Good day, ladies and gentlemen, welcome to the Bionano Genomics, Third Quarter 2018 Earnings Conference. Today's program is being recorded. At this time, I would like to hand things over to Mr. Ashley Robinson. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Welcome to the Bionano Genomics, third quarter, 2018 earnings conference call. Leading the call today will be Dr. Erik Holmlin, CEO of Bionano, and Mike Ward, Bionano's, Chief Financial Officer. After market closed today, Bionano issued a press release announcing its financial results for the third quarter 2018. A copy of the release can be found on the Investor Relations page of the Company's website. Before we begin, I would like to remind everyone that certain statements made during this conference call may contain forward-looking statements. Such forward-looking statements are based upon 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 a number of factors and risks, some of which are identified in our press release and our other reports filed with the SEC. These forward-looking statements are based on information available to Bionano today, and the Company assumes no obligation to update statements as circumstances change. An audio recording and webcast replay for today's conference call will also be available online in the Investor Section of the Company's website. For the benefit of those who may be listening to the replay or archive website, this call is held and recorded on November 7, 2018. With that, I'll turn the call over to Erik Holmlin. Erik?

Thank you, Ashley, and good afternoon, everyone. I am very pleased to have the opportunity to update you today on our progress and accomplishments on this, our very first earnings call as a public company. Joining me on the call today is our Chief Financial Officer, Mike Ward, who will review our quarter and year-to-date 2018 financials. And after our prepared remarks, we will open the call for a question-and-answer session. This quarter has been very active as has been the past year quite frankly. We completed our IPO in August of this year, raising $23.7 million in gross proceeds before underwriting discounts and commissions and other offering expenses. With over $20 million in cash at the end of the third quarter, we are sufficiently capitalized to pursue our markets with an aggressive global commercialization strategy, coupled with product development initiatives designed to expand the utility and the use of use of our Saphyr system all to grow our business. In this quarter and for all of 2018 to date, we have seen widespread adoption of the Saphyr platform in all categories of the markets we are targeting. The Saphyr system is unique because of its ability to see the structural variations that sequencing misses. As a compliment to sequencing, Saphyr adoption is increasing in key segments such as pharma, where they're purchased by one of the world's leading pharmaceutical companies Novartis. In government, we have continued to progress with a purchase by USDA to build high-quality genomes for important crops and livestocks. Genomics pioneer, the Wellcome Trust Sanger Center in the UK has adopted Saphyr system this quarter. And we sold Saphyr’s to children's, hospital’s studying genetic diseases and to pediatric cancer departments and many other clinical and translational research centers. We couldn't be happier with how Saphyr has…

Thank you, Erik, and good afternoon, everyone. I will now briefly review some of the highlights from our three and nine-month financials. During the third quarter, Bionano recorded total revenue of $2.8 million compared to $2.7 million in the third quarter of last year, an increase of 3%. Total revenue for the nine-month period was $8 million compared to $6.7 million for the same period last year, an increase of 20%. Product revenue for the quarter was $2.7 million, compared to $2.6 million for the same period last year, an increase of 4%. Year-to-date product revenue was $7.6 million, compared to $6.2 million for the same period last year, an increase of 23%. It is important to note that cost of revenue was meaningfully higher due to a charge of $1.3 million this quarter reflecting the write-off of inventory of Irys, our prior-generation instrument. None of this inventory write-off was related to Saphyr, the only instrument that we sell today. For this foreseeable future, we do not expect to have a need to write-off any additional instruments as this $1.3 million write-off depletes our inventory of Irys instruments from an accounting standpoint. Operating expenses during the quarter were $5.7 million, compared to $6.1 million for the same period last year, a decrease of 6%. Year-to-date, they were $16.6 million compared to $20.1 million for the same period last year, a decrease of 18%. The decrease in operating expense, as our revenue continues to grow is a reflection of the success of our cost savings initiatives began late last year. While we have been able to keep our operating expenses lower than last year, we expect operating expenses to grow going forward, especially as we further expand our global commercialization presence. Finally, as of September 30, our cash balance was $20.7 million inclusive of proceeds from the IPO, which includes the exercise of the underwriters’ full over-allotment option in August. Thank you. And I will now turn it back over to Erik before going into our Q&A.

