HTGM - Earnings call transcript Q4 2018 | HTG Molecular Diagnostics, Inc.

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Operator

Greetings, and welcome to the HTG Molecular Diagnostics Fourth Quarter and Full Year 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Monique Kosse. Thank you.

You may begin.

Monique Kosse

for quarter results December year financial XXXX. XX, released the and fourth ended HTG

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

TJ Johnson

all their and XXXX continuing like do, and everyone, team outstanding efforts like members to for Good normally commitment thank Monique, much. HTG you to-date. start thanking by the very I'd during and of afternoon, I

molecular medicine. broader the into precision HTG around HTG. difference make individual's solutions to trial error fully the from in the and a picture based further information we spend clinicians and our recognize care Before on customers, promise the impact details, actionable on data company I of approaches. advancing a versus committed We the We with derived few an can patient is technology and patients. believe to minutes a traditional want dive are

is company HTG the on promise platform. razor-razorblade business based our a developing precision on using of medicine strategy model Our EdgeSeq realizing focused proprietary

often blades, menu Our purchase for disposables, reason and that as to the and referred research diagnostic reagent, to the instrument. panels EdgeSeq test razor, drive our our incentive assays

programs, companion to best X a reoccurring a Simply be expression was X instrument map EdgeSeq each with and commercialized years. model, are revenue X-phased position We determine XXXX, and platform, by diagnostic from a are with are of in Phase technology to more this model, Phase mission. research-service believe driven which biopharma technology right approach the doubling efforts still value are and believe adoption, with key HTG building rich placements. in pipeline streams. what demand we system, solution several used the a that of propel in biopharma diagnostic drug/drug shift assay achieving biomarker stage this as new cancer a to from diagnostic or bit project our predictable, the for In working the technology. to the helping put, discovery our of coupled believe future be the further reoccurring Most revenue some will we diagnostic momentum more pipeline, tends road important forefront nonlinear at a are of the we opportunities, our has and to technology. business that revenues to toward moving early We early we of gene projects our advancement the assay. as assays to their total revenue our project-based of a a rapid the establish in enabling of be strong we growth towards we phases lumpy believe, establish and tends with which such, will model, and development we a reoccurring launch last was results leaders validated combination validate right X have other launched unlock the RNA opinion translational of publications the this to which would messages of for into patient. clinical we the diseases, in proposition be research We The companion importantly, our panels, with to our space and see value by EdgeSeq our in the in essentially researchers instrument, predictable.

of are clinicians We the cost further accelerate will revenue road efforts we driven is with and instruments only better map, EdgeSeq facilitating HTG and as means diagnostic the provide a to platform lower precision technology of in menu our this a placement end. the labs, and our expected streams, start the diagnostic phase new third is can medicine our road we now to XXXX. later biopharma's our as information clinical of service, preference Today, for workflow, service see commercialized, map we in the we to believe component the of This a solutions a phase initial believe by have clear that significant is but for which improve patients.

increasing shareholder We market. to diagnostic and company the value product clinical in committed in are be a

grew fourth to our XX%, assay increased $XX.X of by PIP the impact XXXX with year our model XXXX XXXX. view and derived PDP of immuno-oncology our look we pharma million newest the strong menu and from XX%, XX% revenue or clear year With a to Services full as years in revenues the large $XX.X to diagnostic and XX%, million driven a meaningfully have the three collaboration path up launch partnerships to more backdrop, place internal development. with five in from Overall, was our let's XXXX. We over at next innovative contributing in growth X increased instruments Product assay targeted year-over-year, that revenue revenue quarter. programs.

nearly future which to of early-stage projects, confidence our likelihood to adds pipeline profiling XX programs. Our biomarker streams revenue grew and PDP new biopharma

the to role as Executive John I strategy transitioning is into As previously focus this copilot my he Lubniewski is for been many has X key years taking and for from have where CEO. at big-picture and over HTG development strategy, announced and earlier been HTG, this leading role at in call well to now the He more confidence for ability leg the our discussion on over I journey. John on exciting HTG quarter, great suited efforts now. Chair, vision, John CEO HTG HTG for and on for his I'm extremely knows It here to He trusted this worked at my and next for I of and past has business years. Systems, Medical together commercial lead pleasure years Ventana the can X business. detailed John? is our my complete turn

