BNGO - Bionano Stock Will Soar as the Company's Diagnostic System Catches On
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Bionano (NASDAQ:BNGO) stock has more going for it than many people may recognize. Among the most exciting is a financial incentive plan for its Saphyr genome mapping system.
Bionano is taking several steps that should convince payors to reimburse healthcare facilities for using Bionano’s Saphyr device.
I’m confident that such reimbursements will greatly improve Bionano’s financial results over the long term.
Much of the money that healthcare companies make comes from public and private insurers, i.e. Medicare, Medicaid, and private insurance companies. These payors, as they’re called within the sector, have access to enormous funds and use them to pay for medical procedures, medical devices and drugs.
By enabling people with diseases to be cured much more quickly and with less expense, Saphyr saves payors a great deal of money. I’m confident that many tests carried out by Saphyr will be reimbursed by payors sooner rather than later.
A Closer Look at BNGO Stock
A key step to convincing payors to reimburse labs for Saphyr’s tests is creating Laboratory Developed Tests, or LDTs, an alternative (or complement) to FDA-approved tests used in labs, according to Bionano CEO Erik Holmlin.
Another step is applying for and receiving proprietary analysis, or PLA codes, which distinguish tests from one another for both use and billing purposes.
Two American entities whose labs have bought Saphyr, Augusta University and Praxis Genomics, already have PLA codes.
Holmlin also said that there has been significant progress toward reimbursement in a number of European countries, including Belgium, Germany and Spain.
Facilitating Reimbursement Is Key
On its own, Bionano has begun working on developing LDTs, and it is establishing a lab accredited by the U.S. government in which it can carry out tests that will be accepted by Medicare, Medicaid and other payors. Bionano plans to use the test results to convince payors to reimburse labs for certain tests that are conducted using Saphyr.
Moreover, Bionano is sponsoring clinical trials that will yield data that shows the high value of Optical Genome Mapping (OGM).
In fact, according to Bionano Chief Medical Officer Alka Chaubey, the company is overseeing trials in four major fields: pre- and postnatal genetic analysis, hematological malignancies, including leukemias and lymphomas, and solid tumor analysis.
Finally, the more labs that use Saphyr, the higher the odds of payors reimbursing labs for its tests, Holmlin said.
So the fact that Bionano sold 13 Saphyr systems last quarter, up from six during the same period a year earlier, also bodes well for reimbursements of tests that use Saphyr.
Holmlin said that Bionano should be able to see results clearly from its trials within a year.
Saphyr’s tests should save payors a great deal of money. By diagnosing illnesses much more quickly than the standard of care in many cases, Saphyr prevents a lot of unnecessary tests, hospitalization days and ineffective, unnecessary treatment, all of which are very costly. Saphyr also is relatively inexpensive, costing $550 per genome.
Payors in general and private health insurance companies, in particular, do, of course, care both about saving money and saving lives.
By affordably providing diagnoses of disease earlier than the standard of care devices, Bionano accomplishes both goals.
The Bottom Line on BNGO Stock
Although Bionano is growing quickly, it is not yet making “big money.” Once payors start reimbursing hospital labs for Saphyr’s tests, the labs will be willing to pay Bionano much more for the devices and tests, and many more labs will be eager to adopt the system.
Of course, those dynamics will meaningfully raise Bionano’s top and bottom lines, significantly lifting BNGO stock, which still has a reasonable market of capitalization of $1.66 billion. Therefore, I advise patient investors to buy the shares at this point.
On the date of publication, Larry Ramer held a long position in Bionano.
Larry has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.
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