What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-04 · 99 added, 88 removed, 227 unchanged (45% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K, or our Annual Report, filed with the Securities and Exchange Commission, or the SEC, on March 1, 2022.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K, or our Annual Report, filed with the Securities and Exchange Commission, or the SEC, on March 1, 2022.

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Bionano Genomics, Inc.

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Our mission is to transform the way the world sees the genome through optical genome mapping, or OGM, solutions, diagnostic services and software.

We offer OGM solutions for applications across basic, translational and clinical research.

Through our Lineagen, Inc., or Lineagen, business, we also provide diagnostic testing for patients with clinical presentations consistent with autism spectrum disorder and other neurodevelopmental disabilities.

We offer OGM solutions for applications across basic, translational and clinical research, and for other applications including bioprocessing.

Through our Lineagen, Inc.

(doing business as Bionano Laboratories, “Bionano Laboratories”) business, we also provide diagnostic testing for patients with clinical presentations consistent with autism spectrum disorder and other neurodevelopmental disabilities.

Through our BioDiscovery, LLC, or BioDiscovery, business, we also offer an industry-leading, platform-agnostic software solution, which integrates next-generation sequencing and microarray data designed to provide analysis, visualization, interpretation and reporting of copy number variants, single-nucleotide variants and absence of heterozygosity across the genome in one consolidated view.

We expect to see OGM adoption in cytogenomics, discovery research and cell bioprocessing quality control.

Within cytogenetics and molecular pathology, we estimate the number of cytogenetic labs on a worldwide basis to be approximately 6,000 and the number of samples being analyzed on a worldwide basis to be approximately 4.2 million per year.

We estimate there are approximately 15,000 sequencers installed worldwide, each representing an opportunity to add OGM.

Based on these estimates, we believe the economic potential for OGM in these markets is currently in the range of $2.8-4.2 billion annually.

We have also identified several potential future market opportunities including newborn screening, population genomics, and neurological and cardiological risk assessment.

Together with cell bioprocessing quality control, we estimate these markets represent an additional $4.0 billion of opportunity for OGM.

We have incurred losses in each year since our inception.

Our net loss was $32.2 million and $62.1 million for the three and six months ended June 30, 2022, respectively.

As of June 30, 2022, we had an accumulated deficit of $278.2 million.

Our net loss was $31.8 million and $93.9 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, we had an accumulated deficit of $310.0 million.

We expect to continue to incur significant expenses and operating losses as we:

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In executing on our commercialization strategy, we expanded the utilization of our Saphyr ® system and:

• Grew our installed base to 196 as of June 30, 2022, an increase of approximately 62% from a total installed base of 121 as of June 30, 2021.

• Grew our installed base to 217 as of September 30, 2022, an increase of approximately 54% from a total installed base of 141 as of September 30, 2021.

Installed base represents the global number of Saphyr instruments installed at end-customer locations and therefore having the technology to process OGM.

• Sold 3,394 flowcells in the three-month period ended June 30, 2022, an increase of approximately 24% over the 2,742 flowcells sold during the same quarter of 2021.

• Sold 3,975 flowcells in the three-month period ended September 30, 2022, which is comparable to the 3,969 flowcells sold during the same quarter of 2021.

Flowcells sold in the nine-month period ended September 30, 2022 totaled 10,594, compared to 9,314 sold in the nine-month period ended September 30, 2021.

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

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

• We analyzed 373 samples in our Saphyr service lab during the quarter ended June 30, 2022, compared to 190 samples analyzed in the same quarter in 2021.

• We analyzed 369 samples in our Saphyr service lab during the quarter ended September 30, 2022, compared to 309 samples analyzed in the same quarter in 2021.

• In the cytogenomics and molecular pathology markets, several sites in the United States have introduced OGM based laboratory developed tests (LDTs,), have obtained proprietary laboratory analyses (PLA) codes and have established pricing for those codes.

In addition, the 2022 Gapfill Final Recommendations were released by the Center for Medicare and Medicaid Services (CMS) for use in constitutional genetic testing.

These include reimbursements of $1,263.53 for two OGM PLA codes and reimbursement of $6,739.33 for another OGM PLA code.

These mark the first time in the United States that a payor has assigned reimbursement amounts for OGM in a Clinical Diagnostic Laboratory Fee Schedule.

