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Re-acceleration with momentum in the back half

OpGen 12 August 2022 Update
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OpGen

Re-acceleration with momentum in the back half

Q222 update

Pharma and biotech

12 August 2022

Price

US$0.63

Market cap

US$30.4m

Pro-forma net cash ($m) at August 2022)

2.7

Shares in issue

48.3m

Free float

92.5%

Code

OPGN

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.8

56.0

(76.7)

Rel (local)

(6.6)

48.3

(75.5)

52-week high/low

3.58

0.32

Business description

OpGen is primarily a lab diagnostic manufacturer focused on the identification and treatment of bacterial infections. With the acquisition of Curetis in H120, management has the technology necessary to detect pathogens and predict resistance. Through the dual platform offering of AMR Gene Panel and Unyvero, the company has the ability to provide diagnostic results in hours instead of days under legacy technologies.

Next events

Unyvero UTI panel readout data and FDA submission

H222

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Nidhi Singh

+44 (0)20 3077 5700

OpGen is a research client of Edison Investment Research Limited

OpGen’s Q222 revenue growth re-accelerated with the post-pandemic normalization in demand. Revenues of $0.97m increased 19% y-o-y, largely driven by strength in its core offering, Unyvero. Management announced several notable wins that provide momentum to close the back half of the year strong, including the signing of two commercial Acuitas AMR Gene Panel contracts, extension of the Unyvero distribution agreement with Menarini in Europe, new distribution agreements in the Middle East and Kosovo, and the steady growth of subsidiary Ares Genetics. Incorporating the quarterly results, lower net cash balance and a higher share count (following the initial utilization of the $10.7m at-the-market sales facility) lowers our valuation to $1.7/share (vs $2.0/share previously).

Year end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/20

4.2

(24.7)

(1.57)

0.0

N/A

N/A

12/21

4.3

(35.7)

(1.17)

0.0

N/A

N/A

12/22e

4.6

(24.0)

(0.50)

0.0

N/A

N/A

12/23e

7.7

(21.4)

(0.44)

0.0

N/A

N/A

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

Unyvero: A strong recovery on all fronts

Unyvero revenues re-accelerated in the quarter as international sales recovered from softness in the prior quarter with the announced close of new international agreements, including a ~$1m, three-year contract with Leader Life Sciences in the Middle East and a ~$360k contribution from an asset purchase (at residual value) by Menarini. The revised agreement with Menarini is agreed to grow ~50% with minimum purchase commitments for the next 12 months (~80% over two years) and is anticipated to provide momentum through the next few quarters. FDA approval for the company’s Unyvero urinary tract infection (UTI) panel test, when achieved (trial readout expected in H222), will likely add upside potential. Any further delays to the clinical trials in China, driven by the stricter COVID-19 related trial restrictions, could be a major damper.

Acuitas AMR Gene Panel: Gathering steam

The company signed its first two commercial Acuitas AMR Gene Panel contracts with two large hospitals (a 1,000-bed teaching hospital and a 400-bed paediatric hospital). Traction of reputable institutions should provide a tailwind to the company’s marketing efforts. Increased utilization would translate into increased demand for consumables/cartridges. Roughly ~500 tests could deliver ~$70k in revenue at an average price of ~$140/test. We are encouraged that management is maintaining an active dialogue with multiple other potential partners.

Valuation: $81m or $1.7 per share

We adjust our revenue and operating expenses estimates following guidance revisions by management as well as factoring in the current run-rate. This, along with a lower pro-forma net cash position ($2.7m) and higher share count (48.3 million), reduces our valuation to $81m, or $1.7/share, from $91m or $2.0/share.

