Bionano Genomics (NASDAQ:BNGO) stock has massively appreciated in price over the past few months. It has gone from facing the threat of Nasdaq delisting for not meeting price requirements, to trading near $10 per share as I write this.
The price appreciation is due to the hype surrounding Bionano’s Saphyr optical gene mapping system. The platform allows scientists to detect structural variations in genome base pairs with greater sensitivity than other systems.
BNGO stock jumped when news regarding its superiority as a structural sequencing platform was published.
A Better Platform
On Dec. 23, a paper was published by the Human Genome Structural Variation Consortium. The paper pitted Bionano Genomic’s Saphyr system against the PacBio HiFi. The results showed that the PacBio HiFi platform only detected 72% of the large structural variations that the Saphyr system did across 32 human genomes.
The accuracy of the Saphyr system is impressive. The advantages surely could translate to economic gains for companies that choose to utilize the Saphyr platform. And perhaps it may allow quantum leaps forward due to its superior accuracy.
However, it’s also important to note that in the test by the Human Genome Structural Variation Consortium, there was also a significant price benefit. The test conducted with the PacBio HiFi costs between $10,000 to $20,000 per genome. The Saphyr test costs $500 per genome.
So, it isn’t difficult to see why investor enthusiasm began to really percolate and BNGO stock began to move around this time. There is a real business case around the Saphyr platform.
Then, a few weeks later BNGO popped.
On Jan. 4, Lineagen, Bionano Genomic’s diagnostic subsidiary announced the publishing of another piece of important research. The findings regarded a genomic sequencing done on Temple Grandin. Grandin is a famous professor who gained notoriety for being on the high-functioning end of the autism spectrum.
The findings provided evidence for symptoms she suffered by identifying specific genetic abnormalities. The company is planning to run further diagnosis on her genome using the Saphyr system. It hopes the platform may have further utility in identifying genetic variations specific to Autism Spectrum Disorders.
BNGO stock also regained compliance with Nasdaq pricing requirements between these two events.
Flurry of Activity
Bionano Genetics has been busy since it caught fire. It announced two separate closings of public offerings of stock on Jan. 12 and Jan. 25. These financing rounds netted the company $101.8 million and $230 million, respectively.
The obvious result is that Bionano Genetics now has $331.8 million more with which to sell its Saphyr platform and services. Yet, there is a risk of shareholder dilution due to conversion of warrants in the future. In either case, the business decision was a no-brainer.
In addition to the stock issuances, Bionano Genetics has increased the number of published findings in 2021. These relate to oncology, neurology and gene mapping.
All of this activity has served to put BNGO stock on the map and relieve the company of delisting pressure from the Nasdaq. But does it make Bionano Genetics worthy of your investment dollars?
To answer that we need to look at the company’s most recent quarterly results.
This is a bit of a loaded answer. The company does look to be heading in the wrong direction when viewed through one lens. Through the first nine months of 2019, Bionano Genetics was losing a fair bit of money. During that period it managed to rack up nearly $22 million in losses.
2020 was worse. During the same period it recorded over $29 million in losses. Any fair assessment should conclude that Bionano Genetics was going from bad to worse.
But it is a bit of a loaded answer, as I mentioned. We don’t have the benefit of knowing what has happened in the intervening five months. Once earnings are released we’ll know more, though there should be no significant changes.
Verdict on BNGO Stock
To me, BNGO stock looks like one to simply keep in mind on the basis of the Saphyr system and its scientific potential. However, right now I can’t see why shares should jump up again. I’d say the gains are gone until the company can provide real sales numbers and use cases in real-world business applications.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.”