Filed Pursuant to rule 424(b)(3)
Registration Statement No. 333-268648
Prospectus
321,207 Shares of Common Stock
2,586,207 Series A-1 Warrants
to Purchase up to 2,586,207 Shares of Common Stock
2,586,207 Series A-2 Warrants
to Purchase up to 2,586,207 Shares of Common Stock
2,265,000 Pre-Funded Warrants
to Purchase up to 2,265,000 Shares of Common Stock
7,437,414 Shares of Common
Stock Underlying the Common Warrants and Pre-Funded Warrants
___________________
We are offering 321,207 shares of our common stock together with Series
A-1 warrants to purchase up to 2,586,207 shares of common stock and Series A-2 warrants to purchase up to 2,586,207 shares of our common
stock. The Series A-1 and Series A-2 warrants are collectively referred to herein as the “common warrants”. Each share of
our common stock, or pre-funded warrant in lieu thereof, is being sold together with a Series A-1 warrant to purchase one share of our
common stock and Series A-2 warrant to purchase one share of our common stock. The shares of common stock and common warrants are immediately
separable and will be issued separately in this offering, but must be purchased together in this offering. The public offering price for
each share of common stock and accompanying warrant is $2.90. Each common warrant will have an exercise price per share of $2.65 and will
be immediately exercisable. The Series A-1 warrants will expire on the 5 year anniversary of the original issuance date. The Series A-2
warrants will expire on the 18-month anniversary of the original issuance date.
We are also offering to certain purchasers
whose purchase of shares of common stock in this offering would otherwise result in the purchaser, together with its affiliates and certain
related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately
following the consummation of this offering, the opportunity to purchase, if any such purchaser so chooses, pre-funded warrants, in lieu
of shares of common stock that would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or, at the election
of the purchaser, 9.99%) of our outstanding common stock. The public offering price of each pre-funded warrant and accompanying common
warrant will be equal to the price at which one share of common stock and accompanying common warrant is sold to the public in this offering,
minus $0.01, and the exercise price of each pre-funded warrant will be $0.01 per share. The pre-funded warrants will be immediately exercisable
and may be exercised at any time until all of the pre-funded warrants are exercised in full. The pre-funded warrants and common warrants
are immediately separable and will be issued separately in this offering, but must be purchased together in this offering. Pursuant to this prospectus, we are also offering the shares of common
stock issuable upon exercise of the common warrants and pre-funded warrants.
This offering will terminate on January
20, 2023, unless we decide to terminate the offering (which we may do at any time in our discretion) prior to that date. We will have
one closing for all the securities purchased in this offering. The combined public offering price per share (or pre-funded warrant) and
common warrant will be fixed for the duration of this offering.
Our common stock is listed
on The Nasdaq Capital Market under the symbol “OPGN”. On January 10, 2023, the last reported sale price of our common stock
on The Nasdaq Capital Market was $2.41 per share. The public offering price per share of common stock and accompanying common warrant
and per pre-funded warrant and accompanying common warrant will be determined between us and investors based on market conditions at
the time of pricing, and may be at a discount to the then current market price of our common stock. The recent market price used throughout
this prospectus may not be indicative of the actual offering price. The actual public offering price may be based upon a number of factors,
including our history and our prospects, the industry in which we operate, our past and present operating results, the previous experience
of our executive officers and the general condition of the securities markets at the time of this offering. There is no established public
trading market for the pre-funded warrants and the common warrants and we do not expect a market to develop. Without an active trading
market, the liquidity of the pre-funded warrants and the common warrants will be limited. In addition, we do not intend to list the pre-funded
warrants or the common warrants on The Nasdaq Capital Market, any other national securities exchange or any other trading system.
We have
engaged H.C. Wainwright & Co., LLC, or the placement agent, to act as our exclusive placement agent in connection with this
offering. The placement agent has agreed to use its reasonable best efforts to arrange for the sale of the securities offered by
this prospectus. The placement agent is not purchasing or selling any of the securities we are offering and the placement agent is
not required to arrange the purchase or sale of any specific number of securities or dollar amount. We have agreed to pay to the
placement agent the placement agent fees set forth in the table below, which assumes that we sell all of the securities offered by
this prospectus. There is no arrangement for funds to be received in escrow, trust or similar arrangement. There is no minimum
offering requirement as a condition of closing of this offering. We will bear all costs associated with the offering. See
“Plan of Distribution” on page 90 of this prospectus for more information regarding these arrangements.
Investing in our common stock involves a high degree of risk.
See “Risk Factors” beginning on page 6 of this prospectus.
__________________
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
| |
Per Share and Common Warrants | | |
Per Pre-Funded Warrant and Common Warrants | | |
Total | |
Public offering price | |
$ | 2.90 | | |
$ | 2.89 | | |
$ | 7,500,000.30 | (1) |
Placement agent fees (2) | |
$ | 0.174 | | |
$ | 0.174 | | |
$ | 450,000.02 | |
Proceeds, before expenses, to OpGen, Inc. | |
$ | 2.726 | | |
$ | 2.716 | | |
$ | 7,050,000.28 | |
(1) |
The total public offering price assumes the full exercise of the pre-funded warrants issued in the offering. |
(2)
|
We have also agreed to reimburse the placement agent for certain of its offering-related expenses, including a reimbursement for legal fees and expenses in the amount of up to $60,000, and for its clearing expenses in the amount of $15,950. For a description of the compensation to be received by the placement agent, see “Plan of Distribution” for more information. |
The placement agent expects to deliver the securities to the
purchasers on or about January 11, 2023, subject to satisfaction of customary closing conditions.
___________________
H.C.
Wainwright & Co.
___________________
Prospectus dated January 6, 2023
TABLE OF CONTENTS
Page
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information other than the information that we have provided or incorporated by reference
in this prospectus and your reliance on any unauthorized information or representation is at your own risk. This prospectus may be used
only in jurisdictions where offers and sales of these securities are permitted. You should assume that the information appearing in this
prospectus is accurate only as of the date of this prospectus and that any information we have incorporated by reference is accurate
only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, or any sale of
our common stock. Our business, financial condition and results of operations may have changed since those dates.
The information appearing
in this prospectus, the documents incorporated by reference in this prospectus and any free writing prospectus that we have authorized
for use in connection with this offering is accurate only as of its respective date, regardless of the time of delivery of the respective
document or of any sale of securities covered by this prospectus. You should not assume that the information contained in or incorporated
by reference in this prospectus, or in any free writing prospectus that we have authorized for use in connection with this offering,
is accurate as of any date other than the respective dates thereof.
We further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference herein were made solely for
the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such
agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties
or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied
on as accurately representing the current state of our affairs.
To the extent there is a conflict between the information contained
in this prospectus, on the one hand, and the information contained in any document incorporated by reference filed with the U.S. Securities
and Exchange Commission (the “SEC”) before the date of this prospectus, on the other hand, you should rely on the information
in this prospectus. If any statement in a document incorporated by reference is inconsistent with a statement in another document incorporated
by reference having a later date, the statement in the document having the later date modifies or supersedes the earlier statement.
Neither we nor the placement agent have done anything that would
permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required,
other than in the United States. Persons who come into possession of this prospectus and any free writing prospectus in jurisdictions
outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution
of this prospectus and any free writing prospectus applicable to that jurisdiction.
This prospectus includes statistical and other industry and market
data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications
and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be
reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that these industry publications
and third-party research, surveys and studies are reliable, we have not independently verified such data and we do not make any representation
as to the accuracy of the information.
Note Regarding Trademarks
We own various U.S. federal trademark registrations and applications
and unregistered trademarks and service marks, including OpGen®, Curetis®, Unyvero®, ARES® and ARES GENETICS®, and
Acuitas®. All other trademarks, servicemarks or trade names referred to in this prospectus are the property of their respective owners.
Solely for convenience, the trademarks and trade names in this prospectus 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.
PROSPECTUS
SUMMARY
This summary highlights information contained
in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider
in making your investment decision. You should read the entire prospectus carefully before making an investment in our securities. You
should carefully consider, among other things, our financial statements and the related notes and the sections entitled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in,
or incorporated by reference into, this prospectus. When we refer to OpGen, Inc., and its subsidiaries, we use the terms “OpGen,”
“the Company,” “us,” “we” and “our.”
Overview
We are 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, Acuitas AMR Gene Panel, and the
ARES Technology Platform including ARESdb, Next Generation Sequencing (NGS) technology and artificial intelligence (AI)-powered bioinformatics
solutions for antibiotic response prediction including ARESiss, ARESid, and AREScloud, as well as the Curetis CE-IVD-marked PCR-based
SARS-CoV-2 test kit.
Our focus is on our combined
broad portfolio of products, which include high impact rapid diagnostics and bioinformatics to interpret antimicrobial resistance (AMR)
genetic data. We will continue to develop and seek FDA and other regulatory clearances or approvals, as applicable, for additional diagnostic
tests. We will continue to offer the FDA-cleared Unyvero LRT and LRT BAL Panels, Acuitas AMR Gene Panel diagnostic test, as well as the
Unyvero UTI Panel as a research use only (RUO) products to hospitals, public health departments, clinical laboratories, pharmaceutical
companies and contract research organizations (CRO). We are also continuing to commercialize our CE-marked Unyvero Panels in Europe and
other global markets through distributors.
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 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 have commercialized 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 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 in vitro diagnostics (IVD) platform 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 for
hospitalized pneumonia, or HPN. As requested by the Chinese regulatory authority National
Medical Products Administration (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. As a result of the Chinese regulatory
authority’s recent adoption of a new electronic submission regime, we plan to prepare a new
submission BCB and their regulatory advisors for our pneumonia cartridge filing and currently
expect to complete the process within 24 to 30 months. |
| · | 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 an 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, presented positive data from an interim
analysis in the first quarter of 2022, and completed enrollment at the end of the third quarter
of 2022. |
| · | The
Unyvero Invasive Joint Infection, or IJI, test, which is a test specifically being developed
for the U.S. market on the Unyvero A30 platform, has also been selected for analytical and
clinical performance evaluation including clinical trials towards a future submission to
the FDA. We anticipate such clinical trial not to commence before the second quarter of 2023.
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 the Unyvero IJI test 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 have begun commercializing
the Acuitas AMR Gene Panel for isolates to customers in the United States and have successfully
signed the first two commercial contracts with customers and completed system installation
and user training for such customers. |
| · | We
recently entered into a research and development collaboration with FIND, the global alliance
for diagnostics, which will fund the development of the A30 RQ platform for use in
low and middle income countries (LMICs). The initial project focuses on a feasibility study
for the rapid detection of AMR from blood culture. The feasibility phase of this research
and development project is set to conclude by the end of the first quarter of 2023 and funded
by FIND with €700 thousand. |
| · | 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
commenced 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 laboratory 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. |
Recent Developments
Nasdaq Notice
On February 28, 2022, we
received a notice from The Nasdaq Stock Market LLC, or Nasdaq, notifying us that, based upon the closing bid price of our common stock,
for the 30 consecutive business days prior to the notice, the Company no longer met the requirement to maintain a minimum closing bid
price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). The Company was originally granted 180 calendar days, or until
August 29, 2022, to regain compliance with the minimum bid price rule. On August 30, 2022, Nasdaq notified the Company that it had been
granted an additional 180-calendar day compliance period, or until February 27, 2023, to regain compliance with the Minimum Bid Price
Rule. In connection with the grant of such additional compliance period, the Company provided notice to Nasdaq that it intended to cure
the bid price deficiency by effecting a reverse stock split, if necessary, prior to the end of the compliance period. While we have until
February 27, 2023 to regain such compliance, we do not believe we will be able to do so without implementing a reverse stock split. In
order to regain compliance, the Company accordingly called a special meeting of stockholders that was held on November 30, 2022 at which
our stockholders voted on and approved a proposal to amend our Amended and Restated Certificate of Incorporation, as amended, or, the
Charter, to authorize a reverse stock split of the issued and outstanding shares of our common stock, at a ratio within a range of not
less than one-for-five (1:5) and not more than one-for-twenty (1:20), such ratio and the implementation and timing of such reverse
stock split to be determined in the discretion of our Board of Directors. Our Board of Directors determined to effect the reverse stock
split at a ratio of one-for-twenty (1:20). On January 4, 2023, we filed a Certificate of Amendment, or the Amendment, to our Charter
to effect the reverse stock split, or the 2023 Reverse Stock Split, which became effective on January 5, 2023.
If we are not in compliance
with the minimum bid price requirement by February 27, 2023, we can appeal Nasdaq’s determination to a hearings panel in order
to present a plan to regain compliance. There can be no assurances however that we will be granted any relief or additional time to regain
compliance with the minimum bid price requirement and do not believe that any additional grace period will allow the Company to comply
with the minimum closing bid price requirement unless a reverse stock split is not approved. Although we expect that the 2023 Reverse
Stock Split will result in a sustained increase in the market price of our common stock, the 2023 Reverse Stock Split may not result
in a permanent increase in the market price of our common stock, which is dependent on many factors, including general economic, market
and industry conditions and other factors detailed from time to time in the reports we file with the SEC.
Reverse Stock Split
On November 30, 2022, at
a special meeting of stockholders, or the Special Meeting, our stockholders approved an amendment to our Charter to effect a reverse
stock split of our common stock, at a ratio of not less than one-for-five (1:5) and not more than one-for-twenty (1:20), with the final
ratio and timing of such reverse stock split to be determined in the discretion of our Board of Directors. Our Board of Directors determined
to effect the 2023 Reverse Stock Split at a ratio of one-for-twenty. On January 4, 2023, we filed the Amendment to effect the 2023 Reverse
Stock Split, which became effective on January 5, 2023. All of the Company’s historic share numbers and share prices in this prospectus
have been adjusted to reflect the 2023 Reverse Stock Split.
In implementing the 2023
Reverse Stock Split, the number of shares of our common stock held by each stockholder was reduced by dividing the number of shares held
immediately before the 2023 Reverse Stock Split by twenty and then rounding down to the nearest whole share. We are paying cash to each
stockholder in lieu of issuing any fractional shares. The 2023 Reverse Stock Split did not affect any stockholder’s percentage
ownership interest in our Company or proportionate voting power, except to the extent that interests in fractional shares were paid in
cash.
In addition, we have adjusted
all outstanding shares of any restricted stock units, stock options and warrants entitling the holders to purchase shares of our common
stock as a result of the 2023 Reverse Stock Split, as required by the terms of these securities. In particular, we have reduced the conversion
ratio for each security, and increased the exercise price in accordance with the terms of each security based on 2023 Reverse Stock Split
ratio (i.e., the number of shares issuable under such securities has been divided by twenty, and the exercise price per share has been
multiplied by twenty). Also, we proportionately reduced the number of shares reserved for issuance under our existing 2015 Equity Incentive
Plan, or the 2015 Plan, based on the 2023 Reverse Stock Split ratio. The 2023 Reverse Stock Split did not otherwise affect any of the
rights currently accruing to holders of our common stock, or options or warrants exercisable for our common stock.
The following table presents
selected share information reflecting the 2023 Reverse Stock Split for the years ended December 31, 2021 and 2020:
| |
Year
Ended December 31, | |
| |
2021 | | |
2020 | |
Shares Outstanding - pre-split | |
| 46,450,250 | | |
| 25,085,534 | |
Shares Outstanding - post-split | |
| 2,322,512 | | |
| 1,254,276 | |
| |
| | | |
| | |
Basic and diluted net loss
per share attributable to common stockholders - pre-split | |
| (1.14 | ) | |
| (1.66 | ) |
Basic and diluted net loss
per share attributable to common stockholders - post-split | |
| (22.80 | ) | |
| (33.20 | ) |
Going Concern
Our management has concluded
that substantial doubt exists about our ability to continue as a going concern for one year from the date of this prospectus. We do not
expect that the net proceeds from this offering will be sufficient to allow us to continue as a going concern for one year from the date
of this prospectus. With the $6.8 million of net proceeds from this offering, we believe that the net proceeds from this offering, together
with our existing cash and cash equivalents, will meet our capital needs into June 2023. If we raise an additional $13.0 million in net
proceeds through the sale of securities or otherwise throughout 2023, we believe that we will then meet our capital needs through the
end of January 2024.
Company Information
OpGen, Inc. was incorporated
in Delaware in 2001. Our principal executive office is located at 9717 Key West Avenue, Suite 100, Rockville, MD 20850, and our telephone
number is (301) 869-9683. We also have operations in Germany and Austria. Our website address is www.opgen.com. We do not incorporate
the information on or accessible through our website into this prospectus, and you should not consider any information on, or that can
be accessed through, our website as part of this prospectus.
THE
OFFERING
Securities
offered by us |
321,207 shares of common stock and Series A-1 common warrants to purchase
up to 2,586,207 shares of common stock and Series A-2 common warrants to purchase up to 2,586,207 shares of common stock, and pre-funded
warrants to purchase up to 2,265,000 shares of common stock and common warrants to purchase shares of common stock. The shares of common
stock or pre-funded warrants, respectively, and common warrants are immediately separable and will be issued separately in this offering,
but must initially be purchased together in this offering. Each Series A-1 common warrant has an exercise price of $2.65 per share of
common stock and is immediately exercisable and will expire five years from the date of the issuance. Each Series A-2 common warrant has
an exercise price of $2.65 per share of common stock and is immediately exercisable and will expire eighteen months from the date of issuance.
See “Description of Securities”. We are also registering up to 7,437,414 shares of common stock issuable upon exercise of
the pre-funded warrants and the common warrants pursuant to this prospectus. |
Pre-funded warrants offered
by us in this offering: |
We
are also offering to each purchaser whose purchase of shares in this offering would otherwise result in the purchaser, together with
its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of
our outstanding common stock immediately following the consummation of this offering, the opportunity to purchase, if the purchaser
so chooses, pre-funded warrants (each pre-funded warrant to purchase one share of our common stock) in lieu of shares that would
otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of our outstanding common stock (or, at the election
of the purchaser, 9.99%). The purchase price of each pre-funded warrant and accompanying common warrant will equal the price at which
one share of common stock and accompanying warrant are being sold to the public in this offering, minus $0.01, and the exercise price
of each pre-funded warrant will be $0.01 per share. The pre-funded warrants will be exercisable immediately and may be exercised
at any time until all of the pre-funded warrants are exercised in full. |
Term of the offering |
This
offering will terminate on January 20, 2023, unless we decide to terminate the offering (which we may do at any time in our discretion)
prior to that date. |
Common stock outstanding
prior to this offering: |
2,416,925
shares of common stock |
Common stock outstanding
after this offering: |
5,003,132 shares, assuming the full exercise of the pre-funded warrants
sold in this offering and no exercise of the common warrants issued in this offering. |
Use of Proceeds: |
We
currently intend to use the net proceeds from this offering to: (i) continue commercialization of the FDA-cleared Acuitas AMR Gene
Panel test for isolates in the U.S.; (ii) commercialize our other products with a focus on the Unyvero Platform and diagnostic tests;
(iii) support further development and commercialization of the Ares Genetics database and service offerings; (iv) support directed
sales and marketing efforts to the customers and collaborators for our products and services; (v) invest in manufacturing and operations
infrastructure to support sales of products; and (vi) the repay certain outstanding indebtedness of the Company. We intend
to use the remaining net proceeds for working capital and other general corporate purposes. |
|
|
Risk Factors: |
Investing in our securities
involves a high degree of risk. See “Risk Factors” beginning on page 6 of this prospectus and the other information included
or incorporated by reference in this prospectus. |
Nasdaq Capital Market symbol: |
Our common stock is listed
on The Nasdaq Capital Market under the symbol “OPGN.” There is no established trading market for the warrants
or the pre-funded warrants, and we do not expect a trading market to develop. We do not intend to list the warrants or the pre-funded
warrants on any securities exchange or other trading market. Without a trading market, the liquidity of the warrants and pre-funded
warrants will be extremely limited. |
Unless otherwise stated, all information contained in this prospectus assumes
the full exercise of the pre-funded warrants in lieu of common stock sold in this offering, no exercise of the common warrants sold in
this offering and gives effect to the 1-for-20 reverse stock split of our common stock that was effected on January 5, 2023.
The number of shares of common stock to be outstanding
immediately after this offering is based on 2,416,925 shares of our common stock outstanding as of September 30, 2022, and excludes:
| · | 108,001
shares of common stock issuable upon the exercise of outstanding options granted as of September
30, 2022, under our equity incentive plans at a weighted average exercise price of $94.52
per share; |
| · | 808,209
shares of common stock issuable upon the exercise of outstanding warrants issued as of September
30, 2022, at a weighted average exercise price of $65.78 per share; |
| · | 40,403
shares of common stock issuable upon vesting of outstanding restricted stock units granted
as of September 30, 2022; |
| · | 68,251
shares of common stock available for future issuance under our equity incentive plans as
of September 30, 2022; and |
| · | 268,000
shares of common stock issued at a price of $7.00 per share, 215,000 shares of common stock
issued upon the exercise of pre-funded warrants at an offering price of $6.80 per share and
483,000 shares of common stock issuable upon the exercise of common warrants with an exercise
price of $7.54 per share, each of which was issued after September 30, 2022 as part of our
registered direct offering of securities completed in October 2022. |
The number of outstanding options, restricted
stock units and shares of common stock available for future issuances under our equity incentive plans does not reflect:
|
· |
2,500
shares of common stock issuable upon vesting of outstanding restricted stock unit grants since September 30, 2022; |
|
· |
the expiration of options to acquire 1,350 shares of
our common stock since September 30, 2022; and |
|
· |
1,000
shares of common stock issuable upon the exercise of outstanding options granted since September 30, 2022, under our equity incentive
plans at a weighted average exercise price of $3.60 per share. |
Unless otherwise indicated, all information contained in this prospectus
assumes (i) no exercise of options issued under our equity incentive plans and (ii) no exercise of warrants.
RISK
FACTORS
Investing in our securities involves a high
degree of risk. You should consider carefully the risks and uncertainties described below, and incorporated by reference herein, together
with all of the other information in, or incorporated by reference in, this prospectus, including our financial statements and related
notes incorporated by reference herein, before making an investment decision. If any of these risks occur, our business, financial condition,
results of operations and prospects could be materially and adversely affected. In that event, the trading price of our common stock
could decline and you could lose part or all of your investment.
Summary
Below is a summary of material factors that
make an investment in our securities and this offering speculative or risky. Importantly, this summary does not address all of the risks
that we face. We encourage you to carefully review the full risk factors contained in this prospectus in their entirety for additional
information regarding the material factors that make an investment in our securities speculative or risky.
| · | We
have a history of losses, and we expect to incur losses for the next several years. |
| · | We
will require additional capital to fund our operations, and if we fail to obtain necessary
financing, we may not be able to continue as a going concern. |
|
· |
Purchasers
who purchase our securities in this offering pursuant to a securities purchase agreement may have rights not available to purchasers
that purchase without the benefit of a securities purchase agreement. |
| · | We
face significant competition from other companies in the life sciences and biotechnology
industry, and our business will suffer if we fail to compete effectively. |
| · | We
may never successfully develop new products or may not receive or be able to maintain regulatory
clearance or approval for or commercialize our new and existing products. |
| · | Our
products and services may never achieve significant commercial market acceptance. |
| · | We
have significant indebtedness that, if we are unable to repay, would cause a material adverse
effect on us. |
| · | The
COVID-19 pandemic has and may continue to adversely impacted our business, financial condition
and results of operations. |
| · | Changes
in healthcare laws policies, including legislation reforming the U.S. healthcare system,
may have a material adverse effect on our financial condition and operations. |
| · | We
rely on collaborations with third parties to develop product and services candidates, including
our collaboration with FIND. If these collaborations are not successful, our business could
be adversely affected. |
| · | We
may not be able to expand our customer base, which is crucial for our future success. |
| · | If
we are unable to protect our intellectual property effectively, our business will be harmed. |
| · | We
may suffer from 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. |
Risks Related to this Offering
and Our Securities
We need to raise capital in this offering to
support our operations. If we are unable to raise capital in this offering, our financial position will be materially adversely impacted.
We have incurred substantial
losses since our inception, and we expect to continue to incur additional losses for the next several years. For the three and nine months
ended September 30, 2022, we had net losses of $14.1 million and $26.7 million, respectively. From our inception through September 30,
2022, we had an accumulated deficit of $262.3 million. We believe that current cash on hand, prior to the receipt of any proceeds from
this offering, is not sufficient to fund operations beyond the first quarter of 2023. With the $6.8 million of net proceeds from this
offering, we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will meet our capital
needs into June 2023. If we raise an additional $13.0 million in net proceeds through the sale of securities or otherwise throughout 2023,
we believe that we will then meet our capital needs through the end of January 2024. In addition, the report of our independent registered
public accounting firm on our financial statements for the years ended December 31, 2021 and 2020 contains explanatory language that substantial
doubt exists about our ability to continue as a going concern. If we do not have access to sufficient cash and liquidity to finance our
business operations as currently contemplated, we would be compelled to 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.
We have no additional committed sources of capital and may find it difficult to raise money on terms favorable to us or at all. The failure
to obtain sufficient capital to support our operations would have a material adverse effect on our business, financial condition and results
of operations. If such sufficient financing is not received timely, we would then need to pursue a plan to license or sell assets, seek
to be acquired by another entity, cease operations and/or seek bankruptcy protection.
We received deficiency
notices from the Nasdaq Capital Market. If we are unable to cure these deficiencies and meet the Nasdaq continued listing requirements,
we could be delisted from the Nasdaq Capital Market, which would negatively impact the trading of our common stock.
On February 28, 2022, we received
a notice from The Nasdaq Stock Market LLC, or Nasdaq, notifying us that, based upon the closing bid price of our common stock, for the
30 consecutive business days prior to the notice, the Company no longer met the requirement to maintain a minimum closing bid price of
$1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). The Company was originally granted 180 calendar days, or until August
29, 2022, to regain compliance with the minimum bid price rule. On August 30, 2022, Nasdaq notified the Company that it had been granted
an additional 180-calendar day compliance period, or until February 27, 2023, to regain compliance with the Minimum Bid Price Rule. In
connection with the grant of such additional compliance period, the Company provided notice to Nasdaq that it intended to cure the bid
price deficiency by effecting a reverse stock split, if necessary, prior to the end of the compliance period.
In order to regain compliance,
the Company accordingly called and held a special meeting of stockholders on November 30, 2022 at which our stockholders voted on and
approved a proposal to amend our Charter to authorize a reverse stock split of the issued and outstanding shares of our common stock,
at a ratio within a range of not less than one-for-five (1:5) and not more than one-for-twenty (1:20), such ratio and the implementation
and timing of such reverse stock split to be determined in the discretion of our Board of Directors. Following receipt of stockholder
approval, on January 4, 2023, we filed the Amendment to our Charter to effect the 2023 Reverse Stock Split at a ratio of 1-to-20 in order
to regain compliance with the Nasdaq Minimum Bid Price Rule. Although we expect that the 2023 Reverse Stock Split will result in a sustained
increase in the market price of our common stock, the 2023 Reverse Stock Split may not result in a permanent increase in the market price
of our common stock, which is dependent on many factors, including general economic, market and industry conditions and other factors
detailed from time to time in the reports we file with the SEC. As a result, there can be no assurance that the market price per share
of our common stock after the 2023 Reverse Stock Split will remain above the Nasdaq Minimum Bid Price Rule requirement. If the market
price per share of our common stock following the 2023 Reverse Stock Split decreases below Nasdaq’s Minimum Bid Price Rule requirements,
we could again be subject to further delisting procedures by Nasdaq.
If our common stock is delisted by Nasdaq,
our common stock may be eligible for quotation on an over-the-counter quotation system or on the pink sheets. Upon any such delisting,
our common stock would become subject to the regulations of the SEC relating to the market for penny stocks. A penny stock is any equity
security not traded on a national securities exchange that has a market price of less than $5.00 per share. The regulations applicable
to penny stocks may severely affect the market liquidity for our common stock and could limit the ability of stockholders to sell securities
in the secondary market. In such a case, an investor may find it more difficult to dispose of or obtain accurate quotations as to the
market value of our common stock, and there can be no assurance that our common stock will be eligible for trading or quotation on any
alternative exchanges or markets.
Delisting from Nasdaq could adversely affect
our ability to raise additional financing through public or private sales of equity securities, would significantly affect the ability
of investors to trade our securities and would negatively affect the value and liquidity of our common stock. Delisting could also have
other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer
business development opportunities.
Even if the 2023 Reverse
Stock Split achieves the requisite increase in the market price of our common stock, we cannot assure you that we will be able to continue
to comply with other continued listing standards of the Nasdaq Capital Market.
Even if the 2023 Reverse
Stock Split achieves the requisite increase in the market price of our common stock to be in compliance with the Minimum Bid Price Rule
of the Nasdaq Capital Market, there can be no assurance that the market price of our common stock following the 2023 Reverse Stock Split
will remain at the level required for continuing compliance with that requirement. It is not uncommon for the market price of a company’s
common stock to decline in the period following a reverse stock split. If the market price of our common stock declines following the
effectuation of the 2023 Reverse Stock Split, the percentage decline may be greater than would occur in the absence of a reverse stock
split. In any event, other factors unrelated to the number of shares of our common stock outstanding, such as negative financial or operational
results, could adversely affect the market price of our common stock and jeopardize our ability to meet or maintain compliance with Nasdaq’s
Minimum Bid Price Rule requirements.
The Nasdaq Capital Market
requires that the trading price of its listed stocks remain above one dollar in order for the stock to remain listed. If our stock once
again trades below such threshold for more than 30 consecutive trading days, then it is subject to delisting from the Nasdaq Capital
Market. In addition, to maintain a listing on Nasdaq, we must satisfy minimum financial and other continued listing requirements and
standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity,
and certain corporate governance requirements. If we are unable to satisfy these requirements or standards, we could be subject to delisting,
which would have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock
when you wish to do so. Although we expect that the 2023 Reverse Stock Split will result in a sustained increase in the market price
of our common stock, we can provide no assurance that the 2023 Reverse Stock Split would enable us to regain or remain in compliance,
stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq Minimum
Bid Price Rule requirements in the future, or prevent future non-compliance with the listing requirements.
The reverse stock
split may decrease the liquidity of the shares of our common stock.
The liquidity of the shares
of our common stock may be affected adversely by the 2023 Reverse Stock Split given the reduced number of shares that will be outstanding
following the 2023 Reverse Stock Split, especially if the market price of our common stock does not increase as a result of the 2023
Reverse Stock Split. In addition, the 2023 Reverse Stock Split may increase the number of stockholders who own odd lots (less than 100
shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares
and greater difficulty effecting such sales.
Following the 2023
Reverse Stock Split, the resulting market price of our common stock may not attract new investors, including institutional investors,
and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.
Although we believe that
a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the
2023 Reverse Stock Split will result in a share price that will attract new investors, including institutional investors. In addition,
there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a
result, the trading liquidity of our common stock may not necessarily improve.
Purchasers who purchase
our securities in this offering pursuant to a securities purchase agreement may have rights not available to purchasers that purchase
without the benefit of a securities purchase agreement.
In addition to rights and remedies available
to all purchasers in this offering under federal securities and state law, the purchasers that enter into a securities purchase
agreement will also be able to bring claims of breach of contract against us. The ability to pursue a claim for breach of contract
provides those investors with the means to enforce the covenants uniquely available to them under the securities purchase agreement
including: (i) timely delivery of shares; (ii) agreement to not enter into variable rate financings for one year from closing,
subject to certain exceptions; (iii) agreement to not enter into any financings for 60 days from closing; and (iv) indemnification for breach
of contract.
This is a best efforts
offering, no minimum amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for
our business plans, including our near-term business plans.
The placement agent has
agreed to use its reasonable best efforts to solicit offers to purchase the securities in this offering. The placement agent has no obligation
to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities.
There is no required minimum number of securities that must be sold as a condition to completion of this offering. Because there is no
minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent fees and
proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth herein. We may sell fewer
than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this
offering will not receive a refund in the event that we do not sell an amount of securities sufficient to support our continued operations,
including our near-term continued operations. Thus, we may not raise the amount of capital we believe is required for our operations
in the short-term and may need to raise additional funds to complete such short-term operations. Such additional fundraises may not be
available or available on terms acceptable to us.
Management will have broad discretion as to
the use of the net proceeds from this offering, and we may not use the proceeds effectively.
Our management will have broad discretion
as to the application of the net proceeds and could use them for purposes other than those contemplated at the time of this offering.
Our stockholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. Moreover, our
management may use the net proceeds for corporate purposes that may not increase our results of operations or the market value of our
common stock. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development
and approval of our products and cause the price of our common stock to decline.
If you purchase common stock sold in this offering,
you will experience immediate dilution as a result of this offering.
Because the price per share
of our common stock being offered may be higher than the net tangible book value per share of our common stock, you will experience dilution
to the extent of the difference between the offering price per share of common stock you pay in this offering and the net tangible book
value per share of our common stock immediately after this offering. Our net tangible book value as of September 30, 2022, was approximately
$1.9 million, or $0.80 per share of common stock. Net tangible book value per share is equal to our total tangible assets minus total
liabilities, all divided by the number of shares of common stock outstanding. See the section titled “Dilution” for a more
detailed discussion of the dilution you will incur if you purchase shares in this offering.
If you purchase
our securities in this offering you may experience future dilution as a result of future equity offerings or other equity issuances.
In order to raise additional capital, we believe
that we will offer and issue additional shares of our common stock or other securities convertible into or exchangeable for our common
stock in the future. We cannot assure you that we will be able to sell shares or other securities in any other offering at a price per
share that is equal to or greater than the price per share paid by investors in this offering, and investors purchasing other securities
in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our common
stock or other securities convertible into or exchangeable for our common stock in future transactions may be higher or lower than the
price per share in this offering.
In addition, we have a significant number
of stock options, restricted stock units and warrants outstanding. To the extent that outstanding stock options or warrants have been
or may be exercised or other shares issued, you may experience further dilution. Further, we may choose to raise additional capital due
to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
The market price of our common stock
and the trading volume of our common stock has been and may continue to be, highly volatile, and such volatility could cause the market
price of our common stock to decrease.
During 2022, the market
price of our Common Stock fluctuated from a high of $22.20 per share to a low of $2.40 per share, and our stock price continues to fluctuate.
The market price and trading volume of our Common Stock may continue to fluctuate significantly in response to numerous factors, some
of which are beyond our control, such as:
| · | our
ability to grow our revenue and customer base; |
| · | the
announcement or the market introduction of new products or product enhancements by us or
our competitors; |
| · | the
trading volume of our common stock; |
| · | developments
concerning regulatory oversight and approvals; |
| · | variations
in our and our competitors’ results of operations; |
| · | changes
in earnings estimates or recommendations by securities analysts, if our common stock is covered
by analysts; |
| · | successes
or challenges in our collaborative arrangements or alternative funding sources; |
| · | developments
in the health care and life science industries; |
| · | the
results of product liability or intellectual property lawsuits; |
| · | 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 on Ukraine; |
| · | the
continued impact of the COVID-19 pandemic on our business and operations; |
| · | future
issuances of common stock or other securities; |
| · | the
addition or departure of key personnel; |
| · | announcements
by us or our competitors of acquisitions, investments or strategic alliances; and |
| · | general
market conditions and other factors, including factors unrelated to our operating performance. |
Further, the stock market in general, and
the market for health care and life sciences companies in particular, has recently experienced extreme price and volume fluctuations.
The volatility of our common stock is further exacerbated due to its low trading volume. Continued market fluctuations could result in
extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock and the loss of some
or all of your investment.
Trading of our common stock is limited, and
trading restrictions imposed on us by applicable regulations may further reduce trading in our common stock, making it difficult for
our stockholders to sell their shares; and future sales of common stock could reduce our stock price.
Trading of our common stock is currently conducted
on the NASDAQ Capital Market. The liquidity of our common stock is limited, including in terms of the number of shares that can be bought
and sold at a given price and reduction in security analysts’ and the media’s coverage of us, if any. These factors may result
in different prices for our common stock than might otherwise be obtained in a more liquid market and could also result in a larger spread
between the bid and asked prices for our common stock. In addition, in the absence of a large market capitalization, our common stock
is less liquid than the stock of companies with broader public ownership, and, as a result, the trading prices of our common stock may
be more volatile. In the absence of an active public trading market, an investor may be unable to liquidate his investment in our common
stock. Trading of a relatively small volume of our common stock may have a greater impact on the trading price of our stock. We cannot
predict the prices at which our common stock will trade in the future, if at all.
The exercise of outstanding common stock purchase
warrants and stock options will have a dilutive effect on the percentage ownership of our capital stock by existing stockholders.
As of January 3, 2023, we had outstanding
warrants to acquire 1,291,209 shares of our common stock, and stock options to purchase 107,652 shares of our common stock. A significant
number of such warrants have exercise prices above our common stock’s recent trading prices, but the holders have the right to
effect a cashless exercise of such warrants. If a significant number of such warrants and stock options are exercised by the holders,
the percentage of our common stock owned by our existing stockholders will be diluted.
We have never paid dividends on our capital
stock, and we do not anticipate paying dividends in the foreseeable future.
We
have never paid dividends on any of our capital stock and currently intend to retain any future earnings to fund the growth of our business.
We may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay
cash dividends on our common stock. For example, our loan agreement with the European Investment Bank (EIB) restricts our ability to
declare or pay dividends. Any determination to pay dividends in the future will be at the discretion of our board of directors and will
depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board
of directors may deem relevant. As a result, capital appreciation, if any, of our common stock will be the sole source of gain, if any,
for the foreseeable future.
There is no public market for the common warrants or
pre-funded warrants to purchase shares of our common stock being offered by us in this offering.
There is no established public trading market
for the common warrants or pre-funded warrants to purchase shares of our common stock that are being offered as part of this offering,
and we do not expect a market to develop. In addition, we do not intend to apply to list the common warrants or pre-funded warrants on
any national securities exchange or other nationally recognized trading system, including The Nasdaq Capital Market. Without an active
market, the liquidity of the common warrants and pre-funded warrants will be limited.
