Bionano Genomics Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2024 (“Quarterly Report”) and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2023, (“Annual Report”), filed with the Securities and Exchange Commission, (“SEC”), on March 9, 2023. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Bionano Genomics, Inc. and its subsidiaries or, as the context may require, Bionano Genomics, Inc. only.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024 (“Quarterly Report”) and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2023, (“Annual Report”), filed with the Securities and Exchange Commission, (“SEC”), on March 5, 2024. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Bionano Genomics, Inc. and its subsidiaries or, as the context may require, Bionano Genomics, Inc. only.

Previous wording

•Grew our installed base to 363 as of June 30, 2024, an increase of approximately 29% from a total installed base of 281 as of June 30, 2023. Installed base represents the global number of OGM instruments installed at end-customer locations and therefore having the technology to process OGM.

Current wording

•Grew our installed base to 368 as of September 30, 2024, an increase of approximately 22% from a total installed base of 301 as of September 30, 2023. Installed base represents the global number of OGM instruments installed at end-customer locations and therefore having the technology to process OGM.

Previous wording

•Sold 6,165 flowcells in the three-month period ended June 30, 2024, a decrease of approximately 13% from 7,062 flowcells sold in the same quarter of 2023. Sold 14,414 flowcells in the six-month period ended June 30, 2024, an increase of approximately 12% from 12,888 flowcells sold in the same period of 2023.The OGM cartridge is the consumable that packages nanochannel arrays for DNA linearization. In its current form, the OGM cartridge can comprise - one, two or three flowcells per cartridge. Flowcells sold refers to the units of genome mapping consumables used for analyzing one genome, purchased by customers to process samples for optical genome mapping. The decrease in flowcells was partially due to the slowdown in regular routine use from customers transitioning from Saphyr to Stratys as well as related to three of our OEM partners in China who underperformed against their purchasing commitments during the three months ended June 30, 2024.

Current wording

•Sold 7,835 flowcells in the three-month period ended September 30, 2024, an increase of approximately 27% from 6,176 flowcells sold in the same quarter of 2023. Sold 22,249 flowcells in the nine-month period ended September 30, 2024, an increase of approximately 20% from 18,464 flowcells sold in the same period of 2023.The OGM cartridge is the consumable that packages nanochannel arrays for DNA linearization. In its current form, the OGM cartridge can comprise - one, two or three flowcells per cartridge. Flowcells sold refers to the units of genome mapping consumables used for analyzing one genome, purchased by customers to process samples for optical genome mapping.

Previous wording

We are subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic developments, such as recent and potential future bank failures, the ongoing conflict between Ukraine and Russia and related sanctions, the Israel-Hamas war, any effects of global pandemics and uncertain market conditions, including inflation and supply chain disruptions, which could continue to have a material impact on our business and financial results. For example, we are anticipating a potential protracted slowdown in our Asia Pacific business due to funding headwinds in the region, which are negatively impacting these manufacturing partners who are reliant on government funding,and are awaiting approval from the NMPA.

Current wording

We are subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic developments, such as recent and potential future bank failures, the ongoing conflict between Ukraine and Russia and in the Middle East, related sanctions, and any effects of global pandemics and uncertain market conditions, including inflation and supply chain disruptions, which could continue to have a material impact on our business and financial results. For example, we are anticipating a potential protracted slowdown in our Asia Pacific business due to funding headwinds in the region, which are negatively impacting these manufacturing partners who are reliant on government funding, and are awaiting approval from the NMPA.

Previous wording

We closely monitor and comply with various applicable guidelines and legal requirements in the jurisdictions in which we operate. In the past, we have experienced supply chain challenges, attributable to such adverse geopolitical and macroeconomic developments including increased costs to secure certain component parts in our products and to produce our products at our contract manufacturers. During the six months ended June 30, 2024, we did not experience material increases in our supply chain costs, but we may experience such increases in future fiscal periods. We expect our costs to remain high for the foreseeable future. As global economic conditions recover, business activity may not recover as quickly as anticipated, and it is not possible at this time to estimate the long-term impact that these and related events could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted. For instance, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, high inflation rates, labor shortages, reduction in consumer confidence, adverse geopolitical and macroeconomic developments, or any similar negative economic condition. These negative effects could have a material impact on our operations, business, earnings, and liquidity.

