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Bionano Genomics (NASDAQ: BNGO)
This fall 2022 Earnings Name
Mar 09, 2023, 4:30 p.m. ET
Contents:
- Ready Remarks
- Questions and Solutions
- Name Members
Ready Remarks:
Operator
Good day and welcome to the Bionano fourth-quarter and full-year 2022earnings convention name At the moment, all individuals are in a listen-only mode. [Operator instructions] Please be suggested that this convention is being recorded. At the moment, I want to flip the convention over to Amy Conrad from investor relations.
Please go forward.
Amy Conrad — Investor Relations
Thanks, Michelle, and good afternoon, everybody. Welcome to the Bionano Genomics fourth-quarter and full-year 2022 monetary outcomes convention name. Main the decision immediately is Dr. Erik Holmlin, CEO of Bionano.
He’s joined by Chris Stewart, CFO of Bionano. After market closed immediately, Bionano issued a press launch saying its monetary outcomes for the fourth quarter and full-year 2022. A duplicate of the discharge may be discovered on the Investor Relations web page of the corporate’s web site. I want to remind everybody that sure statements made throughout this convention name are forward-looking, together with statements about Bionano’s strategic and commercialization plans, gross sales pipeline, future fundraising actions and prospects, anticipated advantages or enhancements to the Saphyr system and Ionic purification system, targets and anticipated milestones for 2023, and achievement of our ELEVATE! progress technique, our anticipated compound annual progress fee, the scale and our capacity to entry our estimated goal markets, the benefit of the Saphyr system and Ionic purification system over present applied sciences, the anticipated advantages of current acquisitions, expectations concerning timing and content material of research outcomes, and anticipated advantages of those research in driving adoption of the Saphyr system and Ionic purification system.
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Such forward-looking statements are primarily based upon present expectations, and there may be no assurances that the outcomes contemplated in these statements shall be realized. Precise outcomes could differ materially from such statements because of quite a lot of elements and dangers, a few of that are recognized in Bionano’s press launch and Bionano’s studies filed with the SEC. These forward-looking statements are primarily based on data obtainable to Bionano immediately, and the corporate assumes no obligation to replace statements as circumstances change. As well as, to complement Bionano’s monetary outcomes reported in accordance with U.S.
usually accepted accounting ideas, or GAAP, the corporate is reporting non-GAAP working expense. This non-GAAP monetary measure shouldn’t be meant to be thought of in isolation, or as an alternative, for comparable GAAP measures, to be learn together with the corporate’s consolidated monetary statements ready in accordance with GAAP, has no standardized which means prescribed by GAAP, and isn’t ready beneath any complete set of accounting guidelines or ideas. An outline of non-GAAP working expense and reconciliation of non-GAAP working expense to GAAP working expense are included on the finish of the corporate’s earnings launch issued earlier immediately, which has been posted on the Investor Relations web page of the corporate’s web site. An audio recording and webcast replay for immediately’s convention name will even be obtainable on-line within the Investor part of the corporate’s web site.
With that, I’ll now flip the decision over to Erik.
Erik Holmlin — Chief Govt Officer
Thanks, Amy, and good afternoon, everybody. Thanks for becoming a member of us immediately. I need to begin off by saying that 2022 was merely a spectacular yr for Bionano. We actually could not be happier with the outcomes.
And in reality, we’re simply blown away with what we see as progress world wide in adopting optical genome mapping. We began 2022 in a fairly troublesome macro surroundings. There was continued uncertainty round COVID, which was limiting our entry to laboratories and impacting our capacity to put in the Saphyr system. We confronted challenges with chip suppliers, and manufacturing yields have been decrease than anticipated.
And I am blissful to report that, over the course of the yr, we have been capable of get manufacturing yields again up and restore them to ranges that they have been beforehand and that we hit our put in base milestone for Saphyr techniques for the yr. And by no means as soon as did we face any backlog or any lack of ability to ship product to prospects primarily based on provide chain points. And that is a credit score to so many unimaginable workers throughout our firm who battled by way of troublesome situations to supply a fantastic outcome. And I am grateful to them.
We kicked off our technique for progress, which we named ELEVATE! at first of 2022, and we delivered towards all of our ELEVATE! milestones for the yr. We met or exceeded our steering for revenues on each a full-year foundation and in every quarter over the course of the yr. I would wish to take slightly little bit of time to share with you some highlights from our 2022 achievements, together with these within the fourth quarter. To start, we grew the put in base of Saphyr techniques on the earth to 240, which represents a 46% enhance over the 164 techniques that have been put in on the finish of 2021.
Within the fourth quarter of 2022, we bought 4,781 flowcells, which represents 49% progress over the identical interval in 2021, and introduced the whole for 2022 to fifteen,375 flowcells bought. That represents a 23% progress over the 12,518 flowcells bought in 2021. And that is simply great progress. You must do not forget that the flowcell is the unit consumable that basically connects most intently to the variety of human genomes which are being analyzed by optical genome mapping.
And so, this progress is actually spectacular. We proceed to course of a considerable variety of samples for optical genome mapping by way of Bionano Laboratories. And it is a automobile that we leverage to introduce people who find themselves eager about OGM to how highly effective that knowledge is on their samples. Revenues for the fourth quarter of 2022 have been $8.2 million, which is up 30% versus the fourth quarter of 2021.
Income for the complete yr was — 2022 was $27.8 million, which represents year-over-year income progress of 55%. And we’re extremely impressed by the efficiency on the highest line within the fourth quarter. And we imagine it actually reveals what we’re able to doing on this enterprise, each from an absolute standpoint, however on an ongoing progress foundation. And so, it is an excellent consequence for our crew promoting optical genome mapping and our different merchandise, medical companies, and software program.
In reality, we exceeded the targets and expectations for all of our deliberate milestones over the course of the yr and superior the corporate technique, in addition to our merchandise. I would wish to share a few of these key highlights from the complete yr. We made important progress towards streamlining the optical genome mapping workflow with our acquisition of Purigen Biosystems, which closed in November of 2022. That acquisition brings their Ionic system, which makes use of isotachophoresis know-how into our optical genome mapping workflow, and we imagine that it actually completes the meeting of the extraordinarily streamlined end-to-end workflow for optical genome mapping as soon as we launched the Ionic system and its consumables for OGM.
