OPGN - Earnings call transcript Q3 2019

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Operator

Welcome to the OpGen Third Quarter 2019 Earnings Calls and Business Update. At this time, all participants are in a listen-only mode.

Following the management prepared remarks there will be a Q&A session.

As a reminder, this conference is being recorded today, November 6, 2019.

Before we begin, I would like to caution you that comments made during this conference call by management may contain forward-looking statements regarding the operations of and future results of OpGen and Curetis N.V. specific review without with recent to limitation, and which to Exchange Securities form differ you cause XX-Q, including, may described Commission, the identify forward-looking materially encourage from OpGen's or in the filings and XX-K actual those I results that the events statements. factors company's most

activities FDA Acuitas that affect the with and of not efforts; other Gene the completion related rate the products services the to; by business use may of services, effect on hospitals isolates; factors. its company's combination are with commercialization its the October healthcare company’s Factors the proceeds of N.V., and and to public success requirements products business new and Curetis clearance Panel regulatory for of and the use economic its of pursuit adoption limited offering; AMR from existing results competitive of include, for XXXX the other and bacterial the but the providers; of

of update events content the call, undertakes only time-sensitive the of information of date November call this to statements as revise call except contains after by accurate today, the of to or obligation XXXX. live required The as no X, or that company conference circumstances law. any reflect is conference date The this the

to Chairman and Jones, call CEO Evan I now over turn OpGen. to would the like of

Evan Jones

actions Curetis. this the towards our joining operations by third you, business provide of business On year, Thank recent update quarter results, you progress financial meeting the us combination call, planned discuss afternoon. XXXX an we and our objectives thank for everyone with and review end corporate of operator today's key will our and and on

in ending months of million We had revenue compared period for XX% year. the the XX solid to increased to $X.X month million XXXX. nine first $X.X September Total a nine

the XX% $XXX,XXX we increase. revenue quarter a business with the period, year announced was plan In options Third in combination the Group. prior September, $XXX,XXX of Curetis compared with

N.V., reminder, under CURE, a acquire N.V. we purchase a Curetis of Euronext, for listed implementation under publicly combined agreement a all agreed of million ticker subsidiary shares Dutch create with As an business a Curetis which a assets we to company entered of and on into GmbH, outstanding approximately Curetis the to all an consideration. of related X.X as business shares the the option

infectious and LRT UNYVERO challenge Molecular severe and the to States. of by has pioneer diseases, respiratory Curetis the been detecting infectious the hospitalized patients. leading disease, company's address was identifying answer designed development a infections is lower for the become test to provider goal or be Curetis cleared LRT microbiology global sample for diagnostics, molecular antibiotic the for of solutions innovative FDA in in to a to first diagnostics resistance United the of test The

the The LRT East Europe, Curetis marked .by five are portfolio marketed products Curetis in test is marketed markets. the and in directly the vitro Asian and U.S IVD currently in partners some Middle through diagnostic distribution CE of

technology of artificial DV, based algorithms. with bioinformatics together science strong in drug health, public developing Diagnostics intelligence Ares next the research, diagnostics. Pharmaceutical microbiology antibiotic is Curetis and partners Genetic platform Solutions most and and industry areas disease molecular advanced subsidiary GmbH comprehensive of life commercializing for tools infectious owned genetics and and are Life wholly generation Genetics with resistance, solutions development, the on on is Ares Science, likely one databases Ares the and the

an a platforms rapid for technology NGS of prediction the as company well proprietary combined broad will base commercial products based, anticipate AI CE of portfolio stage We U.S. have FDA cleared AMR. a diagnostic IVD and and molecular as powered the marked knowledge and

for lower AMR and services OpGen. prediction as diagnostics side for as on flow second, urinary and initial services infection based and tract two Genetics, The respiratory Acuitas company by well Ares bioinformatics the for knowledgebase first, infection rapid by AMR the bioinformatics be NGS will Lighthouse,

include and proprietary company's molecular regulatory Key leverage, platforms, achieving establishing pursuing to clearances combined return position profitability. elements on platforms, capital unique and capitalizing for leveraging and research approvals commercial future market continuing capabilities strategy a diagnostic on and operational collaborations, improve gain capitalizing to global development and and of on partnerships, the technology testing financial synergies

quarter I would now activities highlight of XXXX. like third business in to OpGen’s the

