Opgen Inc

Welcome to the OpGen third quarter 2021 earnings call and business update. At this time, all participants are in a 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, 2021. Before we begin, I would like to caution you that any comments made during this conference call by management may contain forward-looking statements regarding the operations of and future results of OpGen, including its subsidiaries, Curatus and Ars Genetics. I encourage you to review OpGen's 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 2021 that will be filed with the SEC, which will 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, our ability to successfully achieve the expected synergies from the company's completed business combination with Curatus 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, our ability to achieve shareholder approval on the items up for vote at the upcoming December 8, 2021 special meeting of stockholders. 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 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, November 11, 2021. The company undertakes no obligation to revise or update any statement to reflect events or circumstances after the date of this conference call, except as required by law. Joining the call today will be Oliver Shaw, President and CEO and OpGen's new CFO as of January 1, 2022. Albert Webber. We'll introduce Mr. Webber in further detail later on this call.

I now like to turn the call over to all of our shock for introductory remarks.

Thank you, operator, and thank you, everyone, for joining us this afternoon. As always, we value your continued support of option. We're very pleased with our third quarter progress and the fourth quarter to date and are well positioned for the rest of 2021 and into 2022. During this call, we will highlight recent accomplishments in our portfolio of products and provide updates on our new and existing partnerships. Option is excited by our achievements, and we believe we're poised for continued growth over the coming years. On today's call, we'd like to begin with a recap of highlights briefly mentioned on the second quarter earnings call, followed by recent updates on our product and R&D pipeline. I will then review the financial highlights from the third quarter and introduce our new CFO. We'll then wrap up the call with an outlook on the company's upcoming milestones, followed by a Q&A session. As mentioned on our previous earnings call, Curator successfully completed development and had manufactured by a third party a batch of 10 final pre-series release Univero A30 analyzers in August. The Univero A30 RQ platform is designed to deliver rapid and multiplex testing results for swabs and simple fluids in under 30 minutes. and 45 to 90 minutes for more complex native specimens. The flexible and versatile design of the cartridge technology allows the Univero A30 to address various sample license requirements, as well as testing for a wide range of DNA and RNA nucleic acid targets. Additionally, the platform is designed to allow straightforward migration of third-party assays for development and commercialization partners and licensees for their own assay menu and product portfolio. We're currently in active dialogue with several parties about licensing and partnering options, which we will continue to provide updates. All of these parties are in active due diligence on the instruments from a hardware, cartridge technology, SA flexibility, manufacturing, and software standpoint. And we have recently shipped some A30 product prototypes to some of these parties for in-depth technical discussion. In parallel, we continue to evaluate our own potential future product development programs on the Univero A30 platform. which includes rapid tests for pathogen identification for viruses, bacteria, and fungi, and a broad range of antimicrobial resistance marker panels. In September, we announced clinical data from a large investigator-initiated and driven prospective randomized controlled multicenter study using the Univero HPN panel for hospitalized patients with a suspicion of pneumonia. The study endpoint was the duration of inappropriate antibiotic therapy. which was significantly shorter in the PCR group. Univero decreased the average duration of inappropriate antibiotic therapy from 86 hours to 47 hours, in addition to reducing the usage of inappropriate antibiotic therapy by over 45%. Overall, the study concluded that the results of Univero combined with antibiotic stewardship is efficient and safe in decreasing time on inappropriate antibiotic therapy in hospitalized patients with pneumonia, at risk for gram-negative rods. Another milestone we would like to highlight is the initiation of the prospective multicenter U.S. clinical trial for options univaro urinary tract infection, or UTI, panel. It will allow testing for a broad range of pathogens as well as antimicrobial resistance markers directly from native urine specimens. The trial is expected to enroll more than 1,500 prospective patient samples, and we expect to submit data from that trial to the United States FDA for an eventual clearance and commercial launch of the Univero UTI product as a diagnostic test in the US. UTIs are amongst the most common infectious diseases. Therefore, rapid and accurate identification of the pathogens and the correct choice of antibiotics is essential. We believe that Univero UTI panel will be a valuable diagnostic tool to help treat these patient populations. As we continue into the fourth quarter, we're extremely excited about our progress in 2021. and look forward to our future milestones. We began the fourth quarter on a high note, receiving 510K clearance by the FDA to market the ACUITUS AMR gene panel. We've already initiated the commercial launch in the U.S., which I will touch on soon. As a reminder, the ACUITUS AMR gene panel allows testing for a comprehensive panel of 28 genetic AMR markers in isolated bacterial colonies from 26 different pathogens. The ACUITUS AMR gene panel expands the diagnostics capability of clinicians to test for select drugs rapidly and simultaneously in nine classes of antibiotics to aid in the identification of potentially antimicrobial-resistant organisms that might otherwise escape detection. The AMR panel can detect antibiotic resistance markers in about two and a half hours compared to one to four days with classic phenotypic methods. Prior to the FDA clearance, we had prepared the launch plan, marketing collateral, trained the sales team, and manufactured several batches of Acutis AMR kits. Therefore, once we received FDA clearance, we were immediately able to begin a major marketing and sales campaign, targeting more than 400 institutions and well over 1,000 individual key stakeholders at these institutions directly. We're actively engaged in numerous conversations across the country about the Acutis AMR gene panel. Recently, we announced and closed a $15 million registered direct offering with a single healthcare-focused institutional investors 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 have a stated value of $100 per share and are 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 has received shareholder approval to increase the number of authorized chairs of common stock of the company, which we have scheduled for a vote at the December 8th, 2021 special meeting of stockholders. The warrants have an exercise price of $2.05 per share and will become exercisable on the later of the date of shareholder approval and six months following the date of issuance and will expire five years following the initial exercise date. We intend to use the net proceeds from the offering to further work towards achieving our milestones, such as the commercial launch and rollout of Acutis AMR in the United States. Also, we plan to continue driving the commercial ramp of our Univero business in the United States and abroad in areas such as pneumonia, urinary tract infections, and other indications. To that end, we'll be able to fund clinical trials, such as the UTI FDA trial and the planned IJI trial in the U.S. as well. We also intend to bring ARIS offerings to the United States, which will require dedicated commercial and operational resources in 2022 and beyond. Lastly, the $15 million also provides us with the option to repay certain outstanding debt obligations to the European Investment Bank. Moreover, we're happy to announce that ARIS Genetics has commercially launched its ARIS Cloud web application. ARIS Cloud is a new commercial web application that fully automates data processing aimed at accelerating the analysis of sequence clinical isolates. The software not only processes the data, but also offers insights into epidemiologically and etiologically relevant information, including pathogen identity, genotype, virulence, plasmids, and antimicrobial resistance. ARIS Genetics is actively engaged in discussions with clinical expert users and is collaborating with two major U.S. hospitals already on independent studies to evaluate the platform for clinical routine use and for outbreak analysis. On the corporate front, we're thrilled to announce Options' new Chief Financial Officer, Albert Weber. Effective January 1, 2022, Mr. Weber is a corporate finance executive with more than 30 years of professional experience, 21 of which were at Epigenomics, a molecular diagnostics company with operations in both the United States and Germany. DeWeber served as their executive officer, executive board member, and executive vice president finance for the past four years. Albert has critical capital markets experience from raising hundreds of millions of dollars in capital during his career. He's been overseeing the finance, accounting, controlling, and all other corporate G&A functions and has gathered a wealth of hands-on operations experience in both the United States and Europe, as well as in China, which was a key factor in our decision to bring Albert to Optium as our CFO.