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Edited Transcript of HTGM earnings conference call or presentation 7-Mar-19 9:30pm GMT

Q4 2018 HTG Molecular Diagnostics Inc Earnings Call

TUCSON Mar 28, 2019 (Thomson StreetEvents) -- Edited Transcript of HTG Molecular Diagnostics Inc earnings conference call or presentation Thursday, March 7, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* John L. Lubniewski

HTG Molecular Diagnostics, Inc. - President & COO

* Shaun D. McMeans

HTG Molecular Diagnostics, Inc. - Senior VP, CFO, Secretary & Treasurer

* Timothy B. Johnson

HTG Molecular Diagnostics, Inc. - CEO & Director

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Conference Call Participants

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* Alexander David Nowak

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst

* David Greaves Delahunt

SVB Leerink LLC, Research Division - Research Analyst

* Yi Chen

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Monique Kosse

LifeSci Advisors, LLC - MD

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Presentation

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Operator [1]

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Greetings, and welcome to the HTG Molecular Diagnostics Fourth Quarter and Full Year 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Monique Kosse. Thank you. You may begin.

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Monique Kosse, LifeSci Advisors, LLC - MD [2]

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HTG released financial results for the fourth quarter and year ended December 31, 2018.

Before we begin the call, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including statements regarding the company's performance trends, growth of its RUO profiling business, activities expected to occur under the company's various collaborations and other agreements, planned product developments and launches and related expected benefits, expected benefits from pharma collaborations and revenue and operating expense expectations for 2019.

These forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond HTG's control that may cause HTG's actual circumstances, events or results to differ materially from those projected on today's call. Factors that could cause events or results to differ materially include those risks and uncertainties described from time to time in HTG's SEC filing. HTG cautions listeners not to place undue reliance on any forward-looking statement.

HTG is providing this information as of the date of this call, today, March 7, 2019, and HTG undertakes no obligation to update any forward-looking statement.

With that, I would like to turn the call over to TJ Johnson, Chief Executive Officer. TJ?

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [3]

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Monique, thank you very much. Good afternoon, everyone, and like I normally do, I'd like to start by thanking all of the HTG team members for their commitment and outstanding efforts during 2018 and continuing today.

Before we dive into the details, I want to spend a few minutes on the broader picture around HTG. HTG is a company committed to advancing precision medicine. We fully recognize the impact in the further promise of patient care based on actionable information derived from an individual's molecular data versus traditional trial and error approaches. We believe our technology solutions are and can further make a difference with customers, clinicians and patients.

Our company strategy is focused on realizing the promise of precision medicine based on developing a razor-razorblade business model using our proprietary HTG EdgeSeq platform. Our blades, often referred to as test menu for reagent disposables, our research panels and diagnostic assays that drive the reason and incentive to purchase the razor, our EdgeSeq instrument.

We are still in the early phases of adoption, and as such, our revenues are moving from a research-service and project-based model, which tends to be nonlinear or lumpy toward what we believe will be a reoccurring revenue model, which tends to be a bit more predictable. We believe we are at the forefront of this important shift in our business and that we are building momentum towards a more predictable, reoccurring revenue model, driven by instrument placements.

In 2015, we launched our technology platform, the HTG EdgeSeq system, with a 3-phased approach to achieving our mission. Phase 1 was to launch new research panels, which would be used by translational researchers to unlock the RNA messages in cancer and other diseases, essentially working with key opinion leaders to establish our value proposition and validate the technology. We see some of the results in this space with a doubling of our publications in each of the last 2 years.

Phase 2 of our road map was to establish a strong position with biopharma as the best gene expression technology and total solution from biomarker discovery to a commercialized companion diagnostic assay. Simply put, we are helping biopharma in their efforts to determine the right drug/drug combination for the right patient. The rapid growth of this early stage project pipeline, coupled with the advancement of several projects into companion diagnostic development programs, we believe, has further validated the clinical and diagnostic value of our technology. Most importantly, we have a pipeline rich in diagnostic assay opportunities, assays that we believe will propel future demand for the EdgeSeq instrument, enabling reoccurring revenue streams.

