Oncocyte(OCX) - 2025 Q1 - Quarterly Results

Executive Summary Oncocyte achieved significant Q1 2025 progress with strong pharmaceutical services revenue and gross margin, advancing its first clinical molecular diagnostic kit for transplant rejection, and planning a corporate rebranding Q1 2025 Highlights Oncocyte achieved significant progress in Q1 2025, with pharmaceutical services revenue from its Nashville lab exceeding expectations and a substantial increase in gross margin. The company made key advancements in commercializing its clinical molecular diagnostic kit for transplant rejection testing and plans a corporate renaming in Q2 to reflect broader market opportunities - Pharmaceutical services revenue from the Nashville lab reached $2.1 million in Q1 2025, exceeding expectations[2] - Gross margin increased from 40% in Q4 2024 to 62% in Q1 2025, primarily due to process improvements[2] - At least three of the top ten U.S. transplant centers are expected to participate in clinical trials, collectively representing nearly 10% of U.S. organ transplants[5] - The company plans to rename in Q2 to better reflect its broader market opportunities in transplant and oncology[7] Strategic Priorities The company's top priority for 2025 is to launch its first clinical molecular diagnostic kit to capture the estimated $1 billion transplant rejection testing market. Q1 efforts focused on advancing key steps from development to commercialization - The primary objective is to launch the first clinical molecular diagnostic kit, targeting an estimated $1 billion transplant rejection testing market[1] - Q1 efforts focused on advancing key steps from development to commercialization[1] Clinical Trial Progress Oncocyte has finalized clinical trial design and secured IRB approval, with top U.S. transplant centers expected to join, aiming for 2026 FDA market authorization via a Class II de novo pathway Trial Design and Regulatory Approvals Oncocyte has completed the clinical trial design for its molecular diagnostic test kit and secured approval from a large central Institutional Review Board (IRB), a critical step for initiating multi-center clinical trials - Clinical trial design is complete, and approval from a large central IRB has been secured, a critical step for initiating clinical trials[4] Clinical Site Recruitment The company anticipates at least three of the top ten U.S. transplant centers will join as clinical trial participants in the coming weeks, collectively representing nearly 10% of U.S. organ transplants. The company looks forward to announcing the first patient enrollment and introducing the study's National Principal Investigator (NPI) and key opinion leaders - At least three of the top ten U.S. transplant centers are expected to participate in clinical trials, collectively representing nearly 10% of U.S. organ transplants[5] - Anticipation for announcing the first patient enrollment and introducing the study's National Principal Investigator (NPI) and key opinion leaders[6] Regulatory Pathway and FDA Engagement Upcoming clinical trials are expected to meet FDA clinical evidence requirements, with the company pursuing a Class II de novo pathway and anticipating U.S. market authorization in 2026. The company has secured CLIA validation and CMS reimbursement for its laboratory-developed test and is satisfied with FDA communications, with a final pre-submission meeting imminent - Upcoming clinical trials are expected to meet FDA clinical evidence requirements, targeting a Class II de novo pathway with anticipated U.S. market authorization in 2026[9] - The laboratory-developed test (LDT) version has received CLIA validation and CMS reimbursement[9] - Satisfaction with FDA communications and anticipation of a final pre-submission (Q-Sub) meeting in the coming weeks[10] Business Update and Product Development GraftAssure RUO adoption is expanding with strong market interest, leveraging digital PCR technology for new applications, while the DetermaIO oncology test shows promise in predicting immunotherapy response GraftAssure RUO Adoption and Commercialization Currently, 10 leading transplant centers are utilizing the GraftAssure Research Use Only (RUO) kit, with the company on track to achieve its target of 20 centers by year-end 2025. GraftAssure RUO has exceeded market