Bionano Genomics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Unaudited results; filed November 4, 2021.
Business context
Bionano sells optical genome mapping (OGM) systems and consumables, provides diagnostic testing through Lineagen, and offers genomic-analysis software through BioDiscovery. Saphyr products were marketed for research use only. In Q3, the company shipped 24 Saphyr systems versus 11 a year earlier; its installed base reached 141 versus 93, and flow-cell sales rose 122% to 3,969.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $4.655M | $2.196M | $11.679M | $4.513M |
| Gross profit / margin | $1.154M / 24.8% | $0.736M / 33.5% | $3.635M / 31.1% | $1.594M / 35.3% |
| Operating expenses | $21.832M | $10.963M | $51.953M | $29.019M |
| Operating loss | $(20.678)M | $(10.227)M | $(48.318)M | $(27.425)M |
| Net loss | $(20.753)M | $(10.792)M | $(49.486)M | $(29.376)M |
| Net loss per share, diluted | $(0.07) | $(0.08) | $(0.18) | $(0.34) |
Q3 revenue increased 112%; nine-month revenue increased 159%. Product revenue growth reflected higher Saphyr instrument, consumable, and reagent-rental demand; service growth primarily reflected Lineagen. Gross margin declined as warranty repair costs and laboratory costs rose. R&D and selling, general and administrative expenses increased substantially, reflecting higher headcount, development spending, and stock-based compensation.
For the nine months, operating cash use was $46.305M, versus $26.210M in 2020. Investing cash use was $185.552M, principally reflecting purchases of available-for-sale securities; financing provided $334.144M, primarily from equity offerings. Cash and cash equivalents were $140.736M and available-for-sale investments were $185.333M at September 30. Working capital was $324.3M. The company had no debt at quarter-end, after paying off its Innovatus term loan in May.
Total assets were $359.657M and total liabilities $18.092M at September 30. The accumulated deficit was $193.170M. Common shares outstanding were 281.441M at quarter-end, versus 189.953M at December 31, 2020; 289.184M shares were outstanding as of October 31.
Material changes and unusual items
- Revenue growth was accompanied by faster growth in cost of revenue and operating expenses; gross margin contracted year over year.
- Equity offerings and ATM sales generated substantial funding. During the nine months, the company reported approximately $342.7M in gross proceeds from common-stock sales and $10.1M from warrant and option exercises.
- The nine-month results included a $1.775M gain from forgiveness of the PPP loan and a $2.076M loss on debt extinguishment, related to repayment fees and write-off of unamortized debt issuance costs.
- After quarter-end, Bionano acquired BioDiscovery on October 18 for approximately $50M cash and $40M in company shares, subject to purchase-price adjustments, with a further $10M cash milestone payment tied to commercial milestones. The filing said approximately $27M of the issued shares were subject to continued-service vesting. Management noted the cash payment in its liquidity discussion.
Outlook, risks, and contingencies
Management expected available cash to fund operations, obligations, and capital investment for at least the next 12 months, but anticipated continued net losses and said future funding could come from equity, debt, collaborations, licenses, or similar arrangements. No specific revenue or earnings guidance was provided. Management said COVID-19-related travel restrictions and reduced activity continued to weigh on Q3 results; future effects remained uncertain.
- Key risks include continued losses and cash burn; product adoption and customer research budgets; competition; reliance on single or limited suppliers and contract manufacturers; and execution and integration risks from acquisitions.
- OGM offerings were generally research-use-only. Clinical diagnostic uses may require regulatory clearance or approval; Lineagen testing is subject to laboratory, reimbursement, and healthcare regulatory requirements.
- The company reported no material litigation exposure and no material off-balance-sheet arrangements.
- Disclosure controls were deemed ineffective because of an unremediated material weakness in financial-reporting controls, including insufficient resources and inadequate segregation of duties. Remediation efforts were underway; no material misstatement was identified.
Important facts for investors to verify
- Whether Saphyr placements and consumable use continue to grow, and whether demand converts into recurring revenue and improved gross margins.
- Cash burn and liquidity after the BioDiscovery acquisition, including the remaining investment portfolio, acquisition adjustments, and potential milestone payment.
- How much additional equity financing may be needed and the resulting dilution; verify current shares outstanding and ATM activity.
- Progress integrating BioDiscovery and Lineagen, including realized revenue, costs, and commercial synergies.
- Whether the internal-control material weakness is fully remediated and disclosure controls become effective.
- COVID-19, supply-chain, regulatory, reimbursement, and product-adoption developments that could affect operations and outlook.