We are now in the initial efforts of our third phase of the road map, which is further facilitating precision medicine with the HTG technology platform that we believe can provide a better diagnostic workflow, lower cost and improve the information solutions for clinical labs, clinicians and patients. This is the phase of our road map that we believe will accelerate the placement of EdgeSeq instruments as our new diagnostic menu is commercialized, expected to start in later 2020.

Today, we have a significant service component to our revenue streams, driven by biopharma's preference for service, but we see this only as a means to a clear end. We are committed to being a product company and increasing shareholder value in the clinical diagnostic market. We have a clear view to the path to our targeted revenue model over the next 3 to 5 years as we place more instruments and launch innovative diagnostic menu derived from our pharma partnerships and internal assay development.

With that backdrop, let's look at 2018. Overall, 2018 was a strong year with revenue growth of 46%, up from $14.8 million in 2017 to $21.5 million in 2018. Product revenues grew 25%, with our newest immuno-oncology or PIP assay contributing meaningfully in the fourth quarter. Services increased 38% year-over-year, and our PDP collaboration revenue increased 56%, driven by the full year impact of 2 large programs. Our early-stage biopharma pipeline grew to nearly 80 projects, which adds confidence to our future biomarker profiling revenue streams and likelihood of new PDP programs.

As announced earlier this quarter, I'm transitioning from my CEO role into the HTG Executive Chair, where I can focus on big-picture strategy for HTG, and John Lubniewski is taking over as CEO. John and I previously worked together for 5 years at Ventana Medical Systems, and he has been my trusted copilot here at HTG for the past 8 years. He is extremely well suited for this role and has been leading key commercial development efforts at HTG for many years now. He knows our vision, business and strategy, and I have complete confidence in his ability to lead HTG on the next leg of this exciting journey.

It is my great pleasure to turn the call now over to John for a more detailed discussion on our business. John?

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John L. Lubniewski, HTG Molecular Diagnostics, Inc. - President & COO [4]

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Thanks, TJ. As previously mentioned, I've been with TJ these last 8 years, and I want to reinforce our commitment to our business strategy and express my appreciation for the opportunity to steward this organization through our next phase.

Now let's turn to the primary aspects of our business, where I'd like to provide some more color. Our RUO profiling revenue grew to $9.1 million, up from $6.8 million or 34%, driven by continuing increases in our early-stage biomarker studies with biopharma. Our new Precision Immuno-Oncology Panel was our top-selling product in the second half of the year, and we expect the launch of our EdgeSeq Reveal data analysis suite to continue to drive growth in these panels. Our biomarker and profiling business is valuable and strategic to HTG as we look to engrain our EdgeSeq technology deeper and more broadly in the drug development process.

Each step of the way, the potential of being tied to a therapy as a companion diagnostic increases. We ended this year with nearly 80 active projects in our pipeline. We certainly recognize that many of these early-stage projects will not make it to commercialization, but a strong pipeline enhances our likelihood of future companion diagnostic assays. Of note, we've analyzed the long-term potential of our biopharma pipeline and believe it approaches over $1 billion of potential annual diagnostic revenues. This includes all the opportunities we see currently in our pipe across the large number of cancer indications and does not include the potential opportunity of any non-oncology applications. To date, our focus has been predominantly on oncology, where the need for biomarkers is high, but now we see EdgeSeq technology being pulled into new disease areas by customers.

Later this year, we plan to launch a new autoimmune panel, opening up an exciting new market for our technology. Autoimmune diseases use the body's own immune system to destroy its tissue. There are over 80 types of autoimmune disorders, and the NIH estimates the direct health care costs associated with autoimmune diseases to be nearly $100 billion and is projected to grow at 11.2% through 2023. We're excited about this market and its potential.

The RUO profiling growth rate accelerated in the fourth quarter and for the full year as our new sales positions became more productive. We expect this acceleration to continue in 2019 as we leverage our sales investments, launch new panels and enter the autoimmune market. We expect Q1 2019 revenues to show approximately 40% growth over Q1 2018.

