Greetings, and welcome to the OpGen Incorporated Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Megan Paul, Investor Relations. Please go ahead..

Welcome to the OpGen’s Second Quarter 2020 Earnings Call and Business Update. At this time, all participants are in listen-only mode. Following the management’s prepared remarks, there will be a Q&A session. As a reminder, this conference call is being recorded today, August 12, 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 OpGen, including its subsidiary Curetis and Ares 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 second 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 Curetis and to implement the combined company strategy; the impact of the current 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 Acuitas 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 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, August 12, 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 Dec, 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 warmly thanking our teams at OpGen, Curetis in Germany and Ares Genetics in Vienna, Austria for demonstrating outstanding commitments, dedication and work ethic, despite the challenges we have all endured not only professionally but also personally during this pandemic.

All of us here at OpGen seek to provide world-class rapid diagnostics that help address not only the acute medical crisis of COVID-19 but also the looming crisis of ever-growing antimicrobial resistance, which kills 700,000 people globally each year.

OpGen has been able to develop industry-leading rapid diagnostic tests and bioinformatics solutions that help save lives and improve antibiotic stewardship preserving the power of antibiotics as an effective weapon in the fight against antimicrobial resistance.

The second quarter of 2020 marks the first ever quarter of operating as a combined company and our business has grown year-over-year during these challenging and unprecedented times.

We have successfully integrated our R&D projects, operations and teams allowing us to develop and commercialize industry-leading data-driven solutions in infectious disease diagnostics. As a combined business, we have what we believe is an exciting portfolio of commercial stage, FDA-cleared or soon to be cleared product in our pipeline.

A broad portfolio of CE-marked and vitro diagnostic tests that we sell via 26 distributors into 45 countries in Europe, the Middle East, Africa, Asia Pacific and China as well as Latin America.

On today’s call, we will address developments relating to the COVID-19 pandemic as the world continues to take steps towards recovery from the first wave of the pandemic and avoiding a second wave as best we can.

We’ll also review financial highlights from the second quarter and then share with you an update on our strategic initiatives and pipeline opportunities. First and foremost, I would like to address the continuation of the global COVID-19 pandemic.

While the extreme precautionary measures originally put in place are beginning to subside, it is important to pause and review how the pandemic has continued to affect our business and operations. The hospital environment continues to be very challenging.

However, some elective surgeries are now being scheduled once again and various non-COVID related clinical studies are beginning to reenroll patients’ samples in specific regions and hospitals on a case by case basis. Corresponding with healthcare professionals has also improved.

Although the focus remains managing the COVID-19 pandemic and most communication remains purely virtual, accordingly we 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 have been able to announce on the 13th of July our new strategic co-promotion partnership in the United States and indeed in North America with Menarini Silicon Biosystems to market and promote Menarini’s portfolio of COVID-19 related products such as the Healgen antibody test cassette, the CELLSEARCH system and the CELLSEARCH Circulating Endothelial Cell kit to our network of infectious disease, healthcare distribution providers and researchers.

If FDA Emergency Use Authorization is granted in the U.S., this portfolio may eventually include a laboratory real-time PCR test open for us on various PCR platforms. Upon potential future FDA Emergency Use Authorization, it may also include a fast point-of-care platform testing for COVID-19 with rapid results.

As previously mentioned, we have continued to adjust and augment our combined company product research and development efforts towards mitigating the impact of the COVID-19 crisis.

OpGen’s subsidiary, Curetis GmbH, secured access to an additional €5 million tranche in non-dilutive debt financing for COVID-19 related research and development from the European Investment Bank. Subject to certain conditions, Curetis can draw down the tranche during a nine-month period, i.e.

until early April 2021, and the tranche will have a five-year maturity from the time of drawdown and is interest-only until then with actual interest payments all deferred into the bullet repayment at maturity.

This tranche also carries an equity incentive of 0.7% PPI or percent participating interest assessed on the then prevailing market cap of option to the European Investment Bank at maturity.

OpGen, via its Curetis subsidiary, in the second quarter continued to supply rapid PCR test kits developed and CE-IVD marked by its strategic partner BGI throughout Europe.