expectations since its summer 2024 launch, with usability improvements completed and initial commercial orders anticipated later this year - Currently, 10 leading transplant centers (3 in the U.S., 6 in Europe, 1 in Southeast Asia) are using the GraftAssure Research Use Only (RUO) kit[11][13] - The company is on track to achieve its goal of at least 20 transplant centers adopting the GraftAssure RUO kit by year-end 2025[11] - Interest in GraftAssure RUO has exceeded expectations, with usability improvements completed and initial commercial orders anticipated later this year[12] - Upon FDA IVD authorization, each transplant center using the company's kit could generate hundreds of thousands to $2 million in high-margin revenue annually[11] GraftAssure Technology and Pipeline Expansion GraftAssure's digital PCR technology is a key differentiator, offering rapid, simple, quantitative, and more economical testing results with low sample volumes. This technology is being explored for new applications, such as microchimerism detection, and successfully identified graft rejection in patients up to 13 years post-transplant in a published study - GraftAssure's digital PCR technology is a key differentiator, providing rapid, simple, quantitative, and more economical test results with low sample volumes[15][16] - Researchers are using GraftAssure to detect microchimerism, an increasingly important area in transplant biology, offering insights into graft health and early signs of rejection[14] - A study published in Transplantation Direct positively confirmed the test's utility in identifying graft rejection in patients up to 13 years post-transplant[17] Oncology Pipeline Advancement (DetermaIO) The company has advanced its oncology pipeline, with the NeoTRIP study accelerating the strategic and scientific direction of the DetermaIO test. DetermaIO, a 27-gene expression test, predicts which Stage II/III triple-negative breast cancer patients benefit from adding immunotherapy to chemotherapy and is poised to support "drug rescue" strategies - The NeoTRIP study has accelerated the strategic and scientific direction of the DetermaIO test, attracting pharmaceutical partners and clinical collaborators[18] - The DetermaIO test can statistically predict which Stage II/III triple-negative breast cancer patients benefit from adding immunotherapy (atezolizumab) to chemotherapy[19] - DetermaIO-positive patients showed pathological complete response benefits with atezolizumab, while negative patients did not[19] - This test is expected to support "drug rescue" strategies by enriching for likely responders, thereby increasing drug success rates in future studies[20] Corporate and Product Rebranding Oncocyte is rebranding its corporate identity and transplant diagnostic portfolio, discontinuing "VitaGraft" and adopting "GraftAssure" as the umbrella brand for its dd-cfDNA tests Company Renaming Oncocyte plans to introduce a new company name this year to better reflect its broader strategic direction and product pipeline in organ transplantation and oncology, as "Oncocyte" no longer encompasses its expanded mission - The company will introduce a new corporate name this year to better reflect its strategic direction and product pipeline in organ transplantation and oncology[21] - The former name "Oncocyte" (derived from Greek for "tumor") no longer adequately covers the company's broader mission[21] - The renaming is expected to be an efficient and relatively low-cost initiative[22] Product Portfolio Rebranding The company is rebranding its transplant diagnostic portfolio, discontinuing the "VitaGraft" name and adopting "GraftAssure" as the umbrella brand for its dd-cfDNA test suite. New naming conventions include GraftAssureCore (LDT), GraftAssureIQ (RUO kit), and GraftAssureDx (IVD kit) - The "VitaGraft" name will be discontinued, with "GraftAssure" serving as the umbrella brand for the dd-cfDNA test portfolio[23] - New product naming conventions include GraftAssureCore (Laboratory Developed Test, LDT), GraftAssureIQ (Research Use Only kit, RUO), and GraftAssureDx (In Vitro Diagnostic kit, IVD)[26] Q1 2025 Financial Overview Oncocyte reported $2.14 million in Q1 2025 revenue with a 62% gross margin, a $6.7 million net loss, and a $32.7 million cash balance after a $28.7 million financing round Revenue