Welcome to the OpGen First Quarter 2023 Earnings Call and Business Update.

Before we turn the call over to OpGen’s 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 obligations to update publicly any forward-looking statements to reflect events or changed 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 are pleased to have this opportunity to provide a business and financial update and will 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 OpGen is in a good position to increase revenues. We started off the year by announcing that our subsidiary, Curetis met several key milestones in the collaboration project with a 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 FIND collaboration accomplishments and recently announced that we successfully achieved all remaining key milestones and completed the deliverables as planned.

In addition, our Austrian subsidiary, Ares 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 Ares 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 are well positioned to continue executing on our plans to expand and improve our menu of accurate AI models to predict antibiotic susceptibility from genomic.

I will now turn the call over to Albert Weber, OpGen’s Chief Financial Officer.

He will review financial results for the first quarter of 2023 and recent financial developments, Albert?.

Support continued commercialization of the FDA-cleared Acuitas AMR Gene Panel test in the U.S., commercialize our products with a focus on the Unyvero platform and diagnostic tests, support further development and commercialization of the Ares Genetics database and related service offerings, support direct sales and marketing efforts to the customers and collaborators for our products and services, invest in manufacturing and operations infrastructure to support sales of our products, continue to invest in R&D for the Unyvero A50 and A30 platforms and products, and the 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 tranche of our EIB debt pool by April this year. There are now only two additional tranches of €3 million, and €5 million 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 million to $5 million per quarter from our operations in 2023 and an expected full year 2023 revenue range of $4 million to $5 million.

We continue to see revenue growth opportunities for our Unyvero products and our genetic services globally, and especially here in the U.S. after having closed the distribution partnership for our Unyvero products with Fisher Healthcare as recently enough.

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 Unyvero universal 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 Unyvero Systems placements here in the U.S. and are making good progress in the commercial rollout of both the Unyvero and Acuitas products. We have also seen Ares Sequencing Services now being offered in the U.S.

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 OpGen.

After we had recognized approximately $300,000 in revenue from the FIND 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 at FIND and Curetis has 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 seeking 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 Unyvero System placements, and pneumonia cartridge sales under our BioVersys collaboration for their BV100 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-dilutive financing opportunities remain a strategic priority for option with multiple opportunities around Unyvero A30 and Ares already submitted and in a various – hello? I continue, sorry. Non-dilutive financing opportunities remain strategic priorities for OpGen....

Operator, can you check if his line has dropped?.

Hello? Can you hear me? Hello?.

We can hear you, Albert..

Okay. Then I'll continue. Oliver? Non-diluted financing opportunities remain a strategic priority for OpGen with multiple opportunities around Unyvero A30 and Ares already submitted in various stages of review and further submissions for additional non-dilutive funding opportunities in preparation.

We look to complement these opportunities with equity funding's that will extend our collaboration potential and allow us to partner with organizations like FIND, BARDA, 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 14% to maybe 70% or 80% ranges. It is therefore vital to ensure that OpGen's balance sheet can provide such co-funding's as otherwise non-dilutive funding would not likely materialize. This concludes the financial update. I will now turn the call back to Oliver..

Thanks Albert. Before we turn to the Q&A, I would like to highlight our progress so far in the second quarter of 2023. OpGen recently completed two interim milestones as part of Curetis collaboration project with InfectoGnostics under the PREPLEX brand.

During this project, novel markers were identified two of which are pathogens of concern on the World Health Organization's list. These markers were also confirmed and validated using our proprietary RSDB database.

This success could allow for additional collaborative work being conducted under the PREPLEX project, which could provide additional funding of a few hundred thousand dollars in the coming years. We signed a short-term expansion of our R&D collaboration with FIND, which originally started in the fall of 2022.

Work already completed under the collaboration will be expanded by three work packages, increasing total project volume to up to about $913,000 in revenue. In April, we submitted a De Novo classification request to the FDA, seeking marketing authorization for our Unyvero UTI panel following the successful completion of our clinical trial.

This marks a major milestones and we're looking forward to working closely with the FDA during the interactive review for the Unyvero UTI panel, which we hope will become the first high multiplex molecular diagnostic test for urine samples granted by the FDA.