There are also multiple sites in Europe that have validated OGM LDTs and are receiving reimbursement through the local healthcare systems.

COVID-19 and Other Geopolitical Events

We are subject to additional risks and uncertainties as a result of the continued spread of COVID-19, adverse geopolitical and macroeconomic events, such as the ongoing conflict between Ukraine and Russia and related sanctions, and uncertain market conditions, including higher inflation and supply chain disruptions, which could continue to have a material impact on our business and financial results.

We are subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic events, such as the the continued impact of COVID-19, the ongoing conflict between Ukraine and Russia and related sanctions, and uncertain market conditions, including higher inflation and supply chain disruptions, which could continue to have a material impact on our business and financial results.

We closely monitor and comply with various applicable guidelines and legal requirements in the jurisdictions in which we operate, which may continue to result in reduced business operations in response to new or existing stay-at-home orders, travel restrictions and other social distancing measures.

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Our manufacturing partners, suppliers, and customers, have implemented similar operational reductions.

This overall reduction in activity has contributed to a decrease in sales which negatively impacted the Company’s financial results in the first and second quarters of 2021 and 2022.

This overall reduction in activity has contributed to a decrease in sales which negatively impacted the Company’s financial results in the first, second and third quarters of 2021 and 2022.

Given the continued evolution of the COVID-19 pandemic and the related complexities and uncertainties associated with the additional variants, the future effects of COVID-19 are unknown and our financial results may continue to be negatively affected in the future.

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Following the recent invasion of Ukraine by Russia, the U.S.

and global financial markets experienced volatility, which has led to disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity globally.

and global financial markets experienced volatility, which has led to disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity

In response to the invasion, the United States, United Kingdom and European Union, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.

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As a result, our business and results of operations may be adversely affected by the ongoing conflict between Ukraine and Russia and related sanctions, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.

During the three and six months ended June 30, 2022, we experienced supply chain challenges, which we largely attribute to the COVID-19 pandemic and the general disruptions resulting from the ongoing conflict between Ukraine and Russia and related sanctions.

While neither the COVID-19 pandemic nor the Ukraine-Russia conflict prevented us from operating our business during the three and six months ended June 30, 2022, we experienced increased cost to secure certain component parts in our products and to produce our products at our contract manufacturers.

During the three and nine months ended September 30, 2022, we experienced supply chain challenges, which we largely attribute to the COVID-19 pandemic and the general disruptions resulting from the ongoing conflict between Ukraine and Russia and related sanctions.

While neither the COVID-19 pandemic nor the Ukraine-Russia conflict prevented us from operating our business during the three and nine months ended September 30, 2022, we experienced increased cost to secure certain component parts in our products and to produce our products at our contract manufacturers.

We expect these increased costs to remain high as the COVID-19 pandemic, the Ukraine-Russia conflict and their respective effects persist.

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Consumable revenue consists of sales of reagents and chips necessary to process a sample.

We generate service revenue from the sale of diagnostic testing services for those with autism spectrum disorder and other neurodevelopmental disabilities through our wholly owned subsidiary Lineagen.

We also generate service and product revenue through BioDiscovery’s NxClinical™ software, which provides customers with solutions for analysis, interpretation and reporting of genomics data.

Other revenue consists of warranty and other service-based revenue, including services performed related to customer sample evaluations using the Saphyr system, license maintenance agreements, and support, repair and maintenance services.

We generate service revenue from the sale of diagnostic testing services for those with autism spectrum disorder and other neurodevelopmental disabilities through Bionano Laboratories, as well as services performed related to customer sample evaluations using the Saphyr system.

We also generate service revenue through BioDiscovery’s NxClinical™ software, which provides customers with solutions for analysis, interpretation and reporting of genomics data.

Other revenue consists of warranty and other service-based revenue, including support, repair and maintenance services.

The following table presents our revenue for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Service and other revenue 3,615,000 1,355,000 8,952,000 3,834,000

2,757,000 1,360,000 5,337,000 2,479,000

Total $ 7,221,000 $ 4,655,000 $ 19,587,000 $ 11,679,000

1 Includes $1.0 million and $2.2 million of revenue generated from BioDiscovery during the three and six months ended June 30, 2022, respectively.

1 Includes $1.8 million and $4.0 million of revenue generated from BioDiscovery during the three and nine months ended September 30, 2022, respectively.

