Bionano Genomics(BNGO) - 2021 Q2 - Quarterly Report

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 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 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 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 - 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] Condensed Consolidated Statements of Cash Flows 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 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][28] 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][111] - In January 2021, the company completed two underwritten public offerings, raising combined gross proceeds of approximately $331.8 million[59][60] - 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][80] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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][92] Results of Operations 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] - 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] Liquidity and Capital Resources 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] - 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] - The company's $1.8 million PPP Loan was forgiven in full in March 2021[129] - Management believes the current cash balance is sufficient to fund operations, obligations, and capital investments for at least the next twelve months[139] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] Item 4. Controls and Procedures 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] - 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][149] - 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][151][152] 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 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] Item 1A. Risk Factors 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] - The business is adversely affected by public health crises like COVID-19, which impacts operations, customer demand, and supply chains[167] - 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][222] - The company relies on single contract manufacturers for its Saphyr instruments and chip consumables, posing a significant supply chain risk[187] - 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] - 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][270] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company indicates this item is not applicable - Not applicable for this reporting period[284] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[284] Item 4. Mine Safety Disclosures The company indicates this item is not applicable - Not applicable[284] Item 5. Other Information The company reports no other information for this period - None[284] Item 6. Exhibits 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] Signatures This section contains the required signatures for the filing