Risks Related to Our Business
We have a history of losses, and we
expect to incur losses for the next several years. The report of our independent registered public accounting firm on our financial statements
for the years ended December 31, 2021 and 2020 contains explanatory language that substantial doubt exists about our ability to continue
as a going concern.
We have incurred substantial losses since
our inception, and we expect to continue to incur additional losses for the next several years. For the years ended December 31, 2021
and 2020, we had net losses of $34.8 million and $26.2 million, respectively. From our inception through September 30, 2022, we had an
accumulated deficit of $262.3 million. The reports of our independent registered public accounting firm on our financial statements for
the years ended December 31, 2021 and 2020 each contain explanatory language that substantial doubt exists about our ability to continue
as a going concern. We completed a number of financings in 2021 and 2022, including an at-the-market public offering which commenced
in June 2022 (the “ATM Offering”) and a registered direct financing in October 2022. The net proceeds from such financings
were approximately $52.0 million. We cannot assure you that we can continue to raise the capital necessary to fund our business.
Even if we achieve significant revenues, we
may not become profitable, and even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly
or annual basis. Our failure to become and remain consistently profitable could adversely affect the market price of our common stock
and could significantly impair our ability to raise capital, expand our business or continue to pursue our growth strategy. We have no
committed sources of capital and may find it difficult to raise money on terms favorable to us or at all. The failure to obtain sufficient
capital to support our operations would have an adverse effect on our business, financial condition and results of operations.
We may not realize the growth
and success that we expected from the combination of the OpGen and Curetis businesses.
Although
we believe the combination of the OpGen and Curetis businesses provided a significant commercial opportunity for growth, we may not realize
all of the synergies that we had anticipated and may not be successful in implementing our commercialization strategy across all products
and platforms as well as all geographies. Our combined business is and continues to be subject to all of the risks and uncertainties
inherent in the pursuit of growth in our industry and we may not be able to successfully sell our products, obtain the regulatory clearances
and approvals we apply for or, realize the anticipated benefits from our distribution, collaboration and other commercial partners. If
we are not able to achieve the expected benefits from the combined business of OpGen as a commercial enterprise, our financial condition
will be negatively impacted.
The process to obtain and maintain
FDA clearances or approvals for our products is complex and time and resource consuming. If we fail to obtain such clearances or approvals,
our business and results of operations will be materially adversely impacted.
The
process of obtaining regulatory clearances or approvals to market a medical device can be costly and time consuming, and we may not be
able to obtain these clearances or approvals on a timely basis, if at all. We were subject to extended delays for the FDA clearance of
our Acuitas AMR Gene Panel test due to the national emergency situation caused by the COVID-19 pandemic and FDA prioritizing COVID-19
related product reviews. The FDA has not been able to provide any feedback in the form of presub meetings for either the Unyvero UTI
or IJI panels and declined to host any presub meetings for the IJI panel in early 2022. In addition, the time and expense needed to prepare
future clinical trial data for submission to the FDA and reviewing and responding to the FDA’s request for additional information
may require significant resources and could impact other research and development project timelines, which may adversely affect our strategy
and ability to commercialize our diagnostic tests and bioinformatics products and services.
We expect our ability to utilize our net operating
loss carryforwards will be limited as a result of an “ownership change,” as defined in Section 382 of the Internal Revenue
Code triggered by consummation of the transaction with Curetis.
As
of December 31, 2021, we had approximately $202.0 million of net operating loss, or NOL, carryforwards for U.S. federal tax purposes.
Under U.S. federal income tax law, we generally can use our NOL carryforwards (and certain tax credits) to offset ordinary taxable income,
thereby reducing our U.S. federal income tax liability, for up to 20 years from the year in which the losses were generated, after which
time they will expire. State NOL carryforwards (and certain tax credits) generally may be used to offset future state taxable income
for 20 years from the year in which the losses are generated, depending on the state, after which time they will expire. The rate at
which we can utilize our NOL carryforwards is limited (which could result in NOL carryforwards expiring prior to their use) each time
we experience an “ownership change,” as determined under Section 382 of the Internal Revenue Code. A Section 382 ownership
change generally occurs if a shareholder or a group of shareholders who are deemed to own at least 5% of our common stock increase their
ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. If an ownership
change occurs, Section 382 generally would impose an annual limit on the amount of post-ownership change taxable income that may be offset
with pre-ownership change NOL carryforwards equal to the product of the total value of our outstanding equity immediately prior to the
ownership change (reduced by certain items specified in Section 382) and the U.S. federal long-term tax-exempt interest rate in effect
at the time of the ownership change. A number of special and complex rules apply in calculating this Section 382 limitation. While the
complexity of Section 382 makes it difficult to determine whether and when an ownership change has occurred, and if a portion of our
NOLs is subject to an annual limitation under Section 382, we believe that an additional ownership change may have occurred upon the
consummation of the transaction with Curetis. In addition, our ability to use our NOL carryforwards will be limited to the extent we
fail to generate enough taxable income in the future before they expire. Existing and future Section 382 limitations and our inability
to generate enough taxable income in the future could result in a substantial portion of our NOL carryforwards expiring before they are
used. In addition, under the 2017 Tax Cut and Jobs Act, effective for losses arising in taxable years beginning after December 31, 2017,
the deduction for NOLs is limited to 80% of taxable income, NOLs can no longer be carried back, and NOLs can be carried forward indefinitely.
Our products and services may never achieve significant
commercial market acceptance.
Our
products and services may never gain significant acceptance in the marketplace and, therefore, may never generate substantial revenue
or profits for us. Our ability to achieve commercial market acceptance for our products will depend on several factors, including:
| · | our
ability to convince the medical community of the clinical utility of our products and services
and their potential advantages over existing tests, including our NGS-based isolate sequencing
services offering, despite the lack of reimbursement for such services; |
| · | our
ability to successfully develop automated rapid pathogen identification and antibiotic resistance
testing products and services, including bioinformatics, and convince hospitals and other
healthcare providers of the patient safety, improved patient outcomes and potential cost
savings that could result; |
| · | our
ability to further grow our microbial isolate and antibiotic resistance genes knowledgebases
and bioinformatics offerings; |
| · | the
willingness of hospitals and physicians to use our products and services; and |
| · | the ability of hospitals
and labs to pay for our products and services. |
Our future success is dependent upon our ability to
expand our customer base.
The
current customers we are targeting for our Unyvero and Acuitas test products and services are hospital systems, acute care hospitals,
particularly those with advanced care units, such as intensive care units, community-based hospitals and governmental units, such as
public health facilities and other laboratories. We need to provide a compelling case for the savings, patient safety and recovery, reduced
length of stay and reduced costs that come from adopting our MDRO diagnosis and antibiotic stewardship products and services. If we are
not able to successfully increase our customer base, sales of our products and our margins may not meet expectations. We are subject
to similar challenges with respect to customers and partners for our ARESdb based offerings and solutions. Attracting new customers and
introducing new products and services requires substantial time and expense. Any failure to expand our existing customer base, or launch
new products and services, would adversely affect our ability to improve our operating results.
We are developing diagnostic products
for the more rapid identification of MDROs and antibiotic resistance genomic information. If we are unable to successfully develop, receive
regulatory clearance or approval for or commercialize such products and services, our business will be materially, adversely affected.
We
are developing products that detect antibiotic resistance markers in under ninety minutes as well as four to five hours – and in
the case of our NGS-based ARESupa, ARESid, or ARESiss (Express) solutions several days to weeks - that we believe could help address
many of the current issues with the need for more rapid identification of infectious diseases and AMR testing. Development of such diagnostic
products is difficult and we cannot assure you that we will be successful in such product development efforts, or, if successful, that
we will receive the necessary regulatory clearances to commercialize such products. We have identified dozens of resistance genes to
help guide clinicians with their antibiotic therapy decisions. Although we have demonstrated preliminary feasibility, and confirmed genotype/phenotype
predictive algorithms, such product development efforts will require us to work collaboratively with other companies, academic and government
laboratories, and healthcare providers to access sufficient numbers of microbial isolates, develop the diagnostic tests, successfully
conduct the necessary clinical trials and apply for and receive regulatory clearances or approvals for the intended use of such diagnostic
tests. In addition, we would need to successfully commercialize such products. Such product development, clearance or approval and commercialization
activities are time-consuming, expensive and we are not assured that we will have sufficient funds to successfully complete such efforts.
Any significant delays or failures in this process could have a material adverse effect on our business and financial condition.
We
offer some of these products in development to the RUO market and for other non-clinical research uses prior to receiving clearance or
approval to commercialize these products in development for use in the clinical setting. We need to comply with the applicable laws and
regulations regarding such other uses. Failure to comply with such laws and regulations may have a significant impact on the Company.
We may enter into agreements with
U.S. or other international government agencies or non-government organizations (NGO), which could be subject to uncertain future funding.
The
presence of MDROs and the need for antibiotic stewardship activities have prompted state, federal and international government agencies
to develop programs to combat the effects of MDROs. From 2018 through September 30, 2021, we were party to a collaboration, called the
New York State Infectious Disease Digital Health Initiative, with the New York State DOH and ILÚM (now IDC) to develop a research
program to detect, track, and manage antimicrobial-resistant infections at healthcare institutions in New York State. In September 2022,
we entered into a research and development collaboration with FIND, an NGO focused on innovative new diagnostics, for the potential use
of the Unyvero A30 platform in low and middle income countries (LMICs).
In
the future, we may seek to enter into additional agreements with governmental funding sources or contract with government healthcare
organizations or NGOs to sell our products and services, such as our collaboration agreement with FIND. Under such agreements, we would
rely on the continued performance by these government agencies and NGOs of their responsibilities under these agreements, including adequate
continued funding of the agencies and NGOs and their programs. We have no control over the resources and funding that government agencies
may devote to these agreements, which may be subject to annual renewal.
Government
agencies or NGOs may fail to perform their responsibilities under these agreements, which may cause them to be terminated by the government
agencies or NGOs . In addition, we may fail to perform our responsibilities under these agreements. Any government agreements or NGO
would be subject to audits, which may occur several years after the period to which the audit relates. If an audit identified significant
unallowable costs, we could incur a material charge to our earnings or reduction in our cash position. As a result, we may be unsuccessful
entering, or ineligible to enter, into future government and NGO agreements.
If the utility of our current
products and products in development is not supported by studies published in peer-reviewed medical publications, the rate of adoption
of our current and future products and services by clinicians and healthcare facilities may be negatively affected.
The
results of several of our clinical and economic validation studies involving our products have been presented at major infectious disease
and infection control society meetings and some have been published in peer reviewed scientific journals. We need to maintain and grow
a continued presence in peer-reviewed publications to promote clinician adoption of our products. We believe that peer-reviewed journal
articles that provide evidence of the utility of our current and future products and services, and adoption by key opinion leaders in
the infectious disease market are very important to our commercial success. Clinicians typically take a significant amount of time to
adopt new products and testing practices, partly because of perceived liability risks and the uncertainty of a favorable cost/benefit
analysis. It is critical to the success of our sales efforts that we educate a sufficient number of clinicians and administrators about
our products and demonstrate their clinical benefits. Clinicians may not adopt our current and future products and services unless they
determine, based on published peer- reviewed journal articles and the experience of other clinicians, that our products provide accurate,
reliable, useful and cost-effective information that is useful in pathogen identification as well as AMR marker detection and possibly
MDRO diagnosis and outbreak prevention. If our current and future products and services or the technology underlying our products and
services or our future product offerings do not receive sufficient favorable exposure in peer-reviewed publications, the rate of clinician
adoption could be negatively affected. The publication of clinical data in peer-reviewed journals is a crucial step in commercializing
our products, and our inability to control when, if ever, results are published may delay or limit our ability to derive sufficient revenue
from any product that is the subject of a study.
Our sales cycle for our marketed
products and services is lengthy and variable, which makes it difficult for us to forecast revenue and other operating results.
The
sales cycles for our products are lengthy, which will make it difficult for us to accurately forecast revenues in a given period, and
may cause revenue and operating results to vary significantly from period to period. Potential customers for our products typically need
to commit significant time and resources to evaluate our products, and their decision to purchase our products may be further limited
by budgetary constraints and numerous layers of internal review and approval, which are beyond our control. We spend substantial time
and effort assisting potential customers in evaluating our products. Even after initial approval by appropriate decision makers, the
negotiation and documentation processes for the actual adoption of our products on a facility-wide basis can be lengthy. As a result
of these factors, based on our experience to date, our sales cycle, the time from initial contact with a prospective customer to routine
commercial use of our products, has varied and could be 12 months or longer, which has made it difficult for us to accurately project
revenues and operating results. In addition, the revenue generated from sales of our products may fluctuate from time to time due to
changes in the testing volumes of our customers. As a result, our results may fluctuate on a quarterly basis, which may adversely affect
the price of our common stock.
We are currently party to, and
may enter into additional collaborations with third parties to develop product and services candidates. If these collaborations are not
successful, our business could be adversely affected.
We
are currently party to several collaborations and anticipate that we will enter into additional collaborations related to our platforms
and product offerings, including our bioinformatics products and services. Such collaborations are and may be with microbiology and IVD
companies, pharmaceutical and biotech companies, CROs and CLIA labs, NGS platform companies or other participants in our industry. We
have limited control over the amount and timing of resources that any such collaborators could dedicate to the development or commercialization
of the subject matter of any such collaboration. Our ability to generate revenues from these arrangements would depend on our and our
collaborator’s abilities to successfully perform the functions assigned to each of us in these arrangements. Our relationships
with collaborators may pose several risks, including the following:
| · | collaborators
have significant discretion in determining the efforts and resources that they will apply
to these collaborations; |
| · | collaborators
may not perform their obligations as expected; |
| · | we
may not achieve any milestones, or receive any milestone payments, under our collaborations,
including milestones and/or payments that we expect to achieve or receive; |
| · | the
clinical trials, if any, conducted as part of these collaborations may not be successful; |
| · | a
collaborator might elect not to continue or renew development or commercialization programs
based on clinical trial results, changes in the collaborator’s strategic focus or available
funding or external factors, such as an acquisition, that diverts resources or creates competing
priorities; |
| · | we
may not have access to, or may be restricted from disclosing, certain information regarding
the identity of the partner, financial details as well as details on product or services
candidates being developed or commercialized under a collaboration and, consequently, may
have limited ability to inform our stockholders about the status of such product or services
candidates; |
| · | collaborators
could independently develop, or develop with third parties, products that compete directly
or indirectly with our product candidates if the collaborators believe that competitive products
are more likely to be successfully developed or can be commercialized under terms that are
more economically attractive than ours; |
| · | product
or services candidates developed in collaboration with us may be viewed by our collaborators
as competitive with their own product or services, which may cause collaborators to cease
to devote resources to the commercialization of our product or services candidates; |
| · | a
collaborator with marketing and distribution rights to one or more of our product or services
candidates that achieve regulatory approval may not commit sufficient resources to the marketing
and distribution of any such product candidate; |
| · | disagreements
with collaborators, including disagreements over proprietary rights, contract interpretation
or the preferred course of development of any product or services candidates, may cause delays
or termination of the research, development or commercialization of such product or services
candidates, may lead to additional responsibilities for us with respect to such product or
services candidates or may result in litigation or arbitration, any of which would be time-consuming
and expensive; |
| · | collaborators
may not properly maintain or defend our intellectual property rights or may use our proprietary
information in such a way as to invite litigation that could jeopardize or invalidate our
intellectual property or proprietary information or expose us to potential litigation; |
| · | disputes
may arise with respect to the ownership of intellectual property developed pursuant to a
collaboration; |
| · | collaborators
may infringe the intellectual property rights of third parties, which may expose us to litigation
and potential liability; and |
| · | collaborations
may be terminated for the convenience of the collaborator and, if terminated, we could be
required to raise additional capital to pursue further development or commercialization of
the applicable product or services candidates. |
If
our collaborations do not result in the successful development and commercialization of products or services, we may not receive any
future research funding or milestone or royalty payments under the collaborations. If we do not receive the funding we would expect under
these agreements, our development of product and services candidates could be delayed, and we may need additional resources to develop
our product candidates.
We
may not be successful in finding strategic collaborators for continuing development of certain of our product or services candidates
or successfully commercializing or competing in the market for certain indications.
We
may seek to develop strategic partnerships for developing certain of our product or services candidates, due to capital costs required
to develop the product or services candidates or manufacturing constraints. We may not be successful in our efforts to establish such
a strategic partnership or other alternative arrangements for our product or services candidates because our research and development
pipeline may be insufficient, our product or services candidates may be deemed to be at too early of a stage of development for collaborative
effort or third parties may not view our product or services candidates as having the requisite potential to demonstrate commercial success.
If
we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms or at all, we may have to curtail
the development of a product or service candidate, reduce or delay our development program, delay our potential commercialization, reduce
the scope of any sales or marketing activities or increase our expenditures and undertake development or commercialization activities
at our own expense. If we elect to fund development or commercialization activities on our own, we may need to obtain additional expertise
and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do
not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to
further develop our product candidates and our business, financial condition, results of operations and prospects may be materially and
adversely affected.
We are an early commercial stage
company and may never be profitable.
We
rely principally on the commercialization of our Unyvero, ARESdb based, and Acuitas products and services to generate future revenue
growth. To date, our products have delivered only limited revenue. We believe that our commercialization success is dependent upon our
ability to significantly increase the number of hospitals, labs, long-term care facilities and other inpatient healthcare settings that
use our products. If demand for products does not increase as quickly as we have planned, we may be unable to increase our revenue levels
as expected. We are currently not profitable. Even if we succeed in increasing adoption of our products by our target markets, maintaining
and creating relationships with our existing and new customers and developing and commercializing additional molecular testing products,
we may not be able to generate sufficient revenue to achieve or sustain profitability.
We have limited experience in
marketing and selling our products, and if we are unable to adequately address our customers’ needs, it could negatively impact
sales and market acceptance of our products and we may never generate sufficient revenue to achieve or sustain profitability.
We
sell our products through our own direct sales force, which sells our products in the U.S. and via distribution partners in all other
territories. All of these products and services may be offered and sold to different potential customers or involve discussions with
multiple stakeholders in inpatient facilities. Our future sales will depend in large part on our ability to increase our marketing efforts
and adequately address our customers’ needs. The inpatient healthcare industry is a large and diverse market. We will need to attract
and develop sales and marketing personnel with industry expertise, including internally and at our distribution partners. Competition
for such personnel is intense. We may not be able to attract and retain sufficient personnel to maintain an effective sales and marketing
force. In addition, we will likely have less control over sales and marketing personnel of our distribution partners. The personnel at
our distribution partners may therefore not be adequately trained with respect to our products or may not be sufficiently incentivized
to sell our products. If we are unable to successfully market our products and adequately address our customers’ needs, it could
negatively impact sales and market acceptance of our products and we may never generate sufficient revenue to achieve or sustain profitability.
If our manufacturing facilities
become inoperable, our products, and our business will be harmed.
We
manufacture our Unyvero products and SARS-CoV-2 test kits in our facility in Bodelshausen, Germany and our Acuitas products in our facility
in Rockville, Maryland, which we are currently transferring to our Bodelshausen facility. We do not have redundant facilities for these
products. Our facilities and the equipment we use to manufacture our products would be costly to replace and could require substantial
lead time to repair or replace, if damaged or destroyed. As a result, the manufacturing transfer of our Acuitas products to our Bodelshausen
facility may not be completed when anticipated and may experience cost overruns. The facilities may be harmed or rendered inoperable
by natural or man-made disasters, including flooding and power outages or fire, which may render it difficult or impossible for us manufacture
our products for some period of time. The inability to manufacture our products may result in the loss of customers or harm our reputation,
and we may be unable to regain those customers in the future. Although we carry insurance for damage to our property and the disruption
of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us
on acceptable terms, if at all.
In
order to establish redundant facilities, we would have to spend considerable time and money securing adequate space, constructing the
facility, recruiting and training employees, and establishing the additional operational and administrative infrastructure necessary
to support a second facility. Additionally, any new manufacturing facility opened by us would be subject to FDA inspection and certification.
If we fail to maintain our FDA certification or if our FDA certification is suspended, limited or revoked, we would not be able manufacture
our products.
If
demand for these products increase beyond our current forecasts or, regulatory requirements arise, we may not be able to meet our obligations
to manufacture these products, and backlog or reduced demand for such products could occur. If any of these issues occur, it could have
a material adverse effect on our financial condition and results of operations.
We rely on a limited number of
suppliers or, in some cases, sole suppliers, for some of our materials and may not be able to find replacements or immediately transition
to alternative suppliers.
We
rely on several sole suppliers and manufacturers, including Zollner, Contexo, Scholz, Thermo Fisher Scientific and Qiagen, for supplying
instrument systems and certain reagents, raw materials, supplies and substances which we use to manufacture our products. An interruption
in our operations could occur if we encounter delays or difficulties in securing these items or manufacturing our products, and if we
cannot, then obtain an acceptable substitute. Any such interruption or damage to third party suppliers or manufacturers for any reason,
such as fire or other events beyond our control, including as a result of natural disasters, terrorist attacks, or the occurrence of
a contagious disease or illness, such as the COVID-19 pandemic, could significantly affect our business, financial condition, results
of operations and reputation.
Our distributors, collaboration
partner, and service providers may be impacted and could be delayed or suspended as a result of the military action by Russia in Ukraine.
We
have distribution relationships with partners for the distribution of certain of our products in Russia and Ukraine as well as other
neighboring territories. We also have relationships with other parties and service providers that may operate in or be impacted by conditions
in Russia and Ukraine.
In
February 2022, Russia commenced a military invasion of Ukraine. Russia’s invasion and the ensuing response by Ukraine may disrupt
our and our distribution partner’s distribution efforts in such jurisdictions, impact the ability of certain service providers
to perform and could increase our costs and disrupt future planned activities. For example, we believe our distribution partner will
not be able to successfully distribute products in Ukraine or Russia during the conflict and Curetis has suspended its business support
to our distributors and will not accept any purchase orders until the geopolitical situation has been resolved. Such disruption would
significantly impact our ability to market, sell and distribute in such territories and could impact our ability to do so in nearby territories,
which would increase our costs and slow down and jeopardize our commercialization efforts.
If we cannot compete successfully
with our competitors, we may be unable to increase or sustain our revenue or achieve and sustain profitability.
Our
competitors include rapid diagnostic testing and traditional microbiology companies, commercial laboratories, information technology
companies, and hospital laboratories who may internally develop testing capabilities. Principal competitive factors in our target market
include organizational size, scale, and breadth of product offerings; rapidity of test results; quality and strength of clinical and
analytical validation data and confidence in diagnostic results; cost effectiveness; ease of use; and regulatory approval status.
Our
principal competition comes from traditional methods used by healthcare providers to diagnose and screen for MDROs and from other molecular
diagnostic companies creating screening and diagnostic products such as Bosch, Cepheid (a Danaher company), Becton-Dickinson, bioMérieux,
Accelerate Diagnostics, T2 Biosystems, GenMark (a Roche company), Qiagen, Mobidiag (a Hologic company) and Luminex (a DiaSorin company).
We
also face competition from commercial laboratories, such as Bio-Reference Laboratories, Inc., Laboratory Corporation of America Holdings,
Quest Diagnostics, Pathnostics, and EuroFins, which have strong infrastructure to support the commercialization of diagnostic laboratory
services.
Competitors
may develop their own versions of competing products in countries where we do not have patents or where our intellectual property rights
are not recognized or using their own technologies that do not infringe our intellectual property rights.
Many
of our potential competitors have widespread brand recognition and substantially greater financial, technical, research and development
and selling and marketing capabilities than we do. Others may develop products with prices lower than ours that could be viewed by hospitals,
physicians and payers as functionally equivalent to our product and service offering or offer products at prices designed to promote
market penetration, which could force us to lower the list prices of our product and service offerings and affect our ability to achieve
profitability. If we are unable to change clinical practice in a meaningful way or compete successfully against current and future competitors,
we may be unable to increase market acceptance and sales of our products, which could prevent us from increasing our revenue or achieving
profitability and could cause our stock price to decline.
Our products and services are
not covered by reimbursement by the Centers for Medicare & Medicaid Services (CMS) and other governmental and third-party payors.
If we cannot convince our customers that the savings from use of our products and services will increase their overall reimbursement,
our business could suffer.
Our
products and services do not currently receive reimbursement from Medicare, Medicaid, other governmental payors or commercial third-party
payors. Policy and rule changes in reimbursement announced by CMS, including potential financial incentives for reductions in healthcare-associated
infections (HAI), and penalties and decreased Medicare reimbursement for patients with HAIs provide us with an opportunity to establish
a business case for the purchase and use of our screening and diagnostic products and services. If we cannot convince our customers that
the savings from use of our products and services will increase or stabilize their overall profitability and improve clinical outcomes,
our business will suffer.
Failure in our information technology,
storage systems or our ares-genetics.cloud services could significantly disrupt our operations and our research and development efforts,
which could adversely impact our revenues, as well as our research, development and commercialization efforts.
Our
ability to execute our business strategy depends, in part, on the continued and uninterrupted performance of our information technology
systems, which support our operations and our research and development efforts, as well as our storage systems and our analyzers. Due
to the sophisticated nature of the technology we use in our products and service offerings, including our ARESdb and ares-genetics.cloud
services, we are substantially dependent on our information technology systems. Information technology systems are vulnerable to damage
from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite
network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses,
ransomware attacks and similar disruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems
that could affect our information technology systems, sustained or repeated system failures that interrupt our ability to generate and
maintain data, and in particular to operate our ARESdb, could adversely affect our ability to operate our business. Any interruption
in the operation of our ARESdb, due to information technology system failures, part failures or potential disruptions in the event we
are required to relocate our instruments within our facility or to another facility, could have an adverse effect on our operations.
Security breaches, loss of data
and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information
and expose us to liability, which could adversely affect our business and our reputation.
In
the ordinary course of our business, we collect and store sensitive data, which may include legally protected health information and
personally identifiable information about our customers and their patients. We also store sensitive intellectual property and other proprietary
business information, including that of our customers. We manage and maintain our applications and data utilizing a combination of on-site
systems and cloud-based data center systems. These applications and data encompass a wide variety of business-critical information, including
research and development information, commercial information and business and financial information.
We
face four primary risks relative to protecting this critical information: loss of access risk, inappropriate disclosure risk, inappropriate
modification risk and the risk of our being unable to identify and audit our controls over the first three risks.
We
are highly dependent on information technology networks and systems, including the Internet, to securely process, transmit and store
this critical information. Security breaches of this infrastructure, including physical or electronic break-ins, computer viruses, phishing
attempts, ransomware attacks or other attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized
disclosure or modification of confidential information. The secure processing, storage, maintenance, and transmission of this critical
information is vital to our operations and business strategy, and we devote significant resources to protecting such information. Although
we take measures to protect sensitive information from unauthorized access or disclosure, our information technology and infrastructure
may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance or other disruptions.
A
security breach or privacy violation that leads to disclosure or modification of or prevents access to consumer information (including
personally identifiable information or protected health information) could harm our reputation, compel us to comply with disparate state
breach notification laws, require us to verify the correctness of database contents and otherwise subject us to liability under laws
that protect personal data, resulting in increased costs or loss of revenue. If we are unable to prevent such security breaches or privacy
violations or implement satisfactory remedial measures, our operations could be disrupted, and we may suffer loss of reputation, financial
loss and other regulatory penalties because of lost or misappropriated information, including sensitive consumer data. In addition, these
breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the
type described above.
Any
such breach or interruption could compromise our networks, and the information stored there could be inaccessible or could be accessed
by unauthorized parties, publicly disclosed, lost or stolen. Any such interruption in access, improper access, disclosure or other loss
of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, such
as the federal Health Insurance Portability and Accountability Act, or HIPAA, and regulatory penalties. Unauthorized access, loss or
dissemination could also disrupt our operations, including our ability to perform tests, provide test results, bill facilities or patients,
process claims and appeals, provide customer assistance services, conduct research and development activities, collect, process and prepare
Company financial information, provide information about our current and future solutions and other patient and clinician education and
outreach efforts through our website, and manage the administrative aspects of our business and damage our reputation, any of which could
adversely affect our business. Any such breach could also result in the compromise of our trade secrets and other proprietary information,
which could adversely affect our competitive position.
In
addition, the interpretation and application of consumer, health-related, privacy and data protection laws in the United States and elsewhere
are often uncertain, contradictory and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent
with our practices. If so, this could result in government-imposed fines or orders requiring that we change our practices, which could
adversely affect our business. Complying with these various laws could cause us to incur substantial costs or require us to change our
business practices and compliance procedures in a manner adverse to our business.
Data collection is governed by
restrictive regulations governing the use, processing, and cross-border transfer of personal information.
The
collection, use, storage, transfer, and other processing of personal data, including personal health data, regarding individuals in the
European Economic Area is governed, as of May 2018, by the General Data Protection Regulation, or GDPR. The GDPR imposes several requirements
on companies that process personal data, including requirements relating to the processing of health and other sensitive data, the consent
of the individuals to whom the personal data relates, the information provided to the individuals regarding data processing activities,
the notification of data processing obligations to the competent national data protection authorities and certain measures to be taken
when engaging third-party data processors. The GDPR also imposes strict rules on the transfer of personal data out of the European Economic
Area, including to the United States. Failure to comply with the requirements of the GDPR, and the related national data protection laws
of the European Union (EU) member states, may result in fines and other administrative penalties. The GDPR also confers a private right
of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain
compensation for damages resulting from violations of the GDPR. The GDPR regulations may impose additional responsibility and liability
in relation to personal data that we process, and we may be required to put in place additional mechanisms ensuring compliance with the
new data protection rules, including as implemented by individual countries. This may be onerous and adversely affect our business, financial
condition, results of operations and prospects. Compliance with the GDPR is a rigorous and time-intensive process that may increase our
cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject
to fines and penalties, litigation, and reputational harm in connection with any future European activities.
In
addition, in the United States, there are state and federal laws relating to data privacy and security. As we expand our operations,
these laws which vary from jurisdiction to jurisdiction, may increase our compliance costs and potential liability. In addition to California,
Virginia and Maine, other states are beginning to propose similar laws, which may be the beginning of a trend toward more stringent privacy
legislation in the United States that could increase our potential liability and adversely affect our business, results of operations
and financial condition.
We
cannot provide assurance that future legislation will not prevent us from generating or maintaining personal data or that patients will
consent to the use of their personal information, either of which may prevent us from undertaking or publishing essential research. These
burdens or risks may prove too great for us to reasonably bear and may adversely affect our ability to achieve profitability or maintain
profitably in the future.
If we are unable to develop products
to keep pace with rapid technological, medical and scientific change, our operating results and competitive position could be harmed.
New test development involves a lengthy and complex process, and we may not be successful in our efforts to develop and commercialize
our diagnostic products and services. The further development and commercialization of additional diagnostic product and service offering
are key to our growth strategy.
A
key element of our strategy is to discover, develop, validate and commercialize a portfolio of additional diagnostic products and services
to rapidly diagnose pathogens and AMR and effectively treat MDRO infections and reduce the associated costs to patients, inpatient facilities
and the healthcare industry. We cannot assure you that we will be able to successfully complete development of or commercialize any of
our planned future products and services, or that they will be clinically usable. The product development process involves a high degree
of risk and may take up to several years or longer. Our new product development efforts may fail for many reasons, including:
| · | failure of the tests at
the research or development stage; |
| · | lack of clinical validation
data to support the effectiveness of the tests; |
| · | delays resulting from
the failure of third-party suppliers or contractors to meet their obligations in a timely
and cost-effective manner; |
| · | failure to obtain or maintain
necessary certifications, licenses, clearances or approvals to market or perform the test;
or |
| · | lack of commercial acceptance
by inpatient healthcare facilities and commercial partners. |
Few
research and development projects result in commercial products, and success in early clinical studies often is not replicated in later
studies. At any point, we may abandon development of new products, or we may be required to expend considerable resources repeating clinical
studies or trials, which would adversely impact the timing for generating potential revenues from those new products. In addition, as
we develop new products, we will have to make additional investments in our sales and marketing operations, which may be prematurely
or unnecessarily incurred if the commercial launch of a product is abandoned or delayed.
If we use hazardous materials
in a manner that causes injury, we could be liable for damages.
Our
activities currently require the use of hazardous materials and the handling of patient samples. We cannot eliminate the risk of accidental
contamination or injury to employees or third parties from the use, storage, handling or disposal of these materials. In the event of
contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources or any applicable
insurance coverage we may have. Additionally, we are subject on an ongoing basis to federal, state and local laws and regulations governing
the use, storage, handling and disposal of these materials and specified waste products. We are, or may be in the future, subject to
compliance with additional laws and regulations relating to the protection of the environment and human health and safety, and including
those relating to the handling, transportation and disposal of medical specimens, infectious and hazardous waste and Occupational Safety
and Health Administration, or OSHA, requirements as well as their international equivalents. The requirements of these laws and regulations
are complex, change frequently and could become more stringent in the future. Failure to comply with current or future environmental
laws and regulations could result in the imposition of substantial fines, suspension of production, alteration of our production processes,
cessation of operations or other actions, which could severely harm our business.
If we are sued for product liability
or errors and omissions liability, we could face substantial liabilities that exceed our resources.
The
marketing, sale and use of our products could lead to product liability claims if someone were to allege that a product failed to perform
as it was designed. We may also be subject to liability for errors in the results we provide to physicians or for a misunderstanding
of, or inappropriate reliance upon, the information we provide. For example, if we diagnosed a patient as having an MDRO but such result
was a false positive, the patient could be unnecessarily isolated in an inpatient setting or receive inappropriate treatment. We may
also be subject to similar types of claims related to products we may develop in the future. A product liability or errors and omissions
liability claim could result in substantial damages and be costly and time consuming for us to defend. Although we maintain product liability
insurance, we cannot assure you that our insurance would fully protect us from the financial impact of defending against these types
of claims or any judgments, fines or settlement costs arising out of any such claims. Any product liability or errors and omissions liability
claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in
the future. Additionally, any product liability lawsuit could cause injury to our reputation or cause us to suspend sales of our products
and services. The occurrence of any of these events could have an adverse effect on our business and results of operations.
If our acquired in-process research and
development costs or finite-lived tangible and intangible assets or any future goodwill 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. For example, 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 $171 thousand 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 in-process research and development projects (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 recent changes in the Company’s stock price and market capitalization, it was determined that goodwill was impaired.
As a result, the Company recorded a one-time non-cash 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.
Risks Related to Our Public Company Status
If we are unable to maintain effective
internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information
and the market price of our common stock may be negatively affected.
As
a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such
internal control. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal
control over financial reporting and provide a management report on internal control over financial reporting. If we have a material
weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may
be materially misstated.
When
we are no longer a smaller reporting company, our independent registered public accounting firm will be required to issue an attestation
report on the effectiveness of our internal control over financial reporting. Even if our management concludes that our internal control
over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses
with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed.
When
we are no longer a smaller reporting company, if our auditors were to express an adverse opinion on the effectiveness of our internal
control over financial reporting because we had one or more material weaknesses, investors could lose confidence in the accuracy and
completeness of our financial disclosures, which could cause the price of our common stock to decline. Internal control deficiencies
could also result in a restatement of our financial results in the future.
Unstable market and economic conditions
may have serious adverse consequences on our business, financial condition and stock price.
The
global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity
and credit availability, declines in consumer confidence, declines in economic growth, high inflation in U.S. and foreign markets, increases
in unemployment rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected
by the current or anticipated impact of military conflict, including Russia’s war on the Ukraine, terrorism or other geopolitical
events. Sanctions imposed by the United States and other countries in response to such conflicts and wars, including the one on the Ukraine,
may also adversely impact the financial markets and the global economy, and any economic countermeasures by affected countries and others
could exacerbate market and economic instability. There can be no assurance that further deterioration in credit and financial markets
and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn,
volatile business environment or continued unpredictable and unstable market conditions, including instability and high inflation. If
the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and
more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect
on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In
addition, there is a risk that one or more of our current service providers, distributors, manufacturers, and other partners may not
survive an economic downturn or could be adversely affected by geopolitical events, such as Russia’s war on the Ukraine, which
could directly affect our ability to attain our operating goals on schedule and on budget.
A large base of individual stockholders
may make it difficult for us to take action on certain corporate transactions and matters, which may limit the ability of the Company
to enter into certain transaction.
We
believe that we currently have a large base of individual stockholders instead of institutional investors. Procuring the vote of such
stockholders in connection with certain corporate transactions and matters is difficult, time consuming and expensive. For example, in
connection with the Company’s 2021 and 2022 Annual Meetings of stockholders, despite extensive efforts by the Company, we were
unable to receive votes from a sufficient portion of our outstanding shares of common stock required to approve certain proposals submitted
at such meeting.
We
expect that we may continue to need stockholder approval of additional matters in the future, including, in connection with, amendments
to the Company’s amended and restated certificate of incorporation, as amended, and for certain other corporate transactions. If
we are unable to obtain the requisite vote due to stockholder disinterest and apathy for engaging in corporate governance of the Company,
we may be unable to take certain actions, which could prevent or limit our ability to further finance the Company in the future or enter
into certain transactions.
Short sellers of our stock may
be manipulative and may drive down the market price of our common stock.
Short
selling is the practice of selling securities that a seller does not own but rather has borrowed, or intends to borrow, from a third
party with the intention of buying identical securities at a later date to return to the lender. A short seller hopes to profit from
a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the
short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the
price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding
the relevant issuer, its business prospects and similar matters calculated to or which may create negative market momentum, which may
permit them to obtain profits for themselves as a result of selling the securities short. The use of the Internet, social media, and
blogging have allowed short sellers to publicly attack a company’s credibility, strategy and veracity by means of so-called “research
reports” that mimic the type of investment analysis performed by legitimate securities research analysts. Issuers with substantial
retail stockholder bases can be particularly susceptible to higher volatility levels, and can be particularly vulnerable to such short
attacks.