The following table reflects total revenue by geography and as a percentage of total revenue, based on the billing address of our customers.

Americas consists of North America and South America.

EMEIA consists of Europe, Middle East, India and Africa.

Asia Pacific includes China, Japan, South Korea, Singapore and Australia.

Three Months Ended June 30, Six Months Ended June 30,

EMEA consists of Europe, the Middle East, and Africa.

Asia Pacific includes China, Japan, South Korea, Singapore, India and Australia.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Americas $ 3,679,000 51 % $ 2,557,000 55 % $ 9,618,000 49 % $ 6,419,000 55 %

EMEIA 2,609,000 39 % 940,000 25 % 4,348,000 35 % 2,518,000 36 %

EMEA 1,969,000 27 % 1,234,000 27 % 6,317,000 32 % 3,762,000 32 %

Asia Pacific 1,573,000 22 % 864,000 18 % 3,652,000 19 % 1,498,000 13 %

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Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table sets forth our results of operations for the three months ended June 30, 2022 and 2021:

Three Months Ended June 30, Period-to-Period Change

Comparison of the Three Months Ended September 30, 2022 and 2021

The following table sets forth our results of operations for the three months ended September 30, 2022 and 2021:

Three Months Ended September 30, Period-to-Period Change

Product revenue $ 3,606,000 $ 3,300,000 $ 306,000 9 %

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Interest expense (73,000) (2,000) (71,000) 3,550 %

Loss on debt extinguishment — (2,076,000) 2,076,000 (100) %

Other income (expenses) 5,000 (67,000) 72,000 (107) %

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Net loss $ (31,809,000) $ (20,753,000) $ (11,056,000) 53 %

Total revenue increased by $2.8 million, or 73%, to $6.7 million for the three months ended June 30, 2022 compared to $3.9 million for the same period in 2021.

The increase in product sales was driven by increased demand for our Saphyr OGM solutions, including an increase in instrument installed base (62%) and flowcell units sold (24%), when compared to the same period last year.

Total revenue increased by $2.6 million, or 55%, to $7.2 million for the three months ended September 30, 2022 compared to $4.7 million for the same period in 2021.

The increase in product sales was driven by increased demand for our Saphyr OGM solutions, including an increase in instrument installed base (54%) when compared to the same period last year.

The increased demand for our reagent rental program continues to drive a significant portion of the increase in consumable sales.

We believe increased demand for our OGM systems was primarily driven by increased market awareness and additional published data demonstrating the utility of OGM.

While not immune to the negative effects caused by COVID-19 and other geopolitical events, we expect revenue to increase as market awareness and published data of OGM utility increases.

The increase in service and other revenue was primarily driven by $1.0 million in revenues generated by our BioDiscovery subsidiary, which was acquired in October 2021.

While not immune to the negative effects caused by geopolitical and macroeconomic events, such as COVID-19, we expect revenue to increase as market awareness and published data of OGM utility increases.

The increase in service and other revenue was primarily driven by $1.8 million in revenues generated by our BioDiscovery subsidiary, which was acquired in October 2021, as well as by increased volume through the Bionano Laboratories sample analysis business.

Cost of Revenue

Cost of revenue increased by $2.8 million, or 115%, to $5.2 million for the three months ended June 30, 2022 compared to $2.4 million for the same period in 2021.

During the three months ended June 30, 2022, gross margin was 22%, compared to 37% during the same period in 2021.

Gross margin for the three months ended June 30, 2022 improved compared to gross margin for the first quarter of 2022, which was 15%.

The improvement in gross margin was primarily due to improvements in chip yield during the second quarter of 2022.

Cost of revenue increased by $1.9 million, or 55%, to $5.4 million for the three months ended September 30, 2022 compared to $3.5 million for the same period in 2021.

During the three months ended September 30, 2022, gross margin was 25%, compared to 25% during the same period in 2021.

Gross margin for the three months ended September 30, 2022 improved compared to gross margin for the first and second quarters of 2022, which were 15% and 22%, respectively.

The improvement in gross margin was primarily due to improvements in chip yield during the second and third quarters of 2022, as well as an increase in high-margin software revenues from BioDiscovery.

