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2020 results

OpGen 6 April 2021 Update
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OpGen

2020 results

Financial update

Pharma & biotech

6 April 2021

Price

US$2.8

Market cap

US$107m

Net cash ($m) at 31 March 2021 (estimated)

19.9

Shares in issue

38.3m

Free float

61.2%

Code

OPGN

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

42.9

23.9

12.9

Rel (local)

34.6

13.2

(31.1)

52-week high/low

US$3.6

US$1.7

Business description

OpGen is a diagnostic company focused on revolutionizing the identification and treatment of bacterial infections. Following the merger with Curetis, the company has technology to detect pathogens and predict resistance. Importantly, both the AMR Gene Panel and Unyvero platforms have the ability to provide results in hours instead of days like current methods require.

Next events

Acuitas Gene Panel (isolates) 510(k) clearance

2021

NMPA approval for pneumonia

2021

Analysts

Maxim Jacobs

+1 646 653 7027

Nathaniel Calloway

+1 646 653 7036

OpGen is a research client of Edison Investment Research Limited

OpGen reported 2020 sales of $4.2m, up 20% compared to the $3.5m in sales in 2019, with growth mainly due to the merger with Curetis. We expect the company to be able to build on this level with the help of the future 510(k) clearance of its Acuitas AMR Gene Panel test in bacterial isolates as well as potential approvals for the Unyvero platform in China and Colombia. To maintain the momentum, OpGen plans to initiate a clinical trial program for complicated urinary tract infections (cUTI) and invasive joint infections (IJI) with the Unyvero platform in H221.

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/19

3.5

(11.9)

(7.38)

0.0

N/A

N/A

12/20

4.2

(25.3)

(1.57)

0.0

N/A

N/A

12/21e

10.5

(25.6)

(0.65)

0.0

N/A

N/A

12/22e

26.4

(16.8)

(0.42)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortization of acquired intangibles, exceptional items and share-based payments.

Bacterial isolates 510(k) clearance review resumed

The FDA has resumed the review of the 510(k) submission for the Acuitas AMR Gene Panel test in bacterial isolates, which had been put on hold due to COVID-19. OpGen believes it has addressed all the remaining requests of the FDA, though the exact timing of a clearance is unknown as the FDA is still capacity constrained due to the large number of emergency use authorizations related to the pandemic.

Moving closer to a Chinese launch

In March, OpGen announced that the Chinese National Medical Products Administration (NMPA) approved the Unyvero instrument system for use in China. Next up would be an approval for the Unyvero A50 pneumonia cartridge, which is necessary for a product launch. As a reminder, OpGen partner Beijing Clear Biotech has significant minimum purchase requirements over the eight-year deal, totaling €150m in revenue to OpGen over that period.

Approval in Colombia expected in H221

In January, OpGen announced a distribution agreement with Annar Health Technologies for Colombia. Annar is responsible for product registration, which is expected to complete in H221. Annar has agreed to purchase a minimum of 10 Unyvero systems over the three-year term following approval.

Valuation: $103m or $2.68 per share

We have adjusted our valuation to $103m or $2.68 per basic share, from $59m or $2.93 per share, previously. The total valuation increase is due to higher net cash and rolling forward our NPV, while the per share value decreased due to a higher number of shares outstanding. The company had $13.4m in gross cash at the end of 2020 and added an additional $23.4m in net proceeds through a private placement in February and $9.65m in gross proceeds through warrant exercises in March. The company expects to have $40m in gross cash at the end of Q121.

