Lineagen, Inc. (BNGO) Earnings Call Transcript & Summary

Hello and welcome to the Bionano Genomics Inc. conference call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Monique Kosse with LifeSci Advisors. Please go ahead, Monique.

Thank you, operator, and good morning, everyone. Welcome to the Bionano Genomics Conference Call. Leading the call today will be Dr. Erik Holmlin, CEO of Bionano. This morning, Bionano issued a press release announcing its acquisition of Lineagen. 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 be forward-looking, including statements about Bionano strategic and commercialization plans, 2020 sales pipeline, anticipated benefits or improvements to the Saphyr System and advantages of the Saphyr System over current technologies, expectations regarding timing, assumptions regarding the COVID-19 pandemic and content of study results. Such forward-looking statements are based on current expectations, and there can be no assurances that results contemplated in these statements will be realized. Actual results may differ materially from statements due to a number of factors and risks, some of which are identified in Bionano's press release issued earlier today and the company's 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 on the Investors section of the company's website. For the benefit of those who may be listening to the replay or archived webcast, this call is held and recorded on August 24, 2020. With that, I will turn the call over to Erik Holmlin. Erik?

Thank you, Monique, and good morning, everyone. It's really exciting for me to be here and talk to you this morning about an acquisition that we completed over the weekend, give you the announcement that Bionano has acquired Lineagen, which is a leader in clinical testing for patients showing signs of neurodevelopmental delay, including autism spectrum disorder and other disorders of childhood development. What we believe through this acquisition is that [ bring ] product line through Bionano, which is based on the Saphyr System and its consumables, but that we will now be able to expand that product portfolio to include a host of Laboratory Developed Tests that are offered in a services environment through a CLIA certified operation at Lineagen. And together, this combination of capabilities is really going to accelerate the development of Bionano into the leader of digital cytogenetics, which is a path that we've been on and will stay on going forward. As Monique mentioned, there will be some forward-looking statements as part of our conversation today, and I would refer you to all of our public filings for the relevant information in connection with these forward-looking statements. And I'd like to begin with just a recap of Bionano in our base business. And as you know, for all of you who have been following the company, Bionano sells the Saphyr System, and it's really the core of our revenue engine, and Saphyr has been developed to detect what we call the other genomic variant, structural variations, and it's the only platform capable of truly comprehensive structural variation detection, ability to see all types of structural variations. And it has the ability to do this in samples that are remarkably complex. So in cancer samples, for example, where pathogenic variants are present at a very low abundance, Saphyr is the only system capable of this type of structural variation detection. And we have been putting it to work to drive something we call the digital cytogenetics revolution. And so if we think about cytogenetics as really a traditional form of diagnostic testing for constitutional genetic disorders and cancer, cytogenetics comprises a handful, 3 primary testing workflows, karyotyping, fluorescence in situ hybridization, or FISH, and microarray analysis. And what's so powerful about Saphyr is that it is capable of consolidating these 3 fairly complicated, labor-intense, cumbersome workflows into a single assay that runs on Saphyr, and we call that digital cytogenetics. Now I want to tell you a little bit about Lineagen because Lineagen is a highly complementary business that has been focused on providing actionable information through diagnostics services to patients with developmental disorders, and they've developed a menu of Laboratory Developed Tests. They're offering 5 different tests today, all of which run off of a single cheek swab or buccal swab. And that testing really begins with the first step assay, which is designed to use chromosomal microarrays to look at large structural variations, the ones that you can see with microarrays, which are deletions and duplications or so-called unbalanced variants. In connection with first step, there are a handful of other assays that are also run, including Fragile X, some pharmacogenomic testing and for patients who are negative by first step. The clinical indications and guidelines in testing for patients with developmental delay provide for running a reflex test by whole exome sequencing, and that's the next step plus assay. And so when a patient's microarray is negative, it's followed up by whole exome sequencing. And there is a whole genome diagnostic assay available as well. And what characterizes all of these assays is that they run from a straightforward cheek swab and our Laboratory Developed Tests, highly personalized, combined with genetic counseling to provide the physicians who are referring patients and their families with end-to-end support, including reimbursement of the assay. So this is a very powerful platform for testing in constitutional genetic diseases. But I want everybody to see Lineagen not only for the incredible products that they have and the solutions that they're providing to patients and their families, but as much more than those products. And so on this slide, we've really outlined some of the key strategic rationale that's underlying