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    OPGN   US68373L3078

OPGEN, INC.

(OPGN)
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OPGEN : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

03/29/2021 | 05:34pm EDT

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report. 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 in the section titled "Risk Factors" included under Part I, Item 1A of this Annual Report.

Overview

OpGen is a precision medicine company harnessing the power of molecular diagnostics and informatics to help combat infectious disease. Along with 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, Curetis' SARS CoV-2 products, QuickFISH, PNA FISH, Acuitas AMR Gene Panel, Acuitas® Lighthouse, and the ARES Technology Platform including ARESdb, using NGS technology and AI-powered bioinformatics solutions for antibiotic response prediction. On October 13, 2020, the Company announced its decision to exit the FISH business in its entirety by June 30, 2021 and the Company's license agreement with Life Technologies, a subsidiary of ThermoFisher, will be terminated as of such date.

On April 1, 2020, the Company completed a 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 ("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"). Curetis is an early commercial-stage molecular diagnostics (MDx) 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 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 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 is the first FDA cleared test

   that can be used for the detection of more than 90% of common causative agents
   of hospitalized pneumonia. 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. 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 are also
   commercializing the Unyvero LRT BAL test for testing bronchoalveolar lavage, or
   BAL, specimens from patients with lower respiratory tract 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 now also includes
   Pneumocystis jirovecii, a key fungal pathogen often found in immunocompromised
   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.

· The Unyvero Urinary Tract Infection, or UTI, test which is CE-IVD marked in

   Europe is currently being made available to laboratories in the U.S. 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.
   As part of our portfolio strategy update on October 13, 2020, we have decided
   to proceed with the analytical and clinical performance evaluation including
   clinical trials required for a subsequent U.S. FDA submission.



· The Unyvero Invasive Joint Infection, or IJI, test, which is a variant

developed for the U.S. market based on the CE-IVD-marked European Unyvero ITI

test, has also been selected for analytical and clinical performance evaluation

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.




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· The Acuitas AMR Gene Panel (Isolates) is currently pending final FDA review and

   a potential clearance decision. The FDA recently notified us that the agency
   plans to continue prioritizing emergency use authorization requests for
   diagnostic products intended to address the COVID-19 pandemic for at least the
   remainder of the year, which will impact the statutory review periods for
   submissions, including the potential clearance decision on our Acuitas AMR Gene
   Panel (Isolates) submission. Despite the FDA having informed us of their
   resumed review at the end of January 2021 of the responses filed by OpGen to
   the AI letters, the FDA still does not commit to any MDUFA timelines. Once FDA
   cleared, we expect to commercialize the Acuitas AMR Gene Panel for isolates
   more broadly to customers in the U.S. The Acuitas AMR Gene Panel (Urine) test
   has been discontinued as part of the October 13, 2020 portfolio and pipeline
   strategy review.



· 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.



OpGen has extensive offerings of additional in vitro diagnostic tests including CE-IVD-marked Unyvero tests for hospitalized pneumonia patients, 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) which we also market as a stand-alone RUO reagent.

OpGen's combined AMR bioinformatics offerings, once such products are cleared for marketing, if ever, will offer important new tools to clinicians treating patients with AMR infections. We have collaborated with Merck, Inc. to establish the Acuitas Lighthouse Knowledgebase, which is currently commercially available in the United States for RUO. The Acuitas Lighthouse Knowledgebase includes approximately 15,000 bacterial isolates from the Merck SMART surveillance network of 192 hospitals in 52 countries and other sources. 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, also by transferring data from the Acuitas Lighthouse® into ARESdb to now cover approximately 55,000 bacterial isolates that have been sequenced using NGS technology and tested for susceptibility with applicable antibiotics from a range of over 100 antimicrobial drugs. In September 2019, Ares Genetics signed a technology evaluation agreement with an undisclosed global IVD corporation. In the collaboration, Ares Genetics further enriched ARESdb with a focus on certain pathogens relevant in a first, undisclosed infectious disease indication. Following the successful completion of this collaborative R&D project, the IVD partner exercised their option for a 90-day period of exclusive negotiations with Ares Genetics for a potential exclusive license to ARESdb in the field of human clinical diagnostics. Following the lapse of such 90-day period without any commercial deal being signed, Ares Genetics is now in multiple, nonexclusive parallel discussions with several interested parties and such discussions are ongoing.