While
we intend to strongly defend our public filings against any such short seller attacks, in many situations we could be constrained, for
example, by principles of freedom of speech, applicable state law or issues of commercial confidentiality, in the manner in which we
are able to proceed against the relevant short seller. Such short-seller attacks may cause, temporary or possibly long term, declines
in the market price of our common stock.
We may be subject to litigation
or government investigations for a variety of claims, which could adversely affect our operating results, harm our reputation or otherwise
negatively impact our business.
We
may be subject to litigation or government investigations. These may include claims, lawsuits, and proceedings involving securities laws,
fraud and abuse, healthcare compliance, product liability, labor and employment, wage and hour, commercial and other matters. Any such
litigation or investigations could result in substantial costs and a diversion of management’s resources and attention. In addition,
any adverse determination could expose us to significant liabilities, which could have a material adverse effect on our business, financial
condition, and results of operations.
Risks Related to Regulation of Our Business
There is no guarantee that the
FDA will grant De Novo classification requests, 510(k) clearance or PMA approval of our products, and failure to obtain necessary clearances
or approvals for our future products would adversely affect our ability to grow our business.
We
have received 510(k) clearance from the FDA for our Acuitas AMR Gene Panel test as well as FDA clearances for Unyvero LRT and LRT BAL
in the past. We have plans to submit additional De Novo classification requests for our Unyvero UTI test and our Unyvero IJI test in
the future. Such process is complex, time consuming and expensive. For any filed 510(k) or De Novo submission, the FDA may not clear
or grant these products for the indications that are necessary or desirable for successful commercialization. Failure to receive, or
a significant delay in receiving, a required clearance or granted request for our products would have a material adverse effect on our
ability to expand our business.
We may be subject to fines, penalties
or injunctions if we are determined to be promoting the use of our products for unapproved or “off-label” uses.
We
are currently offering for sale some RUO products to labs, CROs, diagnostics, pharmaceutical and biotech companies, hospitals and other
healthcare facilities. We believe that our promotional activities for these products falls within the scope of the FDA’s enforcement
discretion and applicable premarket exemptions. However, the FDA could disagree and require us to stop promoting our products for unapproved
or “off-label” uses unless and until we obtain FDA clearance or approval for those uses. We could be subject to regulatory
or enforcement actions for any violations, including, but not limited to, the issuance of an untitled letter, a Form 483 letter, a warning
letter, injunction, seizure, civil fine and criminal penalties. It is also possible that other federal, state or foreign enforcement
authorities might take action if they consider our promotional materials to constitute promotion of an unapproved use, which could result
in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that
event, our reputation could be damaged, and adoption of the products would be impaired.
A number of our rapid diagnostic
products are regulated by the FDA and non-U.S. regulatory authorities. If we or our suppliers fail to comply with ongoing FDA, or other
foreign regulatory authority, requirements, or if we experience unanticipated problems with the products, these products could be subject
to restrictions or withdrawal from the market.
We
have limited experience in complying with the rules and regulations of the FDA and foreign regulatory authorities. The rapid diagnostic
products regulated as medical devices, and the manufacturing processes, reporting requirements, post-approval clinical data and promotional
activities for such products, are subject to continued regulatory review, oversight and periodic inspections by the FDA and other domestic
and foreign regulatory bodies. In particular, we and our suppliers are required to comply with FDA’s Quality System Regulations
(QSR) for the manufacture, labeling, distribution and promotion of products and other regulations which cover the methods and documentation
of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of any product for which we
obtain clearance or approval, and with ISO regulations. The FDA enforces the QSR and similarly, other regulatory bodies with similar
regulations enforce those regulations through periodic inspections. The failure by us or one of our suppliers to comply with applicable
statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any
adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions
against us: (1) untitled letters, Form 483 observations, warning letters, fines, injunctions, consent decrees and civil penalties; (2)
unanticipated expenditures to address or defend such actions; (3) customer notifications for repair, replacement and refunds; (4) recall,
detention or seizure of our products; (5) operating restrictions or partial suspension or total shutdown of production; (6) refusing
or delaying our requests for De Novo classification, 510(k) clearance or premarket approval (PMA) of new products or modified products;
(7) operating restrictions; (8) withdrawing granted De Novo classifications, 510(k) clearances or PMAs that have already been granted;
(9) refusal to grant export approval for our products; or (10) criminal prosecution.
If
any of these actions were to occur, it could harm our reputation and cause our product sales and profitability to suffer and may prevent
us from generating revenue. Furthermore, if any of our key component suppliers are not in compliance with all applicable regulatory requirements,
we may be unable to produce our products on a timely basis and in the required quantities, if at all.
We
and our suppliers are also subject to periodic inspections by the FDA to determine compliance with the FDA’s requirements, including
primarily the QSR and medical device reporting regulations. The results of these inspections can include inspectional observations on
FDA’s Form 483, untitled letters, warning letters, or other forms of enforcement. Since 2009, the FDA has significantly increased
its oversight of companies subject to its regulations, by hiring new investigators and stepping up inspections of manufacturing facilities.
The FDA has recently also significantly increased the number of warning letters issued to companies. If the FDA were to conclude that
we are not in compliance with applicable laws or regulations, or that any of our FDA-cleared products are ineffective or pose an unreasonable
health risk, the FDA could take a number of regulatory actions, including but not limited to, preventing us from manufacturing any or
all of our devices or performing laboratory testing on human specimens, which could materially adversely affect our business.
Some
of the clearances obtained are subject to limitations on the intended uses for which the product may be marketed, which can reduce our
potential to successfully commercialize the product and generate revenue from the product. If the FDA determines that our promotional
materials, labeling, training or other marketing or educational activities constitute promotion of an unapproved use, it could request
that we cease or modify our training or promotional materials or subject us to regulatory enforcement actions. It is also possible that
other federal, state or foreign enforcement authorities might take action if they consider our training or other promotional materials
to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities,
such as laws prohibiting false claims for reimbursement.
In
addition, we may be required to conduct costly post-market testing and surveillance to monitor the safety or effectiveness of our products,
and we must comply with medical device reporting requirements, including the reporting of adverse events and malfunctions related to
our products. Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events
of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result
in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary
or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines,
suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely
affect our business, operating results and prospects.
If
we were to lose, or have restrictions imposed on, FDA clearances received to date, or clearances we may receive in the future, our business,
operations, financial condition and results of operations would likely be significantly adversely affected.
Modifications to our marketed
products may require new 510(k) clearances, De Novo classifications or PMAs or, in the future, new CE-IVD markings that comply with the
new EU Regulation on In Vitro Diagnostic Medical Devices (IVDR), or may require us to cease marketing or recall the modified products
until clearances or approvals are obtained.
If
we modify any of our CE-IVD marked or FDA-cleared products, such modifications may require additional future approvals and filings, e.g.,
notified body authorization or FDA clearance. Modifications to a CE-IVD marked or 510(k)-cleared device that could significantly affect
its safety or effectiveness, or that would constitute a major change in its intended use, may require additional approvals or filings
or a new or revised 510(k) submission, or possibly, a PMA or new IVDR compliant product authorization.
The
FDA and other regulatory authorities, including notified bodies, require every medical device manufacturer to make this determination,
with the potential for the regulatory authorities to impose additional requirements. The applicable regulatory authority nevertheless
maintains the right to disagree with a company’s decisions regarding whether new clearances or approvals are necessary. If the
FDA or any other relevant regulatory authority requires us to submit additional filings, such as a technical file review and CE-marking
under new IVDR, 510(k) submission, or file a De Novo classification request or a PMA, for any modification to a previously cleared product,
we may be required to cease marketing and distributing, or to recall the modified product until we obtain such clearance or approval,
and we may be subject to significant regulatory fines or penalties. Furthermore, our products could be subject to recall if the FDA or
any other relevant regulatory authority determines, for any reason, that our products are not safe or effective. A mandate for a recall
or correction, or where new or revised regulatory submissions are required, could result in significant delays, fines, increased costs
associated with modification of a product, loss of revenue and potential operating restrictions imposed by the FDA or other relevant
regulatory agencies in other territories.
New or revised regulatory requirements
may require us to cease marketing or recall the modified products until clearances or approvals are obtained.
In
2017, the EU Regulation on In Vitro Diagnostic Medical Devices (Regulation (EU) 2017/746) was adopted. The IVDR became effective in May
2022, subject to certain extended transition periods for existing CE-IVD marked products until the 2025 to 2027 time frame, and is, among
other things, intended to establish a uniform, transparent, predictable and sustainable regulatory framework across European Economic
Area. The IVDR introduced new classification rules for in vitro diagnostic medical devices and new regulatory requirements. Moreover,
the scrutiny imposed by notified bodies for the technical documentation related to these devices will increase considerably. Complying
with the requirements of this regulation may result in the reclassification of existing CE-IVD marked products and will require additional
filings with the notified body or competent authority by the time the extended transition periods have expired. Additional filings and
or modifications to products to comply with the IVDR could result in significant delays, increased costs associated with modification
of a product, loss of revenue and other significant expenditures.
Our products may in the future
be subject to product recalls that could harm our reputation, business and financial results.
The
FDA and similar foreign governmental authorities have the authority to require the recall of regulated products in the event of material
deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding
that there is a reasonable probability that the device would cause serious injury or death. In addition, foreign governmental bodies
have the authority to require the recall of our products in the event of material deficiencies or defects in design or manufacture.
Manufacturers
may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary
recall by us or one of our distributors could occur as a result of component failures, manufacturing errors, design or labeling defects
or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse
effect on our financial condition and results of operations. The FDA requires that certain classifications of recalls be reported to
the FDA within 10 working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if
they are not reportable to the FDA. We may initiate voluntary recalls involving our products in the future that we determine do not require
notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls. A future
recall announcement could harm our reputation with customers and negatively affect our sales. In addition, the FDA could take enforcement
action for failing to report the recalls when they were conducted.
If our products cause or contribute
to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can
result in voluntary corrective actions or agency enforcement actions.
Under
the FDA and international medical device reporting regulations, medical device manufacturers are required to report to the applicable
regulatory authority information that a device has, or may have, caused or contributed to a death or serious injury or has malfunctioned
in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or one of our similar devices
were to recur. If we fail to report these events within the required timeframes, or at all, the regulatory authorities could take enforcement
action against us. Any such adverse event involving our products also could result in future voluntary corrective actions, such as recalls
or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary,
as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating
our business, and may harm our reputation and financial results.
We may generate a larger portion
of our future revenue internationally and would then be subject to increased risks relating to international activities, which could
adversely affect our operating results.
A
significant portion of our current revenue and anticipated future revenue growth will come from international sources as we implement
and expand overseas operations. Engaging in international business involves a number of difficulties and risks, including:
| · | required compliance with
existing and changing foreign health care and other regulatory requirements and laws, such
as those relating to patient privacy; |
| · | required compliance with
anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act, or FCPA, data privacy
requirements, labor laws and anti- competition regulations; |
| · | export or import restrictions; |
| · | various reimbursement
and insurance regimes; |
| · | laws and business practices
favoring local companies; |
| · | longer payment cycles
and difficulties in enforcing agreements and collecting receivables through certain foreign
legal systems; |
| · | political and economic
instability; |
| · | potentially adverse tax
consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers; |
| · | foreign exchange controls; |
| · | difficulties and costs
of staffing and managing foreign operations; and |
| · | difficulties protecting
or procuring intellectual property rights. |
As
we expand internationally, our results of operations and cash flows would become increasingly subject to fluctuations due to changes
in foreign currency exchange rates. Our expenses are generally denominated in the currencies in which our operations are located, which
is in the United States, Germany, and Austria. If the value of the U.S. dollar increases relative to foreign currencies in the future,
in the absence of a corresponding change in local currency prices, our future revenue could be adversely affected as we convert future
revenue from local currencies to U.S. dollars. Conversely, a weakening of the value of the U.S dollar relative to foreign currencies
would make our operations in Germany and Austria which operate in euros relatively more expensive. If we dedicate resources to our international
operations and are unable to manage these risks effectively, our business, operating results and prospects will suffer.
We face the risk of potential
liability under the FCPA for past international distributions of products and to the extent we distribute products or otherwise operate
internationally in the future.
In
the past, we have distributed certain of our products internationally, and in the future, we will distribute our products internationally
and possibly engage in additional international operations. The FCPA prohibits companies such as us from engaging, directly or indirectly,
in making payments to foreign government and political officials for the purpose of obtaining or retaining business or securing any other
improper advantage, including, among other things, the distribution of products and other international business operations. Like other
U.S. companies operating abroad, we may face liability under the FCPA if we, or third parties we have used to distribute our products
or otherwise advance our international business, have violated the FCPA or any of the relevant international equivalents. Any violations
of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant
costs and expenses, including legal fees, and could result in a material adverse effect on our business, prospects, financial condition
or results of operations. We could also suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial
measures.
Risks Related to Compliance
with Healthcare and Regulations
Changes in healthcare policy,
including legislation reforming the U.S. healthcare system, may have a material adverse effect on our financial condition and operations.
In
March 2010, both the Patient Protection and Affordable Care Act, or Affordable Care Act, and the reconciliation law known as Health Care
and Education Reconciliation Act, with the Affordable Care Act, the 2010 Health Care Reform Legislation, were enacted. The constitutionality
of the 2010 Health Care Reform Legislation was confirmed twice by the Supreme Court of the United States. The 2010 Health Care Reform
Legislation has changed the existing state of the health care system by expanding coverage through voluntary state Medicaid expansion,
attracting previously uninsured persons through the health care insurance exchanges and by modifying the methodology for reimbursing
medical services, drugs and devices. The U.S. Congress is seeking to replace the 2010 Health Care Reform Legislation. At this time the
Company is not certain as to the impact of federal health care legislation on its business.
The
2010 Health Care Reform Legislation includes the Open Payments Act (formerly referred to as the Physician Payments Sunshine Act), which,
in conjunction with its implementing regulations, requires manufacturers of certain drugs, biologics, and devices that are reimbursed
by Medicare, Medicaid and the Children’s Health Insurance Program to report annually certain payments or “transfers of value”
provided to physicians and teaching hospitals and to report annually ownership and investment interests held by physicians and their
immediate family members during the preceding calendar year. Recent amendments to the Open Payments Act expand the categories of health
care providers for which reporting is required. The failure to report appropriate data accurately, timely, and completely could subject
us to significant financial penalties. Other countries and several states currently have similar laws and more may enact similar legislation.
We
cannot predict whether future healthcare initiatives will be implemented at the federal or state level or in countries outside of the
United States in which we may do business, or the effect any future legislation or regulation will have on us. Any changes in government
regulation of the United States healthcare industry may result in decreased profits to us, which may adversely affect our business, financial
condition and results of operations.
We are subject to potential enforcement
actions involving false claims, kickbacks, physician self-referral or other federal or state fraud and abuse laws, and we could incur
significant civil and criminal sanctions, which would hurt our business.
The
government has made enforcement of the false claims, anti-kickback, physician self-referral and various other fraud and abuse laws a
major priority. In many instances, private whistleblowers also are authorized to enforce these laws even if government authorities choose
not to do so. In most of these cases, private whistleblowers brought the allegations to the attention of federal enforcement agencies.
The risk of our being found in violation of these laws and regulations is increased by the fact that some of the laws and regulations
have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.
We could be subject to enforcement actions under the following laws:
| · | the
federal Anti-Kickback Statute, which constrains certain marketing practices, educational
programs, pricing policies and relationships with healthcare providers or other entities
by prohibiting, among other things, soliciting, receiving, offering or paying remuneration,
directly or indirectly, to induce or in return for, the purchase or recommendation of an
item or service reimbursable under a federal healthcare program, such as the Medicare and
Medicaid programs; |
| · | federal
civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among
other things, individuals or entities from knowingly presenting, or causing to be presented,
claims for payment from Medicare, Medicaid, or other third party payors that are false or
fraudulent; |
| · | federal
physician self-referral laws, such as the Stark Law, which prohibit a physician from making
a referral to a provider of certain health services with which the physician or the physician’s
family member has a financial interest, and prohibit submission of a claim for reimbursement
pursuant to a prohibited referral; and |
| · | state
law equivalents of each of the above federal laws, such as anti-kickback and false claims
laws, which may apply to items or services reimbursed by any third-party payor, including
commercial insurers, many of which differ from each other in significant ways and may not
have the same effect, thus complicating compliance efforts. |
If
we or our operations are found to be in violation of any of these laws and regulations, we may be subject to penalties, including civil
and criminal penalties, damages, fines, exclusion from participation in U.S. federal or state healthcare programs, such as Medicare and
Medicaid, and the curtailment or restructuring of our operations. We will monitor changes in government enforcement as we grow and expand
our business. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant
legal expenses, divert our management’s attention from the operation of our business and hurt our reputation. If we were excluded
from participation in U.S. federal healthcare programs, we would not be able to receive, or to sell our tests to other parties who receive
reimbursement from Medicare, Medicaid and other federal programs, and that could have a material adverse effect on our business.
Risks Related to Our Intellectual
Property
If we cannot license rights to
use technologies on reasonable terms, we may not be able to commercialize new products in the future.
In
the future, we may license third-party technology to develop or commercialize new products. In return for the use of a third party’s
technology, we may agree to pay the licensor royalties based on sales of our solutions. Royalties are a component of cost of services
and affect the margins on our products. We may also need to negotiate licenses to patents and patent applications after introducing a
commercial product. Our business may suffer if we are unable to enter into the necessary licenses on acceptable terms, or at all, if
any necessary licenses are subsequently terminated, if the licensors fail to abide by the terms of the license or fail to prevent infringement
by third parties, or if the licensed patents or other rights are found to be invalid or unenforceable.
If we are unable to protect our
intellectual property effectively, our business would be harmed.
We
rely on patent protection as well as trademark, copyright, trade secret and other intellectual property rights protection and contractual
restrictions to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights
or permit us to gain or keep any competitive advantage. If we fail to protect our intellectual property, third parties may be able to
compete more effectively against us and we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual
property.
We
apply for patents covering our products and technologies and uses thereof, as we deem appropriate, however we may fail to apply for patents
on important products and technologies in a timely fashion or at all, or we may fail to apply for patents in potentially relevant jurisdictions.
It is possible that none of our pending patent applications will result in issued patents in a timely fashion or at all, and even if
patents are granted, they may not provide a basis for intellectual property protection of commercially viable products, may not provide
us with any competitive advantages, or may be challenged and invalidated by third parties. It is possible that others will design around
our current or future patented technologies. We may not be successful in defending any challenges made against our patents or patent
applications. Any successful third-party challenge to our patents could result in the unenforceability or invalidity of such patents
and increased competition to our business. The outcome of patent litigation can be uncertain and any attempt by us to enforce our patent
rights against others may not be successful, or, if successful, may take substantial time and result in substantial cost, and may divert
our efforts and attention from other aspects of our business.
The
patent positions of life sciences companies can be highly uncertain and involve complex legal and factual questions for which important
legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has
emerged to date in the United States or elsewhere. Courts frequently render opinions in the biotechnology field that may affect the patentability
of certain inventions or discoveries, including opinions that may affect the patentability of methods for analyzing or comparing DNA.
In
particular, the patent positions of companies engaged in the development and commercialization of genomic diagnostic tests, like ours,
are particularly uncertain. Various courts, including the U.S. Supreme Court, have recently rendered decisions that affect the scope
of patentability of certain inventions or discoveries relating to certain diagnostic tests and related methods. These decisions state,
among other things, that patent claims that recite laws of nature (for example, the relationship between blood levels of certain metabolites
and the likelihood that a dosage of a specific drug will be ineffective or cause harm) are not themselves patentable. What constitutes
a law of nature is uncertain, and it is possible that certain aspects of genetic diagnostics tests would be considered natural laws.
Accordingly, the evolving case law in the United States may adversely affect our ability to obtain patents and may facilitate third-party
challenges to any owned and licensed patents. The laws of some foreign countries do not protect intellectual property rights to the same
extent as the laws of the United States, and we may encounter difficulties protecting and defending such rights in foreign jurisdictions.
The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly
those relating to biotechnology, which could make it difficult for us to stop the infringement of our patents in such countries. Proceedings
to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other
aspects of our business.
Changes
in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our
intellectual property. We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.
We may not develop additional proprietary products, methods and technologies that are patentable.
In
addition to pursuing patents on our technology, we take steps to protect our intellectual property and proprietary technology by entering
into agreements, including confidentiality agreements, non-disclosure agreements and intellectual property assignment agreements, with
our employees, consultants, academic institutions, corporate partners and, when needed, our advisors. Such agreements may not be enforceable
or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure
or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure. If we are required to assert our
rights against such party, it could result in significant cost and distraction.
Monitoring
unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be,
adequate. If we were to enforce a claim that a third party had illegally obtained and was using our trade secrets, it would be expensive
and time consuming, and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect
trade secrets.
We
may also be subject to claims that our employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary
information of third parties, or to claims that we have improperly used or obtained such trade secrets. Litigation may be necessary to
defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights and face increased competition to our business. A loss of key research personnel work product could hamper or prevent
our ability to commercialize potential products, which could harm our business. Even if we are successful in defending against these
claims, litigation could result in substantial costs and be a distraction to management.
Further,
competitors could attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe
our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside
of our intellectual property rights. Others may independently develop similar or alternative products and technologies or replicate any
of our products and technologies. If our intellectual property does not adequately protect us against competitors’ products and
methods, our competitive position could be adversely affected, as could our business.
We
have not yet registered certain of our trademarks in all of our potential markets. If we apply to register these trademarks, our applications
may not be allowed for registration in a timely fashion or at all, and our registered trademarks may not be maintained or enforced. In
addition, opposition or cancellation proceedings may be filed against our trademark applications and registrations, and our trademarks
may not survive such proceedings. If we do not secure registrations for our trademarks, we may encounter more difficulty in enforcing
them against third parties than we otherwise would.
To
the extent our intellectual property offers inadequate protection, or is found to be invalid or unenforceable, we would be exposed to
a greater risk of direct competition. If our intellectual property does not provide adequate coverage of our competitors’ products,
our competitive position could be adversely affected, as could our business. Both the patent application process and the process of managing
patent disputes can be time consuming and expensive.
We may be involved in litigation
related to intellectual property, which could be time-intensive and costly and may adversely affect our business, operating results or
financial condition.
We
may receive notices of claims of direct or indirect infringement or misappropriation or misuse of other parties’ proprietary rights
from time to time. Some of these claims may lead to litigation. We cannot assure you that we will prevail in such actions, or that other
actions alleging misappropriation or misuse by us of third-party trade secrets, infringement by us of third-party patents and trademarks
or other rights, or the validity of our patents, trademarks or other rights, will not be asserted or prosecuted against us.
We
might not have been the first to make the inventions covered by each of our pending patent applications and we might not have been the
first to file patent applications for these inventions. To determine the priority of these inventions, we may have to participate in
interference proceedings, derivation proceedings, or other post-grant proceedings declared by the United States Patent and Trademark
Office that could result in substantial cost to us. No assurance can be given that other patent applications will not have priority over
our patent applications. In addition, recent changes to the patent laws of the United States allow for various post-grant opposition
proceedings that have not been extensively tested, and their outcome is therefore uncertain. Furthermore, if third parties bring these
proceedings against our patents, we could experience significant costs and management distraction.
Litigation
may be necessary for us to enforce our patent and proprietary rights or to determine the scope, coverage and validity of the proprietary
rights of others. The outcome of any litigation or other proceeding is inherently uncertain and might not be favorable to us, and we
might not be able to obtain licenses to technology that we require on acceptable terms or at all. Further, we could encounter delays
in product introductions, or interruptions in product sales, as we develop alternative methods or products. In addition, if we resort
to legal proceedings to enforce our intellectual property rights or to determine the validity, scope and coverage of the intellectual
property or other proprietary rights of others, the proceedings could be burdensome and expensive, even if we were to prevail. Any litigation
that may be necessary in the future could result in substantial costs and diversion of resources and could have a material adverse effect
on our business, operating results or financial condition.
As
we move into new markets and applications for our products, incumbent participants in such markets may assert their patents and other
proprietary rights against us as a means of slowing our entry into such markets or as a means to extract substantial license and royalty
payments from us. Our competitors and others may now and, in the future, have significantly larger and more mature patent portfolios
than we currently have. In addition, future litigation may involve patent holding companies or other adverse patent owners who have no
relevant product revenue and against whom our own patents may provide little or no deterrence or protection. Therefore, our commercial
success may depend in part on our non-infringement of the patents or proprietary rights of third parties. Numerous significant intellectual
property issues have been litigated, and will likely continue to be litigated, between existing and new participants in our existing
and targeted markets and competitors may assert that our products infringe their intellectual property rights as part of a business strategy
to impede our successful entry into or growth in those markets. Third parties may assert that we are employing their proprietary technology
without authorization. In addition, our competitors and others may have patents or may in the future obtain patents and claim that making,
having made, using, selling, offering to sell or importing our products infringes these patents. We could incur substantial costs and
divert the attention of our management and technical personnel in defending against any of these claims. Parties making claims against
us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products, and could
result in the award of substantial damages against us. In the event of a successful claim of infringement against us, we may be required
to pay damages and ongoing royalties, and obtain one or more licenses from third parties, or be prohibited from selling certain products.
We may not be able to obtain these licenses on acceptable terms, if at all. We could incur substantial costs related to royalty payments
for licenses obtained from third parties, which could negatively affect our financial results. In addition, we could encounter delays
in product introductions while we attempt to develop alternative methods or products to avoid infringing third-party patents or proprietary
rights. Defense of any lawsuit or failure to obtain any of these licenses could prevent us from commercializing products, and the prohibition
of sale of any of our products could materially affect our business and our ability to gain market acceptance for our products.
Furthermore,
because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some
of our confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of
this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments.
If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of
our common stock.
In
addition, our agreements with some of our customers, suppliers or other entities with whom we do business require us to defend or indemnify
these parties to the extent they become involved in infringement claims, including the types of claims described above. We could also
voluntarily agree to defend or indemnify third parties in instances where we are not obligated to do so if we determine it would be important
to our business relationships. If we are required or agree to defend or indemnify third parties in connection with any infringement claims,
we could incur significant costs and expenses that could adversely affect our business, operating results, or financial condition.
General Risk Factors
The COVID-19 pandemic has and
other similar pandemic events may adversely impact our business, financial condition and results of operations.
The
COVID-19 pandemic and more recently possible endemic has continued to impact the global economy and has impacted our operations in the
United States and abroad (including, in particular, China), including by negatively impacting our sales and revenue. As a result, we
have implemented certain operational changes in order to address the evolving challenges presented by the global pandemic. We have experienced
significant reductions in the demand for certain of our products, particularly due to the decline in elective medical procedures and
medical treatment unrelated to COVID-19, which negatively impacted our revenues in fiscal years 2020 and 2021 as well as into 2022. As
the pandemic or endemic continues, we expect to continue to experience weakened demand for these products as a result of the reduction
in elective and nonessential procedures, lower utilization of routine testing and related specimen collection, reduced spending by customers
due to funding diverted to fight COVID-19 and reduced demand from research laboratories and staffing shortages with many hospitals and
labs as well as our own personnel.
Healthcare
providers, including our strategic partners worldwide, spend significant time dealing with COVID-19, and may be unable to initiate or
continue to participate in our clinical activities. For example, some clinical trial sites, most notably in China, have imposed and continue
to maintain restrictions on site visits by sponsors and CROs, the initiation of new or execution of ongoing trials, and new patient enrollment
to protect both site staff and patients from possible COVID-19 exposure and to focus medical resources on patients suffering from COVID-19.
The pandemic may therefore delay initiation enrollment in and completion of our clinical trials due to prioritization of hospital resources
toward the outbreak, and some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement
or interrupt healthcare services. Moreover, due to site and participant availability during the pandemic and in the interest of patient
safety, many of our partners had paused new subject enrollment for most clinical trials during the earlier phase of the pandemic and
might do so again.
For
ongoing and/or planned future trials, we have seen an increasing number of clinical trial sites imposing restrictions on patient visits
to limit risks of possible COVID-19 exposure, and we may experience issues with participant compliance with clinical trial protocols
as a result of quarantines, travel restrictions and interruptions to healthcare services. The current pressures on medical systems and
the prioritization of healthcare resources toward the COVID-19 pandemic have also resulted in interruptions in data collection and submissions
for certain clinical trials and delayed starts for certain planned studies such as for example the supplemental clinical study in China.
Further, health regulatory agencies globally may also experience disruptions in their operations as a result of the COVID-19 pandemic.
The FDA and comparable foreign regulatory agencies have had and may continue to have slower response times or be under-resourced, which
could significantly delay the FDA’s ability to timely review and process any submissions we or our partners have filed or may file.
The FDA in 2021 notified us that the agency would continue prioritizing emergency use authorization requests for diagnostic products
intended to address the COVID-19 pandemic during 2021. Due to delays from such prioritization, we only received a clearance decision
on our Acuitas AMR Gene Panel on September 30, 2021, which was originally targeted for a decision by mid-2020 and we did not receive
responses to our most recent requests for pre-submission meetings.
As
a result of the outbreak, we and certain of our suppliers may also be affected and could experience closures and labor shortages, which
could disrupt activities. We could therefore face difficulty sourcing key components necessary to produce our product candidates, which
may negatively affect our clinical development activities. Even if we are able to find alternate sources for some of these components,
they may cost more, which could affect our results of operations and financial position.
At
this point in time, there remains significant uncertainty relating to the potential effect of the coronavirus on our business and results
of operations. As coronavirus and its mutations become endemic, it could have a continued negative impact on our ability to operate
our business, financial condition and results of operations as well as virtual marketing, sales and customer service interactions not
being as effective as in-person interactions. While several vaccines have been approved for use, and with vaccination programs successfully
implemented in many countries, the limited acceptance of vaccination by many individuals in the United States as well as in Europe and
globally, and potential failure to be effective for all known mutations of the SARS-CoV-2 virus still makes it hard to predict if and
when the pandemic will subside and remain endemic.
Moreover,
we have continued to have a subset of our office-based employee population in a remote work environment in an effort to mitigate the
spread of COVID-19, which may exacerbate certain risks to our business, including cybersecurity attacks and risk of phishing due to an
increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased
numbers).
Customer demand for and our ability
to sell and market our products may be adversely affected by the COVID-19 pandemic and the legislative and regulatory responses thereto.
U.S.
state and local governments as well as many governments around the world had imposed orders, restrictions and recommendations resulting
in closures of businesses, work stoppages, travel restrictions, quarantine orders, social distancing practices and cancellations of gatherings
and events. Such orders, restrictions and recommendations, combined with fears of the spreading of COVID-19, had and may continue to
cause certain of our customers to delay, cancel or reduce orders of our products and makes it difficult to facilitate meetings with current
and potential customers, as our sales personnel often rely on in-person meetings and interaction with our customers. COVID-19 related
restrictions have thus harmed our sales efforts, and continued restrictions could continue to have a negative impact on our sales and
results of operations. We are unable to accurately predict how these factors will reduce our sales going forward and when these orders,
restrictions and recommendations will be relaxed or lifted. There can be no assurances that our customers and distributors will resume
purchases of our products upon termination of these governmental orders, restrictions and recommendations, particularly if there remains
any continued community outbreak of COVID-19. A prolonged economic contraction or recession may also result in our customers seeking
to reduce their costs and expenditures, which could result in lower demand for our products. If our sales decline, or if such lost sales
are not recoverable in the future, our revenues, business and results of operations will be significantly adversely affected.
We incurred significant indebtedness
as a result of the combination with Curetis, which could have a material adverse effect on our financial condition.
On
April 1, 2020, we assumed the indebtedness of Curetis GmbH. As of September 30, 2022, we owed indebtedness of $14.2 million (€14.5
million) of principal (including deferred interest of $1.7 million (€1.8 million)) under a loan provided by the EIB with remaining
maturities in June 2023 and June 2024. In particular, of the approximately $15 million of such indebtedness that was due to the EIB in
April 2022, we had paid approximately $5 million and have agreed to amortize the remaining amount over a 12-month period in monthly installments
of approximately $700 thousand each. While we continue evaluating options to restructure the remaining indebtedness, we may not be able
to do so, and in such event, OpGen may not be able to generate sufficient cash to service all of its indebtedness and may be forced to
take other actions to satisfy its obligations under indebtedness that may not be successful. The inability in the future to repay such
indebtedness when due would have a material adverse effect on us.
The business combination transaction
with Curetis significantly changed our business and operations. We may continue to face challenges integrating the Curetis businesses.
Following
the consummation of the combination with Curetis, we continued as the operating entity and both the size and geographic scope of our
business significantly increased. Most of the Curetis business is currently conducted in Europe, Asia and other countries outside of
the United States, and many of the OpGen employees are located outside of the United States. We have and may face further challenges
integrating such geographically diverse businesses and implementing a smooth transition of business focus and governance in a timely
or efficient manner. In particular, if the effort we devote to the continued integration of our businesses diverts more management time
or other resources from carrying out our operations than we originally planned, our ability to maintain and increase revenues as well
as manage our costs could be impaired. Furthermore, our capacity to expand other parts of our existing businesses may be impaired. We
also cannot assure you that following our combination with Curetis the combined OpGen group will function as we anticipate, or that significant
synergies will result from the business combination. Any of the above could have a material adverse effect on our business.
We are dependent on the services
of our management and other key personnel and members of our board of directors, and if we are not able to retain these individuals or
recruit additional management, our business will suffer.
Our
success depends in part on our continued ability to attract, retain, manage and motivate highly qualified management and other key personnel.
We are highly dependent upon our senior management and other members of our management team. The loss of services of any of these individuals,
such as the departure of our former chief financial officer and our former chairman and founder, could cause the loss of critical Company
knowledge and information, delay or prevent the successful development of our products, initiation or completion of our preclinical studies
and clinical trials or the commercialization of our products. Although we have executed employment agreements or offer letters with each
member of our senior management team, we may not be able to retain their services as expected. We do not currently maintain “key
person” life insurance on the lives of our executives or any of our employees. This lack of insurance means that we may not have
adequate compensation for the loss of the services of these individuals.
We
will need to expand and effectively manage our managerial, operational, financial and other resources in order to successfully pursue
our clinical development and commercialization efforts. We may not be successful in maintaining our unique company culture and continuing
to attract or retain qualified management and scientific and clinical personnel in the future due to the intense competition for qualified
personnel among biopharmaceutical, biotechnology and other businesses. Our industry has experienced a high rate of turnover of management
personnel in recent years. If we are not able to attract, integrate, retain and motivate necessary personnel to accomplish our business
objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to
raise additional capital and our ability to implement our business strategy.
Our insurance policies are expensive
and protect us only from some business risks, which will leave us exposed to significant uninsured liabilities.
We
do not carry insurance for all categories of risk that our business may encounter. Some of the policies we currently maintain include
general liability, employee benefits liability, property, umbrella, business interruption, workers’ compensation, product liability,
errors and omissions and directors’ and officers’ insurance. We do not know, however, if we will be able to maintain existing
insurance with adequate levels of coverage. Any significant uninsured liability may require us to pay substantial amounts, which would
adversely affect our cash position and results of operations.
Integrating the businesses of
OpGen and Curetis may disrupt or have a negative impact on OpGen.
We
could have difficulty integrating the assets, personnel and businesses of OpGen and Curetis. The proposed transaction was complex and
we have devoted and will need to continue to devote significant time and resources to further integrating the businesses, including in
connection with certain internal corporate restructuring matters. As such, risks that could impact us negatively include:
| · | the difficulty of integrating
the acquired companies, and their concepts and operations; |
| · | the difficulty in combining
our financial operations and reporting; |
| · | the potential disruption
of the ongoing businesses and distraction of our management; |
| · | risks related to international
operations; |
| · | the potential impairment
of relationships with employees and partners as a result of any integration of new management
personnel; and |
| · | the potential inability
to manage an increased number of locations and employees. |
If
we are not successful in addressing these risks effectively, our business could be severely impaired.
While we currently qualify as
a smaller reporting company under SEC regulations, we cannot be certain whether taking advantage of the reduced disclosure requirements
applicable to these companies will not make our common stock less attractive to investors. Once we lose smaller reporting company status,
the costs and demands placed upon our management are expected to increase.
The
SEC’s rules permit smaller reporting companies to take advantage of certain exemptions from various reporting requirements applicable
to other public companies. As long as we qualify as a smaller reporting company, based on our public float, and report less than $100
million in annual revenues in a fiscal year we are permitted, and we intend to, omit the auditor’s attestation on internal control
over financial reporting that would otherwise be required by the Sarbanes-Oxley Act.
We
lost our status as an emerging growth company as of December 31, 2020. While we expect to remain a smaller reporting company and non-accelerated
filer, we now face increased disclosure requirements as a non-emerging growth company, such as stockholder advisory votes on executive
compensation (“say-on-pay”). Until such time that we lose smaller reporting company status, it is unclear if investors will
find our common stock less attractive because we may rely on certain disclosure exemptions. If some investors find our common stock less
attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile and could
cause our stock price to decline.
As
a result of the loss of our emerging growth company status, we expect the costs and demands placed upon our management to increase, as
we now have to comply with additional disclosure and accounting requirements. In addition, even if we remain a smaller reporting company,
if our public float exceeds $75 million and we report $100 million or more in annual revenues in a fiscal year, we will become subject
to the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring an independent registered public accounting firm to provide an
attestation report on the effectiveness of our internal control over financial reporting, making the public reporting process more costly.
We incur increased costs and demands
on management as a result of compliance with laws and regulations applicable to public companies, which could harm our operating results.
As
a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, including costs
associated with public company reporting requirements. In addition, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, as
well as rules implemented by the SEC and the Nasdaq Stock Market, impose a number of requirements on public companies, including with
respect to corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance
and disclosure obligations. Moreover, compliance with these rules and regulations has increased our legal, accounting and financial compliance
costs and has made some activities more time-consuming and costly. It is also more expensive for us to obtain director and officer liability
insurance.
We may be adversely affected by
the current economic environment and future adverse economic environments.
