Opgen Inc

Greetings. Welcome to the OpGen Incorporated Q3 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Megan Paul, Investor Relations. You may begin.

Welcome to the OpGen third quarter 2020 earnings call and business update. At this time, all participants are in listen-only mode. Following management's prepared remarks, there will be a Q&A session. As a reminder, this conference call is being recorded today, November 11, 2020. 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 OpGens. including its subsidiary, Curitus 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 and Form 10-Q for the third quarter of 2020 that will be filed with the SEC, which identifies 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, our ability to successfully achieve the expected synergies from the company's completed business combination with Curitas and to implement the combined company strategy. The impact of the continuing global COVID-19 pandemic on our business and operations. Our use of proceeds from the at-the-market offering that we commenced in February 2020, as well as the proceeds from recent warrant exercises. pursuit of FDA clearance for the Acutis AMR gene panel for use with bacterial isolates, and for our other products and services, the rate of adoption of our products and services by hospitals and other healthcare providers in general, as well as in the current COVID-19 pandemic situation in particular, the success of our commercialization efforts and partnering strategy, the effects of 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, November 11, 2020. 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 will be Oliver Schacht, President and CEO, and Tim Deck, CFO of OpGen. I would now like to turn the call over to Oliver Schacht for introductory remarks.

Thank you, Megan, and thank you, everyone, for joining us this afternoon. I would like to start this call by recognizing the hard work and dedication put forth by the committed teams at Opgen here in the United States, as well as our Opgen Group subsidiaries, Curatus in Germany, and RS Genetics in Vienna, Austria, during this tumultuous time. During the third quarter of 2020, our business grew year over year, and we're excited to announce that we have almost entirely completed the successful integration of our businesses, including R&D efforts, operations, and global commercial as well as G&A teams integration. As a combined business, we have a very exciting portfolio of products which we believe will help us achieve strong growth towards becoming one of the industry leaders in the antimicrobial resistance and bioinformatics space. On today's call, we will be providing more details on options recently announced corporate strategy, and reprioritization efforts, including further color on the product portfolio and platform pipeline changes. We will also address developments relating to the COVID-19 pandemic and the next wave causing an uptake in cases around the world. Lastly, we will review financial highlights from the third quarter and then share with you an update on our strategic initiatives and pipeline opportunities. First and foremost, We're excited to provide further details regarding the strategic reprioritization of our product portfolio and platform pipeline going forward. This reprioritization was based on feedback from extensive market research performed by a renowned third-party market research and consulting firm. They conducted a voice of customer survey of 150 stakeholders in the decision-making on new diagnostic platforms and a significant number of key opinion leader interviews. Over the past two quarters, Following a review of insights and conclusions derived from this research, Opgen and its board have decided to focus the company's product portfolio on our proprietary Univero platform and unique bioinformatics capabilities. I'd like to walk you through some of the key impacts of this reprioritization, starting with our product portfolio, which will be centered around rapid molecular diagnostic platform offerings with an increased focus on bioinformatics solutions, including ours genetics next-generation sequencing-based and artificial intelligence powered antimicrobial resistance, or AMR, and susceptibility, AST, prediction capability. In addition to focusing on RS Genetics AMR prediction capabilities, following the successful completion of all three phases of the partnered R&D program, as announced in our Q2 earnings call, RS Genetics has recently received formal notification from its undisclosed global leading IVD corporation partner that they have exercised their option to exclusively negotiate with Aris Genetics the scope and terms of a potential worldwide exclusive license or other arrangement to Aris Genetics technology in the field of human clinical diagnostics in the coming months. It is also important to note that during this third quarter, Aris Genetics successfully completed a technology feasibility study for yet another major global IVD corporate partner who has since been duly informed of the 90-day exclusive negotiation with the other partners. following the exercise of their option as mentioned before. Furthermore, Ars Genetics has delivered first next-gen sequencing and bioinformatics analysis of several samples for Austrian Agency for Health and Food Safety, who have since followed up with a request for proposals for future commercial services that Ars could offer in the NGS space using its proprietary AI-powered bioinformatics and prediction models for AMR and AST. The reprioritization also includes a platform consolidation to realize significant operational synergies and cost savings over time. We look to expand the Univero platform and product portfolio to include complicated urinary tract infections and invasive joint infections in the United States, with clinical trials for future FDA submission and clearance anticipated to start next year in 2021. We will aim to hold so-called pre-submission meetings with the FDA on each of the two products during the first half of 2021. Similar products in both clinical indications using identical sample types have already been successfully developed and C-marked and are commercially available in Europe and other markets. Additionally, in October, we submitted our formal response to the FDA's January 2020 request for additional information for the Acuitous AMR Gene Panel for Isolates. I will discuss the anticipated timing of the FDA's final review a little later. If cleared by the FDA, Optin anticipates swift commercial launch in the U.S. in the following month. As part of the reprioritization, we will be discontinuing the legacy fish products business, including quick fish and P&A fish, by mid-2021 in Europe, the U.S., and the rest of the world, with last production lots to be manufactured in early 2021. We have informed all customers and distributors accordingly and have requested last binding purchase orders to be placed during this fourth quarter of 2020. We have also decided to discontinue the ACUITIS AMR gene panel urine clinical trial and have informed all clinical trial sites accordingly. This will help us shift our focus