Our third quarter results demonstrated progress against our new operating strategy. We delivered record recurring revenue, a strong rebound of platform placements, gross margin improvement, and cash burn in line with our plan,
- Dr. Siddhartha Kadia, CEO of Berkeley Lights.
Biotech stocks have fallen out of favor, and investors are nervously awaiting an opportunity to buy the dip. Today, Berkeley Lights (NASDAQ: BLI) trades at $3, down 84% year-to-date and $100 lower than its multi-year high in December 2020. So, is BLI a biotech stock worth a closer look or could it continue to plummet? Let’s wade in.
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What Does Berkeley Lights Do?
Scientific researchers use the Berkeley Lights platform to find the best cells for the job in a fraction of the time and cost of traditional methods. Berkeley Lights’ technology works with thousands of cells simultaneously, rapidly speeding up workflow. It records cell behavior and links to genetic information in real-time, thus helping develop and commercialize biotherapeutics and other cell-based products.
The Berkeley Lights Platform captures deep phenotypic, functional, and genotypic information for thousands of single cells in parallel. It can also deliver the live biology customers desire in the form of the best cells. It is a fully integrated, end-to-end solution comprising proprietary consumables, including Berkeley’s OptoSelect® chips, reagent kits, advanced automation systems, and application software.
The company developed its Berkeley Lights Platform to provide the most advanced environment for rapid functional characterization of single cells at scale and to establish an industry standard for its customers throughout its cell-based product value chain.
While Berkeley Lights is based in the United States, it has subsidiaries in the United Kingdom, China and Singapore.
Q3 Highlights
Berkeley Lights Inc (BLI) reported its quarterly earnings on November 8. FactSet analyst estimates provided an EPS consensus of -$0.32 and a sales consensus of $21.58m. BLI met the consensus estimates with actual EPS of -$0.32 and slightly missed sales estimates with revenues of $21.4m.
Total Revenue: $21.4m (-12% Y/Y, +12% Q/Q)
Record Recurring Revenue: $7m (+48% Y/Y, +18% Q/Q)
Gross Margin: 70.2% (+6.8% Y/Y, +2.7% Q/Q)
Forward Guidance
Berkeley Lights expects full-year 2022 revenue to be approximately in line with 2021 full-year revenue.
Dr. Siddhartha Kadia, CEO of Berkeley Lights, said:
We are well on our way to transforming Berkeley Lights from a technology platform company into a growing, profitable, and sustainable life sciences tools and services company. We will continue to advance important changes to our business as we close out this year and lay a strong foundation for the immense opportunities ahead of us.
Berkeley Lights is expected to provide guidance for 2023 and insight into partnership opportunities and gross margin expectations in its Q4 earnings call.
BLI Stock Financial Metrics
BLI stock has a price-to-book-value (P/BV) of 1.2. It does not offer shareholders a dividend.
Over the past year, BLI stock has traded between $1.82 and $26.75. Today it trades at around $3.09. Year-to-date, the Berkeley Lights Inc stock price is down -83.96%, while the S&P 500 is down -21.85% over the same period.
Analyst Ratings
Seven FactSet analysts have a Hold rating on BLI stock, with a target share price of $10.25.
Berkeley Lights Corp Growth Potential and Risks
Berkeley Lights is taking a new approach to its growth strategy to better fit progressing in challenging economic times. The company confirmed it ended its collaboration agreement with Ginkgo Bioworks (NYSE: DNA) in early September as it ‘no longer supports its profitability goal.’ Meanwhile, Berkeley Lights confirmed that its collaboration agreements with Thermo Fisher Scientific, Bayer Crop Sciences and Vestaron are going very well and at different stages of completion.
Berkeley Lights is introducing a more flexible configuration and pricing strategy with a higher recurring revenue growth model. It is on track to launch the first of several application-specific Beacon system models early next year.
While currently focused on assisting clients in the areas of AAV gene therapy and TCR discovery (virus and cancer detection), the company also serves some clients in the agrochemicals space.
The company may also consider M&A opportunities to expand its total addressable market.
In terms of providing leverage to our current cost structure, we are looking at consolidation opportunities that will enhance our commercial infrastructure or drive significant R&D and G&A synergies.
During its Q3 earnings call, Mehul Joshi, CFO of Berkeley Lights, noted that even though capital expenditure budgets are being scrutinized and sales cycles are being extended, new customers are still very interested in the products and services Berkeley Lights has to offer. That’s reassuring to hear.
Furthermore, the company has been in discussions with 100 potential gene therapy clients, so it is hopeful for positive returns from this engagement further down the line. Indeed, Berkeley Lights has validated with several customers that its platform can rapidly isolate and recover functional TCR sequences from patients who received personalized cancer vaccines. Therefore, its partnerships and services team is actively exploring commercial partners interested in this significant opportunity.
Is BLI Stock a Good Investment?
Operationally, Berkeley Lights is moving in the right direction, aiming to become a profitable life sciences company. Its Q3 net losses rose 5% Y/Y but fell 16.2% Q/Q. Recurring revenues growing is a good sign, but partnership revenues have been declining, which is less encouraging.
With the markets currently in a phase of uncertainty and inflation weighing on margins, share price volatility is to be expected, particularly in more speculative areas of the market, such as biotech and penny stocks.
For investors interested in BLI stock, it may be worth waiting for further insight from its Q4 and full-year earnings report, which should give more color to its future projections.
