OpGen — Fisher deal broadens US commercialization opportunity

OpGen (NASDAQ: OPGN)

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Research: Healthcare

OpGen — Fisher deal broadens US commercialization opportunity

OpGen has announced a non-exclusive distribution agreement with Fisher Healthcare to market and distribute its Unyvero A50 platform and range of diagnostic assays in the United States. Although this is a departure from the company’s self-commercialization strategy for the region, we see merits in this decision, as it allows OpGen to scale market coverage while easing financial demands related to salesforce expansion. Funding is likely a key consideration for the company given the short cash runway (June 2023) and upcoming debt repayments. In another key milestone, OpGen announced the filing of the de novo application for its Unyvero urinary tract infection (UTI) panel, following encouraging data reported from the recently concluded clinical trials. If approved, we anticipate OpGen to launch the UTI panel in the United States in 2024, adding another revenue stream for the business. We also expect Fisher to distribute the UTI panel as well (once approved), which should support broader market coverage.

Adam McCarter

Written by

Adam McCarter

Associate Analyst

Laboratory Opgen

Healthcare

OpGen

Fisher deal broadens US commercialization opportunity

Business update

Pharma and biotech

20 April 2023

Price

US$1.05

Market cap

US$6m

Pro-forma net cash (US$m) at 31 December

2022 (including net proceeds from January

2023 equity raise)

2.4

Shares in issue

5.5m

Free float

92.5%

Code

OPGN

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

Business description

OpGen is primarily a lab diagnostic manufacturer focused on identifying and treating 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 the AMR Gene Panel and Unyvero, the company can provide diagnostic results in hours instead of days under legacy technologies.

Analysts

Dr. Adam McCarter

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

OpGen is a research client of Edison Investment Research Limited

OpGen has announced a non-exclusive distribution agreement with Fisher Healthcare to market and distribute its Unyvero A50 platform and range of diagnostic assays in the United States. Although this is a departure from the company’s self-commercialization strategy for the region, we see merits in this decision, as it allows OpGen to scale market coverage while easing financial demands related to salesforce expansion. Funding is likely a key consideration for the company given the short cash runway (June 2023) and upcoming debt repayments. In another key milestone, OpGen announced the filing of the de novo application for its Unyvero urinary tract infection (UTI) panel, following encouraging data reported from the recently concluded clinical trials. If approved, we anticipate OpGen to launch the UTI panel in the United States in 2024, adding another revenue stream for the business. We also expect Fisher to distribute the UTI panel as well (once approved), which should support broader market coverage.

Year

end

Revenue
($m)

EBITDA*

($m)

PBT*
($m)

EPS*
($)

P/E
(x)

Net debt/(cash)
($m)

12/21

4.3

(20.4)

(35.7)

(23.4)

N/A

(14.4)

12/22

2.6

(20.6)

(25.3)

(10.4)

N/A

4.4

12/23e

4.7

(17.7)

(21.0)

(3.8)

N/A

17.6

12/24e

7.9

(15.3)

(19.6)

(3.6)

N/A

37.5

Note: *Figures are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments. EPS adjusted for the 1:20 share consolidation in January 2023.

Fisher Healthcare is part of Thermo Fisher Scientific and we expect OpGen to leverage Fisher’s established footprint and relationships with hospitals and diagnostic labs to expand commercial coverage of its Unyvero suite of products in the United States. We highlight that OpGen has been exclusively working with distribution partners across different geographies (including with Menarini for Europe) but had opted to self-commercialize in the United States. Following the deal with Fisher, OpGen will continue to co-commercialize in the United States, although we expect lower incremental investments in selling and marketing related activities in future. The agreement includes the distribution of OpGen’s Unyvero A50 platform and in vitro diagnostic tests for bacterial pneumonia (Unyvero LRT and LRT BAL) and its research use only test for UTI (Unyvero UTI), but we expect the deal to expand to include commercial sales of the UTI panel, once approved.

OpGen has also announced the widely anticipated de novo submission of its Unyvero UTI test panel to the US FDA. We highlight that the Unyvero UTI panel has been designed to test for a broad range of bacterial and fungal pathogens as well as antimicrobial resistance markers (25 pathogens and 15 resistance genes) directly from native urine specimens (without the need for culturing), resulting in much quicker turnaround times (four to five hours versus days in the case of culture-based tests). OpGen had reported encouraging final data from its clinical studies (assessing >1,800 patient samples), reporting an overall weighted average sensitivity of 96.4% and specificity of 97.4%. We expect approval and subsequent launch of the panel to add materially to the company’s top line. We attribute an 80% probability of approval to the panel.

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.

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Copyright: Copyright 2023 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

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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.

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.

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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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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