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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): November 10, 2022

 

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)

 

(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 November 10, 2022, Oncocyte Corporation (“we,” “us,” “our,” the “Company” or “Oncocyte”) issued a press release announcing its financial results for the three and nine months ended September 30, 2022. A copy of the press release is attached 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 (the “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 9.01 - Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit Number   Description
99.1   Press release, dated November 10, 2022.
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: November 10, 2022 By: /s/ Ronald Andrews
    Ronald Andrews
    Chief Executive Officer

 

 

 

EX-99.1 2 ex99-1.htm

 

Exhibit 99.1

 

 

Oncocyte Reports Third Quarter 2022 Financial Results

 

Irvine, Calif., November 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, today reports financial results for the third quarter 2022, ended September 30, 2022.

 

Third Quarter and Recent Highlights:

 

SWOG Cancer Research Network selected the DetermaIOTM test to be used in its S1418 clinical trial, a prospectively designed biomarker study of breast cancer tissues.
DetermaIO sample volume from Early Adopters grew at 117% quarter over quarter.
DetermaRxTM test sample volume increased by 51%, compared to third quarter of 2021 and onboarded physician base increased by 62%, as compared to the same period in 2021.
Received recommendation from the Advisory Panel for the DetermaRx test to be cross walked to CPT code 81522, increasing reimbursement rate by 23% beginning January 2023.
Announced that Palmetto GBA, a Medicare administrative contractor for the Molecular Diagnostics Services program (MolDX), has conveyed the validity of a Local Coverage Determination (LCD) reconsideration request for broader coverage for DetermaRx to include risk-stratification to assess the risk of recurrence for the early-stage non-small cell lung cancer patient to determine the best course of action for patient management.
Completed initial phase of our cost reduction initiatives to streamline the company.

 

“We have maintained our momentum against our major milestones across our portfolio, leveraging our newly streamlined organization, as we announced in August. Our reimbursement efforts for our VitaGraftTM products are in a productive dialogue with MolDx as we get close to a final determination,” said Ron Andrews, Chief Executive Officer of Oncocyte. “We have learned a lot about the potential utility for our VitaGraft Liver test during our Early Access Program launch and have identified a compelling opportunity from the experts we have engaged to date. We also continued to make solid progress with DetermaRx in the third quarter, delivering 51% year over year growth in sample volumes and successfully onboarding new physicians and accounts.”

 

“Looking ahead, we remain on track to submit our dossier for DetermaIO reimbursement in coming weeks. Additionally, our corporate development activities are yielding several interesting opportunities, and we have engaged Perella Weinburg Partners as our advisor to assist us in identifying and evaluating a range of potential strategic alternatives. On a parallel path, we continue to explore avenues to bolster our cash runway and to reduce our spend. We believe that Oncocyte has a bright future in front of us as the product development efforts from the past few years transition to market launches of several new high-value, reimbursed tests over coming quarters.”

 

Third Quarter 2022 Financial Results

 

Total revenue was $1.0 million for the third quarter of 2022, compared to $2.1 million for the prior quarter. Third quarter revenues associated with DetermaRx were $1.0 million, an increase of $0.1 million sequentially, and $0.5 million year over year. Operating expenses for the third quarter 2022 were $8.0 million, compared to $12.7 million, a decrease of $4.7 million from the same period in the prior year. Research and Development expense for the third quarter 2022 was $4.4 million, an increase of $1.3 million from the same period a year ago. The increase in R&D expense was due to full integration of the Chronix R&D team, the growth and enrollment of our clinical trials, and added headcount related to the buildout of our IVD product development capabilities in the first quarter. General and Administrative expense for the third quarter of 2022 was $5.8 million, an increase of $0.3 million for the same period in 2021. Sales and Marketing expense in the quarter was $4.0 million, an increase of $1.1 million year over year, primarily attributable to an increase in headcount and continued ramp in sales and marketing activities related to the transplant business, as well as support the commercialization efforts within oncology.

 

 

 

 

Net loss was $9.3 million for the third quarter of 2022 and net loss per share was $0.08 on a weighted-average basic and diluted share count of 118.6 million, compared to a net loss of $13.8 million and a net loss per share of $0.15 on a weighted-average basic and diluted share count of 91.5 million in the same period of the prior year.

 

Cash, cash equivalents, restricted cash and marketable securities were $34.2 million as of September 30, 2022.

 

Webcast and Conference Call Information

 

Oncocyte will host a conference call to discuss the third quarter 2022 financial results after market close on Thursday, November 10, 2022 at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The conference call can be accessed by dialing (877) 407-9716 for U.S. callers or (201) 493-6779 for international callers, using conference ID: 13732984. The live webinar can be accessed at https://investors.oncocyte.com.