Current wording

We closely monitor and comply with various applicable guidelines and legal requirements in the jurisdictions in which we operate. In the past, we have experienced supply chain challenges, attributable to such adverse geopolitical and macroeconomic developments including increased costs to secure certain component parts in our products and to produce our products at our contract manufacturers. During the nine months ended September 30, 2024, we did not experience material increases in our supply chain costs, but we may experience such increases in future fiscal periods. We expect our costs to remain high for the foreseeable future. As global economic conditions recover, business activity may not recover as quickly as anticipated, and it is not possible at this time to estimate the long-term impact that these and related events could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted. For instance, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, high inflation rates, labor shortages, reduction in consumer confidence, adverse geopolitical and macroeconomic developments, or any similar negative economic condition. These negative effects could have a material impact on our operations, business, earnings, and liquidity.

Previous wording

In March 2024, we announced a cost savings plan that aims to reduce annualized operating expenses by approximately $35.0 to $40.0 million starting in the second half of 2024. As part of the plan, we reduced our overall headcount by approximately 120 employees. The Company has substantially completed the reduction in force as of June 30, 2024. In addition, on March 1, 2024, we decided to phase out the offering by Bionano Laboratories of certain testing services related to related to neurodevelopmental disorders, including autism spectrum disorders and other disorders of childhood development. These cost-saving measures are incremental to the cost saving initiatives previously announced in May 2023 and October 2023. See Note 7 (Commitments and Contingencies) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Current wording

In March 2024 and September 2024, we announced restructuring plans that aim to reduce annualized operating expenses by approximately $35.0 to $40.0 million starting in the second half of 2024, and by an additional $25.0 million to $30.0 million beginning in the fourth quarter of 2024, respectively. As part of the plans, we reduced our overall headcount by approximately 120 and 83 employees, respectively. The Company has substantially completed the reductions in force as of September 30, 2024. In addition, as of September 30, 2024, we have phased out the offering by Bionano Laboratories of certain testing services related to neurodevelopmental disorders, including autism spectrum disorders and other disorders of childhood development. These measures were incremental to the cost saving initiatives previously announced in May 2023 and October 2023. See Note 7 (Commitments and Contingencies) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Previous wording

We generate product revenue from sales of our OGM and Ionic® Purification systems and consumables, which includes our instruments, and our VIA™ software. At the end of July 2023 we began installations of VIA software as a replacement to NxClinical software. Like NxClinical, VIA has a simple integrated workflow for visualization, interpretation and reporting of NGS and microarray data. VIA additionally incorporates OGM data to that workflow creating a standard software tool for use across molecular pathology and cytogenomics applications. We currently sell our systems for research use only applications and our customers are primarily laboratories associated with academic and governmental research institutions, academic and commercial clinical laboratories, as well as pharmaceutical, biotechnology and contract research companies. In addition, we provide instruments to certain customers at no cost under our reagent rental program, and the customers agree to purchase minimum quantities of consumables. Consumable revenue consists of sales of reagents and chips necessary to process a sample. Sales of our VIA software, which provides customers with solutions for analysis, interpretation and reporting of genomic data, are made on a subscription basis. We generate service revenue from the sale of diagnostic testing services for those with autism spectrum disorder and other neurodevelopmental disabilities through Bionano Laboratories, as well as services performed related to customer sample evaluations using an OGM system. Other revenue consists of warranty and other service-based revenue, including support, repair and maintenance services.

Current wording

We generate product revenue from sales of our OGM and Ionic® Purification systems and consumables, which includes our instruments, and our VIA™ software. At the end of July 2023 we began installations of VIA software as a replacement to NxClinical software. Like NxClinical, VIA has a simple integrated workflow for visualization, interpretation and reporting of NGS and microarray data. VIA additionally incorporates OGM data to that workflow creating a standard software tool for use across molecular pathology and cytogenomics applications. We currently sell our systems for research use only applications and our customers are primarily laboratories associated with academic and governmental research institutions, academic and commercial clinical laboratories, as well as pharmaceutical, biotechnology and contract research companies. In addition, we provide instruments to certain customers at no cost under our reagent rental program, and the customers agree to purchase minimum quantities of consumables. Consumable revenue consists of sales of reagents and chips necessary to process a sample. Sales of our VIA software, which provides customers with solutions for analysis, interpretation and reporting of genomic data, are made on a subscription basis. We generate service revenue from the sale of diagnostic testing services through Bionano Laboratories, as well as services performed related to customer sample evaluations using an OGM system. Other revenue consists of warranty and other service-based revenue, including support, repair and maintenance services. We anticipate that our change in business strategy to focus on driving utilization and adoption of OGM from our existing installed base, with less emphasis on new placements of our OGM systems would slow the pace of our revenue growth when compared to historical growth rates. We expect service and other revenue to continue to decrease over the remainder of 2024 as a result of phasing out Bionano Laboratories offerings.

