Oncocyte Corporation (Nasdaq: OCX) (“Oncocyte” or the “Company”), a
diagnostics technology company, today published the following
letter to shareholders in conjunction with its third quarter
results:
Fellow Shareholders,
We are pleased to report that we are making considerable
progress on two fronts that help de-risk our path to meaningful
revenue. First, we are continuing to sign new research customers at
well-respected hospitals and universities. In addition to the two
customers mentioned in our August update, we have now signed
agreements with two leading transplant university hospitals in the
U.S. and Germany, as well as major research hospitals in
Switzerland, Austria, and the U.K. Given the concentrated nature of
the transplant market, we believe each new customer represents a
key step toward capturing an estimated $1 billion global total
addressable market for our transplant rejection testing
technology.
Second, our clinical kitted test product development remains on
track, and we have already had productive dialogue with the U.S.
Food and Drug Administration (FDA), which we describe below.
The international response to GraftAssure™, which is our
research-use-only assay that can detect early evidence of graft
organ damage, is exceeding our expectations. We attribute this
success to our robust research partnerships in Europe, and to our
team’s scientific leadership in researching the dd-cfDNA biomarker1
for over a decade. Our customers in Germany now represent about 9%
of the country’s annual organ transplant volumes.2
Additionally, we are making inroads toward capturing share in
the much larger U.S. market. In August, we reported that our U.S.
sales funnel represents 25% of transplant volumes. Three months
later, we are pleased to report that hospitals representing about
2% of overall organ transplant volumes3 have now signed up to use
GraftAssure.
We also received significant interest and engagement from the
transplant lab community at the American Society for
Histocompatibility & Immunogenetics (ASHI) conference in
Anaheim in October. This continuous positive reinforcement from the
customer base gives us confidence that we are on the right
track.
Executive summary
Oncocyte is at a pivotal stage in commercializing our IP in
organ transplant, primarily by making a kitted test that quantifies
an established biomarker, donor-derived cell-free DNA (dd-cfDNA),
and uses a digital-PCR workflow that we believe offers distinct
advantages over assays run on Next-Generation Sequencing (NGS)
technology. Our scientists have played a pivotal role over the past
decade in developing the science that established dd-cfDNA as a
trusted biomarker4, and we are now commercializing a product by
pursuing a market disruptive approach. We aim to deliver proven,
more affordable, faster tests that can be run at local labs.
While we don’t expect meaningful revenue in transplant rejection
testing until we have reached the clinical in-vitro diagnostic
(IVD5) stage of our kitted product development, we believe that
customers who are signing up for GraftAssure RUO are motivated by
the eventual opportunity to use our IVD kits to measure this
biomarker in their own labs, capturing the benefit of a rapid
response time and the ability to generate revenue by running the
test.
We also can run our clinical-use assay, VitaGraft, at our
clinical lab in Nashville. We received Medicare reimbursement on
that test in August 2023.
Strategic progress
We are on track to meet the commitment that we made to investors
in August to have more than 20 transplant centers running
GraftAssure tests through the end of 2025. We estimate that each
center represents a potential annual high-margin revenue stream of
several hundred thousand dollars to $2 million of clinical-use
tests, depending on the size of the center.
By staying science-driven and putting customers first, we are
building solid relationships. Deploying our GraftAssure assay is a
key part of our land-and-expand strategy to drive commercial
adoption of our tests.
We are especially pleased to report on how quickly we are moving
to capture market share. GraftAssure began shipping in June and in
less than five months, we are well into step two of our
land-and-expand strategy. In fact, we have one customer in the U.S.
and one prominent university hospital in Europe that are
progressing to stage three. A simple breakdown:
Land: Drive market penetration with GraftAssure to build
customer install base
1. Convert sales
funnel into signed customers: Either our sales team or
Bio-Rad’s, or a combination of both, helps introduce our assay to
potential academic research customers. Then, we work with
institutions to sign agreements to run GraftAssure.
