CapForce Inc 10-Q for FY2022 Q3
CapForce Inc. (CFOR)
About this 10-Q
CapForce Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $448.71K
- down 63.8% from $1.24M a year earlier
- Net loss
- $14.1M
- compared with a net loss of $6.06M a year earlier
- Diluted EPS
- -$0.30
- compared with -$0.16 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
| FORM | ||
(Mark one)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
| OPGEN, INC. | ||
| (Exact name of registrant as specified in its charter) | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) | |
| (Address of principal executive offices) | (Zip code) | |
Registrant’s telephone number, including
area code:
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbols | Name of each exchange on which registered |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
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Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Accelerated filer | ☐ | ||
| Smaller reporting company | ☒ | |||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
OPGEN, INC.
TABLE OF CONTENTS FOR FORM 10-Q
| 2 |
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q of OpGen, Inc. contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In this quarterly report, we refer to OpGen, Inc. as the “Company,” “we,” “our” or “us.” All statements other than statements of historical facts contained herein, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect” or the negative version of these words and similar expressions are intended to identify forward-looking statements.
We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II Item 1A “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances included herein may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| ● | the continued impact of COVID-19 on our business and operations; |
| ● | our liquidity and working capital requirements, including our cash requirements over the next 12 months; |
| ● | our use of proceeds from capital financing transactions; |
| ● | our ability to maintain compliance with the ongoing listing requirements for the Nasdaq Capital Market; |
| ● | the completion of our development efforts for our Unyvero UTI and IJI panels, Unyvero A30 RQ platform and ARESdb and the timing of regulatory submissions; |
| ● | our ability to meet our obligations and extend our relationships under our collaboration agreements, including our collaboration agreement with the Foundation for Innovative New Diagnostics (FIND); |
| ● | our ability to obtain regulatory clearance for and commercialize our product and services offerings; |
| ● | our ability to establish a market for and sell our Acuitas AMR Gene Panel test for use with bacterial isolates; |
| ● | our ability to sustain or grow our customer base for our Unyvero IVD and Acuitas AMR Gene Panel products as well as our current research use only (RUO) products; |
| ● | regulations and changes in laws or regulations applicable to our business, including regulation by the FDA, European Union, including new IVDR requirements, and China’s NMPA; |
| ● | our ability to further integrate the OpGen, Curetis, and Ares Genetics businesses; |
| ● | our ability to successfully transfer, and realize the expected benefits of the transfer of, the manufacturing of our Acuitas AMR Gene Panel from our Rockville, Maryland facility to our Bodelshausen, Germany manufacturing facility; |
| ● | our ability to satisfy our debt obligations; |
| ● | adverse effects on our business condition and results of operations from general economic and market conditions and overall fluctuations in the United States and international markets, including deteriorating market conditions due to investor concerns regarding inflation and Russia’s war against Ukraine; |
| ● | anticipated trends and challenges in our business and the competition that we face; |
| ● | the execution of our business plan and our growth strategy; |
| ● | our expectations regarding the size of and growth in potential markets; |
| ● | our opportunity to successfully enter into new collaborative or strategic agreements; |
| ● | compliance with the U.S. and international regulations applicable to our business; and |
| ● | our expectations regarding future revenue and expenses. |
| 3 |
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. These risks should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to the risk factors described in Part II, Item 1A of this quarterly report. Other risks may be described from time to time in our filings made under the securities laws. New risks emerge from time to time. It is not possible for our management to predict all risks. All forward-looking statements in this quarterly report speak only as of the date made and are based on our current beliefs and expectations. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
NOTE REGARDING TRADEMARKS
We own various U.S. federal trademark registrations and applications and unregistered trademarks and servicemarks, including but not limited to OpGen®, Curetis®, Unyvero®, ARES® and ARES GENETICS®, and Acuitas®. All other trademarks, servicemarks or trade names referred to in this quarterly report are the property of their respective owners. Solely for convenience, the trademarks and trade names in this quarterly report are sometimes referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies, products or services.
| 4 |
Part I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
OpGen, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
| September 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Finance lease right-of-use assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Strategic inventory, net | ||||||||
| Other noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued compensation and benefits | ||||||||
| Accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Current maturities of long-term debt | ||||||||
| Short-term finance lease liabilities | ||||||||
| Short-term operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, net | ||||||||
| Long-term finance lease liabilities | ||||||||
| Long-term operating lease liabilities | ||||||||
| Derivative liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ outstanding at September 30, 2022 and December 31, 2021 | ||||||||
| Common stock, $ December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive (loss) income | ( | ) | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 5 |
OpGen, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | ||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Laboratory services | ||||||||||||||||
| Collaboration revenue | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Cost of products sold | ||||||||||||||||
| Cost of services | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Impairment of right-of-use asset | ||||||||||||||||
| Goodwill impairment charge | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income | ||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Warrant inducement expense | ( | ) | ||||||||||||||
| Interest and other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign currency transaction (losses) gains | ( | ) | ||||||||||||||
| Change in fair value of derivative financial instruments | ( | ) | ( | ) | ||||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss available to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss - foreign currency translation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 6 |
OpGen, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Additional Paid- in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total | |||||||||||||||||||||||||
| Balances at December 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Offering of common stock and warrants, net of issuance costs | ||||||||||||||||||||||||||||||||
| Inducement expense related to warrant reprice | — | — | ||||||||||||||||||||||||||||||
| Common stock warrant exercises, net of issuance costs | ||||||||||||||||||||||||||||||||
| Proceeds from issuance of common stock warrants | — | — | ||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at March 31, 2021 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of RSUs | ( | ) | ||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at June 30, 2021 | ( | ) | ||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at September 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Balances at December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Issuance of RSUs | ( | ) | ||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at March 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of RSUs | ( | ) | ||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock compensation expense | — | — | ||||||||||||||||||||||||||||||
| At the market offering, net of offering costs | ||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 7 |
OpGen, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
| Nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash interest expense | ||||||||
| Loss on disposal of equipment | ||||||||
| Change in inventory reserve | ||||||||
| Stock compensation expense | ||||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Inducement expense related to warrant reprice | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Impairment of right-of-use asset | ||||||||
| Goodwill impairment charge | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued compensation and other liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock warrants | ||||||||
| Proceeds from issuance of common stock and pre-funded warrants in registered offering, net of selling costs | ||||||||
| Proceeds from the exercise of common stock warrants, net of issuance costs | ||||||||
| Payment of deferred offering costs | ( | ) | ||||||
| Proceeds from at the market offering, net of issuance costs | ||||||||
| Payments on debt | ( | ) | ( | ) | ||||
| Payments on finance lease obligations | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effects of exchange rates on cash | ( | ) | ( | ) | ||||
| Net (decrease) increase in cash and cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents and restricted cash at beginning of period | ||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing activities | ||||||||
| Right-of-use assets acquired through operating leases | $ | $ | ||||||
| Inventory transferred to property and equipment | $ | $ | ||||||
| Property and equipment transferred to inventory | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 8 |
OpGen, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2022
Note 1 – Organization
OpGen, Inc. (“OpGen” or the “Company”) was incorporated in Delaware in 2001. On April 1, 2020, OpGen completed its business combination transaction (the “Transaction”) with Curetis N.V., a public company with limited liability under the laws of the Netherlands (the “Seller” or “Curetis N.V.”), as contemplated by the Implementation Agreement, dated as of September 4, 2019 (the “Implementation Agreement”), by and among the Company, the Seller, and Crystal GmbH, a private limited liability company organized under the laws of the Federal Republic of Germany and wholly-owned subsidiary of the Company (the “Purchaser”). Pursuant to the Implementation Agreement, the Purchaser acquired all of the shares of Curetis GmbH, a private limited liability company organized under the laws of the Federal Republic of Germany (“Curetis GmbH”), and certain other assets and liabilities of the Seller (together, “Curetis”). References to the “Company” include OpGen and its wholly-owned subsidiaries. The Company’s headquarters are in Rockville, Maryland, and the Company’s principal operations are in Rockville, Maryland; Holzgerlingen and Bodelshausen, Germany; and Vienna, Austria. The Company operates in one business segment.
OpGen Overview
OpGen is a precision medicine company harnessing the power of molecular diagnostics and informatics to help combat infectious disease. Along with its subsidiaries, Curetis GmbH and Ares Genetics GmbH, the Company is developing and commercializing molecular microbiology solutions helping to guide clinicians with more rapid and actionable information about life threatening infections to improve patient outcomes and decrease the spread of infections caused by multidrug-resistant microorganisms, or MDROs. OpGen's current product portfolio includes Unyvero, Acuitas AMR Gene Panel, and the ARES Technology Platform including ARESdb, NGS technology and AI-powered bioinformatics solutions for AMR surveillance, outbreak analysis, and antibiotic response prediction including ARESiss, ARESid, and AREScloud, as well as the Curetis CE-IVD-marked PCR-based SARS-CoV-2 test kit.
Following its initial announcement in October 2020, the Company discontinued its QuickFISH and PNA FISH product portfolio in its entirety during the first quarter of 2021 (see Note 10). The Company's FISH customers and distribution partners had been informed accordingly and last orders were received and processed in the first quarter of 2021. The discontinuance of these product lines did not qualify for discontinued operations reporting.
The focus of OpGen is on its combined broad portfolio of products, which include high impact rapid diagnostics and bioinformatics to interpret antimicrobial resistance (“AMR”) genetic data. OpGen will continue to develop and seek FDA and other regulatory clearances or approvals, as applicable, for the Unyvero UTI and IJI products. OpGen offers the FDA-cleared Unyvero LRT and LRT BAL Panels, the FDA-cleared Acuitas AMR Gene Panel diagnostic test, as well as the Unyvero UTI Panel as an RUO product to hospitals, public health departments, clinical laboratories, pharmaceutical companies, and contract research organizations, or CROs. OpGen is also commercializing its CE Marked Unyvero Panels in Europe and other global markets via distributors.
