Bionano Genomics Stock

Bionano Genomics, Inc. operates as a global genomics company.

The company is a pioneer of optical genome mapping (OGM) for genome analysis and provides a suite of genome analysis solutions designed to enable researchers and clinicians to reveal answers to challenging questions in biology and medicine. Through the company’s OGM solutions, the company’s nucleic acid isolation and purification solutions, the company’s genomic analysis and interpretation software, and the company’s clinical testing and laboratory services, the company has a suite of products that will drive new discoveries, elevate health and wellness, and increase the company’s understanding of the genome in transformative ways.

The company markets and sells the Saphyr system, which delivers OGM data to enable ultra-sensitive and ultra-specific detection of all classes of structural variation (SV). The Saphyr system is used to identify structural changes in chromosomes, known as cytogenetics, and to accelerate the search for answers in genetic disease and cancer applications. The Saphyr system is consisted of an instrument, chip consumables, reagents and software containing a suite of data analysis and visualization tools. The Saphyr system has been shown to outperform the current gold standard methods for cytogenetics and molecular genetics, including karyotyping, fluorescence in-situ hybridization (FISH), Southern blot and chromosomal microarray (CMA). The Saphyr system has also been shown to identify structural changes in chromosomes that cannot be identified using current commercially available solutions for gene sequencing.

The company markets and sells the Ionic Purification system, which is able to deliver high quality DNA in a more natural, native form and with fewer contaminants when compared to other isolation and purifications solutions. The Ionic Purification system is used to extract, purify, and concentrate DNA or RNA from a variety of sample types, and is consisted of an instrument, consumables, and reagents.

The company’s software delivers genomic data interpretation solutions tailored for research use in cytogenomics and molecular pathology labs in genetic disease and cancer research markets, with an emphasis on structural variation. This industry leading, platform agnostic software solution is designed to provide analysis, visualization, interpretation and reporting of SVs, single-nucleotide variants and absence of heterozygosity across the genome in one consolidated view. The company’s software enables analysis of next-generation sequencing (NGS) and microarray data, and the company is developing a version that the company expects to be able to incorporate OGM data to make the company’s software a more comprehensive offering for analysis of genomic data. The integration of OGM with data types common in the industry, such as Variant Call Format (VCF), and Binary Alignment Map (BAM), should accelerate and broaden the company’s position in digital cytogenetics and comprehensive genome analysis by enabling the company to simplify the assessment of clinically relevant variants in cytogenomics applications, potentially reducing interpretation time per sample and expanding the company’s reach into the discovery and translational research markets through the combination of OGM and NGS.

The company’s Bionano Laboratories business provides proprietary genetic clinical testing services for individuals demonstrating clinical presentations consistent with neurodevelopmental disorders (NDDs), including autism spectrum disorders (ASDs) and other disorders of childhood development. Their comprehensive genetic testing services include reporting for known NDD-causing genome variations, including testing for proprietary variations, and combines testing with the company’s Proprietary Variant Index (PRISM) which uses a proprietary database of over 35,000 individuals with NDDs tested with over 60,000 tests that provides additional evidence for candidate genes associated with NDDs. This testing is a CLIA-certified diagnostic testing service, and the company has expertise in selling cytogenetic assays to physicians, providing genetic counseling services to individuals undergoing testing and their families, and contracting with third-party payors for reimbursement. Additionally, Bionano Laboratories has developed OGM-based laboratory developed tests (LDTs) for facioscapulohumeral muscular dystrophy type 1 (FSHD1), which is a progressive disorder that primarily affects the muscles of the face, shoulder blades (scapula), upper arms, and lower legs, and for detecting SVs in individuals with hematologic malignancies.

Bionano Laboratories also provides laboratory services to clinicians, scientists, pharmaceutical companies, and others who are seeking to incorporate OGM into their genomics research without the need to bring the company’s Saphyr system in house. Laboratory services for OGM are performed in the company’s laboratory facilities in San Diego, California and at partner laboratories in the United States and Europe, and serve as solutions for researchers and clinicians who would like to use OGM for various applications in genomics but have yet to acquire the Saphyr system.

