Good day, and welcome to the Bionano Genomics Third Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Amy Conrad from Investor Relations. Please go ahead, ma'am.

Thank you, Cynthia, and good afternoon, everyone. Welcome to the Bionano Genomics third quarter 2022 financial results conference call. Leading the call today is Dr. Erik Holmlin, CEO of Bionano. He is joined by Chris Stewart, CFO of Bionano. After market closed today, Bionano issued a press release announcing its financial results for the third quarter of 2022. A copy of the release can be found on the Investor Relations page of the company's website. I would like to remind everyone that certain statements made during this conference call may be forward-looking, including statements about Bionano’s revenue outlook, strategic and commercialization plans, anticipated benefits or improvements to Bionano's products, including the Sapphire system and MX clinical software, anticipated milestones for 2022, including progress on Elevate and each pillar of Elevate the advantages of the PACCAR system over current technologies and fan expectations regarding study results and anticipated benefits of these studies and their ability to drive adoption of OGM. 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 Bionano's press release and Biomate 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. In addition, to supplement Bionano's financial results reported in accordance with U.S. generally accepted accounting principles or GAAP, the company is reporting non-GAAP operating expense. This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable GAAP measures should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP has no standardized meaning prescribed by GAAP and is not prepared under any comprehensive set of accounting rules or principles. A description of non-GAAP operating expense and reconciliation of non-GAAP operating expense to GAAP operating expense are included at the end of the company's earnings release issued earlier today, which has been posted on the IR page of the company's website. An audio recording and webcast replay for today's conference call will also be made available online on the company's IR page. With that, I will turn the call over to Erik. Erik?

Thank you, Amy, and thank you, everyone, for joining the call today. We had another outstanding quarter -- third quarter for 2022, and Chris and I are excited to provide you with key results and an overview of the quarter as well as to give you an update on our growth strategy, Elevate. And we want to take this opportunity to also talk to you a little bit more about the market areas where we see the highest potential for the adoption of optical genome mapping. Now, turning to our third quarter results. Total revenue was $7.2 million for the quarter, which represents another record revenue for the company and an increase of 55% over the third quarter in 2021. We've seen revenue growth compared to the same time last year across APAC, Europe, Middle East, Africa and Americas. And so we're very pleased with this progress. We sold 3,975 flow cells in the quarter, which is a record for the number of flow cells sold in any quarter in the company's history, and that represents a 17% sequential increase over the second quarter of this year, and it's comparable to the 3,969 flow cells we sold a year ago in 2021. We analyzed 369 samples in our laboratories, which represents 19% growth over the third quarter in 2021, and we ended the quarter with an installed base of 2017 Sapphire systems, which is a growth of 54% over the 141 systems installed at the end of the third quarter in 2021 and an 11% sequential increase over the second quarter of this year. An another area where we saw significant progress was in Bionano Laboratories, which officially launched this quarter. Bionano Labs is a new organization that combines our optical genome mapping data services with the clinical testing services that were previously known as Lineage [ph]. We've also launched the first optical genome-based mapping-based laboratory developed test out of Bionano Labs, and we received CLIA certification for the San Diego lab. Now this certification is important because it enables Bionano laboratories to offer services to customers who seek to implement optical genome mapping into their clinical routines and for research applications with hospitals, pharmaceutical companies and other groups that require a more robust regulatory structure for their projects. At this point, I'd like to turn the call over to Chris, so he can go a little deeper into the financials for the quarter. After Chris' remarks, I will provide updates to the 5 strategic pillars in the growth strategy and then discuss the market potential we see for optical genome mapping in key areas, including Cytogenomics discovery research and something we haven't been talking a lot about, but is really exciting called cell bioprocessing QC. Chris?