Note 2 – Going Concern and Management’s Plans
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since inception, the Company has incurred, and continues to incur, significant losses from operations and negative operating cash flows and has a significant amount of debt coming due in 2022, 2023, and 2024. The Company has funded its operations primarily through external investor financing arrangements and significant actions taken by the Company, including the following:
| ● | On June 24, 2022, the Company entered into an At the Market Common Offering
(the “2022 Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), as a sales agent, pursuant to which
the Company may offer and sell from time to time in an “at the market offering”, at its option, up to an aggregate of $ |
| ● |
On May 23, 2022, the Company, as guarantor, the Company’s German
operating subsidiary Curetis GmbH, as borrower, the Company’s operating subsidiary Ares Genetics GmbH, as an additional guarantor,
and the European Investment Bank (the “EIB”) entered into a Waiver and Amendment Letter (the “Amendment”) relating
to the amendment of that certain Finance Contract, dated December 12, 2016 (the “Finance Contract”), as amended, between the
EIB and Curetis pursuant to which Curetis borrowed an aggregate amount of € |
| 9 |
| ● | On October 18, 2021, the Company closed a registered direct offering (the
“October 2021 Offering”) with a single healthcare-focused institutional investor of |
| ● | On March 9, 2021, the Company entered into a Warrant Exercise Agreement (the
“Exercise Agreement”) with the institutional investor (the “Holder”) from our 2020 PIPE financing. Pursuant to
the Exercise Agreement, in order to induce the Holder to exercise all of the remaining |
| ● | On February 11, 2021, the Company closed a registered direct offering (the
"February 2021 Offering”) with a single U.S.-based, healthcare-focused institutional investor for the purchase of (i) |
| ● | On February 11, 2020, the Company entered into an At the Market Common Offering (the “ATM Agreement”)
with Wainwright which was amended and restated on November 13, 2020 to add BTIG, LLC (“BTIG”) as a sales agent, pursuant to
which the Company may offer and sell from time to time in an “at the market offering”, at its option, up to an aggregate of
$ |
| 10 |
On February 28, 2022, the Listing Qualifications Staff of The Nasdaq Stock Market LLC notified the Company that the closing bid price of the Company’s common stock had, for
To meet its capital needs, the Company is considering multiple alternatives, including, but not limited to, strategic financings or other transactions, additional equity financings, debt financings and other funding transactions, licensing and/or partnering arrangements. There can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise. The Company believes that current cash will be sufficient to repay or refinance the current portion of the Company’s debt and fund operations into the first quarter of 2023. This has led management to conclude that there is substantial doubt about the Company’s ability to continue as a going concern. In the event the Company is unable to successfully raise additional capital during or before the end of the first quarter of 2023, the Company will not have sufficient cash flows and liquidity to finance its business operations beyond the first quarter of 2023 as currently contemplated. Accordingly, in such circumstances, the Company would be compelled to immediately reduce general and administrative expenses and delay research and development projects, pause or abort clinical trials including the purchase of scientific equipment and supplies, until it is able to obtain sufficient financing. If such sufficient financing is not received on a timely basis, the Company would then need to pursue a plan to license or sell its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection.
Note 3 – Summary of Significant Accounting Policies
Basis of presentation and consolidation
The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information not misleading. The Company recommends that the unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. In the opinion of management, all adjustments that are necessary for a fair presentation of the Company’s financial position for the periods presented have been reflected. All adjustments are of a normal, recurring nature, unless otherwise stated. The interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. The December 31, 2021 consolidated balance sheet included herein was derived from the audited consolidated financial statements, but does not include all disclosures including notes required by GAAP for complete financial statements.
The accompanying unaudited condensed consolidated financial statements include the accounts of OpGen and its wholly-owned subsidiaries as of September 30, 2022; all intercompany transactions and balances have been eliminated.
Foreign currency
The Company has subsidiaries located in Holzgerlingen, Germany; and Vienna, Austria, each of which use currencies other than the U.S. dollar as their functional currency. As a result, all assets and liabilities are translated into U.S. dollars based on exchange rates at the end of the reporting period for these unaudited condensed consolidated financial statements. Income and expense items are translated at the average exchange rates prevailing during the reporting period. Translation adjustments are reported in accumulated other comprehensive income (loss), a component of stockholders’ equity. Foreign currency translation adjustments are the sole component of accumulated other comprehensive income (loss) at September 30, 2022 and December 31, 2021.
Foreign currency transaction gains and losses, excluding gains and losses on intercompany balances where there is no current intent to settle such amounts in the foreseeable future, are included in the determination of net loss. Unless otherwise noted, all references to “$” or “dollar” refer to the United States dollar.
| 11 |
Use of estimates
In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the accompanying unaudited condensed consolidated financial statements, estimates are used for, but not limited to, liquidity assumptions, revenue recognition, inducement expense related to warrant repricing, stock-based compensation, allowances for doubtful accounts and inventory obsolescence, discount rates used to discount unpaid lease payments to present values, valuation of derivative financial instruments measured at fair value on a recurring basis, deferred tax assets and liabilities and related valuation allowance, determining the fair value of assets acquired and liabilities assumed in business combinations, the estimated useful lives of long-lived assets, and the recoverability of long-lived assets. Actual results could differ from those estimates.
Fair value of financial instruments
Financial instruments classified as current assets and liabilities (including cash and cash equivalents, receivables, accounts payable, deferred revenue and short-term notes) are carried at cost, which approximates fair value, because of the short-term maturities of those instruments.
Cash and cash equivalents and restricted cash
The Company considers all highly liquid instruments
with original maturities of three months or less to be cash equivalents. The Company has cash and cash equivalents deposited in financial
institutions in which the balances occasionally exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit of
$
At September 30, 2022 and December 31, 2021, the Company
had funds totaling $
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:
| September 30, 2022 | December 31, 2021 | September 30, 2021 | December 31, 2020 | |||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||||
| Total cash and cash equivalents and restricted cash in the condensed consolidated statements of cash flows | $ | $ | $ | $ | ||||||||||||
Accounts receivable
The Company’s accounts receivable result from
revenues earned but not yet collected from customers. Credit is extended based on an evaluation of a customer’s financial condition
and, generally, collateral is not required. Accounts receivable are due within
At September 30, 2022, the Company had accounts receivable
from one customer which individually represented
| 12 |
Inventory
Inventories are valued using the first-in, first-out cost method and stated at the lower of cost or net realizable value and consist of the following:
| September 30, 2022 | December 31, 2021 | |||||||
| Raw materials and supplies | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
Inventory includes Unyvero instrument systems, Unyvero cartridges, reagents and components for Unyvero, Acuitas, Curetis SARS CoV-2 test kits, and reagents and supplies used for the Company’s laboratory services.
The Company periodically reviews inventory quantities
on hand and analyzes the provision for excess and obsolete inventory based primarily on product expiration dating and its estimated sales
forecast, which is based on sales history and anticipated future demand. The Company’s estimates of future product demand may not
be accurate, and it may understate or overstate the provision required for excess and obsolete inventory. Accordingly, any significant
unanticipated changes in demand could have a significant impact on the value of the Company’s inventory and results of operations.
Based on the Company’s assumptions and estimates, inventory reserves for obsolescence, expirations, and slow-moving inventory were
$
The Company classifies finished good inventory it does not expect to sell or use in clinical studies within 12 months of the unaudited condensed consolidated balance sheets date as strategic inventory, a non-current asset.
Long-lived assets
Property and equipment
Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which we can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets. During the three and nine months ended September 30, 2022 and 2021, the Company determined that its property and equipment were not impaired.
Leases
The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, right-of-use (“ROU”) assets represent the Company’s right to use the underlying asset for the term of the lease and the lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date of the underlying lease arrangement to determine the present value of lease payments. The ROU asset also includes any prepaid lease payments and any lease incentives received. The lease term to calculate the ROU asset and related lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company’s lease agreements generally do not contain any material variable lease payments, residual value guarantees or restrictive covenants.
Lease expense for operating leases is recognized
on a straight-line basis over the lease term as an operating expense while expense for financing leases is recognized as depreciation
expense and interest expense using the effective interest method of recognition. The Company has made certain accounting policy elections
whereby the Company (i) does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of
ROU assets
ROU assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated
by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which the
Company can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying
amount of assets exceeds the fair value of the assets. During the nine months ended September 30, 2021,
the Company had determined that the ROU asset associated with its San Diego, California office lease may not be recoverable. As
a result, the Company had recorded an impairment charge of $
| 13 |
Intangible assets and goodwill
Intangible assets and goodwill as of September 30, 2022 consist of finite-lived and indefinite-lived intangible assets and goodwill.
Finite-lived and indefinite-lived intangible assets
Intangible assets include trademarks, developed technology, in-process research & development, software and customer relationships and consisted of the following as of September 30, 2022 and December 31, 2021:
September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||
| Subsidiary | Cost | Accumulated Amortization | Effect of Foreign Exchange Rates | Net Balance | Accumulated Amortization | Effect of Foreign Exchange Rates | Net Balance | |||||||||||||||||||||||
| Trademarks and tradenames | Curetis | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||
| Distributor relationships | Curetis | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| A50 - Developed technology | Curetis | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Ares - Developed technology | Ares Genetics | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
A30 – Acquired in-process research & development | Curetis | ( | ) | |||||||||||||||||||||||||||
| $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
Identifiable intangible assets will be amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of the intangibles are:
| Estimated Useful Life | |||
| Trademarks and tradenames | |||
| Customer/distributor relationships | |||
| A50 – Developed technology | |||
| Ares – Developed technology | |||
| A30 – Acquired in-process research & development |
Acquired in-process research and development (“IPR&D”) represents the fair value assigned to those research and development projects that were acquired in a business combination for which the related products have not received regulatory approval and have no alternative future use. IPR&D is capitalized at its fair value as an indefinite-lived intangible asset, and any development costs incurred after the acquisition are expensed as incurred. Upon achieving regulatory approval or commercial viability for the related product, the indefinite-lived intangible asset is accounted for as a finite-lived asset and is amortized on a straight-line basis over its estimated useful life. If the project is not completed or is terminated or abandoned, the Company may have an impairment related to the IPR&D which is charged to expense. Indefinite-lived intangible assets are tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount may be impaired. Impairment is calculated as the excess of the asset’s carrying value over its fair value.
