Oncocyte(OCX) - 2025 Q2 - Quarterly Results

Letter to Shareholders & Business Highlights Introduction & Market Opportunity Insight Molecular Diagnostics Inc. (iMDx) is nearing the launch of its regulated kitted transplant monitoring assay, GraftAssureDx, targeting a $1 billion transplant rejection testing market, emphasizing its strategy to democratize access to complex molecular diagnostics by developing FDA and EU-equivalent authorized kitted tests for localized hospital testing - iMDx is close to launching a regulated kitted transplant monitoring assay, GraftAssureDx, aiming to capture share in the $1 billion total addressable transplant rejection testing market[1] - The company's strategy involves designing kitted tests for FDA and EU regulatory approval to democratize access to complex molecular diagnostics, allowing hospitals to run tests themselves[2][3] GraftAssureDx Regulatory & Clinical Progress iMDx has made consistent progress on its GraftAssureDx kitted development, FDA submission preparation, and ongoing clinical trial, marked by productive FDA meetings, attracting leading transplant hospitals, and presenting strong head-to-head data comparing its digital PCR-based test kits favorably against NGS kits - iMDx remains on track to submit GraftAssureDx for FDA review by the end of 2025, with potential marketing authorization as soon as mid-2026[6] - The company completed a productive second pre-submission meeting with the FDA on July 30, 2025, and its clinical trial has attracted top transplant hospitals including Mayo Clinic, Tampa General, Cleveland Clinic, Vanderbilt University, and Intermountain Health[7] - New data presented at major conferences confirmed the utility of dd-cfDNA and demonstrated iMDx's digital PCR assay's ability to combine relative and absolute measurements into a single score, potentially improving positive predictive values and reducing unnecessary biopsies[8] FDA Submission & Meetings iMDx reiterated its timeline for FDA submission of GraftAssureDx by the end of 2025, with potential marketing authorization by mid-2026, following a productive second pre-submission meeting with the FDA on July 30 that maintained encouraging dialogue and guidance - Reiterated timeline for FDA submission of GraftAssureDx by end of 2025, with potential marketing authorization by mid-2026[5][6] - Completed a productive second pre-submission meeting with the FDA on July 30, 2025, continuing encouraging dialogue and guidance[7] Clinical Trial & Key Data The GraftAssureDx clinical trial, publicly accessible since July 15, includes leading transplant hospitals like Mayo Clinic and Cleveland Clinic, with Dr. Anthony J. Langone of Vanderbilt University Medical Center as the national principal investigator, and recent data favorably compared iMDx's digital PCR-based test kits with NGS kits, presenting late-breaking data at the World Transplant Congress showing a novel combined score for dd-cfDNA that significantly improved positive predictive values for graft rejection - Clinical trial listing became publicly accessible on July 15, including top transplant hospitals: Mayo Clinic in Florida, Tampa General Hospital, Cleveland Clinic, Vanderbilt University, and Intermountain Health[7] - Dr. Anthony J. Langone of Vanderbilt University Medical Center was announced as the national principal investigator for the GraftAssureDx trial[7] - New head-to-head data favorably compared iMDx's digital PCR-based test kits with NGS kits, and late-breaking data at the World Transplant Congress showed a combined score for dd-cfDNA that significantly improved positive predictive values for graft rejection[8] Reimbursement & Market Clarity Medicare boosted reimbursement for GraftAssureCore, the Lab Developed Test (LDT) version of iMDx's assay, to $2,753 per result, setting a benchmark for future kitted test reimbursement, while MolDx also provided clarity on surveillance testing with a draft local coverage determination (LCD) recommending four cfDNA tests in the first year post-transplant and two per year thereafter, aligning with iMDx's market thesis - Medicare boosted reimbursement for the Lab Developed Test (LDT) version of GraftAssureCore to $2,753 per result, establishing a benchmark for future kitted test reimbursement[8] - MolDx's draft local coverage determination (LCD) set a baseline for cfDNA surveillance testing in kidney transplant patients, recommending four tests in the first year and two per year thereafter, aligning with iMDx's total addressable market and investment