Our collaboration revenue, which is the revenue associated with our companion diagnostic development programs, increased 56% year-over-year. We generated $12.4 million of revenue from our precision diagnostic programs, or PDP programs. And I want to emphasize that HTG is working directly with biopharma program leads and maintains direct relationships with all biopharma customers in this line of business.

In our PDP program #2, we completed key milestones, including the validation of the investigational-use-only assay across more than 10 clinical applications. Our customer expressed an interest in using our assay across a broader section of their portfolio, which is exactly the position we're striving to create across all of our biopharma customers. In PDP program #3, we completed assay validation and exited 2018 in a clinical trial phase.

We're encouraged by the extension and expansion of our existing programs and continue to work to generate new PDP programs. Predicting the signing of these new PDP programs is always difficult as many factors, most of which are out of our control, impact the timing of signing these new programs, and some of these factors include the availability of certain configurations of our partner sequencing platform. However, we maintain a positive longer-term outlook on that partnership and its likelihood to generate high-value diagnostic menu. We expect 2019 revenues to dip versus 2001 -- Q1 2018 revenues because PD program -- PDP program #1, which terminated in 2018, was not -- was in the previous year's numbers, and PDP program 2 and 3 are both in lower-activity periods awaiting go-forward decisions.

Our diagnostic product revenues were just developing in 2018. The majority of 2018 activity centered on initial comparative analysis by customers looking at our CE/IVD products available in Europe, the DLBCL Cell of Origin assay and the ALKPlus Assay. Initial results of comparative studies were favorable and we believe could drive material growth through these products in 2019. The market for B-cell lymphoma in Europe is small, approximately 30,000 cases, but we see increasing customer demand to move from the current IHC method of subtyping to a gene expression method, and we think we are well positioned to take advantage of that shift.

ALK testing in lung cancer is a potentially bigger market, with approximately 275,000 cases in Europe. We'll be looking to drive market acceptance of our ALKPlus Assay in this market.

As TJ highlighted at the beginning of this call, we're intent on building a business based on reoccurring revenue, and the diagnostic segment is critical for this transition of our revenues. Additionally, we believe the ability to innovate and develop new assays will drive growth in the years to come. As such, we've made strategic additions to our team, and we will lead a new development effort in breast cancer. The biology around breast cancer has advanced considerably in the last decade, opening up the opportunity to innovate the content and workflows around prognostic and predictive testing.

To seize this opportunity, we've hired Dr. Maureen Cronin as our Chief Science Officer late last year and have built a development team, which will work from our planned diagnostic development center in the Bay Area. Maureen and this team have extensive experience developing clinical assays, especially in breast cancer. Additionally, we have partnered with Dr. Joseph Sparano to lead our Scientific Advisory Board to help us design and clinically validate this product family.

Finally, we've just announced that Laura Beggrow has joined our leadership team as President of Diagnostics. Laura Beggrow is a successful commercial leader with over 2 decades in molecular diagnostics, pharmaceutical, biotech and personalized medicine. Most recently, Ms. Beggrow was Chief Commercial Officer for Celcuity, where she led and directed the company's first commercial product and clinical pipeline development, resulting in a successful public offering in 2017. Prior to this, she served in a number of leadership roles in diagnostics, including over 8 years at Genomic Health.

We believe we have substantially enhanced our diagnostic development and commercialization capabilities and are thrilled to welcome our Bay Area team to the HTG organization. Maureen, Laura and the team joined HTG because they believe HTG technology can take breast cancer molecular diagnostics to a new level. They believe that HTG's small sample requirements and decentralized laboratory approach will enable a change in the paradigm of breast cancer diagnostics. We expect this will benefit patients, clinicians and payers, and we believe the market opportunity for HTG for this test family is over $1 billion.

So as we look forward to our other opportunities, we're excited about our future. We believe we have the right vision, the right product concept and the right talent to successfully advance precision medicine.

With that, it's my pleasure to turn the call over to Shaun for a review of our fourth quarter and year-end financials. Shaun?