The Company reviews the useful lives of intangible assets when events or changes in circumstances occur which may potentially impact the estimated useful life of the intangible assets.
| 14 |
Total amortization expense of intangible assets was
$
| Year Ending December 31, | ||||
| 2022 (Three months) | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total | $ |
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any indicators were present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), the Company would perform the next step, which is to determine the fair value of the asset and record an impairment loss, if any.
In accordance with ASC 360-10, Property, Plant and Equipment, the Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. During the three and nine months ended September 30, 2022 and 2021, the Company determined that its finite-lived intangible assets were not impaired.
Goodwill
Goodwill represents the excess of the purchase
price paid when the Company acquired AdvanDx, Inc. in July 2015 and Curetis in April 2020, over the fair values of the acquired tangible
or intangible assets and assumed liabilities. Goodwill is not tax deductible in any relevant jurisdictions. The Company’s goodwill
balance as of September 30, 2022 and December 31, 2021 was 0 and $
The changes in the carrying amount of goodwill as of September 30, 2022, and since December 31, 2021, were as follows:
| Balance as of December 31, 2021 | $ | |||
| Changes in currency translation | ( |
) | ||
| Goodwill impairment | ( |
) | ||
| Balance as of September 30, 2022 | $ |
The Company conducts an impairment test of goodwill on an annual basis and
will also conduct tests if events occur or circumstances change that would, more likely than not, reduce the Company’s fair value
below its net equity value. During the three and nine months ended September 30, 2021, the Company had determined that its goodwill had
not been impaired. As circumstances changed during the three and nine months ended September 30, 2022 that would, more likely than not,
reduce the Company’s fair value below its net equity value, the Company performed qualitative and quantitative analyses, assessing
trends in market capitalization, current and future cash flows, revenue growth rates, and the impact of global unrest and the COVID-19
pandemic on the Company and its performance. Based on the analysis performed, and primarily due to changes in the Company’s stock
price and market capitalization in the third quarter of 2022, it was determined that goodwill was impaired. As a result, the Company recorded
a goodwill impairment charge in the full amount of $
Revenue recognition
The Company derives revenues from (i) the sale of Unyvero Application cartridges, Unyvero Systems, Acuitas AMR Gene Panel test products, and SARS CoV-2 tests, (ii) providing laboratory services, (iii) providing collaboration services including funded software arrangements, and license arrangements, and (iv) granting access to a subset of the proprietary ARESdb data asset.
| 15 |
The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers, (ii) identification of distinct performance obligations in the contract, (iii) determination of contract transaction price, (iv) allocation of contract transaction price to the performance obligations, and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation.
The Company recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to our customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.
The Company defers incremental costs of obtaining a customer contract and amortizes the deferred costs over the period that the goods and services are transferred to the customer. The Company had no material incremental costs to obtain customer contracts in any period presented.
Deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of services being provided.
Research and development costs
Research and development costs are expensed as incurred. Research and development costs primarily consist of salaries and related expenses for personnel, other resources, laboratory, engineering workshop, and instrument supplies, and fees paid to consultants and outside service partners.
Government grant agreements and research incentives
From time to
time, the Company may enter into arrangements with governmental entities for the purposes of obtaining funding for research and development
activities. The Company recognizes funding from grants and research incentives received from Austrian government agencies in the condensed
consolidated statements of operations and comprehensive loss in the period during which the related qualifying expenses are incurred,
provided that the conditions under which the grants or incentives were provided have been met. For grants under funding agreements and
for proceeds under research incentive programs, the Company recognizes grant and incentive income in an amount equal to the estimated
qualifying expenses incurred in each period multiplied by the applicable reimbursement percentage. The Company classifies government grants
received under these arrangements as a reduction to the related research and development expense incurred. The Company analyzes each arrangement
on a case-by-case basis. For the three months ended September 30, 2022 and 2021, the Company recognized $
Stock-based compensation
Stock-based compensation expense is recognized at fair value. The fair value of stock-based compensation to employees and directors is estimated, on the date of grant, using the Black-Scholes model. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period of the option. For all time-vesting awards granted, expense is amortized using the straight-line attribution method. The Company accounts for forfeitures as they occur.
Option valuation models, including the Black-Scholes model, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant-date fair value of an award. These assumptions include the risk-free rate of interest, expected dividend yield, expected volatility and the expected life of the award.
| 16 |
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred income tax assets to the amount expected to be realized.
Tax benefits are initially recognized in the financial
statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions
are initially, and subsequently, measured as the largest amount of tax benefit that is greater than
The Company had federal net operating loss (“NOL”)
carryforwards of $
The Company also has foreign NOL carryforwards of
$
Loss per share
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.
For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method, and convertible preferred stock and convertible debt using the if-converted method.
For periods of net loss, diluted loss per share is
calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive. The number of
anti-dilutive shares, consisting of (i) common stock options, (ii) stock purchase warrants, and (iii) restricted stock units representing
the right to acquire shares of common stock which have been excluded from the computation of diluted loss per share, was
Recently issued accounting standards
The Company has evaluated all other issued and unadopted ASUs and believes the adoption of these standards will not have a material impact on its results of operations, financial position or cash flows.
| 17 |
Note 4 – Revenue from contracts with customers
Disaggregated revenue
The Company provides diagnostic test products, laboratory services to hospitals, clinical laboratories, and other healthcare providers, and enters into collaboration agreements with government agencies, non-profit organizations, and healthcare providers. The revenues by type of service consist of the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Laboratory services | ||||||||||||||||
| Collaboration revenue | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
Revenues by geography are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Domestic | $ | $ | $ | $ | ||||||||||||
| International | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
Deferred revenue
Changes in deferred revenue for the period were as follows:
| Balance at December 31, 2021 | $ | |||
| New deferrals, net of amounts recognized in the current period | ||||
| Currency translation adjustment | ( | ) | ||
| Balance at September 30, 2022 | $ |
Contract assets
The Company had no contract assets as of September 30, 2022 and December 31, 2021. Contract assets are generated when contractual billing schedules differ from revenue recognition timing and they represent a conditional right to consideration for satisfied performance obligations that becomes a billed receivable when the conditions are satisfied.
Unsatisfied performance obligations
The Company had no unsatisfied performance obligations related to its contracts with customers at September 30, 2022 and December 31, 2021.
Note 5 – Fair value measurements
The Company classifies its financial instruments using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
| ● | Level 1 - defined as observable inputs such as quoted prices in active markets; |
| ● | Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
| ● | Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions such as expected revenue growth and discount factors applied to cash flow projections. |
For the three and nine months ended September 30, 2022, the Company has not transferred any assets between fair value measurement levels.
| 18 |
Financial assets and liabilities measured at fair value on a recurring basis
The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the hierarchy.
In June 2019, Curetis drew down a third tranche of
€
The fair value of Level 3 liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2022 was as follows:
| Description | Balance at December 31, 2021 | Change in Fair Value | Effect of Foreign Exchange Rates | Balance at September 30, 2022 | ||||||||||||
| Participation percentage interest liability | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Total | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Financial assets and liabilities carried at fair value on a non-recurring basis
The Company does not have any financial assets and liabilities measured at fair value on a non-recurring basis.
Non-financial assets and liabilities carried at fair value on a recurring basis
The Company does not have any non-financial assets and liabilities measured at fair value on a recurring basis.
Non-financial assets and liabilities carried at fair value on a non-recurring basis
The Company measures its long-lived assets, including
property and equipment and intangible assets (including goodwill), at fair value on a non-recurring basis when a triggering event requires
such evaluation. During the three and nine months ended September 30, 2021, the Company recorded impairment expense of and $
Note 6 – Debt
The following table summarizes the Company’s long-term debt and short-term borrowings as of September 30, 2022 and December 31, 2021:
| September 30, 2022 | December 31, 2021 | |||||||
| EIB | $ | $ | ||||||
| Total debt obligations | ||||||||
| Unamortized debt discount | ( | ) | ( | ) | ||||
| Carrying value of debt | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
EIB Loan Facility
In 2016, Curetis entered into a contract for an up
to €
| 19 |
The funding can be drawn in up to five tranches within
In April 2017, Curetis drew down a first tranche of
€
In June 2019, Curetis drew down a third tranche of
€
The debt was measured and recognized at fair value
as of the acquisition date. The fair value of the EIB debt was approximately $
On May 23, 2022,
the Company and the EIB entered into a Waiver and Amendment Letter (the “2022 EIB Amendment”) relating to the amendment of
the EIB loan facility, between the EIB and Curetis pursuant to which Curetis borrowed an aggregate amount of €
As of September
30, 2022, the outstanding borrowings under all tranches were €
PPP
On April 22, 2020, the Company entered into a Term
Note (the “Company Note”) with Silicon Valley Bank (the “Bank”) pursuant to the Paycheck Protection Program (the
“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small
Business Administration. The Company’s wholly-owned subsidiary, Curetis USA Inc. (“Curetis USA” and collectively with
the Company, the “Borrowers”), also entered into a Term Note with the Bank (the “Subsidiary Note,” and collectively
with the Company Note, the “Notes”). The Notes were dated April 22, 2020. The principal amount of the Company Note was $
In accordance with the requirements of the CARES Act,
the Borrowers used the proceeds from the Notes in accordance with the requirements of the PPP to cover certain qualified expenses, including
payroll costs, rent and utility costs. Interest accrued on the Notes at the rate of
Total interest
expense (including amortization of debt discounts and financing fees) on all debt instruments was $
| 20 |
Note 7 – Stockholders’ equity
As of September 30, 2022, the Company had
Following receipt of approval from stockholders
at a special meeting of stockholders held on December 8, 2021, the Company filed an amendment to its Amended and Restated Certificate
of Incorporation to increase the authorized shares of common stock from
Following receipt of approval from stockholders at a special meeting of stockholders held on January 17, 2018, the Company filed an amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of common stock, at a ratio of one share for twenty-five shares. Additionally, following receipt of approval from stockholders at a special meeting of stockholders held on August 22, 2019, the Company filed an additional amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of common stock, at a ratio of one share for twenty shares. All share amounts and per share prices in this Quarterly Report have been adjusted to reflect the reverse stock splits.