Exhibit 1: Financial summary

$'000s

2019

2020

2021

2022e

2023e

Year end 31 December

GAAP

GAAP

GAAP

GAAP

GAAP

PROFIT & LOSS

 

 

Revenue

 

 

3,499

4,214

4,306

4,623

7,713

Cost of Sales

(1,632)

(3,848)

(2,848)

(2,464)

(4,349)

Gross Profit

1,867

366

1,458

2,159

3,364

Sales, General and Administrative Expenses

(8,496)

(12,367)

(13,649)

(14,033)

(13,459)

Research and Development Expense

(5,121)

(9,965)

(10,911)

(9,274)

(8,429)

EBITDA

 

 

(10,829)

(19,631)

(20,388)

(18,546)

(16,308)

Operating Profit (before amort. and excepts.)

 

(11,750)

(21,966)

(23,102)

(21,148)

(18,524)

Intangible Amortisation

0

0

0

0

0

Other

0

0

0

0

0

Exceptionals

(522)

(752)

(171)

0

0

Operating Profit

(12,272)

(22,718)

(23,273)

(21,148)

(18,524)

Net Interest

(178)

(3,294)

(4,754)

(2,857)

(2,892)

Other

2

(66)

(6,735)

0

0

Profit Before Tax (norm)

 

 

(11,928)

(24,742)

(35,742)

(24,006)

(21,417)

Profit Before Tax (reported)

 

 

(12,447)

(26,078)

(34,762)

(24,006)

(21,417)

Tax

0

(132)

(44)

0

0

Deferred tax

0

0

0

0

0

Profit After Tax (norm)

(11,928)

(24,875)

(35,786)

(24,006)

(21,417)

Profit After Tax (reported)

(12,447)

(26,211)

(34,806)

(24,006)

(21,417)

Average Number of Shares Outstanding (m)

1.6

15.8

36.7

48.3

48.3

EPS - normalised (c)

 

 

(737.70)

(157.43)

(117.12)

(49.73)

(44.36)

EPS - Reported ($)

 

 

(7.70)

(1.66)

(1.14)

(0.50)

(0.44)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

3,755

32,863

31,924

29,719

27,915

Intangible Assets

1,418

24,606

21,983

20,956

20,001

Tangible Assets

2,133

5,791

5,917

4,738

3,890

Other

203

2,466

4,024

4,024

4,024

Current Assets

 

 

6,667

16,888

39,743

8,370

3,033

Stocks

473

1,486

1,239

1,013

1,787

Debtors

568

653

1,172

887

1,479

Cash

2,708

13,360

36,080

5,220

(1,484)

Other

2,918

1,388

1,250

1,250

1,250

Current Liabilities

 

 

4,939

7,372

19,917

15,896

14,906

Creditors

4,565

6,673

5,398

6,497

6,387

Short term borrowings

374

699

14,519

9,399

8,519

Long Term Liabilities

 

 

1,190

21,188

10,533

4,067

18,382

Long term borrowings

329

19,379

7,176

996

15,696

Other long-term liabilities

860

1,809

3,356

3,070

2,685

Net Assets

 

 

4,293

21,191

41,217

18,126

(2,339)

CASH FLOW

Operating Cash Flow

 

 

(11,506)

(23,397)

(21,479)

(19,166)

(19,580)

Net Interest

0

0

0

0

0

Tax

0

0

0

0

0

Capex

(32)

(130)

(1,984)

(397)

(413)

Acquisitions/disposals

0

1,267

0

0

0

Equity Financing

13,062

33,793

48,159

1

1

Dividends

0

0

0

0

0

Other

0

0

(266)

0

0

Net Cash Flow

1,524

11,533

24,430

(19,562)

(19,991)

Opening net debt/(cash)

 

 

(3,514)

(2,005)

6,717

(14,385)

5,175

HP finance leases initiated

0

0

0

0

0

Exchange rate movements

(19)

(2)

(5)

(13)

(4)

Other

(3013)

(20,254)

(3,322)

15

(529)

Closing net debt/(cash)

 

 

(2,005)

6,717

(14,385)

5,175

25,700

Source: OpGen, 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 £60,000 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.

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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

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

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1185 Avenue of the Americas

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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 £60,000 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 2022 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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