towards the univaro platform for the complicated UTI and IJI indications as well as potentially additional future applications. We're extremely encouraged by this new business strategy and believe this shift towards fewer platforms and more menu will create meaningful long-term shareholder value for our investors as well as stakeholder value to our partners, healthcare providers, and patients alike as we continue to strive towards establishing ourselves as one of the industry's leaders in the molecular diagnostics and bioinformatics space in antimicrobial resistance. Switching gears to the persisting global COVID-19 pandemic, While recovery efforts ensue, it is important to review how the pandemic has continued to affect options business and operations. The hospital environment continues to be very challenging. However, elective surgeries are being scheduled regularly and various non-COVID related clinical studies are beginning to re-enroll patient samples in specific regions and hospitals. Corresponding with healthcare professionals has also improved, although the focus remains managing the COVID-19 pandemic and most communications remains purely virtual. The continued very high number of new infections and hospitalizations here in the United States, as well as renewed partial lockdowns in key European markets such as Germany, France, and many others, is likely going to pose continuing challenges to the commercial distribution of our product across many key markets. Accordingly, we have started to take decisive action in reprioritizing our R&D efforts to ensure the long-term durability of our business. We continue to adjust our operations and business practices to capitalize on opportunities to help assist in the fight against the virus. With that being said, we're excited to continue working with Manarini Silicon Biosystems here in the U.S. to market and co-promote Manarini's portfolio of COVID-19-related products. If FDA emergency use authorization is granted in the U.S., this portfolio may eventually include additional relevant COVID-19-related products. Opgen, via its curated subsidiary, announced last quarter the successful completion of the development of our own proprietary PCR-based COVID-2 test kit. We're excited to announce that this rapid one-hour test that includes our proprietary PCR-compatible universal license buffer called PULP obtains CE-IBD marking in the European Union for the detection of SARS-CoV-2 in August of 2020. With the launch of our CE-Marked COVID-2 kit, we also announced the termination of distribution of the BGI kits as we have a significantly greater pricing flexibility and much-improved margin profile on our own proprietary tests, which, again, takes only about one hour to result compared to the almost three hours for the BGI test. As we continue to work with Manarini in the U.S., no decision has been made yet as to whether or if the when we might seek FDA EUA for this SARS-CoV-2 test ourselves, as the market in the U.S. already comprises a large number of EUA PCR test kits. In the first half of 2020, we have announced an investigator-initiated collaboration with the Karolinska Institute in Sweden to identify bacterial co-infections in patients admitted to the intensive care unit for COVID-19 pneumonia using the Univero HPN or hospitalized pneumonia panel. Options Univero HPN panel for pneumonia identifies life-threatening bacterial co-infections in COVID-19 patients in just five hours. and Univero LRT and LRT-BAL panels are FDA cleared here in the U.S. for the rapid detection of lower respiratory tract infections such as pneumonia. It is our pleasure to report that this study has been successfully completed and data on the Univero HPN panel was presented by the Karolinska investigators at ECVIT 2020. The study demonstrated reliable performance and potentially high clinical utility of the Univero HPN panel as a rapid rule-out diagnostic tool based on its high negative predictive value of 99.8% observed in this study. The average turnaround time for a final culture result was 68 hours, during which patients continued to receive empiric antibiotics, while the Univero HPN panel reduced turnaround times from days to less than five hours. We believe such rapid and accurate detection is essential to assess bacterial pneumonia co-infections and critically ill COVID-19 patients. The study investigators concluded, quote, that the univaro HPN panel is a useful diagnostic tool to help with the early detection of lower respiratory tract infections and antimicrobial stewardship. And in patients suspected with AMR, the panel can be beneficial for escalation or de-escalation of antibiotics. Additionally, Optin announced the publication of two notable peer-reviewed studies, the first being a publication that demonstrated the clinical utility of the Univero LRT panel and its potential impact on antibiotic use in hospitalized patients with suspected pneumonia compared to treatment directed based on microbiological culture results only. Additionally, Optin's subsidiary, Ars Genetics, in collaboration with researchers from the Johns Hopkins University School of Medicine, also announced the publishing of a peer-reviewed study on modifiable risk factors for the emergence of Staphylozane Tazobactin resistance, or by its trade name, also known as Zervaxa, in Pseudomonas aeruginosa, in the Journal of Clinical Infectious Diseases. Along with peer-reviewed studies came awards. Options subsidiary Ars Genetics won the Austrian National Digitization Award and was also nominated for the 40th Austrian Innovation Award for its Artificial Intelligence-Powered next-generation sequencing-based molecular antibiotic susceptibility test marketed under the brand name RSUPA, universal pathogenome assay. In addition to pipeline updates and awards, Optum was awarded two grants during the third quarter, which will contribute to non-dilutive German government funding towards some of our R&D programs. With our Univero A30 platform, we recently announced the award of a German federal government grant to our subsidiary, Curatus, and collaborators Karpagen, Münster in Germany, and the Clinic for Small Animal Internal Medicine of the Ludwig-Maximilians University in Munich, Germany. The project will focus on travel-related and enteric diseases in small animals, which is an area of growing concern with increasing incidence rates. Several of these diseases are caused by potential zoonotic pathogens that could also be passed to humans. While looking at veterinary applications, one might also help prevent human diseases in the future. OpGyn also issued a press release regarding the award of a German federal government grant to its subsidiary creators and collaborators at the research campus InfectiGnostics. The project is coordinated by Jena University Hospital and designed to use artificial intelligence-based assay development for carbapenem resistance based on porin loss and efflux pump overexpression in gram-negative bacteria. I will now turn the call over to our Chief Financial Officer, Tim Deck, to review financial results for the third quarter 2020 and recent financial developments for the business. Tim?