HTGM - Earnings call transcript Q3 2018 | HTG Molecular Diagnostics, Inc.

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Operator

Good day, and welcome to the HTG Molecular Diagnostics Third Quarter 2018 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, Operator. financial the released XX, ended HTG XXXX. today, results quarter for September Earlier

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

Timothy Johnson

us you third Good and thank on conference you afternoon, call. very for much. Ashley, our thank quarter everyone, joining

year. quarter, our last the XX% quarter top to This compared same grew line

for grown year X XXX%. top months period very importantly, growth line a the to has same More compared strong the last

been our to programs two Our XX and projects, grown trial-related have active extended biopharma early and stage PDP nearly pipeline expanded. has

XX%. losses reduced net nine same last have versus period year been month or the Our million $X.X by

the to extremely are as of our performance continue direction I am the business team. right Our we proud trends against in execute objectives.

be RUO PDP building. finish are believe programs the the $X expanding, recognized very our end, million programs. the to our key a pleased of we momentum will we and to discussed, We strong end-of-year and quite of and revenues the guidance. key milestone October, into our the that's milestones achievement Our which current dependent we upon believe million QX associated are top the slip as a in did in looking in see the expect with of To $X we be is business strong, are on But with QX programs. we we company through that as October one year profiling growing, is progressing range range. of middle line We will PDP X and

anticipate profiling for of which for strength segment. also year-end, profiling to quarter prior studies We the to push provide large our a should RUO completion

the which few profiling well for meaningful and quarters. PDP of multiple completing to drivers to our milestones business launching prepare important with a panels potentially XXXX, custom are as expanded year team, for Looking of panels, sales in of customers, productivity mouse we and programs, the number quickly new next come of end of our broader pharma driving large some the executing our we and have very will our the

aggressive drug of of expression deliver perseveration timelines. of now extremely utilized development responses. Our have that are assays against to and teams drug extremely combination in assays, the they multiplex determine if I'm clinical customer being are companion X achieved gene year proud numerous X last diagnostic these trials the predictive in and acceptance commitment to

company newly created exactly in extensive have tests, always that and Scientific we fits the a asset. plans, our Last care Importantly, industry such, to Cronin potentially underscores will President developing our strategic execute cancer trusted and HTG proven diagnostic can high-level diagnostic impacting biopharma of and week, especially a initiative role development she high-value team is as that and internally tremendous performance Barring cancer, what Officer. executive and is a the of diagnostic with appointment management Vice breast the Maureen's our having is companion join our Maureen lead in is test into as our Dr. announced partner This patients. Senior HTG crucial believed of exciting experience a executive what a that its new team deliver. developing strategy, and demonstrates strengthening Chief breast

market collaborators, program have to innovate with off opportunity cancer believe this assessing to been development kicked the future an is effort. to in there and have look and feature about are breast our excited more updates. I'll We

our next drug a on menu diagnostic are As relevant company, we category. power establishing focused to medically

setting menu small one who marked our generated believe and kicked over in details have program building our an a With we of on in lymphoma, presence [indiscernible]. led our Shaun fully of the development was assays, diagnostic collaborations companion lung faced established instrumental is technology, now DX to in and issues sample in amounts, why PDP internal Oncotype with existing are hand for financials. be such programs. with to year being program by as important our breast cancer said, diagnostic diagnostic very the HTG's of business in which accomplished and Europe, breast that more our I'll and launched of through biopharma-based pipeline numerous all in the are call biomarker basket, as the industry diagnostic labs areas cancer. that, biopharma eggs strong especially now is believe we are XXXX committed with off building our ability leader collaborations our have to a diagnostics, we the to in assays We CE/IVD work putting With up with approach significant we addresses technologies. effectively HTG-generated We being like clinical very many not balancing

Shaun McMeans

growth, million Thanks, XX% PDP of total the associated be continued QX TJ. to reflecting with $X.X QX increase. programs to pharma $X.X pharma Included compared revenues million in services QX revenue XXXX, in programs. was of $X.X $XXX,XXX clinical XXXX our to Collaborative million our with QX development of QX driver XXXX. a profit primary from closed revenue with million in in compared of $X.X sharing

XXXX QX RUO ended $X.X annual and was QX product-related an XXXX. QX services increase year our previously, development XXXX in of months in to then the Based September compounded from our a grew XXXX product full low million year compared $X.X As XXXX. XX% million product higher X XX%, guidance, revenue or growth X XXXX same exceed compounded million revenue service reflects $X.X same million growth collaborative TJ million ended $XX.X XX, in the in over September product-related in rate period period and the finishing stated months was the profiling growth XXXX. year in than year-to-date end revenues This $X.X X XXX% in million the RUO would for $X.X quarterly profiling months excess our to on revenues during service over revenue for over XXX%. at revenue of XXXX. since XX

full services annual of into growth our propel QX and year and the revenues product XX% we product is believe target. robust, Our pipeline range our we could

development product both spending, recent product-based with sales included to planned Our PDP and our to team, will future pharma previously programs continue initiatives discussed QX collaborative our XXXX Transitioning our our and the RUO related expense. $X.X we in which expansion quarters. in additions development research revenues grow believe and are to menu sales of of expenses million fuel to

approximately expenses million increase related QX general were QX as and compared the ended to mainly breast collaborative headcount, program. approximately and increased September the we increase spend going expect XXXX in higher to new the to panels our compared or costs we expense New programs to higher This million, and product-related XXXX. same research for to period X were $X.X and XX% million, and attributable XXXX, XX, diagnostic the were to QX expenses administrative development compensation $X.X Selling, months continue and innovative XXXX, XXXX. or is unrelated XX% fund $XX.X in consulting in RUO for development forward

in Our research in which our XXXX. period operating from margin in $X.X million $X.X XXXX. gross to Year-to-date $X.X the as QX costs higher in pharma expense. to increased for increased gross are continue QX same margin impact million These program million expenses to of in associated development reported revenue development million and gross the margins from $X.X reflect clinical

we our both price selling average a services, sales and a improvement and XXXX, QX trend For which in products our is key focus of saw positive leadership. in

innovative new move versus and improving our expect to fixed base, our cost improved with sales. leverage sales as towards We we continue pricing see margins product service mix products,

loss for compared was to $X.X $X.X QX million million QX operating Our XXXX. in

of We for for was targeted outstanding. stock grow opportunities been common the share Net XXXX. continue We team the million, our cash, QX for was $XX.X future of been has the convertible shares debt $X.XX year as for P&L. $X.X primarily amortization currently establish approximately burn with repayment quarterly shape and collateral available equivalents closing of $X.XX turn loss million our note elimination this reporting cash a million have per comments. cash point, few as asset. restricted to refinancing Our proud forward QX months. am business, in like a XX.X year. million with cash I and for ended reflecting and back we loss of I I to a full securities. as TJ reclassified results some XXXX loan our to would earlier to manage look our than to has QX senior this At and a of the call and short-term $X.X the QX smaller in non-current extremely QX of

Timothy Johnson

full Biomarker a We HTG over HTG you, its XXXX at million mid-XXXX, Thank the RNA EdgeSeq launched first Shaun. years EdgeSeq In Oncology messenger X year Panel. exited revenue. $X ago, panel, little

X of quarter, XXX% diagnostic which custom in for X late-stage launched. messenger mouse million assays are X RUO clients. new RNA panels development trajectory are This first panel greater panels and possible to actively that was and and than a revenue, surpass $XX believe since We growth tests we our we on would annual level IUO which our panel companion use, other have of completed in development; very launched Xth be X in

We our have along share fair in struggles of strategy. the but stayed way, had our steadfast

our we As execution stay pharma We managing our of for our believe our of on diagnostic a company up strong for relentlessly years last in make a impact franchise, are expanding which to objectives, I'll to over to and open and opportunities X journey call and P&L. our we any illuminated XXXX business to better the note our create our will has finish the plan value positively portfolio, to a and questions. to X medicine focused on XXXX, position stakeholders. strengthened our targeted shape advancing difference market precision now the up lives

Operator

Instructions]. [Operator

now take first Partners. We Souda of Leerink question from Puneet our will

Puneet Souda

all, of just to of you and First sight elaborate hoping line on projects. to the the understand, could if

with a XX made good You projects. progress here

sense the head can looking evolving how a And would funnel here? there have sort up. we quarter Just change of of any be I very follow either the hoping that is and a get could give helpful. is number And as you into if XXXX sense us as dramatically way to