the deal. And importantly, I want to begin by saying that Lineagen is a commercial stage company. And so at the very beginning of this combination of companies, there is going to be an immediate impact of revenues. And so we will be able to add the Lineagen revenues to our revenues and really increase the overall critical mass of revenues in the company and accelerate that path. And so revenue impact is an important driver for us. The idea of combining a product-based business and a services-based business is something that we think is really powerful because in this area of genetic testing, genomic analysis, it sometimes becomes critical to offer a centralized services service, this offering, this is something that we've done very deliberately in Bionano this year, and that is to expand our services offering. And now we're going to be able to do that even more broadly, but under the CLIA umbrella. And so that's really important because that's a quality system that allows for the data to be used by a much broader audience than ever before. So those are 2 key product and revenue-based drivers. But when we think more strategically, I think one of the most powerful aspects of the Lineagen acquisition is this idea that we are really bringing into Bionano, all of the essential components for building a reimbursed diagnostic menu on Saphyr. So we gain a clear certification, and this is powerful because this allows us to develop Laboratory Developed Tests and commercialize them into the space. We are acquiring access, exclusive access to a proprietary database that was developed at Toronto SickKids Hospital. And this is what makes the Lineagen test the most powerful test available for pediatric neurodevelopmental delay and other disorders of childhood development because they have access to genes and information about those genes that nobody else has access to. And so what may turn up as a variant of unknown significance in an assay run by another lab at Lineagen, they're able to link that variant to disease in many cases because it's covered in this proprietary database, and that's a database that we will be able to leverage going forward to develop assays on Saphyr. There also is an archive of patient samples and large database fully annotated that's derived from the over 30,000 patients and 60,000 tests overall that have performed -- have been performed to date in Lineagen. And of course, this number is growing on a daily basis. And so we'll be able to leverage that database in development of tests going forward. And then Lineagen brings with it a number of skills that Bionano is seeking to really leverage going forward. And in the first area, it's around this clinical cytogenetics and custom interpretation software. And so in order to provide results for patients and their families and the physicians who have referred them, Lineagen employees leading cytogeneticist to make determinations of significance of variants that are found in their assays through an interpretation pathway. This capability is critical as we begin to transfer tests from the traditional platforms on to Saphyr. They bring genetic counseling. And so this is a key solution that provides support and interpretation of results but also in support of physicians who are seeking to determine whether they should be referring patients in the first place. And so this skill is not only critical for maintaining and growing Lineagen's place as a provider of key solutions, but it's also critical and informing Saphyr product developers as we build that menu of tests. And then there are 2 aspects that are so key to providing us with the ingredients that we need to eliminate any reimbursement challenge around the commercialization of Saphyr-based tests. So certified coders are people who are trained in applying the network of CPT codes and other methodologies to communicate with payers in an effort to get tests reimbursed. And then we bring in a host of third-party payer contracts. And so we will be able to leverage those as we integrate Saphyr testing into the workflow. And so I really want folks to recognize that Lineagen brings revenues in the short term, but it's much more than revenues. It's a whole set of skills that we don't have to create from scratch at Bionano. We acquire them, and we have them up and running at really a market-leading level. And so now if we look at the 2 companies side-by-side, we see that we're bringing Bionano with its product-based business that is derived from Saphyr sales where we're addressing a $3 billion market and an opportunity to sell 10,000 Saphyr's growing adoption in the cytogenetics community in the U.S. and Europe. We have about 101 employees at Bionano and our trailing 12-month revenues as of June 30 were about $8.5 million. We combine that with Lineagen, which is a services-based business, running a portfolio of Laboratory Developed Tests, developed under the CLIA umbrella, addressing roughly a $1 billion market of pediatric developmental disorders. They have about 35 employees and their trailing 12-month revenues as of the end of June were about $6 million. And so we really want you to think about this as a comparable scale to Bionano revenues with the potential of really accelerating the top line expansion for Bionano essentially immediately. Now I want to look at the 2 companies really as one. And so we've started out with the Bionano base business that's derived from system sales, consumable sales. And as we know, we're progressing in that area with the growing installed base and incredible performance of consumable sales that we reported on recently, ongoing validation of Saphyr as the key platform for digital cytogenetic analysis, and layer on top of that, the existing Lineagen business that's based on its first-line chromosomal microarray analysis, future whole exome sequencing analysis. And so these are 2 components