On May 17, 2021 Oncocyte Corporation (NASDAQ: OCX), a molecular diagnostics company with a mission to provide actionable answers at critical decision points across the cancer care continuum, reports financial results for the first quarter 2021 ended March 31, 2021, along with a corporate update (Press release, Oncocyte, MAY 17, 2021, View Source [SID1234580150]).
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"Oncocyte’s rapid execution across our four growth engines has continued into 2021 and solidified our potential opportunity in over $10 billion in combined market TAMs. First quarter was marked by revenue above the consensus of analyst estimates, driven by DetermaRx and Pharma Services, as well as by the delivery of a compelling data set that supports the pan-cancer utility of DetermaIO, and by the completion of acquisitions that solidify our leadership in providing a single, comprehensive solution for molecular diagnostics in solid tumors," said Ron Andrews, Chief Executive Officer and President of Oncocyte. "DetermaIO has had a terrific start to 2021. With the podium presentation of our data in bladder cancer at AACR (Free AACR Whitepaper), and upcoming presentation of our renal cell carcinoma data at ASCO (Free ASCO Whitepaper), we now have validated the test in four solid tumor types. Together with our prior results in TNBC and NSCLC, the evidence is clear that DetermaIO has the potential to be a disruptive pan-cancer immunotherapy treatment selection test, and we look forward to the anticipated clinical launch of DetermaIO in the second half of the year and expect this test to be a major revenue growth opportunity for Oncocyte over the next 18 – 24 months."
Mr. Andrews continued, "Our recent acquisition of Chronix Biomedical will play an important role in our long-term growth, providing an entry into the emerging $5 billion global therapy monitoring markets with a patented, novel, blood-only/tumor naïve approach that will deliver faster information on disease progression compared to the competing tumor-informed approaches that require tissue samples. We also gain access to broader intellectual property that may enable Oncocyte to offer additional innovative blood-based tests. From an execution standpoint, we will replicate our proven DetermaIO playbook as we rapidly launch DetermaCNI for blood-based immunotherapy response monitoring for research use in pharmaceutical clinical trials in late 2021. In terms of immediate growth, our Pharma Services offerings are gaining significant traction as we have recently signed agreements with two of the largest molecular diagnostics platform companies to deliver test development and contract research services, as well as act as a priority launch site for one of their new companion diagnostic products. As I look out into the coming quarters of 2021, I envision a great year with rising revenue and at least three product launches: DetermaIO, DetermaTx for clinical use and DetermaCNI for pharma clinical research use. The efforts of our incredibly dedicated team have enabled steady progress toward our goal of developing a comprehensive array of molecular diagnostic tests for cancer. We will continue to advance our suite of technology to develop novel commercial products across the continuum of care."
First Quarter and Recent Highlights Include:
DetermaRx had continued momentum with 50% sequential quarterly growth in onboarded physicians (to 208 total), a 50% increase in onboarded accounts (to 123 hospitals total), and a total of 236 billable samples in Q1 2021, with steady sample growth month over month despite the pandemic surge in January and February
Announced agreement with MultiPlan Network, expanding access to DetermaRx to an additional 60 million covered lives at a negotiated price in line with CMS pricing
Technology transfer to Burning Rock Biotech according to our license of DetermaRx in China, the world’s largest early-stage lung cancer market, remains on-track for full onboarding and validation in Q3 with market launch in China to follow in late Q4
Closed second investment in Razor Genomics to complete acquisition with Oncocyte becoming sole shareholder of Razor, the initial developer of DetermaRx
New DetermaIO data presented at two major medical meetings, American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting (AACR) (Free AACR Whitepaper) 2021 and American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2021 demonstrate the potential for pan-cancer utility for DetermaIO
AACR 2021: Oral symposium presentation of a bladder cancer study which achieved its primary endpoint, demonstrating significant correlation between DetermaIO positivity and two-year overall survival rate for patients receiving atezolizumab in metastatic bladder cancer. DetermaIO identified additional immunotherapy responsive patients missed by currently used standard of care biomarkers, PD-L1 and TMB.
ASCO 2021: Upcoming presentation at the 2021 ASCO (Free ASCO Whitepaper) Annual Meeting demonstrating utility as predictor of immunotherapy response in renal cell carcinoma, a fourth indication, further supporting the pan-cancer utility of the test
DetermaIO pilot projects secured from three biopharma companies developing novel 2nd generation immunotherapies. Projects will evaluate DetermaIO as a predictive biomarker.
Entered the rapidly growing blood-based cancer monitoring market with the acquisition of Chronix Biomedical Inc. The acquisition gives Oncocyte proprietary capabilities for blood-based immune therapy monitoring with the CNI monitor test and transplant rejection testing.
