OpGen, Inc. (NASDAQ:OPGN) Q4 2021 Earnings Conference Call March 29, 2022 4:30 PM ET
Company Participants
Joe Green – Investor Relations
Oliver Schacht – President and Chief Executive Officer
Albert Weber – Chief Financial Officer
Conference Call Participants
Yi Chen – H.C. Wainwright
Ben Haynor – Alliance Global Partners
Nidhi Singh – Edison Group
Operator
Welcome to the OpGen Fourth Quarter and Full Year 2021 Earnings Call and Business Update. Today, OpGen Management will provide an update on the company’s current business and outlook for the future. [Operator Instructions] As a reminder, this conference call is being recorded today, March 29, 2022.
At this time, we would like to turn the call over to Joe Green, OpGen’s IR representative to provide the opening remarks.
Joe Green
Thank you, operator, and good afternoon. Before we begin, some important information. Any comments made by management during this conference call may contain forward-looking statements regarding the operations of and future results of OpGen, including its subsidiaries, Curetis and Ares Genetics. I encourage you to review OpGen’s filings with the Securities and Exchange Commission, including, without limitation, the company’s most recent Form 10-K for fiscal year 2021 that will be filed with the SEC, which will identify the specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Factors that may affect the company’s results include, but are not limited to, our ability to continue to successfully achieve the expected synergies from the company’s completed business combination with Curetis and to implement our commercial strategy, the impact of the continuing global COVID-19 pandemic on our business and operations, our use of proceeds from recent financings as well as our ability to access additional financing in the future, our ability to satisfy our debt obligations under our loan with the European Investment Bank, the rate of adoption of our products and services by hospitals and other healthcare providers in general as well as during the current COVID-19 pandemic, and geopolitical situation, in particular, the effect of the military action in Russia and Ukraine on our distributors, collaborators and service providers, the success of our commercialization efforts and partnering strategy, the effects on our business of existing and new regulatory requirements and other economic and competitive factors.
The content for this conference call contains time-sensitive information that is accurate only as of the date of this live call, March 29, 2022. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law.
Joining the call today are Oliver Schacht, OpGen’s President and CEO; and Albert Weber, its CFO. Now I’ll turn the call over to Oliver for introductory remarks and his report.
Oliver Schacht
Thank you, Joe, and thank you, everyone, for joining us this afternoon. Glad to be sitting here with our CFO, Albert and reporting on our progress. 2021 was a year filled with progress, and we look forward to highlighting our milestones and achievements throughout this call.
As you know, OpGen, along with its subsidiaries, is committed to improving patient care and fighting antimicrobial resistance or AMR through cutting-edge molecular microbiology. We’re developing and commercializing molecular solutions and diagnostic tests to help guide clinician’s treatment decisions and improve patient outcomes with more rapid and actionable information about life-threatening infections. We’ve made great progress with our diversified portfolio of products and strategic partnerships, which contribute to our positive outlook for 2022.
Today, I’ll begin with recent updates on our product and R&D pipeline. Albert will then review Q4 and full year 2021 financial highlights. Last, I will preview OpGen’s upcoming milestones and catalysts. We’ll also make sure we’ll leave some time for a Q&A session.
We started off the fourth quarter with multiple achievements and updates, which I will discuss in detail. Within the first few days of Q4, we announced the 510(k) clearance by the FDA to market our comprehensive molecular diagnostic product, the Acuitas AMR Gene Panel. The Acuitas AMR Gene Panel accurately detects 28 genetic antimicrobial resistance marker in isolated bacterial colonies from 26 different pathogens. The panel provides clinicians with a way to rapidly and simultaneously test for and identify whether an organism is resistant or vulnerable to selected drugs in nine classes of antibiotics.
OpGen’s AMR panel can detect antibiotic resistance markers in about 2.5 hours compared to one to four days required with classic phenotypic methods. We believe our Acuitas AMR Gene Panel is the first FDA-cleared molecular diagnostic test kit to detect such a broad number of AMR markers from bacteria, isolated from any patient specimen. We believe that the Acuitas AMR Gene Panel is an essential and indispensable tool to strengthen effective antibiotic stewardship. We see our product is helping to improve infection control and prevention by helping guide doctors to better target antimicrobial therapy, thus improving patient outcomes.
We initiated the commercial launch and rollout of the Acuitas AMR Gene Panel in October of 2021. As stated in our Q3 2021 earnings call, we anticipate the sales cycle for a novel molecular diagnostic test like the AMR panel to be in the six to 12 month range. As of today, we’re actively engaged in numerous conversations about the Acuitas AMR Gene Panel with large academic centers, state reference labs and other large, well-equipped hospital labs across the country. We have a healthy and growing funnel of several dozen active opportunities that we’re working on. And we have recently provided commercial agreements to several potential accounts in the Northeast and Midwest.