Solutions

An end-to-end OGM solution begins with the sample and ends with data analysis. The OGM workflow includes several steps: DNA isolation, DNA labeling, DNA mapping, data processing and data analysis. At each step the company has either organically developed a solution or partnered with a third party to enable and provide a solution. The company highly values its relationships with third parties that enable the company to provide these solutions and will continue to work with others to ensure the company’s customers’ needs are being met. The company is constantly on the look-out for opportunities to better meet the needs of the company’s customers whether that is through partnerships, organic development, or strategic acquisitions that accelerate and up-shift the company’s capabilities. To that end, the company has recently engaged in two transactions, which will substantially benefit the company’s customers and their adoption of OGM as a solution of choice for SV and CNV analysis. In 2021, the company acquired BioDiscovery and its leading NxClinical software for data analysis. In 2022, the company acquired Purigen, and its proprietary isolation and purification technology.

OGM Systems

The company’s system uses a proprietary approach to measure genome structure and SV through OGM. The OGM workflow is novel, comprehensive, scalable, cost effective and highly differentiated. OGM data is generated using the Saphyr system, which directly measures sequence specific patterns (SSPs) along UHMW DNA molecules in an unbiased approach without any amplification. Using the SSPs, software constructs a detailed physical map of the genome that accurately assigns the chromosomal location, order, orientation and quantity of sequence and in-turn, all the genome’s functional elements. OGM is capable of comprehensive, cost-effective and efficient detection of all classes of SVs and CNVs. The Saphyr system is ideally suited to be adopted alongside the installed base of high throughput sequencers as a complement that is designed to give users the ability to see a much wider scope of genome variation, from single bases of DNA to full chromosomes.

The Saphyr system provides a solution for comprehensive SV analysis at a higher resolution than traditional techniques allowing for more answers that matter to be obtained in genetic disease and cancer applications. The Saphyr system is the only product capable of detecting SVs at high sensitivity and specificity with a workflow that is cost-effective and time efficient.

The company’s customers include researchers and clinicians who seek to identify and understand the biological implications of genome variation. The Saphyr system can replace more traditional cytogenetic tools, which are expensive, slow and labor-intense, with an advanced solution designed to simplify workflow, reduce cost, and increase assay success rates. The Saphyr system has the potential to significantly increase success rates and provide more answers across a wide range of applications in genomics.

Nucleic Acid Isolation and Purification Systems

The company’s nucleic acid isolation and purification system uses a novel and proprietary application of isotachophoresis (ITP) to isolate nucleic acid molecules in a gentle and efficient process. The process involves the gentle lysis of biological samples followed by the addition of the sample and buffer to an Ionic fluid chip. An electric field is applied to the chip and the nucleic acid is isolated in its natural, native form. Traditional methods of isolating nucleic acid, including column-based isolation and bead-based isolation, can be laborious, and result in molecules that are denatured, dehydrated and fragmented, and solutions that are contaminated and have low purity. An additional limitation of many of the traditional isolation processes is the number of cells that are required to be processed in order to obtain sufficient nucleic acid molecules for OGM analysis. Current methodologies require upwards of 1.5 million cells in order to isolate sufficient DNA for use on the Saphyr system. The company’s Ionic Purification system, employing ITP technology, addresses many of these deficiencies and yields high purity nucleic acid that is not denatured, dehydrated or fragmented. Additionally, the Ionic Purification system is capable of isolating sufficient quantities of DNA for use in OGM applications from far fewer cells in contrast to traditional methods. The addition of the Ionic Purification system to the OGM workflow will provide a more efficient yield of DNA at higher quality than can be achieved with current processes.

Although OGM is the company’s primary focus, the Ionic Purification system has a current customer base of non-OGM users that use the system to isolate and purify nucleic acid molecules from sample types, including formalin-fixed, paraffin-embedded (FFPE) sample, tissue, cells, and viral. The company anticipates continuing to support and expanding this customer base.

Software Solutions

The company offers industry leading genome analysis software that enables genomics labs to analyze and interpret data across a wide range of platforms to generate highly informative data visualizations for streamlined and simple reporting of causal variants. NxClinical software is among the most comprehensive solutions for analysis and interpretation of any microarray or NGS generated data integrating CNVs, absence of heterozygosity (AOH) and loss of heterozygosity (LOH), as well as SNVs from sequencing data into a single well integrated interface that is used across the globe by renowned academic and commercial clinical laboratories.

