Bionano Genomics, Inc. (NASDAQ:BNGO) Q3 2021 Earnings Conference Call November 4, 2021 4:30 PM ET Company Participants Amy Conrad - Investor Relations Erik Holmlin - Chief Executive Officer Chris Stewart - Chief Financial Officer Rich Shippy - CBO Conference Call Participants Destiny Buch - Ladenburg Thalmann Kevin DeGeeter - Oppenheimer Operator Good day, and welcome to the Bionano Genomics' Third Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn th ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________________________ FORM 10-Q _________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission file numb ...

Bionano Genomics, Inc. (NASDAQ:BNGO) Q2 2021 Earnings Conference Call August 4, 2021 4:30 PM ET Company Participants Amy Conrad – Investor Relations Erik Holmlin – Chief Executive Officer Alka Chaubey – Chief Medical Officer Chris Stewart – Chief Financial Officer Conference Call Participants Sung Ji Nam – BTIG Jeffrey Cohen – Ladenburg Thalmann Jason McCarthy – Maxim Group Susan Chor – Oppenheimer Operator Good day, and welcome to the Bionano Genomics Second Quarter 2021 Earnings Conference Call. Today’s c ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2021, and 2020, including Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows, along with accompanying notes detailing accounting policies, revenue recognition, debt, equity transactions, and the acquisition of Lineagen [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (as of June 30, 2021 vs. December 31, 2020) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $332.6M | $38.4M | | Total current assets | $342.0M | $46.8M | | Total assets | $356.8M | $60.5M | | **Liabilities & Equity** | | | | Total current liabilities | $10.7M | $8.9M | | Long-term debt | $0 | $16.3M | | Total liabilities | $10.9M | $25.4M | | Total stockholders' equity | $345.9M | $35.1M | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$3.9M** | **$1.2M** | **$7.0M** | **$2.3M** | | Loss from operations | $(16.5M) | $(7.4M) | $(27.6M) | $(17.2M) | | **Net Loss** | **$(18.8M)** | **$(8.1M)** | **$(28.7M)** | **$(18.6M)** | | Net loss per share | $(0.07) | $(0.09) | $(0.11) | $(0.29) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) - Total stockholders' equity increased significantly from **$35.1 million** at the start of 2021 to **$345.9 million** at June 30, 2021, primarily driven by the issuance of common stock from public offerings, which raised net proceeds of approximately **$327.5 million** in the first quarter[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Six Months Ended June 30 | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26.3M) | $(15.3M) | | Net cash provided by (used in) investing activities | $50,000 | $0 | | Net cash provided by financing activities | $320.4M | $15.1M | | **Net increase (decrease) in cash** | **$294.1M** | $(0.1M) | | Cash at end of period | $332.6M | $17.2M | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations for the financial statements, covering the company's business description, liquidity position, impact of COVID-19, revenue breakdown by source and geography, debt extinguishment, significant equity offerings, and details of the Lineagen acquisition - The company believes its cash and cash equivalents of approximately **$332.6 million** as of June 30, 2021, will be sufficient to fund operations for at least the next twelve months[27](index=27&type=chunk)[28](index=28&type=chunk) Revenue by Source (Six Months Ended June 30) | Revenue Source | 2021 | 2020 | | :--- | :--- | :--- | | Instruments | $2.0M | $0.8M | | Consumables | $2.5M | $1.2M | | Service and other | $2.5M | $0.4M | | **Total Revenue** | **$7.0M** | **$2.3M** | - In Q2 2021, the company paid off its term loan with Innovatus in full for a total of **$17.0 million**, which included an end-of-term fee and a prepayment fee, resulting in a loss on debt extinguishment of **$2.1 million**[55](index=55&type=chunk)[111](index=111&type=chunk) - In January 2021, the company completed two underwritten public offerings, raising combined gross proceeds of approximately **$331.8 million**[59](index=59&type=chunk)[60](index=60&type=chunk) - The company acquired Lineagen in August 2020 for an estimated total purchase price of **$7.14 million**, consisting of cash, stock, and assumed liabilities, providing a platform for accelerating sales growth for the Saphyr system[75](index=75&type=chunk)[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides an overview of the business, recent operational highlights, and the impact of COVID-19, analyzing financial results for the three and six months ended June 30, 2021, compared to 2020, covering revenue, cost of revenue, operating expenses, and liquidity drivers [Overview & Recent Highlights](index=18&type=section&id=Overview%20%26%20Recent%20Highlights) - Key operational metrics for Q2 2021 showed strong growth compared to Q2 2020: - **Saphyr Systems Shipped:** 13 (vs. 6) - **Total Installed Base:** 121 (vs. 87) - **Nanochannel Flow Cells Sold:** 2,742 (118% increase) - **Samples Analyzed in Service Lab:** 190 (vs. 77)[91](index=91&type=chunk)[92](index=92&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of operating results for the three and six-month periods ending June 30, 2021 and 2020, breaking down significant increases in revenue, driven by product sales and Lineagen services, and explaining the corresponding rise in cost of revenue and operating expenses due to increased sales volume, headcount growth, and higher compensation costs Q2 2021 vs Q2 2020 Performance | Metric | Q2 2021 | Q2 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $3.9M | $1.2M | +226.2% | | Cost of Revenue | $2.4M | $0.6M | +300.8% | | R&D Expenses | $4.1M | $2.4M | +70.2% | | SG&A Expenses | $13.8M | $5.6M | +146.4% | | Loss from Operations | $(16.5M) | $(7.4M) | +121.6% | - The **226.2%** increase in Q2 2021 revenue was driven by higher demand for the reagent rental program and consumables, as well as **$1.1 million** in service revenue from the Lineagen subsidiary[106](index=106&type=chunk) - The **146.4%** increase in Q2 2021 SG&A expenses was primarily due to a **133%** increase in headcount (over half from Lineagen), higher compensation costs (including a **$1.4 million** increase in stock-based compensation), and a **$1.9 million** increase in professional services[110](index=110&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's financial position, sources of liquidity, and cash flow activities, noting **$332.6 million** in cash as of June 30, 2021, primarily from significant equity offerings, which management believes is sufficient to fund operations for at least the next year, also discussing debt extinguishment and PPP loan forgiveness - As of June 30, 2021, the company had approximately **$332.6 million** in cash and cash equivalents and working capital of **$331.2 million**[132](index=132&type=chunk) - Net cash provided by financing activities was **$320.4 million** for the first six months of 2021, primarily from two follow-on offerings and ATM sales that raised approximately **$328.6 million** in gross proceeds[127](index=127&type=chunk) - The company's **$1.8 million** PPP Loan was forgiven in full in March 2021[129](index=129&type=chunk) - Management believes the current cash balance is sufficient to fund operations, obligations, and capital investments for at least the next twelve months[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that as a smaller reporting company, it is not required to provide the information typically disclosed under this item - As a smaller reporting company, Bionano is exempt from providing detailed disclosures about market risk[144](index=144&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures and concluded they were not effective as of June 30, 2021, due to a previously reported material weakness in internal control over financial reporting, specifically an insufficient number of resources and inadequate segregation of duties, with remediation efforts underway but not yet complete - Management concluded that disclosure controls and procedures were not effective as of June 30, 2021[147](index=147&type=chunk) - A material weakness in internal control over financial reporting was identified, stemming from an insufficient number of resources and inadequate segregation of duties, though this weakness did not result in any identified material misstatements[148](index=148&type=chunk)[149](index=149&type=chunk) - Remediation efforts are in process, including engaging external consultants and hiring a new Chief Financial Officer and other senior accounting personnel, but the material weakness has not yet been fully remediated[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently a defendant in any material legal proceedings - The company states it has no material legal proceedings[155](index=155&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section provides a comprehensive list of risks and uncertainties that could materially affect the company's business, financial condition, and operating results, including a history of net losses, reliance on market acceptance of the Saphyr system, competition, dependence on key suppliers, potential regulatory hurdles, intellectual property protection, and risks associated with being an emerging growth company with identified material weaknesses in internal controls - The company has a history of recurring net losses (**$28.7 million** in H1 2021) and expects to incur future losses as it invests in commercial expansion and R&D[161](index=161&type=chunk) - The business is adversely affected by public health crises like COVID-19, which impacts operations, customer demand, and supply chains[167](index=167&type=chunk) - The company's products are currently for "Research Use Only" (RUO), and if the FDA determines they are medical devices, it would require expensive and time-consuming regulatory clearance, which could materially harm the business[185](index=185&type=chunk)[222](index=222&type=chunk) - The company relies on single contract manufacturers for its Saphyr instruments and chip consumables, posing a significant supply chain risk[187](index=187&type=chunk) - A material weakness in internal control over financial reporting has been identified and is being remediated, and failure to maintain effective controls could lead to a loss of investor confidence[271](index=271&type=chunk) - The company will cease to be an "emerging growth company" effective December 31, 2021, which will increase compliance costs and require adherence to stricter reporting standards[269](index=269&type=chunk)[270](index=270&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company indicates this item is not applicable - Not applicable for this reporting period[284](index=284&type=chunk) [Item 3. Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[284](index=284&type=chunk) [Item 4. Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company indicates this item is not applicable - Not applicable[284](index=284&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this period - None[284](index=284&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including the company's certificate of incorporation, bylaws, forms of stock and warrant certificates, and officer certifications required by the Sarbanes-Oxley Act - Lists filed exhibits, including officer certifications (31.1, 31.2, 32.1) and corporate governance documents[285](index=285&type=chunk) [Signatures](index=69&type=section&id=SIGNATURES) This section contains the required signatures for the filing

Key Points Company and Industry Overview * **Company**: Bionano Genomics, Inc. (NASDAQ:BNGO) * **Industry**: Genomics, specifically genome structure analysis and optical genome mapping * **CEO**: Erik Holmlin * **Focus**: Developing and commercializing optical genome mapping technology for structural variation analysis Core Views and Evidence * **Genomics Landscape**: Genomics has driven significant healthcare disruption and value creation over the past 20 years, primarily driven by advancements in technology like microarrays and next-generation sequencing. * **Next Wave of Innovation**: The next wave of innovation in genomics is in genome structure analysis, which Bionano Genomics is leading with its optical genome mapping technology. * **Business Performance**: Bionano Genomics had a strong start to 2021, with key achievements in expanding its installed base, commercial offerings, and market presence. * **Market Development**: Bionano Genomics is focusing on market development through publications, assay development, and reimbursement pathways. * **Saphyr System**: The Saphyr system is a key product for Bionano Genomics, offering optical genome mapping capabilities for structural variation analysis. * **Clinical Studies**: Bionano Genomics is conducting clinical studies to demonstrate the performance of the Saphyr system compared to traditional methods. * **Lineagen Acquisition**: The acquisition of Lineagen in August 2020 has provided Bionano Genomics with additional capabilities and revenue streams. Other Important Points * **Structural Variation**: Structural variation refers to changes in the location and amount of functional elements in the genome, and is an important factor in genetic diseases and cancer. * **Saphyr System Advancements**: Bionano Genomics has introduced new capabilities to the Saphyr system, including increased speed and throughput. * **Financial Results**: Bionano Genomics reported total revenues of $3.2 million in the first quarter of 2021, up 180% year-over-year. * **Capital Structure**: Bionano Genomics raised $337 million in January 2021, ending the quarter with a strong cash position of $362 million. * **Future Milestones**: Bionano Genomics expects to achieve key milestones in 2021, including assay accreditation, clinical study results, and expansion of the installed base.