and Gross Margin Oncocyte generated $2.14 million in revenue in Q1 2025, entirely from pharmaceutical services at its Nashville lab. The company's gross margin significantly improved to 62%, driven by enhanced operational efficiencies, including automation and workflow optimization Q1 2025 Revenue and Gross Margin | Metric | Q1 2025 (Million USD) | | :--- | :--- | | Revenue | 2.14 | | Gross Profit | 1.33 | | Gross Margin | 62% | - Revenue was entirely from pharmaceutical services at the Nashville lab, not yet including commercial transplant test kit sales[28] - Gross margin increased from 40% in Q4 2024 to 62% in Q1 2025, primarily due to operational efficiencies achieved at the Nashville lab, such as automation and workflow enhancements[28] Operating Expenses Operating expenses for Q1 2025 totaled $8.1 million, including non-cash items. R&D expenses increased due to kit product development, sales and marketing expenses remained flat, and general and administrative expenses included a $279,000 one-time charge related to the termination of the Needham & Company sales agreement Q1 2025 Operating Expenses | Operating Expense Category | Q1 2025 (Million USD) | | :--- | :--- | | Total Operating Expenses | 8.1 | | Research and Development Expenses | 2.9 | | Sales and Marketing Expenses | 1.2 | | General and Administrative Expenses | 3.1 | - Research and development expenses increased to $2.9 million, primarily for kit product development, including FDA-compliant software development, lab supplies, and personnel[28] - Sales and marketing expenses remained flat quarter-over-quarter at $1.2 million, benefiting from cost controls[28] - General and administrative expenses were $3.1 million, including a $279,000 one-time charge related to the termination of the Needham & Company sales agreement[28] Net Loss and EPS The company reported a net loss of $6.7 million in Q1 2025, with a loss per share of $0.26. Non-GAAP operating loss was $5.0 million, reflecting core operational performance excluding certain non-cash items Q1 2025 Net Loss and EPS | Metric | Q1 2025 | | :--- | :--- | | Net Loss | $6.7 Million | | Net Loss Per Share | ($0.26) | | Non-GAAP Operating Loss | $5.0 Million | | Weighted Average Shares Outstanding | 25.7 Million Shares | - As of May 12, including shares issued in February 2025 and private placements, the company had 28.6 million shares outstanding[28] Cash Position and Cash Flow As of Q1 end, Oncocyte's cash, cash equivalents, and restricted cash balance was $32.7 million, including $28.7 million net cash flow from February 2025 financing activities. Cash outflow from operating activities (net cash used in operating activities) was $5.9 million, and capital expenditures were $307,000, aligning with the company's targeted average quarterly spend Q1 2025 Cash Position and Cash Flow | Metric | Q1 2025 End (Million USD) | | :--- | :--- | | Cash, Cash Equivalents, and Restricted Cash | 32.7 | | Net Cash Outflow from Operating Activities | 5.9 | | Capital Expenditures | 0.307 | - Cash balance includes $28.7 million in net financing cash flow from a February 2025 registered direct offering and private placement[34] - Operating cash outflow and capital expenditures align with the company's targeted $6 million average quarterly spend[34] - Accounts receivable at Q1 end was $3.5 million, with $1.4 million collected in the first week of April[34] Financial Statements The Q1 2025 financial statements show increased assets and positive equity, improved net revenue and narrowed operating loss, significant cash inflow from financing, and a reconciliation of non-GAAP operating loss Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $60.36 million, a significant increase from $35.081 million on December 31, 2024, primarily due to growth in cash and cash equivalents. Total liabilities were $50.142 million, and stockholders' equity (deficit) turned positive at $10.218 million Condensed Consolidated Balance Sheets | Metric (Thousands USD) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | 31,029 | 8,636 | | Accounts Receivable, Net | 3,540 | 1,613 | | Total Current Assets | 36,263 | 11,759 | | Total Assets | 60,360 | 35,081 | | Liabilities and Stockholders' Equity | | | | Total Current Liabilities | 9,683 | 7,275 | | Total Liabilities | 50,142 | 47,355 | | Total Stockholders' Equity (Deficit) | 10,218 | (12,274) | Unaudited Condensed Consolidated Statements of Operations In Q1 2025, net revenue was $2.138 million, a significant increase from $0.176 million in the prior year. Gross profit was $1.325 million, compared to $0.045 million last year. Operating loss narrowed from $9.267 million in the prior year to $6.799 million. Net loss was $6.671 million, with a net loss per share of $0.26 Unaudited Condensed Consolidated Statements of Operations | Metric (Thousands USD) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net Revenue | 2,138 | 176 | | Cost of Sales | 806 | 109 | | Gross Profit | 1,325 | 45 | | Operating Expenses | 8,124 | 9,312 | | Operating Loss | (6,799) | (9,267) | | Net Loss | (6,671) | (9,129) | | Net Loss Per Share | (0.26) | (1.13) | | Weighted Average Shares Outstanding | 25,694 | 8,264 | Unaudited Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash outflow from operating activities was $5.858 million. Net cash outflow from investing activities was $0.307 million. Financing activities provided $28.558 million in net cash, primarily from common stock sales. Total cash, cash equivalents, and restricted cash at period-end significantly increased to $32.729 million from $10.336 million at the beginning of the period Unaudited Condensed Consolidated Statements of Cash Flows | Metric (Thousands USD) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (5,858) | (3,830) | | Net Cash Used in Investing Activities | (307) | (24) | | Net Cash Provided by Financing Activities | 28,558 | — | | Net Change in Cash, Cash Equivalents, and Restricted Cash | 22,393 | (3,854) | | Cash, Cash Equivalents, and Restricted Cash at Period End | 32,729 | 7,278 | Reconciliation of Non-GAAP Financial Measure The company provides a reconciliation of non-GAAP operating loss, excluding non-cash and/or intangible items such as stock-based compensation, depreciation and amortization, changes in fair value of contingent consideration, and impairment losses, to better reflect core operational performance. Non-GAAP operating loss for Q1 2025 was $4.956 million Reconciliation of Non-GAAP Financial Measure | Metric (Thousands USD) | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | GAAP Consolidated Operating Loss | (6,799) | (33,627) | (9,267) | | Stock-Based Compensation | 473 | 499 | 418 | | Depreciation and Amortization Expense | 491 | 563 | 335 | | Change in Fair Value of Contingent Consideration | 879 | (13,696) | 3,312 | | Impairment Loss | — | 41,900 | — | | Impairment Loss on Assets Held for Sale | — | — | 169 | | Non-GAAP Consolidated Operating Loss (Adjusted) | (4,956) | (4,361) | (5,033) | Additional Information Additional information includes details on the Q1 2025 earnings webcast, company overview, forward-looking statements with associated risks, and investor contact information Webcast and Conference Call The company held its Q1 2025 earnings webcast and conference call on March 12, 2025, providing registration and replay information - The company held its Q1 2025 earnings webcast and conference call on March 12, 2025[29] About Oncocyte Oncocyte is a diagnostic technology company dedicated to democratizing novel molecular diagnostic tests to improve patient outcomes. The report lists the company's trademarks - Oncocyte is a diagnostic technology company dedicated to democratizing novel molecular diagnostic tests to improve patient outcomes[33] Forward-Looking Statements The report contains forward-looking statements regarding the company's future expectations, beliefs, goals, plans, or prospects, including clinical trials, FDA approvals, commercialization plans, and financial projections. These statements involve risks and uncertainties, and actual results may differ materially from expectations - The report contains forward-looking statements regarding the company's future expectations, beliefs, goals, plans, or prospects, including clinical trials, FDA approvals, commercialization plans, and financial projections[35] - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from expectations; investors are advised to refer to the "Risk Factors" in the company's SEC filings[35] Investor Contact Investor contact information is provided for further company-related inquiries - Investors can contact Doug Farrell for additional information[36]