 

About Oncocyte

 

Oncocyte is a precision diagnostics company with a mission to improve patient outcomes by providing personalized insights that inform critical decisions throughout the patient care journey.

 

Through its proprietary tests and pharmaceutical services business, the Company aims to help save lives by accelerating the diagnosis of cancer and advancing cancer care. The Company’s tests are designed to help provide clarity and confidence to physicians and their patients at every stage. DetermaRx™ identifies early-stage lung cancer patients who are at high risk for cancer recurrence and who may benefit from adjuvant chemotherapy. DetermaIO™ is a gene expression test that assesses the tumor microenvironment to predict response to immunotherapies. The Company’s pipeline of tests in development also includes DetermaTx™, which will assess mutational status of a tumor, DetermaCNI™, a blood-based monitoring test, DetermaMx™, a long-term recurrence monitoring test, and VitaGraft™, a blood-based solid organ transplantation monitoring test. In addition, Oncocyte’s pharmaceutical services provide companies that are developing new cancer treatments a full suite of molecular testing services to support the drug development process.

 

DetermaRx™, DetermaIO™, DetermaTx™, DetermaCNI™, DetermaMx™ 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, reimbursement efforts for VitaGraft products, the anticipated submission of the Company’s dossier for DetermaIO reimbursement in coming weeks, potential strategic alternatives, plans to bolster the Company’s cash runway and reduce its spend, anticipated market launches of new high value, reimbursed tests over coming quarters , 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 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.

 

Investor & Media Contact

 

Caroline Corner

ICR Westwicke

415.202.5678

Caroline.corner@westwicke.com

 

 

 

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

    September 30, 2022     December 31, 2021  
             
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 32,053     $ 35,605  
Accounts receivable     1,990       1,437  
Marketable equity securities     419       904  
Prepaid expenses and other current assets     2,174       1,197  
Total current assets     36,636       39,143  
                 
NONCURRENT ASSETS                
Right-of-use and financing lease assets, net     2,337       2,779  
Machinery and equipment, net, and construction in progress     9,256       5,748  
Goodwill     18,684       18,684  
Intangible assets, net     88,365       91,245  
Restricted cash     1,700       1,700  
Other noncurrent assets     366       264  
TOTAL ASSETS   $ 157,344     $ 159,563  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
CURRENT LIABILITIES                
Accounts payable   $ 1,826     $ 2,447  
Accrued compensation     4,067       3,376  
Accrued expenses and other current liabilities     3,809       2,425  
Accrued severance from acquisition     2,314       2,352  
Accrued liabilities from acquisition     109       1,388  
Loans payable, net of deferred financing costs     -       1,313  
Right-of-use and financing lease liabilities, current     827       819  
Total current liabilities     12,952       14,120  
                 
NONCURRENT LIABILITIES                
Right-of-use and financing lease liabilities, noncurrent     2,935       3,545  
Contingent consideration liabilities     59,524       76,681  
                 
TOTAL LIABILITIES     75,411       94,346  
                 
COMMITMENTS AND CONTINGENCIES                
                 
Series A Redeemable Convertible Preferred Stock, no par value; stated value $1,000 per share; 12 shares authorized, 6 shares issued and outstanding at September 30, 2022; aggregate liquidation preference of $6,001 as of September 30, 2022     5,076       -  
                 
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; 118,619 and 92,232 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively     292,536       252,954  
Accumulated other comprehensive income     19       37  
Accumulated deficit     (215,698 )     (187,774 )
Total shareholders’ equity     76,857       65,217  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 157,344     $ 159,563  

 

 

 

 

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2022     2021     2022     2021  
                         
Net revenue   $ 1,017     $ 984     $ 4,508     $ 4,138  
                                 
Cost of revenues     1,215       860       3,641       2,948  
Cost of revenues – amortization of acquired intangibles     976       990       2,888       2,371  
Gross profit     (1,174 )     (866 )     (2,021 )     (1,181 )
                                 
Operating expenses:                                
Research and development     4,421       3,142       15,123       9,040  
Sales and marketing     4,005       2,931       10,764       7,858  
General and administrative     5,763       5,495       16,927       18,193  
Change in fair value of contingent consideration     (6,142 )     1,170       (17,157 )     2,260  
Total operating expenses     8,047       12,738       25,657       37,351  
                                 
Loss from operations     (9,221 )     (13,604 )     (27,678 )     (38,532 )
                                 
OTHER INCOME (EXPENSES), NET                                
Interest expense, net     (14 )     (50 )     (65 )     (167 )
Unrealized gain (loss) on marketable equity securities     (160 )     (138 )     (485 )     248  
Pro rata loss from equity method investment in Razor     -       -       -       (270 )
Gain on extinguishment of debt (PPP loan)     -       -       -       1,141  
Other income (expenses), net     62       (8 )     304       10  
Total other income (expenses), net     (112 )     (196 )     (246 )     962  
                                 
