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Oncocyte Reports Full Year 2023 Financial Results

Bay Street

IRVINE, Calif., April 12, 2024 (GLOBE NEWSWIRE) — Oncocyte Corporation (Nasdaq: OCX), a precision diagnostics company, today reported financial results for the year ended December 31, 2023.

Recent Highlights

“In 2023, we made significant progress on cost controls and in the development of our transplant monitoring IP,” said Josh Riggs, CEO of Oncocyte. “We achieved reimbursement for VitaGraft™ Kidney, manufactured the first lots of GraftAssure RUO, and ran a competitive partnering process that resulted in the announced Bio-Rad agreement. We look forward to working with them on the commercialization of GraftAssure RUO and the development of VitaGraft Kidney IVD. We continue to benefit from strong support from our core investors and welcome new ones in our recently completed $15.8 million private placement offering. With this partnership and financing we believe that we are well-positioned to meet our critical commercial and regulatory milestones.”

2023 Fourth Quarter and Full-Year Financial Results

Net revenue for the three months and year ended December 31, 2023, was $314,000 and $1.5 million, respectively, an increase of 15% compared to the fourth quarter 2022 and 57% compared to the full year 2022, due to increased revenue from Pharma Services.

Cost of revenues for the three months ended December 31, 2023 was $431,000, including $409,000 from the cost of diagnostic tests and testing services we performed for our Pharma Services customers, with the remaining cost from noncash amortization expense.

Cost of revenues for the year ended December 31, 2023 was $1.1 million, including $1.0 million from the cost of diagnostic tests and testing services we performed for our Pharma Services customers, with the remaining cost from noncash amortization expense.

Research and development expense for the three months and year ended December 31, 2023, was $2.5 million and $9.3 million, respectively, an increase of 85% compared to the fourth quarter 2022 and 27% compared to the full year 2022. The increases were driven by continued focused investment in developing manufacturable versions of assays including DetermaIO™, VitaGraft and DetermaCNI™.

Sales and marketing expense for the three months and year ended December 31, 2023, was $582,000 and $2.8 million, respectively, an increase of 74% compared to the fourth quarter 2022 and 147% compared to the full year 2022. The increases were primarily driven by a continued ramp in sales, marketing and commercialization activities related to the recent coverage decision and launch of VitaGraft Kidney.

General and administrative expense for the three months and year ended December 31, 2023, was $1.8 million and $11.2 million, respectively, a decrease of 66% compared to the fourth quarter 2022 and 49% compared to the full year 2022. The decreases were primarily due to decreased stock-based compensation and personnel expenses.

Loss from operations for the three months ended December 31, 2023, was $16.2 million, an increase of 39% compared to fourth quarter 2022. The 2023 loss from operations included a noncash loss of $11.2 million from the change in fair value of contingent consideration, compared to a gain of $13.9 million in 2022.

Loss from operations for the year ended December 31, 2023, was $25.1 million, an increase of 40% compared to the full year 2022. The 2023 loss from operations included a noncash gain of $5.8 million from the change in fair value of contingent consideration, compared to a gain of $31.0 million in 2022.

For Oncocyte’s complete financial results for the year ended December 31, 2023, see the Company’s annual Form 10-K to be filed with the Securities and Exchange Commission on April 15, 2024.

Webcast and Conference Call Information

Oncocyte will host a conference call to discuss fourth quarter and full year 2023 financial results prior to market open on Friday, April 12, 2024 at 5:00 a.m. Pacific Time / 8:00 a.m. Eastern Time. The conference call may be accessed live via telephone by dialing toll free (888) 550-5422 for both domestic and international callers. Once dialed in, ask to be joined to the Oncocyte Corporation call. The live webcast of the call may be accessed by visiting the “Events & Presentation” section of the Company’s website at https://investors.oncocyte.com.

About Oncocyte

Oncocyte is a precision diagnostics company. The Company’s tests are designed to help provide clarity and confidence to physicians and their patients. VitaGraft™ is a clinical blood-based solid organ transplantation monitoring test, GraftAssure™ is a research use only blood-based solid organ transplantation monitoring test, DetermaIO™ is a gene expression test that assesses the tumor microenvironment to predict response to immunotherapies, and the pipeline test DetermaCNI™ is a blood-based monitoring tool for monitoring therapeutic efficacy in cancer patients. For more information, visit https://oncocyte.com/

VitaGraft™, GraftAssure™, DetermaIO™, and DetermaCNI™ 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, the expectation that the Company and Bio-Rad will successfully commercialize GraftAssure RUO and develop VitaGraft Kidney IVD, the belief that the Company is well positioned to meet its critical commercial and regulatory milestones, 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, 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.

