Bionano Genomics a Fundamentally Solid Investment on Massive Cytogenetics Opportunity

Jan 21, 2021 07:47 PM ET
Bionano Genomics a Fundamentally Solid Investment on Massive Cytogenetics Opportunity
  • Bionano Genomics has succeeded in strengthening its genome sequencing platform Saphyr. With the upgrade, the company is on track to transition it from a research tool to a platform for clinical cytogenetics.
  • The genome mapping platform is capable of imaging up to 96 human genomes per week. There is no viable sequencing technology that can match what Bionano genomics has to offer with Saphyr, given its performance and cost structure for cytogenetics testing.
  • By offering a research tool that is being validated for clinical applications, Bionano Genomics is well-positioned to generate significant revenues in line with the 86% growth registered in the third quarter.
  • In addition to the strong fundamentals, technicals also point to further up-side action as the stock has continued to edge higher on pullbacks.

Bionano Genomics: The company and its products

BioNano Genomics Inc. (NASDAQ: BNGO) casts itself as a life sciences instrumentation company with operations in the genome analysis space. The company's core business revolves around developing and marketing the Saphyr system, a platform being used to search for new diagnostics and therapeutic targets. The platform has also found great use in the study of changes in chromosomes.

Founded in 2003, the company has its headquarters in San Diego, California. It sells its products commonly used for research purposes to laboratories associated with academic and government institutions. Bionano Genomics also boasts of a robust pipeline of customers made up of pharmaceutical and biotechnology companies worldwide.

Bionano Genomics chart

Bionano Genomics went public in 2018 after selling 3.36 million of its common share at $6.125 a unit. The stock has been on an impressive run in recent months, powering to record highs of $9 a share after a long period of consolidation in 2020. An 800% plus rally over the past three months has come at the back of solid underlying fundamentals.

Why is Bionano Genomics exploding?

Saphyr system upgrade

An 800% plus rally in recent months affirms renewed investor interest in Bionano Genomics. The stock has continued to catch a bid on the genome sequencing company, making important strides in transitioning its most important product, the Saphyr system, into a research tool for clinical cytogenetics.

The company has already implemented new updates, conversely increasing the system’s throughput by nearly 1400%. The updates have also automated the platform’s quality assurance and reporting standards. With the new update, Saphyr can now image up to 96 human genomes or 32 SaphyrChips per week.

Saphyr Competitive edge

The upgrades have strengthened the Saphyr system, conversely causing a storm in the genome sequencing business as a reliable genome mapping platform. Saphyr has already proven to be highly effective in finding structural variants than other market systems. Likewise, it has proven to be more cost-effective; thus the reason it continues to elicit strong demand from researchers and laboratories.

The Saphyr system is expected to gain broader adoption in genome sequencing and research applications. According to analysts, the system can disrupt the clinical diagnostic landscape given its time, labor, and cost efficiencies. Likewise, Bionano Genomics should continue to see increased Saphyr adoption in cytogenetics labs worldwide and for COVID-Host genome research.

A new head-to-head comparison with PacBio has further solidified Saphyr's competitive edge as a preferred optical imaging platform. The comparison affirmed Saphyr's edge in resolving structural variants complexity relevant to cancer and assisted sensitivity in detecting indels in regions related to neurodevelopment.

Bionano Genomics COVID-19 opportunity

Bionano Genomics is also the subject of growing interest on Wall Street after publishing a study that showed how Saphyr was used to identify various structural variants in genes that control the immune and inflammatory response.

Bionano Genomics COVID-19 opportunity

The study is of great importance as it sheds more light on why COVID-19 triggers severe reactions in some people and not others. According to the study, severely affected patients carry genetic variants that cause it to contribute to the severity of their disease.

The fact that the genome analysis system can contribute to a better understanding of disease affirms its need at a time when scientists are trying to understand how people react differently to the coronavirus.

Bionano Genomics has already carried out a capital raise of $88 million via a stock offering. Net proceeds from the offering should help the biotech company demonstrate further the utility of its genetic testing system, especially as it relates to COVID-19.

Revenue growth

Given the labor and cost efficiencies up for grabs, Saphyr remains well-positioned to see rising usage. Increased usage should fuel robust growth in the Bionano Genomics revenue base.

Bionano Genomics graph

Bionano Genomics reported an 86% sequential increase in revenues totaling $2.2 million in the third quarter. Revenue growth looks set to continue as the Saphyr system continues to elicit strong demand as a preferred genome sequencing platform.

The Chief Executive Officer Erik Holm has already confirmed that key events have set the company for continued growth and success in recent months. Cytogenetic thought leaders in leading U.S institutions are increasingly recommending the use of Saphyr as the first-line diagnostic tool of Leukemia.

Bionano genomics technical

Bionano Genomics is currently trading in a steep uptrend after gapping higher at the start of the year. After powering to highs of $7 a share, the stock did pull lower to the $4 a share level from where bulls had missed out on the initial Bull Run joined the party.

Bionano genomics technical

The stock has since resumed its uptrend, having powered to all-time highs above the $8 a share level. Considering the underlying solid fundamentals, the stock looks set to continue powering high, with pullbacks acting as crucial support levels.

A breach of the $9 a share level should affirm the uptrend paving the way for the stock to continue edging higher.

Conclusion

Bionano Genomics is in a phase of robust growth as it continues to transition its genome sequencing platform Saphyr from a research tool to a platform for clinical cytogenetics. The company is well-positioned to enjoy sequential growth on increased uptake of its genome platform. Buoyed by solid growth metrics, eight research firms currently rate the stock as a buy. 

Bionano Genomics

 

Likewise, 2021 is expected to be an important year for adopting Saphyr for clinical cytogenetics based on a series of recent positive publications. Once that happens, the company's revenue base should further strengthen a development that should continue to strengthen investor's sentiments in the stock.


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