Following receipt of approval from stockholders at a special meeting of stockholders held on January 17, 2018, the Company filed an amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of common stock, at a ratio of one share for twenty-five shares. Additionally, following receipt of approval from stockholders at a special meeting of stockholders held on August 22, 2019, the Company filed an additional amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of common stock, at a ratio of one share for twenty shares. All share amounts and per share prices in this Quarterly Report have been adjusted to reflect the reverse stock splits.
On June 24, 2022, the Company entered into the 2022
ATM Agreement with Wainwright, as a sales agent, pursuant to which the Company may offer and sell from time to time in an “at the
market offering”, at its option, up to an aggregate of $
On October 18, 2021, the Company closed the October
2021 Offering with a single healthcare-focused institutional investor of
On March 9, 2021, the Company entered into an
Exercise Agreement with the Holder from our 2020 PIPE financing. Pursuant to the Exercise Agreement, in order to induce the Holder to
exercise all of the remaining
| 21 |
On February 11, 2021, the Company closed the February
2021 Offering with a single U.S.-based, healthcare-focused institutional investor for the purchase of (i)
On February 11, 2020, the Company entered into an
ATM Agreement with Wainwright, which was amended and restated on November 13, 2020 to add BTIG, LLC as a sales agent, pursuant to which
the Company could offer and sell from time to time in an “at the market offering,” at its option, up to an aggregate of $
Stock options
In 2008, the Company adopted the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), pursuant to which the Company’s Board of Directors could grant either incentive or non-qualified stock options or shares of restricted stock to directors, key employees, consultants and advisors.
In April 2015, the Company adopted, and the Company’s stockholders approved, the 2015 Equity Incentive Plan (the “2015 Plan”); the 2015 Plan became effective upon the execution and delivery of the underwriting agreement for the Company’s initial public offering in May 2015. Following the effectiveness of the 2015 Plan, no further grants will be made under the 2008 Plan. The 2015 Plan provides for the granting of incentive stock options within the meaning of Section 422 of the Code to employees and the granting of non-qualified stock options to employees, non-employee directors and consultants. The 2015 Plan also provides for the grants of restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and stock payments to employees, non-employee directors and consultants.
Under the 2015 Plan, the aggregate number of shares
of the common stock authorized for issuance may not exceed (1)
On September 30, 2020,
the Company held its 2020 Annual Meeting of Stockholders (the “Annual Meeting”). At the Annual Meeting, stockholders of the
Company voted to approve, among other things, a plan under which stock options to purchase an aggregate of
In connection with the
appointment of Albert Weber as Chief Financial Officer, OpGen granted Mr. Weber an inducement grant of stock options to purchase an aggregate
of
| 22 |
Replacement awards
In connection with the acquisition of Curetis, the
Company issued equity awards to Curetis employees consisting of stock options (“replacement awards”) in exchange for their
Curetis equity awards. The replacement awards consisted of
For the three and nine months ended September 30, 2022 and 2021, the Company recognized share-based compensation expense as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Cost of services | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
No income tax benefit for share-based compensation arrangements was recognized in the condensed consolidated statements of operations and comprehensive loss due to the Company’s net loss position.
The Company granted no options during the three
months ended September 30, 2022. During the three months ended September 30, 2022,
The Company had total stock options to acquire
Restricted stock units
The Company granted no restricted stock units
during the three months ended September 30, 2022, no restricted stock units vested and
Stock purchase warrants
At September 30, 2022 and December 31, 2021, the following warrants to purchase shares of common stock were outstanding:
| Outstanding at | ||||||||||||||||||
| Issuance | Exercise Price | Expiration | September 30, 2022 (1) | December 31, 2021 (1) | ||||||||||||||
| February 2015 | $ | |||||||||||||||||
| June 2017 | $ | |||||||||||||||||
| July 2017 | $ | |||||||||||||||||
| July 2017 | $ | |||||||||||||||||
| July 2017 | $ | |||||||||||||||||
| February 2018 | $ | |||||||||||||||||
| February 2018 | $ | |||||||||||||||||
| October 2019 | $ | |||||||||||||||||
| October 2019 | $ | |||||||||||||||||
| November 2020 | $ | |||||||||||||||||
| February 2021 | $ | |||||||||||||||||
| February 2021 | $ | |||||||||||||||||
| March 2021 | $ | |||||||||||||||||
| October 2021 | $ | |||||||||||||||||
The warrants listed above were issued in connection with various debt, equity or development contract agreements.
| (1) | Warrants to purchase fractional shares of common stock resulting from the reverse stock split on August 22, 2019 were rounded up to the next whole share of common stock on a holder by holder basis. |
| 23 |
Note 8 – Commitments and Contingencies
Registration and other stockholder rights
In connection with the various investment transactions, the Company entered into certain registration rights agreements with stockholders, pursuant to which the investors were granted certain demand registration rights and/or piggyback and/or resale registration rights in connection with subsequent registered offerings of the Company’s common stock.
Supply agreements
In June 2017, the Company entered into an agreement with Life Technologies Corporation, a subsidiary of Thermo Fisher Scientific (“LTC”), to supply the Company with Thermo Fisher Scientific’s QuantStudio 5 Real-Time PCR Systems (“QuantStudio 5”) to be used to run OpGen’s Acuitas AMR Gene Panel tests. Under the terms of the agreement, the Company must notify LTC of the number of QuantStudio 5s that it commits to purchase in the following quarter. As of September 30, 2022, the Company had acquired twenty-four QuantStudio 5s including none during the three and nine months ended September 30, 2022. As of September 30, 2022, the Company has not committed to acquiring additional QuantStudio 5 systems in the next three months.
Curetis places frame-work orders for Unyvero Systems and for raw materials for its cartridge manufacturing to ensure availability during commercial ramp-up-phase and also to gain volume-scale-effects with regards to purchase prices. Some of the electronic parts used for the production of Unyvero Systems have lead times of several months, hence it is necessary to order such systems with long-term framework-orders to ensure the demands from the market are covered. The aggregate purchase commitments over the next twelve months are approximately $
COVID-19 Impact
In December 2019 and early 2020, the coronavirus known as COVID-19 was reported to have surfaced in China. The spread of this virus including its variants and mutations globally in 2020, 2021 as well as into 2022 has caused significant business disruption domestically in the United States and in Europe, as well as China, the areas in which the Company primarily operates or has significant business interest. While the disruption is currently expected to be temporary, such disruption is still ongoing and there remains considerable uncertainty around the duration of this disruption. Therefore, while the Company expects that this matter will continue to impact the Company’s financial condition, results of operations, or cash flows, the extent of the financial impact and duration cannot be reasonably estimated at this time.
Note 9 – Leases
The following table presents the Company’s ROU assets and lease liabilities as of September 30, 2022 and December 31, 2021:
| Lease Classification | September 30, 2022 | December 31, 2021 | ||||||
| ROU Assets: | ||||||||
| Operating | $ | $ | ||||||
| Financing | ||||||||
| Total ROU assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current: | ||||||||
| Operating | $ | $ | ||||||
| Finance | ||||||||
| Noncurrent: | ||||||||
| Operating | ||||||||
| Finance | ||||||||
| Total lease liabilities | $ | $ | ||||||
| 24 |
Maturities of lease liabilities as of September 30, 2022 by fiscal year are as follows:
| Maturity of Lease Liabilities | Operating | Finance | Total | |||||||||||
| 2022 (Three months) | $ | $ | $ | |||||||||||
| 2023 | ||||||||||||||
| 2024 | ||||||||||||||
| 2025 | ||||||||||||||
| 2026 | ||||||||||||||
| Thereafter | ||||||||||||||
| Total lease payments | ||||||||||||||
| Less: Interest | ( | ) | ( | ) | ( | ) | ||||||||
| Present value of lease liabilities | $ | $ | $ | |||||||||||
Condensed consolidated statements of operations classification of lease costs as of the three and nine months ended September 30, 2022 and 2021 are as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||
| Lease Cost | Classification | 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating | Operating expenses | $ | $ | $ | $ | |||||||||||||
| Finance: | ||||||||||||||||||
| Amortization | Operating expenses | |||||||||||||||||
| Interest expense | Other expenses | |||||||||||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||||
Other lease information as of September 30, 2022 is as follows:
| Other Information | Total | |||
| Weighted average remaining lease term (in years) | ||||
| Operating leases | ||||
| Finance leases | ||||
| Weighted average discount rate: | ||||
| Operating leases | % | |||
| Finance leases | % | |||
Supplemental cash flow information as of the nine months ended September 30, 2022 and 2021 is as follows:
| Supplemental Cash Flow Information | 2022 | 2021 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Cash used in operating activities | ||||||||
| Operating leases | $ | $ | ||||||
| Finance leases | $ | $ | ||||||
| Cash used in financing activities | ||||||||
| Finance leases | $ | $ | ||||||
| ROU assets obtained in exchange for lease obligations: | ||||||||
| Operating leases | $ | $ | ||||||
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Note 10 – License agreements, research collaborations and development agreements
NYSDOH
In 2018, the Company announced a collaboration with
the New York State Department of Health (“DOH”) and ILÚM Health Solutions, LLC (“ILÚM”), a wholly-owned
subsidiary of Merck’s Healthcare Services and Solutions division, to develop a state-of-the-art research program to detect, track,
and manage antimicrobial-resistant infections at healthcare institutions statewide. ILÚM has since been acquired by Infectious
Disease Connect, Inc. (“IDC”), a University of Pittsburgh Medical Center (“UPMC”) Enterprise company. The Company
was working together with DOH’s Wadsworth Center and IDC to continue development of an infectious disease digital health and precision
medicine platform that connects healthcare institutions to DOH and uses genomic microbiology for statewide surveillance and control of
antimicrobial resistance. As part of the collaboration, the Company received approximately $
Sandoz
In December 2018, Ares Genetics entered into a service frame agreement with Sandoz International GmbH (“Sandoz”), to leverage Ares Genetics’ database on the genetics of antibiotic resistance, ARESdb, and the ARES Technology Platform for Sandoz’ anti-infective portfolio.
