Good day, and welcome to the Bionano First Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to David Holmes from Investor Relations. Please go ahead.

Thank you, Lisa, and good afternoon, everyone. Welcome to Bionano's first quarter 2025 financial results conference call. Leading the call today is Dr. Eric Holmlin, CEO and Principal Financial Officer of Bionano, and he is joined by Mark Adamchak, Bionano's Vice President of Accounting and Principal Accounting Officer. After market closed today, Bionano issued a press release accounting for its financial results for the first quarter 2025. A copy of the release can be found on the Investor Relations page of the company's website. Certain statements made during this conference call may be forward-looking statements, including statements about Bionano's revenue outlook, profitability, cash runway, cost savings initiatives, and commercialization and product plans. Such statements are based on current expectations, and there can be no assurances that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to several factors and risks, some of which are identified in Bionano's press release and Bionano's reports filed with the SEC. These forward-looking statements are based on information available to Bionano today, May 14, 2025, and the company assumes no obligation to update statements as circumstances change. In addition, to supplement Bionano's financial results in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, the company reports certain non-GAAP financial measures. A description of these non-GAAP financial measures as well as a reconciliation to the nearest GAAP financial measures are included at the end of the company's earnings release issued earlier today, which has been posted on the Investor Relations page of the company's website. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures but should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP, have no standardized meaning prescribed by GAAP, and are not prepared under any comprehensive set of accounting rules or principles. An audio recording and webcast replay for today's conference call will also be available online on the company's Investor Relations page. With that, I will turn the call over to Eric.

