Q4 2021 OpGen Inc Earnings Call
Welcome to the op Gen fourth quarter and full year 2021 earnings call and business update.
Today management will provide an update on the company's current business outlook for the future. At this time all participants are in a listen only mode. Following objects prepared remarks, there will be a Q&A session. As a reminder, this conference call is being recorded today March 29th 20.
'twenty two at this time, we would like to turn the call over to Joe Green object IR representative to provide the opening remarks.
Thank you operator, and good afternoon before we begin some important information any comments made by management. During this conference call may contain forward looking statements regarding the operations and future results of option, including its subsidiaries curated and Ares genetics.
Encourage you to review options filings with the Securities and Exchange Commission, including without limitation. The company's most recent Form 10-K for fiscal year 2021 that will be filed with the SEC, which will identify the specific factors that may cause actual results or events to differ materially from those described in the forward looking statements.
Factors that may affect the company's results include but are not limited to our ability to continue to successfully achieve the expected synergies from the company's completed business combination with greatest and to implement our commercial strategy the impact of the continuing global COVID-19 pandemic on our business and operations our use.
The proceeds from recent financings as well as our ability to access additional financing in the future our ability to satisfy our debt obligations under our along with the European investment bank the rate of adoption of our products and services by hospitals and other health care providers in general as well as during the current COVID-19 pandemic and geopolitical situation in particular the effect of the <unk>.
Military action in Russia, and Ukraine, and our distributors collaborators and service providers.
As of our commercialization efforts and partnering strategy the effects on our business of existing and new regulatory requirements and other economic and competitive factors.
Content for this conference call contains time sensitive information is accurate only as of the date of this live call March 29, 2022, 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 joined the call today are Oliver shock often.
President and CEO and album Weber CFO now I will turn the call over to Oliver for introductory remarks in his report.
Thank you Joe and thank you everyone for joining us this afternoon.
If you're sitting here with our CFO Albert and reporting on our progress.
2021 was a year filled with progress and we look forward to highlighting our milestones and achievements throughout this call.
As you know option along with its subsidiaries that are committed to improving patient care and fighting on microbial resistance or a MLR through cutting edge molecular microbiology.
We're developing and commercializing molecular solutions, a diagnostic test to help guide clinician treatment decisions and improve patient outcomes with more rapid and actionable information about white threatening infections.
We've made great progress with our diversified portfolio of products and strategic partnerships, which contributed to our positive outlook for 2022.
Today I'll begin with recent updates on our product and R&D pipeline.
Albert will then review Q4, and full year, 2020 , one financial highlights last I'll preview options upcoming milestones and catalysts.
Also make sure to leave some time for a Q&A session.
We started off the fourth quarter with multiple achievements and updates, which I'll discuss in detail.
Within the first few days of Q4, we announced a five 10-K clearance by the FDA to market our comprehensive molecular diagnostic product the acuity AMR gene panel.
The acute EMR gene panel accurately detect 28 genetic antimicrobial resistance marker and isolated bacterial colony from 26 different pathogens.
The panel provides collections with a way to rapidly and simultaneously test for and identify whether one organism is resistant or vulnerable to select drugs in line classes of antibiotics.
At HIMSS EMR panel can detect antibiotic resistance markers about two and a half hours compared to one to four days required with classic phenotypic methods.
We believe our acuity and marching panel is the first FDA cleared molecular diagnostic test kits to detect such a broad number of AML markers from bacteria isolated from any patient specimens.
We believe that the acuity AMR gene panel is an essential an indispensable tool to strengthen effective antibiotic stewardship.
We see our product is helping to improve infection control and prevention.
And guy doctors to better target and our microbial therapy.
Thus improving patient outcomes.
We initiated the commercial launch and rollout of the accused marching steadily in October of 2021.
As stated in our Q3 2021 earnings call, we anticipate the sales cycle for a novel molecular diagnostic test like the EMR.
To be in the six to 12 month range.
As of today, we're actively engaged in numerous conversations about the accuracy of margin.
With large academic centers state reference labs, and other large well equipped hospital labs across the country.
We have a healthy and growing follow up several dozen active opportunities that we're working on.
We have recently provided commercial agreements to several potential accounts in the northeast and Midwest.
These proposals, which remains subject to final negotiations range in size from smaller scale initial test volumes of about 100 to 200 tests. This year at some sites relating to expected revenue into couple of tens of thousands of dollars all the way to high volume opportunity for as many as 1000 acuity AMR gene panel test.
