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Item 1. Business

2022-03-01 compared with 2021-03-23 · 310 added, 403 removed, 386 unchanged (65% of the section changed)

We are a global leader in optical genome mapping, or OGM, solutions for genome analysis.

We provide tools and services based primarily on our Saphyr® system to scientists and clinicians conducting genetic research and patient testing.

We also provide diagnostic testing services for pediatric patients suspected of neurodevelopmental disabilities through our wholly owned subsidiary, Lineagen, Inc.

Our Saphyr system is a platform for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the identification of structural changes in chromosomes, known as cytogenetics.

Our Saphyr system is comprised of an instrument, chip consumables, reagents and a suite of data analysis tools.

We also offer genome analysis services with the Saphyr system for researchers who want to evaluate OGM data quickly and with a low up-front investment.

Lineagen has been providing genetic testing services to families and their healthcare providers for over nine years and has performed over 65,000 tests for those with neurodevelopmental concerns.

Optical Genome Mapping

Optical genome mapping is a method of genome analysis that reveals structural variations, or SVs.

Structural variation refers to large-scale structural differences in the genomic DNA of one individual compared to another.

Each structural variation involves the rearrangement or repetition of as few as several hundred base pairs to as many as tens of millions of base pairs.

Structural variations may be inherited or arise spontaneously.

Structural variations are well known to cause diseases such as genetic disorders, cancer and others.

We believe no other products exists that can detect structural variations more comprehensively or cost and time-efficiently than our Saphyr system does.

Our customers include researchers and clinicians who seek to identify and understand the biological or clinical implications of genome variation.

OGM with the Saphyr system can be used to facilitate new research and to improve the treatment of patients through better testing and development of new medicines or treatment protocols.

It can also be used as a single alternative to multiple traditional cytogenetic tests like karyotyping, microarrays and fluorescent in-situ hybridization (FISH), which are expensive, slow and labor-intense.

OGM with the Saphyr system provides an advanced solution designed to simplify workflow, reduce cost, and increase diagnostic yield.

Our customers also include researchers in non-human segments, such as agricultural genomics, seeking to advance their understanding of how structural variation impacts industrial applications of plants and animals.

We have established relationships with key opinion leaders in genomics research and clinical applications, including rare diseases and oncology, including some of the world’s most prominent clinical, translational research, basic research, academic and government institutions as well as leading pharmaceutical and diagnostic companies.

Examples include Augusta University, Children’s Hospital of Philadelphia, Children’s National Health System, Boston Children’s Hospital, PerkinElmer, GeneDx, Mayo Clinic, Columbia University, DuPont Pioneer, Garvan Institute of Medical Research, Genentech, McDonnell Genome Institute at Washington University, National Institutes of Health, Pennsylvania State University, Radboud University Medical Center and Salk Institute for Biological Studies.

We believe that Saphyr is the only genome analysis platform capable of comprehensive, cost effective & efficient detection of large structural variations, typically involving 500 base pairs and larger.

Today, these structural variations cannot be reliably detected by gene sequencing.

Research Use Only (RUO) high throughput sequencers, of which there are approximately 6,000 - 7,000 currently installed worldwide, cannot reliably detect the larger structural variations that our Saphyr is designed to detect.

Therefore, Saphyr may be adopted alongside this installed base of sequencers as a complement that is designed to give users the ability to see a much wider scope of genome variation than ever before.

The Saphyr system, which is for RUO, is starting to be adopted by cytogenetics labs that seek to use it in commercial clinical tests of its patients as a laboratory-developed test, or LDT.

We estimate that approximately 2,500 cytogenetics labs exist worldwide.

These labs currently rely on legacy methods for clinical tests and research that look at chromosomal structure, location, and function in cells.

Prominent guidelines for oncology and genetic disease clinical diagnostics recommend use of these existing methods for first-line structural variation testing.

The organizations issuing these guidelines include, among many others, World Health Organization (WHO), National Comprehensive Cancer Network (NCCN), American College of Medical Genetics (ACMG) and American College of Obstetricians & Gynecologists (ACOG).

Over the past few years, several major medical institutions have conducted more than 20 human translational research and human clinical studies to assess Saphyr’s ability to detect structural variations and diagnose patients and, in certain studies, to compare those results to those produced via existing cytogenetic methods.

In 2020, the results of several of these studies were published by the institutions.

We believe that these publications, as well as additional forthcoming publications and the results of large-scale clinical studies that are being conducted in 2021 will lead to further adoption of the Saphyr system.

Diagnostic Services

Through our wholly owned subsidiary, Lineagen, acquired in August 2020, we provide proprietary molecular genetic diagnostic services for individuals demonstrating clinical presentations consistent with neurodevelopmental disorders (NDDs), including Autism Spectrum Disorders (ASD) and other disorders of childhood development.

Lineagen's comprehensive genetic testing services can detect a majority of known NDD-causing genome variations, including testing for proprietary variations, and combines testing with Lineagen’s Proprietary Variant Index (PRISM) that uses a proprietary database of over 35,000 individuals with NDDs tested with over 60,000 tests that provides additional evidence for candidate genes associated with NDDs.

We are a global genomics company focused on elevating the health and wellness of all people.

We are pioneers of optical genome mapping, or OGM, for genome analysis and provide a suite of genome analysis solutions designed to enable researchers and clinicians to reveal answers to challenging questions in biology and medicine.

Our mission is to transform the way the world sees the genome through OGM solutions, clinical testing and laboratory services and software.

We offer OGM and software solutions for applications across applied, translational and clinical research and we offer diagnostic services to physicians specializing in medical management for individuals with genetic conditions such as pediatric neurodevelopmental disorders, or NDDs, including autism spectrum disorders, or ASDs.

We market and sell the Saphyr ® system, which delivers OGM data to enable ultra-sensitive and ultra-specific detection of all classes of structural variation.

The Saphyr system is used in clinical and discovery research to streamline the identification of structural changes in chromosomes, known as cytogenetics, and to accelerate the search for answers in genetic disease and cancer applications.

The Saphyr system is comprised of an instrument, chip consumables, reagents and software containing a suite of data analysis and visualization tools.

In addition to our Saphyr system and software products, we offer laboratory services to provide data generated by the Saphyr system to researchers seeking access to OGM data.

The Saphyr system has been shown to outperform the current gold standard methods for cytogenetics and molecular genetics including karyotyping, fluorescence in-situ hybridization (FISH), Southern blot and chromosomal microarray.

The Saphyr system has also been shown to identify structural changes in chromosomes that cannot be identified using current commercially available solutions for gene sequencing.

We provide proprietary molecular genetic clinical testing services for individuals demonstrating clinical presentations consistent with NDDs, including ASDs and other disorders of childhood development.

Our comprehensive genetic testing services include reporting for known NDD-causing genome variations, including testing for proprietary variations, and combines testing with our Proprietary Variant Index (PRISM) which uses a proprietary database of over 35,000 individuals with NDDs tested with over 60,000 tests that provides additional evidence for candidate genes associated with NDDs.

This testing is a CLIA-certified diagnostic testing service, and we have expertise in selling cytogenetic assays to physicians, providing genetic counseling services to individuals undergoing testing and their families, and contracting with third-party payors for reimbursement.

We also provide laboratory services to clinicians, scientists, pharmaceutical companies, and others who are seeking to incorporate OGM into their genomics research without the need to bring our Saphyr system in house.

Laboratory services for OGM are performed in our laboratory facilities in San Diego and at partner laboratories in the United States and Europe, and serve as solutions for researchers and clinicians who would like to use OGM for various applications in genomics but have yet to acquire the Saphyr.

Our software solutions deliver genomic data interpretation solutions tailored for research use in cytogenomics and molecular pathology labs in genetic disease and cancer research markets, with an emphasis on structural variation.

We offer an industry-leading, platform-agnostic software solution that can integrate OGM with next-generation sequencing, or NGS, and microarray data.

This software solution is designed to provide analysis, visualization, interpretation and reporting of structural variants, single-nucleotide variants and absence of heterozygosity across the genome in one consolidated view.

Our software currently enables analysis of NGS and microarray data, and we are developing a version that we expect to be able to incorporate OGM data to make our software a more comprehensive offering for analysis of genomic data.

We believe the integration of OGM with data types common in the industry, such as Variant Call Format (VCF), and Binary Alignment Map (BAM), should accelerate and broaden our position in digital cytogenetics and comprehensive genome analysis by enabling us to simplify the assessment of clinically relevant variants in cytogenomics applications, potentially reducing interpretation time per sample and expanding our reach into the discovery and translational research markets through the combination of OGM and NGS data.

Over the past year, we believe we have transformed our business from an instrument company to a provider of a full suite of genomics solutions.

We expanded into molecular genetic clinical testing services through our August 2020 acquisition of Lineagen Inc.

Our recent expansion into software solutions was made possible by our October 2021 acquisition of BioDiscovery, LLC.

We believe that these acquisitions, along with internal investments in research and development and the build out of our commercial teams, have positioned us well to make OGM standard of care for many constitutional genetic disorders and cancers.

Recent Highlights

Commercial Adoption of Offerings for Saphyr

Bionano executed on its commercialization strategy, expanded the utilization of its Saphyr system and increased the amount of Bionano data generated across the globe, driving scientific momentum.

• Grew our installed base to 164 as of December 31, 2021, an increase of approximately 69% from a total installed base of 97 as of December 31, 2020.

Installed base represents the global number of Saphyr instruments installed at end-customer locations and therefore ready to process optical genome mapping.

• Sold 3,204 flowcells in the fourth quarter of 2021, an increase of approximately 29% over the 2,484 flowcells sold during the fourth quarter of 2020.

For the year ended December 31, 2021, total flowcells sold reached 12,518, an increase of approximately 98% over the 6,311 flowcells sold during the year ended December 31, 2020.

The Saphyr chip is the consumable that packages nanochannel arrays for DNA linearization.

In its current form, each Saphyr chip has three flowcells.

Flowcells sold refers to the units of genome mapping consumables used for analyzing one genome, purchased by customers to process optical genome mapping.

Validated the Utility of OGM for Applications in Clinical Research with Benchmarking, Scientific Publication and Adoption

Rigorous and extensive benchmarking of Saphyr was conducted against traditional cytogenetic methods and long read sequencing and these results were published and validated in several key publications, presentations and announcements including:

• OGM demonstrated 100% concordance with karyotyping, FISH, and chromosomal microarray in constitutional disorders in two studies appearing in the August 2021 issue of the American Journal of Human Genetics;

• The authors in these back-to-back AJHG publications describe OGM as a better alternative to traditional cytogenetics assays for both inherited genetic disease and hematologic malignancy applications since it consolidates multiple antiquated methods requiring manual integration for interpretation into a single workflow with higher resolution for detection of all classes of structural variants.

• University Hospitals Leuven in Belgium, received its accreditation from the Belgian Accreditation Body (BELAC) for using OGM in analysis of acute lymphoblastic leukemia (ALL) and showed significant improvements in cost and turnaround time relative to traditional techniques of FISH and MLPA.

• Published study by Johns Hopkins University in the Journal of Clinical & Anatomic Pathology outlining a stepwise approach to adoption of OGM for cancer analysis in their cytogenetics lab.

• A team from the University of Iowa published the largest clinical research study to date evaluating OGM for facioscapulohumeral muscular dystrophy (FSHD).

