OpGen Inc. Q1 2023 Earnings Call
Welcome to the Upjohn first quarter 2023 earnings call and business update.
Before we turn the call over to opt in management. Please note that any forward looking statements made during this call are based on management's current expectations and observations and are subject to risks and uncertainties that could cause actual results to differ from the forward looking statements.
Upjohn does not undertake any obligation to publicly.
Update any forward looking statement to reflect events or changed circumstances. After this call.
For a discussion of factors that could cause results to differ please see the company's filings with the Securities and Exchange Commission, including without limitation. The company's annual report on Form 10-K for the year ended December 31st 2022, and its reports on forms 10-Q and form 8-K.
Joining the call today are Oliver shocked opt.
Bob Jones, President and CEO and Albert Weber CFO .
Now I would like to turn the call over to Oliver for introductory remarks.
Yeah.
Thank you operator, and thank you all for taking the time to join today's call.
We're pleased to have this opportunity to provide a business and financial update Andrew.
We'll follow with a Q&A session.
On our last call, we discussed reaching key milestones upcoming near term catalysts as well as continued commercialization initiatives.
Business advancements have carried on from late 2022 into the first quarter of 2023 and year to date and we believe option is in a good position to increase revenues.
We started off the year by announcing that our subsidiary curated met several key milestones in the collaboration project with a foundation for an orphan if new diagnostics or find.
This achievement triggered an undisclosed milestone payment per the terms of the agreement.
We're excited about our fine collaboration accomplishment and recently announced that we successfully achieved all remaining key milestones and completed the deliverables as planned.
In addition, our Austrian subsidiary Ares Genetics announced that they were granted a key patent in China.
The patent covers the identification and diagnostic use of genomic variants for the diagnosis of antibiotic resistant bacteria.
We welcome the decision by the Chinese patent office as we believe it accentuates the strategic value of our intellectual property portfolio.
We also announced that Ares genetics moved to a new Vienna location.
The move is one of several milestones that will help support our further growth plans for the product and next generation sequencing or N G. S service business.
With recent growth in our hours D V database asset from 102000 datasets to over 130000 datasets in Q1 of this year alone. We believe we're well positioned to continue executing on our plans to expand and improve our menu of accurate AI models to predict antibiotics susceptibility.
From genomic data.
I will now turn the call over to Albert Webber options Chief Financial Officer.
He will review financial results for the first quarter of 2023, and recent financial developments Albert.
Thank you Oliver and welcome to everyone on the call I.
I will discuss the first quarter highlights and financial results and our thoughts on guidance for the remainder of 2023.
Up to this first quarter revenue what 'twenty 'twenty story was approximately $913000 an increase of approximately 94% over the company's revenue of $470000 in the first quarter of 'twenty to 'twenty two.
Compared to the fourth quarter 2022 revenue was $722000.
We achieved a 26% increase in the first quarter of 2023.
This increase was primarily due to revenue generated from defined collaboration project, even if ever product sales revenue we received under O. Acute this a M. R gene panel commercial contracts as well as ours related service revenues.
With the upcoming quarters in 2022 weeks, we will continue to work on generating revenue from existing commercial agreements as well as from new collaborations and customers.
Looking at our operating expenses.
The total operating expenses decreased in the first quarter of 2020.
So $6 million compared to $6 $3 million for the same quarter in 2022.
Oh first quarter 2023 research and development or R&D expense was $1 $8 million compared to $2 3 million.
It was a corresponding period over the previous year I E a 22% reduction.
Oh first quarter 'twenty to 'twenty, three general and administrative or G&A expense was $2 $4 million.
Compared to $2 $6 million for the corresponding period off the previous year.
Or an 8% reduction.
Sales and marketing expenses stayed fairly consistent at approximately $1 billion in the first quarter of 2023 compared to one $1 million.
First quarter of 2022.
Now turning to our capitalization.
We ended at 2022 with approximately $7 4 million cash.
And as of the end of first quarter 'twenty to 'twenty three we had a cash position of approximately 7 million Bucks.
The company continues to closely monitor its cash consumption rate, while also evaluating potential future financing opportunities.
In January we announced the closing of a public offering was $75 million of gross proceeds and recently on May four 2023, we announced the closing of another public offering was $3 $5 million of gross for the students.
We have been and continues to be using proceeds from these offerings for the following.
Both continued commercialization of our SDA clear to give it to us a M. R gene panel test in the U S.
Commercial lives all products with the focus on the Union Gotta wear platform and diagnostic tests.