In addition to potential future licensing and partnering, OpGen's subsidiary Ares Genetics intends to independently utilize the proprietary biomarker content in these databases, as well as to build an independent business in NGS and 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 has recently signed up Siemens Technology Accelerator and AGES (Austrian Agency for Health and Food Safety) as new customers, as well as entered into another technology assessment and feasibility project with another undisclosed major global IVD corporation, which was also successfully completed.

The 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. As of December 31, 2020, there is an installed base of about 179 Unyvero A50 Analyzers globally. 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 45 to 90 minutes with 2-5 minutes of hands on time. The Unyvero A30 RQ has a small laboratory footprint and has an attractive cost of goods profile. Curetis has been following a partnering strategy for the Unyvero A30 RQ.

The Company has extensive partner and distribution relationships to help accelerate the establishment of a global infectious disease diagnostic testing and informatics business. Partners include A. Menarini Diagnostics for pan-European distribution to currently 11 countries and Beijing Clear Biotech Co. Ltd. for Unyvero A50 product distribution in China. We have a network currently consisting of over 20 distributors covering more than 40 countries. With the discontinuation of our FISH products business in Europe we expect that network of distributors to be reduced to only those distributors actively commercializing our Unyvero line of products and / 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 the Acuitas AMR Gene Panel (Isolate) diagnostic test, Unyvero UTI and IJI products. OpGen will continue to offer the FDA-cleared Unyvero LRT and LRT BAL Panels, as well as Unyvero UTI Panel and Acuitas AMR Gene Panel (Isolates) and Acuitas Lighthouse Software as RUO products to hospitals, public health departments, clinical laboratories, pharmaceutical companies and contract research organizations ("CROs").

Our headquarters are in Gaithersburg, Maryland, and our principal operations are in Gaithersburg, Maryland and Holzgerlingen and Bodelshausen, both in Germany. We also have operations in Vienna, Austria. The Company will move its headquarters in April 2021 and US operations in May 2021 from Gaithersburg, Maryland to Rockville, Maryland. We operate in one business segment.

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Financing Transactions

Since inception, the Company has incurred, and continues to incur, significant losses from operations. The Company has funded its operations primarily through external investor financing arrangements. The following financing transactions took place during 2019 and 2020:

· On March 29, 2019, the Company closed the March 2019 Public Offering of 450,000

   shares of its common stock at a public offering price of $12.00 per share. The
   offering raised gross proceeds of $5.4 million and net proceeds of
   approximately $4.8 million.

· On October 28, 2019, the Company closed the October 2019 Public Offering of

   2,590,170 units at $2.00 per unit and 2,109,830 pre-funded units at $1.99 per
   pre-funded unit, raising gross proceeds of approximately $9.4 million and net
   proceeds of approximately $8.3 million. Each unit included one share of common
   stock and one common warrant to purchase one share of common stock at an
   exercise price of $2.00 per share. Each pre-funded unit included one pre-funded
   warrant to purchase one share of common stock for an exercise price of $0.01
   per share, and one common warrant to purchase one share of common stock at an
   exercise price of $2.00 per share. The common warrants are exercisable
   immediately and have a five-year term from the date of issuance. As of December
   31, 2019, all 2,109,830 pre-funded warrants issued in the October 2019 Public
   Offering have been exercised.

· On February 11, 2020, the Company entered into an ATM Agreement with

   Wainwright, which was subsequently amended and restated on November 13, 2020,
   to add 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 $22.1 million of shares of its common stock through the sales
   agents. During the year ended December 31, 2020, the Company sold 7,521,610
   shares of its common stock under the 2020 ATM Offering resulting in aggregate
   net proceeds of approximately $15.8 million, and gross proceeds of $16.7
   million.

