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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 001-39434
NAUTILUS BIOTECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

Delaware98-1541723
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

2701 Eastlake Avenue East Seattle, Washington

98102
(Address of principal executive offices)(Zip Code)
(206) 333-2001
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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, par value $0.0001 per shareNAUT
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 ☒ 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, 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 fileroAccelerated filero
Non-accelerated filerSmaller 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.  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   o     No  x
As of July 29, 2022, the registrant had 124,663,186 shares of common stock, $0.0001 par value per share, outstanding.



NAUTILUS BIOTECHNOLOGY, INC.
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

i


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained principally in the section entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include, but are not limited to, statements concerning the following:
our dependence on the success of our proteomics platform (the “Nautilus platform”), which remains in the development stage and subject to scientific and technical validation;
our expectations regarding the timing and progress of the development of the Nautilus platform;
our estimates of our addressable market, market growth, future revenue, key performance indicators, expenses, capital requirements and needs for additional financing;
our expectations regarding the rate and degree of market acceptance of the Nautilus platform;
the impact of the Nautilus platform on the field of proteomics and the size and growth of the addressable proteomics market;
our ability to manage and grow our business and commercialize our Nautilus platform;
our ability to successfully implement our three phase commercial launch plan;
the implementation of our business model and strategic plans for the Nautilus platform;
our ability to establish and maintain intellectual property protection for our products or avoid or defend claims of infringement;
our ability to recognize the anticipated benefits of the Business Combination (as defined in Part I, Item I, Note 1, “Description of Business and Basis of Presentation,” in our notes to condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which may be affected by, among other things, competition, our ability to grow and manage future growth effectively, and our ability to retain our key employees;
our expectations regarding the use of proceeds from the Business Combination;
the performance of third-party manufacturers and suppliers;
changes in applicable laws or regulations;
our ability to raise financing in the future;
our success in retaining or recruiting, or changes required in, our officers, key employees or directors or other key personnel;
the volatility of the trading price of our common stock;
our ability to develop and commercialize new products;
our expectations about market trends;
the impact of local, regional, national and international economic conditions and events;
the effect of COVID-19 on the foregoing; and
other factors including but not limited to those detailed under the section entitled “Risk Factors.”
ii


Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.
Forward-looking statements involve known and unknown risks, uncertainties, and other 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. We discuss these risks in greater detail in Part II, Item 1A, “Risk Factors,” elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and market opportunity, including data regarding the estimated size of the market. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.
This Quarterly Report on Form 10-Q contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of it by, any other companies.

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

iii

Nautilus Biotechnology, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2022 and December 31, 2021 (Unaudited)
(in thousands, except share and per share amounts)June 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$210,354 $185,619 
Short-term investments88,984 160,110 
Prepaid expenses and other current assets4,108 3,493 
Total current assets303,446 349,222 
Property and equipment, net3,402 2,483 
Operating lease right-of-use assets28,304 29,377 
Long-term investments35,558 16,371 
Other long term assets997 997 
Total assets$371,707 $398,450 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$1,429 $1,723 
Accrued expenses and other liabilities3,108 3,119 
Current portion of operating lease liability1,562 970 
Total current liabilities6,099 5,812 
Operating lease liability, net of current portion28,050 29,062 
Total liabilities34,149 34,874 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 200,000,000 authorized as of June 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021
  
Common stock, $0.0001 par value, 1,000,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 124,562,745 and 124,303,083 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
12 12 
Additional paid-in capital449,406 444,388 
Accumulated other comprehensive loss(768)(184)
Accumulated deficit(111,092)(80,640)
Total stockholders’ equity337,558 363,576 
Total liabilities and stockholders’ equity$371,707 $398,450 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1

Nautilus Biotechnology, Inc.
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except share and per share amounts)2022202120222021
Operating expenses
Research and development$8,856 $6,380 $18,514 $11,215 
General and administrative6,616 4,317 12,980 7,899 
Total operating expenses15,472 10,697 31,494 19,114 
Other income (expense), net783 (16)1,042 (8)
Net loss$(14,689)$(10,713)$(30,452)$(19,122)
Net loss per share attributable to common stockholders, basic and diluted$(0.12)$(0.19)$(0.24)$(0.43)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted124,494,036 55,070,480 124,456,518 44,096,149 
    