Support towards the development and commercialization of our genetics database related service offerings.
So both direct sales and marketing efforts to the customers and collaborators for all of our products and services.
Invest in manufacturing and operations infrastructure to sports fans of product.
Continues to invest in all of the key for the younger they enrolled 50 and sort of your platforms and products.
Entry pesos and outstanding indebtedness of the company and its subsidiaries.
As mentioned on previous earnings calls, we have met our debt repayment obligations from the first tranche of our beat that pool by April of this year.
No only two additional tranches of 3 million approximately numerous in principle plus accumulated deferred interest that'd become due in June 2023, and June 'twenty 'twenty four is back to chip.
We continue to be in active dialogue with the EIB about potential opportunities to restructure the upcoming with payments.
Yeah.
At this time.
Our guidance, we provided in our full year earnings call at the end of March going to expect that net cash consumption of around four $5 million to $5 million per quarter from operations in 2023, and then the expected full year 2022 year revenue range of $4 million to $5 million.
We continue to see revenue growth opportunities for our unique product and Irish genetic services globally, and especially here in the U S. After having closed the distribution partnership for Aero products with Fisher held scale. That's recently you nuts.
Alibaba share. Some further details of this distribution partnership with you later on this call.
We expect to see traction and momentum building for our unavailable in the U S and this distribution partnership in the coming quarters and beyond.
We have also recently signed new contracts with customers for further unit payable systems placements here in the U S and are making good progress into commercial rollout.
Only their REIT index you with this product.
We have also seen our sequencing services now being offered in the U S market as well, which will keep customer orders coming in consistently on a weekly basis during the first and into the second quarter of this year.
Sample processing has quickly become routine for our local team.
Taken together, Oh commercial funnel as proposals to customers with a substantial dollar value annually, clearly, indicating significant revenue growth potential for option.
After we have recognized approximately 300000 pallets into revenue from fine collaboration in 'twenty to 'twenty. Two we recognized 400000 in revenue from this project in the first quarter of 2023.
With the expansion of the first phase so just brought up.
The first phase.
We anticipate recognizing another approximately $180000 for the additional work that could close in the second quarter.
It seems that find and crew radius, that's already initiated discussions on a potential follow on project and the new contract looking at full product development.
Microbial resistance or a M. Our test for blood culture samples in low and middle income countries or Olympics.
This would include clinical trials regulatory submissions and CE market approval is needed for those specific elements.
Preparing for commercial launch down the road in these countries.
Also during the first quarter of 'twenty to 'twenty three we have seen initial revenue generation from the only viable system placements and monier cartridge sales under our buyer versus collaboration was their E. D 100 clinical trial.
We expect to have the systems to be added it's more trial sites come online and expect revenue recognition under that collaboration to continue and grow your 'twenty to 'twenty, three and 'twenty 'twenty four is that clinical.
Clinical trial progresses.
Non dilutive financing opportunities remain a strategic priority for option with multiple opportunities around June .
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Dilutive financing opportunities remains a strategic priority.
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Non dilutive financing opportunities remain a strategic priority for option with multiple opportunities around Geneva Arrow, if 30, and arris already submitted and at various stages of revenue and participation for additional non dilutive funding opportunities in preparation.
We look to complement these opportunities with equity fundings that will extend our collaboration potential and allow us to partner with organizations like find all of the European Union and other funding bodies.
It is key to understand that I don't know if he is non dilutive funding opportunities provide for full 100% funding all the respect this project.
Lee funding Florida's range from somewhere in the 40% to maybe 70 or 80% ranges.
It is therefore vital to ensure that the options balance sheet can provide such go fundings as otherwise non dilutive funding would not likely mature of us.
This concludes the financial update I will now turn the call back to Oliver.
Thanks, Albert before we turn to the Q&A I would like to highlight our progress so far in the second quarter of 2023.
Option recently completed two interim milestones as part of <unk> collaboration project with Infector plastics under the pre Plex Grant.
During this project novel markers were identified two of which are pathogens of concern on the world Health organization's list.
These markers were also confirmed and validated using our proprietary <unk> database.
This success could allow for additional collaborative work being conducted under the pre Plex project, which could provide additional funding of a few hundred thousand dollars in the coming years.
Signed a short term expansion of our R&D collaboration with find which originally started in the fall of 2022.
Work already completed under the collaboration will be expanded by three work packages, increasing total project volume to up to about $913000 in revenue.