thesis[8] GraftAssureIQ Commercialization & "Land and Expand" Strategy iMDx's GraftAssureIQ research-use-only (RUO) kit program is driving its "Land and Expand" strategy, with the company booking its first revenue from GraftAssureIQ RUO kits in Q2 2025 from a major Swiss hospital and beginning to ship optimized second-generation kits in June, observing positive demand trends at European conferences with pilot users generating initial data sets - Booked first revenue from first-generation GraftAssureIQ research-use-only kits in Q2 2025 from a major hospital in Switzerland, serving as a key proof point for the RUO pilot program[5][9] - Began shipping optimized second-generation GraftAssureIQ kits in early June, incorporating ease-of-use improvements based on pilot site feedback[5][9] - Incremental data points for demand trended positively, with significant follow-up interest from laboratory professionals after attending European conferences[9] New Product Pipeline & IP Expansion iMDx is actively investing in and preparing for its new product pipeline, particularly in oncology, gaining momentum by signing a non-binding development letter of intent with a major instrument maker for its DetermaIO immuno-oncology assay, and strengthening its intellectual property with a new U.S. patent (No. 12,359,252 B2) for detecting colorectal cancer using circulating nucleic acid biomarkers, supporting expansion into blood-based cancer diagnostics - Oncology pipeline gained momentum with the signing of a non-binding development letter of intent with a major instrument maker regarding the DetermaIO immuno-oncology assay[9] - Awarded U.S. Patent No. 12,359,252 B2 on July 15, 2025, covering a method for detecting colorectal cancer using circulating nucleic acid biomarkers, reinforcing IP for noninvasive cancer detection[9] Corporate Updates & Future Outlook In Q2 2025, the company rebranded from Oncocyte to Insight Molecular Diagnostics and relocated its headquarters to Nashville, Tennessee, home of its accredited lab, with a high focus on concluding its clinical trial and submitting GraftAssureDx to the FDA by year-end, and anticipating at least six potential areas for clinical and regulatory expansion of its dd-cfDNA kitted assays from 2026 to 2028, including monitoring therapeutic response, recurrence, and expansions into heart, lung, and liver transplant rejection testing - Renamed the company from Oncocyte to Insight Molecular Diagnostics and moved headquarters to Nashville, Tenn., in Q2 2025[10] - High focus on concluding the clinical trial and submitting GraftAssureDx to the FDA by the end of 2025, with no change from prior communication[11] - From 2026 to 2028, the company sees at least six potential areas for clinical and regulatory expansion of its dd-cfDNA kitted assays, including monitoring therapeutic response, recurrence, and expansions into heart, lung, and liver transplant rejection testing[12] Q2 2025 Financial Overview Revenue & Gross Profit iMDx reported total revenues of $518,000 in Q2 2025, primarily from laboratory services and the first sale of GraftAssureIQ kitted products, with gross profit reaching $350,000, representing a 67.6% gross margin, an increase from 62% in Q1 2025, driven by operational efficiencies and the full amortization of certain acquired intangibles Revenue and Gross Profit Summary | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :------------------------- | :--------------------- | :--------------------- | | Laboratory Services | $494 | $104 | | Kitted Products | $24 | — | | Total Revenue | $518 | $104 | | Gross Profit | $350 | $50 | | Gross Margin | 67.6% | 48.1% | - Gross margin expanded to 67.6% in Q2 2025, up from 62% in Q1 2025, primarily due to operational efficiencies in the Nashville lab and the full amortization of certain acquired intangibles[19] Operating Expenses & Net Loss Total operating expenses in Q2 2025 were $10.2 million, including significant non-cash charges, with operating expenses increasing 1% sequentially (excluding these charges), reflecting increased investment in the FDA program and sales and marketing, while research and development expenses rose 12% sequentially to $3.3 million, sales and marketing expenses grew 21% sequentially to $1.5 million, and general and administrative expenses declined 15% sequentially to $2.6 million due to cost discipline and a Q1 one-time charge, resulting in a net loss of $9.7 million, or ($0.30) per share for Q2 2025 Operating Expenses and Net Loss Summary | Metric (in thousands) | Q2 