We developed and launched enhanced kits for DNA isolation and labeling in our OGM workflow, the SP-G2 labeling equipment and the Bionano Prep Direct Label and Stain-G2 DNA isolation and labeling kits. These allow pattern to leads to as little as three days for most cancers samples, and they’re proving to dramatically enhance the reliability of the workflow in prospects’ palms. And it is all the time been a key pillar of our technique to please prospects with strong merchandise, and these new kits do precisely that. We additionally launched an automatic model of our DNA isolation chemistry, which has been carried out in partnership with Hamilton and is linked to their Lengthy String VANTAGE DNA isolation robotic.
We launched quite a lot of optical genome mapping laboratory-developed checks, or LDTs, by way of Bionano Laboratories. One is for hematologic malignancies and one other is for the genetic dysfunction, FSHD1. We imagine these permit healthcare suppliers to discover the medical utility of optical genome mapping-based assays by way of these LDTs, and we imagine that this utilization will help efforts to achieve coding and protection for reimbursement by third-party payors. We additionally met all of our milestones in our medical research for prenatal and postnatal and hematologic trials, together with research enrollment targets, completion of our postnatal research which has now been revealed as a preprint, in addition to the interim publication of the prenatal research which was revealed in December of 2022.
We additionally initiated our stable tumor trial. These trials are important to offering the important mass of information that shall be used to drive medical societies to help the inclusion of optical genome mapping of their really helpful first-line checks. A number of websites throughout the US and Europe validated laboratory-developed checks, and in the US, they submitted functions for reimbursement codes, together with Z codes and proprietary laboratory evaluation, or PLA, codes which allow them to receives a commission for optical genome mapping checks. And so they have been very happy with the extent of reimbursement that is been assigned to those codes, ranging within the space of about $1,300 for constitutional genetic dysfunction testing, which is akin to reimbursement charges obtainable out there immediately.
NxClinical software program model 7.0, which is the model of that software program enabled for OGM knowledge evaluation, is getting used within the subject. And we’re planning a full industrial launch for functions in hematologic malignancies within the first half of 2023. A pre-commercial model of our next-generation high-throughput Saphyr system has been working within the subject with glorious outcomes, and we plan to launch that new instrument into the sphere this yr. Preliminary launch shall be within the first half of 2023, and we’ll see adoption and set up towards the second half of the yr.
We count on this instrument to allow optical genome mapping evaluation at considerably larger throughputs in comparison with the Saphyr system and that it’ll help labs which are working a lot larger volumes. Lastly, there have been quite a lot of wonderful publications that have been revealed in 2022, and we imagine they inform the story of optical genome mapping and the way the way forward for the corporate will unfold. 5 groundbreaking publications that I need to define for you immediately are as follows. You might do not forget that we talked about an extremely highly effective publication from quite a lot of scientists at The College of Texas MD Anderson Most cancers Heart, the place they describe the usage of optical genome mapping and analysis of myelodysplastic syndrome, or MDS, prognostication.
And what was unimaginable about this paper because it confirmed that as much as 21% of research topics had a special prognostic threat rating when optical genome mapping was used to guage them in comparison with the usual of care. That is 1 in 5 folks. So, the impression of OGM can’t be denied. This publication actually underscores it.
Researchers from Necker Hospital in France discovered that optical genome mapping detected extra clinically related variants in 33% of MDS sufferers and 54% of acute myeloid leukemia samples, which is a important demonstration of the utility of optical genome mapping to go above and past the usual of care. Researchers from eight completely different institutes analyzed OGM’s utility for cytogenetic abnormalities in, once more, AML samples. And right here, they discovered that 12% of the circumstances had completely different threat ranges and have been eligible for medical trials on account of these new findings. This inclusion in medical trials is extremely significant as a result of it connects these sufferers to doubtlessly lifesaving therapeutics that they in any other case wouldn’t have had entry to with out the findings of OGM.
So, you may think about the impression of those findings. Researchers from Augusta College revealed the primary validation research to guage the efficiency of optical genome mapping versus conventional strategies for hematologic neoplasms, which confirmed an extremely excessive technical efficiency and concordance fee with, importantly, 100% first-pass fee, which means that the reliability of optical genome mapping in these workflows is very dependable and doesn’t require repetition of the check, which drives up prices for payers and delays outcomes to sufferers. Lastly, researchers from a basis at Kyoto College demonstrated the utility of optical genome mapping as a part of a workflow to guage hypo immunogenic induced pluripotent stem cells, iPSCs, and that this workflow may very well be utilized in regenerative drugs, exhibiting OGM’s capacity to detect off-target results or areas the place genome modification has gone awry and divulges that these modified stem cells could or might not be helpful in a specific affected person setting. And that is an space of serious curiosity within the adoption of optical genome mapping for numerous functions in cell remedy.
On the shut of this name, I need to undergo our milestones deliberate as a part of ELEVATE! for 2023. However earlier than doing that, I need to flip the decision over to Chris Stewart, our CFO, who will evaluation the financials for the yr. Chris.
Chris Stewart — Chief Monetary Officer
Thanks, Erik. The fourth quarter of 2022 was one other excellent quarter, which capped off a fantastic yr the place we achieved spectacular year-over-year income progress and diversified our income throughout product strains and geography. With the acquisition of Purigen, we now management the end-to-end OGM workflow and count on to broaden our goal markets. Now, to get to the numbers.
Income within the fourth quarter of 2022 was roughly $8.2 million, a 30% enhance over the fourth quarter of 2021 and inside the preliminary vary of $8.1 million to $8.4 million that we supplied on January fifth of this yr. Income for the complete yr was 27.8 million, representing a 55% enhance over the full-year 2021. This year-over-year enhance was pushed by sturdy efficiency in all three of our core companies, OGM, Bionano Labs, and software program, and throughout all three main geographies. Gross margin for the fourth quarter of 2022 was 22%, in comparison with 4% within the fourth quarter of 2021.
