Development of DetermaVu™ Remains on Track for Completion in 2018
-Conference Call Today at 4:30 pm ET-
ALAMEDA, Calif., April 02, 2018 (GLOBE NEWSWIRE) -- OncoCyte Corporation (NYSE American:OCX), a developer of novel, non-invasive liquid biopsy tests for the early detection of cancer, today reported financial results for the fourth quarter and full year ended December 31, 2017.
“Since our last quarterly update to investors in November, the team at OncoCyte has been busy making substantial progress on several fronts,” commented William Annett, President and Chief Executive Officer. “OncoCyte has upgraded its management team, brought additional talent to its Board of Directors, strengthened its balance sheet, expanded its patent estate, and continued to advance the development of DetermaVu™ to be ready for potential commercialization by the end of 2018. So far in 2018 we have continued to be deeply engaged in a number of activities that we believe should create significant value for our shareholders over time by bringing innovative technologies to market that have the potential to save and improve the lives of cancer patients.”
Recent Highlights
- Strengthened balance sheet through a $10 million private placement of common shares with two current investors.
- Discovered and filed patent applications for 190 novel lung cancer biomarkers that may enhance OncoCyte’s lung cancer test and enable better differentiation of malignant from benign lung nodules for improved lung cancer diagnosis.
- Reported positive data from a small study using a preliminary algorithm incorporating a combination of existing and newly discovered biomarkers. The study demonstrated at least equivalent accuracy for DetermaVu™ in diagnosing lung cancer on three different commercial molecular diagnostic platforms. These results need to be verified in a larger confirmation study to confirm the potential utility of the new biomarker panel. The Company is currently conducting that study and expects that it will be completed during the second quarter of 2018.
- Announced the appointment of Cavan Redmond, a director of the Company since 2015, as Chairman of the Board of Directors.
- Continued to enhance our abilities to rapidly prototype, evaluate, and develop lung cancer diagnostic products through the continued growth of our well-characterized lung cancer clinical sample bank.
Upcoming Milestones in 2018
First half:
- Complete DetermaVu™ confirmation study.
Second half:
- Select final commercial platform for DetermaVu™.
- Conduct R&D Validation Study of DetermaVu™
- Conduct and report results of Analytical Validation Study of DetermaVu™.
- Conduct CLIA Validation Study of DetermaVu™.
- Conduct and report results of Clinical Validation Study of DetermaVu™.
Fourth Quarter 2017 Financial Results
For the quarter ended December 31, 2017, OncoCyte incurred a net loss of $4.0 million, or ($0.13) per share, compared to a net loss of $3.1 million, or ($0.11) per share, in the fourth quarter of 2016.
Operating expenses for the three months ended December 31, 2017, were $3.9 million as reported, and were $3.3 million, on an as adjusted basis.
Research and development expenses for the fourth quarter of 2017, as reported, were $1.5 million compared to $1.4 million for the same period in 2016. The increased costs include outside laboratory and clinical trial expenses, salaries and payroll related expenses, stock-based compensation expenses, and charges to OncoCyte by its former parent company BioTime, Inc. for continued shared facilities and services provided to OncoCyte.
General and administrative expenses for the fourth quarter of 2017, as reported, were $1.8 million compared to $1.1 million for the same period in 2016. The $0.7 million increase was mainly attributable to increased legal and patent related costs, consulting, salaries and payroll related expenses, including stock-based compensation, as we upgraded our management team with additional key hires made in 2017.
Sales and marketing expenses for the fourth quarter of 2017, as reported, were $0.6 million, relatively unchanged from $0.5 million for the same period in 2016.
At December 31, 2017, OncoCyte had cash and cash equivalents of $7.6 million and available-for-sale securities valued at $0.8 million.
Fiscal 2017 Financial Results
For 2017, OncoCyte reported a net loss of $19.4 million, or ($0.64) per share, compared to $11.2 million, or ($0.42) per share, in 2016.
Operating expenses for 2017 were $18.8 million, as reported, and were $12.6 million, on an as adjusted basis.
Research and development expenses for 2017, as reported, were $7.2 million, compared to $5.7 million during 2016. The $1.5 million increase was primarily due to the certification and maintenance costs related to the Company’s CLIA laboratory and the cost of the DetermaVu™ program. The increased costs include outside laboratory and clinical trial expenses, salaries and payroll related expenses, including stock-based compensation, and charges to OncoCyte by its former parent company, BioTime, Inc., for continued shared facilities and services provided to OncoCyte.
General and administrative expenses for 2017, as reported, were $9.2 million compared to $4.3 million during 2016. The $4.9 million increase was mainly attributable to a $4.1 million noncash charge for the issuance of warrants to certain investors who exercised stock purchase warrants, $0.4 million in legal and patent related expenses, $0.3 million in personnel costs and related benefits, including stock-based compensation expenses, and $0.2 million in insurance expense.