These proposals, which remain subject to final negotiations, ranging size from smaller scale initial test volumes of about 100 to 200 tests this year at some sites, relating to expected revenue in the couple of tens of thousands of dollars, all the way to high-volume opportunities for as many as 1,000 Acuitas AMR Gene Panel’s tests for a full year once implementation has been completed. Such accounts could then turn into annual revenue-generating opportunities in the $100,000 to $150,000 range.
The second milestone we announced in October was the commercial launch of AREScloud by our Austrian subsidiary, Ares Genetics. AREScloud is a simple web-based application available under a subscription model that fully automates data processing to accelerate the analysis of sequenced clinical isolates. The software not only processes data, but also provides insights into clinically and epidemiologically relevant data to researchers around the globe. This includes information on pathogen identity, genotype, virulence, plasmids and AMR. Powered by Amazon Web Services and using our state-of-the-art AI-powered algorithms and machine learning, this Ares cloud-based platform offers researchers the opportunity to interrogate their own next-generation sequencing or NGS data against the ARESdb, enabling, for instance, the prediction of antibiograms directly from pathogen genome data.
Our first AREScloud software subscription deals have already been signed in 2022. Ares Genetics is actively working with clinical expert users. It is collaborating with two major U.S. hospitals to conduct independent studies to evaluate the platform for routine clinical use and for outbreak analysis. Further collaboration agreements with clinical and public health partners in several additional countries are currently underway.
In November of 2021, Ares Genetics brands are permanent unrestricted and nonexclusive axis for a small subset of its proprietary ARESdb data asset to an unnamed global corporation and leader in microbiology and infectious disease diagnostics. ARESdb is a growing and continuously curated AMR database of genetic AMR markers as well as data sets from by now more than 78,000 bacterial isolates. The unnamed IVD Corporation paid Ares Genetics in excess of $600,000 for the data transfer and data access fee to approximately 1.1% of ARESdb’s then current total content.
Under this agreement, the partner furthermore has the option to purchase at the same price per sample that we agreed upon in November 2021, additional data sets as they may become available in 2022. Such additional samples and data sets could potentially become available to Ares as part of its involvement in the large prospective multicenter U.S. clinical trial for the Unyvero UTI, that’s the urinary tract infection panel.
This transaction is yet another example of Ares Genetics growing commercial traction. It adds to Ares Genetics list of global commercialization partnerships, which already include companies such as Sandoz, with whom Ares recently expanded and extended its strategic collaboration until January of 2025 and QIAGEN to name a few. Rounding out to 2021, Ares Genetics announced the strategic expansion of ARESdb proprietary content. After successfully completing the first phase of its collaboration with a leading U.S. CRO and reference lab, Ares has now entered the second phase of this collaboration. This phase will provide access to up to 1,000 specifically chosen proprietary clinical isolates from key pathogens.
Ares plans to further increase the value of ARESdb and expand its content through strategic collaborations with external partners and supporting clinical trials conducted by OpGen. In 2021 and year-to-date in 2022, ARESdb content has grown by more than 40%, and we expect this percentage to continuously expand. As mentioned on our previous earnings call, Albert Weber joined OpGen in January of 2022 as our Chief Financial Officer and Managing Director of OpGen’s subsidiary, Curetis GmbH. Albert has more than 30 years of experience in accounting, controlling and corporate finance, and has hands on operational experience in the United States, Europe and China. He’s been a great addition to the team.
With that introduction, I turn today’s update over to Albert. He will review financial results for the fourth quarter and full year 2021 and recent financial developments of our business. Albert?
Albert Weber
Thank you, Oliver, and welcome to everyone on the call. I will touch briefly on the Q4 2021 highlights, review the full year 2021 financial results, update you on our balance sheet position and conclude with some thoughts on guidance.
To begin, we would like to discuss the closing of a $50 million registered direct offering, which OpGen successfully completed in October 2021. The offering was with a panel of U.S.-based healthcare-focused institutional investor. It consisted of 150,000 shares of convertible preferred stock and warrants to purchase up to an aggregate of 7.5 million shares of common stock. The shares of preferred stock had a standard value of $100 per share and were convertible into an aggregate of 7.5 million shares of common stock at a conversion price of $2 per share at any time after the company received shareholder approval to increase the number of authorized shares of the company’s common stock from 50 million to 100 million shares.