Under the terms of the framework agreement, which
had an initial term of
Qiagen
On February 18, 2019, Ares Genetics and Qiagen GmbH, or Qiagen, entered into
a strategic licensing agreement for ARESdb and AREStools in the area of AMR research. The agreement has a term of
Ares Genetics has retained the rights to use ARESdb and AREStools for AMR research, customized bioinformatics services, and for the development of specific AMR assays and applications for the Curetis Group (including Ares Genetics), as well as third parties (e.g., other diagnostics companies or partners in the pharmaceutical industry). As the Qiagen research offering is expected to also enable advanced molecular diagnostic services and products, Qiagen’s customers may obtain a diagnostic use license from Ares Genetics.
Under the terms of the original agreement, Qiagen, in exchange for a moderate six figure up-front licensing payment, has received an exclusive RUO license to develop and commercialize general bioinformatics offerings and services for AMR research use only, based on Ares Genetics’ database on the genetics of antimicrobial resistance, ARESdb, as well as on the ARES bioinformatics AMR toolbox, AREStools. Under the agreement, the parties had agreed to a mid-single digit percentage royalty rate on Qiagen net sales, which is subject to a minimum royalty rate that steps up upon certain achieved milestones, which is payable to Ares Genetics. The parties also agreed to further modest six figure milestone payments upon certain product launches. The contract was subsequently amended in May 2021 to a non-exclusive license and a flat annual license fee as well as a royalty percentage on potential future panel-based products that are developed by Qiagen.
FISH License
The Company was
party to one license agreement with Life Technologies to acquire certain patent rights and technologies related
to its FISH product line. Royalties were incurred upon the sale of a product or service which utilizes the licensed technology. The Company
terminated this license agreement in October 2020 effective as of
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Siemens
In 2016, Ares Genetics acquired the GEAR assets from
Siemens Technology Accelerator GmbH (“STA”), providing the original foundation to ARESdb. Under the agreement with STA, Ares
Genetics incurs royalties on revenues from licensed product sales or sublicensing proceeds. Royalty rates under the Siemens agreement
range from
Foundation for Innovative New Diagnostics (FIND)
On September 20, 2022, Curetis GmbH and FIND entered into a research and development
collaboration agreement for a total amount due to Curetis of €
Note 11 - Subsequent Events
Subsequent to September 30, 2022, the Company consummated a registered direct offering
of shares of common stock and Series C Mirroring Preferred Stock pursuant to a Securities Purchase Agreement entered into with a certain
institutional investor. Pursuant to the Securities Purchase Agreement, the Company agreed to issue and sell to the investor (i)
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes thereto included in Part I, Item 1 of this quarterly report on Form 10-Q. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under Part II. Item 1A. “Risk Factors” of this quarterly report on Form 10-Q and Part 1. Item 1A of our annual report on Form 10-K for the year ended December 31, 2021.
Overview
OpGen, Inc. (the “Company”) is a precision medicine company harnessing the power of molecular diagnostics and informatics to help combat infectious disease. Along with our subsidiaries, Curetis GmbH and Ares Genetics GmbH, we are developing and commercializing molecular microbiology solutions helping to guide clinicians with more rapid and actionable information about life threatening infections to improve patient outcomes and decrease the spread of infections caused by multidrug-resistant microorganisms, or MDROs. Our current product portfolio includes Unyvero, Acuitas AMR Gene Panel, and the ARES Technology Platform including ARESdb, NGS technology and AI-powered bioinformatics solutions for AMR surveillance, outbreak analysis, and antibiotic response prediction including ARESiss, ARESid, and AREScloud, as well as the Curetis CE-IVD-marked PCR-based SARS-CoV-2 test kit. The Company exited its FISH business in early 2021, and the Company's corresponding license agreement with Life Technologies, a subsidiary of Thermo Fisher, was terminated as of June 30, 2021.
On April 1, 2020, the Company completed a business combination transaction whereby the Company acquired Curetis GmbH, a private limited liability company organized under the laws of the Federal Republic of Germany (“Curetis GmbH”). Curetis is an early commercial-stage molecular diagnostics company focused on rapid infectious disease testing for hospitalized patients with the aim to improve the treatment of hospitalized, critically ill patients with suspected microbial infection and has developed the innovative Unyvero molecular diagnostic solution for comprehensive infectious disease testing. The business combination transaction was designed principally to leverage each company’s existing research and development and relationships with hospitals and clinical laboratories to accelerate the sales of both companies’ products and services.
The focus of OpGen is on its combined broad portfolio of products, which includes high impact rapid diagnostics and bioinformatics to interpret antimicrobial resistance (or AMR) genetic data. The Company currently expects to focus on the following products for lower respiratory infection, urinary tract infection and invasive joint infection:
| ● | The Unyvero Lower Respiratory Tract, or LRT, test (e.g., for bacterial pneumonias) is the first U.S. Food and Drug Administration, or FDA, cleared test that can be used for the detection of more than 90% of common causative agents of pneumonia in hospitalized patients. According to the National Center for Health Statistics (2018), pneumonia is a leading cause of admissions to the hospital and is associated with substantial morbidity and mortality. It also increases in elderly patients, transplant, cancer or other immunocompromised patients. The Unyvero LRT automated test detects 19 pathogens within less than five hours, with approximately two minutes of hands-on time and provides clinicians with a comprehensive overview of 10 genetic antibiotic resistance markers. We have commercialized the Unyvero LRT BAL test for testing bronchoalveolar lavage, or BAL, specimens from patients with LRT infections following FDA clearance received by Curetis in December 2019. The Unyvero LRT BAL automated test simultaneously detects 20 pathogens and 10 antibiotic resistance markers, and it is the first and only FDA-cleared panel that also includes Pneumocystis jirovecii, a key fungal pathogen often found in immunocompromised patients (such as AIDS and transplant patients) that can be difficult to diagnose, as the 20th pathogen on the panel. We believe the Unyvero LRT and LRT BAL tests have the ability to help address a significant, previously unmet medical need that causes over $10 billion in annual costs for the U.S. healthcare system, according to the Centers for Disease Control, or CDC. |
| ● | Following registration of the Unyvero instrument system as an IVD for the Chinese market in early 2021, we are supporting our strategic partner Beijing Clear Biotech (BCB) in pursuing execution of a supplemental clinical trial with the Unyvero HPN test. As requested by the Chinese regulatory authority NMPA, this study is geared towards generating additional data in China that will complement a larger data set with data from abroad compiled from other clinical and analytical studies performed in the past. Due to the continued impact of strict COVID-19 restrictions in China, this supplementary study has not yet been initiated and OpGen currently does not have visibility on the timelines for such a clinical study to start. In the third quarter of 2022, regulatory advisors to BCB informed OpGen that the NMPA has implemented a mandatory new electronic filing regime that requires the Company to re-submit its filing seeking approval for the pneumonia cartridge under the new regime. The regulatory advisors estimate a total duration for the review and approval process to be between 24 to 30 months, and during that time, the clinical study is believed to take approximately 10 to 12 months. |
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| ● | The Unyvero Urinary Tract Infection, or UTI, test, which is CE-IVD marked in Europe, is currently being made available to laboratories in the United States as a research use only, or RUO, kit. The test detects a broad range of pathogens as well as antimicrobial resistance markers directly from native urine specimens. We initiated a prospective multi-center clinical trial for the Unyvero UTI in the United States in the third quarter of 2021 and have recently completed enrollment of more than 1,800 patient samples. We currently expect to conclude reference testing in the coming months and expect unblinding in December 2022 as the next step towards a subsequent FDA submission. |
| ● | The Unyvero Invasive Joint Infection, or IJI, test, which is a variant being developed for the U.S. market, has also been selected for analytical and clinical performance evaluation on the Unyvero A30 platform including clinical trials towards a future U.S. FDA submission. Microbial diagnosis of IJI is difficult because of challenges in sample collection, usually at surgery, and patients being on prior antibiotic therapy which minimizes the chances of recovering viable bacteria. We believe that Unyvero IJI could be useful in identifying pathogens as well as their AMR markers to help guide optimal antibiotic treatment for these patients. |
| ● | On September 30, 2021, we received clearance from the FDA for our Acuitas AMR Gene Panel for bacterial isolates. The Acuitas AMR Gene Panel detects 28 genetic AMR markers in isolated bacterial colonies from 26 different pathogens. We believe the panel provides clinicians with a valuable diagnostic tool that informs about potential AMR patterns early and supports appropriate antibiotic treatment decisions in this indication. We signed two commercial customer contracts, and in October 2022, installed the first two systems for the Acuitas AMR Gene Panel for isolates and have a funnel of several additional commercial contract proposals that we expect to enter into during the coming quarters. |
| ● | On September 20, 2022, we signed a research and development collaboration agreement with the Foundation for Innovative New Diagnostics (FIND), the global alliance for diagnostics, which will fund the development of the A30RQ platform for use in low- and middle-income countries (LMICs). The initial project focuses on a feasibility study for the rapid detection of AMR markers from blood culture. The feasibility phase of this research and development project is set to conclude in the first half of 2023 and is funded for €0.7 million. |
| ● | On October 25, 2022, we announced that our subsidiary Curetis and BioVersys AG, a Swiss biotech company developing novel antibiotics against drug resistant infections, signed a collaboration agreement. Under that collaboration agreement, BioVersys will be using the Unyvero systems and HPN pneumonia test at all its sites for its upcoming BV100 phase II clinical trial. |
| ● | We are also developing novel bioinformatics tools and solutions to accompany or augment our current and potential future IVD products and may seek regulatory clearance for such bioinformatics tools and solutions to the extent they would be required either as part of our portfolio of IVD products or even as a standalone bioinformatics product. |
| ● | We have started offering validated high-quality sequencing and analysis services with rapid turnaround times for key applications in microbiology. The unique and differentiated offering for rapid and comprehensive genetic characterization of bacterial isolates and interpretive services include whole genome sequencing, taxonomic identification and typing, detection of plasmids, and other mobile elements, AMR, and virulence markers. Furthermore, the RUO services provided by OpGen’s lab in Rockville, MD, will provide prediction of phenotypic antibiotic susceptibility based on our ARESdb database as well as specialized software for bacterial outbreak analysis via our AREScloud web application. |
OpGen has extensive offerings of additional IVD tests including CE-IVD-marked Unyvero tests for hospitalized pneumonia patients who are hospitalized, implant and tissue infections, intra-abdominal infections, complicated urinary tract infections, and blood stream infections. Our portfolio furthermore includes a CE-IVD-marked PCR based rapid test kit for SARS-CoV-2 detection in combination with our PCR compatible universal lysis buffer (PULB).
