Q1 2022 Bionano Genomics Inc Earnings Call
Thank you for holding ladies and gentlemen, and your online for this bio nano genomics conference call. At this time, we are still gathering industrial participants who will get started momentarily. We thank you for your patience and ask that you. Please continue to hold.
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Please standby we're about to begin.
Good day and welcome to the bio nano genomics first quarter 2022 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, Jeff and good afternoon, everyone.
Welcome to the bio nano genomics.
First quarter 2022 financial results conference call, leading the call today is Dr. Eric Homeland CEO of bio nano here.
Going by Chris Stewart CFO Biodata.
After market close today <unk> issued a press release announcing its financial results for the first quarter of 2022.
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 bio nanos revenue outlook strategic and commercialization plans.
His baited benefits or improvements about nanos product, including the Sapphire system and our next clinical software.
Anticipated milestones for 2022, and the advantages of the Sapphire system over current technologies and biomass expectations regarding study results and anticipated benefits of these studies in driving adoption of ODM.
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 <unk> press release, and bio Nanos reports filed with the SEC.
These forward looking statements are based on information available to bio nano today and the company assumes no obligation to update statements as circumstances change.
In addition to supplement bio nanos financial results reported in accordance with U S. Generally accepted accounting principles or GAAP. The company is reporting non-GAAP operating expense.
This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable GAAP measures.
Should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP.
No standardized meaning prescribed by GAAP and is not prepared under any comprehensive set of accounting rules or principles a.
A description of non-GAAP operating expense and reconciliation of non-GAAP operating expense to GAAP operating expense 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.
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 Eric.
Thank you Amy and good afternoon, everyone. We are really thrilled with our Q1 results the momentum Bill.
Over 2021 has continued into this first quarter of 2022.
I want to begin today's call with a summary.
Some key business highlights so revenue was $5 7 million for Q1, 2022, which represents an 80% year over year increase compared to the same period.
2021, and this first quarter of 2022.
<unk> was a record for any first quarter in the company's history.
Our staff our installed base grew to 176.
Systems as of March 31, 2022, which represents 64% growth over Q1 2021.
In the quarter, we sold 3225 <unk>.
Represents a 24% year over year increase compared to the same period in 2021, Yes, we ran 329 samples and borrowed out of laboratories, and the first quarter of 2022, and that's a 45% year over increase year over year increase from the same period in 2000.
'twenty one.
We count is up 42 publications, all optical genome mapping or ODM and the quarter end, we announced publication of the first readout of our ongoing clinical study of postnatal genetic diseases rich reported.
Strong data that we believe will allow completion of the study this year.
Finally, our symposium, which is the quintessential events, where the ODM community.
Kicked off this year with a 63% increase in average daily attendance over 2021, which was the first year that we hosted a symposium.
And this year it included 31 presentations.
37, posters, all of which highlighted <unk> utility in a variety of applications across genetic diseases cancer and in <unk>.
All of this from a bio processing and gene editing.
Other events in the first quarter, including included China Symposium, which was a version of symposium that was hosted entirely in Mandarin and featured many speakers.
The experience with optical mapping in China, we were at <unk>, which is the college of medical genetics, and genomics and Thats why we launched our rugged initiative, which focuses on the 350 million people with rare diseases, we were at the AAD.
We see our annual meeting.
Featured optical genome mapping and an additional 19 presentations and posters overall, which continue to expand the message of how optical genome mapping is utilized.
Our customers are consistently excited about the capabilities of optical genome now being EMEA or working with us to.
Annualized articles now being around the world.
Now, let's take a moment to speak about the performance of our stock price as you know our sector of growth stocks in healthcare has experienced a greater impact than <unk>.
The broader market, while we are disappointed with our performance over the past several months our focus as leaders of the company is on executing our long term growth plan.
Our milestones that we outlined during our last call and we will revisit today, which have been designed to drive value.
And we're pleased that we have achieved all of our anticipated milestones in 2021, and we expect to achieve those stated milestones for 2022.
