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 10, 2022
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. ☐
Item2.02 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.
Item9.01 - Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release, dated November 10, 2022. |
| 104 | Cover<br> 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:<br> November 10, 2022 | By: | /s/ Ronald Andrews |
| Ronald<br> Andrews | ||
| Chief<br> Executive Officer |
Exhibit99.1
OncocyteReports 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.
ThirdQuarter and Recent Highlights:
| ● | SWOG<br> Cancer Research Network selected the DetermaIO^TM^ test to be used in its S1418<br> clinical trial, a prospectively designed biomarker study of breast cancer tissues. |
|---|---|
| ● | DetermaIO<br> sample volume from Early Adopters grew at 117% quarter over quarter. |
| ● | DetermaRx^TM^test sample volume increased by 51%, compared to third quarter of 2021 and onboarded<br> physician base increased by 62%, as compared to the same period in 2021. |
| ● | Received<br> recommendation from the Advisory Panel for the DetermaRx test to be cross walked to CPT code<br> 81522, increasing reimbursement rate by 23% beginning January 2023. |
| ● | Announced<br> that Palmetto GBA, a Medicare administrative contractor for the Molecular Diagnostics Services<br> program (MolDX), has conveyed the validity of a Local Coverage Determination (LCD) reconsideration<br> request for broader coverage for DetermaRx to include risk-stratification to assess the risk<br> of recurrence for the early-stage non-small cell lung cancer patient to determine the best<br> course of action for patient management. |
| ● | Completed<br> 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 VitaGraft^TM^ 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.”
ThirdQuarter 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.
Webcastand 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.
AboutOncocyte
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-LookingStatements
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
ONCOCYTECORPORATION
UNAUDITEDCONDENSED CONSOLIDATED BALANCE SHEETS
(Inthousands)
| 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 |
All values are in US Dollars.
ONCOCYTECORPORATION
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Inthousands, 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 |
ONCOCYTECORPORATION
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Inthousands)
| 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 |
OncocyteCorporation
Reconciliationof Non-GAAP Financial Measure
AdjustedLoss from Operations
(Amountsin 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 | ) |