2025 | Q2 2024 | | :-------------------- | :------ | :------ | | Operating Expenses | $10,192 | $4,682 | | Net Loss | $(9,742)| $(4,530)| | Net Loss Per Share | $(0.30) | $(0.36) | | Weighted Average Shares Outstanding | 32,023 | 12,870 | - Research and development expenses increased 12% sequentially to $3.3 million, reflecting increased investment in kitted product development, FDA-compliant software, and regulatory consulting[20] - Sales and marketing expenses grew 21% sequentially to $1.5 million, driven by go-to-market investments ahead of commercial launch[20] - General and administrative expenses declined 15% sequentially to $2.6 million, attributed to cost discipline and the absence of a Q1 one-time charge[20] Cash Position & Cash Flow The company's cash, cash equivalents, and restricted cash balance stood at $26.0 million at the end of Q2 2025, including $28.7 million in net financing cash flow from a February 2025 offering, with net cash used in operating activities at $6.3 million and capital expenditures at $349,000, generally aligning with the targeted quarterly average spend of $6 million Cash Flow Summary | Metric (in thousands) | Q2 2025 | | :-------------------- | :------ | | Cash, Cash Equivalents, and Restricted Cash (end of quarter) | $25,987 | | Net Cash Used in Operating Activities | $(6,279) | | Capital Expenditures | $(349) | - The cash balance includes $28.7 million in net financing cash flow from a registered direct offering and private placement in February 2025[20] - Outgoing cash flow from operations of $6.3 million, combined with capital expenditures of $349,000, were generally in line with the targeted quarterly average spend of $6 million[20] Non-GAAP Financial Measures iMDx reported a Q2 2025 non-GAAP loss from operations of $5.98 million, excluding certain non-cash items such as stock-based compensation, depreciation and amortization expenses, and changes in the fair value of contingent consideration, providing additional insight into the company's core operating performance Non-GAAP Loss from Operations Reconciliation | Metric (in thousands) | Q2 2025 | | :------------------------------------ | :------ | | Consolidated GAAP loss from operations | $(9,842) | | Stock-based compensation | $504 | | Depreciation and amortization expenses | $559 | | Change in fair value of contingent consideration | $2,804 | | Consolidated Non-GAAP loss from operations, as adjusted | $(5,975) | - The non-GAAP measure excludes certain non-cash and/or intangible items to provide insight into the Company's core operating performance[32] Company Information & Disclosures Webcast and Conference Call Information Insight Molecular Diagnostics hosted a live Zoom call and webcast for its Q2 2025 earnings on Monday, August 11, 2025, and a virtual Key Opinion Leader (KOL) event featuring Dr. Anthony Langone of Vanderbilt University was scheduled for Friday, August 15, 2025 - Live Zoom call and webcast for Q2 2025 earnings held on Monday, August 11, 2025[21] - Virtual Key Opinion Leader (KOL) event featuring Dr. Anthony Langone of Vanderbilt University scheduled for Friday, August 15, 2025[24] About Insight Molecular Diagnostics, Inc. Insight Molecular Diagnostics Inc. (iMDx) is a pioneering diagnostics technology company focused on democratizing access to novel molecular diagnostic testing to improve patient outcomes, with a mission to lead in molecular diagnostics by developing proprietary algorithms that drive scalable value - Insight Molecular Diagnostics is a pioneering diagnostics technology company with a mission to democratize access to novel molecular diagnostic testing to improve patient outcomes[26] - The company aims to lead in molecular diagnostics by developing proprietary algorithms that drive scalable value[10] Forward-Looking Statements The report contains forward-looking statements regarding the company's continued development of a regulated kitted assay, regulatory progress, clinical trials, market strategy, product pipeline, and future financial expectations, which involve inherent risks and uncertainties, including those related to test development, regulatory approvals, supply chains, capital needs, intellectual property, and third-party reimbursement, and actual results may differ materially - Statements in the report containing words like "will," "believes," "plans," "anticipates," "expects," "estimates," "may," and similar expressions are forward-looking statements[27] - Forward-looking statements involve risks and uncertainties, including