Cost of product revenue increased primarily due to increased instrument and flowcell sales volume, but was also negatively impacted by unfavorable flowcell yields in the production cycle, which is in part attributable to COVID-19.

Our gross margins for the three months ended June 30, 2022 were affected by the unfavorable flowcell yields in the production cycle which led to increased scrap and quality control costs during the second quarter of 2022.

Our gross margins for the three months ended September 30, 2022 were affected by the unfavorable flowcell yields in the production cycle which led to increased scrap and quality control costs.

If we are unable to solve the unfavorable flowcell yield issue, it could lead to lower gross margins in future periods.

Cost of service and other revenue increased primarily due to increased maintenance and service costs on our increased installed base, as

well as increased service expenses related to our laboratory services.

Cost of service and other revenue increased primarily due to increased maintenance and service costs on our increased installed base, as well as increased

service expenses related to our laboratory services.

We expect cost of product and service and other revenue to continue to increase as we continue to increase our installed base and the number of customers purchasing laboratory services

Research and Development Expenses

Research and development, or R&D, expenses increased by $7.7 million, or 188%, to $11.8 million for the three months ended June 30, 2022 compared to $4.1 million for the same period in 2021.

Research and development, or R&D, expenses increased by $6.2 million, or 96%, to $12.7 million for the three months ended September 30, 2022 compared to $6.5 million for the same period in 2021.

The increase is primarily due to a $5.4 million increase in compensation expenses, of which $2.9 million relates to stock-based compensation expense, and an increase of $0.5 million in product development costs.

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We expect R&D expenses to increase in the remainder of 2022 relative to 2021 as we have added headcount in order to support our efforts to develop more scalable and efficient manufacturing workflows, expand the utility of Saphyr, and develop the next versions of OGM products – including integration of OGM data into our NxClinical software.

We expect that stock based compensation will continue to drive a significant portion of the increase in expense in the remainder of 2022 as a result of the stock issued as consideration in the BioDiscovery acquisition, which primarily rolls up into R&D expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $8.0 million, or 58%, to $21.8 million for the three months ended June 30, 2022 compared to $13.8 million for the same period in 2021.

Selling, general and administrative expenses increased by $5.9 million, or 38%, to $21.2 million for the three months ended September 30, 2022 compared to $15.3 million for the same period in 2021.

The increase is primarily due to a $4.1 million increase in compensation expenses, of which $0.4 million relates to stock-based compensation, a $1.4 million increase in amortization of intangibles related to the acquisition of BioDiscovery, a $0.2 million increase in marketing expenses, and a $0.4 million increase in other headcount-related expenses.

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This is due to growth in our global sales, service, and back-office teams to facilitate the expanding customer base, as well as headcount additions attributed to the acquisition of BioDiscovery.

We anticipate headcount additions to our global sales and back-office teams in the coming 12 months.

We anticipate headcount additions to our global sales, service and back-office teams in the coming 12 months.

While we expect headcount to continue to grow, we anticipate that headcount will grow at a slower pace than the trailing twelve months.

Other headcount-related expenses included the cost of recruiting, temporary employment, and facilities expenses incurred in order to support increased product demand.

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We expect stock based compensation to continue to drive a significant portion of the increase in expense in the remainder of 2022 due to stock option awards issued to senior-level fourth quarter 2021 hires as well as annual refresher grants issued to executives and non-executives in February 2022.

Interest Expense

Interest expense decreased by $0.2 million, or 72%, to $0.07 million for the three months ended June 30, 2022 compared to $0.3 million for the same period in 2021, driven by us paying off the outstanding principal balance of our outstanding term loan with Innovatus, or the Innovatus LSA, during the three months ended June 30, 2021.

Interest Income

Interest income was $0.2 million for the three months ended June 30, 2022, as compared to $58,000 for the same period in 2021 resulting from positive returns on investments.

Our total available for sale securities balance was $160.2 million as of June 30, 2022.

Loss on debt extinguishment

A loss on debt extinguishment of $2.1 million was recognized during the three months ended June 30, 2021 in connection with our payment in full of the term loan under the Innovatus LSA, including all accrued interest, an end of term fee, a prepayment fee, and write-off of unamortized debt issuance costs.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following table sets forth our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30, Period-to-Period Change

Interest income was $0.4 million for the three months ended September 30, 2022, as compared to $0.03 million for the same period in 2021 resulting from positive returns on investments.

