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Oncocyte(OCX) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenues for Q2 2022 were approximately $2.1 million, up $0.7 million quarter-over-quarter and a slight increase compared to the same period a year ago [37] - GAAP net loss for Q2 2022 was $8.3 million or $0.07 per share, a decrease of $2 million quarter-over-quarter and an increase of $2.2 million compared to the same period a year ago [45] - Non-GAAP operating loss for Q2 2022 was $11.2 million, an increase of $3.4 million compared to the same period a year ago [44] Business Line Data and Key Metrics Changes - Revenues associated with DetermaRx were $0.8 million, down $0.2 million sequentially but up $0.2 million year-over-year [37] - Pharma Services business generated $0.2 million in Q2 2022, a decrease of $0.1 million quarter-over-quarter but an increase of $0.1 million year-over-year [38] - DetermaRx sample volumes were 66% above the prior year, driving towards the goal of doubling 2021 volumes and revenues in 2022 [33] Market Data and Key Metrics Changes - The company signed on one of the largest liver transplant centers in the U.S. as part of the early adopter program for the VitaGraft product [13] - The liver transplant center is estimated to perform between 300 to 500 liver transplants annually, indicating a significant market opportunity [99] Company Strategy and Development Direction - The company is focused on reducing operating expenses and cash burn, with anticipated annual operating cost reductions of over $12 million [9] - A strategic shift has been made to prioritize shorter-term revenue opportunities and reduce the number of clinical trials over the next 18 to 24 months [48] - The company plans to launch the VitaGraft liver and kidney products in Q4 2022, pending reimbursement decisions [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market headwinds and emphasized a well-constructed plan to deliver on critical product launches over the next 6 to 8 quarters [53] - The anticipated cash burn rate is expected to decline below $10 million in the first half of 2023 and further below $8 million in the second half of 2023 [53][81] Other Important Information - The company raised $32.8 million in net proceeds from an underwritten offering of common stock early in Q2 2022 [46] - The company is exploring non-dilutive forms of capital, including capital lease lines and licensing tests in ex-U.S. markets [47] Q&A Session Summary Question: Can you provide insight on the control over the liver and kidney reimbursement timelines? - Management indicated that they expect to receive responses for both liver and kidney reimbursement submissions around September to October [59][62] Question: What does the change in management roles mean for day-to-day operations? - Management clarified that while the CEO will focus more on corporate development and investor relations, the new COO will handle daily operations [65][67] Question: Is there a delay in DetermaIO due to needing more patient data? - Management confirmed that DetermaIO is on track for submission this fall, with no additional patient data needed for the current tumor types [70] Question: What is the expected ramp-up for the VitaGraft product? - Management expects a rapid revenue ramp for the VitaGraft product in 2023, with significant market interest already noted [79] Question: What is the focus for the Pharma Services business? - Management stated that while there has been a pullback on commercial efforts, long-term relationships with pharma partners will continue to drive the business [91]