Oncocyte(OCX) - 2024 Q4 - Annual Report

Financial Performance - Total net revenue increased to $1.9 million for the year ended December 31, 2024, compared to$1.5 million in 2023, representing a 25% increase [266]. - Loss from continuing operations was $60.7 million for the year ended December 31, 2024, compared to$24.9 million in 2023, an increase of 144% [268]. - Consolidated net loss for the year ended December 31, 2024, was $60.7 million, significantly higher than the$27.8 million loss in 2023, indicating a 118.7% increase in losses [295][296]. - Cash used in operating activities for 2024 amounted to $20.7 million, slightly lower than the$23.3 million used in 2023, showing an 11.1% decrease [295][296]. - Net cash provided by financing activities in 2024 was $20.4 million, an increase from$12.2 million in 2023, representing a 67.7% growth [298][299]. Revenue and Expenses - Pharma Services revenue increased by $392,000, with a total of$1.9 million in 2024, reflecting a 27% increase from $1.5 million in 2023 [269]. - Sales and marketing expenses rose by$1.1 million, primarily due to increased activities related to the transplant business and oncology commercialization efforts [268]. - Research and development expenses totaled $9.839 million in 2024, a 6$9.294 million in 2023, with personnel-related expenses rising by 21% [272]. - Sales and marketing expenses increased by 41% to $3.944 million in 2024, compared to$2.795 million in 2023, driven by a 43% rise in personnel-related expenses [274]. - General and administrative expenses decreased by 9% to $10.204 million in 2024 from$11.182 million in 2023, with a notable reduction in stock-based compensation by 38% [275]. Impairment and Losses - Impairment losses surged to $41.9 million in 2024, a 520$6.8 million in 2023 [266]. - Impairment losses for in-process research and development intangible assets amounted to $41.9 million in 2024, compared to$5.0 million in the prior year [271]. - The company recorded a total impairment of $41.9 million for intangible assets as of December 31, 2024, following a$5.0 million impairment recorded in March 2023 [308]. Strategic Initiatives - The company expects to begin commercializing its oncology product line, including DetermaIO, over the next 15 months [260]. - The company entered into a global strategic partnership with Bio-Rad on April 5, 2024, to develop and commercialize transplant products [289]. - The company plans to explore various commercialization options to enter overseas markets and reduce capital needs, including potential joint ventures [288]. - The company is focusing on regulatory approvals for its kitted tests to support future distribution and higher sales for clinical use [258]. - The company plans to pursue clinical trials for DetermaIO in 2025, contingent on the diagnostic test's development progress [273]. Financing Activities - The company entered into a sales agreement for an at-the-market facility to offer up to $7.5 million in common stock, with net proceeds of approximately$1.7 million received by December 31, 2024 [264]. - A registered direct offering in February 2025 generated approximately $29.1 million in gross proceeds [265]. - The company raised approximately$29.1 million in gross proceeds from the February 2025 Offering, netting about $28.7 million after expenses [287]. Tax and Regulatory Matters - The company established a full valuation allowance for deferred tax assets due to uncertainty in realizing future tax benefits [279]. - The company accounts for income taxes using the asset and liability method, with potential changes in market conditions affecting deferred tax asset realizability [313]. - No amounts were accrued for the payment of interest and penalties related to unrecognized tax benefits as of the financial statement periods presented [314]. - The company is currently unaware of any tax issues under review by relevant taxing authorities [314]. - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk [315]. Other Financial Metrics - Total other income, net increased by$97,000 in 2024, primarily due to additional interest income compared to 2023 [271]. - Cash used in investing activities for 2024 was $512,000, a decrease from$932,000 in 2023, reflecting a 45.0% reduction [297]. - Total contingent consideration liabilities as of December 31, 2024, were $37.9 million, down from$42.2 million in 2023, indicating a 10.2% decrease [306]. - As of December 31, 2024, the allowance for credit losses related to Pharma Services was $16,000, an increase from$5,000 in 2023 [311]. - Total stock-based compensation recognized for the years ended December 31, 2024, and 2023 was $1.8 million and$2.8 million, respectively [312].