The study, published in the Journal of Molecular Diagnostics, concluded that OGM can be performed quicker, more accurately, and more reproducibly than the current gold standard method of Southern blot analysis.

• Publication of a study and of 76 subjects by authors at The University of Texas MD Anderson Cancer Center, which evaluated the utility of OGM as an alternative to traditional cytogenomic methods for the characterization of structural variation (SV) in myelodysplastic syndrome (MDS).

The study was published in Blood, the journal of the American Society of Hematology (ASH) and presented at the 2021 ASH annual conference.

• Publication of a study from the International COVID-19 Host Genome Structural Variation Consortium, which is a global open host genome structural variation consortium for COVID-19 response.

The consortium is comprised of over 30 researchers from leading institutions who are using OGM to assess structural variations in the human genome that could be contributing to COVID-19 susceptibility or progression.

In this study, OGM was conducted on samples from 52 severely ill COVID-19 subjects to investigate structural variations as decisive predisposition factors associated with COVID-19.

The researchers identified 7 structural variations in 9 subjects (17% of subjects analyzed) involving genes implicated in two key host-viral interaction pathways:

innate immunity and inflammatory response, and viral replication and spread.

• Researchers from leading institutions in the US published in medRxiv the first readout from the ongoing multi-site clinical research study designed to support OGM as an alternative to traditional workflows in cytogenetics for postnatal inherited genetic disease.

The IRB-approved clinical study evaluated 331 individual sample runs from 202 unique samples across five sites for interim measures of key endpoints:

◦ Concordance with traditional techniques – 97.7% (214 out of 219 samples)

◦ Partially concordant with traditional techniques – 2.3% (5 out of 219 samples)

◦ Concordance with traditional techniques for pathogenic variant calls – 100% (219 out of 219 samples)

◦ Concordance with chromosomal microarray (CMA) – 100% (103 out of 103 samples)

◦ First-pass success rate for OGM – 94% (311 out of 331 samples)

◦ Reproducibility of analytical QC from site-to-site – 98.8% (171 out of 173 replicates)

◦ Reproducibility of pathogenic variant calls from site-to-site – 100% (173 out of 173 replicates)

• Researchers from the Medical College of Georgia/Augusta University published a study that evaluated the performance and utility of combining OGM and a 523-gene NGS panel for comprehensive evaluation of myeloid tumors and compared it to standard cytogenetic methods (karyotyping and fluorescence in situ hybridization (FISH) and a 54-gene NGS panel.

The combination of OGM and a 523-gene NGS panel is superior to standard methods and more cost effective than whole genome sequencing.

COVID-19 Overview

The COVID-19 pandemic, and the measures imposed to contain this pandemic in areas where we operate our business and elsewhere have disrupted and are expected to continue to impact our business.

For example, to comply with applicable regulations and to safeguard the health and safety of our employees and customers, we temporarily reduced our on-site business operations, implemented work-from-home practices, and modified other business practices, including those related to employee travel and physical participation in meetings, events, and conferences.

In addition, the quarantine of our personnel and the inability to access our facilities or customer sites adversely affected, and is expected to continue to adversely affect, our operations.

During the twelve months ended December 31, 2020, we experienced a $1.6 million decrease in revenue, as compared to the same period of the prior year, which we largely attribute to the COVID-19 pandemic due to labs shutting down and other measures restricting operation of facilities where our instruments are installed.

While the COVID-19 pandemic did not prevent us from operating our business during the twelve months ended December 31, 2020, we took steps to reduce our cash used in operations in order to offset the decrease in cash generated from sales.

For example, we implemented salary reductions for most of our salaried employees and reduced the number of working hours of most of our hourly employees by 25% from April through June of 2020.

Disruptions resulting from the COVID-19 pandemic may continue to impact our operations and overall business.

The impact of COVID-19 is evolving rapidly and its future effects remain uncertain.

As a result of such uncertainties, the duration of the disruption and the related impact on our business, operating results and financial condition cannot be reasonably estimated at this time.

We are continuing to closely monitor the impact of the COVID-19 pandemic on our business and are taking proactive efforts designed to protect the health and safety of our workforce, continue our business operations and advance our corporate objectives.

Recent Saphyr System Highlights

Executed on Commercialization Offerings for Saphyr

The Company executed on its commercialization strategy, expanded the utilization of its Saphyr system and increased the amount of Bionano data generated across the globe, driving scientific momentum.

The installed base of Saphyr systems was 97 at the end of the year, an increase of 24 from year-end 2019.

Validated System Utility with Benchmarking, Scientific Publication and Clinical Adoption

• OGM concordant with traditional cytogenetics in landmark leukemia study;

• International consortium demonstrates that Bionano's Saphyr detects all 100 chromosomal aberrations in 85 Genetic Disease Patients;

• Large multi-center study on 100 AML samples shows that Saphyr outperforms standard-of-care and leads to the recommendation of Saphyr being a first line test.

• Publication reveals in side-by-side comparison that method using PacBio sequencing detects only 72% of the large structural variants detected by optical genome mapping with Saphyr;

• University of Iowa Hospitals and Clinics (UIHC) switched their method of clinical molecular testing for patients with presumed Facioscapulohumeral Muscular Dystrophy (FSHD) to an assay based on OGM that they developed using Bionano’s Saphyr and validated as a Laboratory Developed Test (LDT).

Expanded System Beyond Cytogenetics and Improved Diagnostics

Researchers and clinicians demonstrated the ability of OGM with Saphyr to go beyond the scope of detection of standard cytogenetics and traditional diagnostics as evidenced in several key publications including :

• UCSF & Children’s Hospital Oakland study finds that Saphyr can diagnose an additional 18% of children with genetic disease who were undiagnosed after standard of care testing.

Revealed Genetic Drivers of Severe Covid-19 Susceptibility

OGM with Saphyr identified SVs that affect genes in pathways that control immune and inflammatory response, viral reproduction and mucosal function.

These results became the foundation of multiple research efforts, including one international consortium and publication:

• COVID-19 Host Genome SV Consortium identifies structural variants with possible roles in pathogenesis and outcomes in severely ill COVID-19 patients using Bionano's Saphyr® system.

Expanded Applications of OGM in Human and Non-Human Research

Several other published studies illustrated key applications of OGM to areas of human and non-human research, including:

• Bionano Genomics data is essential part of the first ever complete assembly of a human X-Chromosome;

• Vertebrate Genome Project rules Bionano optical genome mapping technology as essential part of assembling reference quality genomes;

• Bionano's Saphyr plays essential role in identifying three previously unknown genetic mutation types in cancer in study from Weill Cornell.

Advanced and Optimized the Performance of the Saphyr System for Adoption in Labs that will Develop Clinical Assays and LDTs

The Company affected several enhancements to the system and made significant advancements in the system’s capabilities including utility in identifying SVs in solid tumor oncology indications and DNA isolation:

• Bionano Genomics Releases Saphyr Updates for Industry-Leading Data Yields that Enable Analysis of Complex Cancer Samples at Unprecedented Depths;

• Bionano Genomics Solidifies its Entry into Solid Tumor Analysis with Launch of New Kit and Protocol that Significantly Simplify Tissue and Solid Tumor Analysis;

• Bionano Genomics Achieves Key Milestone with Software Update for its Saphyr System that Increases Throughput to 96 Human Genomes Per Week and Adds Saphyr Assure for Monitoring System Health.

Recent Corporate Highlight s

• In January 2021, Bionano raised approximately $350 million in gross proceeds from two underwritten public offerings of shares of its common stock.

The underwriters exercised in full their options to purchase additional shares, which were priced at $3.05 per share and $6.00 per share, respectively;

• The Company successfully closed the acquisition of diagnostics services provider, Lineagen, to accelerate the clinical adoption of Saphyr for digital cytogenetics, expanded diagnostic testing menu with the launch of Lineagen’s EpiPanelDx PLUS Gene Panel Test that identifies genetic conditions related to epilepsy;

• The Company enhanced the senior management team with the appointments of Christopher Stewart as Chief Financial Officer and Dr.

Alka Chaubey as Chief Medical Officer.

COVID-19 related disruptions to the global supply chain created and may continue to create challenges in our getting sufficient components and raw materials for production of our OGM systems and consumables.

At various times throughout the pandemic, we have been unable to visit certain customer sites to support installation or service our OGM systems.

In addition, study enrollment for clinical studies generally has been affected by COVID-19.

While we have not experienced adverse effects on study enrollment, we may begin to as we continue to pursue clinical studies.

For a more detailed discussion of the impacts of the COVID-19 pandemic on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - COVID-19.”

Industry Background

Optical Genome Mapping

Genome analysis is the process of extracting and interpreting biological information from DNA.

Genome analysis is the process of extracting and interpreting biological information from DNA and RNA.

DNA is the code that is found in all living cells and determines the characteristics and health of all living organisms.

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Genome structure refers to the way in which the various functional elements of the genome such as genes, reading frames, promoters and others are ordered, oriented and organized across the 23 pairs of chromosomes.

Variation in genome structure, or structural variation, is one of the most biologically important aspects of the human genome.

It is the underlying driver of many known human diseases, including numerous genetic disorders, cancer, metabolic disorders and other.

Structural variations occur when large

groups of base pairs are deleted or change their position in the genome relative to a normal standard.

Structural variations can be as small as a few hundred base pairs or as large as tens of millions of base pairs.

Structural variations represent differences in the amount or location of genomic DNA from one individual compared to a reference genome.

Structural variation is one of the most biologically important aspects of the human genome and is a major factor for the cause of genetic disorders and cancer.

Each structural variation involves the rearrangement or repetition of as few as several hundred base pairs to as many as tens of millions of base pairs.

Structural variations may be inherited or arise spontaneously.

Structural variations are well-known to cause diseases such as constitutional genetic disorders and cancer.

Many researchers and clinicians now agree that despite major advances in the speed and cost-effectiveness of DNA sequencing, it fails to reliably detect structural variations.

We believe the currently available methods to detect structural variations for research and clinical applications, other than Saphyr, are antiquated and cumbersome and can only detect a small proportion of the structural variations across an entire genome.

For example, chromosomal microarray analysis (CMA) is a widely accepted, front-line test used in the diagnostic evaluation of children with developmental disabilities.

CMA can detect most unbalanced structural variations, but cannot detect balanced structural variations which are identifiable by the Saphyr system.

Balanced structural variations are known causes of cancer (ex:

BRC-ABL and other fusion genes).

CMA and similar methods therefore have very limited utility in population research studies that seek to discover new structural variations to explain a wide array of disease pathology.

Without additional tools, researchers and clinicians cannot comprehensively study the genome, which we believe will ultimately result in the failure of genomics to deliver on its full promise of new therapies and diagnostics.

The Saphyr system is a proprietary, sample-to-result platform based on optical mapping of the genome, which is the process of assigning the chromosomal location, order and orientation of all elements of the genome.

OGM enables the detection of all classes of structural variants, and we believe no methodology exists that can detect structural variations more comprehensively or cost efficiently than OGM with the Saphyr system.

We believe the traditional cytogenomic methods of detecting structural variations for research and clinical applications, karyotyping, CMA, and fluorescent in situ hybridization, or FISH, are antiquated and cumbersome and can only detect a small proportion of the structural variations across an entire genome.

OGM is designed to offer cytogeneticists the ability to fully digitize and replace these traditional methods with one simplified, cost effective and scalable workflow using the Saphyr system.

We believe that software is necessary for genome analysis and should be the primary interface for how cytogeneticists interact with the data and report their findings.

We believe the software’s ease of use, core analysis functionality and the time necessary to obtain a reportable result are the most important factors to customers when considering a platform adoption decision and that data interpretation is typically a critical bottleneck in methods of genome analysis and therefore software is a key component in the entire workflow.

The majority of software solutions on the market today have been developed with NGS as the primary application with the focus on the interpretation and reporting of single nucleotide variants (SNVs) instead of SVs.

Our software solution, NxClinical, was developed with copy number variation as the core focus and has become established as an industry leading solution for interpretation and reporting of CNVs for CMA and NGS.

To the extent we are successful in integrating OGM into NxClinical, we anticipate that our software will be the first software solution delivering a fully integrated interpretation capability for SVs from OGM as well as seamless integration with NGS, with the potential to enable complementary OGM and NGS workflows through one software solution.

Our Solutions

OGM is our proprietary approach to measuring genome structure and structural variation.

The OGM workflow is novel, comprehensive, scalable, cost effective and highly differentiated.

OGM data are currently generated using the Saphyr system, which directly measures sequence specific patterns (SSPs) along extremely long DNA molecules in an unbiased approach without any amplification.

Using the SSPs, software constructs detailed physical map of the genome that accurately assigns the chromosomal location, order, orientation and quantity of sequence and in-turn, all the genome’s functional elements.

We believe OGM is capable of comprehensive, cost effective and efficient detection of all classes of SVs and CNVs.

Today, these structural variations cannot be reliably detected by genome sequencing.

High throughput sequencers, of which there are approximately 16,000 currently installed worldwide, are reliable for detecting genomic differences involving a few base pairs or SNVs, which Saphyr does not identify.

Sequencing, including NGS, cannot reliably detect the larger structural variations that our Saphyr system is designed to detect.

Therefore, Saphyr may be adopted alongside this installed base of sequencers as a complement that is designed to give users the ability to see a much wider scope of genome variation from single bases of DNA to full chromosomes.

OGM was built upon four key elements:

• Extremely long molecules for analysis.

The Saphyr system is capable of analyzing single molecules that are on average approximately 250,000 base pairs in length and can be as long as millions of base pairs.

These lengths are over 1,000 times longer than the average read length with Illumina sequencing systems and approximately 10-20 times longer than the average read lengths with Pacific Biosciences of California, or PacBio, and Oxford Nanopore systems.

We believe these long read lengths overcome the inherent challenges of genome complexity and are the key to Saphyr’s unprecedented sensitivity and specificity.

• Proprietary nanotechnology for massively parallel linearization and analysis of long molecules with single molecule imaging.

Analyzing these extremely long chromosomal fragments required invention.

We invented, patented, developed and commercialized nanochannel arrays to capture long single molecules of DNA from solution and unwind and linearize them for structural variation analysis.

Each molecule is imaged separately, making it possible to deconvolute complex mixtures including haplotypes and heterogeneous tumors.

• DNA labeling chemistry specifically for physical mapping.

The detailed analysis of SSPs we use is also highly unique and novel.

Instead of identifying the sequence of every base pair in these long fragments, we label and detect SSPs or motifs that occur universally across every genome with an average frequency of approximately one site for every few thousand base pairs.

The key to our method entails introducing fluorescent tags at the sequence-specific site using highly specific and robust enzymatic chemistry along the extremely long fragments.

These fragments, stretched out in nanochannels, are then directly imaged allowing us to measure the distance between labels with high accuracy.

The pattern of labels detected on all these fragments can then be related to the pattern of sequence motif sites in a reference genome for comparison.

Changes in the pattern indicate structural variation.

• Bioinformatic tools for structural variation analysis.

Finally, our approach includes a novel bioinformatics platform that we developed from the ground-up to take advantage of the unique benefits of our solution.

It comprises proprietary algorithms for the construction of a structurally accurate physical map of the genome to assign structure.

Physical maps of a test subject are then compared to a reference or other subjects in cross-mapping analysis that allows our system to detect genome wide structural variation, including the most complex balanced events.

The Saphyr system provides a solution for comprehensive structural variation analysis at a higher resolution than traditional techniques allowing for more answers that matter to be obtained in genetic disease and cancer applications.

We believe that Saphyr is the only product capable of detecting structural variations at high sensitivity and specificity with a workflow that is cost-effective and time efficient.

A complete and accurate physical map of the genome enables the user to much more readily and systematically detect the structural variations that sequencing and cytogenetics technologies miss.

Diagnostic Services

Through our Lineagen subsidiary, we offer tests that use chromosomal microarray analysis (CMA), which is recommended by the American College of Medical Genetics and Genomics (ACMGG), the American Academy of Pediatrics (AAP), and the American Academy of Neurology (AAN), among other renowned societies for evaluation of patients suspected of genetic disease.

Our customers include researchers and clinicians who seek to identify and understand the biological implications of genome variation.

We believe that Saphyr can replace more traditional cytogenetic tools which are expensive, slow and labor-intense, with an advanced solution designed to simplify workflow, reduce cost, and increase assay success rates.

We believe Saphyr has the potential to significantly increase success rates and provide more answers across a wide range of applications in genomics.

Testing and Laboratory Services

We offer tests that use CMA for evaluation of patients suspected of having certain genetic diseases, which is recommended by the American College of Medical Genetics and Genomics (ACMG), the American Academy of Pediatrics (AAP), and the American Academy of Neurology (AAN), among other renowned societies.

We are actively performing research to determine whether OGM with the Saphyr system can replace CMA as the front-line test for children with developmental disorders.

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Studies are ongoing to determine the sensitivity and specificity for OGM as it relates to fragile X syndrome.

We also employ Whole Exome Sequencing (WES), which aims to detect genome single nucleotide variations that are different from genome structural variations and are not detectable by OGM.

Market Opportunity

Optical Genome Mapping

According to Research and Markets, the worldwide market for genomics products and services is expected to reach approximately $54.4 billion by 2025, up from approximately $22.7 billion in 2020, representing a compound annual growth rate of 19%.

The two areas of the genomics market that are driving the uptake of our product are:

• Sequencing for Discovery Research.

In discovery research across patient cohorts, sequencing is primarily used to find single nucleotide variations responsible for disease or therapeutic response.

Sequencing alone, however, is significantly limited due to its inability to reveal structural variations.

Our Saphyr system has been expanding this market segment by complementing sequencing to expand the scope of genome variation that can be analyzed in a study and achieve a more comprehensive view of the genome.

• Cytogenetics.

To provide a clinical diagnosis, cytogenetic tests detect known variations that are linked to specific diseases or therapeutic responses.

The technologies used for detecting structural variations are expensive and involve cumbersome workflows with relatively limited ability to scale to higher volumes or more complex testing panels.

Sequencers tend not to be used for cytogenetics due to their inability to reliably detect structural variations.

Cytogenetics laboratories are beginning to adopt Saphyr as a more effective and efficient approach to finding the structural variations relevant to cytogenetics.

For this segment, Saphyr is used alone to provide comprehensive detection of structural variations and enable diagnostic calls without the need for any sequencing or cytogenetic technology.

We believe that the discovery research and cytogenetics segments together comprise an addressable opportunity for us to sell up to approximately 9,500 Saphyr systems, representing a current total instrument market opportunity of approximately $2.1 billion.

Importantly, we expect this market opportunity to expand at the rate of adoption of new RUO high throughput sequencers which we estimate is over 15% per year.

While we do not expect the number of cytogenetics labs to increase significantly, we expect our growth in this market to be driven by conversion of traditional cytogenetics methodologies to our Saphyr system.

In addition to the instrument sales opportunity, Saphyr instruments generate recurring revenue from chip consumables that are used on a per-sample basis.

We believe each Saphyr instrument has the potential to create recurring revenue in a range of approximately $60,000 to approximately $150,000 per year, suggesting a potential annual recurring revenue opportunity of approximately $0.6 billion to approximately $1.4 billion.

Therefore, we believe that our currently addressable portion of the genome analysis market is estimated to be between $2.7 billion and $3.5 billion.

Further, we believe that if Saphyr is able to successfully penetrate the currently addressable market, this will spur additional basic and translational research creating new areas where Saphyr and OGM data can be used to improve medical care.

These may include pre-conception and pre-natal genetic screening, uses to advance gene editing techniques and precision medicine.

Diagnostic Services

According to estimates from the Centers for Disease Control and Prevention (CDC), approximately one in six, or about 17%, of children have one or more developmental disabilities, including ADHD, ASD, and other NDDs.

Excluding the approximate 5% to 6% subset of developmental disabilities that Lineagen does not provide genetic diagnostic genetic testing for, the total addressable market (TAM) for Lineagen’s genetic diagnostic testing is estimated to be approximately 11% of children between the ages of 0 and 18 years old, or approximately 8,140,000 children.

We believe a portion of the TAM is not serviceable due to a number of factors, including suboptimal and/or inaccessible payors that include certain U.S.

Medicaid plans, patients tested by in-house laboratories (i.e., at medical institutions) unavailable for testing by Lineagen, and patients previously tested/diagnosed.

Given that CMA testing is recommended as first-line genetic diagnostic testing for all individuals with ASD and other forms of NDDs, we believe the serviceable addressable market (SAM) in the United States for Lineagen’s first-line FirstStepDx PLUS testing is approximately is 1,971,069 children.

Therefore, based on reimbursement rates for CMA testing established by the Centers for Medicaid & Medicare Services (CMS) of between $900 - $1,160, we believe that our SAM of the first-line genetic testing market for ASD and other NDDs is estimated to be between $1.7 billion and $2.2 billion.

employ Whole Exome Sequencing (WES), which aims to detect genome SNVs that are different from genome structural variations and are not detectable by OGM.

We believe we are uniquely positioned to develop LDT’s that can improve upon the existing standards of care for diagnostic testing for NDDs.

We have an established channel to work with payers to secure reimbursement alternatives for Saphyr-based testing.

If reimbursements can be established, we intend to share our strategies with our customers to drive demand for the Saphyr system.

We plan to expand our testing menu with inclusion of OGM to demonstrate workflow implementation in a clinical setting in order to drive adoption as well as serve as a conduit for enabling access for those customers unable to make a capital equipment expenditure.

Our goal is to enable access, demonstrate excellence of the OGM workflow as a model within a CLIA setting for educational purposes, drive advancements in product development for clinical grade testing of OGM at scale.

Software Solutions

We offer industry leading genome analysis software that enables genomics labs to analyze and interpret data across a wide range of platforms to generate highly informative data visualizations for streamlined and simple reporting of causal variants.

Today, NxClinical software is among the most comprehensive solutions for analysis and interpretation of any microarray or NGS generated data integrating copy number variants (CNVs), absence of heterozygosity (AOH) and loss of heterozygosity (LOH), as well as SNVs from sequencing data into a single well integrated interface that is used across the globe by renowned academic and commercial clinical laboratories.

Our acquisition of BioDiscovery has expanded our portfolio into providing data analysis and interpretation solutions across NGS, CMA and OGM.

These software solutions are expected to allow us to leverage and expand our network of Bionano customers and to potentially enable future adoption of OGM.

We believe integrating OGM data into NxClinical should substantially improve the analysis and reporting capabilities of our current Saphyr system, making OGM easier to adopt and use by our customers.

Through BioDiscovery, we can now serve the NGS and array markets directly though software with an industry leading data interpretation solution for revealing more answers with delivery of copy number variants across the genome.

Our software monetization strategy is predicated on a pay-per-sample model where customers running NGS and/or array today can adopt, which sets the stage for future OGM adoptions.

Software is a way for us to participate directly in the NGS market while also enabling OGM data to be seamlessly integrated with NGS in one view for a comprehensive analysis, which is unique to Bionano.

Our Commercial Offerings

Optical Genome Mapping

The Saphyr System and Consumables

We develop and market the Saphyr system, a complete sample-to-result solution for structural variation analysis by OGM that empowers comprehensive genome analysis and facilitates a deeper understanding of genetic variation and function.

We believe it is the only solution capable of addressing the needs for structural variation analysis because it is:

We believe the Saphyr system is capable of addressing the needs for structural variation analysis because it is:

• Highly sensitive.

We believe Saphyr is the most sensitive detector of structural variations larger than 500 base pairs currently on the market.

• Highly specific.

Saphyr has a very low false positive rate, typically less than 2%.

• Cost effective.

We expect the end user cost of reagents and chip consumables per sample to continue to decline from less than $500 in 2020 to approximately $100 per sample in 2023.

Saphyr generates over 4,400 giga base pairs of information per day, outpacing the fastest sequencers in the market.

For highly sensitive structural variation detection, this performance allows Saphyr to process twelve human samples per day.

We expect future generations of Saphyr to exhibit throughputs as high as 192 human samples per day by the end of 2023.

Over this same period, we expect to continuously improve the automation of sample prep and bioinformatics to help drive efficiencies of workflow.

The consumables cost per genome, at an average of approximately $500, can be less than the combination of standard techniques and well below both short-read and long-read WGS at a depth of 160x coverage.

• Scalable and fast.

Relative to traditional techniques, Saphyr has demonstrated up to a 75% reduction in turnaround time for analysis of acute lymphoblastic leukemia (ALL) subjects when used instead of karyotyping, FISH and MLPA.

The Saphyr Instrument

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The computational hardware is responsible for the secondary processing of the image data being produced on the Saphyr.

The Saphyr instrument is currently capable of analyzing up to 5,000 human samples per year.

A higher throughput version is currently in development that is expected to dramatically increase the throughput.

The Saphyr instrument is currently capable of analyzing up to 5,000 human genomes per year at 30x coverage.

At the end of 2021 we announced the completion of a prototype currently in development that is expected to significantly increase the throughput.

The Saphyr Chip

The Saphyr Chip® is the consumable that packages the nanochannel arrays for DNA linearization.

In its current form, each Saphyr chip has three flow cells containing approximately 120,000 nanochannels that are roughly 30 nanometers wide and can hold a unique sample.

In its current form, each Saphyr chip has three flow cells containing approximately 120,000 nanochannels that are roughly 30 nanometers wide, and each flowcell can hold one unique sample.

To manufacture the arrays, we use photolithography in a semiconductor fabrication facility to print hundreds of thousands of tiny grooves on silicon wafers and then dice the wafers into individual chips.

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The label patterns on each molecule allow them to be uniquely identified and aligned in a pair-wise comparison against all other molecules imaged from the same sample.

Data Solutions

Software Solutions

Our data solutions offering includes a complete suite of hardware and software for end-to-end experiment management, algorithms for assembling genome maps and algorithms and databases for bioinformatics processing, all of which is driven through convenient web-based management and monitoring tools.

Bionano Access is our web-based hub for Saphyr operations.

It provides all the software that our customers need for experiment management and our structural variation analysis in one place.

With Bionano Access our customers can:

• set up runs and monitor real-time data quality metrics remotely to flag potential sample quality issues early;

• automatically start de novo assemblies and structural variation analysis when the desired amount of data has been collected;

• detect variants with an allele fraction of 1%

• visualize and manipulate maps and structural variants;

• analyze trios and clinical samples by filtering through uncommon variants to identify inherited and de novo variants, and export in a file format that is used consistently throughout the industry.

We have a suite of proprietary algorithms and databases that fully enable our proprietary bioinformatic and structural variation analysis pipelines.

Using pairwise alignment of the single molecule images, consensus genome maps are constructed, refined, extended and merged.

Molecules are then clustered into two alleles, and a diploid assembly is created to allow for heterozygous structural variation detection.

Molecules are then clustered into two alleles, and a diploid assembly is created to allow for heterozygous

structural variation detection.

Genome maps typically span entire chromosome arms in single, contiguous maps.

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Our customers use our variant annotation workflow to specifically uncover rare and sample-specific mutations.

For example, to help a customer determine genomic variant frequency in a tumor, Saphyr compares the cancer sample structural calls against over 600,000 structural variations from over 250 humans with no evidence of diseases.

To identify somatic mutations, the workflow can run comparisons of the tumor specimen against a control sample to determine whether the cancer mutations are present in low abundance among the control’s genome.

Using this high through-put pipeline approach, we can efficiently focus on dozens of clinically significant structural candidates for further analysis.

Our hardware solution includes the Saphyr Compute Server, which provides cluster-like performance in an affordable, compact solution and the Bionano Compute Server, which expands the analytical capacity of the suite of tools.

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We also offer a cloud-based solution for data analysis.

Our approach to measuring genome structure and structural variation is novel and highly differentiated.

Most efforts in the genomic industry to address structural variation have been based on taking sequencing by synthesis as the starting point and attempting to overcome its deficiencies to make it applicable to structural variation analysis.

In contrast, the Saphyr system directly observes extremely long genomic DNA without any amplification to construct a physical map that accurately assigns the chromosomal location, order, orientation and quantity of all the genome’s functional elements.

Our solution is built upon four key elements:

• Extremely long molecules for analysis.

Structural accuracy can only come from analysis of extremely long chromosomal fragments.

The Saphyr system is capable of analyzing single molecules that are on average approximately 250,000 base pairs long.

Such fragments will contain enough unique sequence information that they are distinguishable from other fragments.

These lengths are over 1,000 times longer than the average read length with Illumina systems and approximately 10 times longer than the average read lengths with Pacific Biosciences and Oxford Nanopore systems.

Building a picture of the genome with massive building blocks overcomes the inherent challenge of genome complexity and is the key to Saphyr’s unprecedented sensitivity and specificity.

• Proprietary nanotechnology for massively parallel linearization and analysis of long molecules with single molecule imaging.

Analyzing these extremely long chromosomal fragments required invention.

Molecules of this size are more like balls of yarn in a test tube and must be unraveled for meaningful analysis.

We invented, patented, developed and commercialized nanochannel arrays to capture them from solution and unwind and linearize them for structural variation analysis.

Each molecule is imaged separately, making it possible to deconvolute complex mixtures including haplotypes and heterogeneous tumors, as shown in the graphic below.

• DNA labeling chemistry specifically for physical mapping.

The detailed analysis of sequence we use is also highly unique and novel.

Instead of identifying the sequence of every base pair in these long fragments, we label and detect specific sequence patterns or motifs that occur universally across every genome with an average frequency of approximately one site for every few thousand base pairs.

The key to our method entails introducing fluorescent tags at the sequence-specific site using highly specific and robust enzymatic chemistry along the extremely long fragments.

These fragments, stretched out in nanochannels, are then directly imaged allowing us to measure the distance between labels with high accuracy.

The pattern of labels detected on all these fragments can then be related to the pattern of sequence motif sites in a reference genome for comparison.

Changes in the pattern indicate structural variation.

• Bioinformatic tools for structural variation analysis.

Finally, our approach includes a novel bioinformatics platform that we developed from the ground-up to take advantage of the unique benefits of our solution.

It comprises proprietary algorithms for the construction of a structurally accurate physical map of the genome without using a reference genome in assignment of structure.

Physical maps of a test subject are then compared in cross-mapping analysis that allows our system to detect genome wide structural variation, including the most complex balanced events.

Our system can do so by comparing one physical map against a common reference, or against the maps of a mother and father in the case of an afflicted child with an undiagnosed disease for example, or against maps of normal blood when studying solid tumor cancers.

This comparative approach uses our proprietary database of healthy individuals to filter out the non-disease causing structural variants found in the general healthy population.

Diagnostic Services

• Multiple LDTs focused on pediatric patients with ASD and other forms of NDDs .

All aspects of the testing services we offer were designed with a specific patient cohort in mind;

namely, children with neurodevelopmental disabilities (NDDs).

Based on the extreme hypersensitivities of children with NDDs, in many cases coupled with intellectual disability (ID), blood draws are incredibly challenging.

We have developed and optimized all genetic testing solutions around DNA collected from a cheek swab, which also allows for operational simplicity and efficiency.

In addition to the sample collection, we have sought technical and interpretive expertise specific to this disease group with customized genetic testing technology platforms and in-licensing of proprietary gene databases focused on NDDs.

• Personalized, easy-to-understand results.

Because the number of children who qualify for clinical diagnostic testing for NDDs far exceed the number of genetic specialists, medical societies such as the American Academy of Pediatrics and the American Academy of Neurology recommend CMA testing be performed by other pediatric specialists.

Without specific training in genetics, most test results are too complex to be meaningfully translated into actions that improve patient care.

Our multi-disciplinary team of genetic counselors, laboratory directors, and variant analysts take care to write reports according to industry standard while also bringing the reading level down for non-genetic specialists and parents alike.

• Genetic counseling and clinical education.

While medical societies support the use of diagnostic genetic testing, they also recommend (and some payors even require) genetic counseling prior to testing.

Genetic counseling is a communication process for families provided by a licensed, nationally certified genetic counselor with a 2-year master's degree.

The purpose is to ensure families understand the benefits and limitations of testing, as well as provide informed consent, to undergo testing that may reveal medical diagnoses or other challenging situations for the patient and possibly his/her relatives.

• End-to-end customer support with reimbursement .

Although diagnostic genetic testing is a recommendation by several medical societies, it is not universally or equitably processed and reimbursed by insurance organizations.

This has become a barrier that prevents physicians and medical clinics from employing standard of care genetic testing for children.

Accordingly, we were the first in our class to develop an integrated process to streamline insurance submissions for diagnostic testing for NDDs.

Our Focus Areas

Optical Genome Mapping

Our Saphyr system serves many segments of the genomics market seeking to find and understand structural variation.

We have identified focus areas where we concentrate our resources to ensure robust adoption of our system and frequent utilization of consumables.

We have selected these segments because of their urgent need to detect structural variations and the significant economic opportunity they represent.

Our current focus areas are human genetic diseases, including rare diseases and oncology.

Our Saphyr system, which is for RUO, is being used for basic and translational research and also beginning to be adopted by cytogenetics labs that seek to use it in commercial clinical tests of its patients as an LDT.

Genetic Diseases

In genetic disease, existing tools have reached a plateau where almost half of patients with genetic disease who are tested in clinical laboratories fail to receive a definitive molecular diagnosis.

In order to increase diagnostic yield, an increase in the understanding of the structure and structural variation of the genome is essential.

The standard of care consists usually of a combination of both phenotype-dependent targeted tests, and whole-genome analysis approaches.

Targeted tests can consist of Multiple Ligation Probe Amplification, or MLPA, to test for the presence or absence of specific exons, PCR amplification and Sanger sequencing of candidate genes and multiple FISH probes to pick up specific structural variants common to the expected disease.

For whole genome approaches, first tier diagnostic tools include CMA and karyotyping techniques like metaphase chromosome spreads.

More recently, whole exome sequencing or whole genome sequencing are increasingly being introduced.

A future workflow in which Saphyr is used as an alternative to karyotyping, the large majority of FISH, microarrays and MLPA tests would allow genetics clinics to rely on Saphyr to detect all structural variants larger than 500 base pairs and on next-generation sequencing to detect all single nucleotide variants and other variants smaller than 500 base pairs.

Since up to numerous FISH and MLPA tests are often performed, Saphyr’s single whole genome analysis provides a cost-effective solution that saves significant amounts of time, labor and analysis in lieu of such tests.

In cancer, each patient has a unique disease with a complex pattern of genome changes.

Traditional and recently-developed treatments do not attack the individual changes in each patient’s tumor.

Recent personalized medicine programs aim to provide clinicians with individual treatments specifically targeting the mutations found in each patient’s cancer.

For personalized cancer medicine to be successful, all variants in the cancer genome need to be detected, which is not feasible with cytogenetic or whole genome sequencing approaches.

The studies presented below demonstrate that Saphyr is critical for a complete understanding of a cancer genome, which is essential to enable truly targeted treatments.

The Saphyr System’s Industry-Leading Sensitivity and Specificity

Saphyr offers unmatched sensitivity for the detection of large structural variations greater than 500 base pairs.

Saphyr’s specific sensitivity percentages from recent studies are shown below

• 99% sensitivity for homozygous insertions/deletions larger than 500 base pairs;

• 95% sensitivity for heterozygous insertions/deletions larger than 500 base pairs;

• 95% sensitivity for balanced and unbalanced translocations larger than 50,000 base pairs;

• 99% sensitivity for inversions larger than 30,000 base pairs;

• 97% sensitivity for duplications larger than 30,000 base pairs;

• 97% sensitivity for copy number variants larger than 500,000 base pairs.

A study by the Human Genome Structural Variation Consortium published in the journal Science allowed for a comparison between OGM with Saphyr and Pacific Biosciences’ (PacBio) long-read sequencing technology’s ability to detect structural variation.

The consortium used a custom sequencing method based on high-coverage HiFi reads generated with PacBio’s Sequel II system and the single-strand preparation and sequencing method StrandSeq to establish a comprehensive catalog of human SVs with base-pair and haplotype resolution.

The PacBio-based method detected only 72% of the large SVs that OGM detected across 32 different human genomes.

OGM uniquely made 5,590 large SV calls missed by PacBio, corresponding to 1,175 unique SV loci.

Many of these large SVs consisted of more complex rearrangements or overlap with large repetitive areas called segmental duplications which are associated with developmental delay and adult neuropsychiatric disease, highlighting the importance of OGM in genome structure analysis.

The publication did classify some large SVs as being uniquely detected by the sequencing-based method based on PacBio HiFi.

Upon further analysis, however, most of these SVs were in fact identified by OGM but classified differently.

Overall, less than 2% of the large SVs detected by PacBio were missed by OGM

In another study, our system detected seven times more structural variations larger than 5,000 base pairs compared to next-generation sequencing.

Pui-Yan Kwok at the University of California, San Francisco, demonstrated the robustness of our system for genome-wide discovery of structural variations in a trio from the 1000 Genomes Project.

Using our system, hundreds of insertions, deletions, and inversions greater than 5,000 base pairs were uncovered amounting to 7.3 times more than the large structural variation events detected by next-generation sequencing.

Importantly, many of the structural variations that were found were in regions believed to contain functional elements leading to disruption of gene function or regulation.

Diagnostic Services

We offer a suite of multiple Laboratory Developed Tests (LDTs) specialized for providers focused on caring for pediatric patients with NDDs.

Our LDT suite includes the following tests, several which are supported by multiple reimbursement codes, and all provide personalized, easy-to-understand result reports supported by a robust team of clinical genetic specialists, including genetic counselors, and cytogeneticists:

• FirstStepDx (FSDx) PLUS.

Our FSDx PLUS is a Chromosomal Microarray (CMA) test designed to identify unbalanced structural variations in the genome (deletion and duplications) that are known to be underlying genetic causes of ASD, developmental delay, and intellectual disability.

CMA is recommended as a first-tier genetic test for individuals with ASD and other forms of NDDs by a number of US-based medical organizations, including the American College of Medical Genetics and Genomics (ACMGG), American Academy of Neurology (AAN), and the American Academy of Pediatrics (AAP).

• Fragile X Syndrome Testing.

Fragile X syndrome is a genetic condition caused by mutations in the FMR1 (fragile X mental retardation 1) gene.

Fragile X is the most common heritable single gene cause of ASD.

Fragile X also causes a range of developmental problems including other developmental disabilities and cognitive impairment as such, Fragile is also recommended as a first-tier genetic test for individuals with ASD and other forms of NDDs.

Additionally, Fragile X can be inherited;

a woman with Fragile X syndrome has a 50% chance of passing on the mutation to her children.

Our Fragile X testing provides screening and diagnosis of triplet repeat expansions that cause this and related (FXTAS and FXPOI) conditions.

• Pharmacogenetics (PGx) Testing.

Our PGx test analyzes genetic variations within genes known to play a role in the metabolism of medications that are commonly prescribed to individuals with ASD and other NDDs, including anti-epilepsy, anti-depression and anti-anxiety, and attention-deficit/hyperactivity disorder (ADHD) drugs.

Our PGx test helps identify the risk of side effects from certain medications and provides healthcare professionals additional information on choice and dosage of most efficacious medications.

• NextStepDx (NSDx) PLUS.

Our NSDx PLUS is a Whole Exome Sequencing (WES) test which aims to detect single nucleotide genome changes that are not detectable by the FSDx CMA test.

The method of testing relies on technologies that allow rapid sequencing of large amounts of DNA in parallel, which are known as next-generation sequencing.

As many known mutations that cause ASD and other forms of NDDs occur in gene-coding regions called exons (all exons in a genome make up a the “exome”), WES is an efficient method to identify additional disease-causing mutations.

• EpiPanelDx PLUS.

NxClinical is among the most comprehensive and up-to-date solutions for cytogenetics and molecular genetics, providing one system for analysis and interpretation of all genomic variants from microarray and NGS data.

We are developing a version of NxClinical to incorporate OGM data, which is expected to become our software solution once completed.

Testing and Laboratory Services

Through Bionano Labs, we offer OGM data to researchers seeking access to OGM data.

We intend to build a menu of LDT’s on Saphyr to demonstrate the capabilities of OGM.

FirstStepDx PLUS is a CMA designed to identify an underlying genetic cause in individuals with autism spectrum disorder, developmental delay, and intellectual disability.

Fragile X syndrome (FXS) testing is designed to detect individuals (both males and females) with FXS, as well as carriers of the condition.

NextStepDx PLUS is a whole exome sequencing test designed to identify genetic variants that are associated with disorders of childhood development.

EpiPanelDx PLUS is a genetic testing panel designed for patients who have experienced seizures, infantile spasms, encephalopathy, or febrile seizures.

Much like CMA, WES, and Fragile X Syndrome testing, identification of the specific genetic etiology through panel testing can help confirm a clinical diagnosis or genetic syndrome, help

determine medical management, provide information about clinical course of disease, and assist family testing for at-risk relatives

• Mitochondrial DNA Testing.

Mitochondrial DNA testing can help identify genetic variants associated with mitochondrial disorders, which comprise a large group of complex conditions with wide clinical variability.

Mitochondrial disorders are caused by dysfunction of the mitochondrial respiratory chain, which is the process by which energy is made for the cell.

Mitochondrial DNA, while largely controlled by genes in the nuclear DNA housed across the 23 chromosomes, is a distinct form of DNA that one inherits only from the mother.

Because it is distinct, it is not included in most genetic testing assays unless specifically ordered.

• Whole Genome Sequence (WGS) Testing.

Our WGS diagnostic test (WGDx) can detect the majority of genome mutations such as deletions, duplications, and single base changes, both within and outside of gene coding regions.

In addition to diagnostic information for ASD and NDDs, understanding one’s genome can give insights that lead to better physician or individual lifestyle, dietary, and disease prevention decisions.

Optical Genome Mapping

Our goal is to enable new research in genomics to allow greater insight into their role in human health in ways that have not been possible with any other current research and diagnostic technologies.

PGx test identifies over 60 alleles in 11 genes.

PGx testing is one aspect of personalized medicine and is used to aid health care providers with medications and dosage.

Market Opportunity

According to Markets and Markets, the worldwide market for genomics products and services is expected to reach approximately $54.4 billion by 2025, up from approximately $22.7 billion in 2020, representing a compound annual growth rate of 19%.

We believe the two areas of the genomics market that are driving demand for the Saphyr System are:

• Consolidation of traditional cytogenetics techniques in constitutional and cancer applications.

To provide a robust clinical analysis, cytogenetic assays detect known structural variations that are linked to specific diseases or therapeutic responses.

The technologies used for detecting structural variations are expensive and involve cumbersome workflows with relatively limited ability to scale to higher volumes or more complex testing panels.

Sequencers tend not to be used for cytogenetics due to their inability to reliably detect structural variations.

Cytogenetics laboratories are beginning to adopt Saphyr as a more effective, scalable and efficient approach to finding the structural variations causative to genetic diseases and cancer.

For this segment, Saphyr is used alone tool for providing comprehensive and accurate detection of all classes of structural variations and enable clinically relevant calls without the need for any sequencing or legacy cytogenetic technology.

We estimate that approximately 2,500 cytogenetics labs exist worldwide.

• Combining OGM with sequencing for molecular genetics and discovery research applications.

In discovery research across patient cohorts, sequencing is primarily used to find SNVs responsible for disease or therapeutic response.

Sequencing alone, however, is significantly limited due to its inability to reveal structural variations.

Our Saphyr system has been expanding this market segment by complementing sequencing to expand the scope of genome variation that can be analyzed in studies to achieve a more comprehensive view of the genome .

We estimate that the current worldwide discovery research and cytogenetics segments together comprise an addressable opportunity for us to sell up to an aggregate of approximately 10,000 OGM-based instruments, representing a total instrument market opportunity of approximately $2.1 billion.

In addition to the instrument sales opportunity, our OGM-based instruments generate recurring revenue from chip consumables and reagents that are used on a per-sample basis.

We believe estimate that each of our OGM-based instruments has the potential to create recurring revenue from chip consumable sales in a range of between $70,000 to approximately $175,000 per year, suggesting a potential annual recurring revenue from chip consumable sales opportunity between approximately $0.7 billion to

approximately $1.7 billion.

We have based this estimated annual recurring revenue opportunity for chip consumable sales on anticipated customer and an assumed price of $500 per chip consumable and sample prep and labeling kit.

We believe that if our OGM-based instruments can successfully penetrate these addressable market opportunities, this should spur additional basic and translational research creating new areas where Saphyr (or successor instruments) and OGM data can be used to improve the standard of care and patient management.

These may include preconception, products of conception and prenatal genetic applications, uses to advance gene editing techniques and precision medicine.

In the long term, we anticipate potential opportunities in population screening, newborn screening, biopharma applications in cell quality control and oncology.

Our current market opportunity estimates for total OGM-based instrument sales and annual recurring revenue from chip consumable sales are forward-looking statements and are subject to significant risks and uncertainties.

While these were prepared in good faith, we cannot provide assurances as to future results or events.

These estimates are based on third-party market research data and our future outlook, which is dependent in principal part on anticipated demand for OGM instruments, complementary capabilities of OGM and NGS, expected consumption of chips and sample prep and labeling kits.

In particular, these estimates are based on current and projected selling prices for instruments and consumables, each of which is subject to change over time.

These estimates and assumptions underlying our addressable market opportunities involve significant judgments with respect to, among other things, future economic, competitive, regulatory, market and financial conditions, as well as future customer demand, business decisions and corporate opportunities that may not be realized, and that are inherently subject to significant business, economic, competitive and regulatory risks and uncertainties, all of which are difficult to predict and many of which are outside of our control.

Our underlying assumptions and estimates may prove to be inaccurate and our financial objectives may not be realized, and therefore our actual results may differ materially from these estimated addressable market opportunities.

In addition, these addressable opportunities should not be construed as financial guidance and should not otherwise be relied upon as being necessarily indicative of future results, and you are cautioned not to place undue reliance on these estimated addressable opportunities.

In preparing these estimated addressable opportunities, we have relied upon and assumed, without independent verification, the accuracy and completeness of certain industry and market information provided to us by third parties or through publicly available sources, which information involves assumptions and limitations, and you should not give undue weight to such information.

Examples include Quest Diagnostics, Brigham and Women’s Hospital, Harvard Medical School, MD Anderson Cancer Center, Children’s Hospital Los Angeles, Columbia University Medical Center, Children’s Hospital of Philadelphia, Medical College of Georgia at Augusta University, Children’s National Health System, Boston Children’s Hospital, PerkinElmer, Praxis Genomics, Garvan Institute of Medical Research, McDonnell Genome Institute at Washington University, National Institutes of Health, Pennsylvania State University, Radboud University Medical Center and Salk Institute for Biological Studies.

We are primarily focused on driving adoption of OGM through the Saphyr system.

Our goal is to streamline structural variant identification and enable new research in genomics to allow greater insight into their role in human health in ways that have not been possible with any other current research and diagnostic technologies.

Our strategy to achieve this includes:

• Drive adoption of Saphyr in discovery research and cytogenetics markets.

Saphyr has the potential to significantly expand the life science research market and genomics-based diagnostics market because of its unrivaled sensitivity, by enabling researchers to perform studies on structural variations that they were previously unable to perform.

We believe Saphyr has the capability to enable the development of a new category of diagnostic tests and tools.

• Through our Lineagen subsidiary, develop novel LDT’s and create reimbursement paths on the Saphyr System.

With our recent acquisition of Lineagen, we are uniquely positioned to develop LDT’s based on OGM with Saphyr that can improve upon the existing standards of care for diagnostic testing for neurodevelopmental disorders.

We plan to work with payers to secure reimbursement alternatives for Saphyr based testing, which we would share with our customers to drive demand for the Saphyr system.

• Support the publication of findings with Saphyr by our customers beyond the more than 280 papers published to date.

• Demonstrate that Saphyr is a superior alternative to traditional techniques in constitutional genetic disorders and hematologic malignancy applications.

Optical genome mapping has demonstrated superior detection sensitivity for all classes of structural variants relative to karyotyping, FISH and CMA in numerous peer-reviewed publications over the last year and offers benefits of improved assay success rates, faster time to result and a lower total cost.

The value proposition and competitive differentiation for OGM in cytogenetics market is exceptionally strong with an immediate opportunity to digitize legacy microscope techniques (karyotyping) with a superior approach using Saphyr.

Since the cytogenetics market understands the importance of structural variants and these genomic variants are the basis of this medical discipline, we believe the cytogenetics market is well poised as the entry point for global expansion.

• Complement NGS with OGM in translational, applied and discovery research markets.

We believe the combination of NGS and OGM can provide the most comprehensive and cost-effective analysis of genome variants from SNVs to whole chromosomes.

NGS is an accurate technique for measuring genome variants below 500 bp while OGM bridges the gap by enabling detection of all structural variants above 500 bp to reveal more answers and resolve previously unresolved cases from using NGS alone.

There are over 15,000 NGS instruments installed globally and for each of these sequencers our vision is to complement with a mapper in Saphyr to provide a more comprehensive picture of the genome for more discoveries, publications and translation into molecular genetics.

• Accelerate broad reimbursement for OGM and establish it as the standard of care in guidelines by professional medical societies.

We are investing in four multi-center clinical studies for postnatal, prenatal, hematologic malignancies and solid tumor analyses relative to standard of care.

Each study is designed with an expectation for recruitment of 1,000 subjects and will assess sensitivity, specificity, reproducibility, concordance and incremental clinically relevant findings relative to standard of care.

We are investing in these programs to build the necessary evidence to establish reimbursement and to pave the way for inclusion in professional society guidelines to advance standard of care.

The first preliminary readout from the multicenter postnatal study was published in December 2021.

• Support the publication of findings with OGM by our customers beyond the more than 340 papers published to date.

The annual number of publications featuring data generated by Saphyr and its predecessor system has steadily increased since 2010 when the first publication appeared.

Recently, the overall number of these publications has grown significantly.

For example, of the more than 280 papers published to date, approximately 80 were published in 2019 alone and 213 since 2017, the year Saphyr was launched.

We will continue to support and foster our customer base to help grow the number of publications featuring our systems’ data.

We believe that these publications are impactful as our customers’ studies cover structural variations in areas of high unmet medical need, such as rare and undiagnosed pediatric diseases, muscular diseases, developmental delays and disorders, prostate cancer and leukemia.

• Expand gross margins through economies of scale and growing sales of consumables.

Our overall gross margin has historically been driven by our instrument gross margin as the sales of our instruments have constituted the significant majority of our total revenues to date.

However, our instrument gross margin is significantly lower than our consumables gross margin.

We expect our overall gross margin to expand in 2020 and beyond as:

◦ We further negotiate with silicon fabrication manufacturers for better contract pricing of our consumables.

As our manufacturing lot volumes increase, we expect to have lower costs of goods sold.

This is driven by the pass along of some of the economies of scale of contract manufacturers that mainly operate in the ultra-high-volume silicon computer chip industry.

◦ Consumables sales continue to represent the fastest growing component of overall revenues.

As consumables growth continues to outpace instrument growth, we expect the proportion of our product mix which is higher gross margin to increase, thereby expanding our overall gross margin.

For example, of the 340 peer-reviewed and pre-print papers published since 2019, 161 were published in 2021 alone.

We intend to continue to support and foster our customer base to help grow the number of publications featuring our systems’ data.

We believe that these publications are impactful as our customers’ studies cover structural variations in areas of high unmet medical need, such as rare and undiagnosed pediatric diseases, neurological and muscular diseases, developmental delays and disorders, prostate cancer and leukemia.

• Continue to innovate our products and technologies.

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For example, hardware upgrades and new consumables are made available to purchase by customers.

We intend for these performance enhancements to be delivered on a regular

We intend for these performance enhancements to be delivered on a regular basis.

In addition, we periodically make available software upgrades to customers through download at no charge.

We expect to continue developing and refining our technologies to improve the ease of use of our Saphyr system and enable our existing installed systems to meaningfully increase sample throughput and sensitivity and specificity of structural variation detection.

• Partner with industry-leading companies and laboratories to accelerate adoption of OGM in clinical markets.

A high throughput version is currently in development that is expected to significantly increase the throughput and lower the cost per sample.

Compared to the Saphyr system, which images DNA at a rate of approximately 205 Gbp per hour, the new system is expected to image nearly 820 Gbp per hour and we announced the completion of this protype at the end of 2021.

• Partner with industry-leading companies and laboratories to expand adoption in clinical markets.

Establish additional collaborations with customers to help drive validating studies.

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Sales and Marketing

Optical Genome Mapping

As of December 31, 2020, our commercial team consisted of 72 individuals, including 29 salespeople, three marketing personnel, and 40 sales support personnel, including customer solutions personnel, field service engineers and field application specialists.

As of December 31, 2021, our commercial team consisted of 152 individuals in sales, sales support and marketing.

Our sales support personnel include individuals in customer solutions, field service engineers and field application specialists.

This commercial staff is primarily located in North America, Europe, and China.

Most of our sales support team is located at our headquarters in San Diego and some work remotely throughout the U.S., Europe, and China.

We sell our products through a direct sales force in based in North America, Europe.

We sell our products through a direct sales force based in North America and Europe.

Our sales strategy involves the use of a combination of sales managers and sales representatives.

Our direct sales force includes 18 salespeople located in the U.S.

and 7 located in Europe, and 4 in China.

We expect to increase our sales force as we expand our business.

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The role of our field application specialists is to provide on-site training and scientific technical support to prospective and existing customers.

Our field application specialists are technical experts with advanced degrees, including seven with Ph.Ds., and generally have extensive experience in academic research and core sequencing lab experience.

Our field application specialists are technical experts with advanced degrees, including seven with PhDs., and generally have extensive experience in academic research and core sequencing lab experience.

In addition, we maintain an applications lab team in San Diego, California composed of scientific experts who can transfer knowledge from the research and development team to the field application specialists.

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This team also provides commercial services by running samples on Saphyr for researchers who do not have a Saphyr system of their own.

We intend to significantly expand our sales, support, and marketing efforts in the future by expanding our direct footprint in North America and Europe as well as developing a more comprehensive support network in China where significant market opportunities exist.

We intend to expand our sales, support, and marketing efforts in the future by expanding our direct footprint in North America and Europe as well as developing a more comprehensive support network in China where significant market opportunities exist.

Additionally, we believe that there is significant opportunity in other European, South American, Asia-Pacific and Middle Eastern regions.

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Because of these factors and the budget cycles of our customers, our sales cycle, the time from initial contact with a customer to our receipt of a purchase order, can often be nine to 12 months.

Diagnostic Services

We primarily sell our suite of LDTs to pediatric physicians through a physician-directed “in-person” sales model.

As of December 31, 2020, our commercial team consisted of three salespeople, and one sales support personnel.

This commercial staff is located in North America, and the sales personnel primarily work remotely in U.S.

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Our managed care efforts are directed to establishing contracts and/or credentialing with private and governmental insurance carriers that provide coverage for patients with ASD and other forms of NDDs.

As of December 31, 2020, we had contracts or credentials with providers of insurance that cover approximately 90 million lives within the U.S.

Manufacturing and Supply

Optical Genome Mapping

Our manufacturing strategy is to outsource instrument and chip manufacturing and internally develop and assemble reagent kits in our own facility.

Our Saphyr instrument is manufactured by a third-party medical device manufacturer.

Nearly complete Saphyr instruments are shipped by the manufacturer to us for final assembly and quality control testing.

Our instruments are manufactured by a third-party medical device manufacturer.

Nearly complete instruments are shipped by the manufacturer to us for final assembly and quality control testing.

Upon completion, we ship directly to our customers’ locations globally, or distributors’ locations in the case of certain systems sold in the Asia-Pacific region.

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We believe this manufacturing strategy is efficient and conserves capital.

However, in the event it becomes necessary to utilize a different contract manufacturer for Saphyr, we would experience additional costs, delays and difficulties in doing so, and our business could be harmed.

However, in the event it becomes necessary to utilize a different contract manufacturer, we would experience additional costs, delays and difficulties in doing so, and our business could be harmed.

This manufacturer actively manages obsolescence of all components in our system.

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Our reagents are sourced from a limited number of suppliers, including certain single source suppliers.

Reagents include all components required to run a sample on Saphyr, such as capture and detector reagents, enzyme reagents and enzyme substrate.

Reagents include all components required to run a sample on OGM, such as capture and detector reagents, enzyme reagents and enzyme substrate.

Although we believe that alternatives would be available, it would take time to identify and validate replacement reagents for our assay kits, which could negatively affect our ability to supply assay kits on a timely basis.

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If a vendor is unable to provide sufficient notification, we keep safety stock of the component to minimize disruption to operations.

Diagnostic Services

We take advantage of outsourcing certain components of the genetic testing process.

Instrumentation, chips, and reagents are developed by Illumina, a widely accepted manufacturer of CMA testing platforms.

In fact, across all academic and commercial laboratories performing CMA, Illumina is one of the top three CMA manufacturers (in addition to Affymetrix/Thermo Fisher and Agilent).

We have also historically contracted with third parties for kits, collection devices, and fulfillment.

Finally, we maintain contracts with a network of laboratories to perform the wet work on our various LDT tests in order to conserve capital and maintain flexibility of adjusting contract lab based on the best-in-class/most updated technology and customer service.

Manufacturing and Supply

Our manufacturing strategy is to outsource instrument and chip manufacturing and internally develop and assemble reagent kits in our own facility.

Our fundamental long-term software strategy is based on our goal of making OGM ubiquitous with increased utilization through simplified data interpretation and a seamless integration with NGS and array data to provide the most compressive genome analysis.

In addition, we can participate directly in the NGS and array markets for genetic disease and cancer applications independent of OGM using a monetization model with a pay-per-sample NxClinical software offering.

In this manner we can expand our network of Bionano customers into our software ecosystem with among the most comprehensive platform-agnostic genome interpretation solution where our proprietary original content in OGM can be adopted when needed to obtain a more comprehensive view of the genome by revealing all classes of structural variants.

We plan on continuing to enable OGM users with the full solution with software at no additional charge while we monetize the per sample utilization for NGS.

Testing and Laboratory Services

Bionano Labs OGM testing is performed at our lab in San Diego, or at our partner labs in the United States and Europe.

We intend to increase our testing capacity, expand our menu of testing, and pursue CLIA certification for the San Diego lab.

For diagnostic testing currently through our Lineagen subsidiary, we maintain contracts with a network of laboratories to perform the wet work on our various LDT tests in order to conserve capital and maintain flexibility of adjusting contract lab based on the best-in-class/most updated technology and customer service.

As of December 31, 2021, we have established contracts with two primary laboratories to perform wet lab services.

All third-party laboratories have met stringent criteria, including passing a site visit from our management, and being CAP and CLIA-certified.

We obtain raw data from laboratories for expert, optimized, and proprietary interpretation and reporting as previously described.

In fact, we have our own CLIA license, for which regular site visits are held to ensure maintenance of compliance, under which this expert interpretation and reporting is carried out by the multidisciplinary team focused on clinical diagnostics for individuals with NDDs.

Furthermore, we maintain all patient and provider touchpoints in all cases.

We obtain raw data from laboratories for interpretation and reporting.

Our short-term strategy is to augment our existing test menu with OGM based LDT’s.

Eventually, we intend to convert these tests to OGM.

Key Agreements

Optical Genome Mapping

License Agreement with Princeton University

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We are obligated to pay Princeton an annual license maintenance fee in the mid-four digits, which can be reduced by royalties paid to Princeton during the preceding 12 month period.

(ii) a percentage in the low-single digits of our and any of our sub-licensees’ revenue from services covered by the License Agreement.

We are also obligated to make royalty payments to Princeton equal to (i) a percentage in the mid-single digits of our and any of our sub-licensees’ net sales of products covered by the License Agreement and (ii) a percentage in the low-single digits of our and any of our sub-licensees’ revenue from services covered by the License Agreement.

Our royalty obligations continue on a licensed product-by-licensed product and licensed service-by-licensed service basis, in every country of the world, until the later of the last sale of a licensed product or service or the expiration of all Princeton patent rights.

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We have secured and continue to pursue intellectual property rights globally, including rights related to analysis of nucleic acid molecules, as well as innovations in the molecular biology and bioinformatics spaces.

We have developed a global patent portfolio that includes 67 issued patents across 14 patent families and an exclusively licensed portfolio of patents and applications from Princeton University, which includes 29 patents across two families.

We have developed a global patent portfolio that includes 101 issued patents or allowed applications across 26 patent families and an exclusively licensed portfolio of patents and applications from Princeton University, which includes 35 patents across two families.

The global patent portfolio owned and licensed by us has effective filing dates ranging from 2001 to 2018.

The owned and licensed patent families contain issued patents and pending applications that relate to devices, systems, and methods for macromolecular analysis, and reflect our active and ongoing research programs.

The commercial focuses of these patent families are discussed below.

Commercial Focus Number of Issued Patents and Pending Patent Applications

Nanochannel devices and systems 79

Methods of macromolecule analysis using nanochannel arrays 71

Methods of genetic detection and copy number analysis 31

Method of genomic sequence and epigenomic analysis.

Method of optimizing nanochannel analysis 6

Next-generation products 12

The owned and licensed patent families contain issued patents and pending applications that relate to devices, systems, and methods for macromolecular analysis, genetic testing, computer software systems and reflect our active and ongoing research programs.

In addition to pursuing patents, we have taken steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners and, as applicable, advisors.

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Lineagen, Inc.

based on such assessments, probe compositions, and related PCR-based methods of diagnosis by detecting ASD-associated SNPs and / or CNVs, methods for treating Wolf-Hirschhorn syndrome (4P- syndrome) seizures with cannabidiol or with vitamin B6 combination in patients with deletion of particular seizure susceptibility region, and has exclusively licensed a method of identifying a genome sequence mutation that is linked to causality of a disease using computer program product from The Hospital for Sick Children (SickKids) in in Toronto, Canada.

has registered trademarks to certain of its genetic testing services and a patent portfolio of patent applications that relate to diagnostic tests and methods to diagnose or predict disease by detecting one or more of ASD-associated CNVs, methods for assessing the presence or absence of a chromosomal deletion or duplication syndrome and methods of selecting patients for treatment based on such assessments, probe compositions, and related PCR-based methods of diagnosis by detecting ASD-associated SNPs and / or CNVs, methods for treating Wolf-Hirschhorn syndrome (4P- syndrome) seizures with cannabidiol or with vitamin B6 combination in patients with deletion of particular seizure susceptibility region, and has exclusively licensed a method of identifying a genome sequence mutation that is linked to causality of a disease using computer program product from The Hospital for Sick Children (SickKids) in in Toronto, Canada.

BioDiscovery has over 25 years of experience in development of software and algorithms for analysis, visualization, and interpretation of genomic data.

It has amassed a large base of commercial grade code along with expertise in multi-modal data integration with specific methods for copy number analysis.

In addition to patents for microarray array data and image analysis, it has developed CNV segmentation algorithms called SNP-Rank and Fast Adaptive State Segmentation Technology (FASST).

Additionally, the company BioDiscovery invented the Multi-Scale Reference (MSR) algorithm for CNV detection from NGS data.

Government Regulation

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Set forth below are highlights of certain key regulatory schemes applicable to our business.

Below are discussions concerning government regulation of our OGM products and services and, separately, our Diagnostic Services.

Below are discussions concerning government regulation of our Optical Genome Mapping, or OGM, products and services and, separately, our Diagnostic Services.

Optical Genome Mapping

Our products are currently intended for research use only, or RUO, applications, although our customers may use our products to develop their own products that are subject to regulation by the FDA.

Our OGM products are currently intended for research use only, or RUO, applications, although our customers may use our products to develop their own products that are subject to regulation by the FDA.

Although most products intended for RUO are not currently subject to clearance or approval by the FDA, RUO products fall under the FDA’s jurisdiction if they are used for clinical rather than research purposes.

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Class III devices, which have the highest level of risk associated with them, are subject to general controls and premarket approval.

Most Class I devices and some Class II devices are exempt from a requirement that the manufacturer submit a premarket notification, or 510(k), and receive clearance from the FDA which is otherwise a premarketing requirement for a Class II device.

Most Class I devices and some Class II devices are exempt from a requirement that the manufacturer submit a premarket notification, or 510(k), and receive clearance from the FDA which is otherwise a

premarketing requirement for a Class II device.

Class III devices may not be commercialized until a premarket approval application, or PMA, is submitted to and approved by the FDA.

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After a PMA is sufficiently complete, the FDA will accept the application for filing and begin an in-depth review of the submitted information.

By statute, the FDA has 180 days to review the accepted application,

although, review of the application generally can take between one and three years.

By statute, the FDA has 180 days to review the accepted application, although, review of the application generally can take between one and three years.

During this review period, the FDA may request additional information or clarification of information already provided.

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To ensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, pre-scheduled and unannounced inspections by the FDA.

Laboratories that purchase certain of our products and perform clinical diagnostic testing are also subject to extensive regulation under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, requiring clinical laboratories to meet specified standards in areas such as personnel qualifications, administration, participation in proficiency testing, patient test management, quality control, quality assurance and inspections.

Adverse interpretations of current CLIA regulations or future changes in CLIA regulations could have an adverse effect on sales of any affected products.

Moreover, if we decide to operate our own clinical testing laboratory, we will be required to comply with CLIA.

If, in the future, we operate our own clinical laboratory to perform clinical diagnostic testing, we would become subject to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its corresponding regulations, as well as additional federal and state laws that impose a variety of fraud and abuse prohibitions on healthcare providers, including clinical laboratories.

Laboratory Developed Tests (LDTs)

Federal agencies involved in the regulation of LDTs include CMS and the Food and Drug Administration (FDA).

CMS regulates the quality of clinical laboratories and the clinical testing process pursuant to the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and the FDA regulates the safety and effectiveness of the diagnostic test pursuant to authorities in the Federal, Food, Drug, and Cosmetic Act.

Federal agencies involved in the regulation of LDTs include CMS and the FDA.

Although the FDA has statutory authority to regulate medical devices, the FDA has historically exercised its enforcement discretion and not enforced applicable provisions of the

Federal Food, Drug, and Cosmetic Act and FDA regulations with respect to LDTs, which are a subset of in vitro diagnostic tests that are intended for clinical use and designed, manufactured and used entirely within a single laboratory.

FDCA and FDA regulations with respect to LDTs, which are a subset of in vitro diagnostic tests that are intended for clinical use and designed, manufactured and used entirely within a single laboratory.

The FDA does not consider devices to be LDTs if they are designed or manufactured completely, or partly, outside of the laboratory that offers and uses them.

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At various times since 2006, the FDA has issued documents outlining its intent to require varying levels of FDA oversight of many types of LDTs.

In October 2014, the FDA issued draft guidance that sets forth a proposed risk-based regulatory framework that

would apply such oversight to LDTs.

The FDA has indicated that it does not intend to implement its proposed framework until the draft guidance documents are finalized.

Congress has also considered legislation that would change how LDTs are regulated.

It is unclear at this time if or when the FDA will finalize its plans to end enforcement discretion for LDTs, and even then, whether the new regulatory requirements are expected to be phased-in over time.

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We generally use third-party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials that we may use during our research.

Laboratories that purchase certain of our OGM products and perform clinical diagnostic testing are also subject to extensive regulation under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, requiring clinical laboratories to meet specified standards in areas such as personnel qualifications, administration, participation in proficiency testing, patient test management, quality control, quality assurance and inspections.

Adverse interpretations of current CLIA regulations or future changes in CLIA regulations could have an adverse effect on sales of any affected products.

Moreover, if we decide to operate our own clinical testing laboratory with respect to our OGM products, such clinical testing would require compliance with CLIA.

If, in the future, we operate our own clinical laboratory to perform clinical diagnostic testing with respect to our OGM products, such activities would become subject to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its corresponding regulations, as well as additional federal and state laws that impose a variety of fraud and abuse prohibitions on healthcare providers, including clinical laboratories.

Coverage and Reimbursement

Currently, our product is for research use only, but clinical laboratories may acquire our instrumentation through a capital purchase or capital lease and use the Saphyr and direct label stain chemistry to create their own potentially reimbursable products, such as laboratory developed tests for in vitro diagnostics.

Currently, our OGM product, Saphyr, is for research use only, but clinical laboratories may acquire our instrumentation through a capital purchase or capital lease and use the Saphyr and direct label stain chemistry to create their own potentially reimbursable products, such as laboratory developed tests for in vitro diagnostics.

Our customers may generate revenue for these testing services by seeking the necessary approval of their product from the FDA or CMS, along with coverage and reimbursement from third-party payors, including government health programs and private health plans.

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Coverage can differ from payor to payor, and the process for determining whether a payor will provide coverage may be separate from the process for setting the reimbursement rate.

In addition, the U.S.

government, state legislatures and foreign governments have shown significant interest in implementing cost containment programs to limit the growth of government-paid healthcare costs, including price controls and restrictions on reimbursement.

Healthcare Reform

and abroad, there have been and continue to be a number of legislative initiatives to contain healthcare costs and change the way healthcare is financed.

By way of example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the ACA, became law.

The ACA is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

For example, the ACA contained a 2.3% excise tax on certain entities that manufacture or import medical devices offered for sale in the U.S., which has been permanently eliminated as part of the 2020 spending package.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA.

For example, President Trump signed several Executive Orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA.

Concurrently, Congress considered legislation to repeal or repeal and replace all or part of the ACA.

While Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the ACA, such as removing penalties, effective January 1, 2019, for not complying with the ACA's individual mandate to carry health insurance.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the ACA is unconstitutional in its entirety because the "individual mandate" was repealed by Congress as part of Legislation enacted in 2017 (H.R.

1, "An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018"), informally titled the Tax Cuts and Jobs Act.

Additionally, on December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

The United States Supreme Court is currently reviewing this case, but it is unknown when a decision will be reached.

Although the Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is unclear how the Supreme Court ruling, other such litigation, and the healthcare reform measures of the Biden administration will impact the ACA and our business.

Further, other legislative changes have been proposed and adopted since the ACA was enacted.

For example, on April 1, 2014, the Protecting Access to Medicare Act of 2014, or PAMA, was signed into law, which, among other things, significantly altered the payment methodology under the Medicare Clinical Laboratory Fee Schedule, or CLFS.

PAMA requires certain laboratories performing clinical diagnostic laboratory tests to report to CMS the amounts paid by private payors for laboratory tests.

Beginning on January 1, 2018, CMS has begun using reported private payor pricing to periodically revise payment rates under the CLFS.

We expect that additional state and federal healthcare reform measures will be adopted in the future, particularly in light of the new presidential administration, any of which could limit the amounts that federal and state governments will pay for healthcare products and services.

In addition, sales of our tests outside of the U.S.

will subject us to foreign regulatory requirements, which may also change over time.

Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

Other Healthcare Laws

Our operations are directly or indirectly, through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal and state anti-kickback statutes and false claims laws.

These laws may impact, among other things, our sales and marketing and education programs, and our financial and business relationships with researchers who use our instruments to develop marketed products or services.

By way of example:

the federal Anti-Kickback Statute prohibits, among other things, any person or entity from, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration, directly or indirectly, to induce, or in return for, purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good, facility, item, or service reimbursable, in whole or in part, under a federal healthcare program;

and the federal false claims laws, including, without limitation the federal civil False Claims Act, prohibit, among other things, anyone from knowingly and willingly presenting, or causing to be presented for payment, to the federal government (including Medicare and Medicaid) claims for reimbursement for, among other things, drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.

The ACA, among other things, amended the intent requirement of the federal Anti-Kickback Statute to clarify that a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a crime.

In addition, the ACA clarifies that the government may assert that a claim that includes items or service resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

Further, the Eliminating Kickbacks in Recovery Act of 2018, or EKRA, prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories.

EKRA’s reach extends beyond federal health care programs to include private insurance (i.e., it is an “all payor” statute).

For purposes of EKRA, the term “laboratory” is defined broadly and without reference to any connection to substance use disorder treatment.

The law includes a limited number of exceptions, some of which closely align with corresponding federal Anti-Kickback Statute exceptions and safe harbors, and others that materially differ.

Additionally, the Stark Law, which prohibits a physician from making a referral for certain designated health services covered by the Medicare or Medicaid program, including laboratory and pathology services, if the physician or an immediate family member of the physician has a financial relationship with the entity providing the designated health services and prohibits that entity from billing, presenting or causing to be presented a claim for the designated health services furnished pursuant to the prohibited referral, unless an exception applies.

There are also state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers.

In addition, we may be subject to HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers and their business associates who create, use or disclose individually identifiable health information on their behalf.

We may also be subject to state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

If our operations are found to be in violation of any of these laws, we may be subject to significant penalties, including, without limitation, civil, criminal, and administrative penalties, damages, fines, disgorgement, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs, additional integrity oversight and reporting obligations, imprisonment, contractual damages, and reputational harm.

Diagnostic Services

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CLIA provides that a state may adopt laboratory licensure requirements and regulations that are more stringent than those under federal law and requires compliance with such laws and regulations.

The State of Utah follows all Clinical Laboratory Improvement Amendments (CLIA) regulations for laboratory facility and personnel requirements.

The State of Utah follows all CLIA regulations for laboratory facility and personnel requirements.

Utah does not have any additional licensure and regulations.

Our laboratory in Salt Lake City, Utah has also been accredited by the College of American Pathologists, or CAP, which means that our laboratory has been certified as following CAP standards and guidelines in operating the laboratory facility and in performing tests that ensure the quality of our test results.

Further, certain states require clinical laboratories to obtain licenses to test specimens from patients, or to receive orders from physicians, within those states.

We hold such out-of-state laboratory licenses in California, Pennsylvania, and Maryland

HIPAA and other Privacy Laws

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Breach reports can lead to investigation, enforcement and civil litigation, including class action lawsuits.

We are currently subject to HIPAA and maintain an active compliance program that is designed to identify security incidents and other issues in a timely fashion and enable us to remediate, mitigate harm or report if required by law.

As a result of our clinical diagnostic services, we are currently subject to HIPAA and maintain an active compliance program that is designed to identify security incidents and other issues in a timely fashion and enable us to remediate, mitigate harm or report if required by law.

We are subject to prosecution and/or administrative enforcement and increased civil and criminal penalties for non-compliance, including a new, four-tiered system of monetary penalties adopted under HITECH.

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Transparency Laws and Regulations

A federal law known as the Physician Payments Sunshine Act (the “Sunshine Act”) requires certain medical device manufacturers to track and report to the federal government certain payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals and ownership or investment interests held by physicians and their immediate family members.

A federal law known as the Physician Payments Sunshine Act (the “Sunshine Act”) requires certain medical device manufacturers to track and report to the federal government certain payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals and ownership or investment interests held by physicians and their immediate family members.

Manufacturers must report data for the previous calendar year by the 90th day of the then-current calendar year.

CMS then publishes the data on a publicly available website no later than June 30th.

Beginning in 2022, applicable manufacturers also will be required to report such information regarding its payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year.

There are also state “sunshine” laws that require manufacturers to provide reports to state governments on pricing and marketing information.

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Laboratories must bill various payors, such as private third-party payors, including managed care organizations (“MCO”), and state and federal health care programs, such as Medicare and Medicaid, and each may have different billing requirements.

Additionally, the audit requirements we must meet to ensure compliance

with applicable laws and regulations, as well as our internal compliance policies and procedures, add further complexity to the billing process.

Additionally, the audit requirements we must meet to ensure compliance with applicable laws and regulations, as well as our internal compliance policies and procedures, add further complexity to the billing process.

Other factors that complicate billing include:

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Several Stark Law exceptions are relevant to arrangements involving clinical laboratories, including but not limited to:

(1) fair market value

compensation for the provision of items or services;

(1) fair market value compensation for the provision of items or services;

(2) payments by physicians to a laboratory for clinical laboratory services;

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The penalties for violating the CMP Law include exclusion, substantial fines, and payment of up to three times the amount billed, depending on the nature of the offense.

Failure to comply with the aforementioned fraud and abuse laws could result in significant penalties, including civil, criminal, and administrative penalties, damages, fines, disgorgement, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs, additional integrity oversight and reporting obligations, imprisonment, contractual damages, and reputational harm.

If any of the physicians or other healthcare providers or entities with whom we do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

International Regulations

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We generally use third-party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials and contractually require them to comply with applicable laws and regulations.

Healthcare Reform

and abroad, there have been and continue to be a number of legislative initiatives to contain healthcare costs and change the way healthcare is financed.

By way of example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the ACA, became law.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA.

Concurrently, Congress considered legislation to repeal or repeal and replace all or part of the ACA.

On June 17, 2021, the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

Thus, the ACA will remain in effect in its current form.

Prior to the U.S.

Supreme Court ruling, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is possible that the ACA will be subject to judicial or Congressional challenges in the future.

It is unclear how such challenges and the healthcare reform measures of the Biden administration will impact the ACA and our business.

Further, other legislative changes have been proposed and adopted since the ACA was enacted.

PAMA requires certain laboratories performing clinical diagnostic laboratory tests to report to CMS the amounts paid by private payors for laboratory tests.

Beginning on January 1, 2018, CMS has begun using reported private payor pricing to periodically revise payment rates under the CLFS.

Based on current law, between January 1, 2023 and March 31, 2023, applicable laboratories will be required to report on data collected during January 1, 2019 and June 30, 2019.

This data will be utilized to determine 2024 to 2026 CLFS rates.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services.

For example, Congress is considering additional health reform measures.

In addition, sales of our tests outside of the U.S.

will subject us to foreign regulatory requirements, which may also change over time.

Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

Other Healthcare Laws

By way of example:

Further, the Eliminating Kickbacks in Recovery Act of 2018, or EKRA, prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories.

EKRA’s reach extends beyond federal health care programs to include private insurance (i.e., it is an “all payor” statute).

For purposes of EKRA, the term “laboratory” is defined broadly and without reference to any connection to substance use disorder treatment.

The law includes a limited number of exceptions, some of which closely align with corresponding federal Anti-Kickback Statute exceptions and safe harbors, and others that materially differ.

Human Capital Management

13 unchanged sentences

Our design logo, “Bionano,” and our other registered and common law trade names, trademarks and service marks are the property of Bionano Genomics, Inc.

Available Information

Access to our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed with or furnished to the SEC, may be obtained through the investor section of our website at http://www.bionanogenomics.com.

We do not charge for access to and viewing of these reports.

Information in the investor section and on our website is not part of this Annual Report on Form 10-K or any of our other securities filings.

Our filings with the SEC may be accessed through the SEC’s website at www.sec.gov.

All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included unless otherwise specified, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business