On November 9, 2021 Oncocyte Corporation (Nasdaq: OCX), a precision diagnostics and monitoring company with the mission to improve patient outcomes by providing clear insights that inform critical decisions in the diagnosis, treatment, and monitoring of cancer, reports financial results for the third quarter 2021 ended September 30, 2021, along with a corporate update (Press release, Oncocyte, NOV 9, 2021, View Source [SID1234595212]).
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"The recently announced clinical launch of our DetermaIO test, via an early access program (EAP), is an important milestone to inform immunotherapy decisions which strengthens Oncocyte’s differentiated position in precision diagnostics," said Ron Andrews, Chief Executive Officer and President of Oncocyte. "We believe that the combination of DetermaIO with our comprehensive genomic profiling test DetermaTx, expected to be launched late in the first quarter of 2022 upon completion of the DetermaIO EAP program, 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 and allows us to enter a total available market of $5 billion. This combined offering is further differentiated by its ability to deliver comprehensive treatment decision information while conserving the limited tumor tissue sample available for testing, with industry leading turnaround time. We are very encouraged with the response to our recently announced early access program for DetermaIO, we have begun onboarding the accounts, and are excited to receive our first clinical patient samples in the coming weeks. Our clinical studies have now reported results for over 1,000 patients, validated DetermaIO in four different tumor types, and shown consistent outperformance of the current tests being used to select patients for treatment."
Mr. Andrews continued, "We’ve continued our progress with DetermaRx and, despite significant disruptions in early-stage lung cancer surgeries over the summer due to the surge of the COVID-19 Delta variant, we generated 65% year over year growth in test volume. We also continue to deliver on our two metrics used to measure test adoption during the current market environment: new hospital onboards increased by42 facilities, growing 24% quarter over quarter, and our ordering physicians grew by 66 doctors or 22% quarter over quarter. We have now established a solid install base that is poised to grow our sample volume and revenue once early-stage lung cancer surgeries return to pre-pandemic levels."
"With the issuance of our IP in blood-based monitoring for transplant rejection, we now have a clear path to launching our own LDT test into the large transplant rejection market in the U.S. and Europe. Oncocyte expects to complete 2021 with solid momentum toward our goal of building a compelling and powerful portfolio of molecular diagnostic tests. As a complement to this progress, our recent appointment of Gisela Paulsen as Chief Operating Officer brings additional world-class talent to the experienced leadership team at Oncocyte and comes on board at an important time as we expand our operations to support the anticipated growth ahead."
Third Quarter and Recent Highlights Include:
●Announced the clinical launch of the DetermaIO immunotherapy response prediction test via an early access program.
●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.
Corporate
·Appointed industry veteran Gisela A. Paulsen as Chief Operating Officer in October 2021.
Third Quarter 2021 Financial Results
On September 30, 2021, Oncocyte had cash, cash equivalents and marketable securities of $44.3 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, 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 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 months ended September 30, 2021, were approximately $1.0 million, generated from three sources: DetermaRx tests, pharma services, and licensing revenues. This compares to revenues of $555,000 for the three months ended September 30, 2020, a year over year growth rate of 77%. DetermaRx samples received this quarter grew 3% compared to last quarter, primarily due to the impact of the Delta Variant on surgical volumes in key sales regions of the United States and 65% versus Q3 2020 .
Cost of revenues for the third quarter 2021 were approximately $1.9 million, which includes approximately $1.0 million in non-cash amortization expenses from the Razor Genomics and Insight Genetics acquisitions. 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 third quarter of 2021 were $3.1 million as compared to $2.6 million for the same period in 2020, an increase of $0.5 million, representing the increased investment in clinical studies to support the commercialization of the portfolio of tests in the pipeline.
General and administrative expenses for the third quarter of 2021 were $5.5 million, as compared to $5.0 million for the same period in 2020, an increase of approximately $0.5 million.
Sales and marketing expenses for the three months ended September 30, 2021 were $2.9 million, as compared to $1.6 million for the same period in 2020. The increase was primarily due to personnel and related expenses resulting from the ramp up in sales and marketing activities for DetermaRx, as well as market development investments in preparation for the launch of new products later this year.
Operating losses, as reported, for the third quarter of 2021 were $13.6 million, as compared to $6.2 million for the third quarter of 2020. Operating losses, on an adjusted basis, were $9.3 million, an increase of $3.2 million from $6.1 million as compared to the third 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 third quarter ended September 30, 2021, Oncocyte reported a net loss of $13.8 million, or ($0.15) per share, as compared to $6.8 million, or ($0.10) per share, for the third quarter ended September 30, 2020.
Cash used in operations was approximately $11.0 million for the third quarter of 2021.
Conference Call Information
The Company will host a conference call today, November 9th 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: 13722620. 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.