Previous wording

Research and development expenses consist of salaries and other personnel costs, stock-based compensation, research supplies, third-party development costs for new products, materials for prototypes, equipment depreciation, and allocated overhead costs that include facility and other overhead costs. We have made substantial investments in research and development since our inception, and plan to continue to make investments in the future. Our research and development efforts have focused primarily on the tasks required to support development and commercialization of existing products. We believe that our continued investment in research and development is essential to our long-term competitive position.

Current wording

Research and development expenses consist of salaries and other personnel costs, stock-based compensation, research supplies, third-party development costs for new products, materials for prototypes, equipment depreciation, and allocated overhead costs that include facility and other overhead costs. We have made substantial investments in research and development since our inception. Our research and development efforts have focused primarily on the tasks required to support development and commercialization of existing products. We believe that our continued investment in research and development is essential to our long-term competitive position.

Previous wording

We have incurred losses in each year since our inception. Our net loss was $16.2 million and $47.6 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2024, we had an accumulated deficit of $628.9 million.

Current wording

We have incurred losses in each year since our inception. Our net loss was $44.2 million and $91.9 million for the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, we had an accumulated deficit of $673.1 million.

Previous wording

We expect to continue to incur significant expenses and operating losses as we:

Current wording

While we have implemented restructuring plans in March and September 2024, we expect to continue to incur significant expenses and operating losses as we:

Previous wording

•continue our sales and marketing efforts to further commercialize our products;

Current wording

•continue our sales and marketing efforts to maintain sales of our existing products;

Previous wording

•add operational, financial and management information systems; and

Current wording

•maintain operational, financial and management information systems; and

Previous wording

We will continue to seek to raise additional capital, but without additional financing we may not be able to continue as a going concern. If we are unable to continue as a going concern, we may have to reorganize or liquidate our business and may receive less than the value at which those assets are carried on our consolidated financial statements, and investors may lose all or a part of their investment. The board of directors (the “Board”) has established a strategy committee to work with the Company and outside advisors in evaluating our options and considering alternatives that we believe will maximize stakeholder value, including any of the following or a combination thereof: debt financing, equity investments, combinations with other companies, or the sale of all or part of the company. There can be no assurances that any transactions will be completed and if we are not able to raise sufficient additional capital to fund our future operation, we maypotentially seek relief available under applicable insolvency laws. We do not intend to make further announcements regarding this process unless and until the Board approves a specific transaction or otherwise determines that further disclosure is appropriate.

Current wording

We will continue to seek to raise additional capital, but without sufficient additional financing in the very near term we will not be able to continue as a going concern. If we are unable to continue as a going concern, we may have to reorganize or liquidate our business and may receive less than the value at which those assets are carried on our consolidated financial statements, and investors may lose all or a part of their investment. The board of directors (the “Board”) has established a strategy committee to work with the Company and outside advisors in evaluating our options and considering alternatives that we believe will maximize stakeholder value, including any of the following or a combination thereof: debt financing, equity investments, combinations with other companies, or the sale of all or part of the company. There can be no assurances that any transactions will be available to us or completed and if we are not able to raise sufficient additional capital in the very near term to fund our operation, we may seek relief available under applicable insolvency laws. We do not intend to make further announcements regarding this process unless and until the Board approves a specific transaction or otherwise determines that further disclosure is appropriate.

Previous wording

Service and other revenue decreased $0.8 million or 20% for the six months ended June 30, 2024 when compared to the same period in 2023. We expect service and other revenue to continue to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories.

Current wording

Service and other revenue decreased by $2.8 million, or 98%, to $0.1 million for the three months ended September 30, 2024 when compared to the same period in 2023 which is the result of discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. We expect service and other revenue to continue to decrease over the remainder of 2024 as a result of phasing out these offerings.

Previous wording

Cost of service and other revenue decreased $1.6 million, or 51%, to $1.5 million for the six months ended June 30, 2024, compared to $3.1 million for the same period in 2023. The decrease in cost of service and other revenue is primarily due to discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. We expect cost of service and other revenue to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories.

Current wording

Cost of service and other revenue decreased by $1.2 million, or 82%, to $0.3 million for the three months ended September 30, 2024, compared to $1.5 million for the three months ended September 30, 2023. The decrease in cost of service and other revenue was primarily due to discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. We expect cost of service and other revenue to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories.

Previous wording

Service and other gross profit increased by $0.3 million, or 73%, to $0.8 million for the three months ended June 30, 2024, compared to $0.5 million for the three months ended June 30, 2023. The increase in service and other gross profit was primarily due to the decrease in cost of sales related to discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. We expect service and other gross profit to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories.