Timothy Johnson

Puneet. Sure,

funnel First early project of looking all, is our healthy. very stage pharma

lot of talked the have of XX internal in of an year. the we a by target I've about end to getting As calls,

continued and number, significant we're think that I in we growth see into expect XXXX. comfortable to very

Our new upfront to we're hires X business market pharma months, in a team X the seeing for have and of been activity. development lot now our into

relates be about how to think it shape up. that could solid So very give I We're as pretty very, pretty team that. to us sense for QX a feeling expecting strong, we're good which XXXX results

Puneet Souda

on in trying obviously still obviously for you seem Okay. to market the or And Any of change but we're biopharma biopharma a in was getting the cancer you I/O understand getting therapy, the there more new that to to come your targeted are XX factor seeing changed advanced seeing -- lines there have just competition the space from on in get front, then settings you entrants with heightened And the competitive we potentially I traction that convenience as liquid, of you is be trying more wondering, projects view competitive giving landscape? increased that just this along has just a -- seen tissue? solid have of you are the you there, sense versus partners liquid there I'm discussions, reach terms to have? the but

Timothy Johnson

a strong. investigation Obviously wanting I've not great call threat but I a seeing market what to the are in question. from great sample it's the But held lot biomarkers great or very both. We're we look going of create tissue-based liquid-based at that necessarily always would but competitive markets a this Yes. as No, transition dynamics competition. see not potentially a biomarkers, additive. what a to do, this bolt-on we on to belief

we our our new before, part mentioned expanding types, research in actively projects, liquid-based or for and I've intracellular interest believe that able watching vesicles. already to exosomes, types, continues We're As sample sample and trend it biopsy into from involved a platelets as as efforts definitely capabilities such of liquid-based liquid our we it is many biopsy team We we'll increasing biopharma closely. mature. obviously in to very be are see enjoy

Puneet Souda

you'll color, SITC where be other where in conferences the provide could you And you any expect conferences any expectations or near Anything lastly, Okay. of any to from present term? attending. if meaningful just any

Timothy Johnson

obviously Yes, goes kind Well, as again that We team MBC into we hit SITC. on the the were of button and think speak long at front. quiet restart AMP, pretty year. I next sure. Then on is then we'll stuff just and at it

Operator

Canaccord take question now from can Mark Genuity. next Massaro of We our

Max Masucci

This on Mark. for is Max

you're on sales And diagnostic market targeting? time? is initially diagnostics, can indications you First that indications for us frame over speak for understanding can largest companion you term, the to hope you're which your you opportunity companion which revenue indications to target long opportunity the just your targeting, assays

Timothy Johnson

when look at portfolio, say our indications area I I much every covered. in would pretty oncology. much there's pretty targeting we think all we're

but specifically which We tremendous companion have we that out late the in we're a for to immuno-oncology, current and that be lay say largest focus one the trials oncology is covering to would really it pan-cancer opportunity. We're is partners, think a really our are X opportunity stage in think diagnostic entire not that the play space. safe I able

are starting to as up autoimmune. we'll about starting that XXXX, attention at of look areas. customers into early is our area also I close probably we XXXX, the very One paying think other and to pull be speak to, in

new request to some and area. a from next do for plans have we're launch them customers early already in RUO panel autoimmune year, work We a existing that getting profiling to

Max Masucci

Great. programs? with you frame goal later that there early us you a it projects? as And enter in the milestones play certain stage then once currently, just can programs projects for into current And these key stage PDP speak you rate two a about these you milestones? progress internally just to for that relates you Is can are conversion to can your where you to PDP stand have

Timothy Johnson

goal historically, development really Yes, through. not programs know in But sure. way conversion the of we've got control early rate on of would XX% don't I it think a I all say because we're about that drug pharma that. I in stage make

range projects. in We to XX% in project growth XX% up number we are the consistent the at see range, XX the and of

out at hit expect for successful. would a our on pipelines of XX% have also would minimum, to be drug our our target rate We of would think and at what play potential us. we greatest number the should we a that look the based programs well ability have being the that better that ability So to knowledge

the of They cohorts. phase, clinical phase, and phase, second have trial both Our the PDP utilized retrospective programs is gone through is in the assays acceptance being where are in against first development which now are those customer. the clinical two the trial studies assays existing by which

on move into into retrospective those And soon review, drug are line are go studies the top Phase regulatory of in market based targeted submissions top which complete, geographies their of programs, PDP would line the success various a cohort we the a X review. as are As those in clients that areas.

