Bionano Genomics, Inc. — Q3 2022 Form 10-Q
Business and period. Bionano provides optical genome mapping (OGM) systems and consumables, diagnostic testing through Bionano Laboratories, and genomics software through BioDiscovery. This unaudited filing covers the three and nine months ended September 30, 2022, compared with the same 2021 periods.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $7.2M | $4.7M | $19.6M | $11.7M |
| Gross profit / margin | $1.8M / 25% | $1.2M / 25% | $4.1M / 21% | $3.6M / 31% |
| Operating expenses | $34.0M | $21.8M | $98.3M | $52.0M |
| Operating loss | $(32.1)M | $(20.7)M | $(94.2)M | $(48.3)M |
| Net loss | $(31.8)M | $(20.8)M | $(93.9)M | $(49.5)M |
| Net loss per share, basic and diluted | $(0.11) | $(0.07) | $(0.33) | $(0.18) |
- Q3 revenue rose 55%; nine-month revenue rose 68%. Product revenue increased 9% and 36%, respectively, while service and other revenue increased 167% and 133%. Service growth included BioDiscovery revenue of $1.8M in Q3 and $4.0M year to date, plus higher laboratory services volume.
- Q3 gross margin held at 25%; nine-month margin declined from 31% to 21%. Management cited unfavorable flowcell yields, scrap and quality-control costs, partly offset in Q3 by improved chip yields and higher-margin BioDiscovery software revenue.
- Research and development expense increased 96% in Q3 and 164% year to date; selling, general and administrative expense increased 38% and 64%. The filing attributes much of the increase to compensation and headcount, including stock-based compensation, as well as BioDiscovery-related amortization.
Financial position and cash flow
- At September 30, 2022, cash and cash equivalents were $28.2M and available-for-sale investments were $152.0M, totaling about $180.2M. Working capital was $184.7M; total assets were $323.7M and total liabilities were $42.0M.
- Cash used in operating activities was $90.3M for the first nine months, compared with $46.3M in 2021. Investing activities provided $71.2M, mainly reflecting net maturities of investment securities; financing activities provided $22.9M, principally from the Cowen ATM stock sale.
- The company reported no outstanding term-loan debt. Balance-sheet lease liabilities totaled approximately $10.4M, including $3.9M of finance leases and $6.5M of operating leases.
- In August 2022, the company sold approximately 6.6M shares under its Cowen ATM, raising $23.1M gross. Shares outstanding increased to 296.9M at September 30, from 289.6M at December 31, 2021.
Changes, outlook and risks
- The Saphyr installed base reached 217, up approximately 54% from a year earlier. Nine-month flowcells sold increased 14%; Q3 volume was essentially unchanged year over year. Management also noted CMS reimbursement recommendations for certain OGM laboratory-developed-test codes.
- Management believes cash, cash equivalents and investments will fund planned operations, obligations and capital investments for at least 12 months, but expects continued losses and negative operating cash flow. It anticipates revenue growth with broader OGM awareness, while expecting increased R&D and selling, general and administrative expenses for the remainder of 2022. No numeric revenue or earnings guidance was provided.
- Supply-chain challenges and higher costs for components and contract manufacturing continued. Flowcell yield issues may weigh on future margins if not resolved. The company also identifies risks from COVID-19, the Ukraine-Russia conflict, inflation, customer spending, product adoption, reimbursement, regulation, and dependence on single manufacturers for instruments and chip consumables.
- A $9.3M BioDiscovery milestone consideration liability was classified as current; management estimated a 95% probability of milestone achievement. Separately, a 5.0M-share restricted stock award tied to a key employee vested in full on October 4, 2022 following a modification, after quarter-end.
- The company reported no material litigation or material loss exposure. Management said disclosure controls were effective at September 30, 2022; ERP implementation was completed during the quarter and led to changes in certain financial-reporting controls.
Key facts for investors to verify
- Whether revenue growth and Saphyr adoption translate into improving gross margins and lower cash burn, particularly given flowcell yield concerns.
- Whether the company’s approximately $180.2M in cash and investments provides adequate runway against operating cash use of $90.3M in nine months and its stated 12-month liquidity assessment.
- Timing and payment of the $9.3M BioDiscovery milestone consideration, and the effects of the post-quarter accelerated vesting on compensation expense and dilution.
- Future financing needs and dilution risk, including potential ATM sales, outstanding options and warrants, and the company’s ability to maintain access to capital markets.
- Progress in clinical adoption and reimbursement, and any regulatory changes affecting OGM, research-use-only products or laboratory-developed tests.