Partnerships are key to success

OpGen has some significant partnerships in place that can significantly affect the adoption of its diagnostic systems. OpGen is partnered in China with Beijing Clear Biotech (BCB), which has agreed to minimum purchase levels of 360 Unyvero A50 systems as well as over 1.5m Unyvero cartridges over the duration of the agreement following regulatory clearance by the NMPA. Based upon previously agreed transfer price levels, this volume equates to €60m in cumulative revenues from China over the first five years for OpGen and then €30m annually over the following three years (note that these are minimum purchase levels and actual revenues could be higher). In March, OpGen announced that the NMPA approved the Unyvero instrument system for use in China. Next up would be an approval for the Unyvero A50 pneumonia cartridge, which is necessary for a product launch. Precise timelines are unknown, but the partners continue to interact closely with the Chinese regulatory agency.

In January, OpGen announced a distribution agreement with Annar Health Technologies for Colombia. Annar is responsible for product registration, which is expected to complete in H221. Annar has agreed to purchase a minimum of 10 Unyvero systems over the three-year term following approval. The dollar value of these minimum purchases was not disclosed but the company estimated on its 2020 results conference call that typical revenue per instrument system per year can range from ‘high five figures’ to ‘low six figures’. So once the instruments are fully in place and utilized, OpGen could see revenue of approximately $1m per year from the Annar partnership based on these estimates.

The company is also currently negotiating with the New York State Department of Health to extend its participation in the New York State Infectious Disease Digital Health Initiative, which is currently scheduled to end on 31 March 2021 (the current agreement has a one-year term). The company is confident that the agreement will be extended and expanded at attractive commercial terms. So far four testing centers that serve 30 hospitals in New York State are running Acuitas AMR Gene Panel tests and the company has seen a ramp up in test volumes in Q420 and Q121.

OpGen continues to seek additional partnerships, including for its subsidiary Ares Genetics as well as for the next generation Unyvero A30 platform.

Valuation

We have adjusted our valuation to $103m or $2.68 per basic share, from $59m or $2.93 per share. The total valuation increase is due to higher net cash and rolling forward our NPV, while the per share value decreased due to a higher number of shares outstanding from recent financings, as described below.

Exhibit 1: OpGen valuation table

Product

Main indication

Status

Probability of successful commercialization

Launch year

Peak sales ($m)

Patent protection

Economics

rNPV
($m)

OpGen/Curetis Diagnostic Platform

cUTI, lower respiratory

Market (RUO)/ registration

40%

2020

183

2039

100.0%

82.8

Total

 

 

 

 

 

 

 

82.8

Net cash (Q121e)

19.9

Total firm value

102.7

Total basic shares (m)

38.3

Value per basic share ($)

2.68

Options (m)

6.8

Total number of shares (m)

45.1

Diluted value per share ($)

2.28

Source: Edison Investment Research

Financials

OpGen reported revenue of $4.2m for 2020, up 20% compared to $3.5m in 2019, mainly due to the inclusion of Curetis products following the business combination with Curetis. Product sales were up 25% to $2.7m while collaboration revenue was mainly unchanged at $1.3m. Laboratory services were $0.2m, up from almost nothing in 2019 due to the inclusion of Ares Genetics’ laboratory services after the Curetis merger. R&D expenses increased from $5.1m in 2019 to $10.0m, while SG&A expenses were up from $8.5m to $12.4m mainly due to the Curetis merger. OpGen’s 2020 net loss was $26.2m compared to $12.4m in 2019. Following these results, we are maintaining our 2021 revenue estimate of $10.5m and slightly reducing our R&D and SG&A estimates by $0.2m and $0.3m respectively. We also are introducing our 2022 estimates, which feature $26.4m in sales.

The company had $13.4m in gross cash (and $20.1m in debt) at the end of 2020 and added an additional $23.4m in net proceeds through a private placement in February to a single US-based healthcare-focused institutional investor (resulting in the issuance of 8.3m shares and 4.167m share purchase warrants exercisable at $3.55 per share) and $9.65m in gross proceeds through warrant exercises (leading to the issuance of 4.84m shares) in March. The company expects to have $40m in gross cash at the end of Q121 and a quarterly cash burn rate of $5m to $6m in 2021. Note that we have eliminated the additional financing need of $36.6m through to profitability (currently expected in 2023) that we had previously estimated prior to the recent financings.

