NEW YORK – Oncocyte said after the close of the market on Wednesday that its fourth quarter net loss rose 77 percent year over year as it pushed toward a transition to commercial test operations.
For the three-month period ended Dec. 31, 2019, Oncocyte's net loss rose to $8.0 million, or $.15 per share, from $4.5 million, or $.11 per share, in the same period of 2018. Wall Street analysts, on average, had expected a lower per-share loss of $.09.
The Irvine, California-based company did not generate any revenue during the year.
Oncocyte's Q4 R&D costs rose 93 percent to $2.3 million from $1.2 million year over year, reflecting increased personnel and laboratory-related expenses for the completion of the CLIA validation of if its DetermaDx lung cancer assay.
Its SG&A expenses for the quarter were up 86 percent at $5.2 million compared to $2.8 million, primarily due to sales and marketing efforts, including key hires and ramp-up in activities for commercialization of DetermaRx, a test the firm launched after acquiring Razor Genomics late last year.
"I am incredibly proud to have officially transitioned to a commercial-stage company with the launch of DetermaRx, the first test for chemotherapy benefit prediction in patients with NSCLC, Oncocyte CEO Ron Andrews, said in a statement. "We have successfully onboarded all seven of our early access partners and they have started sending patient samples to our lab and, notably, all physicians have re-ordered the test, a very important indicator of future utilization," he added.
During a call discussing the firm's financial results, Andrews said the company is continuing its efforts to strategically bring on more customers with the anticipation of having a "rapidly growing list over the next several months." This is despite uncertainties relating to the current pandemic, Andrews added.
While Oncocyte is working to "minimize the COVID-19 situation" in its local community, the company has been able to continue lab operations in compliance with applicable orders and mandates and has "made great strides" in expanding its suite of tests.
That said, state and national responses to the pandemic have required the firm to curtail planned face-to-face engagement and adjust marketing and selling activities "to reflect the current environment," Andrews said. Among its adaptations, he said the company has developed new virtual environments for physician education regarding the test.
OncoCyte had previously said it expected a finalization of the draft local coverage determination for the DetermaRx assay by the end of this month, but it is now anticipating that may take till the end of the first half of the year.
Andrews also highlighted Oncocyte's acquisition of Insight Genetics and subsequent launch of the research-use-only DetermaIO test based on Insight's immunotherapy response prediction intellectual property.
According to Andrews, that launch leaves Oncocyte "poised to provide a valuable and potentially transformative test that we believe, based on recently published clinical data, outperforms currently available PD-L1 and TMB immunotherapy response prediction tests."
He added that Oncocyte has also now completed the CLIA validation of the DetermaDx test that was originally the core of its commercial testing plan but had been significantly postponed over the last year due to various technical setbacks.
"[We] believe we are now are on track with clinical validation and preparations for commercial availability," Andrews said in a statement. "While cancer surgeries are being impacted by the current COVID-19 situation, our discussions with surgeons indicate that these patients will still be getting treated and surgeries will restart soon, so our focus is on being ready when that moment happens," he said.
The company has now begun its final clinical validation which will involve 500 blinded samples, all of which were procured prior to the current pandemic situation.
According to Andrews, company researchers are on track to complete that final study y the end of the second quarter of this year, fulfilling its planned timeline to submit a dossier for that test to CMS this fall.
For full-year 2019, Oncocyte's net loss rose about 42 percent to $22.4 million, or $.44 per share, from $15.8 million, or $.42 per share, in 2018. Analysts, on average, expected loss per share of $.38.
Its R&D costs for the year rose slightly to $6.8 from $6.5 million and SG&A expenses were up 77 percent at $15.4 million compared to $8.7 million in 2018.
According to the company, increases in this arena were primarily attributable to personnel and related expenses. As the company transitioned last year from a system of shared services with Lineage Cell Therapeutics, it had to hire its own administrative, human resources, legal, finance and accounting functions and teams. This transition also included the termination of a shared facilities agreement with Lineage as of Dec. 31, 2019, in which Oncocyte leased its own facilities and laboratories and moved into its Irvine headquarters in January 2020.
At the end of 2019, Oncocyte had cash, cash equivalents, and marketable securities totaling $22.5 million. On March 20 of this year the firm put in place a new at-the-market offering for access to additional working capital.