John Lubniewski

TJ. Thanks,

X my steward I've these TJ and appreciation to phase. last opportunity our our been for mentioned, the want previously with reinforce this our organization As through to and to next years, commitment I strategy express business

like Now turn color. let's to our provide I'd of aspects business, to the more some primary where

from to in our with XX%, profiling Our increases by $X.X biomarker million, biopharma. revenue or grew early-stage studies up continuing $X.X million RUO driven

continue the expect Panel Immuno-Oncology of panels. was year, to Precision Reveal growth launch we product of half and the the these new drive our in second suite EdgeSeq data Our our in top-selling to analysis

we quarter the future an customers. year, assays. is XX early-stage we this diagnostic Later $X predominantly new with profiling all to billion technology is market use profiling more in where to pulled potential is types enhances areas new note, cancer increases. of our HTG any we new business EdgeSeq XX.X% does the being became by has nearly This the analyzed costs step ended companion currently Of and Our of these now the our with associated up not commercialization, destroy to over revenues. our There it technology and diseases biomarkers diagnostic and its the deeper of the our autoimmune as see billion health across of a a We're exciting our XXXX. accelerated of opportunity to pipe this high, projects opportunities nearly $XXX oncology, plan for grow of the engrain Today, potential of likelihood annual disorders, pipeline autoimmune look technology. companion the strong development active through disease large potential we projects biopharma but certainly care projected direct new and estimates year Autoimmune to diseases EdgeSeq NIH We opening XX of will broadly believe valuable been strategic market in make non-oncology its productive. fourth process. long-term number many potential. panel, pipeline. to as pipeline to are focus diagnostic and growth the and sales we've RUO way, into applications. rate the a excited to for the see drug full immune and be our Each in launch tied a and autoimmune this not We it recognize but system need at of and being The our more tissue. positions about for on own year approaches include indications includes the therapy body's potential in our as the that biomarker over

panels XXXX as and our sales the we autoimmune acceleration market. launch this in We enter expect investments, new to leverage continue

We approximately to show expect XXXX XX% growth QX XXXX. QX revenues over

diagnostic I biopharma increased revenue is of our milestones, biopharma revenue, assay diagnostic line precision to the our And maintains companion In associated programs, the validation number $XX.X more direct want programs, is this we our than across We emphasize XX% collaboration clinical Our development with which business. XX PDP applications. that directly or programs. revenue leads HTG with X, with million working completed from program PDP investigational-use-only generated the all year-over-year. and of key in relationships of program including customers

timing all portfolio, interest our an our these is striving validation generate most the and trial the always partner new and our which of encouraged phase. platform. broadest exited of to signing X, existing across In of biopharma customers. difficult programs their the control, using PDP new PDP of our and certain PDP program some impact We're availability a sequencing assay continue of in number we're is signing out programs, programs many the across customer the factors position we to programs. clinical exactly of work our XXXX configurations these are Our include to new expansion the create by expressed of extension in of and which as Predicting assay of of these completed section factors,

high-value likelihood maintained outlook partnership diagnostic we menu. longer-term to generate its that on a However, and positive

previous the revenues XXXX in PDP XXXX in expect XXXX, program PD We and in year's program which are not program and X, -- both dip -- periods numbers, terminated because XXXX X X decisions. revenues awaiting PDP QX -- was to versus lower-activity number was go-forward

we XXXX could Initial cases, XX,XXX to our believe at diagnostic studies XXX,XXX in market, products take were of Cell analysis the think through drive in demand expression looking assay comparative with we ALK of initial on Assay bigger product customers of just positioned products B-cell the potentially CE/IVD and approximately subtyping well were favorable market We'll revenues from of drive in Our Assay. XXXX. IHC we the increasing cancer testing our market. of lung to available but is majority gene method small, material developing be to in current activity and DLBCL The customer The for growth we ALKPlus of approximately acceptance Europe, market method, cases Origin lymphoma by to in centered looking are that Europe a comparative results is this advantage in ALKPlus in XXXX. see and Europe. a move these shift.

this As at is on our reoccurring call, beginning segment revenues. we're business of the this based TJ for revenue, and of transition building a the intent diagnostic on highlighted critical

