Kim Sutton Golodetz - Senior Vice President/Principal, LHA Investor Relations Evan Jones - Chairman and Chief Executive Officer Timothy Dec - Chief Financial Officer.

Bob Wasserman - Dawson James Securities Inc..

Welcome to the OpGen Third Quarter 2017 Conference Call. At this time all participants are in a listen-only mode. Following management’s prepared remarks, we’ll hold a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded, November 7, 2017. I would like to turn the conference over to Kim Golodetz. Please go ahead, ma’am..

Thank you, operator. This is Kim Golodetz with LHA. Thank you all for participating in today’s call. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of OpGen Inc.

I encourage you to review the company’s filings with the Securities and Exchange Commission, including, without limitation, the company’s Forms 10-K and 10-Q, which 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, timely and cost effectively develop, seek and obtain regulatory clearance for and commercialize our products and services offerings, the rate of adoption of our products and services by hospital and other healthcare providers, the success of our commercialization efforts, the effect on our business of existing and new regulatory requirements and other economic and competitive factors.

The content of this conference call contains time-sensitive information that is accurate only as of the date of the live call, today, November 7, 2017. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

I would now like to turn the call over to Evan Jones, OpGen’s Chairman and CEO.

Evan?.

Thank you, Kim, and thank you for joining us today. This afternoon, we will review our third quarter 2017 financial results and provide an update on our business plans and progress towards achieving key operational objectives.

During the third quarter and in recent weeks, we continue to achieve important corporate milestones and the development of our Acuitas Gene Tests and Informatics for multidrug-resistant organisms.

We achieved development of our first Acuitas AMR Gene Panel, the u5.47 test, and the Acuitas Lighthouse Knowledgebase, and we are planning to begin clinical validation studies during the fourth quarter of 2017.

Consistent with our corporate initiative to obtain third-party funding for priority development programs, we were awarded a one-year $860,000 contract from the Centers for Disease Control and Prevention, the CDC, to develop smartphone-based clinical decision support solutions for antimicrobial stewardship, or AMS, and infection control in low and middle income countries.

During the quarter, we made solid progress in our efforts to strengthen our balance sheet and to reduce operating expenses to extend our cash runway. In July, we completed a public offering for $10 million of gross proceeds with $8.8 million of net proceeds to the company.

In early June, we took steps to reduce OpGen’s cost structure with a goal of achieving reduced operating expenses in the 25% to 30% range in the second-half of 2017. The results of this initiative were apparent in our third quarter financial results.

We achieved a 29% reduction in operating expenses compared with the third quarter of 2016, a reduction of $1.6 million during the quarter. The results of our cost saving initiative and the progress we are making with our core business position, position OpGen to have a successful completion to fiscal 2017.

I will now turn the call over to Tim Dec, our Chief Financial Officer, who will provide a brief summary of our third quarter and year-to-date results.

Tim?.

research and development expenses of $5.4 million, compared with $6.3 million; general administrative expenses again were flat at $5.3 million, compared with $5 million; sales and marketing expenses of $2.3 million compared with $4.3 million.

This decrease was due to a lower cost associated with our sales and marketing team and the completion of the Intermountain Healthcare Retrospective Study in 2016. The net loss attributable to common stockholders for the first nine months of 2017 was $12.5 million, or $0.37 per share.

This compares with the net loss attributable to common stockholders for the nine months ended September 30, 2016, a $14.7 million, or $0.92 per share. Turning to the balance sheet. The company had cash and cash equivalents of $4.9 million as of September 30, 2017.

As Evan mentioned earlier, in early June of this year, we commenced the strategic realignment of our operations to improve efficiency and reduce our cost structure. On our last call on August, we said we were expecting a 25% to 30% reduction on our operating expense in the second-half of this year.

Operating expenses for the third quarter of 2017 were $3.9 million, as compared to $4.9 million for the second quarter of 2017, where a 20% reduction on a sequential quarter basis. Comparing this quarter that of last year, we reported $1.6 million reduction in operating expenses, or a 29% reduction.

The actions taken in June of this year to reduce our operating expense clearly has had an immediate impact on our cash burn, reducing our adjusted EBITDA loss from roughly $4.4 million a quarter in 2016 to roughly $2.6 million in the third quarter of this year.

We achieved this reduction while maintaining our quarterly revenue from our QuickFISH product line, as well as continuing to invest strategically in our R&D initiatives. In July, we closed a public offering raising gross proceeds of approximately $10 million and net proceeds of $8.8 million.

Each units sold included one share of common stock and one warrant to purchase one share of common stock. Those warrants have a five-year term from the date of issuance. Proceeds for the warrants, if exercised, could be as much as $10.6 million.

We also still have $3.1 million of capacity under our ATM, with Cowen and Company serving as our sales agent. As Evan mentioned, we received a contract from CDC for $860,000. These funds will be paid upon the achievement of certain milestones over the next four quarter, beginning with the fourth quarter of this year.

During the quarter, we narrowed our net loss by more than $1.6 million from the same quarter of 2016. We believe you will continue to see our quarterly net loss and cash burn reduce as we work through the balance of the year. On our last call, I mentioned we’re in the process of consolidating our operations in Gaithersburg, Maryland.

