8-K
Insight Molecular Diagnostics Inc. (IMDX)
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 9, 2021
OncocyteCorporation
(Exact name of registrant as specified in its charter)
| California | 1-37648 | 27-1041563 |
|---|---|---|
| (State<br> or other jurisdiction | (Commission | (IRS<br> Employer |
| of<br> incorporation) | File<br> Number) | Identification<br> No.) |
15Cushing
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<br> Stock, no par value | OCX | The<br> 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<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> 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. ☒
Forward-LookingStatements
Anystatements that are not historical fact (including, but not limited to statements that contain words such as “may,” “will,”“believes,” “plans,” “intends,” “anticipates,” “expects,” “estimates”)should be considered to be forward-looking statements. Factors that could cause actual results to differ materially from the resultsanticipated in these forward-looking statements are contained in Oncocyte Corporation’s Annual Report on Form 10-K filed with theSecurities and Exchange Commission (“SEC”) under the heading “Risk Factors” and in other filings that Oncocytemay make with the SEC. Undue reliance should not be placed on these forward-looking statements which speak only as of the date they aremade, and the facts and assumptions underlying these statements may change. Except as required by law, Oncocyte disclaims any intentor obligation to update these forward-looking statements.
Referencesto “Oncocyte,” “we,” “us,” and “our” are references to Oncocyte Corporation.
Theinformation in Item 2.02 and the accompanying Exhibit 99.1 shall be deemed “furnished” and not “filed” underSection 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilityof that section, and shall not be incorporated by reference into any filings made by Oncocyte under the Securities Act of 1933, as amended,or the Exchange Act except as may be expressly set forth by specific reference in such filing.
Item2.02 - Results of Operations and Financial Condition
On November 9, 2021, Oncocyte issued a press release announcing its financial results for the three and nine months ended September 30, 2021. A copy of the press release is attached as Exhibit 99.1, which, in its entirety, is incorporated herein by reference.
The information under this Item 2.02 and 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, nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item9.01 - Financial Statements and Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release dated November 9, 2021 |
| 104 | Cover<br> Page Interactive Data File (embedded within the Inline XBRL document) |
| 2 |
| --- |
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:<br> November 9, 2021 | By: | /s/ Mitchell Levine |
| Mitchell<br> Levine | ||
| Chief<br> Financial Officer |
| 3 |
| --- |
Exhibit 99.1
OncocyteReports Third Quarter 2021 Financial Results and Provides Corporate Update
Clinicallaunch of DetermaIO as first and only immunotherapy response prediction clinical test that comprehensively assesses the tumor microenvironmentand consistently outperforms PD-L1 IHC and other biomarkers
DetermaIOdata in Triple Negative Breast Cancer published in a peer reviewed journal and confirmed in a randomized clinical trial study presentedat ESMO; Evidence in fourth tumor type suggests pan-cancer utility
DetermaRxtest volume grows 65% year over year
UStransplant IP issued supporting the planned launch of TheraSure Transplant Monitor LDT testing in the U.S. and Europe
ConferenceCall to be held today at 4:30pm ET/ 1:30 pm PDT
IRVINE,Calif., 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.
“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.”
ThirdQuarter and Recent Highlights Include:
| ● | Announced<br> the clinical launch of the DetermaIO immunotherapy response prediction test via an early<br> access program. |
|---|---|
| ● | Oral<br> presentation at the European Society for Medical Oncology (ESMO) on randomized clinical trial<br> data definitively established DetermaIO as a predictive biomarker of immunotherapy response.<br> In the triple negative breast cancer (TNBC) NeoTRIPaPDL1 study, DetermaIO outperformed 80<br> other immune signatures. |
| --- | --- |
| ● | Published<br> a peer-reviewed study in the journal Cancers with investigators from leading academic<br> institutions MD Anderson and Yale demonstrating the predictive potential for DetermaIO. Study<br> data showed that DetermaIO demonstrates superior accuracy compared to standard of care PD-L1<br> immunohistochemistry (IHC) for prediction of a patient’s response to immunotherapy<br> in TNBC. Previous data has been presented in lung, bladder, renal and kidney cancers suggesting<br> a broad pan-cancer utility of the test. |
| --- | --- |
| ● | Strengthened<br> transplant IP portfolio with issuance of a U.S. patent covering digital PCR technology for<br> early detection of organ transplant rejection, building upon prior issued U.S. and EU patent<br> for quantification of donor derived cfDNA, supporting the launch of TheraSure Transplant<br> Monitor as an LDT in the U.S. |
|---|---|
| ● | Launched<br> and completed site enrollment of the first Real-World Evidence (RWE) registry intended to<br> evaluate biomarker adoption and precision medicine in creating personalized treatment options<br> for early-stage lung cancer patients, with enrollment targeting more than 1,000 patients<br> at 25 sites across the U.S. beginning in Q4 2021. |
| --- | --- |
Corporate
| · | Appointed<br> industry veteran Gisela A. Paulsen as Chief Operating Officer in October 2021. |
|---|
ThirdQuarter 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.
