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Research: Healthcare
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.
Written by
Maxim Jacobs
OpGen |
Q121 results |
Financial update |
Pharma & biotech |
19 May 2021 |
Share price performance
Business description
Next events
Analysts
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* |
EPS* |
DPS |
P/E |
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 |
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
|
|
The Artisanal Spirits Company (ASC) is the owner of The Scotch Malt Whisky Society, which curates unique ultra-premium single cask Scotch malt whiskies and other spirits, with a focus on distinct flavour profiles. Sales are made exclusively to its global subscription-paying members and are mostly made direct to consumer (D2C), namely its own online websites and venues, and with remaining sales via partner bars around the world. ASC has a loyal customer base and a significant inventory of maturing whiskies. Future growth opportunities include continued growth of its membership and geographic and virtual presence, as well as moves into adjacent product markets such as blended whiskies, with the potential to improve profitability.
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