LOSS BEFORE INCOME TAXES     (9,333 )     (13,800 )     (27,924 )     (37,570 )
                                 
Income tax benefit     -       -       -       9,358  
                                 
NET LOSS   $ (9,333 )   $ (13,800 )   $ (27,924 )   $ (28,212 )
                                 
Accretion of Series A redeemable convertible preferred stock     (222 )     -       (294 )     -  
                                 
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS: BASIC AND DILUTED   $ (9,555 )   $ (13,800 )   $ (28,218 )   $ (28,212 )
                                 
Net loss per share: basic and diluted   $ (0.08 )   $ (0.15 )   $ (0.26 )   $ (0.32 )
                                 
Weighted average shares outstanding: basic and diluted     118,610       91,453       108,158       87,812  

 

 

 

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

    Nine Months Ended  
    September 30,  
    2022     2021  
             
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (27,924 )   $ (28,212 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation expense     1,062       582  
Amortization of intangible assets     2,880       2,371  
Pro rata loss from equity method investment in Razor     -       270  
Stock-based compensation     7,423       5,136  
Unrealized (gain) loss on marketable equity securities     485       (248 )
Amortization of debt issuance costs     12       46  
Change in fair value of contingent consideration     (17,157 )     2,260  
Change in fair value of Series A redeemable convertible preferred stock second tranche obligation     (352 )     -  
Deferred income tax benefit     -       (9,358 )
Gain on extinguishment of debt (PPP loan)     -       (1,141 )
                 
Changes in operating assets and liabilities:                
Accounts receivable     (553 )     (824 )
Lease liabilities     (156 )     169  
Prepaid expenses and other assets     (745 )     (787 )
Accounts payable and accrued liabilities     422       (1,592 )
Accrued severance and liabilities from Chronix Biomedical acquisition     (1,317 )     2,452  
Net cash used in operating activities     (35,920 )     (28,876 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Acquisition of Insight Genetics, net of cash acquired     -       (607 )
Acquisition of Razor Genomics asset, net of cash acquired     -       (6,648 )
Acquisition of Chronix Biomedical, net of cash acquired     -       (4,459 )
Construction in progress and purchases of equipment     (3,538 )     (1,846 )
Net cash used in investing activities     (3,538 )     (13,560 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from exercise of stock options     -       2,573  
Proceeds from sale of common shares     32,812       65,262  
Financing costs to issue common shares     (389 )     (2,676 )
Proceeds from sale of redeemable convertible Series A preferred shares     4,875       -  
Financing costs to issue redeemable convertible Series A preferred shares     (93 )     -  
Proceeds from sale of common shares under at-the-market transactions     31       12,724  
Financing costs for at-the-market sales     (1 )     (390 )
Proceeds from exercise of warrants     -       2,631  
Common shares received and retired for employee taxes paid     -       (239 )
Repayment of loan payable     (1,325 )     (1,125 )
Repayment of financing lease obligations     (4 )     (127 )
Net cash provided by financing activities     35,906       78,633  
                 
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH     (3,552 )     36,197  
                 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING     37,305       8,843  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING   $ 33,753     $ 45,040  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                
Cash paid for interest   $ 24     $ 96  
                 
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES                
Common stock issued for acquisition of Razor Genomics asset   $ -     $ 5,756  
Deferred tax liability generated from the acquisition of Razor Genomics asset     -       7,564  
Common stock issued for acquisition of Chronix Biomedical     -       3,299  
Deferred tax liability generated from the acquisition of Chronix     -       1,794  
Initial fair value of contingent consideration at acquisition date     -       42,295  
Assumed liability from Chronix Acquisition     -       3,489  
Construction in progress, machinery and equipment purchases included in accounts payable, accrued liabilities and landlord liability     1,032       193  

 

 

 

 

Oncocyte Corporation

Reconciliation of Non-GAAP Financial Measure

Adjusted Loss from Operations

(Amounts in Thousands)

 

    For the Three Months Ended  
    September 30,     December 31,     September 30,  
    2022     2021     2021  
    (unaudited)     (unaudited)     (unaudited)  
GAAP loss from operations - as reported   $ (9,221 )   $ (35,680 )   $ (13,604 )
Stock-based compensation expense     3,181       1,706       1,849  
Change in fair value of contingent consideration     (6,142 )     25,006       1,170  
Severance charge     1,046       255       -  
Depreciation and amortization expense     1,367       1,251       1,246  
Non-GAAP loss from operations, as adjusted   $ (9,769 )   $ (7,462 )   $ (9,339 )