HTGM - Earnings call transcript Q3 2017 | HTG Molecular Diagnostics, Inc.

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Operator

Good day, and welcome to the HTG Molecular Diagnostics’ Third Quarter 2017 Earnings Call. Today’s conference is being recorded. There will be a question-and-answer session at the end of today’s presentation and instructions on how to ask the questions will be given at that time. At this time, I would like to turn the conference over to your Ashley Robinson from LifeSci Advisors. Please go ahead.

Ashley Robinson

Melinda. you, Thank released September HTG for third the Earlier XXXX. financial ended XX, quarter today, results

as many Before cause These risks to call, materially the begin revenue reliance numerous statements. additional remarks securities –expectations filings. place materially from those we of collaborations turn and the forward-looking and the Officer. to on uncertainties including is HTG’s I projected and HTG and may include expected gross Executive results the uncertainties, margins. to statements. you laws, pharma XXXX pharma forward-looking risks like Company’s other of not that any beyond forward-looking on in could from benefits providing for J. Johnson, or would T. include statements the to improvement With to collaborations, update regarding subject full-year cautions forward-looking existing which differ within the expense are statements meaning control T.J.? operating from federal let and of this events cause today’s expected HTG’s those undue and me from possible remind this HTG call any no that to call. date Chief time-to-time information described to circumstances, SEC statements revenue that, are obligation HTG’s differ of undertakes President and listeners events results HTG in Factors call that actual or over customers,

T. J. Johnson

provide make on After Shaun progress some and in of made On today’s building our will results. business on view XXXX provide quarter third quarter and a I then and Ashley, open to CFO, toward financial then closing to will our Thank our call. continued call third joining our remainder the your a of goals. our additional Good will quarter also thanks that, us Shaun and for I McMeans. will significant turn call this conference color momentum provide the that of the I summary our the everyone afternoon we’ve you. over call, long-term on comments review questions.

creation Let we long-term this strength are of especially we demonstrates value with in have EdgeSEQ as menu which our value a saying, I efficient our our quarter, begin that developing capital extremely high platform our the partnership. the progress companion believe consumables made customer believe want build each strategy we future for diagnostic menu business. me by drug instrument key via to and diagnostic achieve to companion diagnostic emphasize We pharma to is segments this to our of adoption. propel is sales a pleased

significant development generating This two quarter revenues. in we activities growth clinical initiated programs in our collaboration assay

commercialization We We opportunities them our possibly are will development of programs now and development further master to customer companion QIAGEN. three both with diagnostic assays. two clinical of under agreement assay have lead optimistic collaborations,

Our diagnostic master agreement completed to agreement exclusive with with QIAGEN. prior Darmstadt was Merck our companion

in our more clinical XXXX. in begin based assays and complete expect We submissions in to development or regulatory of testing one collaboration

as regulatory see could as sales successful Assuming instrument approvals early XXXX. we kit reagent corresponding

control. are to Our and collaboration pharma clinical additional a forecast Revenue quarters. factors recognition opportunities programs strengthen pipeline in in the basis not programs our from continues we’re quarterly working is to on many as coming for our difficult on direct

assay this in We customers. expected single estimate is programs quarter. to under and now broad in between performance into due could consideration recognition our We collaboration fiscal an our our tied with our into year that fairly increasing pharma this to any this million. impact and of program period. a far our portion realize revenue business fact milestone an increase shift $XX the range, $XX revenue A clinical of our any full given work one but is However, million thus taking is

development Oncology research-use-only and being pharma in focus These be stage late Panel our translational programs assays pharma. our to academic RUO and centers Biomarker microRNA studies our profiling used continues assays. growth research retrospective business While medical are and primary drug and led is by in contributing

sometime the while about organization have we I’ll We now early financial momentum the results. state XXXX. the turn date stage that the development business in will for we’ve assays profiling over new set be Overall have launch pleased we extremely with just a and is are our and excited not yet we specific Shaun early built. to it of targeting in

