On March 10, 2022 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, reported that financial results for the fourth quarter 2021 ended December 31, 2021, along with a corporate update (Press release, Oncocyte, MAR 10, 2022, View Source [SID1234609890]).
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"Our fourth quarter and the first two months of 2022 were a productive period for Oncocyte. A key accomplishment was forming a strategic collaboration with Thermo Fisher for two distributed in vitro diagnostic (IVD) assays on their Ion Torrent Genexus System" said Ron Andrews, President and CEO of Oncocyte. "By leveraging Thermo Fisher’s proven global capabilities and installed base, we will be able to expand the commercial availability of our proprietary tests as IVD assays beyond the U.S. market."
Mr. Andrews continued, "During the fourth quarter, DetermaRx returned to double-digit quarter over quarter growth as the COVID-19 pandemic receded, and surgical procedures began to recover. In addition to significantly growing our testing volume, we continue to deliver on two metrics used to measure test adoption during the current market environment – new hospital onboards increased by 16% and ordering physicians grew by 17% quarter over quarter. We have now established a solid install base of 429 physicians and are poised to grow our sample volume and revenue once early-stage lung cancer surgeries return to pre-pandemic levels."
"The recent publication of data showing that DetermaCNI detects cancer recurrence with higher sensitivity than the standard of care, propels an important component of our strategy: to provide physicians with a blood-based monitoring test to help them better understand how well a therapy is working. The published data are indicative of the potential value of DetermaCNI in the monitoring of therapeutic response, and given the data published to date in multiple tumor types, we believe this test may ultimately become a valuable treatment monitoring tool that will complement our treatment decision test menu. There is currently a blanket reimbursement approach by CMS for these types of monitoring tests at high value rates. Our recent publications build upon the evidence we need to secure Medicare approval for this very lucrative market."
"In Transplant rejection monitoring, we are on track to launch our TheraSure Transplant Monitor as a lab-developed test (LDT) in the U.S. by the end of March from our Nashville CLIA lab. We continue to believe that our patented digital PCR method can deliver unique capabilities, including absolute quantification and better turn-around time more cost effectively than current methods. We remain in discussions with multiple global digital PCR platform companies, and are confident we will partner with a world-class company as a development and channel partner as we decentralize this important test to transplant centers in the US and Europe."
"In November, we initiated the clinical launch of our DetermaIO test via an early access program (EAP), an important milestone to inform immunotherapy decisions, which strengthens Oncocyte’s differentiated position in precision diagnostics. Physicians are recognizing the importance of DetermaIO as the first commercially available test to evaluate the tumor and its microenvironment (TIME) in a manner that has been shown to inform response to immunotherapy. The tumor microenvironment plays a critical role in treatment response and resistance," continued Mr. Andrews. "We believe that the combination of DetermaIO with our comprehensive genomic profiling test DetermaTx, expected to be launched in mid-Q2, will offer the most complete precision diagnostic solution to inform cancer treatment decisions for the 1.8 million patients diagnosed with cancer in the United States each year, a total addressable market of $5 billion. We anticipate that the launch of DetermaCNI as a research use only test to monitor these patients will enable Oncocyte to become the only company to provide upfront testing to inform immunotherapy treatment via TIME assessment as well as monitor patients on treatment for early detection of progression."
"Looking ahead to 2022, our goals are to concentrate on market-focused initiatives that support clinical utility and adoption of our comprehensive testing portfolio. We expect to launch three major products across oncology and transplant, expanding indications and securing reimbursement over the course of the year. We are well positioned to achieve the promise of the Determa platform, and to help physicians address the unanswered questions in treating patients across all stages of cancer," concluded Mr. Andrews.
Fourth Quarter and Recent Highlights Include:
●Announced co-development and co-marketing with Thermo Fisher to for two distributed in vitro diagnostic (IVD) assays on Thermo Fisher Scientific’s Ion Torrent Genexus System. The agreement also grants Oncocyte rights to develop future companion diagnostics on the Genexus System.
●Oral presentation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) on randomized clinical trial data definitively established DetermaIO as a predictive biomarker of immunotherapy response. In the triple negative breast cancer (TNBC) NeoTRIPaPDL1 study, DetermaIO outperformed 80 other immune signatures.
●Published a peer-reviewed study in the journal Cancers with investigators from leading academic institutions MD Anderson and Yale demonstrating the predictive potential for DetermaIO. Study data showed that DetermaIO demonstrates superior accuracy compared to standard of care PD-L1 immunohistochemistry (IHC) for prediction of a patient’s response to immunotherapy in TNBC. Previous data has been presented in lung, bladder, renal, and kidney cancers suggesting a broad pan-cancer utility of the test.
●Strengthened transplant IP portfolio with issuance of a U.S. patent covering digital PCR technology for early detection of organ transplant rejection, building upon prior issued U.S. and EU patent for quantification of donor derived cfDNA, supporting the launch of TheraSure Transplant Monitor as an LDT in the U.S.