The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Nautilus Biotechnology, Inc.
Condensed Consolidated Statements of Comprehensive Loss
Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Net loss$(14,689)$(10,713)$(30,452)$(19,122)
Other comprehensive loss:
Unrealized loss on securities available-for-sale(214)(12)(584)(13)
Total other comprehensive loss(214)(12)(584)(13)
Comprehensive loss$(14,903)$(10,725)$(31,036)$(19,135)
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Nautilus Biotechnology, Inc.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity
Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)

Three Months Ended June 30, 2022Redeemable Convertible Preferred StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’Equity
Series SeedSeries ASeries BCommon Stock
(in thousands, except share amounts)SharesAmountSharesAmountSharesAmountSharesAmount
Balances at March 31, 2022 $  $  $ 124,456,653 $12 $446,654 $(554)$(96,403)$349,709 
Issuance of common stock upon exercise of vested stock options— — — — — — 57,739 — 32 — — 32 
Issuance of common stock under employee stock purchase plan— — — — — — 48,353 — 153 — — 153 
Stock-based compensation expense— — — — — — — — 2,567 — — 2,567 
Other comprehensive loss— — — — — — — — — (214)— (214)
Net loss— — — — — — — — — — (14,689)(14,689)
Balances at June 30, 2022
 $  $  $ 124,562,745 $12 $449,406 $(768)$(111,092)$337,558 
Three Months Ended June 30, 2021Redeemable Convertible Preferred StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ (Deficit) Equity
Series SeedSeries ASeries BCommon Stock
(in thousands, except share amounts)
Shares (1)
Amount
Shares (1)
Amount
Shares (1)
Amount
Shares (1)
Amount
Balances at March 31, 202113,174,805 $5,494 16,836,436 $27,067 22,164,724 $75,857 33,069,513 $1 $1,936 $2 $(38,734)$(36,795)
Issuance of common stock upon exercise of vested stock options— — — — — — 65,003 — 46 — — 46 
Issuance of common stock upon exercise of warrants— — — — — — 62,772 — — — — — 
Conversion of redeemable convertible preferred stock into common stock in connection with the reverse recapitalization(13,174,805)(5,494)(16,836,436)(27,067)(22,164,724)(75,857)52,175,965 7 108,411 — — 108,418 
Issuance of common stock upon the reverse recapitalization, net of issuance costs— — — — — — 38,721,137 4 327,276 — — 327,280 
Stock-based compensation expense— — — — — — — — 1,820 — — 1,820 
Other comprehensive loss— — — — — — — — — (12)— (12)
Net loss— — — — — — — — — — (10,713)(10,713)
Balances at June 30, 2021
 $  $  $ 124,094,390 $12 $439,489 $(10)$(49,447)$390,044 
4

Nautilus Biotechnology, Inc.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity
Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)
Six Months Ended June 30, 2022Redeemable Convertible Preferred StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’Equity
Series SeedSeries ASeries BCommon Stock
(in thousands, except share amounts)
Shares (1)
Amount
Shares (1)
Amount
Shares (1)
Amount
Shares (1)
Amount
Balances at December 31, 2021 $  $  $ 124,303,083 $12 $444,388 $(184)$(80,640)$363,576 
Issuance of common stock upon exercise of vested stock options— — — — — — 211,309 — 188 — — 188 
Issuance of common stock under employee stock purchase plan— — — — — — 48,353 — 153 — — 153 
Stock-based compensation expense— — — — — — — — 4,677 — — 4,677 
Other comprehensive loss— — — — — — — — — (584)— (584)
Net loss— — — — — — — — — — (30,452)(30,452)
Balances at June 30, 2022
 $  $  $ 124,562,745 $12 $449,406 $(768)$(111,092)$337,558 
Six Months Ended June 30, 2021Redeemable Convertible Preferred StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ (Deficit) Equity
Series SeedSeries ASeries BCommon Stock
(in thousands, except share amounts)
Shares (1)
Amount
Shares (1)
Amount
Shares (1)
Amount
Shares (1)
Amount
Balances at December 31, 202013,174,805 $5,494 16,836,436 $27,067 22,164,724 $75,857 33,069,513 $1 $600 $3 $(30,325)$(29,721)
Issuance of common stock upon exercise of vested stock options— — — — — — 65,003 — 46 — — 46 
Issuance of common stock upon exercise of warrants— — — — — — 62,772 — — — — — 
Conversion of redeemable convertible preferred stock into common stock in connection with the reverse recapitalization(13,174,805)(5,494)(16,836,436)(27,067)(22,164,724)(75,857)52,175,965 7 108,411 — — 108,418 
Issuance of common stock upon the reverse recapitalization, net of issuance costs— — — — — — 38,721,137 4 327,276 327,280 
Stock-based compensation expense— — — — — — — — 3,156 — — 3,156 
Other comprehensive loss— — — — — — — — — (13)— (13)
Net loss— — — — — — — — — — (19,122)(19,122)
Balances at June 30, 2021
 $  $  $ 124,094,390 $12 $439,489 $(10)$(49,447)$390,044 
(1)    The shares of the Company’s common and redeemable convertible preferred stock, prior to the Business Combination (as defined in Note 1) have been retroactively restated to reflect the exchange ratio of approximately 3.6281 established in the Business Combination as described in Note 3.

