Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 04, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | OncoCyte Corp | ||
Entity Central Index Key | 0001642380 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 47,000,000 | ||
Entity Common Stock, Shares Outstanding | 62,471,122 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 22,072 | $ 8,034 |
Marketable equity securities | 379 | 428 |
Prepaid expenses and other current assets | 505 | 180 |
Total current assets | 22,956 | 8,642 |
NONCURRENT ASSETS | ||
Right-of-use assets, machinery and equipment, net | 3,728 | 614 |
Deposits and other noncurrent assets | 2,211 | 262 |
Equity method investment in Razor | 10,964 | |
TOTAL ASSETS | 39,859 | 9,518 |
CURRENT LIABILITIES | ||
Amount due to Lineage and affiliates | 6 | 2,101 |
Accounts payable | 469 | 166 |
Accrued expenses and other current liabilities | 2,610 | 2,109 |
Loan payable, current | 1,125 | 800 |
Right-of-use and financing lease liabilities, current | 230 | 385 |
Total current liabilities | 4,440 | 5,561 |
NONCURRENT LIABILITIES | ||
Loan payable, net of deferred financing costs, noncurrent | 1,905 | 347 |
Right-of-use and financing lease liabilities, noncurrent | 2,676 | 187 |
TOTAL LIABILITIES | 9,021 | 6,095 |
Commitments and contingencies (Note 10) | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, no par value, 5,000 shares authorized; none issued and outstanding | ||
Common stock, no par value, 85,000 shares authorized; 57,032 and 40,664 shares issued and outstanding at December 31, 2019 and 2018, respectively | 124,583 | 74,742 |
Accumulated other comprehensive loss | ||
Accumulated deficit | (93,745) | (71,319) |
Total shareholders' equity | 30,838 | 3,423 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 39,859 | $ 9,518 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, no par value | ||
Common stock, shares authorized | 85,000,000 | 85,000,000 |
Common stock, shares issued | 57,032,000 | 40,664,000 |
Common stock, shares outstanding | 57,032,000 | 40,664,000 |
Statements of Operations
Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING EXPENSES | ||
Research and development | $ 6,794 | $ 6,514 |
General and administrative | 13,281 | 7,007 |
Sales and marketing | 2,164 | 1,681 |
Total operating expenses | 22,239 | 15,202 |
Loss from operations | (22,239) | (15,202) |
OTHER INCOME (EXPENSES), NET | ||
Loss on extinguishment of debt | (153) | |
Interest income (expense), net | 299 | (216) |
Unrealized loss on marketable equity securities | (49) | (427) |
Pro rata loss from equity method investment in Razor | (281) | |
Other income (expense), net | (3) | 91 |
Total other expenses, net | (187) | (552) |
NET LOSS | $ (22,426) | $ (15,754) |
Net loss per share; basic and diluted | $ (0.44) | $ (0.42) |
Weighted average shares outstanding; basic and diluted | 51,296,000 | 37,850,000 |
Statements of Comprehensive Los
Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
NET LOSS | $ (22,426) | $ (15,754) |
Other comprehensive loss, net of tax | ||
COMPREHENSIVE LOSS | $ (22,426) | $ (15,754) |
Statements of Shareholders' Equ
Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 59,968 | $ (888) | $ (54,677) | $ 4,403 |
Balance, shares at Dec. 31, 2017 | 31,452,000 | |||
Net loss | (15,754) | (15,754) | ||
Cumulative-effect adjustment for adoption of ASU 2016-01 on January 1, 2018 | 888 | (888) | ||
Stock-based compensation | $ 1,479 | 1,479 | ||
Stock-based compensation, shares | ||||
Sale of common shares and warrants | $ 13,592 | 13,592 | ||
Sale of common shares and warrants, shares | 9,192,000 | |||
Financing costs paid to issue common shares and warrants | $ (355) | (355) | ||
Financing costs paid to issue common shares and warrants, shares | ||||
Exercise of stock options | $ 58 | 58 | ||
Exercise of stock options, shares | 20,000 | |||
Balance at Dec. 31, 2018 | $ 74,742 | (71,319) | 3,423 | |
Balance, shares at Dec. 31, 2018 | 40,664,000 | |||
Net loss | (22,426) | (22,426) | ||
Stock-based compensation | $ 2,995 | 2,995 | ||
Stock-based compensation, shares | ||||
Sale of common shares and warrants | $ 48,850 | 48,850 | ||
Sale of common shares and warrants, shares | 15,793,000 | |||
Financing costs paid to issue common shares and warrants | $ (3,317) | (3,317) | ||
Financing costs paid to issue common shares and warrants, shares | ||||
Exercise of stock options | $ 943 | 943 | ||
Exercise of stock options, shares | 575,000 | |||
Issuance of warrants | $ 370 | 370 | ||
Issuance of warrants, shares | ||||
Balance at Dec. 31, 2019 | $ 124,583 | $ (93,745) | $ 30,838 | |
Balance, shares at Dec. 31, 2019 | 57,032,000 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (22,426) | $ (15,754) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 344 | 438 |
Amortization of intangible assets | 121 | |
Amortization of right of use assets and liabilities | 7 | |
Pro rata loss from equity method investment in Razor | 281 | |
Amortization of prepaid maintenance | 37 | 18 |
Impairment charge for intangible assets | 625 | |
Stock-based compensation | 2,995 | 1,479 |
Dividend income from AgeX Therapeutics common stock received as a dividend-in-kind | (96) | |
Unrealized loss on marketable equity securities | 49 | 427 |
Amortization of debt issuance costs | 59 | 77 |
Loss on extinguishment of debt | 153 | |
Warrants issued for advisory services | 234 | |
Other | 107 | 23 |
Changes in operating assets and liabilities: | ||
Amount due to Lineage and affiliates | (2,094) | 2 |
Prepaid expenses and other current assets | (202) | (11) |
Accounts payable and accrued liabilities | 741 | 1,002 |
Net cash used in operating activities | (19,715) | (11,649) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Equity method investment in Razor | (11,245) | |
Purchase of equipment | (918) | (31) |
Security deposit and other | (252) | |
Net cash used in investing activities | (12,415) | (31) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 943 | 58 |
Proceeds from sale of common shares | 48,850 | 10,000 |
Financing costs to issue common shares | (3,288) | (65) |
Proceeds from sale of common shares and warrants | 3,592 | |
Financing costs to issue common shares and warrants | (290) | |
Proceeds from refinance of bank loan | 3,000 | |
Payoff of principal and bank fees from refinancing of bank loan | (516) | |
Repayment of principal of loan payable prior to refinancing | (667) | (800) |
Repayment of financing lease obligations | (454) | (381) |
Net cash provided by financing activities | 47,868 | 12,114 |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 15,738 | 434 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||
At beginning of the year | 8,034 | 7,600 |
At end of the year | 23,772 | 8,034 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | 171 | 142 |
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES: | ||
SeeNote10ForAdditionalDisclosures | ||
Deferred final commitment fee for bank loan | 200 | |
Equipment purchased under financing leases | $ 209 |
Organization, Description of th
Organization, Description of the Business and Liquidity | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Description of the Business and Liquidity | 1. Organization, Description of the Business and Liquidity OncoCyte Corporation (“Oncocyte”), incorporated in 2009 in the state of California, is a molecular diagnostics company focused on developing and commercializing proprietary laboratory-developed tests (“LDTs”) to serve unmet medical needs across the cancer care continuum. Oncocyte’s mission is to provide actionable information to physicians and patients at critical decision points to optimize diagnosis and treatment decisions, improve patient outcomes, and reduce overall cost of care. Oncocyte has prioritized lung cancer as its first indication. Lung cancer remains the leading cause of cancer death in the United States, despite the availability of molecular testing and novel therapies to treat patients. Oncocyte’s first product for commercial release is a proprietary treatment stratification test called DetermaRx™ that identifies which patients with early stage non-small cell lung cancer may benefit from chemotherapy, resulting in a significantly higher, five-year survival rate. Oncocyte is also developing DetermaDx™, as a proprietary non-invasive blood test using molecular markers to determine whether lung nodules detected through imaging are unlikely to be malignant, with the goal of reducing the number of unnecessary invasive and expensive diagnostic biopsy procedures. Oncocyte holds a 25% equity interest in Razor Genomics, Inc. (“Razor”), a privately held company, developing a proprietary treatment stratification laboratory test to assist physicians in the management of non-small cell lung cancer. Razor’s key product is a commercially ready treatment stratification test called “DetermaRx™” for early stage lung cancer. Oncocyte has licensed all rights to commercialize DetermaRx™ and plans to conduct certain clinical trials for purposes of promoting commercialization (see Note 5). On January 31, 2020 (the “Merger Date”), Oncocyte completed its acquisition of Insight Genetics, Inc. (“Insight”), pursuant to an Agreement and Plan of Merger, dated as of January 10, 2020 (the “Merger Agreement”), pursuant to which a newly incorporated wholly-owned subsidiary of Oncocyte (“Merger Sub”) merged with and into Insight such that the separate existence of Merger Sub ceased and Insight survived as a wholly-owned subsidiary of Oncocyte (the “Merger”). Prior to the Merger, Insight was a privately held company specializing in the discovery, development and commercialization of the multi-gene molecular, laboratory-developed diagnostic tests that Oncocyte has branded as DetermaIO™. Oncocyte entered into the Merger Agreement to acquire Insight’s technology and pharma service offerings. Insight has a CLIA-certified diagnostic laboratory with the capacity to support clinical trials or assay design on certain commercially available analytic platforms that may be used to develop additional diagnostic tests. Insight has also performed assay development and clinical testing for pharmaceutical and biotechnology companies. See Note 11 for further discussion of the Merger. Oncocyte is currently devoting substantially all of its efforts on developing and commercializing its lung cancer diagnostic tests DetermaDx™, DetermaRx™ and DetermaIO™. Liquidity For all periods presented, Oncocyte generated no revenues. Since inception, Oncocyte has financed its operations through the sale of common stock, warrants, warrant exercises, bank loans, and sales of Lineage Cell Therapeutics, Inc. (“Lineage”) common shares that it holds as marketable equity securities. Lineage also provided Oncocyte with accounting, billing, bookkeeping, payroll, treasury, payment of accounts payable, and other similar administrative services, and the use of Lineage office and laboratory facilities, under a Shared Facilities and Services Agreement (the “Shared Facilities Agreement”), which was terminated as to all services on September 30, 2019, and as to all use of facilities on December 31, 2019 (see Note 4). Oncocyte has incurred operating losses and negative cash flows since inception and had an accumulated deficit of $93.7 million as of December 31, 2019. Oncocyte expects to continue to incur operating losses and negative cash flows for the foreseeable future. At December 31, 2019, Oncocyte had $22.1 million of cash and cash equivalents and held Lineage and AgeX Therapeutics, Inc. (“AgeX”) common stock as marketable equity securities with a combined fair market value of $0.4 million. In January 2020, Oncocyte entered into a series of stock purchase agreements pursuant to which Oncocyte sold a total of 3,523,776 shares of common stock for approximately $7.6 million in cash in an offering registered under the Securities Act of 1933, as amended (the “Securities Act”) (see Note 11). On March 20, 2020, Oncocyte entered into an for an Oncocyte believes that its current cash, cash equivalents and marketable equity securities, and its access to additional capital through the ATM Agreement are sufficient to carry out current operations through at least twelve months from the issuance date of the financial statements included in this Report. Oncocyte will need to raise additional capital to finance its operations, including the development and commercialization of its cancer diagnostic tests, until such time as it is able to complete development and commercialize one or more tests and generate sufficient revenues to cover its operating expenses. Presently, Oncocyte is devoting substantially all of its efforts on . Oncocyte may also explore a range of other commercialization options in order to reduce capital needs and the risks associated with the timelines and uncertainty for attaining the Medicare and commercial reimbursement approvals that will be essential for the successful commercialization of Oncocyte’s cancer tests. Those alternative arrangements could include marketing arrangements with other diagnostic companies through which Oncocyte might receive a royalty on sales, or through which it might form a joint venture to market its cancer tests and share in net revenues. Delays in the development of DetermaDx™ or DetermaIO , or both, or obtaining reimbursement coverage from Medicare for Oncocyte’s cancer diagnostic tests could prevent it from raising sufficient additional capital to finance the completion of development and commercial launch of those tests. Investors may also be reluctant to provide Oncocyte with capital until its tests are approved for reimbursement by Medicare or private insurers or healthcare providers. The unavailability or inadequacy of financing or revenues to meet future capital needs could force Oncocyte to modify, curtail, delay, or suspend some or all aspects of planned operations. Sales of additional equity securities could result in the dilution of the interests of its shareholders. Oncocyte cannot assure that adequate financing will be available on favorable terms, if at all. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of presentation The financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Prior to February 17, 2017, Lineage consolidated the results of Oncocyte into Lineage’s consolidated results based on Lineage’s ability to control Oncocyte’s operating and financial decisions and policies through its then majority ownership of Oncocyte common stock. Beginning on February 17, 2017, Lineage’s percentage ownership of the outstanding Oncocyte common stock declined below 50%, resulting in a loss of “control” of Oncocyte under GAAP and, as a result, Lineage deconsolidated Oncocyte’s financial statements from Lineage’s consolidated financial statements. As a result of this deconsolidation, Oncocyte is no longer considered a subsidiary of Lineage under GAAP with effect from February 17, 2017. As of December 31, 2019, because Lineage’s ownership interest in Oncocyte decreased to below 20%, Lineage no longer exercises significant influence over the operations and management of Oncocyte. As of the date of this Report, Lineage’s ownership interest in Oncocyte is below 10%. However, Oncocyte may still be considered an affiliate of Lineage. Through the year ended December 31, 2019, to the extent Oncocyte did not have its own employees or human resources for its operations, Lineage or Lineage subsidiaries provided certain employees for administrative or operational services, as necessary, for the benefit of Oncocyte (see Note 4). Accordingly, Lineage allocated expenses such as salaries and payroll related expenses incurred and paid on behalf of Oncocyte based on the amount of time that particular employees devoted to Oncocyte affairs. Other expenses such as legal, accounting, human resources, marketing, travel, and entertainment expenses were allocated to Oncocyte to the extent that those expenses were incurred by or on behalf of Oncocyte. Lineage also allocated certain overhead expenses such as facilities rent and utilities, property taxes, insurance, internet and telephone expenses based on a percentage determined by management. These allocations have been made based upon activity-based allocation drivers such as time spent, percentage of square feet of office or laboratory space used, and percentage of personnel devoted to Oncocyte’s operations or management. Management has evaluated the appropriateness of the percentage allocations on a periodic basis and believes that this basis for allocation is reasonable. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates estimates which are subject to significant judgment, including those related to the going concern assessments of Oncocyte financial statements, allocation of direct and indirect expenses, useful lives associated with long-lived intangible assets, equipment and furniture, key assumptions in operating and financing leases, including incremental borrowing rates, loss contingencies, valuation allowances related to deferred income taxes, and assumptions used to value stock-based awards, debt or other equity instruments. Actual results could differ materially from those estimates. Going concern assessment In accordance with FASB’s standard on going concern, Accounting Standard Update, or ASU No. 2014-15, Oncocyte assesses going concern uncertainty in its financial statements to determine if it has sufficient cash, cash equivalents and working capital on hand, including marketable equity securities, and any available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued, which is referred to as the “look-forward period” as defined by ASU No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to Oncocyte, it will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, Oncocyte makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent Oncocyte deems probable those implementations can be achieved and it has the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15. Fair value measurements Oncocyte accounts for fair value measurements in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements ● Level 1 ● Level 2 ● Level 3 In determining fair value, Oncocyte utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the periods presented, Oncocyte has no financial assets or liabilities recorded at fair value on a recurring basis, except for cash and cash equivalents consisting of money market funds and marketable equity securities of Lineage and AgeX common stock held by Oncocyte described below. These assets are measured at fair value using the period-end quoted market prices as a Level 1 input. The carrying amounts of cash equivalents, prepaid expenses and other current assets, amounts due to Lineage and other affiliates, accounts payable, accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items. The carrying amount of the Loan Payable to Silicon Valley Bank approximates fair value because the loan bears interest at a floating market rate (see Note 6). Cash and cash equivalents Cash equivalents typically consist of money market fund investments for capital preservation Financial instruments that potentially subject Oncocyte to credit risk consist principally of cash and cash equivalents. Oncocyte maintains cash and cash equivalent balances at financial institutions in excess of amounts insured by United States government agencies. Oncocyte places its cash and cash equivalents with high credit quality financial institutions. Restricted cash Oncocyte classifies cash that has contractual or legal restrictions imposed by third parties as restricted cash, which is restricted as to withdrawal or use except for the specified purpose under a contract. Oncocyte includes the restricted cash consistent with the nature of the underlying contract and classifies it as part of current assets if the restricted cash will be released in the next twelve months from the balance sheet date, or in deposits and other noncurrent assets if it will be restricted for longer than twelve months from the balance sheet date. Oncocyte adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet dates that comprise the total of the same such amounts shown in the statements of cash flows in accordance with ASU 2016-18 (in thousands): December 31, 2019 December 31, 2018 Cash and cash equivalents $ 22,072 $ 8,034 Restricted cash included in deposits and other noncurrent assets (see Note 10) 1,700 - Total cash, cash equivalents, and restricted cash as shown in the statements of cash flows $ 23,772 $ 8,034 Investments in common stock of privately held companies Oncocyte evaluates whether investments held in common stock of other companies require consolidation of the company under, first, the variable interest entity (“VIE”) model, and then under the voting interest model in accordance with accounting guidance for consolidations under Accounting Standards Codification (“ASC”) 810-10. If consolidation of the entity is not required under either the VIE model or the voting interest model, Oncocyte determines whether the equity method of accounting should be applied in accordance with ASC 323, Investments – Equity Method and Joint Ventures Oncocyte initially records equity method investments at fair value on the date of the acquisition with subsequent adjustments to the investment balance based on Oncocyte’s share of earnings or losses from the investment. The equity method investment balance is shown in noncurrent assets on the consolidated balance sheets. Oncocyte reviews investments accounted for under the equity method for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be fully recoverable. If a determination is made that an “other-than-temporary” impairment exists, Oncocyte writes down its investment to fair value. On September 30, 2019, Oncocyte acquired a 25% ownership interest in Razor accounted for under the equity method of accounting as further discussed in Note 5. Accounting for Lineage and AgeX shares of common stock Oncocyte accounts for the Lineage shares it holds, including the AgeX shares of common stock received as a dividend-in-kind on November 28, 2018, as marketable equity securities in accordance with ASC 320-10-25, Investments – Debt and Equity Securities Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities On November 28, 2018, distributed shares of AgeX common stock owned by to holders of common shares, on a pro rata basis, in the ratio of one share of AgeX common stock for every ten common shares owned. As a shareholder of common stock, Oncocyte received 35,326 shares of AgeX common stock as its pro rata share and recorded a $96,000 dividend in other income and expenses for the year ended December 31, 2018. For the year ended December 31, 2018, Oncocyte recorded an unrealized loss of $427,000, included in other income and expenses, net, due to the decrease in fair market value of the shares from January 1, 2018 to December 31, 2018, and the decrease in the fair market value of the AgeX shares from November 28, 2018 to December 31, 2018. As of December 31, 2019, Oncocyte held 353,264 and 35,326 shares of common stock of Machinery and equipment Machinery and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally over a period of 3 to 10 years. For equipment purchased under financing leases, Oncocyte depreciates the equipment based on the shorter of the useful life of the equipment or the term of the lease, ranging from 3 to 5 years, depending on the nature and classification of the financing lease. Maintenance and repairs are expensed as incurred whereas significant renewals and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is reflected in Oncocyte’s results of operations. Impairment of long-lived assets Oncocyte assesses the impairment of long-lived assets, which consist primarily of long-lived intangible assets, machinery and equipment, whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. As part of Oncocyte’s impairment assessment of its intangible assets, Oncocyte determined that certain intangible assets, for therapeutic uses that Oncocyte no longer plans to develop or commercialize, were impaired as of June 30, 2018 and, accordingly, Oncocyte recorded a noncash charge of $625,000 representing the net book value of those assets as of that date, and included that charge in research and development expenses for the year ended December 31, 2018. Accounting for warrants Oncocyte determines the accounting classification of warrants it issues, as either liability or equity classified, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock Income taxes Oncocyte has filed a standalone U.S. federal income tax return since its inception. For California purposes, Oncocyte activity for 2016 and for the period from January 1, 2017 through February 16, 2017, the date immediately before Lineage owned less than 50% of Oncocyte outstanding common stock, was included in Lineage’s California combined tax return. For periods beginning on February 17, 2017 and thereafter, Oncocyte filed or will file a standalone California income tax return. The provision for state income taxes has been determined as if Oncocyte had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of Oncocyte in future years could vary from its historical effective tax rates depending on the future legal structure of Oncocyte and related tax elections. The historical deferred tax assets, including the operating losses and credit carryforwards generated by Oncocyte, will remain with Oncocyte. Oncocyte accounts for income taxes in accordance with ASC 740, Income Taxes The guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not sustainable upon examination by taxing authorities. Oncocyte will recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2019 and 2018. Oncocyte is not aware of any uncertain tax positions that could result in significant additional payments, accruals, or other material deviation for the years ended December 31, 2019 and 2018. Oncocyte is currently unaware of any tax issues under review. On December 22, 2017, the United States enacted major federal tax reform legislation, Public Law No. 115-97, commonly referred to as the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”), which enacted a broad range of changes to the Internal Revenue Code. Changes to taxes on corporations impacted by the 2017 Tax Act include, but are not limited to, lowering the U.S. federal tax rates to a 21% flat tax rate, eliminating the corporate alternative minimum tax (“AMT”), imposing additional limitations on the deductibility of interest and net operating losses, allowing any net operating loss (“NOLs”) generated in tax years ending after December 31, 2017 to be carried forward indefinitely and generally repealing carrybacks, reducing the maximum deduction for NOL carryforwards arising in tax years beginning after 2017 to a percentage of the taxpayer’s taxable income, and allowing for additional expensing of certain capital expenditures. (see Note 9). Research and development expenses Research and development expenses include both direct expenses incurred by Oncocyte and indirect overhead costs incurred by Lineage and allocated to Oncocyte under the Shared Facilities Agreement as expenses that benefited or supported Oncocyte’s research and development functions. The Shared Facilities Agreement was terminated as of December 31, 2019 (see Note 4). Direct research and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation, consulting fees, and obligations incurred to suppliers. Indirect research and development expenses allocated by Lineage to Oncocyte under the Shared Facilities Agreement (see Note 4), were primarily based on headcount or space occupied, as applicable, and include laboratory supplies, laboratory expenses, rent and utilities, common area maintenance, telecommunications, property taxes and insurance. Research and development costs are expensed as incurred. General and administrative expenses General and administrative expenses include both direct expenses incurred by Oncocyte and indirect overhead costs incurred by Lineage and allocated to Oncocyte under the Shared Facilities Agreement as expenses that benefited or supported Oncocyte’s general and administrative functions (see Note 4). Direct general and administrative expenses consist primarily of compensation and related benefits, including stock-based compensation, for executive and corporate personnel, and professional and consulting fees. Indirect general and administrative expenses allocated by Lineage to Oncocyte under the Shared Facilities Agreement (see Note 4) were primarily based on headcount or space occupied, as applicable, and include costs for financial reporting and compliance, rent and utilities, common area maintenance, telecommunications, property taxes and insurance. Sales and marketing expenses Sales and marketing expenses consist primarily of personnel costs and related benefits, including stock-based compensation, trade show expenses, branding and positioning expenses, and consulting fees. Indirect sales and marketing expenses allocated by Lineage, were primarily based on Oncocyte’s headcount or space occupied, as applicable, and include costs for rent and utilities, common area maintenance, telecommunications, property taxes and insurance, incurred by Lineage and allocated to Oncocyte under the Shared Facilities Agreement . Stock-based compensation Oncocyte recognizes compensation expense related to employee option grants and restricted stock grants, if any, in accordance with FASB ASC 718, Compensation – Stock Compensation All excess tax benefits and tax deficiencies from stock-based compensation awards accounted for under ASC 718 are recognized as income tax benefit or expense, respectively, in the statements of operations. An excess income tax benefit arises when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting purposes and, a tax deficiency arises when the compensation cost exceeds the tax deduction. Because Oncocyte has a full valuation allowance for all periods presented (see Note 9), there was no impact to Oncocyte statements of operations for any excess tax benefits or deficiencies, as any excess benefit or deficiency would be offset by the change in the valuation allowance. Forfeitures are accounted for as they occur. Oncocyte estimates the fair value of employee stock-based payment awards on the grant-date and recognizes the resulting fair value over the requisite service period. For stock-based awards that vest only upon the attainment of one or more performance goals set by Oncocyte at the time of the grant (sometimes referred to as milestone vesting), compensation cost is recognized if and when Oncocyte determines that it is probable that the performance condition or conditions will be, or have been, achieved. Oncocyte uses the Black-Scholes option pricing model for estimating the fair value of options granted under Oncocyte’s equity plans. The fair value of each restricted stock grant, if any, is determined based on the value of the common stock granted or sold. Oncocyte has elected to treat stock-based payment awards with graded vesting schedules and time-based service conditions as a single award and recognizes stock-based compensation on a straight-line basis over the requisite service period. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting The Black-Scholes option pricing model requires Oncocyte to make certain assumptions including the expected option term, the expected volatility, the risk-free interest rate and the dividend yield (see Note 8). The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. Oncocyte estimates the expected term of options granted based on its own experience and, in part, based on upon the “simplified method” provided under Staff Accounting Bulletin, Topic 14 Net loss per common share Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share reflects the weighted-average number of shares of common stock outstanding plus the potential effect of dilutive securities or contracts which are exercisable to common stock, such as stock options and warrants (using the treasury stock method) and shares issuable in future periods, except in cases where the effect would be anti-dilutive. Because Oncocyte reported net losses for all periods presented, all potentially dilutive common stock is antidilutive for those periods. The following common stock equivalents were excluded from the computation of diluted net loss per common share of common stock for the years ended December 31, 2019 and 2018 because including them would have been antidilutive (in thousands): Year Ended December 31, 2019 2018 Stock options 1,589 3,578 Warrants 3,384 4,035 Segments Oncocyte’s executive management team, as a group, represents the entity’s chief operating decision makers. To date, Oncocyte’s executive management team has viewed Oncocyte’s operations as one segment that includes the research and development of diagnostic tests for the detection of cancer. As a result, the financial information disclosed materially represents all of the financial information related to Oncocyte’s sole operating segment. Recently adopted accounting pronouncements In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. On January 1, 2019, Oncocyte adopted Accounting Standards Update 2016-02, Leases Codification Improvements to Topic 842, Leases, Leases (Topic 842): Targeted improvements, Upon adoption of ASC 842 and based on the available practical expedients under that standard, Oncocyte did not reassess any expired or existing contracts, reassess the lease classification for any expired or existing leases and reassess initial direct costs for exiting leases. Oncocyte also elected not to capitalize leases that have terms of twelve months or less. The adoption of ASC 842 did not have a material impact to Oncocyte’s financial statements because Oncocyte did not have any significant operating leases at the time of adoption. During the year ended December 31, 2019, Oncocyte entered into various operating leases and an embedded operating lease in accordance with ASC 842 discussed in Notes 5 and 10. Oncocyte’s accounting for financing leases (previously referred to as “capital leases”) remained substantially unchanged. Financing leases are included in machinery and equipment, and in financing lease liabilities, current and noncurrent, in Oncocyte’s balance sheets (see Note 10). Recently issued accounting pronouncements not yet adopted The following accounting standard, which is not yet effective, is presently being evaluated by Oncocyte to determine the impact that it might have on its financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. |
Selected Balance Sheet Componen
Selected Balance Sheet Components | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Selected Balance Sheet Components | 3. Selected Balance Sheet Components Prepaid expenses and other current assets As of December 31, 2019 and 2018, prepaid expenses and other current assets were comprised of the following (in thousands): 2019 2018 Prepaid insurance $ 80 $ 102 Prepaid vendors, deposits and service agreements 389 - Other 36 78 Total prepaid expenses and other current assets $ 505 $ 180 Deposits and other noncurrent assets As of December 31, 2019 and 2018, deposits and other noncurrent assets were comprised of the following (in thousands): 2019 2018 Restricted cash and security deposit for the Irvine Lease (Note 10) $ 1,850 $ - Long-term prepaid maintenance contracts 268 262 Other 93 - Total deposits and other noncurrent assets $ 2,211 $ 262 Accrued expenses and other current liabilities As of December 31, 2019 and 2018, accrued expenses and other current liabilities were comprised of the following (in thousands): 2019 2018 Accrued compensation $ 1,287 $ 1,303 Accrued vendors and other expenses 1,323 806 Accrued expenses and other current liabilities $ 2,610 $ 2,109 Right-of-use assets, machinery and equipment, net At December 31, 2019 and 2018, rights-of-use assets, machinery and equipment, net, were comprised of the following (in thousands): 2019 2018 Machinery and equipment $ 1,215 $ 1,562 Right-of-use assets for operating leases (1) 2,856 - Accumulated depreciation and amortization (343 ) (948 ) Right-of-use assets, machinery and equipment, net $ 3,728 $ 614 (1) Oncocyte recorded certain right-of-use assets and liabilities in accordance with ASC 842 (see Notes 5 and 10). Depreciation expense amounted to approximately $344,000 and $438,000 for the years ended December 31, 2019 and 2018, respectively. During the year ended December 31, 2019, Oncocyte wrote off $0.9 million in fully depreciated machinery and equipment with a corresponding adjustment to accumulated depreciation. During the year ended December 31, 2018, Oncocyte entered into financing leases for laboratory equipment totaling $209,000. No financing leases were entered into for the year ended December 31, 2019. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 4. Related Party Transactions Shared Facilities and Service Agreement On October 8, 2009, Oncocyte and Lineage executed the Shared Facilities Agreement. Beginning on October 1, 2019, Oncocyte ceased using shared services and has hired its own administrative, finance and accounting personnel. Effective December 31, 2019, Oncocyte terminated the Shared Facilities Agreement and is no longer using a portion of Lineage’s facilities in Alameda, California. Under the terms of the Shared Facilities Agreement, Lineage permitted Oncocyte to use Lineage’s office and laboratory facility and equipment located in Alameda, California. Through September 30, 2019, Lineage provided accounting, billing, bookkeeping, payroll, treasury, payment of accounts payable, and other similar administrative services to Oncocyte and through December 31, 2019, Lineage permitted Oncocyte the use of Lineage’s office and laboratory facilities and equipment. In January 2020, Oncocyte moved into its new corporate headquarters in Irvine, California, and continues to operate its laboratories from Brisbane, California (see Notes 10 and 11). Lineage has charged Oncocyte a Use Fee for services received and usage of facilities, equipment, and supplies. For each billing period, Lineage prorated and allocated costs incurred, as applicable, to Oncocyte. Such costs have included services of Lineage employees, equipment, insurance, lease, professional, software, supplies and utilities. Allocation depends on key cost drivers including actual documented use, square footage of facilities used, time spent, costs incurred by or for Oncocyte, or upon proportionate usage by Lineage and Oncocyte, as reasonably estimated by Lineage (collectively “Use Fees”). Lineage charges Oncocyte a 5% markup on such allocated costs as permitted by the Shared Facilities Agreement. The Use Fee was determined and invoiced to Oncocyte on a regular basis, generally monthly or quarterly. If the Shared Facilities Agreement terminates prior to the last day of a billing period, the Use Fee will be determined for the number of days in the billing period elapsed prior to the termination of the Shared Facilities Agreement. Each invoice will be payable in full by Oncocyte within 30 days after receipt. Any invoice, or portion thereof, not paid in full when due will bear interest at the rate of 15% per annum until paid. In addition to the Use Fees, Oncocyte reimbursed Lineage for any out of pocket costs incurred by Lineage for the purchase of office supplies, laboratory supplies, and other goods and materials and services for the account or use of Oncocyte based on invoices documenting such costs. Lineage has no obligation to purchase or acquire any office supplies or other goods and materials or any services for Oncocyte, and if any such supplies, goods, materials or services are obtained for Oncocyte, Lineage may arrange for the suppliers thereof to invoice Oncocyte directly. The Shared Facilities Agreement was not considered a lease under the provisions of ASC 842 discussed in Note 2, because, among other factors, a significant part of the Shared Facilities Agreement is a contract for services, not a tangible asset, and was cancelable by either party without penalty. In the aggregate, Lineage charged Use Fees to Oncocyte as follows (in thousands): Year Ended December 31, 2019 2018 Research and development $ 696 $ 882 General and administrative 438 375 Sales and marketing 108 310 Total use fees $ 1,242 $ 1,567 As of December 31, 2018, Oncocyte had $2.1 million outstanding and payable to Lineage and affiliates included in current liabilities on account of Use Fees under the Shared Facilities Agreement. In February 2019, Oncocyte paid the $2.1 million owed to Lineage for prior services provided under the Shared Facilities Agreement. As of December 31, 2019, amounts owed to Lineage under the Shared Facilities Agreement were insignificant. Financing Transactions On July 31, 2018, Oncocyte raised approximately $3.3 million in net proceeds, after offering expenses, from the sale of 1,256,118 shares of its common stock and warrants (the “July 2018 Offering”). The shares of common stock and warrants were sold in “Units” at a purchase price of $2.86 per Unit, with each Unit consisting of one share of common stock and one warrant to purchase one share of its common stock (“July 2018 Offering Warrants”). The Units of common stock and warrants were sold in a registered direct offering. Oncocyte’s former Chief Executive Officer, the Chief Financial Officer, the Senior Vice President of Research and Development, and certain members of Oncocyte’s Board of Directors purchased Units in the July 2018 Offering on the same terms as other investors. On March 28, 2018, Oncocyte entered into securities purchase agreements with two accredited investors for the private placement of 7,936,508 shares of Oncocyte’s common stock for $1.26 per share, for total gross proceeds of $10.0 million before deducting offering expenses, $8.0 million of which was received in March 2018 and $2.0 million in May 2018. The securities purchase agreements contain certain registration rights. The investors are Broadwood Partners, L.P. (“Broadwood”) and George Karfunkel, who beneficially own more than 5% of Oncocyte’s outstanding common stock. Oncocyte agreed to register the shares sold to the investors for resale under the Securities Act not later than 60 days after the closing of the sale of the shares. Oncocyte also agreed to pay liquidated damages calculated in the manner provided in the securities purchase agreement if Oncocyte did not file the registration statement in a timely manner. Because the registration statement was not filed as required by the securities purchase agreement during the year ended December 31, 2018, Oncocyte accrued $300,000 on account of liquidated damages owed and paid this amount in March 2019. In June 2019, Oncocyte filed a registration statement to register all the shares underlying the securities purchase agreement. On November 13, 2019, Oncocyte entered into a series of stock purchase agreements in which Oncocyte sold a total of 5,058,824 shares of common stock for approximately $8.6 million in cash in an offering registered under the Securities Act. As part of this offering, Broadwood purchased 1,176,471 shares (see Note 11). Consulting Services During the year ended December 31, 2019, Oncocyte incurred consulting fees of $0.4 million to a firm in which Oncocyte’s current President and Chief Executive Officer, Ronald Andrews, was a partner. Mr. Andrews resigned from this firm as an active partner effective June 30, 2019, the date prior to commencement of his employment by Oncocyte. |
Equity Method Investment in Raz
Equity Method Investment in Razor Genomics, Inc. | 12 Months Ended |
Dec. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment in Razor Genomics, Inc. | 5. Equity Method Investment in Razor Genomics, Inc. On September 30, 2019, Oncocyte completed the purchase of 1,329,870 shares of Razor Series A Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), representing 25% of the outstanding equity of Razor on a fully diluted basis, for $10 million in cash (the “Initial Closing”) pursuant to a Subscription and Stock Purchase Agreement (the “Purchase Agreement”), dated September 4, 2019, among Oncocyte, Encore Clinical, Inc. (“Encore”), and Razor. Pursuant to the Purchase Agreement, Oncocyte entered into Minority Holder Stock Purchase Agreements of like tenor (the “Minority Purchase Agreements”) with the shareholders of Razor other than Encore (the “Minority Shareholders”) for the future purchase of the shares of Razor common stock they own. Oncocyte has also entered into certain other agreements with Razor and Encore, including a Sublicense and Distribution Agreement (the “Sublicense Agreement”), a Development Agreement (the “Development Agreement”), and an amendment to a Laboratory Services Agreement (the “Laboratory Agreement”) pursuant to which Oncocyte became a party to that agreement. Purchase Agreement Under the Purchase Agreement, Oncocyte has the option to acquire the balance of the outstanding shares of Razor common stock from Encore under the Purchase Agreement and from the Minority Shareholders under the Minority Purchase Agreements (the “Option”) for an additional $10 million in cash and Oncocyte common stock valued at $5 million in total (the “Additional Purchase Payment”). If the issuance of shares of Oncocyte common stock having a market value of $5 million would require Oncocyte to issue a number of shares that, when combined with any shares issuable under the Development Agreement discussed below, would exceed 19.99% of the issued and outstanding shares of Oncocyte common stock or the outstanding voting power of its shares as of the date of the Purchase Agreement, Oncocyte may deliver a number of shares of common stock that would not exceed that combined 19.99% limit and an amount of cash necessary to bring the combined value of cash and shares to $5 million. Oncocyte has agreed to exercise the Option if, within a specified time frame, certain milestones are met related to the contracting of clinical trial sites for a clinical trial of DetermaRx™. Even if DetermaRx™ clinical trial milestones are not met within the time frame referenced in the Purchase Agreement and the Minority Purchase Agreements, Oncocyte will have the option, but not the obligation, to purchase the balance of the outstanding Razor common stock from Encore and the Minority Shareholders for the Additional Purchase Payment that would be applicable if the milestones were met. Oncocyte’s obligations to purchase the Razor shares from Encore and the Minority Shareholders are subject to the satisfaction of certain conditions customary for a transaction of this kind. Development Agreement Under the Development Agreement, Razor reserved as a “Clinical Trial Expense Reserve” $4 million of the proceeds it received at the Initial Closing from the sale of the Preferred Stock to Oncocyte, to fund Razor’s share of costs incurred in connection with a clinical trial of DetermaRx™ for purposes of promoting commercialization (“Clinical Trial”). Oncocyte and Encore will each appoint two representatives to a joint steering committee (“Steering Committee”), which will be formed under the terms of the Development Agreement to oversee the Clinical Trial. Acting by majority vote of the appointed representatives, the Steering Committee will make all design, execution, and termination decisions related to the Clinical Trial, but any deadlocked decisions other than approval of the Clinical Trial budgets, will be resolved by a member designated by Encore. The Steering Committee will agree on a total budget and an initial annual budget for the Clinical Trial. The annual budget will be reviewed and may be revised annually by a majority vote of the Steering Committee. Oncocyte will be responsible for all expenses for the Clinical Trial that exceed the Clinical Trial Expense Reserve up to the total budget amount approved by the Steering Committee, which is expected to cover multiple years and is estimated to be up to $12 million for Oncocyte’s portion. The Development Agreement provides for certain payments by Oncocyte to Encore if certain product reimbursement, Clinical Trial, and financing milestones are attained. Oncocyte has paid Encore $1 million in cash as a milestone payment for the receipt of a preliminary positive coverage decision from the Centers for Medicare and Medicaid Services Molecular Diagnostic Services Program (“CSM/MolDx”) for DetermaRx™ (the “Preliminary Coverage Milestone Payment”). In the event Razor receives the final positive coverage decision from CMS/MolDx for reimbursement of patient costs of DetermaRx™ within 12 months after the Initial Closing, Oncocyte will pay Encore $4 million (“CMS Final Milestone Payment”). Oncocyte will account for those milestone payments as part of its equity method investment in Razor. Upon completion of enrollment of the full number of patients for the Clinical Trial, Oncocyte will issue to Encore and the Minority Shareholders shares of Oncocyte common stock with an aggregate market value at the date of issue equal to $3 million (“Clinical Trial Milestone Payment”). If the issuance of shares of our common stock having a market value of $3 million would require us to issue a number of shares that, when combined with any shares we issued under the Purchase Agreement and the Minority Shareholder Purchase Agreements, would exceed 19.99% of the issued and outstanding shares of Oncocyte common stock or the outstanding voting power of its shares as of the date of the Purchase Agreement, Oncocyte may deliver a number of shares of our common stock that would not exceed that combined 19.99% limit and an amount of cash necessary to bring the combined value of cash and shares to $3 million. If within a specified time frame Encore is substantially responsible for obtaining funding to Oncocyte or Razor for the Clinical Trial from any third-party pharmaceutical company, a portion of such additional funding amount will be paid to Encore, subject to a $3 million cap on the payment to Encore if the funding is provided by a designated pharmaceutical company. Sublicense Agreement Under the Sublicense Agreement, Razor granted to Oncocyte an exclusive worldwide sublicense under certain patent rights applicable to DetermaRx™ in the field of use covered by the applicable license held by Razor for purposes of commercialization and development of DetermaRx™ (the “License Agreement’). Oncocyte will make royalty payments to Encore and the Minority Shareholders based on the net cash revenues actually collected from the commercialization of DetermaRx™, less certain related costs including certain payments by Oncocyte to third parties as royalties and revenue share payments owed by Razor to third parties with respect to revenues from the commercialization of DetermaRx™. The initial royalty rate payable to Encore and the Minority Shareholders will be a low double-digit percentage and will decline as certain cumulative net revenue benchmarks are reached, with a single digit royalty rate payable to them as the benchmarks are attained. Royalties will be payable to Encore and the Minority Shareholders on a quarterly basis. Laboratory Agreement Under the Laboratory Agreement, Oncocyte has assumed Razor’s Laboratory Agreement payment obligations of $450,000 per year (see Note 10). The Laboratory Agreement gives Oncocyte the right to use Razor’s CLIA laboratory in Brisbane, California. Oncocyte pays Encore a quarterly fee for services related to operating and maintaining the CLIA laboratory, including certain staffing. The Laboratory Agreement will expire on September 29, 2021, but Oncocyte may extend the term for additional one-year periods, or Oncocyte may terminate the agreement at its option after it completes the purchase of the shares of Razor common stock from Razor stockholders pursuant to