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Currency in USD
Last close As at 30/03/2023
USD0.17
▲ 0.04 (30.77%)
Market capitalisation
USD7m
Research: Healthcare
OpGen reported Q122 revenues of $470k, compared to $830k in the prior year period. The decline was largely attributable to the discontinuation of the FISH business, the conclusion of the NY Department of Health collaboration and softness in Unyvero international. In contrast, US Unyvero sales increased 76% from the prior year. In light of the current performance and anticipated slower ramp-up in China, we have trimmed our FY22–24 revenue estimates and pushed profitability to FY26 (versus FY24 previously).
OpGen |
US momentum offset by one-time items |
Earnings update |
Pharma & biotech |
16 May 2022 |
Share price performance
Business description
Next events
Analysts
OpGen is a research client of Edison Investment Research Limited |
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OpGen reported Q122 revenues of $470k, compared to $830k in the prior year period. The decline was largely attributable to the discontinuation of the FISH business, the conclusion of the NY Department of Health collaboration and softness in Unyvero international. In contrast, US Unyvero sales increased 76% from the prior year. In light of the current performance and anticipated slower ramp-up in China, we have trimmed our FY22–24 revenue estimates and pushed profitability to FY26 (versus FY24 previously).
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
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 |
5.0 |
(22.8) |
(0.49) |
0.0 |
N/A |
N/A |
12/23e |
8.1 |
(19.0) |
(0.41) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Unyvero performance – a mixed bag
Despite the bright spots in the US with the continued build-up of the domestic salesforce, there were several one-time offsets and softness in the international business. Management continues to build international Unyvero sales through its distributor arrangements, the latest being with AnnarDx in Colombia (and potentially other markets in South America). There was no material update to the anticipated supplementary clinical study in China (covering ~600 patients across three sites) required for the approval of the Unyvero hospitalized pneumonia (HPN) test/cartridge from the Chinese authorities (National Medical Products Administration, NMPA). These unanticipated delays are primarily driven by the stringent COVID-19 restrictions. Management anticipates US sales growth to outpace sales abroad driven by continued investments in its US salesforce. We expect this improving mix to have a positive impact on margins.
Acuitas commercialization efforts at full steam
Following FDA clearance in October 2021, OpGen’s legacy Acuitas AMR Gene Panel (Acuitas) has now been launched in the US. Sales efforts remain strong, and the company continues to market to over 400 institutions and 1,000 key stakeholders. Based on the six- to 12-month anticipated sales cycle, we are likely to see the first agreements signed in the next few weeks.
Valuation: $91m or $2.0 per share
Based on the quarterly update and lower cash position, we have adjusted our valuation to $91m or $2.0 per share, from $98m or $2.1 per share, previously. Following advancement in the commercialisation of OpGen’s product portfolio, we have now segregated our NPV valuation into separate products to better reflect their individual contributions to the group valuation. We estimate the $30.7m gross cash at end-Q122 provides an operating runway into 2023, but we project the need to raise a total of $55m before reaching profitability in FY26.
Financials
OpGen reported Q122 revenue of $470k, a 43% y-o-y decline over $830k in the prior year. Lower revenues are attributed to the exit from the fluorescence in situ hybridization (FISH) business at the end of Q121 ($170k in sales in Q121), culmination of the collaboration agreement with the New York State (NYS) Department of Health in September 2021 ($108k in sales in Q121) and lower international sales from the Unyvero business. These declines were offset by stronger than expected US sales (up 76% y-o-y to $154k in Q122).
Overall product sales of $366k declined 40% from the prior year, while laboratory services of $43k declined 56% from the prior year. Softness in laboratory services was attributable to lower requirements for COVID-19 testing. Collaboration revenues of $61k declined 49% from the prior year, mainly due to the conclusion of the NYS Department of Health project.
The company reported operating losses of $5.8m, down slightly from $6.3m in the prior year. Overall operating expenses increased as a percentage of sales with the softness in international sales. As expected, R&D expenses declined 18% to $2.3m following the completion of the Acuitas AMR clinical trials in H221 and lower associated payroll related expenses. G&A expenses were mostly in line with Q121, while S&M expenses increased 17% with the continued investment in the US salesforce to drive commercialization of both Unyvero and Acuitas systems and related consumables. The normalized loss before tax during the quarter stood at $6.8m, broadly in line with the Q121 figure of $7.1m (excluding the $7.8m warrant inducement expense during Q121).