We did not hold available for sale securities until August 2021.

Our total available for sale securities balance was $152.0 million as of September 30, 2022.

Comparison of the Nine Months Ended September 30, 2022 and 2021

The following table sets forth our results of operations for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30, Period-to-Period Change

Product revenue $ 10,635,000 $ 7,845,000 $ 2,790,000 36 %

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Net loss $ (93,919,000) $ (49,486,000) $ (44,433,000) 90 %

Total revenue increased by $5.3 million, or 76%, to $12.4 million for the six months ended June 30, 2022 compared to $7.0 million for the same period in 2021.

Total revenue increased by $7.9 million, or 68%, to $19.6 million for the nine months ended September 30, 2022 compared to $11.7 million for the same period in 2021.

The increase in product sales was driven by increased demand for our Saphyr OGM solutions, including an increase in instrument installed base (54%) and flowcell units sold (14%), when compared to the same period last year.

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We believe increased demand for our OGM systems was primarily driven by increased market awareness and additional published data demonstrating the utility of OGM.

While not immune to the negative effects caused by COVID-19 and other geopolitical events, we expect revenue to increase as market awareness and published data of OGM utility increases.

The increase in service and other revenue was primarily driven by $2.2 million in revenues generated by our BioDiscovery subsidiary, which was acquired in October 2021.

The increase in service and other revenue was primarily driven by $4.0 million in revenues generated by our BioDiscovery subsidiary, which was acquired in October 2021, as well by increased volume through the Bionano Laboratories sample analysis business.

Cost of Revenue

Cost of revenue increased by $5.5 million, or 121%, to $10.0 million for the six months ended June 30, 2022 compared to $4.5 million for the same period in 2021.

Cost of revenue increased by $7.4 million, or 92%, to $15.4 million for the nine months ended September 30, 2022 compared to $8.0 million for the same period in 2021.

Our gross margins for the six months ended June 30, 2022 were affected by the unfavorable flowcell yields in the production cycle which led to increased scrap and quality control costs during the first half of 2022.

Our gross margins for the nine months ended September 30, 2022 were affected by the unfavorable flowcell yields in the production cycle which led to increased scrap and quality control costs during the first half of 2022.

If we are unable to solve the unfavorable flowcell yield issue, it could lead to lower gross margins in future periods.

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Research and Development Expenses

R&D expenses increased by $15.5 million, or 230%, to $22.3 million for the six months ended June 30, 2022 compared to $6.8 million for the same period in 2021.

R&D expenses increased by $21.8 million, or 164%, to $35.0 million for the nine months ended September 30, 2022 compared to $13.3 million for the same period in 2021.

The increase is primarily due to a $17.0 million increase in compensation expenses, of which $9.2 million relates to stock-based compensation expense, and an increase of $4.2 million in product development costs.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $18.7 million, or 80%, to $42.1 million for the six months ended June 30, 2022 compared to $23.4 million for the same period in 2021.

Selling, general and administrative expenses increased by $24.6 million, or 64%, to $63.3 million for the nine months ended September 30, 2022 compared to $38.7 million for the same period in 2021.

The increase is primarily due to a $13.9 million increase in compensation expenses, of which $2.8 million relates to stock-based compensation, a $4.2 million increase in amortization of intangibles related to the acquisition of BioDiscovery, a $2.1 million increase in marketing expenses, and a $1.2 million increase in other headcount-related expenses.

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This is due to growth in our global sales, service, and back-office teams to facilitate the expanding customer base, as well as headcount additions attributed to the acquisition of BioDiscovery.

We anticipate headcount additions to our global sales and back-office teams in the coming 12 months.

We anticipate headcount additions to our global sales, service and back-office teams in the coming 12 months.

While we expect headcount to continue to grow, we anticipate that headcount will grow at a slower pace than the trailing twelve months.

Other headcount-related expenses included the cost of recruiting, temporary employment, and facilities expenses incurred in order to support increased product demand.

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Interest Expense

Interest expense decreased by $0.7 million, or 83%, to $0.2 million for the six months ended June 30, 2022 compared to $0.9 million for the same period in 2021, driven by us paying off the outstanding principal balance of our outstanding term loan under the Innovatus LSA during the six months ended June 30, 2021.

Interest expense decreased by $0.7 million, or 74%, to $0.2 million for the nine months ended September 30, 2022 compared to $0.9 million for the same period in 2021, driven by us paying off the outstanding principal balance of our outstanding term loan under the Innovatus LSA during the nine months ended September 30, 2021.

Interest Income

Interest income was $0.3 million for the six months ended June 30, 2022, as compared to $0.1 million for the same period in 2021 resulting from positive returns on investments.

Our total available for sale securities balance was $160.2 million as of June 30, 2022.

Interest income was $0.7 million for the nine months ended September 30, 2022, as compared to $0.2 million for the same period in 2021 resulting from positive returns on investments.

We did not hold available for sale securities until August 2021.

Our total available for sale securities balance was $152.0 million as of September 30, 2022.

Loss on debt extinguishment

A loss on debt extinguishment of $2.1 million was recognized during the six months ended June 30, 2021 in connection with our payment in full of the term loan under the Innovatus LSA, including all accrued interest, an end of term fee, a prepayment fee, and write-off of unamortized debt issuance costs.

A loss on debt extinguishment of $2.1 million was recognized during the nine months ended September 30, 2021 in connection with our payment in full of the term loan under the Innovatus LSA, including all accrued interest, an end of term fee, a prepayment fee, and write-off of unamortized debt issuance costs.

Gain on forgiveness of Paycheck Protection Program loan

A gain on forgiveness of our Paycheck Protection Program loan, or PPP Loan, of $1.8 million was recognized during the six months ended June 30, 2021 in connection with the forgiveness of the PPP Loan in full, including all accrued interest.

A gain on forgiveness of our Paycheck Protection Program loan, or PPP Loan, of $1.8 million was recognized during the nine months ended September 30, 2021 in connection with the forgiveness of the PPP Loan in full, including all accrued interest.

Liquidity and Capital Resources

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Revenue from our commercial operations has increased due to increased demand for our product offerings and our acquisition of revenue-positive BioDiscovery.

See Note 6 to our condensed consolidated financial statements for a discussion of our recent equity activity included elsewhere in this Quarterly Report on Form 10-Q for more information.

We incurred net losses of $62.1 million and $28.7 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had an accumulated deficit of $278.2 million, cash and cash equivalents of $27.2 million, and available for sale investment

securities of $160.2 million.

See Note 6 to our unaudited condensed consolidated financial statements for a discussion of our recent equity activity included elsewhere in this Quarterly Report on Form 10-Q for more information.

We incurred net losses of $93.9 million and $49.5 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $310.0 million, cash and cash equivalents of $28.2 million, and

available for sale investment securities of $152.0 million.

As of December 31, 2021, we had an accumulated deficit of $216.1 million, cash and cash equivalents of $24.6 million, and available for sale investment securities of $226.0 million.

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Net cash provided by (used in):

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities $ (90,299,000) $ (46,305,000)

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As discussed below, we anticipate our available cash balance will be sufficient to fund those increases in cash used in operating activities for at least the next 12 months, but we may consider funding those increases or increases beyond the next 12 months with the methods discussed in the section below entitled “Capital Resources.”

Net cash used in operating activities was $60.8 million during the six months ended June 30, 2022 as compared to $26.3 million during the same period in 2021.

The increase in cash used in operating activities of $34.5 million was primarily attributed to an incremental headcount growth compared to our headcount as of June 30, 2021.

Net cash used in operating activities was $90.3 million during the nine months ended September 30, 2022 as compared to $46.3 million during the same period in 2021.

The increase in cash used in operating activities of $44.0 million was primarily attributed to an incremental headcount growth compared to our headcount as of September 30, 2021, as well as additional spending to support ongoing business operations and increase our international presence, including increased marketing costs and professional fees.

Investing Activities

Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure, the acquisitions of Lineagen and BioDiscovery to grow our business, and purchases of available for sale investment securities.

Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure, the acquisitions of Bionano Laboratories and BioDiscovery to grow our business, and purchases of available for sale investment securities.

We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods.

During the six months ended June 30, 2022, cash provided by investing activities was $63.2 million, as compared to $0.05 million during the same period in 2021.

The increase in cash provided by investing activities of $63.2 million was primarily attributed to the sale of $93.5 million in available for sale securities, offset by a purchase of $29.5 million in available for sale securities.