May, OpGen XXX(k) Acuitas to In During detection our of product AMR execute on our FDA resistance for Software of of Panel highest filed Acuitas to to the isolates. novel bring Lighthouse genes detection in continued bacterial quarter, seeking AMR a Panel Gene antimicrobial submission, for one and the priorities, Acuitas, the we market. the third Gene clearance

first the the approximately the are been have address submission a early items received to our through for deadline. responses additional the formal to the requests we've by towards and the information response of to the agency in formal two-thirds agency We interactive a and request from working review XXXX response working remaining process. we FDA July, in to provided Today, agency January with an

In review we responses begin sample to the and early for November, AMR Urine de seek Through align timely process, the Panel with successful completion submission. the our FDA facilitate of to clearance testing we novo interactive FDA this expectations Gene process. will

incorporation than through sites trial nine specimens. later the of result clinical testing involve feedback contract under is remnant sub approximately X,XXX samples of collection There originally FDA Q planned additional the date the are will that as contrived for the a and from process. of start received of The

Acuitas transition we clearance, nine driver months from In XXXX the revenue period. Acuitas year-to-date. first growth being and the XX% revenue seen related total to behind represented revenue primary $X.X In driver comparable of X% was the growth million, encouraging of we up RUO XX% or in beginning the products year, Gene This trend less Lighthouse AMR the the Panel have than advance FDA company. for of to the are Acuitas

CFO, Tim? Tim to like to I would call now turn Dec, the over OpGen

Tim Dec

I for of quarter today's On the the on XXXX. third XXXX call, XX, quarter compared months was of Evan. will $XXX,XXX and third in touch quarter nine the the the Operating third highlights expenses $X.X XXXX. to in of million you, $XXX,XXX expenses million proposed ended September Thank the combination third Acuitas. of primarily of of increase $X.X quarter with was operating were compared XXXX. associated with The the in the with attributable for XXXX quarter costs third to transaction $XXX,XXX business Revenue

share, XXXX were share down million, of $X.X $XXX,XXX. $X.X compared in and were third from $XX.XX million, net in marketing G&A The million per R&D down the quarter-over-quarter expenses for $X.X expenses of XXXX, million, the XXXX. and was at expenses in flat third or quarter loss loss of net quarter million $X.X to the $X.X to $X.XX were or per $X.X million, XXXX. sales

revenue Total XXXX September XX, XX, XXXX. the ended nine million, ended first was $X.X with compared months months nine for $X.X for September million

of operating for with and for two XX an total operating expenses the $XXX,XXX September nine associated ended was XXXX $XX.X nine to a facility. QX of abandonment increase combination with expenses months attributable the Woburn charge million associated in Evan in ended As XXXX. XX.X%, The XX, increase September of our mentioned, items, XX.X the impairment were transaction to year Acuitas $XXX,XXX this months million costs compared business

were million first of up was $X.X XXXX. to the XXXX. XX, from per and or $X.X $X.X loss in $X.X the for XXXX Net months per marketing million XX, period $XX.XX $XX.X for nine ended share, million September $X.X or compared share, were And September expenses year-over-year million were million. sales flat million, from expenses million, XXXX. expenses in G&A R&D at $X.X $X.X down

of closed proceeds this We million the roughly cash. the was unit. quarter public when October year, we closed gross $X amount per with $X.X X.X offering million. units This of on of raised $X offering XX million of The augmented at

the of rule from with recently are compliance currently NASDAQ the equity had have regained regained them all we we listing requirement. terms compliance Early NASDAQ, heard minimum bid price In continuing requirements. in we quarter, the and with shareholder in that compliance with

of everyone this exciting aware combination the and At Curetis. is OpGen point, business of

will closing a we requirements. roughly be meet we issuing time to and shares the other X.X As million expect customary of closing reminder, at

working actively deal announced the have We since integrating teams early in two been on September. was the

number be or primary The we will and Curetis continue and will late OpGen next completed, to This week a the occur other to of been the combination Gaithersburg which members efforts. expect focus Germany been of until our by be to team team integration February times with approved early traveling the to has or XXXX. I has January

transaction In we announcement, I million to million the pro to a the forma would terms be estimated of few are on. in the combination, combined XXXX would In touch revenue $X range. items there $X like

our revenue to three XXXX, in to revenue. times million expect grow million to a to two potential in $XX $XX line top increase We

discipline. efficiencies integration are focused operational efforts on and financial Our

has CapEx a of Panel investments has Curetis $XX historical our note. manufacturing save potential the approaching facility millions the to market. up when This scaling to million. to expedient robotic opportunities saving AMR future of with Gene bring Key ability help to facility and state-of-the-art capital manufacturing dollars

to Curetis partner has longer be that will team, currently European be and rapid pathogen to. expenses cutest operating EMR will dedicated marketing support looking a strong build has a teams team, Curetis were utilizing U.S. we no us something necessary. sales save also these and going once force sales ID are sold or U.S. dollars that of clear selling the millions will same is forward. products in are accounts our into commercial

AMR capabilities that databases leveraged diagnostics to data can the analytics platforms Genetics venture and future. both Ares bioinformatics Curetis in and and sequencing with into integrate companies has reporting be based infectious next-generation advanced

of look to look burn. our all across will We certainly other both to reduce company for and combined ways net cash loss the areas

over months, through and with in then on combination capturing next financial will efforts this associated synergies and the work our primary we three two be identifying focus beyond. As the XXXX integration to our

saving higher. cost the estimates Our even XX% preliminary in potentially XX% annual range, are to

continue everything are our improve the to we laid committed the do out to the power we at objectives will shareholder we value. beginning to year critical Overall, and of in

back the turn I’ll that, to Evan. call With

Evan Jones

Tim. you, Thank

business making clearance. on Gene of progress Lighthouse As are good Panel noted AMR earlier call, our and Acuitas FDA we advance developing the in Acuitas

respectively. be Center clap project. approval York the fourth and the the over and anticipate infectious approvals XXXX, we the additional We fourth received, the initiative are We participating milestone, are the project. and the was third completing honored in QX health milestones completed New we are in digital as clap successfully State summer, of project conditional fifth Wadsworth to and beginning of by testing phase demonstration received disease the quarter Conditional hospital

with and behind plan creating business like with strategic Curetis capitalize to strategic some share diagnostic detection, the opportunities include a platforms, combined global positive and would the combination tests solutions multiple business to global These anti-microbial synergies to partners bioinformatics disease and financial channel for market I a multi drug in driven the the powered resistance Group. resistance infectious capabilities leader AI position growth of proprietary thinking business. on leverage, and bring diagnostics, outlook. The Curetis molecular premiere will and combination operational benefits commercial

several In I addition OpGen, like business progress have that to accomplished by recent milestones highlight the Curetis. and development key operational recently to been at

its leading global entered undisclosed, First, multi-phase on that in for generation NV Ares solutions in September, develop to disease vitro wholly-owned Genetics next Curetis sequencing collaboration jointly testing, technology. into diagnostic a announced an infectious corporation based has with subsidiary, diagnostics

phase bacterial The first the collaboration development will the additional Genetics and company predicting research fund the signed characterization an agreement, partner the current genotypic Under activities optimized resistance. and of R&D of development algorithms antibiotic to fully AresDB, and and for for collaboration. the the the augment option Ares for agreement strains phenotypic of

the for to collaboration diagnostic rite human return fee, Ares obtains an clinical AresDB option technology license first in the of use an platform. and undisclosed Furthermore, exclusive partner for upfront negotiation a

tests, volume artificial sequencing an generation powered, access announcement, of launch Ares Following test. intelligence orders this exceeding for announced Ares €XXX,XXX. Genetics based has in than novel, program order its X,XXX Ares received the early UPA new molecular commercial for susceptibility more antibiotic next of the important October, Genetics an

to for with artificial access bioinformatics received AresDB Genetics in well amounting for €X the intelligence as has services, pharma and advanced to XXXX than to more orders Together and diagnostics as contracted industry, date. million certain and leveraging Ares rights

is business adopter early on solid also sales a The nicely focus funnel with core a opportunities and Unyvero progressing Testing LRT XXX of accounts.

ongoing, end and the are United analyzers of As have QX first States. XXXX, installed in evaluations evaluations are been XX Numerous successfully of XXX the Unyvero the commercial completed.