that come together to increase the revenues of Bionano right out of the gate. But then there are a number of pathways that we are able to pursue in following a path toward expanded clinical product development. And so we're able to leverage this CLIA license to expand and develop more tests. And it's our intention to work with labs, not only within our own 4 walls at Bionano, but partner labs around the world. We will be able to leverage Lineagen's key experience in reimbursing assays to get Saphyr assays reimbursed and when we believe -- when we've done that, and we can point other cytogenetic labs to that successful pathway of reimbursement, we believe that, that will lower a critical barrier in adoption of Saphyr throughout cytogenetics. Novel Laboratory Developed Tests based on proprietary content is something that we can now begin to get into. And lastly, and this is really the first time that we're talking about it, we will have an option to develop an FDA-cleared platform running -- based on Saphyr running FDA-cleared assays. And so by bringing this acquisition in, we really amplify the opportunities that we have to become a full-fledged clinical diagnostics system and services provider. And so lastly, I just want to underscore that this combination is driving financial benefits through a series of revenue synergies. And there will be cost synergies. I want folks to know that this is a highly complementary team. And so we're not talking about synergies upfront. But what we're talking about is as we are able to leverage economies of scale for the combined companies, we believe that operating expenses will be more efficient over time. And I also want to point out that this idea of combining a genomics platform company like Bionano with a diagnostic services company like Lineagen has been done before. One of the first examples of that happening was when Illumina acquired Verinata Health in 2013. Folks will probably remember that at that time, Sequenom and other companies were leading the charge to implement Illumina technology for NIPT or noninvasive prenatal testing. And Illumina acquired one of the leading service providers in that area, and this was something that caused some questions to come up was Illumina going to be competing with Sequenom and other service providers competing with their customers. And the answer was no. They were bringing Verinata in so that they could really optimize the platform to serve that services -- those service customers who would adopt that platform, optimize the sequencer for NIPT testing. I would also point out that subsequent to that acquisition, they also sought and received FDA clearance for a sequencer that was running NIPT testing. And so the acquisition of Illumina -- of Verinata Health by Illumina is a real close parallel. And then recently, in the past few months, we saw the acquisition of Archer by Invitae. And so in that case, it was a services company acquiring the platform company that brought Invitae into oncology, but it also gave Invitae this combination of centralized services offering to support customers, combined with a decentralized product offering. And so exactly what we're doing in this acquisition is that we are providing ourselves with the capability to serve whatever customer is out there seeking Bionano data, we're giving them a path to get it. So that will ensure that the Saphyr and Bionano data become the basis of digital cytogenetic testing in the future. Here's a look at a 2019 pro forma financial snapshot. So for Bionano on a stand-alone, in 2019, revenues were about $10.1 million, Lineagen $7.5 million. And so on a pro forma combined basis, $17.6 million for the full year 2019. The cost of revenues are listed down below. And from that, you can walk to gross margin. And you can see that the revenues from Lineagen enjoy significant margin as of 2019. And I can say that those margins have improved substantially in 2020 as a result of really excellent work by the Lineagen team to improve the cost of revenue and decrease that. And so there's margin expansion even beyond what's presented on this slide. And so this is really an opportunity for us to expand our blended margin in the combined company. And lastly, I just want to summarize the terms. And so this is a very affordable acquisition for Bionano, a stock deal where we had paid no cash to acquire the company. We issued about 6.2 million shares at a total value of $5 million, which equates to a price per share of $0.81 in this transaction, and we absorbed about $4.6 million in the company's trade payables and paid off their paycheck protection program loan. And so this is a very modest financial commitment for Bionano to bring in this incredible value to expand our revenue line on a comparable scale to what we have today and really bring in a skill set that vastly complements what we have today and really creates a scenario where we are going to accelerate the adoption of Saphyr throughout the cytogenetics community. And so in closing, I just want to welcome all of our Lineagen friends to Bionano. And I want to thank them and their Board and their CEO, Michael Paul, who will be staying on at Bionano as the Chief Strategy Officer through the transition. And I want to emphasize that this is a augmentation to the strategic path that Bionano has been on. We are focused on this digital cytogenetics revolution, but we believe that this move dramatically accelerates that. And then in taking this step, we not only become a fully clinical player in genome analysis now, but that we will create this leader in digital cytogenetics by offering the combination of systems and consumables together with Laboratory Developed Tests in a way that's completely unparalleled for cytogenetic analysis. And so that is really the end of the prepared remarks that I have for you today, and I would like to open the floor for Q&A.