Current wording

Service and other gross profit decreased by $1.6 million, or 115%, to $0.2 million for the three months ended September 30, 2024, compared to $1.4 million for the three months ended September 30, 2023. The decrease in service and other gross profit was impacted by a $0.5 million write-down of aged receivables tied to discontinued clinical service offerings from Bionano Laboratories. The write-down was treated as a reversal of revenue. We expect service and other gross profit to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories.

Previous wording

Research and development (“R&D”) expenses decreased by $7.8 million, or 53%, to $6.8 million for the three months ended June 30, 2024 compared to $14.6 million for the same period in 2023. The decrease is partially due to decreases of $4.3 million in salaries, wages and benefits driven by headcount reductions announced throughout 2023 and 2024, and of $2.1 million in professional and consulting fees including costs incurred to support clinical research studies, Stratys development, foundry expenses, and cloud computing. We also reduced our consumption of inventory and materials and supply by $1.3 million of non-inventory materials and supply. We anticipate that R&D expenses will decrease for the remainder of 2024 as a result of our cost savings initiatives announced in March 2024.

Current wording

Research and development (“R&D”) expenses decreased by $9.1 million, or 66%, to $4.7 million for the three months ended September 30, 2024 compared to $13.8 million for the same period in 2023. The decrease was partially due to decreases of $4.6 million in salaries, wages and benefits driven by headcount reductions announced throughout 2023 and 2024, and of $2.6 million in professional and consulting fees including decreases in costs incurred to support clinical research studies, Stratys development, foundry expenses, and cloud computing. We also reduced our internal consumption of inventory, materials and supplies by $1.4 million. We anticipate that R&D expenses will decrease for the remainder of 2024 as a result of our cost saving initiatives announced in March and September 2024.

Previous wording

Selling, general and administrative (“SG&A”) expenses decreased by $15.4 million, or 57%, to $11.6 million for the three months ended June 30, 2024 compared to $26.9 million for the same period in 2023. The decrease is primarily due to a $6.0 million decrease in salaries, wages and benefits driven by headcount reductions announced throughout 2023 and 2024, a $2.7 million decrease in professional and consulting fees which is primarily marketing-related expenses and software maintenance, a $2.1 million decrease in administration and other expenses which includes the gain/loss recorded on fair value of the contingent consideration due for BioDiscovery and Purigen milestones, and $0.9 million decrease in travel entertainment. We anticipate that SG&A expenses will decrease for the remainder of 2024 as a result of our cost savings initiatives announced in March 2024.

Current wording

Selling, general and administrative (“SG&A”) expenses decreased by $15.4 million, or 62%, to $9.5 million for the three months ended September 30, 2024 compared to $24.9 million for the same period in 2023. The decrease was primarily due to a $6.3 million decrease in salaries, wages and benefits driven by headcount reductions announced throughout 2023 and 2024, a $6.1 million decrease in the gain/loss recorded on fair value of the contingent consideration due for BioDiscovery and Purigen milestones, a $3.2 million decrease in professional and consulting fees which is primarily marketing, software and legal expenses, and $0.6 million decrease in travel and entertainment. We anticipate that SG&A expenses will decrease for the remainder of 2024 as a result of our restructuring initiatives announced in March and September 2024.

Previous wording

Restructuring costs were $1.2 million for the three months ended June 30, 2024, as a result of our cost savings initiatives announced in March 2024. We had no expenses that were classified as restructuring costs during the same period in 2023.

Current wording

Restructuring costs were $1.8 million for the three months ended September 30, 2024, as a result of our cost saving initiatives announced in March and September 2024. We had no expenses that were classified as restructuring costs during the same period in 2023.

Previous wording

Interest income decreased by $0.2 million, or 34%, to $0.5 million for the three months ended June 30, 2024, as compared to $0.7 million for the same period in 2023 resulting from positive returns on investments. The decrease is the result of a reduction in investments offset by higher returns.

Current wording

Interest income was $0.4 million for the three months ended September 30, 2024, as compared to $0.7 million for the same period in 2023. The decrease is the result of a reduction in investments offset by higher returns.

Previous wording

The following table sets forth our results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table sets forth our results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

Service and other revenue decreased by $0.8 million, or 39%, to $1.3 million for the three months ended June 30, 2024 when compared to the same period in 2023 which is the result of discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. Such clinical service offerings from Bionano Laboratories contributed$0.7 millionin revenues for the three months ended June 30, 2024. We expect service and other revenue to continue to decrease over the remainder of 2024 as a result of phasing out these offerings.