The company received shareholder approval at a special meeting of stockholders on December 8, 2021, with very strong support from its shareholders. Following the stockholder meeting in December, all preferred shares were converted into shares of common stock in December 2021, and as of December 31, 2021, the company’s outstanding shares consisted of approximately 46.5 million shares of common stock and no shares of preferred stock remain outstanding. The gross proceeds from the offering were $50 million before deducting placement agent fees and other offering expenses.
The company currently intends to use the net proceeds from the offering for the commercialization of the company’s FDA-cleared Acuitas AMR Gene Panel, the further development and international commercialization of its Unyvero platform, the further development and expansion of the Ares Genetics database and bioinformatic solutions as well as laboratory service offerings, the repayment of certain outstanding indebtedness to the European Investment Bank, and for other general corporate purposes.
We are excited to highlight our positive revenue growth in 2021. For the fourth quarter of 2021, revenue was $1.4 million, a 5% increase from the fourth quarter of 2020. Total revenue for 2021 was $4.3 million, a 2% increase from the previous year. This increase is largely attributable to stronger Unyvero product sales in the U.S. and globally, which counteracted the discontinuation of the legacy FISH diagnostics product line, which was discontinued in early 2021. During 2020, the latest FISH business has contributed $1.5 million to full year 2020 revenue compared to a mere $173,000 in all of 2021, given the exit from the FISH business in early 2021. Additionally, the onetime Ares data asset sales positively contributed to our 2021 product revenue.
Laboratory service revenues saw a very strong increase over prior year, mainly attributable to an increase in COVID testing services provided by Curetis, as well as Ares services rendered to researchers from its Vienna, Austria-based NGS lab. Collaboration revenue declined in 2021 due to the conclusion of a nonrecurring R&D collaboration project with an IVD partner at Ares Genetics in 2020 and the completion of the New York State Department of Health Project at the end of September 2021.
Looking at our operating expenses. Our total operating expenses for 2021 was $27.6 million, compared to $26.9 million in 2020. It is important to remember that with the OpGen, Curetis business combination closing on April 1, 2020, the full year 2020 numbers include only nine months of Curetis and Ares, whereas the 2021 numbers includes the full year of both entities. Accordingly, despite 2020 only, including nine months of expenses attributable to Curetis and Ares, our operating expenses remained relatively flat in 2021, based on successfully realizing post-merger integration and co-spending cost reductions and synergy.
Our full year 2021 R&D was $10.9 million, compared to $10 million in 2020 due to the inclusion of full 12 months of Curetis related R&D in 2021 compared to only nine months in 2020. Q4 2021 R&D was $2.9 million compared to $3.3 million the previous year. The change in R&D expense compared to prior year is due to the timing of clinical trial work and outside service expenses.
Full year 2021 G&A was $9.9 million compared to $8.8 million in the previous year due to the inclusion of full 12 months of Curetis related G&A in 2021 compared to only nine months in 2020. Q4 2021 G&A was $2.6 million compared to $2.3 million the previous year. Full year 2021 sales and marketing expenses, which included items such as market research, advertising, travel, exhibitions, and conferences, and our Clinical Advisory Board, was $3.7 million compared to $3.1 million the previous year. The increase was due primarily to the expansion of our U.S. sales team in 2021. Q4 2021 sales and marketing expenses was $1 million compared to $835,000 in Q4 2020.
Turning to our net loss. Our net loss available to common shareholders was $42.0 million or $1.14 per share in 2021, compared to $26.2 million or $1.66 per share in 2020. This increase is mostly attributable to $7.8 million noncash accounting item for the warrant inducement expense in Q1 and a $7.2 million noncash in dividend related to our preferred stock deal in October 2021 for a combined total of $15 million in noncash retiring accounting charge. We are delighted to report that OpGen has its strongest cash position in the company’s history as of year-end.
Our cash balance as of December 31, 2021, was $36.1 million up from $13.4 million at the end of 2020. This increase was mainly a result of our successful financing transactions in the reporting year. Overall, the net cash provided by financing activities in 2021 added up to $48.2 million. Our 2021 operating expenses are in-line with our expectations, and we tracked very well against our guidance for yearly net cash consumption. Looking forward, we anticipate continuing that track record in the coming year at an expected net cash consumption of around $5 million to $6 million per quarter.
The focus we placed on strategic R&D programs in 2021 puts us in a strong position to expand execution and commercialization throughout 2022 and beyond. We expect to see strong growth in our product business across the Unyvero as well as the Acuitas AMR Gene Panel portfolio with a major growth driver in our direct sales in the U.S. For year-over-year in 2022, we expect to see in the 50%-plus range annual growth. We also expect to see continued growth in our International Distribution businesses with focuses on the Unyvero product line outside of the U.S. However, growth rates are expected to be more moderate there.
