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spk00: Welcome to the OpGen fourth quarter and full year 2021 earnings call and business update. Today, OpGen management will provide an update on the company's current business and outlook for the future. At this time, all participants are in a listen-only mode. Following OpGen's prepared remarks, there will be a Q&A session. As a reminder, this conference call is being recorded today, March 29, 2022. At this time, we would like to turn the call over to Joe Green, OpGen's IR representative, to provide the opening remarks.
spk07: Thank you, Operator, and good afternoon. Before we begin, some important information. Any comments made by management during this conference call may contain forward-looking statements regarding the operations of and future results of OpGen, including its subsidiaries Curatus and Aries Genetics. I encourage you to review opt-in filings with the Securities and Exchange Commission, including, without limitation, the company's most recent Form 10-K for fiscal year 2021 that will be filed with the SEC, which will identify the 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 not limited to, our ability to continue to successfully achieve the expected synergies from the company's completed business combination with Puratus, and to implement our commercial strategy, the impact of the continuing global COVID-19 pandemic on our business and operations, our use of proceeds from recent financings, as well as our ability to access additional financing in the future, our ability to satisfy our debt obligations under our loan with the European Investment Bank, The rate of adoption of our products and services by hospitals and other healthcare providers in general, as well as during the current coven 19 pandemic. And geopolitical situation, in particular, the effect of the military action in Russia and Ukraine on our distributors collaborators and service providers. The success of our commercialization efforts and partnering strategy, the effects on our business of existing and new regulatory requirements and other economic and competitive factors. The content for this conference call contains time-sensitive information that is accurate only as of the date of this live call, March 29th, 2022. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law. Joining the call today are Oliver Schacht, Optum's President and CEO, and Albo Weber, its CFO. Now I turn the call over to Oliver for introductory remarks and his report.
spk08: Thank you, Joe, and thank you, everyone, for joining us this afternoon. Glad to be sitting here with our CFO, Albert, and reporting on our progress. 2021 was a year filled with progress, and we look forward to highlighting our milestones and achievements throughout this call. As you know, Optin, along with its subsidiaries, is committed to improving patient care and fighting antimicrobial resistance, or AMR, through cutting-edge molecular microbiology. We're developing and commercializing molecular solutions and diagnostic tests to help guide clinician treatment decisions and improve patient outcomes with more rapid and actionable information about life-threatening infections. We've made great progress with our diversified portfolio of products and strategic partnerships, which contribute to our positive outlook for 2022. Today, I'll begin with recent updates on our product and R&D pipeline. Albert will then review Q4 and full-year 2021 financial highlights. Last, I'll preview options' upcoming milestones and catalysts. We'll also make sure to leave some time for a Q&A session. We started off the fourth quarter with multiple achievements and updates, which I will discuss in detail. Within the first few days of Q4, we announced the 510K clearance by the FDA to market our comprehensive molecular diagnostic product, the ACUITIS AMR gene panel. The ACUITIS AMR gene panel accurately detects 28 genetic antimicrobial resistance marker in isolated bacterial colonies from 26 different pathogens. The panel provides clinicians with a way to rapidly and simultaneously test for and identify whether an organism is resistant or vulnerable to selected drugs in nine classes of antibiotics. Options AMR panel can detect antibiotic resistance markers in about two and a half hours compared to one to four days required with classic phenotypic methods. We believe our Acutis AMR gene panel is the first FDA-cleared molecular diagnostic test kit to detect such a broad number of AMR markers from bacteria isolated from any patient specimen. We believe that the Acutis AMR gene panel is an essential and indispensable tool to strengthen effective antibiotic stewardship. We see our product as helping to improve infection control and prevention by helping guide doctors to better target antimicrobial therapy, thus improving patient outcomes. We initiated the commercial launch and rollout of the Acutis AMR gene panel in October of 2021. As stated in