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Item 1. Business

2023-03-09 compared with 2022-03-01 · 278 added, 265 removed, 431 unchanged (56% of the section changed)

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.

We are pioneers of optical genome mapping (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 our OGM solutions, our nucleic acid isolation and purification solutions, our genomic analysis and interpretation software, and our clinical testing and laboratory services, we believe that we have a suite of products that will drive new discoveries, elevate health and wellness, and increase our understanding of the genome in transformative ways.

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 (SV).

The Saphyr system is used to identify 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.

We market and sell the Ionic ® Purification system, which is able to deliver high quality DNA in a more natural, native form and with fewer contaminants when compared to other isolation and purifications solutions.

The Ionic Purification system is used to extract, purify, and concentrate DNA or RNA from a variety of sample types, and is comprised of an instrument, consumables, and reagents.

Our software delivers 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.

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

Our software currently enables analysis of next-generation sequencing (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.

Our Bionano Laboratories business provides proprietary genetic clinical testing services for individuals demonstrating clinical presentations consistent with neurodevelopmental disorders (NDDs), including autism spectrum disorders (ASDs) and other disorders of childhood development.

Their 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.

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.

Additionally, Bionano Laboratories has developed OGM-based laboratory developed tests (LDTs) for facioscapulohumeral muscular dystrophy type 1 (FSHD1), which is a progressive disorder that primarily affects the muscles of the face, shoulder blades (scapula), upper arms, and lower legs, and for detecting SVs in individuals with hematologic malignancies.

Bionano Laboratories also provides 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, California 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 system.

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

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

We furthered our transformation through the expansion into software solutions, made possible by our October 2021 acquisition of BioDiscovery and continued with our November 2022 acquisition of Purigen bringing their leading nucleic acid isolation and purification technology to Bionano.

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 provide solutions to our customers that we believe will make OGM the standard of care for many constitutional genetic disorders and cancers.

Recent Highlights

Achievement of 2022 ELEVATE!

Bionano executed on its 2022 ELEVATE!

milestones and achieved or exceeded all publicly stated milestones outlined at the beginning of 2022.

• Reimbursement:

We applied for a category 1 Current Procedural Terminology (CPT) code for OGM.

• Clinical Studies:

We received institutional review board (IRB) approval for our hematological study.

Site selection was completed, and enrollment commenced for our hematological study.

Data generation for our prenatal study commenced.

We completed our postnatal study.

We had an interim publication for our prenatal study.

• Expand Awareness:

We achieved an installed base of 240 Saphyr systems.

• Planned Product Developments:

We released a pre-commercial version of NxClinical software, version 7.0, enabling OGM data analysis in the field.

We released labeling protocol 2.0 and the SP Next DNA isolation protocol.

We placed a pre-commercial version of our next-generation OGM system in the field.

Our Bionano Laboratories business launched an OGM test menu for genetic disease and hematologic malignancies.

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.

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 commercial momentum.

• Grew our installed base of Saphyr systems to 240 as of December 31, 2022, an increase of approximately 46% from a total installed base of 164 as of December 31, 2021.

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

• Sold 4,781 flowcells in the fourth quarter of 2022, an increase of approximately 49% over the 3,204 flowcells sold during the fourth quarter of 2021.

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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.

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.

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.”

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

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

• Researchers from The University of Texas MD Anderson Cancer Center published the first study to evaluate the utility of OGM for myelodysplastic syndrome (MDS) prognostication.

The publication reported that when OGM was used instead of karyotyping, 17 to 21% of study subjects had different prognostic risk scores depending on the scoring system used, and in 13% of study subjects additional pathogenic variants were revealed.

• In a study published in Blood Cancer Journal , researchers found that in 33% of MDS samples and 54% of acute myeloid leukemia (AML) samples, more clinically relevant variants were detected using OGM than were found by traditional cytogenetic methods and these variants were reported to be highly relevant to the understanding of pathogenesis of these disorders.

• Researchers from eight research institutes analyzed OGM’s utility for detection of cytogenetic abnormalities in AML samples, finding that OGM identified pathogenic variants in 12% of cases that altered European LeukemiaNet ( ELN) risk-level or identified eligibility for clinical trials.

