Bionano Genomics Inc.

Bionano Genomics Inc. (NASDAQ: BNGO) is a life sciences instrumentation company in the genome analysis space. The group develops and distributes the Saphyr system, a platform used for ultra-sensitive and ultra-specific structural variation detection. The above system enables researchers and clinicians to enhance the detection of new diagnostics and therapeutic targets and to simplify the study of changes in chromosomes.

Key Highlights:

• Negative Cash flows: The company reported cash used in operating activities of USD 13.904 million, which stood higher from USD 8.032 million a year ago. The above was primarily due to a net loss which occurred in the current quarter.

• Impressive result from Optical Genome Mapping (OGM): The company reported that it received results from University Hospitals Leuven, Belgium, for its optical genome mapping (OGM) with Bionano’s Saphyr ^® system, which is used for acute lymphoblastic leukemia disease. The report highlighted faster turnaround time, higher success rates v/s traditional methods, and lower cost per sample. 
  

Q1FY21 Financial Highlights:

• BNGO announces its quarterly result, wherein the company posted total revenue of USD 3.168 million, surged from USD 1.136 million in the previous corresponding period (pcp). The growth was supported from both the company’s revenue stream.
• Cost of revenue jumped to USD 2.125 million, from USD 0.856 million in the previous corresponding period (pcp). The company reported a higher selling, general and administrative expense due to a surge in the headcount-related costs due to the acquisition of Lineagen.
• Research and development expenses stood at USD 2.678 million, at par with USD 2.674 million in pcp.
• The company reported a net loss of USD 9.947 million, as compared to USD 10.510 million in pcp.

Q1FY21 Income Statement Highlights (Source: Company Report)

Risks: In order to support the company’s growth prospects, the group would require additional funding as the corporation is incurring losses from its existing operations. Moreover, any delay in the regulatory approvals would dampen the company’s overall performance.

Stock Recommendation:

The company reported an encouraging topline in the first quarter of FY21 but failed to retain the momentum in its bottom line. Moreover, a surge in the input costs due to the new acquisition has dampened the company’s operations. Additionally, the Management highlighted that its operations were negatively impacted due to the travel restriction imposed on account of COVID-19, and further imposition of restriction would pose a threat to the company’s operations. The stock of BNGO declined ~22% and ~30% in the last one month and six months, respectively, and closed below the immediate support levels of 50-days and 100-days simple moving averages (SMA), respectively, indicating a bearish pattern. Considering the above facts, we give a ‘Watch’ rating on the stock at the closing price of USD 5.90 on July 19, 2021.

One-Year Technical Price Chart (as on June 19, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.