Full year once implementation has been completed.
Such accounts could then turning to annual revenue generating opportunities and the 100 to $150000 ranges.
The second milestone we announced in October what's the commercial launch of <unk> cloud, our Austrian subsidiary Ares genetics.
<unk> cloud as a simple web based applications available onto a subscription model that fully automate state of processing to accelerate the analysis of secrets clinical isolates.
The software not only processes data, but also provides insights into clinically and he could give me a logically relevant data to researchers around the globe.
This includes information on pathogen identity genotype virulence plasmids and TMR.
Powered by Amazon Web services, using our state of the art AI powered algorithms and machine learning with <unk> cloud based platform.
Offers researchers the opportunity to interrogate their own next generation sequencing or NGF data against the Ares DB, enabling for instance, the prediction of antibody that's directly from pathogen genome date.
Our first RF cloud software subscription deals have already been signed in 2022.
Ours genetics is actively working with clinical expert users. It is collaborating with two major U S hospitals to conduct independent studies.
He went to platform for routine clinical use and for outbreak analysis.
Further collaboration agreements with clinical and public health partners and several additional countries apparently underway.
In November of 2021, Ares genetics granted permanent unrestricted a nonexclusive axis.
Small subset of its proprietary Iris D b data asset.
To an unnamed global Corporation, a leader in microbiology and infectious disease diagnostics.
Aristide me, he's a growing and continues to mature even EMR database of genetic markers as well as datasets from by now more than 78000 bacterial isolates.
The other named ITT Corporation paid Ares genetics in excess of $600000 worth of data transfer and data access fee to.
So approximately one 1% of RST b's than current total content.
Although this is a great partner. Furthermore has the option to purchase at the same price per sample that we agreed upon in November of 2021.
Digital data sets as they may become available in 2022.
Dr traditional samples and data sets could potentially become available to ours as part of its involvement in the large prospective multicenter U S clinical trial for the unit URL UTI is the urinary tract infection panel.
This transaction is yet another example of Ares genetics growing commercial traction.
It adds to our genetics list of global commercialization partnerships, which already include companies such as sandals, which empowers recently expanded and extended its strategic collaborations until January of 2025.
And to name a few.
Rounding out to 2021 Ares genetics announced the strategic expansion of our <unk> proprietary content.
After successfully completing the first phase of its collaboration with a leading U S. C. R O and reference lab ours has now entered the second phase of this collaboration.
Phase will provide access to up to 1000, specifically chosen proprietary clinical isolates from key pathogens.
<unk> plans to further increase the value of RSVP and expand its content towards cheat your collaborations with external partners and supporting clinical trials conducted by auction.
In 2021 and year to date in 2022 hours television content has grown by more than 40% and we expect this percentage to continuously expand.
As mentioned on our previous earnings call Albert waiver joint auction in January 2022 as our Chief Financial Officer, and managing director of <unk> subsidiary Greatest G. M B H.
Albert has more than 30 years of experience in accounting controlling our corporate finance and has hands on operational experience in the United States Europe and China.
He's been a great addition to the team.
With that introduction I turn todays update over to help.
He will review financial results for the fourth quarter and full year 2021.
Recent financial developments of our business. However.
Thank you all and welcome to everyone on the call.
I will touch briefly on the coupon of 21 highlight.
Revenue for the full year 2021 financial results.
I'll take you on our balance sheet position and conclude with some thoughts on got it.
So again, we would like to discuss the closing of a $50 million registered direct offering which option successfully completed in October 2021 .
The offering was obtained U S based health care focused institutional investor.
It consisted of 150000 shares of convertible preferred stock and warrants to purchase up to an aggregate of seven 5 million shares of common stock.
The shares of preferred stock at a stated value of $100 per share and were convertible into an aggregate of seven 5 million shares of common stock at a conversion price of $2 per share at any time. After the company received shareholder approval to increase the number of authorized shares of the company.
Stock from 50 million to 100 million chest.
The company received shareholder approval at a special meeting of stockholders on December eight 2021 with very strong support from the shareholders.
Hello, English stockholder meeting in December all preferred shares were converted into shares of common stock in December 2020 one.
And as of December 31st 2021, the company's outstanding shares consisted of approximately $46 5 million shares of common stock and no shares of preferred stock remained upsetting.
The gross proceeds from the offering were $50 million before deducting placement agent fees and other offering expenses.
The company currently intends to use the net proceeds from the offering for the commercialization of the company's F. D. A clear does AML gene panel.