Additionally, to come. and develop years the will the believe growth we new drive ability to innovate in assays

built decade, opening workflows prognostic As made The has new breast and in and around biology such, Maureen to we've this team, considerably cancer. Chief experience we center this effort as in cancer cancer. and strategic seize we've diagnostic in development predictive up planned Dr. Maureen work will the a around extensive late content hired the the developing the Bay opportunity, have Science Cronin especially our development Area. and development breast from year and in To additions innovate opportunity breast will advanced lead team assays, team, Officer to which a have clinical last testing. last our our

product Additionally, family. and to partnered we Dr. have this Advisory with help Scientific lead Sparano Board Joseph our validate us clinically to design

product Commercial requirements they a leadership directed technology pharmaceutical, molecular small our in pipeline We thrilled Most team HTG's believe Beggrow Finally, that medicine. development, in cancer, commercialization that President just has was development enhanced a leader in paradigm to breast to diagnostics XXXX. as organization. and clinical diagnostics. believe Genomic for approach Bay in and with public because diagnostics, HTG we've enable change X diagnostics, decentralized leadership new of take breast Beggrow successful in will served joined a Beggrow level. Officer Health. recently, can and including over believe Celcuity, company's molecular biotech and HTG our sample she Laura the to she Maureen, Laura roles Ms. X at cancer Prior a decades announced have diagnostic They is personalized are and Laura joined of and led commercial Chief laboratory over Diagnostics. years the the in and welcome Area first team to offering a HTG of where successful resulting number this, substantially capabilities the team our we commercial

this the for over expect market $X benefit opportunity and family payers, believe we for test billion. patients, HTG this is We and will clinicians

product Shaun? we Shaun believe my to the quarter We look other to for right advance our our that, have we the excited it's concept medicine. pleasure opportunities, financials. a we're as precision vision, call So year-end talent future. our With of to right right over about successfully and review to turn fourth and the forward the

Shaun McMeans

Thanks, John.

profiling XX% increase with increase including This revenue $X.X services product collaborative or XX% million or reflects product-related $XX.X in programs associated revenue services and revenue. XX% a development revenue, for in As overall million our increase in $X.X a pharma our and million our versus increase or a PDP revenue previously million year-over-year was total in XXXX. million $X.X $XX.X a mentioned, a increase in in revenue XX% XXXX XX%

our are growth assays. overall to growth revenue, product-related base profiling on future pleased reflects opportunities products very of our diagnostic and We which potential the report in and the XXXX, our and revenue business services in particular, in downstream

a larger, team. HTG's The Our foreign profiling customer reflects our in deploy $X.X presence further business and QX QX QX to the first to activity RUO to local provides and and further XXXX EU grew a XXXX our also more expand market, push our opening efforts to $X in million experienced of enhance into subsidiary France MDx selling with responsiveness. evidence sales in compared and of million pharma

result improvement Our to and compared cost improvement only and our revenue product price in business, and a product-related our sales trend services This of margin by the XXXX. per product-related reflects which a of increased as sample average to X% XXXX product our an very $X.X of of remains million leadership. focus positive services increase selling of a steady a profiling in key

to approximately our further mainly costs and and expense, a We higher as This mix to compared sales increased also million leverage slow product stock-based as expenses products in our in we associated menu business XXXX. attributable expect to with $XX.X versus to our in related see increase Selling, our million growth cost with base, component. headcount, innovating increased fixed new general costs is profiling and $XX to compensation XX% consulting service XXXX. in administrative compensation XXXX moves

million $X.X new development compared continued our to collaborative million development unrelated amounted $X.X product-related in to for XXXX expenses, Our programs, research and to XXXX.

program are XXXX, our new key in the expense expected California-based a increase diagnostic with panels team. remaining we the While from to milestones is to PDP breast R&D our begin programs. we period to slight spending related XXXX development These experienced vary and and to to funding continue assay our of as to spending our one in development XXXX decrease non-PDP timing RUO significantly expected research development next for is breast development activities. million collaborative the of The $X due expenses total and program innovate

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

million, our cash stock XXXX. collaboration of compensation QX shares stock We to share cash, reduction an $XX The on year-over-year sold million from shares increase XXXX. versus XXXX, common common We expect operating approximately was $X.XX available-for-sale in and million in equivalents we per financings. XXXX reflects revenues for in QX, and with XX.X QX and with issued Further XXXX common have proceeds our shares for burn cash versus was decline and to debt securities. ended in in early operating $X.XX stock excludes show Net equity additional of revenues per currently and program. in profiling share reflecting from outstanding. a QX for $XX.X XXXX loss short-term comments Our a smaller approximately John's XXXX primarily loss XXXX loss comparison to QX

be the We the to revenue million the XXXX million expect full company $XX to QX top also year for range. to $X.X in million XXXX providing range. guidance The line total $X.X is million in $XX

We or expect go-forward do based range wide client see year XX% potential and grow revenues a to decisions. on our RUO profiling timing the higher but PDP revenues for

to products expect confidence regarding closing driven guidance QX initial our growth in CE/IVD of the our our Europe. outcomes programs. conscious diagnostic collaborative call few the reflects increases in material would business point, on comment. see turn to of to core I expectations profiling near-term I also by We and a back forward development report weeks. revenues, to like the to our results our This this in At in look TJ ongoing for