As end customer prices have eroded significantly and transfer prices from third-party manufacturers have become less attractive, we have now developed our own proprietary PCR-based coronavirus test kit.

We’ve completed the development of a rapid one hour test that already includes our proprietary PCR-compatible Universal Lysis Buffer or PULB and we’re looking to CE-IVD mark and then offer to our network of distribution partners in Europe.

We’ll continue to provide updates when there is more clarity regarding the available regulatory pathway and potential Emergency Use Authorization and subsequent commercial launch in the United States in the near future. But at this time, no determination has been made yet whether or if so when we would seek U.S.

FDA Emergency Use Authorization for this product. Depending on the availability of PCR test kits that may already have EUA from the FDA via our Menarini partnership in North America, we may determine whether or not to seek such EUA in the U.S. for our own test kit.

Ares Genetics has also made tremendous progress during the second quarter and into this summer.

Ares completed all three phases of the R&D program for its undisclosed global IVD partner, added a second technology evaluation agreement with another undisclosed global IVD corporation, extended its collaboration with Sandoz through the end of Q2, signed up new customers such as Siemens Technology Accelerator and the Austrian Agency for Health and Food Safety as well as published strong data in collaboration with Johns Hopkins University and the Mayo Clinic.

Last quarter, we also announced an investigator-initiated collaboration with the Karolinska Institutet in Sweden to identify bacterial co-infections in patients admitted to the intensive care unit for COVID-19 pneumonia using the Unyvero HPN, or hospitalized pneumonia panel.

Curetis has provided Karolinska with additional Unyvero analyzers for increased throughput and additional HPN cartridges to enable testing for a study in which the preliminary data was recently released.

OpGen’s Unyvero HPN panel for pneumonia identified life-threatening bacterial co-infections in COVID-19 patients in just five hours, and Unyvero LRT and LRT BAL panels are FDA-cleared in the United States for rapid detection of lower respiratory tract infections such as pneumonia.

As with the European HPN pneumonia cartridge, we’re also running a COVID-19 co-infection testing campaign here in the United States with our Unyvero LRT and LRT BAL cartridges. Furthermore, performance of the Unyvero system was highlighted in several posters and abstracts in ASM Microbe 2020 online.

I’ll now turn the call over to Tim Dec, who will review financial results for the second quarter of 2020 and recent financial developments for the business.

Tim?.

Thank you, Oliver. On today's call, I will touch briefly on the highlights of the second quarter 2020 financial results. Please keep in mind that the business combination was approved on April 1st of this year. Therefore, Q2 results include the first full quarter as a combined company.

The year-to-date or six-month numbers only include three months as a combined company and all references to 2019 pertain to the option-only numbers. Any pro forma reference will be noted separately. Revenue for the second quarter of 2020 was $1.2 million, up from $1 million from a year ago.

This increase is largely due to the strong collaboration revenue from Ares Genetics as well as international sales from Curetis, offset in part by lower collaboration revenue related to the New York State collaboration agreement and lower FISH product revenue.

Total revenue for the first half of 2020 was 1.8 million compared with 2 million for the first half of 2019. As a reminder, we disclosed on our last call that Curetis and Ares revenue for Q1 2020 was approximately $1 million. Therefore, our pro forma revenue for the first half of 2020 was approximately $2.8 million.

Operating expenses for the combined company for the second quarter of 2020 were 7.7 million compared with 3.6 million in the second quarter of 2019. Operating expenses for the first half of 2020 were 12.3 million compared with 8.4 million for the first half of 2019.

Net loss for the second quarter of 2020 was 7.5 million or $0.49 per share as compared with 2.6 million or $2.94 per share in the second quarter of 2019. The net loss for the first half of 2020 was $11.4 million or $1.00 per share compared with a net loss of $6.4 million or $9.54 per share for the first half of 2019.

As we continue to navigate through the COVID-19 recovery process, we will continue to prioritize the transparency of our business, our pipeline and key financial metrics. However, at this time we will not be providing any guidance for the company. I’d like to conclude my prepared remarks by updating everybody on some positive news.

Over the last few months, we have seen an increase in our average volume in our stock with average trading volume in excess of 2 million shares per day.