In April we submitted at the Novo classification requests to the F. D. A seeking marketing authorization for our Universal UTI panel following the successful completion of our clinical trial.
This marks a major milestone said, we're looking forward to working closely with the FDA during the interactive review for Universal UTI panel, which we hope will become the first high multiplex molecular diagnostic tests for urine samples granted by the FDA.
The FDA has recently sent confirmation already that the submission is complete and that they have initiated their substantive review.
We were pleased to learn that the lead reviewer only gonna Vero UTI submission will be the same lead reviewer who has worked closely with the option on the acuity AMR gene panel submission and eventual FDA clearance.
Also in April we announced that option has entered into a non exclusive distribution agreement, which fit with Fisher health care, a part of Thermo Fisher scientific.
The agreement is for the distribution of options unilaterally 50 platform and in vitro diagnostic test for bacterial pneumonia as well as its currently research use only test for urinary tract infection, which we expect to become a FDA cleared in the future.
We're very excited about the strategic distribution partnership with Fisher as we believe it will increase our unit burrow 850 platforms commercial presence and footprint across the U S do.
<unk> to Fisher, a strong position in the relevant markets.
We view this expansion in our commercial channel strategy is the next step towards driving commercial adoption of univar, when the U S and achieving our revenue growth objectives in the coming years.
Health care has existing contracts with many of the relevant target accounts already we believed that there was a potential for the sales cycle to be shortened and the hospital onboarding process to be streamlined.
Our momentum during the first quarter has carried over to the second quarter of this year.
In April alone, we've announced several key achievements for the business.
A few other milestones to look out for include.
We teamed up with a strategic advisory firm to support our unit burrow 830 specific corporate business development campaign in China.
Well, we believe there is an attractive opportunity to partner with and possibly license or otherwise monetize the 830 platform.
After completion of their due diligence on our platform. They are now launching the strategic outreach to a target list of identified Chinese corporate partners that might be interested in a strategic deal around thinking of airway 30 platform for China.
We continue our weekly contact with our existing Chinese partners for the 850 platform.
Including upcoming in person meetings in both Germany and in China during the months of May.
And they are prepared to move forward with their clinical studies and work towards a final submission for review by the National Medical product administration or N M. P. A.
We expect the overall process to obtain clearance from the N M. P. A to take somewhere around 24 to 30 months per guidance from Chinese regulatory advisors to our partner.
We believe options near term catalysts and milestones along with the continued commercialization of our existing approved product sets option on a path to increase revenues.
We look forward to updating everyone on our developments.
Thank you for your continued support and for participating in this afternoons call I would now like to turn the call back to the operator for questions.
Thank you.
We will now begin the question and answer session.
If you have a question. Please press star one now to be placed in the queue. One moment. Please while we poll for questions.
Okay.
Thank you.
Our first question comes from Puneet, Yeah, Hi, Mani with.
Edison Group. Please proceed with your question.
Yes, Hello, and thank you very much for taking my questions.
First of all we saw a bit of a strategic shift from a self commercialization to outlay same thing with the recently announced a non exclusive distribution agreement with Thermo Fisher.
Parcel to walk us through that change and also maybe explain some of the potential upside from this strategy.
Sure. Thanks for that question well just to clarify this was not an out licensing deal all of our distribution partnership deals are classic distribution deals I E. We as option sell all our products at an agreed upon transfer price to the distributor who in turn sell some products to the end customers.
This decision was mainly driven by the desire to significantly broaden and deepen our footprint of commercial feet on the street from coast to coast here in the U S.
To add an indirect distribution channel alongside and in addition to our own internal sales and marketing efforts we.
We see absolutely no downside here and the upside is obviously faster and broader penetration of the relevant market segments for our unit barrel products here in the U S.
Okay.
Well. Thank you. Thank you for that clarification.
It was also good to hear about the.
Expansion of defined R&D collaboration in there and get results reported so far can you help just give us some color on what are the next steps that we can expect over the next few quarters or so.
Okay.
Sure sure.
I mean, the added work packages allow us to continue the collaboration and as we said would generate up to $180000 in revenue in the second quarter. While in parallel we have an ongoing discussion about the next phase of a potential new contractual relationship and a development partnership if you remember the first phase was really a feasibility.
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We've recently met with the team from find at our curated facilities in Germany and discuss progress as what was the remaining work packages and discuss the path forward in terms of projects the different phases timelines and potential scope.
We shared our thoughts with the fine team and expect the dialogue about this.
Potential next stages to continue throughout this quarter in the coming weeks.
Okay. Thank you very much for that and you had mentioned in your prepared remarks, a bit about our about the China opportunity can you, maybe just give us a bit more clarification on when we should expect a clinical trials in China for a unit era.
Well all I can say at this point is that we do have a team of three clinical and operations experts from option in China. At this very moment, they will be meeting with our partners at Beijing clear as well as to meet at that site or on onsite with several of the clinical trial sites in China in person.
Over the coming days and weeks this.
This is the first time since Covid started in 2020 that this has actually been possible.
Also we have the a C E O M. A senior delegation from Beijing clear visit the Ark, you latest offices and manufacturing facility in Germany later this week.
I'm sure. These discussions will center around the next steps in and what May become possible here in the coming weeks and months in terms of getting that clinical study initiated will provide an update as soon as there are facts that can be communicated but the excellent news here really is that for the first time in over three years, we're meeting our partners face to face and <unk>.
China and in Germany. During the month of May which as you know the way I look at it that's huge progress from where we all come from.
Well, thank you very much and congratulations on the quarter.
Thank you I appreciate it.
Okay.
Thank you.
Our next question comes from <unk> Chen with H C. Wainwright. Please proceed with your question.
Hi, Thank you for taking my questions. My first question is could you discuss your expectation regarding the FDA review time training for UTI panel and when do you think it could possibly secure the marketing clearance.
Yeah.
Oh, great. Thanks he.
Now from again I mean, obviously, all we have to go on this.
For.
The formal process, we would typically expect the F D a to get back to us within 90 days.
With a substantive review and feedback.
Normally that would take the form of thought what's typically called an AI letter or additional information request letter.
Once we get that we're gonna have a much clearer picture on the types of topics that the FDA wants to focus on.
I mean from from previous de Novo 510 case.
You know this that this whole process of interactive review can certainly take anywhere from nine to 12 or even 15 months. So I would carefully look at this right now and say, it's probably going to be a 'twenty 'twenty four clearance decision, but again, we're going to have a much clearer picture once we get that first formal response here or there.
Coming weeks again, the good news is that the the Lady that we're gonna be working with as lead reviewer she's a known known entity to us and we worked very very closely with her and the team during the whole of Kyoto process. So hopefully, there's there's a mutual rapport and and good open communication channel, which you know again.
That that's really turning things around quickly as they come from the agency back to us there's going to be the name of the game and the team is standing by to respond to any questions as quickly as possible to drive this on as sort of timeline is feasible.
Got it and to market the U T. A panel once they clear a secures the marketing clearance.
Does upton disruption need to increase your own sales team or you will just rely on the partnership with Fisher.
Good question. So first of all we're not going to wait to commercialize the UTI will already commercializing UTI today as a research use only and you know we actually have a growing universe of our lab customers that are using the UTI panel I would venture that why if the.
Feeling.
Product in the portfolio to Thermo Fisher clearly was the UTI panel given that they actually have a an active franchise in urinary tract infections are.
With an open PCR platform and sort of standard PCR kits, so to them, having a sample to answer cartridge based kit was clear we do not anticipate growing our own internal sales and marketing organization from here on out.
In the U S. So clearly our focus is going to be to use our expert.
Sales and marketing folks in leveraging what is an organization that is more than 20 times the size of our whole commercial team in the U S.
Literally coast to coast and these are anything from generalist sales are in the molecular diagnostics to our government accounts to our strategic accounts.
Two instrument specialists, so there's a whole.
Theories of teams that we're gonna be working with on the AR on the Fisher side. So we would look to them to really.
B the bulk of the feet on the street and.
Help them with obviously technical expertise clinical expertise the deep domain knowledge around being a barrel platform and products, but really have the selling and also the contracting of end customer accounts be primarily driven going forward by by Thermo Fisher.
Got it and lastly could you discuss.
How many new customers has got on board will be a cure for Denmark gene panel or what would be your expectation for 'twenty to 'twenty three current sort of new customers.
We're not providing any specific numbers of individual customers that said, we've got the first couple of commercial accounts are on the acute us I would anticipate us to grow that list, but the primary focus for 2023 will be to drive the unit Vero installed base and adoption through the Thermo Fisher.
Relationship.
Because again, that's the platform sample to answer that is going to be our primary focus so while we continue to add individual accounts on the acute side.
We're going to look at a much broader rollout on the unit of Aero side.
Got it thank you.
Okay.
Thank you.
That is all the time, we have today I will now turn the call back to Oliver <unk> 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.
Thank you and with that this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
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