that programs is over about us response So marks. as for existing communicated, the critical are in our both milestones are how assay drug next. hear and PDP those the rates quarter trial of in see we this expecting the various And to to and we've cohorts phase, for

any new shots hear numbers of be anxious considering XX/XX, the greater and things stream the goal decision we as drugs don't along out programs have these about of we're that that but more these So so results, play would We time, but these and steady have don't will far really how very of come. success but success from opportunities look one-off trials, generating likelihood kind knowledge on for of us. likelihood would these we're that cohorts we hope those that also to have and of, than pivotal going our at and about to a over other points,

Max Masucci

And helpful. in. one squeeze That's Great. more, I can if one then

Just the most, of all if do how you with on not pharma? early many the would And patient the traction be need sales panel evidence I/O great. hires, to any then cover

Timothy Johnson

biotech/biopharma we a so worries. next Yes, that no There's not many over X cover, the to to tremendous X quarters. new of that to hiring amount don't we expect see need

Europe to last we're are I give U.S. it. We think And resources set some team. better forget so but in our question, us slightly we adding coverage, in that your hopefully pretty covered

Max Masucci

that's good me. for Yes,

Timothy Johnson

customer we're if and Yes, successes, are asking work doing on comments exploratory you there seeing I us proposals with are for us. were think and/or that definitely new asking early

Max Masucci

That works.

Operator

Instructions]. [Operator

now take next Yi We from our will Chen question H.C. of Wainwright.

Yi Chen

second have the third quarter revenue and first, than XXXX the the much revenue, highest Based fourth revenue and year quarter guidance, higher on quarter. third full XXXX will it the seems the

expect expect quarter? fluctuate same revenue in to you wondering, to pattern repeat simply that So you the could I'm quarter do the from just do XXXX, or

Timothy Johnson

Actually, great question. that's a

start are getting actually European QX on that in in but XXXX versus business to now they're XXXX, our how basically their that least I to and is how on for a beginning shaping up, quarters -- don't Europe, trends, of number. there we think business and definitely our say trends we at was QX cycles. be we fairly impacted QX think cycle. definite And And business are cycles, would see the business the how based X QX feel seasonal significantly what double we're seeing know I as such We are will already could a but

will between I XXXX looking trends similar see and I four QX, think likely think we cycle. at So be tremendous to very see quarter the we'll how a

Yi Chen

noticed expenses that third quarter, meaningfully the And I the relatively stable. remain Okay. also, SG&A were expenses the in the R&D higher while second quarter than

expect expenses R&D to do increase the the you continue to So in quarters? coming

Timothy Johnson

non-collaboration R&D we obviously move to In the off starting see least where do. X we We RUO our think numbers. were the the forward, our funding the kicked you quarters up But expense over that QX I we to see team revenue, quarter, climb collaboration drives diagnostic in breast revenues we new we QX. are expecting are panel per PDP which R&D program the and obviously up, because at as development on in

starting state expect in higher would hit number more to You XXXX. to number QX steady see it a and

Yi Chen

finally, And it. when the have expect the next project? to go/no-go for do Got decision you

Timothy Johnson

we'll quickly Hard would turns. at least But We're we fairly this if if it quarter. not hopeful see as yet X the will to X, year come predict. expect more that decision that than than not more -- not,

Operator

we it back As will further or there are remarks. host to our no any for additional hand closing questions,

Timothy Johnson

call. I good updating to Shaun rest again the on Have for like of next day a the thank and and us evening. call just look the today, and everyone you to I'd forward joining earnings Yes, on

Operator

and today's Thank conference gentlemen, participation. your call. Ladies concludes you for this

disconnect. may now You

HTG Molecular Diagnostics (HTGMQ) 9 Nov 182018 Q3 Earnings call transcript