HTGM - Earnings call transcript Q4 2017 | HTG Molecular Diagnostics, Inc.

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Operator

Good day, and welcome to the HTG Molecular Diagnostics’ Fourth Quarter and Full Year 2017 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ashley Robinson. Please go ahead, Sir.

Ashley Robinson

Thank you, Bethany. financial XXXX. the released ended and HTG XX, December today, results quarter for year Earlier

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

T. J. Johnson

moved like strengthen our of expand to adoption, we balance commercialization biopharma entered phenomenal employees and by our XXXX in my customer We and sheet. and Europe XXXX a joining of looking call. our quarter momentum. thanks accelerate yearend us expectations start building for on initiate year. with exceeded and XXXX on CE you, into performance expressing forward I'd fourth Thank and each for Good specific the afternoon, IVD products our conference gratitude to HTG our to pipeline, everyone Ashley. goals to our

of key diagnostic partnerships of clinical strategy of revenue a I've the which particularly compelling in and in these noteworthy certain especially as aspect completed our the was recognized via full to our profit year of milestones discussed, provided schedule fourth quarter, quarter programs half develop for sharing. is As we catalyst the second development often the our first of growth with and BioPharma. BioPharma Execution menu ahead

program Precision with exciting in expected this with the We second client the a underway Agreement occurring clinical of PDP Master half our date we programs Partnership also year. in as QIAGEN significant four program January contracted We is milestones under initial new of this the To Master and XXXX announced refer QIAGEN Agreement. programs. to of the development these a Development sharing Manufacturing three have and programs Commercialization and under third this with year profit or our Diagnostic

potential indications phase. B trial QIAGEN with potential least under This and results trial expression immuno-oncology go-forward client. parallel for our completed with BioPharma associated collaboration await PDP the currently assay later at of gene is the be to the the commercialization request Topline One analysis we is of go, BioPharma assay analysis from the assuming data for XXXX are the the preparing which more. expected has submissions trial three the for the and is clinical full positive the and a clinical will phase clinical multiple At call development on assay A PDP the development in Program submission expected regulatory BMS again trial in anxiously agreement geographic partner, with our with decision QX. of a the Program we three assay decision. no-go we in and programs, for

our to of HTG research our we and meeting. collaboration amendment BMS working and the C program was to value biomarker immuno-oncology continuously initial value workplan and announced adding are kickoff of completed announced expand development just in recently also its research under Program PDP the add the the We BMS programs. their to

our Companion of will not with are expect under Master XXXX. We excited Diagnostic program Merck statement to development under this Agreement with athlete from expansion with the meaningful work anticipate of indication very KGaA, The that biomarker a We in due program Darmstadt early targeted is program about this and an the directly potential We currently initial an fourth underway expected X in least quarter the a key announce QIAGEN. it program developing revenues did once to late with expression calls. multiplex submissions are in XXXX. is XXXX Darmstadt six collaboration aggressive our on potential the Phase very large a and including information contracted regulatory fourth the utilized of specifics schedule studies in do at We'll locked provide know added we down is future or indications. and the the research gene assay timeline early for Merck, full across milestones will be more have in

We and affiliates. relationship are Merck, very with positive about Darmstadt the overall growth opportunities and

of a our the diagnostic as compared growth in I other any revenues to But due single as with I additional So, whole is BioPharma our early and milestones quarter described. to we collaboration-based revenue milestone our sales recognition before, pipeline business increasing be several to and positions meet very our critical to strong continued summary, are said capacity catalysts partnership XXXX, with demand. in in We're and will increasing I emphasize responding QIAGEN. PDP in want to investing factors. phase anticipated expecting to expected are XXXX customers favorably development timing as in accelerate lumpy

HTG matter and due QX to the just time. As XXXX, than revenue growth research result immuno-oncology continue third the consecutive prefer cannot also will an when for platform Oncology PDP PDP first year. revenue early our the fourth and continue we approximately development XXXX, Whole-transcriptome we a the and we microRNA menu versus be moves for panel, only believe believe we grew of in Biomarker the as XX% to in to steady [indiscernible] HTG QX we Customers we panel, right during importantly, to until is in to program milestones our trend offering diagnostic our business near-term. recognized expect EdgeSeq QX of to Most regulatory segment this purchases continued approach Panel the powered total profiling the demonstrated expect product BioPharma this by control our submissions, continue it's in completion The do service our use approach our do example, developing revenue a quarter. and lower we that while