with Unyvero licensing LRT corporate launch potential Ares China partnering the of FDA XXXX IVD clearance for expanded Corporation of collaboration diagnostics technology China, for the include transactions test Unyvero in and approval such HPN the MPA Unyvero indications, to milestones Anticipated partner. and Global progressing Genetics’ clinical human for and use Curetis and

the quarter clinical with of Acuitas Panel business planned anticipated Curetis completing AMR use completing resistance bacterial Software urine completing novo Gene Lighthouse Infectious antibiotics, AMR de the Disease isolates, in the with data In prediction FDA obtaining the addition of FDA and developments, and to Health to State rapid Acuitas XXXX, to studies for and Panel Digital project. specimens the submissions and OpGen frontline these for market collection testing phase combination anticipate the Acuitas for for important filing urine, the New of Gene antibiotic Initiative demonstration first York with clearance

our excited year about we pleased with far with we very this combine are so progress future, business transition and We the and our company's are Curetis. as

And support to and to turn for I back your appreciate the like afternoon. would the We now time questions. your this operator call

Operator

line Chen, for comes line now a first from have Yi now from the open. Wainwright. We your Chen Yi Evan. questions. question you, time of Thank Your few Instructions] is [Operator H.C.

Yi Chen

my taking questions. you for Hi. Thank

isolates AMR whether So depend that Acuitas the Thank of once how clearance, commercialization can completion Curetis? obtains bacterial start? you. And the on would XXX(k) the combination for with soon the test Panel the Gene

Evan Jones

sales just Thanks the the announcement it. we're following launch software. dovetail month likely merger think, appreciate key close work and FDA line. timing product the clearly of two And to will Yi. the incorporation their and date, getting changes the the of into with is pinpoint, take will And that commercialization finish our on this new to a clearance the the with to question, through to is or I labeling little force. that us side, to with for and of your well Curetis be that that but another milestone hard the required The the being We a clearance should

Yi Chen

Could XXXX, see. second the XXXX? on of panel? provide completion also the for towards clinical for of the of you or it middle I color some potential urine timeframe in studies Is the half the

Evan Jones

verification month we urine has study. to that to the analytical things imagine. it is of begun complexity more might occurred We've to to the over work back that recent also begin worked the So, testing. one the trial, the do you than And

the There's believe to for all the that, microbiology approvals early as shortly us. a here third take party envision site, And we doing just winter. begin the that's into testing we

sequencing to be there additional then will analysis be And DNA required.

done if with the all be So, goes well, during those first phases, we'll quarter.

Yi Chen

Okay, great.

could And data collection? remind can So State during the after is next the New possibly complete DOH, be us, you over, what when you York XXXX. contract will a step be

Evan Jones

Sure.

to support subsidiary. And Department the the So our original testing. a of Health to deploy develop is rollout to contract both was ILÚM Merck and for conjunction one infrastructure infrastructure, year, in with State New and York

including in data in to That determine a work funding the New of contract, involve will authorities been and Phase. data The has State phase, And largely on completed collection to collection our software. potential the months six based that work future perspective years. lighthouse York adaptations last

Yi Chen

it. got Okay, you. Thank

Evan Jones

Thank you.

Operator

Max, your line Your next question Investment Research. now open. the from Jacobs comes Edison line of from Max is

Victoria Pease

here result Jacobs. the a Tim, on How merger? has? mentioned, actually as savings Tim over a Victoria cost Hi, of call. hi, of of much Thanks the behalf what you taking my financial company Evan. runway is for This and combined Max

Tim Dec

looking fact we're So, just see that, factoring to reach expect race next that ways that in completed the the into we potentially amount. that into and year. of We'd QX augment to currently

Victoria Pease

for then Acuitas. also with great. there you closing are Okay, mentioned some conditions remaining the transaction And that

closes and are what you the if go the conditions if the main what So, successfully? you say probability of over transaction would

Evan Jones

Victoria. Sure, answering. This is Evan

critical financing The week. guess was the completed, was milestone last first that I just completing

lead to will and shareholder just companies would by was you we transaction be significant will the close that So meeting The will shareholders. of, to timing And follow optimistic will appropriate a very, that of the currently major milestone. I approvals. successfully. a milestone say then very their that both January/February that are materials next distribution And gaining the

Victoria Pease

Okay and when is the shareholder for? approval assorted

Evan Jones

the little a you the an And color review SX be give what's a will to SEC. process, just filing by called OpGen have So more SX. on that will

then provide SEC declares materials will stockholders up for our the As the SX to soon for vote merger. we tee approve that as the and effectiveness the meeting can

Tim Dec

and here on, the the touched conclusion into or few we're next preparation business in days Evan SX hopefully week. well As

Victoria Pease

you great. Evan, Tim, time. much your appreciate I Okay, for thank so it.