• The first published validation study to evaluate the performance of OGM versus traditional cytogenetic techniques for the analysis of hematological neoplasms showed that OGM’s technical performance resulted in a 100% first-pass rate, with concordance to traditional methods showing a sensitivity of 98.7%, a specificity of 100%, and an accuracy of 99.2%.

• A study demonstrated the utility of OGM as part of a workflow to evaluate the quality of hypoimmunogenic induced pluripotent stem cells (iPSCs) which could be used in regenerative medicine.

This research provides scientific and practical support for OGM’s ability to detect cryptic and balanced SVs in CRISPR-edited cells, some of which were not detected by karyotyping, and which may impact the genomic integrity of iPSCs.

Macroeconomic and Geopolitical Developments

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

For a more detailed discussion of the impacts of macroeconomic and geopolitical developments on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Macroeconomic and Geopolitical Developments.”

Industry Background

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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.

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.

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.

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

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

SVs may be inherited or arise spontaneously.

SVs 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 SVs.

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

We believe the traditional cytogenomic methods of detecting SVs for research and clinical applications, such as karyotyping, CMA, and FISH are antiquated and cumbersome and can only detect a small proportion of the SVs 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 DNA isolation is the critical first step in the analysis of DNA.

Short and long read sequencing applications typically require nucleotide lengths of 150 and, generally, 10,000 to 20,000 base pairs, respectively.

OGM, conversely, optimally requires DNA lengths of greater than 100,000 base pairs.

Due to market needs, the vast majority of DNA isolation and preparation technologies have been directed to meeting the requirements for short and long read sequencing applications.

We believe that DNA isolation and purification processes that allow long segments of DNA (ultra-high molecular weight (UHMW) DNA) to remain intact are important for the success of OGM.

Our Ionic Purification system has the capability to isolate and purify UHMW DNA that is ideal for OGM applications.

We believe that the system’s ease of use, reproducibility, and cost per sample profile has the potential to accelerate the adoption of OGM across a broad spectrum of applications.

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.

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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 software solution, NxClinical™, was developed with CNV 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 our NxClinical software, 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.

We believe that an end-to-end OGM solution begins with the sample and ends with data analysis.

The OGM workflow includes several steps:

DNA isolation, DNA labeling, DNA mapping, data processing and data analysis.

At each step we have either organically developed a solution or partnered with a third party to enable and provide a solution.

We highly value our relationships with third parties that enable us to provide these solutions and will continue to work with others to ensure our customers’ needs are being met.

We are constantly on the look-out for opportunities to better meet the needs of our customers

whether that is through partnerships, organic development, or strategic acquisitions that accelerate and up-shift our capabilities.

To that end, we have recently engaged in two transactions, which we believe will substantially benefit our customers and their adoption of OGM as a solution of choice for SV and CNV analysis.

In 2021 we acquired BioDiscovery and its leading NxClinical software for data analysis, and in 2022 we acquired Purigen, and its proprietary isolation and purification technology.

We believe that each of these acquisitions, together with our organic development, will significantly enhance the customer experience with OGM.

Our system uses a proprietary approach to measure genome structure and SV through OGM.

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.

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

Using the SSPs, software constructs a 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.

Today, these SVs cannot be reliably detected by genome sequencing, from existing high throughput sequencers, which is focused on identifying genomic differences involving a few base pairs or SNVs, which the Saphyr system does not identify.

We believe the Saphyr system is ideally suited to be adopted alongside the installed base of high throughput 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.

• Extremely long molecules for analysis (or UHMW DNA).

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.

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

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

Analyzing UHMW DNA required invention.

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

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

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Changes in the pattern indicate structural variation.

• Bioinformatic tools for structural variation analysis.

• Bioinformatic tools for SV 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.

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 SV, including the most complex balanced events.

The Saphyr system provides a solution for comprehensive SV 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 the Saphyr system is the only product capable of detecting SVs at high sensitivity and specificity with a workflow that is cost-effective and time efficient.

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.

As the scientific, peer-reviewed literature supports this claim, the coding entities such as CMS and the AMA would need to adopt the proper procedural codes to allow for insurance reimbursement of new testing methodologies before they become mainstream clinical diagnostic instruments.

Importantly, OGM is expected to be able to detect full mutations consistent with fragile X syndrome, which is another front-line test for children, especially males, with autism spectrum disorder and intellectual disability.