Our
ability to attract and retain customers, invest in and grow our business and meet our financial obligations depends on our operating
and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial,
business and other factors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States
and continued high inflationary pressures. We cannot anticipate all the ways in which the current economic climate and financial market
conditions, and those in the future, could adversely impact our business.
We
are exposed to risks associated with reduced profitability and the potential financial instability of our customers, many of which may
be adversely affected by volatile conditions in the financial markets. For example, unemployment and underemployment, and the resultant
loss of insurance, may decrease the demand for healthcare services and diagnostic testing. If fewer patients are seeking medical care
because they do not have insurance coverage, we may experience reductions in revenues, profitability and/or cash flow. In addition, if
economic challenges in the United States result in widespread and prolonged unemployment, either regionally or on a national basis, a
substantial number of people may become uninsured or underinsured. To the extent such economic challenges result in less demand for our
proprietary tests, our business, results of operations, financial condition and cash flows could be adversely affected.
The Company’s Charter provides that the
Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between the Company and
its stockholders, which could limit its stockholders' ability to obtain a favorable judicial forum for disputes with the Company or its
directors, officers or other employees.
The Company’s Charter provides that, unless
the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the
sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim
of breach of a fiduciary duty owed by any director, officer or other employee of the Company or its stockholders, (iii) any action asserting
a claim arising pursuant to any provision of the DGCL or the Company’s Certificate of Incorporation or Bylaws, or (iv) any action
asserting a claim governed by the internal affairs doctrine. This exclusive forum provision is intended to apply to claims arising under
Delaware state law and would not apply to claims brought pursuant to the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, or any other claim for which the federal courts have exclusive jurisdiction. The exclusive forum provision in
the Company’s Charter will not relieve the Company of its duties to comply with the federal securities laws and the rules and regulations
thereunder, and stockholders of the Company will not be deemed to have waived the Company’s compliance with these laws, rules and
regulations.
This
exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with
the Company or its directors, officers or other employees, which may discourage lawsuits against the Company and its directors, officers
and other employees. In addition, stockholders who do bring a claim in the Court of Chancery of the State of Delaware could face additional
litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The Court of Chancery of the State
of Delaware may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise
choose to bring the action, and such judgments or results may be more favorable to the Company than to its stockholders. However, the
enforceability of similar exclusive forum provisions in other companies’ certificates of incorporation has been challenged in legal
proceedings, and it is possible that a court could find this type of provision to be inapplicable to, or unenforceable in respect of,
one or more of the specified types of actions or proceedings. If a court were to find the exclusive forum provision contained in the
Company’s Charter to be inapplicable or unenforceable in an action, the Company might incur additional costs associated with resolving
such action in other jurisdictions.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains “forward-looking
statements” within the meaning of Section 27A of the Securities and Section 21E of the Securities Exchange Act of 1934, as amended,
or the Exchange Act. All statements, other than statements of historical fact, included or incorporated in this prospectus regarding
our strategy, future operations, collaborations, intellectual property, cash resources, financial position, future revenues, projected
costs, prospects, plans, and objectives of management are forward-looking statements. The words “believes,” “anticipates,”
“estimates,” “plans,” “expects,” “intends,” “may,” “could,” “should,”
“potential,” “likely,” “projects,” “continue,” “will,” and “would”
and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these
identifying words.
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 under the heading “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:
| · | 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; |
| · | 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 products; |
| · | regulations and changes
in laws or regulations applicable to our business, including regulation by the FDA, European
Union, including pending IVDR requirements, and China’s NMPA; |
| · | 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; |
| · | the continued impact of
the COVID-19 pandemic on our business and operations; |
| · | 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 on
the 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. |
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 risks described under the heading “Risk Factors.” 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 prospectus 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.
USE
OF PROCEEDS
We estimate that the net proceeds
from the sale of the securities offered under this prospectus, after deducting placement agent’s fees and estimated offering expenses
payable by us, will be approximately $6.8 million.
We intend to use the net proceeds
from the sale of the shares to: (i) support continued commercialization of our FDA-cleared Acuitas AMR Gene Panel test for isolates in
the U.S.; (ii) commercialize our products with a focus on the Unyvero Platform and diagnostic tests; (iii) support further development
and commercialization of the Ares Genetics database and service offerings; (iv) support directed sales and marketing efforts to the customers
and collaborators for our products and services, (v) invest in manufacturing and operations infrastructure to support sales of products;
and (vi) repay certain outstanding indebtedness of the Company and its subsidiaries. We intend to use the remaining net proceeds for
working capital and other general corporate purposes.
This expected use of net proceeds from
this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our
plans and business conditions evolve. We cannot currently allocate specific percentages of the net proceeds to us from this offering
that we may use for the purposes specified above. Our management will have broad discretion in the application of the net proceeds from
this offering and could use them for purposes other than those contemplated at the time of this offering. Our stockholders may not agree
with the manner in which our management chooses to allocate and spend the net proceeds. Moreover, our management may use the net proceeds
for corporate purposes that may not result in our being profitable or increase our market value.
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization as of September 30, 2022 as follows:
| · | on an actual basis
(after giving effect to a 1-for-20 reverse stock split effected on January 5, 2023); and |
| · | on an as adjusted basis to give effect to the sale by us of 321,207 shares
in this offering at a public offering price of $2.90 per share and accompanying warrant and pre-funded warrants to purchase up to 2,265,000
shares in this offering at a public offering price of $2.89 per pre-funded warrant and accompanying warrant, assuming the full exercise
of the pre-funded warrants sold in this offering at an exercise price of $0.01 per share underlying the pre-funded warrants and after
deducting estimated placement agent fees and estimated offering expenses. |
The as adjusted information set forth below is illustrative only
and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You should read
this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and our financial statements and related notes included elsewhere in, or incorporated by reference into, this prospectus.
| |
As of September 30, 2022 | |
| |
Actual | | |
As Adjusted | |
| |
(In thousands, except share and per share data) | |
Cash and cash
equivalents | |
$ | 10,276 | | |
$ | 17,037 | |
Debt | |
| 12,451 | | |
$ | 12,451 | |
Stockholders’ equity: | |
| | | |
| | |
Common stock, par value $0.01 per
share: 100,000,000 shares authorized, 2,416,925 shares issued and outstanding as of September 30, 2022, actual; 100,000,000
shares authorized, 5,003,132 shares issued and outstanding, as adjusted (assuming full exercise of all pre-funded warrants issued
in this offering) | |
| 483 | | |
| 27 | |
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized,
no shares outstanding, actual and no shares outstanding as adjusted | |
| — | | |
| — | |
Additional paid-in capital | |
| 277,407 | | |
| 284,623 | |
Accumulated other comprehensive loss | |
| (1,662 | ) | |
| (1,662 | ) |
Accumulated deficit | |
| (262,290 | ) | |
| (262,290 | ) |
Total stockholders’ equity | |
| 13,938 | | |
| 20,698 | |
Total capitalization | |
$ | 26,389 | | |
$ | 33,149 | |
A $1.00 increase (decrease) in the public offering
price of $2.90 per share would increase (decrease) the expected net proceeds to us from this offering by approximately $2.4 million, assuming
that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated
placement agent commissions and estimated offering expenses payable by us and excluding the proceeds, if any, from the exercise of the
pre-funded warrants issued pursuant to this offering.
Similarly, a 100,000 share increase or decrease in
the number of shares offered by us, as set forth on the cover page of this prospectus, would increase or decrease the net proceeds to
us by approximately $0.3 million, at the same public offering price of $2.90 per share, and after deducting estimated placement agent
commissions and estimated offering expenses payable by us and excluding the proceeds, if any, from the exercise of the pre-funded warrants
issued pursuant to this offering.
The number of shares of common stock to be outstanding immediately
after this offering is based on 2,416,925 shares of our common stock outstanding as of September 30, 2022, and excludes:
|
· |
108,001
shares of common stock issuable upon the exercise of outstanding options granted as of September 30, 2022, under our equity incentive
plans at a weighted average exercise price of $94.52 per share; |
|
· |
808,209
shares of common stock issuable upon the exercise of outstanding warrants issued as of September 30, 2022, at a weighted average
exercise price of $65.78 per share; |
|
· |
40,403
shares of common stock issuable upon vesting of outstanding restricted stock units granted as of September 30, 2022; |
|
· |
68,251
shares of common stock available for future issuance under our equity incentive plans as of September 30, 2022; and |
|
· |
268,000 shares of common stock issued at a
price of $7.00 per share, 215,000 shares of common stock issued upon the exercise of pre-funded warrants at an offering price of
$6.80 per share and 483,000 shares of common stock issuable upon the exercise of common warrants with an exercise price of $7.54
per share, each of which was issued after September 30, 2022 as part of our registered direct offering of securities completed in
October 2022. |
The number of outstanding options, restricted
stock units and shares of common stock available for future issuances under our equity incentive plans does not reflect:
|
· |
2,500
shares of common stock issuable upon vesting of outstanding restricted stock unit grants since September 30, 2022; |
|
· |
the
expiration of options to acquire 1,350 shares of our common stock since September 30, 2022; and |
|
· |
1,000 shares of common stock issuable upon
the exercise of outstanding options granted since September 30, 2022, under our equity incentive plans at a weighted average exercise
price of $3.60 per share. |
DILUTION
Our net tangible book value as of September 30, 2022 was approximately
$1.9 million, or $0.80 per share. Net tangible book value per share is determined by dividing our total tangible assets, less total liabilities,
by the number of shares of our common stock outstanding as of September 30, 2022. Dilution with respect to net tangible book value per
share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the net
tangible book value per share of our common stock immediately after this offering.
After giving effect to the sale of 321,207 shares of our common
stock and accompanying common warrant in this offering at a public offering price of $2.90 per share of common stock and accompanying
warrant, and after giving effect to the sale of pre-funded warrants to purchase up to 2,265,000 shares of common stock and accompanying
warrant at a public offering price of $2.89 per pre-funded warrant and accompanying warrant, and assuming the full exercise of the pre-funded
warrants sold in this offering at an exercise price of $0.01 per share underlying the pre-funded warrants and after deducting estimated
placement agent fees and estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2022 would
have been approximately $8.7 million, or $1.74 per share. This represents an immediate increase in net tangible book value of $0.94 per
share to existing stockholders and immediate dilution of $1.16 per share to investors purchasing our securities in this offering at the
public offering price. The following table illustrates this dilution on a per share basis:
Public offering price per share |
|
|
|
|
|
$ |
2.90 |
|
|
Net tangible book value per share of as September 30, 2022 |
|
$ |
0.80 |
|
|
|
|
|
|
Increase in net tangible book value per share attributable to this offering |
|
$ |
0.94 |
|
|
|
|
|
|
As adjusted net tangible book value per share as of September 30, 2022, after giving effect to this offering |
|
|
|
|
|
$ |
1.74 |
|
|
Dilution per share to new investors purchasing our common stock in this offering |
|
|
|
|
|
$ |
1.16 |
|
|
A $1.00 increase or decrease in the public offering price of $2.90
per share of common stock, would decrease the number of shares of our common stock offered in this offering by approximately 0.7 million
shares or increase the number of shares of our common stock offered in this offering by approximately 1.4 million shares, respectively.
We may also increase or decrease the number
of shares of common stock we are offering. An increase of 100,000 in the number of shares of common stock offered by us would increase
our as adjusted net tangible book value by approximately $0.3 million, or $0.02 per share, and decrease the dilution per share to investors
participating in this offering by $0.02 per share, assuming the offering price per share remains the same and after deducting the estimated
placement agent commissions and estimated offering expenses payable by us. Similarly, a decrease of 100,000 in the number of shares of
common stock offered by us would decrease our as adjusted net tangible book value by approximately $0.3 million or $0.02 per share, and
increase the dilution per share to investors participating in this offering by $0.02 per share, assuming the offering price per share
remains the same and after deducting the estimated placement agent commissions and estimated offering expenses payable by us. The information
discussed above is illustrative only and will adjust based on the actual offering price, the actual number of shares of common stock we
offer in this offering, and other terms of this offering determined at pricing.
The number of shares of common stock to
be outstanding immediately after this offering is based on 2,416,925 shares of our common stock outstanding as of September 30, 2022,
and excludes:
|
· |
108,001
shares of common stock issuable upon the exercise of outstanding options granted as of September 30, 2022, under our equity incentive
plans at a weighted average exercise price of $94.52 per share; |
|
· |
808,209
shares of common stock issuable upon the exercise of outstanding warrants issued as of September 30, 2022, at a weighted average
exercise price of $65.78 per share; |
|
· |
40,403
shares of common stock issuable upon vesting of outstanding restricted stock units granted as of September 30, 2022; |
|
· |
68,251
shares of common stock available for future issuance under our equity incentive plans as of September 30, 2022; and |
|
· |
268,000 shares of common
stock issued at a price of $7.00 per share, 215,000shares of common stock issued upon the exercise of pre-funded warrants at an offering
price of $6.80 per share and 483,000 shares of common stock issuable upon the exercise of common warrants with an exercise price
of $7.54 per share, each of which was issued after September 30, 2022 as part of our registered direct offering of securities completed
in October 2022. |
The number of outstanding options, restricted
stock units and shares of common stock available for future issuances under our equity incentive plans does not reflect:
|
· |
2,500
shares of common stock issuable upon vesting of outstanding restricted stock unit grants since September 30, 2022; |
|
· |
the
expiration of options to acquire 1,350 shares of our common stock since September 30, 2022; and |
|
· |
1,000 shares of common
stock issuable upon the exercise of outstanding options granted since September 30, 2022, under our equity incentive plans at a weighted
average exercise price of $3.60 per share. |
BUSINESS
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 sequencing
services, 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
Polymerase Chain Reaction, or 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 (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 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 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 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 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 U.S. Centers for Disease Control and Prevention, or CDC. |
| · | Following
registration of the Unyvero instrument system as an in vitro diagnostics (IVD) platform 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 Hospitalized
Pneumonia (HPN) test. As requested by the Chinese regulatory authority National Medical Products
Administration (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 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 clinical trial plan
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. |
| · | 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 submission to the FDA. |
| · | 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 submission to the FDA.
Such clinical trial is not expected to start before the second quarter of 2023. 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 antimicrobial resistance, or 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 Unyvero 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 by FIND 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 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 intra-abdominal 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.
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 verification and validation testing of the A30 RQ 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 of the Unyvero A50 product line to currently 12 countries
and Beijing Clear Biotech Co. Ltd. for Unyvero A50 product distribution in China. We have a network of other 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.
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 for 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
in the United States. 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.
OpGen’s Products and Products in Development
Through its wholly owned
subsidiary Curetis GmbH, OpGen maintains a comprehensive portfolio of molecular diagnostics for rapid infectious disease and AMR testing.
At the core of the portfolio is the Unyvero Platform and product family, which is developed, manufactured and commercialized by Curetis.
On the bioinformatics side, OpGen has combined data from its now discontinued Acuitas Lighthouse with the Ares Genetics (Ares) data into
the ARESdb. Ares develops and commercializes its NGS as well as AI-powered prediction models and solutions to partners and customers
in the pharma, biotech and diagnostics industries as well as to public research institutions.
OpGen is a molecular diagnostics
company that focuses on the development and commercialization of reliable, fast and cost-effective products for diagnosing severe infectious
diseases in hospitalized patients, an indication with a high unmet medical need and significant prevalence in developed countries. Our
unique Unyvero A50 Platform currently comprises the Unyvero System with the Unyvero A50 Analyzer at its core, proprietary software, and
single use Application Cartridges. These Application Cartridges contain molecular tests addressing specific severe infectious diseases
and detect a broad range of pathogens relevant in a given indication and associated toxin genes and genetic antimicrobial resistance
markers.
The Unyvero A50 Platform
has been CE-IVD-marked since 2012 and is commercialized in Europe and certain other markets that accept CE-IVD-marking or where it has
successfully passed the registration process (i.e. Colombia, Kuwait, and Singapore), and has been rolled out commercially in the United
States following De Novo clearance of the Unyvero A50 System and the LRT Application Cartridge by the FDA in April 2018 and the 510(k)
clearance of the LRT Application for BAL samples in December 2019.
Today, the diagnosis of
infectious diseases in the hospital setting is still largely carried out through traditional culture-based microbiology methods. This
process is labor-intensive and time-consuming, typically delivering results only after 24 to 72 hours or, in some cases, weeks. As a
result, informed antibiotic therapy decisions may be delayed, which can lead to poor patient outcomes, including higher mortality rates
for indications such as pneumonia and sepsis, longer hospital stays, increased hospital costs and overall spread of antibiotic resistance,
a significant and increasing problem throughout the world. All of these factors pose clinical and economic challenges to hospitals and
a significant threat to public health globally.
OpGen aims to improve on
this standard-of-care by offering comprehensive test information in a timely manner that allows for early, efficacious treatment, which
OpGen believes results in improved clinical and health economic outcomes. The Company’s Unyvero A50 Platform delivers results within
four to five hours and can cover over 100 diagnostic targets. The broad Unyvero test panels also allow the identification of microorganisms
that are difficult to culture and hence missed in culture-based test methods, as well as rare but critical pathogens not routinely tested
for by standard methods, a conclusion confirmed by a number of clinical studies. The FDA clinical trial for the LRT Application Cartridge
concluded that the Unyvero A50 System identified 32 positive atypical pathogen results in 1,653 prospectively tested specimens, as opposed
to only four confirmed positive atypical pathogen results identified in 116 specimens from this cohort using traditional culture-based
diagnostic methods. The Company believes this allows clinicians to make early adjustments to the specific treatment of the patient, saving
significant time and cost, in particular by reducing the duration of the patient’s hospital stay.
The Unyvero Platform is
intended to complement rather than replace traditional microbiology-based diagnostics testing. OpGen believes, however, that timely diagnosis
of the underlying pathogens and their resistances could greatly improve outcomes for patients and is likely to provide net savings to
hospitals.
The Unyvero A50 Platform
is marketed through a combination of direct sales in the United States and a growing network of distribution partners in Europe, Middle
East, the ASEAN Region, Asia and Latin America. As of September 30, 2022, the distribution network comprises 12 distributors covering
28 countries in those regions with regulatory clearance for the Unyvero A50 System and the Unyvero Application Cartridges in some of
these countries still pending.
There are currently seven commercially available
Application Cartridges, consisting of:
| · | the HPN Application Cartridge,
which addresses severe forms of pneumonia and is CE-IVD-marked in Europe; |
| · | the ITI Application Cartridge,
which addresses severe cases of implant and tissue infections and is CE-IVD-marked in Europe; |
| · | the BCU Application Cartridge,
which addresses severe blood stream infections and is CE-IVD-marked in Europe; |
| · | the IAI Application Cartridge,
which addresses intra-abdominal infections and is CE-IVD-marked in Europe; |
| · | The UTI Application Cartridge,
which addresses severe urinary tract infections and is CE-IVD-marked in Europe. The Company
has begun analytical and clinical performance evaluations, including completion of enrollment
of more than 1,800 patient samples into its clinical trial at the end of the third quarter
of 2022. Data read out from that trial will be required for a subsequent submission to the
FDA for clearance in 2023; |
| · | the LRT Application Cartridge,
which is technically similar to the HPN Application Cartridge and also addresses severe forms
of pneumonia, which was cleared by the FDA in April 2018 for use with tracheal aspirates
and is now being marketed in the United States; and |
| · | the LRT BAL Application
Cartridge which was cleared on December 20, 2019 by the FDA for use with BAL specimens and
has been launched in the Unites States in the first quarter of 2020. |
In addition to the current
Unyvero A50 System, the Company through its subsidiary Curetis also develops its Unyvero A30 RQ Analyzer module designed to offer
a rapid time-to-result (potentially as fast as 30 to 90 minutes), qualitative and, where needed, quantitative real-time PCR testing in
a cartridge format that can provide up to 11 parallel multiplex (i.e. simultaneously running multiple assays in one reaction) PCR reactions
from one sample, with up to three assays per reaction (for a total of up to 33 assays per cartridge). The Unyvero A30 RQ Analyzer
is expected to be operated on a stand-alone basis or fully integrated into the Unyvero System suite of products with respect to system
architecture, design, software and handling, thereby expanding the Unyvero Platform to include low- and mid-plex capabilities. We expect
that the costs of the Unyvero A30 RQ Analyzer and cartridges will be lower than those for the current Unyvero A50 System and its
Application Cartridges, potentially opening up commercial opportunities in the medium multiplexing infectious disease testing market
segment. Initially developed as an expansion of the Unyvero platform, complementing the Unyvero A50 high-plex Application Cartridges
with low- to mid-plex Unyvero A30 RQ Application Cartridges for infectious diseases, OpGen adjusted its strategy and now also seeks partners
in the global IVD industry that may want to access the Unyvero A30 RQ for commercialization of their own assays on this platform,
potentially even as legal manufacturer under their own branding.
The Unyvero A50 Platform
Curetis launched its CE-IVD-marked Unyvero A50
Platform with a first disposable Application Cartridge for pneumonia in 2012. The FDA cleared the Unyvero A50 System and LRT Application
Cartridge in April 2018 and the LRT BAL Application Cartridge in December 2019.
The Unyvero A50 Platform is a highly automated
sample-to-answer molecular diagnostics platform, based on multiplexed end-point PCR with an array-based detection process. It integrates
fully automated sample preparation, analysis and identification of disease relevant pathogens and antibiotic resistance markers to provide
timely high-quality information to its end-users. The scalable system is designed to be either placed in laboratory settings or directly
in hospital wards or intensive care units. Time-to-result is four to five hours for the different Application Cartridges commercially
available today, including 30 minutes of automated sample preparation (lysis) and total hands-on time of no more than five minutes. The
Unyvero A50 Platform’s intuitive workflow with only minimal hands-on time enables untrained hospital staff to perform molecular
tests at the point of need, such as intensive care units, or ICUs.
Unyvero A50 Platform, System Components and
Workflow
The Unyvero A50 System consists
of three devices, the Unyvero L4 Lysator, the Unyvero C8 Cockpit and the Unyvero A50 Analyzer. The Unyvero L4 Lysator is used for sample
pre-processing and pathogen lysis. The Unyvero C8 Cockpit is the control panel for the Unyvero L4 Lysator and Unyvero A50 Analyzer and
displays the results of patient sample analysis. The Unyvero A50 Analyzer integrates mechanical, electronic, pneumatic and optical elements
and enables a fully automatic random-access processing of the Application Cartridges. The Application Cartridges are single-use, disposable
and disease specific. The Unyvero System, together with proprietary software and the Application Cartridges, comprise the Unyvero A50
Platform.
Figure 1: Unyvero Platform
The Unyvero L4 Lysator
The Unyvero L4 Lysator instrument is used
for sample pre-processing and pathogen lysis. It performs proprietary software-controlled lysis of up to four samples, simultaneously
within 30 minutes, combining mechanical, thermal, enzymatic and chemical lysis steps and allows the use of a wide range of native sample
types due to a proprietary sample processing method (in respect of which several patents have been granted or are currently pending).
Biofilm-forming pathogens can be detected by the Unyvero A50 Platform. In addition, the Unyvero A50 Platform is CE-IVD-marked for a broad
variety of native patient sample types including sputum, (mini) BAL, tracheal aspirates, aspirates and exudates, catheter tips, pus,
sonication fluid, synovial fluid, swabs and tissue. The lysis of further sample types such as blood, urine, stool and formalin-fixed
paraffin embedded tissues is also possible with the proprietary Unyvero lysis method. Up to two Unyvero L4 Lysators can be attached to
a single Unyvero C8 Cockpit to allow processing of up to eight samples simultaneously within 30 minutes.
The Unyvero C8 Cockpit
The Unyvero C8 Cockpit device is the control
panel for the Unyvero L4 Lysator and Unyvero A50 Analyzer. It has a touchscreen and built-in bar code reader and runs on proprietary
in-house developed Unyvero software. Step-by-step instructions guide the user from preparing a test to executing the fully automated
process in the Unyvero A50 Analyzer in just a few minutes. The results display, storage of results and data storage, as well as information
about the performed tests including the Application Cartridges’ shelf-life and lot numbers, are generated automatically. Data can
be exported as PDF-formatted files via a USB key or to a connected printer. It also features built-in interfaces for possible future
connectivity to standard hospital and laboratory information systems.
The Unyvero A50 Analyzer
The Uyvero A50 Analyzer instrument consists
of mechanical, electronic, pneumatic and optical elements and enables a fully-automatic random-access processing of the Application Cartridges.
Once a run is started, the Unyvero A50 Analyzer automatically executes and controls all sample processing and analysis steps (including
DNA extraction, DNA purification, PCR set-up, highly multiplexed end-point PCR amplification and a hybridization array-based fluorescence
detection) inside the Application Cartridge. For safety and equipment longevity, and to avoid issues of calibration or waste-removal,
the Unyvero A50 Analyzer contains neither reagents nor waste. All fluids are handled within the sealed Application Cartridge. Up to four
Unyvero A50 Analyzers can be attached to a single Unyvero C8 Cockpit and each Unyvero A50 Analyzer includes the two available slots that
provide full random access per Unyvero A50 Analyzer, allowing the processing of up to eight patient samples simultaneously within four
to five hours. In the future, OpGen believes a further expansion to up to eight Unyvero A50 Analyzers will also be possible.
Figure 2:
Unyvero sample tube, sample tube cap, sample pre-treatment tool and Master Mix tube
Workflow
The Unyvero
A50 Platform is a modular, flexible easy-to-use platform, which substantially reduces turnaround time from up to 24 hours or even weeks
for traditional microbiology culture-based tests to approximately four to five hours. This allows physicians to adjust treatment at a
much earlier stage than with the traditional microbiology culture-based test, which is the current clinical standard of care. OpGen believes
that the reduced hands-on time of no more than five minutes and the intuitive workflow make the system operable by non-specialty trained
laboratory personnel and reduce the risks of errors.
Unyvero A50 Application Cartridge
Portfolio
Figure 3:
Currently available Application Cartridges
The HPN and LRT Application Cartridges
The HPN
Application Cartridge was commercially launched in April 2015 and is the second-generation version of the P50 Application Cartridge,
the Pneumonia Application Cartridge originally launched in 2012. It is a CE-IVD-marked Application Cartridge for the fully automated
performance of currently 21 PCR assays for microorganisms and 19 PCR assays for antibiotic resistance markers combined in a total of
eight multiplex PCR reactions on native respiratory samples, such as sputum, tracheal aspirates and BAL fluids with no pre-culturing
required. This Application Cartridge combines the necessary detection of bacteria, fungus and resistance markers into a single test to
aid diagnosing pneumonia. With the HPN Application Cartridge, the Company aims to detect the vast majority of pneumonia-causing pathogens
and antibiotic resistance markers in hospitalized patients.
The HPN
Application Cartridge of microorganisms and resistance gene markers was designed based on feedback of clinical experts and international
and national guidelines. It aims to detect at least 90% of healthcare-associated pneumonia-causing pathogens and clinically relevant
resistances against antimicrobials. The Application Cartridge is primarily designed to capture patients at risks for:
| · | microorganisms
causing severe, and complicated to treat, forms of pneumonia, e.g. Pseudomonas aeruginosa; |
| · | microorganisms
carrying antibiotic resistance and where patients may need isolation (MRSA, Klebsiella); |
| · | infections
with multidrug-resistant bacteria that might not be targeted by empiric treatment schemes;
and |
| · | rare
and difficult to detect pathogens like Legionella sp. |
The Application
Cartridge composition takes pathogen incidences into account. It includes those microorganisms showing an incidence of above 1%. The
Application Cartridge is completed by adding pathogens with lower incidence but a high clinical need, such as Legionella sp.
The HPN
Application Cartridge covers 19 antibiotic resistance markers, including: (i) ß-Lactam resistance, including ESBL; (ii) kpc resistance;
(iii) macrolide resistance; (iv) quinolone resistance; and (v) multi-drug resistance.
The LRT
Application Cartridge was launched in the United States in April 2018. It is an FDA-cleared Application Cartridge for the fully automated
detection of 46 targets, covering 36 microorganisms and 10 antibiotic resistance markers, for lower respiratory tract infections with
a total of 29 PCR assays combined in eight multiplexed PCR reactions. Although similar in most respects to the HPN Application Cartridge,
the LRT differs from the HPN in its pathogen reporting due to FDA reporting requirements. In accordance with a De Novo request that was
granted by the FDA in April 2018, the label claim covers the use of LRT with tracheal aspirate samples only and has cleared 19 pathogen
assays as well as 10 antibiotic resistance marker assays.
The LRT
BAL Application Cartridge that was 510(k)-cleared by the FDA in December 2019 and launched in the United States in January 2020, is a
version of the LRT Application Cartridge that is optimized for use with commonly obtained BAL specimens. The Unyvero LRT BAL application
is the first and only FDA-cleared molecular diagnostic panel that detects Pneumocystis jirovecii in addition to a broad spectrum
of clinically relevant bacterial pathogens and antibiotic resistance markers associated with pneumonia.
The ITI Application Cartridge
The ITI
Application Cartridge was launched in May 2016 and is the second-generation version of the ITI Application Cartridge originally launched
in the second quarter of 2014. Improvements were made to the panel and analytical performance as well as clinical sensitivity and specificity.
It is a CE-IVD-marked Application Cartridge for the fully automated detection of currently 102 targets, covering 85 microorganisms and
17 antibiotic resistance markers for eight different clinical indications within the areas of prosthetic joint infections, surgical site
infections, diabetic foot ulcers, catheter-associated infections, deep skin and tissue infections, cardiology-related infections, burn
wounds and other implant infections. CE performance evaluation has demonstrated sensitivity of 86.9% at specificity of 99.2%. A diverse
range of sample types such as aspirates and exudates, pus, sonication fluid, swabs, synovial fluid and tissue can be used on this Application
Cartridge. Moreover, biofilm-forming pathogens can be identified by the Unyvero A50 Platform. The ITI Application Cartridge was jointly
developed and co-funded with a worldwide market leader in orthopedic bone cement, which offers comprehensive infection management solutions.
The Company pays a customer referral commission but has retained full control on product commercialization.
The BCU Application Cartridge
The BCU
Application Cartridge was launched in Europe in April 2016. It is a CE-IVD-marked and Singapore Health Sciences Authority (HSA)-cleared
Application Cartridge for the fully automated detection of 103 targets, covering 87 microorganisms and 16 antibiotic resistance markers
relevant in the area of blood stream infections. The CE-IVD performance evaluation has demonstrated a weighted average sensitivity for
all pathogens of 96.2%, and a weighted average specificity of 99.4%. Unlike other Unyvero Application Cartridges, BCU uses samples from
positive blood cultures rather than native patient samples. Such blood cultures are started in cases of suspected blood stream infections.
The IAI Application Cartridge
The IAI
Application Cartridge was launched in April 2017. It is a CE-IVD-marked Application Cartridge for the fully automated detection of 130
targets, covering 105 pathogens, three toxins and 22 resistance markers for several different clinical indications within the areas of
severe intra-abdominal infections such as symptoms of peritonitis, appendicitis, acute abdomen, acute pancreatitis, and megacolon. Overall
weighted average sensitivity for the pathogens specifically targeted by the test panel was 93.8% at an overall weighted average specificity
of 99.7% following discrepant result resolution.
The UTI Application Cartridge
The UTI
Application Cartridge was launched in April 2018. It is a CE-IVD-marked Application Cartridge for the fully automated detection of up
to 103 diagnostic targets, covering 88 microorganisms and 15 genetic resistance markers for the areas of severe urinary tract infections
in patients with anatomical, structural and functional alterations, renal impairments, impaired immune status, catheter-associated UTI,
patients failing to respond to therapy and suffering from severe manifestations, urosepsis. OpGen estimates that the addressable market
for the UTI Application Cartridge is 1.6 million cases eligible for testing per year in the EU and the United States. The UTI Application
Cartridge is also available as RUO in the United States since 2020. As part of our portfolio strategy update in the fourth quarter of
2020, we decided to proceed with the analytical and clinical performance evaluation including clinical trials required for a subsequent
submission to the FDA for this Application Cartridge and initiated clinical trials in the third quarter of 2021. We completed enrollment
of over 1,800 patient samples into a prospective multi-center clinical trial at the end of the third quarter of 2022. Data read out from
that trial will be required for a subsequent submission to the FDA in 2023.
Ares Genetics’ NGS and Bioinformatics
Services for Molecular Microbiology
OpGen’s
other core business in NGS and bioinformatics based solutions for molecular microbiology is operated by its wholly-owned subsidiary Ares
Genetics GmbH, or Ares Genetics, or Ares, founded in 2017 and based in Vienna, Austria. Ares Genetics’ business is based on the
proprietary ARES Technology Platform and Ares Genetics’ proprietary genetic database on AMR, ARESdb. The ARES Technology Platform
and ARESdb build and expand upon the GEAR assets acquired from Siemens Technology Accelerator GmbH in 2016. On the bioinformatics side,
OpGen has combined data from its now discontinued Acuitas Lighthouse with the Ares Genetics (Ares) data into the ARESdb. Ares Genetics
believes ARESdb is a unique comprehensive database on the genetics of antibiotic resistance currently including data from over 90,000
sequenced isolates and phenotypic data on over 100 antibiotics. Ares Genetics also pursues an active out-licensing and collaboration
strategy with suitable partners in the life science, pharmaceutical, and diagnostic industry to jointly develop solutions for microbiology
relying on the database and/or the Ares Technology Platform. Ares Genetics entered into its first partnering and strategic collaborations
with Qiagen, Sandoz, and in 2021 entered into strategic data access deal with one of the world’s leading microbiology and IVD corporations
which obtained non-exclusive access to approximately 1.1% of Ares Genetics’ then-current datasets.
In addition
to its out-licensing strategy, Ares Genetics offers next-generation molecular AMR testing services out of its NGS service lab opened
in mid-2019 in Vienna, Austria, with initial focus on infection control, AMR epidemiology and surveillance, clinical research and pharmaceutical
anti-infectives research and development.
Ares Genetics
has also developed its ARESupa Universal Pathogenome Assay, which is based on the ARES Technology Platform and ARESdb. ARESupa is intended
to cover nearly any pathogen in a broad array of sample types and to predict antimicrobial drug response to a wide variety of treatment
options using a single NGS laboratory workflow.
In August
2019, Ares Genetics opened a specialized service laboratory offering next-generation AMR testing services with an initial focus on infection
control, AMR epidemiology and surveillance, clinical research and pharmaceutical anti-infectives research and development. All services
are based on NGS and Ares Genetics’ proprietary, AI-powered AMR database ARESdb and the ARES Technology Platform for data interpretation.
OpGen also began offering Ares’ services in the United States from its Rockville, Maryland-based lab.
OpGen’s Acuitas AMR Gene Panel
We believe
more rapid genetic identification methods will reduce morbidity from MDROs, reduce healthcare costs through reduced length of stay, and
assist in the identification of targeted antibiotic therapy. Current conventional microbiology, largely unchanged in 50 years, requires
one to two days for growth and phenotypic analysis and often leads to the use of broad spectrum antibiotic therapy in the early stages
of infection.
OpGen has
developed the Acuitas AMR Gene Panel, which has been 510(k)-cleared by the FDA on September 30, 2021 for testing bacterial isolates.
This test had already been made available in the United States prior to FDA-clearance as an RUO test, and had been used in such capacity
in connection with The New York State Infectious Disease Digital Health Initiative for testing of bacterial isolates.
The Acuitas
AMR Gene Panel is FDA cleared to detect a comprehensive panel of 28 genetic AMR markers, covering select drugs in 9 classes of antibiotics,
in isolated bacterial colonies from 26 different pathogens. An identified bacterial isolate is tested, and the antibiotic resistance
gene markers associated with the selected bacterial species are reported as “Detected”, “Not Detected” or “NA/NR”.
Market Overview
Antibiotic Resistance –
An Urgent Global Issue
AMR is one of the greatest
global public health threats that has been recognized by many international bodies, including the World Health Organization (WHO) and
the U.S. Centers for Disease Control and Prevention (CDC). A recent publication in The Lancet (January 19, 2022) confirms the rapid spread
of AMR infections and highlights that, an estimated 4.95 million deaths were associated with AMR in 2019, and between 2014 and 2019,
the burden of fatalities directly attributable to bacterial AMR rose from 700 thousand to 1.27 million. The growing threat of AMR to
public health is exacerbated by existing and newly developed antibiotics facing a wide range of drug resistance mechanisms in pathogens
of concern. Recent Infectious Diseases Society of America (IDSA) treatment guidance for multidrug-resistant Gram-negative bacterial infections
(Clin Infect Dis 2021 Apr 8;72(7):e169-e183) highlights how detection of AMR genes or a specific mechanism of resistance can help guide
reporting practices for novel antimicrobial agents and tailor therapy for these difficult to treat infections. Furthermore, it can help
with infection prevention and control initiatives such as patient isolation procedures when multiple isolates with the same AMR profile
are detected as an early indication of transmission within a facility or for surveillance of serious or emerging AMR threats.
Antibiotic-resistant infections add considerable
but often avoidable costs to the U.S. healthcare system. In most cases, these infections require prolonged and/or costlier treatments,
extended hospital stays, additional doctor visits and healthcare facilities use, and result in greater disability and death compared
with infections that are treatable with antibiotics. Estimates for the total economic cost to the U.S. economy are difficult to calculate
but have been estimated to be as high as $20 billion in excess direct healthcare costs annually.
Over the last decade, multidrug-resistant
Gram-negative bacteria, frequently referred to as superbugs, have been implicated in severe healthcare-associated infections (HAIs),
and their occurrence has increased steadily. For example, Klebsiella pneumoniae, or K. pneumoniae, is responsible for roughly
15% of Gram-negative infections in hospital intensive care units. Infections caused by carbapenemase producing Klebsiella pneumonia,
or KPC, strains have few treatment options and are associated with a mortality rate upwards of 50%.