2. Empower labs to
run our assay in-house: Our team provides comprehensive
training on the digital-PCR workflow used for GraftAssure, which we
believe offers distinct advantages over assays run on
Next-Generation Sequencing (NGS) technology.6
3. Drive routine
use of GraftAssure & reorders: Customer labs begin to
run GraftAssure to perform research. Once the lab uses up the
initial GraftAssure marketing samples, they place orders for
additional kits. Initially, we expect kit orders will reflect
nominal (low revenue) amounts and will increase significantly in
the next phase of our strategy.
Expand: Democratize testing through FDA-cleared
VitaGraft+ kit
4. Obtain
regulatory clearance for clinical use: Oncocyte is
pursuing IVD clearance from the FDA for VitaGraft+, which is based
on the same underlying IP and is similar to GraftAssure. In Europe,
we will be pursuing CE Marketing under In Vitro Diagnostic
Regulation (IVD-R).7
5. Obtain
reimbursement from Medicare and other payors: Shortly
after FDA clearance, we expect MolDx to attach a coverage decision
to VitaGraft+, making it a reimbursed test. (Note that the version
of the test that we run at our Nashville lab received reimbursement
in August 2023).
6. Begin to
generate meaningful revenue: Oncocyte expects to sell
about $1 million per year in VitaGraft+ kits to an average hospital
lab customer, which would order the test to manage its patients in
house. Our goal is to enable labs to serve patients more quickly,
and to bill payors, thus generating revenue for the hospital and
increasing the sustainability of local care for the community. To
put it simply, we expect our kits would enable the lab to perform
the test to generate revenue for the lab.
To recap, our strategy is to land major transplant centers and
research universities with our research-use-only (RUO) product.
Doing so establishes our technology and increases its potential
utility by enabling researchers to explore and expand potential
applications of dd-cfDNA.
Once we have achieved FDA clearance for our test kits to be used
to make clinical decisions – that is, approved as an IVD – we
believe that these institutions will begin using our VitaGraft+
tests to manage their patients, while continuing to use our
GraftAssure test kit to perform research. Of note, our GraftAssure
research product may not be used to support clinical treatment
decisions.
We are pleased with our strategic progress and our ability to
move quickly to establish a customer base to support future revenue
growth. As a reminder of our journey to date: The first prototypes
of GraftAssure were completed in December 2023, and by April 2024,
we welcomed Bio-Rad Laboratories as an investor and strategic
partner, supporting GraftAssure’s global launch. Under this
partnership, Bio-Rad and Oncocyte are co-marketing GraftAssure in
the U.S. and Germany. Bio-Rad has exclusive distribution and
commercial rights of the RUO product outside the U.S. and Germany,
with the exception of several major potential international
customers where both companies have mutually agreed to allow
Oncocyte to take commercial lead.
The transplant market is highly concentrated with fewer than 100
academic and research centers in the U.S. that account for
approximately 80% of transplant volumes8. Markets outside the U.S.
are similarly concentrated within high-end academic institutions.
Bio-Rad’s global infrastructure puts those centers well within
reach, allowing for high-touch sales and service in those
regions.
Regulatory update
We are pleased to report that our FDA pre-submission remains on
track. Since our last quarterly update, we have cleared the first
stage gate in our clinical product development process and
submitted a Q-Sub to the FDA.
Specifically, Oncocyte has submitted its plan for an IVD version
of the dd-cfDNA kitted test to the FDA, beginning the Q-submission
process. We already have begun to engage in productive dialogue
with the FDA, and a meeting is scheduled for early December in
connection with the submission. The Q-sub is a formal pathway for
companies to get written feedback on their development plan and is
a critical step in gaining confidence in the validation process
that we expect to begin in early 2025.
As a reminder, the IVD development process occurs in three
phases, culminating in FDA submission. Since our August update, we
have completed Phase 1: Planning and Inputs. We are currently in
Phase 2: Design and Outputs and will proceed with Phase 3:
Verification and Validation thereafter.
Meanwhile, we also are thrilled to report that several hospitals
have expressed interest in supporting the FDA submission process.
Six hospitals or clinics, all of which are in major cities (given
the highly concentrated nature of the transplant market) have
expressed interest in participating in our clinical observational
study. In addition, four institutions have expressed interest in
participating in the reproducibility study. We believe these sites
represent potential future VitaGraft+ customers.
