HTGM - Earnings call transcript Q2 2018 | HTG Molecular Diagnostics, Inc.

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Operator

Good day, and welcome to today’s HTG Molecular Diagnostics’ Second Quarter 2018 Earnings Call. I would like to remind everyone this conference is being recorded. And now I would like to turn the floor over to Monique Kosse. Please go ahead.

Monique Kosse

Thank you, Greg. financial second released XX, ended HTG XXXX. today, results quarter for June Earlier

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

T. J. Johnson

second quarter for you and our Monique. conference on Thank everyone you, Good us thank afternoon, call. joining

the longer our targets six my for quarters XX%. gratitude Let execution focus strategies. compounded rate in employees of me HTG a and Resulting on or growth their our quarterly begin to each last and expressing of XXXX term by

for daily basis management customer differentiates have employees our would really dedication today and that difference of to me is result, brings a us like tangible as get I important differentiators that I with delivering we service fundamental who have This outstanding are three customers. business. our our feedback hard on cover a And in you frequently We to a a us and on worked our initiatives. believe talent are we group for makes the highlights

technology. First is our

Second of is our us. sheet innovation in in set opportunities balance front and incredible is third of the

First technology. our reinforce on believe key I want technology We matter. our to that advantages

samples by next without in Our existing small fashion, installed sequencers highly utilizing ability customers. generation to valued highly is analyze the extremely multiplex extraction

a non-small entered HTG an developed from tracked we histopathological practical. routine using and a papers develop over The last signature tracked a have at as few EdgeSeq benefits of of messenger XXXX and adjunct small research for classifier results express purpose are test classification posters have using of growing cell version year non-small signature so As customer cancers. RNA Stated Aid pathology expressive this cancer, was developed rate be The to XXXX, specimens. its classification with far is a a a practical classification We section, the want HTG being study difficult. the in XXXX, EdgeSeq grew of abstracts, abstracts, of saw extremely In described XX. And In can lung years. nuclease commercialization, full value XX publications. has feature standard only the customer can of next our third we the its which In that we cancer biopsies and small number a technology our are Formula was number posters which publications. now to that number in tissues have overall of worth most July, XX cell our premier publications, for biopsies. run data The cancers the we is paper EdgeSeq with lung lung titled a use and and Histological feature year. starting customer a relevant sequencing frequent generation Gerard to lung cancer non-small I clinical needle was be and to combination an diagnosed HTG to considering cell that in proposition in Xx and technology over highly biopsies of diagnostics. applied six and clinical small our technology based capability protection in to terabytes

indications Seconds Platinum with by al. XXX, tissue samples Multicenter, great by example XX Turner We of II panel Nicholas response HTG in trial gene In gamma HTG and accelerating Institute important EdgeSeq is the Hospital customer Nivolumab. paper a technology to of Trial. a cancer. BMS Sharma, Cancer Checkmate HTG's and et titled Research, January, the P. after panels strong presentation Metastatic references Urothelial XXXX a signature Single-armed, the number Therapy: use patients trial is the used AACR biomarker Lancet Phase adoption Nivolumab a of see generated Royal A and trails. interferon in PALOMA-X FFPE oncology in breast as in The this correlates awareness, XXX Marsden Carcinoma from podium recent that third very metastatic growing Pfizer featuring

clinical in incoming coming out diagnostic programs. us example collaborate their recent research is relationship and inquiries are at immunooncology are have to looking partner grows, team their a Oncologie Oncologie programs. dedicated new an chosen utilize HTG technology of drug and Dr. development and with is and HTG's that customers supporting thrilled to awareness A biomarker-driven and master her in and these accelerating As biomarker pipeline, pace, our capabilities as key International agreement their Benjamin with we development.