An area that we expect to see significant traction and acceleration is our Ares Genetics related Services and Software Solutions business with potential upside coming from additional data asset monetization as well as possible new collaboration deals. There is also significant upside from a potential Unyvero A30-related platform partnership. We do believe that overall revenue growth from our product and service business for 2022 should be expected in a range of somewhere around 25% to 50% year-over-year.
Any material strategic collaboration, licensing and partnering deal, whether on the our side or around the Unyvero A30 platform, which has the potential to significantly accelerate that growth, although timing and structuring of any such deal is not clear, and hence, revenue recognition in 2022 could range from a nominal amount to a very material additional growth in top line revenues. We continue to make meaningful progress with the European Investment Bank as well as several other brokers about possible opportunities to address the company’s upcoming EIB debt tranche repayment of approximately $50 million in the late April 2022.
In addition, the company is strategizing our longer-term plan to address the complete repayment of the EIB debt, which will have two further tranches become due in June 2023 and 2024 of approximately $4.4 million and approximately $7.4 million, respectively. Such opportunities include options that would allow us to partially repay the EIB’s first tranche in cash at the maturity date and to amortize on or equitize the remainder of such tranche as well as possibly the future tranches over a period of up to 12 to 24 months.
These options would allow us to avoid either using all $50 million in cash from our balance sheet or having to convert a larger amount of debt into equity at this time when our stock price has been under continued pressure. We believe that these options would provide us with greater flexibility in managing our cash, address our debt repayment in strategic and well-structured manner, and minimize dilution as we would potentially benefit from stock price appreciation based on some of our future milestones and achievements over the coming two years. We anticipate having further details in the coming quarters.
With that, I’ll turn the call back to Oliver to discuss the company’s recent achievements and upcoming milestones. Oliver?
Oliver Schacht
Thank you, Albert. 2022 will be a year focused on commercialization. As mentioned previously on this call, our subsidiary, Ares Genetics, has several upcoming commercial launches of services and solutions, including the launch of various Ares related services in the United States via our own service labs here at our OpGen headquarters in Rockville, Maryland. We already have an experienced team as well as the laboratory infrastructure in place. We will be leveraging the experience and expertise of our team that successfully developed the Acuitas AMR Gene Panel for these NGS-based services for Ares genetics in the U.S.
This commercial rollout will be coordinated by our Senior Vice President of Corporate Development and Operations for Ares in the U.S., Dr. Theo deVos. This launch of our own direct-to-customer services in the U.S., which we envisage by Q3 of 2022 does not preclude us from also doing further licensing and partnering deals around the Ares portfolio of data assets, technologies and solutions here in the U.S. as well as globally.
Furthermore, we expect to continue the commercial rollout of our Unyvero A50 platform and products. In 2021 and year-to-date in 2022, we have successfully closed a series of multiyear commercial customer deals for the Unyvero products, including our UTI test, which we offer as research-use-only products ahead of the future FDA submission and clearance. A handful of these accounts since 2021 have by now developed a reliable and consistent cadence of monthly purchase orders that indicate annual test volumes of 600 to 700 plus cartridges per account, making them each an account that is around $100,000 in recurring consumables revenue to OpGen in 2022.
We have also seen selected customer accounts significantly increased their monthly ordering volumes in Q1 2022 to to-date. To the extent, if these were consistently occur on a recurring monthly basis, some of these individual accounts would have annual revenue potential exceeding $200,000 each. In Q1 of 2022, we have already signed additional commercial agreements as well as additional evaluation and validation agreements for other labs and hospital accounts.
While COVID and specifically the Omicron wave from November of 2021 until late February of 2022, has clearly slowed progress at several customer sites. We’ve recently seen a significant acceleration and momentum shift. Many more U.S. customers are engaging in discussions around our Unyvero LRT BAL that is the lower respiratory tract application cartridge for use with bronchioalveolar lavage samples in pneumonia patients and UTI as well as Acuitas AMR Gene Panel products.
March 2022 has been the single most active month in driving funnel expansion and opportunity progression in the last 18 to 24 months. Our active set of funnel opportunities in the United States alone is around 60, plus individual target customer accounts at this time. Earlier this quarter, the Unyvero A30 RQ instrument successfully completed their lifetime testing and met all verification and validation, or V&V testing requirements. This is very exciting as it allows us to finalize product design and to get a first set of series ready instruments built in 2022.