●Launched and completed site enrollment of the first Real-World Evidence (RWE) registry intended to evaluate biomarker adoption and precision medicine in creating personalized treatment options for early-stage lung cancer patients, with enrollment targeting more than 1,000 patients at 25 sites across the U.S. beginning in Q4 2021..
Fourth Quarter and Full Year 2021 Financial Results
On December 31, 2021, Oncocyte had cash, cash equivalents and marketable securities of $36.5 million, as compared to $7.8 million on December 31, 2020.
Oncocyte currently derives its revenues from the sale of its lung cancer test, DetermaRx, which was commercially launched in early 2020 and pharma services generated by its wholly owned subsidiary, Insight Genetics, Inc., which was acquired on January 31, 2020. During the first quarter of 2021, after accumulating additional history of cash receipts and other factors considered by management for Medicare and Medicare Advantage-covered DetermaRx tests, including the recently published Medicare rate, the Company transitioned to the accrual basis for tests covered by Medicare Advantage insurance plans. Oncocyte will continue to recognize revenues for commercial and other payors on a cash basis until we have reimbursement contracts with those payors. At that point, those contracts will also progress to the accrual basis for DetermaRx tests. Until that time, for all payors other than Medicare and Medicare Advantage, Oncocyte expects to recognize revenue for DetermaRx tests performed on a cash basis.
Revenues for the three and twelve months ended December 31, 2021, were approximately $3.6 million and $7.7 million, respectively, generated from three sources: DetermaRx tests, pharma services, and licensing revenues. Revenues for the three months and twelve months ended December 31, 2020, were approximately $503,000 and $1.2 million, respectively.
Research and development expenses for the fourth quarter of 2021 were $4.6 million as compared to $1.8 million for the same period in 2020, an increase of $2.8 million. Research and development expenses for the year ended December 31, 2021, were $13.6 million as compared to $9.8 million in 2020, an increase of $3.8 million primarily attributable to the increased investment in clinical studies to support the commercialization of the portfolio of tests in the pipeline.
General and administrative expenses for the three months ended December 31, 2021 were $4.1 million, as compared to $3.4 million for the same period in 2020, an increase of approximately $0.7 million. General and administrative expenses for the year ended December 31, 2021, were $22.3 million, as compared to $16.8 million for the same period in 2020, an increase of $5.5 million, primarily attributable to personnel growth and related expenses.
Sales and Marketing expenses for the three months ended December 31, 2021 were $3.3 million, as compared to $1.9 million for the same period in 2020. For the full year 2021, sales and marketing expenses were approximately $11.2 million, as compared to $6.5 million for the full year 2020, primarily attributable to an increase in headcount and continued ramp in sales and marketing activities to support our continued commercialization efforts of our diagnostic tests.
GAAP loss from operations, as reported, for the three months ended December 31, 2021 was $35.7 million, as compared to a GAAP loss of $6.3 million the fourth quarter of 2020. Operating loss, on an adjusted basis, was $5.3 million for the fourth quarter of 2021, as compared to operating losses of $6.2 million for the fourth quarter of 2020. GAAP loss from operations, as reported, for the year ended December 31, 2021, was $74.2 million, as compared to $29.7 for the full year 2020. Operating loss, on an adjusted basis, was $33.2 million, as compared to an operating loss of $26.5 million for the full year 2020. The principal difference between GAAP and non-GAAP operating losses is the "Change in fair value of contingent consideration" related to the acquisition of Chronix Biomedical in 2021. This increase in Fair Value reflects a favorable risk-adjustment for the CNI product line and the likelihood of larger milestone payments to Chronix shareholders based on an increase in Oncocyte’s predicted revenues. This benefits Oncocyte’s shareholders because of the potential increase in expected revenues.
Oncocyte has provided a reconciliation between GAAP and non-GAAP operating losses in the financial tables, included with this earnings release, which it believes is helpful in understanding its ongoing operations.
For the fourth quarter ended December 31, 2021, Oncocyte reported a net loss of $35.9 million, or ($0.39) per share, as compared to $6.3 million, or ($0.09) per share, for the fourth quarter ended December 31, 2020.
For the year ended December 31, 2021, Oncocyte reported a net loss of $64.1 million, or ($0.72) per share, compared to $29.9 million, or ($0.46) per share for 2020.
Net cash used in operations was approximately $7.1 million for the fourth quarter of 2021.
Conference Call Information
The Company will host a conference call today, March 10th at 4:30 pm EDT / 1:30 pm PDT to discuss the results along with recent corporate developments. The dial-in number in the U.S./Canada is 1-877-407-9716; for international participants, the number is 1-201-493-6779. For all callers, please refer to Conference ID: 13726740. To access the live webcast, go to the investor relations section on the Company’s website, or by clicking here View Source;tp_key=769c96014b. A webcast replay will be available on the Oncocyte website for 90 days following the completion of the call.