OpGen Inc (OPGN) 2015 Q1 法說會逐字稿

Welcome to the OpGen first-quarter financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded June 17, 2015. I would now like to turn the conference over to Kim Golodetz. Please go ahead, ma'am.

Thank you, operator. This is Kim Golodetz with LHA. Thank you all for participating in today's call. Joining me from OpGen, Inc., are Evan Jones, Chief Executive Officer; Tim Dec, Chief Financial Officer; and Kevin Krenitsky, M.D., President.

Earlier this afternoon OpGen announced financial results for the first quarter of 2015. If you have not received this news release, or if you would like to be added to the Company's distribution list, please call LHA in New York at 212-838-3777 and speak with Carolyn Curran.

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of OpGen, Inc. I encourage you to review the Company's filings with the Securities and Exchange Commission, including without limitation the Company's Forms S-1 and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Factors that may affect the Company's results include but are not limited to the rate of adoption of its products and services by hospitals; the success of its commercialization effort; the successful completion of its new product development efforts; the effect on its business of existing and new regulatory requirements; and other economic and competitive factors. Also, the content of this conference call contains time-sensitive information that is accurate only as the date of the live call -- today, June, 17, 2015. The Company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that said, I would like to turn the call over to Evan Jones. Evan?

Thank you, Kim; and my thanks to each of you for joining us this afternoon. This is our first conference call as a public company, and we are excited to be updating you today. As we begin this first call, I would like to take a moment and reflect on why we are here as a Company.

Antimicrobial drug resistance is an urgent global issue, and it is increasingly becoming one of the most significant issues of our time. At OpGen we are committed to helping combat life-threatening multi-drug resistant infections, or MDROs. This is a significant clinical problem that is estimated to impact approximately 2 million people annually, and it results in at least 23,000 deaths each year in the United States.

Our vision is to help make sure that no patient suffers from one of these life-threatening drug-resistant infections. As a Company we are working to help transform infectious disease management through innovation in molecular diagnostics, information technology, and microbiology to aid in reducing the burden of drug-resistant infections. Our initial products and services are designed to help healthcare providers rapidly identify hospital patients who are colonized or infected with drug-resistant microbes and to help guide antibiotic therapy.

We have been working towards this goal for several years. This spring we achieved a number of key milestones in our efforts to accomplish these objectives. First, we completed the initial development and launch of our complete solution for managing gram-negative MDRO infections in the hospital.

At the ASM meeting at the end of May, we launched our Resistome Test, MDRO whole-genome sequencing, and our Acuitas Lighthouse MDRO Management System. Finally, we raised $17 million through our IPO to help fund continued development of these products and to accelerate their commercialization. We are well on our way towards building a successful molecular information business.

On today's call Tim Dec will update you on finance and operations at the Company, and I will provide detail regarding our commercial progress, ongoing research and development, business development activities, and anticipated milestones for 2015. I am very pleased with the management changes we made prior to our IPO. We appointed Dr. Kevin Krenitsky President. And as you probably know, Kevin comes to us from Foundation Medicine, where he helped build their cancer testing business as their Chief Operating Officer and subsequently as their Chief Commercial Officer.

He will play a key role in helping to build OpGen. In the near-term Kevin will oversee the rollout of our MDRO testing products into the hospital market. Tim Dec has been named CFO. Tim has a wealth of valuable financial experience, and we are honored to have him join our team.

With that introduction to Tim, I would like to turn the call over to him for a review of our financial results. Tim?

Thank you, Evan, and thanks to all of our participants. Subsequent to the close of the first quarter, we completed our initial public offering of 2.85 million shares of common stock and detachable stock purchase warrants for a gross proceed of $17.1 million. After the exchange of $2.1 million in short-term notes payable; underwriter discounts; and legal, accounting, and other fees, net cash raised by the Company was approximately $12.8 million.

In connection with our public offering all of the Company's outstanding Series A Preferred Stock, 2014 convertible notes, and our 2015 convertible notes were converted into 7.4 million shares of common stock. As of June 2015, 10.7 million shares were outstanding, and we have essentially no debt on our balance sheet.

Total revenue for the first quarter of 2015 was $500,000 compared with $1.1 million for the first quarter of 2014. The decrease was largely attributable to contract R&D funding with Hitachi High-Technologies as we near completion of their project to commercialize whole-genome mapping technology for mapping, assembly, and analysis of human genomes.

Reflecting the stage of this project, collaboration revenue in the first quarter decreased from $600,000 in 2014 to $300,000 in 2015. Net product sales of our legacy Argus mapping technology were down from $300,000 in 2014 to $200,000 in 2015. These declines were anticipated as we transition from our legacy mapping products to the introduction of Acuitas MDRO products and the Acuitas Lighthouse Management System.

Total operating expenses for the first quarter of 2015 were $3 million compared with $2.3 million in the first quarter of 2014. The primary drivers of those expenses were research and development expenses of $1.1 million compared with $1 million in the first quarter of 2014 and sales and marketing expenses of $1 million compared with $500,000 in the first quarter of 2014.