We believe there are a number of reasons for the increased trading activity in our stock; such as the completion of our business combination, the announcement of the co-promotional partnership with Menarini, our efforts to battle COVID-19 with collaborators such as Menarini and via other distributor channels.

The continued execution of our Ares strategic partnering programs and corresponding news flow, and of course strengthening our balance sheet via both our ATM facility and the exercise of warrants from the October 2019 public offering.

Because of this strong support, we have raised approximately $24.2 million in the first seven plus months of this year. We may consider utilizing the expanded capacity under our ATM facility or other financing alternatives on a selective basis at the appropriate time over the coming months and quarters.

Total current shares outstanding are approximately 19.7 million shares as of June 30, 2020. We reported 12.9 million in cash. With that, I'll turn the call back to Oliver to discuss additional key milestones..

Thank you, Tim. I would now like to highlight some of OpGen’s key development programs and commercial activities. As stated on our previous call in May of this year, we have submitted the Acuitas AMR Gene Panel for isolates 510(k) to the FDA in the second quarter of 2019.

The agency had responded in July of 2019 and again in January of 2020 with extensive questions in what are called additional information request letters. OpGen has responded and is continuing to respond to the FDA’s additional information requests.

We anticipate approaching a clearance decision for the Acuitas AMR Gene Panel for isolates in the second half of 2020. The exact timing cannot be projected due to the COVID-19 pandemic and subsequent FDA delays.

As a result of the pandemic, the FDA has granted a 90-day extension to all marketing submissions and applications on hold as of June 2020, which resulted in OpGen’s original submission deadline of July 15 being extended to October 13, 2020.

Despite the FDA’s decision to extend all submissions, OpGen will continue to be prepared for speedy communications with the agency should the timeline change. Our team is fully prepared and has continued to provide the information and data required for the review process immediately upon request.

With regards to our Acuitas AMR Gene Panel for urine, clinical trials were initiated during the first quarter of 2020. We currently have nine participating sites accruing urine samples for enrollment for the Acuitas AMR Gene Panel Urine de novo.

Testing and the trial have been suspended during most of the second quarter of 2020 due to hospitals focusing resources on the COVID-19 pandemic. However, a number of sites have reinitiated enrollment at the end of the second quarter.

During the unexpected pause of this trial, we have conducted a comprehensive market survey to inform our future prioritization of programs across our portfolio of pipeline assets and platforms in various indication areas, including our bioinformatics solutions.

We expect to provide updates on any potential future changes we may make to our pipeline and prioritization of various parts of the business in due course.

Earlier in the year, we announced the completion of the final milestone during the first year of our partnership with the New York State Department of Health and ILÚM Health Solutions, now part of IDC.

We announced in the second quarter that this partnership has been expanded into a second tier to detect, track and manage antimicrobial resistant infections at healthcare institutions statewide.

In response to the COVID-19 pandemic in New York State, testing under the program was put on hold by the Wadsworth Center and participating hospitals during the second quarter with sites expecting to begin running tests again in Q3.

We will continue to update shareholders regarding the expected restart date of this program when more information is available.

Based on strong validating data published by Ares Genetics and several of its clinical partners, such as the Mayo Clinic and Johns Hopkins as well as the excellent progress made in the execution on the partnered R&D programs, we have continued to work very closely with our first undisclosed global leading IVD corporate partner in defining potential next areas of collaboration.

Ares has also added a new undisclosed global IVD company now conducting an evaluation and technical feasibility study of RSDB and recently added Siemens Technology Accelerator as customer to some of Ares bioinformatics service offerings.

Overall, we’re really excited about the upcoming milestones and inflection points in the Ares IVD R&D collaborations.

Just to remind everyone, upon completion of all three phases in our partnered R&D project, which has recently occurred, there is the potential during the next three months for our partner to exercise an option, which upon exercise would grant them a 90-day exclusive negotiation period for certain continued R&D collaboration, strategic partnering, licensing and commercial rights to the Ares database.

In closing, we’re very pleased with our results for the second quarter of 2020 and head into the third quarter with a strong foundation and a healthy financial position which has been significantly strengthened during the course of Q2 and the year-to-date.

