Bionano Genomics, Inc.

Good day, and welcome to the BioNano Genomics Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Amy Conrad from Investor Relations. Please go ahead.

Thank you, Laura, and good afternoon, everyone. Welcome to the BioNano Genomics Second Quarter 2021 Financial Results Conference Call. Leading the call today is Dr. Eric Holman, CEO of BioNano. He is joined by Chris Stewart, CFO of Bionano, and Dr. Alka Chavez, CMO of Bionano. After market closed today, Bionano issued a press release announcing its financial results for the second quarter of 2021. A copy of the release can be found on the investor relations page of the company's website. I would like to remind everyone that certain statements made during this conference call may be forward-looking, including statements about Bionano's strategic and commercialization plan, sales pipeline, anticipated benefits or improvements to the SAFIRE system, anticipated milestones for 2021, and the advantages of the SAFIRE system over current technologies, our expectations regarding timing and content of study results, and anticipated benefits of these studies in driving adoption of the SAFIRE system. Such forward-looking statements are based upon current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in BioNano's press release and BioNano's reports filed with the SEC. These forward-looking statements are based on information available to BioNano today, and the company assumes no obligation to update statements as circumstances change. An audio recording and webcast replay for today's conference call will also be available online in the Investors section of the company's website. With that, I will turn the call over to Eric.