Firalis a and is now diagnostic one disorders. another launch. anti-TNF see commercialization enabling and licensing predict sequencing supporting also for products was and arthritis messenger to to product agreement our base research alpha our initial autoimmune capabilities inflammatory Another of next-generation is new RNA them patients' it us rheumatoid customers, in profiling to European Firalis therapy theranostic recognize product our response of a as partner trust our of with fulfilling

tools broad to like also profiling biopharma opportunities large believe are been for numerous building. We custom customers' portfolios. have We contracted these designed develop our panels biomarker as

genes, which development This the delivery, is and the what product be for Precision which most status aggressively Company, immune product sheet, the believe of panel mentioned advisors IO efforts. expand funnel month, is our our have earlier gives launching our our entailing us highlight Another confidence. orders amounts diagnostics. for we the large EdgeSeq in of tumor concept provide to strong of oncology critical panel will already early of phenotyping, and deep The of immediate applications of X,XXX, set we subtyping, organized are commercialization comprehensive to allows a scientific us the I small all to by balance customer and HTG vision purchase a sample. our Panel. nearly biology Immunooncology new precision opportunity exciting history in inflammation profiling This We total us opportunity gives of analysis very enable checkpoint future this inhibition,

containing biopharma. sales, immune current has on new IO While future as innovative further therapies work made believe to planned integrate panel can OBP minuscule partner broadly who for amounts biomarker we development strategic from the related significant respond. much identify With biomarker panel, been HTG ourselves to profile this better and progress diagnostic patients sample enable a customers and our samples remains and will our right

HTG launch the development our Whole capital based EdgeSeq fourth and much two Tumor panels, we mouse the Mouse RNA the Mouse have Transcriptome In EdgeSeq species product deployment plan targeted new quarter, Assay Messenger Response on As Micro-RNA of to Assay. HTG capacity. we

QX these planned have models though, for volumes. high have been these for strong a mouse initial in customers are Even utilized will asking as panels translational panels Our believe this, demand. good opportunity have commercialization, and early heavily are studies funnel in we

yield We a expect purchases. catalyst types, volume these instrument be panels higher sample which also to could for

per again, precision at driven cancer is by profile new account goal least quarter, diagnostics. of our Our one innovation to add vision

into such RNA and to XXXX, first of Looking instability. new as burden mutation additional covering with we base genomic quickly the tumor applications panels part follow plan

research portfolio. sample team cellular is platelets. of actively zones, liquid for Our particular in type extra our of is important and the use Of ventricles the working interest HTG to further expand and also extra biopsies increasingly measurement technology

in compelling front product team number with has added majority and new expanded the of calls hires sales theme we the the a and the I decision Considering innovations in that our have We discuss been the have will see launches filings now of us. we complete. the opportunities made number new We plan intellectual property once future team. to of our biopharma of

Our presence business. Tucson our new left extremely for hires completed new and fired just expanding training and about up competing market

business. time to front opportunity accelerate to the the profiling third of RUO the brings which our would now like point me in are diagnostic precision I is to Which We highlight, us. confident is

partnerships We increase. believe As accelerate our we diagnostics companion RUO launched our diagnostic and panels and for other opportunities profiling collaborative business. new

PDP Our phase programs. is feeder for deep system or involvement diagnostic and foundation earlier the companion studies and late-stage

hope developed be In utilizing XXXX that mapping is assays, of many expression very be Our our will grow throughout profiles is use HC we by of gene clinical project for investors Bristol-Myer trials. in utilized broad stage remain as explore with by we team. and research this It being our immune HTG May, and to novel to Squibb to profile note We Bristol-Myers XX, expression oncology improved we reached expect the the technology will and for count Launched with products number commercial molecule Squibb count continue program, HTG of are companion now gene collaboration develop our we BMS. year important predictive clinical number An which earlier the diagnostics groundbreaking PDP user what NGS to across about developing. the expanded Qiagen tools late and we of for new first phase technology. expect has a example relationship business leverage and optimistic to have is very that developed the

program - mentioned, XXXX. local assay the year further Our custom continue is this that HTG in including or early reach for expect in phase which as current and portfolios. we I biopharma we would already late second are have other the panels development the deeper milestone to Also active and development for PDP staff developing into go

are While revenues plus from they a these programs. to commercially lumpy convinced our EU. forecast diagnostic to for developer tied or Out quick difficult that as HTG matter remain and is time. available others our on collaborations our biopharma One just partners’ of We update one are HT collaborations of companion

continue expect presented be we and completion nearing the in Pathology to are Europe the in of at to results European September. studies Congress Our

first in this is receive Our commercialization we continue and order actually effort our quarter.