The clinical director of one transplant center, who expressed
interest in supporting our FDA submission, told us that his
transplant center would benefit from having access to a kitted
product. Because Oncocyte’s kitted test is run on a digital PCR
instrument9, our FDA-cleared tests will be designed to provide
actionable information when the time to treat is critical. “In a
for-cause setting, send out testing doesn’t do me any good,” the
clinical director said. “I cannot wait for two days.”
Scientific update
We continue to advance the science of dd-cfDNA and demonstrate
its clinical value.
On August 11, Transplant International published a review that
concluded that dd-cfDNA is a valuable, non-invasive biomarker that
enhances graft surveillance and personalized therapy for patients
with antibody-mediated rejection (AMR), potentially improving
outcomes and reducing premature graft loss.
Also in August, we announced a case series that represented the
second study showing VitaGraft Kidney as a measure of response to
the benefit of therapy on AMR, which is a leading cause of
allograft failure. The case series study, involving two patients,
underscored the significant potential of using repeated VitaGraft
Kidney measurements to monitor the efficacy of a targeted therapy
drug, in this case, daratumumab.
The daratumumab study represented the second publication this
year that showed Oncocyte’s ability to monitor therapeutic
efficacy. In the phase 2 randomized controlled
trial published in The New England Journal of Medicine in
May 2024, VitaGraft Kidney was also used to measure the response to
the drug felzartamab for patients with AMR after kidney
transplantation.
These papers’ authors included Oncocyte’s Chief Science Officer,
Ekke Schuetz, and Senior R&D Director, Julia Beck.
We believe that the growing body of literature around the
dd-cfDNA biomarker should support claims expansion, which we expect
to translate to an increase in our total addressable market. Within
the coming years, we expect to see claims expansion regarding using
dd-cfDNA to monitor DSA+ patients, in the application of anti-CD38
drugs, as described above with daratumumab and felzartamab, and
claims expansion to monitoring for minimal residual disease (MRD)
in transplant rejection. Notably, in October, felzartamab received
Breakthrough Therapy Designation (BTD) from FDA for the treatment
of late AMR in kidney transplant patients.
Finally, our engagement in oncology also continues to make
progress, even with limited additional investment, as we primarily
focus on commercializing our transplant products. In October, we
announced the peer-reviewed publication of positive data
related to our proprietary gene expression test, DetermaIO™.
Our DetermaIO immuno-oncology assay predicted response to the
drug atezolizumab in a phase 2 clinical trial, the results of which
were published in the peer-reviewed journal, Clinical Cancer
Research10. In the study, only DetermaIO was both statistically
significant and predictive of a pathologic complete response (pCR)
among the various biomarkers assessed. This study validated
DetermaIO’s utility in identifying which breast cancer patients are
most likely to benefit from neoadjuvant atezolizumab therapy and
furthered our progress into the multi-billion-dollar addressable
market in oncology diagnostics.
With this publication, DetermaIO continues to solidify its added
value over standard-of care biomarkers and assays. The
aforementioned study has been included in our CMS submission as we
continue our efforts to secure reimbursement coverage to increase
access to this valuable test.
While we don’t expect to realize meaningful revenue related to
our oncology IP within the near term, these studies support
partnering discussions with larger companies, support our CMS
submission, and validate our research and development pipeline,
which is designed to drive sustained rapid growth over the next
decade.
Financing update
We continue to prudently manage the inherent tradeoffs between
investing for rapid growth and controlling expenses to limit
dilutive capital raises ahead of a material potential valuation
increase.
On October 2, we announced that we entered into a securities
purchase agreement for a private placement that generated gross
proceeds of $10.2 million, before deducting banking and legal fees
and other capital raising expenses. We sold 3.46 million11 shares
of our common stock in the private placement, which priced at the
market at $2.948 per share.
We were pleased to welcome support from new and existing
investors, including Bio-Rad Laboratories, and to be able to
finance the company’s continued operations by selling common stock
priced at the market, meaning without any discount to the closing
price.
We feel confident in our ability to continue to execute on
critical milestones and access capital to fund operations and
growth.