· On November 25, 2020, the Company closed a private placement with one

   healthcare-focused U.S. institutional investor of (i) 2,245,400 shares of
   common stock together with 2,245,400 warrants (the "Common Warrants") to
   purchase up to 2,245,400 shares of common stock and (ii) 2,597,215 pre-funded
   warrants (the "Pre-Funded Warrants"), with each Pre-Funded Warrant exercisable
   for one share of common stock, together with 2,597,215 Common Warrants to
   purchase up to 2,597,215 shares of common stock. Each share of common stock and
   accompanying Common Warrant were sold together at a combined offering price of
   $2.065, and each Pre-funded Warrant and accompanying Common Warrant were sold
   together at a combined offering price of $2.055. The Common Warrants have an
   exercise price of $1.94 per share and are exercisable commencing on the six
   month anniversary of the date of issuance, and will expire five and one half
   (5.5) years from the date of issuance (collectively, the "2020 PIPE"). The 2020
   PIPE raised aggregate net proceeds of $9.3 million, and gross proceeds of $10.0
   million.

· During the year ended December 31, 2020, approximately 4.3 million common

warrants issued in our October 2019 Public Offering were exercised raising net

proceeds of approximately $8.7 million.

In addition to the foregoing, the Company also completed the following financing transactions during 2021:

· 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) 2,784,184 shares of common stock

and (ii) 5,549,149 pre-funded warrants (the "Pre-Funded Warrants"), with each

Pre-Funded Warrant exercisable for one share of common stock. The Company also

issued to the investor, in a concurrent private placement, unregistered common

share purchase warrants (the "Common Warrants") to purchase 4,166,666 shares of

the Company's common stock. Each share of common stock and accompanying Common

Warrant were sold together at a combined offering price of $3.00, and each

Pre-Funded Warrant and accompanying Common Warrant were sold together at a

combined offering price of $2.99. The Pre-Funded Warrants are immediately

exercisable, at an exercise price of $0.01, and may be exercised at any time

until all of the Pre-Funded Warrants are exercised in full. The Common Warrants

have an exercise price of $3.55 per share, are exercisable commencing on the

six-month anniversary of the date of issuance, and expire five and one half

(5.5) years from the date of issuance. The February 2021 Offering raised

aggregate net proceeds of $23.4 million, and gross proceeds of $25.0 million.








57







· As noted above on November 23, 2020, the Company entered into a securities

   purchase agreement with an institutional investor (the "Holder"), pursuant to
   which the Company issued to the Investor, securities of the Company, including
   warrants (the "Existing Warrants") to purchase up to 4,842,615 shares of common
   stock of the Company (the "Warrant Shares"). The Existing Warrants were
   exercisable six months after their issuance at an exercise price of $1.94 per
   share and expire on the fifth and a half year anniversary of the date of
   issuance. On March 9, 2021, the Company entered into a Warrant Exercise
   Agreement (the "Exercise Agreement") with the Holder. Pursuant to the Exercise
   Agreement, in order to induce the Holder to exercise all of the remaining
   4,842,615 outstanding Existing Warrants for cash, pursuant to the terms of and
   subject to beneficial ownership limitations contained in the Existing Warrants,
   the Company agreed to issue to the Holder, new warrants (the "New Warrants") to
   purchase 0.65 shares of Common Stock for each share of Common Stock issued upon
   such exercise of the remaining 4,842,615 outstanding Existing Warrants pursuant
   to the Exercise Agreement or an aggregate of 3,147,700 New Warrants. The terms
   of the New Warrants are substantially similar to those of the Existing
   Warrants, except that the New Warrants will have an exercise price of $3.56.
   The New Warrants are immediately exercisable and expire five years from the
   date of the Exercise Agreement. On March 12, 2021, the Company and the Holder
   amended the Exercise Agreement to provide that the Holder would pay the Company
   $0.08125 for each New Warrant issued to the Holder. The Holder paid an
   aggregate of $255,751 to the Company for the purchase of the New Warrants. The
   Company received aggregate gross proceeds before expenses of approximately
   $9.65 million from the exercise of all of the remaining 4,842,615 outstanding
   Existing Warrants held by the Holder and the payment of the purchase price for
   the New Warrants.