more believe start before, stated meaningful assay As generate revenues we to XXXX. in will

on will the value Our have of new which and I end believe FDA were very I this we constructive feedback are and in decisions are on had and recent proposition And advantage PMA would discussion lung with begin. and I adding adoption. will in and assay. We as potentially its gene recently informed conclusion, submission These and matter. U.S. have become the our discussions customer cancer updates. keep technology future clinically with relevant targets more is timing that our we excited active improve In

sheet product opportunities. With our launches more new Our driving biopharma to that, I us about capital will and work now strengthened to optimistic and we turn over expanded progress And balance to programs put call aggressive the building Shaun financials. finally review our in our are and in to resources. the with our QX diagnostic be to pipeline allows commercial future

Shaun McMeans

TJ. Thanks

was $XXX,XXX $X.X increase included total XXXX our revenues our to clinical in XXXX QX $X.X to from revenue QX XXXX sharing million with in was million Our QX, reflecting compared an profit services million total programs. compared in revenue QX, of former in $XXX,XXX in development revenue QX, collaborative Driving XXX%. $X.X

and expected us approximately compounded XXXX, was our growth an XX%, services Since XXXX annual on We to calls. rate in in growth a quarterly revenue places compounded XX% I increase in million Product have past revenues to XX%. you excess product $X discussed QX to of year-over-year. - compared a of equivalent run-rate rate have increased revenue $X.X QX, which in million royalty given QX, in

to programs year-over-year As consumable And million compared in QX, are our product operating $X.X are and instrument with related collaborative sales to of research primarily previously million in our are expenses and expense. discussed initiatives to a development increases XXXX. product beginning $X.X development based appear in revenues sales. responsible increase in for to we grow included expenses our

million unrelated Our to expansion R&D development reflects launched QX spending development our of XXXX collaboration million menu, programs decrease late With on in earlier evidenced T.J's XXXX. $X.X research profiling comments resources non-collaboration This early half collaborative and and of the in new R&D second of XXXX. into shift X RUO panels HTG's the XXXX. by being expenses compared the our $X.X were in programs QX to

non-collaboration attributable services expect headcount and of QX expense. approximately or QX growth. to Selling, of related XXXX million in our for mainly higher administrative expense, XXXX, X% spending in marketing R&D and revenue to We related in increase $X.X general support product to compensation second product to and compare increased half

the In selling the of percent team first addition, expect expenses and, absolute consistent second expansion while XXXX, as sales to June dollars, selling expenses our revenue. we half a our higher remain in increasing XXXX with than of in half to pharma we of total expect be

collaborative services margin development gross phases revenue costs to development research million Our from reflect development early QX, We for reported development significantly greater the costs XXXX. be during our program expect and in increased increase of continues associated expenses as our in $XXX,XXX programs. as of which in to revenue these This $X.X are QX generally operating pharma to expense. percentage clinical

and refinancing, QX QX in under XXXX for and operating QX XXXX lower transaction XXXX million XXXX decrease on for reiterate shares QX, cash, our and the with to share look We short-term recent QX for comments. reflects million from closing this QX. shares for currently calls. with equity We ATM sale million rate, the equivalents our million would equity have was cash $X.X turn $X.X senior operating million since future Net with of loan $XX per guidance back million follow-on again our million burn $X.X revenue. $X.XX like facility $XX.X million At primarily available a to are call XXXX. forward QX common balance started and has pleased contributed elimination of earnings compared with annual approximately loss securities. additional in stock on point, sale we our our of Our in and QX amortization loss to outstanding. XX.X to cash solid With issued our to for together $X.XX $XX.X of approximately ended sheet of $XX Comparing our updating a was I to former QX, I loss the debt to T.J. you completed