OpGen’s combined AMR bioinformatics offerings, when and if such products are cleared for marketing, will offer important new tools to clinicians treating patients with AMR infections. OpGen’s subsidiary Ares Genetics’ ARESdb is a comprehensive database of genetic and phenotypic information. ARESdb was originally designed based on the Siemens microbiology strain collection covering resistant pathogens and its development has significantly expanded, as a result of transferring data from the discontinued Acuitas Lighthouse into ARESdb to now cover more than 90,000 bacterial isolates that have been sequenced using Next Generation Sequencing, or NGS, technology and tested for susceptibility with applicable antibiotics from a range of over 100 antimicrobial drugs. In the fourth quarter of 2021, Ares Genetics entered into a strategic database access deal with one of the world’s leading microbiology and IVD corporations for their non-exclusive access to approximately 1.1% of Ares Genetics’ total database asset at the time of signing. Ares Genetics continues to explore various discussions with several interested parties in potential future collaboration or licensing opportunities. Additional partnerships with a U.S. CLIA lab, a contract research organization (“CRO”) and a major University Medical Center as well as the Belgian national reference laboratory at the University Hospital Leuven have been initiated and are ongoing and the collaboration master service agreement with Sandoz has recently been extended until January 2025.
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In addition to potential future licensing and partnering, Ares Genetics intends to independently utilize the proprietary biomarker content in this database, as well as to build an independent business in NGS and Artificial Intelligence, or AI, based offerings for AMR research and diagnostics in collaboration with its current and potential future partners in the life science, pharmaceutical and diagnostics industries. Ares Genetics’ customers for such offerings include Siemens Technology Accelerator and academic, public health, and biotechnology institutions from various European countries as new customers.
Curetis’ Unyvero A50 tests for up to 130 diagnostic targets (pathogens and resistance genes) in under five hours with approximately two minutes of hands-on time. The system was first CE-IVD-marked in 2012 and was FDA cleared in 2018 along with the LRT test through a De Novo request. The Unyvero A30 RQ is a new device designed to address the low-to mid-plex testing market for 5-30 DNA targets and to provide results in approximately 30 to 90 minutes with 2-5 minutes of hands-on time. The Unyvero A30 RQ has a small benchtop footprint and has an attractive cost of goods profile. Curetis has been following a partnering strategy for the Unyvero A30 RQ and, following the successful completion of a key development milestone, Curetis has completed final verification and validation testing of the A30 instruments and, in addition to the new collaboration with FIND, is actively engaged in ongoing partnering discussions and due diligence.
The Company has extensive partner and distribution relationships to help accelerate the establishment of a global infectious disease diagnostic testing and informatics business. The Company’s partners include A. Menarini Diagnostics S.r.l. for Pan-European distribution to currently 12 countries and Beijing Clear Biotech Co. Ltd. for Unyvero A50 product distribution in China. We have a network of distributors covering countries in Europe, the Middle East and Africa, Asia Pacific and Latin America. With the discontinuation of our FISH products business in Europe, we have reduced our network of distributors to only those distributors actively commercializing our Unyvero line of products or CE-IVD-marked SARS-CoV-2 test kits.
OpGen will continue to develop and seek FDA and other regulatory clearances or approvals, as applicable, for its Unyvero UTI and IJI products as well as its Unyvero A30 RQ platform. OpGen will continue to offer the FDA-cleared Unyvero LRT and LRT BAL Panels, and FDA-cleared Acuitas AMR Gene Panel tests, as well as the Unyvero UTI Panel as RUO products to hospitals, public health departments, clinical laboratories, pharmaceutical companies and CROs. Curetis continues its efforts in ensuring compliance with the new In-Vitro-Diagnostic Device Regulation (IVDR) in the European Union (EU), which officially went into effect in May 2022. Given the lack of designated Notified Bodies at this time, and with the recently approved EU commission proposal to provide for generous multi-year grace periods for IVD products with former In-Vitro-Diagnostic Device Directive (IVDD) CE marking, it is now possible for Curetis to continue its portfolio of existing CE-IVD-marked products until at least May 2025 and May 2026, respectively, as long as no material changes are being made to any of its products. Following May 2022, however, any new or changed CE-marked products will be required to be IVDR compliant from the outset.
Our headquarters are in Rockville, Maryland, and our principal operations are in Rockville, Maryland and Holzgerlingen and Bodelshausen, both in Germany. We also have operations in Vienna, Austria. We operate in one business segment.
Recent developments
COVID-19
On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. COVID-19 has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption in the financial markets.
As a result of the outbreak, we have experienced a material impact on our business, financial condition and results of operations for the three and nine months ended September 30, 2022 as well as significant business disruptions. For example, the recurring and ongoing COVID-19 related lockdowns and restrictions resulted in delays to the start of the clinical study required in China.
We continue to monitor the impacts of COVID-19 on the global economy and on our business operations. However, at this time, it is difficult to predict how long the potential operational impacts of COVID-19 will remain in effect or to what degree they will impact our operations and financial results. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition, as well as our ability to execute our business strategies and initiatives in their respective expected time frames.
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Financings
Since inception, we have incurred, and continue to incur, significant losses from operations. We have funded our operations primarily through external investor financing arrangements. During 2021, we raised net proceeds of approximately $48 million. During 2022, we raised net proceeds of approximately $1 million through September 30, 2022.
Results of operations for the three months ended September 30, 2022 and 2021
Revenues
| Three months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Product sales | $ | 359,112 | $ | 643,887 | ||||
| Laboratory services | 31,016 | 192,753 | ||||||
| Collaboration revenue | 58,585 | 402,492 | ||||||
| Total revenue | $ | 448,713 | $ | 1,239,132 | ||||
Total revenue for the three months ended September 30, 2022 decreased approximately 64% when compared to the same period in 2021, with a change in the mix of revenue, as follows:
| ● | Product sales: the decrease in revenue of approximately 44% in the 2022 period compared to the 2021 period is primarily attributable to a decrease in international Unyvero system and cartridge sales; |
| ● | Laboratory services: the decrease in revenue of approximately 84% in the 2022 period compared to the 2021 period is primarily attributable to a decrease in COVID-19 testing services performed by Curetis; and |
| ● | Collaboration revenue: the decrease in revenue of approximately 85% in the 2022 period compared to the 2021 period is primarily due to the end of the contract with the New York State DOH in the third quarter of 2021, which had contributed $0.2 million of collaboration revenue for the three months ended September 30, 2022. |
Operating expenses
| Three months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cost of products sold | $ | 1,886,191 | $ | 648,298 | ||||
| Cost of services | 17,239 | 203,314 | ||||||
| Research and development | 2,031,113 | 2,382,303 | ||||||
| General and administrative | 2,020,452 | 2,088,226 | ||||||
| Sales and marketing | 1,031,496 | 1,003,577 | ||||||
| Goodwill impairment charge | 6,975,520 | — | ||||||
| Total operating expenses | $ | 13,962,011 | $ | 6,325,718 | ||||
Our total operating expenses for the three months ended September 30, 2022 increased approximately 121% when compared to the same period in 2021. Operating expenses changed as follows:
| ● | Cost of products sold: cost of products sold for the three months ended September 30, 2022 increased approximately 191% when compared to the same period in 2021. The increase is primarily attributable to the increase of $1.4 million in the Company’s inventory reserve which was driven by review and approval delays of the Company’s pneumonia cartridge encountered in China which required re-submission under the new electronic filing regime; |
| ● | Cost of services: cost of services for the three months ended September 30, 2022 decreased approximately 92% when compared to the same period in 2021. The decrease in cost of services is primarily attributable to lower cost of services due to the conclusion of our contract with the New York State DOH in the third quarter of 2021 and a decrease in COVID-19 testing services by Curetis; |
| ● | Research and development: research and development expenses for the three months ended September 30, 2022 decreased approximately 15% when compared to the same period in 2021. The decrease in research and development is primarily attributable to a reduction in payroll related costs resulting primarily from streamlining our operating activities and reducing headcount in research and development and operations at our Rockville headquarters; |
| ● | General and administrative: general and administrative expenses for the three months ended September 30, 2022 decreased approximately 3% when compared to the same period in 2021, primarily due to a reduction in payroll related costs; |
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| ● | Sales and marketing: sales and marketing expenses for the three months ended September 30, 2022 increased approximately 3% when compared to the same period in 2021, primarily due to the expansion of the Company’s sales force; and |
| ● | Goodwill impairment charge: goodwill impairment charge for the three months ended September 30, 2022 represents the impairment of the Company’s goodwill primarily due to recent decreases in the Company’s stock price and market capitalization. |
Disregarding the impact of the goodwill impairment charge, total operating expenses for the three months ended September 30, 2022 increased approximately 10% when compared to the same period in 2021.
