Quantum Si (QSI) Below Net Cash
Medical Life Sciences Protein Sequencing Company At Deep Discount
Quantum-Si (QSI) is a life sciences company that engages in the development of a single-molecule detection platform to enable next generation protein sequencing (NGPS). The company's platform is comprised of the Platinum NGPS instrument; the Platinum Analysis Software service; Proteus and reagent kits and semiconductor chips. Their platforms are used in protein identification, protein variants, antibody characterization, biomarker identification, and post translational modification analysis applications.
QSI has a proprietary platform that sequences proteins in a massively parallel fashion (rather than sequentially, one at a time), that can be used for the study of nucleic acids. The platform offers an end-to-end workflow including both sample preparation and sequencing.
They believe they are the first company to successfully enable NGPS on a semiconductor chip, thus digitizing a massive proteomics opportunity, which allows for a massively parallel solution at the ultimate level of sensitivity - single-molecule detection.
"We believe our platform, which is designed to streamline sequencing and data analysis at a lower instrument cost than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome. For example, we believe our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, vaccine development, quality assurance and quality control, among other applications."
Financials
In the most recent quarter,
Total revenue increased $0.6 million or 252.9% year over year.
Gross profit increased $.3 million or 239% year over year
They just started recording revenue last year and since then revenue has grown sequentially quarter over quarter since September 2023. Revenue grew from $200,000 to $787,000 over that time span.
Earnings per share was negative -$.18
They have cash and marketable securities of $196.2 million with $42 million in cash and $119mil in U.S. treasuries and the rest in commercial paper.
Net cash and securities is $170.3 mil. The current market cap of the company is just $168 mil with the stock at $1.18 a share. So we are below cash less all debt.
Obviously, the balance sheet is strong with $179.9 in net current assets and an extremely high current ratio of 13.4. They have no long-term debt other than a lease.
Recent Developments
Just fourteen days ago they announced a distribution agreement with Avantor® (AVTR). Avantor will distribute Quantum-Si’s Next-Generation Protein Sequencing (NGPS) portfolio for the U.S. and Canadian markets.
There was another recent press release that they will be using NVIDIA's BioNeMo for their proteomics platform, Proteus.™ Nvidia BioNeMo uses AlphaFold2 which overall is the best and fastest AI protein structure model developed by Google Deep Mind.
They also expanded their partnership with Planet Innovation to manufacture and commercialize their Platinum Pro in the first half of 2025 and the Proteus platform over the next couple years.
In early November they got a Nasdaq non-compliance notice of the minimum stock price being under $1.00 a share for 30 days. The stock has recently risen substantially lately and is currently over the threshold at 1.18 a share. They have until May 2025 to regain this compliance.
Institutional Owners
ARK Investment Management is the largest institutional holder. Interestingly, Sumitomo Mitsui Trust Holdings is the second largest holder. They are part of Sumitomo Mitsui Bank. They are the largest trust company and the fifth-largest bank in Japan.
Final Thoughts
I like the fact that they are selling the platforms and not in the pharma business themselves which gives them stability. They are just getting started on commercialization. So far, the consistent revenue growth is promising. Combining that with trading below net cash makes this compelling.
Full disclosure: I don’t currently own any shares or options but may take a position in the near future.