Current wording

Service and other revenue decreased by $3.6 million or 53% for the nine months ended September 30, 2024, compared to the same period in 2023 which is the result of discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. Such clinical service offerings from Bionano Laboratories contributed $1.7 million in revenues for the nine months ended September 30, 2024 compared to $5.1 million for the same period in 2023. We expect service and other revenue to continue to decrease over the remainder of 2024 as a result of phasing out these offerings.

Previous wording

Cost of product revenue increased by $1.0 million, or 12%, to $9.6 million for the six months ended June 30, 2024, compared to $8.6 million for the same period in 2023. The increase in cost of product revenue was due to higher sales of consumables offset by lower sales of instruments. We expect cost of product revenue to continue to increase as product revenues increase.

Current wording

Cost of product revenue increased by $10.1 million, or 74%, to $23.9 million for thenine months ended September 30, 2024, compared to $13.7 million for the same period in 2023. The increase in cost of product revenue was due to higher sales of consumables offset by lower sales of instruments. In addition, during the three months ended September 30, 2024, $9.8 million in total expenses recognized to write-off excess Saphyr instrument spare parts and other obsolete inventory for $7.2 million as well as dispose of reagent rentals that were underutilized for$2.6 million. We expect cost of product revenue to fluctuate with the volume of product sales.

Previous wording

Service and other gross profit increased by $0.7 million, or 80%, to $1.7 million for the six months ended June 30, 2024, compared to $0.9 million for the same period in 2023. The increase in service and other gross profit was primarily due to the decrease in cost of sales related to discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. We expect service and other gross profit to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories.

Current wording

Service and other gross profit decreased by $0.9 million, or 37%, to $1.5 million for thenine months ended September 30, 2024, compared to $2.3 million for the same period in 2023. The decrease in service and other gross profit was primarily due to discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024. We expect service and other gross profit to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories.

Previous wording

R&D expenses decreased by $11.9 million, or 42%, to $16.6 million for the six months ended June 30, 2024 compared to $28.5 million for the same period in 2023. The decrease is partially due to decreases of $6.5 million in salaries, wages and benefits driven by headcount reductions announced throughout 2023 and 2024 and $3.6 millionin professional and consulting fees including costs incurred to support clinical research studies, Stratys development, foundry expenses, and cloud computing. Lastly, we reduced information technology and rent and facility costs by $0.6 million and we reduced the internal consumption of inventory and materials and supply by $1.1 million. We anticipate that R&D expenses will decrease for the remainder of 2024 as a result of our cost savings initiatives announced in March 2024.

Current wording

R&D expenses decreased by $21.0 million, or 50%, to $21.3 million for thenine months ended September 30, 2024 compared to $42.3 million for the same period in 2023. The decrease was partially due to decreases of $11.1 million in salaries, wages and benefits driven by headcount reductions announced throughout 2023 and 2024 and $6.2 millionin professional and consulting fees, including decreases in costs incurred to support clinical research studies, Stratys development, foundry expenses, and cloud computing. Lastly, we reduced information technology and rent and facility costs by $0.6 million, and we reduced our internal consumption of inventory, materials and supplies by $2.5 million. We anticipate that R&D expenses will decrease for the remainder of 2024 as a result of our cost saving initiatives announced in March and September 2024.

Previous wording

SG&A expenses decreased by $21.8 million, or 41%, to $31.1 million for the six months ended June 30, 2024 compared to $52.9 million for the same period in 2023. The decrease is primarily due to a $9.8 million decrease in salaries, wages and benefits driven by headcount reductions announced in 2023 and 2024, a $4.2 million decrease in primarily marketing-related expenses and a $2.9 million decrease in administration and other expenses which includes the gain/loss recorded on fair value of the contingent consideration due for Purigen and BioDiscovery milestones and is offset by intangible impairment charges recorded to our non-OGM Bionano Laboratories asset group. We anticipate that SG&A expenses will decrease for the remainder of 2024 as a result of our cost savings initiatives announced in March 2024.

Current wording

SG&A expenses decreased by $37.7 million, or 48%, to $40.1 million for thenine months ended September 30, 2024 compared to $77.8 million for the same period in 2023. The decrease was primarily due to a $16.1 million decrease in salaries, wages and benefits driven by headcount reductions announced in 2023 and 2024, a $13.4 million decrease in the gain/loss recorded on fair value of the contingent consideration due for Purigen and BioDiscovery milestones, a $7.4 million decrease in professional and consulting fees which is primarily marketing, software, and legal expenses, and a $1.7 million decrease in travel and entertainment. We anticipate that SG&A expenses will decrease for the remainder of 2024 as a result of our cost saving initiatives announced in March and September 2024.

