Oncocyte(OCX) - 2024 Q2 - Quarterly Results

Product Launch and Market Strategy - Oncocyte successfully launched GraftAssure, a research-use-only assay for detecting early graft organ damage, with initial tests conducted at major transplant centers in the US and Southeast Asia[1][2] - The US sales funnel for GraftAssure includes transplant centers representing approximately 25% of US transplant volumes, equating to over 11,000 transplants annually[3][4] - The company aims to have more than 20 transplant centers running GraftAssure tests by the end of 2025, with each center potentially generating annual revenue of $400,000 to $2 million[12] - Oncocyte's total addressable market for its diagnostic tests is estimated at $1 billion, with a land-and-expand strategy focused on major transplant centers and research universities[7][8] - The company has established partnerships, including with Bio-Rad Laboratories, to support the global launch of GraftAssure and co-market the product in the US and Germany[4][5] - The Increasing Organ Transplant Access Model legislation, effective January 1, 2025, is expected to increase demand for dd-cfDNA testing due to higher rates of adverse events[14] Financial Performance - Revenue for Q2 2024 was $104,000, primarily from pharma services in Nashville[20] - Gross profit was $50,000, reflecting fixed operating costs of the Nashville CLIA laboratory[20] - Operating expenses totaled $4.7 million, with a 5% sequential decrease and a 9% year-over-year decrease when excluding non-cash items[20] - Research and development expenses increased by approximately 6% sequentially to $2.5 million[20] - General and administrative expenses fell by 10% sequentially to $2.4 million, indicating cost discipline[20] - Loss from continuing operations was $4.5 million, equating to $0.36 per share[20] - Cash and cash equivalents at the end of Q2 were approximately $11.0 million, an increase of $3.7 million sequentially[20] - The company raised approximately $9.9 million in a private placement on April 11, 2024, after expenses[20] - The total assets as of June 30, 2024, were $74.72 million, a slight decrease from $74.89 million in 2023[25] - Total liabilities increased to $52.02 million from $49.30 million in 2023, primarily due to contingent consideration liabilities[25] - Net revenue for June 2024 was $104,000, a decrease of 77.5% compared to $463,000 in June 2023[26] - Total operating expenses decreased to $4,682,000 in June 2024 from $8,566,000 in June 2023, representing a reduction of 45.5%[26] - Net loss for June 2024 was $4,530,000, down from a net loss of $8,333,000 in June 2023, indicating a 45.5% improvement[26] - Research and development expenses remained stable at $2,453,000 in June 2024 compared to $2,435,000 in June 2023[26] - Cash used in operating activities was $5,978,000 for the three months ended June 30, 2024, compared to $6,832,000 for the same period in 2023[27] - Proceeds from the sale of common shares amounted to $15,807,000 in June 2024, compared to $13,848,000 in June 2023[27] - Ending cash and cash equivalents were $10,956,000 as of June 30, 2024, compared to $19,068,000 at the same date in 2023[27] - The company reported a gross profit margin of 69% for the three months ended June 30, 2024, compared to 63% for the same period in 2023[26] - The weighted average shares outstanding increased to 12,870,000 in June 2024 from 8,090,000 in June 2023[26] - The company experienced a significant reduction in general and administrative expenses, which fell to $2,407,000 in June 2024 from $3,531,000 in June 2023, a decrease of 31.9%[26] Operational Efficiency and Future Strategies - The company aims to improve its financial performance by focusing on reducing operational losses and managing expenses effectively[28] - Future strategies may include further adjustments in stock-based compensation and careful monitoring of contingent considerations to stabilize financial results[28] - The company continues to evaluate its operational efficiency and explore avenues for market expansion and product development[28] - The FDA clearance process for the in-vitro diagnostic (IVD) product is targeted for late 2025, with a Q-Sub submission planned for feedback by the end of 2024[15][16] - Oncocyte's new CFO, Andrea James, brings extensive experience in financial strategy and capital stewardship, which will support the company's growth initiatives[17][18] - The company is focused on increasing throughput for its tests through automation, which will support ongoing clinical trials and data generation for its IVD program[6]