For the complete yr, gross margin was 21%, in comparison with 22% in 2021. The slight lower from 2021 was primarily because of the yield challenges that we skilled starting in late 2021. As Erik talked about, yields on product being produced immediately is now again to the degrees we noticed pre-COVID. So, we count on that that situation is now behind us.
Concerning working expense, we report each GAAP and non-GAAP numbers. We imagine that offering our working expense, excluding sure ongoing noncash bills and different one-time bills, supplies a extra helpful measure of our efficiency. Fourth-quarter 2022 GAAP working expense was $39.3 million, in comparison with $29 million the prior yr. Full-year 2022 GAAP working expense was $137.6 million, in comparison with $81 million in 2021.
The rise for the quarter and the yr was primarily because of elevated headcount and headcount-related bills and a rise in advertising and R&D expense. Full-year 2022 non-GAAP working expense was $107.7 million and excludes $22.4 million in stock-based compensation, $5.8 million in amortization of intangibles, and $1.8 million in acquisition-related transaction prices. Fourth quarter non-GAAP working expense was $30.6 million, in comparison with $21.8 million within the fourth quarter of 2021. Fourth-quarter non-GAAP working expense excludes $5.5 million in stock-based comp, $1.5 million in amortization of intangibles, and $1.7 million in bills associated to our acquisition of Purigen.
We ended the fourth quarter with $113.2 million in money, money equivalents, and available-for-sale securities, in comparison with $180 million on the finish of Q3. Throughout the quarter, we incurred prices of roughly $34 million associated to the Purigen acquisition, and we elevated our security inventory of stock by about $4.7 million to make sure provide to our prospects. We have now been and can proceed to be proactive and opportunistic by way of elevating extra capital as a way to place the corporate to capitalize on the promise of OGM. Because the begin of the yr — of this yr, we have been lively on our ATM facility, elevating $14.8 million up to now in Q1 of 2023.
This morning, we filed an modification to our present S-3, inserting a cap on the whole quantity of capital that may be raised beneath present shelf to $400 million, of which $200 million may be raised beneath the ATM. This can be a discount to the $350 million beneath our earlier ATM settlement. Tomorrow, we are going to file a brand new S-3 with the identical capital limits that may substitute our present S-3 as soon as declared efficient by the SEC. Trying ahead, as we start 2023, we count on Q1 2023 revenues to be within the vary of $7 million to $7.5 million, in keeping with the everyday seasonal softness that we see in Q1.
We count on full-year 2023 income to be within the vary of $35 million to $38 million, which, on the midpoint, could be 31% progress over 2022 income. I am actually happy concerning the progress we’re making throughout all points of the enterprise and really enthusiastic about the place we’re headed. With that, I’ll flip the decision again to Erik to debate our anticipated enterprise plans earlier than we take your questions. Erik.
Erik Holmlin — Chief Govt Officer
Thanks, Chris. Congratulations on the unimaginable outcomes. I would like to shut out immediately by diving into the 2023 milestones that shall be tied to our progress technique. Earlier than doing that, I need to remind everybody that we held our first-ever technique day at NASDAQ in New York, the place this complete crew went by way of an in-depth evaluation of our technique, progress drivers, monetary targets, key initiatives associated to medical trials, and new product developments, in addition to in-depth discussions with six present customers of the Saphyr system who’re thought to be world leaders of their fields, who gave unimaginable testimonials concerning the utility of that platform and its positioning.
And so, I encourage everybody to take a look at the recording of the occasion, which may be accessed on the Investor aspect of our internet web page. As we reviewed in depth throughout Technique Day, we’re centered on driving what we imagine is a cytogenetics revolution. ELEVATE! is our progress technique. ELEVATE! is predicated on six strategic pillars.
The primary one is to broaden industrial traction and validation of optical genome mapping and actually all of our options to please prospects with strong merchandise; clear the trail for OGM reimbursement in our goal markets; proceed to advance the product to allow additional penetration of our present markets, in addition to broaden the marketplace for penetration into new ones; make software program a strategic driver of Bionano options; and with the acquisition of Purigen Biosystems, we’ll prolong that to incorporate making pattern prep options for DNA isolation; one other strategic driver; after which, lastly, the sixth pillar and one which’s actually necessary on a go-forward foundation is that we have to execute these pillars with operations and methods that may scale with this rising enterprise. And so, we now have quite a lot of key milestones which are deliberate in 2023. They cowl areas, product developments, our ongoing medical research, milestones in reimbursement, milestones round increasing the bottom — put in base of optical genome mapping techniques, and necessary regulatory developments with the FDA. I need to run by way of a number of of those, and you’ll evaluation them by way of the recording of this name, which shall be archived on our web site.
However we intend to broaden the OGM system put in base to 325 techniques by the tip of 2023. We intend so as to add to our menu of LDTs at Bionano Labs with one for complete genome analysis of structural variations in constitutional genetic illness. We’ll be inspected by the Faculty of American Pathologists at Bionano Laboratories in reference to our utility for accreditation by CAP. Within the first half of 2023, we’ll be launching the high-throughput Saphyr system, which we imagine will enhance throughput considerably and shall be related to the brand new Saphyr compute, which has been developed in collaboration with NVIDIA.
We’ll have necessary pre-submission discussions with the FDA which are main as much as a pre-submission in reference to the high-throughput Saphyr system afterward. We plan to submit an necessary file to Medicare for one thing known as an area protection choice in 2023, and we are going to advance our medical research. There are a variety of milestones in connection to those research, together with ongoing enrollment of our prenatal research, in addition to ongoing enrollment of the heme research, round which we count on to attain about 50% enrollment. We’re persevering with to pursue our Class I CPT codes for heme and constitutional use of optical genome mapping, and we count on to have pre-commercial variations, at a minimal, of our OGM kits for isotachophoresis that may run on the Ionic purification system within the subject by the tip of the yr.