[Operator Instructions] Our first question today is coming from Kevin DeGeeter from Oppenheimer.

Congrats on a really nice transaction here. A couple of questions from us. First, can you comment with regard to the LDT test menu, are there opportunities to validate or consolidate that onto Saphyr? Just kind of talk to us about going forward, as we think about new content really being driven in part by some of the proprietary database you're acquiring, should we think about that content is sort of solely being developed on Saphyr or will this remain a hybrid model that where appropriate, other technologies will continue to be used in the service offering?

Thank you, Kevin. I appreciate the kind words. And you're sort of thinking along the right direction as to where the questions lie and what -- our plan is definitely to transition that menu over to Saphyr over time. But we want to do this in a very thoughtful way because currently, the test and its reimbursement is based on a relatively narrow swath of variants that are detected. So only some unbalanced large structural variations. And as you know, Saphyr will detect the balanced ones as well, such as inversions and translocations. And so what we want to do is develop really a proprietary test that can run on Saphyr, launch that as a laboratory developed test, but something that's really specialized relative to what's the current offering is and maintain the current offering, because the current offering is totally consistent with guidelines. And when we have developed more advanced tests, we can then go and work with the payers who are contracted with the company to really develop elegant, value-based reimbursement strategy for that test. And it's really at that time that we would convert the business over once the test is reimbursed. And I want to emphasize that it's not our intention to make that something that only Lineagen as a Bionano company offers. We want that to be available throughout the market. And so what we will be doing on a go-forward basis is really leveraging the Lineagen capability as a platform to expand and proliferate Saphyr throughout the community.

That makes sense. And maybe just 1 or 2 other quick ones for me. With regard to the pretty significant database of, I guess, they had over 30,000 patients, how do you think about the opportunities to leverage that database, both, I think, as you mentioned, in terms of menu expansion, new test development for Bionano. But is that a database that is appropriate for potential partnering with pharma on the therapeutic side? I think you sort of alluded to it in a couple of the slides. So just kind of thought -- help us better think of how to really leverage that asset that's coming in as part of the transaction?

So absolutely, you're right on track. I mean I think -- and there's 2 pieces to that puzzle. One, it's the proprietary database that has been in license. And so this is something that contains all sorts of data that link various genes to disorders of childhood development, many of which are already known and published, but not consolidated into a single place, but many of the genes and links that are contained in that database have never been published or not available to the market as a whole. And so this becomes a very valuable dataset, as you know, rare disease, therapy and drug development for rare diseases is an area of great interest throughout biotech and pharma. And so this becomes a source of information that can be used to develop cutting-edge assays push for research and target development and discovery as well as advancement in the clinic. And then down the road, assays that can be used to manage patients. And so we do fully intend to leverage that with the community. The other component, the other piece of the puzzle is the existing consented patient registry that exists within the company. And this is something that we intend to fully support, invest in and expand on a go-forward basis. And so it's our hope that we will be able to very soon be able to consent patient samples that are coming in the door so that we can start running them on Saphyr. Because as you know, current tools are okay at seeing structural variations, but Saphyr is amazing at seeing structural variation. So we will be able to really dramatically expand the content in that registry on a go-forward basis. And taking the database and the registry together is something that we can leverage for pharma in all sorts of partnerships that are simply not anything that we can do with Bionano as a stand-alone. So this is a whole area of economic opportunity for the combined company that didn't exist before this weekend.

Great. Super helpful. And then one last one for me, then I'll get back in the queue. How should we think about the impact on cash burn from this transaction or some metrics around operating expenses?

Well, what I can tell you is that the team at Lineagen, a lot out of necessity, has learned how to do really a lot with a little. And we think we do that at Bionano, but they are really -- they have been amazing at that. And so this is not a operation that burns a lot of cash. I don't want to put numbers out there that we can't substantiate on a go-forward basis. But overall, we see this as burning less than about $1 million a quarter. And so compared to Bionano, that's relatively minimal. And I would caveat that number with that being kind of what we've seen in their financials for the first half of 2020. And we certainly reserve the right to invest in areas that impact that, but bring in top line results and accelerate the combined company programs that we've been talking about. But this is not a very -- in my opinion, it's not a very significant incremental cash burn for Bionano. The acquisition itself, we're bringing in $4.6 million of trade payables that have to be retired over time. And so that's going to add some incremental burn until that is retired. But you should not think of this as a significant change to our overall cash runway.

Our next question today is coming from Scott Henry from ROTH Capital.

A couple of questions. First, can you talk about the volume of tests performed over the last 12 months? And can you talk about -- with regards to that, what you would expect as kind of the organic growth rate for testing expansion? And I don't know if COVID-19 has had much of an impact on their business. I guess any color you can provide there would be helpful as well.

Yes. Well, I think let me sort of start with your last question because that's the one that colors how I'm going to respond to the others. And for sure, COVID-19 has had a dramatic effect on their business because there has been a shutdown in the physicians who would pediatric specialists, neurodevelopmental specialists who would be seeing the patients and referring them for testing. Those offices were closed for a substantial portion of the second quarter. They have begun to reopen. And so we're starting to see samples flowing in. So like many companies, 2020 is a question mark for Lineagen. And it's tough to kind of think about how they would grow coming out of this. But I think that this is going to be a growing business. And what we want to do is think about it as something that -- where our main growth is driven by Saphyr sales, a modest growth over the next 3 to 5 years. I do believe that 2020 will be a $3 million to $5 million top line year, there's a lot of -- it's difficult to predict where the full year will end up just because of the COVID-19 issues. And I think that, that can probably undergo a significant step-up in 2021. And our thinking is to support the business. So it grows at a 15% to 20% CAGR going forward. We could probably invest in it to accelerate that growth, but we want the main focus to be on driving Saphyr sales and adoption, while this becomes a component of our overall market revenue product and market development initiatives. Overall, in terms of testing volume, what I just want to say that they've tested about 60,000 tests overall in the 9-year history of the lab.

Okay. Great. And when we evaluate this transaction, I guess, what will be the signals that we know if it's successful? Kind of what would be the time line you would expect for revenue growth on the Saphyr System or even within Lineagen, just how should we think about evaluating this in the signals of going in the right and wrong direction?

Sure. Well, I mean I think we will be breaking out those revenues and reporting them. And so I think you should expect to see the revenues for 2021, as an example, being relatively comparable to Bionano's in scale. And we want to grow those with the kind of CAGR that I mentioned. And so you'll be able to monitor that and judge us on that performance right out of the gate. I think that what you're going to want to see in Saphyr sales and Saphyr's consumables, growth in Saphyr installed base is how I want to talk about it because, as you know, we're working on the reagent rental programs and other strategies besides Saphyr sales alone. But I think what you should see -- what you should measure us on there is really just the successful execution of growing that installed base at an increasingly accelerated rate. And so I don't know that we're going to be able to point to a definitive stand-alone metric within the Bionano business that says this worked. But if Bionano works and Saphyr drives the digital cytogenetics revolution, I believe that it's going to be having a lot to do with this acquisition.

Okay. And what do you think the time line would be to generating the first test specifically for the Saphyr System? How long would we expect that to take?

Yes. We would expect to see those types of assays coming online, being developed sometime next year. And we are beginning an integration phase, where the 2 companies are doing what they do after an acquisition in coming together. I think the beauty in this particular integration is that this is really a lock and key fit, excellent strategic fit. And so it's really about how can we support each other? And then how can we write these combined company plans? And so we need to write those plans. And I want to be hesitant to give you a lot of concrete time lines until we've written those plans. And I would expect in some of our upcoming calls to be able to talk about that stuff more definitively. But I think we should see an LDT or test coming out of Lineagen next year based on Saphyr.

Okay. Great. And I get -- a final question, and I don't know if you have this answer in front of you, but can you tell me how much capital has been spent at Lineagen to date? Just trying to get a sense of the resources that have been put there and what you're gathering here?

Yes. I mean it's tens of millions. And so it's well over $80 million.

Our next question today is coming from Jason McCarthy from Maxim Group.

Congratulations on the acquisition. I have more of a broad-based question. Can you talk a little bit about how the natural progression or evolution of cytogenetics occur? Do they seem to fit other molecular techniques like western blotting went to high throughput? Obviously, the microarray came about. Karyotyping is now relatively digital, but this is a natural progression from microarrays to eventually convert to a Saphyr they have. Lineagen, I think, has 4 or 5 tests now. Do you see those tests converting over to Saphyr-based approaches? And then how does all of that going to work in transforming cytogenetics? Of course, to Scott's point, when is that next test coming, how many tests do you envision developing for Saphyr, basically converting microwaves all over the Saphyr?

