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 Holman, 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 14, 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 U.S. 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 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 meaning 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 installed 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 installed base of routine OGM and VS software users. Drive utilization through adoption of VS 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 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-GAAP 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 GAAP 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-GAAP 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 31, 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 sales sold, we can make a year-over-year comparison by removing the flow sales sold to any new customers in the first quarter of 2024 And the same thing in Q1 2025. Now doing so reveals that flow sales 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 want to 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 12-31-2020. 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 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 1 variants that were missed by standard cytogenomics. Now, these Tier 1 variants are those with direct diagnostic, prognostic, and therapeutic significance. And overall, in 58% of the cases, OGM detected at least one Tier 1, Tier 2, or Tier 3 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 margins. 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 of 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.