Bionano (NASDAQ:BNGO) stock has tumbled, but it will come back big.
Source: Dennis Diatel / Shutterstock.com
As Cathie Wood and many others know, owning growth stocks over the last year has not been easy.
Amid fears about inflation and rising interest rates, many such equities have tumbled.
Famously, the Street and many retail investors tend to give up on companies that face tough issues but wind up becoming great.
For example, I remember around 2005-2007, the sentiment towards Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) (then Google) was fairly gloomy.
Until around five years ago, many were very skeptical about Amazon (NASDAQ:AMZN). (I distinctly recall a professor in my MBA program predicting in 2017 that Amazon’s purchase of Whole Foods would cause AMZN stock to tumble.)
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Staying the course with life sciences companies can be especially difficult for investors. That’s because it often takes many years for such firms’ scientific breakthroughs to translate into major financial gains.
For the reasons I’ll describe below, I continue to think that BNGO stock will be one of the names that (eventually) rewards investors.
Bionano Can Save Many Cancer Victims
The market failed to grasp the potentially huge implications of a Jan. 26 press release issued by the company.
In that release, Bionano reported that its Saphyr system was more effective at identifying novel variants in blood cancer tumors than standard methods.
But the company failed to note that, out of just 15 bone marrow samples, Saphyr was deemed responsible for producing five “better characterized and resolved structural variants.”
Bionano also did not explain how crucial identifying these variations and characteristics of genes may be when it comes to treating actual cancer patients.
For example, the 523-gene panel, which was developed by Illumina (NASDAQ:ILMN), located 14 variants that may affect the disease.
Illumina’s panel can also be used to provide more effective, targeted treatments for patients with AML, the publication quoted the trial’s investigators as saying.
In other words, the variants identified by Illumina’s panel and by Bionano’s Saphyr potentially could enable AML to be diagnosed earlier and treated more effectively, saving hundreds of thousands of lives.
According to the U.S. government, “Leukemia accounted for approximately 3.4% of all new cancer cases and 3.8% of all cancer deaths in 2020.”
Drugs that successfully combat cancer generally generate large amounts of revenue.
For example, Merck’s (NYSE:MRK) anti-cancer drug, Keytruda, which the FDA has approved as a treatment for 30 types of cancer generated $14.4 billion in sales for the company in 2020 alone.
Nor are drugs the only type of cancer treatments that can be lucrative for companies. Novocure (NASDAQ:NVCR), which uses electric fields to treat cancer, reported nearly $500 million of revenue and operating income of $30.4 million in 2020.
Over the past four years the value of its shares has nearly quadrupled. Interestingly for the owners of BNGO stock, at the end of 2018, Novocure’s shares tumbled from their September high of around $52 to a low of around $29.
Saphyr Adoption Increases
In January the company announced that, as of the end of the fourth quarter, the product’s installed base had jumped 69% year-over-year to 164. In Q4, the installed base increased by a record 23 systems.
As I pointed out in a previous column, multiple experts are very optimistic about Saphyr.
Dr. Rashmi Kanagal-Shamanna said that the product could “help drive better outcomes as a result of better patient management.”
Brynn Levy, the medical director of the Clinical Cytogenetics Laboratory of the New York Presbyterian Hospital said he believes that the product could be a game-changer for “prenatal and pediatric disorders, hematological malignancies and solid tumor cancers.”
The Bottom Line on BNGO Stock
Saphyr’s ability to find more DNA variants than existing tools should make the device an important tool in the fight against cancer. That development, in turn, looks poised to enable BNGO stock to soar at least 500%-1.000% over the long term.
On the date of publication, Larry Ramer held long positions in BNGO and ILMN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
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