Bionano Genomics IPO Expected Next Week to Advance Genomics Mapping Technology

Equities Research  |

According to Research and Markets, the worldwide market for genomics products and services is expected to reach approximately $23.9 billion by 2022, up from $14.7 billion in 2017. This growth will be driven in part by technological advances that go beyond merely DNA sequencing—determining the precise order of the bases (adenine, guanine, cytosine and thymine in a genome—which has not completely fulfilled the needs of researchers and clinicians. For example, after 10 years with next-generation sequencing in use, the diagnostic yields of the leading genetic testing laboratories in the world continue to hover around only 50%, which is where they have been for at least two decades—meaning that only half of patients receive a confirmed pathogenic diagnosis.

Existing sequencing technologies fail to adequately address the need to detect structural variations in the genome, either because they can't overcome the inherent complexity of the genome or they are not capable of providing a cost-effective, scalable solution. Each structural variation involves the rearrangement or repetition of as few as hundreds to as many as tens of millions of DNA base pairs. Structural variations may be inherited or arise spontaneously. Accurate detection of such variations is critical, as many are known to affect biological functions and cause disease, including cancers and developmental disorders.

San Diego based Bionano Genomics (proposed Nasdaq: BNGO) develops and markets the Saphyr (pronounced like "sapphire") system, a platform for ultra-sensitive and ultra-specific structural variation detection. Bionano is expected to have its initial public offering next week via Roth Capital. The company is offering 3.35 million shares at $8 to $10. At the midpoint of the filing range, the $30 million deal would give Bionano a $103 million post-IPO market valuation.


Source: BioNano Genomics

Bionano has sold 90 of its structural variation detection systems (including the first generation Irys systems and the current Saphyr systems) to over 80 customers globally, 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, including:

  • Children’s National Health System
  • DuPont Pioneer
  • Garvan Institute of Medical Research
  • Genentech
  • Icahn School of Medicine at Mount Sinai
  • McDonnell Genome Institute at Washington University
  • National Institutes of Health
  • Pennsylvania State University
  • Salk Institute for Biological Studies.

The company generated $10.7 million in revenue in the 12 months ended June 30, 2018, with a net loss of $18.6 million. Bionano believes that the discovery research and cytogenetics (study of chromosomal structure, location and function) segments comprise an addressable opportunity to sell up to approximately 8,500 Saphyr systems, representing a current total instrument market opportunity of approximately $2.1 billion.

In addition to the instrument sales opportunity, Bionano markets chip consumables that are used on a per-sample basis. The company believes each Saphyr instrument has the potential to create recurring revenue in a range of approximately $75,000 to $150,000 per year, suggesting a potential annual recurring revenue opportunity of between $600 million and $1.3 billion, yielding a combined addressable portion of the genome analysis market of between $2.7 billion and $3.4 billion.

Bionano has raised $129 million through four rounds of venture financing. The largest shareholders include Legend Capital (39.2%), Domain Partners (25.7%) and Praise Alliance International (10.0%). The upcoming IPO hasn't generated as much attention as many of the recent offerings by developers of therapeutics, but we think Bionano is worth watching closely. We note with interest that Roth Capital, one of the few remaining microcap specialists, is bookrunning the deal.


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