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OpGen Q3 Revenues Fall 23 Percent

NEW YORK (GenomeWeb) – OpGen reported after the close of the market on Monday that third quarter revenues fell 23 percent, largely due to a decrease in sales of rapid pathogen identification and legacy genome mapping products.

For the quarter ended Sept. 30, the molecular diagnostics company reported revenues of $759,663, down from revenues of $980,786 in the year-ago quarter. Product sales fell 21 percent to $730,325 from $929,241, laboratory services fell slightly to $23,036 from $23,765, and revenues from collaborations with other firms fell 77 percent to $6,302 from $27,780 a year ago.

"During the third quarter, our revenues were negatively impacted by several items," said OpGen Chairman and CEO Evan Jones in a statement. "These included the timing of sales, the phase-out of our legacy whole-genome mapping products, and supply chain issues for our rapid pathogen ID products. We have addressed the supply chain issues and, looking forward, we anticipate a stable recurring revenue base from our rapid pathogen ID testing products and growing contribution to revenue from our new product sales and service offerings."

On a conference call with analysts following the release of the earnings, Jones added that despite the drop in quarterly revenues, the company is still on track to achieve its goals for the year. He also clarified the supply chain issue as being related to the company's acquisition of AdvanDx in July 2015 — in tightening up certain quality control measures after the acquisition, the company saw that some key vendors were sending products that were of unacceptable quality, leading OpGen to refuse deliveries on certain supplies. This caused a backlog, but the issue has been addressed and is "under control," Jones said.

OpGen's Q3 net loss widened to $4.8 million from $4.7 million a year earlier. However, its loss per share narrowed to $.23 from $.38 in the year-ago quarter as the number of weighted average shares outstanding almost doubled to 21 million from around 12.3 million.

"During the quarter we continued to make progress developing our genomics and informatics business," Jones said. "In the area of rapid antibiotic decision-making, our automated rapid pathogen ID system [QuickFish] is on track to begin 510(k) clinical trials in Q1 2017 and development of our mAST antibiotic resistance testing solution is underway. We have begun testing thousands of pathogens to support development of our Acuitas Lighthouse rapid antibiotic resistance test and knowledge base following the successful verification of our expanded Resistome test and the initial performance confirmation of our mAST genotype/phenotype predictive algorithms. These products and services are being developed to address the large and growing global antibiotic-resistance testing opportunity."

On the call, Jones also highlighted several milestones the company has achieved in recent months including its continuing development of QuickFish. The first indications QuickFish will be developed for are complicated urinary tract infections, respiratory infections, and wounds, though the company will also develop tests for other indications as well, Jones said. With QuickFish, results will be available in 30 to 45 minutes, he added.

The company's goal is to follow this up with the rapid mAST antibiotic resistance test to ID potential antibiotic resistance in hours instead of days. In the third quarter, the firm advanced development of a 185-gene panel to predict resistance to major classes of antibiotics when used in conjunction with the company's Acuitas Lighthouse knowledge base, according to Jones. Clinical trials will begin in the second half of 2017.

In the coming months, the company anticipates entering into a health system information services agreement and a pharmaceutical information services agreement. It also anticipates receiving approval from the New York State Department of Health for its CLIA lab, and expects to complete testing 10,000 bacteria to support the Acuitas Lighthouse knowledge base and to validate the mAST test.

OpGen's R&D costs for the quarter rose 22 percent to $2.2 million from $1.8 million in Q3 2015, while its SG&A costs rose 12 percent to $2.9 million from $2.6 million. CFO Tim Dec said on the call that he expects R&D costs to decline in the second half of 2017 as products the company is currently developing go to market.

OpGen ended the quarter with $4.3 million in cash and cash equivalents. Dec also highlighted an $11.5 million stock placement the company announced in September. 

The company's shares fell 17 percent to $1.46 in aftermarket trading Monday on the Nasdaq.