Morning, everyone, and thank you for joining the H.C. Wainwright 26th Annual Global Investment Conference on September ninth to the 11th, 2024 . My name is Joshua Corson, and I'm an H.C. Wainwright equity research associate. So today, I would like to introduce our presenter, Erik Holmlin, who is the President and CEO of Bionano Genomics, which specializes in the development of genome analysis software for various applications in clinical care, research, and therapeutics. The floor is yours.
Thank you very much, Joshua, and I want to thank everybody for attending with us here today. I certainly want to thank H.C. Wainwright for the opportunity to present at this event, which is an excellent platform, and I want to welcome everybody who's joining the webcast live. So the purpose today is to really describe for you an update for the business, but we're also in the process of transforming how we're going to market with our products and how we see the future of optical genome mapping, our proprietary platform, and Bionano, and so this is a great time to give the world an update. We'll be making certain forward-looking statements, and so I want to make sure that everybody refers to our public filings on the SEC website for documentation in connection with these forward-looking statements.
So to begin with an overview, Bionano sees itself as a company that's transforming the way the world sees the genome. We've pioneered a method for structural variation analysis called optical genome mapping. Optical genome mapping is a life sciences, tools, and diagnostics, instrumentation workflow. It's been designed to consolidate three legacy cytogenetic methods into a single assay, and so it's a pretty traditional technology conversion, labor release value proposition, but of course, there's much more. It complements sequencing today, so optical genome mapping is not a competitor to next-generation sequencing. In fact, customers can use them together to bring about very powerful results. And what's super exciting about optical genome mapping is that it consistently finds more actionable variants in samples in days, versus the weeks that's required using these legacy methods at an overall lower cost. And so there's tremendous value for labs that are adopting this platform.
We're commercial stage, trailing twelve months revenues of about $36.6 million. And our focus going forward will be driving growth in utilization of our systems. And so we've installed about 360 optical genome mapping systems around the world, and we recognize that those are the growth and power, profit engine for the company going forward. And so what I'll describe for you is a lot of effort to really increase the utilization at those sites. We're targeting academic medical centers and commercial reference labs around the United States, Canada, Europe, and we estimate the total available market for optical genome mapping to be about $10 billion in a combination of cytogenetic analyses and work that's being done in pharmaceutical research and development for cell and gene therapeutics.
Our long-term focus is really addressing the legacy technologies across the entire anatomic pathology spectrum, and so you can see on this slide that, as of today, the current state or standard of care across anatomic pathology is really a combination of cytogenomic analysis, molecular pathology analysis, and an array of additional anatomic and clinical pathology workflows, and there is the potential over time to convert these and consolidate them into an entirely digital series of workflows. Optical genome mapping is where Bionano has started, and our bridge to the sequencing, transcriptome, and proteomic world is through our AI-driven software. This is the end-to-end solution, the optical genome mapping workflow, and the economic engine for our company. It's based on a core instrument called the Stratys System. The Stratys System is our third-generation platform.
It was released commercially this year, and compared to its predecessor, the Saphyr System, the Stratys System offers four times the throughput. And what's important is that when Bionano approaches a customer, we offer the entire end-to-end solution. So a customer only needs to work with Bionano to achieve its results. So starting from sample preparation to imaging consumables, all the way through, analysis, software, and reporting. And so this is really the key to driving this broad adoption and converting from these legacy methods by providing an end-to-end workflow that goes from sample all the way through to interpreted report in as few as three days for as much as ten thousand samples per year per instrument. Our computational solutions have been developed in collaboration with NVIDIA to make them as powerful and as rapid as they can be.
What we see going forward is that this is the platform that will become the cytogenetic lab of the future. Now, where does this optical genome mapping fit into the genome analysis landscape compared to sequencing and traditional cytogenetics? To answer that question, you've got to think about what we call the genome variation continuum, and that's the scale that's presented at the top of this slide. Ranging on the right-hand side all the way from a single base pair, genome variation can occur across the genome and vary by size, all the way up to full chromosome variation. Now, what's important is that a researcher doing cancer research, trying to understand the drivers of that cancer or trying to understand the therapeutic interventions that might influence that cancer, wants to be able to access variants across this entire continuum.