Chronix Biomedical’s ongoing and completed studies of the CNI Monitor test in lung, head and neck, ovarian and pancreatic cancer have now recruited over 700 patients to date. Completed studies demonstrate broad potential utility of this blood only test, including predicting the presence of disease post-surgery (MRD) and recurrence in ovarian cancer, and predicting response to cancer treatment, including but not limited to immunotherapy treatment.
Medicare Coverage Determination for molecular testing in solid organ allograft rejection, which exclusively cites multiple publications from Chronix Biomedical, Inc. This coverage policy for transplant rejection monitoring establishes a simplified and accelerated pathway for Medicare coverage of Chronix’s solid organ transplant rejection monitoring test that Oncocyte now owns.
Initiated project with top 20 pharma company utilizing Oncocyte’s proprietary blood-based cell-cycle test for monitoring resistance in an ongoing Phase 3 trial
Corporate
Strengthened balance sheet with $69 million raised in offerings of common stock
Transitioned listing to Nasdaq Global Market
Oncocyte Revenues for Q1 were $1.12 million, above the consensus estimate, driven by DetermaRx growth and Pharma Services projects
Completed relocation to new Irvine clinical facility
First Quarter 2021 Financial Results
At March 31, 2021, Oncocyte had cash, cash equivalents and marketable securities of $59.8 million. In January and February 2021, Oncocyte raised an aggregate of $69 million in net proceeds from a direct placement and a public offering, as well as shares sold from its at-the-market (ATM) program. In February 2021, Oncocyte completed the acquisition of the remaining equity interests in Razor Genomics and paid the $10 million cash portion to the selling shareholders, so Oncocyte now owns all of the outstanding common stock of Razor and will consolidate Razor as of that date.
Consolidated revenues for the first quarter of 2021 were approximately $1.12 million, a 123% increase from the fourth quarter of 2020, as revenues from both sources increased over the fourth quarter of 2020. Since inception, Oncocyte generated revenues for the first time in the first quarter of 2020, therefore comparison of current quarter consolidated revenues to the first quarter of 2020 is not meaningful. During the three months ended March 31, 2021, Oncocyte commenced recognizing Medicare Advantage covered tests on an accrual basis, rather than on a cash basis, after accumulating additional history of cash receipts and other factors considered by management that it believes entitles Oncocyte to get reimbursed for Medicare Advantage covered DetermaRx tests at the Medicare rate. Accordingly, DetermaRx tests performed for both Medicare covered patients and Medicare Advantage covered patients are being recognized when the tests are performed, on an accrual basis, at the Medicare rate, rather than on a cash basis. Oncocyte will continue to recognize revenues from commercial and other payors on a cash basis until it has reimbursement contracts with those payors, at which point Oncocyte will recognize all DetermaRx revenues on an accrual basis.
Cost of revenues for the first quarter 2021 was approximately $1.0 million, which included $307,000 in non-cash amortization expenses from the Razor Genomics asset acquired in February. The cost of our Razor asset amortization, which is a non-cash amortization expense over the remaining life of the Razor patent, will be included in cost of revenues each quarter. Cost of revenues also include testing services we perform for our pharma customers.
Research and development expenses for the first quarter of 2021 were $3.4 million as compared to $2.2 million for the same period in 2020, an increase of $1.2 million, primarily due to increased investment in DetermaIO, personnel and related expenses.
General and administrative expenses for the first quarter of 2021 were $4.8 million, as compared to $4.6 million for the same period in 2020, an increase of $0.2 million.
Sales and marketing expenses for the three months ended March 31, 2021, were $2.3 million, as compared to $1.5 million for the same period in 2020. The increase during the respective period was primarily due to personnel and related expenses for ramp up in sales and marketing activities for the commercialization efforts of DetermaRx as well as market development investments in preparation for the launch of new products later this year.
Operating losses, as reported, for the first quarter of 2021 were $11.4 million, an increase of $3.0 million from $8.4 million as compared to the first quarter of 2020. Operating losses, on an adjusted basis, were $8.6 million, an increase of $1.2 million from $7.4 million as compared to the first quarter of 2020.
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 first quarter ended March 31, 2021, Oncocyte reported a net loss of $3.9 million, or ($0.05) per share, as compared to $7.7 million, or ($0.13) per share, for the first quarter ended March 31, 2020.
Cash used in operations was approximately $9.8 million for the first quarter of 2021. The first quarter of each year is generally our largest cash burn quarter due to annual merit and bonus payments.
Conference Call Information
The Company will host a conference call today, May 17, 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 877-407-9716; for international participants, the number is 201-493-6779. For all callers, please refer to Conference ID 13719464. To access the live webcast, go to the investor relations section on the Company’s website, or by clicking here View Source The webcast replay will be available on the Oncocyte website for 90 days following the completion of the call.