We also expect to begin work on our first A30 cartridge application, a panel for invasive joint infections or IJI from synovial fluids and bring the A30 platform and IJI test into its first clinical trial here in the United States later in the fourth quarter of 2022. Having the A30 ready for clinical trials, followed by an FDA submission and eventual clearance, and subsequent commercialization, will also be key to any partnering and licensing conversations going forward. On that front, we have continued strategic conversations to technical as well as commercial due diligence with multiple parties.
Following the latest Omicron wave of COVID, we’ve been able to have our first in-person meetings this month with teams from interested party. We expect to have business development conversations with U.S., European and Asian partners about the A30 platform and future Curetis technologies throughout the coming months and quarters in 2022. As mentioned earlier on this call, we received 510(k) clearance binding FDA to market the Acuitas AMR Gene Panel. We’re actively engaged in numerous conversations across the country about the Acuitas AMR Gene Panel and we’ll continue to build out the funnel of commercial contract opportunities in 2022.
And we currently have several specific multiyear commercial contract proposals under review, and these remain subject to final negotiation by potential customers and we expect to close several of these and additional ones in the coming quarters, in line with our guidance pertaining to typical sales cycle being in the six- to 12-month range. We previously discussed the request by the Chinese regulators at the NMPA for supplementary clinical data to be generated in China for submission and potential approval of the pneumonia cartridge and subsequent commercial launch.
In the fourth quarter of 2021 and year-to-date, we’ve been able to support our partner, Beijing Clear Bio, or BCB, in their efforts to begin that study. They have successfully secured IRB approvals for each of the three clinical trial sites in China. The study profile has been finalized. It includes many inputs and learnings from our successful U.S. and European clinical studies. Because this is not a clinical study or trial that we at OpGen or Curetis own and control, the time line for this study is being developed by our partner, BCB, their CRO and regulatory advisers in China.
We expect an initial purchase of pneumonia cartridges by BCB in the second quarter. However, the recent reemergence of COVID in China and very stringent lockdowns of multimillion metropolitan areas, including Shenzhen and Shanghai most recently, puts the caveat on any timeline and we will simply need to see what transpires in terms of realistic time lines given the dynamic COVID situation in China at this point.
On the distribution side of the International Unyvero A50 business, we have seen the successful regulatory clearance of all Unyvero A50 products and tests in Colombia. Together with our partner, Annar Dx, an ongoing launch campaign focused on key opinion leader events has been initiated. The campaign includes on-site face-to-face meetings with key accounts and target customers across Colombia scheduled for the second quarter of 2022. Downstreaming their continued commitments to the Unyvero product line and business, Menarini has recently taken over the Austrian market from our prior distributor, Axon Lab.
Going forward, from the middle of the first quarter of 2022, Menarini will now cover 12 European countries for us. A very helpful fact in this context has been the European Union’s granting of multiyear transition period for the continued commercialization of all IVD products that have been previously CE marked despite the IVDR coming into effect in May of 2022. Therefore, we will be able to continue selling our products without any material changes from 2025 to 2026. And in addition, there will be a one-year added for any inventory sell-off at the end of this time period.
We’re also planning to provide clinical trial and regulatory submission updates for Unyvero UTI and IJI products. We’re excited to announce that enrollment for the Unyvero UTI diagnostic panel trial is going very well with more than 350 patient samples enrolled already as of today. All three trial sites had first completed reproducibility testing, running hundreds of Unyvero UTI cartridges in total. And upon successful completion of such reproducibility testing, all three sites went into enrolling clinical patient samples. We expect an interim data readout of this trial based on the first 150, approximately 50 per site or so patient samples, in the near future, really early in the second quarter.
Once we have confirmed that the interim data meets our criteria and objectives, we will continue full steam ahead with full enrollment of all 1,500-plus patient samples across all three trial sites. We would expect completion of the trial, final data readouts and eventual FDA submission in the second half of 2022. We recently submitted and already received a formal reply to our FDA pre-submission meeting request for our planned Unyvero IJI clinical trial. Because of the COVID pandemic and more than 6,000 emergency use authorizations they have received to date, the FDA is still unable to schedule a meeting or call at this time.
Nonetheless, based on our past experience with the FDA and our successful FDA clearances of three diagnostic products on two different platforms, we aim to start an IJI trial in the late fourth quarter of 2022, even in the absence of FDA feedback from such an optional precept meeting. Overall, 2022 will be a year focused on commercialization, both here in the U.S. and globally by our distribution partners. We’re excited about the progress and achievements throughout the past year, which have positioned us ready for significant continued revenue growth in direct product sales, service offerings and future strategic partnerships.