Exhibit 2: Financial summary

$'000s

2019

2020

2021e

2022e

Year end 31 December

GAAP

GAAP

GAAP

GAAP

PROFIT & LOSS

Revenue

 

 

3,499

4,214

10,497

26,406

Cost of Sales

(1,632)

(3,848)

(5,511)

(7,922)

Gross Profit

1,867

366

4,986

18,484

Sales, General and Administrative Expenses

(8,496)

(12,367)

(13,604)

(18,794)

Research and Development Expense

(5,121)

(9,965)

(12,157)

(11,549)

EBITDA

 

 

(11,741)

(21,966)

(20,775)

(11,859)

Operating Profit (before amort. and except.)

 

 

(11,741)

(21,966)

(20,775)

(11,859)

Intangible Amortisation

0

0

0

0

Other

10

0

0

0

Exceptionals

(521)

(752)

0

0

Operating Profit

(12,261)

(22,718)

(20,775)

(11,859)

Net Interest

(188)

(3,294)

(4,782)

(4,973)

Other

2

(66)

0

0

Profit Before Tax (norm)

 

 

(11,928)

(25,260)

(25,557)

(16,832)

Profit Before Tax (reported)

 

 

(12,446)

(26,078)

(25,557)

(16,832)

Tax

0

(132)

0

0

Deferred tax

(0)

(0)

(0)

(0)

Profit After Tax (norm)

(11,928)

(25,392)

(25,557)

(16,832)

Profit After Tax (reported)

(12,446)

(26,211)

(25,557)

(16,832)

Average Number of Shares Outstanding (m)

1.6

15.8

39.4

39.8

EPS - normalised ($)

 

 

(7.38)

(1.57)

(0.65)

(0.42)

EPS - Reported ($)

 

 

(7.70)

(1.66)

(0.65)

(0.42)

Dividend per share (c)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

3,755

32,863

34,773

36,780

Intangible Assets

1,418

24,606

26,427

28,339

Tangible Assets

2,133

5,791

5,880

5,975

Other

203

2,466

2,466

2,466

Current Assets

 

 

6,667

16,888

25,205

10,671

Stocks

473

1,486

1,486

1,486

Debtors

568

653

686

2,641

Cash

2,708

13,360

21,646

5,157

Other

2,918

1,388

1,388

1,388

Current Liabilities

 

 

(4,939)

(7,372)

(6,673)

(6,673)

Creditors

(4,565)

(6,673)

(6,673)

(6,673)

Short term borrowings

(374)

(699)

0

0

Long Term Liabilities

 

 

(1,190)

(21,188)

(21,199)

(21,386)

Long term borrowings

(329)

(19,379)

(19,221)

(19,221)

Other long term liabilities

(860)

(1,809)

(1,978)

(2,165)

Net Assets

 

 

4,293

21,191

32,106

19,392

CASH FLOW

Operating Cash Flow

 

 

(11,505)

(23,397)

(22,756)

(13,968)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(32)

(130)

(136)

(141)

Acquisitions/disposals

0

1,267

0

0

Financing

13,062

33,793

33,050

0

Dividends

0

0

0

0

Other

(3,836)

0

0

0

Net Cash Flow

(2,310)

11,533

10,158

(14,109)

Opening net debt/(cash)

 

 

(3,514)

(2,005)

6,717

(2,424)

HP finance leases initiated

0

0

0

0

Exchange rate movements

4

(1,587)

0

0

Other

798

(18,669)

(1,017)

(2,380)

Closing net debt/(cash)

 

 

(2,005)

6,717

(2,424)

14,065

Source: company reports, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by OpGen and prepared and issued by Edison, in consideration of a fee payable by OpGen. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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1185 Avenue of the Americas

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United States of America

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by OpGen and prepared and issued by Edison, in consideration of a fee payable by OpGen. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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