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

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.

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

Nucleic Acid Isolation and Purification Systems

Our nucleic acid isolation and purification system uses a novel and proprietary application of isotachophoresis (ITP) to isolate nucleic acid molecules in a gentle and efficient process.

The process involves the gentle lysis of biological samples followed by the addition of the sample and buffer to an Ionic ® fluid chip.

An electric field is applied to the chip and the nucleic acid is isolated in its natural, native form.

Traditional methods of isolating nucleic acid, including column-based isolation and bead-based isolation, can be laborious, and result in molecules that are denatured, dehydrated and fragmented, and solutions that are contaminated and have low purity.

An additional limitation of many of the traditional isolation processes is the number of cells that are required to be processed in order to obtain sufficient nucleic acid molecules for OGM analysis.

Current methodologies require upwards of 1.5 million cells in order to isolate sufficient DNA for use on the Saphyr system.

Our Ionic Purification system, employing ITP technology, addresses many of these deficiencies and yields high purity nucleic acid that is not denatured, dehydrated or fragmented.

Additionally, the Ionic Purification system is capable of isolating sufficient quantities of DNA for use in OGM applications from far fewer cells in contrast to traditional methods.

We believe the addition of the Ionic Purification system to the OGM workflow will provide a more efficient yield of DNA at higher quality than can be achieved with current processes.

Although OGM is our primary focus, the Ionic Purification system has a current customer base of non-OGM users that use the system to isolate and purify nucleic acid molecules from sample types including formalin-fixed, paraffin-embedded (FFPE) sample, tissue, cells, and viral.

We anticipate continuing to support and expanding this customer base.

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.

Today, NxClinical software is among the most comprehensive solutions for analysis and interpretation of any microarray or NGS generated data integrating 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 we are working to add 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.

We believe integrating OGM data into the NxClinical software 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.

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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.

Testing and Laboratory Services

Our Bionano Laboratories business offers 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.

Importantly, OGM is expected to be able to detect full mutations consistent with fragile X syndrome, which is another front-line test for children, especially males, with

autism spectrum disorder and intellectual disability.

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

Bionano Laboratories also employs Whole Exome Sequencing (WES), which aims to detect genome SNVs that are different from genome SVs and are not detectable by OGM.

We believe that Bionano Laboratories is uniquely positioned to develop LDT’s that can improve upon the existing SOC for diagnostic testing for NDDs.

Bionano Laboratories is working with payers to secure reimbursement alternatives for OGM-based testing.

If reimbursements can be established, Bionano Laboratories intends to share its strategies with other labs which may drive demand for the Saphyr system.

Bionano Laboratories plans to expand its 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.

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

Our Commercial Offerings

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

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

We believe the Saphyr system is capable of addressing the needs for SV 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.

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

• Cost effective.

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The instrument’s control interface is the user’s primary control center to design and monitor experiments as they occur in real time.

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

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

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.

At the end of 2022 we announced the placement of a pre-commercial unit that we expect to significantly increase the throughput.

The Saphyr Chip

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Saphyr Sample Prep and Labeling Kits

Our Bionano Prep Kits™ and DNA labeling kits provide the reagents and protocols needed to extract and label ultra-high molecular weight, or UHMW, DNA for use with the Saphyr system.

Our Bionano Prep™ kits and DNA labeling kits provide the reagents and protocols needed to extract and label UHMW DNA for use with the Saphyr system.

These kits are optimized for performing our genome mapping applications on a variety of sample types.

Our workflow begins with the isolation of ultra-high molecular weight DNA.

Our sample prep kits are optimized for isolating and purifying ultra-high molecular weight DNA in a process that is gentler than existing DNA extraction methods.

The resulting purified DNA is millions of base pairs long and optimal for use with our systems.

Each Bionano Prep Kit allows customers to perform five to 10 HMW DNA preps.

Our kits and protocols enable the extraction of HMW DNA from a variety of sample types including human or animal tissue and tumors, plant tissue, cell lines, bone marrow aspirates and human blood.

Our workflow begins with the isolation of UHMW DNA.

Our Bionano Prep kits are optimized for isolating and purifying UHMW DNA in a process that is gentler than existing DNA extraction methods.

The resulting purified DNA is up to millions of base pairs long and optimal for use with our systems.