Looking ahead to the rest of this year, our financial guidance remains on track and the company expects full year 2022 revenues to be in the range of 24% to $27 million, which would represent a range of 33% to 50% growth over full year 2021.
Our revenue and we expect the second quarter 2022 revenues to be in the range of six to $6 5 billion.
Now before handing over to Chris to cover some of the financials in a little more detail I want to spend time to break down our plan for growth and long term value, which is based on the five pillars, we set out during our last call.
The first pillar is expanding commercial traction and validation of optical genome mapping with sapphire.
We want to drive optical genome adoption of optical genome mapping by targeting roughly 2500 labs, comprising academic medical centers and regional reference labs that account for about half of the sample volumes processed and cytogenetics.
Today.
The application is driving adoption of our genetic disease research, including rare undiagnosed genetic diseases are rugged and cancer and.
In rugged.
Optical genome mapping is providing valuable information and diagnosing diseases that are challenging to diagnose using current techniques and cancer. Our primary focus initially is on blood cancers leukemias and lymphomas.
And if we are able to continue to penetrate these segments and growing our installed base. We believe it will validate optical genome as a mass method that is gaining widespread traction in the field.
Which can play an important role in influencing the various agencies that evaluates for example applications for reimbursement of ODM based tests or consider a consideration of ODM and various guidelines set by the medical societies.
We have set an ambitious goal of reaching a 240 some of our systems installed worldwide by the end of 2022, and we are on track to achieve at.
Another important component of validation that comes with increasingly installed base would be ODM users develop their own assays and validate them as laboratory developed tests or <unk> were similar types of assays outside the U S.
Growing installed base and number of laboratory developed tests would provide.
Agencies that evaluate the relevance of new medical technologies, such as <unk>.
And those agencies include one like the American Medical Association centers for Medicare and Medicaid services World Health organization and others with the evidence that there is an established leader in the field that optical mapping could impact.
So the first pillar is focused on expanding the installed base, which drives validation. The second is to delight our customers with robust products that are suitable for routine use at scale. We believe successful customers at this stage of our commercial ramp are incredibly important not only do we expect to Denver.
Form a part of our <unk>.
As for consumables revenue growth, but we expected to serve as a network of early adopters that advocated for the utility of <unk> <unk> as a partner.
One of the areas, where our commercial head count has grown substantially as interest in our solutions and this is the team that install sapphire systems.
<unk> lab and data analysis personnel and support them as they run any analyzer sample. We believe this investment is important to keep the installed base growing productive and to keep them excited about the increasing capabilities of optical genome mapping.
In addition to building and fielding a strong support team.
There are a number of planned product updates, including updates to our DNA isolation and labeling chemistries integration of optical mapping into our Nx clinical software.
All of these.
New advances should simplify product workflows and in turn enhance the ease of use and eliminate certain aspects of the product design that we have found to be challenging to either product shelf life our performance in the field.
We're very focused on customer delight and product robustness.
And a third pillar.
Our plan focuses on clearing the path to a reimbursement of optical genome mapping based tests.
Building, a critical mass of ODM data through our family of clinical studies and we've talked to you about these studies.
On a repeated basis, it's a significant investment that the companies, making and these studies are designed to first evaluate optical genome now being utility in a variety of indications genetic diseases hematologic malignancies and cancer.
Solid tumors.
And as these studies progress they provide the essential comparisons against the standard of care that could if compelling result in optical genome mapping being included into medical society recommendations such as those by college of medical genetics.
World Health organization.
National comprehensive cancer network or <unk> cancer.
These four studies are underway or getting underway. They provide this critical support and will further advance our ability to penetrate into our target markets and support potential third party reimbursement by insurance companies and other agencies responsible for health care.
Yeah.
These studies span our major markets and have been designed to demonstrate articles about mapping as an alternative to traditional cytogenetic methods and the emphasize key endpoints.
Concordance with standard of care.
The increase in the success rate for finding pathogenic variants health and <unk> health economic impact.
The potential for revising protocols for patient management that we hope results in better outcomes.
The long term goal of all of these studies is to provide critical data.
That support optical genome mapping as a standard of care in the field.
As these studies progress we believe the data will.
Serve as a basis for applications of optical mapping on a go forward basis, and we plan to keep you continuously updated and you'll be seeing more and more publications on these studies going forward.
Now the fourth pillar of our plan is to advance our products in a way that enables higher market adoption of current products and entry into new markets.
In addition to rolling out enhancements that we believe improve their products in customers hands as we've talked about centered on robustness.
We are working on major new products that we believe will that we anticipate releasing over the course of this year and into 2023.
Now the first of those products.
<unk>.
Version seven of our Nx clinical software.
Which we acquired through the acquisition about discovery.
Now this version of <unk> clinical is being designed with fully integrated the structural variation and visualization interpretation and reporting capabilities that ex political already has for.
Next generation sequencing and microarray data, we believe that this combination of data types.
In a single software environment with the capabilities that bio discovery software is widely known for across cytogenetics inside of genomics.
Can be that innovation that transforms the way that we will see the genome.
We believe that adding these capabilities will also enhance the value of optical genome mapping.
And can be a significant driver of future adoption of MGM.
The second key aspect to attract advancement is the next version of genome mapping instrument.
We completed a prototype of that system last year, and we're focused on bringing a pre commercial version to the field. This year before we finalize development.
In 2023, and <unk> released the new system commercially.
With our current Sapphire assistant we believe we have a product that is suitable for most labs worldwide.
But those labs account for only about half of the volume of samples.
The balance of the volume is concentrated in a smaller number of wells, we estimate to be fewer than 500 that Brian very high volumes around the world.
Some of those institutions are currently evaluating the sapphire system and establishing their plans for menu development, but we believe a higher throughput system will be important if we want to capture that volume.
Other capabilities that this new system will have include several random access, allowing for staff processing the ability to scale from one to six systems working in unison and it will also be part of an integrated workflow supported with automation of sample preparation.
And integration of Nx clinical software.
In addition to targeting these high volume segments of the market. There are other segments, including those outside the U S that will benefit if that system is eventually taken through a process of FDA clearance.
With this new generation of system.
Tend to begin the process of taking it through the FDA. After its commercially released in 2023. It is important to note that with SaaS fire, which doesn't have FDA clearance. We believe we can address the morning majority of labs and testing volumes in markets. We are currently targeting.
But we also believe having FDA approval for the next instrument can expand our total available market and accelerate global adoption, so that will be a key advancement.
Finally, as our fifth pillar, we intend to make software a strategic driver of Iowa Analyst solutions, we are using <unk> clinical indexes copy number the two software products from Bayou discovery.
To target the existing installed base of sequencing and arrays, which we estimate to be at least 10000 systems installed worldwide. We believe our products software products have a strong value proposition for these customers today and increasing the number of Nx clinical and Nexus copy number of subscribers.
Media, increasing the number of buying now subscribers will help us build relationships with these customers so when.
When they are ready to incorporate optical genome mapping into their labs, they will be familiar with biogen.
Our team and our tools.
This quarter, we launched version six two of our next clinical software with an integrated genomic scar analysis floor homologous.
Homologous recombination deficiency or HRD and this feature provides a comprehensive consistent and automated analysis of Biomarkers from next generation sequencing antimicrobial Ray data that can help clinical researchers stratify therapeutic response across multiple tumor types. This analysis.
This allows cancer researchers to gain important insights from Jenny genetic data that they are already generating from arrays and sequencing and.
And we believe this product will be useful to next generation sequencing users focus on oncology by providing them with a powerful tool for visualization interpretation and reporting of their data and now <unk> Nx clinical seven point OS is available with the integration of optical.
Mapping we believe.
This capability will drive more adoption of <unk> solutions that we've already had.
Data presented from Augusta University that shows the importance of combining sequencing an ODM analysis in this way, especially in hematologic malignancies.
Now all the time, what we are executing this strategy.
It's all in the backdrop of a challenging environment with the lasting impact of Covid COVID-19.