Thank you, David, and good afternoon, everyone. I'm pleased to provide you all with an update on this first quarter of 2025. I'd like to start off by reiterating the strategic shift we implemented in September of 2024, going away from heavy spending on customer acquisition associated with new instrument placements and toward a focus concentrated on those customers who use our OGM products and via software routinely in cytogenomics. We still expect to see growth in the installed base, but our investments in capital sales and new installations have been scaled back to focus on users with the potential to be routine users of our products. We believe this group of users is the one who will drive most of our profit and growth while we await improvements in the equity capital markets and clarity in the global trade situation. This strategy has four pillars: support and sustain the installed base of routine OGM and via software users, drive utilization through the adoption of via software across OGM users, facilitate menu expansion, build support needed for OGM reimbursement and inclusion in medical society recommendations and guidelines, and improve profitability and scalability with lower costs, higher volumes, and improvements in gross profit. Let me now turn to the results for Q1 2025. We believe these results in Q1 reflect excellent progress. Total revenue for the first quarter of 2025 was $6.5 million, which is a decrease of 26% compared to the first quarter of 2024. Q1 2024 revenues included $1.4 million from discontinued clinical services compared to no revenue from such clinical services in Q1 2025. We sold 6,994 flowcells in the first quarter of 2025. Now keep in mind, the flowcell is the unit consumable that applies to a single genome to be analyzed across all of our platforms. This quantity reflects a 15% decrease compared to the same period last year. However, if we exclude flowcells that were sold to new customers in each period, the Q1 2025 flowcells sold were up 1% compared to the period a year before. And I will drill down into those numbers a little bit more later in the call. Now GAAP gross margin for the first quarter of 2025 was 46%, which was significantly higher than the 32% GAAP gross margin reported for the first quarter of 2024. Non-GAAP gross margin for the first quarter of 2025 was also 46% and can be compared to 34% for the first quarter of 2024. First quarter 2025 GAAP operating expense was $11.4 million compared to $33.9 million in the first quarter of 2024. The year-over-year decrease was primarily driven by cost savings initiatives across the whole company. First quarter 2025 non-GAAP operating expense was $8.5 million, which can be compared to $24.4 million in the prior year. The installed base of OGM systems grew to 379, which is a 9% year-over-year increase and a net increase of eight systems versus December 31, 2024 after nine new installations in the quarter. Cash, cash equivalents, and available for sale securities as of March 31, 2025 were $29.2 million, of which $11 million was subject to certain restrictions. We completed a $10 million registered direct offering in January of 2025 and raised net proceeds of $3.2 million through ATM sales in the first quarter of 2025, and quarter-to-date Q2 net ATM proceeds were $1.3 million. We believe our cash runway extends into the first quarter of 2026. This first quarter of 2025 is the first full quarter of execution with our new cost structure, and we believe the year-over-year comparisons should be useful in determining whether our hypothesis is accurate. The hypothesis is that there is a committed group of routine users who use our consumables and software at higher rates than average across all of our customers and, therefore, a focus on their success, as a critical mass group of users can help us as we seek to drive toward profitable growth. When we look at just two metrics, revenues and the number of flowcells sold, we can see support for this hypothesis. First for revenue, the $8.8 million in revenues in the first quarter of 2024 included $1.4 million in revenues from discontinued clinical services, and it also included $1.6 million of instrument sales revenues. The revenues from OGM and software sales to customers that were in place as of December 31, 2023, was $5.8 million. Conducting the same analysis for the $6.5 million in Q1 2025 revenues, which had none of the discontinued clinical services but did have $700,000 in instrument sales, we see that the installed base of customers generated the same $5.8 million in revenues in Q1 2025. When we look then at flowcells sold, we can make a year-over-year comparison by removing the flowcells sold to any new customers in the first quarter of 2024 and the same thing in Q1 2025. Now doing so reveals that flowcells sold to this existing customer group increased on an apples-to-apples basis by 1%. So flat revenues and a 1% volume increase in sales of consumables are not necessarily our long-term objective for these super users, but we do expect them to increase volume and utilization going forward. And we want to keep in mind that Bionano, during this period of 2024, was undergoing rather disruptive organizational change, which was a challenge for us inside the company but also a challenge for our customers as they sought to find the right cadence for working with us. We view stability on a year-over-year basis as a great outcome, and we feel it reflects the fact that we have gotten through much of the heavy disruption associated with this strategic shift, and we are now ready to support customers who want to run more OGM and via software. Now among the strategic pillars, we have a focus on supporting the routine use customers through training and menu expansion as well as helping build the support needed for reimbursement. The best tools for these activities are generated by our customers themselves, and those tools are publications. The first quarter of 2025 had 95 publications, second only to the 99 publications in the first quarter of 2024, but reflecting a strong start to 2025. In 2025, this first quarter of 2025, we also had 978 clinical research genomes published, bringing the total to over 9,100, which is remarkable progress considering that there were only 500 published clinical research genomes as of 12/31/2020. All the publications that appeared this quarter were outstanding, but four of them stood out in particular. A large international group of experts from what is called the International Consortium of OGM published the first recommendations for integration of OGM into the standard of care in hematologic malignancies, both as a first-line analysis in some hematologic malignancy subtypes and as an alternative to karyotyping FISH and chromosomal microarray analysis in others. Second, a leading team in France at the CHU Lille published their method for the analysis of multiple myeloma, a commonly difficult subtype to analyze by traditional methods. The innovation they published allows for the sample input requirement for multiple myeloma to be reduced by a factor of two, which we believe can open the door for other users to expand their menu of OGM research applications to now readily include multiple myeloma. Third, an OGM routine user in the Netherlands, Radboud University Medical Center, published a study showing OGM's performance for analysis of repetitive segments of the genome for use with repeat expansion disorder research, which is a large body of study and potential in constitutional genetic diseases. And then lastly, very recently, the University of Texas MD Anderson Cancer Center published the largest OGM study, 519 hematologic malignancy cases, in which they evaluated the clinical utility of optical genome mapping, showing that in 15% of these cases, optical genome mapping detected critically important tier 1 variants that were missed by standard cytogenomics. Now these tier 1 variants are those with direct diagnostic, prognostic, and therapeutic significance. Overall, in 58% of the cases, OGM detected at least one tier 1, tier 2, or tier 3 variant that were not picked up by the standard cytogenetic methods, meaning that optical genome mapping has the potential to add tremendously to cytogenetic analysis of hematologic malignancy research. Finally, for the quarter, reducing cash burn by lowering expenses and increasing gross margin remains a cornerstone of our strategic shift. Operating expense on a GAAP basis is down 66% year-over-year and down 65% on a non-GAAP basis year-over-year. This is driven by a variety of cost reduction initiatives across the whole company, including a rather substantial impact on headcount. Perhaps the most striking among these cash burn initiatives is the improvement that we are seeing in gross margin, which was 46% for both GAAP and non-GAAP in the first quarter of 2025 versus 32% on a GAAP basis and 34% on a non-GAAP basis in the first quarter of 2024. This margin expansion has been the result of significant work internally to reduce costs but also in working with suppliers to reduce input costs and improve yields. This has been going on for at least the previous nine quarters now. To wrap up, I would like to provide our outlook on the second quarter and the remainder of 2025. With our strategic pillars as the underpinning of our streamlined business focus, we expect full year revenues to be in the range of $26 million to $30 million, which is an update compared to our previous views on March 31 during our Q4 2024 call. This simply reflects the turbulence we have seen this quarter related to global trade and uncertainty there. Q2 revenues are expected to be in the range of $6.3 million to $6.8 million. With nine new OGM system installations in the first quarter, we are reiterating our expectation to install 15 to 20 new OGM systems over the course of the full year 2025, and we expect those to be primarily at routine use sites. With that, operator, please go ahead and open the line for questions.

