Opgen Inc

Welcome to the OpGen first quarter 2023 earnings call and business update. Before we turn the call over to OpGen management, please note that any forward-looking statements made during this call are based on management's current expectations and observations and are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. OpGen does not undertake any obligation to publicly update any forward-looking statement to reflect events or change circumstances after this call. For a discussion of factors that could cause results to differ, please see the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year ended December 31, 2022, and its reports on Form 10-Q and Form 8-K. Joining the call today are Oliver Schacht, OpGen's president and CEO, and Albert Weber, its CFO. Now, I would like to turn the call over to Oliver for introductory remarks.

Thank you, operator, and thank you all for taking the time to join today's call. We're pleased to have this opportunity to provide a business and financial update, and we'll follow with a Q&A session. On our last call, we discussed reaching key milestones, upcoming near-term catalysts, as well as continued commercialization initiatives. Business advancements have carried on from late 2022 into the first quarter of 2023 and year to date, and we believe OPTION is in a good position to increase revenues. We started off the year by announcing that our subsidiary curators met several key milestones in the collaboration project with the Foundation for Innovative New Diagnostics, or FIND. This achievement triggered an undisclosed milestone payment per the terms of the agreement. We're excited about our fine collaboration accomplishments and recently announced that we successfully achieved all remaining key milestones and completed the deliverables as planned. In addition, our Austrian subsidiary, Aris Genetics, announced that they were granted a key patent in China. The patent covers the identification and diagnostic use of genomic variants for the diagnosis of antibiotic resistant bacteria. We welcome the decision by the Chinese Patent Office as we believe it accentuates the strategic value of our intellectual property portfolio. We also announced that RS Genetics moved to a new Vienna location. The move is one of several milestones that will help support our further growth plans for the product and next generation sequencing or NGS service business. With recent growth in our RSDB database asset from 102,000 data sets to over 130,000 data sets in Q1 of this year alone, we believe we're well positioned to continue executing on our plans to expand and improve our menu of accurate AI models to predict antibiotic susceptibility from genomic data. I will now turn the call over to Albert Weber, Options Chief Financial Officer. He will review financial results for the first quarter of 2023 and recent financial developments. Albert?

Thank you, Oliver, and welcome to everyone on the call. I will discuss the first quarter highlights and financial results and our thoughts and guidance for the remainder of 2023. Options first quarter revenue for 2023 was approximately $913,000, an increase of approximately 94% over the company's revenue of $470,000 in the first quarter of 2022. Compared to the fourth quarter 2022 revenue of $722,000, we achieved a 26% increase in the first quarter of 2023. This increase was primarily due to the revenue generated from the fine collaboration project, Univero product sales revenue we received under our ACUTUS AMR gene panel commercial contracts, as well as ARIS-related service revenues. For the upcoming quarters in 2023, we will continue to work on generating revenue from existing commercial agreements as well as from new collaborations and customers. Looking at our operating expenses, our total operating expenses decreased in the first quarter of 2023 to $6 million compared to $6.3 million for the same quarter in 2022. Our first quarter 2023 research and development, or R&D expense, was $1.8 million compared to $2.3 million for the corresponding period of the previous year, i.e., a 22% reduction. Our first quarter 2023 general and administrative, or G&A expense, was $2.4 million compared to $2.6 million for the corresponding period of the previous year, or an 8% reduction. Our sales and marketing expenses stayed fairly consistent at approximately $1 million in the first quarter of 2023, compared to $1.1 million in the first quarter of 2022. Now turning to our cash position. We ended 2022 with approximately $7.4 million cash, and as of the end of first quarter 2023, we had a cash position of approximately $7 million. The company continues to closely monitor its cash consumption rate while also evaluating potential future financing opportunities. In January, we announced the closing of a public offering with $7.5 million of gross proceeds, and recently, on May 4, 2023, we announced the closing of another public offering with $3.5 million of gross proceeds. We have been and continue to be using proceeds from these offerings for the following. Support continued commercialization of our FDA-cleared Aqueous AMR gene panel test in the U.S. Commercialize our products with a focus on the Univaro platform and diagnostic tests. Support further development and commercialization of the IRIS genetics database and related service offerings. support direct sales and marketing efforts to the customers and collaborators for all of our products and services, invest in manufacturing and operations infrastructure to support sales of products, continue to invest in R&D for the Univero A50 and A30 platforms and products, and repay certain outstanding indebtedness of the company and its subsidiaries. As mentioned on previous earnings calls, we have met our debt repayment obligations from the first round of our EIB debt in full by April this year. There are now only two additional tranches of 3 million and 5 million euros in principle, plus accumulated and deferred interest that become due in June 2023 and June 2024 respectively. We continue to be in an active dialogue with the EIB about potential opportunities to restructure the upcoming repayments. At this time, we reiterate our guidance that we provided in our full year earnings call at the end of March for an expected net cash consumption of around $4.5 to $5 million per quarter from our operations in 2023, and an expected full year 2023 revenue range of $4 to $5 million. We continue to see revenue growth opportunities for our univaro product and our genetic services globally and especially here in the U.S. after having closed the distribution partnership for our Univero products with Fisher Healthcare as recently announced. Oliver will share some further details of this distribution partnership with you later on this call. We expect to see traction and momentum building for our Univero sales in the U.S. under this distribution partnership in the coming quarters and beyond. We have also recently signed new contracts with customers for further Univero systems placements here in the US and are making good progress in the commercial rollout of both the Univero and Acuitas products. We have also seen ARIS sequencing services now being offered in the US market as well, with repeat customer orders coming in consistently on a weekly basis during the first and into the second quarter of this year. Sample processing has quickly become routine for our local team. Taken together, our commercial funnel has proposals to customers with substantial dollar value annually, clearly indicating significant revenue growth potential for options. After we had recognized approximately $300,000 in revenue from the fund collaboration in 2022, we recognized more than $400,000 in revenue from this project in the first quarter of 2023. With the expansion of the first phase of this product and of the first phase, we anticipate recognizing another approximately $180,000 for the additional work packages in the second quarter. The teams that find and curate it have already initiated discussions on a potential follow-on project and a new contract looking at full product development of an antimicrobial resistance or AMR test for blood culture samples in low- and middle-income countries, or LMICs. This would include clinical trials, regulatory submissions, and seeing market approvals as needed for the specific LMICs, and preparing for commercial launch down the road in these countries. Also, during the first quarter of 2023, we have seen initial revenue generation from Univero system placements and pneumonia cartridge sales under our BioVersus collaboration. for their EV100 clinical trial. We expect further systems to be added as more trial sites come online and expect revenue recognition under that collaboration to continue and grow during 2023 and 2024 as their clinical trial progresses. Non-diluted financing opportunities remain a strategic priority for Aptium with multiple opportunities around Genevero, E30 and Ares already submitted and in various stages of review and further submissions for additional non-dilutive funding opportunities in preparation. We look to complement these opportunities with equity fundings that will extend our collaboration potential and allow us to partner with organizations like FIND, ARDA, European Union and other funding bodies. It is key to understand that none of these non-dilutive funding opportunities provide for full 100% funding of the respective projects. Typically, funding quotas range from somewhere in the 40% to maybe 70% or 80% ranges. It is therefore vital to ensure that options balance sheet can provide such co-fundings as otherwise non-dilutive funding would not likely materialize. This concludes the financial update. I will now turn the call back to Oliver.