our Q3 2021 earnings call, we anticipate the sales cycle for a novel molecular diagnostic test like the AMR panel to be in the 6- to 12-month range. As of today, we're actively engaged in numerous conversations about the Acutis AMR gene panel with large academic centers, state reference labs, and other large, well-equipped hospital labs across the country. we have a healthy and growing funnel of several dozen active opportunities that we're working on. And we have recently provided commercial agreements to several potential accounts in the Northeast and Midwest. These proposals, which remain subject to final negotiations, ranging size from smaller scale initial test volumes of about 100 to 200 tests this year at some sites, relating to expected revenue in the couple of tens of thousands of dollars, all the way to high volume opportunities for as many as 1,000 acute as AMR gene panel tests for a full year once implementation has been completed. Such accounts could then turn into annual revenue-generating opportunities in the $100,000 to $150,000 ranges. The second milestone we announced in October was the commercial launch of ARIS Cloud by our Austrian subsidiary, ARIS Genetics. ARIS Cloud is a simple web-based application available under a subscription model that fully automates data processing to accelerate the analysis of sequenced clinical isolates. The software not only processes data, but also provides insights into clinically and epidemiologically relevant data to researchers around the globe. This includes information on pathogen identity, genotype, virulence, plasmids, and AMR. Powered by Amazon Web Services and using our state-of-the-art AI-powered algorithms and machine learning, this R is cloud-based platform. offers researchers the opportunity to interrogate their own next-generation sequencing, or NGS, data against the RSDB, enabling, for instance, the prediction of antibiograms directly from pathogen genome data. Our first RS Cloud software subscription deals have already been signed in 2022. ARIS Genetics is actively working with clinical expert users. It is collaborating with two major U.S. hospitals to conduct independent studies to evaluate the platform for routine clinical use and for outbreak analysis. Further collaboration agreements with clinical and public health partners in several additional countries are currently underway. In November of 2021, RS Genetics granted permanent, unrestricted, and non-exclusive access to a small subset of its proprietary RSDB data asset to an unnamed global corporation and leader in microbiology and infectious disease diagnostics. RSDB is a growing and continuously curated AMR database of genetic AMR markers, as well as data sets from by now more than 78,000 bacterial isolates. The unnamed IVD Corporation paid RS Genetics in excess of $600,000 for the data transfer and data access fee to approximately 1.1% of RSDB's then current total content. Under this agreement, the partner, furthermore, has the option to purchase at the same price per sample that we agreed upon in November of 2021, additional data sets as they may become available in 2022. Such additional samples and data sets could potentially become available to ARIS as part of its involvement in the large prospective multicenter U.S. clinical trial for the Univero UTI, that is the Urinary Tract Infection Panel. This transaction is yet another example of ARIS Genetics' growing commercial traction. It adds to ARIS Genetics' list of global commercialization partnerships, which already include companies such as Sondos, with whom ARIS recently expanded and extended its strategic collaboration until January of 2025, and QIAGEN, to name a few. Rounding out 2021, ARIS Genetics announced the strategic expansion of RSDB proprietary content, After successfully completing the first phase of its collaboration with a leading US CRO and reference lab, ARIS has now entered the second phase of this collaboration. This phase will provide access to up to 1,000 specifically chosen proprietary clinical isolates from key pathogens. ARIS plans to further increase the value of RSDB and expand its content through strategic collaborations with external partners and supporting clinical trials conducted by option. In 2021, And year-to-date in 2022, RSDB content has grown by more than 40%, and we expect this percentage to continuously expand. As mentioned on our previous earnings call, Albert Weber joined Options in January of 2022 as our Chief Financial Officer and Managing Director of Options Subsidiary Curatus GmbH. Albert has more than 30 years of experience in accounting, controlling, and corporate finance, and has hands-on operational experience in the United States, Europe, and China. He's been a great addition to the team. With that introduction, I turn today's update over to Albert. He will review financial results for the fourth quarter and full year 2021 and recent financial developments of our business. Albert?
