HTG Molecular Diagnostics, Inc.

Good afternoon, ladies and gentlemen, and welcome to the HTG Molecular Diagnostics, Inc. Second Quarter 2022 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star and zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Andrew Erickson of LifeSci Advisors. Please go ahead.

Before we begin the call today, let me remind you that the company's remarks include forward-looking statements within the meaning of the federal securities laws, including statements regarding our expected revenue build and momentum in 2022, our expectations regarding profiling revenue in future periods, our expectation that customers may use our HTP and whole transcriptome miRNA panel for their studies as a result of the harmonized sample preparation protocol, the importance of the company's HTG transcriptome panel, statements related to the company's HTG therapeutics and drug discovery business, the impacts of recent hires, our planned white paper for specific drug discovery application, our expectation that HTG may become a disruptive hybrid lifestyle drug discovery company. Expected improvement in the coming quarters are future growth, business momentum, and market opportunities, and the expected capabilities of our technology. 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, as well as labor and supply chain issues. and their impact on HGG and its customers. That may cause actual circumstances, 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, including under the risk factors heading of the company's quarterly report or on form 10Q for the quarter ended June 30th, 2022 filed today with the SEC. HTG cautions listeners not to place undue reliance on any forward-looking statements. HTG is providing this information at the date of this call, August 11th, 2022, and the company undertakes no obligation to update any forward-looking statement. With that, I'd like to turn the call over to John Lubineski, Chief Executive Officer.

John? Good afternoon, everyone. As always, it's great to be here to provide an update on the progress of the company. This quarter had some major successes, and we've also had some ongoing challenges. But we've continued to face these challenges head on, and we've made adjustments to our operating plan that we believe allows us the best opportunity to achieve our vision at HTG. So let me start with a reminder of our vision and our strategy. We have what we believe is a disruptive technology that partners RNA profiling and medicinal chemistry, and that we're using to address two of the most significant challenges in drug development. That is drug candidate attrition, and getting the right drug to the right patient. We're using our technology in molecular profiling to study disease and in drug discovery to de-risk the drug development process. These are significant opportunities. The combined biotech and pharma market is almost $800 billion today and is expected to grow to almost $1 trillion in the next four years. The precision diagnostic market is approximately $25 billion today and expected to grow to $50 billion in that same timeframe. We believe our technology can continue to disrupt and add substantial value in these large and growing markets. We continue to fire on all cylinders as it pertains to our strategic development objectives and have achieved all of our first half development milestones. Our assay development team delivered our RNA modification assay, which we're using internally as part of our drug discovery platform of tools. Our drug discovery team delivered a second white paper that builds off the first white paper we issued in Q1. The second white paper is the next big step in our drug discovery process proof of concept, where we designed a library to screen for our first target, what we call HTG T1, for our first two indications. and then conducted follow-on RNA analysis from the cell lysates. As expected, this data confirmed our ability to biologically distinguish closely related compounds for the same target, as well as to see indication-specific effects. This data is now being used by our therapeutics team to inform chemistry optimization with the aim to improve biological response and reduce potential undesirable properties of our lead compounds. We're also pleased to showcase this data in our second white paper, as well as to hear about the advantages of using RNA profiling in candidate development from one of our KOLs, Dr. Robert Spitali, at our recent Drug Discovery Investor Day. The next milestone for HTG will be an early preclinical characterization for our lead compound and our first indication. This process will then be repeated with additional indications and for follow-on targets. In short, right now we believe we're on spec and on plan with our drug discovery initiative. In our profiling business, we continue to face challenges as we try to get this business back to pre-pandemic growth. Oncology trials are still not back to where they were in 2019, and this is impacting our profiling business. However, we are seeing this market return, albeit slower than we would want. Our revenue for this quarter was $1.5 million, compared with 2.1 million for the same period of 2021, primarily reflecting this continued sluggishness in the oncology market. While this is off from prior year, it is an increase in the prior quarter and is consistent with the market recovery that we're now seeing. Going forward, we're seeing increasing momentum in customer and potential customer interest in our technology, and especially our new HTP panel, which has positively changed how potential customers view HTG. We expect to see these trends continuing for the remainder of 2022. During the second quarter of 2022, we added 11 new customers and finished the quarter with 50 active pharma programs. We also added 12 publications referencing HTG technology, including our first peer-reviewed article on HDP and Frontiers of Medicine. This brings the total number of publications referencing HTG to over 370. We also had two exciting customer presentations showcasing the use of our technology in pharma applications. In the first presentation, Dr. Shaitan Deshpande from Pfizer gave a keynote talk at a companion diagnostic conference showcasing their use of HTG technology in clinical trials. This was followed by a webinar by Dr. Peter Ansell from AbbVie, who discussed their broad use of HTG technology in translational medicine and clinical development. With this caliber of customer testimonials, we remain confident in our value proposition and the opportunity in profiling, even with the delayed revenue recovery. Despite our continuing optimism for the impact of our technology can and will have, both in profiling and drug discovery, we have acknowledged these continuing market headwinds and have worked to ensure that our operating plan properly addresses the financial impacts that they have had. As a result, in the second quarter, we made significant adjustments to spending to contain cash burn, rightsizing our organization for expected revenue while maintaining our capabilities to continue to grow and address new market applications to fully leverage the capabilities of our technology. We believe these spending adjustments will allow HDG to achieve our stated business objectives while still being responsible to our balance sheet. With that, I'd like to now turn the call over to Sean for a deeper dive on our financials.