Q2 2021 OpGen Inc Earnings Call
You are now live.
Welcome to the Op Jen second quarter 2021 earnings call and business update at this time all participants are in a listen only mode. Following management's prepared remarks, there will be a Q&A session. As a reminder, this conference call is being recorded today August 12.2020.
Before we begin.
Like to caution you that any comments made during this conference call by management may contain forward looking statements regarding the operations and future results of objects, including its subsidiary Securitas and Ares genetics I encourage you to review options filings with the Securities and Exchange Commission, including without limitation the company's most.
Recent Form 10-K 10-Q for the second quarter of 2021, it will be filed with the SEC, which identify specific factors that may cause actual results or events to differ materially from those described in the fourth booking statements.
Factors that may affect the company's results include but are not limited to our ability to successfully achieve the expected synergies from the company's completed business combination curious to implement the combined company strategy the impact of the continuing global COVID-19 pandemic on our business and operations are you.
The proceeds from recent financings pursuit of FDA clearance for the acuity AMR gene panel for use with bacterial isolates and for our other products and services the rate of adoption of our products and services by hospitals and other health care providers in general as well as in the current COVID-19 pandemic situation in.
The success of our commercialization efforts and partnering strategy the effects on our business of existing and new regulatory requirements and other economic and competitive factors. The contents of this conference call contains time sensitive information that is accurate only as of the date of this live call August 12.2021.
The company undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call, except as required by law.
Joining the call today will be Oliver Shaw, President and CEO and Tim Dec CFO option I would now like to turn the call over to Oliver shock for introductory remarks.
Thank you operator, and thank you everyone for joining us this afternoon.
We appreciate your continued support of option.
We're very pleased with our second quarter performance and strong momentum through 2020 one.
We will focus on our firm progress within our diversified portfolio of products combined with our growing partnerships.
We look forward to increased activity in our pipeline in the near future as we continue executing on our strategy of becoming a leader in the molecular diagnostics and bioinformatics industry.
On today's call, we'd like to begin with a recap of highlights briefly mentioned on our first quarter earnings call followed by recent updates in our product and R&D pipeline.
I'll then pass the call over to Tim to review financial highlights from the second quarter will then wrap up the call with an outlook on the company's upcoming milestones followed by a Q&A session.
Our previous earnings call, we announced results from the very well attended multi presentation webinar titled pneumonia diagnosis spectacles superinfection in COVID-19 patients.
And senior consultant physician Christian Visco at the Department of Laboratory Medicine, Heartland, Scott Institute, Stockholm, Sweden highlighted several important findings from his study, including key advantages of the Universal H P M panel compared with conventional bacterial culture.
Professor geese could conclude that the unit barrel demonstrated higher dark diagnostic yield specifically 25, 3% more detections van bacterial culture, including several key pathogens of concern, notably Smalto Philia was called out as an important target on the universal panel because of its intrinsic resistance against many of the standard antibiotics.
An analysis of chart reviews of patients that had multiple lower respiratory cultures ordered during the course of their hospital stay revealed two clinically important cohorts.
In group, one culture and unify our H P. N results, we're 100% concordance on the first and all subsequent samples that had been ordered the findings in this cohort demonstrated that unilateral H P. N would enable significantly more rapid detection of pathogens not covered by empiric therapy due to intrinsic resistance within five hours.
As opposed to two and a half days by culture.
And group too.
H P undetected bacterial pathogens up to seven days earlier in patient samples that were initially negative by culture, but subsequent cultures order during hospital stay well confirmed as positive for the same pathogen at a much later stage.
As a consequence of lack of finding antimicrobial etiology by culture. This group of patients was exposed to longer duration of empirical antibiotic treatment.
The second presentation focused on a number of clinical cases from the unit L. R. T. P. A L study that exemplify the performance characteristics and potential clinical impact of this unit barrel Pal in pneumonia diagnostic algorithms presented by drew Bell medical and public health Microbiology fellow at any of the Indiana University School of Medicine.