The further development and the National Commerce elevation of Univar platform.
The development and expansion of the Arris genetics database and bioinformatics solutions as well as laboratory service offerings.
Repayment of certain outstanding in debt.
With the European investment Bank and for other general corporate purposes.
We are excited to highlight our positive revenue rose in 2021.
For the fourth quarter of 2021 revenue was $1 4 million, a 5% increase from the fourth quarter of 'twenty to 'twenty.
Total revenue for 2020 , one was $4 3 million, a 2% increase from the previous year.
This increase is luxury attributable to stronger Universal you only available product sales in the U S and globally.
Which counteracted the discontinuation of the legacy fish diagnostics product line, which was discontinued in early 2021 .
During 2020, the legend lessons from the British business has contributed $1.5 million to.
Full year 2020 revenue compared to a mere 173000 and all of 2021 .
The exit from the fish business in early 2021 .
Additionally, the onetime arris data some failed positively contributed to.
<unk> 2021 product revenue.
Laboratory service revenues saw a very strong increase over prior year, mainly attributable to an increase in Covid testing services provided by <unk> as well as ore services rendered to researchers from its very Vienna, Austria based engineers.
Collaboration revenue decline in 'twenty or 'twenty, one due to the conclusion, although nonrecurring R&D collaboration project with an IBD Park at Arris genetics in 2020.
And the completion of the New York State Department of Health project.
The end of September 2021.
Looking at operating expenses, our total operating expenses for 2021 was $27 6 million compared to $26 $9 million in 2020.
It is important to remember that with the option <unk> business combination closing on April one 'twenty 'twenty four 'twenty 'twenty numbers include only nine months of delay just an error, whereas with 'twenty 'twenty. One numbers includes the full year of both ended.
Accordingly, despite 'twenty or 'twenty, one, including nine months of expenses attributable to courageous and errors or operating expenses remained relatively flat in 2020 . One based on successfully realizing post merger integration and go to spending cost reductions and synergy.
Oh pretty good 2021, R&D was $10 9 million.
That's a $10 million in 2020 due to the inclusion of full 12 months of <unk> related R&D in 2021 compared to only nine months in 20th way.
Q4, 2021 or do you want to partner rather than <unk>.
First with $3 $3 million.
Previous year.
The change in R&D expense compared to prior years.
Two the timing of clinical trial work in outside services expense.
What do you got 2021, G&A was $9 $9 million compared to $8 8 million the previous year due to the inclusion of a full 12 months of greatest related to G&A in 2020 , one compared to only nine months and 24.
Q1, Q4, 2021 G&A was $2 6 million compared to two.
<unk> 3 million the previous year.
What are your 'twenty or 'twenty, one sales and marketing expenses, which included items such as market research advertising travel exhibitions and conferences and our clinical advisory Board.
$3 $7 million compared to $3 $1 billion the previous year.
The increase was due primarily to the expansion of our U S sales team in 2020 one.
Q4, 2021 sales and marketing expenses were $1 million compared to $835000 in Q4 training right.
Turning to our net loss net loss available to common shareholders was $42.0 million or $1 14 per share in 2020 , one compared to $26 2 million or.
A $1 66 per share in 2020.
This increase is mostly attributable to them seven 8 million noncash accounting items for the warrant inducement expense in Q1, and a $7 $2 million noncash deemed dividend related to our preferred stock deal.
October 2021 for a combined total of $15 million and noncash rather on the chart.
We are delighted to report that option has its strongest cash position in the company's history as of year end.
Our cash balance as of December 31st 'twenty or 'twenty, one was $36 1 million up from $13.4 million at the end of 2020 .
This increase was mainly a result of our successful financing transactions.
Yes.
Overall, the net cash provided by financing activities in 2021 added up to $48 2 million.
Our 2020 one operating expenses are in line with our expectations and we tracked very well against our guidance for it yearly net cash consumption.
Looking forward, we anticipate continuing that track record in the coming year editing the expected net cash consumption of around $5 million to $6 million per quarter.
The focus we placed on strategic R&D programs in 'twenty or 'twenty, one puts us in a strong position to expand execution and commercialization throughout 2020 two.
No.
We expect to see stronger growth in our product business across the unit as well as the acute just a AMR gene panel portfolio with a major growth driver being our diode sales in the U S.
Well year over year in 2022 we expect to see in the 50% plus range annual growth.
We also expect to see continued growth in our antenna international distribution business as well.
With focus on the young of every product line outside the U S.
However growth rates are expected to be more moderate that.