Our kits and protocols enable the extraction of UHMW DNA from a variety of sample types including human or animal tissue and tumors, plant tissue, cell lines, bone marrow aspirates and human blood.

Our labeling reagents are optimized for applications on our genome mapping systems.

Starting with HMW DNA purified using the appropriate Bionano Prep Kit, fluorescent labels are attached to specific sequence motifs.

The result is uniquely identifiable genome-specific label patterns that enable de novo map assembly, anchoring sequencing contigs and discovery of structural variations as small as 500 base pairs to up to chromosome arm lengths.

Starting with UHMW DNA purified using the appropriate Bionano Prep kit, fluorescent labels are attached to specific sequence motifs.

The result is uniquely identifiable genome-specific label patterns that enable de novo map assembly, anchoring sequencing contigs and discovery of SVs as small as 500 base pairs to up to chromosome arm lengths.

Our kit for DNA labeling, the Direct Label and Stain (DLS) kit, is a proprietary, nondestructive chemistry for sequence motif labeling of genomic DNA that improves every aspect of our genome mapping.

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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.

The Ionic Purification System

We acquired the Ionic Purification system through our November 2022 acquisition of Purigen.

The Ionic Purification system uses a proprietary ITP method to isolate and purify nucleic acid molecules.

The technology was initially developed at Stanford University and intellectual property from that development was exclusively licensed to Purigen.

The technology was further developed and commercialized by Purigen.

The system includes an instrument, consumable and reagents necessary to process samples.

The system works by applying an electric field to specially formulated reagents in a consumable.

The electric field electrophoretically focuses nucleic acid into a narrow band and purifies the molecules away from other potential inhibitors.

This results in a higher yield of pure nucleic acid than traditional bind-and-strip approaches that is also less fragmented and free from bead or wash buffer contamination.

We offer reagents to isolate DNA and RNA from FFPE, tissue, and cells.

We are optimizing the system with the intent it be used in an OGM workflow.

We believe that the isolation and purification of DNA using the Ionic system in an OGM workflow will create a number of opportunities, including, enabling additional sample types not currently available to OGM, increasing sample throughput, decreasing sample preparation complexity.

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.

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

We have a suite of proprietary algorithms and databases that fully enable our proprietary bioinformatic and SV 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 SV detection.

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

Comparative analysis of maps reveals structural variation.

Comparative analysis of maps reveals SV.

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

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

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.

Our NxClinical software is among the most comprehensive and up-to-date solutions for cytogenetics and molecular genetics, providing one solution 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.

Our Bionano Laboratories business offers OGM data to researchers seeking access to OGM data.

Bionano Laboratories intends to build a menu of LDTs using OGM solutions, and in 2022 Bionano Laboratories introduced their first two OGM-based tests, one for hematological malignancy and another for genetic disorder applications.

Additionally, Bionano Laboratories offers molecular genetic clinical testing services for individuals demonstrating clinical presentations consistent with NDDs, including ASDs and other disorders of childhood development, including:

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

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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:

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

Within cytogenetics and molecular pathology, we estimate the number of cytogenetic labs on a worldwide basis (excluding India and

developing countries) to be approximately 10,000.

We estimate that these labs analyze approximately 10.0 million samples per year.

Additionally, we estimate the number of pharmaceutical and biotech companies that are engaged in research and development of various cell therapies that rely on methods, including cytogenetics, for QC of the cell modification and manufacturing process to be approximately 1,400.

Based on these estimates, we believe the economic potential for OGM in these markets is approximately $10.0 billion annually, $3.0 billion of which we attribute to cell bioprocessing QC.

We believe there are additional potential future market opportunities for OGM including newborn screening, population genomics, and neurological and cardiological risk assessment which are not included in our estimates above.

We believe the three areas of the genomics market that are driving demand for the Saphyr system today:

• 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.

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

The technologies used for detecting SVs 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 SVs.

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

For this segment, the Saphyr system can be used as the sole tool for providing comprehensive and accurate detection of all classes of SVs and enable clinically relevant calls without the need for any sequencing or legacy cytogenetic technology.

We estimate that approximately 10,000 cytogenetics labs exist worldwide (excluding India and developing countries).

• 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.

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

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.

• Cell bioprocessing QC applications.

