Oncocyte Reports Preliminary Fourth Quarter and Full Year

IRVINE, Calif., March 31, 2023 (GLOBE NEWSWIRE) — Oncocyte Corporation (Nasdaq: OCX), a precision diagnostics company, today announced plans to file a Form 12b-25 with the U.S. Securities and Exchange Commission regarding its Annual Report on Form 10-K and reports preliminary financial results for the full year ended December 31, 2022. The Company is completing its final review of the information required to be presented for the relevant period. The Form 12b-25 provides the Company with an additional 15 calendar days to complete its assessment and allows its independent registered public accounting firm extra time to complete its audit of the Company’s financial statements before filing its Form 10-K reports.

The Company currently anticipates filing the 2022 Form 10-K as soon as practicable and expects that, in compliance with Rule 12b-25, it will be filed no later than April 17, 2023.

“The Company continues to work diligently to submit the filing. Turning to our recent performance, we have committed to a strategic shift from a service lab model to a product-driven revenue model with low-cost infrastructure and scalable high-margin distributable content,” said Joshua Riggs, CEO. “With a reduced cash burn, we believe this puts us in a better position to support the future of our core products and rapidly deliver on our major milestones ahead. We are confident that a kitted product approach puts our unique technology in the hands of researchers at every level, from pharma to academia, encouraging research on the role of the tumor microenvironment in oncology and transplant graft health and viability.”

Recent Highlights:

Appointed Joshua Riggs to President, CEO, and to its Board of DirectorsAppointed seasoned healthcare executive Lou Silverman to its Board of Directors as Lead Independent DirectorAnnounced the divestiture of DetermaRx, resulting in expected savings of approximately $30 million in operating cost and development obligations over the next two yearsImplemented cost reduction plans to drive expected quarterly average 2H 2023 cash burn below $6 million, down from $10.5 million in 2H 2022Focused development of VitaGraft and DetermaIO in 2023 with DetermaCNI in development pipeline for 2024Entered into an amendment to the Chronix Merger Agreement in February 2022 to reduce contingent liabilities and open a kitting opportunity for VitaGraftCompleted VitaGraft RUO feasibility, anticipated to enter pre-manufacturing optimization in 2Q 2023Initiated DetermaIO multicenter SWOG study for Triple Negative Breast Cancer and had Metastatic Colorectal Cancer data accepted for publication in Clinical Cancer ResearchSubmitted DetermaIO reimbursement dossier to MolDx in December 2022

2022 Preliminary Financial Results

Consolidated revenues for the three and twelve months ended December 31, 2022, were approximately $1.1 million and $5.6 million, respectively, a decrease of 69% compared to fourth quarter 2021 and 27% compared to the full year 2021. Excluding DetermaRx revenue, the continuing operations revenue was $1.0 million for the year ended December 31, 2022.

Consolidated DetermaRx revenues for the three months ended December 31, 2022 were $0.8 million, a 3% increase from the same period in 2021. Consolidated DetermaRx revenues for the year ended December 31, 2022, were approximately $3.6 million, a 47% percent increase from the previous year.

Consolidated cost of revenues for the three months ended December 31, 2022 were approximately $2.4 million, including $1.6 million from the cost of diagnostic tests and testing services we performed for our pharma customers, and approximately $0.8 million in noncash amortization expense.

Consolidated cost of revenues for the year ended December 31, 2022 were approximately $8.9 million, including $5.2 million from the cost of diagnostic tests and testing services we performed for our pharma customers, and $3.7 million in noncash amortization expense. Cost of revenues for continuing operations were approximately $1.0 million.

Consolidated operating expenses for the year ended December 31, 2022 were approximately $69.0 million, including $22.4 million from general and administrative, $19.4 million from research and development, $13.6 million from sales and marketing, $31.0 million gain from change in fair value of contingent consideration, $44.6 million from impairment loss. Operating expenses from continuing operations for the year ended December 31, 2022 were approximately $18.0 million.

Conference Call Information
The Company will host a conference call on April 3rd at 8:30 am EDT / 5:30 am PDT to discuss the results along with recent corporate developments. The dial-in number in the U.S./Canada is 1-877-407-9716; for international participants, the number is 1-201-493-6779. To access the live webcast, go to the investor relations section on the Company’s website, or by clicking here: https://viavid.webcasts.com/starthere.jsp?ei=1596927&tp_key=b228274c7e. A 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 company. The Company’s tests are designed to help provide clarity and confidence to physicians and their patients. DetermaIO™ is a gene expression test that assesses the tumor microenvironment to predict response to immunotherapies. VitaGraft™ is a blood-based solid organ transplantation monitoring test, and pipeline test DetermaCNI™ is blood-based monitoring tool for monitoring therapeutic efficacy.