Results of Operations for the Years Ended December 31, 2020 and 2019

Revenues



                           Years Ended December 31,
                             2020            2019
Revenue
Product sales           $  2,704,364     $ 2,168,179
Laboratory services          167,736           5,435
Collaboration revenue      1,342,341       1,325,000
Total revenue           $  4,214,441     $ 3,498,614



The Company's total revenue for the year ended December 31, 2020 increased 20%, to $4.2 million from $3.5 million, when compared to the same period in 2019. This increase is primarily attributable to:

· Product Sales: the increase in revenue of 25% in the 2020 period compared to

   the 2019 period is primarily attributable to the inclusion of Curetis' products
   sales subsequent to the Transaction, offset in part by a reduction in the sale
   of the Company's FISH rapid pathogen ID testing products due to the loss of
   large customers and COVID-19;

· Laboratory Services: the increase in revenue in the 2020 period compared to the

2019 period is primarily attributable to the inclusion of Ares Genetics'

laboratory services subsequent to the Transaction; and

· Collaboration Revenue: the decrease in collaboration revenue of 1% in the 2020

   period compared to the 2019 period is primarily the result of by lower revenue
   from our contract with the New York State DOH offset by the inclusion of Ares
   Genetics' Collaboration revenue subsequent to the Transaction.


Operating expenses



                                      Years Ended December 31,
                                        2020             2019
Cost of products sold              $  3,360,280     $    911,565
Cost of services                        488,211          720,156
Research and development              9,964,720        5,121,168
General and administrative            8,801,661        6,252,442
Sales and marketing                   3,094,092        1,464,721
Transaction costs                       471,522          779,048

Impairment of right-of-use asset 101,838 520,759 Impairment of intangible assets 750,596

               -
Gain on sale of equipment              (100,000 )             -
Total operating expenses           $ 26,932,920     $ 15,769,859






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The Company's total operating expenses for the year ended December 31, 2020 increased 71%, to $26.9 million from $15.8 million, when compared to the same period in 2019. This increase is primarily attributable to:

· Costs of products sold: expenses for the year ended December 31, 2020 increased

   approximately 269% when compared to the same period in 2019. The change in
   costs of products sold is primarily attributable to the inclusion of Curetis'
   cost of products sold subsequent 'to the Transaction as well as increased
   regulatory costs and an increase in the Company's write off of its FISH
   inventory;

· Costs of services: expenses for the year ended December 31, 2020 decreased

   approximately 32% when compared to the same period in 2019. The change in cost
   of service was primarily attributable to lower costs associated with our New
   York State DOH contract partially offset by the inclusion of Curetis' and Ares
   Genetics' cost of services subsequent to the Transaction;

· Research and development: expenses for the year ended December 31, 2020

   increased approximately 95% when compared to the same period in 2019. The
   change in research and development is primarily attributable to the inclusion
   of Curetis' and Ares' research and development expenses subsequent to the
   Transaction;

· General and administrative: expenses for the year ended December 31, 2020

increased approximately 41% when compared to the same period in 2019, primarily

due to the inclusion of Curetis' expenses subsequent to the Transaction;

· Sales and marketing: expenses for the year ended December 31, 2020 increased

   approximately 111% when compared to the same period in 2019, primarily due to
   the inclusion of Curetis' sales and marketing expenses subsequent to the
   Transaction, partially offset by lower travel costs;

· Transaction costs: transaction costs for the year ended December 31, 2020

decreased approximately 39% when compared to the same period in 2019, primarily

due to the timing of the Transaction announcement in 2019;

· Impairment of intangible assets: impairment of intangible assets for the year

ended December 31, 2020 represents the write down of intangible assets acquired

from AdvanDx in 2015;

· Impairment of right-of-use asset: impairment of right-of-use asset for the year

   ended December 31, 2020 represents the impairment of our Woburn, Massachusetts
   ROU asset recorded as part of the Company's adoption of ASU
   2016-02, Leases (Topic 842) in 2019 and the additional impairment expense in
   2020; and

· Gain on sale of equipment: gain on sale of equipment for the year ended

   December 31, 2020 represents the sale of laboratory equipment to one of our
   vendors.






Other expense



                                                        Years Ended December 31,
                                                         2020              2019
Gain on extinguishment of debt                     $      884,970     $          -
Interest expense                                       (3,399,384 )        (187,549 )
Foreign currency transaction (losses) gains            (1,468,855 )           2,410
Change in fair value of derivative financial
instruments                                               517,680                67
Interest and other income                                 105,627             9,859
Total other expense                                $   (3,359,962 )   $    (175,213 )



Other expense for the year ended December 31, 2020 increased to a net expense of $3,359,962 from a net expense of $175,213 in the same period of 2019. The increase was primarily a result of an increase in interest expense associated with the debt assumed as part of the Transaction with Curetis offset by a gain on extinguishment of debt related to the Company's PPP loan.