An important part of cell bioprocessing applications is to ensure that genomic modifications did not introduce any SVs into the cell population.

As a QC step, our Saphyr system has been used by researchers to evaluate the ability of OGM to detect SVs that may impact cellular stability.

Several studies have been published showing the OGM can be used to evaluate cellular stability.

We believe that this is an emerging market opportunity and could be up to $3.0 billion annually.

We believe that if our OGM-based solutions can successfully penetrate these addressable market opportunities, this should spur additional basic and translational research creating new areas where the Saphyr instrument (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.

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 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.

We are primarily focused on driving adoption of OGM through the Saphyr system (and successor instruments).

Our goal is to streamline SV 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:

• 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.

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

• 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.

NGS is an accurate technique for measuring genome variants below 500 bp while OGM bridges the gap by enabling detection of all SVs 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 our vision is for each of these sequencers to be complemented with an OGM system 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 SOC 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 SOC.

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 SOC.

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 SOC.

• Support the publication of findings with OGM by our customers beyond the more than 687 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.

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

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

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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.

We believe that these publications are impactful as our customers’ studies cover SVs 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.

We designed Saphyr to accommodate performance enhancements without the need for replacement of the entire instrument.

We designed the Saphyr system to accommodate performance enhancements without the need for replacement of the entire instrument.

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

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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.

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.

A high throughput version is currently in development 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 placement of a pre-commercial beta system at a customer facility in December 2022.

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

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

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

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

We sell our products through a network of distributors in the Asia-Pacific region and select other markets outside of North America and Europe.

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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 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.

We plan to expand into these regions via initial penetration with distributors.

Our systems are relatively new to the life science marketplace and require a capital investment by our customers.

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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.

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

Bionano Laboratories primarily sells a suite of LDTs to pediatric physicians through a physician-directed “in-person” sales model.

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

states where we have obtained insurance reimbursement.

Our sales and marketing efforts are targeted primarily on specialty pediatricians, including pediatric neurologists, medical geneticists, and developmental and behavioral pediatricians.

We also target general pediatricians with large numbers of patients.

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.

states where Bionano Laboratories has obtained insurance reimbursement.

The sales and marketing efforts are targeted primarily on specialty pediatricians, including pediatric neurologists, medical geneticists, and developmental and behavioral pediatricians.

Bionano Laboratories also targets general pediatricians with large numbers of patients.

Their 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.

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.

Complete or 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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This is done through their supply management process where we get notified of any parts that will become obsolete with enough lead time to identify alternatives.

All our chip consumables are produced by a third-party manufacturer at its facility;

All of our chip consumables for both OGM and ITP applications are produced by third-party manufacturers at their facilities;

however, we have established procedures for a replacement manufacturer if required.

We complete final assembly and quality control assessments of our chips at our headquarters in San Diego.

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 OGM, such as capture and detector reagents, enzyme reagents and enzyme substrate.

We complete final assembly and quality control assessments of our chips at our headquarters in San Diego and our facility in Pleasanton.

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

Our ITP reagents are sourced from a limited number of suppliers, including certain single source suppliers and also prepared in-house at our facility in Pleasanton.

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

The ITP reagents include all the components required to run a sample for isolation and purification of nucleic acid.

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.

Reagents are supplied through a single source supplier.

Some reagents are supplied through a single source supplier.

This supplier requires a sufficient notification period to allow for supply continuity and the identification and technology transfer to a new supplier in the event either party wishes to terminate the relationship.

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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.

Our fundamental long-term software strategy is based on our goal of making OGM ubiquitous.

We believe that simplified data interpretation and a seamless integration with NGS and array data to provide the most compressive genome analysis will increase utilization.

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 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.

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

Bionano Laboratories intends to increase its testing capacity, and expand its menu of testing.

Bionano Laboratories has CLIA certification for its San Diego lab.

For diagnostic testing, Bionano Laboratories maintains contracts with a network of laboratories to perform the wet work on various non-OGM LDT tests in order to conserve capital and maintain flexibility of adjusting contract labs to seek the best-in-class/most updated technology and customer service.

As of December 31, 2022, Bionano Laboratories has established contracts with four primary laboratories to perform wet lab services.

All third-party laboratories have met stringent criteria and are CLIA-

Bionano Laboratories obtains raw data from contracted laboratories for select tests and then performs its own interpretation and reporting.