And lastly, we shall be launching and having a full industrial launch of VIA, which is the newly named software program for knowledge evaluation primarily based on what we acquired from BioDiscovery, and VIA contains the flexibility for optical genome mapping evaluation and it’ll goal heme functions within the first half of 2023 after which a complete genome evaluation model obtainable within the second half of the yr. And so, these are extremely necessary milestones that we count on to attain this yr. And the entire driver behind them is to supply catalysts that may allow ongoing income progress and the event of a really strong P&L. And so, as we proceed to execute on these core components of the technique, we count on to develop income for the following few years at a wholesome compound annual progress fee starting from 30% to 50% by way of 2025.
We imagine that we’re constructing a enterprise that may ultimately scale into this huge market alternative that we’re pursuing and ship distinctive monetary outcomes. And so, in closing, I need to say that we’re actually enthusiastic about what we are able to obtain this yr, and we look ahead to updating you quickly concerning the first quarter and all year long going ahead. With that, Michelle, we’re able to take questions.
Questions & Solutions:
Operator
Thanks. [Operator instructions] Our first query comes from the road of Jeffrey Cohen with Ladenburg. Your line is open. Please go forward.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
Hello, Erik and Chris. How are you?
Erik Holmlin — Chief Govt Officer
Good. Hello, Jeff. Doing nice.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
So, I suppose, first, only a fast one for Chris so far as the stock and stock construct from This fall. You probably did name out a pair issues. Was there some relationship there to your new high-throughput instrument, or was the buildup with flowcells or present Saphyr devices?
Chris Stewart — Chief Monetary Officer
It was present Saphyrs and flowcells. And mainly, , when — within the peak of the provision chain challenges, we needed to make sure that we would not be constrained on demand. So, we began constructing security inventory. And I suppose the important thing level is we’re nearly carried out with that in This fall, slightly bit in Q1, after which we’ll begin bringing that security inventory down as we carry up the brand new instrument and consumables later within the yr and into subsequent yr.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
OK. Obtained it. That is useful. So, it is not essentially going to extend alongside together with your revenues, however it could have peaked for the shorter time period.
Chris Stewart — Chief Monetary Officer
Right.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
OK. Obtained it. And, Erik, you simply known as out the 2 LDTs so far. Would you count on others to be launched throughout 2023 as nicely?
Erik Holmlin — Chief Govt Officer
Sure, we’ll proceed constructing that menu. So, in 2023, for positive, we’ll launch a LDT for constitutional genetic issues that is trying on the complete genome and revealing structural variations which may be related to quite a lot of indications comparable to mental incapacity, developmental delay, and so forth.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
Obtained it. After which, so far as the brand new instrument introduction within the first half this yr, you count on that may substitute Saphyr’s at high-throughput amenities and facilities, or wouldn’t it be adjunct at high-throughput facilities?
Erik Holmlin — Chief Govt Officer
I imagine it will be incremental adjunct as a result of the Saphyr system operates nicely and performs simply in addition to its high-throughput model will. However it may be utilized in a setting like that for the event of recent assays and different methods {that a} laboratory or buyer could need to work on or consider. And so, I actually do count on that to be — that the brand new system could be adjunctive to what they have already got.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
Obtained it. After which, lastly, another, if I’ll. So far as the margins and searching ahead into ’23, would you count on that they develop from ’22 ranges? And if that’s the case, the place are the levers? Is it on the product aspect or the service and different aspect?
Chris Stewart — Chief Monetary Officer
So, we do count on it to development up from right here. , we’re not offering any extra steering on precisely how a lot. However the reason being that we have now labored by way of the stock of chips that have been produced in the course of the time after we have been combating our yields. And so, , we constructed up a number of stock throughout that point to — once more, to make it possible for we are able to service our prospects.
As Erik talked about, fortunately, we did not miss any deliveries to any of our prospects. However, , we did that by advantage of getting this stock. So, we have now labored by way of that, and we’re again to manufacturing at form of the yield ranges that we have been at previous to — early 2020. So, that is what’s actually going to drive it up.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
OK. And another fast one for Erik. So far as the payor surroundings, each the payors and Medicare, what’s your sense on their receptiveness extra lately to the overwhelming physique of information that you just’re delivering to them and the way they’re fascinated about the economics on the — within the area now?
Erik Holmlin — Chief Govt Officer
I imply, I feel the progress that we’re seeing could be very optimistic. And, , we now have a perform within the firm, market entry led by an actual veteran within the business, and she or he’s within the means of placing these knowledge in entrance of those payors. And so, when you and I observe Bionano’s communications and press releases and publications extremely intently, the payors are nonetheless catching up. And so, Donna goes to make it a problem for them and put it in entrance of them.
However we now have a number of discussions ongoing already and payors get it. There’s only a course of that we now have to undergo, , to fulfill them. And, , Donna is growing a multi-pronged technique, and we’ll be capable to say extra about that sooner or later as we begin delivering towards a few of these key milestones. However, , I feel the basic reply is that they like what they see.
And we now have to make it possible for all of them see it after which proceed to see an increasing number of and an increasing number of.
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
Obtained it. OK. Tremendous. Thanks for taking our questions.
Erik Holmlin — Chief Govt Officer
Thanks, Jeff.
Operator
Thanks. And one second for our subsequent query. Our subsequent query comes from the road of Sung Ji Nam with Scotiabank. Your line is open.
Please go forward.
Sung Ji Nam — Scotiabank — Analyst
Hello. Thanks for taking the questions. So, I used to be questioning concerning the completion of the postnatal research and the publication there. Sort of what are the following steps? Is it one thing the place you form of look ahead to all the opposite research to be accomplished, , by way of starting your conversations with, , the rule of thumb our bodies or whatnot? Or simply form of curious what the following steps is likely to be.
Erik Holmlin — Chief Govt Officer
I feel that the principal subsequent step is to finalize the preprint which has been revealed after which submit it for peer-reviewed publication. I feel that that is the important thing subsequent step for that physique of information. However there are some 1,047 knowledge units related to this research, they usually all comprise inside them a number of publications that may be capable to dive deeply into and spotlight a few of the key endpoints that we have been looking for to measure. The preprint goes into a few subpopulations, one with autism spectrum dysfunction, one other which was a potential cohort that was collected, and it already reveals virtually a rise of 20% in pathogenic findings in comparison with the usual of look after each of these populations.