to pharmaceutical We more would on focused therefore companion of we diagnostic not place we and release development together most RUO to products in biotech instruments, customers. future more programs. calls. application new We to resources with new plan on While others of are with working immuno-oncology do our release were we'll version today later a BioPharma like development and the any did provide that double and panel the content our in and specifics future effort dedicated XXXX, assays, fully as this year

with provides translational and in a limited us means As reminder, is artwork BioPharma and the targeted market an other content, market tools the participation This end. access to and collaborations a to centers. diagnostic our research strategic

target longer-term primary Our is diagnostics. market clinical molecular

in ways. this market are We assays two for developing

second the subtyping for through through targeted collaborations and in our Companion as origin such for early EdgeSeq of ALKPlus DLBCL and expression Diagnostics First HTG assays Assay molecular commercialization in HTG EdgeSeq Europe. now BioPharma cell

comparison be and Europe. samples customers XXX% utilizing including our During played parallel accounts have Initial have and reimbursement our hired been purposes. in on broader XXXX, diagnostic adopter European commercialization, processing for current appear results to in overseeing to we collaboration Also, performance additional early These year. several and focusing we with results their recently into this resources instruments promising team, assay and our assays publish efforts. standard expect later we

IVD While we're forecasting this year, from XXXX. we're material not CE stage for sales the setting products

the planning due uncertainties ALK clinical to our We the submissions and funded diagnostic in call comments of planning at HTG In now FDA currently in our our timing we associated have have efforts are with our summary, planned turn we to least For studies our our to commercialization Shaun for some market, BioPharma XXXX XXXX, we associated final I one PMA companion with on US other do the possible segment are over programs. XXXX. in continue this submission early for Diagnostic for ALKPlus DLBCL begin and modular as and will on Europe EdgeSeq ramping to focus diagnostic. responding financials.

Shaun McMeans

T. Thanks J.

QX and is a for on XXXX. million were revenue XXXX. increases component million XXX% of QX XXXX, compared to service million This XXX% revenue to XXXX bringing significant period our million, continuing in $X.X $XX.X respectively the same year increase XXXX. QX $X.X accounting service of were development revenue have an revenue in year-over-year. for reflecting Collaborative the $X.X for revenue revenues Product of our million revenue of to in development QX and XXXX results $X to over product-related Our impact and revenues increased primary in million full $X.X full-year our expected XX% in

QX XXXX. Our the early revenue punctuates Pharma our continuing in collaborations success since

our revenues delighted programs earlier, or administrative expenses. and Primarily over with forward attributable strong to reflect $X.X general compensation research and also XXXX million for XXXX. a and increased look including higher QX which XXXX and related the development to $X.X $X.X included to XX% the respectively. of QX $X.X in profit-sharing these strong in expenses by million and development million revenue. unevenness QX TJ strong a report and collaborative period-to-period Our of full result We're year XXXX, QX variability Pharma expected million of XXXX mentioned operating compared that our are as expenses approximately were results QX expense, mainly the expenses Selling, XXXX to

expected clinical in year as related higher activities full were XXXX general a now including increase up. only third selling, year ramp our expenses $XX,XXX administrative is programs to spending Pharma than to XXXX. program and Our OpEx full QX

CE We will in to of and headcount marketing, products also commercialization continue pursue our IVD in sales and Europe. invest

million from these costs programs. early greater expenses during percentage costs. collaborative $X significant our revenue amounted expect of in associated contributions $X.X clinical driven a associated $X.X increased phases in million related margin from in this gross clinical million reflecting was contributing $X Full-year QX programs. our from $X.X X,XXX $X.X Included to profit-sharing significantly to from XXX% margins Pharma million XXXX. gross for expenses our the as generally the from gross development to year be to gross We clinical million Pharma are cost revenue and revenue period. programs, million clinical revenue grew programs and QX with the QX for QX our operating Pharma reported in margin as in Our million $X.X QX development for margins XXXX, for Pharma Operating which our full by of in

we gross gross facility, loss $XX.X approximately for in its XXXX in cash our calls. through and shares earnings substantial and million T. for operating proceeds convertible currently XX. and ATM issuance compared to year in of solid loss approximately million additional February would million the $X.X note. towards future We Our million progress believe XX, QX follow-on gross shares prudent including our finally point, outstanding. issued At mutually XX,XXX,XXX adequately we $X.X point J. financing, in progress on company XX, in million was $X.XX comments. We under shares additional share XXXX December our million of key From promissory a approximately January cash $X.X QX from of the inflection QX financing stock. and raised common strength million through sale Net sheet $X.XX for QX balance reflect inception XXXX. closed of per $X our I On facility through terminated $XX our subordinated management $XX.X to which periods. full XXXX results equity we reporting summary, success In have QX with was equity of was the sale from in of the I look equivalents, for XX ATM turn reflects this proceeds and ended growth, of from January our QX the proceeds in and stock closing raising common like our to revenue in and back for significant million it forward future XX.