T. J. Johnson

Shaun. you, Thank

we also Shaun the are solid year As through start. a halfway fiscal and discussed,

collaboration period compounded outlier year a fourth milestones. and XX% are a from driven by previously revenues up excess last significantly rate Our our growth same quarter stellar with of positive as annual mentioned, in approximates XXXX substantial program of

improve early product-based quarter an the last profiling saw on in sales, in revenues and in call, discussed As our product we uptick we with are further profiling actions to our placements. this three unit

expect opportunities our call market. at diagnostic to trust important I I lot your as RUO our the continue growth the QX and we of heavily to is quarters in new will be future believe team our have we open and profiling are optimistic as expected and panel our and collaborations. We about I the discussed, our believe and we QX continued launch of system panels, believe productive. Top-line to we feeder boost thank questions. our line to very focused fixed to shareholders the customers execution our our work for look a further of PDP we of and I us, future capital the IO will future. three double for to is diagnostic up we costs leverageable other is based. over will want HTG be companion positioned in sales in members extremely that to gross In forward customer on is updates. business. margin our precision profiling manage rates ahead diagnostic know, growth mouse also speed which programs following well and new HTG profiling next and reemphasize strategically our closing, overall incentivize As getting menu again will it up and purchases business our the

Operator

[Operator Instructions] from Massaro will Mark with hear And Genuity. first we Canaccord

Mark Massaro

of pretty to deal then trials. your decent the They cancer And near-term? the are to is have They maybe which expect the in any the seem states can we ongoing terms targeting? Are a you a share, on you collaboration comment on should Congratulations oncology Cambridge and of company. mass any based payments able pipeline with deal.

T. J. Johnson

question. Mark. Sure the for Thanks

First, color just I’m yet. not able additional provide to

early expect in broad will relevance we see across have We revenues from very their yes, believe our and are it back year. to portfolio and We collaboration work. the in this do would of this half

Mark Massaro

Okay, that’s ask at ASCO. panel helpful. And that then about wanted to showed your you expanded

but took you orders, it. indicated yet launched You that haven’t you

the you panel launch can the in your of And to are if Curious, was that others? about we or there rollout half? that you any to think should about talk maybe planning back I pricing some delay imminently. think there relative how of

T. J. Johnson

Sure.

of we quality product on believe lot simply so to are ASCO we preannounce are in ASCO, I customer official Monday, First to as where principally the August wanted system and exactly have a to, time value at documentation we panel. of launch it all, to after of referenced we launching plan others of launch, product the this We when finalize to the to actually market we use initial We and we expect for ship our orders. understand get a way the be. as

think to programs So half the field. were had and of use looking as it an your in after the folks back about they opportunity

in consistent the with in other the really We be have how market, of product would discuss not think products priced pricing we market but market. the out I very

Mark Massaro

you maybe I think type partners execution. right HALO if think pharma. having maybe comment seeing maybe seeing question. now? are an at just is commented, you just Alumina can higher I are which similar them any you Great period could speak clearly, Obviously, unbelievable I are level and as on guess excitement and goes right of of from funnel you you wondering or I strikes pipeline, can are could effect you many XX I if I your speak in Illumina total ask the areas deals, a And disease of if out if states heard to inflection? you most But was to

T. J. Johnson

of discoveries determining That we taking HALO happening Certainly into Yes, additional of next sure. what's middle or and sequencing called precision at in the phase. a is based of in I much velocity fueled and advancement Alumina change that essence general with don't how when know the funnel translational just those enables. medicine. in the of pool generation the or portfolios look the discoveries the is clinical relevance. We

is from effort discovery. more So and our absolute has that been positive research perspective, that's there the a accelerates no question market a business. for our And

I at our stage earlier number of think look that programs the when and part Xs mostly Phase were portfolio Biopharma. we yes, with

think that very the we focus based the again therapies. as at complicated, immune-oncology is These our looking in in predominant Company. of customers compelling are a overall approach of pipelines and are gene is combination many and more RNA area the therapies importance trials of expression gene expression complicated so these and that positive are combination and advancement Our more little HTG biologies of applications for

Mark Massaro

one That last one just is housekeeping great. And for me.