The FDA has recently sent confirmation already that the submission is complete and that they have initiated their substantive review. We were pleased to learn that the lead reviewer on the Unyvero UTI submission will be the same lead reviewer who had worked closely with OpGen on the Acuitas AMR Gene Panel submission and eventual FDA clearance.

Also in April, we announced that OpGen has entered into a non-exclusive distribution agreement with Fisher Healthcare, a part of Thermo Fisher Scientific.

The agreement is for the distribution of OpGen's Unyvero A50 platform and in vitro diagnostic tests for bacterial pneumonia as well as its currently research use-only test for urinary tract infection, which we expect to become FDA-cleared in the future.

We're very excited about the strategic distribution partnership with Fisher as we believe it will increase our Unyvero A50 platform, commercial presence and footprint across the U.S. due to Fisher's strong position in the relevant markets.

We view this expansion in our commercial channel strategy as the next step towards driving commercial adoption of Unyvero in the U.S. and achieving our revenue growth objectives in the coming years.

Since Fisher Healthcare has existing contracts with many of the relevant target accounts already, we believe that there is a potential for the sales cycle to be shortened and the hospital onboarding process to be streamlined. Our momentum during the first quarter has carried over to the second quarter of this year.

In April alone, we've announced several key achievements for the business.

A few other milestones to look out for include, but we teamed up with a strategic advisory firm to support a Unyvero A30 specific corporate business development campaign in China, where we believe there is an attractive opportunity to partner with and possibly license or otherwise monetize the A30 platform.

After completion of their due diligence on our platform, they are now launching the strategic outreach to a target list of identified Chinese corporate partners that might be interested in a strategic deal around the Unyvero A30 platform for China.

We continue our weekly contact with our existing Chinese partners for the A50 platform, including upcoming in-person meetings in both Germany and in China during the month of May, and they are prepared to move forward with their clinical studies and work towards a final submission for review by the National Medical Products Administration or NMPA.

We expect the overall process to obtain clearance from the NMPA to take somewhere around 24 to 30 months per guidance from Chinese regulatory advisers to our partner. We believe OpGen's near-term catalysts and milestones, along with the continued commercialization of our existing approved product, sets OpGen on a path to increase revenues.

We look forward to updating everyone on our developments. Thank you for your continued support and for participating in this afternoon's call. I would now like to turn the call back to the operator for questions..

Thank you. [Operator Instructions] Our first question comes Pooya Hemami with Edison Group. Please proceed with your question..

Yes. Hello and thank you very much for taking my questions. First of all, we saw a bit of a strategic shift from self-commercialization to out-licensing with the recent announced non-exclusive distribution agreement with Thermo Fisher.

Is it possible to walk us through the change and also maybe explain some of the potential upside from the strategy?.

Sure. Thanks for that question. Well, just to clarify this was not an out-licensing deal. All of our distribution partnership deals are classic distribution deals. i.e., we at OpGen sell our products at an agreed-upon transfer price to the distributor, who in turn sells to products to the end customers.

This decision was mainly driven by the desire to significantly broaden and deepen our footprint of commercial feet on the street from coast to coast here in the U.S. and to add an indirect distribution channel alongside and in addition to our own internal sales and marketing efforts.

We see absolutely no downside here in the upside is obviously faster and broader penetration of the relevant market segments for our Unyvero products here in the U.S..

Well, thank you. Thank you for that clarification. It was also good to hear about the expansion of the FIND R&D collaboration and the good results reported so far.

Can you help just give us some color on what are the next steps that we can expect over the next few quarters or so?.

Sure, sure. Indeed, I mean, the added work packages allow us to continue the collaboration, and as we said, would generate up to $180,000 in revenue in the second quarter. While in parallel, we have an ongoing discussion about the next phase of a potential new contractual relationship and a development partnership.

You remember the first phase was really a feasibility phase. We've recently met with the team from FIND at our Curetis facilities in Germany and discussed progress as well as the remaining work packages and discussed the path forward in terms of projects, the different phases, time lines and potential scope.

We shared our thoughts with the FIND team and expect the dialogue about this potential next stages to continue throughout this quarter in the coming weeks..

Okay. Thank you very much for that. And you had mentioned in your prepared remarks a bit about the China opportunity.

Can you maybe just give us a bit more clarification on when we should expect clinical trials in China for Unyvero?.