In addition to its current menu, Bionano Laboratories’ plans to add OGM-based LDTs to be performed at its San Diego facility, the first two of which have been announced.

Key Agreements

License Agreement with Princeton University

In January 2004, we entered into a license agreement, or the License Agreement, with Princeton University, or Princeton.

Pursuant to the License Agreement, we received a worldwide, exclusive right and license to, among other things, manufacture and market products or services utilizing patents and inventions related to our sample preparation, DNA imaging and genomic data analysis platform and other key technology.

In January 2004, we entered into a license agreement (the Princeton License Agreement) with Princeton University (Princeton).

Pursuant to the Princeton License Agreement, we received a worldwide, exclusive right and license to, among other things, manufacture and market products or services utilizing patents and inventions related to our sample preparation, DNA imaging and genomic data analysis platform and other key technology.

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.

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.

The term of the License Agreement will continue until all of our royalty payment obligations have expired, unless terminated earlier.

Princeton may terminate the License Agreement upon written notice in the event of our material breach of the License Agreement if such breach remains uncured for 60 days.

We may terminate the License Agreement without cause upon 60 days’ advance written notice to Princeton.

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 Princeton 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 Princeton License Agreement.

The term of the Princeton License Agreement will continue until all of our royalty payment obligations have expired, unless terminated earlier.

Princeton may terminate the Princeton License Agreement upon written notice in the event of our material breach of the Princeton License Agreement if such breach remains uncured for 60 days.

We may terminate the Princeton License Agreement without cause upon 60 days’ advance written notice to Princeton.

License Agreement with Stanford University

In connection with our November 2022 acquisition of Purigen, we acquired an amended and restated license agreement (the Stanford License Agreement) between Purigen and the Board of Trustees of the Leland Stanford Junior University (Stanford).

Pursuant to the Stanford License Agreement, we received a worldwide, exclusive right and license to, among other things, make, have made, use, import, offer to sell and sell certain products utilizing patents and inventions related to our ITP-based sample preparation platform.

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

We are also obligated to make royalty payments to Stanford equal to a percentage in the low-single digits of our and any of our sub-licensees’ annual net sales of products covered by the Stanford License Agreement.

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

The term of the Stanford License Agreement will continue until all of our royalty payment obligations have expired, unless terminated earlier.

Stanford may terminate the Stanford License Agreement upon written notice in the event of our material breach of the Stanford License Agreement if such breach remains uncured for 60 days.

We may terminate the Stanford License Agreement without cause upon 30 days’ advance written notice to Stanford.

Agreement for the Manufacture of Our Instruments

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Our core technology for nucleic acid research is related to methods and devices for non-sequencing based analysis of macromolecules such as nucleic acids.

Using this technology, long (high-molecular weight) nucleic acids can be suitably labeled and elongated in order to ascertain structural information such as scaffold organization, copy number, and genomic repeats that is not readily obtained with current sequencing-based approaches.

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 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, genetic testing, computer software systems and reflect our active and ongoing research programs.

Using this technology, long (UHMC) nucleic acids can be suitably labeled and elongated in order to ascertain structural information such as scaffold organization, copy number, and genomic repeats that is not readily obtained with current sequencing-based approaches.

We recently added a portfolio of patents and patent applications related to ITP through the Purigen acquisition, which we plan to continue to pursue and develop.

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

Additionally, our portfolio includes patents and patent applications directed to related parts of our business, including certain diagnostic tests and methods of diagnosis and analysis of microarray and image data.

We have developed a global patent portfolio that includes more than 160 issued patents or allowed applications across approximately 35 patent families that are either owned or exclusively licensed.

The owned and licensed patent families contain issued patents and pending applications that relate to devices, systems, and methods for macromolecular analysis, isolation and purification of molecules, 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.

Diagnostic Services

Lineagen, Inc.

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.

In addition to a robust and active patent portfolio, we believe that our software and algorithms for analysis, visualization and interpretation of genomic data represent a valuable asset that we continue to develop and exploit through current and planned software offerings.

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 Optical Genome Mapping, or 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, the Diagnostic Services performed by Bionano Laboratories.

