snce-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2022


☐			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 001-39727

SCIENCE 37 HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware			84-4278203
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
800 Park Offices Drive, Suite 3606 Research Triangle Park, North Carolina			27709
(Address of Principal Executive Offices)			(Zip Code)

Registrant's telephone number, including area code: (984) 377-3737

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


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

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No x

As of November 4, 2022, there were 116,663,640 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

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Science 37 Holdings, Inc.

Form 10-Q

For the Quarter Ended September 30, 2022

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			Page
Cautionary Note Regarding Forward-Looking Statements			3
Part I.	Financial Information
	Item 1.	Financial Statements	5
		Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)	5
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)	6
		Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2022 and 2021 (unaudited)	7
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	9
		Notes to Condensed Consolidated Financial Statements (unaudited)	10
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4.	Controls and Procedures	29

Part II.	Other Information
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	31
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 3.	Defaults Upon Senior Securities	31
	Item 4.	Mine Safety Disclosures	31
	Item 5.	Other Information	31
	Item 6.	Exhibits	32
Signatures			33

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may” or “should” or, in each case, their negative or other variations or comparable terminology. They may appear in a number of places throughout this Quarterly Report on Form 10-Q, including Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and include statements regarding our future results of operations and financial position, business strategy, expectation as to the timing and amount of cost savings related to the planned cost reduction program, plans and prospects, existing and prospective products, research and development costs, timing and likelihood of success, and plans and objectives of management for future operations and results.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include:

•our ability to respond to general economic and financial market conditions, including fluctuations in currency exchange rates, economic instability and inflationary conditions, changes in regulatory environment and/or competitive factors;

•our limited operating history;

•our ability to raise additional funding to strengthen our core business, expand into additional markets and extend the reach of our operating system;

•failure to realize anticipated cost savings;

•potential loss or non-renewal of Science 37’s contracts, any delay in our customers’ clinical trials or non-payment by its customers for services that we have performed;

•our ability to recognize the anticipated benefits of the Merger (defined below);

•our dependence on the clinical trial market;

•our reliance on third parties for important products, services and licenses to certain technology and intellectual property rights;

•the continuing impact of the COVID-19 pandemic;

•political, legal and compliance, operational, regulatory, economic and other risks associated with the international expansion of our operations;

•risks related to our technology, intellectual property and data privacy practices;

•our exposure to geopolitical risks and changes in applicable laws and regulations;

•litigation and regulatory enforcement risks; and

•volatility in the trading price of our common stock.

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Furthermore, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the Company’s current expectations and beliefs and are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, that information may be limited or incomplete. Our forward-looking statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. The Company will not and does not undertake any

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obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as require by law.

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Part I - Financial Information

Item 1. Financial Statements

Science 37 Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	(unaudited)
(In thousands, except share data)	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	130,239	$	214,601
Accounts receivable and unbilled services, net	9,018		10,699
Prepaid expenses and other current assets	6,664		7,403
Total current assets	145,921		232,703
Property and equipment, net	1,074		1,393
Operating lease right-of-use assets	1,227		2,086
Capitalized software, net	41,049		24,290
Other assets	153		326
Total assets	$	189,424	$	260,798

Liabilities, redeemable convertible preferred stock and stockholders’ equity
Current liabilities:
Accounts payable	$	6,608	$	12,819
Accrued expenses and other liabilities	11,877		17,073
Deferred revenue	4,603		5,130
Total current liabilities	23,088		35,022
Non-current liabilities:
Deferred revenue	4,170		2,478
Operating lease liabilities	873		1,322
Other long-term liabilities	1,390		1,477
Long-term earn-out liability	1,300		98,900
Total liabilities	30,821		139,199
Commitments and Contingencies (Note 10)
Redeemable convertible preferred stock:
Redeemable convertible preferred stock, $0.0001 par value; 100,000,000 shares authorized, 0 issued and outstanding at September 30, 2022 and December 31, 2021, respectively	—		—
Stockholders’ equity:
Common stock, $0.0001 par value; 400,000,000 shares authorized, 116,574,031 and 114,991,026 issued and outstanding at September 30, 2022 and December 31, 2021, respectively	12		11
Additional paid-in capital	344,984		323,666
Accumulated other comprehensive income	152		—
Accumulated deficit	(186,545)		(202,078)
Total stockholders’ equity	158,603		121,599
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	189,424	$	260,798

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

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Science 37 Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2022		2021		2022		2021
Revenue	$	16,249	$	14,236	$	54,210	$	39,222

Operating expenses:
Cost of revenue	12,157		10,318		41,985		26,246
Selling, general and administrative	24,485		16,932		82,822		37,477
Depreciation and amortization	4,870		1,916		12,569		5,189
Total operating expenses	41,512		29,166		137,376		68,912
Loss from operations	(25,263)		(14,930)		(83,166)		(29,690)

Other income (expense):
Interest income	559		—		748		1
Sublease income	240		230		719		444
Change in fair value of earn-out liability	1,200		—		97,600		—
Other income (expense), net	(264)		8		(369)		12
Total other income (expense), net	1,735		238		98,698		457
Income (loss) before income taxes	(23,528)		(14,692)		15,532		(29,233)
Income tax expense (benefit)	—		—		(1)		—
Net income (loss)	$	(23,528)	$	(14,692)	$	15,533	$	(29,233)

Earnings (loss) per share:
Basic	$	(0.20)	$	(1.78)	$	0.13	$	(4.22)
Diluted	$	(0.20)	$	(1.78)	$	0.12	$	(4.22)
Weighted average common shares outstanding:
Basic	116,412		8,238		115,935		6,925
Diluted	116,412		8,238		126,717		6,925

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

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Science 37 Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Three and Nine Months Ended September 30, 2022 and 2021

(unaudited)


	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
(In thousands)	Shares	Amount		Shares	Amount
Balance at December 31, 2021	—	$	—	114,991	$	11	$	323,666	$	—	$	(202,078)	$	121,599
Stock-based compensation	—	—		—	—		7,557		—		—		7,557
Proceeds from option exercises	—	—		723	1		130		—		—		131
Net income	—	—		—	—		—		—		44,894		44,894
Balance at March 31, 2022	—	$	—

SEC Form 10-Q filed by Science 37 Holdings Inc.