spk01: Thank you, Oliver, and welcome to everyone on the call. I will touch briefly on the Q421 highlights, review the full year 2021 financial results, update you on our balance sheet position, and conclude with some thoughts on guidance. To begin, we would like to discuss the closing of a $15 million registered direct offering, which Optin successfully completed in October 2021. The offering was with a single U.S.-based healthcare-focused institutional investment. It consisted of 150,000 shares of convertible preferred stock and warrants to purchase up to an aggregate of 7.5 million shares of common stock. The shares of preferred stock had a stated value of $100 per share and were convertible into an aggregate of 7.5 million shares of common stock at a conversion price of $2 per share at any time after the company received shareholder approval to increase the number of authorized shares of the company's common stock from 50 million to 100 million shares. The company received shareholder approval at its special meeting of stockholders on December 8, 2021, with very strong support from its shareholders. Following the stockholder meeting in December, all preferred shares were converted into shares of common stock in December 2021, and as of December 31, 2021, the company's outstanding shares consisted of approximately 46.5 million shares of common stock, and no shares of preferred stock remained outstanding. The gross proceeds from the offering were $50 million before deducting placement agent fees and other offering expenses. The company currently intends to use the net proceeds from the offering for the commercialization of the company's FDA-cleared ACUITAS AMR gene panel, the further development and international commercialization of its univariate platform, the further development and expansion of the ARIS genetics database and bioinformatics solutions, as well as laboratory service offerings, the repayment of certain outstanding indebtedness to the European Investment Bank, and for other general corporate purposes. We are excited to highlight our positive revenue growth in 2021. For the fourth quarter of 2021, revenue was $1.4 million, a 5% increase from the fourth quarter of 2020. Total revenue for 2021 was $4.3 million, a 2% increase from the previous year. This increase is largely attributable to stronger universal product sales in the U.S. and globally, which counteracted the discontinuation of the legacy fish diagnostics product line, which was discontinued in early 2021. During 2020, the legacy fish business had contributed $1.5 million to full-year 2020 revenue compared to a mere $173,000 in all of 2021, given the exit from the fish business in early 2021. Additionally, the one-time ARIS data asset sales positively contributed to our 2021 product revenue. Laboratory service revenues saw a very strong increase over prior year, mainly attributable to an increase in COVID testing services provided by Duratis, as well as ARIS services rendered to researchers from its Vienna, Austria-based NGS lab. Collaboration revenue declined in 2021 due to the conclusion of a non-recurring R&D collaboration project with an IVD partner at ARIS Genetics in 2020 and the completion of the New York State Department of Health's project at the end of September 2021. Looking at our operating expenses, our total operating expenses for 2021 was $27.6 million compared to $26.9 million in 2020. It is important to remember that with the option curators business combination closing on April 1, 2020, the full year 2020 numbers include only nine months of curators and errors. whereas with 2021 numbers includes the full year of both entities. Accordingly, despite 2020 only including nine months of expenses attributable to curators and errors, our operating expenses remained relatively flat in 2021 based on successfully realizing post-merger integration and corresponding cost reductions and synergy. Our full year 2021 R&D was $10.9 million compared to $10 million in 2020 due to the inclusion of full 12 months of curated-related R&D in 2021 compared to only nine months in 2020. Before 2021, R&D was $2.9 million compared to $3.3 million the previous year. The change in R&D expense compared to prior years is due to the timing of clinical trial work and outside service expense. Full year 2021 G&A was $9.9 million compared to $8.8 million the previous year due to the inclusion of full 12 months of QRADIS-related G&A in 2021 compared to only nine months in 2020. Q4 2021 G&A was $2.6 million compared to $2.3 million the previous year. Full year 2021 sales and marketing expenses which included items such as market research, advertising, travel, exhibitions, and conferences, and our clinical advisory board was $3.7 million compared to $3.1 million the previous year. The increase was due primarily to the expansion of our U.S. sales team in 2021. Q4 2021 sales and marketing expenses was $1 million compared to $835,000 in Q4 2020. Turning to our net loss, our net loss available to common shareholders was $42.0 million or $1.14 per share in 2021 compared to $26.2 million or $1.66 per share in 2020. This increase is mostly attributable to a $7.8 million non-cash accounting item for the warrant inducement expense in Q1 and a $7.2 million non-cash deemed dividend related to our preferred stock deal in October 2021 for a combined total of $15 million in non-cash relevant accounting charges. We are delighted to report that ARCHEN has its strongest cash position in the company's history as of year end. Our cash balance as of December 31st, 2021, was $36.1 million, up from $13.4 million at the end of 2020. This increase was mainly a result of our successful financing transactions in the reporting year. Overall, the net cash provided by financing activities in 2021 added up to $48.2 million. Our 2021 operating expenses are in line with our expectations, and we prepped very well against our guidance for yearly net cash consumption. Looking forward, we anticipate continuing that track record in the coming year at an expected net cash consumption of around $5 to $6 million per quarter. The focus we placed on strategic R&D programs in 2021 puts us in a strong position to