An analysis of retrospective chart reviews performed on patients suffering with various types of pneumonia as well as non pneumonia patients revealed that based on conventional microbiological results, 41% were under treated 19%, where overtreated, while only 25% were appropriately treated and 16%.
Where appropriate without antibiotic treatment.
In contrast, the study demonstrated that using the unit barrel LRT B a L parents would have enabled prompt and appropriate targeted antibiotic therapy, and 41, 3% of cases, including Escalations and D escalations, reducing the time to appropriate therapy by 25.7 hours.
Additionally, we previously touched on our extended collaboration with the New York State Department of Health through September 30th of 2021.
The partnership extension remains valued up to an additional $540000, which includes a monthly retainer based project fee as well as volume dependent protest fees the.
The extension period gives us time to discuss and evaluate potential future forms of collaboration with the New York State Department of health across the state.
We've seen nice levels of increased testing volumes throughout the second quarter, and we hope to continue and expand our relationship with the department.
To that end the dialogue with the New York State Department of Health is already ongoing.
In June we submitted an updated five 10-K summary to the FDA for our acuity AMR gene panel for isolates.
The FDA had previously provided substantive feedback on what we believe is all key documents, including the package insert electronic user guide and operate properly dramatically in.
In line with their currently expected timeline of doing so by the end of May.
The FDA recently reiterated to us that it intends to complete its review by the end of August of 2021.
And submitting a revised documents to the FDA, we have not received any additional feedback nor questions or requests for additional information.
Although the FDA clarified that their time lines can be affected by various factors. We're confident in the progress moving us much closer towards reaching a final FDA clearance decision point in the coming weeks based on the Fda's current expected timeline.
Recently, we successfully completed the move of our U S headquarters labs and operations to a new facility here in Rockville, Maryland, The 10000 square foot facility results, a net savings of approximately $600000 annually in operating efficiencies and reduce rents.
Going forward all unit cartridges as well as acute as consumables for the U S will be stocked and shipped directly from this facility.
Regarding Ares genetics ours, just recently signed several additional collaboration agreements for example, one with U P. M C in Pittsburgh, Pennsylvania.
We're in a scientific and clinical collaboration project, we will be working on not a poor technology based approaches.
Furthermore, Ares has entered into a strategic R&D collaboration with a major U S based zero and reference lab.
As part of that collaboration harvest has the right to select a large number of key isolates for sequencing and data curation, thereby significantly expanding the Ares database content and scope as a leading database of AMR markers and a S T data.
And return Orris will provide certain next generation sequencing services and its AI powered predictive I S T capabilities to the partner lab.
Also during the second quarter of 2020, one Ares amended its licensing agreement with Qiagen to now allow for non exclusive access to research use only of the Ares DB and thereby opening up the path to adding further collaboration partners for global research uses off the platform.
The collaboration with Sandoz has been extended and expanded once again in Q2, and we also expect further projects in collaboration opportunities to be added to the Sandoz partnership during the second half of 2021.
Several additional collaborations are currently at various stages of negotiations with pricing discussions ongoing on some of these.
Doctor you hottest Weinberger N G. S lab director recently provided an update on our culture free genomic assay for EMR surveillance Dark Divined Berger spoke via a virtual presentation at a conference sponsored by twist Bioscience.
Okay Weinberger I commented that I quote the sensitivity for a M. Our marker detection and native urine samples from septic patients with confirmed mono infections in our study was determined to be between 94% and 100% when compared to comparator data obtained from whole genome sequencing of the corresponding bacterial isolate.
On day two after the twist Bioscience conference Dr. Arnold <unk> Turner CEO of Ares genetics presented virtually at the genomics track discussion at the Amazon Web services Health care and life Sciences Symposium.
Doctor My turn I discussed at the Ares Universal powerful genome assay Ares Upa is currently being evaluated in a paid for early access program for which Arris has already signed up five public health organizations from different European countries.
We further extended our R&D updates through two virtual seminars were doctor Materna presented preliminary data of an ongoing multicenter validation of long read not a poor sequencing of clinical isolates.
We're conducting the multicenter validation by Oxford, not a poor technology or O N T in combination with Ares cloud for data analysis.
Ares cloud assisted conversion of O N T data into clinically and Epidemiologically relevant information proved highly accurate for participating labs with average accuracies of consistently 100% for pathogen identification opt.
Up to 97% for Ahmar marker detection, and again up to 100% for predictive antimicrobial susceptibility testing or S. T.
As a result, we're planning to assess the performance and utility of O N T based isolate sequencing for clinical routine use in collaboration with a major U S academic hospital.
The results from the multicenter validation and subsequent clinical study are targeted to be published in a peer reviewed scientific journal to expand the workflow adoption and laboratories worldwide.
We're extremely pleased with the progress of Ares genetics to commercialized solutions for pathogen in Amr's surveillance and are excited by the opportunity to continue developing additional new partnerships with more organizations, both in the United States and overseas.
Continuing with more recent presentations and conference attendance says we'd like to note a few highlights.
The company announced positive prospective clinical data on the unit barrel LRT B a L. A webinar at the end of June titled One academic medical centers experience with BUNAVAIL multiplex platform for testing Bronchoalveolar lavage fluids analytical and clinical assessment.
Which study patients in the intensive care unit for whom B a L specimen was ordered for diagnostic purposes, and prospectively evaluated with a unit of Aero LRT B a L panel in conjunction with quantitative bacterial culture and antimicrobial susceptibility testing.
The clinical impact of the universe results on antibiotic stewardship and patient management were discussed and acted upon in real time.
Enabling earlier adjustment of antimicrobial therapy, and 53% of all cases.
At the World Microbe Forum, Dr. Drew Bell of Indiana University School of Medicine reported in an eye poster titled clinical evaluation of a multiplex molecular diagnostic lower respiratory tract panel for Bronchoalveolar lavage specimen.
Which demonstrated that the universal LRT B, a L provided the basis for appropriate escalation and the escalation of antibiotic therapies and 42% of cases, reducing time to appropriate therapy by 31 hours.
Dr. Corrie hail infectious disease clinical pharmacist at the Penn State Health Milton Hershey Medical Center in Hershey, Pennsylvania presented on unilateral LRT titled and I'm Accruable stewardship opportunities using results from a multiplex molecular lower respiratory tract panel as compared to conventional culture.
Their data characterize the potential impact of universal LRT, an antibiotic therapy and patients being treated for pneumonia.
Retrospective chart reviews were performed 92 of these patients, including 51 critically ill ICU patients at 39 pediatric patients.
They reported complete agreement between Universal LRT and culture results in 50% of cases.
And in 45.7% of cases unit arrow yielded more information than culture alone.
In addition, two posters on the acute is a AMR gene panel for isolates were presented at the conference by the Wadsworth Center, New York State Department of health and their participating sites.
The first poster titled Combating antimicrobial resistance in New York State with public health partnerships.
Highlighted the collaboration project between the Wadsworth Center, an option as part of the New York State Life Science initiative to demonstrate the benefit of a rapid molecular diagnostic assay and identifying related list of antimicrobial resistant organisms indicative of outbreaks or transmission.
The second poster titled Comparative analysis of a carbo Panama.
Reducing klebsiella pneumonia outbreak in a New York State Health care facility using multiple typing methods investor.
Investigated a large outbreak of carbo, Panama is producing carbo <unk> resistant enterobacteriaceae.
At a health care facility detected through the a our laboratory network.
The investigation concluded that the acute is a M. R gene panel produced highly concordant results with whole genome sequencing.
And that these findings can be used to improve infection control practices in this and other facilities.
This type of data provides us the evidence basis for a highly focused and targeted commercial launch campaign. Once we have obtained FDA clearance for the product.
<unk> successfully completed and assembled a batch of 10 final pre series released unilateral 830 RQ analyzers.
The unit Arrow, a 30 RQ platform is designed to deliver rapid and multiplex testing results in under 30 minutes for some assays and then 45 to 90 minutes for more complex samples.
The platform has also been designed for competitive makes a features such as its multiplexing and rapid time to result, optional quantitative assays where needed all at very favorable cost of goods for both the instrument system and the single use cartridges.
This is a major development milestone in the unit Arrow, a 30 program as they are now available for final verification and validation testing.
Such a V N V testing is actually already underway as we speak with a focus on mechanical and electric functionality as well as lifetime testing of the instruments.
Aligning with our sales and partnership strategy. The unilateral 830 platform can be made available to third party development and commercialization partners and licensees for their own assay menu and product portfolio.
Discussions are currently ongoing with several potential platform partners for various content and licensing or partnering scopes.
Finally, we'd like to make a quick note that our U S. Sales force has expanded through the recent hire of Derek Guilting Senior Vice President of sales.
Recently, Mr. Yelstin, let the north American expansion for genetic signatures.
It was focused on expanding the north American sales team at identifying and driving new business opportunities prior to that mistake hosting was instrumental in the early success of T. Two biosystems building and leading the sales team to launch their first FDA cleared products.
His 20 years of diagnostics and medical device sales experience include molecular diagnostic sales leadership and pathology sales leadership as well as sales experience in diagnostic imaging anesthesia oral surgery and ophthalmology.
We couldn't be happier with the addition during such an exciting time in the company's history, and we have full confidence in Mr. Yeltsin's ability to complement our growing team in fact, Mr. Hosting is already further expanded our U S sales team with an additional regional business development director, who had previously been responsible for the northwest territory of bio fire.
We're currently looking to add an additional regional business development team member in the southwest to complete and round out our combined you'd have Errol <unk> U S sales team.
I'll now turn the call over to our CFO, Tim Dec, who will review financial results for the second quarter Tim.
Thank you Oliver on today's call I will briefly touch on the highlights of the second quarter discuss our balance sheet position and review underlying growth drivers for the business.
Revenue for the second quarter of 2021 was $811000 down 32% from $1.2 million for the prior year period.
Even though revenue for the quarter was down is important to note why <unk>.
Elaborate Tory service revenues increased approximately 926% the increase.
It is primarily attributable to the inclusion of $200000 of lab service subsequent to the transaction, including Covid testing services performed by the company's curated subsidiary.
The increase in laboratory service revenue was offset by the following.
A decrease of product revenue of approximately 49% the decrease is primarily attributable.
Two a decline of $300000 due to the strategic exit from the company's fish business.
And a decrease in collaboration revenue of approximately 58% the decrease.
This is primarily attributable to a decline of a $300000 due to the conclusion of a nonrecurring completed R&D collaboration project with an IBD partner at Ares genetics in 2020.
Revenue for the first half of 2021 was $1.6 million as compared to $1.8 million for the first half of 2020.
This decrease is primarily due to a change in revenue from the various product offerings.
The company had a decrease in product revenue of approximately 14%.
The decrease is primarily attributable to a decline of $400000 due to the strategic exit from the company's fish business offset in part by a $300000 increase due to the inclusion of curated product sales subsequent to the transaction.
The company also had a decrease in collaboration revenue of approximately 56%.
The decrease is primarily attributable to a decline of $500000 due to the conclusion of a nonrecurring R&D collaboration project with an IBD partner at Ares genetics in 2020.
These decreases were offset in part by an increase in the lab revenue service. The increase is primarily attributable to the inclusion of $400000 of laboratory services subsequent to the transaction, including Covid testing services performed by the company's curated subsidiary.
Operating expenses for the second quarter of 2020 were $7 million compared with $7.7 million in the second quarter of 2020.
Operating expenses for the first half of 2021 was $14 million as compared to $12.3 million for the first half of 2020.
Net loss for the second quarter of 2021 was $7.1 million or <unk> 19 per share.
Compared with $7.5 million or <unk> 49 per share in the second quarter of 2020.
The net loss for the first half of 2020, one was $21.9 million or <unk> 65 per share as compared with a net loss of $11.4 million or $1 per share for the first half of 2020.
Our cash our cash position as of June 32021 was $31.2 million.
As a reminder, our cash position was bolstered this year as a result of a $25 million registered direct offering in February of 2021 at a strong price point and the warrant exercise in exchange of $9.7 million in March of 2021.
Our Q2.2021 cash burn was higher than the normal $5 million to $6 million per quarter due to three items that all occurred during the second quarter and are not expected to occur again until Q2.2022.
Our annual D&O insurance renewal of approximately 800000.
Our annual debt interest payments to EIB of approximately $900000.
And 2020 staff bonuses of approximately $700000 paid in Q2.
Total shares outstanding as of today, our approximately $38.3 million shares and the fully diluted number of shares as of today would be $49.3 million shares.
As Albert mentioned in his prepared remarks, there are a number of near term and long term milestones that the company is working very diligently diligently on achieving.
On August 5th we determined to cancel the reconvening of the adjourn portion of our annual meeting of stockholders for the consideration of proposal two relating to the increase in the company's authorized shares of common stock.
In order to provide the most strategic financial flexibility to the company, we filed $150 million S. Three shelf registration this past Monday.
This filing does not constitute any offer at this time, but the board and senior management option will continue we will continue to evaluate various alternatives for financing the future development and growth of option over the coming months and quarters.
As previously mentioned, our first quarter earnings call due to the ongoing challenges presented by COVID-19 pandemic, we will refrain from any specific revenue guidance today.
However, we are excited by the recent development progress in both the cure curators, Universal 830, RQ platform and Ares genetics progress on multiple fronts and strategic partnering as well as the commercial launch efforts of our service offerings, such as the Ares ISS and Ares Upa.
We are actively capitalizing on our breakthroughs and are determined to continue our momentum through increased collaboration and partnership efforts.
I'd also like I'd also like to note that it comes with bittersweet emotions that as of August 20th 21, I'll be stepping down as Chief Financial Officer, and corporate Secretary of option I have a huge amount of respect for our leadership team management and all of our employees.
I am confident in their ability to continue to provide the strategic focus the necessary support required and continue to drive shareholder value.
With that I'll turn the call back dollars.
Thanks, Tim as a personal note myself and the entire leadership team and board of option are hugely appreciative of the great work you've done in recent years for option and your leadership and bring an option in case together and completing the integration following last year's business combination.
Knowing that you will literally be just two floors upstairs is great and I wish you all the best for your new endeavor, it's upon us.
I would now like to talk about the company's recent and upcoming milestones.
As stated earlier and on last quarter's call. We have submitted an updated five 10-K summary to the F. D. A four hour cutest AMR gene panel for isolates, we remain confident that option has addressed all of the fda's comments and edits to date.
The FDA has previously stated that they quote expect to complete the review by the end of August 2021.
Although the FDA said that their timelines can be affected by various factors there have been no changes or amendments to the previously established timeline and we continue to expect to see a completed review by the aforementioned dates.
We delivered on our previously stated guidance and expectation to complete a batch of 10 final pre series unit Arrow, a 30 analyzers.
I can't stress enough, how proud I am of the curators team achieving such an impressive milestone on time and within budget. Despite headwinds from COVID-19, global semiconductor shortages and other supply chain issues, It's testament to their flexibility and hard work and it illustrates that our team can continue to execute and put our best foot forward.
Word while facing deep global challenges.
We recently received additional feedback via our Chinese partners at Beijing clear bile from the Chinese regulators at N M. P. A M.
A N N P. A is asking for some supplementary clinical data on the unit arrow pneumonia cartridge to be generated in China and submit it to the N M. B a N N P. A to address ethnicity and prevalence differences in the U S and European data.
Thus far we're talking about a small scale study of maybe around 600 samples to be tested.
Together with BCB, we're working on the next steps in logistics to ensure a swift execution of such study and we'll be providing further updates in due course.
In closing, we're pleased with our R&D advancement of milestone achievements over the last few months.
We'd like to thank all of our employees, Tim and I, along with the rest of the management team are deeply appreciative of your continued commitment your.
Your dedication is integral to our success.
To all our listeners we're looking forward to updating you as we progress on our partnership strategy R&D pipeline and pending clearance decision from the FDA as well as subsequent commercial launch of the acute is a AMR gene panel here in the U S heading into the third quarter of 2021.
As always thank you for your unwavering support and for participating in this afternoons call.
I'd now like to turn the call back to the operator for questions operator.
Thank you we will now begin the question and answer session. If you do have a question. Please press star. One also if you are using a speaker phone. Please make sure that your mute button is turned off to allow your signal to reach our equipment. Once again. Please press star one at this time can be placed in the queue and well pause for just a.
Moment to give everyone the opportunity to signal.
We will take our first question from Ben Hayner.
With Alliance Global partners.
Good afternoon, gentlemen, thanks for taking my questions are first off for me just on the the a b C b and the N M. P. A a supplemental data that you'll need to be generating it doesn't sound like it's going to take a long time to to test 600 samples, but do you have any indication on the how come.
Quickly the N M P a might be able to turn that around once you do submit do those they've requested.
Ben Thanks for the question, so you're absolutely right I mean, especially looking at the size and scale of some of these AAA hospitals in China and the high prevalence of pneumonia as a disease, we wouldn't anticipate enrollment for such a small supplementary study two and eat.
The relatively short top definitely not more than than a couple of months now the M. P. E. However at this point still does not provide any clarity or guidance on their review timelines thereafter.
I have however reviewed all of the submission data that we have provided.
From our FDA data from our European data from the data that has already been generated in China and this is sort of the ancillary or supplementary dataset that they're asking for so they're not going to be starting the review, but they're literally going to look at this incremental and supplementary dataset.
Okay. So that that doesn't sound really all that bad, but I suppose you you never know when you're dealing with any government agency.
And then you know just.
I apologize if you've mentioned this but it but just a on the studies the FDA studies for the U T. I N I J I panels did you guys did you guys give an update on the timelines. There are we still looking you know sometimes later this summer for U T. I and later this year for Iga.
Yeah, Yeah. So good question I Didnt specific comment, but we're absolutely on track with both clinical trials in terms of the preparation.
The U T I a trial sites here in the U S are currently seeking IRB approvals and final clinical trial agreements are being reviewed by legal and finance and we expect to get the UTI trial off to a good start here in the coming weeks.
We already have sufficient instrument systems unify our instruments here in the U S where are preparing large batches of UTI cartridges on the manufacturing site for the trial and so everything is progressing as planned.
On track and no changes thus far.
Great and then on <unk> some of the clinical data that's come out here recently on L. O T B L.
You know, 53% earlier adjustment of anti microbial therapy escalation of appropriate escalation de escalation and 42% of the cases.
You know that seems like you're changing the therapy decision quite a bit you know you do hear about the you know other companies and and similar studies, saying, Oh, well, we we altra therapy, 12% of the time or 26% of the time.
Is there kind of a threshold that you know hospitals and facilities like to see before they even take a look at evaluating.
Something in in terms of the you know alteration of therapy or you know because I would think you know half the time would get everyone's attention pretty quickly.
It sure does and you're absolutely right I mean when you.
When you look at the a lot of the literature and preconceived notions probably people say well you know maybe it's 10% of cases 15 on the outside but we're seeing this time and time again specific to pneumonia, which again is a critical critical disease and.
Current standard of care based on Empiric brought back bought broad spectrum antibiotics is simply inadequate and a lot of cases, what we've seen with these datasets as a lot of.
Kind of.
Not just raised eyebrows, but really sort of aha moments, where clinicians pharmacists and lab folks in in some of the major hospitals that have generated these have gotten together have pushed for.
You know some strong support towards their own hospital administration. So clearly this type of data is extremely supportive.
Of getting not only clinicians attention, but also you know the sense that look if were inadequately trading half of our patients I mean, that's a real problem.
It's a problem clinically and from a patient management, but it's also a problem for them any quality management metric.
From you know potential Readmissions and CMS financial penalties and the economics, if you look at we've.
<unk> spent time and energy working with several of these hospitals on some health economic modeling.
Do you look at some of that modeling it.
Typically takes and again it depends a bit on you know specific DRG coding and case numbers per hospital, but typically.
Anywhere from the mid to high single digit percentage into the very low double digit percentage health economically you have a clear justification. So if youre in the 40, 50% in heartburn. This is economically a great a great support so were definitely excited by the data we have an upcoming.
Webinar on September 14th, which we'll look at a study from Europe, which was an interventional trial multi centric that looks again at sort of the the clinical impact that univar, one pneumonia testing can make and again I'd just encourage everybody to listen into that because it's some some really exciting data that speaks volumes to the.
The problem and the solution that's right available.
No. It's a very intriguing for sure and then and then lastly for me on the.
Is signing up I think you said five public health organizations and different different European countries. You know obviously option already had the the New York State Department of Health agreement you know at some.
Sounds like there's kind of a you know you guys are going to kind of have like an offering or almost a package that you'll be able to offer to you know other organizations in jurisdictions and public health I mean is that a fair assessment or what's the right way to think about it if not.
Absolutely I mean, whether it's the acuity is a AMR gene panel for isolates, which is very much focused on infection prevention and the sort of public health monitoring.
The Ares genetics a next gen sequencing based is also very attractive as a tool and you could potentially even imagine as you said packaging are combining some of these offerings. So yes, I mean, it is a strategic focus.
Bringing these types of solutions to public health institutions.
And if we look out look forward here into the third and fourth quarter.
In addition to these.
Five public health institutions. The Ares genetics team is already engaged with several national reference laboratory across Europe on several specific you know pathogens of concern that these national reference labs are a responsible for it. So again you can definitely anticipate seeing more of that.
Strategically getting getting the solutions into the hands of public health institutions public Health Labs, and then gradually moving from there into a more more patient focused routine clinical routine if you will.
Okay makes sense. That's it for me you know I just wanted to say to them you know it's been a really enjoyable working with you and getting to know you over the years and you know congrats on moving two floors up and best of luck at the new gig.
Thanks Ben.
Moving on we'll go to <unk>.
Shannon with H C Wainwright.
Hey, guys How's it going this is cheap on behalf of <unk> Chen.
I know that in your prepared remarks, you said you can't really get into the details of.
Our revenue expectations, but maybe help us.
I understand some of the key catalyst.
Key events that drive our.
Revenue expectations for the coming quarters and specifically.
You could comment on the trend of operating expenses.
Very helpful. Thank you.
Let's start with the operating expenses. So I think if you look at our G&A R&D as well as marketing and sales they have been extraordinarily consistent quarter over quarter. The guidance. We've provided previously and thought we definitely stand by that here today. So we're not expecting any significant changes also.
We expect consistency in the third and fourth quarter and moving into early parts of next year.
On that sort of breakdown.
I would say on the revenue side, you will continue to see that gradual shift.
As we move through the year or quarter after quarter will have the fish business drop out we completed and exited that as we said in our previous earnings call at the end of Q1. So there will be no fish revenue and it was just short of $2 million last year.
That will be.
Overtime compensated by growing service revenue on the one Hampton that services from the Ares genetics offerings that we've just been discussing as.
As well as some some ongoing service.
Service offerings on the Covid testing side.
But the real focus here is going to be on product sales and are the key milestones here I mean, obviously being able to get back into hospitals and labs for the unit <unk>, we've already seen a number of new and additional placements with some clinical reference labs here in the U S for the urinary tract infection.
We've expanded that install base here in the second quarter I expect that to continue and we also expect to drive forward with the clinical and commercial implementation at several of these institutions that have presented this great data, we now have that support and backing so product revenue on the unit Aero side growth.
Service revenue growing on the Ares genetics site. There's a you know a couple of unknowns here.
Current extension of the New York State Department of Health project runs through September 30th and as I commented, there's a obviously the the desire on all parties sides to continue and think about extending and expanding that but so far we have obviously not signed anything or announced but that's something to look for from the.
Fourth quarter this year and onwards.
And the obvious the obvious commercial catalysts here on the acuity say AMR gene panels FDA clearance.
Again, just to remind everybody we have already manufactured multiple batches of product it's sitting here in Rockville. It on the on the shelf, we're waiting for final FDA clearance to be able to fix the final label and basically start rolling out and launching launching that product.
And then the other significant catalysts commercially.
Will will be China, and again, you know looking at those timelines clearly we're pushing forward as aggressively as we can to make sure that that supplementary study gets done gets done swiftly.
And then once that that approval comes through and the the launch happens.
Again over an eight year period up to $180 million, but even in the in the first year it should add materially to the top line revenue both on instrument sales as well as pneumonia cartridge sales.
But that's really the focus.
U S direct sales on unit barrel lower respiratory tract as well as U T I continuing the distribution business in Europe internationally, China, and then Ares genetics the other.
You know if you want to look at it as a potential catalyst and there's there's certainly a few of them is partnering deals and you know we have <unk>.
Repeat it and reiterated today that we are engaged with multiple parties around the unit Arrow a 30 platform.
Depending on the structure of such a deal if you think about our classical licensing deal that you know may have elements, such as an upfront license or technology access fee. It may or may not involve ongoing collaborative R&D funding. It may have certain milestones and then potentially future royalties, it's obviously difficult to <unk>.
Project until you actually know the details of any such partnership how the revenue recognition pattern from those types of deals what would materialize into quarterly earnings.
And the same holds true for any.
Potential future deals with Ares genetics and yeah.
<unk> continued to add deals both with existing partners they've added new partners and it is our clear intention to continue adding strategic partnerships and as I said, we have several specific proposals for collaborations and licensing opportunities from Ares genetics in front of several interested parties.
It all depends on the specifics of the deal whether its you know our upfront lump sum payments ongoing payments royalty payments. Some revenue recognition on these will be hard to predict and it will always be lumpy.
And deal driven but of course from a cash flow perspective any of these deals have significant potential to provide non dilutive cash and capital to option.
Okay.
Awesome. Thank you so much that was very helpful and comprehensive.
And once again it is star one at this time for questions moving on well go to Max Jacobs with Edison Group.
Hi, guys. Thanks for taking my my questions actually no. Most of mine have already been answered. So I just was wondering what's the status of the <unk>.
New York Department of Health partnership I know it expires on September 30th. So just you know besides for the negotiations to go past that.
I would venture a guess that the state of New York, probably currently has bigger issues.
But.
But in all seriousness.
This was a program that are you.
Previous Governor had a strong interest in and at the Wadsworth Center and at the New York State Department of Health, there is genuine and strong interest.
They have gone through a lot of the data that has been generated already theyre working very closely with the three in.
In addition to Wadsworth as the state's lab that working with the three major labs, the north well NYU and Mount Sinai Labs that have if you remember more than 35 affiliated hospitals that are feeding into that system.
And we're working with them to Oh really pull out and help in the in the interpretation of the impact. This type of data can have on public health in terms of outbreak tracing tracking and monitoring.
<unk>.
We've certainly made it clear from options perspective that to US this is not a.
A research interests are per se, we're interested in driving this into clinical use in clinical routine and we're a commercial enterprise. So they full well understand that in order to keep the.
Sort of metaphorically keep the lights on and the lighthouse <unk> that we have deployed across the state there needs to be an agreement on that in an ideal world should be in place no later than October 1st.
You know from previous experience with the state.
They are very you know there are a very reliable and.
Constructive partner their legal team is not always the fastest so we'll we'll see where that stands but again all parties are genuinely working towards figuring out what the best path is here and I'm.
I'm not going to speculate on what that deal may look like but as soon as you know, we we agree and put something in place, we'll obviously, let everybody know.
Great. Thank you so much for all the color. So that's it for my questions and I just wanted to say best of luck 10 with your future endeavor now, but we'll definitely Miss you.
Thanks, Matt.
Okay.
That's all the time, we have today I will now turn the call back over to Mr. Shah for any closing remarks.
Well again, thank you everyone for joining us today I'm pleased to visit our Investor section on our website for all of our SEC filings for updates on the company really appreciate you are taking part and thank you very much.
Thank you and that does conclude today's conference we'd like to thank everyone for their participation you may now disconnect.