Thank you, Amy, and good afternoon, everyone. We had a really great quarter to cap off this first half of 2021, which we believe has been one of the most transformational periods in our history. Total revenue for Q2 2021 was $3.9 million, which is up 226% versus Q2 of 2020. And that's a record for any Q2 in the history of the company. We also had great performance in many areas of execution, including seeing customers develop laboratory-developed tests, or LDTs, based on optical genome mapping, or OGM, with SAFIRE, and obtaining accreditation for SAFIRE-based LDTs in certain European markets, which was an important milestone for Q2. I also want to welcome to the team two outstanding executives who joined us this quarter, Jason Pryor, who became our Chief Commercial Officer, and Rich Schippe, who became our Chief Business Officer. Jason and Rich are experienced leaders, with Jason having held previous leadership positions at PerkinElmer and GeneDx, among other companies, and Rich having held previous leadership positions at Affymetrix and Illumina. So welcome to Jason and Rich. I want to start out our update today by outlining our strategy which is focused on execution in three key areas. First is growing the installed base of the SAFIRE systems and their consumables use in two markets. The clinical research market, where OGM provides an alternative to traditional methods that are outdated, slow, and have low success rates for finding the variants that drive biology and pathology. The other market is the discovery research market, where OGM empowers researchers looking for novel therapeutic targets and biomarker signatures. The second area of execution focus for us is continuously innovating, so we can bring new capabilities that accelerate the throughput of OGM, accommodate more sample types, and simplify data analysis and interpretation. Third is supporting the development of validation data through pivotal clinical research studies to show the efficacy of OGM, while following key opinion leaders as they showcase the prowess of our SAFIRE system in their presentations and publications, and also while they aim to gain third-party payer support through development and validation of their own LDTs to be applied in cytogenetics and cytogenomics. Here's how we're tracking against these objectives. Regarding the SAFIRE install base and utilization, SAFIRE systems installations completed in the quarter brought the total number of installed SAFIRES to 121 as of June 30th, 2021, versus 107 as of March 30th, the end of the first quarter. We shipped 13 SAFIRE systems this past quarter compared to six systems shipped in the same quarter in 2020. Our goal for 2021 is to reach 150 SAFIRE systems installed worldwide, and we believe we're on track to meet that goal. During the quarter, we sold 2,742 nano-channel array flow cells. Let me remind you that the flow cell is the unit consumable for analysis of one human genome. More flow cells sold leads to more utilization of optical genome mapping in the field and more data to support it. The increase represents 93% growth over the second quarter of 2020 and also represents the most flow sills sold ever in a single quarter. And so we're really proud of our progress in growing the installed base and seeing the utilization, which is measured by the number of flow cells that are going out into the field. Now, several notable cytogenetics laboratories in the U.S., including Children's Hospital of Cincinnati, which is using optical genome mapping to identify structural variations in pediatric leukemias, have adopted the SAFIRE system. Outside the U.S., SAFIRE was adopted enthusiastically in places like Korea, Europe, Africa, and China. including at Medicover in Germany, which is one of the largest commercial diagnostic companies in Europe, and NuProbe in China, which is a leading-edge company developing cancer diagnostic assays. In the United Kingdom, SAFIRE was adopted by two large laboratories that belong to the National Health System of the UK. Those are King's College Hospital in London and and the NHS Regional Genetics Laboratory in Belfast City Hospital. And so that actually gives us SAFIRE systems at all of the most significant sites in the United Kingdom doing cytogenetic and molecular pathology analysis. Regarding our progress and innovation, we continue to improve optical genome mapping with SAFIRE by making it easier, faster, and more cost-effective to operate. So this quarter, we released new protocols for isolating ultra-high molecular weight DNA, and that allows us to commercially support lower sample inputs, meaning smaller quantities of cells coming from a particular sample. It allows us to get down to as few as 500,000 cells from a single sample, which is really impressive. Our instrument control software has been updated to include the newest version of what we call SAFIRE Assure. And this is designed to enable system monitoring for predictive failure analysis and prevention to maximize SAFIRE uptime. And this is critical as the install base grows so we can monitor it and make sure that customer's product is performing as it's intended to. We are on track now to release in Q3 novel assays that will expand into different sample types for genetic disease and cancer analysis. And we are on track to release a significant update to our analysis software, which will streamline cytogenetic data analysis for clinical research and assay development. And so we'll look forward to updating you on that progress in our next call. Our project to build the next generation SAFIRE system, which we expect to have the ability to run up to 70,000 samples per year by the end of 2023, is on track. And we anticipate completing the first prototype system by the end of 2021. And lastly, in innovation, on May 4th, we were issued a patent entitled Methods and Devices for Single Molecule Whole Genome Analysis, which covers novel labeling methods that complement our whole genome approach. They allow us to target certain areas of the genome and provide a higher level of resolution below the typical 500 base per cutoff of OGM with SAFIRE. And so this was an important IP for us to get. Lastly, I want to talk about the progress we've made in proliferating data that validates optical genome mapping and demonstrate its incredible scope of utility. And this is not only our own work, but it's work by customers who are using the SAFIRE system. And they, in turn, influence prospective customers who are seeking to adopt the technology. And so it's really important to see this progress at conferences and in the literature because that's a precursor to adoption and sales. We had the largest presence to date at the 2021 Annual Clinical Genetics Meeting of the American College of Medical Genetics and Genomics, which is known as ACMG. That was held in April. It featured 16 presentations by SAFIRE customers and bio-nano scientists, which is nearly triple the number presented last year and based primarily on work done in the United States. And so that's really exciting progress for us. Our users delivered Overall, a record number of presentations featuring optical genome mapping at the 2021 European Cytogenomics Conference. And the data presented there by leading key clinicians and in their posters showcase optical genome mapping as a superior solution for genomic analysis in leukemia and genetic disease. One presentation in particular from Dr. Barbara de Wally at Leuven in Belgium, outlined their implementation of optical genome mapping in a new workflow focused on pediatric ALL patients that was 21 days faster with OGM compared to the traditional method. So imagine a patient who is being evaluated for blood cancer and then being able to get their results three weeks faster than they can with the traditional methods. and how that can impact and change management of these patients. It's really incredible. And then just this week, at the 2021 Annual Cancer Genomics Consortium meeting, which is one of the most important cancer genetics meetings in the world, our customers delivered 10 presentations that highlight the benefits of optical genome mapping for clinical research applications ranging from solid tumor analysis to hematologic malignancies, products of conception, pre- and postnatal genetic analysis. So you can see that the scope of optical genome mapping is being defined, and it's very broad. And these customers have spoken about the incredible enthusiasm they have for bringing in this technology over the traditional methods. They've also emphasized that they've been waiting for this kind of solution for a long time, and so we're really excited about the progress there. Now, overall, with regard to publications, which is an incredible leading indicator of interest and utilization of the technology, year-to-date there have been 111, and that includes 49 new publications in the second quarter. And I would note that that's the most publications on OGM ever in a single quarter. And so those are the kinds of metrics that we want to see. And we're very proud of the progress there. Now the lineage in business also had a good quarter with samples received for analysis across their suite of assays for pediatric neurodevelopmental disorders. Revenues for these diagnostic services are included with all service and other revenue on our financial statements. Lineagen is also a key element in our strategy to develop our own menu of laboratory-developed tests based on SAFIRE and leverage Lineagen's network of ordering physicians and contracts with third-party payers. They provide us with a clinical team of cytogenetics and genetic counselors, along with a direct channel to physicians and patients, and we see that as a key element of accelerating adoption of the SAFIRE system. Finally, we've seen significant progress in the field for the development of laboratory-developed tests and accreditation in Europe, including in Belgium, Germany, and Spain. In the U.S., two sites, Augusta University and Praxis Genomics, received proprietary analysis or PLA codes, which are anticipated to be used by these institutions to bill third-party payers for reimbursement of OGM tests, and we expect pricing for those codes to be determined and released by the end of this year. This is, again, incredible progress to support the adoption and utilization of optical genome mapping in our target markets. I would like to now turn the call over to our CMO, Dr. Alka Chabe. So you can get an update from her on the pivotal studies we are conducting to demonstrate utility of OGM as an alternative to cytogenetic methods. with a higher overall success rate.