The company’s acquisition of BioDiscovery has expanded the company’s portfolio into providing data analysis and interpretation solutions across NGS, CMA and the company is working to add OGM. These software solutions are expected to allow the company to leverage and expand the company’s network of Bionano customers and to potentially enable future adoption of OGM. Integrating OGM data into the NxClinical software should substantially improve the analysis and reporting capabilities of the company’s Saphyr system, making OGM easier to adopt and use by the company’s customers. Through BioDiscovery, the company can now serve the NGS and array markets directly though software with an industry leading data interpretation solution for revealing more answers with delivery of copy number variants across the genome. The company’s software monetization strategy is predicated on a pay-per-sample model where customers running NGS and/or array today can adopt, which sets the stage for future OGM adoptions. Software is a way for the company to participate directly in the NGS market while also enabling OGM data to be seamlessly integrated with NGS in one view for a comprehensive analysis, which is unique to Bionano.

Testing and Laboratory Services

The company’s Bionano Laboratories business offers tests that use CMA for evaluation of patients suspected of having certain genetic diseases, which is recommended by the American College of Medical Genetics and Genomics (ACMG), the American Academy of Pediatrics (AAP), and the American Academy of Neurology (AAN), among other renowned societies. The company is actively performing research to determine whether OGM with the Saphyr system can replace CMA as the front-line test for children with developmental disorders. As the scientific, peer-reviewed literature supports this claim, the coding entities, such as CMS and the AMA would need to adopt the proper procedural codes to allow for insurance reimbursement of new testing methodologies before they become mainstream clinical diagnostic instruments. Importantly, OGM is expected to be able to detect full mutations consistent with fragile X syndrome, which is another front-line test for children, especially males, with autism spectrum disorder and intellectual disability. Studies are ongoing to determine the sensitivity and specificity for OGM as it relates to fragile X syndrome. Bionano Laboratories also employs Whole Exome Sequencing (WES), which aims to detect genome SNVs that are different from genome SVs and are not detectable by OGM.

Bionano Laboratories is uniquely positioned to develop LDT’s that can improve upon the existing SOC for diagnostic testing for NDDs. Bionano Laboratories is working with payers to secure reimbursement alternatives for OGM-based testing. If reimbursements can be established, Bionano Laboratories intends to share its strategies with other labs which may drive demand for the Saphyr system. Bionano Laboratories plans to expand its testing menu with inclusion of OGM to demonstrate workflow implementation in a clinical setting in order to drive adoption, as well as serve as a conduit for enabling access for those customers unable to make a capital equipment expenditure. Bionano Laboratories is working to enable access, demonstrate excellence of the OGM workflow as a model within a CLIA setting for educational purposes, and drive advancements in product development for clinical grade testing of OGM at scale.

Commercial Offerings

The Saphyr System and Consumables

The company develops and markets the Saphyr system, a complete sample-to-result solution for SV analysis by OGM that empowers comprehensive genome analysis and facilitates a deeper understanding of genetic variation and function.

The Saphyr Instrument

The Saphyr instrument is a single-molecule imager that includes high performance optics, automated sample loading based on machine learning algorithms and computational hardware and control software. The instrument’s high-performance optics simultaneously image DNA linearized in hundreds of thousands of nanochannels. The instrument’s control interface is the user’s primary control center to design and monitor experiments as they occur in real time. The computational hardware is responsible for the secondary processing of the image data being produced on the Saphyr instruments. The Saphyr instrument is capable of analyzing up to 5,000 human genomes per year at 30x coverage. At the end of 2022, the company announced the placement of a pre-commercial unit that the company expects to significantly increase the throughput.

The Saphyr Chip

The Saphyr Chip is the consumable that packages the nanochannel arrays for DNA linearization. In its current form, each Saphyr chip has three flow cells containing approximately 120,000 nanochannels that are roughly 30 nanometers wide, and each flowcell can hold one unique sample. To manufacture the arrays, the company uses photolithography in a semiconductor fabrication facility to print hundreds of thousands of tiny grooves on silicon wafers and then dice the wafers into individual chips. The company’s chips are inexpensive to manufacture and highly scalable. The fluidic environment in each channel allows individual molecules to move swiftly utilizing only the charge of DNA. Hundreds of thousands of molecules can move through hundreds of thousands of parallel nanochannels simultaneously, enabling extremely high-throughput processing on a single-molecule basis.