Management previously guided for a 25–50% revenue growth in the Products and Services segment in FY22 (including over 50% growth from the US). Our current estimates assume a slower ramp-up in international sales (including a slower roll out in China with COVID lockdown induced delays). For China, while we maintain our total sales potential expectations (€180m over eight years), we now assume delayed commercialization (mid-2023) and have assumed an 80% probability of approval to factor in the uncertainty. We expect the momentum in volumes/sales to start improving from FY24 with a steady growth thereafter with the continued investments in a dedicated salesforce, which also have an impact on our bottom-line projections. We expect the company to reach profitability in 2026, versus 2024 previously.
OpGen’s subsidiary Curetis and the European Investment Bank (EIB) propose to restructure the first tranche (approximately €13.35m) of debt that matured on 22 April, subject to the finalization of legal agreements. Curetis repaid €5m in cash in April 2022 and the remaining c €8.35m ($9m) is to be paid in equal instalments over the following 12-month period (monthly cash instalments of around €0.7m). The second and third tranches of EIB debt amount to €3.0m ($3.2m) and €5.0m ($5.3m) plus accumulated deferred interest, respectively, and continue to be due for repayment in June 2023 and June 2024.
At the end Q122, OpGen had $30.7m in gross cash and $22.4m in debt. With $11.3m of debt due in FY22 and an estimated upcoming quarterly operating cash burn of c $5m (consistent with the Q122 rate), we estimate the need to raise c $20m in incremental funds in FY23 (incorporated as illustrative debt in our model) excluding expected repayment of EIB debt components. We also project the need to raise another $35m in FY24–25 before reaching the scale to fund operations from internally generated cash flows. This is higher than our previous estimate of $45m and is driven by our more conservative assumptions for the sales ramp-up. These estimates will be revisited as the developmental pipeline and commercialization efforts progress.
Valuation
We have slightly adjusted our valuation from $98m or $2.10 per share to $91m or $2.0 per share. While the implied enterprise value of OpGen’s products/platforms increases to $82.9m from $78.2m, the decline in the overall valuation has been driven by a lower net cash position at the end of Q122. Given that a significant proportion of OpGen’s development pipeline has progressed towards commercialization (including the legacy AMR Gene Panel following the FDA approval in H221), we have now segregated our valuation to reflect contributions from each of these products/segments to the group NPV. Unyvero, as expected, comprises the bulk of our valuation as we now factor in the potential contributions from the complicated urinary tract infection (cUTI) and invasive joint infection (IJI) cartridges, adjusted for their respective probabilities of approval (80% and 50% respectively). This contribution has been tempered by the uncertainty we have now built in for the Chinese market (80% probability of success). Progression on the aforementioned products will create upside opportunities for the company. While OpGen is actively seeking monetization opportunities for its AresDB dataset, accurately valuing the asset given the limited information available currently has proven challenging. We have therefore used the carrying value of the asset in our valuation as the next best alternative. We will update this figure as more information becomes available. Our per share valuation remains largely unchanged at $2.0.
