Why critics are so wrong about BNGO Stock

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Critics of the Bionano stock (NASDAQ: BNGO) ignore and / or seriously underestimate developments involving its DNA mapping tool, Saphyr.

Source: Natali_ Mis / ShutterStock.com

Specifically, there is overwhelming evidence that – driven by positive clinical data, improvements in Saphyr, and continued progress towards reimbursements – demand for the product is expected to skyrocket in the long term.

While the sharp declines in BNGO shares this year have been frustrating, patient and long-term investors who hold their shares are well positioned to be generously rewarded for doing so.

Two reviews of Bionano

In a November 14 column, Bashar Issa, a Seeking Alpha contributor, made several very negative comments about BNGO shares. He suggests that Bionano is unlikely to be bought out because “more conservative biotech companies focus on genomics companies with a clearer strategy and more defined markets.” The author also suggests that Bionano’s technology, first developed in the 1990s, is obsolete and no longer attractive to healthcare professionals and scientists.

And, of course, Issa highlights the company’s financial data and the number of Saphyr systems it has sold or leased, calling the information “disappointing.”

Another reviewer is InvestorPlace contributor Dana Blankenhorn. His main points are the poor performance of BNGO shares, the failure of the ARK Invest exchange-traded funds led by Cathie Woods, to buy the shares, and what he sees as the high cost of Saphyr and his tests.

The immense utility of the Sapphyr of Bionano

Issa’s first two points – regarding the chances of acquiring the business and the current relevance of its technology – are refuted by the great rescue potential that Saphyr has shown in the studies.

For example, Dr. Rashmi Kanagal-Shamanna of the University of Texas, commenting in a statement on the study of the usefulness of Saphyr in a bone marrow disorder, Dec. 8, said: “It is important to Note that {Saphyr… allowed us to see more variation in subjects at a higher resolution compared to traditional workflows, which has the potential to help achieve better results through better patient management.

She explained that not only were Saphyr’s results 100% consistent with standard methods of genetic analysis, but Bionano’s product “allowed us to see more variants in subjects at higher resolution compared to traditional workflows, which has the potential to help achieve better results. thanks to better patient care. Specifically, Saphyr identified “23 clinically significant SV in 18% of patients” that standard methods did not detect.

In summary, Kanagal-Shamanna said that Saphyr identified more variations than standard tools in 18% of patients and that identifying these variations could allow these patients to receive more effective treatments.

In other studies, Saphyr has shown great potential to improve the treatment of patients with several other diseases, including cancer and genetic diseases.

The diagnostic advantages Saphyr has demonstrated over standard techniques are one of the main reasons Brynn Levy, medical director of the Clinical Cytogenetics Laboratory at New York Presbyterian Hospital, is so optimistic about his technology.

He believes the technology, known as optical genome mapping (GMO), could be more disruptive than standard DNA testing for “prenatal and pediatric disorders, blood malignancies and solid tumor cancers.” In addition, the doctor believes that the GMO could even possibly replace the standard tools used to evaluate DNA.

Bionano’s finances are likely to increase over time

In the United States and most other advanced countries, the amount of money paid for the treatment of disease is ultimately determined primarily by three factors. These factors are the extent to which treatments are helping patients, the number of patients they can treat, and the number of competing treatments that can meet or approach the same goals.

GMOs, as Levy has pointed out and various studies have shown, have enormous potential to greatly help many patients. Meanwhile, Bionano has exclusive rights to many of the technologies used by Saphyr.

But another hallmark of disease treatments is that they typically have to be tested for years before regulators allow them to be used. As a result, it takes several months for biotech companies like Bionano to generate large revenues from their products.

And sometimes, for a variety of reasons, the streets don’t give nearly adequate value to the stocks of companies that in all likelihood have products that will become blockbusters in the future.

I think BNGO’s stock falls into the latter category. This is because, as I stated before, I think there is enormous evidence that, as Dr Levy said, Sapyr will prove to be very ‘disruptive’.

But before the product can generate huge revenues, it will need to be approved by government and private insurers as a valid diagnostic tool for multiple diseases. When this happens, many hospitals and laboratories will be eligible for reimbursement for the cost of using the product.

Likewise, once Saphyr’s ability to analyze DNA correctly and more efficiently is proven, researchers will be much more likely to purchase and use the product.

Of course, after the surge in demand for Saphyr, Bionano’s financial results will also increase, causing BNGO shares to rally. Additionally, as evidence of Saphyr’s effectiveness accumulates, companies will likely be interested in acquiring it.

The result on BNGO Stock

There is in fact very strong evidence that Saphyr can greatly improve the treatment of many patients. And, regarding Blankenhorn’s argument that Wood is not buying Bionano shares, having bought a number of shares that were clearly unattractive this year, including Palantir (NYSE: PLTR), Teladoc (NYSE: TDOC) and Workhorse (NASDAQ: WKHS), I am not too swayed by his judgment.

But it could easily be 18 to 36 months for the market to give BNGO stock the credit it deserves. Considering the huge potential of the product, I think the profits generated by the shares will be worth the wait. Therefore, I continue to recommend the purchase of the name.

At the time of publication, Larry Ramer held a long position in BNGO. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.

Larry Ramer has researched and written articles on US equities for 13 years. He was employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing articles for InvestorPlace in 2015. Some of his highly successful contrarian picks include GE, Solar Stocks, and Snap. You can reach him on StockTwits at @larryramer.

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