Q3 2024 Financial Overview
- Relative to our strategic objective of commercializing our
transplant tests, we consider ourselves to be “pre-revenue.” Our
reported revenue of $115,000 in the third quarter was derived from
pharma services performed at our clinical laboratory in
Nashville.
- A gross profit of $50,000 reflected the relatively fixed costs
of operating our Nashville laboratory. These costs include labor as
well as infrastructure expenses such as the depreciation of
laboratory equipment, allocated rent costs, leasehold improvements,
and allocated information technology costs.
- Operating expenses of $13.6 million included $448,000 in
non-cash stock-based compensation expenses, $318,000 in non-cash
depreciation and amortization expenses and a $7.1 million non-cash
expense from the change in fair value of contingent consideration.
Excluding these non-cash items in the current and prior periods,
our Q3 operating expenses increased approximately 13% sequentially
and decreased 8% year over year.
- Research and development expenses of $2.8 million reflected the
incremental investments we are making in our IVD product launch.
Specifically, we increased investment in IVD software development
and regulatory consulting expenses in the third quarter compared
with the second quarter.
- Sales and marketing expenses of $1.0 million reflected added
costs as we commercialize our transplant tests. Specifically, we
recorded growth in commissions, lease expenses associated with the
cost of digital PCR instruments at our customer pilot sites, and
incremental travel to newly signed European customers and potential
customers.
- General and administrative expenses of $2.6 million were
roughly flat, reflecting cost discipline as we focus on investing
in research and development on IVD product development, and sales
and marketing of GraftAssure.
- The $7.1 million non-cash expense associated with the increase
in the fair value of the contingent consideration liability was
tied primarily to a decrease in the discount rate percentage used
in valuing our transplant intellectual property, due to both macro
and micro factors, including the lowered interest rate targets from
the Federal Reserve and Oncocyte’s progress toward achieving
revenue.
- Loss from continuing operations was $13.5 million, or $0.98
share.
- Non-GAAP loss from operations was $5.6 million and excludes
certain non-cash items. Please refer to the table below,
“Reconciliation of Non-GAAP Financial Measure,” for additional
information.
- Our Q3 2024 per share results reflect 13.7 million weighted
average shares outstanding. Including the shares issued as part of
our October private placement, we currently have 16.8 million
shares outstanding.
- Oncocyte’s cash, cash equivalents, and restricted cash balance
at the end of the third quarter was approximately $5.1 million,
down $5.9 million sequentially. As mentioned, on October 2, 2024,
we entered into a securities purchase agreement for a private
placement. After deducting banking and legal fees and other
transaction-related expenses, net proceeds were approximately $9.4
million from the private placement.
We are pleased that our third quarter outgoing cash flow from
operations (net cash used in operating activities) of $5.55 million
came in favorable to our budget of $6 million, which was partially
a result of operational efficiency and partly a result of inventory
manufacturing timing.
Webcast and Conference Call Information
Conference Call and Webcast on Tuesday, November 12,
2024, at 2:00 p.m. PT / 5:00 p.m. ET
Interested parties may access the live call via telephone by
dialing toll free 800-715-9871 for domestic callers. Once dialed
in, ask to be joined to the Oncocyte
Corporation call.
The live webcast of the call may be accessed by visiting the
“Events & Presentations” section of the Company’s website at
https://investors.oncocyte.com/. A replay of the webcast will be
available on the Company’s website shortly after the conclusion of
the call.
CONFERENCE CALL DETAILS:Participant Toll-Free
Dial-In Number: (800) 715-9871Participant Toll Dial-In Number: +1
(646) 307-1963Conference ID: 4153469
WEBCAST DETAILS:
https://events.q4inc.com/attendee/686764682
About Oncocyte
Oncocyte is a diagnostics technology company. The Company’s
tests are designed to help provide clarity and confidence to
physicians and their patients. VitaGraft™ is a clinical blood-based
solid organ transplantation monitoring test. GraftAssure™ is a
research use only (RUO) blood-based solid organ transplantation
monitoring test. DetermaIO™ is a gene expression test that assesses
the tumor microenvironment to predict response to immunotherapies.
