Exagen(XGN) - 2024 Q3 - Quarterly Report

Revenue and Financial Performance - Revenue from the AVISE CTD product comprised 91% and 88% of total revenue for the nine months ended September 30, 2024 and 2023, respectively[89]. - The company incurred net losses of $11.4 million and$ 18.1 million for the nine months ended September 30, 2024 and 2023, respectively, and expects to continue incurring operating losses in the near term[89]. - Revenue decreased by $0.9 million, or 6.8%, for the three months ended September 30, 2024, primarily due to a$ 1.2 million decrease related to revenue adjustments[114]. - Revenue increased by $3.2 million, or 8.3%, for the nine months ended September 30, 2024, primarily due to improved average selling price (ASP)[122]. - The number of AVISE CTD tests delivered declined by approximately 6% year-over-year for the three months ended September 30, 2024, accounting for 93% of revenue[114]. - The number of AVISE CTD tests delivered declined by approximately 13% year-over-year for the nine months ended September 30, 2024, accounting for 91% of revenue[122]. - Gross margin as a percentage of revenue decreased to 55.8% for the three months ended September 30, 2024, compared to 57.4% for the same period in 2023[115]. Cash and Liquidity - As of September 30, 2024, the company had$ 22.0 million in cash and cash equivalents and an accumulated deficit of $290.6 million[89]. - The company anticipates that existing cash and cash equivalents, along with anticipated future revenue, will be sufficient to meet cash requirements for at least the next 12 months[136]. - The company expects to incur operating losses in the near term, with net cash used in operating activities for the nine months ended September 30, 2024, amounting to$ 13.6 million, compared to $22.8 million for the same period in 2023[140][141]. - Cash used in investing activities for the nine months ended September 30, 2024, was$ 0.4 million, compared to $0.7 million for the same period in 2023[142]. - Net cash used in financing activities for the nine months ended September 30, 2024, was$ 0.4 million, significantly lower than $10.4 million for the same period in 2023, which included a Term Loan Prepayment of$ 10.0 million[143]. - The company has not sold any shares of its common stock under the Sales Agreement as of September 30, 2024[134]. Operational Insights - The company has delivered approximately 980,714 AVISE CTD tests since its launch in 2012[96]. - The company has sufficient laboratory capacity to support increased test volume as it continues to grow its business[135]. - The company’s cash flow from operating activities was impacted by delays in claim submission and processing, affecting accounts receivable[140][141]. - Reimbursement for testing products is critical, with a significant portion of revenue coming from a limited number of commercial payors, many of which are not contracted as participating providers[96]. Research and Development - The company plans to incorporate three new biomarkers (TC4d, TIgG, and TIgM) into the AVISE CTD test by the end of 2024, which are expected to enhance diagnostic sensitivity for lupus beyond the current 80%[93]. - The addition of new biomarkers is anticipated to positively impact the average sales price of AVISE CTD and overall revenue, with expectations of achieving positive cash flows within a year of their launch[94]. - Research and development expenses increased by $0.1 million, or 5.8%, for the three months ended September 30, 2024, mainly due to higher employee-related expenses[118]. Compliance and Future Financing - As of September 30, 2024, the company was in compliance with all covenants of the Amended Loan Agreement with Innovatus[132]. - The company has filed a registration statement covering the offering of up to$ 150.0 million of various securities, which remained unsold as of September 30, 2024[133]. - The company expects to finance operations through equity offerings, debt financings, or other capital sources if additional funding is required[137].