Sales and marketing expenses for 2017, as reported, were $2.4 million compared to $1.2 million during 2016. The $1.2 million increase was mainly attributable to increases of $0.7 million in salaries and payroll related expenses, including stock-based compensation, $0.2 million in consulting expenses, and $0.2 million in amounts charged to OncoCyte by BioTime for continued shared facilities and services provided to OncoCyte.
Conference Call
OncoCyte will host a conference call today, April 2, 2018, at 4:30 p.m. ET / 1:30 p.m. PT to discuss financial results.
The dial-in number in the U.S./Canada is 800-281-7973, for international participants the number is 323-794-2093. For all callers, refer to Conference ID 4101947. To access the live webcast, go to the investor relations section on the company’s website, http://investors.oncocyte.com/events-and-presentations.
A replay of the conference call will be available for seven business days beginning about two hours after the conclusion of the live call, by calling 888-203-1112 toll-free (from U.S./Canada); international callers dial 719-457-0820. Use the Conference ID 4101947. Additionally, the archived webcast will be available http://investors.oncocyte.com/events-and-presentations.
About OncoCyte Corporation
OncoCyte is focused on the development and commercialization of novel, non-invasive blood and urine (“liquid biopsy”) diagnostic tests for the early detection of cancer. Early detection of cancer can improve health outcomes, reduce the cost of care, and improve patients’ quality of life. Liquid biopsy diagnostic tests like those OncoCyte is developing may reduce the need for costlier and riskier diagnostic procedures such as invasive biopsy and cystoscopic procedures. OncoCyte’s development pipeline is focused on non-invasive confirmatory diagnostic tests for lung, breast, and bladder cancer. OncoCyte’s tests are being developed using proprietary sets of genetic and protein molecular markers that differentially express in specific types of cancer. OncoCyte conducts ongoing research to identify additional molecular markers, acquire and license markers and related technology, and develop tests based on those markers.
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” and similar expressions) are forward-looking statements. These statements include those pertaining to the implementation and results of research, development, clinical trials and studies, commercialization plans, future financial and/or operating results, and future opportunities for OncoCyte, along with 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 potential diagnostic tests or products, uncertainty in the results of clinical trials or regulatory approvals, the capacity of our third-party supplied blood sample analytic system to provide consistent and precise analytic results on a commercial scale, the need and ability to obtain future capital, and maintenance of intellectual property rights, and the need to obtain third party reimbursement for patients’ use of any diagnostic tests we commercialize. Actual results may differ materially from the results anticipated in these forward-looking statements and accordingly as 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 filings. OncoCyte disclaims any intent or obligation to update these forward-looking statements, except as required by law.
Investor Contacts:
EVC Group LLC
Matt Haines / Michael Polyviou
917-733-9297 / 732-933-2754
mhaines@evcgroup.com / mpolyviou@evcgroup.com
Financial Media Contact:
GIBSON Communications, LLC
Tom Gibson
201-476-0322
tom@tomgibsoncommunications.com
FINANCIAL TABLES FOLLOW
ONCOCYTE CORPORATION
BALANCE SHEETS
(In thousands)
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 7,600 | $ | 10,174 | ||||
| BioTime shares held as available-for-sale securities, at fair value | 760 | 2,237 | ||||||
| Prepaid expenses and other current assets | 168 | 285 | ||||||
| Total current assets | 8,528 | 12,696 | ||||||
| NONCURRENT ASSETS | ||||||||
| Intangible assets, net | 746 | 988 | ||||||
| Equipment and furniture, net | 822 | 688 | ||||||
| Deposits | 120 | 75 | ||||||
| TOTAL ASSETS | $ | 10,216 | $ | 14,447 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Amount due to BioTime and affiliates | $ | 2,099 | $ | 2,854 | ||||
| Accounts payable | 175 | 422 | ||||||
| Accrued expenses and other current liabilities | 1,042 | 797 | ||||||
| Loan payable, current | 800 | - | ||||||
| Capital lease liability, current | 338 | 202 | ||||||
| Total current liabilities | 4,454 | 4,275 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Loan payable, net of deferred financing costs, noncurrent | 1,070 | - | ||||||
| Capital lease liability, noncurrent | 289 | 310 | ||||||
| TOTAL LIABILITIES | 5,813 | 4,585 | ||||||
| Commitments and contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, no par value, 5,000 shares authorized; none issued and outstanding | - | - | ||||||
| Common stock, no par value, 50,000 shares authorized; 31,452 and 28,737 shares issued and outstanding at December 31, 2017 and 2016, respectively | 59,968 | 45,818 | ||||||