TJ Johnson

early will customers sequencers. initial to we full X our sales. reimbursement, of with and still assays have expanding recognize year. Ion customer this adoption these methodically Torrent Thanks, XXXX initial do lab successful product to workflows is much the on on include be We in to Initial assays, of evaluations products there believe Shaun. the for drive working us We spear and mode our sales our commercial CE/IVD can tip diagnostic be of

XX of diagnostic of X of Our such EdgeSeq cancer X Leeds; program; programs, and tests products program diagnostic our from run the resulting development as a WIN, full are in PDP catalysts has breast our expected ALKPlus breast development our expected and DLBCL next or full efforts and in process of first behind commercialization lung with the to of Origin headquarter commercialization diagnostic in X in to diagnostic business full to IVO collaboration-based about that our number total companion programs. new CE/IVD center; of including timing; development pharma years, Europe; our months planned continued Cell

establishing line. earlier-stage also opportunities programs diagnostic capabilities for research We have broader down the

First, testing. what we call DNA end-line

we Our and expected provisional feasibility run been our that is ability forward to large further parallel RNA/DNA license This then up sample patents our filed, to the library multi-modal open have are opportunities. panel diagnostic reactions testing number come together at moving and workflow. of capability with stage of split validate the to

working it's but in the Second, the bright capable already clinicians biopsy patients. types. biopsy liquid adapting our we to XXXX to additional In less performance several EdgeSeq but EdgeSeq future screen expand summary, market of to in ways plan are look instrument our capabilities in sample and monitor participate liquid strong, and not to prospects sample liquid order as is types, challenges. invasive was HTG's fully in for without

be our over reshape products. X our revenue next on diagnostic As continue we focus the years, to model will

ability dependent are Europe. drug pharma of produce be pharma not programs. pipeline we breast CE/IVD in and confident growing and diagnostics. have solely in companion revenue short-term rapidly commercialization cancer want its We pharma in product future diagnostic uncertainty, program our recognize collaboration Therefore, investing the our are to products to our of on initiated signing new programs also do and While has we timing that a we

unpredictability growth and gain for guidance the driven measured in update we revenues. pharma range, programs but RUO the collaboration by accelerating our both decisions we'll as We of our go/no-go balance very XXXX through wide the in forward-looking is in revenue profiling the term, expect year. in do Our PDP a by clarity shorter views

call up open questions. the now to will We

Operator

Alex first from question from is Nowak [Operator Craig-Hallum. Instructions] Our

Alex Nowak

the Congrats, TJ around commentary moves. Appreciate Three. the recent PDP and PDP and John, executive on Two

both when partners lot are think these we'll a are programs hear and their color to these tests. your of I drug for commercializing trying on figure if moving looking out here some in of investors forward

just within hear you So these end, we programs? say than the within us you You that? that months, decisions. term, longer Is year? we'll some talking the next help can frames give very go/no-go Are on the mentioned X at us near next time

TJ Johnson

provide would To color obviously, can. Yes. we we a as Alex, as love don't some have much specific of possibly degree, lot either. to we knowledge

today say readout the are want is next would that's existing or that of have X definitely everyone remind and belief quarter decisions latest. short move-forward that to in the or going just Our go/no-go decisions term, within is our these to the probably Two we I a both firm yes, -- next a go/no-go. at not single single programs PDP

we've previously, now assay more this customer our sample XX with has As or indications. across announced validated types been IUO and

is expectations firm have multiple with through once readouts a current we their that as then trial, Our in portfolio. other readout suit initial follow indications likely these we'll the we on work

-- or X also trial stage short term, in to worst PDP kind as clinical clarity of think and would Three, is case, we hope some quarters. we quarter, of around have and expectations we hopefully that timing the The the the X over second stated, PDP

Alex Nowak

sure correct or not go/no-go move i.e. I'm is decision, the that I say Understood. commercializing their forward make to drug, cetera? partner et just to When FDA, you here. stating want filing whether will Okay. specifically

TJ Johnson

decision The Alex. correct, next is in this step That's submissions. begin PDP to regulatory the process

in number decision submissions a would QIAGEN, with over Two, PDP And HTG to trial and that indications types. for then multiple trials the in hopefully, our initial of partner, for that different for this this quarters, assay and sample looking we're along next we'll cause labeling. So different assay being PMA then with indications see which utilized initiate

of would a indication. the the is initial one hope across it for true pan-cancer broader become Our with utility, assay assay that readout but is more