Although our current global business environment remains uncertain, with continued investments in various strategic initiatives, we strongly believe OpGen is well positioned to meet our long-term product and profitability targets.

Our combined proprietary product portfolio and pipeline includes many exciting prospects, such as the pending FDA clearance decision of the Acuitas AMR Gene Panel for isolates in the United States, along with additional clinical trials and future regulatory milestones such as an expected Chinese regulatory approval of Unyvero and the pneumonia test once the Chinese NMPA concludes its review and ancillary Chinese clinical data becomes available.

But above all, we’re truly excited by the multiple strategic partnering and licensing opportunities around the Ares Genetics technology platform as well as the Unyvero A30 platform. As always, we appreciate your ongoing support and look forward to growing this business together. I would now like to turn the call back to the operator for questions..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. The first question is from Maxim Jacobs with Edison Group. Please go ahead..

Hi, guys. Thanks for taking my questions.

So I was just wondering on the German government investigation into the merger, just give us a sense of like what’s the worst case scenario that can happen with that investigation?.

Sure, Maxim. I’m still being in Germany, it’s kind of funny one because it is utterly political.

So theoretically the German government upon review of any M&A transaction of a non-European Union acquiror acquiring a company here in Germany has the right to review such a transaction up to five years in Ares and could hypothetically even declare a transaction null and void.

Now for that to happen as a hypothetical worst case, it would take a vote of the entire German federal government. The only time this has ever happened in history is upon a hostile acquisition by a Chinese company of a nuclear metals company. So what we would normally see is a clearance post hoc, basically stating no further concerns.

Given that this is primarily – at least that’s our understanding, primarily driven by the fact that Curetis has a franchise in COVID-19 related products, they could of course require us as option to continue providing these products on an ongoing basis also to German and European customers, which frankly is our business plan and strategy anyways, so that would be of absolutely no concern.

But that’s sort of the hypothetical scenario. We do anticipate – now Germany coming out of summer holidays, we would expect a response here over the next couple of weeks. We’ll of course update the market as soon as we have that..

Okay, great. That’s extremely helpful in putting into context. And then I was just wondering about just on the Menarini co-promotion.

Can you just give us a little more sense about just where those products fit into the market, kind of like what’s their edge, what’s the – how is it going to be marketed?.

Sure. The first thing to understand, the relationship with Menarini globally is a strategic one. They are obviously our exclusive distribution partner here in Europe across 11 key markets for our Unyvero platform. And so we recently added to that strategic partnership the U.S. and Canadian and Mexican co-marketing and co-promotion aspects.

This is for a portfolio of products. Initially, there is two products; the CELLSEARCH platform which is a Menarini Silicon Biosystems own platform for research use only that’s really looking at circulating endothelial cells which in certain complications of COVID patients may play a role that’s mostly targeting large academic centers.

And then the Healgen antibody test kit is one of only four FDA Emergency Use Authorized antibody test cassette.

It takes a simple drop of blood, results in 10 minutes and basically indicates for both IgG and IgM antibodies whether you’ve had a COVID infection either very recently or over the last several weeks or months, depending on whether it’s IgG or IgM.

Very simple to use, validated in literally tens of thousands of patient specimen, high-quality performance data. And one of the key factors and that’s also why we’re excited about the Menarini partnership, Menarini is taking care of all of the supply chain issues.

So they’re buying the product and keeping it in stock and inventory at Menarini Silicon Biosystems in the U.S., buying it from Healgen in Texas in almost unlimited quantities, literally they have access to potentially millions of tests every month. So supply chain shortage will not be an issue, performance is great, it’s FDA EUA.

And the deal that we have with Menarini is fairly simple. As we announced in our July 13 press release, it’s a co-marketing, co-promotion, so it’s not a distribution deal. At OpGen we’re not buying any product. We’re not stocking any product. We’re not actually fulfilling any orders.

We’re referring our customers or potential customers to Menarini Silicon Bio who then do all of the contracting and order fulfillment, invoicing and accounts receivable collecting and we get paid a commission on the net revenue realized by Menarini on such referral customers, which think about it from a margin profile, that commission that we get from Menarini would be pure margin as we don’t have any cost of goods..