Sure. So that conversion process itself, and we've seen this. We've seen this in clinical testing overall, not necessarily in cytogenetics, but you cited westerns in the conversions by ProteinSimple, for example. And so those steps have been very successful, and that's been a process of taking a difficult cumbersome workflow based on a lot of manual intervention and manual interpretation and converting it over to something that's digitized. We saw that in situ hybridization where Ventana automated that whole in situ hybridization testing paradigm. And so those are the things that we're seeking to do with Saphyr convert. It's not just chromosomal microarrays, but karyotyping, FISH and CMA together. CMA is incredibly powerful, but it's limited to looking at the unbalanced structural variations. And so that's why karyotyping and FISH are still very broadly used. But Saphyr converts those 3 assays into a single assay and makes it much more efficient. So that's a value proposition. And the process itself really involves a product development initiative around a set of indications. And listen, we've actually outlined several between at least 7 indications that we have outlined that are around this area of developmental delay and other forms of constitutional genetic disorders. It's not -- it's by no means every single one, but there are several indications that we've outlined where Saphyr is really the single-best platform to be testing for those on some repeat expansion disorders and other assays like that. And so the conversion process involves working with a team, like the team at Lineagen to develop those assays. And while we have a great product development team at Bionano, we don't have the insights that Lineagen has, the cytogenetics, the genetic counselors, the links to the physicians and patients and families who are undergoing this test, the understanding of how to build the proper interpretation software. So all of these capabilities come together to put the markers into an assay on Saphyr. And that's the product development test. So we can do that under the CLIA certification there and launch it as a laboratory developed test. And that just begins the process with leveraging the commercial infrastructure that's in place at Lineagen. We can get that out and how physicians start sending samples in and so we can go down a path of setting up the demand for those tests, and that begins the process of addressing reimbursement. And so for the first time in Bionano, we will be able to, through Lineagen, bill payers for tests that are running on Saphyr. And as I've said to people many, many times, reimbursement for these assays is an art, it's not a science, and there are many pathways that are available, but they need to be implemented, tested and worked out. And the only way to do that is to adopt the platform and do it. And what we see is that while the community as a whole could do it, they're taking some risk, right, because they have an existing reimbursed production line. And so we're going to take that risk for them. We're going to develop the test on Saphyr, create the demand, go to the payers who are already under contract with us through Lineagen and negotiate reimbursement. And once we've done that, we're going to make that playbook available to any cytogenetics lab that wants to adopt the system. And that's what's unique. So some services labs would develop those tests and keep them for themselves, but we don't want to do that. We want to develop the test. We want to create the demand, but then we want to share that demand. And so this acquisition really addresses key skill sets upfront, the engine for product development, and we're going to be focusing this team on their area of expertise, which is neurodevelopmental disorders. It solves the reimbursement challenge. And once we have those things in play, it creates another opportunity that's really unique that we always had as part of Bionano, but is much more tangible now. And it's that we can begin to put on paper and my product development team that's listening to this call is saying, I hope he's careful when he talks about this, but we can put -- begin to put on paper and lay out the path to an FDA-cleared -- Saphyr System running FDA-cleared assays. And that's something that just expands our market overall. In the U.S., there's still going to be a lot of LDTs run on Saphyr even when it's FDA cleared, but FDA clearance opens the doors to international adoption in a way that's much, much easier than the RUO designation that Saphyr currently has. So this is a step that really expands the addressable market for us, starting with product development, solving the reimbursement challenge and then getting on to an FDA-cleared system down the road.

As part of the -- and this is probably the last question. As part of the strategy, they have 35 people at the company. How many of those 2,000 or so cytogenetics labs are they in? And as part of the strategy now to use that kind of reagent rental model to install Saphyr that cytogenetic labs where Lineagen already has contacts to get them to start using and kind of see its value and go from there.

Well, actually, I mean, Lineagen in itself, you've got to think of is one of the 2,500 cytogenetics labs worldwide. And their team is calling on physicians who are referring patients for testing. And now with regard to where they're selling their tests, it's throughout the pediatric neurodevelopmental specialties and neurogenetic specialties, pediatric specialties overall. And what we're going to be able to do is give cytogenetics labs that don't have access to this testing, access in the future based on adopting Saphyr.

We've reached end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Well, I just want to thank everybody who's joined this call. And we are very excited about taking this big, big step for Bionano becoming a full-fledged clinical services provider along with selling Saphyr throughout genomic analysis. And we believe this is really important for our development, and we are just thrilled to put these 2 companies together and deliver the results that we've been talking about. And we'll be excited to update you when we get together on our next quarterly update. Thank you very much.

Well, that does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.