Financial Data and Key Metrics Changes - Revenue for Q1 2021 was approximately $3.2 million, representing a 179% increase from $1.1 million in Q1 2020 [34] - Gross margins improved to 33%, up 8% year-over-year, primarily due to a shift towards higher margin consumables and services [35] - Operating expenses for Q1 2021 were $12.2 million, an increase of $2.2 million compared to the same period in 2020 [35] - Cash balance as of March 31, 2021, was $362 million, supported by a $337 million capital raise [36] Business Line Data and Key Metrics Changes - The company shipped 11 Saphyr systems in Q1 2021, up from 5 systems in the same quarter of 2020 [12] - A record 2,603 nanochannel array flow cells were sold, marking a 275% increase compared to Q1 2020 [13] - The company analyzed 227 samples in its Saphyr services lab, the highest number for any first quarter [14] Market Data and Key Metrics Changes - Expansion into new geographic markets included South Africa, Greece, Russia, South Korea, and key clinical research sites in the UK and Germany [15] - Adoption of Saphyr systems by significant institutions like King's College Hospital in London and the University Health Network in Toronto [16] Company Strategy and Development Direction - The company is focused on increasing the adoption of optical genome mapping as an alternative to traditional cytogenetic methods [20] - Plans to develop assays for various applications, including prenatal and postnatal genetic analysis, hematological malignancies, and solid tumor analysis [29] - The next generation Saphyr system aims to significantly increase throughput, targeting high-volume labs [58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing commercial success and the potential for optical genome mapping to become a standard of care [39] - The company aims to grow the installed base to approximately 150 Saphyr systems by the end of 2021 [40] - Management acknowledged the uncertainty in the operating environment but remains focused on execution and growth [72] Other Important Information - The company is investing heavily in clinical studies to generate data that could influence medical guidelines for genome analysis [31] - The reagent rental program has shown promise, with some customers converting to outright purchases [49] Q&A Session Summary Question: Can you provide a breakdown of reagent rental versus capital purchase on the 11 placements in the quarter? - Management indicated that the majority of the systems shipped were part of the reagent rental program but did not provide a specific breakdown [41] Question: Can you provide more details on the sites involved in the postnatal studies? - Management clarified that there are five studies organized in four pillars, with a target of 1,000 patients across multiple sites [43] Question: What is the timeline for data collection in the prenatal and postnatal studies? - Management expects to collect a substantial fraction of postnatal samples by the end of the year, with interim results anticipated [44] Question: Will the samples analyzed in clinical trials run through the P&L line as recognized revenue? - Management stated it would be a mix, depending on the relationship with the sites, with some studies generating revenue and others classified as R&D expenses [47] Question: How is the company planning to invest its strong balance sheet? - The focus will be on driving clinical studies, expanding the sales and marketing team, and investing in the next generation product [56] Question: What is the expected gross margin trend throughout 2021? - Management anticipates marginal improvements in gross margins as revenue grows, with more significant increases expected beyond 2021 [50] Question: How is the installed base geographically distributed? - The installed base is approximately 50% in the US and 50% outside the US, with Europe contributing significantly to recent growth [51] Question: What is the competitive dynamic between optical mapping and long-read sequencing? - Management noted that optical genome mapping is often compared to traditional cytogenetic methods and sequencing methods, with ongoing studies supporting its value proposition [64] Question: What are the company's thoughts on providing revenue guidance? - Management remains conservative about providing revenue guidance due to uncertainties but expects meaningful double-digit growth in 2021 [73]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, revenue recognition, balance sheet accounts, debt, equity, and the acquisition of Lineagen [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's balance sheet shows a significant increase in cash and total assets as of March 31, 2021, primarily driven by substantial equity offerings, with total assets growing from **$60.5 million** at December 31, 2020, to **$384.9 million** at March 31, 2021 | Metric | March 31, 2021 | December 31, 2020 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $362,057,000 | $38,449,000 | +$323,608,000 | | Total current assets | $370,251,000 | $46,790,000 | +$323,461,000 | | Total assets | $384,861,000 | $60,451,000 | +$324,410,000 | | Total liabilities | $22,143,000 | $25,369,000 | -$3,226,000 | | Total stockholders' equity | $362,718,000 | $35,082,000 | +$327,636,000 | | Accumulated deficit | $(153,631,000) | $(143,684,000) | -$(9,947,000) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2021, the company reported a net loss of **$9.9 million**, an improvement from **$10.5 million** in the prior year, driven by significant revenue growth across product and service segments and a gain from PPP loan forgiveness | Metric | March 31, 2021 | March 31, 2020 | Change | % Change | | :-------------------------------------- | :------------- | :------------- | :------------- | :------- | | Product revenue | $2,049,000 | $983,000 | +$1,066,000 | 108.4% | | Service and other revenue | $1,119,000 | $153,000 | +$966,000 | 631.4% | | Total revenue | $3,168,000 | $1,136,000 | +$2,032,000 | 178.9% | | Total cost of revenue | $2,125,000 | $856,000 | +$1,269,000 | 148.2% | | Research and development expenses | $2,678,000 | $2,674,000 | +$4,000 | 0.1% | | Selling, general and administrative expenses | $9,528,000 | $7,368,000 | +$2,160,000 | 29.3% | | Loss from operations | $(11,163,000) | $(9,762,000) | -$(1,401,000) | 14.4% | | Gain on forgiveness of PPP loan | $1,775,000 | — | +$1,775,000 | — | | Net loss | $(9,947,000) | $(10,510,000) | +$563,000 | (5.4)% | | Net loss per share, basic and diluted | $(0.04) | $(0.30) | +$0.26 | (86.7)% | | Weighted-average common shares outstanding | 263,939,000 | 35,569,000 | +228,370,000 | 642.0% | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(Deficit)) Stockholders' equity significantly increased from **$35.1 million** at January 1, 2021, to **$362.7 million** at March 31, 2021, primarily due to the issuance of common stock from public offerings and warrant exercises, despite a net loss | Metric | January 1, 2021 | March 31, 2021 | Change | | :-------------------------------- | :-------------- | :------------- | :------------- | | Common Stock (Amount) | $19,000 | $28,000 | +$9,000 | | Additional Paid-in Capital | $178,747,000 | $516,321,000 | +$337,574,000 | | Accumulated Deficit | $(143,684,000) | $(153,631,000) | -$(9,947,000) | | Total Stockholders' Equity (Deficit) | $35,082,000 | $362,718,000 | +$327,636,000 | - Key Equity Activities (Three Months Ended March 31, 2021): * Stock option exercises: **$333,000**[18](index=18&type=chunk) * Stock-based compensation expense: **$371,000**[18](index=18&type=chunk) * Issue common stock, net of issuance costs: **$327,486,000**[18](index=18&type=chunk) * Issue stock for warrant exercises: **$9,393,000**[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net increase in cash and cash equivalents of **$323.6 million** for the three months ended March 31, 2021, primarily driven by significant cash provided by financing activities, offsetting cash used in operating activities | Activity | March 31, 2021 | March 31, 2020 | Change | | :-------------------------------------- | :------------- | :------------- | :------------- | | Net cash used in operating activities | $(13,904,000) | $(8,032,000) | -$(5,872,000) | | Net cash used in investing activities | $(24,000) | — | -$(24,000) | | Net cash provided by (used in) financing activities | $337,536,000 | $(1,135,000) | +$338,671,000 | | Net increase in cash and cash equivalents | $323,608,000 | $(9,167,000) | +$332,775,000 | | Cash and cash equivalents at end of period | $362,057,000 | $8,144,000 | +$353,913,000 | - Key Financing Activities (Three Months Ended March 31, 2021): * Proceeds from sale of common stock: **$328,635,000**[22](index=22&type=chunk) * Proceeds from warrant and option exercises: **$9,726,000**[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed context and breakdowns for the financial statements, covering business operations, liquidity, accounting policies, revenue recognition, balance sheet specifics, debt obligations, equity activities, and the acquisition of Lineagen [Note 1. Organization and Basis of Presentation](index=8&type=section&id=Note%201.%20Organization%20and%20Basis%20of%20Presentation) Bionano Genomics is a life sciences instrumentation company focused on genome analysis with its Saphyr system and provides diagnostic testing through its subsidiary Lineagen. The company has significantly improved its liquidity position with **$362.1 million** in cash and cash equivalents as of March 31, 2021, and expects to fund operations for at least the next twelve months, despite anticipating continued net losses. The COVID-19 pandemic continues to pose risks to operations and financial results - Business Description: Bionano Genomics provides tools and services based on its Saphyr system for genetic research and patient testing, and diagnostic testing for autism spectrum disorder (ASD) and other neurodevelopmental disabilities through Lineagen, Inc[25](index=25&type=chunk) - Saphyr System Components: Instrument, chip consumables, reagents, data analysis tools, and genome analysis services[25](index=25&type=chunk) - Liquidity Position (March 31, 2021): * Cash and cash equivalents: **$362.1 million**[27](index=27&type=chunk) * Working capital: **$363.1 million**[27](index=27&type=chunk) * PPP Loan forgiveness: **$1.8 million** in March 2021[27](index=27&type=chunk) * Revolving line of credit: **$5.0 million** available, no borrowings outstanding[27](index=27&type=chunk) - Future Funding Strategy: Expects to fund losses and capital needs through equity offerings, debt financings, or collaborations[28](index=28&type=chunk) - COVID-19 Impact: Continued spread of COVID-19 and market conditions pose risks, negatively impacting Q1 2021 financial results due to travel restrictions and reduced activity, with unknown future effects[29](index=29&type=chunk) - Significant Accounting Policies: No changes to significant accounting policies during the three months ended March 31, 2021[32](index=32&type=chunk) - Emerging Growth Company Status: Elected extended transition period for new accounting standards[33](index=33&type=chunk) - Potential Change in Filer Status: If market value of common stock held by non-affiliates exceeds **$700.0 million** by June 30, 2021, the company will become a large accelerated filer and cease to be an emerging growth company effective December 31, 2021[33](index=33&type=chunk) - ASU 2016-2 (Leases): Anticipates implementing using the alternative method beginning Q1 2023[34](index=34&type=chunk) - ASU No. 2016-13 (Credit Losses): Effective Q1 2023, currently evaluating impact[34](index=34&type=chunk) - Recently Adopted Accounting Pronouncements: Early adopted ASU No. 2020-06 on January 1, 2021, with no material impact on consolidated financial statements[35](index=35&type=chunk) [Note 2. Net Loss Per Share](index=9&type=section&id=Note%202.