However it additionally reveals that there have been a considerable variety of, presumably, reportable findings which have a excessive probability of being pathogenic. And so, we have to type that out by trying deeply into the character of these occasions. And so, I feel the best way to consider it’s that this preprint has been revealed, and we’ll get that out. It is going to cowl 1,047 knowledge units, which is an extremely impactful quantity that no person can run from.
We present 100% concordance with the usual of care and substantial enhance in efficiency general, so it’s totally highly effective. However there are lots of, many extra publications that may dig out of that knowledge set and proliferate. And so, it is best to count on there to be simply an increasing number of data popping out, highlighting the unimaginable significance of optical genome mapping. And people publications will help our efforts to persuade guideline companies, medical societies to embrace optical genome mapping, proper, issues like consensus statements that finally leads to the medical societies recommending optical genome mapping as first-line testing.
Sung Ji Nam — Scotiabank — Analyst
Obtained you. That is tremendous useful. After which, I am simply curious concerning the HRD detection publication that got here out. Clearly, very attention-grabbing there.
Is that one thing that you may — you may be capable to incorporate into your stable tumor research? Or is that simply form of one thing that you just assume the purchasers will proceed to doubtlessly, , develop on their very own?
Erik Holmlin — Chief Govt Officer
We — so, Bionano is a participant in HRD at two ranges. Primary, we now have what we imagine is essentially the most robustly performing strategy to calling HRD and scoring HRD from present knowledge sorts like sequencing, next-generation sequencing, and different knowledge sorts, microarrays. And that is commercially obtainable now, and labs are adopting it and using it. As well as, optical genome mapping is now been proven to be nearly as good as sequencing, if not considerably higher.
There was a paper, and perhaps that is the one that you just’re referring to, that was revealed from the Curie Institute in Paris, and it confirmed that optical genome mapping manner outperformed complete genome sequencing for figuring out sufferers within the research who have been, the truth is, certified for PARP inhibitors. But when they solely use sequencing to select up these sufferers, they would not have picked up as many. And so, optical genome mapping seems to be extra highly effective. And so, that is a great distance of claiming, sure, we count on optical genome mapping to function prominently in HRD scoring and that that shall be one thing that we’ll measure as a part of these research.
Now, I’ve obtained to, , be honest and level out that the overwhelming majority of stable tumor specimens which are collected and analyzed all through oncology immediately are in formalin-fixed, paraffin-embedded tissue, and that is not one thing that we now have an assay for optical genome mapping on but. We count on to have the ability to work on that ultimately utilizing isotachophoresis. However what I can inform you is that the outcomes that Curie is getting are so extremely impactful that their establishment is now advocating the gathering of and preservation of frozen recent tissue in breast most cancers as a result of it appears that evidently optical genome mapping is so highly effective that it warrants a change in observe of pattern assortment and pattern utilization. And so, perhaps that is one thing that may affect — be an affect on practices right here in the US.
Sung Ji Nam — Scotiabank — Analyst
Nice. After which, lastly, from me, in your 2023 steering, for the 325 OGM system steering, I used to be questioning if that is together with the brand new high-throughput techniques. And likewise, are you seeing perhaps a few of your potential prospects or present prospects form of ready or holding off by way of adopting OGM techniques within the — , presently or within the first half of the yr in anticipation of the launch within the second half of the yr?
Erik Holmlin — Chief Govt Officer
We do not see that. And, , the supply of this new high-throughput system shall be comparatively restricted within the second half of this yr, and that is considerably by design to guard towards any hesitation out there. We additionally could have completely different industrial phrases and can proceed to make it very engaging to carry Saphyr in and, , undertake and rise up and working with it, whereas the dedication for the high-throughput system shall be slightly bit larger. So, we’re engaged on methods during which we are able to actually engineer the demand and make it possible for there is not a pause.
, having mentioned that, I am positive that there shall be some websites that shall be, , go forward and wait on the sidelines. We all know that there are websites which are ready on the sidelines immediately, however we’re not pondering that it will pause considerably present alternatives within the gross sales pipeline. However, , we now have to see there’s that threat. And with regard to the primary query, the 325 is inclusive of each Saphyr techniques and the brand new high-throughput system.
Sung Ji Nam — Scotiabank — Analyst
Nice. Thanks a lot.
Erik Holmlin — Chief Govt Officer
Thanks, Sung Ji.
Operator
Thanks. And one second for our subsequent query. Our subsequent query comes from the road of Jason McCarthy with Maxim Group. Your line is open.
Please go forward.
Michael Okunewitch — Maxim Group — Analyst
Hey, guys. Thanks for taking my query. That is Michael Okunewitch on the road for Jason. And I need to congratulate you on the incredible progress, not simply over this most up-to-date quarter, however actually over 2022 general.
Erik Holmlin — Chief Govt Officer
Thanks, Michael. That is nice. Adore it. Respect it.
Thanks.
Michael Okunewitch — Maxim Group — Analyst
Yeah. So, I truly needed to ask a follow-up query on the publications that you just simply launched lately from the postnatal research. There are two actual key takeaways. Clearly, you had the excessive technical efficiency and that is key.
However there was additionally a 30% to 40% enhance in diagnostic yields in a few of these knowledge units. So, may you discuss slightly bit about how the — how each payors and tips assign significance to demonstrating full concordance inside a simplified and streamlined workflow versus the will increase in diagnostic yield?
Erik Holmlin — Chief Govt Officer
Effectively, I feel that it is clearly the secret. That is what we’re aiming for. We imagine that we might be seeing these sorts of outcomes, and we went for it. Or I ought to say that Alka Chaubey, our chief medical officer, believed it so strongly that she left PerkinElmer to return right here and make these items occur.
And, , she’s been proper, proper heading in the right direction. And with regards to speaking about — pontificating, if you’ll, on how medical societies and payors and so forth will reply, after all, it is hypothesis. We do not know, however we now have historical past to take a look at. Karyotyping was as soon as the really helpful first-line technique of research in constitutional genetic testing.