Other (expense) income
| Three months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Interest expense | $ | (569,306 | ) | $ | (1,222,867 | ) | ||
| Foreign currency transaction (losses) gains | (51,547 | ) | 229,074 | |||||
| Other income | 11,174 | 31,844 | ||||||
| Change in fair value of derivative financial instruments | 18,995 | (8,161 | ) | |||||
| Total other expense | $ | (590,684 | ) | $ | (970,110 | ) | ||
Our total other expense for the three months ended September 30, 2022 decreased when compared to the same period in 2021 primarily due to lower interest expense offset by foreign currency transaction losses.
Results of operations for the nine months ended September 30, 2022 and 2021
Revenues
| Nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Product sales | $ | 1,614,435 | $ | 1,479,270 | ||||
| Laboratory services | 94,515 | 643,602 | ||||||
| Collaboration revenue | 176,713 | 757,591 | ||||||
| Total revenue | $ | 1,885,663 | $ | 2,880,463 | ||||
Total revenue for the nine months ended September 30, 2022 decreased approximately 35% when compared to the same period in 2021, with a change in the mix of revenue, as follows:
| ● | Product sales: the increase in revenue of approximately 9% in the 2022 period compared to the 2021 period is primarily attributable to the one-time sale of a pool of Unyvero A50 instrument systems to our Pan-European distribution partner Menarini; |
| ● | Laboratory services: the decrease in revenue of approximately 85% in the 2022 period compared to the 2021 period is primarily attributable to a decrease in COVID-19 testing services performed by Curetis; and |
| ● | Collaboration revenue: the decrease in revenue of approximately 77% in the 2022 period compared to the 2021 period is primarily due to the end of the contract with the New York State DOH in the third quarter of 2021, which had contributed $0.6 million of collaboration revenue for the nine months ended September 30, 2022. |
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Operating expenses
| Nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cost of products sold | $ | 2,824,577 | $ | 1,544,932 | ||||
| Cost of services | 63,450 | 446,232 | ||||||
| Research and development | 6,621,310 | 8,055,384 | ||||||
| General and administrative | 6,779,773 | 7,444,138 | ||||||
| Sales and marketing | 3,252,277 | 2,705,378 | ||||||
| Impairment of right-of-use asset | — | 170,714 | ||||||
| Goodwill impairment charge | 6,975,520 | — | ||||||
| Total operating expenses | $ | 26,516,907 | $ | 20,366,778 | ||||
Our total operating expenses for the nine months ended September 30, 2022 increased approximately 30% when compared to the same period in 2021. Operating expenses changed as follows:
| ● | Costs of products sold: cost of products sold for the nine months ended September 30, 2022 increased approximately 83% when compared to the same period in 2021. The increase is primarily attributable to the increase of $1.4 million in the Company’s inventory reserve which was driven by review and approval delays of the Company’s pneumonia cartridge encountered in China which required re-submission under the new electronic filing regime; |
| ● | Costs of services: cost of services for the nine months ended September 30, 2022 decreased approximately 86% when compared to the same period in 2021. The decrease in cost of services is primarily attributable to lower cost of services related to the conclusion of our contract with the New York State DOH in the third quarter of 2021 and a decrease in COVID testing services by Curetis; |
| ● | Research and development: research and development expenses for the nine months ended September 30, 2022 decreased approximately 18% when compared to the same period in 2021. The decrease in research and development is primarily attributable to a reduction in payroll related costs resulting primarily from streamlining operations and reducing headcount in research and development and operations at our Rockville headquarters; |
| ● | General and administrative: general and administrative expenses for the nine months ended September 30, 2022 decreased approximately 9% when compared to the same period in 2021, which is primarily due to a reduction in payroll related costs; |
| ● | Sales and marketing: sales and marketing expenses for the nine months ended September 30, 2022 increased approximately 20% when compared to the same period in 2021, which is primarily due to the expansion of the Company’s sales force as well as their participation in an increasing number of international and domestic trade shows and exhibitions as the COVID-19 pandemic is gradually brought under control; |
| ● | Impairment of right-of-use asset (ROU asset): impairment of right-of-use asset for the nine months ended September 30, 2021 represents the impairment of Curetis’ former office facility in San Diego, California; and |
| ● | Goodwill impairment charge: goodwill impairment charge for the nine months ended September 30, 2022 represents the impairment of the Company’s goodwill primarily due to recent decreases in the Company’s stock price and market capitalization. |
Disregarding the impact of the goodwill impairment charge, total operating expenses for the nine months ended September 30, 2022 decreased approximately 4% when compared to the same period in 2021.
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Other expense
| Nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Warrant inducement expense | $ | — | $ | (7,755,541 | ) | |||
| Gain on extinguishment of debt | — | 259,353 | ||||||
| Interest expense | (2,618,799 | ) | (3,586,018 | ) | ||||
| Foreign currency transaction gains | 419,160 | 655,774 | ||||||
| Other income | 28,147 | 41,471 | ||||||
| Change in fair value of derivative financial instruments | 54,623 | (122,572 | ) | |||||
| Total other expense | $ | (2,116,869 | ) | $ | (10,507,533 | ) | ||
Our total other expense for the nine months ended September 30, 2022 decreased when compared to the same period in 2021 primarily due to warrant inducement expense related to our 2021 Warrant Exercise.
Liquidity and capital resources
As of September 30, 2022, we had cash and cash equivalents of $10.3 million compared to $36.1 million at December 31, 2021. We have funded our operations primarily through external investor financing arrangements and have raised funds in 2022 and 2021, including:
During the year ended December 31, 2021, we sold 680,000 shares of common stock under the ATM Agreement resulting in aggregate net proceeds to us of approximately $1.48 million, and gross proceeds of $1.55 million.
On February 11, 2021, we closed the February 2021 Offering for the purchase of (i) 2,784,184 shares of common stock, (ii) 5,549,149 pre-funded warrants, and (iii) unregistered common share purchase warrants to purchase 4,166,666 shares. The February 2021 Offering raised aggregate net proceeds of $23.5 million, and gross proceeds of $25.0 million.
On March 9, 2021, we closed the 2021 Warrant Exercise resulting in the issuance of 4,842,615 shares of common stock and raising gross proceeds of approximately $9.65 million and net proceeds of $9.3 million.
On October 18, 2021, we closed the October 2021 Offering of 150,000 shares of convertible preferred stock and warrants to purchase up to an aggregate of 7,500,000 shares of common stock. The October 2021 Offering raised aggregate net proceeds of $13.9 million, and gross proceeds of $15.0 million.
On June 24, 2022, we entered into the 2022 ATM Agreement with Wainwright, as a sales agent, pursuant to which the Company may offer and sell from time to time in an at the market offering, at its option, up to an aggregate of $10.65 million of shares of the Company's common stock through the sales agent. As of September 30, 2022, the Company sold 1,714,882 shares under the 2022 ATM Offering totaling $1.03 million in gross proceeds and $0.99 million in net proceeds. On September 30, 2022, the Company reduced the amount of common stock that may be sold under the 2022 ATM Offering to up to an aggregate of $3.5 million, not including the shares of common stock previously sold under the 2022 ATM Offering.
On October 3, 2022, we closed the October 2022 Offering for the purchase of 5,360,000 shares of the Company’s common stock, 33,810 shares of the Company’s Series C Mirroring Preferred Stock, and pre-funded warrants to purchase an aggregate of 4,300,000 shares of common stock. The October 2022 Offering raised aggregate gross proceeds of $3.34 million before deducting the placement agent’s fees and the offering expenses, and net proceeds of $3.04 million.
To meet our capital needs, we are considering multiple alternatives, including, but not limited to, additional equity financings, debt financings and other funding transactions, and licensing and/or partnering arrangements. There can be no assurance that we will be able to complete any such transaction on acceptable terms or otherwise. We believe that current cash on hand will be sufficient to fund operations into the first quarter of 2023. This has led management to conclude that there is substantial doubt about our ability to continue as a going concern. In the event we are unable to successfully raise additional capital during or before the end of the first quarter of 2023, we will not have sufficient cash flows and liquidity to finance our business operations beyond the first quarter of 2023 as currently contemplated. Accordingly, in such circumstances we would be compelled to immediately reduce general and administrative expenses and delay research and development projects, including the purchase of scientific equipment and supplies, until we are able to obtain sufficient financing. If such sufficient financing is not received on a timely basis, we would then need to pursue a plan to license or sell its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection.