The increase in operating expenses was primarily attributable to $600,000 in non-cash stock-based compensation associated with employee stock option grants. The Company reported an operating loss of $2.5 million for the first quarter of 2015 compared with an operating loss of $1.2 million for the first quarter of 2014. The net loss attributable to common stockholders in the first quarter of 2015 was $2.8 million or $5.61 per share compared with a net loss attributable to common stockholders for the first quarter of 2014 of $1.3 million or $3.62 per share.

The Company had cash and cash equivalents of $600,000 at the end of March 31, 2014. We added approximately $12.8 million of cash to the balance sheet on May 8, the date of the IPO closing. Accounts receivable at March 31, 2015, were $100,000.

We anticipate a continuing change in the mix of our top-line revenue as we gain momentum from our MDRO testing business. This transition will help lay the foundation for future growth at the Company.

And finally, I am very pleased to be part of the talented and dedicated team here at OpGen. We will continue to focus on building a world-class organization, design and implement best-in-class systems, and financial controls -- all of which will be aimed at driving shareholder value over the coming years.

With that, I will turn the call back to Evan.

Thank you, Tim. I'd like to continue by providing an update on our Acuitas testing pilot program and our commercial plans for 2015. Since we began our pilot program in the summer of 2014, we have been involved in 15 evaluations and related clinical studies. More than 2,000 clinical samples have been tested.

Our efforts are starting to pay off. We are working through the early phases of customer adoption, and starting in July we anticipate approximately one customer conversion per month through the second half of the year. Assuming continued progress, we will finish calendar 2015 with 6 to 8 hospital accounts.

Anticipated client uses include routine ICU screening, broader point prevalent studies and management of high-risk immuno-compromised patients. While we are performing fee-for-service testing today, the routine customer conversions I highlighted a moment ago will begin to have an impact on our third-quarter financial results and beyond.

An important aspect of these client-side conversions: that they are being structured to collect clinical outcomes and cost-benefit data to support expanded clinical implementations and, hopefully, a series of groundbreaking publications. These hospital implementations and the data they generate should also serve as a basis for commercial expansion for selling into additional health systems as this data provide evidence about controlling MDROs and hospital costs.

With the proceeds from the IPO we anticipate increasing our investments in direct sales, marketing and promotion, PR, and advocacy. We anticipate increasing our sales and marketing organization from five people to 10 by the end of the calendar year.

As noted earlier in the call, the launch of our complete MDRO testing and analysis workflow was a significant milestone for the Company. OpGen is the first commercial CLIA laboratory to offer a complete solution for MDRO screening, follow-on culture confirmation, high-resolution molecular typing of individual microbes, companion MDRO DNA sequencing, and antibiotic susceptibility testing.

All of this information is integrated into our Acuitas Lighthouse MDRO Management System for healthcare providers. Capabilities will include the ability to rapidly identify colonized patients in hospital ICUs, provide alerts and follow-on analysis for potential transmission events, and match our Resistome molecular profiles with antibiotic susceptibility data.

The feedback at the ASM meeting was very positive, and we anticipate continued success with our launch. Additional milestones we anticipate for 2015 include technology and marketing alliances; progress in our efforts to gain government support for MDRO testing and new technology development; release of our proprietary MDRO Lighthouse portal; and by the end of Q1 2016, we anticipate obtaining our unrestricted New York State testing license.

Accomplishing these milestones should help position OpGen for growth into calendar 2016 and beyond. As we finish our prepared remarks, I would like to thank our customers and collaborators and all of our OpGen employees, who have worked so hard to help realize our vision of building a successful molecular information business.

I would also like to thank our long-term stockholders and all of our new investors for your confidence and support. We will now turn to the operator for the question-and-answer session. Thank you.

(Operator Instructions) Brian Brockmeyer, Independent Analysis.

This is Brian Brockmeyer. So, just quickly, you mentioned in the press release a little bit about the White House Forum. Could you elaborate a little bit on that -- on the types of companies and organizations that were also there, and your role in the Forum?

Yes, sure. And thanks for calling in, Brian. First off, we were pleased to be in the company of so many other top-tier companies in the industry to discuss the important issues that were raised at the White House Forum. The attendees there ranged from the largest insurance companies, to companies like CVS, to many other major diagnostic companies.

And overall I would say that the White House Forum highlighted both the recognition we are getting for our work and the market opportunity for companies like OpGen to try and solve these problems that are getting so much visibility from the Executive Branch.

And you mentioned your White House commitment. Can you expand on what that commitment is?

Yes, you can find that in our press release; but generally, we committed to the strategic direction that we are taking with the Company to implement those activities in conjunction with the federal government and their agencies. So, for instance, the rollout of our MDRO solution both for the hospital market but also for the public sector, and to collaborate -- as an example -- with the CDC in some of their work to establish CRE screening systems for the North American hospital market.

Okay. And then, lastly, a modeling question, maybe for Tim is: you talked a little bit about the customers, customer adoption -- one customer, I think it is, per month starting in July. How should we think about the operating expenses trending over the course of the year?

As an early-stage growth company, we need to be very careful not to provide forward-looking guidance right at this point. So we are going to sit with that position.

Okay. Well, congrats on the strong start, and look forward to following you guys more closely.

And we have no further questions in queue at this time. Please proceed with your presentation or any closing remarks.

Thank you, operator. I'd like to thank all of you for participating on today's conference call, and we look forward to updating you on our next conference call in early August. Have a good day and thank you again.

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.