And its general diagnostic yield was fairly poor, low single digits. And microarrays provided the identical form of concordance that we’re seeing with optical genome mapping relative to the usual of care however an incremental enchancment. And in case you have a look at the efficiency of microarrays, it is wherever between 10% and 20% or so diagnostic yield, on common, throughout all labs which are performing it. And so, after we are — , when microarray research have been carried out and this enhance in diagnostic yield was reported, we noticed the medical societies and payors come on board enthusiastically and make suggestions for microarrays to be thought of because the first-line check.
And that is how these tips are written on a worldwide foundation. And so, after we carry the extent of efficiency towards the usual of care, so now, we’re 100% concordant, to not karyotyping, however to the newly elevated customary set by microarrays and karyotyping mixed. And by the best way, in lots of circumstances, in constitutional genetic issues, it was — extra modalities have been used as nicely, FISH, Southern blot. And so, we examine it towards the entire kitchen sink that is obtainable immediately, 100% concordance.
After which, once you have a look at this incremental efficiency, it is actually excellent. So, we really feel just like the medical group would see this as an unimaginable development within the efficiency alone. However then, once you add, as you probably did, the truth that it is coming from a single assay, which shrinks the time to outcomes, which is extremely impactful for these households who’re ready to listen to the solutions, , we predict it is form of very clear the trail ahead on this case. The work stays, although, to proceed the research, to proceed the evaluation, to drive the publications, and to get this in entrance of those societies.
We have now slightly little bit of a head begin as a result of lots of the PIs on this research are concerned in these societies, and so, they’re actually conscious. However it’s unimaginable outcomes, and I feel it is only the start.
Michael Okunewitch — Maxim Group — Analyst
All proper. Sure, thanks a lot for that. I additionally needed to the touch on NxClinical 7.0. Now that that is out within the subject.
have you ever gotten any suggestions from the early adopters on that new software program resolution?
Erik Holmlin — Chief Govt Officer
We have now. They’re obsessed with it. And, , they love our present techniques, which is nice as a result of I feel, , our crew has labored for years in growing analytical platforms for OGM knowledge, and it is a brand-new knowledge kind. And everyone was excited to develop strategies for sequencing out on the earth academically, however we have been on our personal with OGM.
And Mark Oldakowski, the chief of product growth, chief working officer, assembled a crew, they usually constructed an extremely highly effective platform that is being utilized. However there are components of that platform that these KOLs and prospects had been asking for round reporting. They need to have a look at a report that tells them whether or not a variant was detected or not detected. They need that report back to be pushed by the medical tips.
This can be a important step of their workflow. They need to have the ability to instantly interpret the structural variation findings that they see, both by way of Entry or what we name VIA, that is NxClinical 7.0. We shortened that title to VIA, which stands for variant clever utility. So, they’re capable of visualize it both manner, Entry or VIA, however the interpretation is one thing that we have now constructed into and is medical for structural variations.
And we’re delivering these studies. These are extremely highly effective. Why are these studies necessary? As a result of, after all, they’re custom-made and validated in prospects’ palms. Keep in mind, this product is analysis use solely, so prospects have to pick out the panels that they need to have reported out.
However as soon as they choose that, they’re capable of put these extremely actionable studies within the palms of clinicians, and oncologists can interpret them instantly. So, it is extremely highly effective. And what they inform us is that they love this workflow and that it actually simplifies their life extremely as a result of, immediately, even with optical genome mapping and Entry that is an unimaginable energy, they’re having to take care of a number of completely different software program platforms. And so, this type of development is one thing that they have been ready for.
And I need to underscore, and it is the rationale that making software program a strategic driver of enterprise for us as one in every of our pillars, is that VIA shouldn’t be solely an answer for optical genome mapping nevertheless it integrates these different knowledge sorts. And once you have a look at the sequencing panorama on the market and also you see all of those firms which are introducing next-generation sequencing options, we now have talked to them and we’re obsessed with working with them. All of us see them bringing worth to the tip consumer. However what the tip consumer sees is that they want an answer that integrates this data all collectively for one-stop reporting, and our VIA supplies that.
So, we’re solely in the beginning of the facility of this software program. We imagine software program goes to be a strategic driver of our options and buyer adoption going ahead. So, we’re excited to roll out the complete industrial launch of the heme — hematologic malignancy utility within the first half of this yr and actually maintain that ball rolling on an ongoing foundation.
Michael Okunewitch — Maxim Group — Analyst
All proper. Thanks very a lot for taking my questions. I will hop again within the queue.
Erik Holmlin — Chief Govt Officer
Thanks, Michael.
Operator
Thanks. And one second for our subsequent query. And our subsequent query comes from the road of Francois Brisebois with Oppenheimer. Your line is open.
Please go forward.
Unknown speaker
Hello, that is Dan on for Franc. Congrats on the quarter and thanks for taking our questions. First, we simply need to begin with in case you may add some colour on the — how the combination of the Purigen Ionic system has been going. Have the event crew and commercialization crew all been utterly onboarded? And by way of the market, are you beginning to see renewed curiosity from these prospects who’re on the sidelines? And likewise, associated to that, how are you fascinated about the extra markets you may broaden into?
Erik Holmlin — Chief Govt Officer
Yeah. Thanks, Dan. Respect the feedback and nice questions. So, with regard to the acquisition, integration is, to a sure diploma, ongoing.
However this one was very easy. We had an excellent product which we now have built-in into our industrial groups in Europe and in the US, after which our channel companions or distribution companions world wide are being onboarded to promote the Ionic system. And we predict that, as a stand-alone enterprise, it has a number of nice potential. It is going to take a while to essentially determine how a lot of the market we are able to penetrate with it, however we all know it is excellent know-how and that the present customers love the system.
We predict we are able to multiply it. However that crew has been totally built-in beneath the gross sales management that we now have in place and advertising management that we now have in place. From a growth perspective, that crew is led by Klint Rose, who is without doubt one of the co-founders of Purigen Biosystems and, , actually one of many gurus of isotachophoresis. And what I can inform you is that Klint and his crew are tremendous fired as much as be a part of Bionano.