Wonderful. That’s was extremely helpful.

And then just my last question is more of a macro question, what sense do you have on where we are in terms of the recovery of elective procedures?.

That’s a good one. First of all, it depends on the country and the geography. Here in Europe, we have seen countries, even the hard hit countries like Italy, Spain, et cetera, also here in Germany, definitely pick up. It’s probably not an extremely steep V. It’s probably more of a U shape.

That said, if we’re for example looking at orthopedic procedures in the U.S. and we’ve got some insight through one of our partners, Heraeus Medical, who are one of the leaders in orthopedic bone cement and they’ve seen a tremendous uptick again on these hip and knee replacement elective surgeries.

Again, it varies depending on where we’re heading here over the summer and into the fall with regards to a second wave and can we get that curve down. But it’s actually been surprisingly steep. Europe coming out of this summer, we are seeing also non-COVID related testing volumes and forecast by our distribution partners picking up again.

And again, U.S. hospitals seem to be opening for things other than COVID cautiously and it varies state by state, but generally good willingness and openness here in the third quarter to start our testing again..

Wonderful. Thanks again for taking my questions..

Thanks, Max..

The next question is from Ben Haynor with Alliance Global. Please go ahead..

Good afternoon, gentlemen. Thanks for taking the questions here.

Can you hear me okay?.

Perfectly..

Great.

So looking at the news you had yesterday on the AMR detection – bacterial pathogen and AMR detection workflow with NGS, my understanding is how this would work is facility runs a test in obviously their own facility, NGS takes the output, sends it over to Ares, Ares uses the AMR prediction AI program, sends the results back to the hospital or the facility, so it’s kind of bioinformatics as a service.

Am I understanding that correctly?.

So you’re right. Ares Genetics has basically both, the capability to offer exactly what you said, SaaS, software as a service, i.e. anybody who in their own facility runs the next-gen sequencing uploads a FASQ file into the Ares cloud and then basically the Ares team using the prediction algorithms will interpret the data and return the returns.

We do also have a service lab in Vienna, so we’re also receiving specimen where Ares Genetics actually performs the next-gen sequencing in the wet lab and then basically goes through the artificial intelligence powered prediction algorithms and bioinformatics. So we can do both.

For example, in our strategic R&D partnership with that large global IVD corporate, Ares Genetics actually conducted all of the wet lab work. So they were actually sent specimen and tested them.

The specific press release you referred to is indeed part of the QIAGEN collaboration where that was more of a software as a service, but they also ran – we have a full QIAGEN sample prep set up and again access to next-gen sequencing in Vienna.

So either is possible and depending on the preference of the collaboration partner, Ares is happy to offer either. Mayo Clinic, again, some of the publication that’s out there, Mayo did all of their own NGS and just uploaded the data and Ares did the data interpretation..

Okay, great. It sounds like quite the sleek solution. And I know others have looked at kind of doing something similar with AI and I looked at some of the papers referenced in – paper published on the results that you guys were able to get, and it didn’t seem like anyone was coming close in terms of the levels sensitivity, specificity.

Are you seeing anyone else out there getting close to the numbers that you’ve been able to achieve in this way that you did or the work you’ve done?.

We certainly believe that Ares has some of the best validated data out there in terms of really full clinical data, peer-reviewed and published, so definitely a head start. We also of course see a number of rather well funded next-gen sequencing players, a company like Caris doing service out of a clear lab, ID by DNA, a couple of others.

So clearly this is getting better, but I think Ares Genetics is the first – first time has been able to demonstrate that it’s not only possible to detect or predict resistance to antibiotics, i.e. AMR prediction, but really train these AI algorithms and identify a number of features sufficient to predict antibiotic susceptibility.

And if you think about it, that’s what you really want.

You want to tell the doctor at the end of the day, look, this bug given this next-gen sequencing information and all of the data we have in this curated RSDB suggest that this bug is still susceptible, therefore use drug A, B or C, and that’s also what our strategic collaboration is about really for a specific set of certain bugs with certain antibiotic drugs to look at literally thousands of data points that you curate and build into the database.

And the bigger your dataset gets for any of those bug-drug combinations, the better these prediction algorithms become. So we’re definitely excited. We believe we have a head start.

But again, it’s going to be key to continue working with partners both academic, clinical but also corporates to continue building out that database and make it better with every bug-drug combination that’s being analyzed..

Excellent. That’s great color there. And then I know it’s only been a couple days since the release and I guess we found out today that you’ve got a second undisclosed global IVD corporation that you’re working with.

Have you seen additional incoming interest now that that data is out there?.

Yes. There’s definitely great interest. Now it’s also fair to say though that the universe of large in vitro diagnostic corporations in the classical microbiology space is a finite number. So everybody who’s not currently one of the two parties also knows that it’s not them.

But yes, we’ve definitely seen and that was also what happened with the second party based on some of the early announcements with our first partnership has definitely triggered some inbound interest and we continue to keep an open dialogue.

But again, with that first partnership, we’re really at a point where all of the work – and this was completely not affected not by a single day, not one iota by COVID.

So the team in Vienna continued powering through all of that, executed it on time, delivered the final report here in July, all three phases completed which now sets this three-month clock for the potential to exercise that option. And I just want to reiterate, it is an option once exercised that gives the party 90 days of exclusive negotiation.

It’s not a first right for refusal. There is no pre-agreed commercial or economic terms. So obviously it could be a very interesting triggering point given that there is additional parties in the mix looking at the technology and doing their own feasibility work..

Okay, great. And then I guess it’s kind of becoming a guess who game of guess who it’s not just given the finite number of these guys out there I guess. And lastly for me I guess this one’s more for Tim.

I know you said you’re not going to offer guidance, but just looking at the combined company’s income statement and exempting the transaction cost that you saw in Q2, are there any special considerations that we should be thinking about to the changes in the various line items of OpEx going forward?.

Well, I think the best way to answer that question, and I’ve said this in the past, is we did file pro forma statements.

If you go back and look at the numbers for last year and compare them to the spend in this quarter and just multiply by 4 or annualized, the numbers are actually lower than the pro forma and they’re really lower for a couple of reasons.

So in not giving specific guidance, I would say if you look at the three main line items between R&D, you’ll see that the number annualized is probably about $3 million or $4 million less than it’s been the year before. We touched on that in our remarks that the reason – the clinical trials associated with urine have been put on hold.

So you can kind of do your own estimate of what those cost would be and try to see if they’d be in the back half of the year. So that’s easy to do. G&A is pretty straightforward. If you look at the pro formas before and look at what we spent this quarter, you don’t have to do much work.

And then from a sales and marketing perspective, you’ll see that the numbers were significantly higher last year and of course that makes sense in terms of where we are in terms of travel restrictions, opportunity to get in front of customers and such.

I would suggest – as I’m alluding to here, I would take a look at the filing we had and then look at what we did today or Q and you should get pretty close to the numbers..

Okay, got it. That’s very helpful. Thanks a lot for taking the questions, gentlemen. That’s all I had..

Thanks, Ben..

The next question is from Yi Chen with H.C. Wainwright. Please go ahead..

Hi. Thank you for taking my questions.

My first question is, was any part of the second quarter revenue related to COVID-19?.

Yes..

Okay..

So as I said in my remarks, we did continue to distribute BGI SARS-CoV-2 PCR kits in Europe and so that did contribute to the international revenue. If the question is, did any revenue under the Menarini partnership contribute? The answer is no because we only closed that deal on July 13, so that is not part of any Q2 numbers..

Got it.

And could you give us more color on the commercialization approach for the new rapid SARS-CoV-2 PCR task kit when it reaches – when it gets the CE-IVD mark and how is it going to be managed with the BGI product?.

So with BGI, that’s fairly simple. As I alluded to with third parties such as BGI and many others over the last couple of months on the one hand increasing their transfer prices to their distribution partners and at the same time market prices coming down substantially here in Europe for these PCR kits.

