Bionano Genomics, Inc.

Good day and welcome to the BioNano first quarter 2025 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to David Holmes from Investor Relations. Please go ahead.

Thank you, Lisa, and good afternoon, everyone. Welcome to BioNano first quarter 2025 financial results conference call. Leading the call today is Dr. Eric Homeland, CEO and Principal Financial Officer of BioNano, and he is joined by Mark Adamczyk, BioNano's Vice President of Accounting and Principal Accounting Officer. After market closed today, BioNano issued a press release accounting its financial results for the first quarter 2025. A copy of the release can be found on the Investor Relations page of the company's website. Certain statements made during this conference call may be forward-looking statements, including statements about BioNano's revenue outlook, profitability, cash runway, cost savings initiatives, and commercialization and product plans. Such statements are based on 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 several 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, May 14th, 2025, and the company assumes no obligation to update statements as circumstances change. In addition, to supplement BioNano's financial results in accordance with the US generally accepted accounting principles or GAAP, the company reports certain non-GAAP financial measures. A description of these non-GAAP financial measures as well as a reconciliation to the nearest GAAP financial measures are included at the end of the company's earnings release issued earlier today, which has been posted on the investor relations page of the company's website. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute to comparable GAAP measures. Should be read in conjunction in the company's consolidated financial statements prepared in accordance with GAAP, have no standardized meeting prescribed by GAAP, and are not prepared under any comprehensive set of accounting rules or principles. An audio recording and webcast replay for today's conference call will also be available online on the company's investor relations page. With that, I will turn the call over to Eric.

Thank you, David, and good afternoon, everyone. I'm pleased to provide you all with an update on this first quarter of 2025. I'd like to start off by reiterating the strategic shift we implemented in September of 2024, going away from heavy spending on customer acquisition associated with new instrument placements and toward a focus concentrated on those customers who use our OGM products and via software routinely in cytogenomics. We still expect to see growth of the install base, but our investments in capital sales and new installations have been scaled back to focus on users with the potential to be routine users of our products. We believe this group of users are the ones who will drive most of our profit and growth while we await improvements in the equity capital markets and clarity in the global trade situation. This strategy has four pillars, support and sustain the install base of routine OGM and via software users, drive utilization through adoption of via software across OGM users and facilitate menu expansion, build support needed for OGM reimbursement and inclusion in medical society recommendations and guidelines, and for improved profitability and scalability with lower costs, higher volumes, and improvements in gross profit. Let me now turn to the results for Q1 2025. We believe these results in Q1 reflect excellent progress. Total revenue for the first quarter of 2025 was 6.5 million, which is a decrease of 26% compared to the first quarter of 2024. Q1 2024 revenues included $1.4 million from discontinued clinical services compared to no revenue from such clinical services in Q1 2025. We sold 6,994 flow cells in the first quarter of 2025. Now keep in mind the flow cell is the unit consumable that applies to a single genome to be analyzed across all of our platforms. This quantity reflects a 15% decrease compared to the same period last year. However, if we exclude flow cells that were sold to new customers in each period, the Q1 2025 flow cell sold were up 1% compared to the period a year before. And I will drill down into those numbers a little bit more later on in the Q1 2025. And I'll drill down into those numbers later on in the call. Now gap gross margin for the first quarter of 2025 was 46%, which was significantly higher than the 32% gap gross margin reported for the first quarter of 2024. Non-gap gross margin for the first quarter of 2025 was also 46%, and that can be compared to 34% for the first quarter of 2024. First quarter 2025 gap operating expense was 11.4 million compared to 33.9 million in the first quarter of 2024. The year over year decrease was primarily driven by cost savings initiatives across the whole company. First quarter 2025 non-gap operating expense was 8.5 million, which can be compared to $24.4 million in the prior year. The installed base of OGM systems grew to 379, which is a 9% year over year increase and a net increase of eight systems versus December 31st, 2024, after nine new installations in the quarter. Cash, cash equivalent and available for sale securities as of March 31st, 2025 were 29.2 million, of which 11 million was subject to certain restrictions. We completed a $10 million registered direct offering in January of 2025 and raised net proceeds of $3.2 million through ATM sales through the first quarter of 2025. And quarter to date, Q2 net ATM proceeds were 1.3 million. We believe our cash runway extends into the first quarter of 2026. This first quarter of 2025 is the first full quarter of execution with our new cost structure. And we believe the year over year comparisons should be useful in determining whether our hypothesis is accurate. The hypothesis is that there is a committed group of routine users who use our consumables and software at higher rates than average across all of our customers and therefore a focus on their success as a critical mass group of users can help us as we seek to drive toward profitable growth. When we look at just two metrics, revenues and the number of flow cells sold, we can see support for this hypothesis. First for revenue, the $8.8 million in revenues in the first quarter of 2024 included $1.4 million in revenues from discontinued clinical services and it also included $1.6 million of instrument sales revenues. The revenues from OGM and software sales to customers that were in place as of December 31st, 2023 was 5.8 million. Conducting the same analysis for the $6.5 million in Q1 2025 revenues, which had none of the discontinued clinical services but did have $700,000 in instrument sales, we see that the installed base of customers generated the same $5.8 million in revenues in Q1 2025. When we look then at flow cells sold, we can make a year over year comparison by removing the flow cells sold to any new customers in the first quarter of 2024 and the same thing in Q1 2025. Now doing so reveals that flow cells sold to this existing customer group increased on an apples to apples basis by 1%. So flat revenues and 1% volume increase in sales of consumables are not necessarily our long-term objective for these super users but we do expect them to increase volume and utilization going forward and we wanna keep in mind that BioNano during this period of 2024 was undergoing rather disruptive organizational change, which was a challenge for us inside the company but also a challenge for our customers as they sought to find the right cadence for working with us. We view stability on a year over year basis as a great outcome and we feel it reflects the fact that we have gotten through much of the heavy disruption associated with this strategic shift and we are now ready to support customers who want to run more OGM and via software. Now among the strategic pillars, we have a focus on supporting the routine use customers through training and menu expansion as well as helping build the support needed for reimbursement. The best tools for these activities are generated by our customers themselves and those tools are publications. The first quarter of 2025 had 95 publications, second only to the 99 publications in the first quarter of 2024 but reflecting a strong start to 2025. In 2025, this first quarter of 2025, we also had 978 clinical research genomes published, bringing the total to over 9,100, which is remarkable progress when you consider that there were only 500 published clinical research genomes as of -31-2020. All the publications that appeared this quarter were outstanding but four of them stood out in particular. A large international group of experts from what is called the International Consortium of OGM, for OGM, published the first recommendations for integration of OGM into the standard of care in hematologic malignancies both as a first line analysis in some hematologic malignancy subtypes and as an alternative to karyotyping, fish and chromosomal microarray analysis in others. Second, a leading team in France at the CHU Lille published their method for analysis of multiple myeloma, a commonly difficult subtype to analyze by traditional methods. The innovation they published allows for the sample input requirement for multiple myeloma to be reduced by a factor of two, which we believe can open the door for other users to expand their menu of OGM research applications to now readily include multiple myeloma. Third, an OGM routine user in the Netherlands, Radboud University Medical Center, published a study showing OGM's performance for analysis of repetitive segments of the genome for use with repeat expansion disorder research, which is a large body of study and potential in constitutional genetic diseases. And then lastly, very recently, the University of Texas MD Anderson Cancer Center published the largest OGM study, 519 hematologic malignancy cases in which they evaluated the clinical utility of optical genome mapping, showing that in 15% of these cases, optical genome mapping detected critically important tier one variants that were missed by standard cytogenomics. Now these tier one variants are those with direct diagnostic, prognostic and therapeutic significance. And overall in 58% of the cases, OGM detected at least one tier one, tier two, or tier three variant that were not picked up by the standard cytogenetic methods, meaning that optical genome mapping has the potential to add tremendously to cytogenetic analysis of hematologic malignancy research. Finally, for the quarter, reducing cash burn by lowering expenses and increasing gross margin remains a cornerstone of our strategic shift. Operating expense on a gap basis is down 66% year over year and down 65% on a non-gap basis year over year. This is driven by a variety of cost reduction initiatives across the whole company, including a rather substantial impact to headcount. Perhaps the most striking amongst these cash burn initiatives is the improvement that we are seeing in gross margin, which was 46% for both gap and non-gap in the first quarter of 2025 versus 32% on a gap basis and 34% on a non-gap basis in the first quarter of 2024. This margin expansion has been the result of significant work internally to reduce costs, but also in working with suppliers to reduce input costs and improve yields. And this has been going on going back for at least the previous nine quarters now. To wrap up, I would like to provide our outlook on the second quarter and the remainder of 2025. With our strategic pillars as the underpinning of our streamlined business focus, we expect full year revenues to be in the range of 26 to $30 million, which is an update compared to our previous views on March 31st during our Q4 2024 call. And it simply reflects the turbulence we have seen this quarter related to the global trade and uncertainty there. Q2 revenues are expected to be in the range of 6.3 to $6.8 million. And with nine new OGM system installations in the first quarter, we are reiterating our expectation to install 15 to 20 new OGM systems over the course of the full year 2025. And we expect those to be primarily at routine use sites. And so with that operator, please go ahead and open the line for questions.