Optical Genome Mapping

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The FDA classifies medical devices into one of three classes on the basis of the intended use of the device, the risk associated with the use of the device for that indication, as determined by the FDA, and on the controls deemed by the FDA to be necessary to reasonably ensure their safety and effectiveness.

Class I devices, which have the lowest level of risk associated with them, are subject to general controls.

Class I devices, which have the lowest level of risk associated

with them, are subject to general controls.

Class II devices are subject to general controls and special controls, including performance standards.

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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In the U.S., if the device is determined to present a “significant risk,” the manufacturer may not begin a clinical trial until it submits an investigational device exemption application, or IDE, and obtains approval of the IDE from the FDA.

These clinical trials are also subject to the review, approval and oversight of an institutional review board, or IRB, at each clinical trial site.

These clinical trials are also subject to the review, approval and oversight of an IRB at each clinical trial site.

The clinical trials must be conducted in accordance with the FDA’s IDE regulations and good clinical practices.

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• Reporting of device malfunctions, serious injuries or deaths;

• Registration of the establishments where the devices are produced;

• Registration of the establishments where the devices are produced and listing of the devices with the FDA;

• Labeling regulations, which prohibit the promotion of products for uncleared or unapproved uses;

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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 (FDCA).

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

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.

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 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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Coverage and Reimbursement

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.

Currently, our OGM products are for research use only, but clinical laboratories may acquire our instrumentation through a capital purchase or capital lease and use the Saphyr system and direct label and stain chemistry to create their own diagnostic tests and potentially seek reimbursement for such tests.

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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The American Medical Association, or AMA, added GSPs to its clinical laboratory fee schedule in 2015.

In addition, CMS recently issued a coverage determination providing for the reimbursement of next-generation sequencing for certain cancer diagnostics using an FDA-approved in vitro diagnostic test.

In addition, CMS issued a coverage determination providing for the reimbursement of next-generation sequencing for certain cancer diagnostics using an FDA-approved in vitro diagnostic test.

Private health plans often follow CMS coverage and reimbursement guidelines to a substantial degree, and it is difficult to predict what CMS will decide with respect to the coverage and reimbursement of any products or services our customers try to commercialize.

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Clinical Laboratory Improvement Amendments of 1988 and State Regulation

As a clinical laboratory, we are required to hold certain federal and state licenses, certifications and permits to conduct our business.

As a clinical laboratory, Bionano Laboratories is required to hold certain federal and state licenses, certifications and permits to conduct is business.

As to federal certifications, in 1988, Congress passed the CLIA, establishing more rigorous quality standards for all commercial laboratories that perform testing on human specimens for the purpose of providing information for the diagnosis, prevention, or treatment of disease or the assessment of the health or impairment of human beings.

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CLIA certification is also a prerequisite to be eligible to bill state and federal healthcare programs, as well as many commercial third-party payers, for laboratory testing services.

Our laboratory located in Salt Lake City, Utah is CLIA certified.

This laboratory must comply with all applicable CLIA requirements.

Both of Bionano Laboratories’ facilities, one located in Salt Lake City, Utah and the other in San Diego, California are CLIA certified.

These laboratories must comply with all applicable CLIA requirements.

If a clinical laboratory is found to be out of compliance with CLIA standards, CMS may impose sanctions, limit or revoke the laboratory’s CLIA certificate (and prohibit the owner, operator or laboratory director from owning, operating, or directing a laboratory for two years following license revocation), a directed plan of correction, on-site monitoring, civil monetary penalties, civil actions for injunctive relief, criminal penalties, or suspension or exclusion from the Medicare and Medicaid programs.

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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

The State of California follows CLIA regulations for in-state laboratory facilities, but requires additional licensing requirements for laboratory personnel established by the California Department of Public Health (CDPH).

CAP accreditation for the San Diego facility is pending.

Additionally, certain states require clinical laboratories to obtain out-of-state licenses to test specimens from patients, or to receive orders from physicians, within those states.

Our Salt Lake City facility currently holds such out-of-state laboratory licenses in 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.

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.

We are also subject to enforcement by state attorneys general who were given authority to enforce HIPAA under HITECH.

To mitigate penalties under the HITECH breach notification provisions, we must ensure that breaches of protected health information are promptly detected and reported within the company, so that we can make all required notifications on a timely basis.