Tim Dec

you. Thank

Operator

Your Alliance next now from Ben of question Haynor open. your Instructions] Global [Operator line line Partners. the is comes Ben from

Ben Haynor

gentlemen. Thanks afternoon, the taking for Good questions.

year, is bottom for both at almost -- QX looking end me for the off the mean, firms to would through different should this? have the as revenue that that year read we read already Acuitas of reflection read about we June as we should How we booked mean, read should your this appear I read or this it just we that conservatism? volume. already of it First this? should say. range, QX at results reflection out and this order least recognition €X think of firms Should recognition as I or through the revenue million to be well will Should Should the revenue guess you're relatively we as I different you've that they've I announcement implying it for contractual policies? of it guided combined minimal. as How policies? as X

Tim Dec

look State say fish milestone our it's New fourth with have looking I we you think well business a We at in have. quarter, should as in the know, revenue, that the conservative You York fairly anticipate that fair we another at to as plate. do QX that legacy meeting

uptick QX results. see So, of the you should on based terms in an revenue

that other New York, XX,XXX. so on increase our should collaboration again, another at You least revenue the for the We modest can by XXXXXX, yeah, it P&L is work. the see milestone only face of a reach

Ben Haynor

more you company? looks for if the like that thinking XXX,XXX something that milestone portion Okay, the so you reach say or of you're QX

Tim Dec

State yet. York New piece The

Ben Haynor

bit had talk have that questions about you the guess the I submission. questions the conducting to how on And Can you place Presumably, little isolates you that taken a, as changes expected a then, impacted just it's you've any said and major you're FDA? okay, Perfect, thinking from what the great. that result the that's FDA of trap. gotten more year and a about

Tim Dec

of Sure, quite well, over review to let interactive from agency. sequencing, And on DNA me then the them first questions Through little give of questions. the receive are of new submission. the some They've XXX in relating is process, There's we a are technical, agency color or many do isolate requiring and results looking terms number to respond studies, methods of study in cases, agency, questions to we and that response been the the them us results. at no a your then acknowledges adequate. clinical these

but So that when questions supports data questions. XXX back off last with and very additional following their are answered all a they've and just to get ultimate a studies. There we're of block we're the that questions basically And agency, one through clearance then somewhere, large these be decision fast are the gone to to up information. finishing

can and to one of thousands our a You them test data multiplex DNA get samples, sequencing whole just literally to points and lot of think ranging microbiology exacting to having that it's so work properly. of many each from results, on genome done

think time verification and we we've in trial methods So, trial And there going. that in successfully last submission over on be we're analytical and a that now in meaning ways many third-party position that's approaching the impact encouraged period trial, and just studies. we the the of we're that execute the -- of get of been number there done has urine site something line by finish that. I and as learned and instance, the use for are mentioned, need to -- a a to refining and that the the The

Ben Haynor

that you quarter to helpful on And then two? the of next panel from do what's ramp-up that good urine QX very that how and the think trial, imagine, started Okay, the now you've tracking R&D a that's to would about expect I then -- color. spending, way for or

Evan Jones

close then QX should in you'll see three of we see year. piece more as this to so then more this And I significantly so a in probably early $XXX,XXX year range modest next Yeah, $X QX, in million in it of aggregate range increasing mentioned, month, maybe the those you in increase over quarters. started QX

Ben Haynor

answer Excellent. a for many? of answer And, question. me ones so, if recent Okay. those lastly offering Presumably is that I already And the then -- kind how guess you lot were correct? can with a just exercised, can housekeeping of prepaid you

Evan Jones

been Yes, they have exercised.

Ben Haynor

gentlemen. Okay, a questions, lot, particularly great. Thanks

Evan Jones

Thanks Ben.

Tim Dec

Thanks Ben.

Operator

time That's call have the will for I remarks. Mr. all today. we turn back closing the Jones now to

Evan Jones

to Thank continue updating more very free SEC section joining website Investor or today we you our to you a and Thank the give for the call. information, of or progress everyone filings for our and Tim much. please look forward you as to visit And business. feel we myself

Tim Dec

you. Thank

Operator

Thank participation wonderful Ladies day. you this today's have conference. concludes and and gentlemen, for your a

You may all disconnect.

OpGen (OPGN) 6 Nov 192019 Q3 Earnings call transcript