And if you wish to study one thing about isotachophoresis and its functions, I encourage everyone to take a look at the archived recording of our workshop on the Advances in Genome Biology and Expertise, or ABGT, assembly which was held February sixth. And Klint offers a superb discuss, and we’re actually happy to have him on board right here. And his crew, as a stand-alone pattern prep firm, was centered on growing options for the whole spectrum of samples that may have to be utilized in genome evaluation. And that is nice, that is thrilling, nevertheless it contains a number of issues which are robust to work on.
We have now actually taken them and mentioned, “Pay attention, let’s concentrate on human genome evaluation stuff that is extremely related for medical translational work. You have carried out an unimaginable job in formalin-fixed paraffin-embedded tissue, FFPE, up to now. Preserve doing that. However now, let’s begin to work on the optical genome mapping workflow.” Initially, they’re centered on blood, bone marrow, frozen tissue, and that basically enhances what’s presently obtainable out there in handbook workflows.
So, you need to automate that as shortly as potential utilizing isotachophoresis, which shall be a complement to what Hamilton has out within the subject. However then, we’ll broaden the menu, as you say, begin to enter new markets, taking a look at prenatal pattern prep; all types of pattern sorts which are very minute, comparable to punch biopsies; and pattern sorts which are quite common in genetic illness, together with buccal, or cheek swabs, the place the cells of curiosity are current in a really dilute focus. And so, isotachophoresis seems to be the proper resolution to creating these samples appropriate with optical genome mapping and provides us the chance to penetrate these new markets inside our, , form of addressable TAM general. And, , with regard to prospects sitting on the sidelines, I feel, , actually, clearly, these new markets would characterize a chance to carry new prospects in.
However the actuality of it’s that the diploma to which anyone’s ready to undertake optical genome mapping, they’re extra ready on us addressing their throughput wants in hematologic malignancies, which we have already got supported pattern prep options for and shall be integrating onto ITP going ahead and reimbursement. So, , ITP is vital to advance the workflow, after which usher in these new pattern sorts to broaden the workflow. However a number of the purchasers that have already got optical genome mapping will add isotachophoresis, and their quantity — their utilization volumes will develop versus prospects coming in from the sidelines.
Unknown speaker
Thanks for that. And simply, lastly, a fast one for me. You highlighted some COVID-related challenges at first of the yr. Are you now seeing manufacturing yield form of normalized to pre-pandemic ranges, or is it extra of a gradual return?
Erik Holmlin — Chief Govt Officer
It was a gradual return that unfolded over the course of the yr. And the precise manufacturing yield, which had mainly tanked within the fourth quarter of 2021, we have reached these ranges. Nonetheless, the impression of that lowered yield translated into the necessity to construct extra stock as a result of we simply wanted to get well extra chips, , from — , on account of the decrease yield. And so, the manufacturing of these chips got here at a better price.
And so, we’re burning by way of that stock. So, the yield — the manufacturing yield itself has been restored. We have started working arduous to maintain it there. There is no assure that it stays there, however we imagine it is stabilized for now.
However we have to work by way of the chips that have been constructed at a better price general. So, it will take a while now for the margin to get well.
Unknown speaker
Nice. Thanks for taking my questions. Congrats once more on the quarter.
Erik Holmlin — Chief Govt Officer
You are welcome, Dan.
Operator
Thanks. One second. And our final query comes from the road of Mark Massaro with BTIG. Your line is open.
Please go forward.
Mark Massaro — BTIG — Analyst
Hey, guys. Thanks for taking the questions. Congrats on a powerful yr and a pleasant Analyst Day and AGBT final month. I needed to start out off with the steering.
I noticed your Q1 income information of $7 million to $7.5 million. That is down 10% to fifteen% sequentially. Simply needed to make it possible for it is largely only a perform of seasonality. , lots of people could have exhausted budgets on the finish of This fall.
Do you assume that Q1 will mark the low level of the yr and that we are able to have, probably, an acceleration from the Q1 degree?
Chris Stewart — Chief Monetary Officer
That is actually sometimes what we see, , mixture of issues, simply getting a gradual begin with new budgets at first of the yr and, such as you mentioned, folks form of dashing to spend the remaining capital budgets on the finish of the prior yr. So, , we all the time see this type of — this degree of drop from This fall to Q1. After which, , not less than for the final three years, we have seen progress off of that Q1 quantity steadily all year long. And that is actually what we count on to see once more this yr.
Mark Massaro — BTIG — Analyst
OK, Glorious. I observed in your 10-Okay, I feel you broke out the software program income from the service and different line, and I feel you famous that software program income is predicted to even out. Ought to we count on, , flattish software program? After which, after I take into consideration the buckets, I feel you grew devices 46% in 2022, you grew consumables 16% in 2022. Is it probably that devices will proceed to outpace consumables in 2023? And perhaps are you able to give us a way for what kind of contribution you may get from companies.
And once more, I assume software program is flattish, however any extra colour there could be useful.
Chris Stewart — Chief Monetary Officer
Yeah. So, , software program, , flattish might be under-calling it slightly bit. We’ll see — , we’ll see modest progress. , the core financial engine of the corporate is OGM.
And so, that is the place we’ll see the majority of the expansion come from. However the software program and companies enterprise, each will — , are projected to be up from final yr. Effectively, with the expansion within the put in base, we must always count on to proceed to see progress within the consumables. And, , finally, the consumables will begin to exceed the instrument income.
, that is actually the objective and the expectation. So, we’ll see that consumable income develop as a share of whole income.
Mark Massaro — BTIG — Analyst
OK. That is useful.
Erik Holmlin — Chief Govt Officer
I feel one thing to remember — yeah, nicely, Mark, I used to be going to say one thing to remember is that, , the instrument revenues may be very lumpy. , the offers are typically fairly massive in measurement. And, , we had fairly important instrument purchases coming from sure geographical areas. And, , so, we’ll see that for a short while the place, , only a specific kind of adoption goes to form of skew the numbers slightly bit.
