HTG Molecular Diagnostics, Inc. (HTG) focuses on advancing precision medicine and drug discovery through its transcriptome-wide profiling and advanced drug discovery platform technologies.
Central to the company’s business strategy is the company’s drug discovery engine, which uses the company’s captive transcriptomic profiling capabilities combined with a proprietary medicinal chemistry machine learning platform to render an artificial intelligence (‘AI’) -driven drug candidate optimization pl...
HTG Molecular Diagnostics, Inc. (HTG) focuses on advancing precision medicine and drug discovery through its transcriptome-wide profiling and advanced drug discovery platform technologies.
Central to the company’s business strategy is the company’s drug discovery engine, which uses the company’s captive transcriptomic profiling capabilities combined with a proprietary medicinal chemistry machine learning platform to render an artificial intelligence (‘AI’) -driven drug candidate optimization platform.
As of December 31, 2022, the company had used its transcriptome-informed drug discovery engine to develop an early pipeline of drug candidate molecules for two known pharmacologic targets, both of which can target several potential therapeutic indications, but with a current focus on oncology and neurodegenerative diseases.
The company’s business strategy is to build the company’s drug discovery pipeline in order to out-license certain drug candidates and carry other candidates into preclinical and early development itself. In addition, the company would expect to retain and potentially capitalize upon clinical diagnostics (‘CDx’) rights through the clinical development and commercialization of these assets where appropriate.
The company also operates a profiling business in life science tools. The company’s profiling product and service solutions enable targeted RNA profiling using a small amount of biological sample, in liquid or solid forms. The company’s menu of HTG EdgeSeq assays, including the company’s HTG Transcriptome Panel (‘HTP’), which has been designed to measure approximately 20,000 mRNA targets using the company’s HTG EdgeSeq technology, is automated on the company’s HTG EdgeSeq system, which applies NGS tools, enabling the generation of gene expression data in a timely manner utilizing the company’s simplified workflow.
The company’s existing products include instruments, consumables and software that, as an integrated platform, automate sample processing and can quickly, robustly and simultaneously profile hundreds, thousands or tens of thousands of molecular targets from samples which are a fraction of the size required by many prevailing technologies. Customers can access the company’s technology by purchasing the company’s HTG EdgeSeq system and assays for their internal use or through the company’s Tucson, Arizona-based VERI/O service laboratory, including molecular profiling of cohorts and development of custom research use only (‘RUO’) panels to support early-stage clinical programs and investigational-use-only assays for clinical trials. However, with the release of the company’s HTP, revenue from the company’s RUO assay design services is expected to be lower than historical levels, as the company’s RUO assay design services revenue is replaced by HTP consumables purchases and sample processing laboratory services using the company’s HTP. The company’s product and service solutions have enabled the company to access a number of early-stage biomarker discovery programs. This approach will enable new opportunities collaborating with biopharmaceutical companies in their future drug development programs.
Strategy
The key components of the company’s strategy are to leverage the company’s existing capabilities in transcriptomic profiling, machine learning chemical library design and AI-driven drug candidate optimization to build a portfolio of best-in-class small molecule drug candidates for known targets; leverage the company’s existing transcriptome-based drug candidate optimization capabilities to partner with other biopharma companies; re-establish companion diagnostic collaborations with biopharmaceutical companies potentially informed by HTG Therapeutics efforts in the future; expand the company’s position in translational medicine with the company’s RUO molecular profiling products; and continue to establish the company’s systems workflow as the best solution for RNA clinical sequencing.
Technology
HTG has assembled a portfolio of technology platforms to provide highly differentiated capabilities to serve the company’s two business areas. These technologies are as follows and are described in further detail below:
HTG EdgeSeq profiling technology provides robust whole transcriptome gene expression analysis with high plex and sensitivity;
HTG EdgeSeq instrumentation to automate the company’s HTG EdgeSeq chemistry, enabling high volume sample processing and improved reproducibility;
Advanced machine learning-driven medicinal chemistry platform for rapid construction of libraries to known targets; and
AI-driven medicinal chemistry platform to iterate chemical structures to transcriptomic data to optimize drug candidate design and selection.
HTG EdgeSeq Profiling Technology
The company’s HTG EdgeSeq profiling technology measures RNA using DNA nuclease protection probes (‘DNA protection probes’). These DNA protection probes include a target-specific region flanked by universal wing sequences and are hybridized in solution to their target RNAs. Target RNA can be both soluble and cross-linked in the biological matrix. Universal DNA wingmen are hybridized to the wings to prevent S1 nuclease digestion. S1 nuclease is added to remove single-stranded nucleic acids, including unhybridized DNA protection probes and RNA. Following S1 nuclease treatment, the only remaining DNA protection probes in the reaction are those hybridized to targeted RNA and wingmen to form a hybridized heteroduplex. This produces an approximately 1:1 ratio of DNA protection probes to the RNA targeted in the sample. DNA protection probes are labeled with sequencing adaptors and molecular barcodes in a PCR reaction. The labeled DNA protection probes are cleaned up, quantified, pooled, and ready for sequencing using standard NGS protocols. Data from the NGS instrument is processed and reported by the parser software provided with the HTG EdgeSeq platform.
HTG Instrument Platform
The company’s instrument and assays were developed internally and are manufactured in Tucson, AZ under ISO 13485:2016 certified procedures using the company’s proprietary HTG EdgeSeq chemistry to simplify multiplexed nucleic acid testing in research and clinical laboratories. The entire workflow from sample preparation to a molecular profiling report can be accomplished in as few as 36 hours for 96 samples. With the speed, flexibility, sensitivity, and accuracy of the company’s HTG EdgeSeq platform, combined with the system’s ability to work effectively with small sample volumes, researchers can profile tens, hundreds or thousands of different genes per sample.
The HTG EdgeSeq platform consists of a processor (shown above), a host computer and integrated software. The processor is a fully automated instrument that prepares biological samples for quantitation using proprietary, electronically barcoded, single-use consumables. The instrument has barcode scanner units to process the two-dimensional barcodes printed on the consumables loaded into the instrument. The barcoded consumables are single-use to reduce operator errors, eliminate cross-contamination and provide chain of custody traceability for the samples. The robotic liquid handling within the instrument is engineered for reliable performance and low maintenance. The walking path of the robot is programmed to minimize any chance of contamination of the reagents or samples. One host computer supports up to six processors allowing laboratories to easily expand their capacity by adding processors.
Applications of the company’s HTG EdgeSeq technology combine the HTG EdgeSeq platform with a NGS platform to enable the quantitative analysis of hundreds or thousands of RNA targets in a single panel. The sample library is prepared on the processor, then labeled with molecular sequencing adaptors and tags. The labeled samples are cleaned up, quantified, pooled, and sequenced on a NGS platform using standard protocols. Data from the NGS instrument are processed and reported by the parser software included with the system. HTG EdgeSeq panels are available to process from one to 96 samples in a single batch.
In addition to direct sales of the company’s systems, the company utilizes several alternative arrangements to provide customer access to the company’s platform. The company’s platform can be purchased directly by the company’s customers, who also then purchase HTG EdgeSeq assays and other consumables from the company on an as-needed basis. In some instances, the company provides its instruments free of charge on a limited basis to facilitate customer evaluation prior to acquisition.
Drug Discovery Engine
Through key learnings from the company’s prior collaborative development services experiences, the company has designed a new approach to drug discovery that leverages the benefits of the company’s HTP and epitranscriptomic profiling technologies in RNA profiling, sequencing and other scientific applications, including drug discovery and development.
In June 2021, the company announced the formation of HTG Therapeutics, with the addition of several highly experienced drug development professionals to the company’s leadership team. Throughout 2021, the company strengthened its HTG EdgeSeq technology platform and added new profiling capabilities, including epitranscriptomic profiling, which provides the capability to generate over 40,000 biological data points from each experimental sample. By leveraging these profiling technologies in the drug discovery process, integrated with an advanced AI and machine learning-based medicinal chemistry approach, the company has established a novel transcriptome-informed small molecule discovery engine at the core of the company’s HTG Therapeutics business unit, which will generate drug candidate molecules that are intrinsically lower risk and will have greater potential for clinical development success when compared to existing early-stage drug discovery methods in the biopharmaceutical industry. The company further expects that this approach to small molecule discovery can be applied agnostically across therapeutic areas and is scalable and flexible, allowing the company to adapt its strategic and therapeutic focus rapidly as new information emerges on the pathogenesis of diseases.
The company’s approach will potentially provide multiple revenue opportunities, including collaboration or out-licensing arrangements for small molecule drug candidates the company generates from as early as lead optimization through early preclinical development, the out-licensing of the company’s technology to pharmaceutical companies to enable them to implement the company’s advanced drug discovery approach into their own internal discovery efforts, and potentially new companion diagnostic opportunities to support the related clinical development programs for molecules that are brought forward through this novel discovery approach.
In the first half of 2022, the company released a series of white papers after demonstrating the utility of the company’s proprietary technologies as a key component of the company’s novel transcriptome-informed drug discovery and design approach and applying the approach to the company’s initial therapeutic target. As anticipated, the results of the company’s studies summarized in these white papers supported the company’s approach and its ability to reveal indication-specific effects and potential undesirable effects in the company’s first target through analysis of transcriptomic profiles from compound-treated human cell line test systems.
Throughout the second half of 2022, the company continued to work to strengthen the company’s drug discovery core platform technology, including advancing the machine learning component of the company’s platform with the refinement of key proprietary algorithms while continuing to generate the company’s own internal data supporting training sets. In addition, the company made capital investments to establish internal cell culture capabilities to support the expansion of the company’s cell-based test system models. The company’s medicinal chemistry effort has produced a series of chemical libraries for the company’s first target, and the company’s most advanced library for this target has entered preclinical characterization, with a series of data generated including early efficacy in two different disease states.
As a result of the progress made throughout 2022, the company filed a patent application in December 2022, which included claims directed toward specific compounds, pharmaceutical compositions and methods of treating or preventing disease by administration of the compounds. The company’s initial therapeutic pipeline is focused on oncology and degenerative neuroscience, emphasizing pharmacologic targets with understood roles in the progression of diseases in these areas.
The most advanced discovery program in oncology is a small molecule program for the treatment of liquid tumors. The company expects to continue lead optimization of this program through the end of the first quarter of 2023, with advancement to support entry into preclinical development later in the year. HTG Therapeutics has a second oncology directed small molecule program for the treatment of a solid tumor type that is nearing completion in the hit-to-lead discovery phase, with lead optimization efforts planned through the second quarter of 2023 and subsequent preparation for potential preclinical development expected by the end of 2023. In the company’s neuroscience pipeline, the company has completed early discovery stage efforts and chemical library generation for candidate small molecules for application to neurodegenerative conditions which are expected to enter the hit-to-lead phase in the second half of 2023.
The company expects to initiate several early discovery-stage programs evaluating small molecule candidates against a variety of different cancers, from which the company plans to select candidates for additional indications to continually expand the company’s drug discovery pipeline. As additional candidates are identified, the company may choose to retain certain candidates internally to be advanced through early development, with the intention to increase the value of these pipeline assets before moving to license or partner for further development. In parallel to these therapy-area specific programs, the company continues to enrich the proprietary dataset that supports the company’s transcriptome-informed drug discovery platform and to evolve and refine the complementary AI and machine learning portions of the company’s drug discovery engine throughout these discovery processes. Finally, the company would expect to maintain the exclusive rights and the opportunity to solely develop new CDx assays relating to these drug candidates as they move through the increasingly advanced stages of development with the company’s future collaboration partners, further growing the company’s existing gene expression profiling business.
Commercialization of the company’s Drug Discovery Assets
The company has recently begun partnering conversations regarding the company’s drug discovery assets. These portfolio discussions are being addressed in two ways. First, the company will seek to identify biopharmaceutical companies who want to partner with the company to further develop individual drug candidates. These partnerships could be molecule, target or indication specific, or a combination of all three. The company expects to have drug candidates for the first two indications available for potential partnership opportunities in 2023.
Second, the company expects to begin partnering conversations with biopharmaceutical companies around the potential licensing of the company’s drug discovery technology. These partnerships could use all of the platform technologies or only certain elements. The company expect the supporting data associated with the company’s discovery efforts to serve as tangible and objective proof of the company’s ability to develop differentiated molecules, which would further enable partnership discussions.
Revenue and Commercialization of the company’s Profiling Products
The company markets proprietary molecular profiling panels targeting early and late-stage drug development programs with potential breakthrough therapies. The company markets these panels to biopharmaceutical companies, with which the company may collaborate in biomarker development programs. These programs could facilitate the company’s commercialization of companion diagnostic tests. In addition, the company’s panels are used in pre-clinical and clinical research areas, which will facilitate the company’s commercialization of diagnostic tests, including tumor classifiers and prognostic tests.
The company’s product and product-related services revenue is generated primarily through the sale of the company’s profiling instruments and consumables and sample processing services to biopharmaceutical companies, academic research centers and molecular testing laboratories.
Customers can purchase the company’s HTG EdgeSeq instrument and related consumables, which consist primarily of the company’s proprietary molecular profiling panels and other assay components. The company markets a number of proprietary profiling panels, including but not limited to, the following panels which profile the full human mRNA and miRNA transcripts, respectively:
HTG Transcriptome Panel. HTP is expertly designed to provide extensive coverage of most human mRNA transcripts. The panel can simultaneously interrogate 19,398 gene targets using FFPE, PAXgene and extracted RNA samples, generating data for up to 96 samples in less than three days. HTP uses the company’s proprietary workflow and leverages the sensitivity and dynamic range of NGS, allowing researchers to generate reliable results using limited sample amount.
HTG EdgeSeq miRNA Whole-Transcriptome Assay. Human microRNAs (‘miRNA’) are short non-coding strands of RNA that are used by the cell for gene expression regulation. The HTG EdgeSeq miRNA Whole-Transcriptome Assay enables the simultaneous profiling of 2,083 miRNAs, allowing new, potentially clinically relevant miRNA profiles to be discovered. The company’s ability to efficiently profile small FFPE samples or as little as 15 µL of plasma or serum is a significant differentiator in the rapidly growing miRNA market.
Customers can also access the company’s technology through contracted services. Pre-clinical services, including custom assay design and sample processing services provided by the company’s VERI/O laboratory, allow the company’s customers to identify and validate biomarker signatures across their drug portfolios or patient cohorts more efficiently. The company’s VERI/O laboratory is a high-volume molecular laboratory focused solely on providing high-quality data from the company’s proprietary molecular profiling technology. For the company’s biopharmaceutical company customers, the company offers an end-to-end solution leveraging a single technology from discovery to diagnostics.
Through collaboration with biopharmaceutical company customers, the company is uniquely positioned to provide comprehensive services to design, develop and manufacture custom targeted assays with complex molecular diagnostic signatures as investigational use only (‘IUO’) assays for use in global prospective or retrospective clinical trials. The company’s expertise in medical device design control and global regulatory submissions, coupled with the company’s ISO 13485:2016 certified quality system, enable the company to support potential CDx programs. Although the company’s initial focus primarily has been in oncology, the company offers customers a full solution from biomarker discovery to deployment of CDx assays across numerous disease states. Utilizing NGS as the company’s method of detection provides its customers with the benefits of the company’s highly multiplexed and extraction-free chemistry and the sensitivity and dynamic range of the sequencers, providing a powerful value proposition and complete workflow.
Sales and Marketing
The company distributes its instruments and consumables via direct sales in the United States and Europe and through distributors in parts of Europe and other countries.
As of December 31, 2022, the company’s U.S. sales and marketing organization consisted of seven employees including three in direct sales or sales management, two in sales support and two in marketing. In addition to the company’s U.S. sales team, as of December 31, 2022, the company had six direct sales and support employees in Europe and distribution agreements in several additional countries. This sales model provides the company with direct sales coverage in Austria, Belgium, France, Germany, Luxembourg, the Netherlands, the United Kingdom and Switzerland, with distributors in Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Finland, Hungary, Ireland, Israel, Italy, Kosovo, Leetonia, Lithuania, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.
The company’s sales and marketing efforts target biopharmaceutical companies, clinical research centers and clinical diagnostic labs focused on sample profiling for translational research, biomarker/companion assay development and lab-developed diagnostic testing. The company intends to promote adoption of the company’s HTG EdgeSeq platform, sample profiling panels and future molecular diagnostic assays upon marketing clearance or approval by the FDA, by expanding the company’s U.S. sales force, building a greater direct sales presence in Europe, expanding international distribution and continuing to collaborate with key opinion leaders to validate the company’s platform and to influence utilization of the company’s products.
Competition
The company has categorized known competition into:
In drug discovery, companies such as Accent Therapeutics, Arrakis Therapeutics, Storm Therapeutics and other discovery-stage biotechnology companies are focused on similar therapeutic areas;
In profiling, other molecular platform offerings, such as PCR-based technologies, microarrays and next-generation sequencers from companies such as Abbott Molecular, Affymetrix, Inc., Agilent Technologies, Inc., BioRad Laboratories, Invitae, Fluidigm Corporation, Illumina, Inc., Luminex Corporation, NanoString Technologies, Inc., Personal Genome Diagnostics (acquired by Labcorp), entities owned and controlled by QIAGEN N.V., Roche Diagnostics, a division of the Roche Group of companies, and Thermo Fisher Scientific, Inc.; and
Centralized CLIA certified labs offering molecular profiling and gene expression tests as laboratory-developed tests (‘LDTs’) such as Caris, Inc., Exact Sciences, Inc., Guardant Health, Inc., Foundation Medicine, Inc., NeoGenomics, Inc., Personalis, Inc. and Trovagene, Inc.
Intellectual Property
Patents and Patent Applications
As of December 31, 2022, the company’s patent portfolio included seven issued U.S. patents, 58 granted foreign patents (variously in Australia, Canada, China, Japan, France, Germany, Italy, Spain, and the United Kingdom), and 22 patent applications pending in the United States and foreign jurisdictions. This portfolio is directed to, inter alia, the company’s nuclease-protection-based technologies, other nucleic-acid detection methods, methods for subtyping diffuse large B-cell lymphoma (‘DLBCL’), distinguishing indeterminate nevi from melanoma and methods of therapeutics treatments using novel pharmaceutical compounds. The company’s patent portfolio will help the company maintain an exclusive position in key areas of the company’s business, including in the areas of targeted nuclease-protection based sequencing, and drug discovery applications of the company’s technology. In addition, this portfolio may provide out-licensing opportunities. There were at least 10 granted patents, including one U.S. patent, directed to the company’s novel HTG EdgeSeq product in the portfolio as of December 31, 2022. The company’s HTG EdgeSeq patents will begin to expire in 2032. The company’s patent portfolio includes at least four applications and five patents directed towards the company’s direct-target sequencing HTG EdgeSeq methods, at least three applications and eight patents directed towards the company’s methods of subtyping DLBCL, and at least six applications directed towards the company’s methods of detecting DNA and RNA in the same sample.
Government Regulation – Medical Device Regulations
The United States
The company’s products and operations are subject to extensive and rigorous regulation by the FDA and other federal, state, local and foreign authorities.
The company’s facilities, records and manufacturing processes are subject to periodic unscheduled inspections by the FDA.
Government Regulation – Fraud and Abuse and Other Healthcare Regulation
The Foreign Corrupt Practices Act obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
Research and Development
The company’s research and development expenses were $6.8 million for the year ended December 31, 2022.
History
The company was incorporated in Arizona in 1997 as High Throughput Genomics, Inc. In 2000, the company was reincorporated in Delaware as HTG, Inc. Further, the company changed its name to HTG Molecular Diagnostics, Inc. in 2011.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