CONTACT:
Jeff Ramson
PCG Advisory
(646) 863-6893
jramson@pcgadvisory.com

– Tables Follow –

ONCOCYTE CORPORATION  
CONSOLIDATED BALANCE SHEETS  
(In thousands, except per share data)  
           
    December 31,  
      2023       2022    
           
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents   $ 9,432     $ 19,993    
Accounts receivable, net of allowance for credit losses of $5 and $154, respectively     484       2,012    
Marketable equity securities     –       433    
Prepaid expenses and other current assets     643       977    
Assets held for sale     139       –    
Current assets of discontinued operations (Note 13)     –       2,121    
Total current assets     10,698       25,536    
           
NONCURRENT ASSETS          
Right-of-use and financing lease assets, net     1,637       2,179    
Machinery and equipment, net, and construction in progress     3,799       8,672    
Intangible assets, net     56,595       61,633    
Restricted cash     1,700       1,700    
Other noncurrent assets     463       371    
TOTAL ASSETS   $ 74,892     $ 100,091    
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Accounts payable   $ 953     $ 1,253    
Accrued compensation     1,649       1,771    
Accrued royalties     1,116       2,022    
Accrued expenses and other current liabilities     452       1,817    
Accrued severance from acquisition     2,314       2,314    
Accrued liabilities from acquisition     –       109    
Right-of-use and financing lease liabilities, current     665       815    
Current liabilities of discontinued operations (Note 13)     45       2,005    
Total current liabilities     7,194       12,106    
           
NONCURRENT LIABILITIES          
Right-of-use and financing lease liabilities, noncurrent     2,204       2,729    
Contingent consideration liabilities     39,900       45,662    
           
TOTAL LIABILITIES     49,298       60,497    
           
Commitments and contingencies          
           
Series A Redeemable Convertible Preferred Stock, no par value; stated value $1,000 per share; 5 and 6 shares issued and outstanding at December 31, 2023 and 2022, respectively; aggregate liquidation preference of $5,296 and $6,091 as of December 31, 2023 and 2022, respectively     5,126       5,302    
           
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; 8,261 and 5,932 shares issued and outstanding at December 31, 2023 and 2022, respectively     310,295       294,929    
Accumulated other comprehensive income     49       39    
Accumulated deficit     (289,876 )     (260,676 )  
Total shareholders’ equity     20,468       34,292    
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 74,892     $ 100,091    
ONCOCYTE CORPORATION  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
           
    Years Ended
  
    December 31,
  
      2023       2022    
           
Net revenue   $ 1,503     $ 958    
           
Cost of revenues     1,002       880    
Cost of revenues – amortization of acquired intangibles     88       96    
Gross profit (loss)     413       (18 )  
           
Operating expenses:          
Research and development     9,294       7,301    
Sales and marketing     2,795       1,132    
General and administrative     11,182       21,881    
Change in fair value of contingent consideration     (5,762 )     (31,019 )  
Impairment losses     6,757       –    
Goodwill impairment     –       18,684    
Loss on disposal and held for sale assets     1,283       –    
Total operating expenses     25,549       17,979    
           
Loss from operations     (25,136 )     (17,997 )  
           
Other (expenses) income:          
Interest expense     (52 )     (83 )  
Realized and unrealized loss on marketable equity securities, net     (61 )     (471 )  
Other income (expenses), net     394       (61 )  
Total other income (expenses)     281       (615 )  
           
Loss from continuing operations     (24,855 )     (18,612 )  
           
Loss from discontinued operations (Note 13)     (2,926 )     (54,290 )  
           
Net loss   $ (27,781 )   $ (72,902 )  
           
Less: dividends and accretion of Series A redeemable convertible preferred stock     (942 )     (520 )  
           
Net loss attributable to common stockholders   $ (28,723 )   $ (73,422 )  
           
Net loss from continuing operations per share: basic and diluted   $ (3.37 )   $ (3.45 )  
Net loss from discontinued operations per share: basic and diluted   $ (0.38 )   $ (9.80 )  
Net loss attributable to common stockholders per share: basic and diluted   $ (3.75 )   $ (13.25 )  
           
Weighted average shares outstanding: basic and diluted     7,651       5,540    
           
Oncocyte Corporation  
Reconciliation of Non-GAAP Financial Measure  
Consolidated Adjusted Loss from Operations  
                 
Note: In addition to financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release also includes a non-GAAP financial measure (as defined under SEC Regulation G). We believe the adjusted amounts are more representative of our ongoing performance. The following is a reconciliation of the non-GAAP measure to the most directly comparable GAAP measure:  
                 
  Three Months Ended December 31,   Years Ended December 31,  
    2023       2022       2023       2022    
  (unaudited)   (unaudited)   (unaudited)   (unaudited)  
  (In thousands)  
Consolidated GAAP loss from operations $ (16,179 )   $ (11,648 )   $ (25,136 )   $ (17,997 )  
Stock-based compensation expense   484       1,726       2,742       6,479    
Severance charge   2       1,640       613       2,830    
Depreciation and amortization expense   325       483       1,680       1,578    
Change in fair value of contingent consideration   11,185       (13,862 )     (5,762 )     (31,019 )  
Impairment losses   (4 )     –       6,757       –    
Goodwill impairment   –       18,684       –       18,684    
Loss on disposal and held for sale assets   –       –       1,283       –    
Consolidated Non-GAAP loss from operations, as adjusted $ (4,187 )   $ (2,977 )   $ (17,823 )   $ (19,445 )  
                 


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