Thanks, Erik. The third quarter of 2022 was another outstanding quarter for Bionano. As Erik mentioned, we recorded significant year-over-year revenue growth and continued growth in the installed base of our Sapphire systems. We believe the building excitement in the market about the capabilities of our products is driving the revenue momentum we are seeing. Revenue in the third quarter of 2022 was $7.2 million, representing an increase of 55% over the third quarter of 2021 and our highest quarterly revenue to date. We came in just above our previous guidance range of $6.7 million to $7.1 million, mainly due to stronger-than-expected sales of NX clinical software. Gross margins for the third quarter came in at 25%, in line with the third quarter of 2021 and a 3% improvement over the 22% we saw in the second quarter of 2022 due to improvements in chip production yields and the favorable product mix in the quarter. We are making good progress on improving yields, and we expect to see continued gross margin improvements in the coming quarters. Q3 2022 GAAP operating expense was $34 million compared to $21.8 million in the third quarter of the prior year. Q3 2022 non-GAAP operating expense was $26.4 million compared to $18.7 million in Q3 of 2021 and roughly flat to the $26.3 million in Q2 2022. I Q3 2022 non-GAAP operating expense includes $6.1 million in stock-based compensation, $1.4 million in amortization of intangibles and $100,000 of transaction-related expenses. The year-over-year increase in OpEx was primarily due to increased headcount and related spending. Our capitalization remained strong with $180.2 million in cash, cash equivalents and available-for-sale securities as of September 30, 2022. That includes $22.5 million in net proceeds raised through the sale of 6.6 million shares in Q3 2022 under our ATM facility. Looking forward, we expect revenues in the fourth quarter to be in the range of $7.5 million to $8 million, which would imply full year revenue in the range of $27.1 million to $27.6 million. This number is slightly above the top end of our prior full year guidance range of $24 million to $27 million. Before I turn it back over to Erik, I want to quickly mention that we plan to hold our first Strategy Day this coming February. More information will be forthcoming in the near future. With that, I'll turn it back to Erik.

Thanks, Chris. Our strategy for growth, which we call Elevate is based on 5 key pillars. -- to expand commercial traction and validation of optical genome mapping with Sapphire to delight our customers with robust products to clear the path for reimbursement of OGM based tests and change medical practice to include optical genome mapping and medical society guidelines to advance our products to enable and support higher market adoption and entry into new markets; and lastly, to make software a strategic driver of our solutions. Now recently, we've added a 6 pillar, and that's that we focus on doing all of these things in a way that's scalable to meet the demands of our growth environment. We've seen great momentum in the adoption of OGM and its validation for use this last quarter. Last week at the Association of the Society for Human Genetics or ASHG Conference, they featured the first dedicated scientific session on genome mapping technologies, where researchers from around the world highlighted optical genome mapping as a technique that has the potential to revolutionize molecular and cytogenetic research. And Bionano recently held its first scientific meet the user event in the company's history where we brought together over 50 researchers who are curious about optical genome mapping seeking to find out where it fit into their lab and what applications they could run on it. These folks came to San Diego from all around the world and visited Bionano Laboratories, which is now a showcase for excellence in optical genome mapping and they were able to see demonstrations of the Bionano Sapphire system and its workflow as well as our NX clinical software. We've continued our previously announced collaboration with Hamilton to release an automated sample prep solution for customers. In support of this effort, we've…

[Operator Instructions] We will take our first question from Jeffrey Cohen with Ladenburg Thalmann.

Erik and Chris, how are you? So a few questions first. Firstly, on the services and other number, which was strong for the quarter, very strong. Should I assume that, that includes some money from the San Diego Clear lab.

Yes. That number does include all of our services, which, yes, includes revenue from the [indiscernible] which is continuing to process samples as we have for the last several years now.

Got it. Okay. And then, Erik, talk a little bit about Hamilton and Vantage and the launch of this new product line. I understand that you'll be supporting them as far as the units and all the reagent kits. Could you talk about perhaps the size of that market as they see it or you see it in some of the competitive advantages that the system has out there in the marketplace?

Yes. Sure, happy to. So a couple of things. As you know, Hamilton is one of the handful of very, very small number of global leaders and workflow automation. And for them to create this program and invest in it, I think, is really a significant validation of the emergence of optical genome mapping as mainstream technique throughout genomics. I don't think that they would put the resources behind this project that they didn't see the potential. And so we're excited about that. If you think about the market size for ultra-high molecular weight DNA isolation, which this robot is expressly developed for. We talked about these 6,000 cytogenetic labs worldwide. We talked about 15,000 sequencers worldwide. And so I've got to believe that Hamilton views the potential of putting automation in many of those labs as we view the potential for putting sapphires in all of those labs. Not every lab is going to need automation, but it certainly simplifies the workflow makes it more consistent and more robust. And what we see in labs is that their throughput is beginning to consistently ramp up, especially in Europe where they've been going through a phase of validation and beginning to build a menu of applications. And so automation at this time makes a lot of sense. If you ask me, do I think every site is going to want to have automation, I think that there will be sites that continue to process samples manually, but the opportunity is very significant. Otherwise, Hamilton wouldn't get behind it.

Got it. And then secondly from us, congratulations on the news with CMS, right? This is the gap fill final recommendations. Has that gone into effect? Or when does that go into effect for the 2 codes you outlined?