DetermaCNI™ is a blood-based monitoring tool for monitoring
therapeutic efficacy in cancer patients. For more information
about Oncocyte, please visit https://oncocyte.com/. For
more information about our products, please visit the following web
pages:
VitaGraft Kidney™
- https://oncocyte.com/vitagraft-kidney/VitaGraft
Liver™
- https://oncocyte.com/vitagraft-liver/GraftAssure™
- https://oncocyte.com/graftassure/DetermaIO™
-
https://oncocyte.com/determa-io/DetermaCNI™
- https://oncocyte.com/determa-cni/
VitaGraft™, GraftAssure™, DetermaIO™, and DetermaCNI™ are
trademarks of Oncocyte Corporation.
CONTACT:
Jeff RamsonPCG Advisory(646) 863-6893jramson@pcgadvisory.com
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, future
expansion and growth, the Company’s land-and-expand strategy to
drive commercial adoption of its tests and capture market share,
plans to have transplant centers running GraftAssure tests through
the end of 2025, projected revenue path, IVD strategy, assumptions
regarding regulatory approvals and clearances, timing and planned
regulatory submissions, the ongoing global launch of GraftAssure
with the support of Bio-Rad Laboratories, our ability to continue
to access capital, 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, 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.
|
|
ONCOCYTE CORPORATIONCONDENSED CONSOLIDATED
BALANCE SHEETS(In thousands, except per share
data) |
|
|
|
September 30, 2024 |
|
December 31, 2023 |
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
3,363 |
|
|
$ |
9,432 |
|
Accounts receivable, net of allowance for credit losses of $2 and
$5, respectively |
|
|
209 |
|
|
|
484 |
|
Inventories |
|
|
232 |
|
|
|
— |
|
Deferred financing costs |
|
|
330 |
|
|
|
— |
|
Prepaid expenses and other current assets |
|
|
627 |
|
|
|
643 |
|
Assets held for sale |
|
|
32 |
|
|
|
139 |
|
Total current assets |
|
|
4,793 |
|
|
|
10,698 |
|
NONCURRENT ASSETS |
|
|
|
|
Right-of-use and financing lease assets, net |
|
|
3,001 |
|
|
|
1,637 |
|
Machinery and equipment, net, and construction in progress |
|
|
3,494 |
|
|
|
3,799 |
|
Intangible assets, net |
|
|
56,529 |
|
|
|
56,595 |
|
Restricted cash |
|
|
1,700 |
|
|
|
1,700 |
|
Other noncurrent assets |
|
|
699 |
|
|
|
463 |
|
TOTAL ASSETS |
|
$ |
70,216 |
|
|
$ |
74,892 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable |
|
$ |
872 |
|
|
$ |
953 |
|
Accrued compensation |
|
|
1,906 |
|
|
|
1,649 |
|
Accrued royalties |
|
|
1,116 |
|
|
|
1,116 |
|
Accrued expenses and other current liabilities |
|
|
985 |
|
|
|
452 |
|
Accrued severance from acquisition |
|
|
2,314 |
|
|
|
2,314 |
|
Right-of-use and financing lease liabilities, current |
|
|
1,283 |
|
|
|
665 |
|
Current liabilities of discontinued operations |
|
|
— |
|
|
|
45 |
|
Contingent consideration liabilities, current |
|
|
614 |
|
|
|
393 |
|
Total current liabilities |
|
|
9,090 |
|
|
|
7,587 |
|
NONCURRENT LIABILITIES |
|
|
|
|
Right-of-use and financing lease liabilities, noncurrent |
|
|
2,708 |
|
|
|
2,204 |
|
Contingent consideration liabilities, noncurrent |
|
|
48,707 |
|
|
|
39,507 |
|
TOTAL LIABILITIES |
|
|
60,505 |
|
|
|
49,298 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Series A Redeemable Convertible Preferred Stock, no par value;
stated value $1,000 per share; 5 shares issued and outstanding at
December 31, 2023; aggregate liquidation preference of $5,296
as of December 31, 2023 |
|
|
— |
|
|
|
5,126 |
|
|
|
|
|
|
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; 13,374 and