We expect that consolidation will be complete in the first quarter of 2018. We have made a great deal of progress this year and we are very optimistic for continued improvements in Q4 and beyond. As mentioned during our previous calls, we’re very mindful of our expenses and cash burn.

However, we will judiciously invest in our future growth through target research and development critical to our success. With that, I will turn the call back to Evan..

finalization of the initial Acuitas Lighthouse Knowledgebase antibiotic resistance prediction algorithms and initiation of clinical validation studies for the Acuitas AMR gene panel u5.47 at major academic medical centers and health systems; completion of analytical validation studies for the AMR gene panel to allow commercial release in Q1 2018 and FDA clinical trials during 2018; entering into additional supply and cooperation agreements in support of the new Acuitas product family and development; completion of the first program milestones with our collaboration partners and the CDC contract for development of smartphone-based clinical decision support solutions for AMS and infection control low and middle income countries; and continuation of ongoing cost reduction efforts and overall cash burn rate to help provide extended operating cash runway.

Additional priorities as we enter 2018 include entering into development and commercialization partners with larger in vitro diagnostic companies, healthcare providers and working to continue to expand our base of third-party development funding.

All of us at OpGen are committed to building a world-class company that will play an important role in the fight against drug resistant infections. We’ve made significant investments over the last several years in pursuit of this vision. And we believe that in 2018, the results of these investments should begin to bear fruit.

We appreciate your support and we look forward to realizing our potential as a company in 2018 and beyond. Thank you for your time this afternoon. We are now ready for questions.

Operator?.

[Operator Instructions] And our first question comes from Yi Chen at H.C. Wainwright..

Hi there. This is Mitchell [ph] on for Yi. Thank you for taking our questions.

For the research use only test being released in the first quarter of 2018, who were your customers, and what is the expected revenue that that panel is suppose to generate in 2018?.

Mitchell, thanks for joining and thanks for the question. Our customers will be a range of sites, including institutions that are doing genotyping for clinical trials and evaluation of infection control metrics and also selected clinical sites.

But I would caution that there are very strict regulations as to how people can use that test while it’s in the research use space. And so we will have to be very careful to monitor compliance, and that’s why gaining the FDA approval is such a critical target for us..

Okay.

And is there any kind of guidance you can provide on the revenue for that panel in 2018?.

Not at this point, no..

Okay.

And when we generate revenue for the AMR Gene Panel?.

To be clear, they are envisioned to be the same product. The branding on that product, we call it, the AMR Gene Panel u5.47. And the U indicates urine sample, 5 indicates five pathogens, where we will provide semiquantitation, and the 47 is for 47 resistance genes. So we will begin making that product available for research use.

There is genuine appetite for that product that we’ve seen to date, and then we will follow likely to gain approval with the same content..

Okay, great. Thank you for that.

And so my last one here is, what are the expected operating expenses that we can expect for the next couple of quarters?.

Yes, this is Tim. In terms of the operating expenses, if you take a look at what’s happened in this particular quarter, you can see how significantly they’ve been down from the historical levels, at least, through 2016 and into 2017. So I would expect to see those levels are to a degree even maybe 10% less across the board..

Okay, great. I really appreciate it, guys. Thank you so much..

Thank you..

Thank you..

And our next question comes from Bob Wasserman from Dawson James..

Hi, Evan. Hi, Jim. Congratulations on the accomplishments and thanks for taking my questions. It’s a little bit related to what you’ve just answered. But with the AMR Gene Panel coming, at least, partially alignment in the first quarter, how do you see the – your – and you’ve been able – done a good job reducing expenses.

Do you see those expenses bouncing back next year, early in the year, or really more later in the year if you get FDA approval?.

Bob, thanks for the question. Let me start on this and then if Tim can provide more color, he will chime in afterwards..

Okay..

In our cost reductions that we did in June, a lot of the target there was to cut back on our sales and marketing expense pending FDA clearance for our product. And so we will time the investments to build back up our sales and marketing organization to be aligned with the FDA clearance..

Okay..

However, there are also some interesting opportunities we’re looking at that could develop in 2018, and if they do, they’ll result in some modest increases to sales and marketing..

Yes, I don’t think I have much to add to that other than what Evan has touched on. We are really kind of stay close to invest with our cost structure. And as we see the revenue line move and we will pull the trigger on spending..

Okay. Would those opportunities relate to some type of partnership, either U.S.

or overseas?.

They relate to pharmaceutical testing projects for our new drugs and also the project we are doing with the CDC for the new software. We anticipate that that product will be commercially available in the back-half of 2018. And so that’s a new potential revenue stream and there would be an introduction associated with that..

Okay. Well, thanks. Thank you, again, for taking my questions..

Thank you..

Okay, Bob..

[Operator Instructions] And at this time, there are further questions in queue..

Then with that, I will thank all of you for joining this afternoon. For those of you heading to San Francisco for the JPMorgan Healthcare Conference, we will be holding one-on-one meetings across the street from the conference hotel and the dates are January 8 and 10, and please contact LHA if you would like to schedule a meeting.

Thank you very much..

Thank you..

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines..