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Q121 results

OpGen 19 May 2021 Update
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OpGen

Q121 results

Financial update

Pharma & biotech

19 May 2021

Price

US$2.0

Market cap

US$77m

Net cash ($m) at 31 March 2021

19.3

Shares in issue

38.3m

Free float

72.5%

Code

OPGN

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.2)

(32.4)

1.0

Rel (local)

(11.9)

(35.9)

(27.7)

52-week high/low

US$3.55

US$1.7

Business description

OpGen is a diagnostic company focused on revolutionizing the identification and treatment of bacterial infections. Following the business combination 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

H221

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 Q121 sales of $0.8m, up 35% compared to Q120, with growth mainly due to the April 2020 business combination with Curetis. The company expects 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) with the Unyvero platform in the summer and invasive joint infections (IJI) later in the year.

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

(25.5)

(0.70)

0.0

N/A

N/A

12/22e

26.4

(14.1)

(0.35)

0.0

N/A

N/A

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

Bacterial isolates 510(k) clearance possible in August

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. The agency has also informed OpGen that it intends to provide feedback on certain documents by the end of May and to complete its review by the end of August. However, these timelines are not written in stone and will depend on the FDA’s workload with regards to COVID-19.

Strategic collaboration with New York extended

OpGen and the New York State Department of Health have extended and expanded their strategic collaboration for another six months, until 30 September 2021. The focus during this period will be to expand the reach of the platform, increase testing volume and enhance data collection.

Waiting on Chinese NMPA cartridge approval

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.

Valuation: $102m or $2.67 per share

We have slightly adjusted our valuation from $103m or $2.68 per basic share to $102m or $2.67 per share. The change in the valuation is mainly due to a decrease in net cash. The company had $39.4m in gross cash at the end of Q121. We forecast that OpGen will need to raise $20m in additional capital to reach profitability though this will be dependent on timely Chinese and FDA approvals.

Waiting on regulators

OpGen is currently waiting on regulators for a variety of approvals/clearances. Most important will be Chinese NMPA approval for the Unyvero A50 pneumonia cartridge, though timing of this is uncertain. 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 on 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).

Additionally, as previously announced, 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. The agency has also informed OpGen that the agency intends to provide feedback on certain documents by the end of May and to complete its review by the end of August. However, these timelines will depend on the FDA’s workload with regards to COVID-19.

OpGen is also seeking approval in Colombia. In January, OpGen announced a distribution agreement with Annar Health Technologies for Colombia. Annar is responsible for product registration (and is working towards an accelerated preliminary 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

We have slightly adjusted our valuation from $103m or $2.68 per basic share, to $102m or $2.67 per share. The change in the valuation is mainly due to a decrease in net cash.

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 (Q121)

19.3

Total firm value

102.1

Total basic shares (m)

38.3

Value per basic share ($)

2.67

Options (m)

11.0

Total number of shares (m)

49.3

Diluted value per share ($)

2.07

Source: Edison Investment Research

Financials

OpGen reported revenue of $0.8m for Q121, up 35% compared to $0.6m in Q121, mainly due to the inclusion of Curetis products following the April 2020 business combination with Curetis. Product sales were up 67% to $0.6m, while collaboration revenue fell from $0.25m to $0.118m due to lower revenue from the New York State collaboration. Laboratory services were $0.098m, up from zero in Q120 due to the inclusion of Ares Genetics’ laboratory services after the combination with Curetis. R&D expenses increased from $1.2m in Q120 to $2.8m in Q121, while SG&A expenses were up from $2.2m to $3.6m (in Q121) mainly due to the Curetis business combination. OpGen’s net loss for the quarter was $14.9m compared to $3.9m in the same quarter a year ago. $7.8m of that increase in net loss was due to a one-time $7.8m non-cash warrant inducement expense related to the 2021 warrant exercise. The Q121 operating cash burn rate was $4.97m. Following these results, we are maintaining our revenue estimates. We have slightly adjusted our 2021 R&D and SG&A estimates. We have reduced our 2021 R&D estimate by $0.7m and increased our corresponding 2021 SG&A estimate by $0.9m.

The company had $39.4m in gross cash (and $19.7m in debt) at the end of Q121. We forecast that OpGen will need to raise approximately $20m in additional capital to reach profitability, currently expected in 2023. This amount will depend on the timing of Chinese and FDA approvals and whether they use cash on hand to repay the $25.1m in long term debt obligations owed to the European Investment Bank (EIB) prior to sustainable profitability (repayments related to the €10m first tranche of the EIB loan taken in April 2017 are due in April 2022 and will also include deferred interest). Note these long-term debt obligations are higher than the carrying value on the balance sheet due to an unamortized debt discount.

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)

(14,467)

(18,794)

Research and Development Expense

(5,121)

(9,965)

(11,424)

(11,538)

EBITDA

 

 

(11,741)

(21,966)

(20,905)

(11,848)

Operating Profit (before amort. and except.)

 

 

(11,741)

(21,966)

(20,905)

(11,848)

Intangible Amortisation

0

0

0

0

Other

10

0

0

0

Exceptionals

(521)

(752)

(55)

0

Operating Profit

(12,261)

(22,718)

(20,960)

(11,848)

Net Interest

(188)

(3,294)

(4,620)

(2,251)

Other

2

(66)

(7,429)

0

Profit Before Tax (norm)

 

 

(11,928)

(25,260)

(25,525)

(14,099)

Profit Before Tax (reported)

 

 

(12,446)

(26,078)

(33,010)

(14,099)

Tax

0

(132)

0

0

Deferred tax

(0)

(0)

(0)

(0)

Profit After Tax (norm)

(11,928)

(25,392)

(25,525)

(14,099)

Profit After Tax (reported)

(12,446)

(26,211)

(33,010)

(14,099)

Average Number of Shares Outstanding (m)

1.6

15.8

36.4

40.6

EPS - normalised ($)

 

 

(7.38)

(1.57)

(0.70)

(0.35)

EPS - Reported ($)

 

 

(7.70)

(1.66)

(0.91)

(0.35)

Dividend per share (c)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

3,755

32,863

34,309

37,092

Intangible Assets

1,418

24,606

25,311

27,253

Tangible Assets

2,133

5,791

6,339

7,180

Other

203

2,466

2,659

2,659

Current Assets

 

 

6,667

16,888

24,823

16,791

Stocks

473

1,486

1,417

1,417

Debtors

568

653

486

2,641

Cash

2,708

13,360

21,447

11,260

Other

2,918

1,388

1,473

1,473

Current Liabilities

 

 

(4,939)

(7,372)

(22,091)

(9,941)

Creditors

(4,565)

(6,673)

(6,291)

(6,291)

Short term borrowings

(374)

(699)

(15,800)

(3,650)

Long Term Liabilities

 

 

(1,190)

(21,188)

(12,551)

(29,192)

Long term borrowings

(329)

(19,379)

(9,431)

(25,781)

Other long term liabilities

(860)

(1,809)

(3,120)

(3,412)

Net Assets

 

 

4,293

21,191

24,490

14,750

CASH FLOW

Operating Cash Flow

 

 

(11,505)

(23,397)

(20,916)

(11,122)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(32)

(130)

(851)

(885)

Acquisitions/disposals

0

1,267

0

0

Financing

13,062

33,793

32,824

0

Dividends

0

0

0

0

Other

(3,836)

0

0

0

Net Cash Flow

(2,310)

11,533

11,057

(12,007)

Opening net debt/(cash)

 

 

(3,514)

(2,005)

6,717

3,784

HP finance leases initiated

0

0

0

0

Exchange rate movements

4

(1,587)

629

0

Other

798

(18,669)

(8,753)

(2,380)

Closing net debt/(cash)

 

 

(2,005)

6,717

3,784

18,171

Source: Company reports, Edison Investment Research


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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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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

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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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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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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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