Thank you. And the first question will be coming from the line of Sung Ji Nam of Scotiabank. Your line is open.

Hi. Thanks for taking the questions. Maybe starting out with the MD Anderson study that was published, that is really exciting to see that. I was wondering, is MD Anderson a big customer currently? If not, could this be an impetus for that institution to broadly adopt OGM going forward?

Well, they are an existing user, and I think it's a really good story of how these sites progress over time. We've been working with them for quite some time, but they started out using the product in some basic research studies and began to see the value in OGM, published a really groundbreaking paper in August of 2022. We're just verifying there. In August of 2022, which showed that OGM compared to the standard of care would give really outstanding prognostic scores and showed that the standard of care was wrong in something like 17% or 21% of cases. That was such an exciting paper and got so much attention at MD Anderson that the cytogenetics group that provides services for the oncologists there began getting interested in OGM, and they have developed a validated workflow that they offer to oncologists there. What we're told anecdotally is that in oncology, every new leukemia case at MD Anderson Cancer Center is mapped, and that oncologists at MD Anderson Cancer Center are reluctant to manage their patients without the OGM results. It's that impactful there. So, their publication is amazing, and I think it shows the progress that they've made. Some of the authors on those papers are influential and involved with groups like NCCN, and we believe that those kinds of data can be key to inclusion of OGM into medical society guidelines, and it provides an example for labs all around the country and indeed the world on how to use OGM. We believe we don't need to go through that basic research study now, but folks can just adopt and validate these workflows that MD Anderson already has running.

Got you. That's super helpful. And then just in terms of your gross margin, it's also great to see continuous improvement there. So, is the mid-40% range sustainable for the remainder of the year? Or could you also see some potential further upside to those numbers?

I think we'll probably hang out in this general vicinity for the remainder of the year. Overall, we do expect it to continue to rise, but it'll take some time for the cost structure to have another significant shift before that happens. We believe what we're seeing now is stable.

Got it. And then lastly, you mentioned the global trade situation currently. Would you be able to provide a bit more color about your manufacturing footprint exposure or supply chain? Are there countermeasures that you're implementing going forward, or is it manageable given your focused commercial strategy currently?

Yeah. A couple of things to comment on there. Based on the inventory that we have in place from a cost structure to the inputs of our products, we have somewhat limited exposure for a while. We will need to begin sourcing some new materials in the future. A relatively small portion of them comes from outside the United States. We've got to be mindful of it. Some items that we do buy and need to continuously replenish do come from places outside the United States. But it seems like a manageable situation for now. We're not overly concerned about input costs being impacted. It's something that we need to pay attention to. The issue we have to deal with is that nearly half of our revenues are coming from outside the United States, so there's uncertainty that customers in those jurisdictions face with the import tariffs that they may have to experience. I really do believe we have seen some deals slow down a little bit as a result of needing to pay attention to what's going on. We added some conservatism into our full-year guide to account for that. Regarding managing the impacts of tariffs, our input suppliers are working to reconfigure where things are made and produced to optimize that situation. So, it's under control, but it's something that we need to pay attention to and could have a negative impact down the road.

Sounds great. Thank you so much for taking the question.

Thank you. One moment for the next question. The next question will come from the line of Mark Massaro of BTIG. Your line is open.

Hey, guys. This is Vivian on for Mark. Thanks for taking the question. I believe you've had the Category 1 CPT code in hand for about five months now. I think this was intended to incentivize customers to get reimbursed for running applications. Just wondering how you've seen this play out as a tailwind thus far. Thanks.

Thank you, Vivian. So, a couple of things just to make sure that we vocalize the situation around the Category 1 CPT code accurately. That was something that an OGM customer petitioned the AMA for, and through that process, the AMA established the code. This process includes a pretty rigorous and deep interaction through the applicant but with the field in representing current utilization, characteristics, and future plans. The AMA establishing that CPT code indicates that optical genome mapping and hematologic malignancies is something that is well established and part of the routine. What we can say anecdotally is that one of the number one questions that is asked when somebody is evaluating optical genome mapping is whether there is a CPT code for it. It's obviously something that prospective customers have in mind. So, we're able to cite the fact that the AMA has established this code. We believe that it is something that reduces barriers to adoption.