An area that we expect to see significant traction and acceleration is our aerostat related services and software solutions business with potential upside coming from additional data as a monetization as well as possible new collaboration deal.
It was also a significant upside potential union barrel eight study related platform partnerships.
We do believe that overall revenue growth from.
From a product and service business for 2022 should be expected in a range of somewhere around 25% to 50% year over year.
Any material strategic collaboration licensing and partnering deal with.
The on the OE side or around the unit that they thought he platform, which has the potential to significantly accelerate our growth.
Although timing and structuring of any such deal is not clear and hence revenue recognition in 2022 could range from a nominal amount to a very material additional growth in topline revenues.
We continue to make meaningful progress with European investment bank as well as several other brokers about possible opportunities to address the company's upcoming EIB debt trench repayment of approximately $15 million in the late April 2022 .
In addition, the company the strength of driving our longer term plan to address the complete repayment of debt, which we will have two further tranches become due in June 2023, and 'twenty 'twenty four of approximately $4 $4 million and approximately seven points.
Milligan perspective.
Such opportunities include options that would allow us to partially repay yup he's supposed to problems in cash at the maturity date and to amortize or echo ties the remainder of such clients as well as possibly the future tranches over a period of up to 12 to 24.
Mark.
These options would allow us to avoid either using <unk>.
All $50 million in cash from our balance sheet or having to convert a larger amount of debt into equity at this time when our stock price has been under continued pressure.
We believe that these options will provide us with right up flexibility in managing our cash addressed our debt repayment and strategic and well structured manner and minimize dilution, that's where you would potentially benefit from stock price appreciation based on some of our future milestones and up.
Piedmont over the coming two years.
We anticipate having further details in the coming quarters.
With that I'll turn the call back to Oliver to discuss the company's recent achievements and upcoming milestones.
Oliver.
Thank you Albert 2022 will be a year focused on commercialization.
As mentioned previously on this call our subsidiary Ares Genetics has several upcoming commercial launches of services and solutions, including the launch of various arris related services in the United States.
Why are our own service lab ear at our option headquarters in Rockville, Maryland.
We already have an experienced team as well as the laboratory infrastructure in place we.
We will be leveraging the experience and expertise of a team that successfully develop the acuity AMR gene panel for these N G. S based services for Ares genetics in the U S.
This commercial rollout will be coordinated by our senior Vice President of corporate development and operations for Arris in the U S doctor tailed off.
This launch of our own direct to customer services in the U S, which we envisaged by Q3 of 2022 does not preclude us from also doing further licensing and partnering deals around the arris portfolio of data assets technologies and solutions are in the U S as well as globally.
Furthermore, we expect to continue the commercial rollout of our go to Merrill 850 platform and products.
2021 and year to date in 2022, we have successfully closed a series of multiyear commercial customer deals for the unilateral products, including our U T I test, which we offer as research use only product.
Future FDA submission and clearance.
A handful of these accounts since 2021 have by now developed a reliable and consistent cadence of monthly purchase orders that indicate annual test volumes of 600 to 700, plus cartridges per account, making them. Each in account that was around $100000 in recurring consumables revenue two option in 2022.
We have also seen selected customer counts significantly increased their monthly ordering volumes in Q1 2022 to date.
To the extent if he's worked consistently occur on a recurring monthly basis southeast individual accounts would have annual revenue potential exceeding $200000 each.
Q1 of 2022 we have already signed additional commercial agreements as well as additional evaluation and validation agreements for other labs and hospital accounts.
While COVID-19 and specifically the omicron weight from November of 'twenty, one until late February of 'twenty two.
Clearly slow progress at several customer site.
We've recently seen a significant acceleration and momentum shift.
Many more U S customers are engaging in discussions around our unit Arrow alert E. P. A L. But it's the lower respiratory tract application cartridge for use with Bronchoalveolar lavage samples in pneumonia patients and UTI as well as secure as a AMR gene panel products.
March 2022 has been the single most active months in driving funnel expansion and opportunity progression in the last 18 to 24 months.
Our active set of funnel opportunities in the United States alone is around 60, plus individual target customer accounts at this time.
Earlier this quarter.
Unit Hero 830, RQ instruments successfully completed their lifetime testing and met all verification and validation or V N V testing requirements.
This is very exciting as it allows us to finalize product design.
We got our first set up series ready instruments built in 2022.
We also expect to begin work work on our first 830 cartridge application.
Panel four invasive joint infections or <unk> from.