Shaun McMeans

J. T. Thanks

$X.X were revenues million, increased XXXX XXX% of QX over revenues last revenues Product respectively to $X.X to year. XX% million, QX reflecting QX in nine our period $X.X in the $X.X XXXX. to months bringing compared million Our and an increase same

further the service incurred our in visibility do provide mentioned J.’s our clinical to directly the to J respect relating significant increase with to and reflects year earlier. we T. final revenues, primarily earlier slightly reflecting collaborations attributable compared with pharma we our operating XXXX our range development demonstrates $XX revenue by pharma nine operating costs will of into to clinical uncertainties T. expectation by as spending Total to higher increase of commercialization and associated continue to however in $X.X $XX and costs ALK our existing than XXXX. in mainly expenses million of Europe. revenues believe in guidance QX of diagnostic programs. the revenue company headcount to to guidance QX QX, million growth those invest have expenses our range driven with Following pharma and expenses in progress marketing earlier million range, clinical programs pharma continue substantial our Plus This full timing enough $XX OpEx XXXX, has expenses sales growth in QX comments, operating full million with attributable clinical to quarter clinical over be programs, the in months development this variability in programs QX year. these We and believe expenses made general We million. the XXXX year as increased have $XX announced program, remain lower XXXX, in administrative activities were compensation to expenses. we Selling, expect XXXX, Consistent

to invest our continue service clinical We programs into activity activity. expected growth to and from meet organization program pharma nonclinical

$X.X Our QX from driven gross XXXX, significantly margins our revenues programs. from pharma clinical have increased negative million to million in QX in by $X.X the

QX cost be as during reported greater the of However of early We development operating pharmaceutical of costs costs. pharma expenses expenses clinical generally amount for with the expect for are work percent QX revenue with each to associated program revenue our pharma activities customers. XXXX. million a Operating associated in of $X these $X.X phases as with associated our our

revenue sharing clinical is to pharma QX, We increase from have in our expected programs future our operating margin periods. not revenue which of profit through percent as recognized a

our the convertible QX $X months the $XX.X progress in additional the and we same of of million In facility. nine equivalents million equity October September issuance net proceeds proceeds from QX of demonstrate subordinated received from towards XX. results note. believe summary, promissory XX, our XXXX reflects we revenue the raised $X.X as XXXX for look to $X.X compared earnings shares to $X.XX QX cash on $X Our XX would was for point, turn issued our per We operating through have sale additional with million loss growth T.J. calls. September $X.X continue ATM back to this the management. and forward like QX approached I At $X.XX cash was ended loss in reporting I for and prudent to million progress to million XXXX call of from future QX million QX and in

T. J. Johnson

Thank Shaun.

As notable projects, we accomplishments. this past our discussed, had we other was that sizable very from productive feel contributions pharma new also quarter clinical but with

at of Conference EdgeSeq in underway excellent in an European is recently initial ALKPlus, is presented with A method. customer clinical commercialization the initial HTG First our Congress promising. Pathology of our performance standard and lead Europe indicating customer comparisons USA feedback the data

a at and sample our earlier rates of commercialization workflow, simplicity failure is assay process encouraging. comments the customer While on from lead low our input, low positive

performance develop lead will in in comparison we sites, which data We multiple reimbursement efforts our continue customer our assist efforts. to expect

we reagent We in to are instrument plans, for be XXXX catalyst revenue a year. our do next placement currently expect to sales assessing fascinate

we plan QX the announced, our the HTG module finish of required for activities XXXX completion U.S. QX to of a for recently with PMA in submission. for plan EdgeSeq As ALKPlus Assay

our I’m Additionally, plasma, important in it’s HTG’s ability about to XXXX to serum note liquid to compete of and the sales. fluid in compete including often already I market. with asked biopsies, projected come profiling of revenue XX% liquid approximately believe we this exosomes isolated market that from biopsy

applications future adoption. shorter in are market We longer assays is our HTG EdgeSeq term based term liquid product opportunities Whole-transcriptome, biopsies. with diagnostic growth opportunities HTG research in is increasing in market more lead seeing And but biopsy see matures. technology growth certainly customer importantly Our this liquid we based on that microRNA

So closing, into believe we to a momentum positioned and we’re very for carrying strong XXXX well with finish XXXX in beyond.

catalyst. of launches clinical for the to to HTG collaboration pharma that see menu to your like commitment by contributions Our medical we number to team further pipeline end continued academic have a EU investors lead opportunity for strengthening our the diagnostics I’d ALKPlus and program center support. company the could for we the and underway EdgeSeq thanking HTG and and

Technology initiatives and open we’re HTG presenting who Forum Diagnostic on New would XX:XX now you Eastern this those Medical up questions. at in the a.m. of For to Time about Genuity I’ll York. like in Thursday Canaccord our know

Operator

[Operator Genuity. go Canaccord you. Thank Massaro, Mark we’ll to Instructions] And

Mark Massaro

sell I Thank was the decent of looks product you. revenue could. and hoping services I split up, if Thanks the quarter. like to on were between to on Congratulations instruments you couple is T.J. if in you able Clarify start product the wanted and quarter? EdgeSeq revenue, revenue just the a it

T. J. Johnson

capital We in sold Mark now were. have We the XX instruments field.

also arrangement. reached key three in are wrap placed instruments Europe. under Four evaluation, a leader rental We instruments have five we’ve that and now seven in sides, under opinion

Mark Massaro

you or Can size helpful. really your the update of not whether an and covered the this force majority give of sales That’s have time? Great. you on global at country us the

T. J. Johnson

coverage increased of U.S. sales plan been direct recently that and couple positions in to in fill. Yes. We’ve close and amount more We’ve XXXX. to here Europe. where this we to slightly into pretty the Mark, year we a exit both enter But got the we’ve plan

direct field field service four those and scientist, management. We the we sales, sales engineers support dedicated Europe. in eight have folks approximately far in and U.S. the associated have in field the And as application then as in

Mark Massaro

helpful. That’s

revenue at term thinking it or about As meaningfully we on should that the can consumable QX you thoughts us pharma in up about near collaboration pick think the whether Can on it give think business you was be driven more flat really or really the not looks about like XXX,XXX we sequentially. roughly being side?

T. J. Johnson

Yes.

ladder. We product our we’re going the sure steady sales of driven some for been see do expect growth it’s on profile Mark business. think I that to by research

So finish to the you from see outputs OPT panel starts driving more U.S. world, for we’re customer razor/razor razor/razor adoption, here we our model as then on expect gain project catalysts. And believe that while a blade XXXX so diagnostics. the traction the therefore believe in immuno-oncology diagnostic on but those the model launch that in the based [ph] revenue on continue bumpy first panel time on and will obviously next revenues would labs product assays growth, we’re Europe. those for now catalyst annuity panel, year our are research pharma for midst see in gain we collaboration potentially dependent product based the very toward start more effect or and would classic next microRNA PMA initial classic We of or clinical we in the as they’re confident the the to we’ll lumpy companion E.U. occur and to and as the than blade our revenues us we’ll as our – side in or

Mark Massaro

submission, feedback for Yes, the the the update or guess responses you agency? I any understand. from And you’ve you’ve three thanks received can to modules my on share the PMA submitted first is, question

T. J. Johnson

our believe full first Yes, modules review. of it’s completed all two I been positive,

to hope would have We this of Our and quarter. module cleared those in three, end forth were questions. responding still back by to the

for review final module a FDA So the we would module prior three because our we’ve the we and review the as four that review by were be be for entered their discussed on then of the rapid hopeful majority expectation before completed as QX XXXX would of modules, module. focused purely and we’ve fairly submission on

Mark Massaro

give have to sheet. of that us QX my comments thoughts and just you the kind but left And Okay. then left around into how was say question ATM vehicle I final refined much kind I share of OpEx, is on on just know the XXXX? Can hoping any balance give on if just OpEx and you’ve is you some of – levels

T. J. Johnson

sure. Yes,

we’ve is million on amount have $XX just ATM more million utilize million has of a which total of our to shelf $XX drawn that. $XX Our But is with little total ATM in of Shaun down under we indicated million. existing the $XX excess which

bit have of room both. quite a So we underneath

levels. OpEx As of resources growing investment collaborations. Obviously very stay continuing and some far currently volume we’re that with the we our Mark modest very, but the cash is support to we’re the Most company, work spending providing that of uptick organization other our at to resources into as have we’re rapid prudent. areas pharma putting very development in of

next uptick not to we see year, QX So expect but even in QX and significant. would modest

Mark Massaro

Great All see for right me. And this you it later I’ll quarter. that’s week.

T. J. Johnson

Mark, thank you.

Operator

we’ll Tannahill, Co. H.C. James & And Wainwright Instructions] to go next [Operator

James Tannahill

for question second thank My Assay us module the I’m XXXX? the ALKPlus you still quarter be question. EXX. on for to PMA Hi, my for taking phone submitted on in is track first

T. J. Johnson

is. It

James Tannahill

activities with QIAGEN? completion Okay, specific of newly the development statement provide work timeline great. Could initiated under a second you of your more for

T. J. Johnson

Yes, provide programs. a of in all up able information associated activities confidential far just and and definitely to both our uptick as unfortunately James, development with ramp we clarity But I’m that. on that’s our not as are more

James Tannahill

All so much. right. Thank you

T. J. Johnson

You welcome. are very

Operator

of the HTG will the over additional J. are this or T. CEO in no at now any questions there Johnson, turn remarks. time. And for additional to queue I closing call

T. J. Johnson

for have have other today. everyone additional participation And than on their the remarks evening. I I thank too. great call no a

Operator

for us. you. conclude all Thank conference joining And today’s does We you that call. thank

HTG Molecular Diagnostics (HTGMQ) 7 Nov 172017 Q3 Earnings call transcript