Okay. Perfect. And then I know last quarter, you've disclosed some metrics around your routine user customer group, that are driving the majority of consumables purchasing and how you're expecting that revenue per customer to increase. Just how are you seeing either of those two metrics trend here?

Yes. They're stable. I think we talked about an estimate of 118 customers as of the end of the year falling into that group, and that number is pretty stable. It has gone up a little bit. We have had some new installations going into these labs. It's a little bit of a subjective classification we make, which is why I'm saying relatively stable and gone up a little bit and not citing specific numbers. We need to pay attention to how that categorization and metric evolves over time. When we look at the year-over-year purchases of flowcells among our stable group, it's these routine users that are purchasing more than 80% of the total number of flowcells sold. I feel like it's consistent with our expectations. If you dig a little deeper, you'll find that the utilization rate is about double the average. We continue to see that pattern. The question is, can we drive those numbers up in terms of the average utilization per purchaser? I think that will take a little time as our strategy is implemented, but we're starting out well.

Okay. Got it. And if I could just squeeze in one more. Your guide for instrument placements is understandably conservative. It just seems like you aren't seeing much attrition in your existing installed base, which I might have expected given the focus on higher utilization customers. Can you just talk about your assumptions for instrument placements for the rest of the year?

Yeah. I think it's based on a plan that we have of doing five or so new installs per quarter, which gets you to the 15 to 20. We did nine new installs here in the first quarter. Some of that is carryover from the fourth quarter, so a bit of momentum going into the year. If we stay around this five level, that will be a good outcome. Those are the assumptions driving that. We are seeing some attrition in the installed base as we start to move away from basic research; some labs that have been on short-term contracts are saying, okay, well, if you're not supporting these applications, we'll wait until you support those applications. We are seeing some systems coming back, and it's not alarming to us. We're not seeing it across our group of routine users. So, there will be attrition, but we don't expect that attrition to have a meaningful negative effect on consumables purchases.

Perfect. Thanks so much for taking the questions.

Thank you. Our next question will come from Jason McCarthy of Maxim Group. Your line is open.

Hi. This is Joanne Lee on the call for Jason McCarthy. Thanks for taking our question. Just one from us. Could you talk a little bit about what steps you're taking to increase Saphyr utilization among existing routine users? Thank you.

Yeah. It's a handful of interactions, but I would really say three things. Number one is working with those customers, especially those doing hematologic malignancy research, to adopt our VIA software and become proficient in it. The reason we have this focus is that VIA software is armed with all sorts of artificial intelligence and other automated steps for reporting and annotation of samples. This combination of AI and automation really speeds up the process of analyzing and reporting a sample. In our view, it increases the capacity of each system of each lab using optical genome mapping, whether it's the Saphyr system or the STRATA system. So adoption of VIA, not just adoption though; we need to work with them to become proficient, which will increase their capacity and at least create the potential for them to utilize more. In addition to this VIA adoption and proficiency, we are eager to support labs in expanding their menus. So they may adopt for one particular indication in hematologic malignancies, like acute myeloid leukemia or AML. Great. They adopt for AML, which is what their principal use case is. But there's been this publication around multiple myeloma. It's clear they can adopt for other indications. We believe overall that labs doing hematologic malignancy research have a lot more samples to run on the system. It's about giving them the use cases to do that, expanding their menu. Third is just overall proficiency with the workflow. Optical genome mapping is a unique workflow. One reason it is so complementary to next-generation sequencing, just as an example, is that it's completely different. The DNA isolation step is unique; it uses different chemistry, different workflow, different steps, and enables access to completely different information, making it incredibly useful. Our team, which is the largest organization in the company, is dedicated to supporting these customers and making them as proficient as they can be in the workflow. So, software proficiency to increase capacity, support around menu expansion, and overall proficiency with the workflow to make sure they can process the samples in their lab. Those are the things we believe will drive the expansion and utilization on a per-customer basis.

Got it. Appreciate all the insight. Thanks so much.

Thank you. And there are no more questions in the queue. I would like to turn the call over to Eric for closing remarks. Please go ahead.

Okay. Well, thank you, Lisa. Thank you, everybody, for joining, and we look forward to updating you on our second quarter 2025 results in a few weeks. Thank you very much.

Thank you for participating in today's conference call. You may now disconnect.