We look forward to providing updates on our strategic partnership discussions and progress on our commercialization efforts throughout 2022. As always, thank you for your unwavering support and for participating in this afternoon’s call. I would now like to turn the call back to the operator for questions. Operator?
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from the line of Yi Chen with H.C. Wainwright. You may proceed with your question.
Yi Chen
Hi, thank you for taking my question. My first question is, could you comment on how many hospitals you have reached regarding the Acuitas panel and whether there are any preliminary feedback? Thank you.
Oliver Schacht
Sure, Yi. I mean we have reached out some, and I believe we commented on that in our November earnings call to roughly 400 institutions across the United States. These were really the large academic institutions as well as some state-run reference labs as well as other large, very well-equipped and sophisticated hospitals and labs across the country. Within those accounts, so that roughly 400-plus number of institutions, we have reached out to well over 1,000 individuals typically covering stakeholders from the lab to antibiotic stewardship and pharmacy, to the clinician side.
And of course, I mean we receive feedback on a daily basis. As I commented earlier, we have several dozen active funnel opportunities for the Acuitas AMR Gene Panel. We have multiple agreements out there upon these conversations. So you ask me, are we where we expect it to be? Absolutely, yes. I mean I did say very clearly at the outset, this is a six- to 12-month sales cycle. We’re just coming up on six months here in a week or two. So again, having multiple contract agreements out there that are currently pending final review and final agreement. I think we’re in excellent shape and continue to grow the funnel.
Yi Chen
I mean, at this point, could you give us any rough estimate regarding the volume of panels, each of those accounts can possibly run on an annual basis?
Oliver Schacht
Well, I believe I did in the prepared remarks. I mean at the low end, you see, let’s call it, 100 to 300 at the low end, the medium of the range is probably 500, 600, 700 and at the high end, you’re probably looking at accounts that are doing 1,000-plus tests a year. And again, you’re looking at a product that has a list price in the United States of $170. Clearly, with volume comes, volume discounts, but again, if you look at some reasonable assumptions as to ASP, that’s why I said you’re looking at an annual recurring – on a full 12-month basis, annual recurring revenue stream from those accounts starting from several tens of thousands of dollars to up to maybe $150,000.
Yi Chen
Got it. Got it. And regarding the Unyvero A30 platform, could you tell us what are the catalysts we should expect to see during the rest of this year? And how is this system going to be positioned in the market relative to the existing Unyvero system? Thank you.
Oliver Schacht
In terms of positioning, it’s going to be complementary, because again, as per the call today, we will be putting a new clinically differentiated panel, an invasive joint infection panel that we do not intend in the U.S. to bring forward on the A50 platform at this stage. So it will have unique and differentiated content. In terms of milestones, I mean, clearly, if you look at the SA development side of things, getting the cartridge up and running, and then initiating a clinical trial. And again, it will be a multicenter clinical trial, same guidelines apply at least three trial sites in the U.S., a minimum of 1,500 patient samples to be enrolled. We have ample experience.
If you remember, in the past, we have run prospective multicentric preliminary studies at well over a dozen hospitals and sites across the U.S. So we have plenty of synovial fluid patient samples. We have plenty of data, really gives us everything we need to finalize the SA development and take it into the clinic. And then it will be initiating the clinical trial as we said late in the fourth quarter of this year and then looking at completion of that trial and data readout in 2023 with submission to the FDA.
So again, the way it’s going to be co-positioned if you will, is it’s a differentiated panel unique to the platform, very rapid turnaround time. So again, depending on the specifics, this could be under an hour from sample into result out and a panel of up to 33 targets on the A30 platform, with quantitative capabilities where needed or just a panel that allows for qualitative decisions depending on the final specs of the product.
Yi Chen
Okay. Thank you.
Operator
Our next question comes from the line of Ben Haynor with Alliance Global Partners. You may proceed with your question.
Ben Haynor
Good afternoon, gentlemen. Thanks for taking the question. Just following up first on the Acuitas contracts that have gone out, have the ones that are out there already indicated that they’re ready to adopt the Acuitas tests or – and you’re just talking terms? Or what’s the right way to think about that?
Oliver Schacht
Yes. I mean the way – again, you look at the sales process here. The first stakeholders you always get convinced is the lab, the clinician and the sort of antimicrobial stewardship folks. You would not put a commercial contract agreement out there unless you have agreed and clear buy-in from those key stakeholders. So yes, you’re absolutely right. The way to think about these is finalization of numbers, commitment for the first year, a number of tests are coming up with per test pricing that works for this introductory phase as well as.