expand execution and commercialization throughout 2022 and beyond. We expect to see strong growth in our product business across the Univero as well as the Acuitous AMR Gene Panel portfolio, with a major growth driver being our direct sales in the U.S., where year-over-year in 2022, we expect to see in the 50% plus range annual growth. We also expect to see continued growth in our international distribution businesses with focuses on the universal product line outside of the U.S. However, growth rates are expected to be more moderate there. An area that we expect to see significant traction and acceleration is our aerodynamics-related services and software solutions business, with potential upside coming from additional data asset monetization, as well as possible new collaboration deals. There's also significant upside from a potential Univero A30-related platform partnership. We do believe that overall revenue growth from our product and service business for 2022 should be expected in a range of somewhere around 25 to 50% year-over-year. Any material strategic collaboration licensing and partnering deal, whether on the Aura side or around the Univero A30 platform, would have the potential to significantly accelerate such growth. Although timing and structuring of any such deal is not clear, And hence, revenue recognition in 2022 could range from a nominal amount to a very material additional growth in top-line revenues. We continue to make meaningful progress with the European Investment Bank, as well as several other brokers, about possible opportunities to address the company's upcoming EIB debt trench repayment of approximately $15 million in the late April 2022. In addition, the company is strategizing a longer-term plan to address the complete repayment of the EIB debt, which will have two further tranches become due in June 2023 and 2024 of approximately $4.4 million and approximately $7.4 million, respectively. Such opportunities include options that would allow us to partially repay the ERV's first tranche in cash at the maturity date and to amortize or equitize the remainder of such tranche as well as possibly the future tranches over a period of up to 12 to 24 months. These options would allow us to avoid either using all $50 million in cash from our balance sheet or having to convert a larger amount of debt into equity at this time when our stock price has been under continued pressure. We believe that these options would provide us with greater flexibility in managing our cash, address our debt repayment in a strategic and well-structured manner, and minimize dilution, as we would potentially benefit from stock price appreciation-based on some of our future milestones and achievements over the coming two years. We anticipate having further details in the coming quarter. With that, I'll turn the call back to Oliver to discuss the company's recent achievements and upcoming milestones.
spk08: Oliver? Thank you, Albert. 2022 will be a year focused on commercialization. As mentioned previously on this call, our subsidiary, Iris Genetics, has several upcoming commercial launches of services and solutions, including the launch of various ARIS-related services in the United States via our own service lab here at our option headquarters in Rockville, Maryland. We already have an experienced team as well as the laboratory infrastructure in place. We will be leveraging the experience and expertise of a team that successfully developed the ACUTUS AMR gene panel for these NGS-based services for ARIS genetics in the U.S. This commercial rollout will be coordinated by our Senior Vice President of Corporate Development and Operations for ARIS in the U.S., Dr. Teo DeVos. This launch of our own direct-to-customer services in the U.S., which we envisage by Q3 of 2022, does not preclude us from also doing further licensing and partnering deals around the ARIS portfolio of data assets, technologies, and solutions here in the U.S., as well as globally. Furthermore, we expect to continue the commercial rollout of our Univero A50 platform and products. In 2021, and year-to-date in 2022, we have successfully closed a series of multi-year commercial customer deals for the Univero products, including our UTI test, which we offer as researchers-only product ahead of the future FDA submission and clearance. A handful of these accounts since 2021 have by now developed a reliable and consistent cadence of monthly purchase orders that indicate annual test volumes of 600 to 700 plus cartridges per account, making them each an account that is around $100,000 in recurring consumables revenue to option in 2022. We have also seen selected customer accounts significantly increase their monthly ordering volumes in Q1 2022 to date. To the extent that these would consistently occur on a recurring monthly basis, Some of these individual accounts would have annual revenue potential exceeding $200,000 each. In Q1 of 2022, we have already signed additional commercial agreements, as well as additional evaluation and validation agreements for other labs and hospital accounts. While COVID and specifically the Omicron wave from November of 21 until late February of 22 has clearly slowed progress at several customer sites, we've recently seen a significant acceleration and momentum shift. Many more U.S. customers are engaging in discussions around our Univero LRT-BAL, that is the lower respiratory tract application cartridge for use with bronchoalveolar lavage samples in pneumonia patients and UTI, as well as Acutis AMR gene panel products. March 2022 has been the single most active month in driving funnel expansion and opportunity progression in the last 18 to 24 months. Our active set of funnel opportunities in the United States alone is around 60, plus individual target customer accounts at this time. Earlier this quarter, the Univero 830RQ instruments successfully completed their lifetime testing and met all verification and validation or V&V testing requirements. This is very exciting as it allows us to finalize product design and to get a first set of series-ready instruments built in 2022. We also expect to begin work on our first A30 cartridge