Previous wording

Restructuring costs were $5.8 million for the six months ended June 30, 2024, as a result of our cost savings initiatives announced in March 2024.We had no expenses that were classified as restructuring costs during the same period in 2023.

Current wording

Restructuring costs were $7.6 million for thenine months ended September 30, 2024, as a result of our cost saving initiatives announced in March and September 2024. We had no expenses that were classified as restructuring costs during the same period in 2023.

Previous wording

Other income (expense) increased by $0.7 million, or 247%, to $1.0 million for the six months ended June 30, 2024 compared to $0.3 million for the same period in 2023. The increase is driven by a net gain on the extinguishment of the High Trail Note and Purchase Option of $4.0 million, offset by a loss recorded on the issuance of the JGB Debentures of $1.9 million, and an increase in interest expense of $1.5 million. See Note 5 (Debt) for further discussion on debt transactions that took effect during the quarter.

Current wording

Other expense was $1.7 million for the nine months ended September 30, 2024 compared to $0.3 million for the same period in 2023. The decrease was driven by a net gain on the extinguishment of the High Trail Note and Purchase Option of $4.0 million, offset by a loss recorded on the issuance of the JGB Debentures of $1.9 million, an increase in the change in fair value (net gain) of $2.0 million for the convertible notes, purchase option, and convertible debentures, and an increase in interest expense of $1.5 million. See Note 5 (Debt)to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Reportfor further discussion on debt transactions that took effect during the year.

Previous wording

Since our inception, we have incurred recurring net losses from operations, negative cash flows from operating activities and accumulated deficit. We have primarily generated cash flows from sales of equity securities and debt financings. We incurred net losses of $47.6 million and $76.0 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $628.9 million, cash and cash equivalents of $10.4 million, $11.4 million in restricted cash and short-term investment securities of $8.5 million. The amount we are required to hold as restricted cash is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures.

Current wording

Since our inception, we have incurred recurring net losses from operations, negative cash flows from operating activities and accumulated deficit. We have primarily generated cash flows from sales of equity securities and debt financings. We incurred net losses of $91.9 million and $188.6 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $673.1 million, cash and cash equivalents of $8.8 million, $11.4 million in restricted cash and short-term investments of $3.2 million. In connection with the Debentures (as defined below), the amount we are required to hold as restricted cash or restricted investments is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures.

Previous wording

In the six months ended June 30, 2024, we incurred negative cash flows from operating activities of $49.1 million. We anticipate that future sources of liquidity will principally come from sales of common stock and other equity instruments, borrowings from credit facilities and revenue from our commercial operations. Revenue from our commercial operations has increased due to increased demand for our product offerings and our acquisition of BioDiscovery and Purigen. See Note 6 (Stockholder’s Equity and Stock-Based Compensation) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of our recent equity activity for more information.

Current wording

In the nine months ended September 30, 2024, we incurred negative cash flows from operating activities of $62.4 million. We anticipate that future sources of liquidity will principally come from sales of common stock and other equity instruments, borrowings from credit facilities and revenue from our commercial operations. See Note 6 (Stockholder’s Equity and Stock-Based Compensation) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of our recent equity activity for more information.

Previous wording

As of June 30, 2024, the Company reported $19.4 million of Debentures at fair value, of which $19.4 million is classified as current and represents twelve months’ principal redemption payments at the holder’s option. Through June 30, 2024, the Company paid $0.2 million in interest and no principal amounts on the Debentures. As of June 30, 2024, the Company may be required to redeem up to $6.0 million of principal and expects to pay an additional $1.4 million in interest on the Debentures in 2024.

Current wording

As of September 30, 2024, the Company reported $15.0 million of Debentures at fair value, which is classified as current on the unaudited condensed consolidated balance sheet. Through September 30, 2024, the Company paid $0.8 million in interest and $3.0 million in principal redemption amounts on the Debentures. As of September 30, 2024, the Company may be required to redeem up to $3.0 million of principal and expects to pay an additional $0.4 million in interest on the Debentures in the fourth quarter of 2024.

Previous wording

See Note 5 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for further information on the Notes and Warrants.

Current wording

See Note 5 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for further information.

Previous wording

Based on our current business plans, we believe the net proceeds from the financings above together with our existing cash and cash equivalents and short-term investments, will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2024. This estimate assumes the inclusion of the amount equal to the outstanding principal amount of the Debentures. Our existing cash and cash equivalents and short-term investments, will not be sufficient for us to achieve cash-flow break even and we expect to need to seek additional capital based on strategic consideration alternatives in the future.

