Bionano Genomics, Inc. — FY 2018 Form 10-K
Reporting period: Fiscal year ended December 31, 2018. This is an annual filing; fourth-quarter figures below are unaudited. The company develops and sells the Saphyr genome-analysis platform and related consumables, primarily for research use. It reported an installed base of more than 110 systems, including Saphyr and its predecessor.
Financial performance and liquidity
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Revenue | $12.0 million | $9.5 million |
| Cost of revenue | $8.7 million | $6.0 million |
| Gross profit / margin | $3.3 million / 27.4% | $3.5 million / 36.6% |
| Operating loss | $20.4 million | $23.2 million |
| Net loss | $18.5 million | $23.4 million |
| Cash used in operating activities | $19.9 million | $20.8 million |
| Cash and cash equivalents at year-end | $16.5 million | $1.0 million |
| Long-term debt, net of discount | $9.0 million | $0 |
- Product revenue rose 31%; other revenue declined 27%. Instrument unit sales increased 29% and consumable unit sales increased 63% year over year.
- Gross margin declined, primarily as product costs grew faster than revenue; the company also recorded a $1.3 million write-down of predecessor Irys instrument inventory in 2018.
- Research and development expense fell 21% to $9.5 million, partly reflecting a prior-year workforce reduction. Selling, general and administrative expense was broadly flat at $14.2 million.
- Year-end current assets were $23.0 million and current liabilities $4.5 million. The balance sheet showed no current portion of long-term debt. The $10 million MidCap loan had a $9.0 million net carrying value and was secured by substantially all assets, including intellectual property.
- Financing cash flow was $35.8 million, including $19.4 million of net IPO proceeds and $14.3 million of convertible-note proceeds. The notes, totaling $14.9 million including accrued interest, converted into common shares at the IPO.
- Unaudited fourth-quarter revenue was $4.0 million and net loss was $6.4 million, compared with $2.8 million and $5.9 million, respectively, in fourth-quarter 2017.
Changes, outlook, risks, and unusual items
- Revenue growth was 26%, versus approximately 40% growth in 2017. Geographic mix shifted: EMEIA rose to 33% of revenue from 13%, while Asia Pacific fell to 29% from 47%; North America was 38% versus 40%.
- The company completed its IPO in August 2018, converted all preferred stock and outstanding convertible notes into common stock, and replaced its prior Western Alliance borrowing with a five-year MidCap facility. The facility’s additional $2.5 million tranche depended on achieving $16 million of trailing-12-month revenue by June 2019; another $2.5 million tranche was no longer available.
- Management said existing cash was expected to fund obligations through the fourth quarter of 2019, but not beyond. The financial statements and auditor’s report identify substantial doubt about the company’s ability to continue as a going concern without additional funding. Management expected continuing operating losses and negative cash flows.
- Management expected R&D and selling, general and administrative costs to rise as it develops higher-throughput systems and expands commercial and support operations. Stated product targets—not formal financial guidance—included throughput of six human samples per day in the first half of 2019 and consumable cost per sample below $300 in 2019 and below $100 in 2020.
- Key risks include the need for additional capital and potential shareholder dilution; uncertain adoption and long sales cycles; competition; reliance on single contract manufacturers and limited or sole-source reagent suppliers; and regulatory, reimbursement, and RUO/LDT risks. Saphyr was marketed for research use only; clinical use by customers may require regulatory and reimbursement pathways.
- Unusual items included a $4.0 million noncash gain from changes in fair value and expirations of preferred-stock warrants, which reduced reported net loss; the warrants’ accounting changed after the IPO. The filing reported no material pending legal proceedings. The auditor issued an unqualified opinion on the financial statements but did not audit internal control over financial reporting.
Important facts for investors to verify
- Subsequent financing, cash burn, and the company’s ability to meet obligations after the stated fourth-quarter 2019 runway.
- Whether Saphyr adoption, instrument placements, and consumable utilization are growing enough to improve gross margin and recurring revenue.
- Progress against throughput and per-sample cost targets, and whether those targets are achieved in customer workflows.
- Status and terms of the conditional MidCap tranche, debt covenants, collateral, and repayment obligations.
- Regulatory status and reimbursement prospects for customer-developed clinical tests, alongside any changes to the company’s RUO activities.