Trump's synovial fluids, and Brady 830 platform and hijack text into its first clinical trial here in the United States later in the fourth quarter of 2022.
Having the 830 ready for clinical trials, followed by an FDA submission and eventual clearance and subsequent commercialization will also be key to any partnering and licensing conversations going forward.
On that front, we've continued strategic conversations the technical as well as commercial due diligence with multiple parties.
Following the latest Armstrong wave of Covid, we've been able to have our first in person meetings. This month with teams from interested party.
We expect to have business development conversations with U S European and Asian partners about the 830 platform and future Qad's technologies throughout the coming months and quarters in 2022.
As mentioned earlier on this call. We received five 10-K clearance by the FDA to market, the acuity and marching down.
We engaged in numerous conversations across the country about the acuity say AMR gene panel and we'll continue to build out the funnel of commercial contract opportunities in 2022.
We currently have several specific multiyear commercial contract proposals under review and these remain subject to final negotiation by potential customers. We expect to close several of these and additional ones in the coming quarters in line with our guidance pertaining to typical sales cycles being in the six to 12 month range.
We previously discussed the request by the Chinese regulators at the N M. P. Eight for supplementary clinical data to be generated in China for submission and potential approval, if the pneumonia cartridge and subsequent commercial launch.
In the fourth quarter of 'twenty, one and year to date, we've been able to support our partner base and clear buyer or PCB and their efforts to begin that started.
They have successfully secured IRB approvals for each of the three clinical trials sites in China.
The study protocol has been finalized and includes many inputs and learnings from our successful U S and European clinical studies.
Because this is not a clinical study or trial that we at optional curated own and control. The timeline for this study is being developed by our partner B C D.
Their C R O and regulatory advisors in China.
We expect an initial purchase of pneumonia cartridges by PCB in the second quarter. However, the.
The recent reemergence of Covid in China, and very stringent lockdowns multimillion metropolitan areas, including Shenzhen and Shanghai. Most recently put the caveat on any timeline and we will simply need to see what transpires in terms of realistic timelines given the dynamic COVID-19 situation in China at this point.
On the distribution side of the International unit 50 business, we've seen the successful regulatory cleared of all kind of barely 50 products in test in Colombia.
Together with our partner on the Rdx and ongoing launch campaign focused on key opinion leader events has been initiated the.
The campaign includes onsite face to face meetings with key accounts and target customers across Columbia scheduled for the second quarter of 2022.
Demonstrating their continued commitment to the unit payroll product line and business men a REIT has recently taken over the Austrian market from our prior distributor Exxon.
Going forward from the middle of first quarter of 2022 men Irene will now cover 12 European countries for us.
It's very helpful fact in this context has been the European Union's granting of multi year transition period for the continued commercialization of all IBD products that have been previously CE marked despite the IBD are coming into effect in may of 2022.
Therefore, we will be able to continue selling our products without any material changes through 2025 to 2026 and in addition, there will be a one year at it for any inventory sell off at the end of this time period.
Yeah.
We're also planning to provide clinical trial and regulatory submission updates for unit URL UTI and agi parts.
We're excited to announce that enrollment for the unit bear with UTI diagnostic panel trial is going very well with more than 350 patient samples enrolled already as of today.
All three trial sites had first completed right produce stability testing running hundreds of universal MTI cartridges and told them.
And upon successful completion of such Rep produce ability testing all three sites went into enrolling clinical patient samples.
We expect an interim data readout of this trial based on the first 150, approximately 50 per site or so patient samples.
In the near future really early in the second quarter.
Once we have confirmed that the interim data meets our criteria and objectives. We will continue full steam ahead with full enrollment of all 1500, plus patients samples across all three trials.
We would expect completion of the trial final data read outs and eventual FDA submission in the second half of 2022.
We recently submitted and already received a formal reply to our FDA pre submission meeting request.
For our planned unit barrel of Iga I clinical trial.
Because of the Covid pandemic had more than 6000 emergency use authorizations. They have received to date. The FDA is still unable to schedule a meeting or call at this time.
Nonetheless based on our past experience with the FDA and our successful FDA clearances of three diagnostic product on two different platforms be inked to start an Iga IDE trial in the late fourth quarter of 2022.
Even in the absence of FDA feedback from such an optional pre submitted.
Overall 2022 will be a year focused on commercialization both here in the U S and globally our distribution partners.
We're excited about the progress and achievements throughout the past year, which has positioned us ready for significant continued revenue growth and direct product sales.
Service offerings and future strategic partnerships.
We look forward to providing updates on our strategic partnership discussions and progress on our commercialization efforts throughout 2022.
As always thank you for your unwavering support and for participating in this afternoons call I would 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 have a question. Please star one now to be placed in the queue.
My first question comes from the line of E. Chen with H C. Wainwright you May proceed with your question.
Okay.
Alright, Thank you for taking my question.
My first question is could you comment on how many hospitals you have reached regarding the acuteness panel and whether there are any preliminary feedback.
Oh sure Yeah, I mean, we have reached out so I believe we commented on that in our November earnings call to roughly 400 institutions across the United States.
And these were really the large academic institutions as well as some states are state run our reference labs as well as other large are very well equipped and sophisticated hospitals and labs across the country.
Within those accounts, so that roughly 400, plus a number of institutions.
We have reached out to well over 1000 individuals typically covering stakeholders from the lab to antibiotic stewardship and pharmacy to the clinician sorry.
And of course, I mean, we were we received feedback on a daily basis.
As I commented earlier, we have several dozen active funnel opportunities putting acute EMR gene panel, we have multiple agreements out there upon these conversations so.
You know you asked me where are we where we expect it to be absolutely. Yes, I mean, I did say very clearly at the outset. This is a six to 12 month sales cycle. We're just coming up on six months here in a week or two so again, having multiple contract.
Ah contract agreements out there that are currently pending final review and final agreement I think you know we're in excellent shape and continue to grow the funnel.
I mean at this point could you give us any rough estimates regarding the volume of panels. Each of those accounts can possibly run on an annual basis.
Well I believe I did in the prepared remarks, I mean at the low end you see you know let's call. It a one to 300 at the low end. So the medium if the range is probably you know 567 hundred and at the high end you are probably looking at accounts that are doing 1000, plus tests a year.
And again Youre looking at a product that has a list.
List price in the United States of $170, you know clearly with volume carbons volume discounts, but you know again, if you look at some reasonable assumptions as to a S. P that that's why I said you are looking at.
And annual recurring on a full 12 month basis annual recurring revenue stream from those accounts starting from the several tens of thousands of dollars to up to maybe $150000.
Got it okay.
And regarding the unit.
30 platform Oh could you tell us what are the catalysts that we should expect to see during the rest of this year and how does this system going to be position on the market relative to the existing get them in our system.
Yeah.
In terms of positioning it's gotta be complementary because again as per the call today, we will be putting a new clinically differentiated.
Panel and invasive joint infection panel that we do not our intent.
And tenants in the U S to bring forward on the 50 platform at this stage, so it'll have unique and differentiated content.
Oh in terms of milestones I mean clearly.
If you look at the.
The assay development side of things getting the cartridge are up and running and then initiating our initiating a clinical trial and again it'll be a a multicenter clinical trial same guidelines apply at least three trial sites in the U S minimum of 1500 patient samples to be enrolled.
We have ample experience if you remember in the past we have run prospective multi centric.
Preliminary studies.
At well over a dozen hospitals and sites across the U S.
So we have plenty of synovial fluid patient samples, we have plenty of data on it really gives us everything we need to to finalize the the assay development and take it into the clinic and I you know it'll be.
You know initiating the clinical trial as we said late in the fourth quarter of this year and then.
Looking at the completion of that trial.
Data readout in 'twenty, three with the submission to the FDA.
So again, that's the way it's gonna be co positioned if you will is.
It's a differentiated panel unique to the platform.
Very rapid turnaround time, so you know again it.
Depending on the specific some of this could be in and you know under an hour from sample into result out some and a panel of up to up to 33 targets on the 830 platform with quantitative capabilities where needed or.
You know still a panel that allows for a qualitative decision with some you know depending on the final specs of the product.
Okay. Thank you.
Our next question comes from the line of Ben Hayner with Alliance Global Partners. You May proceed with your question.
Good afternoon, gentlemen, thanks for thanks for taking my question just following up first on the the acute as contracts that have gone out you know, how but ones that are out there already.
Uh huh.
Already indicated that they're they're ready to adopt the acute us tests are and you're just talking terms or what's the right way to think about that.
Yeah, I mean, the way the way again when you look at the sales process here. The first stakeholders you always got to convinced is the lab the clinician and the the.
So fan microbial stewardship Bulks, you would not put a commercial contract agreement out there unless you have.
Agreed and clearer buying from those key stakeholders. So yeah, you're absolutely right the way to think about these as finalization of numbers.