Current wording

Based on our current business plans, we will continue to require additional capital in the very near term to fund our operating expenses and capital expenditure requirements, or we may need to further curtail or cease operations and seek protection by filing a voluntary petition for relief under the United States Bankruptcy Code. If this were to occur, the value available to our various stakeholders, including our creditors and stockholders, is uncertain and trading prices for our securities may bear little or no relationship to the actual recovery, if any, by holders of our securities in bankruptcy proceedings, if any. This estimate assumes the inclusion of the amount equal to the outstanding principal amount of the Debentures. Our existing cash and cash equivalents and short-term investments, will not be sufficient for us to achieve cash-flow break even and we expect to need to seek additional capital.

Previous wording

We expect that our near and longer-term liquidity requirements will consist of working capital and general corporate expenses associated with the growth of our business, including, without limitation, expenses associated with scaling up our operations and continuing to increase our manufacturing capacity, sales and marketing expense, increasing market awareness of our products and services to target customers, instrument placements with customers via the reagent rental sales strategy, additional research and development expenses associated with expanding and proving the utility of our offerings, expenses associated with continuing to build out our corporate infrastructure, enhancements to information technology, and expenses associated with being a public company. We expect such expenditures to continue throughout 2024.

Current wording

We expect that our near and longer-term liquidity requirements will consist of working capital and general corporate expenses associated with the growth of our business, including, without limitation, expenses associated with scaling up our operations and continuing to increase our manufacturing capacity, sales and marketing expense, increasing market awareness of our products and services to target customers, instrument placements with customers via the reagent rental sales strategy, additional research and development expenses associated with expanding and proving the utility of our offerings, expenses associated with continuing to build out our corporate infrastructure, enhancements to information technology, restructuring and advisory fees, and expenses associated with being a public company. We expect such expenditures to continue throughout the balance of 2024.

Previous wording

We had $10.4 million in cash and cash equivalents, $8.5 million in short-term investments and $11.4 million in restricted cash as of June 30, 2024. The amount we are required to hold as restricted cash is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures. Based on recurring losses from operations incurred since inception and the expectation of continued operating losses, we anticipate our available cash balance will not be sufficient to operate our business for the next twelve months from the issuance of this Quarterly Report. Accordingly, we determined that there is substantial doubt about our ability to continue as a going concern within 12 months after the date that the financial statements included in this Quarterly Report are issued. In order to continue to operate our business beyond that time, we will need to raise substantial additional capital. We are actively evaluating debt and equity financing sources available to us as well as cost reduction strategies, but there can be no assurance that financing will be available on terms acceptable to us, on a timely basis, or at all, or that we are able to effectively reduce our operating expenses. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. Any disruptions to, or volatility in, the credit and financial markets or any deterioration in overall economic conditions may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we are unable to raise additional funds through debt or equity financing or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research and development activities or future commercialization efforts. Even if we raise additional capital, we may also be required to modify, delay or abandon some of our plans which could have a material adverse effect on our business, operating results and financial condition and our ability to achieve our intended business objectives.

Current wording

As of September 30, 2024, we had $8.8 million in cash and cash equivalents, $3.2 million in short-term investments and $11.4 million in restricted cash and investments. The amount we are required to hold as restricted cash or restricted investments is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures. Based on recurring losses from operations incurred since inception and the expectation of continued operating losses, we anticipate our available cash balance will not be sufficient to operate our business for the next twelve months from the issuance of this Quarterly Report. Accordingly, we determined that there is substantial doubt about our ability to continue as a going concern within 12 months after the date that the financial statements included in this Quarterly Report are issued. In order to continue to operate our business beyond that time, we will need to raise substantial additional capital. We are actively evaluating debt and equity financing sources available to us as well as cost reduction strategies, but there can be no assurance that financing will be available on terms acceptable to us, on a timely basis, or at all, or that we are able to effectively reduce our operating expenses. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. Any disruptions to, or volatility in, the credit and financial markets or any deterioration in overall economic conditions may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we are unable to raise additional funds through debt or equity financing or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research and development activities or future commercialization efforts. Even if we raise additional capital, we may also be required to modify, delay or abandon some of our plans which could have a material adverse effect on our business, operating results and financial condition and our ability to achieve our intended business objectives.

Previous wording

We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support our business. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure, and this may continue in the future. As discussed above, we anticipate our available cash balance will not be sufficient for the next twelve months from the issuance of this report. We plan to raise additional capital to fulfill our operating and capital requirements for at least 12 months through equity or debt financings, however, we may not be able to secure such financing in a timely manner or on favorable terms, if it all. See Note 5 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of our recent debt financing. We anticipate that our cash used in operating activities will decrease over the next 12 to 24 months; however, we may observe fluctuations in the cash used in operating activities on a quarterly basis to sustain the expansion of our commercial offerings.