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Shaun D. McMeans, HTG Molecular Diagnostics, Inc. - Senior VP, CFO, Secretary & Treasurer [5]

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Thanks, John. As previously mentioned, total revenue for 2018 was $21.5 million versus $14.8 million in 2017. This $6.7 million or 46% increase in our overall revenue year-over-year reflects a $4.4 million or 56% increase in collaborative development services revenue associated with our pharma PDP programs and a $2.3 million or a 34% increase in our profiling revenue, including a 25% increase in product revenue and a 38% increase in product-related services revenue. We are very pleased to report our overall revenue growth in 2018, in particular, and our profiling revenue, which reflects the growth in our base business of products and product-related services and the potential downstream opportunities in future diagnostic assays.

Our profiling business grew to $4 million in Q4 2018 compared to $2.4 million in Q4 2017 and provides further evidence of our efforts to expand and deploy a larger, more experienced pharma sales team. The Q4 opening of our first foreign subsidiary in France also reflects our further push into the EU RUO and MDx markets, with a local presence to enhance HTG's selling activity and customer responsiveness.

Our cost of product and product-related services revenue increased by only 2% to $5.1 million in 2018 compared to 2017. This increase reflects an improvement of our product and product-related services margin as a result of a steady improvement of the average selling price per sample in our profiling business, which remains a very positive trend and a key focus of our sales leadership. We also expect to see slow growth in costs associated with our profiling business as we further leverage our fixed cost base, innovating our menu with new products and as our sales mix moves to a higher product versus service component.

Selling, general and administrative expenses increased approximately 14% to $20 million in 2018 compared to $17.5 million in 2017. This increase is mainly attributable to increased headcount, related compensation expense, stock-based compensation and consulting costs in 2018.

Our continued new product-related research and development expenses, unrelated to our collaborative development programs, amounted to $4.6 million for 2018 compared to $5.2 million in 2017. While we experienced a slight decrease in our non-PDP R&D spending for 2018, the spending is expected to increase as we continue to innovate new RUO panels and begin funding our breast diagnostic program in 2019 with our California-based breast assay development team. The remaining $8 million of 2018 total research and development expense is related to our collaborative development PDP programs. These expenses are expected to vary significantly from one period to the next due to the timing of key program milestones and development activities.

Our operating loss for 2018 was $16.2 million compared to $17.7 million in 2017. Our operating cash burn for 2018 was approximately $15 million, primarily reflecting a smaller operating loss versus 2017 and excludes proceeds from equity and debt financings. Net loss per share was $0.60 for 2018 and $1.79 for 2017. The reduction in our year-over-year loss per share reflects additional shares of common stock sold early in 2018 and common shares issued from our stock compensation program. We currently have approximately 28.6 million shares of common stock outstanding.

We ended Q4 with $31.1 million in cash, cash equivalents and short-term available-for-sale securities.

Further to John's comments on Q1, we expect Q1 2019 to show a decline in collaboration revenues versus Q1 2018, with an increase in profiling revenues in comparison to Q1 2018. We expect Q1 2019 total revenue to be in the $2.5 million to $3.0 million range. The company is also providing top line guidance for the full year 2019 in the $23 million to $28 million range. We expect our RUO profiling revenues to grow 40% or higher for the year but do see a wide range of potential PDP revenues based on client timing and go-forward decisions.

We also expect to see initial material increases in diagnostic revenues, driven by CE/IVD products in Europe. This near-term guidance reflects our confidence in the growth of our core profiling business and our conscious expectations regarding the outcomes of our ongoing collaborative development programs. I look forward to reporting our Q1 results in a few weeks.

At this point, I would like to turn the call back to TJ for closing comment.

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [6]

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Thanks, Shaun. We believe 2019 can be the tip of the spear for our diagnostic product sales. Initial customer evaluations and early sales of our 2 CE/IVD products have us in full commercial mode this year. We recognize there is still much to do to drive successful adoption of these assays, and we will be methodically working with initial customers on reimbursement, initial lab workflows and expanding our assays to include Ion Torrent sequencers.

Our diagnostic business has a number of catalysts that are in process or planned in the next 1 to 3 years, including first full commercialization of our EdgeSeq ALKPlus and DLBCL Cell of Origin CE/IVD products in Europe; continued efforts with collaboration-based diagnostic programs, such as WIN, IVO and Leeds; full development of our breast cancer program, headquartered in our new diagnostic development center; full development of our total lung program expected to run about 6 to 12 months behind the breast timing; and expected commercialization of companion diagnostic tests resulting from our pharma PDP programs.

We also have earlier-stage research programs establishing capabilities for broader diagnostic opportunities down the line. First, what we call end-line DNA testing. Our provisional patents have been filed, and we are moving forward with further feasibility testing to validate our ability to split the sample license and run parallel RNA/DNA reactions that then come together at the library stage of our workflow. This capability is expected to open up a large number of multi-modal diagnostic panel opportunities.

Second, it's adapting the EdgeSeq instrument to additional liquid biopsy sample types. EdgeSeq is already capable of working in several liquid sample types, but we plan to expand our capabilities in order to fully participate in the liquid biopsy market as clinicians look for less invasive ways to screen and monitor patients.

In summary, HTG's performance in 2018 was strong, and our future prospects are bright but not without challenges. As we reshape our revenue model over the next 3 years, our focus will continue to be on diagnostic products. While timing of short-term pharma collaboration revenue and the signing of new programs has uncertainty, we are confident in our rapidly growing pharma pipeline and its ability to produce future companion diagnostics.

We recognize that we do not want our diagnostic products to be solely dependent on pharma drug programs. Therefore, we have initiated a breast cancer program and are also investing in our CE/IVD product commercialization in Europe. Our revenue guidance for 2019 is a very wide range, driven by accelerating growth in RUO profiling but measured by the unpredictability in our pharma collaboration revenues. We do expect go/no-go decisions in both PDP programs in the shorter term, and we'll update our forward-looking views as we gain clarity through the balance of the year.

We will now open up the call to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Alex Nowak from Craig-Hallum.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [2]

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Congrats, TJ and John, on the recent executive moves. Appreciate the commentary around PDP Two and PDP Three. I think a lot of investors here are looking for some color on both of these programs and trying to figure out when we'll hear if these partners are moving forward commercializing their drug in your tests.

So can you help us give us some time frames on these programs? You mentioned just there at the end, you say very near term, we'll hear go/no-go decisions. Is that within the next 6 months, within the next year? Are we talking longer than that?

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [3]

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Yes. Alex, obviously, we would love to provide as much color as we possibly can. To some degree, we don't have a lot of specific knowledge either. Our firm belief today is that yes, both of our existing programs are going to have these go/no-go decisions or move-forward decisions in the short term, and we would say that's definitely within the next quarter -- next 2 at probably the latest.

I want to remind everyone that PDP Two is not just a single readout or a single go/no-go. As we've announced previously, this IUO assay has now been validated with our customer across 10 or more sample types and indications. Our current expectations is that once we have a firm readout on the initial trial, then we'll likely follow suit with multiple readouts as we work through these other indications in their portfolio.

The second PDP -- or PDP Three, as we stated, is in the clinical trial stage and we would hope to have some clarity around the timing and expectations of that also over the short term, hopefully 1 quarter, we think kind of worst case, 2 quarters.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [4]

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Okay. Understood. I just want to make sure I'm correct here. When you say go/no-go decision, is that specifically stating whether or not the partner will move forward commercializing their drug, i.e. filing with the FDA, et cetera?

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [5]

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That's correct, Alex. The next step in these PDP processes is the decision to begin regulatory submissions. So we're looking for that initial trial decision in PDP Two, which would then cause HTG along with our partner, QIAGEN, to initiate PMA submissions for this assay for that indication and labeling. And then hopefully, over the next multiple quarters, we'll see this assay being utilized in a number of trials with different indications and different sample types. Our true hope for the assay is that it would become more of a pan-cancer assay with broader utility, but the initial readout is across one indication.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [6]

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Okay. Understood. And then just last question from me here. HTG, over the years, has gone back and forth, I think, between developing tests internally versus leveraging pharma partners to build out the menu. So just given the recent hires and the, obviously, commentary on this call, it certainly seems like you're leaning back towards developing your own test. So just maybe walk us through why you've ultimately decided to go back there, spend the extra R&D expense to build out the test menu internally versus relying solely on the pharma partners.

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John L. Lubniewski, HTG Molecular Diagnostics, Inc. - President & COO [7]

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Alex, this is John. Actually, I think, that was a little bit symptomatic of we actually signed more PDP programs, kind of, coming right out of the gate than we had anticipated, and we actually ended up redirecting almost all of our R&D organization to fulfill those initial commitments. And what that did was that paused our ability to develop our own proprietary menu.

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [8]

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Now Alex, post our raise in January of last year, we've been putting that money to work, expanding our R&D capability. So we now have quite a bit more capacity here in Tucson with our R&D group and then obviously are now adding even additional new capacity in the Bay Area with this team in what we would view as a broader talent-rich environment. So I think, overall, we're not interested in having one or the other. We really believe a balanced approach to product development between biopharma collaborations and our own internal development.

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Operator [9]

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Our next question is from David Delahunt from SBC Leerink (sic) [SVB Leerink].

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David Greaves Delahunt, SVB Leerink LLC, Research Division - Research Analyst [10]

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This is Dave on for Puneet from SVB. I was wondering if you could speak to the strength of the pharma projects funnel you're experiencing as you compete for these products -- projects. We're seeing an increasing number of trials entering the funnel, but I want to get a sense if you should continue to expect this number to trend up.

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [11]

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Yes, I would say we absolutely do believe that. If you recall, last year, we also deployed a lot of our new capital into increasing the size of our pharma sales team. We now feel that the U.S. sales team is at full strength. And we've actually now added in the European environment.

So between the additional feet on the street to our business development headcount as well as, as John mentioned, we're now able to produce new products to support the pharma business out of our R&D group, such as our PIP panel last year.

We plan to launch our next mouse model product before the end of this quarter and then follow suit with the autoimmune. I think the additional sales folks, coupled with the new products, we would expect to see the growth rate in this category continue to expand and -- as well as pushing in a lot of the early-phased projects into later-phased projects.

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David Greaves Delahunt, SVB Leerink LLC, Research Division - Research Analyst [12]

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Great. And then regarding the liquid biopsy, I was wondering if you could discuss that a little more. And is there any color you could add around the time line you're looking at?

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [13]

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Yes. We currently are already running -- a fairly sizable percentage of our service business within pharma is working out of blood samples. But we currently believe we're in the market as far as it relates to liquid biopsies. But we have customers that are pushing us to expand that further, whether it's looking at exosomes or applying [pachytene] across a broader array of products.

So we've been monitoring the liquid biopsy market. And as we see, liquid biopsy is becoming more viable for clinical applications versus only research applications. We will time our investments and push in those areas to kind of -- to go hand in hand with how we see that market maturing. We definitely believe that our product in the autoimmune space will be a heavy liquid biopsy product.

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Operator [14]

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(Operator Instructions) The next question is from Yi Chen from H.C. Wainwright.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [15]

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My first question is, is your -- does your 2019 revenue guidance include the consideration of the PDPs when there is a go decision or when there is a no-go decision, just for clarification?

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [16]

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Sure. I think, Yi, part of the reason why we provided a fairly wide range is that we tried to give an idea of how that range could affect 2019 based on no-gos versus one of each versus both go forward. So I would say that the bottom of the range would kind of indicate the worser of the situations, and then the top of the range is where we would see the likelihood if we get positives based on when the timing of those positives could occur.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [17]

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Okay. But does it include any potential revenue from the autoimmune program and the breast cancer program?

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [18]

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It does not.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [19]

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And my last question is how many new PDP collaborations do you expect to enter in 2019?

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [20]

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Yes, we're -- it's really hard to say on that. We do monitor the pipeline, and the number of Phase 2 programs that we're involved with has grown. And I think that is a positive indicator for us that those Phase 2s could potentially be getting closer to clients wanting to discuss registration trials. We've always kind of had an internal target of 1 to 2 new PDP programs per year, and that has not changed.

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Operator [21]

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This concludes the question-and-answer session. I'd like to turn the floor back to management for any closing comments.

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Timothy B. Johnson, HTG Molecular Diagnostics, Inc. - CEO & Director [22]

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Yes, I would just like to end by thanking everybody for their time today and look forward to our next call.

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Operator [23]

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This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.