Saphyr Sample Prep and Labeling Kits

The company’s Bionano Prep kits and DNA labeling kits provide the reagents and protocols needed to extract and label UHMW DNA for use with the Saphyr system. These kits are optimized for performing the company’s genome mapping applications on a variety of sample types.

The company’s workflow begins with the isolation of UHMW DNA. The company’s Bionano Prep kits are optimized for isolating and purifying UHMW DNA in a process that is gentler than existing DNA extraction methods. The resulting purified DNA is up to millions of base pairs long and optimal for use with the company’s systems. The company’s kits and protocols enable the extraction of UHMW DNA from a variety of sample types including human or animal tissue and tumors, plant tissue, cell lines, bone marrow aspirates and human blood.

The company’s labeling reagents are optimized for applications on the company’s genome mapping systems. Starting with UHMW DNA purified using the appropriate Bionano Prep kit, fluorescent labels are attached to specific sequence motifs. The result is uniquely identifiable genome-specific label patterns that enable de novo map assembly, anchoring sequencing contigs and discovery of SVs as small as 500 base pairs to up to chromosome arm lengths.

The company’s kit for DNA labeling, the Direct Label and Stain (DLS) kit, is a proprietary, nondestructive chemistry for sequence motif labeling of genomic DNA that improves every aspect of the company’s genome mapping. DLS uses a single direct-labeling enzymatic reaction to attach a fluorophore to the DNA at a specific 6-base pair sequence motif, yielding approximately 16 labels per 100,000 base pairs in the human genome. After labeling, the molecules are linearized in the Saphyr chip on the Saphyr instrument and imaged. Through the isolation, labeling and linearization steps, the molecules maintain an average length of around 250,000 base pairs. The label patterns on each molecule allow them to be uniquely identified and aligned in a pair-wise comparison against all other molecules imaged from the same sample.

The Ionic Purification System

The company acquired the Ionic Purification system through the company’s November 2022 acquisition of Purigen. The Ionic Purification system uses a proprietary ITP method to isolate and purify nucleic acid molecules. The technology was initially developed at Stanford University and intellectual property from that development was exclusively licensed to Purigen. The technology was further developed and commercialized by Purigen. The system includes an instrument, consumable and reagents necessary to process samples. The system works by applying an electric field to specially formulated reagents in a consumable. The electric field electrophoretically focuses nucleic acid into a narrow band and purifies the molecules away from other potential inhibitors. This results in a higher yield of pure nucleic acid than traditional bind-and-strip approaches that is also less fragmented and free from bead or wash buffer contamination.

The company offers reagents to isolate DNA and RNA from FFPE, tissue, and cells. The company is optimizing the system with the intent it be used in an OGM workflow. The isolation and purification of DNA using the Ionic system in an OGM workflow will create a number of opportunities, including, enabling additional sample types not available to OGM, increasing sample throughput, decreasing sample preparation complexity.

Software Solutions

The company’s data solutions offering includes a complete suite of hardware and software for end-to-end experiment management, algorithms for assembling genome maps and algorithms and databases for bioinformatics processing, all of which is driven through convenient web-based management and monitoring tools.

The company has a suite of proprietary algorithms and databases that fully enable the company’s proprietary bioinformatic and SV analysis pipelines. Using pairwise alignment of the single molecule images, consensus genome maps are constructed, refined, extended and merged. Molecules are then clustered into two alleles, and a diploid assembly is created to allow for heterozygous SV detection. Genome maps typically span entire chromosome arms in single, contiguous maps. Comparative analysis of maps reveals SV. The company’s customers use its variant annotation workflow to specifically uncover rare and sample-specific mutations.

The company’s hardware solution includes the Saphyr Compute Server, which provides cluster-like performance in an affordable, compact solution and the Bionano Compute Server, which expands the analytical capacity of the suite of tools. With these solutions, the company’s customers are capable of performing multiple simultaneous analyses and sustaining continuous throughput, which allows them to spend less time waiting for data, so they can focus on investigating results. The company also offers a cloud-based solution for data analysis.

The company’s NxClinical software is among the most comprehensive and up-to-date solutions for cytogenetics and molecular genetics, providing one solution for analysis and interpretation of all genomic variants from microarray and NGS data. The company is developing a version of NxClinical to incorporate OGM data, which is expected to become the company’s software solution once completed.

