HTG Molecular Diagnostics, Inc.

Demolecular Diagnostics Incorporated First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Should you require operator assistance during the conference, please press star zero to signal an operator. Please note, this conference is being recorded. I will now turn the conference over to your host, Monique Cossey, with Lifestyle Advisors. Thank you. You may begin.

Thank you, operator. Earlier today, HTG released its financial results for the first quarter ended March 31st, 2021. Before we begin the call, let me remind you that the company's remarks include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond HTG's control, including uncertainties regarding the ongoing COVID-19 pandemic, and its impacts on HTG and its customers that may cause actual circumstances or events or results to differ materially from those projected on today's call. Factors that could cause events or results to differ materially include those risks and uncertainties described from time to time in the company's SEC filings. HTG cautions listeners not to place undue reliance on any forward-looking statements. HTG is providing this information as of the date of this call, May 13th, 2021, and the company undertakes no obligation to update any forward-looking statement. With that, I would like to turn the call over to John Lubnatsky, Chief Executive Officer. John?

Thank you, Monique. As always, it's a pleasure to present the results we've delivered during the past quarter through the hard work of our employees. While it's disappointing our results continue to be affected by the COVID-19 pandemic, we believe the macro drivers for HCG's eventual success remain strong. Cancer and personalized medicine are not going away. And while the last several quarters have seen headwinds, we strongly believe that these markets will return. Cancer is a very complex disease, and we believe understanding the biology of disease and its treatments is a key to improving care for patients and managing treatment costs for our healthcare systems. We believe the ability of HTG's EDC technology to help unlock the secret of the transcriptome with our advanced technology is more relevant than ever. And I believe the best days for this company are still ahead of us. There's no doubt that Q1 was challenging for HTG. In the fourth quarter of 2020, we saw an increase in the number of our customers returning to work in either partially or full time. This created cautious optimism that we were starting to move past the COVID-19 related revenue headwinds that we had faced through the second and third quarters of 2020. However, in the first quarter, we saw another wave of country and company shutdowns, especially in Europe, that again created turbulence for our commercial teams. Orders weren't lost, but in many cases, they were delayed to later in the year. We've been in close contact with our customers and approximately 30% are reporting that they're more or less back to normal, but over 70% are still in partial or complete shutdown. In part, and as a result of the COVID-19 impacts on our customers, our total revenue for the quarter was 1.4 million, down from 2.2 million for the same period in 2020. Product and product-related services revenue was 1.4 million, compared to 2 million for the same period in 2020. and there was no collaboration development services revenue for the quarter compared with 200,000 for the same period in 2020. Though we came out of the previous quarter with a robust forecast, we saw many of the expected orders slip out as customers were either too aggressive in their expectations of returning to their workplaces or, as in many situations in Europe, another wave of shutdowns closed laboratories that had just begun to return to normal operating levels. As it has throughout the COVID-19 pandemic, this limited the ability of our customers to either run planned tests or to send samples to our VarioLab in Tucson for processing. Early indications suggest that some of these planned studies will resume in the second quarter of 2021, but given the unpredictable COVID-19 landscape and resulting impact on laboratories being open, we cannot predict our customers' business. While the challenges that we have faced cannot be overstated, I'm proud of the accomplishments that our team has made in areas that are more under our direct control. In our development program for our transcriptome panel, we continue to achieve all of our development milestones scheduled for the first quarter of 2021, including completing our sixth and final round of probe quality control, locking our probe design for the planned transcriptome panel, and ordering the final probe pool, reflecting this design, finalizing our reagent formulation for the panel, defining our quality control metric strategy, and completing the sample input robustness study for the panel. Our next steps are to achieve design lock, initiate verification testing, and get the panel into the hands of our scientific collaborators as part of our early adopter program. As of the date of this call, we are in active discussions with over 25 current and prospective customers to identify cohorts and to develop study designs as part of our early adopter program collaborations. These collaborations will provide access to the transcriptome product to both academic and pharma customers prior to commercial launch to generate critical data and customer feedback for the promotion of this product at launch. To prepare for this exciting launch and commercialization, as well as to continue our customer and market diversification strategies, we completed a comprehensive overhaul of the company's website in the first quarter of 2021. adding new applications and content intended to make HTG more discoverable from search engines and to increase customer engagement. We also launched targeted online campaigns to help drive traffic to HTG and created two new microsites, y.htgmolecular.com and htg.transcriptomepanel.com to help drive new traffic to our primary website. Our customer and market diversification efforts continue to be another bright spot, where we saw 13 new customers and 24 new pharma programs added for the quarter. The new pharma programs bring us up to a net of 68 active programs at the end of the quarter, up from 50 at year end. New customers and new programs start small and won't offset the impact that some of our largest customers from prior years delaying studies or being partially or fully closed, But in time, we expect they and the company will grow. We expect that this diversified customer base will be far more decentralized and in many new markets in addition to oncology, creating a more balanced revenue engine that isn't so reliant on big pharma and oncology in the future. Finally, on the publications front, We added 20 new publications for the quarter, bringing our cumulative total to 286, a further demonstration of our market penetration and customer satisfaction with our products. I'll now turn the call over to Sean for a deeper dive on our financials. Sean?