DetermaIO™, DetermaCNI™, and VitaGraft™ are trademarks of Oncocyte Corporation

Oncocyte 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’s cash runway can support future product development milestones, the expected savings of approximately $30 million in operating cost & development obligations over the next two years as a result of the divestiture of DetermaRx, the expectation that cost reduction plans will drive quarterly average 2H 2023 cash burn below $6M, the anticipation that DetermaCNI will be in the development pipeline for 2024, the anticipation of kitting opportunities for VitaGraft, the anticipation that VitaGraft RUO will enter pre-manufacturing optimization in Q2 2023, the belief that the Company is poised to rapidly deliver on major milestones, the belief that a kitted product approach will put the Company’s unique technology in the hands of researchers at every level and encourage research on the role of the tumor microenvironment in oncology and transplant graft health and viability, 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 the recent COVID-19 pandemic 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 Contact
Caroline Corner
ICR Westwicke
(415) 202-5678
caroline.corner@westwicke.com 

ONCOCYTE CORPORATIONUNAUDITED CONSOLIDATED BALANCE SHEETS(In thousands)       December 31,   2022   2021      ASSETS    CURRENT ASSETS    Cash and cash equivalents $19,993  $32,948 Accounts receivable, net  2,012   1,437 Marketable equity securities  433   904 Prepaid expenses and other current assets  977   901 Current assets of discontinuing operations  2,121   2,953 Total current assets  25,536   39,143      NONCURRENT ASSETS    Right-of-use and financing lease assets, net  2,088   2,779 Machinery and equipment, net, and construction in progress  8,763   5,590 Goodwill  –   18,684 Intangible assets, net  61,633   61,721 Restricted cash  1,700   1,700 Other noncurrent assets  371   264 Other noncurrent assets of discontinuing operations  –   29,682 TOTAL ASSETS $100,091  $159,563      LIABILITIES AND SHAREHOLDERS’ EQUITY    CURRENT LIABILITIES    Accounts payable $1,253  $1,810 Accrued compensation  1,771   3,092 Accrued expenses and other current liabilities  3,839   2,085 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  815   819 Current liabilities of discontinuing operations  2,005   1,261 Total current liabilities  12,106   14,120      NONCURRENT LIABILITIES    Right-of-use and financing lease liabilities, noncurrent  2,729   3,545 Contingent consideration liabilities  45,662   76,681      TOTAL LIABILITIES  60,497   94,346      COMMITMENTS AND CONTINGENCIES         Series A Redeemable Convertible Preferred Stock, no par value; stated value $1,000 per share; 6 shares issued and outstanding at December 31, 2022; aggregate liquidation preference of $6,091 as of December 31, 2022  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; 118,644 and 92,232 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively  294,929   252,954 Accumulated other comprehensive income  39   37 Accumulated deficit  (260,676)  (187,774)Total shareholders’ equity  34,292   65,217 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $100,091  $159,563       ONCOCYTE CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)               Year Ended December 31,   2022   2021        Net revenue $958  $2,198        Cost of revenues  880   697  Cost of revenues – amortization of acquired intangibles  96   81  Gross margin  (18)  1,420        Operating expenses:     Research and development  7,301   5,035  Sales and marketing  1,132   552  General and administrative  21,881   22,205  Change in fair value of contingent consideration  (31,019)  27,266  Loss from goodwill impairment  18,684   –  Loss from held for sale assets  –    Total operating expenses $17,979  $55,058        Loss from operations $(17,997) $(53,638)       OTHER INCOME (EXPENSES), NET     Interest expense, net  (77)  (209) Unrealized gain (loss) on marketable equity securities  (471)  229  Pro rata loss from equity method investment in Razor  –   (270) Gain on extinguishment of debt (PPP loan)  –   1,141  Other expenses, net  (67)  (37) Total other income (expenses), net  (615)  854        LOSS BEFORE INCOME TAXES  (18,612)  (52,784)       Income tax benefit  –   9,261        Loss from continuing operations  (18,612)  (43,523) Loss from discontinued operations  (54,290)  (20,574)       NET LOSS  (72,902)  (64,097)       Accretion of Series A redeemable convertible preferred stock  (520)  –        NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS: BASIC AND DILUTED  (73,422)  (64,097)       Net loss per share from continuing operations, basic and diluted $(0.17) $(0.49) Net loss per share from discontinuing operations, basic and diluted $(0.49) $(0.23) Net loss per share: basic and diluted  (0.66)  (0.72)       Weighted average shares outstanding: basic and diluted  110,800   88,920  

 

Oncocyte Corporation                     Unaudited Reconciliation of Non-GAAP Financial Measure          Adjusted Loss from Operations          (Amounts in Thousands)                     For the Three Months Ended  For the Year Ended  December 31, December 31,   2022   2021    2022   2021    (unaudited) (unaudited)  (unaudited) (unaudited) Consolidated GAAP loss from operations – as reported $ (44,664) $ (35,680)  $ (72,287) $ (74,212) Stock-based compensation expense  2,619   1,706    10,042   6,841  Change in fair value of contingent consideration  (13,862)  25,006    (31,019)  27,266  Severance charge  1,640   255    2,829   2,707  Depreciation and amortization expense  1,278   1,251    5,220   4,205  Impairment loss  44,550   –    44,550   –  Consolidated Non-GAAP loss from operations, as adjusted $ (8,439) $ (7,462)  $ (40,665) $ (33,193)