application, a panel for invasive joint infections, or IGI, from synovial fluids, and bring the A30 platform and IGI test into its first clinical trial here in the United States later in the fourth quarter of 2022. Having the A30 ready for clinical trials, followed by an FDA submission and eventual clearance, and subsequent commercialization will also be key to any partnering and licensing conversations going forward. On that front, we have continued strategic conversations and technical as well as commercial due diligence with multiple parties. Following the latest Omicron wave of COVID, we've been able to have our first in-person meetings this month with teams from interested parties. We expect to have business development conversations with US, European, and Asian partners about the A30 platform and future curated technologies throughout the coming months and quarters in 2022. As mentioned earlier on this call, we received 510 clearance by the FDA to market the ACUTUS AMR gene panel. We're actively engaged in numerous conversations across the country about the ACUTUS AMR gene panel, and we'll continue to build out the funnel of commercial contract opportunities in 2022. And we currently have several specific multi-year commercial contract proposals under review, and these remain subject to final negotiation by potential customers, we expect to close several of these and additional ones in the coming quarters in line with our guidance pertaining to typical sales cycles being in the six to 12 month range. We previously discussed the request by the Chinese regulators at the NMPA for supplementary clinical data to be generated in China for submission and potential approval of the pneumonia cartridge and subsequent commercial launch. In the fourth quarter of 21, and year to date, we've been able to support our partner, Beijing ClearBio, or BCB, in their efforts to begin that study. They have successfully secured IRB approvals for each of the three clinical trial sites in China. The study protocol has been finalized. It includes many inputs and learnings from our successful US and European clinical studies. Because this is not a clinical study or trial that we, at Optin or Curatus, own and control, the timeline for this study is being developed by our partner BCB, their CRO, and regulatory advisors in China. We expect an initial purchase of pneumonia cartridges by BCB in the second quarter. However, the recent reemergence of COVID in China and very stringent lockdowns of multi-million metropolitan areas, including Shenzhen and Shanghai most recently, puts a caveat on any timeline, and we will simply need to see what transpires in terms of realistic timelines given the dynamic COVID situation in China at this point. On the distribution side of the international Univero A50 business, we have seen the successful regulatory clearance of all Univero A50 products and tests in Colombia. Together with our partner on RDX, an ongoing launch campaign focused on key opinion leader events has been initiated. The campaign includes on-site, face-to-face meetings with key accounts and target customers across Colombia scheduled for the second quarter of 2022. Demonstrating their continued commitment to the Univero product line and business, Menorini has recently taken over the Austrian market from our prior distributor, Axon Lab. Going forward from the middle of the first quarter of 2022, Menorini will now cover 12 European countries for us. A very helpful fact in this context has been the European Union's granting of multi-year transition period for the continued commercialization of all IBD products that have been previously CE marked despite the IBDR coming into effect in May of 2022. Therefore, we will be able to continue selling our products without any material changes from 2025 to 2026, and in addition, There will be a one-year edit for any inventory sell-off at the end of this time period. We're also planning to provide clinical trial and regulatory submission updates for Univero UTI and IGI products. We're excited to announce that enrollment for the Univero UTI diagnostic panel trial is going very well, with more than 350 patient samples enrolled already as of today. All three trial sites had first completed reproducibility testing running hundreds of Univero UTI cartridges in total. And upon successful completion of such reproducibility testing, all three sites went into enrolling clinical patient samples. We expect an interim data readout of this trial based on the first 150, approximately 50 per site or so, patient samples in the near future, really early in the second quarter. Once we have confirmed that the interim data meets our criteria and objectives, We will continue full steam ahead with full enrollment of all 1,500-plus patient samples across all three trial sites. We would expect completion of the trial, final data readout, and eventual FDA submission in the second half of 2022. We recently submitted and already received a formal reply to our FDA pre-submission meeting request for our planned Univero IJI clinical trial. Because of the COVID pandemic and more than 6,000 emergency use authorizations they have received to date, the FDA is still unable to schedule a meeting or call it this time. Nonetheless, based on our past experience with the FDA and our successful FDA clearances of three diagnostic products on two different platforms, we aim to start an IGI trial in the late fourth quarter of 2022, even in the absence of FDA feedback from such an optional precept meeting. Overall, 2022 will be a year focused on commercialization both here in the US and globally by our distribution partners. We're excited about the progress and achievements throughout the past year, which have positioned us ready for significant continued revenue growth in direct product sales, service offerings, and future strategic partnerships. We look forward to providing updates on our strategic partnership discussions and progress on our commercialization efforts throughout 2022. As always, Thank you for your unwavering support and for participating in this afternoon's call. I would now like to turn the call back to the operator for questions. Operator?