the Purchase Agreement and Minority Purchase Agreements. Oncocyte also has the right to terminate the Laboratory Agreement if there is an event or occurrence that adversely affects, in any material respect, DetermaRx™ or its prospects or its ability to be commercialized, and it remains continuing and uncured Accounting for the Razor Investment The Razor investment is being accounted for under the equity method of accounting under ASC 323 because Oncocyte exercises significant influence over, but does not control, the Razor entity. Oncocyte does not control the Razor entity because, among other factors, Oncocyte is entitled to designate one person to serve on a three-member board of directors of Razor, with the other two members designated by Encore, and any deadlocked decisions by the Steering Committee, other than with respect to the Clinical Trial budget, will be resolved by a member designated by Encore. The Razor Preferred Stock is considered to be in-substance common stock for purposes of the ASC 323 equity method investment in Razor. The equity method investment in Razor is considered an asset, rather than a business, because, among other factors, Razor has no workforce, no commercial product, no revenues, no distribution system and no facilities. Substantially all of the fair value of Razor’s assets at the Initial Closing was concentrated in Razor’s intangible asset, DetermaRx™, thus satisfying the requirements of the screen test in accordance with Accounting Standards Update (“ASU”) 2017-01 , Business combinations (Topic 805): Clarifying the Definition of a Business Contingencies Summarized financial data for Razor For the period from September 30, 2019 through December 31, 2019, the initial period during which Razor was an equity method investment of Oncocyte, Razor did not engage in significant operations, accordingly, Razor’s standalone results of operations were immaterial. The following table summarizes Razor’s standalone selected balance sheet information as of December 31, 2019 (in thousands): Condensed Balance Sheet information (1) 2019 Current assets $ 4,000 Noncurrent assets - $ 4,000 Current liabilities $ - Noncurrent liabilities - Stockholders’ equity 4,000 $ 4,000 (1) The condensed balance sheet information of Razor as of December 31, 2019 is provided for informational purposes only. Razor is not included in Oncocyte’s balance sheet as of December 31, 2019 because Razor is accounted for under the equity method of accounting and not consolidated with Oncocyte’s financial statements for any period presented. |
Loan Payable to Silicon Valley
Loan Payable to Silicon Valley Bank | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Loan Payable to Silicon Valley Bank | 6. Loan Payable to Silicon Valley Bank On February 21, 2017, Oncocyte entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”) pursuant to which Oncocyte borrowed $2.0 million on March 23, 2017. Payments of interest only on the principal balance were due monthly from the draw date through October 31, 2017, and, beginning on November 1, 2017, monthly payments of principal of approximately $67,000 plus interest are due and payable. The outstanding principal amount plus accrued interest will be due and payable to the Bank at maturity on April 1, 2020, which was paid off on account of the loan refinancing completed in October 2019, including a payment of the $116,000 final payment fee as further discussed below. Oncocyte may prepay in full the outstanding principal balance at any time, subject to a prepayment fee equal to 1.0% of the outstanding principal balance if prepaid after February 21, 2019, which was waived by the Bank due to the refinancing in October 2019. The outstanding principal amount of the loan, with interest accrued, the final payment fee, and the prepayment fee may become due and payable prior to the applicable maturity date if an “Event of Default” as defined in the Loan Agreement occurs and is not cured within any applicable cure period. Upon the occurrence and during the continuance of an Event of Default, all obligations due to the Bank will bear interest at a rate per annum which is 5% above the then applicable interest rate. An Event of Default includes, among other events, failure to pay interest and principal when due, material adverse changes, which include a material adverse change in Oncocyte’s business, operations, or condition (financial or otherwise), failure to provide the bank with timely financial statements and copies of filings with the Securities and Exchange Commission (the “SEC”), as required, legal judgments or pending or threatened legal actions of $50,000 or more, insolvency, and delisting from the NYSE American. Oncocyte’s obligations under the Loan Agreement are collateralized by substantially all of its assets other than intellectual property such as patents and trade secrets that Oncocyte owns. Accordingly, if an Event of Default were to occur and not be cured, the Bank could foreclose on its security interest in the collateral. Bank Warrants In 2017, in connection with the Loan Agreement, Oncocyte issued common stock purchase warrants to the Bank (the “Bank Warrants”) entitling the Bank to purchase shares of Oncocyte common stock in tranches related to the loan tranches under the Loan Agreement. In conjunction with the availability of the loan, the Bank was issued warrants to purchase 8,247 shares of Oncocyte common stock at an exercise price of $4.85 per share, through February 21, 2027. On March 23, 2017, the Bank was issued warrants to purchase an additional 7,321 shares at an exercise price of $5.46 per share, through March 23, 2027. The Bank may elect to exercise the Bank Warrants on a “cashless exercise” basis and receive a number of shares determined by multiplying the number of shares for which the applicable tranche is being exercised by (A) the excess of the fair market value of the common stock over the applicable exercise price, divided by (B) the fair market value of the common stock. The fair market value of the common stock will be the last closing or sale price on a national securities exchange, interdealer quotation system, or over-the-counter market. The Bank Warrants are classified as equity since, among other factors, they are not mandatorily redeemable, cannot be settled in cash or other assets and require settlement by issuing a fixed number of shares of common stock of Oncocyte. Oncocyte determined the fair value of the Bank Warrants using the Black-Scholes option pricing model to be approximately $62,000, which was recorded as a deferred financing cost against the loan payable balance. Aggregate deferred financing costs of $196,000, recorded against the loan payable balance, are amortized to interest expense over the term of the loan using the effective interest method. As of December 31, 2019, there were no unamortized deferred financing costs on account of the debt extinguishment in October related to the refinancing of the loan discussed below. Amended Loan Agreement On October 17, 2019, Oncocyte entered into a First Amendment to Loan and Security Agreement (the “Amended Loan Agreement”) with the Bank pursuant to which Oncocyte obtained a new $3 million secured credit facility (“Tranche 1”), a portion of which was used to repay the remaining balance of approximately $400,000 on outstanding loans from the Bank, plus a final payment of $116,000, under the February 21, 2017 Loan Agreement with the Bank discussed above. The credit line under the Amended Loan Agreement may be increased by an additional $2 million (“Tranche 2”) if Oncocyte obtains at least $20 million of additional equity capital, as was the case with the original Loan Agreement, and a positive final coverage determination is received from the Centers for Medicate and Medicaid Services for DetermaRx™ at a specified minimum price point per test (the “Tranche 2 Milestone”), and Oncocyte is not in default under the Amended Loan Agreement. Payments of interest only on the principal balance will be due monthly from the draw date through March 31, 2020 followed by 24 monthly payments of principal and interest, provided, however, that if the Tranche 2 Milestone is achieved the interest only payment period will be extended through September 30, 2020 followed by 18 equal monthly payments of principal plus interest. The outstanding principal balance of the loan will bear interest at a stated floating annual interest equal to the greater of (a) the prime rate or (b) 5% per annum. As of December 31, 2019, the latest published prime rate was 4.75% per annum. The principal amount of all loans plus accrued interest will be due and payable to the Bank at maturity on March 31, 2022. At maturity, Oncocyte will also pay the Bank an additional final payment fee of $200,000, which was recorded as a deferred financing charge in October 2019 and is being amortized to interest expense over the term of the loan using the effective interest method. As of December 31, 2019, the unamortized deferred financing cost was $170,000. Oncocyte may prepay in full the outstanding principal balance at any time, subject to a prepayment fee equal to 3.0% of the outstanding principal balance if prepaid within one year after October 17, 2019, 2.0% of the outstanding principal balance if prepaid more than one year but less than two years after October 17, 2019, or 1.0% of the outstanding principal balance if prepaid two years or more after October 17, 2019. Any amounts borrowed and repaid may not be reborrowed. The outstanding principal amount of the loan, with interest accrued, the final payment fee, and the prepayment fee may become due and payable prior to the applicable maturity date if an “Event of Default” as defined in the Amended Loan Agreement, substantially unchanged as discussed above. Oncocyte was in compliance with the Amended Loan Agreement as of the filing date of this Report. On October 17, 2019, in conjunction with Tranche 1 becoming available under the Amended Loan Agreement, Oncocyte issued a common stock purchase warrant to the Bank (the “Bank Warrant”) entitling the Bank to purchase 98,574 shares of Oncocyte common stock at the initial Warrant Price of $1.69 per share through October 17, 2029. The number of shares of common stock issuable upon the exercise of the Bank Warrant will increase on the date of each draw, if any, on Tranche 2. The number of