NEW YORK – OncoCyte said after the close of the market on Tuesday that its second quarter net loss rose year over year as it continues to advance its lung cancer liquid biopsy test, DetermaVu.
For the three months ended June 30, the Alameda, California-based diagnostic developer incurred a net loss of 5.4 million, or $.10 per share, compared to $4.5 million, or $.12 per share, in the year-ago period. Analysts on average had expected a loss per share of $.09.
OncoCyte did not report any revenues for the quarter.
The company saw some setbacks in Q2, announcing in late June that it would need additional time to complete the CLIA validation study it began in April, and which it previously believed would allow it to launch DetermaVu before the end of this year.
The firm also had a leadership shakeup at the end of the quarter, appointing Ronald Andrews as its CEO, effective July 1, to replace the outgoing Will Annett.
"We have now clarified the key steps for our development path forward and our R&D team is diligently executing on the plan," Andrews said in a statement. "Importantly, concurrent to our work in the lab, we have also continued to advance our market preparation activities to create the commercial momentum necessary to move DetermaVu closer to market," he added.
During a call discussing the firm's results, Andrews provided an updated timeline and some details on exactly why the CLIA was being delayed, saying that the company is stepping back to rerun samples from its R&D validation in order to make sure the RUO reagents it employs are working reproducibly.
"The key finding from our R&D efforts in the last four to six weeks is that we were encountering … lot to lot variability from our RNA extraction reagents. Now that we have isolated the cause we will establish incoming QC protocols to ensure no further impact on our test reproducibility, "Andrews said.
"These additional steps mean we're pushing out the original timeline by approximately six to nine months."
"The good news," he added, is that "the Gene Studio platform that we implemented last year is performing well. The system remains incredibly reproducible and we remain confident that this is the best next-gen sequencing platform for use for the commercial launch of DetermaVu."
One thing the company won't be rejiggering during this pre-CLIA reevaluation period is the manual sample prep aspect of the assay, Andrews said.
"We took a long hard look at [whether], now that we have paused, we should go ahead and try to institute automation. And after thinking about it we realized that the best thing we can do right now is to get the manual process stabilized and ready for market. It's much easier to automate a stable process than it would be to try to add one more variable," he said.
"We will obviously layer in that automation once we're CLIA validated and we're on the market … as we ramp up and scale out our volumes," he added.
OncoCyte's Q2 R&D expenses dropped 35 percent to $1.5 million from $2.3 million. Its SG&A expenses more than doubled to $4.0 million from $1.9 million. The firm attributed the increase to a combination of banking expenses, management transition and other personnel costs, and other corporate spending.
Although the firm reduced its sales and marketing related expenses during Q2, it also hired a new senior vice president of marketing in late May. Because of that, sales and marketing expenses should increase as the company continues to build a team for the planned commercialization of DetermaVu, officials said.
OncoCyte ended the quarter with $35.8 million in cash and cash equivalents and $518,000 in marketable securities.