| Accumulated other comprehensive loss on available-for-sale securities | (888 | ) | (654 | ) | ||||
| Accumulated deficit | (54,677 | ) | (35,302 | ) | ||||
| Total stockholders’ equity | 4,403 | 9,862 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 10,216 | $ | 14,447 | ||||
ONCOCYTE CORPORATION
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended December 31, (unaudited) | Year Ended December 31, | |||||||||||||||||
| OPERATING EXPENSES | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Research and development | $ | 1,507 | $ | 1,431 | $ | 7,174 | $ | 5,677 | ||||||||||
| General and administrative | 1,785 | 1,120 | 9,232 | 4,265 | ||||||||||||||
| Sales and marketing | 600 | 543 | 2,443 | 1,198 | ||||||||||||||
| Total operating expenses | 3,892 | 3,094 | 18,849 | 11,140 | ||||||||||||||
| Loss from operations | (3,892 | ) | (3,094 | ) | (18,849 | ) | (11,140 | ) | ||||||||||
| OTHER EXPENSES, NET | ||||||||||||||||||
| Loss on sale of available-for-sale securities and other expenses, net | - | - | (309 | ) | - | |||||||||||||
| Interest expense, net | (68 | ) | (9 | ) | (217 | ) | (28 | ) | ||||||||||
| Total other expenses, net | (68 | ) | (9 | ) | (526 | ) | (28 | ) | ||||||||||
| NET LOSS | $ | (3,960 | ) | $ | (3,103 | ) | $ | (19,375 | ) | $ | (11,168 | ) | ||||||
| Basic and diluted net loss per share | $ | (0.13 | ) | $ | (0.11 | ) | $ | (0.64 | ) | $ | (0.42 | ) | ||||||
| Weighted average shares outstanding: basic and diluted | 31,440 | 28,712 | 30,195 | 26,529 | ||||||||||||||
ONCOCYTE CORPORATION
STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended December 31 | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | (19,375 | ) | $ | (11,168 | ) | $ | (8,735 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation expense | 338 | 145 | 41 | |||||||||
| Amortization of intangible assets | 242 | 242 | 242 | |||||||||
| Stock-based compensation | 1,630 | 922 | 1,815 | |||||||||
| Loss on sale of available-for-sale securities, including selling commissions | 309 | - | - | |||||||||
| Warrants issued to certain shareholders as inducement to exercise of warrants | 4,074 | - | - | |||||||||
| Contingently issuable warrant expense to investors | - | - | 65 | |||||||||
| Amortization of debt issuance costs and interest expense | 83 | - | 18 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Amount due to BioTime and affiliates | (753 | ) | 2,007 | 1,557 | ||||||||
| Prepaid expenses and other current assets | 115 | 101 | (274 | ) | ||||||||
| Accounts payable and accrued liabilities | (48 | ) | 229 | 1,042 | ||||||||
| Net cash used in operating activities | (13,385 | ) | (7,522 | ) | (4,229 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Net proceeds from sale of available-for-sale securities | 934 | - | 815 | |||||||||
| Purchase of equipment | (91 | ) | (106 | ) | (500 | ) | ||||||
| Security deposit | - | (75 | ) | - | ||||||||
| Net cash provided by (used in) investing activities | 843 | (181 | ) | 315 | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from exercise of options | 610 | 218 | 4 | |||||||||
| Proceeds from exercise of warrants | 7,774 | - | - | |||||||||
| Proceeds from sale of common stock | - | - | 11,649 | |||||||||
| Proceeds from sale of common stock and warrants | - | 10,550 | - | |||||||||
| Financing costs related to sale of common stock and warrants | - | (773 | ) | - | ||||||||
| Proceeds from issuance of loan payable, net of financing costs | 1,982 | - | - | |||||||||
| Repayment of loan payable | (133 | ) | - | - | ||||||||
| Repayment of capital lease obligation | (265 | ) | (114 | ) | - | |||||||
| Net cash provided by financing activities | 9,968 | 9,881 | 11,653 | |||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (2,574 | ) | 2,178 | 7,739 | ||||||||
| CASH AND CASH EQUIVALENTS: | ||||||||||||
| At beginning of the year | 10,174 | 7,996 | 257 | |||||||||
| At end of the year | $ | 7,600 | $ | 10,174 | $ | 7,996 | ||||||
Non-GAAP Financial Measures
This earnings release includes operating expenses prepared in accordance with accounting principles generally accepted in the United States (GAAP), and includes certain historical non-GAAP operating expenses. In particular, OncoCyte has provided non-GAAP total operating expenses, adjusted to exclude noncash stock-based compensation, depreciation and amortization and warrants expense issued to certain shareholders as an inducement of exercise of warrants. 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 operating expenses, when viewed in conjunction with our GAAP total operating expenses, is helpful in understanding OncoCyte’s ongoing operating expenses 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 Operating Expenses | Amounts In Thousands | |||||
| For the Three Months Ended December 31, 2017 (unaudited) | For the Year Ended December 31, 2017 | |||||
| GAAP Operating Expenses - as reported | $ | 3,892 | $ | 18,849 | ||
| Stock-based compensation expense | (472 | ) | (1,630 | ) | ||
| Noncash warrant expense | - | (4,074 | ) | |||
| Depreciation and amortization expense | (162 | ) | (580 | ) | ||
| Non-GAAP Operating Expenses, as adjusted | $ | 3,258 | $ | 12,565 | ||