The global instability, we are face potential challenges in staffing and supply.
And so wherever possible we believe we have anticipated these challenges.
And while we believe that they represent an ever present risk or concern, we have announced them now for several quarters and we will continue to be vigilant against them.
I am very proud of what our team has done to operate the company and I feel confident that if we maintain that vigilance we.
Have the opportunity to face the challenges that may come.
Now at this point I would like to turn the call over to Chris.
Our CFO for an overview of our financials Chris.
Eric the first quarter of 2022 is another great quarter for bio nano we demonstrated strong performance in the face of our typical Q1 seasonal softness and the macro headwinds that Eric mentioned.
We recorded significant year over year revenue growth and continued to steady growth in the installed base of Sapphire AGM systems.
Our revenue in the first quarter of 2022 was $5 $7 million in line with our previous guidance range of five five to $5 8 million.
This result is an increase of $2 5 million or 80% over the first quarter of 2021.
Compared to the fourth quarter of 2021 results were consistent with the typical seasonality that we see in our business.
Gross margin for the first quarter came in at 15% compared to 33% in the first quarter of 2021, and just 4% in the fourth quarter of 2021.
The year over year decrease was primarily due to lower yields on our chip consumables produced at one of our contract manufacturers we.
We are making good program, we are making good progress with our supplier and have started to see improvement to our yields. However, we expect we expect it to take a few more quarters before our yields returned to historic levels and gross margins significantly improved.
First quarter 2020 to GAAP operating expense was $30 8 million compared to $12 $2 million in the first quarter of the prior year non.
non-GAAP operating expense was $24 3 million compared.
Compared to $11 8 million in the first quarter of 2021 first.
<unk> first quarter 2022, non-GAAP operating expense excludes $5 1 million in stock based compensation expense and $1 4 million in amortization of intangibles.
The year over year increase in Opex was primarily due to increased head count related spending increased R&D expense and increased marketing expense.
We ended the first quarter with 309 employees up from 164 employees in Q1 of 2021.
Going forward, we expect the growth in head count and spending to moderate from the pace of growth we saw last year.
We continue to be well capitalized with $216 5 million in cash cash equivalents and available for sale Securities as of March 31, 2022.
As Eric mentioned, we remain on track to our full year 2022 revenue guidance to be in the range of $24 million to $27 million.
Q2 revenue is expected to be in the range of six to $6 5 million.
Before I turn the call back over to Eric I'd like to take this opportunity to remind you that our annual meeting is coming up on June 9th you.
You may have received your proxy and voting materials in the mail or online three year brokerage firm. Please vote your shares as soon as possible as this will help us get to a quorum for the annual meeting.
Now I'll turn it back over to Eric for closing remarks.
Great. Thank you, Chris and I want to close with a review of our milestones for this year and we're on track to achieve our elevate 2022 milestones as we outlined on our last call. We have several milestones planned for this year across the five pillars of <unk>.
Including in reimbursement clinical studies, expanding awareness and product development.
In the first quarter, we plan to receive IRB approval for our hematologic study and to apply for a category one CPT code for optical genome mapping and I'm pleased to say that both were completed we're enrolling subjects in the heat study and gathering feedback from the CPT code application process.
And we of course look forward to updating you on the milestones that we're going to be achieving here in the second quarter and over the course of the remainder of the year in closing I just want to reiterate that we're really excited about the progress that we've made so far.
In 2022.
And we look forward to updating you soon about this second quarter.
As well as our progress for the remainder of the year and with that yes.
We are ready to take questions.
Thank you ladies and gentlemen, if you have a question or comment is star one on your Touchtone phone again that is star one for any questions or comments at this time.
Our first question comes from Michael <unk> at Maxim Group. Your line is open. Please go ahead.
Hey, Thanks for taking the question.
Sure.
I would like to start off I guess.
A bit of a big picture kind of question and thank you for a bit of speculation here.
Could you give us.
Kind of your idea of what you think of the application utilization of Sapphire that type of customer and what the addressable market looks like for SaaS higher on the other side.
<unk>.