spk00: Thank you. We will now begin the question and answer session. If you have a question, please press star 1 now to be placed in the queue. Our first question comes in the line of Yi Chen with HC Wainwright. You may proceed with your question.
spk06: Hi, thank you for taking my question.
spk09: My first question is, could you comment on how many hospitals you have reached regarding the ACUDIS panel and whether there are any preliminary feedback? Thank you.
spk08: Sure. I mean, we have reached out, and I believe we commented on that in our November earnings call, to roughly 400 institutions across the United States. These were really the large academic institutions as well state-run reference labs, as well as other large, very well-equipped and sophisticated hospitals and labs across the country. Within those accounts, so roughly 400-plus number of institutions, we have reached out to well over 1,000 individuals, typically covering stakeholders from the lab to antibiotic stewardship and pharmacy to the clinician side. And, of course, I mean, we receive feedback on a daily basis. As I commented earlier, we have several dozen active funnel opportunities for the ACUTUS AMR gene panel. We have multiple agreements out there upon these conversations. So, you know, you ask me, are we where we expect it to be? Absolutely, yes. I mean, I did say very clearly at the outset, this is a six to 12 month sales cycle. We're just coming up on six months here in a week or two. So again, having multiple contract agreements out there that are currently pending final review and final agreement, I think we're in excellent shape and continue to grow the funnel.
spk09: I mean, at this point, could you give us any rough estimate regarding the volume of panels each of those accounts can possibly run on an annual basis?
spk08: Well, I believe I did in the prepared remarks. I mean, at the low end, you see, you know, let's call it 1 to 300 at the low end. The medium of the range is probably, you know, 5, 6, 700. And at the high end, you're probably looking at accounts that are doing 1,000-plus tests a year. And, again, you're looking at a product that has a list price in the United States of $170. You know, clearly with volume comes volume discounts. But, you know, again, if you look at some reasonable assumptions as to ASP, that's why I said you're looking at an annual recurring, on a full 12-month basis, annual recurring revenue stream from those accounts starting from the several tens of thousands of dollars up to maybe $150,000. Got it. Got it.
spk09: And regarding the Univero A30 platform, could you tell us what are the catalysts we should expect to see during the rest of this year, and how is this system going to be positioned on the market relative to the existing Univero system? Thank you.
spk08: In terms of positioning, it's going to be complementary because, again, as per the call today, we will be putting a new clinically differentiated system an invasive joint infection panel that we do not intend in the U.S. to bring forward on the A50 platform at this stage. So it'll have unique and differentiated content. In terms of milestones, I mean, clearly, if you look at the SA development side of things, getting the cartridge up and running and then initiating a clinical trial, and again, it'll be a multicenter clinical trial. Same guidelines apply at least three trial sites in the U.S., minimum of 1,500 patient samples to be enrolled. We have ample experience. If you remember in the past, we have run prospective multicentric preliminary studies at well over a dozen hospitals and sites across the U.S. So we have plenty of synovial fluid patient samples. We have plenty of data. It really gives us everything we need to finalize the the essay development and take it into the clinic and then you know it'll be you know initiating the clinical trial as we said late in the fourth quarter of this year and then looking at completion of that trial and data readout in 23 with submission to the FDA so again the way it's going to be co-positioned if you will is it's a differentiated panel unique to the platform very rapid turnaround time so you know again Depending on the specifics, this could be under an hour from sample in to result out in a panel of up to 33 targets on the 830 platform with quantitative capabilities where needed or just a panel that allows for qualitative decisions depending on the final specs of the product.
spk06: Okay. Thank you.
spk00: Our next question comes from the line of Ben Hainer with Alliance Global Partners. You may proceed with your question.
spk10: Good afternoon, gentlemen. Thanks for taking the questions. Just following up first on the ACUTUS contracts that have gone out, have the ones that are out there already indicated that they're ready to adopt the ACUTUS tests and you're just talking terms or what's the right way to think about that?
spk08: Yeah, I mean, the way, again, you look at the sales process here, the first stakeholders you always got to convince is the lab, the clinician, and the sort of antimicrobial stewardship folks. You would not put a commercial contract agreement out there unless you had, you know, agreed and clear buy-in from those key stakeholders. So, yeah, you're absolutely right. The way to think about these is finalization of numbers, commitment for the first year, number of tests, coming up with a per-test pricing that works for this introductory phase, as well as, and again, several of these contracts are, as I said, multi-year contracts. So it's not just getting that first foot in the door in 2022. It's really about how do you think about the instrument financing in that mix, and how do you think about pricing with volume? Again, some of these drafts that are out there have volume pricing at accounts of 1,000 tests a year. And, you know, you can imagine you're now talking about, you know, somewhere between $100,000 and $150,000 a year in recurring revenue stream from the consumables. And so, you know, you've got to make sure that the T's get crossed and the I's get dotted on the commercial side of things.