And again, several of these contracts are, as I said, multiyear contract. So it’s not just getting that first foot in the door in 2022, it’s really about how do you think about the instrument financing in that mix and how you think about pricing with volume. Again, some of these drafts that are out there have volume pricing accounts 1,000 tests a year. And as you can imagine, you’re now talking about somewhere between $100,000 and $150,000 a year in recurring revenue stream from the consumables. And so you got to make sure that Ts get crossed and the Is get dotted on the commercial side of things.
Ben Haynor
Okay. That makes sense. So the legs out there just about lockdown, it sounds like. Got it. And then can you talk a little bit more about the Ares collaboration with the CRO and the – what does that entail, those 1,000 data sets you referenced? Is that each a collection of specimens, it is hundreds? Is it dozens, is it thousands within each dataset? Or how does that maybe help me understand how that looks and what’s going on with that collaboration?
Oliver Schacht
Sure, sure. So the way to think about this collaboration is really for both parties strategically levering each other’s assets. And frankly, that CRO and U.S. Clear Lab has been a recurring repeat commercial customer for our services as well. So the way we structured this collaboration was in two phases. Phase 1, and we’ve successfully completed that, Ares Genetics conducted certain next-gen sequencing services out of the Vienna lab, running data analysis and provided those back to the U.S. CRO and Clearlab. In that process, we did, because we obviously were providing specific samples and generated data sets. We have already grown the Ares database again.
And what we now have in the second phase is at our discretion at Ares Genetics to handpick at our choice up to 1,000 specific isolates and pathogens that are complementary to our RSDB. Remember, we already have 78,000 deep sequenced bacterial isolates in the database, with phenotypic data on over 100 antibiotics. So at this stage, this is not a shotgun give me whatever you have. This is a very targeted, very focused approach that allows us to specifically address pathogens and isolates that are of low prevalence and therefore, extremely rare with very interesting and unique AMR profiles that augment and complement and potentially fill certain, I’m not going to say, gaps, but like the power of any artificial intelligence-based algorithm to predict resistance or susceptibility highly depends and correlates with the end with a number of relevant cases you have in the database.
The bigger that end, the bigger that number, the more accurate the prediction becomes. And we published to our extent, we believe the only prospective multicentric purviewed study in the U.S., where we’ve demonstrated once you have a sufficient number of these genotype phenotype correlations, you can train the AI to predict with accuracies that exceeds 99%, but you have to get to that number. So this collaboration is a unique opportunity through the CRO to dig into their, call it, treasure vault, their biobank and handpick and hand-select for ours genetics. And we’re not going to comment on which ones we’re picking specifically.
But again, I mean what I would point to is some very specific combinations that we already had in the Ares database were not exclusively sold in the fourth quarter of last year, for a very attractive price point for a nonexclusive, literally a copy of the data. So again, being able to handpick and hand select the strength in the data asset, we’ll increase the predictive power of the Ares AI in those models and will make the database more valuable and more unique and differentiated.
Ben Haynor
Okay. Great. That’s very helpful and exactly what I was looking for. And then on the BCB study in China, and I apologize if I missed this when you were talking about it, but did you offer a time line on when they might complete that? I mean it sounded like there’s IRP approval in place and then I kind of missed it, so I apologize.
Oliver Schacht
I mean, look, beyond what we said, it’s really hard because we do not have control over the time line nor the execution of this study. And the situation in China, if you literally look at the news earlier this week, you look at the news last week, whether it was Shenzhen or Shanghai, there’s some massive lockdowns going on, which clearly aren’t helpful in getting clarity and visibility on this time line. Once started, once you actually get into enrolling, you can expect this study to take, let’s call it, six months to complete and the NMPA will then drive the review time line. To the extent possible, we’ve already submitted all other data and filings to the NMPA via our partners.
So hopefully, this is just going to focus on the supplementary study result. On a personal view, if this was – I think we’ve proven it with the Unyvero UTI trial here in the U.S., if this was our trial, I’m confident we would have started that trial in the fourth quarter of last year. But beyond advising our partners, talking to them on a daily, multiple times a week basis, and giving them guidance and our experience, it’s ultimately their choice. They’re running the study, they’re funding the study. It’s their study, their CRO, their execution. And so we’re going to respect that. They do it the Chinese way, and there’s a limited decision discretion that we have beyond – again, enabling them to fully execute that.
Ben Haynor
Okay. That’s helpful. And then I guess lastly for me. Can you talk about the equity issuance over 24 months, that option that you – how that would work? I mean does that issue with the EIB. Is that something where you’d issue a certain dollar value of shares every quarter or every month or every year? Or how would that actually be structured?
Oliver Schacht
Again, at this point, I’m not going to speculate as to the specifics and as Albert outlined, we have multiple different structural alternatives and options that we’re actively discussing with the EIB, one of which could indeed be up to 24 months of gradual conversion of the total debt amount across all three tranches into equity over time. But there is also alternatives that we pointed to in terms of amortization. So rather than converting into equity, we could be using the various instruments available at our disposable over prolonged periods of time. And if you look back over the last 12, 24 months, we’ve very successfully used multiple ATM facilities and kind of amortized the debt payments, again, over an extended period of time rather than having a bullet repayment here in the second quarter of $15 million.
So there’s – it’s not a foregone conclusion whether we’re going to equitize anything at all. But again, to belay the concerns that, well, we’re not going to use option stock at this current price level and then turn around in April and equitize $15 million worth to EIB. None of the scenarios that we’re currently discussing, has that sort of scenario.
Ben Haynor
Okay. Got it. That’s all I have gentlemen. Thanks for taking the questions.
Oliver Schacht
Thanks, Ben. Pleasure.
Operator
Our next question comes from the line of Nidhi Singh with Edison Group. You may proceed with your question.
Nidhi Singh
Thanks for taking my questions. I have three questions. So first one is related to AMR Gene panel. So can you give some color on the responses you have received so far? And based on that, if you could give some time lines as in how quickly you believe it can scale up after launch?
Second would be, is there any further update or communication on the status of NYC project? And third one would be, as FISH products have been discontinued now. Did it have any impact on this distribution network as in terms of number of distributors?
Oliver Schacht
Sorry, I’m not sure I caught the second. So let’s take the AMR panel, and I believe it’s sort of the question that Yi Chen asked. So I mean the response so far is exactly what we expected. With each of those accounts, you have to go through the lab, the clinician, the pharmacy and stewardship. Having multiple contracts out at this point and having dozens of live opportunities at various stages in the funnel. And again, pointing back to the 6- to 12-month sales cycle that is what we expect. We’re not going to be providing specific product revenue guidance for individual product lines here for 2022.
But again, we are anticipating the first of these commercial opportunities to materialize in the coming weeks and months. And then accelerated from there on out. Again, the total universe of accounts that we have reached out is 400 with a total funnel across the various U.S. accounts and product portfolio, roughly 60 opportunities at any given time. Opportunities you win and convert or opportunities that eventually are closed out and lost, you replenish and refill that funnel.
In terms of FISH products and distribution, again, we discontinued the FISH products. There was a network that action had that was a legacy distributor network in Europe for only the FISH products business, zero synergy with any molecular. That network of distributors was discontinued last year in – basically in the first quarter, as we sunset the FISH business.
So there is zero impact or read-through on any of the Curetis distribution network, because there was zero overlap and zero impact from the FISH discontinuation on the existing distribution network. Overall, of course, if you just look at share numbers, we now have fewer distributors as we terminated all of the old FISH legacy ones. And you may have to – there was a middle question that I simply couldn’t hear and couldn’t quite understand. So if you can rephrase that or repeat that?
Nidhi Singh
Yes, yes, sure. So I just wanted to ask about any further update on New York State Department of Health project?
Oliver Schacht
Yes. But just reiterating what we told in the Q3 earnings call, that project is finished. It’s completed. It ended as planned and scheduled on September 30, 2021. And the way to think about that to repeat what we said in the Q3 earnings call is there’s not going to be a New York State Department of Health funded research project. That’s not the intention. The way to think about this is that individual hospitals or sites within that New York State network that have already been using the Acuitas AMR to be switched over to the now FDA-cleared Acuitas AMR Gene Panel and becoming commercial routine users and clinical routine users of the FDA cleared Acuitas.
But they are customers or accounts just like any other. I would say, it’s not a far-fetched assumption that maybe a couple of the contract drafts that we have out there may very well come from that original New York State Unyvero site. But again, there’s not going to be a New York State Department of Health project nor did we expect that. We specifically guided against that back in Q3. And so again, you’ve got to look at individual New York State sites as well as individual 49 other state sites to become customers of the FDA cleared product.
Nidhi Singh
Okay. Okay, thanks.
Operator
That’s all the time we have today. I will now turn the call back over to Mr. Schacht for closing remarks.
Oliver Schacht
Well, thank you, everyone, for joining us today. Please visit the Investors section of our website or our SEC filings for updates on the company. Thank you very much, and have a great day. Thank you.
Operator
This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.
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