additional shares of common stock issuable upon the exercise of the Bank Warrant will be equal to 0.02% of Oncocyte’s fully diluted equity outstanding for each $1 million draw under Tranche 2. The Warrant Price for Tranche 2 warrant shares will be determined upon each draw of Tranche 2 funds and will be closing price of Oncocyte common stock on the NYSE American or other applicable market on the date immediately before the applicable date on which Oncocyte borrows funds under Tranche 2. The Bank may elect to exercise the Bank Warrant on a “cashless exercise” basis and receive a number of shares determined by multiplying the number of shares for which the Bank Warrant is being exercised by (A) the excess of the fair market value of the common stock over the applicable Warrant Price, divided by (B) the fair market value of the common stock. The fair market value of the common stock will be last closing or sale price on a national securities exchange, interdealer quotation system, or over-the-counter market. The Amended Loan Agreement was considered an extinguishment of the Loan Agreement in accordance with ASC 470-50, Debt Modifications and Extinguishment Future Cash Payments of Loan Payable As of December 31, 2019, principal and interest payments due on the loan payable in each of the next three years are as follows (in thousands): Year Ending December 31, Loan Payments 2020 $ 1,258 2021 1,561 2022 578 Total payments of principal and interest 3,397 Less: amounts representing interest (197 ) Total payments of principal before deferred financing costs 3,200 Less: deferred financing costs (170 ) Total loan payable, net of deferred financing costs $ 3,030 |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Shareholders' Equity | 7. Shareholders’ Equity Preferred Stock Oncocyte is authorized to issue up to 5,000,000 shares of no par value preferred stock. As of December 31, 2019 and 2018, no preferred shares were issued or outstanding. Common Stock Oncocyte has up to 85,000,000 shares of no par value common stock authorized. The holders of Oncocyte’s common stock are entitled to receive ratably dividends when, as, and if declared by the Board of Directors out of funds legally available. Upon liquidation, dissolution, or winding up, the holders of Oncocyte common stock are entitled to receive ratably the net assets available after the payment of all debts and other liabilities and subject to the prior rights of Oncocyte outstanding preferred shares, if any. The holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of Oncocyte stockholders. The holders of common stock have no preemptive, subscription, or redemption rights. The outstanding shares of common stock are fully paid and non-assessable. As of December 31, 2019 and 2018, Oncocyte had 57,031,654 and 40,664,496 issued and outstanding shares of common stock, respectively (see Note 11). See Note 4 with respect to certain financing transactions pursuant to which Oncocyte sold shares of common stock and common stock purchase warrants during the years ended December 31, 2019 and 2018. Common Stock Purchase Warrants As of December 31, 2019, Oncocyte had an aggregate of 3,383,913 common stock purchase warrants issued and outstanding with exercise prices ranging from $1.69 to $5.50 per warrant. The warrants will expire on various dates through March 23, 2027. Certain warrants have “cashless exercise” provisions meaning that the value of a portion of warrant shares may be used to pay the exercise price rather than payment in cash, which may be exercised under any circumstances in the case of the Bank Warrants or, in the case of certain other warrants, only if a registration statement for the warrants and underlying shares of common stock is not effective under the Securities Act or a prospectus in the registration statement is not available for the issuance of shares upon the exercise of the warrants. Oncocyte has considered the guidance in ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Stock Option Exercises During the years ended December 31, 2019 and 2018, 575,000 and 20,312 shares of common stock were issued upon the exercise of stock options, from which Oncocyte received $943,000 and $58,000 in cash proceeds, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 8. Stock-Based Compensation Stock Option Plan Oncocyte had a 2010 Stock Option Plan (the “2010 Plan”) under which 5,200,000 shares of common stock were authorized for the grant of stock options or the sale of restricted stock. On August 27, 2018, Oncocyte shareholders approved a new Equity Incentive Plan (the “2018 Incentive Plan”) to replace the 2010 Plan. In adopting the 2018 Incentive Plan, Oncocyte terminated the 2010 Plan and will not grant any additional stock options or sell any stock under restricted stock purchase agreements under the 2010 Plan; however, stock options issued under the 2010 Plan will continue in effect in accordance with their terms and the terms of the 2010 Plan until the exercise or expiration of the individual options. The 2018 Incentive Plan reserved 11,000,000 shares of common stock for the grant of stock options or the sale of restricted stock (“Restricted Stock”) or for the settlement of hypothetical units issued with reference to common stock (“Restricted Stock Units”). Oncocyte may also grant stock appreciation rights (“SARs”) under the 2018 Incentive Plan. The 2018 Incentive Plan also permits Oncocyte to issue such other securities as its Board of Directors (the “Board”) or the Compensation Committee (the “Committee”) administering the 2018 Incentive Plan may determine. Awards of stock options, Restricted Stock, SARs, and Restricted Stock Units (“Awards”) may be granted under the 2018 Incentive Plan to Oncocyte employees, directors, and consultants. Awards may vest and thereby become exercisable or have restrictions on forfeiture lapse on the date of grant or in periodic installments or upon the attainment of performance goals, or upon the occurrence of specified events. Awards may not vest, in whole or in part, earlier than one year from the date of grant. Vesting of an Award after the date of grant may be accelerated only in the limited circumstances specified in the 2018 Incentive Plan. In the case of the acceleration of vesting of any performance-based Award, acceleration of vesting shall be limited to actual performance achieved, pro rata achievement of the performance goal(s) on the basis for the elapsed portion of the performance period, or a combination of actual and pro rata achievement of performance goals. No person shall be granted, during any one-year period, options to purchase, or SARs with respect to, more than 1,000,000 shares in the aggregate, or any Awards of Restricted Stock or Restricted Stock Units with respect to more than 500,000 shares in the aggregate. If an Award is to be settled in cash, the number of shares on which the Award is based shall not count toward the individual share limit. No Awards may be granted under the 2018 Incentive Plan more than ten years after the date upon which the 2018 Incentive Plan was adopted by the Board, and no options or SARS granted under the 2018 Incentive Plan may be exercised after the expiration of ten years from the date of grant. Stock Options Options granted under the 2018 Incentive Plan may be either “incentive stock options” within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”), or “non-qualified” stock options that do not qualify incentive stock options. Incentive stock options may be granted only to Oncocyte employees and employees of subsidiaries. The exercise price of stock options granted under the 2018 Incentive Plan must be equal to the fair market of Oncocyte common stock on the date the option is granted. In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes of Oncocyte stock, the exercise price of any incentive stock option must be at least 110% of the fair market value of the common stock on the grant date, and the term of the option may be no longer than five years. The aggregate fair market value of common stock (determined as of the grant date of the option) with respect to which incentive stock options become exercisable for the first time by an optionee in any calendar year may not exceed $100,000. The exercise price of an option may be payable in cash or in common stock having a fair market value equal to the exercise price, or in a combination of cash and common stock, or other legal consideration for the issuance of stock as the Board or Committee may approve. Generally, options will be exercisable only while the optionee remains an employee, director or consultant, or during a specific period thereafter, but in the case of the termination of an employee, director, or consultant’s services due to death or disability, the period for exercising a vested option shall be extended to the earlier of 12 months after termination or the expiration date of the option. Restricted Stock and Restricted Stock Units In lieu of granting options, Oncocyte may enter into purchase agreements with employees under which they may purchase or otherwise acquire Restricted Stock or Restricted Stock Units subject to such vesting, transfer, and repurchase terms, and other restrictions. The price at which Restricted Stock may be issued or sold will be not less than 100% of fair market value. Employees or consultants, but not executive officers or directors, who purchase Restricted Stock may be permitted to pay for their shares by delivering a promissory note or an installment payment agreement that may be secured by a pledge of their Restricted Stock. Restricted Stock may also be issued for services actually performed by the recipient prior to the issuance of the Restricted Stock. Unvested Restricted Stock for which Oncocyte has not received payment may be forfeited, or Oncocyte may have the right to repurchase unvested shares upon the occurrence of specified events, such as termination of employment. Subject to the restrictions set with respect to the particular Award, a recipient of Restricted Stock generally shall have the rights and privileges of a shareholder, including the right to vote the Restricted Stock and the right to receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld for the recipient’s account, and interest may be credited on the amount of the cash dividends withheld. The cash dividends or stock dividends