spk10: Okay. That makes sense. Like I thought, they're just about locked out, it sounds like. Got it.
spk05: And can you talk a little bit more about the REC?
spk10: collaboration with the CRO and the, you know, what does that entail, those thousand data sets you referenced? You know, is that each a collection of specimens? Is it, you know, hundreds? Is it dozens? Is it thousands within each data set? Or how does that maybe help me understand how that looks and what's going on with that collaboration?
spk08: Sure, sure. So the way to think about this collaboration is really for both parties strategically levering each other's assets. And, you know, frankly, that CRO and U.S. CLIA Lab has been a recurring repeat commercial customer for our services as well. So the way we structured this collaboration was in two phases. Phase one, and we've successfully completed that, RS Genetics conducted certain research next-gen sequencing services out of the Vienna lab, running data analyses, and provided those back to the U.S. CRO and CLIA lab. In that process, we did, because we obviously were provided specific samples and generated datasets, we've already grown the ARIS database again. And what we now have in this second phase is, at our discretion, at ARIS Genetics, to handpick at our choice up to 1,000 specific isolates, pathogens, that are complementary to our RSDB. Remember, we already have 78,000 deep-sequenced bacterial isolates in the database with phenotypic data on over 100 antibiotics. So at this stage, this is not a shotgun test. give me, you know, whatever you have. This is a very targeted, very focused approach that allows us to specifically address pathogens and isolates that are of low prevalence and therefore extremely rare with very interesting and unique AMR profiles that augment and complement and potentially fill certain, you know, I'm not going to say gaps, but like the power of any artificial intelligence-based algorithm to predict resistance or susceptibility highly depends and correlates with the N, with the number of relevant cases you have in the database. The bigger that N, the bigger that number, the more accurate the prediction becomes. We've published, to our extent, we believe the only prospective multicentric peer-reviewed study in the U.S. where we've demonstrated once you have a sufficient number of these genotype-phenotype correlations, you can train the AI to predict with accuracies that exceed 99%. But you have to get to that number. So this collaboration is a unique opportunity through the CRO to dig into their, we call it treasure trove, their biobank, and hand-pick and hand-select for Irish genetics. And we're not going to comment on which ones we're picking specifically. But again, I mean, what I will point to is some very specific combinations that we already had in the ARIS database were not exclusively sold in the fourth quarter of last year for a very attractive price point for a non-exclusive, literally a copy of the data. So, again, being able to hand-pick and hand-select will strengthen the data assets, will increase the predictive power of the ARIS AI in those models, and will make the database more valuable and more unique and differentiated. Okay, great.
spk10: That's very helpful and exactly what I was looking for. The BCB study in China, and I apologize if I missed this when you were talking about it, but did you offer a timeline on when they might complete that? It sounded like there's IRP approval in place, and then I kind of missed it, so I apologize.
spk08: I mean, look, it happens. Beyond what we said, it's really hard because we do not have control over the timeline nor the execution of this study. And the situation in China, if you literally look at the news earlier this week, you look at the news last week, whether it was Shenzhen or Shanghai, there's some massive lockdowns going on, which clearly aren't helpful in getting clarity and visibility on this timeline. Once started, once you actually get into enrolling, you can expect this study to take, you know, let's call it six months to complete, and the NMPA will then drive the review timeline. To the extent possible, we've already submitted all other data and filings to the NMPA via our partners. So hopefully, this is just going to focus on the supplementary study results. On a personal view, if this was, I think we've proven it with the Univero UTI trial here in the US, if this was our trial, I'm confident we would have started that trial in the fourth quarter of last year. But beyond advising our partners, talking to them on a daily, multiple times a week basis, and giving them guidance in our experience. It's ultimately their choice. They're running the study. They're funding the study. It's their study, their CRO, their execution. And so we've got to respect that they do it the Chinese way, and there's a limited decision discretion that we have beyond, again, enabling them to fully execute that.
spk05: Okay. That's helpful.