Of the clinical programs, assuming that gets you reimbursement into the clinical guidelines.
Essentially how would a sapphire system was validated in reimbursed diagnostic use in those four markets be used differently from how it is today.
Thanks, Michael Good question.
I think that.
We kind of understand this roadmap because it's been followed before for other solutions such as micro arrays.
Next generation sequencing in certain applications and so clearly today.
People, who are applying obstacle genome mapping and their clinical research are using it to find.
More answers and increasingly they are integrating the information they get from analysis with optical genome mapping together with sequencing analysis to provide really a comprehensive view of genome variation, which can answer questions about <unk>.
Why a particular phenotype exist but.
In many settings, they're being used for research applications that begin to investigate pain.
Patients or subjects in our clinical research study two.
<unk>.
May have had negative by traditional methods.
Our standard testing and so they are involved in a clinical trial to explore.
Why they're negative by standard of care and yet.
Clearly exhibiting symptoms and signs of a genetic disease or cancer. So the answers to those questions are powerful research findings that can define few.
Future task or future interventions and maybe even pull in some existing interventions that were missed by the standard of care for some reason so.
That's a good synopsis of current use.
The <unk> space now as clinical adoption.
Happens more frequently, especially on the heels of inclusion of optical genome mapping as a first line test recommended by medical Society guidelines.
Just as the first line test so it becomes the standard of care.
So when the sample is submitted to the laboratory <unk>.
The laboratory is typically follow these guidelines very closely.
And so they will apply optical genome mapping first and there will be other analyses that follow it.
After.
And so that's what we believe will be pretty much. The that's our goal as you say.
In conducting these studies and hopefully influencing the medical society guidelines, but thats.
That's only part of our vision.
Because as you know you are an expert on optical genome mapping.
It doesn't detect sequenced variance, but there is a solution out there that does really well is next generation sequencing and so what we believe is an outstanding future state.
And it's something that we believe the market recognizes as well and is working toward is that.
Genome sequencing is recommended as a first line analysis for sequence variance and optical genome mapping could potentially be recommended as a first line analysis for structural variance.
Those two are used in combination.
And that's the game changer, and so when you're talking about the volume of samples that are going through cytogenetic analysis now they are being sequenced in NAFTA every single time, because those are the first line <unk>.
Recommended test.
That medical societies advocate and a lot of work to be done between now and then and as you know, it's a competitive environment and there can be new technologies and new solutions, but that's the vision that we're driving toward.
Thank you I really appreciate that answer.
Just a.
General follow up I'd like to get a bit more into the.
Onto the finances and specifically on your.
On your revenues.
On the on the unit placements throughout 12 placements this quarter, it's a bit of a decline from the fourth quarter does this track with the typical seasonality of the first quarter versus the ended the year that you.
As you would normally see in previous quarters.
Yes so.
Sure so.
Hi, Mike.
The business as a whole and Chris mentioned this in his comments that.
We're accustomed to.
We're accustomed to a seasonality there.
<unk>.
In Q4 was.
Very solid for.
Installations, and I want to be clear here, we're talking about systems that we've installed and we're not we're not measuring.
The definition of placement is variable in the field and so we're not actually talking about like deals that we did per se our Ceos that came in.
We're just talking about systems that were installed in the growth in the installed base. That's been most objective metric, but one of the things that I can tell you about it is that we ended the quarter with several systems that were in a backlog for installation and that backlog was driven by some of the <unk>.
First of all the crime and Covid, which reduced staffing and caused delays in installations. So I think the answer is we always expect we expected a sequential decline the overall demand.
Success on the business side.
Is solid our ability to operationally install them was impacted by Covid and.
We are catching up.
Alright. Thank you very much I really appreciate you taking the questions.
No problem. Thank you.
With no other questions holding I'll turn the conference back to Dr. Hoffman for any additional or closing comments.
Well, thank you very much Jeff well I appreciate everybody joining.
This call and as I've said already we look forward to updating you on our progress during the second quarter in our next call. So thank you very much.
And ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect at this time.
Okay.
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