Is BioNano Genomics Stock A Buy?

BionNano Genomics Inc (NASDAQ:BNGO) is a rare company researching the genetic makeup of autism.

Autism spectrum disorder (ASD) is a developmental disability affecting approximately one in 54 children. It only gained recognition in recent decades, and researching the genome of people with ASD contributes to better understanding.

You may buy its premise, but is Bionano Genomics stock a Buy?

The basis of the company’s IP is a platform called Saphyr, which competes with proprietary clinical DNA analysis platforms used by companies like Ancestry or 23andMe. If it works, it could be a medical breakthrough in clinical diagnosis.

Of course, that’s may all be just a pipe dream in 2021, even with the company opening the year with a published study that skyrocketed it to a $1 billion market capitalization.

The study involves autism spokesperson Professor Temple Grandin’s DNA and expects to revolutionize the way ASD is diagnosed and treated.

Can Bionano Denomics live up to its promise or will investors instead find themselves afflicted with sensory overload?

Bionano Genomics:Optical Genome Mapping Platform

The steak and potatoes of the company’s business model revolves around its optical genome mapping platform, Saphyr. It launched in 2017 and is busily mapping almost 5,000 human genomes each year.

Our genomes contain 3.2 billion base DNA sequencing pairs, and the Human Genome Project hopes to map all our chromosomes to fully understand what we’re made of. The implications are exponential and could lead to multiple advancements that give us longevity in our lives.

Genome mapping software used by other companies focuses directly on specific genomes meant to trace ancestry or determine genetic risk for specific health conditions, like diabetes or Alzheimer’s.

Bionano Genomics is participating in the Human Genome Project, but it has a different focus than companies like 23andMe or Ancestry. The company targets neurodevelopmental disabilities like ASD through its Lineagen system while the Saphyr platform continuously generates new genome data.

The services are offered to both families and clinicians, but it’s only approved by the Food and Drug Administration for research only. That means it has a long road toward marketing its services, and it could pivot the business model several times on the way there.

This uncertainty leaves some analysts wondering if Bionano Genomics stock is worth buying.

Is Bionano Genomics Stock A Buy?

Bionano Genomics has a market capitalization over $1 billion at the start of 2021. Its shares went on a hot streak starting on Christmas Eve 2020 after it published research showing Dr. Gradin’s genome.

The rate of autism detection in the U.S. jumped from one in 150 in 2000 to one in 54 by 2016, according to data from the Centers for Disease Control (CDC). That equates to approximately 6.13 million Americans who are afflicted with the neurological disorder. It doesn’t count how many people are tested but found not to have it.

Psychological testing is difficult in a clinical setting because much of it relies on patient self-reporting. Even an EKG brain scan can only tell doctors so much. This opens a lane for Bionano Genomics, but it’s not generating a lot of cash yet.

The company’s total revenue for the first nine months of 2020 was $4.5 million, versus $7.3 million in the same period of 2019.

It holds $18.0 million in cash and cash equivalents that will give it a runway of several years, and it’s pushing on despite the regulatory hurdles ahead. Still, there’s plenty of reason to be wary of investing in this company.

Buying Bionano Genomics Stock Is A Gambit

Although it trades on the NASDAQ, Bionano is effectively a penny stock, with share prices trading at $0.25-$0.50 for most of 2020. It wasn’t until the final week of the year that share prices climbed over 1,000 percent to start 2021 over $7.00 per share.

This stock will be highly volatile, and investors can make or lose a fortune investing in it during the turbulent first quarter of 2021.

Also, mapping Temple Gradin’s genome is an accomplishment, but it doesn’t necessarily lead to a breakthrough in autism research. More clinical research needs to be conducted to determine similarities between her genome and others with known ASD.

There’s no guarantee the ASD community will rally behind it either. Like people with other medical conditions, sharing an ailment doesn’t mean sharing an opinion. Many already struggle to get diagnosed with neurological conditions, and the stigma of mental health could keep people from signing up for clinical trials.

And the company has competitors.

Can Bionano Genomics Competitors Win?

There are other companies involved in the Human Genome Project, and each uses its own proprietary platforms.

The contents of our DNA data could one day prove as valuable as the data we feed Facebook and Google.

In fact, Google is already reaching into our biometrics and fitness data. The Fitbit purchase shows it knows how valuable it believes our health and DNA information could be.

But Bionano isn’t a one-trick pony – on top of neurological disorders, it’s also looking for genetic links to cancer and other human health conditions. It could be a long road, but if COVID-19 taught us anything, it only takes one hit cure to make a company valuable to investors.

Is Bionano Genomics Stock A Buy? The Bottom Line

Bionano Gemonics is a genetic disease research company focusing on all the medical problems we haven’t solved. Healthcare is a growing concern to an aging population, and understanding our DNA could be the key to living longer, healthier lives.

The company’s market capitalization started 2021 on a hot streak, thanks to publication of research involving a famous autistic spokesperson. But it still has a long way to go to prove its efficacy in a clinical setting. And there’s a lot of competition in the way.

Proceed with caution.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.