There's 3 of them, to in constitutional genetic disorders. And then one -- well, they're all in constitutional, but one is 2 of them are for OGM alone and then one is for the combination of optical genome mapping and sequencing. They are in effect now, and I think that's in the last week or so. And now you got to keep in mind, and this is important for everybody to be clear about. These are what we call -- or what CMS calls proprietary laboratory analysis codes, and they are unique to the lab that has developed the LDT and applied for the code. But I will tell you that having CMS go through the process to study and analyze and discuss at the panel level and then go through a process of gap fill to price these codes that the next steps for other labs following the same path will be more straightforward. And so I think we're finally in a period where we can say that there is reimbursement for OGM. Early days, but it exists.

Fantastic. I know you've been working on that for a number of years. So that does it for us.

Thank you, Jeff.

We will take our next question from Francois Bridgeville [ph] with Oppenheimer.

Just congrats again on the CMS and the reimbursement progress and kind of hope or just the fact that it's out there now for OGM a little more here. So I was just wondering, in terms of practices changing what they do is reimbursement -- is that probably the main driver of a potential hockey stick kind of growth in terms of top line? Or is it more a combination of publications and more validation getting the word out? Or was this really kind of one of the key drivers here?

Well, I think that you really do need to think in terms of a combination or multifactorial process of demand creation through illustration of utility that's validated in the publications, combined with pulling down barriers to adoption, such as reimbursement. And so all of these things are ongoing in parallel, but they accelerate continuously. So one -- we're here at the Association for Molecular Pathology meeting, AMP in Phoenix. And we were talking about the number of human genomes that have been analyzed and published. -- in the last year or so. And it's a little over 1,000. At this point last year in the history of the company, it was $300, right? So 300 for the history of the company up until October 2021, from October 2021 until October of 2022, triple that in 1 year. So these things accelerate as we're moving through time and pushing forward on all of these different fronts. And as a result, that's what really drives the revenue growth. You said hockey stick, I'll just say the revenue growth. And I know that down the road, you're going to expect us to continue the revenue growth. And so when we see this initial reimbursement, that's going to pull some folks in who are on the sideline. When we see this automation that comes out, we'll see some people come in from the sidelines who are waiting for the automation. They will do work in published papers, which will, in turn, drive some additional folks in from the sidelines, then we'll see things like we hope or we believe we will see things like private payers coming on board, so on and so forth. So it really is multifactorial, but I can tell you that the process is accelerating on all fronts.

Okay. That's very helpful. And then maybe can you touch on -- do you see any seasonality in the business? Or is it not -- does it not affect the business as much as maybe others in summer months. And then also maybe just touch on -- in the press release, there's a couple of publications that are mentioned and talked about. I'm just wondering in terms of the research, if there's one in particular or again, it's kind of multifactorial where all of these are extremely helpful or some more important than others.

I'll start by answering the seasonality question and then let Erik weigh in on publications. We have seen over the past several years, typically, we're stronger in the second half of the year as companies get their arms around their budget. And then in Q4, typically, they're spending their budgets before they lose it. Seasonality is a little bit slower in Q1 with, among other things, Chinese New Year and then people kind of getting slow back to work after the holidays. So yes, that's what we've seen typically seasonal strength in the second half of the year, a little bit seasonally weaker in the first half of the year.

Yes. I mean I think -- listen, we've seen a number of significant publications that have come out certainly in the third quarter. And I think one of the most impactful ones and we talked about it during our last call. So I don't want to seem like I'm diminishing the impact of the others, but the paper from Dr. Rashmi Kanagal-Shamanna from MD Anderson Cancer Center, I don't think that we can really understate or overstate how significant that is because she touched on a number of different areas in that publication where optical genome mapping really dramatically impacts the patient management workflow in myelodysplastic syndrome, which was the topic of her paper. But I think it's reasonable to extend that through our hematologic malignancies. And there are other aspects of that publication, which go into depth about the relationship between new findings that optical genome mapping revealed and existing clinical trials for treatment. So when you begin to put together and kind of connect all the dots in that paper, you realize that, that's a seminal work that really highlights -- number one, the impact of optical genome mapping, but number two, the importance of driving these new methods forward. Of course, we're doing this here in Bionano Genomics because we have an incredible platform and we know we can build a great company behind it. But we really have to be focused on the importance of innovation in health care because at the end of the day, this changes people's lives and it certainly helps them in some of their most desperate times. So, I think that's the most significant paper that really was published this quarter.

There are no further questions at this time. Dr. Homeland, I will turn the conference back to you for any additional or closing remarks.

Okay, Cynthia. I want to thank everybody for joining the call, and we look forward to updating you on the fourth quarter call after the first of the year. Thank you very much.

This concludes today's call. Thank you for your participation. You may now disconnect.