NEW YORK – OncoCyte's shares fell nearly 29 percent to $2.85 in Wednesday morning trading on the Nasdaq after the company announced that it will need additional time to complete its ongoing CLIA validation study of its DetermaVu liquid biopsy test for lung cancer.
In the CLIA validation study, which Oncocyte started in late April, the company is assaying approximately 120 samples previously tested in its R&D validation study, in order to determine if it can obtain the same results in its CLIA-validated laboratory. To complete a technology transfer from an R&D setting to full commercial production in a CLIA lab requires validation of workflow components like sample prep and sample extraction kits that can ultimately be automated, Oncocyte said, adding that it is attempting to create consistency in this process. The firm also said it wants to "ensure the CLIA assay provides the most consistent, sensitive results for patients," and will therefore continue its development work before releasing the final data.
This isn't the first delay for DetermaVu. OncoCyte set out to commercialize the test after licensing IP from the Wistar Institute, and initially expected to have a commercial product on the market by the end of 2017. But a decision to reevaluate the test platform led to a delay in the firm's timeline and then prompted a reexamination of the test signature itself.
In January, Oncocyte said it would likely be able to launch the test by the end of 2019, following strong performance data from its internal validation using a population-reflective, blinded sample cohort.
"In an effort to maintain frequent updates for our shareholders, we wanted to address the mid-year timing previously committed to by management," Oncocyte President and CEO William Annett said in a statement. "Our talented R&D professionals and CLIA lab staff are working diligently to analyze and address the remaining steps needed to proceed with the CLIA validation study. Once these teams have made progress with these remaining steps, management intends to provide an update on the timing of the key milestones for DetermaVu."
Piper Jaffray analyst William Quirk, who initiated coverage of Oncocyte with an Overweight rating and a $6 target in February, wrote a note to investors today saying he believes Oncocyte can still meet the bank's expectations.
"Specifically, though the company may not complete the study by our initial estimate of summer 2019, we believe our remaining timeline is still reasonable (with Medicare coverage in 2021 and private payer coverage in 2022)," Quirk said. "Additionally, we believe the assay is best-in-class and has the potential to be successful once the company gets over commercialization hurdles."