Testing and Laboratory Services

The company’s Bionano Laboratories business offers OGM data to researchers seeking access to OGM data. Bionano Laboratories intends to build a menu of LDTs using OGM solutions, and in 2022 Bionano Laboratories introduced their first two OGM-based tests, one for hematological malignancy and another for genetic disorder applications. Additionally, Bionano Laboratories offers molecular genetic clinical testing services for individuals demonstrating clinical presentations consistent with NDDs, including ASDs and other disorders of childhood development, including:

FirstStepDx PLUS is a CMA designed to identify an underlying genetic cause in individuals with autism spectrum disorder, developmental delay, and intellectual disability;

Fragile X syndrome (FXS) testing is designed to detect individuals (both males and females) with FXS, as well as carriers of the condition;

NextStepDx PLUS is a whole exome sequencing test designed to identify genetic variants that are associated with disorders of childhood development;

EpiPanelDx PLUS is a genetic testing panel designed for patients who have experienced seizures, infantile spasms, encephalopathy, or febrile seizures; and

PGx test identifies over 60 alleles in 11 genes. PGx testing is one aspect of personalized medicine and is used to aid health care providers with medications and dosage.

Strategy

The company is primarily focused on driving adoption of OGM through the Saphyr system (and successor instruments). The company’s strategies are to demonstrate that Saphyr is a superior alternative to traditional techniques in constitutional genetic disorders and hematologic malignancy applications; complement NGS with OGM in translational, applied and discovery research markets; accelerate broad reimbursement for OGM and establish it as the SOC in guidelines by professional medical societies; support the publication of findings with OGM by the company’s customers beyond the more than 687 papers published as of December 31, 2022; continue to innovate the company’s products and technologies; and partner with industry-leading companies and laboratories to expand adoption in clinical markets.

Sales and Marketing

As of December 31, 2022, the company’s commercial team consisted of 168 individuals in sales, sales support and marketing. The company’s sales support personnel include individuals in customer solutions, field service engineers and field application specialists. This commercial staff is primarily located in North America, Europe, and China. Most of the company’s sales support team is located at the company’s headquarters in San Diego and some work remotely throughout the U.S., Europe, and China.

The company sells its products through a direct sales force based in North America and Europe. The company sells its products through a network of distributors in the Asia-Pacific region and select other markets outside of North America and Europe. Specifically, the company distributes its instruments and reagents via third-party distributors in markets, such as China, Japan, South Korea, Singapore, Australia, India and South Africa. Three of the company’s distributors are in China, one in Australia, one in Italy, one in Sweden, one in Japan, and one in South Korea.

Bionano Laboratories primarily sells a suite of LDTs to pediatric physicians through a physician-directed ‘in-person’ sales model. This commercial staff is located in North America, and the sales personnel primarily work remotely in U.S. states where Bionano Laboratories has obtained insurance reimbursement. The sales and marketing efforts are targeted primarily on specialty pediatricians, including pediatric neurologists, medical geneticists, and developmental and behavioral pediatricians. Bionano Laboratories also targets general pediatricians with large numbers of patients. Their managed care efforts are directed to establishing contracts and/or credentialing with private and governmental insurance carriers that provide coverage for patients with ASD and other forms of NDDs.

Instruments

The company’s instruments are manufactured by a third-party medical device manufacturer. Complete or nearly complete instruments are shipped by the manufacturer to the company for final assembly and quality control testing. Upon completion, the company ships directly to its customers’ locations globally, or distributors’ locations in the case of certain systems sold in the Asia-Pacific region. Installation of, and training on, the company’s products is provided by its employees in the markets where the company conducts direct sales, and by distributors in those markets where the company operates with distributors.

Consumables

All of the company’s chip consumables for both OGM and ITP applications are produced by third-party manufacturers at their facilities; however, the company has established procedures for a replacement manufacturer if required. The company completes final assembly and quality control assessments of the company’s chips at its headquarters in San Diego and the company’s facility in Pleasanton.

The company’s OGM reagents are sourced from a limited number of suppliers, including certain single source suppliers. The company’s ITP reagents are sourced from a limited number of suppliers, including certain single source suppliers and also prepared in-house at the company’s facility in Pleasanton. The OGM reagents include all components required to run a sample on OGM, such as capture and detector reagents, enzyme reagents and enzyme substrate. The ITP reagents include all the components required to run a sample for isolation and purification of nucleic acid.