Alex Nowak

between up years, pharma the Okay. versus forth, developing Understood. build HTG, menu. partners And me tests to just the back leveraging then last has and over think, internally gotten I question here. from

you're the, back recent on the this seems call, obviously, leaning own your commentary test. and like given certainly developing just it towards hires So

to through the So up pharma partners. go versus back just test solely decided R&D extra internally to why walk ultimately you've on relying build expense maybe us menu there, the spend the

John Lubniewski

we coming the think, right a had bit of symptomatic Alex, than this I was programs, actually that more is gate out signed and we initial own actually ended R&D fulfill our up paused was to proprietary those of did And our almost redirecting little all Actually, PDP our organization anticipated, we of, menu. what that John. commitments. to kind ability develop -- that

TJ Johnson

Now year, raise of to in Alex, putting R&D that our our post January expanding last work, we've money been capability.

more quite environment. Tucson with in talent-rich Area So group the now additional even what would capacity have now are and with we then a broader here bit in Bay as this in new capacity view our we R&D a team adding obviously

We think, biopharma not the in our having own approach one product overall, development. balanced we're really believe internal to I other. collaborations So interested a or development between and

Alex Nowak

Thank you. that’s helpful. Okay,

TJ Johnson

You’re welcome.

Operator

from Delahunt SVB Please go question David ahead. from next Leerink. is Our

David Delahunt

products to could on an this up. funnel from a want to you you Dave funnel, strength of to as trials This SVB. projects. trend continue compete speak the is Puneet for wondering to We're these was sense experiencing for projects I but the number you're I seeing you entering if increasing get -- pharma of number should if the expect

TJ Johnson

absolutely do we would I say that. believe Yes,

now team. is actually sales strength. we've we full feel that deployed our of size And sales new our If you team pharma U.S. We added at the in last the capital recall, now a into year, lot the environment. European of increasing also

to PIP mouse additional follow before to and our the launch of mentioned, such to the Last the end speed business pharma group, R&D -- we're model our development well produce business product headcount between next we with support planned street out quarter the panel. as So the our then John this to now our of as new on year, suit able autoimmune. products as

I in additional the early-phased products, expect to lot the later-phased we as a and as the in folks, pushing of see to think new projects. well and -- expand rate sales this would category the the growth continue projects with coupled

David Delahunt

could Great. you're wondering is And discuss line then liquid could you the was And time looking around add I there little a at? you more. regarding color biopsy, any if the that

TJ Johnson

currently pharma the we of applying Yes. we of within of service expand We are far out blood believe working further, samples. whether it percentage market or have fairly as But and relates as But pachytene running already to business us currently that we're liquid sizable a our a customers at products. it's [ph] array exosomes across are pushing that looking broader biopsies. to in

see, applications. So the monitoring research been more we've is biopsy versus And market. liquid clinical applications viable as only biopsy we becoming for liquid

to that product our those time maturing. hand -- market product. investments will that how in We and be will push space areas see kind autoimmune in of We believe a we heavy hand to with go in the definitely our biopsy liquid

Operator

go [Operator Instructions] The next ahead. Please Wainwright. question is from Yi H.C. Chen from

Yi Chen

include guidance go for of there is My is or PDPs does is no-go a the consideration your when -- the revenue there clarification? first decision your a question just XXXX when is, decision,

TJ Johnson

Sure.

no-gos to XXXX could is wide give Yi, go I versus a how versus each of range reason forward. idea think, we of both that on one range based of provided that fairly tried part why affect the we an

that of timing of bottom when worse on the if positives kind see would say and I positives situations, the top of So of would would get likelihood indicate is the those the could of based we then range where the occur. the the range we

Yi Chen

potential Okay. from revenue But breast it the include cancer program? the autoimmune does and program any

TJ Johnson

not. does It

Yi Chen

in do you my is to collaborations how question new PDP XXXX? enter And expect many last

TJ Johnson

getting And discuss monitor say us Phase that kind year, hard has of programs that. and be closer Xs had not really internal of to potentially on changed. X of the that could with number per do involved for has think is X I Phase pipeline, those it's registration -- a that trials. always X clients We we're Yes, positive to we're the to new grown. PDP We've programs indicator an target to and wanting that

Operator

This any concludes closing turn the comments. to the question-and-answer session. floor management I'd like back to for

TJ Johnson

call. today end Yes, for like to their forward thanking look everybody by time just next I our and would to

Operator

teleconference. today's concludes This

your at disconnect for you this again lines may your time. You participation. Thank

HTG Molecular Diagnostics (HTGMQ) 12 Mar 192018 Q4 Earnings call transcript