I think sales you grow the to last plans call, your indicated force.

ballpark? I think is around my notes have end number the year. right Am so I the or folks in at I of in the the XX

T. J. Johnson

are. You

Mark Massaro

That is it Thanks for me. guys.

T. J. Johnson

Mark. Thank you,

Operator

Partners, moving from Puneet Souda. we Leerink And have

T. J. Johnson

Puneet. Hi,

Operator

to you from response, [Operator we Instructions]. Puneet, H.C. I to we no move yourself hearing you. on have Wainwright. Chan aren’t might hear will suppose mute, able

Julian Harrison

is there, Hi Julian Yi. this on for

provide with the date at out this approximate to Regarding us collaboration. time? an you next Are with no that go go, Qiagen decision able

T. J. Johnson

late program first is or second that is on believe program. BMS. SLWX is that I it a can initial go, go, we year which Again we year very no hits the Yes with next provide early that associated think kind that the active this the best

of updates. on goes. any will of the we on announced of not The that completed there future have instance particular trials, on a progress We be going is number for that next we updating phase and program all assay everybody application the into

Julian Harrison

expected the that. year the contribution revenue earlier talk it. about for of as in Oncologie I you remainder of XXXX, the Got possible. touched but well if call, was Thanks more if curious just this know for Okay. the I partnership this was on as could

T. J. Johnson

not did Oncologie with associated we Yes, out this laid specifics at time.

at overall disclosing in We that will we but time specifics. partnership, move point as with forward we any the this are not evaluate

Julian Harrison

Okay.

sorry just was updates I'm my For ALKPlus I Module but I question, any missed X? there last curious if the regarding and Assay it, if are

T. J. Johnson

sure. Yes,

no noted, I As problem.

the had and We far designed targets relevant that years about gene the over constructive. with conversations product, originally very three since we the to FDA those as as FDA were with recent cancer panel. additional number advanced discussions have has Lung adding last markers the

be our is the with finalized we proceeding make expectation it, will be timing abreast not So as with PMA. we we that right I definitely and that, now, those will But associated everybody have decisions. keeping

Julian Harrison

question. taking for my you Thank great. Okay,

T. J. Johnson

You are welcome.

Operator

Alright. Souda will back we Leerink. And move with Puneet to

Puneet Souda

to about funnel now Yes, just you terms are biopharma diagnostics. of that. terms understand where you funnel is have in the enthusiasm get sorry the entering hi, wanted in stand before versus how the to companion T.J looked we among I'm and of how at that the projects

of Let are understand, Are that seeing seeing into a funnel? overall table? your where at biopharma of the and you coming next the you on me to more couple the at you the early how are funnel look to the getting introduced sort that year of projects is in What the here you before? months outlook when projects versus just are

T. J. Johnson

Yes, our sure. in seen have No, we years. consistent funnel, to a over last fairly Puneet, growth three definitely two the

a heavy kind theme very us. doubling the number point is should expectations of high these the for for see grow, in continue of that more a appetite than in Our late-phase number quickly. pharma and now that trials. XX approximately are, to grow our we today market We think commercial But with field fairly for it's our

need for precision to response. expression potentially a that lot business relevant RNA of predicting into It's communicated we believe look oncology, trials, I As has combination at molecular before, of the for driven advancement the subclassification.