spk10: And then I guess lastly for me, can you talk about the equity issuance over 24 months, that option that you, how that would work? I mean, is that, you know, issue with the EIB, is that, you know, something where you'd issue a certain, you know, dollar value of shares every quarter or every month or every year?
spk08: How would that actually be structured? Sure. Again, at this point, I'm not going to speculate as to the specifics. And as Albert outlined, we have multiple different structural alternatives and options that we're actively discussing with the EIB, one of which could indeed be up to 24 months of gradual conversion of the total debt amount across all three tranches into equity over time. But there is also alternatives that we pointed to in terms of amortization. So rather than converting into equity, We could be using the various instruments available at our disposal over prolonged periods of time. If you look back over the last 12, 24 months, we've very successfully used multiple ATM facilities and then kind of amortized the debt payments, again, over an extended period of time rather than having a bullet repayment here in the second quarter of $15 million. So it's not a foregone conclusion whether we're going to equitize anything at all. But again, to delay the concerns that, well, we're not going to use, you know, option stock at this current price level and then turn around in April and, you know, equitize $15 million worth to the EIB. None of the scenarios that we're currently discussing has that sort of scenario.
spk05: Okay. Got it. That's all I had, gentlemen. Thanks for taking the questions.
spk04: Thanks, Ben. Pleasure.
spk00: Our next question comes from the line of Nidhi Singh with Edison Group. You may proceed with your question.
spk02: Thanks for taking my question. I have three questions. So first one is related to AMR gene panel. So can you give some color on the responses you have received so far? And based on that, if you could give some timelines as in how quickly you believe it can scale up after launch? Second would be, is there any further update or communication on the status of NY state projects? And third one would be, as fresh products have been discontinued now, did it have any impact on distribution network in terms of number of distributors?
spk06: Sorry, I'm not sure I caught the second.
spk08: So let's take the AMR panel, and I believe it's sort of the question that... Yi Chen asked. The response so far is exactly what we expected. With each of those accounts, you have to go through the lab, the clinician, the pharmacy and stewardship. Having multiple contracts out at this point and having dozens of live opportunities at various stages in the funnel, And again, pointing back to the six to 12-month fail cycle, that is what we expect. We're not going to be providing specific product revenue guidance for individual product lines here for 2022. But again, we are anticipating the first of these commercial opportunities to materialize in the coming weeks and months and then accelerate it from there on out. Again, the total universe of accounts that we have reached out is 400 with a total funnel across the various US accounts and product portfolio, roughly 60 opportunities at any given time. Opportunities you win and convert or opportunities that eventually are closed out and lost, you replenish and refill that funnel. In terms of fish products and distribution, Again, we discontinued the fish products. There was a network that Option had that was a legacy distributor network in Europe for only the fish products business, zero synergy with any molecular. That network of distributors was discontinued last year, basically in the first quarter, as we sunset the fish business. So there is zero impact or read-through on any of the Curata's Univero distribution network because there was zero overlap and zero impact from the fish discontinuation on the existing distribution network. Overall, of course, if you just look at share numbers, we now have fewer distributors as we terminated all of the old fish legacy ones. There was a middle question that I simply couldn't hear and couldn't quite understand, so if you can rephrase that or repeat that. Great.
spk02: Yes, yes, sure. So I just wanted to ask about any further update on New York State Department of Health project.
spk08: Yeah. But just reiterating what we told in the Q3 earnings call, that project is finished. It's completed. It ended as planned and scheduled on September 30th, 2021. And the way to think about that, to repeat what we said in the Q3 earnings call, is there is not going to be a New York State Department of Health-funded research project. That's not the intention. The way to think about this is that individual hospitals or sites within that New York State network that have already been using the Acute as AMR to be switched over to the now FDA-cleared Acute as AMR gene panel and becoming commercial routine users and clinical routine users of the FDA cleared. But their customers or accounts, just like any other, I would say it's not a far-fetched assumption that maybe a couple of the contract drafts that we have out there may very well come from that original New York State universe of sites. But again, there's not going to be a New York State Department of Health project, nor did we expect that. We specifically guided against that back in Q3. And so, again, you've got to look at individual New York State sites as well as individual 49 other state sites to become customers of the FDA clear product.
spk04: That's all the time we have today.
spk00: I will now turn the call back over to Mr. Schach for closing remarks.
spk08: Well, thank you, everyone, for joining us today. Please visit the investor section of our website or our SEC filings for updates on the company. Thank you very much, and have a great day. Thank you.
spk00: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.
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