We will be replacing the BGI kits from a commercial distribution side with our own SARS-CoV-2 kit simply because the margin profile is going to be a multiple better, i.e. the COGS a lot lower than buying BGI kits. Plus, as I said, our test is a one hour time to results test kit. The BGI test kit is a roughly two and a half hour time to results kit.

So significantly faster, significantly cheaper, significantly better margins. Performance, we’ll see the data when the final verification validation data is out. We’re certainly confident that the product that we’ve developed from our essay development team is going to at least meet if not surpass performance.

But again, that data once out, we will communicate. And then once CE marked, strategically we’ll do exactly what we did with the BGI kit, namely use our European distribution network across different markets.

It can be Eastern Europe, it can be across core European markets, it can be internationally, wherever CE mark is accepted as a regulatory clearance.

So far, just to reiterate, we have not made a determination or decision whether or if so when we may also seek FDA EUA in the U.S., because again we may find ourselves in a position that under the Menarini partnership if you look at the Menarini global Web site, you will find a full portfolio of various COVID-19 related assets.

We don’t exactly know which of these will get FDA Emergency Use Authorization and when. But if and when they do, they would become available to us under the Menarini commercial co-promotion partnership. That’s also what we said in our press release back in July.

And therefore if there were a PCR kit that has already received EUA, we may prefer that over going through the whole EUA process for our own product. But to be determined. As of yet, unclear..

But I think just to follow up, Menarini uses COVID-19 PCR products.

Do they require RNA extraction or they do not?.

My understanding is that the ones they have at least that what I’ve seen here in Europe, they do, but we also believe that they have certain programs – and again, so far the ones that they have require an RNA prep. And our kit will work either with or without any RNA prep depending on what your input material is.

If you go from a dry swab, straight you can go; you pulp and go straight into the PCR.

But if you had something that’s been heavily diluted, et cetera, you could just as well use any run of the mill RNA prep kit, you’d still have the advantage of having a one hour time to results PCR as opposed to some of the ones that are on the market that are more two and half, some of them even three hours..

Got it. My last question is, the U.S. FDA has recently established a criteria for COVID-19 screening test used on population that do not have symptoms or not suspected to have COVID-19 infection. And so far I think there’s only one test who – and that’s from LabCorp who has previously been issued EUA. Now they got reissued EUA with screening purposes.

So I’m just wondering what is the EMA’s opinion on COVID-19’s screening tests for asymptomatic population and what is OpGen’s approach to that population as people return to workplaces and schools?.

When you say EMA, are you talking about the European Medical Association?.

Yes..

Well, because they’re not – technically there is no approval required by the EMA or any other governmental or super national body in Europe. We’re still in the fortunate situation that all of these products are CE marked, which basically means upon signing a declaration of conformity, it’s a self certification.

What we’re certainly seeing right now literally these days and weeks here in Germany and Europe, people coming back from summer holidays, case numbers going back up. There is tremendous pressure on testing.

Here in the local state just decided that every teacher from kindergarten through high school is entitled to having two tests done over the months of August and September. So there’s going to be tremendous pressure on getting tests done.

So there is – so far at least here in Europe, we are not seeing any restrictions in terms of certain evidence that you need to have for at least regulatory clearance. Again, the question is are you really going for screening as a screening claim or are you really thinking of it more as a diagnostic test.

And then again, if you look at our products, both the BGI kit as well as our own PCR kit, this is not aimed at these ultra-high throughput mass screening platforms, think of something like a Roche COVID’s platform or others where you’re doing tens of thousands, hundreds of thousands tests of highly automated central labs.

We’re talking about tests that run on standard real-time PCR platforms, 96 well plates. So you do 96 tests at a time minus probably two for your controls. So it’s for a moderate throughput and hundreds or maybe a few thousands of tests per instrument per lab there.

So again, if you’re looking at mass screening, there are other approaches and other platforms that are probably better suited..

Got it. Thank you very much..

Sure thing, Yi..

There are no further questions at this time. I would like to turn the floor back over to Mr. Schacht for any closing remarks..

Well, thanks everyone for joining us today and we look forward to updating you as we continue to progress the business. For more information, please visit the Investor section of our Web site or our SEC filings. And feel free to give Tim or myself a call. Thank you very much and have a great day..

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..