%20Net%20Loss%20Per%20Share) Basic and diluted net loss per share were **$(0.04)** for the three months ended March 31, 2021, compared to **$(0.30)** for the same period in 2020, with potentially dilutive securities excluded due to the net loss | Period | Net Loss Per Share | | :--------------------- | :----------------- | | March 31, 2021 | $(0.04) | | March 31, 2020 | $(0.30) | - Anti-dilutive Securities: Warrants and stock options were excluded from diluted EPS calculation[38](index=38&type=chunk) | Type | March 31, 2021 | March 31, 2020 | | :------------- | :------------- | :------------- | | Stock options | 5,126,000 | 2,760,000 | | Warrants | 4,411,000 | 24,128,000 | | Total | 9,537,000 | 26,888,000 | [Note 3. Revenue Recognition](index=10&type=section&id=Note%203.%20Revenue%20Recognition) Total revenue increased by **178.9%** to **$3.168 million** for the three months ended March 31, 2021, compared to **$1.136 million** in the prior year, driven by significant increases in both product revenue (**108.4%**) and service and other revenue (**631.4%**), with EMEIA showing the highest regional growth | Revenue Type | March 31, 2021 | March 31, 2020 | | :---------------------- | :------------- | :------------- | | Instruments | $882,000 | $534,000 | | Consumables | $1,167,000 | $449,000 | | Total product revenue | $2,049,000 | $983,000 | | Service and other | $1,119,000 | $153,000 | | Total revenue | $3,168,000 | $1,136,000 | | Region | March 31, 2021 ($) | March 31, 2021 (%) | March 31, 2020 ($) | March 31, 2020 (%) | | :-------------- | :----------------- | :----------------- | :----------------- | :----------------- | | North America | $1,498,000 | 47% | $726,000 | 64% | | EMEIA | $1,587,000 | 50% | $390,000 | 34% | | Asia Pacific | $83,000 | 3% | $20,000 | 2% | | Total | $3,168,000 | 100% | $1,136,000 | 100% | - Lineagen Revenue Contribution: Service revenue includes **$851,000** generated from Lineagen during Q1 2021[97](index=97&type=chunk)[99](index=99&type=chunk) - Remaining Performance Obligations: Estimated future revenue of **$409,000** as of March 31, 2021, primarily from extended warranty and support, with **64.8%** expected in remainder of 2021[42](index=42&type=chunk) [Note 4. Balance Sheet Account Details](index=11&type=section&id=Note%204.%20Balance%20Sheet%20Account%20Details) Net accounts receivable decreased to **$2.0 million** as of March 31, 2021, from **$2.8 million** at December 31, 2020, with a recovery of bad debt expense recorded in Q1 2021, while total inventory also decreased to **$3.0 million**, mainly due to a reduction in finished goods | Metric | March 31, 2021 | December 31, 2020 | | :----------------------------- | :------------- | :---------------- | | Accounts receivable, trade | $4,083,000 | $4,894,000 | | Less allowance for doubtful accounts | $(2,091,000) | $(2,119,000) | | Net accounts receivable | $1,992,000 | $2,775,000 | - Bad debt expense recovery: **$(28,000)** recorded in Q1 2021[45](index=45&type=chunk) - Concentrations: No customer balances exceeded **10%** of total accounts receivable as of March 31, 2021 (vs. Illumina **17.3%** and Quest Diagnostics **10.1%** at Dec 31, 2020)[46](index=46&type=chunk) | Component | March 31, 2021 | December 31, 2020 | | :---------------- | :------------- | :---------------- | | Raw materials | $2,736,000 | $2,283,000 | | Finished goods | $300,000 | $1,033,000 | | Total inventory | $3,036,000 | $3,316,000 | [Note 5. Debt](index=12&type=section&id=Note%205.%20Debt) The company's **$1.8 million** Paycheck Protection Program (PPP) Loan was fully forgiven in March 2021, resulting in a gain, and the total carrying value of debt decreased to **$14.9 million** as of March 31, 2021, with the company in compliance with all covenants under its Innovatus LSA - PPP Loan Forgiveness: Approximately **$1.8 million** PPP Loan, including all accrued interest, was fully forgiven in March 2021, resulting in a **$1.8 million** gain[50](index=50&type=chunk)[51](index=51&type=chunk) - Innovatus LSA: Includes term loans and a **$5.0 million** revolving line of credit (no borrowings outstanding as of March 31, 2021), with an effective interest rate for term loans of **16.7%**[52](index=52&type=chunk)[54](index=54&type=chunk) - Compliance: Company was in compliance with all covenants under the Innovatus LSA as of March 31, 2021[55](index=55&type=chunk) | Metric | March 31, 2021 | December 31, 2020 | | :----------------------------- | :------------- | :---------------- | | Term Loans | $16,099,000 | $15,981,000 | | PPP Loan | — | $1,775,000 | | Total principal | $16,099,000 | $17,756,000 | | Less unamortized debt issuance costs | $(1,233,000) | $(1,430,000) | | Total carrying value of debt | $14,866,000 | $16,326,000 | [Note 6. Stockholders' Equity and Stock-Based Compensation](index=13&type=section&id=Note%206.%20Stockholders%27%20Equity%20and%20Stock-Based%20Compensation) The company significantly increased its capital through two public offerings in January 2021, raising approximately **$331.8 million** in gross proceeds, and utilized an at-the-market facility, while stock warrant exercises reduced outstanding warrants and stock-based compensation expense increased to **$371,000** in Q1 2021 - Follow-on Public Offerings (January 2021): Raised approximately **$101.8 million** and **$230.0 million** in gross proceeds from two separate underwritten public offerings[58](index=58&type=chunk)[59](index=59&type=chunk) - At-the-Market Facility: Sold **6,298,152** shares for ~**$16.9 million** gross proceeds in January 2021 under Ladenburg ATM, which was terminated, and a new **$350.0 million** ATM facility with Cowen was entered into in March 2021[60](index=60&type=chunk)[61](index=61&type=chunk) | Metric | Shares of Stock under Warrants | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | | :----------------------------- | :----------------------------- | :------------------------------ | :------------------------------------------ | :------------------------ | | Outstanding at January 1, 2021 | 15,174,000 | $2.34 | 3.76 | $26,841,000 | | Exercised | (10,739,000) | $0.89 | | $57,912,000 | | Outstanding at March 31, 2021 | 4,411,000 | $5.89 | 2.50 | $2,911,000 | | Metric | Shares of Stock under Stock Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | | :----------------------------------- | :---------------------------------- | :------------------------------ | :------------------------------------------ | :------------------------ | | Outstanding at January 1, 2021 | 5,290,000 | $1.91 | 8.7 | $10,178,000 | | Granted | 138,000 | $10.83 | | | | Exercised | (102,000) | $3.28 | | $1,153,000 | | Outstanding at March 31, 2021 | 5,126,000 | $2.16 | 8.66 | $31,554,000 | | Expense Category | March 31, 2021 | March 31, 2020 | | :----------------------------- | :------------- | :------------- | | Research and development | $81,000 | $67,000 | | General and administrative | $290,000 | $261,000 | | Total | $371,000 | $328,000 | - Restricted Stock Units (RSUs): Granted **580,000** RSUs to CEO (time-based and performance-based) and **240,000** RSUs to COO (time-based) on May 12, 2021[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Note 7. Litigation](index=15&type=section&id=Note%207.%20Litigation) The company regularly assesses potential liabilities from claims and legal actions but currently does not have any material loss exposure as it is not a defendant in any claims or legal actions - No material loss exposure from litigation as of March 31, 2021[72](index=72&type=chunk) [Note 8. Income Taxes](index=15&type=section&id=Note%208.%20Income%20Taxes) The company's effective tax rate primarily differs from the federal statutory rate due to a full valuation allowance on its U.S. net operating losses - Primary difference in effective tax rate: Full valuation allowance on U.S. net operating losses[73](index=73&type=chunk) [Note 9. Acquisition of Lineagen](index=15&type=section&id=Note%209.%20Acquisition%20of%20Lineagen) Bionano Genomics acquired Lineagen, Inc. on August 21, 2020, to accelerate sales growth for its Saphyr system through Lineagen's expertise in diagnostic testing, with an estimated purchase price of **$7.1 million**, allocated to assets including **$7.2 million** in goodwill - Acquisition Date: August 21, 2020[74](index=74&type=chunk) - Strategic Rationale: Lineagen's expertise in laboratory-developed tests provides a platform for accelerating Saphyr system sales growth[74](index=74&type=chunk) - Consideration: **6,167,510** shares of common stock (subject to adjustment), **$1.9 million** cash to creditors, assumption of **$2.9 million** liabilities, and repayment of Lineagen PPP Loan (**$1.1 million**)[76](index=76&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) | Asset/Liability | Amount | | :-------------------------------- | :------------- | | Cash and cash equivalents | $596,000 | | Accounts receivable | $337,000 | | Other assets | $209,000 | | Property and equipment, net | $111,000 | | Intangible assets | $1,580,000 | | Goodwill | $7,173,000 | | Accounts payable and other accrued liabilities | $(2,862,000) | | Net assets acquired | $7,144,000 | - Goodwill: **$7.173 million**, non-tax deductible, relates to expected synergies[78](index=78&type=chunk)[81](index=81&type=chunk) - Intangible Assets Acquired: Customer relationships (**$950,000**) and trade name (**$630,000**)[81](index=81&type=chunk) | Metric | Amount | | :----------------------------- | :------------- | | Revenue | $2,676,000 | | Net loss | $(11,637,000) | | Basic and diluted net loss per share | $(0.28) | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=17&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance, liquidity, and capital resources for the three months ended March 31, 2021, highlighting revenue growth, ongoing losses, the impact of the COVID-19 pandemic, and recent financing activities [Overview](index=18&type=section&id=Overview) Bionano Genomics is a life sciences instrumentation company providing genome analysis tools (Saphyr system) and diagnostic testing (Lineagen), which incurred a net loss of **$9.9 million** in Q1 2021 and expects continued losses due to investments in commercialization, R&D, personnel, and public company costs - Business Focus: Genome analysis (Saphyr system) and diagnostic testing for neurodevelopmental disabilities (Lineagen)[87](index=87&type=chunk) - Net Loss (Q1 2021): **$9.9 million**[88](index=88&type=chunk) - Accumulated Deficit (March 31, 2021): **$153.6 million**[88](index=88&type=chunk) - Expected Future Expenses: Expansion of sales/marketing, R&D, hiring, collaboration, operational systems, and public company costs[89](index=89&type=chunk) [Recent Highlights](index=18&type=section&id=Recent%20Highlights) In Q1 2021, the company shipped **11** Saphyr systems, increasing the installed base to **107**, and saw a **275%** increase in nanochannel array flow cell sales compared to Q1 2020 - Saphyr systems shipped (Q1 2021): **11** (vs. **5** in Q1 2020)[90](index=90&type=chunk) - Installed base of Saphyr systems (end of Q1 2021): **107**[90](index=90&type=chunk) - Nanochannel array flow cells sold (Q1 2021): **2,603** (**275%** increase YoY)[90](index=90&type=chunk) - Samples analyzed in Saphyr service lab: **227**[91](index=91&type=chunk) [COVID-19 Overview](index=18&type=section&id=COVID-19%20Overview) The COVID-19 pandemic continues to disrupt business operations, including reduced on-site activities, work-from-home policies, and travel restrictions, negatively impacting productivity and financial results, with future effects remaining uncertain - Disruptions: Reduced on-site operations, work-from-home, modified business practices (travel, events)[92](index=92&type=chunk) - Impact: Adversely affected operations, productivity, and Q1 2021 financial results[92](index=92&type=chunk)[29](index=29&type=chunk) - Uncertainty: Future effects are unknown, and financial results may continue to be negatively affected[93](index=93&type=chunk)[29](index=29&type=chunk) [Financial Overview](index=19&type=section&id=Financial%20Overview) The financial overview details the company's revenue growth across product and service segments, the cost of revenue, and operating expenses, providing context for the overall financial performance [Revenue](index=19&type=section&id=Revenue) Total revenue increased by **178.9%** to **$3.168 million** in Q1 2021, driven by a **108.4%** increase in product revenue and a **631.4%** increase in service and other revenue, with Lineagen contributing **$851,000** to service revenue | Revenue Type | March 31, 2021 | March 31, 2020 | % Change | | :---------------------- | :------------- | :------------- | :------- | | Product revenue | $2,049,000 | $983,000 | 108.4% | | Service and other revenue | $1,119,000 | $153,000 | 631.4% | | Total revenue | $3,168,000 | $1,136,000 | 178.9% | - Lineagen revenue contribution: **$851,000** to service revenue in Q1 2021[97](index=97&type=chunk)[99](index=99&type=chunk) - Geographic growth: North America **+106%**, EMEIA **+307%**, Asia Pacific **+315%**[106](index=106&type=chunk)[108](index=108&type=chunk) [Cost of Revenue](index=19&type=section&id=Cost%20of%20Revenue) Total cost of revenue increased by **148.2%** to **$2.1 million** in Q1 2021, primarily due to a shift in product mix towards higher-margin consumables and services - Total cost of revenue (Q1 2021): **$2.125 million** (vs. **$0.856 million** in Q1 2020), a **148.2%** increase[105](index=105&type=chunk)[109](index=109&type=chunk) - Increase attributed to shift towards higher margin consumables and services[109](index=109&type=chunk) [Research and Development Expenses](index=20&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses remained relatively flat at **$2.678 million** in Q1 2021 compared to **$2.674 million** in Q1 2020, reflecting continued investment in product development - R&D expenses (Q1 2021): **$2.678 million** (vs. **$2.674 million** in Q1 2020), a **0.1%** increase[105](index=105&type=chunk) - Continued investment in R&D is essential for long-term competitive position[103](index=103&type=chunk) [Selling, General and Administrative Expenses](index=20&type=section&id=Selling%20General%20and%20Administrative%20Expenses) Selling, general and administrative expenses increased by **29.3%** to **$9.5 million** in Q1 2021, mainly due to higher headcount-related costs from the Lineagen acquisition, partially offset by a decrease in bad debt expense - SG&A expenses (Q1 2021): **$9.528 million** (vs. **$7.368 million** in Q1 2020), a **29.3%** increase[105](index=105&type=chunk)[110](index=110&type=chunk) - Primary driver: Additional headcount-related costs from Lineagen acquisition (August 2020)[110](index=110&type=chunk) - Offset by: **$1.0 million** decrease in bad debt expense[110](index=110&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) The company's net loss decreased by **5.4%** to **$9.9 million** in Q1 2021, primarily due to a substantial increase in total revenue (**178.9%**) and a **$1.8 million** gain from PPP loan forgiveness, partially offset by higher operating expenses | Metric | March 31, 2021 | March 31, 2020 | Change | % Change | | :-------------------------------------- | :------------- | :------------- | :------------- | :------- | | Total revenue | $3,168,000 | $1,136,000 | +$2,032,000 | 178.9% | | Total cost of revenue | $2,125,000 | $856,000 | +$1,269,000 | 148.2% | | Total operating expenses | $12,206,000 | $10,042,000 | +$2,164,000 | 21.5% | | Loss from operations | $(11,163,000) | $(9,762,000) | -$(1,401,000) | 14.4% | | Gain on forgiveness of PPP loan | $1,775,000 | — | +$1,775,000 | — | | Net loss | $(9,947,000) | $(10,510,000) | +$563,000 | (5.4)% | - Interest expense decreased by **$0.2 million** (**29.3%**) due to changes in term-loan debt[105](index=105&type=chunk)[111](index=111&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved in Q1 2021, driven by substantial financing activities, including public offerings and ATM sales, which provided **$337.5 million** in cash, and despite ongoing operating losses, management believes current cash is sufficient for at least the next twelve months [Sources of Liquidity](index=21&type=section&id=Sources%20of%20Liquidity) The company has historically relied on equity sales and debt financing to fund operations, incurring net losses and negative cash flows, and as of March 31, 2021, it had **$362.1 million** in cash and cash equivalents and expects future liquidity from equity offerings, credit facilities, and commercial operations - Historical funding: Sales of equity securities and debt financing[113](index=113&type=chunk) - Net losses (Q1 2021): **$9.9 million**[113](index=113&type=chunk) - Cash and cash equivalents (March 31, 2021): **$362.1 million**[113](index=113&type=chunk) - Accumulated deficit (March 31, 2021): **$153.6 million**[113](index=113&type=chunk) - Future liquidity sources: Equity offerings, credit facilities, and commercial operations revenue[113](index=113&type=chunk) [Cash Flows](index=21&type=section&id=Cash%20Flows) The company's cash flows saw a significant net increase of **$323.6 million** in Q1 2021, primarily driven by **$337.5 million** from financing activities, which offset **$13.9 million** used in operating activities | Activity | March 31, 2021 | March 31, 2020 | | :-------------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(13,904,000) | $(8,032,000) | | Net cash used in investing activities | $(24,000) | — | | Net cash provided by (used in) financing activities | $337,536,000 | $(1,135,000) | [Operating Activities](index=21&type=section&id=Operating%20Activities) Net cash used in operating activities increased by **$5.9 million** to **$13.9 million** in Q1 2021, primarily due to increased headcount-related costs from the Lineagen acquisition - Net cash used in operating activities (Q1 2021): **$13.9 million** (vs. **$8.0 million** in Q1 2020)[117](index=117&type=chunk) - Increase attributed to: Increased headcount-related costs from Lineagen acquisition[117](index=117&type=chunk) [Investing Activities](index=22&type=section&id=Investing%20Activities) Cash used in investing activities was negligible in Q1 2021, consistent with historical patterns of capital expenditures for infrastructure - Net cash used in investing activities (Q1 2021): **$(24,000)**[114](index=114&type=chunk)[118](index=118&type=chunk) - Primary activities: Capital expenditures for equipment[118](index=118&type=chunk) [Financing Activities](index=22&type=section&id=Financing%20Activities) Net cash provided by financing activities surged to **$337.5 million** in Q1 2021, a **$338.7 million** increase from the prior year, driven by proceeds from two follow-on public offerings and at-the-market facility sales, as well as warrant and option exercises - Net cash provided by financing activities (Q1 2021): **$337.5 million** (vs. **$(1.1) million** used in Q1 2020)[114](index=114&type=chunk)[119](index=119&type=chunk) - Key drivers: **$328.6 million** from follow-on offerings and ATM sales, **$9.7 million** from warrant and option exercises[119](index=119&type=chunk) [Paycheck Protection Program](index=22&type=section&id=Paycheck%20Protection%20Program) The company's **$1.8 million** PPP Loan was fully forgiven in March 2021 after an application in February 2021, following its use for eligible costs under the CARES Act - PPP Loan received: Approximately **$1.8 million** in April 2020[120](index=120&type=chunk) - Forgiveness: Applied in February 2021, fully forgiven in March 2021[121](index=121&type=chunk) - Use of proceeds: For Eligible Costs (payroll, etc.) through October 2, 2020[122](index=122&type=chunk) [Capital Resources](index=22&type=section&id=Capital%20Resources) As of March 31, 2021, the company had **$362.1 million** in cash and cash equivalents and **$363.1 million** in working capital, having secured significant capital through public offerings and an ATM facility in late 2020 and early 2021, and established a new **$350.0 million** ATM facility in March 2021, with management believing current cash is sufficient for at least the next twelve months - Cash and cash equivalents (March 31, 2021): **$362.1 million**[124](index=124&type=chunk) - Working capital (March 31, 2021): **$363.1 million**[124](index=124&type=chunk) - Outstanding debt (March 31, 2021): **$14.9 million**[124](index=124&type=chunk) - Capital Raised (Oct 2020 - Jan 2021): * Ladenburg ATM: ~**$22.1 million** (Oct-Dec 2020), ~**$16.9 million** (Jan 2021)[125](index=125&type=chunk)[126](index=126&type=chunk) * Underwritten public offering (Jan 12, 2021): ~**$101.8 million**[129](index=129&type=chunk) * Underwritten public offering (Jan 25, 2021): ~**$230.0 million**[129](index=129&type=chunk) - New Cowen ATM facility (March 23, 2021): Up to **$350.0 million**[130](index=130&type=chunk) - Liquidity outlook: Sufficient cash for at least the next twelve months[131](index=131&type=chunk) [Off-Balance Sheet Arrangements](index=23&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements or holdings in variable interest entities during the periods presented - No off-balance sheet arrangements[132](index=132&type=chunk) - No holdings in variable interest entities[132](index=132&type=chunk) [Critical Accounting Policies and Estimates](index=23&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There were no material changes in the company's critical accounting policies and estimates during the three months ended March 31, 2021 - No material changes in critical accounting policies and estimates in Q1 2021[134](index=134&type=chunk) [Recent Accounting Pronouncements](index=23&type=section&id=Recent%20Accounting%20Pronouncements) Information concerning recent accounting pronouncements is provided in Note 1 to the condensed consolidated financial statements - Refer to Note 1 for recent accounting pronouncements[135](index=135&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=23&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - Not required to provide market risk disclosures as a smaller reporting company[136](index=136&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=23&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2021, due to a material weakness in internal control over financial reporting, specifically insufficient resources and inadequate segregation of duties, with remediation efforts ongoing but not fully achieved by the end of Q1 2021 [Evaluation of Disclosure Controls and Procedures](index=23&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of March 31, 2021, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were not effective at a reasonable assurance level due to a material weakness in internal control over financial reporting - Disclosure controls and procedures: Not effective at a reasonable assurance level as of March 31, 2021[139](index=139&type=chunk) - Reason: Material weakness in internal control over financial reporting[139](index=139&type=chunk) [Material Weaknesses in Internal Control over Financial Reporting](index=24&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20over%20Financial%20Reporting) As of December 31, 2020, and March 31, 2021, the company identified a material weakness in its internal control environment due to insufficient resources to support financial reporting growth and complexity, leading to inadequate segregation of duties, though no material misstatements were identified - Material weakness identified: Insufficient resources for financial reporting growth and complexity[140](index=140&type=chunk) - Impact: Inadequate segregation of duties, pervasive impact on financial statement account balances and disclosures[141](index=141&type=chunk) - No material misstatements identified in financial statements[141](index=141&type=chunk) [Remediation of Material Weaknesses](index=24&type=section&id=Remediation%20of%20Material%20Weaknesses) The company is actively implementing a remediation plan, including engaging external consultants and hiring additional qualified personnel, to address the identified material weaknesses, though full remediation was not achieved as of March 31, 2021 - Remediation efforts: Engaged external consultants, hiring additional qualified individuals[142](index=142&type=chunk)[143](index=143&type=chunk) - Status: Material weaknesses not fully remediated as of March 31, 2021[144](index=144&type=chunk) [Changes in Internal Control over Financial Reporting](index=24&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Other than the ongoing remediation efforts, there were no material changes in the company's internal control over financial reporting during Q1 2021 - No material changes in internal control over financial reporting in Q1 2021, aside from remediation efforts[145](index=145&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=25&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reported no legal proceedings - No legal proceedings[147](index=147&type=chunk) [ITEM 1A. RISK FACTORS](index=25&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines various risks that could impact the company's business, financial condition, and stock price, including financial instability, operational challenges, regulatory compliance, intellectual property protection, and factors affecting securities ownership [RISK FACTOR SUMMARY](index=25&type=section&id=RISK%20FACTOR%20SUMMARY) This section provides a summary of principal factors that make an investment in the company's securities speculative or risky, including recurring net losses, fluctuating operating results, limited operating history, adverse effects from public health crises (like COVID-19), uncertain future capital needs, market acceptance challenges, reliance on "research use only" products, dependence on R&D spending, new product development risks, regulatory clearance requirements, intellectual property protection issues, debt facility restrictions, and stock price volatility - Recurring net losses and uncertainty of profitability[148](index=148&type=chunk) - Fluctuating operating results and cash flows[148](index=148&type=chunk) - Limited operating history as an early commercial-stage company[148](index=148&type=chunk) - Adverse effects of public health crises, including COVID-19[148](index=148&type=chunk) - Uncertain future capital needs and risk of insufficient funding[148](index=148&type=chunk) - Risk of failure to achieve and sustain sufficient market acceptance for products[148](index=148&type=chunk) - Limitations of "research use only" products and potential regulatory requirements for clinical use[148](index=148&type=chunk) - Dependence on R&D spending by academic/governmental institutions and biopharmaceutical companies[148](index=148&type=chunk) - Risks associated with managing new product development and launch[148](index=148&type=chunk) - Challenges in protecting intellectual property[148](index=148&type=chunk) - Restrictions from debt facility covenants[148](index=148&type=chunk) - Volatility of securities price[148](index=148&type=chunk) [RISK FACTORS](index=26&type=section&id=RISK%20FACTORS) This section details the specific risks the company faces, categorized into financial, operational, regulatory, intellectual property, and ownership-related risks, providing a comprehensive view of potential challenges and uncertainties [Risks related to our financial condition and need for additional capital](index=27&type=section&id=Risks%20related%20to%20our%20financial%20condition%20and%20need%20for%20additional%20capital) The company has a history of net losses and negative cash flows, with an accumulated deficit of **$153.6 million** as of March 31, 2021, and expects continued losses due to significant investments and public company costs, necessitating future funding through equity, debt, or collaborations, while the COVID-19 pandemic further complicates financial stability and covenant compliance - Net losses: **$9.9 million** (Q1 2021), **$10.5 million** (Q1 2020)[152](index=152&type=chunk) - Cash used in operations: **$13.9 million** (Q1 2021), **$8.0 million** (Q1 2020)[152](index=152&type=chunk) - Accumulated deficit: **$153.6 million** (March 31, 2021)[152](index=152&type=chunk) - Future funding needs: Expansion of sales/marketing, R&D, regulatory approvals, facility expansion, personnel, collaborations[155](index=155&type=chunk) - COVID-19 impact: May compromise loan agreement compliance, leading to default or need for additional financing[155](index=155&type=chunk) [Risks related to our business operations](index=31&type=section&id=Risks%20related%20to%20our%20business%20operations) The company faces risks including the need for market acceptance of its Saphyr system, challenges in integrating acquisitions like Lineagen, and potential dilution from equity issuances, while also relying on a limited number of suppliers and contract manufacturers, and being vulnerable to facility damage, product defects, and international operational risks - Market acceptance: Success depends on demonstrating Saphyr technology as a cost-effective alternative to existing systems[162](index=162&type=chunk) - Acquisition risks: Integration challenges, unanticipated expenses, diversion of management time, dilution from equity issuances (e.g., Lineagen acquisition)[165](index=165&type=chunk)[166](index=166&type=chunk) - Equity issuances: Future sales of equity or convertible debt may cause dilution[167](index=167&type=chunk) - Lineagen sales strategy: Need to establish market and build acceptance through physician education and clinical trial results[167](index=167&type=chunk) - Dependence on R&D spending: Sales of Saphyr system and services depend on budgets of academic, governmental, and biopharmaceutical customers[170](index=170&type=chunk) - Sales cycle: Lengthy and variable, making revenue forecasting difficult[171](index=171&type=chunk) - Product development: Long-term results depend on improving existing products and introducing new ones successfully[172](index=172&type=chunk) - Customer penetration: Future success depends on penetrating existing customer base and attracting new customers[175](index=175&type=chunk) - "Research Use Only" (RUO) limitation: Many materials are RUO; expanding to diagnostic use requires regulatory clearance and non-RUO suppliers[176](index=176&type=chunk) - Limited manufacturing: Reliance on single contract manufacturers for instruments and chip consumables poses supply risks[178](index=178&type=chunk) - Manufacturing problems: Delays or shortfalls could limit revenue growth[179](index=179&type=chunk) - Facility risks: Single laboratory facilities for R&D, OGM services, and molecular diagnostics services are vulnerable to damage or inoperability[180](index=180&type=chunk) - Supplier reliance: Reliance on limited or sole suppliers for materials and components[181](index=181&type=chunk) - Product defects: Undetected errors or defects could harm reputation and lead to product liability claims[182](index=182&type=chunk) - International sales: Reliance on distributors outside the U.S. and exposure to foreign regulatory, economic, and political risks[183](index=183&type=chunk)[184](index=184&type=chunk) - Anti-corruption laws: Subject to U.S. and foreign anti-corruption laws; non-compliance can lead to liability[185](index=185&type=chunk) - Export/import controls: Subject to regulations that could impair international competition[185](index=185&type=chunk) - Key personnel: Future success depends on ability to recruit, train, retain, motivate, and integrate key personnel[186](index=186&type=chunk) - Technical support: Need for highly trained technical support personnel to assist customers[187](index=187&type=chunk) - Security breaches: Vulnerability to cyberattacks and security incidents, potentially leading to data disruption, liability, and reputational damage[189](index=189&type=chunk)[190](index=190&type=chunk) - Data privacy: Subject to stringent and changing laws (CCPA, CPRA, GDPR) related to privacy and data security, with non-compliance risks[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - Competition: Highly competitive life sciences research and diagnostic markets with established and early-stage companies[201](index=201&type=chunk) - PPP Loan eligibility: Potential for future determination of impermissibility or reputational damage regarding PPP Loan application/forgiveness[204](index=204&type=chunk) - Global economic conditions: Unfavorable global economic conditions, including Brexit, could adversely affect business[205](index=205&type=chunk)[207](index=207&type=chunk) - Exclusive forums: Charter documents designate exclusive forums for disputes, potentially