However, even if we make required reports on a timely basis, we may still be subject to penalties for the underlying breach.

As a result of the clinical diagnostic services offered by Bionano Laboratories, Bionano Laboratories, is currently subject to HIPAA and maintains 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.

Bionano Laboratories is 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.

Bionano Laboratories is also subject to enforcement by state attorneys general who were given authority to enforce HIPAA under HITECH.

To mitigate penalties under the HITECH breach notification provisions, Bionano Laboratories must ensure that breaches of protected health information are promptly detected and reported within the company, so that Bionano Laboratories can make all required notifications on a timely basis.

However, even if Bionano Laboratories makes required reports on a timely basis, Bionano Laboratories may still be subject to penalties for the underlying breach.

In addition to the federal privacy and security regulations, there are a number of state laws regarding the privacy and security of health information and personal data that are applicable to our clinical laboratories.

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The GDPR applies not only to organizations within the EU, but also applies to organizations outside of the EU that offer goods or services to EU data subjects or that process or hold personal data of EU data subjects.

The regulation specifies higher potential liabilities for certain data protection violations, and we anticipate that it will result in a greater compliance burden for us as we conduct our business in the European Union.

Additionally, from January 1, 2021, companies have had to comply with the GDPR and also the United Kingdom GDPR (“UK GDPR”), which, together with the amended United Kingdom Data Protection Act 2018, retains the GDPR in the United Kingdom national law.

Both the GDPR and the UK GDPR regulations specify potential liabilities for certain data protection violations, and we anticipate that it will result in a greater compliance burden for us as we conduct our business in the European Union.

Fines for non-compliance can range from the greater of 2% of annual global revenues or €10 million, up to the greater of 4% of annual global revenues or €20 million.

The GDPR is discussed in more detail under the heading “International Regulations” below.

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), 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.

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

Several states have enacted legislation requiring medical device manufacturers to, among other things, establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales and marketing activities, and such laws may also prohibit or limit certain other sales and marketing practices.

These laws may adversely affect our sales, marketing, and other activities by imposing administrative and compliance burdens on us.

If we fail to track and report as required by these laws or to otherwise comply with these laws, we could be subject to the penalty provisions of the pertinent state and federal authorities.

Reimbursement and Billing

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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 Bionano Laboratories 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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• the patient.

• Presently, approximately 90% of our diagnostic service revenue is paid by private third-party payors.

Presently, approximately 90% of the diagnostic service revenue for Bionano Laboratories is paid by private third-party payors.

Federal and State Fraud and Abuse Laws

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Other Regulatory Requirements

Our laboratory is subject to federal, state and local regulations relating to the handling and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood and bone marrow samples and other human tissue.

Our laboratories, and the laboratories of Bionano Laboratories, are subject to federal, state and local regulations relating to the handling and disposal of regulated medical waste, hazardous waste and biohazardous waste, including chemical, biological agents and compounds, blood and bone marrow samples and other human tissue.

Typically, we use outside vendors who are contractually obligated to comply with applicable laws and regulations to dispose of such waste.

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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.

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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.

For example, on August 16, 2022, President Biden signed the Inflation Reduction Act into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

The IRA also eliminates the coverage gap under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program.

In addition, 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.

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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

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.

We acquired BioDiscovery in October 2021 and Purigen in November 2022.

For a further discussion of these acquisitions, please refer to Note 14, Acquisitions, to our consolidated financial statements included in this Annual Report.

Human Capital Management

As of December 31, 2021, we had 299 employees, of which 152 work in sales, sales support and marketing, 80 work in research and development, 34 work in operations and 33 work in general and administrative.

As of December 31, 2021, of our 299 employees, 251 were located in the U.S.

As of December 31, 2022, we had 405 employees, of which 168 work in sales, sales support and marketing, 130 work in research and development, and 107 work in general and administrative.

As of December 31, 2022, of our 405 employees, 342

were located in the U.S.

and 63 were employed outside the U.S.

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The principal purposes of our equity incentive plans are to attract, retain and reward personnel through the granting of stock-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

We value diversity, equity, and inclusion across our workforce, in our communities, and in the work that we do.

We will continue to focus on diversity, equity, and inclusion initiatives that support a culture that is centered on belonging while aligning with our shared corporate mission and values.

Corporate Information

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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