Liquidity and Capital Resources

At December 31, 2020, the Company had cash and cash equivalents of $13.4 million, compared to $2.7 million at December 31, 2019. The Company has funded its operations primarily through external investor financing arrangements and has raised significant funds in 2020 and 2019, including:

On November 25, 2020, the Company closed the 2020 PIPE of 2,245,400 shares of common stock together with 2,597,215 pre-funded warrants. The 2020 PIPE raised aggregate net proceeds of $9.3 million, and gross proceeds of $10.0 million.

On February 11, 2020, we entered into the 2020 ATM Agreement, pursuant to which we may offer and sell from time to time at our option, up to an aggregate of $22.1 million of shares of our common stock through the sales agents. During the year ended December 31, 2020, the Company sold 7,521,610 shares of its common stock under the 2020 ATM Offering resulting in aggregate net proceeds of approximately $15.8 million, and gross proceeds of $16.7 million.



59







During the year ended December 31, 2020, approximately 4.3 million common warrants issued in the Company's October 2019 Public Offering were exercised raising net proceeds of approximately $8.7 million.

On October 28, 2019, the Company closed the October 2019 Public Offering of 2,590,170 units at $2.00 per unit and 2,109,830 pre-funded units at $1.99 per pre-funded unit. The offering raised gross proceeds of approximately $9.4 million and net proceeds of approximately $8.3 million.

On March 29, 2019, the Company closed the March 2019 Public Offering of 450,000 shares of its common stock at a public offering price of $12.00 per share. The offering raised gross proceeds of $5.4 million and net proceeds of approximately $4.8 million.

Sources and uses of cash

The following table summarizes the net cash provided by (used in) operating activities, investing activities and financing activities for the periods indicated:


                                                Years Ended December 31,
                                                 2020              2019

Net cash used in operating activities $ (23,396,532 ) $ (11,505,439 ) Net cash used in investing activities (1,063,505 ) (2,502,576 ) Net cash provided by financing activities 34,087,148 12,168,146

Net cash used in operating activities

Net cash used in operating activities in 2020 consisted primarily of our net loss of $26.2 million, reduced by certain non-cash items, including depreciation and amortization expense of $2.3 million, non-cash interest of $2.6 million, share-based compensation of $0.3 million, partially offset by gains on debt forgiveness of $0.9 million, changes in warrant liabilities of $0.5 million, and the net change in operating assets and liabilities of $2.3 million. Net cash used in operating activities in 2019 consisted primarily of our net loss of $12.4 million, reduced by certain non-cash items, including depreciation and amortization expense of $0.9 million, share-based compensation of $0.4 million, partially offset by the net change in operating assets and liabilities of $0.9 million.

Net cash used in investing activities

Net cash used in investing activities in 2020 consisted primarily of funds provided to Curetis GmbH as part of the Interim Facility offset by the acquisition of Curetis net of cash acquired of $1.3 million. Net cash provided by investing activities for the year ended December 31, 2019 consisted of funds provided to Curetis GmbH as part of the Interim Facility and purchases of property and equipment offset by proceeds from the sale of equipment.

Net cash provided by financing activities

Net cash provided by financing activities in 2020 of $34.1 million consisted primarily of net proceeds from the 2020 PIPE, 2020 ATM Offering and exercises of common stock warrants and issuance of debt. Net cash provided by financing activities in 2019 of $12.2 million consisted primarily of net proceeds from the October 2019 Public Offering and March 2019 Public Offering.

Funding requirements

Our primary use of cash is to fund operating expenses, including our research and development expenditures. Our future funding requirements will depend on many factors, including the following:

· the initiation, progress, timing, costs and results of preclinical studies and

clinical trials for our products;

· the clinical development plans we establish for these products;

· the number and characteristics of products that we develop;

· the outcome, timing and cost of meeting regulatory requirements established by

the FDA, EMA and other comparable foreign regulatory authorities;




60







· the terms of our existing and any future license or collaboration agreements we

may choose to enter into, including the amount of upfront, milestone and

royalty obligations;

· the other costs associated with in-licensing new technologies, such as any

increased costs of research and development and personnel;

· the cost of filing, prosecuting, defending and enforcing our patent claims and

other intellectual property rights;

· the cost of defending intellectual property disputes, including patent

infringement actions brought by third parties against us or our product

candidates;

· the effect of competing technological and market developments;

· the degree of commercial success achieved following the successful completion

of development and regulatory approval activities for our products.

