IRVINE, Calif., Aug. 10, 2022 (GLOBE NEWSWIRE) -- Oncocyte Corporation (Nasdaq: OCX), a precision diagnostics company with the mission to improve patient outcomes by providing personalized insights that inform critical decisions throughout the patient care journey, today reports financial results for the second quarter 2022, ended June 30, 2022.
Second Quarter and Recent Highlights:
- Recent rightsizing of organization to match new program priorities is expected to reduce headcount carrying costs by over $4.5 million annually and, in combination with reprioritization cost reduction and anticipated strategic activities, annualized operating costs are expected to be reduced by approximately $12 million in 2023 as compared to 2022.
- Reported total revenue of $2.1 million in the second quarter of 2022, compared with $2.0 million in the second quarter of 2021.
- Received $1.0 million milestone payment from the final delivery of DetermaRx(TM) to Burning Rock, our Chinese partner.
- Grew DetermaRx sample volume by 66% compared to second quarter of 2021 and increased onboarded physician base by 82% as compared to the same period in 2021.
- Launched our CLIA validated laboratory test for our newly branded VitaGraft(TM) Liver Transplant Monitoring, a donor-derived cell-free DNA (dd-cfDNA) test.
- Submitted VitaGraft Liver and VitaGraft Kidney for CMS reimbursement.
- Clinical Partners presented five abstracts at ASCO and AACR expanding the evidence supporting DetermaIO(TM) as clinically relevant to decision making in six different cancer types including:
- Independent, prospective randomized clinical trial (RCT) evidence that DetermaIO can identify responders and expand the market for immune checkpoint inhibitor (ICI) therapy in colorectal cancer.
- Phase II independent blinded clinical trial evidence that DetermaIO can inform the use of pembrolizumab therapy (Keytruda) in the neoadjuvant treatment of triple negative breast cancer, expanding upon prior reported RCT data with atezolizumab.
- Closed an underwritten offering of $32.8 million in net proceeds of common stock and warrants, and a preferred stock offering of $4.9 million in net proceeds, to strengthen the balance sheet and further support our product portfolio.
"Our recent reprioritization efforts have led to a rightsizing of our employee base to better match the resourcing required to deliver DetermaIO, DetermaCNI(TM) and VitaGraft to the market. The expected program cost reductions combined with the reduction in headcount and planned monetization of assets through strategic activities are anticipated to result in a decrease of approximately $12 million in annualized operating expenses year over year, extending our cash runway into 2024," said Ron Andrews, Chief Executive Officer of Oncocyte. "We continued to make solid progress in the second quarter, delivering 66% year over year growth in DetermaRx sample volumes and successfully onboarding new physicians and accounts. We also successfully completed our CLIA lab test validation of our VitaGraft product line and submitted both Liver and Kidney for CMS reimbursement."
Continuing, Mr Andrews commented, "Looking ahead, we are excited by the response to the anticipated launch of our VitaGraft Liver test and expect our first samples from a high-profile liver transplant center by the end of August. We also remain on track to submit our dossier for DetermaIO reimbursement this fall. Despite the continued market headwinds, we believe that Oncocyte has an incredibly bright future in front of us as the product development efforts from the past few years are expected to result in new product launches of high value, reimbursed products over the next four to six quarters. I would also like to recognize the promotion of Anish John to CFO and Gisela Paulsen to President and COO. These are well-deserved promotions for two executives that have been instrumental in reshaping our priorities and helping find ways to reduce our burn while still accomplishing our mission. We are now aligned around key areas where our skill sets can best serve Oncocyte's future. I appreciate the continued support of our shareholders and look forward to updating you as we work to deliver on the key product milestones throughout the second half of 2022."
Second Quarter 2022 Financial Results
Total revenue was $2.1 million for the second quarter of 2022, compared to $1.4 million for the prior quarter. Second quarter revenues associated with DetermaRx were $0.8 million, down $0.2 million sequentially, and up $0.2 million year over year. Operating expenses for the second quarter 2022 were $8.2 million, compared to $13.2 million, a decrease of $5.0 million from the same period in the prior year. Research and Development expense for the second quarter 2022 was $5.6 million, an increase of $3.0 million from the same period a year ago. The increase in R&D expense was due to full integration of the Chronix R&D team, the growth and enrolment of our clinical trials, and added headcount related to the buildout of our IVD product development capabilities. General and Administrative expense for the second quarter of 2022 was $5.5 million, a decrease of $2.4 million for the same period in 2021, primarily due to one-time acquisition related costs related Chronix Biomedical acquisition in the same period in the prior year. Sales and Marketing expense in the quarter was $3.5 million, an increase of $0.8 million year over year, primarily attributable to an increase in headcount and continued ramp in sales and marketing activities related to the transplant business, as well as support the commercialization efforts within oncology.
Net loss was $8.3 million for the second quarter of 2022 and net loss per share was $0.07 on a weighted-average basic and diluted share count of 113.0 million, compared to a net loss of $10.5 million and a net loss per share of $0.12 on a weighted-average basic and diluted share count of 89.8 million in the same period of the prior year.
Cash, cash equivalents, restricted cash and marketable securities were $47.1 million as of June 30, 2022.
Webcast and Conference Call Information
Oncocyte will host a conference call to discuss the second quarter 2022 financial results after market close on Wednesday, August 10, 2022 at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The conference call can be accessed live over the phone (877) 407-9716 for U.S. callers or (201) 493-6779 for international callers, using conference ID: 13731553. The live webinar can be accessed at https://investors.oncocyte.com.
Oncocyte is a precision diagnostics company with a mission to improve patient outcomes by providing personalized insights that inform critical decisions throughout the patient care journey.
Through its proprietary tests and pharmaceutical services business, the Company aims to help save lives by accelerating the diagnosis of cancer and advancing cancer care. The Company's tests are designed to help provide clarity and confidence to physicians and their patients at every stage. DetermaRx(TM) identifies early-stage lung cancer patients who are at high risk for cancer recurrence and who may benefit from adjuvant chemotherapy. DetermaIO(TM) is a gene expression test that assesses the tumor microenvironment to predict response to immunotherapies. The Company's pipeline of tests in development also includes DetermaTx(TM), which will assess mutational status of a tumor, DetermaCNI(TM), a blood-based monitoring test, DetermaMx(TM), a long-term recurrence monitoring test, and VitaGraft(TM), a blood-based solid organ transplantation monitoring test. In addition, Oncocyte's pharmaceutical services provide companies that are developing new cancer treatments a full suite of molecular testing services to support the drug development process.
DetermaRx(TM), DetermaIO(TM), DetermaTx(TM), DetermaCNI(TM), DetermaMx(TM) and VitaGraft(TM) are trademarks of Oncocyte Corporation.
Any statements that are not historical fact (including, but not limited to statements that contain words such as "will," "believes," "plans," "anticipates," "expects," "estimates," "may," and similar expressions) are forward-looking statements. These statements include those pertaining to, among other things, expected program cost reductions, planned monetization of assets through strategic activities, the anticipation of a $12 million improvement in annualized operating expenses related to such cost reductions and planned monetization of assets, the expectation that our cash runway will extend well into 2024, the anticipated launch of our VitaGraft Liver product and the expectation that we will receive our first samples from a high-profile liver transplant center by the end of August, the anticipated submission of our dossier for DetermaIO reimbursement this fall, the expectation of new product launches of high value, reimbursed products over the next four to six quarter, and other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management. Forward-looking statements involve risks and uncertainties, including, without limitation, the potential impact of COVID-19 on Oncocyte or its subsidiaries' financial and operational results, risks inherent in the development and/or commercialization of diagnostic tests or products, uncertainty in the results of clinical trials or regulatory approvals, the capacity of Oncocyte's third-party supplied blood sample analytic system to provide consistent and precise analytic results on a commercial scale, potential interruptions to supply chains, the need and ability to obtain future capital, maintenance of intellectual property rights in all applicable jurisdictions, obligations to third parties with respect to licensed or acquired technology and products, the need to obtain third party reimbursement for patients' use of any diagnostic tests Oncocyte or its subsidiaries commercialize in applicable jurisdictions, and risks inherent in strategic transactions such as the potential failure to realize anticipated benefits, legal, regulatory or political changes in the applicable jurisdictions, accounting and quality controls, potential greater than estimated allocations of resources to develop and commercialize technologies, or potential failure to maintain any laboratory accreditation or certification. Actual results may differ materially from the results anticipated in these forward-looking statements and accordingly such statements should be evaluated together with the many uncertainties that affect the business of Oncocyte, particularly those mentioned in the "Risk Factors" and other cautionary statements found in Oncocyte's Securities and Exchange Commission (SEC) filings, which are available from the SEC's website. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. Oncocyte undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Investor & Media Contact
|UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS|
|June 30, 2022||December 31, 2021|
|Cash and cash equivalents||$||44,836||$||35,605|
|Marketable equity securities||579||904|
|Prepaid expenses and other current assets||2,151||1,197|
|Total current assets||49,368||39,143|
|Right-of-use and financing lease assets, net||2,489||2,779|
|Machinery and equipment, net, and construction in progress||9,087||5,748|
|Intangible assets, net||89,341||91,245|
|Other noncurrent assets||382||264|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Accrued expenses and other current liabilities||4,564||2,425|
|Accrued severance from acquisition||2,314||2,352|
|Accrued liabilities from acquisition||609||1,388|
|Loans payable, net of deferred financing costs||574||1,313|
|Right-of-use and financing lease liabilities, current||839||819|
|Total current liabilities||14,154||14,120|
|Right-of-use and financing lease liabilities, noncurrent||3,134||3,545|
|Contingent consideration liabilities||65,666||76,681|
|Commitments and contingencies|
|Series A Redeemable Convertible Preferred Stock, no par value; stated value $1,000 per share; 12 shares authorized, 6 shares issued and outstanding at June 30, 2022; aggregate liquidation preference of $5,911 as of June 30, 2022||4,854||-|
|Preferred stock, no par value, 5,000 shares authorized; no shares issued and outstanding||-||-|
|Common stock, no par value, 230,000 shares authorized; 118,609 and 92,232 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively||289,649||252,954|
|Accumulated other comprehensive loss||31||37|
|Total shareholders' equity||83,243||65,217|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||171,051||$||159,563|
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except per share data)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Cost of revenues||1,405||1,350||2,426||2,088|
|Cost of revenues - amortization of acquired intangibles||976||1,074||1,912||1,381|
|Research and development||5,574||2,537||10,702||5,898|
|Sales and marketing||3,522||2,673||6,759||4,927|
|General and administrative||5,511||7,934||11,164||12,698|
|Change in fair value of contingent consideration||(6,359||)||30||(11,015||)||1,090|
|Total operating expenses||8,248||13,174||17,610||24,613|
|Loss from operations||(8,562||)||(13,568||)||(18,457||)||(24,928||)|
|OTHER INCOME (EXPENSES), NET|
|Interest expense, net||(21||)||(49||)||(51||)||(117||)|
|Unrealized gain (loss) on marketable equity securities||5||173||(325||)||386|
|Pro rata loss from equity method investment in Razor||-||-||-||(270||)|
|Gain on extinguishment of debt (PPP loan)||-||1,141||-||1,141|
|Other income, net||278||16||242||18|
|Total other expenses, net||262||1,281||(134||)||1,158|
|LOSS BEFORE INCOME TAXES||(8,300||)||(12,287||)||(18,591||)||(23,770||)|
|Income tax benefit||-||1,794||-||9,358|
|Net loss per share: basic and diluted||$||(0.07||)||$||(0.12||)||$||(0.18||)||$||(0.17||)|
|Weighted average shares outstanding: basic and diluted||113,042||89,758||102,700||85,961|
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|Six Months Ended|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Amortization of intangible assets||1,904||1,381|
|Pro rata loss from equity method investment in Razor||-||270|
|Unrealized (gain) loss on marketable equity securities||325||(386||)|
|Amortization of debt issuance costs||11||33|
|Change in fair value of contingent consideration||(11,015||)||1,090|
|Change in fair value of Series A redeemable convertible preferred stock second tranche obligation||(305||)||33|
|Deferred income tax benefit||-||(9,358||)|
|Gain on extinguishment of debt (PPP loan)||-||(1,141||)|
|Accrued severance from Chronix Biomedical acquisition||-||2,452|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||(773||)||(103||)|
|Accounts payable and accrued liabilities||239||(766||)|
|Accrued severance and liabilities from Chronix Biomedical acquisition||(817||)||-|
|Net cash used in operating activities||(24,568||)||(17,893||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Acquisition of Insight Genetics, net of cash acquired||-||(607||)|
|Acquisition of Razor Genomics asset, net of cash acquired||-||(6,648||)|
|Acquisition of Chronix Biomedical, net of cash acquired||-||(4,459||)|
|Construction in progress and purchases of furniture and equipment||(2,679||)||(1,452||)|
|Net cash used in investing activities||(2,679||)||(13,166||)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Proceeds from exercise of stock options||-||1,600|
|Proceeds from sale of common shares||32,812||65,262|
|Financing costs to issue common shares||(389||)||(2,676||)|
|Proceeds from sale of redeemable convertible Series A preferred shares||4,875||-|
|Financing costs to issue redeemable convertible Series A preferred shares||(93||)||-|
|Proceeds from sale of common shares under at-the-market transactions||31||6,483|
|Financing costs for at-the-market sales||(1||)||(203||)|
|Proceeds from exercise of warrants||-||823|
|Common shares received and retired for employee taxes paid||-||(37||)|
|Repayment of loan payable||(750||)||(750||)|
|Repayment of financing lease obligations||(7||)||(84||)|
|Net cash provided by financing activities||36,478||70,418|
|NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH||9,231||39,359|
|CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING||37,305||8,843|
|CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING||$||46,536||$||48,202|
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION|
|Cash paid for interest||$||21||$||70|
|SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES|
|Common stock issued for acquisition of Razor Genomics asset||$||-||$||5,756|
|Deferred tax liability generated from the acquisition of Razor Genomics asset||-||7,564|
|Common stock issued for acquisition of Chronix Biomedical||-||3,299|
|Deferred tax liability generated from the acquisition of Chronix||-||1,794|
|Initial fair value of contingent consideration at acquisition date||-||42,295|
|Assumed liability from Chronix Acquisition||-||9,294|
|Construction in progress, machinery and equipment purchases included in accounts payable, accrued liabilities and landlord liability||1,331||9|
|Reconciliation of Non-GAAP Financial Measure|
|Adjusted Loss from Operations|
|(Amounts in Thousands)|
|For the Three Months Ended |
|June 30,||December 31,||June 30,|
|GAAP loss from operations - as reported||$||(8,562||)||$|| (35,680||)||$|| (13,568||)|
|Stock-based compensation expense||2,232||1,706||1,996|
|Change in fair value of contingent consideration||(6,359||)||25,006||30|
|Depreciation and amortization expense||1,360||1,251||1,280|
|Non-GAAP loss from operations, as adjusted||$||(11,186||)||$|| (7,462||)||$|| (7,810||)|
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