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Nautilus Biotechnology, Inc.
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2022 and 2021 (Unaudited)
Six Months Ended June 30,
(in thousands)20222021
Cash flows from operating activities
Net loss$(30,452)$(19,122)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation562 479 
Stock-based compensation4,677 3,156 
Amortization of premiums on securities, net(147)213 
Amortization of operating lease right-of-use assets1,073 760 
Changes in operating assets and liabilities:
Prepaid expenses and other assets(503)(331)
Accounts payable(643)725 
Accrued expenses and other liabilities(11)410 
Operating lease liability(420)(835)
Net cash used in operating activities(25,864)(14,545)
Cash flows from investing activities
Proceeds from maturities of securities 105,575 40,000 
Purchases of securities (54,185)(100,035)
Purchases of property and equipment(1,132)(1,013)
Net cash provided by (used in) investing activities50,258 (61,048)
Cash flows from financing activities
Proceeds from exercise of stock options188 46 
Proceeds from issuance of common stock under employee stock purchase plan153  
Net proceeds from reverse recapitalization and PIPE financing 335,409 
Payments of offering costs (8,082)
Net cash provided by financing activities341 327,373 
Net increase in cash, cash equivalents and restricted cash24,735 251,780 
Cash, cash equivalents and restricted cash at beginning of period186,461 37,219 
Cash, cash equivalents and restricted cash at end of period$211,196 $288,999 
Supplementary cash flow information on non-cash activities
Acquisitions of property and equipment included in accounts payable$413 $101 
Deferred offering costs in accounts payable and accrued expenses and other liabilities$ $47 
Conversion of redeemable convertible preferred stock into common stock in connection with the reverse recapitalization$ $108,418 
Deferred offering costs reclassified to equity$ $8,129 
Modification to reduce right-of-use assets and lease liability$ $3,254 
The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1.Description of Business and Basis of Presentation
Nautilus Biotechnology, Inc. (the “Company”) is a biotechnology company incorporated in 2016 and based in Seattle, Washington with laboratory operations in San Carlos, California. Since the Company’s incorporation in 2016, the Company has devoted substantially all of its resources to research and development activities, including with respect to its proteomics platform, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations.
On June 9, 2021 (the “Closing Date”), Nautilus Biotechnology, Inc. a Delaware corporation (f/k/a ARYA Sciences Acquisition Corp. III, a Cayman Islands exempted company and the Company’s predecessor company (“ARYA”)), consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of that certain Business Combination Agreement, dated as of February 7, 2021 (the “BCA”), by and among ARYA, Mako Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ARYA (“Mako Merger Sub”), and Nautilus Subsidiary, Inc., a Delaware corporation (f/k/a Nautilus Biotechnology, Inc.) (“Legacy Nautilus”). As a result of the Business Combination, ARYA changed its name to “Nautilus Biotechnology, Inc.” and Mako Merger Sub merged with and into Legacy Nautilus with Legacy Nautilus surviving as the surviving company and becoming a wholly-owned subsidiary of ARYA (the “Merger” and, collectively with the other transactions described in the BCA, the “Reverse Recapitalization”).
In addition, in conjunction with the completion of the Business Combination, certain investors (“PIPE Investors”) subscribed for the purchase of an aggregate of 20,000,000 shares of common stock of the Company (“New Nautilus Common Stock”) at a price of $10.00 per share for aggregate gross proceeds of $200.0 million (“PIPE Financing”).
Please refer to Note 3 “Reverse Recapitalization” for further details of the Business Combination.
Basis of Presentation
The condensed consolidated financial statements and accompanying notes are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. All intercompany transactions and balances have been eliminated upon consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements were prepared on the same basis as the audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2022, the results of its operations for the three and six months ended June 30, 2022 and 2021 and its cash flows for the six months ended June 30, 2022 and 2021. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 on file with the SEC. The Company’s reporting currency is the U.S. dollar.
Going Concern
The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, the realization of assets, and the satisfaction of liabilities in the ordinary course of business. Since inception, the Company has been engaged in developing its technology, raising capital, and recruiting personnel. The Company’s operating plan may change as a result of many factors currently unknown and there can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company, and it may need to seek additional funds sooner than planned. If adequate funds are not available to the Company on a timely basis, it may be required to delay, limit, reduce, or terminate certain commercial efforts, or pursue merger or acquisition strategies, all of which could adversely affect the holdings or the rights of the Company’s stockholders. The Company has incurred net operating losses and negative cash flows from operations in every year since
7

Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
inception and expects this to continue for the foreseeable future. As of June 30, 2022, the Company had an accumulated deficit of $111.1 million.
The Company has funded its operations primarily with proceeds from the issuance of redeemable convertible preferred stock and common stock. In June 2021, the Company received gross proceeds of approximately $345.5 million from PIPE Investors and the Business Combination offset by approximately $18.2 million of transaction costs and underwriters’ fees relating to the closing of the Business Combination. The Company had cash, cash equivalents, and short-term investments of $299.3 million as of June 30, 2022. As of the date on which these condensed consolidated financial statements were available to be issued, the Company believes that its cash, cash equivalents, and short-term investments will be sufficient to fund its operations for the next twelve months following the issuance of the condensed consolidated financial statements. The Company’s actual results could vary as a result of, and its near and long-term future capital requirements will depend on many factors, including its growth rate and the timing and extent of spending to support its research and development efforts. The Company has based its estimates on assumptions that may prove to be wrong, and it could use its available capital resources sooner than it currently expects. The Company may be required to seek additional equity or debt financing. Future liquidity and cash requirements will depend on numerous factors. In the event that additional financing is required, the Company may not be able to raise it on acceptable terms or at all. If the Company is unable to raise additional capital when desired, or if it cannot expand its operations or otherwise capitalize on its business opportunities because it lacks sufficient capital, its business, operating results, and financial condition would be adversely affected.
Impact of the COVID-19 Coronavirus
In December 2019, COVID-19 was first reported to the World Health Organization (“WHO”), and in January 2020, the WHO declared the outbreak to be a public health emergency. In March 2020, the WHO characterized COVID-19 as a pandemic. Since then, the COVID-19 pandemic and efforts to control its spread have significantly curtailed the movement of people, goods, and services worldwide. As a result, the Company has taken certain measures in response to COVID-19.
While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment and mitigation actions, it has already had an adverse effect on the global economy, and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets, which may adversely affect the Company’s ability to access capital markets in the future. Furthermore, the impact of the COVID-19 pandemic could adversely impact the Company’s cash flows and operations and delay the Company’s research and development activities.
While the Company has developed and continues to develop plans to help mitigate the potential negative impact of COVID-19, these efforts may not be effective, and any protracted economic downturn will likely limit the effectiveness of its efforts. Accordingly, it is not possible for the Company to predict the duration and ultimate extent to which this will affect its business, future results of operations, and financial condition at this time.
2.Significant Accounting Policies
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include determining the estimated lives of property and equipment, stock-based compensation including the estimated fair value per share of common stock prior to the date the Company became public, research and development accruals, and the valuation allowance for deferred tax assets. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in
8

Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
the economic environment will be reflected in the financial statements in future periods. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.
Concentrations of Credit Risk and Other Risks and Uncertainties
Credit risk represents the accounting loss that would be recognized as of the reporting date if counterparties failed completely to perform as contracted.
Financial instruments, which potentially subject the Company to concentration of credit risk, consist of cash balances maintained in excess of federal depository insurance limits and investments in U.S. Treasury securities that are not federally insured. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk on cash or investments. The Company relies, and expects to continue to rely, on a number of vendors to provide services, supplies and materials related to its research and development programs. The Company relies on single source suppliers for certain components and materials used in the Nautilus platform. The loss of any of these single source suppliers would require the Company to expend significant time and effort to locate and qualify an alternative source of supply for these components. The Company also relies, and expects to continue to rely, on third-party manufacturers and, in many cases, single third-party manufacturers for the production of certain reagents and antibodies. These programs could be adversely affected by a significant interruption in these services or the availability of materials.
The Company is subject to risks similar to those of other pre-clinical stage companies in the biopharmaceutical industry, including dependence on key individuals, the need to develop commercially viable products, competition from other companies, many of whom are larger and better capitalized, the impact of the COVID-19 pandemic and the need to obtain adequate additional financing to fund the development of its products. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be maintained, that any products developed will obtain required regulatory approval or that any approved products will be commercially viable. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from the sale of its products.
Segment Reporting
Operating segments are defined as components of an entity where discrete financial information is evaluated regularly by the chief operating decision market (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer is its CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has determined that it operates in one operating and one reportable segment. The Company’s long-lived assets are entirely based in the United States.
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less as of the date of acquisition to be cash equivalents.
Investments
The Company considers investments with an original maturity greater than three months and remaining maturities less than one year to be short-term investments. The Company classifies those investments that are not required for use in current operations and that mature in more than 12 months as long-term investments.
The Company classifies its investments as available for sale and reports them at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). For investments sold prior to maturity, the cost of investments sold is based on the specific identification method. Realized gains and losses on the sale of investments are recorded in other income (expense), net in the condensed consolidated statement of operations.
9

Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
Other-than-temporary Impairment
The Company evaluates its investments with unrealized losses for other-than-temporary impairment. When assessing investments for other-than-temporary declines in value, the Company considers factors such as, among other things, the extent and length of time the investment’s fair value has been lower than its cost basis, the financial condition and near-term prospects of the investment, the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value, and the expected cash flows from the security. If any adjustments to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment to fair value through a charge to the condensed consolidated statement of operations and condensed consolidated statement of comprehensive loss. No such adjustments were necessary during the periods presented.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
The carrying amounts of cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses and other liabilities approximate their respective fair values due to their short-term nature.
Leases
The Company determines if an arrangement includes a lease at inception by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Operating leases with a term of more than one year are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the Company's condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments. Operating lease ROU assets and liabilities are recognized on the lease commencement date based on the present value of the future minimum lease payments over the lease term. The Company uses the incremental borrowing rate commensurate with the lease term based on the information available at the lease commencement date in determining the present value of the lease payments as the Company's leases generally do not provide an implicit rate. ROU assets initially equal the lease liability, adjusted for any prepaid lease payments and initial direct costs incurred, less any lease incentives received. Certain of the Company's leases include renewal options which allow the Company to, at its election, renew or extend the lease for a fixed or indefinite period of time. These renewal periods are included in the lease terms when the Company is reasonably certain the options will be exercised. Lease expense is recognized on a straight-line basis over the lease term when leases are operating leases. If it is considered a finance lease, expense is recognized over the lease term within
10

Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
interest expense and amortization in the Company’s condensed consolidated statements of operations. The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company's facility leases and to account for the lease and non-lease components as a single lease component. The Company also elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for leases with terms of 12 months or less.
Comprehensive Loss
Comprehensive loss consists of net loss and other gains or losses affecting stockholders’ equity that, under U.S. GAAP are excluded from net loss. For the three and six months ended June 30, 2022 and 2021, unrealized losses on debt securities were included as components of comprehensive loss.
Accounting Pronouncements
The Company is provided the option to adopt new or revised accounting guidance as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) either (1) within the same periods as those otherwise applicable to public business entities, or (2) within the same time periods as non-public business entities, including early adoption when permissible. With the exception of standards the Company elected to early adopt, when permissible, the Company has elected to adopt new or revised accounting guidance within the same time period as non-public business entities, as indicated below.
Recently Adopted Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848).” The amendments in ASU 2020-04 provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company adopted this guidance effective January 1, 2022 using the prospective method, which did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which amends existing guidance on the impairment of financial assets and adds an impairment model that is based on expected losses rather than incurred losses and requires an entity to recognize as an allowance its estimate of expected credit losses for its financial assets. An entity will apply this guidance through a cumulative-effect adjustment to retained earnings upon adoption (a modified-retrospective approach) while a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. This ASU is effective for the Company for its fiscal year ending December 31, 2023. Early adoption is permitted. The Company is in the process of evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements and related disclosures. The Company does not anticipate adoption to have a material impact on its condensed consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as the elimination of exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, the recognition of deferred tax liabilities for outside basis differences, ownership changes in investments, and tax basis step-up in goodwill obtained in a transaction that is not a business combination. This ASU is effective for the Company for its fiscal year ending December 31, 2022. Early adoption is permitted. The Company is in the process of evaluating the impact of the
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Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
adoption of this ASU on its condensed consolidated financial statements and related disclosures. The Company does not anticipate adoption to have a material impact on its condensed consolidated financial statements.
3.Reverse Recapitalization
On June 9, 2021, Mako Merger Sub merged with Legacy Nautilus, with Legacy Nautilus surviving as the surviving company and as a wholly-owned subsidiary of ARYA.
As a result of the Business Combination, Legacy Nautilus equity holders received an aggregate number of shares of New Nautilus Common Stock equal to (i) $900.0 million plus $24.3 million, which reflects the aggregate exercise price of all stock options (whether vested or unvested) of Legacy Nautilus at the consummation of the Business Combination, divided by (ii) $10.00 giving effect to the exchange ratio of approximately 3.6281 (“Exchange Ratio”) based on the terms of the Business Combination Agreement. For purposes of calculating the aggregate number of New Nautilus Common Stock issuable to each holder of Legacy Nautilus Common Stock pursuant to the Business Combination Agreement, all Legacy Nautilus Common Stock held by such holder was aggregated, and the Exchange Ratio was applied to that aggregate number of shares held by such holder, and not on a share-by-share basis, and the number of New Nautilus Common Stock issued was rounded down to the nearest whole share. At the Closing Date, (i) an aggregate of 18,721,137 shares of Class A and Class B ordinary shares of ARYA were exchanged for an equivalent number of Common Stock, (ii) an aggregate of 85,324,118 shares of Common Stock were issued in exchange for the shares of Nautilus outstanding as of immediately prior to the Business Combination and (iii) an aggregate of 20,000,000 shares of Common stock were issued to the PIPE Investors in the PIPE Financing with total gross proceeds of $200.0 million. Moreover, at the Closing, all options to purchase shares of Nautilus were exchanged for comparable options to purchase shares of Common Stock based on an implied Legacy Nautilus equity value of $900.0 million. Immediately after giving effect to the transactions, there were 124,045,255 shares of Common Stock outstanding and 7,106,767 shares of Common Stock subject to outstanding options under the 2017 Plan.
The Business Combination is accounted for as a reverse recapitalization under U.S. GAAP. This determination is primarily based on Legacy Nautilus stockholders comprising a relative majority of the voting power of Nautilus and having the ability to nominate the members of the Board, Legacy Nautilus’s operations prior to the acquisition comprising the only ongoing operations of Nautilus, and Legacy Nautilus’s senior management comprising a majority of the senior management of Nautilus. Under this method of accounting, ARYA is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Nautilus represent a continuation of the financial statements of Legacy Nautilus with the Business Combination being treated as the equivalent of Nautilus issuing stock for the net assets of ARYA, accompanied by a recapitalization. The net assets of ARYA are stated at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are presented as those of Nautilus. All periods prior to the Business Combination have been retrospectively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization.
In connection with the Business Combination, the Company raised $335.4 million of net proceeds. This amount was comprised of $135.4 million of cash held in ARYA’s trust account from its initial public offering, net of ARYA’s transaction costs and underwriters’ fees of $10.1 million, and $200.0 million of cash in connection with the PIPE Financing. The Company incurred $8.1 million of transaction costs, consisting of banking, legal, and other professional fees which were recorded as a reduction to additional paid-in capital.
The number of shares of Common Stock issued immediately following the consummation of the Business Combination was:
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Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
Number of Shares
Common Stock of ARYA outstanding prior to the Business Combination19,186,500 
Less redemption of ARYA shares(465,363)
Common Stock of ARYA18,721,137 
Shares issued in PIPE Financing20,000,000 
Business Combination and PIPE Financing shares38,721,137 
Legacy Nautilus shares85,324,118 
Total shares of Common Stock immediately after the Business Combination124,045,255 