8,261 shares issued and outstanding at September 30, 2024 and
December 31, 2023, respectively |
|
|
326,682 |
|
|
|
310,295 |
|
Accumulated other comprehensive income |
|
|
57 |
|
|
|
49 |
|
Accumulated deficit |
|
|
(317,028 |
) |
|
|
(289,876 |
) |
Total shareholders’ equity |
|
|
9,711 |
|
|
|
20,468 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
70,216 |
|
|
$ |
74,892 |
|
|
|
|
|
|
|
ONCOCYTE CORPORATIONUNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share data) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net revenue |
|
$ |
115 |
|
|
$ |
429 |
|
|
$ |
395 |
|
|
$ |
1,189 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
43 |
|
|
|
159 |
|
|
|
184 |
|
|
|
593 |
|
Cost of revenues – amortization of acquired intangibles |
|
|
22 |
|
|
|
22 |
|
|
|
66 |
|
|
|
66 |
|
Gross profit |
|
|
50 |
|
|
|
248 |
|
|
|
145 |
|
|
|
530 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
2,817 |
|
|
|
2,185 |
|
|
|
7,582 |
|
|
|
6,747 |
|
Sales and marketing |
|
|
1,043 |
|
|
|
713 |
|
|
|
2,742 |
|
|
|
2,213 |
|
General and administrative |
|
|
2,565 |
|
|
|
2,487 |
|
|
|
7,645 |
|
|
|
9,430 |
|
Change in fair value of contingent consideration |
|
|
7,140 |
|
|
|
(435 |
) |
|
|
9,421 |
|
|
|
(16,947 |
) |
Impairment losses |
|
|
— |
|
|
|
1,811 |
|
|
|
— |
|
|
|
6,761 |
|
Impairment loss on held for sale assets |
|
|
— |
|
|
|
— |
|
|
|
169 |
|
|
|
1,283 |
|
Total operating expenses |
|
|
13,565 |
|
|
|
6,761 |
|
|
|
27,559 |
|
|
|
9,487 |
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(13,515 |
) |
|
|
(6,513 |
) |
|
|
(27,414 |
) |
|
|
(8,957 |
) |
|
|
|
|
|
|
|
|
|
Other (expenses) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(31 |
) |
|
|
(14 |
) |
|
|
(54 |
) |
|
|
(39 |
) |
Unrealized (loss) gain on marketable equity securities |
|
|
— |
|
|
|
(89 |
) |
|
|
— |
|
|
|
8 |
|
Other income, net |
|
|
53 |
|
|
|
127 |
|
|
|
316 |
|
|
|
125 |
|
Total other income, net |
|
|
22 |
|
|
|
24 |
|
|
|
262 |
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
|
(13,493 |
) |
|
|
(6,489 |
) |
|
|
(27,152 |
) |
|
|
(8,863 |
) |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,926 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(13,493 |
) |
|
$ |
(6,489 |
) |
|
$ |
(27,152 |
) |
|
$ |
(11,789 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
Net loss from continuing operations - basic and diluted |
|
$ |
(13,493 |
) |
|
$ |
(6,687 |
) |
|
$ |
(27,415 |
) |
|
$ |
(9,602 |
) |
Net loss from discontinued operations - basic and diluted |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(2,926 |
) |
Net loss attributable to common stockholders - basic and
diluted |
|
$ |
(13,493 |
) |
|
$ |
(6,687 |
) |
|
$ |
(27,415 |
) |
|
$ |
(12,528 |
) |
|
|
|
|
|
|
|
|
|
Net loss from continuing operations per share - basic and
diluted |
|
$ |
(0.98 |
) |
|
$ |
(0.81 |
) |
|
$ |
(2.36 |
) |
|
$ |
(1.29 |
) |
Net loss from discontinued operations per share - basic and
diluted |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.39 |
) |
Net loss attributable to common stockholders per share - basic and
diluted |
|
$ |
(0.98 |
) |
|
$ |
(0.81 |
) |
|
$ |
(2.36 |
) |
|
$ |
(1.68 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted |
|
|
13,714 |
|
|
|
8,256 |
|
|
|
11,624 |
|
|
|
7,446 |
|
|
ONCOCYTE CORPORATIONUNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(13,493 |
) |
|
$ |
(6,489 |
) |
|
$ |
(27,152 |
) |
|
$ |
(11,789 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
318 |
|
|
|
404 |
|
|
|
935 |
|
|
|
1,289 |
|
Amortization of intangible assets |
|
|
22 |
|
|
|
22 |
|
|
|
66 |
|
|
|
66 |
|
Stock-based compensation |
|
|
450 |
|
|
|
608 |
|
|
|
1,254 |
|
|
|
2,276 |
|
Equity compensation for bonus awards and consulting services |
|
|
14 |
|
|
|
108 |
|
|
|
110 |
|
|
|
108 |
|
Unrealized gain on marketable equity securities |
|
|
— |
|
|
|
89 |
|
|
|
— |
|
|
|
(8 |
) |
Change in fair value of contingent consideration |
|
|
7,140 |
|
|
|
(435 |
) |
|
|
9,421 |
|
|
|
(16,947 |
) |
Impairment losses |
|
|
— |
|
|
|
1,811 |
|
|
|
— |
|
|
|
6,761 |
|
Loss on disposal of discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,521 |
|
Impairment loss on held for sale assets |
|
|
— |
|
|
|
— |
|
|
|
169 |
|
|
|
1,283 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(124 |
) |
|
|
(166 |
) |
|
|
275 |
|
|
|
130 |
|
Inventories |
|
|
(232 |
) |
|
|
— |
|
|
|
(232 |
) |
|
|
— |
|
Prepaid expenses and other assets |
|
|
(295 |
) |
|
|
78 |
|
|
|
(345 |
) |
|
|
645 |
|
Accounts payable and accrued liabilities |
|
|
649 |
|
|
|
126 |
|
|
|
263 |
|
|
|
(4,193 |
) |
Lease assets and liabilities |
|
|
— |
|
|
|
75 |
|
|
|
(123 |
) |
|
|
(43 |
) |
Net cash used in operating activities |
|
|
(5,551 |
) |
|
|
(3,769 |
) |
|
|
(15,359 |
) |
|
|
(18,901 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from sale of equipment |
|
|
— |
|
|
|
231 |
|
|
|
— |
|
|
|
354 |
|
Construction in progress and purchases of furniture and
equipment |
|
|
(87 |
) |
|
|
(17 |
) |
|
|
(302 |
) |
|
|
(17 |
) |
Cash sold in discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,372 |
) |
Net cash used in investing activities |
|
|
(87 |
) |
|
|
214 |
|
|
|
(302 |
) |
|
|
(1,035 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from sale of common shares |
|
|
— |
|
|
|
— |
|
|
|
15,807 |
|
|
|
13,848 |
|
Financing costs to issue common shares |
|
|
— |
|
|
|
— |
|
|
|
(538 |
) |
|
|
(427 |
) |
Proceeds from sale of common shares under at-the-market
transactions |
|
|
18 |
|
|
|
— |
|
|
|
18 |
|
|
|
— |
|
Financing costs for at-the-market sales |
|
|
(187 |
) |
|
|
— |
|
|
|
(187 |
) |
|
|
— |
|
Redemption of Series A redeemable convertible preferred shares |
|
|
— |
|
|
|
— |
|
|
|
(5,389 |
) |
|
|
(1,118 |
) |
Repayment of financing lease obligations |
|
|
(86 |
) |
|
|
(30 |
) |
|
|
(119 |
) |
|
|
(87 |
) |
Net provided by financing activities |
|
|
(255 |
) |
|
|
(30 |
) |
|
|
9,592 |
|
|
|
12,216 |
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS (INCLUDES DISCONTINUED
OPERATIONS) AND RESTRICTED CASH |
|
|
(5,893 |
) |
|
|
(3,585 |
) |
|
|
(6,069 |
) |
|
|
(7,720 |
) |
|
|
|
|
|
|
|
|
|
CASH, CASH EQUIVALENTS (INCLUDES DISCONTINUED OPERATIONS)
AND RESTRICTED CASH, BEGINNING |
|
|
10,956 |
|
|
|
19,068 |
|
|
|
11,132 |
|
|
|
23,203 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH,
ENDING |
|
$ |
5,063 |
|
|
$ |
15,483 |
|
|
$ |
5,063 |
|
|
$ |
15,483 |
|
|
|
|
|
|
|
|
|
|
Oncocyte
CorporationReconciliation of Non-GAAP Financial
MeasureConsolidated Adjusted Loss from
Operations
Note: In addition to financial results determined in accordance
with U.S. generally accepted accounting principles (“GAAP”), this
press release also includes a non-GAAP financial measure (as
defined under SEC Regulation G). We believe that disclosing the
adjusted amounts is helpful in assessing our ongoing performance,
providing insight into the Company’s core operating performance by
excluding certain non-recurring, non-cash, and / or intangible
items that may obscure the underlying trends in the business. The