ConferenceCall Information
The Company will host a conference call today, November 9^th^ 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 http://public.viavid.com/index.php?id=146378. The webcast replay will be available on the Oncocyte website for 90 days following the completion of the call.
About Oncocyte
****Oncocyte is 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. The Company, through its proprietary tests and pharmaceutical services business, 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™, a gene expression test currently used as a research-use only tool, 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, blood-based monitoring test DetermaCNI^TM^, and long-term recurrence monitoring test DetermaMx™. 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^TM^, DetermaIO^TM^, DetermaTx^TM^, DetermaCNI^TM^, DetermaMx^TM^ and TheraSure^TM^ are trademarks of Oncocyte Corporation.
OncocyteForward Looking Statements
Oncocyte cautions you that this press release contains 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, the expected launch of DetermaTX late in the first quarter Q1 of 2022; the expectation that the combination of DetermaIO and DetermaTX 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, allow Oncocyte to enter a total available market of $5 billion and deliver comprehensive treatment decision information while conserving the limited samples available for testing, and with industry leading turnaround time; the expected receipt of Oncocyte’s first clinical patient samples for the DetermaIO early access program in the coming weeks; the expectation that the DetermaRx install base is poised to grow Oncocyte’s sample volume and revenue once early-stage lung cancer surgeries return to pre-pandemic levels; the expected launch of Oncocyte’s own LDT test (TheraSure Transplant Monitor) into the large transplant rejection market in the U.S. and Europe; the expectation that Oncocyte will complete 2021 with solid momentum toward its goal of building a compelling and powerful portfolio of molecular diagnostic tests; the anticipation of growth ahead; the planned enrollment of more than 1,000 patients at 25 sites across the U.S. beginning in Q4 2021, for the first Real-World Evidence registry intended to evaluate biomarker adoption and precision medicine in creating personalized treatment options for early-stage lung cancer patients; 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.
InvestorContact
Bob Yedid
LifeSci Advisors, LLC
646-597-6989
bob@lifesciadvisors.com
MediaContact
Terri Clevenger
Westwicke/ICR
203-856-4326
Terri.clevenger@icrinc.com
ONCOCYTECORPORATION
UNAUDITEDCONDENSED CONSOLIDATED BALANCE SHEETS
(Inthousands)
| September 30, 2021 | December 31, 2020 | |||||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| CURRENT ASSETS | ||||||
| Cash and cash equivalents | $ | 43,340 | $ | 7,143 | ||
| Accounts receivable | 1,032 | 203 | ||||
| Marketable equity securities | 923 | 675 | ||||
| Prepaid expenses and other current assets | 2,296 | 1,205 | ||||
| Total current assets | 47,591 | 9,226 | ||||
| NONCURRENT ASSETS | ||||||
| Right-of-use and financing lease assets, net | 2,918 | 3,262 | ||||
| Machinery and equipment, net, and construction in progress | 4,719 | 3,262 | ||||
| Equity method investment in Razor | - | 13,417 | ||||
| Goodwill | 18,432 | 9,187 | ||||
| Intangible assets, net | 92,722 | 15,009 | ||||
| Restricted cash | 1,700 | 1,700 | ||||
| Other noncurrent assets | 259 | 356 | ||||
| TOTAL ASSETS | $ | 168,341 | $ | 55,419 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| CURRENT LIABILITIES | ||||||
| Accounts payable | $ | 1,198 | $ | 432 | ||
| Accrued compensation | 3,336 | 3,468 | ||||
| Accrued expenses and other current liabilities | 1,869 | 2,284 | ||||
| Accrued severance from acquisition, current | 2,452 | - | ||||
| Accrued liabilities from acquisition, current | 2,236 | - | ||||
| Loans payable, current | 1,500 | 2,390 | ||||