Exhibit 1: OpGen valuation
Product |
Main indication |
Status |
Probability of successful commercialization |
Launch |
Peak sales ($m) |
Patent protection |
rNPV |
Unyvero excluding China |
Lower respiratory |
Market |
100% |
2020 |
130.9 |
2040 |
103.4 |
|
UTI (US) |
Clinical |
80% |
2024 |
|||
|
IJI (US) |
Preclinical |
50% |
2025 |
|
|
|
Unyvero - China |
HPN |
Registration |
80% |
2023 |
42.2 |
2040 |
26.2 |
Acuitas AMR Panel |
AMR |
Market |
100% |
2022 |
22.2 |
2040 |
16.7 |
AresDB (book value) |
Bioinformatics |
Market |
|
|
|
|
4.8 |
Unyvero A30 (book value) and others |
IJI |
Preclinical |
|
|
|
|
11.0 |
Unallocated R&D costs |
(25.9) |
||||||
G&A costs |
(53.3) |
||||||
Net cash (as of March 2022) |
|
|
|
|
|
|
8.3 |
Total firm value |
91.2 |
||||||
Total shares outstanding (m) |
46.6 |
||||||
Value per share ($) |
|
|
|
|
|
|
2.0 |
Source: Edison Investment Research
Exhibit 2: Financial summary
$'000s |
2019 |
2020 |
2021 |
2022e |
2023e |
||
Year end 31 December |
GAAP |
GAAP |
GAAP |
GAAP |
GAAP |
||
PROFIT & LOSS |
|
|
|||||
Revenue |
|
|
3,499 |
4,214 |
4,306 |
5,013 |
8,113 |
Cost of Sales |
(1,632) |
(3,848) |
(2,848) |
(2,616) |
(4,515) |
||
Gross Profit |
1,867 |
366 |
1,458 |
2,397 |
3,598 |
||
Sales, General and Administrative Expenses |
(8,496) |
(12,367) |
(13,649) |
(12,542) |
(10,843) |
||
Research and Development Expense |
(5,121) |
(9,965) |
(10,911) |
(9,820) |
(8,896) |
||
EBITDA |
|
|
(10,829) |
(19,631) |
(20,388) |
(17,363) |
(13,925) |
Operating Profit (before amort. and excepts.) |
|
(11,750) |
(21,966) |
(23,102) |
(19,965) |
(16,141) |
|
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
(522) |
(752) |
(171) |
0 |
0 |
||
Operating Profit |
(12,272) |
(22,718) |
(23,273) |
(19,965) |
(16,141) |
||
Net Interest |
(178) |
(3,294) |
(4,754) |
(2,857) |
(2,889) |
||
Other |
2 |
(66) |
(6,735) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(11,928) |
(24,742) |
(35,742) |
(22,823) |
(19,031) |
Profit Before Tax (reported) |
|
|
(12,447) |
(26,078) |
(34,762) |
(22,823) |
(19,031) |
Tax |
0 |
(132) |
(44) |
0 |
0 |
||
Deferred tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(11,928) |
(24,875) |
(35,786) |
(22,823) |
(19,031) |
||
Profit After Tax (reported) |
(12,447) |
(26,211) |
(34,806) |
(22,823) |
(19,031) |
||
Average Number of Shares Outstanding (m) |
1.6 |
15.8 |
36.7 |
46.6 |
46.6 |
||
EPS - normalised ($) |
|
|
(7.38) |
(1.57) |
(1.17) |
(0.49) |
(0.41) |
EPS - Reported ($) |
|
|
(7.70) |
(1.66) |
(1.14) |
(0.49) |
(0.41) |
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 |
9,487 |
6,437 |
Stocks |
473 |
1,486 |
1,239 |
1,075 |
1,856 |
||
Debtors |
568 |
653 |
1,172 |
961 |
1,556 |
||
Cash |
2,708 |
13,360 |
36,080 |
6,200 |
1,775 |
||
Other |
2,918 |
1,388 |
1,250 |
1,250 |
1,250 |
||
Current Liabilities |
|
|
4,939 |
7,372 |
19,917 |
15,831 |
14,743 |
Creditors |
4,565 |
6,673 |
5,398 |
6,431 |
6,224 |
||
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 |
19,308 |
1,228 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(11,506) |
(23,397) |
(21,479) |
(18,185) |
(17,299) |
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 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
(266) |
0 |
0 |
||
Net Cash Flow |
1,524 |
11,533 |
24,430 |
(18,582) |
(17,711) |
||
Opening net debt/(cash) |
|
|
(3,514) |
(2,005) |
6,717 |
(14,385) |
4,195 |
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) |
4,195 |
22,440 |
Source: OpGen, Edison Investment Research
|
|
Research: Industrials
It was announced on Friday that Mytilineos is one of just two Greek companies that were added to the MSCI Greece index, which forms part of the MSCI Global Standard indices. This should bring significant additional demand for Mytilineos’s shares. In this note, we also highlight Mytilineos’s strong Q122 results, reported on 4 May. They were roughly in line with our expectations. Net profit after minorities was €67m, an increase of 83% versus Q121 (€37m) and higher than the strong performance in Q421 (€65m). The strong performance extends across Power & Gas, Metallurgy and Renewable Storage Development, which have all delivered results in line with (or slightly above) our expectations. Sustainable Engineering Solutions is below expectations; however, we note that a number of projects are close to completion stage, which should imply a stronger performance in the coming quarters. Mytilineos is on a strong growth trajectory and has been investing to benefit from the energy transition. We maintain our forecasts and valuation of €27.0 per share.
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