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. If you would like to withdraw your question, press star one one again. One moment for the first question. And the first question will be coming from the line of Sung Jinam of Scotiabank. Your line is open. Hi, thanks for taking

the questions. Maybe starting out with the MD Anderson study that was published. It's really exciting to see that. Was wondering, is MD Anderson a big customer currently? It's not, could this be an impetus for that institution to broadly adopt OGM going forward?

Well, so they are an existing user and I think it's a really good story of how these sites progress over time. And we've been working with them for quite some time, but they started out using the product in some basic research studies and began to see the value in OGM. Published a really groundbreaking paper in August of 2020, 2022, we're just verifying there. In August of 2022, which showed that OGM compared to the standard of care would give really outstanding like prognostic scores and showed that the standard of care was wrong in something like 17 or 21% of cases. And that was such an exciting paper and got so much attention at MD Anderson that the cytogenetics group that provides services for the oncologists there began getting interested in OGM and they have developed a validated workflow that they offer to oncologists there. And what we're told anecdotally is that every new leukemia case at MD Anderson Cancer Center is mapped and that oncologists at MD Anderson Cancer Center are reluctant to manage their patients without the OGM results. It's that impactful there. So their publication is amazing and I think it shows the progress that they've made. Some of the authors on those papers are influential and involved with groups like NCCN and so we believe that those kinds of data can be key to inclusion of OGM into medical society guidelines. And it provides an example for labs all around the country and indeed the world how to use OGM. And we believe that we don't need to go through that basic research study now, but folks can just adopt and validate these workflows that MD Anderson already has running.

That's super

helpful.

And then just in terms of your gross margins, also great to see continuous improvement there. So is the mid kind of 40% range, do you think is that sustainable for the remainder of the year or could you also see some potential further upside to those numbers?

I think we'll probably hang out in this general vicinity for the remainder of the year. Overall, we do expect it to continue to rise. But it'll take some time for the cost structure to have another significant shift before that happens. But we believe what we're seeing now is stable. Got it.

And then lastly, you mentioned kind of the global trade situation currently. Would you be able to provide a bit more color in terms of your kind of the manufacturing footprint exposure or supply chain? And are there kind of countermeasures that you're implementing going forward or is that just pretty much manageable just given your very much focused

commercial

strategy currently?

Yeah, a couple of things to comment on there. Based on the inventory that we have in place, from a cost structure to the inputs of our products, we have somewhat limited exposure for a while. We will need to begin sourcing some new materials in the future. A relatively small portion of them come from outside the United States. And so, we've got to be mindful of it. Some things that we do buy and need to continuously replenish do come from places outside the United States. But it seems like a manageable situation for now. We're not too overly concerned about input costs being impacted. It's something that we need to pay attention to. The issue I think that we have had to deal with because nearly half of our revenues are coming from outside the United States is just the uncertainty that customers in those jurisdictions face with the import tariffs that they may have to experience. And so, I really do believe that we have seen some deals slow down a little bit as a result of needing to pay attention to what's going on. And so, we added some conservatism into our full year guide to account for that. With regard to this idea of managing the impacts of tariffs, what we see is that a lot of our input suppliers are working to kind of reconfigure where things are made and produced to optimize that situation. So, it's under control, but it's something that we need to pay attention to and could have a negative impact down the road.

It sounds great. Thank you so much for taking the question.

Thank you, and one moment for the next question. The next question will come from the lines of Mark Macario of BTIG. Your line is open.

Hey, guys, this is Vivian on for Mark. Thanks for taking the questions. So, I believe you've had the Category 1 CPC code in hand for about five months now. I think this was intended to incentivize customers to get reimbursed for running applications. Just wondering how you've seen this play out as a tailwind thus far. Thanks.

Yeah, thank you, Vivian. So, a couple of things just to make sure that we vocalize the situation around the Category 1 CPT code accurately. That was something that a OGM customer petitioned the AMA for, and through that process, the AMA established the code. And that process includes a pretty rigorous and deep interaction through the applicant, but with the field in representing current utilization, characteristics, and future plans. And so, the AMA establishing that CPT code indicates that optical genome mapping and hematologic malignancies is something that is well established and part of the routine. What we can say anecdotally ourselves is that, really, that one of the number one questions that is asked when somebody is evaluating optical genome mapping is whether there is a CPT code for it. So, it's obviously something that prospective customers have in mind. And so, we're able to cite the fact that the AMA has established this code. And so, we do believe that it is something that reduces barriers to adoption.

Okay, perfect. And then I know last quarter, you disclosed some metrics around your routine user customer group that are driving the majority of consumables purchasing and how you're expecting that rev per customer to take up. Just how are you seeing either of those two metrics trend here?

Yes, they're stable. So, I think we talked about an estimate of 118 customers as of the end of the year falling into that group. And that number is pretty stable. It's gone up a little bit. We have had some new installations going into these labs. It's a little bit of a subjective classification that we make, which is why I'm saying relatively stable and gone up a little bit and not citing specific numbers. It's something that we need to pay attention to and see how that categorization and metric evolves over time. But when we look at the, for example, the sort of like same store sales, if you will, the year over year purchases of flow cells amongst that stable group, amongst the entire user base, it's these routine users that are purchasing about 80 to, more than 80% of the total number of flow cells sold are sold into this routine use group. So, I feel like it's consistent with what we expect. And if you dig a little bit deeper, you find that that utilization rate is about double the average. And so, I think we're continuing to see that pattern. And the question is, can we drive those numbers up in terms of the average utilization per purchaser? I think that'll take a little bit of time as our strategy is implemented, but we're starting out good there. And we see consistent numbers.

Okay, got it. And if I could just squeeze in one more, just on the FOIA guide for instrument placements, is understandably conservative. It just seems like you're not seeing that much attrition in your existing installed base, which I might've expected, just given the focus on the fire utilization customers. Can you just talk about your assumptions for instrument placements for the rest of the year?

Yeah, I mean, I think that it's based on a plan that we have of doing five or so new installs per quarter. So that gets you to 15 to 20. Now we did nine new installs here in this first quarter. Some of that is carryover from the fourth quarter. So a little bit of a momentum going into the year. I think for the remainder of the year, if we're staying around this five level, that'll be a good outcome. So those are the assumptions that are driving that. And we are seeing some attrition in the install base. As we start to move away from basic research, some labs that have been on short-term contracts, for example, are saying, okay, well, if you're not supporting these applications, we'll wait until you support those applications. And so we are seeing some systems coming back and it's not alarming to us. And we're not seeing it at all across our group of routine users. So there will be attrition, but we don't expect that attrition to have a meaningfully negative effect on consumables purchases.

Perfect, thanks so much for taking the questions.

Thank you. If you would like to ask a question, please press star one one on your telephone. One moment, please. And our next question will be coming from the line of Jason McCarthy of Maxine Group. Your line is open.

Hi, this is Joanne Lee on the call for Jason McCarthy. Thanks for taking our question. Just one from us. Could you just talk a little bit about what steps you're taking to increase SAFIRE? Utilization among existing routine users.

Thank

you.

Yeah. It's a handful of interactions, but I would really cite three things. Number one is working with those customers, especially the ones doing hematologic malignancy research to adopt our VIA software and become proficient in it. And the reason that we have this focus is that VIA software is armed with all sorts of artificial intelligence and other automated steps for reporting and annotation of samples. This combination of AI and automation really speeds up the process of analyzing and reporting a sample. And so in our view, it increases the capacity of each system, of each lab using optical genome mapping, whether it's the SAFIRE system or the STRATUS system. So adoption of VIA, not just adoption though, we need to work with them to become proficient, will increase their capacity and at least create the potential for them to utilize more. In addition to this VIA adoption and proficiency, we are eager to support labs in expanding their menus. So they may adopt for one particular indication in hematologic malignancies, let's say acute myeloid leukemia or AML. Great, so they adopt for AML and that's what their principal use case is. But now there's been this publication around multiple myeloma, it's clear that they can adopt for other indications. And in doing so, they expand their menu and start to run more samples. We believe overall that these labs doing hematologic malignancy research have a lot more samples to run on the system. And so it's really giving them the use cases to be doing that menu expansion. And then third is just overall proficiency with the workflow. Optical genome mapping is a unique workflow. One of the reasons it is so complimentary to next generation sequencing, just as an example, is that it's completely different. The DNA isolation step is unique, uses different chemistry, different workflow, different steps and enables the access to completely different information. And that's why it's so incredibly useful, but it is a unique process. And so our team and really the largest organization in the company is the organization that is dedicated to supporting these customers and making them as proficient as they can be in the workflow. So software proficiency to increase capacity, support around menu expansion, and then overall proficiency with the workflow to make sure that they can process the samples that are in their lab. Those are the things that we believe will drive the expansion and utilization on a per customer basis.

Got it, appreciate all the insight, thanks so much.

Thank you. And there are no more questions in the queue. I would like to turn the call over to Eric for closing remarks, please go ahead.

Okay, well, thank you, Lisa. Thank you everybody for joining. And we look forward to updating you on our second quarter 2025 results in a few weeks. Thank you very much. Thank you for participating in today's conference call. You may now disconnect.