following is a reconciliation of the non-GAAP measure to the most
directly comparable GAAP measure:
|
|
Three Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
|
|
2024 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
|
|
Consolidated GAAP loss from operations |
|
$ |
(13,515 |
) |
|
$ |
(4,632 |
) |
|
$ |
(6,513 |
) |
Stock-based compensation |
|
|
450 |
|
|
|
386 |
|
|
|
608 |
|
Depreciation and amortization expenses |
|
|
340 |
|
|
|
326 |
|
|
|
426 |
|
Change in fair value of contingent consideration |
|
|
7,140 |
|
|
|
(1,031 |
) |
|
|
(435 |
) |
Impairment losses |
|
|
— |
|
|
|
— |
|
|
|
1,811 |
|
Consolidated Non-GAAP loss from operations, as
adjusted |
|
$ |
(5,585 |
) |
|
$ |
(4,951 |
) |
|
$ |
(4,103 |
) |
|
|
|
|
|
|
|
_____________________________
1 Donor-derived cell-free DNA (dd-cfDNA). The proprietary
intellectual property we acquired in 2021 was developed in
Germany.2 According to Deutsche Stiftung Organtransplantation (DSO)
data, 2023 German organ transplant volumes were 3,586 and German
hospitals using GraftAssure performed 323 transplants that year,
representing about 9% of 2023 German transplant volumes.3 According
to Organ Procurement and Transplantation Network data, 2023 U.S.
kidney, liver, heart and lung transplant volumes were 45,562 and
U.S. hospitals using GraftAssure performed about 930 transplants
that year, representing about 2% of 2023 U.S. transplant volumes.4
MolDX, a program that identifies and establishes coverage and U.S.
government reimbursement for molecular diagnostic tests, cited our
publications twice when it established the LCD (Local Coverage
Determination) for Medicare and Medicaid reimbursement coverage for
cell free DNA testing. Source:
https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?lcdId=38671&ver=45
The kitted version of our assay must be cleared by regulatory
bodies in the U.S., Europe and elsewhere as an in-vitro diagnostic
(IVD) to be used in clinical decision making.6 Our assay runs on a
digital PCR (polymerase chain reaction) instrument, which allows us
to create a simple workflow for the lab technician, delivering a
result in four to eight hours, compared with ≥30 hours in estimated
time using NGS technology. Further, testing a single sample is an
affordable option, given that the batch size – in contrast to NGS –
does not alter the cost per result.7 CE Marketing refers to
Conformité Européenne (French for "European Conformity"), under the
European Union’s IVD-R.8 Company estimates based on UNOS data
(https://unos.org/about/national-organ-transplant-system/)9 Digital
PCR provides ultrasensitive nucleic acid detection and absolute
quantification.10 The NeoTRIP Phase 2 clinical trial (NCT002620280)
randomized patients with triple-negative breast cancer (TNBC) to
receive neoadjuvant carboplatin and nab-paclitaxel (chemotherapies
to shrink tumors), with or without the immunotherapy, atezolizumab.
Oncocyte’s DetermaIO test was among several established biomarkers
and gene signatures assessed for its ability to predict which
patients with early stage TNBC are most likely to benefit from the
immunotherapy. The study was performed in collaboration with
the Michelangelo Foundation for Cancer Research, a
well-regarded independent scientific organization based
in Milan.11 For accuracy, this share amount includes insider
purchases of 37,037 shares at $2.97 per share, a higher amount paid
than non-insiders due to specific exchange rules regarding insider
transactions.
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