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Sources and uses of cash
Our principal source of liquidity is from financing activities, including issuances of equity and debt securities. The following table summarizes the net cash and cash equivalents provided by (used in) operating activities, investing activities and financing activities for the periods indicated:
| Nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Net cash used in operating activities | $ | (16,454,854 | ) | $ | (17,690,398 | ) | ||
| Net cash used in investing activities | (186,556 | ) | (1,824,765 | ) | ||||
| Net cash (used in) provided by financing activities | (7,746,808 | ) | 32,037,452 | |||||
Net cash used in operating activities
Net cash used in operating activities for the nine months ended September 30, 2022 consisted primarily of our net loss of $26.7 million, reduced by certain non-cash items, including depreciation and amortization expense of $1.3 million, non-cash interest expense of $2.0 million, a change in inventory reserve of $1.4 million, a goodwill impairment charge of $7.0 million, and share-based compensation expense of $0.7 million. Net cash used in operating activities for the nine months ended September 30, 2021 consisted primarily of our net loss of $28.0 million, reduced by certain non-cash items, including inducement expense related to warrant repricing of $7.8 million, depreciation and amortization expense of $2.1 million, non-cash interest expense of $3.0 million, and share-based compensation expense of $0.7 million.
Net cash used in investing activities
Net cash used in investing activities for the nine months ended September 30, 2022 and 2021 consisted of purchases of property and equipment. The majority of the purchases of property and equipment in 2021 were related to the Company’s new corporate headquarters in Rockville, Maryland.
Net cash (used in) provided by financing activities
Net cash used in financing activities for the nine months ended September 30, 2022 consisted of payments on the Company’s EIB debt and finance leases. Net cash provided by financing activities for the nine months ended September 30, 2021 consisted primarily of the net proceeds from the February 2021 Offering, 2021 Warrant Exercise, October 2021 Offering, and exercises of common stock warrants, net of payments on debt and insurance financings.
Contractual Commitments
OpGen’s subsidiary, Curetis, has contractual commitments under its 2016 senior, unsecured loan financing facility of up to €25.0 million with the European Investment Bank (“EIB”). Curetis drew down three tranches under the facility: €10.0 million in April 2017, €3.0 million in June 2018, and €5.0 million in June 2019. The first and second tranches have a floating interest rate of EURIBOR plus 4% payable after each 12-month-period from the draw-down-date and another additional 6% interest per annum that is deferred and payable at maturity together with the principal. The third tranche originally had a 2.1% PPI. Upon maturity of the third tranche, which is not before approximately mid-2024 (and no later than mid-2025), the EIB would have been entitled to an additional payment that is equity-linked and equivalent to 2.1% of the then total valuation of Curetis N.V. As part of an amendment between the Company and the EIB on July 9, 2020, the parties adjusted the PPI percentage applicable to the third EIB tranche of €5.0 million, which was funded in June 2019 from its original 2.1% PPI in Curetis N.V.’s equity value upon maturity to a new 0.3% PPI in OpGen’s equity value upon maturity. This right constitutes an embedded derivative, which is separated and measured at fair value with changes being accounted for through income or loss.
As of September 30, 2022, the outstanding borrowings under all tranches were €14,544,429 ($14,177,909), including deferred interest payable at maturity of €1,755,429 ($1,711,193). On May 23, 2022, the Company and the EIB entered into a Waiver and Amendment Letter (the “2022 EIB Amendment”), which amended the EIB loan facility. The 2022 EIB Amendment restructured the first tranche of approximately €13.35 million (including accumulated and deferred interest) of the Company’s indebtedness with the EIB. Pursuant to the 2022 EIB Amendment, the Company repaid €5.0 million to the EIB in April 2022. The Company also agreed, among other things, to amortize the remainder of the debt tranche over the twelve-month period beginning in May 2022. The 2022 EIB Amendment also provides for the increase of the PPI of the third tranche under the loan facility from 0.3% to 0.75% beginning in June 2024. The terms of the second and third tranches of the Company’s indebtedness of €3.0 million and €5.0 million, respectively, plus accumulated deferred interest remain unchanged.
Critical accounting policies and use of estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In our audited consolidated financial statements, estimates are used for, but not limited to, liquidity assumptions, revenue recognition, share-based compensation, allowances for doubtful accounts and inventory obsolescence, valuation of derivative financial instruments measured at fair value on a recurring basis, deferred tax assets and liabilities and related valuation allowance, estimated useful lives of long-lived assets, and the recoverability of long-lived assets. Actual results could differ from those estimates.
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A summary of our significant accounting policies is included in Note 3 “Summary of significant accounting policies” to the accompanying unaudited condensed consolidated financial statements. Certain of our accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain. Our critical policies are summarized in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021.
Recently issued accounting pronouncements
See Note 3 “Summary of significant accounting policies” in this Form 10-Q for a full description of recent accounting pronouncements, including the respective expected dates of adoption and effects on our unaudited condensed consolidated financial statements.
Off-balance sheet arrangements
As of September 30, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements.
JOBS Act
Prior to December 31, 2020, the Company was an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act, (JOBS Act), and elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies until the Company is no longer an EGC, including using the extended transition period for complying with new or revised accounting standards. As of December 31, 2020, the Company has become a non-accelerated filer under the rules of the SEC and is no longer classified as an EGC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management has carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of September 30, 2022. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Changes in Internal Control over Financial Reporting
For the quarter ended September 30, 2022, there have been no changes in the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Our business and financial results are subject to numerous risks and uncertainties. As a result, the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 should be carefully considered. There have been no material changes in the assessment of the risk factors set forth in such Form 10-K, except for the additional risk factors noted below, which update the risk factors included in Part II, Item 1A of our Quarterly Reports on Form 10-Q for the quarter ended June 30, 2022:
If our goodwill, acquired in-process research and development costs or finite-lived tangible and intangible assets become impaired in the future, we may be required to record non-cash charges to earnings, which could be material and could reduce stockholders’ equity or otherwise adversely affect the Company’s financial condition.
We review long-lived assets, including property and equipment and identifiable amortizing intangible assets, for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. If the fair value is less than the carrying amount of the asset, an impairment is recognized for the difference. Factors which may cause an impairment of long-lived assets include significant changes in the manner of use of these assets, negative industry or market trends, a significant underperformance relative to historical or projected future operating results, extended period of idleness or a likely sale or disposal of the asset before the end of its estimated useful life. In 2021, the Company had determined that the right-of-use asset associated with the Company’s San Diego, California office lease may not be recoverable, and, as a result, the Company recorded an impairment charge of $170,714 during the six months ended June 30, 2021. There can be no assurance that our other long-lived assets and intangible assets will not be further impaired. If our property and equipment and identifiable amortizing intangible assets are determined to be impaired in the future, we may be required to record non-cash charges to earnings during the period in which the impairment is determined, which could be material and have an adverse effect on our financial position and results of operations.
In addition, we review and test goodwill for impairment at least annually and whenever changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. The impairment test for goodwill consists of comparing the fair value of the reporting unit and acquired IPR&D, which is estimated using both the income and market approach, to its carrying value. The process of impairment testing for our goodwill involves a number of judgments and estimates made by management including future cash flows, revenue growth rates, profitability assumptions, terminal growth rates and discount rates with regards to our reporting unit. Our internally generated long-range plan includes assumptions regarding pricing and operating forecasts for our products and technologies. For instance, based on the goodwill impairment assessment performed during the quarter ended September 30, 2022, and primarily due to changes in the Company’s stock price and market capitalization, it was determined that goodwill was impaired. As a result, the Company recorded a goodwill impairment charge in the full amount of $6,975,520 for the three and nine months ended September 30, 2022. Accordingly, if the judgments and estimates used in such analyses are not realized or are affected by external factors, our actual results may not be consistent with such judgments and estimates, and we may be required to record further impairment of the Company’s assets in the future, which could be material, could reduce stockholders’ equity and have an adverse effect on our financial position and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
|
Exhibit Number |
Description | ||
|
| |||
| 3.1 | Certificate of Designation of Preferences, Rights and Limitations of Series C Mirroring Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022). | ||
| 4.1 | Form of Common Stock Purchase Warrant. (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022). | ||
| 4.2 | Form of Pre-Funded Common Stock Purchase Warrant. (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022). | ||
| 10.1 | Form of Securities Purchase Agreement, dated September 30, 2022, by and between OpGen, Inc. and the Investor. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022). | ||
| 10.2 | Form of Warrant Amendment Agreement, dated September 30, 2022, by and between OpGen, Inc. and the Investor. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022). | ||
| 31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a). | ||
| 31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a). | ||
| 32.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
| 101* | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss, (iii) the Unaudited Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements. |
| * | Filed or furnished herewith |
| 38 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| OPGEN, INC. | |||
| By: | /s/ Albert Weber | ||
| Albert Weber | |||
| Chief Financial Officer (principal financial officer and principal accounting officer) | |||
| Date: | November 14, 2022 | ||
| 39 |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A)/15D-14(A)
I, Oliver Schacht, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of OpGen, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 |
| /s/ Oliver Schacht |
| Oliver Schacht, Ph.D. |
|
Chief Executive Officer (principal executive officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A)/15D-14(A)
I, Albert Weber, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of OpGen, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 |
| /s/ Albert Weber |
| Albert Weber |
|
Chief Financial Officer (principal financial officer and principal accounting officer) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report on Form 10-Q of OpGen, Inc. (the “Company”) for the quarterly period ended September 30, 2022 (the “Report”) as filed with the Securities and Exchange Commission on the date hereof, the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify that, to such officer’s knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| Date: November 14, 2022 | By: | /s/ Oliver Schacht | ||
| Oliver Schacht, Ph.D. | ||||
| Chief Executive Officer | ||||
| (principal executive officer) | ||||
| Date: November 14, 2022 | By: | /s/ Albert Weber | ||
| Albert Weber | ||||
| Chief Financial Officer | ||||
| (principal financial officer and principal accounting officer) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.