However Chris is true, which is that, , we’re seeing the consumables’ progress on a year-over-year foundation. From a unit perspective, the expansion of models is important. And so, , every little thing that we’re seeing is pointing towards substantial progress on the consumables line. And I need to thanks for asking the query concerning the $7 million to $7.5 million steering.
That’s, as Chris mentioned, however I need to underscore it for you and for everyone, that that is typical seasonality. I feel, , we have been 5 and alter within the first quarter of 2022. So, typical seasonality.
Mark Massaro — BTIG — Analyst
All proper, excellent. After which, I additionally needed to ask concerning the next-gen Saphyr. I feel, on the Analyst Day, you talked about a 13x enhance in throughput capability. If I’ve it proper, the Saphyr checklist worth is 150,000.
Given the truth that that is larger throughput, can we assume perhaps a better checklist worth? And I do not know in case you can present any specificity to that. After which because it pertains to the associated fee per pattern, I do know that NGS has been dropping. I feel you guys are at round 450 per pattern. Are you able to give us a way for the place you assume that may development on a greenback foundation exiting 2023 or 2024?
Erik Holmlin — Chief Govt Officer
So, , with regard to, , consumables pricing, I imply, in — over the course of the yr, , I feel that ASP — and what we have seen traditionally for the final, , handful of quarters, , 4 quarters, perhaps six quarters, is that we do not have a number of strain on worth. The 450 is definitely checklist worth in case you personal a system. Should you hire a system, it is slightly bit larger. However we do not see a number of strain there.
We all know that as we broaden geographically, if we need to get the enterprise, we’re in all probability going to need to cheaper price. And so. a number of our efforts round particularly on the next-gen aspect growth of consumables is to drive prices of growth — of manufacturing down in order that, , we now have extra flexibility round worth. I see perhaps some erosion of the 450 general this yr in 2023 however not a considerable quantity.
And, , it is wholesome to think about that happening over the following years due to the value elasticity that exists on the market. And we now have mentioned that we might count on to — that it is form of one in every of our targets, to have the opportunity, if we needed to, to supply our consumables in such a manner that if we ever needed to get right down to sub $200, we may do it and have good margins. So, — however that is going to occur over time, and that is going to be pushed by actually, actually substantial will increase in quantity. Now, turning to your query concerning the high-throughput Saphyr system, we’ve not set pricing for it but.
We actually assume that the worth is there. I need to emphasize one factor, and that’s that, sure, it is a 13-fold enhance in throughput general in comparison with Saphyr, however that goes stepwise. So, on a per-instrument foundation, it is proper round fourfold enhance in throughput. However we now have a scheme developed the place we are going to leverage one thing known as a piece cell, which is quite common within the business, and permits us to hyperlink collectively a number of techniques.
And so, that is the place we get that second section of throughput enhance that will get us to the 13x or so, perhaps even larger. And so, , that work cell shall be obtainable in 2024. Now, one thing that is a crucial lever that we’re taking a look at, with regard to the commercialization of this high-throughput system, is whether or not or not it will be obtainable within the reagent rental program. And I feel that it’ll in all probability be a extra demanding rental program than we now have put on the market for the Saphyr.
And so, I feel what may occur, on common, is that you’ll see extra purchases for the high-throughput system than you see for the Saphyr system. And so, that will have the impact of driving up revenues. , the prices of constructing that high-throughput system will allow us to have, , acceptable margins on the 150K degree.
Mark Massaro — BTIG — Analyst
Yep. Is sensible. My — thanks for all that. My final query is, are you able to broaden slightly bit on conversations you are having to acquire an LCD for OGM reimbursement? , is that with Palmetto MolDX or Meridian? And may you give us a way for timing and, , maybe what knowledge chances are you’ll have to submit?
Erik Holmlin — Chief Govt Officer
So, these discussions have been ongoing with Palmetto for a while, truly. We talked with them in — actually in early 2021 about laying the groundwork. And, , one thing that they have been in search of is to see adoption of optical genome mapping and validation of laboratory-developed checks by customers within the subject as a result of they do not need to work on one thing that solely the producer cares about. So, , I respect that.
And what we have seen now’s an incredible enhance within the variety of laboratory-developed checks and, importantly, of their jurisdiction, in Palmetto’s jurisdiction. And so, they’re beginning to see, , submissions for reimbursement of their areas. And so, , our technique is to be a facilitator out there and, , work with Palmetto the diploma to which we’re allowed as a producer researchers-only platform in reference to customers, but additionally with what is going on on at Bionano Laboratories, our personal CLIA lab. And we need to work with them and different MACs to ascertain native protection choices.
And we’re pursuing all of them in parallel, I feel you may say, in precept. There are some deserves to going after Palmetto initially. However I feel, , our view is that we have to be in conversations with all of them. And Palmetto and MolDX have fairly clear, , necessities for data that must be submitted round issues like medical utility, medical validity, analytical validity, issues like restrict of detection and different types of efficiency that set up that optical genome mapping workflow is powerful, it is dependable, and it may be operated on, , a lab-to-lab foundation.
And so, we have communicated with them. We have now that checklist, and we’re working towards it into growing a file that we’ll be submitting to them someday this yr.
Mark Massaro — BTIG — Analyst
Good. That is it for me. Thanks, guys.
Erik Holmlin — Chief Govt Officer
Thanks, Mark.
Operator
Thanks. And I want to flip the convention again over to Dr. Erik Holmlin for any additional remarks.
Erik Holmlin — Chief Govt Officer
Thanks, Michelle. And thanks to everybody for becoming a member of. Due to everybody who requested such extremely insightful and penetrating questions. We look ahead to updating you on our progress on the first-quarter 2023 name briefly order.
Thanks very a lot.
Operator
[Operator signoff]
Period: 0 minutes
Name individuals:
Amy Conrad — Investor Relations
Erik Holmlin — Chief Govt Officer
Chris Stewart — Chief Monetary Officer
Jeffrey Cohen — Ladenburg Thalmann and Firm — Analyst
Sung Ji Nam — Scotiabank — Analyst
Michael Okunewitch — Maxim Group — Analyst
Unknown speaker
Mark Massaro — BTIG — Analyst
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