T. J. Johnson

want and follow-on our have Thank sheet. execute or and now financing of Post-closing we filings I lumpsum payments Shaun. lumpy, we clinical efforts range. are wrap pleased That to growth facility of in profit-sharing pharmaceutical year, milestones. We've with the revenue linear in terminated are periodic extremely due continue up and early we to million have regulatory our the strong of of financing, this plans. future and a be revenues, our received, the reiterate our the to and completed that range To of nature you, to to progress $XX balance our will collaboration said, quarterly although aftermarket our partner's ATM guidance certain million topline communicated comfortable programs our have $XX timing the things industry cost-effectively not

goals in the our for Continue Europe, adoption, implementation remain of and PDP products commercialize programs, pipeline BioPharma strategic IVD XXXX while the acceleration management. our approach prudent a of CE Our consistent. cash expanding Excel in maintain to customer

XXXX While we this and do, year. excited we encouraged have about to progress much by our are

any in belief XXXX shareholders customers again and in our great to your up call I'll for open to So, a want thank HTG. now closing, I employees and trust our questions. and for the

Operator

Mark Canaccord our instructions] [Operator from Massaro you. Thank of come question will Genuity. first And

Mark Massaro

million end Hey obviously now that in I a are guys. strong the margins My this revenues the firming gross first on the question, of understand quarters lumpy, up is above two year XX% $XX sheet. straight of at Basically, coming Congratulations gross level 'XX. XX% there but collaboration balance can million the margins is modeling in think I of do in? a $XX this to you of in you year, expectation particular given come XX% for to revenue 'XX, was

Shaun McMeans

expenses we plus range as gross the of I extremely year were our project. that and at the mix and But at under year in we falls year, to the we to our the accounting full collaboration could fully plus project expense, we probably relates XX% the that the or our fact cost really R&D because and will close for basis, with the we associated both and we're pure running look up more believe that be approach in with on to XX% confident the programs R&D into PDP Mark it QX. then continue going business it again, revenue revenues high where see margin as a margins on we're pull when current the be pretty range and for those to of

Mark Massaro

that's operating the really you've now your QX up you then and expenses sheet. likely it, Got be that that balance in helpful stabilized will indicated

you the goals your of build sense and additions can a force made sense So, size sales will give you've post us go and a us the for sales the where, some Give your if comment even for about where spending maybe to today force? what delays. are

T. J. Johnson

increase leverage that think Yes, comes factors on hard sure We're expecting two would burden our first P&L past working consider we to revenue are down operating Mark, reducing I in I and what modest year-over-year. our into the really overall very losses. expense growth

our the what than highest this leaps really as the a spending later we program substantial little up would what ramp R&D expense any don't bit we'll other year. in consider the So, expect, into in see in anywhere third that kicks clinical I gear

our both in but consider to it and as Europe, fixed additional in got a expect that So XX% to modest, U.S. than and XX% side, our and and very somewhere higher that leverageable in on we've both in cost the of both here team, now, revenues belief field the in spending. Tucson Europe, any ramp base well much faster much as is right I we into but fairly are the the in area investing the sales headcount sales US we would

Mark Massaro

and the speak stronger in for you to to in hover what full-year grew it, XX% be business I XX% Got quarter, revenue, somewhere range came XX% full XX%. outpaced of your QX growth and like we lab the 'XX? which which to should lab it Can that year thinking growth for which in think about drove your product around business is looks at the the in

T. J. Johnson

XX% are We the number good number is that year. expecting for a that full

I customers some think by the the end our projects of what of push quarter. the was we traditional saw their get done in of fiscal within QX to some

QX. in extremely that our XX% the to in Some to to going pacing us of expected, we're be But to resulting going push think believe see of I what it's don't year. stronger than QX XX% more full I is strong for we that range. representative was

