BioNano Genomics (NASDAQ:BNGO) has very astutely taken advantage of the massive runup in BNGO stock and sold shares. They have done this twice in the space of one month. These guys are on the ball when it comes to raising capital and taking advantage of the massive runup in their stock.
BNGO stock rose from about 50 cents in mid-December to $5.36 per share as of Jan. 12. So on Jan. 8, they first sold shares at $3.05 per share. This brought in $82.8 million, but later it increased to $101.8 million.
Then BNGO stock ran up to $11.05 as of Jan. 29. At one point BNGO topped $12.58 on Jan. 25. The company immediately took advantage of this again and sold shares at $6 per share. It looks like the company now has raised another $230 million (before capital-raise expenses) in this second round, according to its recent prospectus.
Total Cash In the Bank
In the last two rounds, both within the space of one month, the San Diego biotech company raised something like $332 million, before underwriting expenses. I suspect that means about $300 million was brought into the company on a net basis.
In addition, BioNano Genomics claims that it already had between $38 and $39 million in cash on hand as of Dec. 31. In addition, the company received cash from warrants that exercised their right to buy shares. That was $7.7 million of additional cash received between Jan. 1, 2021, and Jan. 15, 2021. Bionano Genomics also raised $16.9 million before expenses from a prior capital-raise program.
Thus, existing cash adds up to about $60 million or so, after underwriting expenses. As a result, I now estimate the total cash in the bank is at least $392 million, and it could be more than $430 million.
This is because the total warrants outstanding as of Sept. 30, according to page 14 of its latest 10-Q was 29.709 million. Moreover, the average exercise price was $1.54.
Therefore, the company has probably raised all of this money, i.e., $1.54 times 29.709 million, or $45.75 million. The prospectus said $7.7 million in warrants that had exercised. This means the company is likely to receive another $38 million.
So total cash in the bank is probably $392 million, plus $38 million, totaling about $430 million. This is important because the market value of BNGO stock is now about $2.3 billion, depending on how many shares are outstanding.
As a result, cash is equal to about 18.7% of the total market value of the company. That is a high percentage. It also allows the company to burn through higher expenses for a good while.
The Cash Burn Rate
BioNano Genomics provided a financial update in its latest prospectus. It expects revenue for the quarter ending Dec. 31 to fall between $3.8 million and $4.2 million.
This is substantially higher than its previous quarter when revenue was $1.96 million (up 104% at the mid-point of the estimate). In addition, a year ago Q4 it generated $3.3 million in revenue. So this quarter its revenue will be 21% higher (at the mid-point).
That’s the good news. But consider this. In the past nine months, the company burned through $26.2 million, and this Q4 it probably burned another $9.5 million (based on last year). That brings its total annual burn rate to $35.8 million.
The company now likely has $430 million in the bank, and this will allow it to cover its burn rate for at least 10 to 12 years, if need be. However, BNGO stock won’t stay where it is if the company cannot get profitable well before then.
What to Do With BNGO Stock
Therefore, I suspect most investors will want to see what the company says that its net cash balance present works out to. In addition, they will want to see what burn rate the company is projecting. Based on that, BNGO stock is probably near its highs for the time being.
However, I want to point out that the company has been very smart in taking advantage of its higher price. This is exactly what capitalism and the stock market are there for. They astutely used the spike in the stock price to raise cash to allow the company to survive until it can get profitable.
Moreover, it is possible the company could even do another capital raise, especially if they are considering making an acquisition. I would not be surprised to see this happen.
On the date of publication, Mark R. Hake did not hold a long or short position (either directly or indirectly) in any of the stocks in this article.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