Thanks Mike. Our long-term trends remain unchanged and we are optimistic as we look ahead. Some of the things you can expect from us going forward include a continued focus on expanding and executing the commercial plan, continued system improvements to further solidify the technology as industry-leading and continued execution on our strategy overall. With that, I will open up the call for Q&A. Operator?

Thank you. [Operator Instructions] We will go to David Solomon, ROTH Capital Partners.

Hey guys. Congrats on the progress and thanks for taking my questions.

Hi David.

Hi. So first I'd like to start with just a little bit more color on the quarter. I'm not looking for specific numbers on instruments versus consumables, but can we just get a little bit of color on how things are going maybe sequentially compared to your expectations on either the assistant sales and consumables? And then secondly, it sounds like you guys are making a lot of progress in the cytogenetics industry and beginning to penetrate that, and it sounds like it could be even faster than your expectation. Can you give a little bit of color on where you see that potentially going near-term?

Sure. Regarding the first question, that's correct. We have not – as a matter of practice broken out, the different components of revenue. But what I can tell you is that consumable sales continue to be strong there, the primary long-term profit driver for the company. They are growing at a rate that's faster than instrument sales, which is what we would expect. And overall, the demand for the system and consumables is very strong. We are very pleased with the quarter as it's – the first quarter kicking off the second half of the year, which is always the strong is period for us over the course of the entire fiscal year. So we feel good about the momentum that we've established in this third quarter as we're entering into the fourth quarter.

Excellent. I apologize about the background noise in the airport.

No worries. You're a hardworking man. With regard to the progress in cyto, I can make a couple of comments here because we were quite active at the Society of Human Genetics meeting, which was held here in San Diego last month and a lot of that activity was centered around the introduction of new simplified capabilities as I summarized in my prepared remarks, and the need for those capabilities has been cited and now applauded by the cytogenetics community. Because they are seeking to really consolidate a number of existing workflows onto a single platform and our Saphyr system appears to offer them exactly that opportunity. And so we really couldn't be happier about where we're going now. You asked me if that's faster than I expected it to go. And what I would say is that we are very comfortable with the pace and we think that that penetration of that market in that segment will continue and be a driver of future growth for us.

Excellent. And then just following up on the ASHG data, it seems like there were a number of posters that were presented with meaningful data demonstrating the value of optical mapping. And I'm aware that there's been obviously growth in the number of publications that have been published in peer-reviewed studies, I'm wondering also how that's progressing compared to your expectations? Is the rate that you're seeing of publications going potentially faster than you initially expected at this point?

Yes. I mean we're very positively surprised. So let me underscore and echo, what you summarized. There was a tremendous amount of activity, scientific presentation, and discourse connected to Bionano, the use of optical mapping, both as a standalone tool to search for structural variations in patients, but also together with sequencing to provide comprehensive variant call lists And so those scientific publications, whether they're in peer-reviewed journals or in posters, advance the understanding and awareness of Bionano, and I would say that we're very pleased with the progress. And we actually do continue to be impressed with the rapid utilization of the system in the field generation of data and the progress that that's making toward publication. So I would say that that's ahead of expectations a little bit.

Excellent. And then lastly, could you speak a little bit to how these platforms that are enabling consolidation of the data could enable a better usability especially considering the recent news of the potential merger between PacBio and Illumina, and how their technology could potentially be combined and then use in concert with yours, and maybe that would make it easier for the industry of the software developers that are developing all these platforms to make decisions on which to go with, we potentially have a little color on that is that could be maybe a driver of some settled things in the growing market?

Sure. I mean, let me sort of pick up towards the end and work backwards. I mean with regard to the announced proposed merger between Illumina and PacBio, I think the first comment that I would make about that is that it illustrates the need for more data types, more tools to fully interrogate and analyze genomes. The PacBio system and Illumina are both sequencing systems. And the Bionano Saphyr system sees the variants that sequencing misses. And so we remain perfectly complimentary to those tools with regard to software that integrates the data types. That really is a critical step. We can be experts in providing the best quality information and data coming from samples that only Bionano can provide, but it does fall to the users to leverage that information, and the degree to which there are software solutions that make that simpler, that fully integrate multiple data types, including clinical annotation to point out what diseases are associated with the variants that are found. This is an important step in the overall value chain, which is why we sought out partnerships to make that happen. And what we believe about this partnership that we've described, this platform that's been launched with Genoox is that it's the start of many such collaborative opportunities to generate more and more and better and better solutions for data analysis throughout the community.