Well, all I can say at this point is that we do have a team of three clinical and operations experts from OpGen in China at this very moment. They will be meeting with our partners at Beijing Clear as well as meet at site or on-site with several of the clinical trial sites in China in person over the coming days and weeks.

This is the first time since COVID started in 2020 that this has actually been possible. Also, we have the CEO and Senior Delegation from Beijing Clear visit our Curetis' offices and manufacturing facility in Germany later this week.

I'm sure these discussions will center around the next steps and what may become possible here in the coming weeks and months in terms of getting that clinical study initiated. We'll provide an update as soon as there are facts that can be communicated.

But the excellent news here really is that for the first time in over three years, we're meeting our partners face-to-face in both China and in Germany during the month of May, which is – the way I look at this, that's huge progress from where we all come from..

Well, thank you very much, and congratulations on the quarter..

Thank you. Appreciate it..

Thank you. Our next question comes from Yi Chen with H.C. Wainwright. Please proceed with your question..

Hi. Thank you for taking my questions.

My first question is; could you discuss your expectations regarding the FDA review time frame for the UTI Panel? And when do you think it could possibly secure the marketing clearance?.

Great. Thanks, Yi. Now from – again, I mean, obviously, all we have to go on is sort of the formal process. We would typically expect the FDA to get back to us within 90 days with substantive review and feedback. Normally, that would take the form of what’s typically called an AI letter or additional information request letter.

Once we get that, we’re going to have a much clearer picture on the types of topics that the FDA wants to focus on. I mean from previous de novo 510(k)s, this whole process of interactive review can certainly take anywhere from nine to twelve or even fifteen months.

So I would carefully look at this right now and say it’s probably going to be a 2024 clearance decision. But again, we’re going to have a much clearer picture once we get that first formal response here over the coming weeks. Again, the good news is that the lady that we’re going to be working with as lead reviewer, she is a known entity to us.

And we worked very, very closely with her and the team during the whole Acuitas process. So, hopefully, there is a mutual and good open communication channel, which, again, that is really turning things around quickly as they come from the agency back to us is going to be the name of the game.

And the team is standing by to respond to any question as quickly as possible to drive this on as short a time line as feasible..

Got it.

And to market the UTI Panel once it secures the marketing clearance, does OpGen need to increase your own sales team? Or you will just rely on the partnership with Fisher Healthcare?.

Good question. So first of all, we’re not going to wait to commercialize UTI. We’re already commercializing UTI today as a research use only. And we actually have a growing universe of lab customers that are using the UTI Panel.

I would venture that one of the healing products in the portfolio to Thermo Fisher clearly was the UTI Panel given that they actually have an active franchise in urinary tract infections with an open PCR platform and sort of standard PCR kits. So, to them having a sample-to-answer cartridge-based kit was key.

We do not anticipate growing our own internal sales and marketing organization from here on out in the U.S.

So, clearly, our focus is going to be to use our expert sales and marketing folks in leveraging what is an organization that is more than 20 times the size of our whole commercial team in the U.S., literally coast to coast, and these are anything from generalist sales in the molecular diagnostics to government accounts, to strategic accounts, to instrument specialists.

So, there’s a whole series of teams that we’re going to be working with on the Fisher side.

So, we would look to them to really be the bulk of the feet on the Street and help them with, obviously, technical expertise, clinical expertise, the deep domain knowledge around the Unyvero platform and products, but really have the selling and also the contracting of end customer accounts be primarily driven going forward by Thermo Fisher..

Got it.

And lastly, could you discuss how many new customers has got onboard for the Acuitas AMR Gene Panel? And what would be your expectation for 2023 in terms of new customers?.

We’re not providing any specific numbers of individual customers. As I said, we’ve got the first couple of commercial accounts on the Acuitas. I would anticipate us to grow that list.

But the primary focus for 2023 will be to drive the Unyvero installed base and adoption through the Thermo Fisher relationship because, again, that’s the platform sample to answer. That’s going to be our primary focus.

So, while we continue to add individual accounts on the Acuitas side, we’re going to look at a much broader rollout on the Unyvero side..

Got it. Thank you..

Thank you. That is all the time we have today. I will now turn the call back to Oliver for closing remarks..

Well, thank you, everyone, for joining us today. Please visit the Investors section of our website or our SEC filings for updates on the company. Thank you very much..

Thank you. And with that, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..