the via historical overall we not our market believe So limiting was inquiries. market in our of a significant of the we access growth uptake seeing And factor but our quite in field. the in the number people projects frankly, the are

strong Now investors our we experienced of to and understand deals. quarters. opportunity. our be new development these III, that excited And on of pipeline certainly also these believe partnership that we for it II percentage balance very highly on sheet that have this more precision year of we the we and But a it’s small we number Phase growth Phase would back reporting folks, into companion which converting about considered I are clinical during seeing of the a important in diagnostic will have these Phase half move into that programs or anxiously be possibilities a diagnostic and III for in better have, the opportunities brought

So any in growth and very companion existing the extensions near-term, or immediate mostly of significant I are for Either on front don’t certainly that customers. hopeful of also timing end, customers expecting have new opportunities that new we clairvoyance agreement. continues in diagnostic within

Puneet Souda

understand but and and you know independent, are do get with you, at that two had wanted you. And just have three insights pharma understand these Thank that pharma that the you experience now helping projects? one gain there of any look progressing. probability here us confidence some obviously How I I experience then are these more are and trials are help success now with And gave Okay. project. just you you how to level

T. J. Johnson

right the We than would better both average. associated trials sure. expect industry average the Yes, would that be being batting with of our

or we we how not the putting with are analysis sense are of programs into their give got rate submission. need given that comparable access XX% that hit I Certainly Phase work. or can on are a a to say we our a for me, we partnerships our lot us history expect progress things. before But regulatory these III I insights We privy let’s we are lot confidential think would earlier a to and through in stage the appropriate number these collaborations forward. customers statistical needs and would have to view close information. But is of are Believe believe start to good do a these better, more has pretty moving many so going to very

one know don’t three our So or will first think we that I if out. probably likely will six of of that two out time but pan is

Puneet Souda

I Okay. more, can in. And then one if just squeeze

In terms of are early educate the biopharma. from driving for Is us that seeing you other more versus I offerings the just versus in are your that versus are higher and more a is competitive liquid landscape there overall of involved us you on of out competitors. get help receiving in early other delivers terms which sensitivity tissue on product factor them still offerings projects terms that sensitivity biopsy to believe,

Just us understand is how their value resonating? proposition help

T. J. Johnson

Sure.

first for think us foremost and I question. without

resonates and into as samples have pharma several accounts. they five one sample and The value work our form the Our valued. that in is greatly number the that our and with are is a of researchers can very one micron one with tissue in sample the do precious these well ability and more for customers with technology These gene panels our is quantities large, number extremely that pool as advantage less question thousand sect small without fact proposition marketplace. fact that tissue and are profile

important, to it the our is on looking continue commercialization for also times tissue our diagnostic and broad as as think our of platelets the dominant leaders and team's mentioned through pharma the to And experience And key as partnering HTG and future. I also are from us here. comments, number EdgeSeq and very in extremely areas [panel] lysosomes biomarker but as my going in biopsy applications for appropriate opinion we actively way indicated and with believe the bringing value liquid in liquid working capable believe valued as agile, we with very I an biopsy both example. We such great a market technology I all has and and greatly earlier an partner. for the regulatory be (Ph) from advisors discovery fast-moving submission pharmas

we less probably absolutely the monitoring about be clinical and clinical tissue and advantage but market. has We out take believe the will extremely worked So biopsy action it will science a we into play market sample lot immediate as we this as of liquid definitely applicable are always and excited value become as the being more type think the labs important, of move forward. we

Puneet Souda

Okay great. you. Thank

T. J. Johnson

welcome. You very are

Operator

does our to to for would And remarks. gentlemen, the session additional like ladies that for I turn conclude any back question-and-answer or today. closing floor and management

T. J. Johnson

Have of Yes. good rest more I us look thank providing enthusiastically the everyone is information day. This to I And TJ. for to joining forward a earnings on next call. want today. our

Operator

does ladies Once for today's and us. gentlemen conclude again Thanks call. that joining earnings

disconnect. may You now

HTG Molecular Diagnostics (HTGMQ) 11 Aug 182018 Q2 Earnings call transcript