NEW YORK – Bionano Genomics is winding down activities to gain new customers and plans to further cut its workforce as part of ongoing efforts to save cash.
"Our disciplined approach to reducing operating expenses and cash burn has been challenging, but it's necessary to preserve the value of optical genome mapping that is being brought to labs around the world," Bionano CEO and Principal Financial Officer Erik Holmlin told investors in a conference call on Wednesday afternoon recapping the company's Q3 financial results.
According to Holmlin, Bionano shifted its commercial strategy in September, when it decided to cut "heavy spending" on growing its global installed base of optical genome mapping (OGM) instruments. Instead, the firm is focusing on driving consumables sales across its existing customers, about 150, with Saphyr and Stratys instruments.
Holmlin said these customers consist of well-established ones who already use the technology routinely and those who are ramping up their OGM usage.
For all of these customers, the company sees "significant potential" to grow their instrument utilization and consumable sales, Holmlin said. Specifically, he noted that a vast majority of these labs currently run their OGM platforms for a single indication. As the company fosters their adoption of OGM for multiple indications, their consumables need will grow, he added.
In addition to shifting its commercial strategy, Bionano also plans to further reduce its headcount to fewer than 100 entering 2025. As of Sept. 30, the company had 125 employees, less than a third of the 426 employees it had in May of 2023, as a result of multiple rounds of layoffs.
With all of the cost cutting measures, Bionano anticipates reducing operating expenses by approximately $100 million per year throughout the next six to seven quarters.
Looking at Bionano's Q3 financial results, for the three months ended Sept. 30, the San Diego-based company reported $6.1 million in revenues, a 34 percent decrease compared to $9.3 million a year ago, below analysts' average estimate of $7.9 million.
Revenues included $6.6 million in product and software sales, in line with the company's previous expectation, offset by a $500,000 write-down of aged receivables, or unpaid invoices, for Bionano Laboratories' clinical services, which the company discontinued in March of this year.
According to Holmlin, the third-quarter revenue decline includes a 29 percent reduction in revenues tied to the discontinued clinical service products. The remaining 6 percent decrease is driven by the lagging instrument sales, including in the China market, as a result of "delayed" orders relative to the company's expectations.
"Some key customers had underestimated the time that was going to be required for them to successfully get these purchases approved, so that was what caused the delay," Holmlin told investors.
During the quarter, Bionano sold five OGM instruments, growing the total installed base to 368, a 22 percent increase over the 301 installed systems reported at the end of Q3 2023. Holmlin attributed the slowed installed base increase "a direct result" of the firm's shift in go-to-market strategy and cost-saving initiatives.
"We understand that we may be seeing slower growth in the adoption and expansion of OGM as a result of these expense reduction actions, but we believe that cash preservation and reaching profitability are more important targets than growth at any cost," he noted.
The company also sold 7,835 nanochannel array flow cells during the quarter, up 27 percent from 6,176 in the year-ago period.
Bionano's Q3 net loss was $44.2 million, compared to a net loss of $112.6 million a year ago. The firm did not report its loss per share. Analysts, on average, had expected a loss of $.21 per share for the quarter.
R&D spending in Q3 dropped 66 percent year over year to $4.7 million from $13.8 million in 2023, while SG&A expenses were cut by more than half to $9.5 million from $24.9 million in the year-ago period.
Despite the cost cutting measures, Holmlin emphasized that the company-sponsored clinical trials are still ongoing, though "a little bit more slowly," in order to continue demonstrating OGM's diagnostic utility. As such, the company will keep generating data and publications to encourage clinical adoption and insurance reimbursement of OGM.
Bionano finished Q3 with $8.8 million in cash and cash equivalents $3.1 million in investments, and $11 million in restricted investments. Since then, it has raised $1.2 million in net proceeds from ATM sales and closed a $3.0 million registered direct stock offering.
For the fourth quarter, Bionano expects revenues to be in the range of $6 million to $7 million and for the OGM installed base to reach 370 to 380 systems. Based on that forecast, the company now estimates full-year 2024 revenues to be in the range of $28 million to $30 million.
In mid-day trading on the Nasdaq, Bionano's shares were down 13 percent at $.24.