limiting stockholder's ability to choose a favorable judicial forum[208](index=208&type=chunk)[209](index=209&type=chunk) [Risks related to government regulation and diagnostic product reimbursement](index=45&type=section&id=Risks%20related%20to%20government%20regulation%20and%20diagnostic%20product%20reimbursement) The company faces significant regulatory hurdles if its RUO products are deemed medical devices or if it pursues clinical diagnostic use, requiring expensive and time-consuming FDA clearances, while its Lineagen diagnostic services are subject to complex billing, reimbursement, and fraud/abuse laws, with potential for unfavorable pricing and penalties for non-compliance - RUO products as medical devices: If FDA determines RUO products are medical devices or if marketed for clinical use, regulatory clearance/approval (510(k) or PMA) will be required, which is expensive, time-consuming, and uncertain[210](index=210&type=chunk) - Laboratory Developed Tests (LDTs): Lineagen's LDTs are currently under FDA enforcement discretion; changes in regulation could increase costs and reduce demand[210](index=210&type=chunk) - Third-party studies: Expects to rely on third parties for future diagnostic product studies, reducing control over activities[212](index=212&type=chunk) - Lineagen billing complexity: Billing for diagnostic testing services is complex, time-consuming, and expensive, involving various payors and compliance with federal/state regulations[213](index=213&type=chunk) - Unfavorable pricing/reimbursement: Lineagen revenue depends on broad coverage and adequate reimbursement from third-party payors; lack thereof could harm business[216](index=216&type=chunk) - Saphyr diagnostic procedures reimbursement: If diagnostic procedures enabled by Saphyr technology face unfavorable pricing or reimbursement, demand could be impacted[217](index=217&type=chunk)[219](index=219&type=chunk) - Healthcare reform: ACA and other reforms (e.g., PAMA) may lead to more rigorous coverage criteria and downward pressure on prices[220](index=220&type=chunk) - Regulatory compliance: Subject to CLIA and state laboratory licenses; non-compliance can result in sanctions and harm business[222](index=222&type=chunk) - Healthcare fraud and abuse laws: Operations subject to federal and state anti-kickback, false claims, Stark Law, EKRA, HIPAA, and other laws; non-compliance could lead to substantial penalties[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk) [Risks Related to Intellectual Property](index=51&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company relies on patents, trademarks, trade secrets, and contractual restrictions to protect its intellectual property, but faces risks including challenges to patent validity, infringement by competitors, and the high costs of litigation, while government-funded intellectual property is subject to "march-in" rights and other regulations, and reliance on licensed technology from Princeton University poses additional risks - Inadequate IP protection: Failure to protect intellectual property (patents, trademarks, trade secrets) may reduce competitive advantage and incur litigation costs[228](index=228&type=chunk) - Patent challenges: Pending or future patent applications may not result in granted patents, or issued patents may be challenged, invalidated, or narrowly interpreted[228](index=228&type=chunk) - Government-funded IP: Intellectual property from government-funded programs is subject to "march-in" rights, reporting requirements, and U.S. manufacturing preference, potentially limiting exclusive rights[230](index=230&type=chunk)[231](index=231&type=chunk) - Reliance on licensed technology: Dependence on exclusive license from Princeton University; breach of obligations could lead to termination or modification of the license[232](index=232&type=chunk) - Infringement claims: Risk of being sued for infringing third-party intellectual property rights, leading to substantial costs, injunctions, or damages[234](index=234&type=chunk) - Patent litigation: Involvement in lawsuits to protect or enforce patents is expensive, time-consuming, and uncertain[235](index=235&type=chunk) - Patent invalidity/unenforceability: Issued patents could be found invalid or unenforceable if challenged, materially impacting business[237](index=237&type=chunk) - Trade secret misuse: Claims that employees/consultants wrongfully used or disclosed trade secrets of former employers[238](index=238&type=chunk) - Inventorship/ownership challenges: Claims challenging inventorship or ownership of patents and other IP[238](index=238&type=chunk) - Global IP protection: Difficulty protecting IP rights throughout the world due to varying laws and enforcement[240](index=240&type=chunk) - Changes in patent laws: Changes like the America Invents Act (AIA) or Supreme Court rulings could diminish patent value[241](index=241&type=chunk)[243](index=243&type=chunk) - Compliance with patent agencies: Failure to comply with procedural requirements can lead to loss of patent rights[244](index=244&type=chunk) - Trademark protection: Inadequate protection of trademarks and trade names could hinder brand recognition[244](index=244&type=chunk) - Open source software: Future use of open source software components could restrict ability to sell products if license terms are not complied with[245](index=245&type=chunk) - Third-party software: Reliance on third-party software may lead to errors or failures, harming reputation[246](index=246&type=chunk) - Limitations of IP rights: Intellectual property rights have limitations and may not adequately protect the business or provide a competitive advantage[247](index=247&type=chunk) [Risks Related to Ownership of our Securities](index=58&type=section&id=Risks%20Related%20to%20Ownership%20of%20our%20Securities) The company's stock price is highly volatile due to various factors, including commercial progress, regulatory changes, competition, and financial performance, with risks of delisting from Nasdaq, limited influence from other stockholders due to significant principal ownership, reduced attractiveness of securities as an emerging growth company, and erosion of investor confidence from material weaknesses in internal controls - Stock price volatility: Highly volatile due to commercial progress, regulatory changes, competition, financial performance, and market factors[248](index=248&type=chunk)[250](index=250&type=chunk) - Nasdaq delisting risk: Failure to comply with listing requirements (e.g., minimum bid price) could lead to delisting, negatively impacting stock price and liquidity[250](index=250&type=chunk)[252](index=252&type=chunk) - No dividends: No intention to pay cash dividends; investment gain depends on stock price appreciation[253](index=253&type=chunk) - Principal stockholder control: Executive officers, directors, and **5%** stockholders own a significant percentage, exerting control over stockholder approval matters[253](index=253&type=chunk) - Emerging Growth Company (EGC) status: Reduced reporting requirements may make securities less attractive; potential loss of EGC status by December 31, 2021, if market value exceeds **$700 million**[254](index=254&type=chunk)[255](index=255&type=chunk) - Material weaknesses in internal control: Identified material weaknesses could lead to inaccurate financial reporting, delayed filings, loss of investor confidence, and stock price decline[255](index=255&type=chunk)[256](index=256&type=chunk) - Disclosure controls limitations: Disclosure controls may not prevent or detect all errors or fraud[258](index=258&type=chunk) - Public company costs: Significant increased costs and management time devoted to compliance initiatives as a public company[258](index=258&type=chunk) - Future stock sales: Sales of substantial amounts of common stock could adversely affect market price[260](index=260&type=chunk) - Anti-takeover provisions: Charter documents and Delaware law contain provisions that could delay or prevent a change of control[260](index=260&type=chunk) - Active trading market: Risk that an active trading market for common stock may not be sustained[261](index=261&type=chunk) [General Risk Factors](index=64&type=section&id=General%20Risk%20Factors) General risks include the impact of securities or industry analysts' research on stock price, potential negative effects of activist stockholders, and the possibility of securities class action litigation diverting management's attention and incurring significant liabilities - Analyst coverage: Lack of or inaccurate/unfavorable research by securities analysts could cause stock price and trading volume to decline[263](index=263&type=chunk) - Activist stockholders: Actions by activist stockholders could disrupt business, divert management attention, and impact stock trading value[264](index=264&type=chunk) - Securities class action litigation: Risk of litigation following stock price volatility, leading to substantial costs and management distraction[265](index=265&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=65&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This item is not applicable - Not applicable[267](index=267&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=65&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities - No defaults upon senior securities[267](index=267&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=65&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable - Not applicable[267](index=267&type=chunk) [ITEM 5. OTHER INFORMATION](index=65&type=section&id=ITEM%205.%20OTHER%20INFORMATION) On May 12, 2021, the compensation committee granted Restricted Stock Units (RSUs) to the CEO (**580,000** RSUs) and COO (**240,000** RSUs), with vesting schedules tied to time and, for a portion of the CEO's grant, revenue targets - RSU Grants (May 12, 2021): * CEO (R. Erik Holmlin): **580,000** RSUs[267](index=267&type=chunk) * **290,000** time-based (**50%** on 1st and 2nd anniversaries)[268](index=268&type=chunk) * **290,000** performance-based (revenue targets within four years)[269](index=269&type=chunk) * COO (Mark Oldakowski): **240,000** RSUs, time-based (**50%** on 1st and 2nd anniversaries)[270](index=270&type=chunk) [ITEM 6. EXHIBITS](index=66&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including organizational documents, warrant forms, registration rights agreements, and certifications - Lists various exhibits, including Amended and Restated Certificate of Incorporation, Bylaws, forms of Warrants, Registration Rights Agreements, Sales Agreement with Cowen, and certifications[272](index=272&type=chunk) [SIGNATURES](index=67&type=section&id=SIGNATURES) The report was duly signed on May 13, 2021, by R. Erik Holmlin, Ph.D., President and Chief Executive Officer, and Christopher Stewart, Chief Financial Officer - Signed by R. Erik Holmlin, Ph.D. (President and CEO) and Christopher Stewart (CFO) on May 13, 2021[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)

Financial Data and Key Metrics Changes - Revenue in Q4 2020 was approximately $4 million, a 43% increase compared to $2.8 million in Q4 2019, primarily driven by a $1.1 million increase in service revenue from the Lineagen subsidiary [29][30] - Total revenue for the year was $8.5 million, down $1.6 million or 16% from 2019, largely due to COVID-19 restrictions affecting customer lab operations [29][30] - Gross margin was 30%, down 9% from the same period last year, mainly due to lower instrument selling prices and year-end accounting entries related to inventory [30] Business Line Data and Key Metrics Changes - The installed base of Saphyr systems increased to 97, up by 24 systems from the previous year [30] - Operating expenses for Q4 2020 were $12.3 million, an increase of approximately $3.4 million compared to $8.9 million in Q4 2019, primarily due to increased salary expenses [32] - Operating expenses for the year totaled $41.3 million, an increase of approximately $11.4 million from $29.9 million in 2019, driven by salary expenses and costs related to the Lineagen acquisition [33] Market Data and Key Metrics Changes - The company noted that the U.S. market requires a path to reimbursement from third-party payers for widespread adoption of optical genome mapping with the Saphyr system [11] - In Europe, the company saw traction due to faster reimbursement processes in single-payer healthcare systems [10] Company Strategy and Development Direction - The company aims to drive the global development of Saphyr-based assays for clinical testing of genetic diseases and hematologic malignancies, focusing on expanding the number of laboratory developed tests (LDTs) [25][26] - The acquisition of Lineagen in 2020 is expected to accelerate the broader adoption of Saphyr technology for clinical assay development [27] - The company plans to introduce new assays, including prenatal assays, and expand capabilities in pediatric applications [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2021 being a transformational year, with a focus on executing clinical studies and increasing published data to support the adoption of Saphyr [24][35] - The company anticipates substantial double-digit growth for the full year, despite a typically soft Q1 due to budget constraints in labs [72] Other Important Information - The company raised approximately $335 million in 2020 through public offerings and other means, strengthening its financial position [34] - The installed base of Saphyr systems is expected to grow by as much as 50% year-over-year to 150 systems [39] Q&A Session Summary Question: Can you walk us through the target product profile for the next-gen optical imaging platform? - The focus is on building a platform for higher throughput labs, anticipating a 14-fold increase in throughput compared to the current Saphyr system [42][43] Question: What is the addressable market for Saphyr in pediatric and prenatal markets? - The cytogenetics market is estimated at $3 billion to $3.5 billion, with significant potential for growth as applications expand [45][46] Question: What was the consumable revenue in Q4 and the split between cytogenetics and other applications? - Consumable revenue was approximately $1.3 million in Q4, with a split of 75:25 for cytogenetics versus research applications outside the U.S. [48][50] Question: How do you see the revenues and placements by geography for 2020 and expectations for 2021? - Strength is seen in Europe, with the U.S. lagging but showing growth in research markets, while China is expected to pick up [62] Question: What developments are expected in psychiatric disorders and neurological conditions? - The company is focusing on neurodevelopmental disorders through its Lineagen business and expects to develop applications on the Saphyr system [64][66]

Part I [Business](index=8&type=section&id=Item%201.%20Business) Bionano Genomics specializes in optical genome mapping with its Saphyr system and provides diagnostic services for neurodevelopmental disorders [Overview](index=8&type=section&id=Item%201.%20Business%20-%20Overview) Bionano Genomics offers OGM solutions and diagnostic services, with Saphyr system installations growing to **97** in 2020, despite a **$1.6 million** revenue impact from COVID-19 - The company's core business revolves around the **Saphyr® system** for **optical genome mapping (OGM)** and diagnostic testing services for neurodevelopmental disabilities via its subsidiary, **Lineagen**[20](index=20&type=chunk) - The installed base of Saphyr systems increased by **24 units** in 2020, reaching a total of **97 systems** by year-end[25](index=25&type=chunk) - The COVID-19 pandemic caused a revenue decrease of approximately **$1.6 million** in 2020 compared to 2019, attributed to lab shutdowns and operational restrictions[24](index=24&type=chunk) - In January 2021, Bionano raised approximately **$350 million** in gross proceeds from two public offerings of its common stock[33](index=33&type=chunk) [Market Opportunity](index=11&type=section&id=Item%201.%20Business%20-%20Market%20Opportunity) The total addressable market for Bionano's Saphyr system and Lineagen's diagnostic services is estimated between **$4.4 billion** and **$5.7 billion** - The total addressable market for the Saphyr system and consumables is estimated to be between **$2.7 billion** and **$3.5 billion**[42](index=42&type=chunk) - The serviceable addressable market (SAM) for Lineagen's first-line genetic testing services for neurodevelopmental disorders is estimated to be between **$1.7 billion** and **$2.2 billion** in the United States[43](index=43&type=chunk) [Commercial Offerings](index=13&type=section&id=Item%201.%20Business%20-%20Commercial%20Offerings) Bionano's offerings include the Saphyr OGM system with consumables and software, alongside Lineagen's LDTs for neurodevelopmental disorders - The Saphyr system is a complete sample-to-result solution for structural variation analysis, comprising the Saphyr instrument, Saphyr Chip consumables, Bionano Prep Kits, and data solutions including Bionano Access software[44](index=44&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[53](index=53&type=chunk) - The end-user cost per sample is expected to decline from under **$500** in 2020 to approximately **$100** in 2023, with throughput expected to increase from **12** to **192** human samples per day in the same period[44](index=44&type=chunk) - Lineagen offers a suite of LDTs for pediatric neurodevelopmental disorders, including Chromosomal Microarray (CMA), Fragile X, Whole Exome Sequencing (WES), and Pharmacogenetics (PGx) testing[71](index=71&type=chunk) [Sales and Marketing](index=22&type=section&id=Item%201.%20Business%20-%20Sales%20and%20Marketing) Bionano employs a direct sales force and distributors for OGM, with a long sales cycle, while diagnostic services target pediatric specialists and secure insurance contracts covering **90 million** lives - The OGM commercial team comprises **72** people, with a direct sales force in North America and Europe, and distributors in Asia-Pacific and other regions[82](index=82&type=chunk) - The sales cycle for the Saphyr system is lengthy, typically **9 to 12 months**, due to the capital investment and customer evaluation process[82](index=82&type=chunk) - The diagnostic services commercial team has **4** people and targets pediatric specialists. As of year-end 2020, the company had insurance contracts covering approximately **90 million** lives in the U.S[83](index=83&type=chunk) [Manufacturing and Supply](index=23&type=section&id=Item%201.%20Business%20-%20Manufacturing%20and%20Supply) Bionano outsources Saphyr instrument and chip manufacturing, assembles reagents in-house, and utilizes third-party labs for diagnostic service wet lab work - The Saphyr instrument and chip consumables are manufactured by third-party contractors, while reagent kits are assembled internally[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Diagnostic services utilize outsourced components, including Illumina's CMA testing platforms, and contract with third-party labs for wet work, while Bionano handles data interpretation and reporting under its own CLIA license[88](index=88&type=chunk) [Government Regulation](index=26&type=section&id=Item%201.%20Business%20-%20Government%20Regulation) Bionano's RUO products and LDT diagnostic services are subject to extensive regulation, including potential FDA oversight and complex reimbursement requirements - The company's OGM products are currently labeled "For Research Use Only" (RUO). If the FDA determines they are intended for clinical diagnostic use, they would require regulatory clearance (510(k)) or approval (PMA)[100](index=100&type=chunk)[188](index=188&type=chunk) - The company's diagnostic services are provided as Laboratory Developed Tests (LDTs), which are regulated under CLIA. The FDA has authority over LDTs but has historically exercised enforcement discretion[107](index=107&type=chunk)[190](index=190&type=chunk) - The company is subject to numerous healthcare regulations, including CLIA, HIPAA, state laboratory licensing laws, and federal/state anti-kickback and fraud and abuse laws[202](index=202&type=chunk)[203](index=203&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including recurring net losses, uncertain profitability, reliance on single-source manufacturers, intense competition, and complex regulatory and reimbursement landscapes [Risks related to our financial condition and need for additional capital](index=42&type=section&id=Item%201A.%20Risk%20Factors%20-%20Financial%20Condition%20and%20Capital) The company has a history of recurring net losses, reported a **$41.1 million** net loss in 2020, and faces uncertainty regarding future profitability and capital needs, alongside restrictive debt covenants - The company has a history of recurring net losses, reporting a net loss of **$41.1 million** for the year ended December 31, 2020, and an accumulated deficit of **$143.7 million**[144](index=144&type=chunk) - The business has been adversely affected by the COVID-19 pandemic, which has disrupted operations, impacted productivity, and may continue to negatively affect demand and financial results[148](index=148&type=chunk) - The company's debt facility with Innovatus contains restrictive covenants. The company was not in compliance with the revenue covenant for Q3 2020 and has previously breached covenants, requiring waivers and fees to avoid default[146](index=146&type=chunk)[153](index=153&type=chunk) [Risks related to our business operations](index=48&type=section&id=Item%201A.%20Risk%20Factors%20-%20Business%20Operations) Key business risks include achieving market acceptance, reliance on single-source manufacturers, long sales cycles, intense competition, and cybersecurity threats - Market acceptance of the Saphyr system is a key risk, as potential customers may be reluctant to replace their existing, long-used research systems[155](index=155&type=chunk) - The company relies on a single contract manufacturer for its Saphyr instruments and a single contract manufacturer for its chip consumables, posing a significant risk to supply continuity[170](index=170&type=chunk) - The life sciences research and diagnostic markets are highly competitive, with competitors including Pacific Biosciences, Oxford Nanopore, and 10x Genomics, many of whom have greater financial and human resources[183](index=183&type=chunk) [Risks related to government regulation and diagnostic product reimbursement](index=62&type=section&id=Item%201A.