Exacerbating the problems associated with
the emergence of these highly resistant KPC strains is their propensity to cause outbreaks in healthcare institutions. These pathogens
persist both in the flora of hospitalized patients and in the hospital environment, and they have the capacity to silently colonize patients
or hospital personnel by establishing residence in the gastrointestinal tract without causing any signs of infection. Individuals can
be silently colonized or become asymptomatic carriers for long periods of time, with detection of these carriers often proving difficult.
These silent carriers act as reservoirs for continued transmission, which makes subsequent spread difficult to control and outbreaks
difficult to stop. In addition, KPC strains can survive for several hours on the hands of hospital personnel, which likely facilitates
the spread of organisms from patient to patient. Effective control of KPC outbreaks requires a detailed understanding of how transmission
occurs, but current technologies do not allow healthcare providers to routinely perform these investigations on a timely basis.
The lack of currently available treatment
options and scarcity of new treatment options in development are compounding the emerging superbug problem. It has been close to 30 years
since a new class of antibiotics was developed and successfully introduced. As a result, we believe that rapid, accurate identification
of the pathogen and its genetic make-up, screening, infection control and antibiotic stewardship have become one of the most powerful
weapons in the fight to contain this threat.
The emergence of multidrug resistant pathogens
has made the treatment of patients with UTIs a growing problem in the United States and internationally. There are approximately 10 million
patients each year in the United States with UTIs and more than one million of these patients have complicated urinary tract infections
( cUTI) often requiring hospitalization with intravenous antibiotic therapy. Among these patients E. coli represents the most
common pathogen, and recent data indicate that 18.3% of U.S. E. coli isolates are extended spectrum β-lactamase (ESBL) resistant.
These patients present complicated therapeutic choices for clinicians and often require last resort carbapenem antibiotics. The rate
of ESBL resistant E. coli increased 34% annually between 2010 and 2014. Therapy with carbapenem antibiotics has contributed to
growing Carbapenem resistance (CRE) rates and high patient treatment costs.
Based on industry analyses, we believe the
global HAI market is a $2 billion dollar market with the molecular diagnostic segment representing a fast-growing segment of such market
with multiple high acuity patients and significant infectious sites, including UTIs, surgical site infections, pneumonia and bloodstream
infections.
Commercial Sales
We currently sell and market our products
and services directly in the United States through a dedicated sales and marketing support team. Internationally, we sell our products
through a network of 12 distributors covering 28 countries.
We operate in one segment. Our operations
are located in the United States, Germany, and Austria.
Competition
We are developing
a molecular diagnostics (MDx) business focused on leading a transformation in microbiology and infectious disease through precision medicine
products and services that combine genomic data and bioinformatics. Our approach combines proprietary platforms and content, namely the
FDA cleared and CE-IVD-marked Unyvero A50 System and its DNA-based Unyvero Panels, the FDA-cleared Acuitas AMR Gene Panel, and NGS applications
based on leading AI-powered AMR knowledge-bases. Our competitors include rapid diagnostic testing, NGS testing, and traditional microbiology
companies, commercial laboratories, information technology companies, and hospital laboratories who may internally develop testing capabilities.
Principal competitive factors in our target market include: organizational size, scale, and breadth of product offerings; rapidity of
test results; quality and strength of clinical and analytical validation data and confidence in diagnostic results; cost effectiveness;
ease of use; and regulatory approval status.
Our principal
competition comes from traditional methods used by healthcare providers to diagnose and screen for MDROs and from other molecular diagnostic
companies creating screening and diagnostic products such as Cepheid (a subsidiary of Danaher), Becton-Dickinson (BD), bioMérieux,
Accelerate Diagnostics, T2 Biosystems, GenMark (a subsidiary of Roche), Qiagen, Luminex (acquired by DiaSorin), Thermo Fisher and Mobidiag
(a subsidiary of Hologic). We believe our focus on identifying antibiotic-resistant genes in addition to broad panels of organisms from
a wide variety of native clinical sample types, and our Ares Genetics bioinformatics offerings differentiate us from such competitors.
Competitors
may develop their own versions of our product offerings in countries where we do not have patents or where our intellectual property
rights are not recognized.
Many of
our potential competitors have widespread brand recognition and substantially greater financial, technical, research and development
and selling and marketing capabilities than we do. Others may develop products with prices lower than ours that could be viewed by hospitals,
physicians and payers as functionally equivalent to our products and services, or offer products and services at prices designed to promote
market penetration, which could force us to lower our list prices and affect our ability to achieve profitability. If we are unable to
change clinical practice in a meaningful way or compete successfully against current and future competitors, we may be unable to increase
market acceptance and sales of our products, which could prevent us from increasing our revenue or achieving profitability and could
cause our stock price to decline.
Competition to the Unyvero System
The Unyvero
A50 Platform is a sample-to-answer MDx solution. There are several other companies who develop and commercialize similar systems. In
terms of devices and assays, OpGen believes its key competitors include bioMérieux (BioFire with its FilmArray® platform),
GenMark (now a subsidiary of Roche) with its ePlex® platform, and Accelerate Diagnostics with its Pheno™. Taking into consideration
the broader market, devices of other key competitors can be extended to include Cepheid (GeneXpert®), T2 Biosystems (T2DX®),
Luminex Corporation (formerly known as Nanosphere; now acquired by DiaSorin) (Verigene System® and Aries®), Becton-Dickinson
(BD Max™), Binx Health (with io™ System), Roche (Cobas® Liat® and GeneWEAVE), Qiagen (QIAstat-Dx™) and Biocartis
N.V (Idylla™), Bosch (Vivalytic platform), SpeeDx (Plex/Resistance), and the Meridian Bioscience (formerly GenePOC) Revogene®
system. Disease-related assay competitors including those providing reagent kits only (e.g. Seegene, Fast-Track Diagnostics/Siemens Healthineers,
Genetic Signatures) and developers of laboratory developed tests (LDT) have to be separately assessed by each application. OpGen believes
that its Unyvero A50 Platform has certain key characteristics that clearly differentiate it from other sample-to-answer systems:
Based on
its corporate market analysis, OpGen believes that due to the proprietary lysis technology its Unyvero A50 Platform is able to process
a broader variety of sample types than competing platforms. In most cases, no labor or time intensive manual sample preparation is necessary
and even difficult and blood-contaminated native samples can be processed. Furthermore, the Unyvero A50 Platform is CE-IVD-marked for
a variety of samples including sputum, bronchoalveolar lavage, tracheal aspirate, exudate, catheter tip, pus, sonication fluid, synovial
fluid, swab and tissue. Further samples such as blood, urine, stool and formalin-fixed paraffin embedded tissues present further options
for extending the variety of samples for future applications. Fresh or frozen samples as well as samples that have been stored in different
media can be processed easily on the Unyvero A50 Platform. As the lysis is integrated into the workflow, hands-on time and potential
handling errors are significantly reduced.
The Unyvero
A50 Platform is also differentiated from competing products by its high multiplexing capability based on end-point PCR, which allows
for the execution of eight independent multiplex PCR reactions simultaneously. Therefore, Unyvero can identify a broad range of microorganisms
and a large variety of antibiotic resistance markers in a single run.
Focusing
on severe infectious diseases and having developed an HPN Application Cartridge, an ITI Application Cartridge, a BCU Application Cartridge,
an IAI Application Cartridge and a UTI Application Cartridge and planning to develop further Application Cartridges (e.g. on Unyvero
A30 platform) in the severe infectious disease area, Unyvero has a highly differentiated positioning in the market.
Although
several direct competitors have in the past several years started to develop or commercialize their own infectious disease tests, OpGen
believes that the variety and breadth of its menu of cartridges targeting different infectious diseases positions it favorably to answer
patient and customer needs.
Competition to the Unyvero Application
Cartridges
Considering
its panel design, the Company believes that there are currently few assays directly comparable to the Company’s HPN, LRT, LRT BAL,
ITI, IAI, and UTI Unyvero Application Cartridges that are commercially available to date. Various competitors offer testing in some,
but not all, of the infections targeted by Unyvero Application Cartridges. For example, for the HPN and LRT Application Cartridges, currently
only two companies (OpGen and bioMérieux/BioFire) offer an FDA-cleared IVD automated molecular panel for lower respiratory tract
infections and pneumonia. According to publicly available sources, Accelerate Diagnostics has a CE-IVD pneumonia assay and it is believed
to be planned for future submission to the FDA for clearance. Other companies, such as, Luminex (formerly Nanosphere; now DiaSorin),
GenMark (now Roche), Seegene, Genomica, Miacom, PathoFinder, Fast-Track Diagnostics (now a Siemens Healthineers company), Randox, ArcDia,
Qiagen, and iCubate are primarily targeting the upper respiratory tract with their panels. Their panels mainly cover viruses and a few
bacteria, and in some occasions a limited number of antibiotic resistance markers only. Diatherix offers a manual test claiming to cover
both upper and lower respiratory infections. OpGen believes that it offers the most comprehensive panel for severe bacterial pneumonia
for critically ill patients that require hospitalization, as the panel includes unique and differentiated bacterial targets and the broadest
coverage of carbapenem resistance markers, while BioFire’s panel has a limited range of resistance markers and viral targets.
Competition by Conventional Microbiology
The conventional
microbiology market consists of culture and matrix assisted laser desorption ionization - time of flight mass spectrometry, or MALDI-TOF,
based testing and is largely shared by well-established players including BD, bioMérieux, Bio-Rad Laboratories, Danaher (Cepheid,
Beckman Coulter), Thermo Fisher Scientific. Culture-based testing is usually performed in the central laboratory at turnaround times
of 48 to 72 hours and it is yet to be seen whether it can robustly be accelerated by miniaturization, an approach pursued by the company
Accelerate Diagnostics and other companies developing rapid antibiotic susceptibility testing, or AST, methods (Pattern Bioscience, Q-Linea
ASTar, Lifescale, Specific Diagnostics Reveal, Gradientech, oCelloScope), as well as efforts to achieve AST with MALDI-TOF. While turnaround
times for MALDI-TOF based testing is much faster, overall turnaround times from sample to report are still greater than 24 hours as MALDI-TOF
generally depends on an initial culturing step for pathogen isolation and cannot be performed from native patient samples. Generally,
providers of conventional microbiology solutions are focusing on reducing turnaround time, use of labor and lab space, as well as overall
costs by automatic specimen processing and pathogen identification.
Competition by Molecular Diagnostics
– PCR
Key players
in the PCR-based molecular diagnostics market include bioMérieux, BD, Danaher, Roche, Qiagen, Abbott, Hologic, OpGen (including
Curetis GmbH), amongst others. PCR-based microbiology testing is usually performed at the point of need or in the central laboratory
at rapidly reduced turnaround time compared to conventional microbiology. Generally, providers of PCR-based molecular diagnostics are
focusing on further reducing turnaround time to less than 30 minutes to one hour and/or increasing multi-plexing degree as well as reducing
use of labor, lab space, and overall costs. The Company believes that its ability to quantitatively predict antibiotic susceptibility
based on the pathogen’s genetic profile complements PCR-based approaches detecting panels of genes and mutations as indicators
of resistance.
Competition to Ares Genetics
Ares Genetics’
peers and competitors include companies providing conventional microbiology, PCR- and NGS based molecular diagnostics, as well as AMR
databases and bioinformatics solutions. In general, many peers and competitors are at the same time also considered potential ARESdb
licensing partners due to the unique content and positioning of ARES’ artificial intelligence curated reference database, ARESdb.
Competition by Molecular Diagnostics
– NGS
The emerging
NGS-based molecular diagnostics market is shared by start-up-like companies such as IDbyDNA, Karius, CosmosID, Noscendo, Day Zero Diagnostics,
or ArcBio aiming at disrupting the molecular microbiology by pathogen detection via direct sequencing from patient samples, as well as
established players such as bioMérieux focusing on isolate sequencing to monitor outbreaks in hospitals (in partnership with Illumina).
NGS-based testing is currently performed as a service and companies mostly focus on reducing turnaround time as well as increasing the
NGS market share in molecular microbiology. NGS-based molecular diagnostics companies are considered as Ares Genetics’ closest
competitors, while Ares Genetics believes to have a competitive advantage by its ability to predict antibiotic susceptibility based on
the pathogen’s genetic profile with a performance meeting FDA requirements for functional testing of AST by culture.
Competing AMR Databases & Bioinformatics
Solutions
To date,
several AMR databases exist (e.g. CARD, PATRIC, etc.) but they are purely designed for academic research applications as they neither
represent IVD-grade reference databases, nor systematically cover high-resolution resistance profiles including confidence levels and
diagnostic performance parameters for associated AMR markers. The commercial microbial bioinformatics solution market on the other hand,
is largely covered by Qiagen, a strategic licensing partner of Ares for co-marketing bioinformatics research solutions based on ARESdb.
Research and Development
We intend to continue to invest in the development
of additional Unyvero panels such as UTI for the Unyvero A50 platform, a Unyvero IJI panel for the Unyvero A30 RQ platform, as
well as the Ares Genetics bioinformatics solutions such as ARESdb and ares-genetics.cloud.
Our ongoing and anticipated research and development
efforts include:
| · | Expanding
the Ares Genetics bioinformatics and NGS offerings such as ARESdb, ares-genetics.cloud, ARESiss,
ARESid, ARESupa etc. |
| · | Development
of Unyvero A30 RQ platform including an IJI cartridge as well as the AMR panel from
blood culture bottles under our research and development collaboration with FIND; |
| · | Data
read out from clinical trial that completed enrollment at the end of the third quarter of
2022 with more than 1,800 patient samples, and subsequent regulatory filing with the FDA
for Unyvero UTI in the United States; |
| · | Clinical
trials and regulatory filings for Unyvero IJI in the United States (expected as De Novo with
clinical trial at a minimum of three trial sites and minimum of 1,500 samples tested) |
Sales and Marketing
We currently sell and market our products and
services directly in the United States through a dedicated sales and marketing support team. Internationally, we sell our products through
12 distributors covering 28 countries.
Our strategy to build demand for our products
following receipt of such regulatory clearance includes completing clinical verification studies, customer driven evaluations and studies,
sales of our tests for RUO.
Customers
OpGen’s commercial teams have identified
several stakeholder groups: treating clinicians, doctors of pharmacy (PharmDs), antibiotic stewardship programs, microbiologists, molecular
biologists and laboratory managers as well as hospital administration, all of whom will be actively involved in the purchase decision
at varying levels and stages. In terms of product benefits, OpGen believes that clinicians and physicians seek timely diagnostic results
that can be used to better inform or confirm a treatment decision and improve patient outcomes, while microbiology laboratory managers,
who have to contend with the steadily decreasing availability of trained lab technicians and the need to perform testing during off-shifts,
need simple-to-use, robust technologies. Ultimately, however, the decision whether a proposed new testing solution is cost effective
and affordable on a routine basis must be made by the payer, which in the case of hospitalized in-patients under the diagnosis-related
groups, or DRG, reimbursement system is typically the hospitals’ purchasing and finance departments. OpGen’s key account
management ensures that all stakeholders are targeted early in the sales process.
Sales Process
The typical sales process starts with an introductory
visit to the microbiology laboratory director and senior microbiology staff. The goal is to introduce Unyvero or Acuitas and assess general
interest in evaluating the products during a demonstration phase. However, the goal is also to initiate contact to any new hospital customer
via the gatekeeping microbiology laboratory function. The primary objective apart from getting a demo phase agreed upon is to seek joint
introductory meetings with the senior microbiology staff and the various intensive care units, or ICUs, and clinicians in any relevant
ICU as well as the relevant member(s) of the antimicrobial stewardship team. Since there can be multiple ICUs (sometimes over a dozen
in major university hospitals) with multiple 24/7 rotating shift operations each, it is paramount to identify one or a few key ICUs as
internal product champions. The clinicians are ultimately the end-customers of Application Cartridge/Panel results for use in treatment
assessment and optimizing medical care for their patients. They will also be the ones routinely requesting a test to be done. At this
stage a discussion about the ideal placement of the Unyvero System during a demonstration usually takes place. In the United States,
the Unyvero System is placed in the core laboratory. In the EU and the rest of world, or RoW, central location in the microbiology laboratory
is the preferred option, or alternatively near patient ICU placement. We believe it is also important to engage the clinical pharmacy
community, and specifically infectious disease pharmacists, in the sales process as an additional key stakeholder and decision maker.
OpGen expects that the entire sales process, from
the introductory visit to the point in time when the hospital begins routinely purchasing Application Cartridges or Acuitas consumables,
known as the push-pull triangle model, which includes the lab, the clinicians and the finance entity, will take around six to twelve
months or longer, based on the experience of competitors and peer companies, in the United States and about the same time from start
to finish in the EU. Depending on the time of year and budget cycle, however, a contractual arrangement can take significantly longer.
An integral part of the sales process is the placement of demo systems without payment for demo evaluation purpose.
OpGen’s marketing provides sales and sales
support tools adapted to the specifics of each stakeholder and stimulates demand by setting up awareness campaigns for lab personnel,
clinicians and general hospital stakeholders. In the more developed markets of the EU and the RoW, additional customer segmentation reflects
the business opportunity per customer or institution and is linked to size of the hospital reflected in the number of beds available
at the institution. Therefore, the sales strategy is based on a key account management approach, initially only targeting large hospitals
with clear focus on departments like pulmonology/pneumology, large ICUs or orthopedics wards depending on the particular Application
Cartridge of interest.
The focus is on high-volume consumable orders (Application
Cartridges, Acuitas AMR Gene Panel kits and other consumables) instead of driving revenues and profits through hardware placements (Unyvero
System or EZ1/QS5 installations). Consequently, OpGen and its distribution partners aim to optimize the utilization of each placed hardware
unit rather than solely maximizing the installed base of instruments. Therefore, OpGen, with its tests primarily targeting in-patients
(hospitalized) with severe infections, is focusing its sales and commercialization efforts on laboratories in hospitals and independent
laboratories serving larger hospitals.
OpGen and its distribution partners will also face
certain market entry barriers mostly related to upfront investments for the implementation of its new technology, as most laboratories
and microbiology centers are cost centers, which do not directly benefit from the current DRG reimbursement scheme. Additionally, the
Unyvero and Acuitas Platforms will be an add-on test not replacing traditional testing – in this case cultures, which are perceived
as comparatively cheap. Therefore, OpGen pursues a sales strategy whereby it offers customers a number of different financial options
for its products and services, including rental agreements (pursuant to which OpGen would provide the instruments on the basis that the
customer commits to buying a certain number of Application Cartridges or other consumables from OpGen over a set period of time, with
the cost of such Application Cartridges or Acuitas consumables incorporating a reagent rental charge for the use of the instrumentation),
or a straight cash purchase of the Unyvero or Acuitas Platforms, as applicable. Similar concepts are employed by OpGen’s distribution
partners at their discretion.
As OpGen is marketing its innovative Unyvero and
Acuitas Platforms to a diverse and demanding customer base implementing solutions that offers the potential to improve upon the current
standard of care, the Company’s management believes it will need to continue making additional investments in clinical validation,
scientific publications, brand awareness and market education worldwide, but with a focus in the EU and United States. Some of the Company’s
tests will require market access activities to prove their value and to obtain sufficient reimbursement by relevant payers for certain
countries.
OpGen has developed a full suite of marketing communications
tools using print and online channels. OpGen also supplies supporting evidence for the various individual stakeholders, for instance
approaching microbiologists and clinicians with first-in-class scientific marketing. This not only includes the classical marketing mix
(i.e. a set of marketing tools regarding product, price, place and promotion), but also compiles information on health economics and
clinical outcomes research.
In addition, OpGen’s marketing focuses on medical
education of physicians through its scientific affairs team, participation in scientific conferences, organizing scientific sessions
and symposia, and by publications in peer-reviewed journals.
Distribution Channels
To distribute the Unyvero A50 System and the Application
Cartridges, OpGen has adopted a dual approach combining direct sales in the United States with indirect sales through specialized distributors
in several countries of Europe, the Middle East, Asia, and Latin America (see section “Indirect Sales Markets” for a detailed
list).
As of September 30, 2022, OpGen had an installed
base of approximately 200 Unyvero A50 Analyzers across global markets.
The choice between direct sales and indirect sales
distribution is based on available funding for OpGen’s commercial operations, the attractiveness of the market in terms of size,
pricing, and reimbursement, the ease of market access in terms of regulations, structure and complexity of the healthcare system, and
payer situation. Markets are also selected based on the availability of suitable distributors with appropriate size, portfolio, sales
channels, experience, networks, and reputation to introduce an innovative product like Unyvero in their respective market. It is also
not uncommon for MDx companies to start with a distributor model before going direct once economics permit establishing a direct sales
infrastructure.
OpGen going forward will regularly evaluate on a
case-by-case basis whether the chosen distribution channel is adequate to also cater for the new target disease segments, or whether
a new structure should be put in place.
Direct Sales
U.S. Market
OpGen markets and sells the
Unyvero and Acuitas platforms and will market any future cleared Application Cartridges and other consumables directly in the United
States through its own U.S.-based commercial organization including sales, marketing and after-sales support.
As of September 30, 2022,
OpGen had an installed base of approximately 30 Unyvero A50 Analyzers across the United States and in different types of hospitals and
laboratories.
Indirect Sales Markets
OpGen enters into a standard distribution agreement with most of its Unyvero distributors, which specifies the particular Unyvero products
and the respective distribution territory. The distribution agreements typically contain provisions for exclusive distribution within
a particular territory and for specified term, typically from three to five-years. During that period, the distributor has exclusive
rights to market, sell and distribute all Unyvero products. In return, each distributor needs to commit to annual minimum purchases of
Unyvero Systems as well as Application Cartridges. Transfer prices for the Unyvero Systems and Application Cartridges are defined and
reflect typical MDx industry distributor margins on consumable sales. If a distributor fails to meet its annual minimum commitments fixed
in the contract, the Company has the right to either terminate such agreement in its entirety, or to terminate such distributor’s
territory exclusivity in such country. Each of these agreements can be extended by mutual agreement between the parties. Furthermore,
the agreements also contain typical change of control provisions, which comprise a merger of the company, the sale of all assets or the
liquidation of the company.
OpGen, through its subsidiary Curetis, has entered
into distribution agreements with 12 distributors covering 32 countries. Distribution agreements usually feature minimal sales commitments
and purchase commitments of the Unyvero A50 Systems and Application Cartridges commensurate with the size and structure of the respective
market. The Company has several distribution agreements in place for the following European countries:
| § | A.
Menarini Diagnostics S.r.l.: Austria, Belgium, France, Germany, Greece, Italy, Luxemburg,
Netherlands, Portugal, Spain, Switzerland, United Kingdom; |
| § | Ako
Med d.o.o.: Bosnia and Hercegovina, Croatia, Montenegro, North Macedonia, and Serbia; |
| § | Synttergy
Consult LTD: Romania |
| § | BioLine
LLC [1]: Kazakhstan, Russia, and Ukraine; |
| § | BioLine
BS LLC [2]: Belarus; and |
| § | Kosova
Export Import Supply Pharmaceutical (KEIS) Sh.p.k.: Kosovo. |
In connection with these distribution agreements, distributors are contractually
obligated to:
| · | cater
for local product registrations as required; |
| · | perform
local clinical studies as required; |
| · | take
responsibility for local marketing based on guidelines and materials provided by Curetis’
global marketing team; |
| · | maintain
regulatory compliance as required; |
| · | maintain
a local inventory; and |
| · | install
the Unyvero System, train customers, and provide first-level service. |
Outside of the EU, distribution agreements are in place for the following
countries:
| · | Future
Horizons Scientific: Egypt; |
| · | Advanced
Technology Co. (ATC): Kuwait |
| · | Leader
Medical Supplies Trading L.L.C.: Qatar and the United Arab Emirates (UAE); |
| · | Acumen
Research Laboratories Pte Ltd.: Singapore; |
| · | Beijing
Clear Bio-tech Co. Ltd. (BCB): China and Taiwan;; |
| · | Quimica
Valaner: Mexico; and |
| · | Annar
Diagnostica Import SAS: Colombia |
The total contractual minimum purchase requirements
of all current distributors are 372 Unyvero A50 Systems of which about 350 are part of BCB’s commitment, which applies over an
eight year period following market approval in China by the National Medical Products Association (NMPA), plus approximately 1.5 million
Application Cartridges which are also part of BCB’s commitment during the same period. Failure of distributors to reach minimum
purchase quantities can lead to a termination of the distribution agreements or termination of exclusivity in territories for such distributor
at the sole discretion of OpGen and its Curetis subsidiary. The above minimum purchase requirements do not guarantee any certain minimum
future levels of revenues.
With respect to after-sales support and maintenance,
OpGen in some markets has established a concept of system replacement instead of onsite repair. In the event of system failure or required
maintenance, systems in such markets are rapidly replaced (within one or a few days), minimizing downtime for the customer as well as
reducing the need for a costly service organization. In certain instances, OpGen uses its own small field service engineering team to
provide ad hoc on-site repair and service. OpGen via its Curetis subsidiary has also trained field service engineers of several of our
distribution partners so that they can perform certain repairs and services themselves. OpGen expects to establish a service maintenance
arrangement where customers and distributors pay for support and repair based on what service package they have purchased.
___________________________
[1]
Distribution agreement currently suspended due to Russia’s war on Ukraine.
[2] Distribution agreement currently suspended due to Russia’s war
on Ukraine.
Manufacturing
During 2022,
we manufactured all our Unyvero products in Germany (Unyvero systems are manufactured by our German supplier Zollner Elektronik AG, or
Zollner, and Unyvero cartridges and consumables at our own manufacturing facility in Bodelshausen, Germany), and all our FDA-cleared
Acuitas AMR products at our new headquarters in Rockville, Maryland. The Acuitas AMR product manufacturing is currently being transferred
to Curetis in Germany, which transfer is expected to be completed in 2023.
Manufacturing
of our CE-IVD-marked and FDA-cleared products is performed under the respective applicable relevant current standards – Quality
System Regulation (QSR) as required by the FDA or other relevant regulatory bodies for the manufacture of IVD labeled products. These
regulations carefully control the manufacture, testing and release of IVD products as well as raw material receipt and control. We also
have ongoing post market surveillance and vigilance responsibilities under applicable European and FDA regulations, and are subject to
periodic inspections by the FDA or other relevant regulatory bodies to determine compliance with the FDA’s or other applicable
requirements, including primarily the quality system regulations and medical device reporting regulations. The results of these inspections
can include inspectional observations on FDA’s Form 483, warning letters, or other forms of enforcement.
For instrument
manufacturing, OpGen’s subsidiary Curetis decided to co-develop and subsequently outsource all of its Unyvero A50 instrument manufacturing
to Zollner. With regard to Application Cartridges, they are developed and manufactured entirely in-house, using equipment provided by
Contexo GmbH and certain components provided by Horst Scholz GmbH, or Scholz. Curetis has established a sophisticated manufacturing site
for its cartridges where it has full control over the entire production process ensuring that Application Cartridges meet stringent quality
requirements.
Curetis’
EMS (Electronic Manufacturing Services) provider Zollner is an established and experienced medical device manufacturer for large global
companies and has flexible production processes ensuring it can meet demands with different volume requests. The Company’s management
believes that manufacturing capacity will not become a bottleneck in the foreseeable future as inventory levels are sufficient to support
anticipated demand for the coming years. Zollner also has all required certifications under all applicable ISO standards for IVD instrument
manufacture and is an FDA registered establishment for the manufacturing of the Unyvero A50 instruments. To date, no decision has been
made on the selection of the original equipment manufacturer (OEM) for the series production of the Unyvero A30 RQ systems. Unyvero
A30 RQ systems are so far being produced in pilot batches by DMT Produktentwicklung GmbH as the current German development partner
to Curetis.
As part
of its operational strategy, OpGen’s subsidiary Curetis decided to build and operate its own manufacturing facility inside premises
leased to it for the manufacturing of the Application Cartridges. The Application Cartridge manufacturing facility based in Bodelshausen,
Germany, has been operational since 2011. Curetis is able to manufacture sufficient product to meet current and forecasted demand. OpGen
expects future Application Cartridges to be used with the Unyvero A30 RQ Analyzer for own research and development purposes and
potential own MDx products of OpGen such as the Acuitas IVD products and/or potential products for the Unyvero A30 RQ will also
be manufactured in Bodelshausen, in a dedicated manufacturing line module using plastic parts manufactured by Scholz.
The Curetis
facilities at Holzgerlingen, Germany, as well as manufacturing facility in Bodelshausen, Germany were subject to an FDA inspection in
February 2019, which was successfully completed with no FDA Form 483 observations.
Zollner
On May 27,
2009, OpGen’s subsidiary Curetis and Zollner Elektronik AG, Zandt, Germany, or Zollner, entered into a framework agreement, pursuant
to which Zollner performs certain development and manufacturing services for the Unyvero System. Under the terms of the agreement, each
party retains rights to its respective intellectual property. The agreement specifies that manufacturing intellectual property created
jointly or solely by Zollner while performing work and services for Curetis shall be solely with Zollner. For any manufacturing intellectual
property owned by Zollner, Curetis receives a non-exclusive, non-transferable, world-wide, royalty free, irrevocable perpetual license
(without a right to sublicense) to use, provided that such manufacturing intellectual property is embodied in a product provided to Curetis.
As of today, there is no such manufacturing intellectual property. The agreement is for an indefinite period of term and may be terminated
with 12 months’ prior written notice.
The framework
agreement has been expanded by a development agreement in 2010 and related project agreements for various development projects as well
as by a strategic supply agreement signed in June 2013 under which Zollner became the OEM contract manufacturer for all Unyvero A50 instrument
for Curetis.
Scholz
On February
1, 2013, Curetis and Horst Scholz GmbH & Co. KG, Kronach, Germany, or Scholz, entered into a framework agreement, pursuant to which
Scholz is requested to perform certain services in the area of tool development and tool making (injection molding tools to make plastic
parts) and manufacturing product components (i.e., all plastic parts for the Application Cartridges) for Curetis. The parts for the Unyvero
A50 products include, among other things, the base plates, valve plate, PCR chamber parts, spin column holder, waste chamber, reagent
container, plungers and housing body parts. All rights, title, interest and ownership in the injection molding tools and plastic products
specified in this agreement, including the respective intellectual property rights shall be transferred and assigned to and solely belong
to Curetis. Under this agreement, Scholz guarantees that all such rights solely belong to Curetis. The framework agreement constitutes
the legal basis for all legal relations between the parties after February 2013, in particular for the supply agreement.
In addition
to volume production with these pre-existing molds, Curetis subsequently commissioned a series of multi-cavity injection molds (owned
by Curetis yet stored and used on site at Scholz) under a strategic lease agreement with Scholz for all injection molded plastics parts
entered into on July 28, 2015. The agreement is for an indefinite period of term and may be terminated with 12 months’ prior written
notice or may be terminated earlier by Curetis once the last order for related plastic parts has been fulfilled.
Under the
framework agreement with Scholz, Curetis in 2018 also commissioned several single- and multi-cavity injection models for parts of the
Unyvero A30 RQ cartridge. These injection molds were developed, manufactured and put into service by Scholz over the course of
2018 and 2019 under the same terms as described above for the injection molds for the Unyvero A50 cartridges.
Supply Agreements
Curetis
is party to a supply agreement with a large single-source supplier for purchase of PCR Master Mix reagent and other product components,
which are used as integral parts of Curetis’ Application Cartridges. Pursuant to the agreement, Curetis has the right to resell
such product components supplied under the agreement, except for the PCR Master Mix, in conjunction and jointly repackaged with Curetis’
products worldwide. Further, the agreement provides that Curetis has the right to resell the PCR Master Mix repackaged and refilled for
use only in conjunction with Curetis’ products worldwide. Pursuant to the PCR Master Mix supply agreement, Curetis’ distribution
right is limited to the sale to end-users and Curetis’ distributors and does not include sales to users who re-sell Curetis products
in modified form (e.g. using their own brand) or sales, which would violate any sanctions, embargos or foreign trade restrictions issued
by the EU or the United States Further, Curetis, or any of its affiliates or distributors, are not permitted to resell any of the product
components, including the PCR Master Mix, to third parties as stand-alone items for use other than in conjunction with Curetis’
products. Under the agreement, Curetis is subject to certain minimum annual purchase requirements.
Raw Materials and Suppliers for Acuitas
OpGen procures
PCR amplification reagents and the QuantStudio 5 Real-Time PCR System from Thermo Fisher Scientific. DNA purification reagents and the
EZ1 DNA Purification System are procured from Qiagen. We also purchase our collection kits from sole-source suppliers. Some of these
items are unique to these suppliers and vendors. While we have developed alternative sourcing strategies for these materials and vendors,
we cannot be certain whether these strategies will be effective or whether alternative sources will be available when we need them. If
these suppliers can no longer provide us with the materials we need to manufacture our Acuitas AMR Gene Panel products if the materials
do not meet our quality specifications, or if we cannot obtain acceptable substitute materials, our business would be negatively affected.
Seasonality of Business
We do not believe our business is subject
to significant seasonality. However, our business can be subject to and affected by the business practices of our business partners.
To the extent that the availability of inventory or materials from or development practices of our partners is seasonal, our sales may
be subject to fluctuations quarter to quarter or year over year.
Quality Assurance
Our quality
and regulatory affairs functions oversee the quality of our research and development operations, laboratories and our FDA-cleared and
CE-IVD-marked diagnostic products as well as the quality systems used in research and development, manufacturing, and commercialization
such as client services, billing operations and sales and marketing. We have established quality management systems across our entire
business, including implementation and maintenance, document control, supplier qualification, corrective or preventive actions, oversight,
and employee training processes. We monitor and seek to improve our quality over time in compliance with all applicable regulations.
Payments and Reimbursements
Our Unyvero tests and Acuitas AMR Gene Panel
tests are, and other future products and services will be, sold to hospitals, laboratories, and public health organizations as products
and on a fee-for-service basis. When hospital and health system clients purchase our products, we bill them directly for the purchase
of test kits and consumables. We believe that hospitals will recoup costs of our products and services by obtaining reimbursement from
the government or private insurance companies for in-bed occupancies, which traditionally includes all testing required for admitted
patients. When our tests are used prior to hospital admission, hospitals, clinical laboratories, and other healthcare provider customers
that purchase our products may bill various third-party payers to cover all or a portion of the costs and fees associated with diagnostic
tests, including the cost of the purchase of our products.
In the IVD market, sales volumes and prices
of innovative products will depend in large part on the availability of coverage and reimbursement from third-party payers, which includes
depending on public funding through governmental programs, private insurance plans and workers’ compensation plans. In most healthcare
settings, reimbursement schemes are complex, processes to achieve reimbursement for new technologies is tedious and time consuming and
payers may deny coverage or reimbursement. As a result, even though a new product may have been cleared for commercial distribution,
it may find limited demand for the product until reimbursement approval has been obtained from governmental and private third-party payers.
However, specific reimbursement codes for laboratory tests are in most countries only applicable for out-patient’s healthcare.
In addition, some public funding is already available in most countries for certain established tests and is often technology specific,
thus code stacking or cross-walking and using corresponding codes is quite usual to overcome challenging reimbursement situations.
OpGen has analyzed existing reimbursement
schemes in Germany, Austria and Switzerland, as well as other European countries and the United States, where hospitalized in-patients
with severe infections are typically covered under the DRG system. With DRG, hospitals receive a lump-sum payment, e.g., up to €22
thousand in Germany for a life-threatening case of ventilator-associated pneumonia (VAP) treated in intensive care. Therefore, OpGen
has taken the strategic direction to target hospitalized patients first as in most countries DRG systems as hospitals’ general
financing are in place covering diagnostics as part of a lump sum payment per patient without specific reimbursement codes for a laboratory
test required.
In addition, the current list prices and future
anticipated prices for Unyvero Application Cartridges and Acuitas AMR Gene Panel consumables, amount to a small fraction of this overall
DRG payment. It is also favorable in some countries, such as the United States, that pathogen identification by a lab test may even warrant
coding to higher DRG rates. For example, OpGen’s marketing team has been working with outside consultants to correctly position
the LRT Application Cartridge in the context of relevant DRG codes so that, based on the pathogens identified by the LRT Application
Cartridge as the causative agent of pneumonia but undetected by conventional microbiology, it can offer hospitals more favorable DRG
coding and higher reimbursement on a per patient case overall.
OpGen’s management believes that existing
DRG reimbursement scheme codes and optimization potential based on a Unyvero or Acuitas diagnostic within those applicable DRGs and their
national equivalents can be used in most major markets and therefore an adoption of the Unyvero and Acuitas technology seems feasible.
Intellectual Property
In order to remain competitive, we must develop
and maintain protection of the proprietary aspects of our technologies. To that end, in order to remain competitive, we must develop
and maintain protection of the proprietary aspects of our technologies. We therefore rely on a combination of patents, copyrights and
trademarks, as well as contracts, such as confidentiality, invention assignment and licensing agreements. We also rely upon trade secret
laws to protect unpatented know-how and continuing technological innovation. In addition, we have what we consider to be reasonable security
measures in place to maintain confidentiality. Our intellectual property strategy is intended to develop and maintain our competitive
position.
As of September 30, 2022, OpGen had a patent portfolio
of 55 granted patents and 12 patent applications. 32 of the granted patents and 4 of the pending patent applications are from Curetis
and 20 of the granted patents and 8 of the pending patent applications are from Ares Genetics. As part of such portfolio, we have three
granted U.S. patents related to our Acuitas products.
As part of the Company’s portfolio, there are
two pending U.S. non-provisional patent applications and 8 issued U.S. patents related to our FISH products. These issued patents begin
to expire in November 2024 and will be fully expired by October 2033. We are currently in the process of sunsetting our FISH intellectual
property.
We have ownership rights to 8 issued U.S. patents
related to our Argus products. These issued patents begin to expire in November 2026 and will be fully expired by July 2031. We
are currently in the process of sunsetting our Argus intellectual property.
We intend to file additional patent applications
in the United States and abroad to strengthen our intellectual property rights; however, our patent applications (including the patent
applications listed above) may not result in issued patents in a timely fashion or at all, and we cannot assure investors that any patents
that have issued or might issue will protect our technology.
