Business context and reporting period
Bionano Genomics, Inc. filed this unaudited Form 10-Q for the quarter and six months ended June 30, 2021. The company sells Saphyr optical genome mapping instruments, consumables and related services, and provides diagnostic testing through its Lineagen subsidiary.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $3.856 million | $1.182 million | $7.024 million | $2.318 million |
| Gross profit / margin | $1.439 million / 37.3% | $0.579 million / 49.0% | $2.482 million / 35.3% | $0.859 million / 37.1% |
| Operating expenses | $17.915 million | $8.014 million | $30.122 million | $18.056 million |
| Operating loss | $16.476 million | $7.435 million | $27.640 million | $17.197 million |
| Net loss | $18.786 million | $8.074 million | $28.733 million | $18.584 million |
| Net loss per share | $0.07 | $0.09 | $0.11 | $0.29 |
Revenue grew 226% in Q2 and 203% for the first half. Gross margin declined, which management attributed primarily to a sales mix shift toward lower-margin instruments. Q2 selling, general and administrative expense rose 146%, and research and development expense rose 70%, reflecting expanded headcount, compensation and development costs. Six-month operating cash use was $26.323 million, versus $15.250 million a year earlier.
At June 30, 2021, cash and cash equivalents were $332.554 million and working capital was $331.2 million. Total liabilities were $10.943 million; the Innovatus term loan had been repaid in full, and the revolving credit facility was terminated. Financing activities provided $320.378 million in the first half, largely reflecting equity offerings and ATM sales. Shares outstanding rose to 279.054 million from 189.953 million at year-end 2020. Management stated cash should fund operations, obligations and capital investments for at least 12 months.
Material changes and operating developments
- Q2 product revenue was $2.496 million; service and other revenue was $1.360 million, including $1.115 million from Lineagen. For the first half, Lineagen contributed $1.966 million of service and other revenue.
- Q2 Saphyr shipments increased to 13 from 6; the installed base reached 121, compared with 87 a year earlier. Flow-cell sales increased 118%, and the service lab analyzed 190 samples versus 77.
- The company completed two January public offerings and January ATM sales; these generated substantial cash but materially increased share count. A new Cowen ATM permits sales of up to $350 million; no shares had been issued under it as of the filing date.
- The $1.8 million PPP loan was forgiven in March, generating a first-half gain. Repayment of the Innovatus loan produced a $2.076 million debt-extinguishment loss in Q2, including prepayment-related costs and unamortized debt issuance costs.
Outlook, risks and unusual items
No specific revenue or earnings guidance was provided. Management expects continued net losses and significant spending to expand commercialization, research and development, staffing and infrastructure; it may seek additional equity, debt or other financing. The company said COVID-19 restrictions and reduced activity negatively affected Q2 results and could continue to disrupt customers, operations and supply chains.
Key risks include early-stage commercial adoption, dependence on research budgets and customer acceptance, sole-source instrument and consumables manufacturers, regulatory limits on research-use-only products and potential FDA requirements for clinical uses, and uncertain diagnostic reimbursement. Lineagen’s testing business also faces complex billing and collection risks. The company reported no material litigation exposure and no off-balance-sheet arrangements.
Management concluded disclosure controls were not effective as of June 30, 2021 because a previously identified material weakness remained unremediated. The weakness involved insufficient financial-reporting resources and inadequate segregation of duties. Remediation efforts include hiring accounting personnel and using external consultants; no material misstatements were identified. The company also reported that non-affiliate market value exceeded $700 million and expected to cease being an emerging growth company effective December 31, 2021.
Important facts for investors to verify
- Whether revenue growth and system placements translate into recurring consumables and service revenue, and whether gross margins recover.
- Cash burn against the $332.6 million cash balance, particularly as operating expenses continue to rise; confirm the assumptions behind management’s 12-month liquidity assessment.
- Potential dilution from outstanding equity awards, warrants and any future sales under the $350 million Cowen ATM.
- Progress in remediating the material weakness and strengthening financial reporting controls.
- Effects of COVID-19, supplier concentration, regulatory requirements and reimbursement on sales and operations.