A Prediction I'd Have Preferred to Have Gotten Wrong

A reporter recently interviewed about BioNano Genomics (NASDAQ: BNGO), and I reiterated many of the points I made in my piece this summer: great science, very troubled financial outlook.  Most glumly, I noted that at their then cash burn rate they had less than two quarters of treasury left, and that this might mean that their upcoming earnings call would include a Going Concern warning - an explicit announcement that they would be critically low of cash in the near future and faced with bankruptcy or liquidation.  Sadly, the earnings announcement this week indeed had a Going Concern warning.

I'm often reticent to don a green eyeshade and go from science to accounting, but sometimes it must be done.  BioNano has many challenges, but one is they have facilities rents that are about on par with their revenue.  That revenue is increasing, but still the loss each quarter is draining their bank account.  At the current rate, they may run out early in January.

Unfortunately, they don't have many options on the table.  The stock is trading for $1.01, so while they could perform At The Market (ATM) sales - PacBio announced they may sell $100M using ATM - they'd have to sell a lot of stock (and thereby dilute current owners) to raise much money.  Worse, increasing the supply of stock would be expected to reduce the price, given constant demand, and they are already flirting with the $1 minimum for NASDAQ listing.  BioNano's market cap is only $14M, not much beyond 2X their most recent loss of $6.45M.  So further sales of equity are unlikely to be a productive way to stay afloat.

Declaring bankruptcy might allow them to escape lease and other obligations, though if that means rapidly vacating key operating sites that would further disrupt operations.  Still, clearing the books of onerous obligations might make them more attractive to a buyer.

Who might buy BioNano?  I'd generally rule out all the major sequencing companies.  Illumina wants you to focus NovaSeq X and now TruPath; buying another longread platform would dilute that.  PacBio was punished by the markets for an acquisition strategy that strayed outside the core HiFi brand, plus HiFi covers much of the clinical space BioNano is in.  Element and Ultima have opaque finances due to being private, but both are likely having to closely watch cash and stay focused to see their core sequencing and multiomics bets to full fruition.  Roche would be an outlier, but tends to focus on high throughput.

Might an Agilent, Revvity, ThermoFisher or Danaher step in?  Based on Gemini search, maybe, particularly for potential synergy with existing sales forces in clinical cytogenetics.  Thermo is strong in FISH and so is Abbott Molecular ; Gemini offers BioTechne as another FISH player.  Thermo and Agilent are both strong in microarray-based cytogenetics.  

Still, BioNano does have some very happy customers - I met one at an event in Cambridge this week who is using the technology in an R&D capacity and is very clear-headed of the advantages over ultralong reads on Oxford Nanopore, primarily favoring the simpler workflow.  A loyal userbase is an asset to a potential acquirer.

Will an acquirer be a white knight, absolving BioNano of financial distractions and enabling focus on technical innovation?  Or more of an asset stripper, treating the platform as a mature asset to be marketed and supported but no more?  Given the user base and established reimbursement channels, it's hard to imagine BioNano just fading away but until its fate is clear we'll all just have to watch.