We require all employees and technical consultants
working for us to execute confidentiality agreements, which provide that all confidential information received by them during the course
of the employment, consulting or business relationship be kept confidential, except in specified circumstances. Our agreements with our
research employees provide that all inventions, discoveries and other types of intellectual property, whether or not patentable or copyrightable,
conceived by the individual while he or she is employed by us are assigned to us. We cannot provide any assurance, however, that employees
and consultants will abide by the confidentiality or assignment terms of these agreements. Despite measures taken to protect our intellectual
property, unauthorized parties might copy aspects of our technology or obtain and use information that we regard as proprietary.
Regulation
The following is a summary of the regulations
materially affecting our business and operations.
Federal Oversight of Research-Use-Only
Products
We
currently offer for sale and sell some of our Unyvero tests to CROs, pharmaceutical companies, reference laboratories, hospitals and
other health care facilities for research use only (RUO). RUO and investigational use only, or IUO, products are not intended for human
clinical use and must be properly labeled in accordance with FDA guidance. Claims for RUOs and IUOs related to safety, effectiveness,
or clinical utility or that are intended for human diagnostic or prognostic use are prohibited. In November 2013, the FDA issued guidance
titled “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only – Guidance
for Industry and Food and Drug Administration Staff.” This guidance sets forth the requirements to utilize such designations, labeling
requirements and acceptable distribution practices, among other requirements.
Mere
placement of an RUO or IUO label on an IVD product does not render the device exempt from otherwise applicable clearance, approval or
other requirements. The FDA may determine that the device is intended for use in clinical diagnosis based on other evidence, including
how the device is marketed.
Our
Unyvero UTI assay was launched for RUO purposes in the second quarter of 2020. We cannot predict the potential effect the FDA’s
current and forthcoming guidance IUOs/RUOs will have on our product offerings or materials used to perform our diagnostic services. We
cannot be certain that the FDA might not promulgate rules or issue guidance documents that could affect our ability to purchase materials
necessary for the performance of our diagnostic services. Should any of the reagents obtained by us from vendors and used in conducting
our diagnostic services be affected by future regulatory actions, our business could be adversely affected by those actions, including
increasing the cost of service or delaying, limiting or prohibiting the purchase of reagents necessary to perform the service.
We
cannot provide any assurance that FDA regulation, including premarket review, will not be required in the future for our surveillance
and diagnostic services, whether through additional guidance or regulations issued by the FDA, new enforcement policies adopted by the
FDA or new legislation enacted by the U.S. Congress. We expect that new legislative proposals will be introduced from time to time. It
is possible that legislation could be enacted into law or regulations or guidance could be issued by the FDA, which may result in new
or increased regulatory requirements for us to continue to offer our diagnostic services or to develop and introduce new services.
FDA’s Premarket Clearance
and Approval Requirements
The
FDA has broad authority over the regulation of medical devices marketed for sale in the United States. The FDA regulates the research,
clinical testing, manufacturing, safety, labeling, storage, recordkeeping, premarket clearance or approval, promotion, distribution and
production of medical devices. The FDA also regulates the export of medical devices manufactured in the United States to international
markets.
Under
the Food, Drug, and Cosmetic Act, or FDC Act, the FDA classifies medical devices into one of three classes: Class I, Class II or Class
III. Devices deemed to pose lower risk are placed into either Class I or Class II.
Class
I devices are deemed to pose the lowest risk to the patient. Accordingly, Class 1 devices are subject to the lowest degree of regulatory
scrutiny and need only comply with the FDA’s General Controls. The General Controls include compliance with the registration, listing,
adverse event reporting requirements, and applicable portions of the Quality System Regulation, or QSR as well as the general misbranding
and adulteration prohibitions. Unless specifically exempted in the regulations, general controls require a company that intends to market
a Class I device, like us, to gain clearance for marketing through the 510(k) process. Many Class I devices, however, are exempt from
510(k) clearance because the level of risk is low.
Class
II devices are considered higher risk devices than Class I devices. Class II devices are subject to General Controls as well as additional
special controls. Special controls may include labeling requirements, mandatory performance standards, and post market surveillance.
Generally, companies that intend to market Class II devices, like us, must comply with applicable regulations and submit a 510(k) premarket
submission for review to receive clearance to list and market their devices. The 510(k) must establish substantial equivalence to a predicate
device. Some Class II devices are exempt from filing a 510(k) but in some instances, Class II devices may be required to file a premarket
approval, or PMA, application, for example, when changes in their technology or intended use present novel risks that warrant separate
review as a Class III medical device.
Class
III devices are deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices
for which no substantially equivalent previously cleared device exists and require a PMA before commercialization.
All
medical device manufacturers must register their establishments and list their devices with the FDA. Establishment registration requires
the payment of user fees. In addition, both 510(k) premarket submissions and PMA applications are subject to the payment of user fees,
paid at the time of submission for FDA review.
510(k) Clearance Pathway
We
are currently working to submit our Unyvero tests for clearance under Section 510(k) of the FDC Act. Such tests are classified as medical
devices, and we have to submit a premarket notification demonstrating that the proposed device is substantially equivalent to a previously
cleared 510(k) device or a device that was in commercial distribution before May 28, 1976, for which the FDA has not yet called for the
submission of premarket approval applications. FDA’s 510(k) clearance pathway usually takes from three to twelve months; by statute,
the FDA has 90 days to review the pre-market notification. On average the review time is approximately six months, but it can take significantly
longer than twelve months in some instances (e.g. in the case of the Acuitas AMR Gene Panel as well as for the original Unyvero LRT products
a total of over 18 months), as the FDA may require additional information, including clinical data, to make a determination regarding
substantial equivalence.
After
a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute
a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, require a PMA. The
FDA requires each manufacturer to determine whether the proposed change requires submission of a new 510(k) notice, or a PMA, but the
FDA can review any such decision and can disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s
determination, the FDA can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or PMA
is obtained. If the FDA requires us to seek 510(k) clearance or PMA for any modifications to a previously cleared product, we may be
required to cease marketing or recall the modified device until we obtain this clearance or approval. Also, in these circumstances, we
may be subject to significant regulatory fines or penalties. We have made, and plan to continue to make, additional product enhancements
to products that we believe do not require new 510(k) clearances, but we cannot guarantee that the future enhancements, should they occur,
will be exempt from new 510(k) clearances.
De Novo Classification Request
The Food and Drug Administration Modernization
Act of 1997, or FDAMA, added the De Novo classification option as an alternate pathway to classify low to moderate risk novel medical
devices that had automatically been placed in Class III after receiving a not substantially equivalent determination in response to a
premarket notification 510(k) submission. FDAMA also permits a sponsor to submit a De Novo classification request to the FDA for a product
otherwise requiring a PMA application without first being required to submit a 510(k) application. The De Novo classification process
is generally more costly and time consuming than the 510(k) process. While the Unyvero LRT Application has been subject to the De Novo
process, both the LRT BAL Application as well as the Acuitas AMR Gene Panel have been FDA-cleared as 510(k) submissions. We currently
expect that the Unyvero UTI and IJI will also fall under the De Novo process.
Premarket Approval Pathway
A PMA application must be submitted if a device
cannot be cleared through the 510(k) process. The PMA application process is generally more costly and time consuming than the 510(k)
process. A PMA application must be supported by extensive data including, but not limited to, analytical, preclinical, clinical trials,
manufacturing, statutory preapproval inspections, and labeling to demonstrate to the FDA’s satisfaction the safety and effectiveness
of the device for its intended use.
After a PMA application is sufficiently complete,
the FDA will accept the application and begin an in-depth review of the submitted information. By statute, the FDA has 180 days to review
the “accepted application,” although, generally, review of the application can take between one and three years, but it may
take significantly longer. During this review period, the FDA may request additional information or clarification of information already
provided. Also, during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the
application and provide recommendations to the FDA as to the approvability of the device. The preapproval inspections conducted by the
FDA include an evaluation of the manufacturing facility to ensure compliance with the QSR, as well as inspections of the clinical trial
sites by the Bioresearch Monitoring group to evaluate compliance with good clinical practice and human subject protections. New premarket
approval applications or premarket approval application supplements are required for modifications that affect the safety or effectiveness
of the device, including, for example, certain types of modifications to the device’s indication for use, manufacturing process,
labeling and design. Significant changes to an approved PMA require a 180-day supplement, whereas less substantive changes may utilize
a 30-day notice, or the 135-day supplement. PMA supplements often require submission of the same type of information as a PMA application,
except that the supplement is limited to information needed to support any changes from the device covered by the original PMA application
and may not require as extensive clinical data or the convening of an advisory panel. None of our products are currently approved under
a PMA.
Clinical Trials
Clinical trials are almost always required
to support a De Novo or PMA application and are usually required to support non-exempt Class I and Class II 510(k) premarket submissions.
Clinical trials may also be required to support certain marketing claims. If the device presents a “significant risk,” as
defined by the FDA, to human health, the FDA requires the device sponsor to file an investigational device exemption, or IDE application,
with the FDA and obtain IDE approval prior to conducting the human clinical trials. The IDE application must be supported by appropriate
data, such as analytical, animal and laboratory testing results, manufacturing information, and an Investigational Review Board, or IRB,
approved protocol showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE
application must be approved in advance by the FDA prior to initiation of enrollment of human subjects. Clinical trials for a significant
risk device may begin once the investigational device exemption application is approved by the FDA. If the clinical trial design is deemed
to be “non-significant risk,” the clinical trial may eligible for the “abbreviated” IDE requirements; in some
instances IVD clinical trials may be exempt from the more burdensome IDE requirements if the test uses a noninvasive sampling method,
does not introduce energy into the subject, and is not used in a diagnostic procedure without confirmation of the diagnosis by another
established medically diagnostic procedure or product. All clinical trials conducted to support a PMA application must be conducted in
accordance with FDA regulations and Federal and state regulations concerning human subject protection, including informed consent, oversight
by an IRB and healthcare privacy requirements. A clinical trial may be suspended by the FDA or the IRB review board at any time for various
reasons, including a belief that the risks to the study participants outweigh the benefits of participation in the study. Even if a study
is completed, the results of our clinical testing may not demonstrate the safety and efficacy of the device or may be equivocal or otherwise
not be sufficient to obtain approval of our product. Similarly, in Europe the clinical study must be approved by the local ethics committee
and in some cases, including studies of high-risk devices, by the Ministry of Health in the applicable country.
Pervasive and Continuing FDA Regulation
Numerous regulatory requirements apply to
products classified as devices, such as ours, and would continue to apply. These include:
| · | product
listing and establishment registration, which helps facilitate FDA inspections and other
regulatory action; |
| · | QSR,
which requires manufacturers, including third-party manufacturers, to follow stringent design,
testing, control, documentation and other quality assurance procedures during all aspects
of the development and manufacturing process; |
| · | labeling
regulations and FDA prohibitions against the promotion of products for uncleared, unapproved
or off-label use or indication; |
| · | clearance
of product modifications that could significantly affect safety or efficacy or that would
constitute a major change in intended use of one of our cleared devices; |
| · | approval
of product design modifications that affect the safety or effectiveness of one of our cleared
devices; |
| · | medical
device reporting regulations, which require that manufacturers comply with FDA requirements
to report if their device may have caused or contributed to a death or serious injury, or
has malfunctioned in a way that would likely cause or contribute to a death or serious injury
if the malfunction of the device or a similar device were to recur; |
| · | post-approval
restrictions or conditions, including post-approval study commitments; |
| · | post-market
surveillance regulations, which apply when necessary to protect the public health or to provide
additional safety and effectiveness data for the device; |
| · | the
FDA’s recall authority, whereby it can ask, or under certain conditions order, device
manufacturers to recall from the market a product that is in violation of governing laws
and regulations; |
| · | regulations
pertaining to voluntary recalls; and |
| · | notices
of corrections or removals. |
OpGen’s Rockville, Maryland facility
is currently registered as a manufacturer with the FDA to manufacture our Acuitas products, whereas the Curetis facility in Bodelshausen,
Germany is registered with the FDA for all Unyvero cartridge and consumable manufacturing. We commenced transferring the manufacturing
of the Acuitas products to Curetis and expect to complete such transfer in 2023. We and any third-party manufacturers are subject to
announced and unannounced inspections by the FDA to determine our compliance with quality system regulation and other regulations.
Failure to comply with applicable regulatory
requirements could result in enforcement action by the FDA, which might include any of the following sanctions: (1) untitled letters,
Form 483 observations, warning letters, fines, injunctions, consent decrees and civil penalties; (2) unanticipated expenditures to address
or defend such actions; (3) customer notifications for repair, replacement and refunds; (4) recall, detention or seizure of our products;
(5) operating restrictions or partial suspension or total shutdown of production; (6) refusing or delaying our requests for 510(k) clearance
or premarket approval of new products or modified products; (7) operating restrictions; (8) withdrawing 510(k) clearances or PMA approvals
that have already been granted; (9) refusal to grant export approval for our products; or (10) criminal prosecution.
After a medical device is placed on the market,
numerous regulatory requirements apply. These include: all of the relevant elements of the QSR, labeling regulations, restrictions on
promotion and advertising, the medical device reporting (which requires the manufacturer to report to the FDA if its devices may have
caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious
injury if it were to recur), the Reports of Corrections and Removals regulations (which requires manufacturers to report certain recalls
and field actions to the FDA), and other post-market requirements.
Health Insurance Portability and Accountability
Act
Under HIPAA, the Department of Health and
Human Services, or HHS, has issued regulations to protect the privacy and security of protected health information used or disclosed
by healthcare providers, such as us, and by certain vendors of ours, also known as our business associates. The regulations include limitations
on the use and disclosure of protected health information and impose notification requirements in the event of a breach of protected
health information. HIPAA also regulates standardization of data content, codes and formats used in healthcare transactions and standardization
of identifiers for health plans and providers. Penalties for violations of HIPAA regulations include civil and criminal penalties.
We have developed and implemented policies
and procedures designed to comply with these regulations. The requirements under these regulations may change periodically and could
have an effect on our business operations if compliance becomes substantially more expensive than under current requirements.
In addition to Federal privacy regulations,
there are a number of state laws governing confidentiality of health information that are applicable to our business. If our business
expands internationally, we would be subject to compliance with other laws regarding confidentiality of health information and privacy.
New laws governing privacy may be adopted
in the future as well. We have taken steps to comply with health information privacy requirements to which we are aware that we are subject.
However, we cannot assure you that we are or will remain in compliance with diverse privacy requirements in all of the jurisdictions
in which we do business. Failure to comply with privacy requirements could result in civil or criminal penalties, which could have a
materially adverse effect on our business.
Federal and State Physician Self-referral
Prohibitions
As a manufacturer and seller of diagnostic
tests, we are subject to the Federal physician self-referral prohibitions, commonly known as the Stark Law, and to similar restrictions
under the Maryland Physician Self-Referral Law. Together, these restrictions generally prohibit us from billing a patient or any governmental
or private payor for any clinical laboratory services when the physician ordering the service, or any member of such physician’s
immediate family, has an investment interest in or compensation arrangement with us, unless the arrangement meets an exception to the
prohibition.
Both the Stark Law and the Maryland Physician
Self-Referral Law contain an exception for compensation paid to a physician for personal services rendered by the physician. We have
compensation arrangements with a number of physicians for personal services, such as clinical advisory board services, speaking engagements
and other consulting activities. We have structured these arrangements with terms intended to comply with the requirements of the personal
services exception to the Stark Law and the Maryland Physician Self-Referral Law.
However, we cannot be certain that regulators
would find these arrangements to be in compliance with the Stark Law, the Maryland Physician Self-Referral Law, or similar state laws.
We would be required to refund any payments we receive pursuant to a referral prohibited by these laws to the patient, the payor or the
Medicare program, as applicable.
Sanctions for a violation of the Stark Law
include the following:
| · | denial
of payment for the services provided in violation of the prohibition; |
| · | refunds
of amounts collected by an entity in violation of the Stark Law; |
| · | a
civil penalty of up to $15,000 for each service arising out of the prohibited referral; |
| · | possible
exclusion from Federal healthcare programs, including Medicare and Medicaid; and |
| · | a
civil penalty of up to $100,000 against parties that enter into a scheme to circumvent the
Stark Law’s prohibition. |
These prohibitions apply regardless of the
reasons for the financial relationship and the referral. No finding of intent to violate the Stark Law is required for a violation. In
addition, knowing violations of the Stark Law may also serve as the basis for liability under the Federal False Claims Act, which prohibits
knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the U.S. Government.
Further, if we submit claims in violation
of the Maryland Physician Self-Referral Law, we can be held liable to the payer for any reimbursement received for the services by us.
Finally, other states have self-referral restrictions with which we have to comply that differ from those imposed by Federal and Maryland
law. While we have attempted to comply with the Stark Law and the Maryland Physician Self-Referral Law, it is possible that some of our
financial arrangements with physicians could be subject to regulatory scrutiny at some point in the future, and we cannot provide assurance
that we will be found to be in compliance with these laws following any such regulatory review.
Federal and State Anti-Kickback
Laws
The Federal healthcare program Anti-Kickback
Law makes it a felony for a person or entity to knowingly and willfully offer, pay, solicit or receive remuneration, directly or indirectly,
in order to induce business that is reimbursable under any Federal healthcare program. A violation of the Anti-Kickback Law may result
in imprisonment for up to five years and fines of up to $250,000 in the case of individuals and $500,000 in the case of organizations.
Convictions under the Anti-Kickback Law result in mandatory exclusion from Federal healthcare programs for a minimum of five years. In
addition, HHS has the authority to impose civil assessments and fines and to exclude healthcare providers and others engaged in prohibited
activities from Medicare, Medicaid and other Federal healthcare programs. Actions which violate the Anti-Kickback Law also incur liability
under the Federal False Claims Act.
Although the Anti-Kickback Law applies only
to Federal healthcare programs, a number of states, including Maryland, have passed statutes substantially similar to the Anti-Kickback
Law pursuant to which similar types of prohibitions are made applicable to all other health plans and third-party payers. Violations
of Maryland’s anti-kickback law are punishable by tiered criminal penalties based on the crime with a maximum penalty of life imprisonment
and fines of up to $200,000, or both. Civil penalties include three times the amount of any overpayment made in violation of the statute.
Federal and state law enforcement authorities
scrutinize arrangements between healthcare providers and potential referral sources to ensure that the arrangements are not designed
as a mechanism to induce patient care referrals or induce the purchase or prescribing of particular products or services. The law enforcement
authorities, the courts and Congress have also demonstrated a willingness to look behind the formalities of a transaction to determine
the underlying purpose of payments between healthcare providers and actual or potential referral sources. Generally, courts have taken
a broad interpretation of the scope of the Anti-Kickback Law, holding that the statute may be violated if merely one purpose of a payment
arrangement is to induce referrals or purchases.
In addition to statutory exceptions to the
Anti-Kickback Law, regulations provide for a number of safe harbors. If an arrangement meets the provisions of a safe harbor, it is deemed
not to violate the Anti-Kickback Law. An arrangement must fully comply with each element of an applicable safe harbor in order to qualify
for protection. There are no regulatory safe harbors to the Maryland anti-kickback law.
Among the safe harbors that may be relevant
to us is the discount safe harbor. The discount safe harbor potentially applies to discounts provided by providers and suppliers, including
laboratories, to physicians or institutions. If the terms of the discount safe harbor are met, the discounts will not be considered prohibited
remuneration under the Anti-Kickback Law. Maryland does not have a discount safe harbor.
The personal services safe harbor to the Anti-Kickback
Law provides that remuneration paid to a referral source for personal services will not violate the Anti-Kickback Law provided all of
the elements of that safe harbor are met. One element is that if the agreement is intended to provide for the services of the physician
on a periodic, sporadic or part-time basis, rather than on a full-time basis for the term of the agreement, the agreement must specify
exactly the schedule of such intervals, their precise length, and the exact charge for such intervals.
Our personal services arrangements with some
physicians may not meet the specific requirement of this safe harbor that the agreement specify exactly the schedule of the intervals
of time to be spent on the services because the nature of the services, such as speaking engagements, does not lend itself to exact scheduling
and therefore meeting this element of the personal services safe harbor is impractical. Failure to meet the terms of the safe harbor
does not render an arrangement illegal. Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account
all facts and circumstances.
While we believe that we are in compliance
with the Anti-Kickback Law and the Maryland anti-kickback law, there can be no assurance that our relationships with physicians, academic
institutions and other customers will not be subject to investigation or challenge under such laws. If imposed for any reason, sanctions
under the Anti-Kickback Law and the Maryland anti-kickback law could have a negative effect on our business.
Other Federal and State Fraud
and Abuse Laws
In addition to the requirements discussed
above, several other healthcare fraud and abuse laws could have an effect on our business. For example, provisions of the Social Security
Act permit Medicare and Medicaid to exclude an entity that charges the Federal healthcare programs substantially in excess of its usual
charges for its services. The terms “usual charge” and “substantially in excess” are ambiguous and subject to
varying interpretations.
Further, the Federal False Claims Act prohibits
a person from knowingly submitting a claim, making a false record or statement in order to secure payment or retaining an overpayment
by the Federal government. In addition to actions initiated by the government itself, the statute authorizes actions to be brought on
behalf of the Federal government by a private party having knowledge of the alleged fraud, also known as qui tam lawsuits. Because the
complaint is initially filed under seal, the action may be pending for some time before the defendant is even aware of the action. If
the government is ultimately successful in obtaining redress in the matter or if the plaintiff succeeds in obtaining redress without
the government’s involvement, then the plaintiff will receive a percentage of the recovery. It is not uncommon for qui tam lawsuits
to be filed by employees, competitors or consultants.
Finally, the Social Security Act includes
its own provisions that prohibit the filing of false claims or submitting false statements in order to obtain payment. Violation of these
provisions may result in fines, imprisonment or both, and possible exclusion from Medicare or Medicaid programs. Maryland has an analogous
state false claims act applicable to state health plans and programs, as do many other states.
International Regulation
Sales of diagnostic tests like our Unyvero tests
outside the United States would be subject to foreign government regulations, which vary substantially from country to country. In order
to market our products in other countries, we would need to obtain regulatory approvals and comply with extensive safety and quality
regulations in other countries. OpGen currently distributes its Unyvero products ex United States via a network of distribution partners.
The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA clearance or approval,
and the requirements may differ significantly. If we elect to, or are required to, seek clearance of or approval for any of our products
from the FDA, we may be able to commercialize such products with shorter lead time in international markets, but would need to establish
international operations in order to do so.
Environmental Matters
Our operations require the use of hazardous
materials (including biological materials) which subject us to a variety of Federal, state and local environmental and safety laws and
regulations. Some of these regulations provide for strict liability, holding a party potentially liable without regard to fault or negligence.
We could be held liable for damages and fines as a result of our, or others’, business operations should contamination of the environment
or individual exposure to hazardous substances occur. We cannot predict how changes in laws or new regulations will affect our business,
operations or the cost of compliance.
Human Capital Resources
As of September 30, 2022, we had 99 employees
worldwide, with 22 employed at OpGen, Inc. in the United States, 62 employed at Curetis GmbH in Germany, and 15 employed at Ares Genetics
GmbH in Austria. Of our 99 worldwide employees, 84 are full-time employees. Except for the managing director of Ares Genetics, our Austria-based
employees are subject to a collective bargaining agreement for employees of companies in the automated data processing and IT services
industry. None of our other employees worldwide are subject to a collective bargaining arrangement. The 22 employees in the United States
work in our Rockville, Maryland location or are field based marketing, sales, and service employees.
We compete in the highly competitive healthcare
and life sciences industry. Our ability to operate and compete effectively and execute our strategy requires us to attract, develop and
retain talented personnel for positions in research, quality assurance, clinical, commercial and other positions. Recruiting and retaining
our personnel depends on factors, such as compensation and benefits, development and career opportunities, and work culture and environment.
We accordingly invest in our employees in a number of different ways.
Culture
Our goal is to create and foster a culture
of high performance and accountability through the attraction, retention and development of expert talent. We compete for top talent
with effective recruitment strategies, well defined roles and attractive total compensation packages. We keep talent engaged through
appreciation, communication and creation of a great work environment based on our shared core values at OpGen: Ownership, Performance,
Generosity, Enthusiasm, Now! We support employee growth professionally and personally through formal and informal opportunities and leadership
support.
Compensation
In addition to competitive base salaries, we
offer incentive-based compensation programs tied to the performance of key objectives. We also provide compensation in the form of restricted
stock unit grants and stock options.
Health & Wellness
The physical health and
wellbeing, life balance and mental health of our employees is vital to our success. Throughout 2021 and 2022, health and wellness was
a key focus of the Company, especially in light of the COVID-19 pandemic. Many of our employee communications focused on the physical
and mental health of our employees. We remain committed to providing our workforce with flexible remote working schedules to suit their
personal needs through this challenging time. We also continue to benchmark all of our health insurance offerings to ensure plan competitiveness.
Throughout the COVID-19
pandemic, employee safety has been a top priority. Ongoing safety measures were put into place at each of our locations including implementing
pre-screening and social distancing requirements in addition to providing personal protective equipment and regular testing of staff
wherever possible.
Glossary
The following scientific, healthcare, regulatory
and OpGen-specific terms are used throughout this prospectus:
“Acuitas AMR Gene Panel” is a
qualitative nucleic acid-based in vitro diagnostic test that is capable of simultaneous detection and identification of multiple bacterial
nucleic acids and select genetic determinants of antimicrobial resistance from bacterial colonies isolated from any specimen.
“Acuitas Lighthouse” is a bioinformatics
platform that we have discontinued following the integration of relevant datasets into our ARESdb.
“AI” means Artificial Intelligence.
“AMR” means antimicrobial resistance.
“antibiotic stewardship” has been defined
by the CDC to mean hospital-based programs dedicated to improving use of antibiotic therapy with the goal of optimizing the treatment
of infections and reducing the adverse events associated with antibiotic use.
“ARESdb” means ARES reference database on antimicrobial resistance.
"ARESiss” means ARES isolate sequencing service
"ARESid” means ARES identification of pathogens
“ARESupa” means ARES universal pathogenome assay.
“ares-genetics.cloud” means ARES web application available
under ares-genetics.cloud.
“AST” means Antimicrobial Susceptibility
Testing.
“ATM offering” means at-the-market
public offering.
“BCB” means Beijing Clear Biotech.
“BCU” means blood culture.
“CAP”-Community-Acquired Pneumonia.
“CCPA” means the California Consumer
Privacy Act.
“CDC” means the U.S. Centers for
Disease Control and Prevention.
“CE” means Conformité Européenne.
“CLIA” means Clinical Laboratory
Improvement Amendments.
“CMS” means the Centers for Medicare
and Medicaid Services.
“CRE” means carbapenem-resistant
Enterobacteriaceae, an MDRO.
“CRO” means contract research
organization.
“DNA sequencing” is the process
of determining the precise order of nucleotides within a DNA molecule.
“DRG” means Diagnosis Related
Group.
“EIB” means European Investment
Bank.
“ESBL” means extended spectrum
beta lactamase bacteria.
“EU” means European Union.
“FCPA” means the U.S. Foreign
Corrupt Practices Act.
“FDA” means the U.S. Food and
Drug Administration.
“FDAMA” means the U.S. Food and
Drug Administration Modernization Act of 1997.
“FDC Act” means the U.S. Food,
Drug, and Cosmetic Act.
“FIND” means Foundation for Innovative
New Diagnostics.
“GDPR” means the General Data
Protection Regulation in the EU.
“HAIs” means healthcare-associated
infections. Such infections could arise first in the hospital or other healthcare setting, or could result from a patient, colonized
with an organism, developing an active infection once admitted to the hospital or other healthcare setting.
“HAP” means Hospital-Acquired
Pneumonia.
“HHS” means the U.S. Department
of Health and Human Services.
“HIPAA” means the Federal Health
Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health
Act, or HITECH Act. HIPAA and HITECH Act are Federal laws mandating security and privacy of protected personal health information of
patients.
“HPN” means hospitalized pneumonia.
“IAI” means intra-abdominal infection.
“ICU” means intensive care unit.
“IDE” means investigational device
exemption.
“IJI” means invasive & joint
infections.
“bioinformatics” refers to methods,
algorithms and processes for the collection, classification, storage and analysis of biochemical and biological data and information
using computers, especially as applied in molecular genetics and genomics. Our focus is on acquiring such data and information related
to MDROs to assist in diagnosis and screening of patients and antibiotic stewardship initiatives by acute care hospitals. When we use
the term “advanced (bio)informatics,” we mean informatics combined with higher levels of complexity, sophistication and subject
matter expertise related to MDROs, diagnostics, antibiotic stewardship, and the development of associated analysis tools, or the novel
application of existing informatics in future products or services. In this Annual Report, we also sometimes use the phrase “(bio)informatics
products and services,” often interchangeably with “(bio)informatics platform,” to describe the Company’s focus
on the use of informatics and advanced informatics in its current and future product and service offerings.
“(bio)informatics platform” means
a combination of software tools and analytical processes that streamline the production and analysis of informatics data. When we use
the term (bio)informatics platform, we are primarily referring to ARESdb and the Ares suite of AI powered and machine learning based
tools.
“IOU” means investigational-use-only.
“IPR&D” means in-process research
and development projects.
“IRB” means Investigational Review
Board.
“ITI” means implant & tissue
infection.
“IVD” means in vitro diagnostic.
“IVDD” means In-Vitro-Diagnostic
Device Directive (Directive 98/79/EC of the European Parliament and of the Council of 27 October 1998 on in vitro diagnostic medical
devices).
“IVDR” means In-Vitro-Diagnostic
Device Regulation (Regulation (EU) 2017/746 of the European Parliament and of the Council of 5 April 2017 on in vitro diagnostic medical
devices).
“KOL” means key opinion leader.
“KPC” means carbapenemase producing
Klebsiella pneumoniae, an MDRO.
“LRT” means lower respiratory
tract infection.
“LRT BAL” means lower respiratory
tract infection for bronchoalveolar lavage (BAL and mini-BAL) samples.
“MDRO” means a multidrug-resistant
organism.
“MDx” means molecular diagnostics.
“ML” means machine learning.
“NGO” means non-governmental
organization.
“NGS” means Next Generation Sequencing.
“NMPA” means National Medical
Products Administration, the Chinese agency for regulating drugs and medical devices.
“NOL” means net operating loss.
“OEM” means original equipment
manufacturer.
“PCR” means polymerase chain reaction.
“PMA” means premarket approval.
“QSR” means Quality System Regulation.
“RUO” means research-use-only.
"RoW” means the rest of the world.
“SEC” means the U.S. Securities
and Exchange Commission.
“Securities Act” means the Securities
Act of 1933, as amended.
“VAP” means Ventilator-associated
Pneumonia.
“UTI” means urinary tract infection.
Corporate Information
OpGen, Inc.
was incorporated in Delaware in 2001. The Company’s headquarters and principal operations are in Rockville, Maryland. The Company,
through its subsidiaries, also has operations in Germany, and Austria.
Available Information
The Company maintains a website at www.opgen.com.
Our Code of Conduct is available on our website. We are not incorporating our website into this prospectus. Our annual reports on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website as soon as practicable after electronic filing
of such material with, or furnishing it to, the SEC. This information may be read at the SEC website at http://www.sec.gov.
EXECUTIVE AND DIRECTOR
COMPENSATION
We are currently a “smaller reporting
company” as defined by Item 10 of the Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and have elected to provide in this prospectus certain scaled disclosures permitted under the Exchange Act for smaller reporting
companies.
Executive Compensation Overview
Following the completion of the Company’s
business combination transaction with Curetis GmbH in 2020, the Compensation Committee and the Board have worked with management to update
the Company’s executive compensation program to (1) highlight the importance of equity-based compensation to the Company’s
named executive officers, (2) evaluate and assess the Company’s executive compensation relative to peer companies, and (3) utilize
performance-based bonuses as a critical portion of total compensation.
The Company believes it is vital to link
executive compensation to corporate performance and to create incentives for management to enhance Company value. In accordance with
its compensation philosophy, the Company seeks to attract and retain employees through salary levels that are competitive with the local
market and similarly situated companies but generally to follow the market rather than lead the market, particularly with respect to
cash compensation, and offer attractive equity and cash-based incentive components to align compensation with Company performance objectives.
In addition, given the Company’s early commercial stage, the Company believes it is important to emphasize equity compensation
in order to help the Company retain cash and incentivize its employees.
The Compensation Committee utilized third
party services and data to compile relevant compensation from companies that are similarly situated to the Company. The Compensation
Committee utilized such data to determine the base salary, bonus opportunity and equity compensation for our named executive officers.
Summary Compensation Table for 2022
and 2021
Our named executive officers for 2022 are
Oliver Schacht, Ph.D., our Chief Executive Officer, Albert Weber, our Chief Financial Officer, and Johannes Bacher, our Chief Operating
Officer. This table below provides disclosure, for the years ended December 31, 2022 and 2021 for our named executive officers.
Named Executive Officer and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards (1)($) | | |
Option Awards (1)($) | | |
Non-Equity Incentive Plan Compensation (2)(3)($) | | |
All Other Compensation ($) | | |
Total ($) | |
Oliver Schacht, Ph.D. (4) | |
| 2022 | | |
$ | 408,000 | | |
$ | — | | |
$ | 60,750 | | |
$ | 52,047 | | |
$ | — | | |
$ | — | | |
$ | 520,797 | |
Chief Executive Officer | |
| 2021 | | |
$ | 408,000 | | |
$ | — | | |
$ | 148,025 | | |
$ | 127,591 | | |
$ | 187,068 | | |
$ | 5,131 | | |
$ | 875,815 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Albert Weber (5) | |
| 2022 | | |
$ | 300,000 | | |
$ | — | | |
$ | — | | |
$ | 195,892 | | |
$ | — | | |
$ | 17,500 | | |
$ | 513,392 | |
Chief Financial Officer | |
| 2021 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Johannes Bacher | |
| 2022 | | |
$ | 300,000 | | |
$ | — | | |
$ | 36,450 | | |
$ | 31,228 | | |
$ | — | | |
$ | — | | |
$ | 367,678 | |
Chief Operating Officer | |
| 2021 | | |
$ | 300,000 | | |
$ | — | | |
$ | 81,175 | | |
$ | 69,969 | | |
$ | 96,525 | | |
$ | — | | |
$ | 547,669 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (1) | The
“Stock Awards” column reflects the grant date fair value for all restricted stock
units awarded under the Amended and Restated 2015 Incentive Plan (the “Plan”)
during 2021. The “Option Awards” column reflects the grant date fair value for
all stock option awards granted under the 2015 Incentive Plan during 2022 and 2021, respectively.
These amounts are determined in accordance with FASB Accounting Standards Codification 718
(ASC 718), without regard to any estimate of forfeiture for service vesting. Assumptions
used in the calculation of the amounts in these columns for 2022 and 2021 are included in
a footnote to the Company’s condensed consolidated audited financial statements for
the year ended December 31, 2021. |
| (2) | Represents
annual incentive bonuses paid under an annual performance-based cash incentive plan. Corporate
performance goals are established by the Compensation Committee for each year. The incentive
bonuses are determined by the Compensation Committee based on the achievement of corporate
performance goals. In lieu of cash incentive bonus, Mr. Schacht and Mr. Bacher agreed to
receive the value of their approved 2021 bonuses in the form of 249,390 and 128,682 restricted
stock units, respectively, which were granted on April 1, 2022, with a value of $0.7501 per
share, the closing price of the Company’s common stock on March 31, 2022. The restricted
stock units will vest completely on the one-year anniversary of the grant and are subject
to acceleration of vesting in connection with certain terminations of service. |
| (3) | The
named executive officers are eligible to receive performance-based cash bonuses for the fiscal
year ended December 31, 2022. The 2022 target performance-based cash bonus for each of Mr.
Schacht, Mr. Weber, and Mr. Bacher is $285,600, $135,000, and $135,000, respectively. The
determination of the actual full bonus amount earned by Mr. Schacht, Mr. Weber and Mr. Bacher
in 2022 has not yet been determined. The Compensation Committee expects to determine such
bonus awards in the first quarter of 2023, and the amounts of these awards will be disclosed
in a Current Report on Form 8-K under Item 5.02(f) when determined. |
| (4) | Mr.
Schacht’s “All Other Compensation” for 2021 represents moving expenses
reimbursed by the Company to Mr. Schacht in accordance with his employment agreement. |
| (5) | Mr.
Weber’s “All Other Compensation” for 2022 represents reimbursement for
commuting expenses incurred by Mr. Weber in 2022 for travel to the Company’s offices
in Germany. |
Agreements with Our Named Executive Officers
Retention Plan
On September 21, 2018, the Board approved a Retention Plan for
Executives, or the “Retention Plan.” The Company considers the establishment and maintenance of a sound and vital management
team to be essential to protecting and enhancing the best interests of the Company and its stockholders. In this connection, the Company
recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such
possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders. Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned
duties without distraction in circumstances arising from the possibility of a change in control of the Company. The executive officers
of the Company, as that term is defined under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, are the eligible participants in the Retention Plan, or the “Executives.” The Executives include Oliver Schacht,
Albert Weber and Johannes Bacher.
The initial term of the Retention Plan was three (3) years.
Its term is automatically extended for one (1) year terms thereafter unless the Company provides notice of termination to the Executives
at least six (6) months before the termination date; provided, that if a change in control (as defined in the Retention Plan) does occur,
the term is then set at two (2) years after the date of the change in control.
The Retention Plan provides for Units to be awarded to the Executives,
which can be issued in fractional Units, with each Unit equal to one percent (1%) of the “transaction value” of a change
in control transaction. A total of four Units are available for award under the Retention Plan. In 2021, the Board granted one Unit to
each of Mr. Schacht and Mr. Bacher, and in 2022, the Board granted one Unit to Mr. Weber.
“Transaction value” means all economic value of
a change in control transaction to the Company, including any debt or other obligations assumed by the surviving entity in the transaction,
amounts paid to the Company or its stockholders, milestone payments, earn-outs and forgiveness of indebtedness. For purposes of this
definition, (i) in the case of the sale, exchange or purchase of the Company's equity securities, the total consideration paid for such
securities (including amounts paid to holders of options, warrants and convertible securities), and (ii) in the case of a sale or disposition
by the Company of assets, the total consideration paid for such assets, plus the net value of any current assets not sold by the Company.