That's why there have been multiple technologies that evolved over time. Sequencing is something we're all familiar with, next-generation sequencing, and now more recently, long-read sequencing. These are very powerful tools at the smaller end of the spectrum. At the higher end of the size spectrum, you have cytogenetic methods. Karyotyping has been around for fifty years. Fluorescence in situ hybridization, or FISH, about 25 years. These are the workhorses of cancer analysis. In fact, these medical societies recommend that all samples be analyzed by karyotyping and FISH in cancer. Then for constitutional genetic diseases, microarrays are commonly used.
But to get the comprehensive set of answers for variants that may be occurring in this size range that you see pictured at the top, about five hundred thousand base pairs up to full chromosome, historically, multiple techniques have been required, and that's where optical genome mapping comes in. It actually has been now proven to take the place of these three methods: karyotyping, FISH, and microarrays, and importantly, bridge a region of the genome that has historically been uncovered. So we call that the coverage gap. And by analyzing variants in this region, it's possible to find new drivers of cancer and diagnose patients in a way that wasn't possible before. And so optical genome mapping is really the replacement for classical cytogenetic methods, and it provides a very clean bridge to sequencing methods.
The Stratys System and our VIA software, which have been rolled out in the last, you know, few quarters, are the drivers of this adoption and transformation. And so the Stratys System really provides higher throughput and enables much greater consumables revenue than we've seen before. The global commercial rollout was in January of 2024, and our first live product debut of the Stratus System and Stratys Compute, developed with NVIDIA, was at the ACMG annual meeting in Toronto in March. And since then, we've seen tremendous response to Stratus, and the VIA software is just as important. It streamlines the visualization, interpretation, annotation, and reporting of genome analysis data, making the end-to-end workflow very efficient. We've had a lot of progress recently, commercially, and I want to highlight some of it here on this slide.
From a commercial partnership perspective, we entered into a software marketing agreement with Revvity, which sells an array of products throughout the life sciences tools and diagnostics industry, but has recently started focusing on a workflow for newborn sequencing research, and our VIA software will be part of that workflow, in partnership with Revvity as they market and commercialize the software for newborn sequencing. From a market development perspective, we've seen tremendous growth in publications. In the first half of 2024, 37% increase over the first half of 2023. Something that's really interesting is that when we look at these papers, what we see is the overall size of each study has expanded enormously.
So almost 1,100 clinical research subjects appearing in these publications, which is a 136% increase over the first half of the prior year. Now, when we survey the landscape, we see that about 91 customer sites have validated, like a laboratory development test or some routine use for optical genome mapping. So what's critical is that of the 360 systems that are out there, about 91 of them are driving routine use of their system. We really believe that they are the economic engine of the future, the potential for the highest consumables utilization, and they'll be our focus going forward across U.S., Canada, Europe, and Israel.
Amazing customer progress, including this announcement, which came out last week, September sixth, by Children's Mercy Kansas City, which became the first pediatric hospital to use optical genome mapping in a clinical setting. And so we're very excited, and we send our congratulations to the team at Children's Mercy. But we think that this is representative of what many, many more academic medical centers can do across the United States. And of course, there's already been tremendous progress in Canada and Western Europe. We think a lot of the progress in the United States is driven by this new CPT code. So in June, the AMA established a Category I CPT code covering the use of optical genome mapping in cytogenomic analysis for hematological malignancies.
A CPT code, especially a Category I code, is a critical component in laboratories receiving reimbursement from insurance companies and other third-party payers to cover optical genome mapping in the analysis of hematological malignancies in this case. And so we think that that is something that's really accelerating adoption, especially in the United States. When we look at financial performance through the second quarter, as I mentioned, $36.6 million in trailing twelve months revenues, which represents about 16% growth over the same period in 2023. Q2 revenues of $7.8 million were down relative to the second quarter of 2023, but I wanna emphasize that that reduction is based primarily on discontinuing certain products. Now, this is related to our efforts to conserve cash.
On a year-over-year basis, the core revenues were roughly flat. You can see some of the other financial metrics listed on this slide, including the expansion of the installed base, which grew by about 30% on a year-over-year basis. Now, we ended the quarter with about $30 million in cash and cash equivalents. You know, certainly that sets us up in a position where we need to be thinking about the cash runway going forward. I think that, you know, we've been through a process of really careful strategic analysis across the landscape, looking at a variety of strategic opportunities. It's become clear, based on feedback from the market, both from the buy side as well as strategic players, that Bionano's capital needs going forward need to be addressed and reduced.
If we look at our previous long-range plans, what we see is that there has been a need for significant incremental cash required to reach cash flow breakeven, and we think that that's justified because the product is growing significantly and the market potential is rather substantial. However, current equity capital markets simply are not willing to support that level of cash consumption, and so we've really had to look for an opportunity to address this, this issue. And so our response is that we intend to transform the business from being this capital-intense focus on global expansion of our installed base, so driving new instruments all around the world, to be one that's more capital efficient, focused on the recurring revenues coming from the installed base. We've done a lot of work to establish this installed base.
We have ninety-one sites that are running validated routine use applications. And so this, we believe, is the way to reduce the capital needs going forward and still reach cash flow breakeven in a timely fashion. And so our emphasis will be on this recurring revenue model by focusing on growth and utilization of the installed base, and importantly, allocating resources away from non-profitable geographies. We want to freeze some of our R&D projects to conserve cash. We can always return to those later. And of course, these steps require us to reduce headcount, and I'll walk through with you some of the rationale and drivers of those reductions. These steps that we're taking will allow us to continue our market development efforts to drive reimbursement of optical genome mapping across the United States.
It will eliminate the need for a large commercial sales force and support team to eventually become cash flow breakeven in year three or four of this program, and so we've been taking very disciplined steps systematically, really beginning in May of 2023, and those steps, at that time our annualized operating expense, looking on a non-GAAP basis, was about $134 million. Over the period of May to March, May 2023 to March of 2024, we took three steps to reduce headcount. You can see the headcount reductions listed at the top of this slide, and an overall reduction in operating expense of about $71 million compared to May 2023, and these reductions were enabled by product launches.
And so when we completed development of the VIA software, completed development of the Stratus system, we didn't need as many product development people as we had had in the past. And so we were able to reduce the sizes of those teams and reduce those expenses without a significant negative impact in overall progress. We also reduced sales and marketing costs during this period by discontinuing our clinical services or several of our clinical services. That is what impacted revenues, but importantly, resulted in a substantial reduction in costs without any negative impact to the core business, optical genome mapping. And so that brought us to a point at the end of the second quarter, where our annualized operating expense was approximately $63.5 million.
And at that point, we undertook these reductions that have been described today in a Form 8-K and are summarized here, which is that we reduced operating expense by almost another 50%, reducing R&D again as a result of the product launches that we've continued to have, as well as freezing some of our product development projects. And then in sales and marketing, we've been able to reduce those expenses by shifting our focus away from global geographies and toward the most productive geographies of the U.S., Canada, Europe, and Israel. And also importantly, shifting that business model to focus not so much on aggressive growth, just for growth's sake, at any expense, toward growth that really drives adoption and utilization of the product at high volumes.
And so what you'll see on an ongoing basis is an operating expense in the neighborhood of about $33.7 million per year, and that's obviously a substantial reduction, and we think we've done this on a very healthy basis to drive the future profitability of Bionano through optical genome mapping. So when we look at this transformed Bionano, we really see four new strategic pillars. We've been talking a lot about this idea of enabling our software to drive more utilization by speeding the process up and making it simpler, and so we'll be having a lot of education around software utilization. We want to leverage the existing customer base to increase their utilization by working with them to expand their menu.
And so typically, what happens is that there will be a single assay running on the system, and so we wanna support these sites as they add additional assays to expand their menu, and by expanding their menu, the consumables revenue will increase. Now, it's very important that we address these initiatives for reimbursement going forward. And so those efforts will continue, including, our focus now, which is on local coverage determinations from Medicare administrative contractors in the U.S., including MolDX, NGS, and Noridian. And then importantly, we have programs that are intended to improve the gross margin profile. And so, we'll be reducing the cost of goods to manufacture consumables, which will also be helped as utilization goes up.
So through increases in volume and programs that reduce cost, the gross margin will improve, and these are the steps that we would believe will bring us to cash flow break-even on a much less, much lower cash burden than originally planned. And so when we think about going forward, we've been talking about this streamlined business focus quite a bit. When we look at guidance, we feel it's appropriate to revise full year guidance down to $32-$36 million, and this just reflects probably some of the you know, more global sites that may not come on board as a result of this shift in focus.
But overall, we'll maintain the guidance around systems for the full year in the range of 381-401, and we're gonna maintain the third quarter guidance of $7.9-$8.9 million on the top line. And so with that, I wanna thank everybody for attending, and I open the floor to any questions and answers.
Perfect. Yeah, I wanna thank Erik for a very informative presentation, and we'd like to-