· the cost to establish and maintain collaborations on favorable terms, if at

all; and

· the cost to comply with our obligations as a public company.

Critical Accounting Policies and Use of Estimates

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our audited 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.

A summary of our significant accounting policies is included in Note 3 to the accompanying audited 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.

Business Combinations

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated acquisition date fair values. The excess of the fair value of the purchase consideration over the fair values of the identifiable assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, we make significant estimates and assumptions, especially with respect to intangible assets and debt instruments.

Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer/distributions relationships, developed technology, and in-process research & development discount rates, and terminal values. Our estimate of fair value is based upon assumptions believed to be reasonable, but actual results may differ from estimates.

We determine the fair value of assumed debt using a discounted cash flow analysis using interest rates for debt with similar terms and maturities. Differences between the fair value and the stated value is recorded as a discount or premium and amortized over the remaining term using the effective interest method. We utilize a Monte Carlo simulation method to determine the fair value of conversion notes, which utilizes inputs including the common stock price, volatility of common stock, the risk-free interest rate and the probability of conversion to common shares at the conversion rate.

Other estimates associated with the accounting for the acquisition may change as additional information becomes available regarding the assets acquired and liabilities assumed, as more fully discussed in Note 4 - Business Combination of the notes to the consolidated financial statements (Part II, Item 8 of this Form 10-K).

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Revenue Recognition



The Company derives revenues from (i) the sale of QuickFISH and PNA FISH diagnostic test products, Unyvero Application cartridges, Unyvero Systems, SARS CoV-2 tests, Acuitas AMR Gene Panel RUO test products, (ii) providing laboratory services, and (iii) providing collaboration services including funded software arrangements, and license arrangements.

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.

Impairment of Long-Lived Assets

Property and equipment is 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.

Definite-lived intangible assets include trademarks, developed technology, software and customer relationships. 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.

Acquired In-Process Research & Development 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 the 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.

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. The Company will conduct an impairment test of goodwill on an annual basis as of December 31 of each year 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.

Share-Based Compensation

Share-based payments to employees, directors and consultants are recognized at fair value. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period of the option. The estimated fair value of equity instruments issued to nonemployees is recorded at fair value on the earlier of the performance commitment date or the date the services required are completed.

For all time-vesting awards granted, expense is amortized using the straight-line attribution method. For awards that contain a performance condition, expense is amortized using the accelerated attribution method. Share-based compensation expense recognized is based on the value of the portion of stock-based awards that is ultimately expected to vest during the period. The fair value of share-based payments is estimated, on the date of grant, using the Black-Scholes model. Option valuation models, including the Black-Scholes model, require the input of highly subjective estimates and assumptions, and changes in those estimates and assumptions can materially affect the grant-date fair value of an award. These assumptions include the fair value of the underlying and the expected life of the award.

See additional discussion of the use of estimates relating to share-based compensation, and a discussion of management's methodology for developing each of the assumptions used in such estimates, in Note 3 to the accompanying consolidated financial statements.



62







Recent Accounting Pronouncements

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 3 to our consolidated financial statements appearing elsewhere in this filing, such standards will not have a material impact on our consolidated financial statements or do not otherwise apply to our operations.

Off-Balance Sheet Arrangements

As of December 31, 2020 and 2019, the Company 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.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2021 7,79 M - -
Net income 2021 -35,6 M - -
Net Debt 2021 3,78 M - -
P/E ratio 2021 -2,21x
Yield 2021 -
Capitalization 83,0 M 83,0 M -
EV / Sales 2021 11,1x
EV / Sales 2022 4,64x
Nbr of Employees 102
Free-Float 99,9%
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Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 3
Average target price 5,50 $
Last Close Price 2,17 $
Spread / Highest target 223%
Spread / Average Target 153%
Spread / Lowest Target 84,3%
EPS Revisions
Managers and Directors
NameTitle
Oliver Schacht Chief Executive Officer & Director
Timothy C. Dec CFO, Secretary & Chief Accounting Officer
Bill E. Rhodes Non-Executive Chairman
Vadim Sapiro Chief Information Officer
G. Terrance Walker Senior Vice President-Research & Development
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