those related to development and commercialization of diagnostic tests, regulatory approvals, clinical trial results, supply chains, capital, intellectual property, and reimbursement[27] - Actual results may differ materially from anticipated results, and readers are cautioned not to place undue reliance on these statements, which speak only as of their original date[27] Investor Contact For investor inquiries, contact Doug Farrell of LifeSci Advisors LLC - Investor contact: Doug Farrell, LifeSci Advisors LLC, dfarrell@lifesciadvisors.com[28] Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, iMDx reported total assets of $50.5 million, a significant increase from $35.1 million at December 31, 2024, primarily driven by a rise in cash and cash equivalents to $24.3 million from $8.6 million, with total liabilities also increasing to $49.4 million mainly due to an increase in noncurrent contingent consideration liabilities, and shareholders' equity shifting from a deficit of ($12.3 million) to a positive $1.1 million Condensed Consolidated Balance Sheet | Metric (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :------------------------------------ | :------------------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $24,287 | $8,636 | | Total current assets | $26,842 | $11,759 | | Total assets | $50,517 | $35,081 | | LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | | | | Total current liabilities | $6,652 | $7,275 | | Total liabilities | $49,419 | $47,355 | | Total shareholders' equity (deficit) | $1,098 | $(12,274) | Unaudited Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, iMDx reported net revenue of $518,000, a substantial increase from $104,000 in the prior year period, with gross profit rising to $350,000 from $50,000, but total operating expenses significantly increased to $10.2 million, primarily due to a $2.8 million change in the fair value of contingent consideration and increased R&D and S&M, resulting in a net loss of $9.7 million, or ($0.30) per share, compared to a net loss of $4.5 million, or ($0.36) per share, in Q2 2024 Condensed Consolidated Statements of Operations | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Net revenue | $518 | $104 | | Gross profit | $350 | $50 | | Total operating expenses | $10,192 | $4,682 | | Loss from operations | $(9,842) | $(4,632) | | Net loss | $(9,742) | $(4,530) | | Net loss per share | $(0.30) | $(0.36) | | Weighted average shares outstanding | 32,023 | 12,870 | Unaudited Condensed Consolidated Statements of Cash Flows For the three months ended June 30, 2025, iMDx used $6.3 million in operating activities, an increase from $6.0 million in the prior year, with investing activities using $349,000, primarily for machinery and equipment purchases, and financing activities resulting in a net outflow of $114,000, a significant change from a net inflow of $9.8 million in Q2 2024, which included proceeds from common share sales, leading to a net decrease of $6.7 million in cash, cash equivalents, and restricted cash, ending the quarter with $26.0 million Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(6,279) | $(5,978) | | Net cash used in investing activities | $(349) | $(191) | | Net provided by financing activities | $(114) | $9,847 | | Net change in cash, cash equivalents and restricted cash | $(6,742) | $3,678 | | Cash, cash equivalents and restricted cash, ending | $25,987 | $10,956 | Reconciliation of Non-GAAP Financial Measure iMDx provides a reconciliation of its non-GAAP adjusted loss from operations to the most directly comparable GAAP measure, showing that for Q2 2025, the GAAP loss from operations was ($9.8 million), and after adjusting for non-cash items such as stock-based compensation ($504,000), depreciation and amortization expenses ($559,000), and the change in fair value of contingent consideration ($2.8 million), the consolidated non-GAAP loss from operations was ($5.98 million) Non-GAAP Loss from Operations Reconciliation | Metric (in thousands) | Three Months Ended June 30, 2025 | | :------------------------------------ | :------------------------------- | | Consolidated GAAP loss from operations | $(9,842) | | Stock-based compensation | $504 | | Depreciation and amortization expenses | $559 | | Change in fair value of contingent consideration | $2,804 | | Consolidated Non-GAAP loss from operations, as adjusted | $(5,975) | - The non-GAAP measure excludes certain non-cash and/or intangible items to provide insight into the Company's core operating performance[32]