| Right-of-use and financing lease liabilities, current | 786 | 422 | ||||
| Total current liabilities | 13,377 | 8,996 | ||||
| NONCURRENT LIABILITIES | ||||||
| Loans payable, net of deferred financing costs, noncurrent | 178 | 1,508 | ||||
| Right-of-use and financing lease liabilities, noncurrent | 3,762 | 4,312 | ||||
| Contingent consideration liabilities, noncurrent | 51,675 | 7,120 | ||||
| TOTAL LIABILITIES | 68,992 | 21,936 | ||||
| Commitments and contingencies | ||||||
| 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; 92,158 and 69,117 shares<br> issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 251,238 | 157,160 | ||||
| Accumulated deficit | (151,889 | ) | (123,677 | ) | ||
| Total shareholders’ equity | 99,349 | 33,483 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 168,341 | $ | 55,419 |
ONCOCYTECORPORATION
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Inthousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net revenue | $ | 984 | $ | 555 | $ | 4,138 | $ | 713 | ||||
| Cost of revenues | 860 | 601 | 2,948 | 1,139 | ||||||||
| Cost of revenues – amortization of acquired intangibles | 990 | - | 2,371 | - | ||||||||
| Gross profit | (866 | ) | (46 | ) | (1,181 | ) | (426 | ) | ||||
| Operating expenses: | ||||||||||||
| Research and development | 3,142 | 2,615 | 9,040 | 8,000 | ||||||||
| Sales and marketing | 2,931 | 1,568 | 7,858 | 4,620 | ||||||||
| General and administrative | 5,495 | 4,995 | 18,193 | 13,378 | ||||||||
| Change in fair value of contingent consideration | 1,170 | (2,980 | ) | 2,260 | (2,980 | ) | ||||||
| Total operating expenses | 12,738 | 6,198 | 37,351 | 23,018 | ||||||||
| Loss from operations | (13,604 | ) | (6,244 | ) | (38,532 | ) | (23,444 | ) | ||||
| OTHER INCOME (EXPENSES), NET | ||||||||||||
| Interest expense, net | (50 | ) | (78 | ) | (167 | ) | (175 | ) | ||||
| Unrealized gain (loss) on marketable equity securities | (138 | ) | 20 | 248 | (18 | ) | ||||||
| Pro rata loss from equity method investment in Razor | - | (482 | ) | (270 | ) | (1,112 | ) | |||||
| Gain on extinguishment of debt (PPP loan) | - | - | 1,141 | - | ||||||||
| Other income, net | (8 | ) | 1 | 10 | 31 | |||||||
| Total other income (expenses), net | (196 | ) | (539 | ) | 962 | (1,274 | ) | |||||
| LOSS BEFORE INCOME TAXES | (13,800 | ) | (6,783 | ) | (37,570 | ) | (24,718 | ) | ||||
| Income tax benefit | - | - | 9,358 | 1,095 | ||||||||
| NET LOSS | $ | (13,800 | ) | $ | (6,783 | ) | $ | (28,212 | ) | $ | (23,623 | ) |
| Net loss per share: basic and diluted | $ | (0.15 | ) | $ | (0.10 | ) | $ | (0.32 | ) | $ | (0.36 | ) |
| Weighted average shares outstanding: basic and diluted | 91,453 | 67,247 | 87,812 | 64,843 |
ONCOCYTECORPORATION
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Inthousands)
| Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| September 30, | ||||||
| 2021 | 2020 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net loss | $ | (28,212 | ) | $ | (23,623 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation expense | 582 | 529 | ||||
| Amortization of intangible assets | 2,371 | 59 | ||||
| Amortization of right-of-use assets and liabilities | 169 | 959 | ||||
| Impairment charge for long-lived assets | - | 88 | ||||
| Pro rata loss from equity method investment in Razor | 270 | 1,112 | ||||
| Stock-based compensation | 5,136 | 4,081 | ||||
| Unrealized (gain) loss on marketable equity securities | (248 | ) | 18 | |||
| Amortization of debt issuance costs | 46 | 80 | ||||
| Change in fair value of contingent consideration | 2,260 | (2,980 | ) | |||
| Deferred income tax benefit | (9,358 | ) | (1,095 | ) | ||
| Gain on extinguishment of debt (PPP loan) | (1,141 | ) | - | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | $ | (824 | ) | $ | (372 | ) |
| Amount due to Lineage and affiliates | - | (6 | ) | |||
| Prepaid expenses and other assets | (787 | ) | (529 | ) | ||
| Accounts payable and accrued liabilities | (1,592 | ) | 1,843 | |||
| Accrued severance from Chronix Biomedical acquisition | 2,452 | - | ||||
| Net cash used in operating activities | (28,876 | ) | (19,836 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Acquisition of Insight Genetics, net of cash acquired | (607 | ) | (6,189 | ) | ||
| Acquisition of Razor Genomics asset, net of cash acquired | (6,648 | ) | - | |||
| Acquisition of Chronix Biomedical, net of cash acquired | (4,459 | ) | - | |||
| Equity method investment in Razor | - | (4,000 | ) | |||
| Construction in progress and purchases of furniture and equipment | (1,846 | ) | (1,061 | ) | ||
| Net cash used in investing activities | (13,560 | ) | (11,250 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from exercise of stock options | 2,573 | 72 | ||||
| Proceeds from sale of common shares | 65,262 | 18,343 | ||||
| Financing costs to issue common shares | (2,676 | ) | (58 | ) | ||
| Proceeds from sale of common shares under at-the-market transactions | 12,724 | - | ||||
| Financing costs for at-the-market sales | (390 | ) | - | |||
| Proceeds from exercise of warrants | 2,631 | - | ||||
| Common shares received and retired for employee taxes paid | (239 | ) | (14 | ) | ||
| Repayment of loan payable | (1,125 | ) | (125 | ) | ||
| Repayment of financing lease obligations | (127 | ) | (53 | ) | ||
| Proceeds from PPP loan | - | 1,141 | ||||
| Net cash provided by financing activities | 78,633 | 19,306 | ||||
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 36,197 | (11,780 | ) | |||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING | 8,843 | 23,772 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING | $ | 45,040 | $ | 11,992 | ||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||
| Cash paid for interest | $ | 96 | $ | 131 | ||
| 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 Insight Genetics | - | 5,000 | ||||
| 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 | 11,130 | ||||
| Assumed liability from Chronix Acquisition | 3,489 | - | ||||
| Holdback liability | - | 600 | ||||
| Construction in progress, machinery and equipment purchases included in accounts<br> payable, accrued liabilities and landlord liability | 193 | 1,109 |
Non-GAAPFinancial Measures
This earnings release includes loss from operations prepared in accordance with accounting principles generally accepted in the United States (GAAP) and includes certain historical non-GAAP adjustments to operating expenses. In particular, Oncocyte has provided non-GAAP total loss from operations, adjusted to exclude noncash stock-based compensation, change in fair value of contingent consideration and depreciation and amortization expenses. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with GAAP. However, Oncocyte believes the presentation of non-GAAP total loss from operations, when viewed in conjunction with our GAAP total loss from operations, is helpful in understanding Oncocyte’s ongoing operations and its programs.
Furthermore, management uses these non-GAAP financial measures in the aggregate to establish budgets and operational goals, to manage Oncocyte’s business and to evaluate its performance and its programs.
Oncocyte Corporation
Reconciliation of Non-GAAP Financial Measure
Adjusted Loss from Operations
(Amounts in Thousands)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
| GAAP loss from operations - as reported | $ | (13,604 | ) | $ | (6,244 | ) | $ | (38,532 | ) | $ | (23,444 | ) |
| Stock-based compensation expense | 1,849 | 1,784 | 5,136 | 4,081 | ||||||||
| Impairment charge for long-lived assets | - | - | - | 422 | ||||||||
| Change in fair value of contingent consideration | 1,170 | (2,980 | ) | 2,260 | (2,980 | ) | ||||||
| Severance charge | - | 1,260 | - | 1,260 | ||||||||
| Depreciation and amortization expense | 1,246 | 91 | 2,954 | 321 | ||||||||
| Non-GAAP loss from operations, as adjusted | $ | (9,339 | ) | $ | (6,089 | ) | $ | (28,182 | ) | $ | (20,340 | ) |