Commitment for the first year number of tests are coming up with all of you know a protest pricing that works for this introductory phase as well as then again several of these contracts are as I said multi year contract.
Not just getting that first foot in the door in 2022, it's really about how do you think about the instrument financing in that mix and how you think about pricing with volume against some of these somebody it's dropped that are out there have a volume pricing at accounts. So you know 1000 tests a year and you know as you can imagine.
I'm talking about.
You know somewhere between 101 hundred $50000 a year in recurring revenue stream from our consumables and so you got to make sure that but he's got cross many eyes get brought up on the commercial side of things.
Okay that makes sense.
Like I thought there just about locked out it sounds like.
Got it.
And then can you talk a little bit more about the rfps.
Collaboration with our CRO and the you know what does that entail those thousand datasets you referenced.
You know it is that.
It's a collection of all specimens as it.
You know hundreds of dozens of thousands within each data set or how does that maybe help me understand how that looks.
What what's going on with that collaboration.
Sure sure. So the way to think about this collaboration is really for both parties.
Strategically leveraging each other's assets.
That's C R O and and U S. CLIA lab has been a recurring repeat commercial customer for our services as well so the way we structured this collaboration was in two phases phase one and we've successfully completed that.
Our genetics are conducted certain next gen sequencing, our services out of Louisiana lab running data analyses and provided those back to to the U S CLO and CLIA lab.
In that process, we did because we obviously were provided specific.
Samples generated datasets, we've already grown the hours database again.
And what we now have in the second phase is at our discretion at Ares genetics to hand pick at our choice up to a thousand specific.
Isolates pathogens that are complementary to our RST be remember we already have 78000.
Sequenced bacterial isolates in the database.
With phenotypic data.
On over 100 antibiotics. So at this stage. This is not a shotgun give me you know whatever you have this is a very targeted very focused approach.
That allows us to specifically address.
Pathogens and isolates that are of low prevalence and therefore extremely rare with very interesting and unique <unk> profile that augment and complement and potentially fill certain.
You know I'm, not going to say gaps, but like.
The power of any artificial intelligence based algorithms to predict resistance or susceptibility.
Highly depends and correlates with the and with a number of relevant cases, you have in the database.
The bigger that and the bigger that number the more accurate prediction coffee Colonsay, we published.
Our extent, we believe the only prospective multicenter peer reviewed study.
In the U S where we.
We've demonstrated once you have a sufficient number of these genotype phenotype correlations you can train to AI to predict with accuracy that exceed 99%.
But you have to get to that number. So this collaboration is a unique opportunity through the C. R O to dig into their call a treasure trove their biobank and hand pick and Hansel Act four hours genetics that we're not going to comment on which ones we're picking specifically.
But again I mean, what I would point to is.
Some very specific combinations that we already had in the hours database.
We're not exclusively sold in the fourth quarter of last year, you know for a very attractive price point port for nonexclusive literally a copy of the data so again being able to handpick enhance the strength of the data assets will increase the predictive power of the hours AI.
In those models and will make the database database more valuable and more unique differentiator.
Okay great.
That's very helpful and exactly what I was looking for.
The PCB studying China and I apologize if I missed this.
When you were talking about it but did you did you offer a timeline on when they might complete that I mean, it sounded like there's IRB approval approval in place.
And I missed it I apologize.
I mean look it.
Beyond what we said, it's really hard because we do not have control over the timeline, nor the execution of the study and the situation in China. If you literally look at the news earlier. This week you look at the news last week, whether it was Shenzhen or Shanghai, there's some massive lockdowns going on which clearly aren't helpful in getting clarity and visibility on this.
Timeline once started.
Once you actually get into enrolling you can expect this study to take you know, let's call it six months to complete.
And the N M. P. A will then drive the review timeline to the extent possible. We've already submitted all other data and filings to the N M. P. A via our partner. So hopefully this is just going to focus on the supplementary study results.
On a personal view with this was I think we've proven it with the unit bearable UTI trial here in the U S. This was our trial I'm confident we would have started their trial and in the fourth quarter of last year, but beyond advising our partners.
Talking to them on a daily multiple times, a week basis, and giving them guidance and our experience. It's ultimately their choice they're running the study they're funding. This study it's their study there CLO execution.
So we've got to respect that they do what they do with the Chinese way and Oh, There's a limited disk.
Decision discretion that we have beyond the thought you don't get an enabling them to fully execute that.
Okay. That's helpful. And then I guess lastly from me can you talk about the equity issuance over 24 months Ah that option that you are.
Uh huh.
How that would work I mean does that.
The issue with the EIB is that something where you would issue a certain you know.
The dollar value of shares every quarter or every month or every year or how how would that actually be structure.
I again I would at this point I'm not going to speculate as to the specifics and as Albert outlined we have multiple different structural alternatives and options that we're actively discussing with EIB, one of which could indeed be up to 24 months you know gradual conversion of the total debt amount across.
All three tranches.
<unk> into equity overtime, but there was also alternatives that we pointed to in terms of amortization, so rather than converting into equity you know we could be using the various instruments available at our disposable over prolonged periods of time, if you look back over the last.
12, 24 months, we very successfully used multiple ATM facility.
And then kind of amortize the debt payments again over an extended period of time, rather than having a bullet repayments here in the second quarter of $15 million. So there's it's not a foregone conclusion, whether we're gonna equities anything at all.
Again to delay the turns that well, we're not going to use.
Options stock at this current price level, and then turnaround in April and you know.
<unk> was $15 million worth to the ERP, none of the scenarios that we're currently discussing how has that sort of scenario.
Okay.
Got it.
That's all I had thanks for taking the questions.
It's been a pleasure.
Our next question comes from the line.
With Edison Group you May proceed with your question.
I think it's pretty it's my pleasure.
I have two questions.
That's when you need to do and what <unk> found out who can you give some color on this point.
Two five and based on that if you could give some timeline how quickly you believe it can kinda ones.
They can be is there any thought did a deep communication on because I'm in my seat I think.
And then it would be I think you're correct.
I've been disappointed is now did you have any back on.
This is Nick Anthony you've done so well.
He did.
Sorry, I'm not sure I caught the second so let's take the a M. Our panel and I believe it's sort of a question that.
E <unk>, so I mean, the responses so far is exactly what we expected.
You know with each of those accounts you have to go through the lap the clinician.
Our pharmacy and stewardship you.
You know, having having multiple contract out at this point in having Douglas talk about life opportunities at various stages in the funnel.
And again pointing back to the six to 12 month sales cycle that is what we expect we're not gonna be providing specific product revenue guidance for individual product lines here for 2022 but again, we are anticipating the first of these commercial opportunities to materialize in the coming weeks and months and then you know.
From there on out again, the total universe of accounts that we have reached out to 400 with the total funnel across the various U S accounts and product portfolio roughly 60 opportunities at any given time.
Yeah.
Maturities, you win and convert or opportunity you said eventually our closeout lost your replenishment rebuilt.
That's funnel.
In terms of fish products and distribution.
You know again, we just continue to fish products. There was a network that auction had that was a legacy distributor network in Europe .
For only the fish products businesses zero synergy with any molecular that that network of distributors was discontinued.
Last year.
You know basically in the first quarter.
We are starting to set a sunset the fish business. So there is zero impact or read through on any of the curated some unit Arrow distribution network, because there was zero overlap and zero impact from the fishes continuation on the on the existing distribution network. Overall of course, if you just look at share numbers, we now have.
Your distributors as we terminated all of the old legacy.
You may have to because there was a middle question that I simply couldn't hear it couldn't quite understand so if you can rephrase that or we repeat that.
Yes sure.
I just wanted to ask about any any thought that a beat on neil's departure.
Budget yet.
Yeah.
But just reiterating what we told in the Q3 earnings call that project is finished it's completed it ended as planned and scheduled on September 30th 2021 and the way to think about that to repeat what we said in the Q3 earnings call is there's not going to be in New York State Department of Health funded research projects that stopped the intention.
The way to think about this is that individual hospitals, where sites within that New York State network that have already been using the acute at Sam Moore.
To be switched over to be now FDA cleared acuity more gene panel it becoming.
Commercial routine users and clinical routine users off the FDA cleared so curious, but their customers or accounts just like any other.
I would say it's a.
It's not a far fetched.
Assumption that maybe a couple of the contract.
You know drafts that we have out there may very well come from that original New York State a universe of site.
But again, there's not could it be in New York State Department of Health project, nor did we expect that we specifically guided against that back in Q3, and so again, you've got to look at individual New York State sites as well as individual 49 other states sites to become customers of the FDA cleared product.
Okay.
Right.
That's all the time, we have today I will now turn the call back over to Mr. Sharp for closing remarks.
Well. Thank you everyone for joining us today. Please visit the investors section of our website or our SEC filings for updates on the company. Thank you very much and have a great day. Thank you.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation during the rest of your day.
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