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HM

HTG MOLECULAR DIAGNOSTICS, INC (HTGMQ)·Q3 2022 Earnings Summary

Executive Summary

  • Revenue declined to $1.25M, down year-over-year from $2.52M and sequentially from $1.49M, as clinical-trial-related profiling demand remains below pre-pandemic levels .
  • Net loss per share improved to $(0.41) versus $(0.60) in Q3 2021 and $(0.54) in Q2 2022; operating loss narrowed to $(4.35)M amid OpEx reductions implemented late Q2 .
  • Management highlighted rapid progress in transcriptome-informed drug discovery, including early efficacy signals in two disease states and reiterated a 2022 year-end goal to begin partnering discussions; a potential near-term catalyst hinges on converting these conversations into agreements .
  • Street consensus via S&P Global was unavailable for HTGMQ in Q3 2022, limiting beat/miss determination against estimates (consensus mapping not found) [SpgiEstimatesError].

What Went Well and What Went Wrong

What Went Well

  • Drug discovery platform advanced: proprietary algorithms refined, internal cell culture capability established, and “most advanced” library entered preclinical characterization with early efficacy in two disease states; partnering conversations targeted by year end 2022 .
  • Commercial traction indicators: 77 active customers, 57 active pharma programs, 50 instruments producing revenue; 21 new customers and programs tied to 15 new pharma-sponsored clinical trials in the nine months through Q3, suggesting gradual market recovery .
  • HTP adoption sustained: consumables and sample processing represented 41% of revenue in Q3 (over 42% in Q2; over 40% in Q1), consistent with HTP becoming the lead profiling product .

Selected management quotes:

  • “We have achieved our third quarter 2022 milestones and remain on track to begin partnering conversations for our first target and indication by the end of 2022.” — CEO John Lubniewski .
  • “Our most advanced library for this target has entered preclinical characterization… including early efficacy in two different disease states.” — SVP Therapeutics Dr. Stephen Barat .
  • “We are encouraged by the number of new customers and orders… indicators that the market is beginning to recover from the pandemic-induced disruptions to oncology trials.” — CCO Byron Lawson .

What Went Wrong

  • Revenue pressure persisted: Q3 revenue fell to $1.25M from $2.52M in Q3 2021 and down from $1.49M in Q2 2022, reflecting fewer large trial cohorts and lingering clinical trial disruptions .
  • Profitability challenge: Net loss was $(4.52)M and operating loss was $(4.35)M; while narrower than Q2, absolute losses remain material given subscale revenue and investment in therapeutics .
  • Liquidity compression: Cash, cash equivalents and short-term investments declined to $6.5M at quarter-end against current liabilities of ~$6.8M and non-current liabilities of $5.6M, tightening runway despite earlier actions to reduce OpEx (including a Q2 workforce reduction) .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ1 2022Q2 2022Q3 2022
Revenue ($USD Millions)$1.18 $1.49 $1.25
Net Loss ($USD Millions)$(6.50) $(5.89) $(4.52)
Net Loss per Share ($USD)$(0.81) $(0.54) $(0.41)
Operating Loss ($USD Millions)$(6.25) $(5.68) $(4.35)
Total Operating Expenses ($USD Millions)$7.44 $7.17 $5.60
Cost of Product & Services Revenue ($USD Millions)$0.86 $1.01 $0.67
Cash, Cash Equivalents & Short-term Investments ($USD Millions)$21.6 $14.1 $6.5

Year-over-Year (Q3 2022 vs Q3 2021)

MetricQ3 2021Q3 2022
Revenue ($USD Millions)$2.52 $1.25
Net Loss per Share ($USD)$(0.60) $(0.41)

Revenue Composition / KPIs

KPIQ1 2022Q2 2022Q3 2022
HTP Share of RevenueOver 40% Over 42% 41%
Active Customers (cum at 9/30)——77
Active Pharma Programs (cum at 9/30)——57
Instruments Producing Revenue (cum at 9/30)——50
New Customers (9M ended 9/30)——21
New Pharma-Sponsored Clinical Trials (9M ended 9/30)——15

Notes:

  • Revenue comprised entirely of product and product-related services across periods .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Partnering Discussions (1st target/indication)By YE 2022“Licensable asset targeted for Q4 2022” (Q1 commentary implying late-2022 externalization) “On track to begin partnering conversations by end of 2022” Maintained
Operating Expenses2H 2022—Actions to reduce OpEx, including reduction in force late Q2 2022 Lowered
Revenue/Margins/Tax/OpEx Numeric Guidance2022—No quantitative guidance disclosed in Q3 press release —

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2022)Previous Mentions (Q2 2022)Current Period (Q3 2022)Trend
Drug Discovery Platform ProgressProof-of-approach white paper confirmed transcriptomic differentiation; moving to proprietary target screen; licensable asset targeted Q4 2022 Achieved H1 milestones; second white paper; preparing early preclinical characterization Advanced library in preclinical characterization; early efficacy in two disease states; partnering by YE 2022 Improving
HTP Adoption & Product MixHTP >40% of revenue; harmonized protocols to drive dual-panel usage HTP >40% revenue; customer testimonials (Pfizer, AbbVie) HTP 41% of revenue; continued new orders and repeat orders Stable-to-improving
Customer Access / Clinical Trial RecoveryAccess constraints extending sales cycles; broader industry supply/labor issues Oncology trials recovering slowly; headwinds persist; OpEx actions taken Market slowly coming back; large cohort declines remain a headwind Gradual improvement
OEM/LDT & Commercial StrategyHired leader to pursue OEM/LDT; push beyond oncology to infectious disease and other areas Opened OEM conversations; early projects with new pharma customers Continued opportunistic profiling growth efforts alongside therapeutics push Building pipeline
Liquidity / Balance SheetCash & ST investments $21.6M at 3/31; private placement completed Amended SVB loan; prepaid principal; ended Q2 at $14.1M cash & ST investments Cash & ST investments $6.5M; current liabilities ~$6.8M; non-current liabilities $5.6M Worsening liquidity

Management Commentary

  • “Our strategy is to build best-in-class drug candidates for known targets with high unmet medical needs… remain on track to begin partnering conversations… by the end of 2022.” — CEO John Lubniewski .
  • “Medicinal chemistry effort has produced a series of chemical libraries… most advanced library… entered preclinical characterization… early efficacy in two different disease states.” — SVP Therapeutics Dr. Stephen Barat .
  • “We have seen a slow but steady increase in first time orders and repeat orders… indicators that the pharma market is slowly coming back.” — CEO John Lubniewski .
  • “Encouraged by the number of new customers and orders… indicators that the market is beginning to recover from the pandemic-induced disruptions to oncology trials.” — CCO Byron Lawson .

Q&A Highlights

  • Publications and KOL validation: Management expects 3–5 additional HTP-related papers to follow the first peer-reviewed article; emphasized HTP as lead product going forward .
  • Broader disease-area adoption: Customers increasingly explore non-oncology applications (e.g., dermatology), expanding potential cohort sizes vs oncology .
  • Revenue growth drivers and OpEx discipline: Rebuilt sales org, harmonized miRNA/HTP protocols to “double up” panel usage; targeted OEM/LDT opportunities; aiming for profiling growth while managing cash burn .
  • Milestone timeline: Early preclinical data pack targeted in Q3 and late preclinical characterization with target disclosure in Q4, supporting partnering discussions .

Estimates Context

  • S&P Global consensus estimates for Q3 2022 could not be retrieved due to missing CIQ mapping for HTGMQ; as a result, beat/miss vs Street cannot be assessed for revenue or EPS [SpgiEstimatesError].
  • Without published consensus, investors should focus on reported sequential and year-over-year trends and management’s partnering milestones as near-term catalysts .

Key Takeaways for Investors

  • Execution in therapeutics is the central near-term driver: early efficacy signals and YE 2022 partnering conversations form the core potential catalysts to re-rate the equity if agreements materialize .
  • Profiling shows green shoots: new customers, programs, and HTP mix strength indicate gradual recovery, but absolute revenue remains subscale versus fixed cost base .
  • Liquidity is tight: $6.5M cash and short-term investments vs ~$6.8M current liabilities at Q3-end suggests careful monitoring of runway and financing options is warranted .
  • Operating discipline is evident: OpEx reductions and workforce actions helped narrow operating loss sequentially; sustained discipline remains key until revenue scales or partnering monetizes .
  • Diversification beyond oncology may accelerate growth: broader disease applications (e.g., derm) and OEM/LDT strategies could expand end markets for HTP .
  • Absent consensus estimates, the narrative hinges on delivery of late preclinical data and conversion of partnering discussions; slippage would likely weigh on sentiment, while tangible deals would be positive .