The Units will vest and be payable only in the event an Executive
has a “qualifying termination” during a defined change in control period, or remains employed by the Company or its successor
at the termination date of the Retention Plan. A “qualifying termination” is a termination without cause by the Company or
a termination for good reason by the Executive in the change in control period that spans from six (6) months before the change in control
to the second anniversary after the change in control consummation.
The Retention Plan is binding on any successor
to the Company.
Employment Agreements
Oliver Schacht
On October 29, 2020, the Company entered into an Executive Employment
Agreement with Oliver Schacht, Ph.D., the Company’s Chief Executive Officer. The employment agreement superseded the (1) Management
Services Agreement, dated as of April 2, 2020, by and between the Company and Mr. Schacht, and (2) the Managing Director’s Employment
Contract, dated as of August 6, 2020, by and between Curetis GmbH, a wholly-owned subsidiary of the Company, and Mr. Schacht (collectively,
the “Prior Agreements”), each of which were terminated, except as expressly provided in the Mr. Schacht’s employment
agreement.
Consistent with the Prior Agreements, Mr. Schacht’s employment
agreement provides that Mr. Schacht will receive an annual base salary of $408,000 per year and will be eligible to receive an annual
bonus of up $285,600, or seventy percent (70%) of the base salary. The annual bonus opportunity will be based on key performance metrics
established by the Board of Directors of the Company. Mr. Schacht will be entitled to participate in the Company’s standard equity
incentive and benefits plans.
The employment agreement extends through September 1, 2021,
unless sooner terminated in accordance with its terms. Thereafter, the employment agreement automatically renews for successive one year
terms, unless either party provides notice of termination at least three months before the commencement of any renewal term. Under the
employment agreement, Mr. Schacht is subject to customary restrictive covenants, including a requirement not to compete with the Company
while the employment agreement is in effect.
Pursuant to the employment agreement, if Mr. Schacht is terminated
without cause or his employment is voluntarily terminated for good reason, or during a change in control, he will receive (a) his annual
base salary for a period of twelve (12) months, (b) acceleration of any outstanding options, restricted stock units, or equity awards,
and (c) reimbursement for the cost of continued healthcare coverage for up to six (6) months. If the Company provides timely notice of
a non-renewal of the employment agreement, Mr. Schacht is entitled to receive (a) severance for a period of nine (9) months, and (b)
reimbursement for the cost of continued healthcare coverage for up to nine (9) months following expiration of the Agreement. All severance
payments are contingent on Mr. Schacht’s signing and not revoking a release of claims and compliance with the terms of the Employment
Agreement.
Johannes Bacher
On April 6, 2020, the Company entered into a Managing Director’s
Employment Contract with Mr. Bacher, pursuant to which he will serve as the Chief Operating Officer of the Company. Mr. Bacher’s
employment agreement provides that Mr. Bacher will receive a base salary of $300,000 per year and will be eligible to receive an annual
bonus of up to forty-five percent (45%) of the base salary. The annual bonus opportunity will be based on key performance metrics established
by the Board and the Compensation Committee. Mr. Bacher will also be entitled to participate in the Company’s 2015 Equity Incentive
Plan, under which awards will be made consistent with the timing made to the Company’s other officers.
In the event of a change of control (as defined in the Mr. Bacher’s
employment agreement), Mr. Bacher will have a one-time right to terminate his employment agreement upon three-months’ notice. In
the event of such termination of Mr. Bacher’s employment agreement, Mr. Bacher is entitled to his salary and variable annual bonus
for a period of six months after the end of the agreement.
Pursuant to his employment agreement, Mr. Bacher is subject to
customary restrictive covenants, including a requirement not to compete with the Company and its affiliates anywhere in the world for
a period of two years after termination of the agreement.
Albert Weber
Effective January 1, 2022, the Company entered into a Managing
Director’s Employment Contract with Mr. Weber, pursuant to which he will serve as the Chief Financial Officer of the Company. Mr.
Weber’s employment agreement provides that Mr. Weber will receive a base salary of $300,000 per year and will be eligible to receive
an annual bonus of up to forty-five percent (45%) of the base salary. The annual bonus opportunity will be based on key performance metrics
established by the Board and the Compensation Committee. Mr. Weber will also be entitled to participate in the Company’s 2015 Equity
Incentive Plan, under which awards will be made consistent with the timing made to the Company’s other officers.
In the event of a change of control (as defined in the Mr. Weber’s
employment agreement), Mr. Weber will have a one-time right to terminate his employment agreement upon three-months’ notice. In
the event of such termination of Mr. Weber’s employment agreement, Mr. Weber is entitled to his salary and variable annual bonus
for a period of six months after the end of the agreement.
Pursuant to his employment agreement, Mr. Weber is subject to
customary restrictive covenants, including a requirement not to compete with the Company and its affiliates anywhere in the world for
a period of two years after termination of the agreement.
In addition, upon commencement of employment on January 1,
2022, Mr. Weber was awarded 10,500 options to purchase common stock (as adjusted for the 2023 Reverse Stock Split) that will vest over
four years in accordance with the terms of the Company’s 2015 Equity Incentive Plan.
Glossary of Terms
For purposes of the Agreements and the
Retention Plan, the following terms have the following meanings (where applicable):
“cause” means (i) executive’s
commission of a felony; (ii) any act or omission of executive constituting dishonesty, fraud, immoral or disreputable conduct that causes
material harm to the Company; (iii) executive’s violation of Company policy that causes material harm to the Company; (iv) executive’s
material breach of any written agreement between executive and the Company which, if curable, remains uncured after notice; or (v) executive’s
breach of fiduciary duty. The termination of executive’s employment as a result of the death or disability is not deemed to be
a termination without cause.
“change in control” means:
(i) a transaction or series of transactions
(other than an offering of common stock to the general public through a registration statement filed with the SEC) whereby any “person”
or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act (other
than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a “person”
that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly
or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing
more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or
(ii) the consummation by the Company (whether
directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation,
reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets
in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case
other than a transaction: (1) which results in the Company’s voting securities outstanding immediately before the transaction continuing
to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result
of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s
assets or otherwise succeeds to the business of the Company (the Company or such person, the Successor) directly or indirectly, at least
a majority of the combined voting power of the Successor’s outstanding voting securities immediately after the transaction, and
(2) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor;
provided, however, that no person or group shall be treated for purposes of this definition as beneficially owning 50% or more of the
combined voting power of the Successor solely as a result of the voting power held in the Company prior to the consummation of the transaction;
or
(iii) the Company’s stockholders
approve a liquidation or dissolution of the Company.
“good reason”
means any of the following, without executive’s consent: (i) a material diminution of executive’s responsibilities or duties
(provided, however, that the acquisition of the Company and subsequent conversion of the Company to a division or unit of the acquiring
company will not by itself be deemed to be a diminution of executive’s responsibilities or duties); (ii) material reduction in
the level of executive’s base salary (and any such reduction will be ignored in determining executive’s base salary for purposes
of calculating the amount of severance pay); (iii) relocation of the office at which executive is principally based to a location that
is more than fifty (50) miles from the location at which executive performed his duties immediately prior to the effective date of a
change in control; (iv) failure of a successor in a change in control to assume the severance agreement; or (v) the Company’s material
breach of any written agreement between executive and the Company. Notwithstanding the foregoing, any actions taken by the Company to
accommodate a disability of executive or pursuant to the Family and Medical Leave Act shall not be a good reason for purposes of the
agreement. Additionally, before executive may terminate employment for a good reason, executive must notify the Company in writing within
thirty (30) days after the initial occurrence of the event, condition or conduct giving rise to good reason, the Company must fail to
remedy or cure the alleged good reason within the thirty (30) day period after receipt of such notice if capable of being cured within
such thirty-day period, and, if the Company does not cure the good reason (or it is incapable of being cured within such thirty-day period),
then executive must terminate employment by no later than thirty (30) days after the expiration of the last day of the cure period (or,
if the event condition or conduct is not capable of being cured within such thirty-day period, within thirty (30) days after initial
notice to the Company of the violation). Transferring executive’s employment to a successor is not itself good reason to terminate
employment under the agreement, provided, however, that subparagraphs (i) through (v) above shall continue to apply to executive’s
employment by the successor. This definition is intended to constitute a “substantial risk of forfeiture” as defined under
Treasury Regulation 1.409A-1(d).
Outstanding Equity Awards at Fiscal Year-End Table—2022
The following table shows the outstanding equity awards held
by the named executive officers as of December 31, 2022.
OPTION
AWARDS | |
| STOCK
AWARDS | |
Name | |
| Number
of Securities Underlying Unexercised Options Exercisable (1) | | |
| Number
of Securities Underlying Unexercised Options Unexercisable (1) | | |
| Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | | |
| Option
Exercise Price ($) | | |
Option
Expiration Date | |
| Number
of Shares of Stock that have not Vested | | |
| Market
Value of Shares of Stock that have not Vested ($) (2) | | |
| Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested | | |
| Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights that
have not Vested ($) (2) | |
Oliver Schacht (3) | |
| 479 | | |
| — | | |
| — | | |
| 1,473.60 | | |
6/16/2026 | |
| 1,937 | | |
| 5,464 | | |
| — | | |
| — | |
| |
| 280 | | |
| — | | |
| — | | |
| 171.20 | | |
6/16/2026 | |
| 3,750 | | |
| 10,575 | | |
| — | | |
| — | |
| |
| 31,500 | | |
| 13,781 | | |
| — | | |
| 42.40 | | |
9/30/2030 | |
| 12,470 | | |
| 35,164 | | |
| — | | |
| — | |
| |
| 3,875 | | |
| 1,937 | | |
| — | | |
| 38.20 | | |
3/03/2031 | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| 3,750 | | |
| 3,750 | | |
| — | | |
| 16.20 | | |
3/02/2032 | |
| — | | |
| — | | |
| — | | |
| — | |
Johannes Bacher (4) | |
| 479 | | |
| — | | |
| — | | |
| 1,473.60 | | |
6/16/2026 | |
| 1,062 | | |
| 2,996 | | |
| — | | |
| — | |
| |
| 191 | | |
| — | | |
| — | | |
| 171.20 | | |
6/16/2026 | |
| 2,250 | | |
| 6,345 | | |
| — | | |
| — | |
| |
| 10,500 | | |
| 4,593 | | |
| — | | |
| 42.40 | | |
9/30/2030 | |
| 6,434 | | |
| 18,144 | | |
| — | | |
| — | |
| |
| 2,125 | | |
| 1,062 | | |
| — | | |
| 38.20 | | |
3/03/2031 | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| 2,250 | | |
| 2,250 | | |
| — | | |
| 16.20 | | |
3/02/2032 | |
| — | | |
| — | | |
| — | | |
| — | |
Albert Weber (5) | |
| 10,500 | | |
| 7,875 | | |
| — | | |
| 21.60 | | |
1/03/2032 | |
| — | | |
| — | | |
| — | | |
| — | |
|
(1) |
The standard
vesting schedule for all stock option grants is vesting over four years with twenty-five percent (25%) vesting on the first anniversary
of the date of grant and six and one-quarter percent (6.25%) vesting on the last day of the next fiscal quarter over three years. |
|
(2) |
Calculated based on the closing
price of the common stock the Nasdaq Capital Market on December 31, 2022 (as adjusted for the 1-for-20 reverse stock split effected
on January 5, 2023) of $2.82 per share. |
|
(3) |
Mr. Schacht’s awards on
July 1, 2016 (479 shares) and July 1, 2019 (280 shares), were Curetis ESOP shares assumed by OpGen as part of the Business Combination.
These awards vest over three years with thirty three percent (33%) vesting on the first anniversary of the date of grant and one
twenty-fourth (4.2%) vesting monthly over the next two years. Mr. Schacht was granted stock option awards on September 30, 2020 (31,500)
which vest over four years with twenty-five percent (25%) vesting on the first anniversary of the date of grant and six and one-quarter
percent (6.25%) vesting on the quarterly anniversary of the first vesting date thereafter over the next three years. Mr. Schacht
was granted stock option awards on March 3, 2021 (3,875) which vest over two years with fifty (50%) vesting annually. Mr. Schacht
was granted restricted stock units on March 3, 2021 (3,875) which vest over two years with fifty (50%) vesting annually. Mr. Schacht
was granted stock option awards on March 2, 2022 (3,750) which vest over two years with fifty (50%) vesting annually. Mr. Schacht
was granted restricted stock units on March 2, 2022 (3,750) which vest over two years with fifty (50%) vesting annually. Mr. Schacht
received his 2021 non-equity incentive cash performance bonus in the form of restricted stock units on March 31, 2022 (12,470), which
vest on a one-year cliff. |
|
(4) |
Mr. Bacher’s awards on July
1, 2016 (479 shares) and July 1, 2019 (191 shares), were Curetis ESOP shares assumed by OpGen as part of the Business Combination.
These awards vest over three years with thirty three percent (33%) vesting on the first anniversary of the date of grant and one
twenty-fourth (4.2%) vesting monthly over the next two years. Mr. Bacher was granted stock option awards on September 30, 2020 (10,500)
which vest over four years with twenty-five percent (25%) vesting on the first anniversary of the date of grant and six and one-quarter
percent (6.25%) vesting on the quarterly anniversary of the first vesting date thereafter over the next three years. Mr. Bacher was
granted stock option awards on March 3, 2021 (2,125), which vest over two years with fifty (50%) vesting annually. Mr. Bacher was
granted restricted stock units on March 3, 2021 (2,125) which vest over two years with fifty (50%) vesting annually. Mr. Bacher was
granted stock option awards on March 2, 2022 (2,250) which vest over two years with fifty (50%) vesting annually. Mr. Bacher was
granted restricted stock units on March 2, 2022 (2,250) which vest over two years with fifty (50%) vesting annually. Mr. Bacher received
his 2021 bonus in the form of restricted stock units on March 31, 2022 (6,434), which vest on a one-year cliff. |
|
(5) |
Mr. Weber was granted stock option awards
on January 3, 2022 (10,500), which vest over four years in accordance with the terms of the Company’s 2015 Equity Incentive
Plan. |
Director Compensation
Our Board of Directors has adopted a non-employee
director compensation plan providing for certain cash and equity compensation to be provided to the Company’s non-employee directors
for their service on the Board and its committees. Pursuant to such plan, each non-employee director receives an annual cash retainer
of $25,000, or, with respect to the Chairman of the Board, $75,000, plus additional annual cash compensation for the Board and committee
chairs ($15,000 for Audit Committee and $12,000 for Compensation Committee) and for committee members ($7,000 for Audit Committee and
$6,000 for Compensation Committee). In addition, each new non-employee director receives an initial equity grant and each non-employee
director receives an annual equity grant. Under such program, each non-employee director receives an initial grant of 30,000 restricted
stock units and an annual grant to non-employee directors of 15,000 restricted stock units. All such awards are made under the 2015 Plan.
The annual equity award may be pro-rated in the first year of service depending on when the non-employee director joins the Board or
may be deferred until the following year.
Dr. Schacht does not receive additional
compensation for his service on the Board. See “Summary Compensation Table” for his 2022 compensation.
Compensation for the non-employee directors for the year ended
December 31, 2022 was:
Name | |
Fees
Earned or Paid
in Cash ($) | | |
Stock
Awards ($)(1) | | |
All
Other Compensation
($) | | |
Total
($) | |
Mario Crovetto(2) | |
$ | 45,500 | | |
$ | 8,550 | | |
$ | — | | |
$ | 54,050 | |
R. Donald Elsey(2) | |
$ | 40,000 | | |
$ | 8,550 | | |
$ | — | | |
$ | 48,550 | |
Dr. Prabhavathi Fernandes(2) | |
$ | 38,000 | | |
$ | 8,550 | | |
$ | — | | |
$ | 46,550 | |
William E. Rhodes, III(2) | |
$ | 90,500 | | |
$ | 8,550 | | |
$ | — | | |
$ | 99,050 | |
Yvonne Schlaeppi (2) | |
$ | 5,128 | | |
$ | 5,400 | | |
$ | — | | |
$ | 10,528 | |
|
(1) |
The “Stock Awards” column
reflects the grant date fair value for all restricted stock awards granted under the 2015 Stock Options Plan during 2022. These amounts
are determined in accordance with FASB Accounting Standards Codification 718 (ASC 718), without regard to any estimate of forfeiture
for service vesting. |
|
(2) |
As of December 31, 2022, the non-employee
directors held the following vested stock options (as adjusted for the 2023 Reverse Stock Split): Rhodes (2,667), Crovetto (2,667),
Elsey (2,500), Fernandes (2,667) and Schlaeppi (0) |
Compensation Risk Assessment
We believe that although a portion of the
compensation provided to our executive officers and other employees is performance-based, our executive compensation program does not
encourage excessive or unnecessary risk taking. This is primarily due to the fact that our compensation programs are designed to encourage
our executive officers and other employees to recognize and support both short-term and long-term strategic goals, in particular in connection
with our pay-for-performance compensation philosophy. As a result, we do not believe that our compensation programs are reasonably likely
to have a material adverse effect on us.
2008 Plan
Our 2008 Stock Option and Restricted Stock
Plan, as amended, or 2008 Plan, was approved by our Board and stockholders in April 2008; subsequent increases in the number of shares
available for awards under the 2008 Plan were approved by our Board and stockholders in January 2009, February 2011, March 2012, December
2012, April 2014 and October 2014. A total of 2,896 shares of our common stock are reserved for issuance under the 2008 Plan.
The 2008 Plan provided for the grant of
stock options and restricted stock awards. The Compensation Committee determined the time or times at which a stock option will vest
or become exercisable and the terms on which such option will remain exercisable. The Compensation Committee determined the conditions
and restrictions and purchase price, if any, for grants or sales or restricted stock to plan participants. The Compensation Committee
may also at any time accelerate the vesting or exercisability of an award.
Under the 2008 Plan, in the event of any
dissolution or liquidation of the Company, the sale of all or substantially all of the Company’s assets, or the merger or consolidation
of the Company where the Company is not the surviving entity or which results in the acquisition of all or substantially all of the Company’s
then outstanding common stock, the Compensation Committee may: (a) provide for the assumption or substitution of some or all of the outstanding
awards; (b) provide for a cash-out payment; or (c) in the case there is no assumption, substitution or cash-out, provide that all awards
not exercised or awards providing for the future delivery of common stock will terminate upon the closing of the transaction.
Following our 2015 Equity Incentive Plan,
or 2015 Plan, becoming effective, no further grants have been or will be made under our 2008 Plan.
2015 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 grants of restricted stock, restricted stock units,
stock appreciation rights, dividend equivalents and stock payments to employees, non-employee directors and consultants. The 2015 Plan
was amended by the Compensation Committee in February 2017 to revise the provisions with respect to net settlement of awards in response
to change in regulations, and to establish standard periods for exercise of vested stock options following termination of service events.
Administration. The Compensation
Committee administers the 2015 Plan, including the determination of the recipient of an award, the number of shares or amount of cash
subject to each award, whether an option is to be classified as an incentive stock option or non-qualified stock option, and the terms
and conditions of each award, including the exercise and purchase prices and the vesting and duration of the award. Our Board may appoint
one or more separate committees of our Board, each consisting of one or more members of our Board, to administer our 2015 Plan with respect
to employees who are not subject to Section 16 of the Exchange Act. Subject to applicable law, our Board may also authorize one or more
officers to designate employees, other than employees who are subject to Section 16 of the Exchange Act, to receive awards under our
2015 Plan and/or determine the number of such awards to be received by such employees subject to limits specified by our Board.
Authorized shares. Under our 2015
Plan, the aggregate number of shares of our common stock authorized for issuance may not exceed (1) 54,200 plus (2) the sum of the number
of shares subject to outstanding awards under the 2008 Plan as of the 2015 Plan’s effective date that are subsequently forfeited
or terminated for any reason before being exercised or settled, plus the number of shares subject to vesting restrictions under the 2008
Plan on the 2015 Plan’s effective date that are subsequently forfeited. In addition, the number of shares that have been authorized
for issuance under the 2015 Plan are automatically increased on the first day of each fiscal year beginning on January 1, 2016 and ending
on (and including) January 1, 2025, in an amount equal to the lesser of (i) 4% of the outstanding shares of our common stock on the last
day of the immediately preceding fiscal year, and (ii) another lesser amount determined by our Board. As of December 31, 2022, 66,101
shares remain available for future awards under the 2015 Plan.
Shares subject to awards granted under
the 2015 Plan that are forfeited or terminated before being exercised or settled, or are not delivered to the participant because such
award is settled in cash, will again become available for issuance under the 2015 Plan. However, shares that have actually been issued
shall not again become available unless forfeited. No more than 160,000 shares may be delivered upon the exercise of incentive stock
options granted under the 2015 Plan.
Types of Awards
Stock options. A stock option is
the right to purchase a certain number of shares of stock, at a certain exercise price, in the future. Under our 2015 Plan, incentive
stock options and non-qualified options must be granted with an exercise price of at least 100% of the fair market value of our common
stock on the date of grant. Incentive stock options granted to any holder of more than 10% of our voting shares must have an exercise
price of at least 110% of the fair market value of our common stock on the date of grant. The stock option agreement specifies the date
when all or any installment of the option is to become exercisable. Payment of the exercise price may be made in cash or, if provided
for in the stock option agreement evidencing the award, (1) by surrendering, or attesting to the ownership of, shares which have already
been owned by the optionee, (2) by delivery of an irrevocable direction to a securities broker to sell shares and to deliver all or part
of the sale proceeds to us in payment of the aggregate exercise price, (3) by a “net exercise” arrangement, or (4) by any
other form that is consistent with applicable laws, regulations and rules.
Restricted stock. Restricted stock
is a share award that may be subject to vesting conditioned upon continued service, the achievement of performance objectives or the
satisfaction of any other condition as specified in a restricted stock agreement. Participants who are granted restricted stock awards
generally have all of the rights of a stockholder with respect to such stock, other than the right to transfer such stock prior to vesting.
Restricted stock units. Restricted
stock units give recipients the right to acquire a specified number of shares of stock at a future date upon the satisfaction of certain
conditions, including any vesting arrangement, established by our Compensation Committee and as set forth in a restricted stock unit
agreement. Unlike restricted stock, the stock underlying restricted stock units will not be issued until the restricted stock units have
vested and are settled, and recipients of restricted stock units generally will have no voting or dividend rights prior to the time the
vesting conditions are satisfied and the award is settled.
Dividend equivalents. At our Compensation
Committee’s discretion, performance-based restricted stock or restricted stock unit awards may provide for the right to dividend
equivalents. Subject to the terms of the 2015 Plan, our Compensation Committee will determine the terms and conditions of any stock unit
award, which will be set forth in a stock unit agreement to be entered into between us and each recipient.
Stock appreciation rights. Stock
appreciation rights typically will provide for payments to the recipient based upon increases in the price of our common stock over the
exercise price of the stock appreciation right. The exercise price of a stock appreciation right will be determined by our Compensation
Committee, which shall not be less than the fair market value of our common stock on the date of grant. Our Compensation Committee may
elect to pay stock appreciation rights in cash or in common stock or in a combination of cash and common stock.
Performance-based awards. Awards
under our 2015 Plan may be made subject to the attainment of performance goals.
Other Plan Features
No Transfer. Unless the agreement
evidencing an award expressly provides otherwise, no award granted under the 2015 Plan may be transferred in any manner (prior to the
vesting and lapse of any and all restrictions applicable to shares issued under such award), other than by will or the laws of descent
and distribution, provided, however, that an incentive stock option may be transferred or assigned only to the extent consistent with
Section 422 of the Code.
Adjustments. In the event of a recapitalization,
stock split or similar capital transaction, our Compensation Committee will make appropriate and equitable adjustments to the number
of shares reserved for issuance under the 2015 Plan, the limitations regarding the total number of shares underlying awards given to
an individual participant in any calendar year, the number of shares that can be issued as incentive stock options, the number of shares
subject to outstanding awards and the exercise price under each outstanding option or stock appreciation right.
Change in Control. If we are involved
in a merger or other reorganization, outstanding awards will be subject to the agreement of merger or reorganization. Such agreement
will provide for (1) the continuation of the outstanding awards by us if we are the surviving corporation, (2) the assumption or substitution
of the outstanding awards by the surviving corporation or its parent or subsidiary, (3) immediate vesting, exercisability and settlement
of the outstanding awards followed by their cancellation, or (4) settlement of the intrinsic value of the outstanding awards (whether
or not vested or exercisable) in cash, cash equivalents, or equity (including cash or equity subject to deferred vesting and delivery
consistent with the vesting restrictions applicable to such award or the underlying shares) followed by cancellation of such awards.
Termination or Amendment. Our Board
may amend or terminate the 2015 Plan at any time, subject to stockholder approval where required by applicable law. Any amendment or
termination may not materially impair the rights of holders of outstanding awards without their consent. No incentive stock option may
be granted after the tenth anniversary of the date the 2015 Plan was adopted by our Board.
Effective Date. The 2015 Plan was
initially adopted by our Board and subsequently approved by our stockholders in April 2015. The 2015 Plan became effective on May 4,
2015. Awards may be granted under the 2015 Plan until April 1, 2025.
Amended and Restated Stock Option Plan
In connection with the consummation of
the Company’s business combination transaction with Curetis N.V., on April 1, 2021, the Company assumed and adopted the 2016 Stock
Option Plan, as amended, of Curetis N.V., the former parent company of Curetis GmbH. The Company assumed the 2016 Stock Option Plan as
the Amended and Restated Stock Option Plan of the Company (the “A&R Plan”). In connection with the foregoing, the Company
assumed all awards thereunder that were outstanding as of April 1, 2020 and converted such awards into options to purchase shares of
common stock of the Company pursuant to the terms of the applicable award.
The A&R Plan provides for the grant
of stock options, which are the right to purchase a certain number of shares of stock, at a certain exercise price, in the future. The
stock option agreement specifies the date when all or any installment of the option is to become exercisable. The Compensation Committee
administers the A&R Plan, including taking all actions required or advisable for the administration and proper implementation of
the A&R Plan; interpreting the A&R Plan unless specifically provided otherwise in the A&R Plan; and making all other decisions
necessary or advisable to enable the administration and proper implementation of the A&R Plan. Under the A&R Plan, the aggregate
number of shares of our common stock authorized for issuance shall not exceed 6,713. Following the assumption of the A&R Plan, no
further grants have been or will be made under the A&R Plan.
Under the A&R Plan, in the event of
a “change in control”, as defined in the A&R Plan, all the outstanding options will vest fully at the date of the change
in control. However, in the event of a change in control due to a sale, merger, sale of substantially all of the assets or consolidation
of the Company, all the outstanding options will be addressed in the applicable acquisition agreement. Such agreement may at the sole
discretion of the Compensation Committee and without the approval or the advice of the optionees being required, provide the following:
(1) the continuation of the outstanding options by the Company (if the Company is the company that continues to exist); (2) the take-over
of the A&R Plan and the outstanding options by the acquiring company or the company that continues to exist, or its parent company;
(3) the replacement of the outstanding options by new option rights with conditions that are equivalent to the conditions of the outstanding
options by the acquiring company or the company that continues to exist, or its parent company; or (4) the cancellation of each outstanding
option in return for payment to the optionee of an amount per option equal to the difference between the fair market value of the common
stock of the Company at the time of the closing under the purchase, merger, or consolidation agreement less the option price.
Except as expressly provided for under the A&R Plan, the
awards granted under the A&R Plan may not be sold, assigned, transferred, pledged, mortgaged or otherwise disposed of. The Compensation
Committee and the Board may alter, amend or terminate the Plan or any part thereof at any time and from time to time, provided, however,
that no such alteration or amendment shall adversely affect the rights relating to any options granted or shares acquired upon exercise
of options prior to that time.
2020 Stock Options Plan
The 2020 Stock Options Plan was approved
by stockholders at the 2020 Annual Meeting of Stockholders and were granted on the date thereof. The 2020 Stock Options were granted
with an exercise price equal to the fair market value of the common stock on the date of grant, or $42.40. No shares remain available
for future awards under the 2020 Stock Options Plan. The following sets forth the principal terms of, and constitutes, the 2020 Stock
Options Plan.
Administration. The Compensation
Committee will administer the 2020 Stock Options Plan, including, whether, for U.S. taxpayer employees, an option is to be classified
as an incentive stock option or non-qualified stock option.
Authorized shares. The aggregate
number of shares of our common stock authorized for issuance under the 2020 Stock Options Plan is 65,000 shares of common stock. Shares
subject to awards granted under the 2020 Stock Options Plan that are forfeited or terminated before being exercised will not be available
for re-issuance under the 2020 Stock Options Plan. No more than 500,000 shares may be delivered upon the exercise of incentive stock
options granted under the 2020 Stock Options Plan.
Stock options. A stock option is
the right to purchase a certain number of shares of stock, at a certain exercise price, in the future. Under our 2020 Stock Options Plan,
incentive stock options and non-qualified options must be granted with an exercise price of at least 100% of the fair market value of
our common stock on the date of grant. Incentive stock options granted to any holder of more than 10% of our voting shares must have
an exercise price of at least 110% of the fair market value of our common stock on the date of grant. The stock option agreement specifies
the date when all or any installment of the option is to become exercisable. For non-employee directors payment of the exercise price
must be made in cash. For executive officers, payment of the exercise price may be made in cash or, if provided for in the stock option
agreement evidencing the award, (1) by surrendering, or attesting to the ownership of, shares which have already been owned by the optionee,
(2) by delivery of an irrevocable direction to a securities broker to sell shares and to deliver all or part of the sale proceeds to
us in payment of the aggregate exercise price, (3) by a “net exercise” arrangement, or (4) by any other form that is consistent
with applicable laws, regulations and rules.
No Transfer. No award granted under
the 2020 Stock Options Plan may be transferred in any manner, other than by will or the laws of descent and distribution, provided, however,
that an incentive stock option may be transferred or assigned only to the extent consistent with Section 422 of the Code.
Adjustments. In the event of a recapitalization,
stock split or similar capital transaction, the Compensation Committee will make appropriate and equitable adjustments to the number
of shares reserved for issuance under the 2020 Stock Options Plan, the number of shares that can be issued as incentive stock options,
the number of shares subject to outstanding awards and the exercise price under each outstanding stock option.
Change in Control. If we are involved
in a merger or other reorganization, outstanding awards will be subject to the agreement of merger or reorganization. Such agreement
will provide for (1) the continuation of the outstanding awards by us if we are the surviving corporation, (2) the assumption or substitution
of the outstanding awards by the surviving corporation or its parent or subsidiary, (3) immediate vesting, exercisability and settlement
of the outstanding awards followed by their cancellation, or (4) settlement of the intrinsic value of the outstanding awards (whether
or not vested or exercisable) in cash, cash equivalents, or equity (including cash or equity subject to deferred vesting and delivery
consistent with the vesting restrictions applicable to such award or the underlying shares) followed by cancellation of such awards.
Termination or Amendment. The 2020
Stock Options Plan can be terminated by the Board of Directors or Compensation Committee at any time, and, subject to stockholder approval
where required by applicable law, can be amended. Any amendment or termination may not materially impair the rights of holders of outstanding
awards without their consent.
Effective Date. The 2020 Stock Options
Plan became effective upon approval by the stockholders at the 2020 Annual Meeting of Stockholders. The 2020 Stock Options Plan will
terminate upon the expiration or termination of the last outstanding award.
Awards to Non-Employee Directors. The
2020 Stock Options granted to the members of the Board have a one-year vesting schedule, vesting quarterly in equal installments on the
first day of each three month period as long as the director is providing services to the Company on each such vesting date. The term
of such stock options is ten (10) years after the date of grant; provided, however, that any unvested stock options will expire if the
director ceases providing services to the Company, and a departing director will have ninety (90) days to exercise vested stock options
after the director ceases providing services to the Company.
Awards to Executive Officers.
The 2020 Stock Options granted to the executive officers have a four year vesting schedule, vesting 25% on the first anniversary of the
date of grant and the remaining options vesting 6.25% on the quarterly anniversary of the first vesting date for a period of three years,
as long as the executive officer continues providing services to the Company on each such vesting date. The term of such stock options
is ten (10) years after the date of grant; provided, however, that any unvested stock options will expire if the executive officer ceases
providing services to the Company, and a departing officer will have ninety (90) days to exercise vested stock options after the executive
officer ceases providing services to the Company.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The number of shares of the Company’s common
stock outstanding at the close of business on December 31, 2022 was 2,899,925 shares (as adjusted for the 2023 Reverse Stock Split).
The following table sets forth the beneficial ownership of the Company’s common stock, as of December 31, 2022, by each Company
director and executive officer, and by all directors and executive officers as a group. Beneficial ownership is determined in accordance
with Rule 13d-3 under the Exchange Act. In computing the number of shares beneficially owned by a person or a group and the percentage
ownership of that person or group, shares of our common stock subject to options and warrants currently exercisable or exercisable within
60 days after December 31, 2022 are deemed outstanding, but are not deemed outstanding for the purpose of computing the percentage ownership
of any other person. To the knowledge of the directors and executive officers of the Company, as of December 31, 2022, there are no persons
and/or companies who or which beneficially own, directly or indirectly, shares representing more than 5% of the voting rights attached
to all outstanding shares of the Company, other than as set forth below. Unless otherwise indicated, the address of each beneficial owner
listed below is c/o OpGen, Inc., 9717 Key West Ave, Suite 100, Rockville, MD 20850.
Name and Address
of Beneficial Owner | |
Number
of Shares of common stock | | |
Percentage
Beneficially Owned | |
| |
| | |
| |
Directors and Named Executive Officers | |
| | | |
| | |
Johannes Bacher (1) | |
| 11,703 | | |
| * | |
Mario Crovetto (2) | |
| 3,418 | | |
| * | |
R. Donald Elsey (3) | |
| 3,325 | | |
| * | |
Prabhavathi Fernandes, Ph.D. (4) | |
| 3,418 | | |
| * | |
William E. Rhodes, III (5) | |
| 3,418 | | |
| * | |
Yvonne Schlaeppi | |
| — | | |
| * | |
Oliver Schacht, Ph.D. (6) | |
| 24,103 | | |
| * | |
Albert Weber (7) | |
| 2,625 | | |
| * | |
All current Directors and Executive Officers as a group (7 individuals) (8) | |
| 52,010 | | |
| 1.79 | % |
* Constitutes less than 1% of our outstanding
common stock.
|
(1) |
Consists of (i) 4,063 shares of common stock and (ii)
stock options to purchase 7,640 shares of common stock that are currently vested or that will become vested within 60 days. |
|
(2) |
Consists of (i) 750 shares of common stock and (ii) stock
options to purchase 2,668 shares of common stock that are currently vested or that will become vested within 60 days. |
|
(3) |
Consists of (i) 825 shares of common stock and (ii) stock
options to purchase 2,500 shares of common stock that are currently vested or that will become vested within 60 days. |
|
(4) |
Consists of (i) 750 shares of common stock and (ii) stock
options to purchase 2,668 shares of common stock that are currently vested or that will become vested within 60 days. |
|
(5) |
Consists of (i) 750 shares of common stock and (ii) stock
options to purchase 2,668 shares of common stock that are currently vested or that will become vested within 60 days. |
|
(6) |
Consists of (i) 3,437 shares of common stock, (ii) 250
shares of common stock owned by Mr. Schacht’s child, and (iii) stock options to purchase 20,416 shares of common stock that
are currently vested or that will become vested within 60 days. |
|
(7) |
Consists of stock options to purchase 2,625 shares of common stock
that are currently vested or that will become vested within 60 days. |
|
(8) |
See the beneficial ownership described
in footnotes (1) through (7). |
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than compensation arrangements described in this prospectus, there
were and are no transactions or series of similar transactions, during our last three fiscal years, to which we were a party or will be
a party, in which: (i) the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company's
total assets at year end for the past two completed fiscal years; and (ii) any of our directors, executive officers or holders of more
than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material
interest. Compensation arrangements for our directors and named executive officers are described elsewhere in this prospectus.
DIVIDEND
POLICY
We have never declared or paid cash dividends
on our common stock. We currently intend to retain our future earnings, if any, for use in our business and therefore do not anticipate
paying cash dividends in the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors
after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and
plans for expansion.
MARKET
AND INDUSTRY DATA
This prospectus and the documents incorporated
by reference in this prospectus contain market data and industry statistics that are based on independent industry publications and other
publicly available information. Although we believe that these sources are reliable, we do not guarantee the accuracy or completeness
of the information and we have not independently verified this information. Although we are not aware of any misstatements regarding
the market and industry data presented or incorporated by reference in this prospectus, these estimates involve risks and uncertainties
and are subject to change based on various factors, including those discussed in the section titled “Risk Factors” or incorporated
by reference herein, and any related free writing prospectus. Accordingly, investors should not place undue reliance on this information.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
We are offering up to 321,207 shares of our
common stock and pre-funded warrants to purchase up to 2,265,000 shares of our common stock along with Series A-1 warrants to purchase
up to 2,586,207 shares of common stock and Series A-2 warrants to purchase up to 2,586,207 shares of common stock. Each share of common
stock or pre-funded warrant is being sold together with a Series A-1 warrant to purchase one share of common stock and a Series A-2 warrant
to purchase one share of common stock. The shares of common stock or pre-funded warrants and accompanying warrants will be issued separately.
We are also registering the shares of common stock issuable from time to time upon exercise of the common warrants and pre-funded warrants
offered hereby.
Common Stock
The description of our common stock offered
by this prospectus is incorporated herein by reference to the description of such common stock included in our Annual Report on Form
10-K for the year ended December 31, 2021.
Common Warrants
The Company is also offering Series A-1 warrants to
purchase up to an aggregate of 2,586,207 shares of our common stock and Series A-2 warrants to purchase up to an aggregate of 2,586,207
shares of our common stock.