Mark Massaro

Great and assays the to you that Plus to important the speak expect or it by you're to that would you module in four is -- to given can your continue the collaboration anymore comments whether indication you QX the end less to not agreements you maybe on indicated that the FDA, assay of business, overall is at this you not FDA hopper this given the to ALK of first submit 'XX. and whether be responding more can ALK clarify point, have Plus or

T. J. Johnson

a that's our the in programs are chronology and current take those explained what have important great remaining of to order partners. to the that currently in as We of the would but module appropriate us our U.S. I We Yeah, through precedent collaboration fourth that sure be like, went I and be studies our done than and market. Pharma question. with our all budget, clinical to are in believe ALK long-term programs more file will

and geography and we that consume based So PMA. each submissions timing that priority believe as will just in take our will we the those the programs run, multiple short those capacity on I diagnostic will our about business, as of are the the believe driving of our are submissions over programs growth know than here definitely issues a requirements more in going of we're long-term US that more have U.S. that to resources ALK which from on far front in

that. in our the in IVD greenlight Europe So in CE DLBCL going now, products is we're focus ALK at the right driving hard and

-- geography then and of or us our those will of out next Pharma the we let that definitively, with quarters, timing one around diagnostics the companion PMA that several with more kind based some submissions on over of ALK programs would Mark, we'll multiple how slot know figure entering are We product. milestones critical

Mark Massaro

makes perhaps or sense. the okay, think or on Friday you from tailwind have perhaps CMS think developing And regarding not NGS sequencing action viewpoint decision any in you do that panels? particular whether Yeah for about headwind a that be panels, last could decision content a the you

T. J. Johnson

first in to think but is on talking for implications that understanding Yeah, of to kind We're trying deeper get perspective lot we're the dig a HTG. our our there, broad belief a to obviously of of a it's other folks pass positive business. I

Mark Massaro

the on the talk Excellent. call. I hope next I'll to and you enjoy [indiscernible] you

T. J. Johnson

Thanks right. All Mark.

Operator

[Operator question Wainwright. of Yi instructions] And our next from H.C. come will Chen

Yi Chen

for you XXXX, Thank of taking of would clarify versus Is different to it a whether questions. categorizing you product your that service nine way months changed my the is on numbers I in first revenue question revenue, the because based My for first methods have correct? that reported categorizing seems you like have revenue.

T. J. Johnson

accounting an No, not of we've from our any perspective. changed categorization

We into would are kind our grouping revenue we buckets. three of what call

product business, RUO both services, the of segment. RUO profiling which that we're include would Our profiling but product elements out and and service breaking

would become The PDP our bucket revenue. our will material, And as diagnostic clinical revenues. that collaboration to then MDX business third starts second be the or or be our

not So we’re how any to changes as revenues. today, of we've made categorizing

Yi Chen

press break were the service. But release third product down; quarter and only two of in one revenue the there

of So, revenue three you have now breakdown. segments

T. J. Johnson

we've delineated so perspective -- we've base a collaboration versus what services. that our from is Well revenues service

what -- what comments base associated out are that in business programs PDP we our also is now specifically our delineating did is our versus services. So we yes, and with

Yi Chen

Okay.

in quarter. I that the noticed G&A numbers have the increased third from the above fourth R&D in So, expenses and quarter the the research

G&A? in expenses at increasing look and So R&D how we should terms XXXX of

T. J. Johnson

increase expenses on will The program driven bulk in the the in with believe of As collaboration associated we year-over-year. new coming the communicated, being spend we that R&D R&D by side overall the third increases of expenses the business. is and

with all these of gets R&D Companion into booked So, developing the expenses Diagnostics associated expense.

various As the but increase bucket. categories in see those We increase spending and that expect nominally. flow in our ebb milestones, to R&D other and fairly programs operating through expenses would will and the ebb modestly flow we

Yi Chen

it. Got Okay. Thank you.

T. J. Johnson

You're welcome.

Operator

additional questions. time gentlemen, this are and ladies there And no at

will So, management for back to it I remarks. hand closing

T. J. Johnson

everybody thank call. I'd just now. talk we'll for you like time and interest next and on to the your Bye to

Operator

And ladies you this does today's for and again participation. We once your thank gentlemen, conclude conference.

disconnect. now may You

HTG Molecular Diagnostics (HTGMQ) 22 Mar 182017 Q4 Earnings call transcript