BNGO - Bionano Genomics Has Disappointed but Its NHS Deal May Turn Things Around
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I’ll go ahead and admit it now: my timing was less than ideal when I issued a bullish call on Bionano Genomics (NASDAQ:BNGO) stock on Feb. 22.
Since that day, unfortunately, BNGO stock has fallen like a rock.
Now, it’s time to pick up the pieces of my tattered, shattered reputation and re-assess Bionano in late April. Is this little biotech upstart still worth investing in?
It’s undeniable that the fate of BNGO stock rides on the success or failure of Bionano’s flagship product, the Saphyr system.
Recent developments, however, might suggest that it’s still too soon to give up hope, even if your stock position is deep in the red.
A Closer Look at BNGO Stock
When it comes to BNGO stock, one of the major battle lines between the bulls and the bears will be the $5 level.
That’s because the U.S. Securities and Exchange Commission (SEC) classified a stock that trades under $5 per share as a penny stock.
There’s nothing wrong with being a penny stock, but $5 might serve as a line of demarcation that the bulls would prefer not to cross, if possible.
Interestingly, BNGO stock came down to almost exactly $5 on April 19. It will open today at something much closer to $6.
That’s a small victory, for sure, but the stock is still far below its 52-week high of $15.69.
I should also mention that Bionano has trailing 12-month earnings per share of -39 cents. That’s not terrible for a $6 stock. Nonetheless, the bulls will definitely want to see that number turn positive in 2021.
Precise and Promising
As I alluded to earlier, Bionano’s primary product is the Saphyr system. This is medical tech platform which the company describes as “a genome imaging tool for high-speed, high-throughput structural variant detection and analysis with exceptional sensitivity and specificity.”
One thing that I really like about the Saphyr system is its wide range of medical applications.
These include gene discovery and therapy, solid tumor research, undiagnosed genetic disorders, reference gene assembly, hematologic malignancies and more.
Plus, the Saphyr system is quite precise. In fact, it “reveals structural variants (>500 bp), at sensitivities as high as 99%, with false positive rates below 2%.”
The Saphyr system was combined with optical genome mapping in a recent study focused on DNA replication as a fundamental process of cancer cell growth. The results were promising.
According to a company release, the Saphyr method can determine the timing, speed and origin of DNA replication in human cells thousands of times higher than earlier methods allowed.
A Notable Client
Clearly, the Saphyr system has the potential to be a game-changer in DNA science.
Still, judging by the price action of BNGO stock, it seems that the market isn’t too impressed with Bionano’s flagship product.
Perhaps a development reported by InvestorPlace contributor Larry Ramer might help to rally the troops.
This news item concerns a deal with the United Kingdom’s national single-payer health insurer, the National Health System (NHS).
Under the deal, two laboratories belonging to the National Health System will use the Saphyr system through a rental agreement. Those two labs are King’s College Hospital in London and the NHS Regional Genetics Laboratory in Belfast City Hospital.
Not only will the NHS rent the Saphyr system, but the insurer has also agreed to purchase multiple products from Bionano that support the system.
Suffice it to say that the NHS is a significant client, and this is a breakthrough deal for Bionano.
The Bottom Line
Undoubtedly, some BNGO stockholders are down on their positions. That’s a tough position to be in.
Yet, I wouldn’t recommend dumping your shares now. Bionano’s DNA technology is still cutting-edge.
And with a substantial deal recently signed, the fiscal picture should be much brighter now.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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