Each common warrant issued in this offering
represents the right to purchase up to one share of common stock at an initial exercise price of $2.65 per share. Each Series A-1 warrant
may be exercised, in cash or by a cashless exercise at the election of the holder at any time following the date of issuance and from
time to time thereafter through and including the five year anniversary of the initial exercise date. Each Series A-2 warrant may be exercised,
in cash or by a cashless exercise at the election of the holder at any time following the date of issuance and from time to time thereafter
through and including the eighteen month anniversary of the initial exercise date.
The common warrants will be exercisable
in whole or in part by delivering to the Company a completed instruction form for exercise and complying with the requirements for exercise
set forth in the common warrant. Payment of the exercise price may be made in cash or pursuant to a cashless exercise, in which case
the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in
the common warrants.
No Fractional Shares
No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the common warrants. As to any fraction of a share which the holder would otherwise
be entitled to purchase upon such exercise, the number of shares of common stock to be issued shall be rounded up to the nearest whole
number.
Failure to Timely Deliver Shares
If we fail to deliver to the holder a certificate
representing shares issuable upon exercise of a common warrant or to credit the holder’s balance account with Depository Trust
Company for such number of shares of common stock to which the holder is entitled upon the holder’s exercise of the common warrant,
in each case, by the delivery date set forth in the common warrant, and if after such date the holder is required by its broker to purchase
(in an open market transaction or otherwise) or the holder’s brokerage firm otherwise purchases, shares of common stock to deliver
in satisfaction of a sale by the holder of the warrant shares which the holder anticipated receiving upon such exercise, or a Buy-In,
then we shall (A) pay in cash to the holder the amount, if any, by which (x) the holder’s total purchase price (including brokerage
commissions, if any) for the shares of common stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of warrant
shares that we were required to deliver to the holder in connection with the exercise at issue, times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the option of the holder, either reinstate the portion of the
applicable warrant and equivalent number of warrant shares for which such exercise was not honored (in which case such exercise shall
be deemed rescinded) or deliver to the holder the number of shares of common stock that would have been issued had we timely complied
with our exercise and delivery obligations. In addition, if we fail to deliver to the holder any common stock pursuant to a validly-exercised
common warrant, we will be required to pay liquidated damages in the amount of $10 per trading day for each $1,000 of the shares of common
stock exercised but not delivered (and rising to $20 per trading day beginning the third trading day after the warrant share delivery
date) until such time the shares of common stock are delivered or the holder rescinds such exercise.
Exercise Limitation
In general, a holder will not have the
right to exercise any portion of a common warrant if the holder (together with its Attribution Parties (as defined in the common warrant))
would beneficially own in excess of 4.99% or 9.99%, at the election of the holder, of the number of shares of our common stock outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the common
warrant. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us,
provided that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase
or decrease will apply only to the holder providing such notice.
Cashless Exercise
If, at the time a holder exercises its warrants,
a registration statement registering the issuance of the shares of common stock underlying the warrants under the Securities Act, is
not then effective or available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be
made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise
(either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the warrant.
Adjustment for Stock Splits
The exercise price and the number of shares
of common stock purchasable upon the exercise of the common warrants are subject to adjustment upon the occurrence of specific events,
including sales of additional shares of common stock, stock dividends, stock splits, and combinations of our common stock.
Dividends or Distributions
If we declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of our common stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness
or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar
transaction) at any time after the issuance of the common warrants, then, in each such case, the holders of the common warrants shall
be entitled to participate in such distribution to the same extent that the holders would have participated therein if the holders had
held the number of shares of common stock acquirable upon complete exercise of the common warrants.
Purchase Rights
If we grant, issue or sell any shares of
our common stock or securities exercisable for, exchangeable for or convertible into our common stock, or rights to purchase stock, common
warrants, securities or other property pro rata to the record holders of any class of shares of our common stock, referred to as Purchase
Rights, then each holder of the common warrants will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the holder could have acquired if the holder had held the number of shares of common stock acquirable upon complete
exercise of the common warrants immediately before the record date, or, if no such record is taken, the date as of which the record holders
of shares of common stock are to be determined, for the grant, issue or sale of such Purchase Rights.
Fundamental Transaction
If a Fundamental Transaction (as defined
below) occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and power that we may
exercise and will assume all of our obligations under the common warrants with the same effect as if such successor entity had been named
in the common warrant itself. Additionally, upon consummation of a Fundamental Transaction pursuant to which holders of shares of our
common stock are entitled to receive securities or other assets with respect to or in exchange for shares of our common stock, we will
make appropriate provision to ensure that the holder will thereafter have the right to receive upon an exercise of the common warrants
at any time after the consummation of the Fundamental Transaction but prior to the applicable expiration date of the common warrants,
in lieu of shares of our common stock (or other securities, cash, assets or other property) purchasable upon the exercise of the common
warrant prior to such Fundamental Transaction, at the option of each holder (without regard to any limitation in the common warrant on
the exercise of the common warrants), the number of shares of common stock of the successor or acquiring corporation or of us, if we
are the surviving corporation, and any additional consideration which the holder would have been entitled to receive upon the happening
of such Fundamental Transaction had the common warrants been exercised immediately prior to such Fundamental Transaction.
If holders of our common stock are given
a choice as to the securities, cash or property to be received in a Fundamental Transaction, then the holder shall be given the same
choice as to the consideration it receives upon any exercise of the common warrants, following such Fundamental Transaction. These provisions
apply similarly and equally to successive Fundamental Transactions and other corporate events described in the common warrants and will
be applied without regard to any limitations on the exercise of the common warrants.
Transferability
Subject to applicable laws, the common warrants
may be offered for sale, sold, transferred or assigned. There is currently no trading market for the common warrants and a trading market
is not expected to develop.
Rights as a Stockholder
Except as otherwise provided in the common
warrants or by virtue of a holder’s ownership of shares of our common stock, the holders of the common warrants do not have the
rights or privileges of holders of our common stock, including any voting rights, unless and until they exercise their common warrants.
Amendments
The common warrants may be amended with
the written consent of the holder of such common warrant and us.
Listing
There is no established public trading market
for the common warrants, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the common warrants
on any national securities exchange.
Definitions
“Black Scholes Value” means
the value of the common warrants based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg,
L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing
purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal
to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the trading day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying
price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus
the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP
immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation
of such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the
applicable Fundamental Transaction and the Termination Date, and (E) a zero cost of borrow.
“Fundamental
Transaction” means (i) we, directly or indirectly, in one or more related transactions effect any merger or consolidation
with or into another Person, (ii) we or any subsidiary, directly or indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of our assets in one or a series of related transactions, (iii) any, direct
or indirect, purchase offer, tender offer or exchange offer (whether by us or another Person) is completed pursuant to which holders
of common stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by
the holders of 50% or more of the outstanding common stock or 50% or more of the voting power of the common equity, (iv) we, directly
or indirectly, in one or more related transactions effect any reclassification, reorganization or recapitalization of our common stock
or any compulsory share exchange pursuant to which our common stock is effectively converted into or exchanged for other securities,
cash or property, or (v) we, directly or indirectly, in one or more related transactions consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement)
with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of our common
stock or 50% or more of the voting power of the common equity.
Pre-Funded Warrants
The following summary of certain terms and
provisions of the pre-funded warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety
by, the provisions of the pre-funded warrant, the form of which is filed as an exhibit to the registration statement of which this prospectus
forms a part. Prospective investors should carefully review the terms and provisions of the form of pre-funded warrant for a complete
description of the terms and conditions of the pre-funded warrants.
Duration and Exercise
Price
Each pre-funded warrant offered hereby will
have an initial exercise price per share equal to $0.01. The pre-funded warrants will be immediately exercisable and may be exercised
at any time until the pre-funded warrants are exercised in full. The exercise price and number of shares of common stock issuable upon
exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting
our common stock and the exercise price.
Exercisability
Each pre-funded warrant may be exercised,
in cash or by a cashless exercise at the election of the holder at any time following the date of issuance and from time to time thereafter
until the pre-funded warrants are exercised in full. The pre-funded warrants will be exercisable in whole or in part by delivering to
the Company a completed instruction form for exercise and complying with the requirements for exercise set forth in the pre-funded warrant.
Payment of the exercise price may be made in cash or pursuant to a cashless exercise, in which case the holder would receive upon such
exercise the net number of shares of common stock determined according to the formula set forth in the pre-funded warrant.
Cashless Exercise
At the time a holder exercises its pre-funded
warrants, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise
price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock
determined according to a formula set forth in the pre-funded warrants.
Exercise Limitation
In general, a holder will not have the right
to exercise any portion of a pre-funded warrant if the holder (together with its Attribution Parties (as defined in the pre-funded warrant))
would beneficially own in excess of 4.99% or 9.99%, at the election of the holder, of the number of shares of our common stock outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded
warrant. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us,
provided, that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase
or decrease will apply only to the holder providing such notice.
Transferability
Subject to applicable laws, a pre-funded warrant
may be transferred at the option of the holder upon surrender of the pre-funded warrant to us together with the appropriate instruments
of transfer.
Fractional Shares
No fractional shares of common stock will
be issued upon the exercise of the pre-funded warrants. Rather, the number of shares of common stock to be issued will, at our election,
either be rounded up to the nearest whole number or we will pay a cash adjustment in respect of such final fraction in an amount equal
to such fraction multiplied by the exercise price.
Trading Market
There is no trading market available for the
pre-funded warrants on any securities exchange or nationally recognized trading system.
Right as a Stockholder
Except as otherwise provided in the pre-funded
warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the pre-funded warrants do not have
the rights or privileges of holders of our common stock, including any voting rights, until they exercise their pre-funded warrants.
Anti-Takeover Effects of Our Certificate of Incorporation, Bylaws
and Delaware Law
Our Certificate of Incorporation and Bylaws
include a number of provisions that may have the effect of delaying, deferring or preventing another party from acquiring control of
us and encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our Board of
Directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.
Meetings of Stockholders
Our Certificate of Incorporation and Bylaws
provide that only the Chair of the Board, the Chief Executive Officer or a majority of the members of our Board of Directors then in
office may call special meetings of stockholders and only those matters set forth in the notice of the special meeting may be considered
or acted upon at a special meeting of stockholders. Our Bylaws limit the business that may be conducted at an annual meeting of stockholders
to those matters properly brought before the meeting.
Advance Notice Requirements
Our Bylaws establish advance notice procedures
with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought
before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to
our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at
our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual
meeting for the preceding year. Our Bylaws specify the requirements as to form and content of all stockholders’ notices. These
requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting.
Exclusive Jurisdiction for Certain Actions
Our Certificate of Incorporation provides
that, once our common stock is a “covered security,” unless we consent in writing to the selection of an alternative forum,
the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought
on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees
to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law,
our certificate of incorporation or our bylaws, or (iv) any action asserting a claim against us governed by the internal affairs doctrine.
Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of
lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers. The enforceability
of similar exclusive forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings,
and it is possible that a court could rule that this provision in our certificate of incorporation is inapplicable or unenforceable.
In addition, this exclusive forum provision is intended to apply to claims arising under Delaware state law and would not apply to claims
brought pursuant to the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
To the extent the provision could be construed to apply to such claims, there is uncertainty as to whether a court would enforce the
provision in such respect, and our stockholders will not be deemed to have waived compliance with federal securities laws and the rules
and regulations thereunder.
Section 203 of the Delaware General Corporation Law
We are subject to the provisions of Section 203
of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in
a “business combination” with an “interested stockholder” for a three-year period following the time that this
stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. Under Section 203,
a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:
| · | before
the stockholder became interested, our Board of Directors approved either the business combination
or the transaction which resulted in the stockholder becoming an interested stockholder; |
| · | upon
consummation of the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of determining
the voting stock outstanding, shares owned by persons who are directors and also officers,
and employee stock plans, in some instances, but not the outstanding voting stock owned by
the interested stockholder; or |
| · | at
or after the time the stockholder became interested, the business combination was approved
by our Board of Directors and authorized at an annual or special meeting of the stockholders
by the affirmative vote of at least two-thirds of the outstanding voting stock which is not
owned by the interested stockholder. |
Section 203 defines
a business combination to include:
| · | any
merger or consolidation involving the corporation and the interested stockholder; |
| · | any
sale, transfer, lease, pledge or other disposition involving the interested stockholder of
10% or more of the assets of the corporation; |
| · | subject
to exceptions, any transaction that results in the issuance or transfer by the corporation
of any stock of the corporation to the interested stockholder; |
| · | subject
to exceptions, any transaction involving the corporation that has the effect of increasing
the proportionate share of the stock of any class or series of the corporation beneficially
owned by the interested stockholder; and |
| · | the
receipt by the interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. |
In general, Section 203 defines an interested
stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity
or person affiliated with or controlling or controlled by the entity or person.
Listing
Our common stock is listed on the Nasdaq Capital
Market under the symbol “OPGN.” There is no established public trading market for the pre-funded warrants or common warrants
to be sold in this offering, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the common
warrants or pre-funded warrants on any national securities exchange.
Transfer Agent and Registrar
The transfer agent and registrar for our common
stock is Pacific Stock Transfer, Inc. The transfer agent’s address is 6725 Via Austi Parkway, Suite 300, Las Vegas, Nevada 89119.
PLAN
OF DISTRIBUTION
We have engaged H.C. Wainwright
& Co., LLC, or the placement agent, to act as our exclusive placement agent to solicit offers to purchase the shares of our common
stock, pre-funded warrants and common warrants offered by this prospectus. The placement agent is not purchasing or selling any such
securities, nor is it required to arrange for the purchase and sale of any specific number or dollar amount of such securities, other
than to use its “reasonable best efforts” to arrange for the sale of such securities by us. Therefore, we may not sell all
of the shares of common stock, pre-funded warrants and common warrants being offered. The terms of this offering were subject to market
conditions and negotiations between us, the placement agent and prospective investors. The placement agent will have no authority to
bind us by virtue of the engagement letter. This is a best efforts offering and there is no minimum offering amount required as a condition
to the closing of this offering. The placement agent may retain sub-agents and selected dealers in connection with this offering. Investors
purchasing securities offered hereby will have the option to execute a securities purchase agreement with us. In addition to rights and
remedies available to all purchasers in this offering under federal securities and state law, the purchasers which enter into a securities
purchase agreement will also be able to bring claims of breach of contract against us. The ability to pursue a claim for breach of contract
is material to larger purchasers in this offering as a means to enforce the following covenants uniquely available to them under the
securities purchase agreement: (i) a covenant to not enter into variable rate financings for a period of one year following the closing
of the offering, subject to an exception; and (ii) a covenant to not enter into any equity financings for 60 days from closing of the
offering, subject to certain exceptions.
The nature of the representations,
warranties and covenants in the securities purchase agreements shall include:
| · | standard
issuer representations and warranties on matters such as organization, qualification, authorization,
no conflict, no governmental filings required, current in SEC filings, no litigation, labor
or other compliance issues, environmental, intellectual property and title matters and compliance
with various laws such as the Foreign Corrupt Practices Act; and |
| | |
| · | covenants
regarding matters such as registration of warrant shares, no integration with other offerings,
filing of an 8-K to disclose entering into these securities purchase agreements, no shareholder
rights plans, no material nonpublic information, use of proceeds, indemnification of purchasers,
reservation and listing of common stock, and no subsequent equity sales for 60 days. |
Delivery of the shares of common shares, pre-funded
warrants and common warrants offered hereby is expected to occur on or about January 11, 2023, subject to satisfaction of certain customary
closing conditions.
We have agreed to pay the placement agent an
aggregate fee equal to $450,000.02. In addition, we have agreed to reimburse the placement agent for its legal fees and expenses and other
out-of-pocket expenses in an amount up to $60,000 and clearing expenses of $15,950.
We estimate the total expenses of this offering
paid or payable by us, exclusive of the placement agent's cash fee of 6% of the gross proceeds and expenses, will be approximately $0.3
million. After deducting the fees due to the placement agent and our estimated expenses in connection with this offering, we expect the
net proceeds from this offering will be approximately $6.8 million.
The following table shows the per share and
total cash fees we will pay to the placement agent in connection with the sale of the common stock and shares of common stock underlying
the pre-funded warrants pursuant to this prospectus.
| |
Per Share and Common Warrants | | |
Per Pre-Funded Warrant and Common Warrant | | |
Total | |
Public offering price | |
$ | 2.90 | | |
$ | 2.89 | | |
$ | 7,500,000.30 | (1) |
Placement agent fees | |
$ | 0.174 | | |
$ | 0.174 | | |
$ | 450,000.02 | |
Proceeds, before expenses, to OpGen, Inc. | |
$ | 2.726 | | |
$ | 2.716 | | |
$ | 7,050,000.28 | |
| (1) | The total public offering price assumes the full exercise of the pre-funded warrants issued in the offering. |
Indemnification
We have agreed to indemnify the placement
agent against certain liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations
and warranties contained in our engagement letter with the placement agent. We have also agreed to contribute to payments the placement
agent may be required to make in respect of such liabilities.
Lock-up Agreements
We and each
of our officers and directors have agreed with the placement agent to be subject to a lock-up period of 60 days following the date of
closing of the offering pursuant to this prospectus. This means that, during the applicable lock-up period, we and such persons may not
offer for sale, contract to sell, sell, distribute, grant any option, right or warrant to purchase, pledge, hypothecate or otherwise
dispose of, directly or indirectly, any of our shares of common stock or any securities convertible into, or exercisable or exchangeable
for, shares of common stock, subject to customary exceptions. The placement agent may waive the terms of these lock-up agreements in
its sole discretion and without notice. In addition, we have agreed to not issue any securities that are subject to a price reset based
on the trading prices of our common stock or upon a specified or contingent event in the future or enter into any agreement to issue
securities at a future determined price for a period of one year following the closing date of this offering, subject to an exception.
The placement agent may waive this prohibition in its sole discretion and without notice.
Other Relationships
From time to time, the placement agent may
provide in the future various advisory, investment and commercial banking and other services to us in the ordinary course of business,
for which they have received and may continue to receive customary fees and commissions. However, except as disclosed in this prospectus,
we have no present arrangements with the placement agent for any further services. The placement agent is currently acting as sales agent
under our existing At the Market, or ATM, Offering, which commenced in June 2022, for which it receives compensation.
Regulation M Compliance
The placement agent may be deemed to be an
underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized
on the sale of our securities offered hereby by it while acting as principal might be deemed to be underwriting discounts or commissions
under the Securities Act. The placement agent will be required to comply with the requirements of the Securities Act and the Exchange
Act, including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing
of purchases and sales of our securities by the placement agent. Under these rules and regulations, the placement agent may not (i) engage
in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt to induce
any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed their participation
in the distribution.
Trading Market
Our common stock is listed
on the Nasdaq Capital Market under the symbol “OPGN.” There is no established public trading market for the pre-funded warrants
or common warrants to be sold in this offering, and we do not expect a market to develop. In addition, we do not intend to apply for
listing of the common warrants or pre-funded warrants on any national securities exchange.
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material
U.S. federal income tax consequences of the acquisition, ownership and disposition of our common stock and pre-funded warrants, but does
not purport to be a complete analysis of all the potential tax considerations relating thereto. Throughout this summary, all references
to our common stock are meant to include our pre-funded warrants. This summary is based upon the provisions of the Internal Revenue Code
of 1986, as amended, or the Code, Treasury Regulations promulgated thereunder, administrative rulings and judicial decisions, all as
of the date hereof. These authorities may be changed or subject to differing interpretations, possibly with retroactive effect, with
the resulting U.S. federal income tax consequences being different from those set forth below. We have not sought and will not seek any
ruling from the Internal Revenue Service, or the IRS, with respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.
This summary also does not address the tax
considerations arising under the laws of any U.S. state or local or any non-U.S. jurisdiction, estate or gift tax, the 3.8% Medicare
tax on net investment income or any alternative minimum tax consequences. In addition, this discussion does not address tax considerations
applicable to a holder’s particular circumstances or to a holder that may be subject to special tax rules, including, without limitation:
| · | banks,
insurance companies or other financial institutions; |
| · | tax-exempt
or government organizations; |
| · | brokers
or dealers in securities or currencies; |
| · | traders
in securities that elect to use a mark-to-market method of accounting for their securities
holdings; |
| · | persons
that own, or are deemed to own, more than 5.0% of our capital stock; |
| · | certain
U.S. expatriates, citizens or former long-term residents of the United States; |
| · | persons
who hold our common stock as a position in a hedging transaction, “straddle,”
“conversion transaction,” synthetic security, other integrated investment, or
other risk reduction transaction; |
| · | persons
who do not hold our common stock as a capital asset within the meaning of Section 1221 of
the Code (generally, for investment purposes); |
| · | persons
deemed to sell our common stock under the constructive sale provisions of the Code; |
| · | partnerships,
or other entities or arrangements treated as partnerships for U.S. federal income tax purposes,
or investors in any such entities; |
| · | persons
for whom our stock constitutes “qualified small business stock” within the meaning
of Section 1202 of the Code; |
| · | integral
parts or controlled entities of foreign sovereigns; |
| · | passive
foreign investment companies and corporations that accumulate earnings to avoid U.S. federal
income tax; or |
| · | persons
that acquire our common stock as compensation for services. |
In addition, if a partnership, including any
entity or arrangement classified as a partnership for U.S. federal income tax purposes, holds our common stock, the tax treatment of
a partner generally will depend on the status of the partner, the activities of the partnership, and certain determinations made at the
partner level. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors
regarding the U.S. federal income tax consequences to them of the purchase, ownership, and disposition of our common stock.
You are urged to consult your tax advisor
with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of
the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws
of any U.S. state or local or any non-U.S. or other taxing jurisdiction or under any applicable tax treaty.
Definition of a U.S. Holder
For purposes of this summary, a “U.S.
Holder” is any beneficial owner of our common stock that is a “U.S. person,” and is not a partnership, or an entity
treated as a partnership or disregarded from its owner, each for U.S. federal income tax purposes. A U.S. person is any person that,
for U.S. federal income tax purposes, is or is treated as any of the following:
| · | an
individual who is a citizen or resident of the United States; |
| · | a
corporation created or organized under the laws of the United States, any state thereof,
or the District of Columbia; |
| · | an
estate, the income of which is subject to U.S. federal income tax regardless of its source;
or |
| · | a
trust that (1) is subject to the primary supervision of a U.S. court and the control of one
or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code), or (2) has
a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes. |
For purposes of this summary, a “Non-U.S.
Holder” is any beneficial owner of our common stock that is not a U.S. Holder or a partnership, or other entity treated as a partnership
or disregarded from its owner, each for U.S. federal income tax purposes.
Tax Consequences to U.S. Holders
Distributions on Common Stock
As discussed above under “Dividend Policy,”
we do not currently expect to make distributions on our common stock. In the event that we do make distributions of cash or other property,
distributions paid on common stock, other than certain pro rata distributions of common stock, will be treated as a dividend to the extent
paid out of our current or accumulated earnings and profits, if any, and will be includible in income by the U.S. Holder and taxable
as ordinary income when received. If a distribution exceeds our current and accumulated earnings and profits, the excess will be first
treated as a tax-free return of the U.S. Holder’s investment, up to the U.S. Holder’s tax basis in the common stock. Any
remaining excess will be treated as a capital gain. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders
may be eligible for taxation as “qualified dividend income” and therefore may be taxable at rates applicable to long-term
capital gains. U.S. Holders should consult their tax advisers regarding the availability of the reduced tax rate on dividends in their
particular circumstances. Dividends received by a corporate U.S. Holder will be eligible for the dividends-received deduction if the
U.S. Holder meets certain holding period and other applicable requirements.
Sale or Other Disposition of Common
Stock
For U.S. federal income tax purposes, gain
or loss realized on the sale or other disposition of common stock will be capital gain or loss, and will be long-term capital gain or
loss if the U.S. Holder held the common stock for more than one year. The amount of the gain or loss will equal the difference between
the U.S. Holder’s tax basis in the common stock disposed of and the amount realized on the disposition. Long-term capital gains
recognized by non-corporate U.S. Holders will be subject to reduced tax rates. The deductibility of capital losses is subject to limitations.
Treatment
of Pre-Funded Warrants
Although it is not entirely
free from doubt, we believe a pre-funded warrant should be treated as common stock for U.S. federal income tax purposes and a holder
of pre-funded warrants should generally be taxed in the same manner as a holder of our common stock, as described below. Accordingly,
no gain or loss should be recognized upon the exercise of a pre-funded warrant and, upon exercise, the holding period of a pre-funded
warrant should carry over to the common stock received. Similarly, the tax basis of the pre-funded warrant should carry over to the common
stock received upon exercise, increased by the exercise price of $0.01 per share. However, our characterization of
a pre-funded warrant is not binding on the IRS, and the IRS may treat our pre-funded warrants as
warrants to acquire our common stock. If so, the amount and character of your gain with respect to an investment in our pre-funded
warrants could change. Accordingly, each holder should consult his, her or its own tax advisor regarding
the risks associated with the acquisition of pre-funded warrants pursuant to this offering (including potential alternative characterizations).
The balance of this discussion generally assumes that our characterization described above is respected for U.S. federal income tax purposes.
Tax Consequences to Non-U.S. Holders
Distributions
As discussed in the section entitled “Dividend
Policy,” we do not anticipate paying any dividends on our common stock in the foreseeable future. If we make distributions on our
common, those payments will constitute dividends for U.S. federal income tax purposes to the extent we have current or accumulated earnings
and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our
accumulated earnings and profits, they will constitute a return of capital and will first reduce a Non-U.S. Holder’s basis in our
common stock, as applicable, but not below zero. Any excess will be treated as capital gain and will be treated as described below under
the “—Gain on Sale or Other Disposition of Common Stock” section. Any such distributions would be subject to the discussions
below regarding back-up withholding and the Foreign Account Tax Compliance Act, or FATCA.
Subject to the discussion below on effectively
connected income, any dividend paid to a Non-U.S. Holder generally will be subject to U.S. withholding tax either at a rate of 30% of
the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. To receive a reduced treaty
rate, a Non-U.S. Holder must provide us or our agent with an IRS Form W-8BEN (generally including a U.S. taxpayer identification number),
IRS Form W-8 BEN-E or another appropriate version of IRS Form W-8 (or a successor form), which must be updated periodically, and which,
in each case, must certify qualification for the reduced treaty rate. Non-U.S. Holders should consult their tax advisors regarding their
entitlement to benefits under any applicable income tax treaty.
Dividends paid to a Non-U.S. Holder that are
effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States and that are not eligible
for relief from U.S. (net basis) income tax under an applicable income tax treaty, generally are exempt from the (gross basis) withholding
tax described above. To obtain this exemption from withholding tax, the Non-U.S. Holder must provide the applicable withholding agent
with an IRS Form W-8ECI or successor form or other applicable IRS Form W-8 certifying that the dividends are effectively connected with
the Non-U.S. Holder’s conduct of a trade or business within the United States. Such effectively connected dividends, if not eligible
for relief under a tax treaty, would not be subject to a withholding tax, but would be taxed at the same graduated rates applicable to
U.S. persons, net of certain deductions and credits and if, in addition, the Non-U.S. Holder is a corporation, may also be subject to
a branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).
If you are eligible for a reduced rate of
withholding tax pursuant to a tax treaty, you may be able to obtain a refund of any excess amounts withheld if you timely file an appropriate
claim for refund with the IRS.
Gain on Sale or Other Disposition of
Common Stock
Subject to the discussion below regarding
backup withholding and FATCA, a Non-U.S. Holder generally will not be required to pay U.S. federal income tax on any gain realized upon
the sale or other disposition of our common stock unless:
| · | the
gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business
within the United States and not eligible for relief under an applicable income tax treaty,
in which case the Non-U.S. Holder will be required to pay tax on the net gain derived from
the sale under regular graduated U.S. federal income tax rates, and for a Non-U.S. Holder
that is a corporation, such Non-U.S. Holder may be subject to the branch profits tax at a
30% rate (or such lower rate as may be specified by an applicable income tax treaty) on such
effectively connected gain, as adjusted for certain items; |
| · | the
Non-U.S. Holder is an individual who is present in the United States for a period or periods
aggregating 183 days or more during the calendar year in which the sale or disposition occurs
and certain other conditions are met, in which case the Non-U.S. Holder will be required
to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S.
source capital losses (even though the Non-U.S. Holder is not considered a resident of the
United States) (subject to applicable income tax or other treaties); or |
| · | we
are a “U.S. real property holding corporation” for U.S. federal income tax purposes,
or a USRPHC, at any time within the shorter of the five-year period preceding the disposition
or the Non-U.S. Holder’s holding period for our common stock. We believe we are not
currently and do not anticipate becoming a USRPHC. However, because the determination of
whether we are a USRPHC depends on the fair market value of our United States real property
interests relative to the fair market value of our other business assets, there can be no
assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however,
gain arising from the sale or other taxable disposition by a Non-U.S. Holder of our common
stock will not be subject to United States federal income tax if (a) shares of our common
stock are “regularly traded,” as defined by applicable Treasury Regulations,
on an established securities market, such as Nasdaq, and (b) the Non-U.S. Holder owns or
owned, actually and constructively, 5% or less of the shares of our common stock throughout
the five-year period ending on the date of the sale or exchange. If the foregoing exception
does not apply, such Non-U.S. Holder’s proceeds received on the disposition of shares
will generally be subject to withholding at a rate of 15% and such Non-U.S. Holder will generally
be taxed on any gain in the same manner as gain that is effectively connected with the conduct
of a U.S. trade or business, except that the branch profits tax generally will not apply. |
Information Reporting and Backup Withholding
Information returns may be filed with the
IRS in connection with distributions on common, and the proceeds of a sale or other disposition of common stock. A non-exempt U.S. Holder
may be subject to U.S. backup withholding on these payments if it fails to provide its taxpayer identification number to the withholding
agent and comply with certification procedures or otherwise establish an exemption from backup withholding.
A Non-U.S. Holder may be subject to U.S. information
reporting and backup withholding on these payments unless the Non-U.S. Holder complies with certification procedures to establish that
it is not a U.S. person (within the meaning of the Code). The certification requirements generally will be satisfied if the Non-U.S.
Holder provides the applicable withholding agent with a statement on the applicable IRS Form (or a suitable substitute or successor form),
together with all appropriate attachments, signed under penalties of perjury, stating, among other things, that such Non-U.S. Holder
is not a U.S. Person. Applicable Treasury Regulations provide alternative methods for satisfying this requirement. In addition, the amount
of distributions on common stock paid to a Non-U.S. Holder, and the amount of any U.S. federal tax withheld therefrom, must be reported
annually to the IRS and the holder. This information may be made available by the IRS under the provisions of an applicable tax treaty
or agreement to the tax authorities of the country in which the Non-U.S. Holder resides.
Payment of the proceeds of the sale or other
disposition of common stock to or through a non-U.S. office of a U.S. broker or of a non-U.S. broker with certain specified U.S. connections
generally will be subject to information reporting requirements, but not backup withholding, unless the Non-U.S. Holder certifies under
penalties of perjury that it is not a U.S. person or an exemption otherwise applies. Payments of the proceeds of a sale or other disposition
of common stock to or through a U.S. office of a broker generally will be subject to information reporting and backup withholding, unless
the Non-U.S. Holder certifies under penalties of perjury that it is not a U.S. person or otherwise establishes an exemption.
Backup withholding is not an additional tax.
The amount of any backup withholding from a payment generally will be allowed as a credit against the holder’s U.S. federal income
tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS.
Foreign Accounts
The Code generally imposes a U.S. federal
withholding tax of 30% on dividends and, subject to the discussion below regarding proposed regulations recently issued by the U.S. Treasury
Department, the gross proceeds of a disposition of our securities paid to a “foreign financial institution” (as specifically
defined for this purpose), unless such institution enters into an agreement with the U.S. government to, among other things, withhold
on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of
such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign
entities with U.S. owners) or otherwise qualifies for an exemption from these rules. A U.S. federal withholding tax of 30% also applies
to dividends and, subject to the discussion below regarding proposed regulations recently issued by the U.S. Treasury Department, will
apply to the gross proceeds of a disposition of our securities paid to a non-financial foreign entity (as defined in the Code), unless
such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect. “United
States owners” (as defined in the Code), provides information regarding each substantial United States owners of the entity, or
otherwise qualifies for an exemption from these rules.
Under certain circumstances, a non-U.S. holder
might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and an applicable foreign
country may modify the requirements described in this paragraph.
The U.S. Treasury Department released proposed
regulations which, if finalized in their present form, would eliminate the federal withholding tax of 30% applicable to the gross proceeds
of a sale or other disposition of our common stock. In its preamble to such proposed regulations, the U.S. Treasury Department stated
that taxpayers may generally rely on the proposed regulations until final regulations are issued. Prospective investors should consult
their own tax advisors regarding the possible impact of these rules on their investment in our common stock, and the possible impact
of these rules and the proposed regulations on the entities through which they hold our common stock, including, without limitation,
the process and deadlines for meeting the applicable requirements to prevent the imposition of this 30% withholding tax.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS
TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING
OF OUR SECURITIES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS. IN ADDITION, SIGNIFICANT CHANGES IN U.S. FEDERAL
TAX LAWS WERE RECENTLY ENACTED. PROSPECTIVE INVESTORS SHOULD ALSO CONSULT WITH THEIR TAX ADVISORS WITH RESPECT TO SUCH CHANGES IN U.S.
TAX LAW AS WELL AS POTENTIAL CONFORMING CHANGES IN STATE TAX LAWS.
LEGAL
MATTERS
The validity of the securities being offered
hereby will be passed upon Ballard Spahr LLP, Philadelphia, Pennsylvania. Certain legal matters will be passed upon for the placement
agent by Ellenoff Grossman & Schole LLP, New York, New York.
EXPERTS
The consolidated financial statements of OpGen,
Inc. and its subsidiaries as of December 31, 2021 and 2020, and for the years then ended, have been incorporated by reference herein
in reliance upon the report, also incorporated by reference herein, of CohnReznick LLP, an independent registered public accounting firm,
and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 2021 consolidated
financial statements contains an explanatory paragraph that states that the Company has experienced losses and negative cash flows from
operations since its inception, has an accumulated deficit, and has debt obligations coming due which collectively raise substantial
doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We filed with the SEC a registration statement
under the Securities Act of 1933 for the securities offered by this prospectus. This prospectus does not contain all of the information
in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information
with respect to us and our securities, we refer you to the registration statement and the exhibits and schedule that were filed with
the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is
filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or
other document filed as an exhibit to the registration statement. The SEC maintains a website that contains reports, proxy and information
statements, and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.
We file periodic reports under the Securities
Exchange Act of 1934, including annual, quarterly and special reports, and other information with the Securities and Exchange Commission.
These periodic reports and other information are available for inspection and copying at the SEC regional offices, public reference facilities
and on the website of the SEC referred to above.
We make available free of charge on or through
our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC. The information found on our website, www.opgen.com, other
than as specifically incorporated by reference in this prospectus, is not part of this prospectus.
INCORPORATION
BY REFERENCE
The SEC allows us to “incorporate by
reference” in this prospectus the information in other documents that we file with it, which means that we can disclose important
information to you by referring you to those documents containing such information. This prospectus is part of a registration statement
we filed with the SEC. You should rely on the information incorporated by reference in this prospectus and the registration statement.
The information incorporated by reference is considered to be part of this prospectus and information we file later with the SEC will
automatically update and supersede this information and information contained in documents filed earlier with the SEC. We incorporate
by reference the documents listed below, any filings made with the SEC after the date of the initial registration statement and prior
to effectiveness of the registration statement, and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the termination of the offering; provided, that we are not incorporating by reference any documents or information
deemed to have been furnished and not filed in accordance with SEC rules. The documents we are incorporating by reference are:
| · | our
Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March
30, 2022; |
| · | our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, filed with the SEC
on May 13, 2022, June 30, 2022, filed with the SEC on August 12, 2022, and September 30,
2022, filed with the SEC on November 14, 2022; |
| · | our
Current Reports on Form 8-K, filed with the Commission on March
3, 2022 (Item 3.01), April
25, 2022 (Items 8.01 and 9.01), May
24, 2022 (Items 1.01, 2.03 and 9.01), June
9, 2022 (Item 5.07), June
24, 2022 (Items 1.01, 1.02 and 9.01), August
31, 2022 (Items 3.01, 8.01 and 9.01), September
20, 2022 (Item 8.01 and 9.01), October
3, 2022 (Items 1.01, 3.02, 3.03, 5.03, 8.01 and 9.01), November
10, 2022 (but only with respect to Item 5.02 and not Item 2.02 or 9.01), and November
30, 2022 (Item 5.07), December
13, 2022 (Items 8.01 and 9.01), and January
4, 2023 (Items 3.03, 5.03, 8.01 and 9.01). |
| · | our
Definitive Proxy Statement for the Company’s 2022 Annual Meeting of Stockholders filed
with the Commission on April 25, 2022; and |
| · | the
description of our common stock contained in the Registration Statement on Form 8-A filed
on April 30, 2015 and any amendments to such Registration Statement filed subsequently thereto,
including all amendments or reports filed for the purpose of updating such description. |
We will furnish to you, on written or oral
request, a copy of any or all of the documents that have been incorporated by reference, including exhibits to these documents. You may
request a copy of these filings at no cost by writing or telephoning our Secretary at the following address and telephone number:
OpGen, Inc.
9717 Key West Avenue, Suite 100
Rockville, MD 20850
Attention: Albert Weber, Corporate Secretary
Telephone No.: (301) 869-9683
321,207 Shares of Common Stock
2,586,207 Series A-1 Warrants to Purchase up to
2,586,207 Shares of Common Stock
2,586,207 Series A-2 Warrants to Purchase up to
2,586,207 Shares of Common Stock
2,265,000 Pre-Funded Warrants to Purchase up to
2,265,000 Shares of Common Stock
7,437,414 Shares of Common Stock Underlying the
Pre-Funded Warrants and Common Warrants
prospectus
H.C. Wainwright & Co.
January 6, 2023
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