ITEM 1:	Legal Proceedings	26
ITEM 1A:	Risk Factors	26

ITEM 6:	Exhibits	50
SIGNATURES		51

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Risk Factor Summary

Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report titled “Risk Factors.” The following is a summary of the principal risks we face:

•We face risks related to health epidemics and other outbreaks, such as COVID-19, which could significantly disrupt our operations and could have a material adverse impact on us.

•We have incurred losses since we were formed and expect to incur losses in the future. We cannot be certain that we will achieve or sustain profitability.

•Our financial results may vary significantly from quarter to quarter which may adversely affect our stock price.

•If we do not achieve, sustain or successfully manage our anticipated growth, our business and growth prospects will be harmed.

•Our future success is dependent upon our ability to expand our customer base and introduce new applications and products.

•New market opportunities may not develop as quickly as we expect, limiting our ability to successfully market and sell our products.

•Our business depends on levels of research and development spending by academic and governmental research institutions and biopharmaceutical companies, a reduction in which could limit demand for our products and adversely affect our business and operating results.

•Our sales cycle is lengthy and variable, which makes it difficult for us to forecast revenue and other operating results.

•Our reliance on distributors for sales of our products outside of the United States could limit or prevent us from selling our products and impact our revenue.

•Our future capital needs are uncertain and we may need to raise additional funds in the future.

•We may not be able to develop new products, enhance the capabilities of our systems to keep pace with rapidly changing technology and customer requirements or successfully manage the transition to new product offerings, any of which could have a material adverse effect on our business and operating results.

•We are dependent on single source suppliers for some of the components and materials used in our products, and the loss of any of these suppliers could harm our business.

•We may experience manufacturing problems or delays that could limit our growth or adversely affect our operating results.

•We expect to generate a substantial portion of our product and service revenue internationally and are subject to various risks relating to our international activities, which could adversely affect our operating results.

•Undetected errors or defects in our products could harm our reputation, decrease market acceptance of our products or expose us to product liability claims.

•If we experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected.

•New product development involves a lengthy and complex process, and we may be unable to commercialize on a timely basis, or at all, any of the products we develop individually or with our collaborators.

•The life sciences research market is highly competitive. If we fail to compete effectively, our business and operating results will suffer.

•We are subject to ongoing and extensive regulatory requirements, and our failure to comply with these requirements could substantially harm our business.

•Healthcare policy changes, including legislation reforming the United States healthcare system, may have a material adverse effect on our financial condition and results of operations.

•If we are unable to protect our intellectual property effectively, our business would be harmed.

•Involvement in lawsuits to protect or enforce our patents and proprietary rights, to determine the scope, coverage and validity of others’ proprietary rights, or to defend against third-party claims of intellectual property infringement, could be time-intensive and costly and may adversely impact our business or stock price.

•The price of our common stock may be volatile, and you could lose all or part of your investment.

•Complying with the laws and regulations affecting public companies increases our costs and the demands on management and could harm our operating results.

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

NanoString Technologies, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)


	March 31, 2022		December 31, 2021
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	98,457	$	107,068
Short-term investments	213,618		241,821
Accounts receivable, net	30,381		40,130
Inventory, net	34,590		31,486
Prepaid expenses and other	10,084		7,115
Total current assets	387,130		427,620
Property and equipment, net	32,704		27,043
Operating lease right-of-use assets	18,562		19,226
Other assets	6,324		5,592
Total assets	$	444,720	$	479,481
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	18,426	$	14,283
Accrued liabilities	4,541		6,765
Accrued compensation and other employee benefits	12,188		17,466
Customer deposits	1,262		1,278
Deferred revenue, current portion	8,053		7,474
Operating lease liabilities, current portion	5,116		4,889
Total current liabilities	49,586		52,155
Deferred revenue, net of current portion	3,820		3,527
Long-term debt, net	225,511		225,144
Operating lease liabilities, net of current portion	20,498		21,693
Total liabilities	299,415		302,519
Commitment and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 15,000 shares authorized; none issued	—		—
Common stock, $0.0001 par value, 150,000 shares authorized; 46,402 and 45,729 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	5		5
Additional paid-in capital	835,845		827,028
Accumulated other comprehensive loss	(1,292)		(318)
Accumulated deficit	(689,253)		(649,753)
Total stockholders’ equity	145,305		176,962
Total liabilities and stockholders’ equity	$	444,720	$	479,481

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NanoString Technologies, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)


	Three Months Ended March 31,
		2022		2021
Revenue:
Product		$	26,571	$	27,708
Service		4,270		3,686
Total product and service revenue		30,841		31,394
Collaboration		239		223
Total revenue		31,080		31,617
Costs and expenses:
Cost of product revenue		11,472		12,046
Cost of service revenue		3,306		3,577
Total cost of product and service revenue		14,778		15,623
Research and development		17,417		15,063
Selling, general and administrative		36,355		26,799
Total costs and expenses		68,550		57,485
Loss from operations		(37,470)		(25,868)
Other income (expense):
Interest income		151		118
Interest expense		(1,883)		(1,870)
Other income (expense), net		(217)		(32)
Total other expense, net		(1,949)		(1,784)
Net loss before provision for income tax		(39,419)		(27,652)
Provision for income tax		(81)		(60)
Net loss		$	(39,500)	$	(27,712)
Net loss per share — basic and diluted		$	(0.86)	$	(0.62)
Weighted average shares used in computing basic and diluted net loss per share		45,998		44,669

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NanoString Technologies, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)


	Three Months Ended March 31,
		2022		2021
Net loss		$	(39,500)	$	(27,712)
Other comprehensive loss:
Change in unrealized loss on available-for-sale debt securities		(974)		(74)
Comprehensive loss		$	(40,474)	$	(27,786)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NanoString Technologies, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at January 1, 2021	44,441	$	4	$	848,891	$	83	$	(542,030)	$	306,948
Cumulative effect of a change in accounting policy(1)	—	—		(58,543)		—		7,531		(51,012)
Common stock issued for stock options and restricted stock units	726	1		2,249		—		—		2,250

SEC Form 10-Q filed by NanoString Technologies Inc.