4.Fair Value Measurements
The following table details the assets carried at fair value and measured on a recurring basis within the three levels of fair value as of June 30, 2022 and December 31, 2021:
(in thousands)Gross UnrealizedReported as:
June 30, 2022Amortized CostGainsLossesFair ValueCash and cash equivalentsShort-term investmentsLong-term investments
Level 1
Mutual funds$1,821 $ $ $1,821 $1,821 $ $ 
U.S. treasury securities39,405 18 (246)39,177  14,976 24,201 
Total Level 141,226 18 (246)40,998 1,821 14,976 24,201 
Level 2
Commercial paper266,695 2 (207)266,490 208,533 57,957  
Corporate debt securities7,365  (135)7,230  7,230  
Agency bonds20,378 19 (219)20,178  8,821 11,357 
Total Level 2294,438 21 (561)293,898 208,533 74,008 11,357 
Total Level 1 and Level 2$335,664 $39 $(807)$334,896 $210,354 $88,984 $35,558 
(in thousands)Gross UnrealizedReported as:
December 31, 2021Amortized CostGainsLossesFair ValueCash and cash equivalentsShort-term investmentsLong-term investments
Level 1
Mutual funds$21,925 $ $ $21,925 $21,925 $ $ 
U.S. treasury securities15,156  (20)15,136  15,136  
Total Level 137,081  (20)37,061 21,925 15,136  
Level 2
Commercial paper301,906 2 (90)301,818 163,694 138,124  
Corporate debt securities14,299  (36)14,263  6,850 7,413 
Agency bonds8,998  (40)8,958   8,958 
Total Level 2325,203 2 (166)325,039 163,694 144,974 16,371 
Total Level 1 and Level 2$362,284 $2 $(186)$362,100 $185,619 $160,110 $16,371 
Contractual maturities of short-term investments as of June 30, 2022 and December 31, 2021 are due in one year or less. Contractual maturities of long-term investments as of June 30, 2022 and December 31, 2021 are due
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Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
after 1 year through 2 years. There were no continuous unrealized loss positions in excess of twelve months as of June 30, 2022 and December 31, 2021.
5.Composition of Certain Condensed Consolidated Financial Statement Line Items
Property and Equipment, Net
Property and equipment consisted of the following:
(in thousands)June 30,
2022
December 31,
2021
Laboratory equipment$4,460 $4,032 
Computer hardware157 157 
Furniture, fixtures and office equipment26 1 
Leasehold improvements8 8 
Construction in progress1,307 279 
5,958 4,477 
Less: Accumulated depreciation(2,556)(1,994)
Total$3,402 $2,483 
The Company recorded depreciation expense of $0.3 million and $0.6 million for the three and six months ended June 30, 2022 and $0.3 million and $0.5 million for the three and six months ended June 30, 2021, respectively, which was primarily allocated to research and development expense.
Other Long Term Assets
Other long term assets consisted of the following:
(in thousands)June 30,
2022
December 31,
2021
Restricted cash$842 $842 
Deposits
155 155 
Total$997 $997 
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following:
(in thousands)June 30,
2022
December 31,
2021
Employee compensation$1,299 $1,465 
Accrued research and development874 518 
Accrued professional and consulting fees539 411 
Accrued facilities 337 
Other396 388 
Total$3,108 $3,119 
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Nautilus Biotechnology, Inc.
Notes to Condensed Consolidated Financial Statements—(Continued)
(Unaudited)
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following:
(in thousands)June 30,
2022
December 31,
2021
Cash and cash equivalents$210,354 $185,619 
Restricted cash included in other long term assets842 842 
Total$211,196 $186,461 
6.Redeemable Convertible Preferred Stock
On June 9, 2021, upon the closing of the Business Combination (as defined in Note 1 and further described in Note 3), all of the outstanding redeemable convertible preferred stock was converted to New Nautilus Common Stock pursuant to the Exchange Ratio effective immediately prior to the Business Combination and the remaining amount was reclassified to additional paid-in capital. As of June 30, 2022 the Company had no issued and outstanding Preferred Stock shares.
7.Common Stock
On June 9, 2021, the Business Combination (as defined in Note 1 and further described in Note 3) was consummated and the Company issued 38,721,137 shares for an aggregate purchase price of $327.3 million, net of issuance costs of $8.1 million. Immediately following the Business Combination, there were 124,045,255 shares of Common Stock outstanding. The holder of each share of Common Stock is entitled to one vote.
The Company has retroactively adjusted the shares issued and outstanding prior to June 9, 2021 to give effect to the exchange ratio established in the Business Combination Agreement to determine the number of shares of Common Stock into which they were converted.
In June 2021, pursuant to the Business Combination, the Company amended its certificate of incorporation to increase the number of authorized common stock shares to 1,000,000,000 shares. There were 124,562,745 shares issued and outstanding as of June 30, 2022.
Common Stock Reserved for Future Issuance
Shares of common stock reserved for future issuance on an as-if converted basis, were as follows: