Merck invests $6M in microbial diagnostics specialist OpGen

OpGen's Gaithersburg, MD, headquarters--Courtesy of OpGen

The Merck Global Health Innovation Fund invested $6 million in OpGen ($OPGN) on the same day the microbial genetics specialist announced it will acquire AdvanDx, a maker of molecular tests for blood cultures.

The financing calls for Merck ($MRK) to purchase more than 1.1 million shares of OpGen at $4.40, as well as a $1 million senior secured promissory note paying 8% interest that matures in July 2017.

In addition, the managing director of Merck GHI, David Rubin, will serve on OpGen's board. He was previously CEO of bioinformatics company Cognia.

"Merck is a world leader in antibiotics and infectious disease therapeutics and vaccines," said OpGen CEO Evan Jones in a statement. "With its strong capabilities and global reach, we see opportunities to accelerate the growth of our business and to improve patient care worldwide. The investment by Merck GHI will help us further develop OpGen's molecular information business and rapid diagnostics to guide antibiotic therapy," adding that the duo will formalize their collaboration in a number of areas in the coming months.

Merck's financing was needed because OpGen's May IPO fell flat. Its shares fell 20% upon debut on the Nasdaq. They currently trade around $4, though the offer price was $6. The company posted a net loss of $2.6 million on revenues of $472,200 in Q1 2015.

Armed with an infusion of cash, OpGen announced that it agreed to acquire AdvanDx in order to obtain FDA-approved rapid molecular tests, as a complement to the company's internal Acuitas MDRO (multidrug-resistant organism) gene tests.

AdvanDx's Quickfish blood culture molecular tests identify and differentiate between gram-negative bacteria and other blood pathogens in about 20 minutes, OpGen said in a release. The to-be-acquired company had revenues of $4.8 million in 2014. It has about 20 employees in Woburn, MA, and Vedbaek, Denmark.

"The acquisition of AdvanDx strengthens OpGen's portfolio of rapid molecular tests for combating drug resistant infections, while providing additional avenues to sell our Acuitas tests," Jones said in a statement. "Combination of the two companies will expand our revenue and customer base and provide rapid testing capabilities to complement our MDRO gene tests. Together we will be able to combine rapid organism ID capabilities with best in class drug resistance testing."

On top of that, the day before the July 14 financing and acquisition were announced, OpGen announced a collaboration with genetics instruments maker Fluidigm ($FLDM). The two will collaborate on developing MDRO tests that deploy Fluidigm's genotyping assays and polymerase chain reaction (PCR) detection instruments.

OpGen's Acuitas MDRO Gene Test and Resistome Test already utilize Fluidigm's microfluidic technologies.  

OpGen's Acuitas MDRO and Resistome gene tests scan patient specimens for the genes of carbapenem-resistant Enterobacteriaceae, Escherichia coli and other bugs like vancomycin-resistant enterococci. Other offerings include PCR tests for the infections Clostridium difficile and MRSA, whole-genome DNA sequencing for gene subtyping and epidemiology research, and the Lighthouse bioinformatics platform for disease tracking, trend analysis and alerts.

- read the release about Merck's investment
- here's the release about the AdvanDx acquisition
- and the release about the partnership with Fluidigm