During the nine months ended September 30, 2022, cash provided by investing activities was $71.2 million, as compared to $185.6 million used in investing activities during the same period in 2021.

The increase in cash provided by investing activities of $256.7 million was primarily attributed to the maturity of $135.4 million in available for sale securities during the nine months ended September 30, 2022, which was partially offset by a purchase of $63.2 million of available for sale securities during the same period.

During the nine months ended September 30, 2021, cash used in investing activities primarily related to the purchase of $205.3 million in available for sale securities, which was offset by the maturity of $20.0 million in available for sale securities.

Financing Activities

Net cash provided by financing activities was $0.2 million during the six months ended June 30, 2022 as compared to the same period in 2021 where we had net cash provided by financing activities of $320.4 million, a decrease of $320.2 million.

During the six months ended June 30, 2021, we raised approximately $328.6 million in gross proceeds from executing two follow-on offerings and sales under our at-the-market facilities with Ladenburg Thalmann & Co.

Inc., or Ladenburg, and Cowen and Company, LLC, or Cowen.

We did not have similar fundraising activity in the six months ended June 30, 2022.

Net cash provided by financing activities was $22.9 million during the nine months ended September 30, 2022 as compared to the same period in 2021 where we had net cash provided by financing activities of $334.1 million, a decrease of $311.3 million.

During the nine months ended September 30, 2021, we raised approximately $342.7 million in gross proceeds from executing two follow-on offerings and sales under our at-the-market facilities with Ladenburg Thalmann & Co.

Inc., or Ladenburg, and

Cowen and Company, LLC, or Cowen.

During the nine months ended September 30, 2022, we raised approximately $23.1 million in gross proceeds from sales under the Cowen ATM.

Paycheck Protection Program

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In February 2021, we applied for forgiveness of the PPP Loan and, in March 2021, the PPP Loan, including all accrued interest, was forgiven in full.

The PPP Loan is also described in Note 5 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

The PPP Loan is also described in Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Capital Resources

As of June 30, 2022, we had approximately $27.2 million in cash and cash equivalents, available for sale securities of $160.2 million, and working capital of $188.4 million.

As of September 30, 2022, we had approximately $28.2 million in cash and cash equivalents, available for sale securities of $152.0 million, and working capital of $184.7 million.

In August 2020, we filed a shelf registration statement on Form S-3 with the SEC covering the offering, issuance and sale of up to $125.0 million of our securities, including up to $40.0 million of common stock pursuant to an At Market Issuance Sales Agreement, with Ladenburg acting as sales agent, or the Ladenburg ATM.

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In August and September 2021, the Company sold 2.3 million shares of common stock under the Cowen ATM at an average share price of $6.15 per share, and received gross proceeds of approximately $13.9 million before deducting offering costs of $0.6 million.

There were no sales of common stock under the Cowen ATM from January 1, 2022 to June 30, 2022.

In August 2022, the Company sold approximately 6.6 million shares of common stock under the Cowen ATM at an average share price of $3.46 per share, and received gross proceeds of approximately $23.1 million before deducting offering costs of $0.6 million.

We believe that our cash, cash equivalents, and available for sale securities will be sufficient to fund our planned operations, obligations as they become due and capital investments for at least the next twelve months.

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We have based these estimates on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.

See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Contingent Consideration

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The Company determined it is highly likely that the milestone will be achieved and therefore used a 95% probability factor which is applied to the $10.0 million milestone consideration.

Based on these valuation assumptions, the fair value of the milestone consideration was determined to be $9.2 million as of June 30, 2022.

During the three months ended June 30, 2022, the milestone consideration liability was reclassified from non-current liabilities to current liabilities.

Based on these valuation assumptions, the fair value of the milestone consideration was determined to be $9.3 million as of September 30, 2022.

During the nine months ended September 30, 2022, the milestone consideration liability was reclassified from non-current liabilities to current liabilities.

Contractual Obligations

1 unchanged sentence

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented.

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Historically, revisions to our estimates have not resulted in a material change to our financial statements.

During the three and six months ended June 30, 2022, there have been no changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

During the three and nine months ended September 30, 2022, there have been no changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Recent Accounting Pronouncements

See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information concerning recent accounting pronouncements.

See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information concerning recent accounting pronouncements.

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-Q

Item 2. Management’s Discussion and Analysis