Bionano’s (NASDAQ:BNGO) recent deal with the United Kingdom’s national single-payer health insurer, the National Health System, has made me meaningfully more confident in Bionano’s Saphyr system. Saphyr allows researchers to detect variations in DNA. More importantly, the agreement is very likely to be a proverbial game changer for the company and BNGO stock.
And finally, Bionano recently announced an innovation enabled by Saphyr that could help scientists develop much more tolerable chemotherapy drugs.
Under the deal with the British insurer, “two large laboratories belonging to the National Health System (NHS) of the United Kingdom” will utilize Saphyr through a rental agreement., Bionano reported in an April 21 press release. As part of the deal, NHS has made “a commitment to purchase consumables (for Saphyr} over time.”
In other words, in addition to renting Saphyr, the insurer has agreed to buy multiple products from Bionano that support the system. As a result, the deal should meaningfully boost Bionano’s top and bottom lines in 2021 and for years to come.
More Confidence and a Game Changer
Both of the NHS labs that are renting Saphyr will use the system to research hematological cancers ” that affect the blood, bone marrow, and lymph nodes.” Additionally, one of the labs “will also evaluate Saphyr for the detection of structural variants (SVs) in patients with developmental delay, infertility, rare disease, and other genetic diseases.”
Before making this major financial commitment, the NHS’ experts almost definitely evaluated Saphyr’s capabilities and determined that there’s an excellent chance that the system can produce breakthroughs in hematological cancers and many other diseases.
So NHS’ decision to utilize Saphyr greatly supports my long-held positive thesis on Saphyr and my bullish view on BNGO stock. My thesis is largely based on the idea that Saphyr will enable “diseases to be more effectively {and more cheaply} researched than competing products,” while helping scientists and doctors more accurately determine which patients are more vulnerable to illnesses. NHS’ decision to utilize Saphyr raises my confidence that it can indeed perform these very valuable functions.
From a financial and marketing standpoint, I think that the NHS deal will turn out to be a huge game changer for Bionano. The UK is one of the most prominent countries in the world, with close ties to the other major English-speaking nations, other Western European countries, and many of its former colonies, such as India, Pakistan, Singapore, Malaysia, and Israel. Consequently, if Saphyr proves to be very beneficial for the UK’s NHS (as I believe it will), then many other nations will likely hear the news and look to utilize Saphyr as well.
A Potential Chemotherapy Research Tool
On April 22, Bionano announced that a group of scientists, using Saphryr and other tools, had developed a technique that is ” capable of determining the timing, speed and origin of DNA replication in human cells at a coverage level that is thousands of times higher than what earlier methods such as nanopore sequencing allowed.” Errors in “DNA replication” may result in cancer, “many chemotherapeutic drugs target and disrupt DNA replication,” Bionano stated. As a result, better comprehending DNA replication can aid scientists in developing cancer treatments with reduced side effects, the company believes.
In summary, Saphyr has enabled scientists to much more effectively understand the DNA replication process. And that increased understanding may allow them to develop chemotherapy treatments with less intense side effects. Consequently, assuming that Saphyr’s ability to fill that role becomes well-established over the longer term, the product will eventually become extremely valuable.
The Bottom Line on BNGO Stock
Bionano’s deal with the NHS goes a long way towards both validating my positive thesis on the company and establishing Saphyr as a highly reputable, widely used tool. Meanwhile, the product could very well be on the road to becoming a key means of developing much more tolerable chemotherapy treatment. That, in turn, would make Saphyr extremely valuable.
There is a great chance that Saphyr will prove to be hugely disruptive, so the $1.72 billion market capitalization of BNGO stock is miniscule, in light of the company’s great potential. As a result, I recommend that investors buy the company’s shares.
On the date of publication, Larry Ramer held a long position in Bionano.
Larry has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.