Current wording

We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support our business. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure, and this may continue in the future. As discussed above, we anticipate our available cash balance will not be sufficient for the next twelve months from the issuance of this report. We expect to seek to raise additional capital to fulfill our operating and capital requirements for at least 12 months through equity or debt financings, however, we may not be able to secure such financing in a timely manner or on favorable terms, if it all, and if we are unable to raise sufficient additional capital in the very near term, we may need to further curtail or cease operations and seek protection by filing a voluntary petition for relief under the United States Bankruptcy Code. See Note 5 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of our recent debt financing. Our recent restructuring activities are anticipated to reduce the cash used in operating activities over the next 12 months; however, our financial condition may result in certain additional restructuring or advisory expenses which may result in our corporate expenditures increasing, potentially materially, and we may observe fluctuations in the cash used in operating activities on a quarterly basis to sustain our current commercial offerings.

Previous wording

Net cash used in operating activities was $49.1 million during the six months ended June 30, 2024 as compared to $69.1 million during the same period in 2023. The decrease in cash used in operating activities of $20.0 million was primarily attributed to a decrease in our net loss in the current quarter and decrease in our working capital usage as a result of our cost savings initiatives announced in March 2024.

Current wording

Net cash used in operating activities was $62.4 million during the nine months ended September 30, 2024 as compared to $95.4 million during the same period in 2023. The decrease in cash used in operating activities of $33.0 million was primarily attributed to a decrease in our net loss and a decrease in cash used for inventory purchases over that time, consistent with the cost saving initiatives that were initiated in May of 2023

Previous wording

Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure, as well as the acquisitions of Lineagen, BioDiscovery and Purigen to grow our business. We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods. During the six months ended June 30, 2024, cash provided by investing activities was $76.2 million, as compared to $46.1 million provided by investing activities during the same period in 2023. The increase in cash provided by investing activities of $30.1 million was primarily attributed to the maturity of $227.9 million in available for sale securities which was offset by a purchase of available for sale securities of $151.6 million during the six months ended June 30, 2024, compared to the maturity of $46.9 million in available for sale securities during the same period in 2023.

Current wording

Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure, as well as the acquisitions of Lineagen, BioDiscovery and Purigen to grow our business. We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods. During the nine months ended September 30, 2024, cash provided by investing activities was $70.8 million, as compared to $79.5 million provided by investing activities during the same period in 2023. The decrease in cash provided by investing activities of $8.7 million was primarily attributed to the maturity of $285.3 million in available for sale securities which was offset by a purchase of available for sale securities of $214.3 million during the nine months ended September 30, 2024, compared to the maturity of $84.9 million in available for sale securities offset by a purchase of $4.5 million of available for sale securities during the same period in 2023.

Previous wording

Net cash used in financing activities was $23.6 million during the six months ended June 30, 2024 as compared to net cash provided by financing activities of $32.7 million during the same period in 2023, a decrease of $56.3 million. During the six months ended June 30, 2024, the Company made payments of $61.0 million towards the convertible notes payable which was offset by approximately $18.0 million in gross proceeds from the issuance of convertible debentures and $27.6 million in gross proceeds from executing sales under our at-the-market facility with Cowen and Company, LLC (“Cowen”) as compared to $33.5 million during the same period in 2023.

Current wording

Net cash used in financing activities was $17.6 million during the nine months ended September 30, 2024 as compared to net cash provided by financing activities of $45.3 million during the same period in 2023, a decrease of $62.9 million. During the nine months ended September 30, 2024, the Company made principal payments of $61.0 million and payments on debt extinguishment costs of $5.4 million towards the High Trail convertible notes payable which was offset by approximately $18.0 million in gross proceeds from the issuance of the JGB convertible debentures and $37.7 million in gross proceeds from executing sales under our at-the-market facility with Cowen and Company, LLC (“Cowen”) as compared to $46.4 million during the same period in 2023.

Previous wording

As of June 30, 2024, we had approximately $10.4 million in cash and cash equivalents, short-term investments of $8.5 million, $11.4 million in restricted cash and working capital of $23.4 million. The amount we are required to hold as restricted cash is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures.

Current wording

As of September 30, 2024, we had approximately $8.8 million in cash and cash equivalents, $3.2 million in short-term investments , $11.4 million in restricted cash and restricted investments and working capital of $14.0 million. The amount we are required to hold as restricted cash or restricted investments is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures.