Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): August 4, 2023

Oncocyte Corporation

(Exact name of registrant as specified in its charter)

California	1-37648	27-1041563
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

15 Cushing

Irvine, California 92618

(Address of principal executive offices) (Zip code)

(949) 409-7600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, no par value		OCX		The Nasdaq Stock Market LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On August 10, 2023, Oncocyte Corporation (“we,” “us,” “our,” the “Company” or “Oncocyte”) issued a press release announcing our financial results for the three and six months ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1, which, in its entirety, is incorporated herein by reference.

The information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Such information shall not be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as otherwise expressly set forth by specific reference in such filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 4, 2023, the Company promoted James Liu to Senior Director, Controller & Principal Accounting Officer. On that same date, the Company appointed Mr. Liu to the additional role of interim Principal Financial Officer. Mr. Liu will serve as interim Principal Financial Officer until such time as a Chief Financial Officer is appointed, or until his earlier resignation or removal.

Mr. Liu, age 28, previously served as the Company’s Manager of Securities and Exchange Commission Reporting & Compliance from July 2021 to July 2022, as interim Controller from July 2022 to September 2022 and as Controller & Principal Accounting Officer since July 2022. Prior to that, Mr. Liu was the Accounting Manager of Acacia Research Corporation, an opportunistic capital platform that identifies and acquires other businesses, from November 2020 to July 2021, and Senior Accountant at Gatekeeper Systems, Inc. (“Gatekeeper Systems”), a provider of loss prevention solutions, from August 2019 to November 2020. Prior to joining Gatekeeper Systems, Mr. Liu served as Senior Assurance Associate at BDO USA, LLP, an accounting firm, from October 2016 to August 2019. Mr. Liu holds a BASc degree from the University of California, San Diego, and is a Certified Public Accountant.

As Senior Director, Controller & Principal Accounting Officer, Mr. Liu will receive an annual salary of $200,000 and will be eligible to receive discretionary annual bonuses based on achievement of personal and corporate performance goals established by Oncocyte, with a target bonus equal to 35% of his annual base salary. Mr. Liu will not receive additional compensation for his service as interim Principal Financial Officer.

Mr. Liu will continue to be eligible to participate in various Oncocyte employee benefit programs and plans.

There are no family relationships between Mr. Liu and any directors or executive officers of the Company. Additionally, there are no arrangements between Mr. Liu and any other person pursuant to which he was selected to serve as Senior Director, Controller & Principal Accounting Officer or as interim Principal Financial Officer. Finally, there are no transactions to which the Company is or was a participant and in which Mr. Liu has a direct or indirect material interest subject to disclosure as a related party transaction under Item 404(a) of Regulation S-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number		Description
99.1		Press release dated August 10, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ONCOCYTE CORPORATION

Date: August 10, 2023	By:	/s/ Joshua Riggs
		Joshua Riggs
		President and Chief Executive Officer

Exhibit 99.1

ONCOCYTE REPORTS SECOND QUARTER 2023 FINANCIAL RESULTS

Conference Call on Thursday, August 10, 2023 at 5:00 a.m. PT / 8:00 a.m. ET

IRVINE, Calif., August 10, 2023 (GLOBE NEWSWIRE) — Oncocyte Corporation (Nasdaq: OCX), a precision diagnostics company, today reported financial results for the second quarter of 2023, ended June 30, 2023.

Second Quarter and Recent Highlights

	●	Transplant product launch on pace for Q4 early access. Manufacturing transfer process for 48-target universal assay began in June
	●	Expanding clinical utility for VitaGraft Kidney, a recent peer-reviewed publication in Kidney International Reports showed ability to identify ABMR and differentiate it from IgA Nephropathy
	●	Landmark randomized triple negative breast cancer study of DetermaIO in patients treated with Keytruda in the adjuvant setting continues to progress
	●	Cash, cash equivalents, and marketable securities totaled $17.9 million at June 30, 2023, with average cash burn projected to drop below $5 million a quarter in 2H 2023

“In the second quarter, we made significant progress towards the development and manufacturing of our Transplant product for institutions conducting research on the use of cfDNA monitoring post-transplantation,” said Josh Riggs, CEO of Oncocyte. “We look forward to serving the global transplant community with our patented technology and expect to meet our target of early access launch by the end of this year. On the clinical front, our transplant and oncology laboratory tests continue their review process with MolDX as they are evaluated for potential coverage. Amongst the potential coverage decisions, ongoing clinical studies and operational improvements, we believe that Oncocyte is positioned for success with several value creating milestones achievable in the second half of this year.”

Second Quarter 2023 Financial Results

Consolidated revenues for the second quarter of 2023 were approximately $0.5 million, and cost of revenues for the second quarter were approximately $0.2 million, primarily from services customers.

Net consolidated operating loss for the three months ended June 30, 2023, was $8.3 million, compared to consolidated operating loss of $8.6 million, a decrease of $0.3 million from the same period in the prior year.

Consolidated research and development expense for the second quarter decreased 56% year-over-year from $5.6 million to $2.4 million driven by focused investment in developing manufacturable versions of our assays.

Consolidated general and administrative expense for the second quarter decreased 36% year-over-year from $5.5 million to $3.5 million, reflecting management’s efforts to control spending not directly related to product development or commercial activities.

Consolidated sales and marketing expense for the second quarter decreased 77% year over year from $3.5 million to $0.8 million. We focused on our early access programs and early market access work for our laboratory tests and research products.

For Oncocyte’s complete financial results for the second quarter ended June 30, 2023, see the Company’s Quarterly Form 10-Q to be filed with the Securities and Exchange Commission on Aug 10, 2023.

Webcast and Conference Call Information

Oncocyte will host a conference call to discuss the first quarter 2023 financial results prior to market open on Thursday, August 10, 2023 at 5:00 a.m. Pacific Time / 8:00 a.m. Eastern Time. The conference call may be accessed live via telephone by dialing (877) 317-6789 for domestic callers or (412) 317-6789 for international callers. Once dialed in, ask to be joined to the Oncocyte Corporation call. The live webinar of the call may be accessed by visiting the “Events & Presentation” section of the Company’s website at https://investors.oncocyte.com.

About Oncocyte

Oncocyte is a precision diagnostics company. The Company’s tests are designed to help provide clarity and confidence to physicians and their patients. DetermaIO™ is a gene expression test that assesses the tumor microenvironment in order to predict response to immunotherapies. VitaGraft™ is a blood-based solid organ transplantation monitoring test, and pipeline test DetermaCNI™ is a blood-based monitoring tool for monitoring therapeutic efficacy. For more information, visit www.oncocyte.com

DetermaIO™, DetermaCNI™, and VitaGraft™ are trademarks of Oncocyte Corporation.

Forward-Looking Statements

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, the expectation that the Company’s transplant product launch is on pace for Q4 2023 early access, the projection that average cash burn will drop below $5 million a quarter in 2H 2023, the anticipation of potential coverage from MolDX for our transplant and oncology laboratory tests, the expectation that Oncocyte is positioned to achieve several value creating milestones in the second half of this year, 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, changes to regulatory oversight and/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.

CONTACT:

Stephanie Prince

PCG Advisory

(646) 863-6341

sprince@pcgadvisory.com

ONCOCYTE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30,			December 31,
	2023			2022
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	17,368		$	19,993
Accounts receivable, net of allowance of $178 and $154, respectively		1,716			2,012
Marketable equity securities		530			433
Prepaid expenses and other current assets		1,179			977
Assets held for sale		191			-
Current assets of discontinuing operations		-			2,121
Total current assets		20,984			25,536

NONCURRENT ASSETS
Right-of-use and financing lease assets, net		1,891			2,088
Machinery and equipment, net, and construction in progress		5,997			8,763
Intangible assets, net		56,639			61,633
Restricted cash		1,700			1,700
Other noncurrent assets		329			371
TOTAL ASSETS	$	87,540		$	100,091

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	875		$	1,253
Accrued compensation		1,301			1,771
Accrued expenses and other current liabilities		2,196			3,839
Accrued severance from acquisition		2,314			2,314
Accrued liabilities from acquisition		109			109
Right-of-use and financing lease liabilities, current		737			815
Current liabilities of discontinuing operations		135			2,005
Total current liabilities		7,667			12,106

NONCURRENT LIABILITIES
Right-of-use and financing lease liabilities, noncurrent		2,398			2,729
Contingent consideration liabilities		29,150			45,662

TOTAL LIABILITIES		39,215			60,497

Commitments and contingencies

Series A Redeemable Convertible Preferred Stock, no par value; stated value $1,000 per share; 5 and 6 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively; aggregate liquidation preference of $5,140 and $6,091 as of June 30, 2023 and December 31, 2022, respectively		4,725			5,302

SHAREHOLDERS’ EQUITY
Preferred stock, no par value, 5,000 shares authorized; no shares issued and outstanding		-			-
Common stock, no par value, 230,000 shares authorized; 8,241 and 5,932 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		309,535			294,929
Accumulated other comprehensive income		41			39
Accumulated deficit		(265,976	)		(260,676	)
Total shareholders’ equity		43,600			34,292
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	87,540		$	100,091

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022

NET REVENUE	$	463		$	237		$	760		$	617

Cost of revenues		169			183			434			288
Cost of revenues – amortization of acquired intangibles		22			23			44			51
Gross profit		272			31			282			278

OPERATING EXPENSES
Research and development		2,435			2,444			4,562			4,451
Sales and marketing		805			127			1,500			393
General and administrative		3,531			5,445			6,943			11,092
Change in fair value of contingent consideration		1,795			(6,359	)		(16,512	)		(11,015	)
Impairment loss from intangible assets		-			-			4,950			-
Loss on disposal and held for sale assets		-			-			1,283			-
Total operating expenses		8,566			1,657			2,726			4,921

Loss from operations		(8,294	)		(1,626	)		(2,444	)		(4,643	)

OTHER INCOME (EXPENSES), NET
Interest income (expenses), net		1			(21	)		(9	)		(51	)
Unrealized gain (loss) on marketable equity securities		(24	)		5			97			(325	)
Other income (expenses), net		(16	)		278			(18	)		242
Total other income (expenses), net		(39	)		262			70			(134	)

LOSS BEFORE INCOME TAXES		(8,333	)		(1,364	)		(2,374	)		(4,777	)

Loss from continuing operations		(8,333	)		(1,364	)		(2,374	)		(4,777	)
Loss from discontinuing operations		-			(6,936	)		(2,926	)		(13,814	)

NET LOSS	$	(8,333	)	$	(8,300	)	$	(5,300	)	$	(18,591	)

LESS: DIVIDENDS AND ACCRETION OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK		(311	)		(72	)		(541	)		(72	)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS: BASIC AND DILUTED	$	(8,644	)	$	(8,372	)	$	(5,841	)	$	(18,663	)

Net loss from continuing operations per share: basic and diluted	$	(1.03	)	$	(0.24	)	$	(0.34	)	$	(0.93	)
Net loss from discontinuing operations per share: basic and diluted	$	-		$	(1.23	)	$	(0.42	)	$	(2.69	)
Net loss per share: basic and diluted	$	(1.07	)	$	(1.48	)	$	(0.83	)	$	(3.63	)

Weighted average shares outstanding: basic and diluted		8,090			5,652			7,030			5,135

Oncocyte Corporation

Reconciliation of Non-GAAP Financial Measure

Consolidated Adjusted Loss from Operations

(Amounts in Thousands)

	For the Three Months Ended
	June 30,			March 31,			June 30,
	2023			2023			2022
	(unaudited)			(unaudited)			(unaudited)
Consolidated GAAP loss from operations	$	(8,294	)	$	2,924		$	(8,562	)
Stock-based compensation expense		834			834			2,232
Change in fair value of contingent consideration		1,795			(18,307	)		(6,359	)
Severance charge		604			14			143
Depreciation and amortization expense		457			472			1,360
Loss on disposal and held for sale assets		-			1,335			-
Impairment loss		-			4,950			-
Consolidated Non-GAAP loss from operations, as adjusted	$	(4,604	)	$	(7,778	)	$	(11,186	)

Cover	Aug. 04, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 04, 2023
Entity File Number	1-37648
Entity Registrant Name	Oncocyte Corporation
Entity Central Index Key	0001642380
Entity Tax Identification Number	27-1041563
Entity Incorporation, State or Country Code	CA
Entity Address, Address Line One	15 Cushing
Entity Address, City or Town	Irvine
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92618
City Area Code	(949)
Local Phone Number	409-7600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	OCX
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false