Bionano Genomics, Inc. quarterly report, Q1 FY2024

Bionano Genomics, Inc. — Q1 2024 Form 10-Q

Reporting period: Three months ended March 31, 2024. Bionano provides optical genome mapping (OGM) systems and consumables, software, diagnostic testing through Bionano Laboratories, and nucleic-acid purification products through Purigen. Financial statements are unaudited.

Financial performance

Product growth was attributed primarily to consumables and software. The installed OGM base reached 347 systems, up approximately 34% year over year, and flowcells sold increased approximately 58% to 8,249. Product gross margin was 28% versus 29%; service and other gross margin increased to 46% from 24%.

Financial position and liquidity

• At March 31, 2024, cash and cash equivalents were $15.8 million, short-term investments were $12.6 million, and restricted cash and investments totaled $24.8 million. Working capital was $27.1 million.
• Total assets were $158.0 million and total liabilities were $75.2 million. Accumulated deficit was $612.6 million.
• Convertible-note principal outstanding was $24.3 million; its fair-value carrying amount was $29.1 million. The holder could require 2024 redemptions at 115% of principal, approximately $28.0 million, plus an estimated $2.2 million retirement fee assuming full redemption and no further conversions.
• Investing activities provided $47.6 million, mainly reflecting securities maturities net of purchases. Financing activities used $21.6 million, including $36.7 million of note payments, partly offset by $15.4 million gross ATM proceeds.

Management states that available resources, including the subsequent April financing, are expected to fund operations and capital expenditures into at least the third quarter of 2024, but not to cash-flow break-even. The filing concludes that substantial doubt exists about the company’s ability to continue as a going concern within 12 months after issuance of the statements; additional capital is required.

Material changes, outlook and risks

• Cost reductions: A March 2024 plan targets approximately $35–$40 million in annualized operating-expense savings starting in the second half of 2024. It includes a planned workforce reduction of approximately 120 employees, expected to be substantially complete by June 30, 2024, and a gradual phase-out of certain Bionano Laboratories neurodevelopmental-disorder testing services. Q1 restructuring charges totaled $4.6 million, including approximately $3.9 million of severance. Management cautions that actual costs and savings may differ.
• Clinical-service revenue: Management expects service and other revenue to decrease over the remainder of 2024 as certain testing services are phased out. Those products generated approximately $7.0 million of 2023 revenue.
• Debt and financing: A February amendment reduced minimum-liquidity and restricted-cash covenant requirements and provided for substantial note redemptions. After quarter-end, holders redeemed $9.0 million of principal for $10.4 million on April 20 and May 1. An April registered direct offering raised $10.0 million gross and $9.3 million net, issuing common shares and warrants; the pre-funded warrants were exercised at closing.
• Dilution: The company issued 11.8 million shares through its ATM in Q1 for approximately $15.4 million gross proceeds. Common shares outstanding rose from 45.8 million at year-end to 57.5 million at March 31; the filing reports 66.9 million shares outstanding on May 6.
• Regulatory exposure: On May 6, 2024, the FDA issued final rules to phase out enforcement discretion for laboratory-developed tests over four years. The filing says certain tests may require FDA clearance or approval by October 1, 2027, potentially increasing costs and affecting the laboratory-services business and clinical-market demand.
• Other items: The company recorded a $0.4 million impairment of Lineagen-related intangible assets. Increasing Saphyr and Stratys instrument useful lives from five to seven years reduced Q1 depreciation expense by $0.5 million. Management cited research-spending sensitivity, market adoption, competition, supply-chain and macroeconomic conditions, and financing availability as risks. It reported no material litigation and concluded disclosure controls were effective.

Investor verification priorities

• Confirm cash runway and financing needs against actual operating cash use, restricted-cash requirements, and debt repayment terms; note that the stated runway is only into at least Q3 2024 and going-concern doubt remains.
• Track the remaining note principal, redemption premiums, retirement fee, covenant compliance, and any further conversions or redemptions.
• Assess whether the targeted $35–$40 million annualized savings are achieved, including severance and other restructuring costs, and how the clinical-service phase-out affects revenue.
• Monitor dilution from ATM sales, the April offering, outstanding warrants, and other potential share issuances.
• Evaluate whether OGM installed-base and consumables growth translates into sustained revenue growth and improved product margins.
• Reconcile the MD&A reference to a $93.9 million prior-period net loss with the financial statements, which report a Q1 2023 net loss of $37.1 million.