Excellent. Guys, thanks for taking my questions and keep up the good work?

Thanks David.

[Operator Instructions] We'll go to Jason McCarthy, Maxim Group.

Hey guys – taking the questions, and by the way, congratulations, you got the IPO done. But the first earnings call is a big deal and everything's going really great on the call so far. Couple of questions; two for you Erik, and one for you, Mike. First, Erik, you were discussing the software platform that combines a small-read NGS data with SV calls. Can you elaborate a little bit more on Bionano's intend on leveraging that platform in terms of expanding its customer base? And do you have any plans to conduct any studies internally, comparing the integration of these two types of datasets versus maybe NGS plus a long-read dataset and showing the differences in the quality of reads that you can get.

Sure, and so – thanks Jason for your comments at the opening. We’re delighted that that we got the financing done and it's really allowed us to propel the company forward in a very strong way. And so thank you for your comments. With regard to these data analysis platforms and how we are evaluating them and what we expect from them, commercially. On the evaluation side, a lot has gone into the sort of co-development of the combined platform. And so that's a very collaborative effort with Genoox and with existing Bionano users, clinical users, translationally users in the field. So there's been already a fairly substantial, evaluation that's gone on to demonstrate the validity of calls and their comprehensiveness and what we would expect from those types of activities is that those data and others in studies that have yet to be kicked off. But we would expect those to all be published and provide the types of comparisons that you're talking about. And sure we would expect that that PacBio data would eventually be incorporated into a perhaps not necessarily the one that we announced recently. But in any of these integrative software tools would also leverage the PacBio data. And I think what you'll see when that's done is that you've got a range of various sensitivities starting with a single nucleotide variants that Illumina is really the gold standard and picking up some of the larger ones, but still below a few thousand base pairs that that PacBio long-read sequencing does a great job at picking up. And then you've got the Bionano capability, which addresses anything from 500 base pairs on up. And so at the end of the day, I think researchers and clinical users seeking to have a molecular solution for whatever they're working on now have the technology that that they need and these software tools are critical for integrating that capability. And what we believe is that there will be many, many of these types of solutions. And so that's why we focused on making Saphyr the best generator of structural variation calls that we can. And with regard to data integration, there's going to be a lot of opportunities there. Customers are excited about it. They're using it on a regular basis. Some will develop those types of tools on their own. But we're very excited about the partnership with Genoox because it gets us started there, and I believe many more of these will come in the future.

So going back to the point of Illumina, aiming to now or likely to acquire PacBio from a Bionano perspective, I actually think it's a good thing because it just brings structural variations kind of more in the limelight – or in the Spotlight for everybody to see, how important they are? And that this platform is complimentary, in addition to that, based on your comments about the Genoox integrated platform and that partnership, can you leverage that platform to loop in the long-read data? Two, could you essentially do small-read data, long-read data and structural variations, and to me that makes the attraction of Bionano all of a more in terms of being complimentary to PacBio at Illumina.

Yes. We completely agree with you. I mean, I think that the proposed acquisition highlights the fact that no one single technology solves all problems and that there's a critical need for long range information with regard to analysis of the data types. It's absolutely feasible and will happen that the long-read and short-read sequencing results can be combined and integrated with the calls that come from Saphyr to provide very high quality, fully comprehensive variant call lists.

Okay. Thanks. And Mike, the question for you, I know you haven't provided a breakout of instrument sales versus consumables. But does the Company have plans in the near future or maybe in 2019 to start providing guidance at least on the topline, whether it's broken out into individual components or not?

It's something that we're considering. It's something that we are taking under consideration. And as the year progresses, we'll have a better answer for you.

Okay. Thanks for taking the questions guys. Congratulations on the first call again.

Thanks Jason. End of Q&A

That does conclude the question-and-answer session. I will hand back to management for any additional or closing remarks.

Terrific. Well, thank you everyone for joining us on this milestone first earnings call as a public company. We look forward to updating you again on our next call. Thank you very much.

Ladies and gentlemen, that does conclude the conference for today. We would like to thank you all for your participation. You may now disconnect.