The company actively manages component obsolescence by subscribing to the company’s vendors’ end-of-life notifications. If a vendor is unable to provide sufficient notification, the company keeps safety stock of the component to minimize disruption to operations.

Key Agreements

License Agreement with Princeton University

In January 2004, the company entered into a license agreement (the Princeton License Agreement) with Princeton University (Princeton). Pursuant to the Princeton License Agreement, the company received a worldwide, exclusive right and license to, among other things, manufacture and market products or services utilizing patents and inventions related to the company’s sample preparation, DNA imaging and genomic data analysis platform and other key technology.

License Agreement with Stanford University

In connection with the company’s November 2022 acquisition of Purigen, the company acquired an amended and restated license agreement (the Stanford License Agreement) between Purigen and the Board of Trustees of the Leland Stanford Junior University (Stanford). Pursuant to the Stanford License Agreement, the company received a worldwide, exclusive right and license to, among other things, make, have made, use, import, offer to sell and sell certain products utilizing patents and inventions related to the company’s ITP-based sample preparation platform.

Agreement for the Manufacture of The company’s Instruments

The company has engaged a single third-party manufacturer to produce and test the company’s instruments on an as-ordered basis. The manufacturer of the company’s instruments has no obligation to manufacture the company’s instruments without a purchase order.

Agreement for the Manufacture of The company’s Chip Consumables

The company has engaged a single third-party manufacturer to manufacture the company’s chip consumables used in the company’s Saphyr system and provide engineering services to the company.

Intellectual Property

Genome Analysis

The company has developed a global patent portfolio that includes more than 160 issued patents or allowed applications across approximately 35 patent families that are either owned or exclusively licensed. The owned and licensed patent families contain issued patents and pending applications that relate to devices, systems, and methods for macromolecular analysis, isolation and purification of molecules, genetic testing, computer software systems and reflect the company’s active and ongoing research programs.

Government Regulation

The company’s business is subject to and impacted by extensive and frequently changing laws and regulations in the United States (at both the federal and state levels) and internationally. These include laws and regulations particular to the company’s business and laws and regulations relating to conducting business generally (e.g., export controls laws, the U.S. Foreign Corrupt Practices Act and similar laws of other jurisdictions). The company is also subject to inspections and audits by governmental agencies.

Optical Genome Mapping

The company’s OGM products are intended for research use only, or RUO, applications, although the company’s customers may use the company’s products to develop their own products that are subject to regulation by the FDA.

Laboratory Developed Tests (LDTs)

The company sells its Saphyr system on an RUO basis to CLIA certified cytogenetic laboratories, which may use the system to develop LDTs.

Other Governmental Regulation

Laboratories that purchase certain of the company’s OGM products and perform clinical diagnostic testing are also subject to extensive regulation under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, requiring clinical laboratories to meet specified standards in areas such as personnel qualifications, administration, participation in proficiency testing, patient test management, quality control, quality assurance and inspections.

Diagnostic Services

Both of Bionano Laboratories’ facilities, one located in Salt Lake City, Utah and the other in San Diego, California are CLIA certified. These laboratories must comply with all applicable CLIA requirements.

As a result of the clinical diagnostic services offered by Bionano Laboratories, Bionano Laboratories, is subject to HIPAA and maintains an active compliance program that is designed to identify security incidents and other issues in a timely fashion and enable the company to remediate, mitigate harm or report if required by law. Bionano Laboratories is subject to prosecution and/or administrative enforcement and increased civil and criminal penalties for non-compliance, including a new, four-tiered system of monetary penalties adopted under HITECH. Bionano Laboratories is also subject to enforcement by state attorneys general who were given authority to enforce HIPAA under HITECH.

The General Data Protection Regulation (‘GDPR’), which applies to all EU member states from May 25, 2018, also applies to some of the company’s operations.

Research and Development Expenses

The company’s research and development expenses were $49.0 million for the year ended December 31, 2022.

History

The company was founded in 2003. It was incorporated in Delaware in 2007. The company was formerly known as BioNanomatrix, Inc. and changed its name to BioNano Genomics, Inc. in 2011.