%20Risk%20Factors%20-%20Government%20Regulation%20and%20Reimbursement) Significant regulatory risks include potential FDA oversight of RUO products and LDTs, and the uncertainty of obtaining favorable reimbursement for diagnostic tests - A primary risk is the potential for the FDA to regulate the company's RUO products as medical devices, which would require costly and lengthy clearance or approval processes and could halt sales[188](index=188&type=chunk) - A significant change in how the FDA regulates Laboratory Developed Tests (LDTs) could substantially increase the cost and time to commercialize the company's diagnostic services and reduce demand from customer labs[190](index=190&type=chunk) - The company's and its customers' ability to generate revenue from diagnostic tests depends on obtaining and maintaining favorable coverage and reimbursement from government and private payors, which is complex and uncertain[195](index=195&type=chunk)[198](index=198&type=chunk) [Risks Related to Intellectual Property](index=68&type=section&id=Item%201A.%20Risk%20Factors%20-%20Intellectual%20Property) The company's success depends on protecting its intellectual property, which faces risks from patent challenges, competitor circumvention, reliance on licensed technology, and potential infringement lawsuits - The company relies on patent protection, but cannot guarantee that pending applications will issue as patents or that existing patents will not be challenged, invalidated, or circumvented by competitors[208](index=208&type=chunk) - A core part of the company's technology is licensed exclusively from Princeton University. A breach of this license agreement could lead to its termination, preventing the company from selling its products[210](index=210&type=chunk) - The company could be sued for infringing third-party intellectual property rights, which could result in costly litigation, substantial damages, and potentially block the sale of its products[213](index=213&type=chunk) [Unresolved Staff Comments](index=88&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments - None[248](index=248&type=chunk) [Properties](index=88&type=section&id=Item%202.%20Properties) The company leases its headquarters in San Diego and an office in Salt Lake City, anticipating future space needs for growth - The company leases its main facility of **35,823 sq. ft.** in San Diego, CA (lease expires Dec 2025) and a **9,710 sq. ft.** office in Salt Lake City, UT (lease expires Sep 2021)[249](index=249&type=chunk) [Legal Proceedings](index=88&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[250](index=250&type=chunk) [Mine Safety Disclosures](index=88&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable, as the company has no mine safety disclosures - None[251](index=251&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=89&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "BNGO", has approximately **90** record holders, and does not intend to pay cash dividends - Common stock trades on The Nasdaq Capital Market under the symbol "**BNGO**"[255](index=255&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[258](index=258&type=chunk) [Selected Financial Data](index=89&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, Bionano Genomics is not required to provide selected financial data - Not required as the company is a smaller reporting company[263](index=263&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=90&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2020, total revenue decreased by **16%** to **$8.5 million**, net loss widened to **$41.1 million**, but liquidity significantly improved through recent equity offerings [Results of Operations](index=94&type=section&id=Item%207.%20MD%26A%20-%20Results%20of%20Operations) In 2020, total revenue decreased **16%** to **$8.5 million** due to lower instrument sales, while net loss widened to **$41.1 million** driven by increased operating expenses Results of Operations (2020 vs. 2019) | Metric | 2020 | 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$8,502,984** | **$10,129,508** | **($1,626,524)** | **(16)%** | | Instrument Revenue | $3,084,869 | $6,762,463 | ($3,677,594) | (54)% | | Consumable Revenue | $3,144,742 | $2,711,981 | $432,761 | 16% | | Service & Other Revenue | $2,273,373 | $655,064 | $1,618,309 | 247% | | **Total Cost of Revenue** | **$5,730,137** | **$6,768,147** | **($1,038,010)** | **(15)%** | | **Loss from Operations** | **($38,551,322)** | **($25,874,906)** | **($12,676,416)** | **49%** | | **Net Loss** | **($41,106,351)** | **($29,815,070)** | **($11,291,281)** | **38%** | | **Net Loss Per Share** | **($0.39)** | **($1.99)** | | | - Selling, general and administrative (SG&A) expenses increased by **$10.9 million (54%)** in 2020, due to headcount additions, increased legal/accounting fees, **$1.5 million** in transaction costs for the Lineagen acquisition, and a **$1.8 million** bad debt expense[287](index=287&type=chunk) [Liquidity and Capital Resources](index=95&type=section&id=Item%207.%20MD%26A%20-%20Liquidity%20and%20Capital%20Resources) The company experienced negative cash flow from operations in 2020 but significantly improved its liquidity position through substantial equity offerings in late 2020 and early 2021 Cash Flow Summary (2020 vs. 2019) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($38,314,378) | ($29,529,720) | | Net cash used in investing activities | ($2,449,952) | ($61,056) | | Net cash provided by financing activities | $61,901,667 | $30,379,420 | - As of December 31, 2020, the company had **$38.4 million** in cash and cash equivalents and an accumulated deficit of **$143.7 million**[289](index=289&type=chunk) - Subsequent to year-end, in January 2021, the company raised gross proceeds of approximately **$101.8 million** and **$230.0 million** from two separate underwritten public offerings[298](index=298&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=102&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Bionano Genomics is not required to provide market risk disclosures - Not required as the company is a smaller reporting company[320](index=320&type=chunk) [Financial Statements and Supplementary Data](index=103&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2020 and 2019, including balance sheets, income statements, cash flows, and detailed notes Consolidated Balance Sheet Summary (as of Dec 31) | | 2020 | 2019 | | :--- | :--- | :--- | | **Total Current Assets** | **$46,789,156** | **$28,258,241** | | Cash and cash equivalents | $38,448,710 | $17,311,373 | | **Total Assets** | **$60,449,526** | **$30,207,866** | | **Total Current Liabilities** | **$8,943,976** | **$26,367,021** | | **Total Liabilities** | **$25,367,352** | **$26,594,148** | | **Total Stockholders' Equity** | **$35,082,174** | **$3,613,718** | Consolidated Statement of Operations Summary (Year Ended Dec 31) | | 2020 | 2019 | | :--- | :--- | :--- | | **Total Revenue** | **$8,502,984** | **$10,129,508** | | **Total Cost of Revenue** | **$5,730,137** | **$6,768,147** | | **Total Operating Expenses** | **$41,324,169** | **$29,236,267** | | **Loss from Operations** | **($38,551,322)** | **($25,874,906)** | | **Net Loss** | **($41,106,351)** | **($29,815,070)** | | **Net Loss Per Share** | **($0.39)** | **($1.99)** | - In August 2020, the company acquired Lineagen, Inc. for consideration including approximately **$1.9 million** in cash and **6.17 million** shares of common stock, plus the assumption of **$2.9 million** in liabilities. The acquisition added **$7.2 million** in goodwill and **$1.6 million** in intangible assets[451](index=451&type=chunk)[453](index=453&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=137&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there were no changes in or disagreements with accountants on accounting and financial disclosure - None[456](index=456&type=chunk) [Controls and Procedures](index=137&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management identified a material weakness in internal control over financial reporting as of December 31, 2020, due to insufficient resources and inadequate segregation of duties, with remediation efforts underway - Management identified a material weakness in internal control over financial reporting as of December 31, 2020[459](index=459&type=chunk) - The weakness was due to an insufficient number of resources, leading to inadequate segregation of duties. This did not result in any identified material misstatements[459](index=459&type=chunk) - Remediation efforts include engaging external consultants and hiring additional qualified financial personnel to enhance internal controls[460](index=460&type=chunk)[462](index=462&type=chunk) [Other Information](index=139&type=section&id=Item%209B.%20Other%20Information) The company reported that on March 15, 2021, its Paycheck Protection Program (PPP) loan of approximately **$1.77 million**, received in April 2020, was forgiven in full by the Small Business Administration (SBA), including all accrued interest - The company's Paycheck Protection Program (PPP) loan of approximately **$1.77 million**, plus accrued interest, was forgiven in full by the SBA, effective March 15, 2021[464](index=464&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=140&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the 2021 Proxy Statement, and the company has adopted a code of business conduct and ethics - Information is incorporated by reference from the 2021 Proxy Statement[467](index=467&type=chunk) - The company has adopted a code of business conduct and ethics applicable to all employees, officers, and directors[468](index=468&type=chunk) [Executive Compensation](index=140&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[469](index=469&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=140&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[470](index=470&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=140&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[471](index=471&type=chunk) [Principal Accounting Fees and Services](index=140&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[472](index=472&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=141&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report, including financial statements and an index of exhibits - This section provides an index of all exhibits filed with the Form 10-K, including material contracts and corporate governance documents[477](index=477&type=chunk)[478](index=478&type=chunk) [Form 10-K Summary](index=143&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports that there is no Form 10-K summary - None[482](index=482&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________________________ FORM 10-Q _________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission file numb ...