so withheld and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the recipient in cash or, at the discretion of the Board or Committee, in shares of common stock having a fair market value equal to the amount of such dividends, if applicable, upon the release of restrictions on the Restricted Stock and, if the Restricted Stock is forfeited, the recipient shall have no right to the dividends. The terms and conditions of a grant of Restricted Stock Units shall be determined by the Board or Committee. No shares of common stock shall be issued at the time a Restricted Stock Unit is granted. A recipient of Restricted Stock Units shall have no voting rights with respect to the Restricted Stock Units. Upon the expiration of the restrictions applicable to a Restricted Stock Unit, Oncocyte will either issue to the recipient, without charge, one share of common stock per Restricted Stock Unit or cash in an amount equal to the fair market value of one share of common stock. At the discretion of the Board or Committee, each Restricted Stock Unit (representing one share of common stock) may be credited with cash and stock dividends paid in respect of one share (“Dividend Equivalents”). Dividend Equivalents shall be withheld for the recipient’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld. Dividend Equivalents credited to a recipient’s account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed in cash or in shares of common stock having a fair market value equal to the amount of the Dividend Equivalents and earnings, if applicable, upon settlement of the Restricted Stock Unit. If a Restricted Stock Unit is forfeited, the recipient shall have no right to the related Dividend Equivalents. Equity awards activity A summary of Oncocyte equity awards activity under the 2010 Plan and related information follows (in thousands except weighted average exercise price): Options Shares Available for Grant Number of Options Outstanding Weighted Average Exercise Price Balance at January 1, 2018 1,384 3,390 $ 3.25 Options granted (1,446 ) 1,446 2.39 Options exercised - (20 ) 2.84 Options forfeited, cancelled or expired 138 (645 ) 3.96 Termination of the 2010 Plan (76 ) - - Balance at December 31, 2018 - 4,171 $ 2.92 Options exercised - (575 ) 1.64 Options forfeited, cancelled or expired - (405 ) 3.43 Balance at December 31, 2019 - 3,191 $ 3.08 Exercisable at December 31, 2019 2,206 $ 3.20 In 2018, under the 2010 Plan, Oncocyte granted certain stock options with exercise prices ranging from $2.30 per share to $3.15 per share, that will vest in increments upon the attainment of specified performance conditions related to the development of DetermaDx™ and obtaining Medicare reimbursement coverage for that test (“Performance-Based Options”). During the year ended December 31, 2019, certain performance conditions required for vesting were met, and, accordingly, 47,500 shares vested and $101,000 of stock-based compensation expense was recorded with regard to the Performance-Based Options. As of December 31, 2019, there were Performance-Based Options outstanding. At December 31, 2019 and 2018, Oncocyte had approximately $6.5 million and $2.7 million, respectively, of total unrecognized compensation expense related to the 2010 Plan and 2018 Incentive Plan that will be recognized over a weighted-average period of approximately 2.6 and 3.3 years, respectively. A summary of 2018 Incentive Plan activity and related information follows (in thousands except weighted average exercise price): Options Shares Available for Grant Number of Options and RSUs Outstanding Weighted Average Exercise Price Balance at January 1, 2018 - - $ - Approval of 2018 Incentive Plan 5,000 - - Options granted (411 ) 411 2.21 Options exercised - - - Options forfeited, cancelled or expired 50 (50 ) 1.95 Balance at December 31, 2018 4,639 361 2.21 Option pool increase 6,000 - - Options granted (4,089 ) 4,089 2.87 RSUs granted (170 ) 85 n/a Options exercised - - - Options forfeited and cancelled 362 (362 ) 3.42 Balance at December 31, 2019 6,742 4,173 $ 2.77 Exercisable at December 31, 2019 396 $ 2.70 Additional information regarding Oncocyte’s outstanding stock options and vested and exercisable stock options is summarized below: As of December 31, 2019 Options Outstanding Exercise Prices Number of Shares (in thousands) Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $1.34 - $1.98 801 8.36 $ 1.82 $2.01 - $2.80 3,647 8.42 2.32 $3.06 - $5.95 2,831 8.03 3.98 $1.34 - $5.95 7,279 8.26 $ 2.91 Oncocyte recorded stock-based compensation expense in the following categories on the accompanying statements of operations for the years ended December 31, 2019 and 2018 (in thousands): 2019 2018 Research and development $ 612 $ 50 General and administrative 2,272 1,154 Sales and marketing 111 275 Total stock-based compensation expense $ 2,995 $ 1,479 The weighted-average estimated fair value of stock options with service-conditions granted during the years ended December 31, 2019 and 2018 was $2.01 and $1.46 per share, respectively, using the Black-Scholes option pricing model with the following weighted-average assumptions: 2019 2018 Expected life (in years) 6.03 5.65 Risk-free interest rates 2.05 % 2.85 % Volatility 79.02 % 75.51 % Dividend yield - % - % The determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If Oncocyte had made different assumptions, its stock-based compensation expense, and net loss for years ended December 31, 2019 and 2018, may have been significantly different. Oncocyte does not recognize deferred income taxes for incentive stock option compensation expense and records a tax deduction only when a disqualified disposition has occurred. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes No provision for income taxes was recorded for the years ended December 31, 2018 and December 31, 2019. Oncocyte has filed standalone U.S. federal income tax returns since its inception. For California purposes, Oncocyte’s activity for 2016 was included in Lineage’s California Combined tax return. As a result of Oncocyte’s deconsolidation from Lineage on February 17, 2017, (see Note 1), Oncocyte has filed a separate California return for tax year 2017 and will continue to do so for subsequent years. The provision for state income taxes has been determined as if Oncocyte had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of Oncocyte in 2019 and future years could vary from its historical effective tax rates depending on the future legal structure of Oncocyte and related tax elections. The deferred tax assets, including the operating loss and credit carryforwards, generated by Oncocyte, will remain with Oncocyte. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The primary components of the deferred tax assets and liabilities at December 31, 2019 and 2018 were as follows (in thousands): 2019 2018 Deferred tax assets/(liabilities): Net operating loss carryforwards and capital loss carryforwards $ 19,391 $ 15,204 Research and development credit carryforwards 2,190 2,444 Marketable equity securities 394 393 Patents and fixed assets 949 523 Stock-based and other compensation 1,166 1,326 Equity method investment in Razor 81 - Right-of-use liability 764 - Right-of-use asset (749 ) - Total 24,186 19,890 Valuation allowance (24,186 ) (19,890 ) Net deferred tax asset $ - $ - Due to losses incurred for all periods presented, Oncocyte did not record any provision or benefit for income taxes. Income taxes differed from the amounts computed by applying the applicable U.S. federal income tax rates indicated to pretax losses from operations as a result of the following: 2019 2018 Computed tax benefit at federal statutory rate 21 % 21 % Permanent differences (2 )% - % State tax benefit 2 % 10 % Research and development credits (2 )% 1 % Other - % (1 )% Adjust basis for available-for-sale-securities - % - % Change in valuation allowance (19 )% (31 )% - % - % As of December 31, 2019, Oncocyte had net operating loss carryforwards of approximately $79.7 million for U.S. federal income tax purposes and $52.1 As of December 31, 2019, Oncocyte has research and development credit carryforwards for federal and state purposes of $1.4 million and $1.5 million, respectively. The federal credits will expire between 2030 and 2039, while the state credits have no expiration. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. Oncocyte established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. The change in the valuation allowance was $4.3 million and $4.8 million for the years ended December 31, 2019 and 2018, respectively. Oncocyte has uncertain tax benefits (“UTBs”) totaling $2.9 million as of December 31, 2019 which were netted against deferred tax assets subject to valuation allowance as shown below. Oncocyte did not have any material UTBs as of December 31, 2018. The UTBs had no effect on the effective tax rate and there would be no cash tax impact for any period presented. Oncocyte recognizes interest and penalties related to UTBs, when they occur, as a component of income tax expense. There were no interest or penalties recognized for the years ended December 31, 2018 and 2019. Oncocyte does not expect its UTBs to change significantly over the next twelve months. A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows (in thousands): December 31, 2019 2018 (in thousands) Balance at the beginning of the year $ - $ - Additions based on tax positions related to current year 1,301 - Adjustments based on tax positions related to prior years 1,587 - Balance at end of year $ 2,888 $ - Other Income Tax Matters Internal Revenue Code Section 382 places a limitation (“Section 382 Limitation”) on the amount of taxable income that can be offset by NOL carryforwards after a change in control (generally greater than 50% change in ownership within a three-year period) of a loss corporation. California has similar rules. Generally, after a change in control, a loss corporation cannot deduct NOL carryforwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the NOL and tax credit carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. To date, Oncocyte has not experienced such an ownership change. Subsequent ownership changes may affect the limitation in future years. In general, Oncocyte is no longer subject to tax examination by the Internal Revenue Service or state taxing authorities for years before 2015. Although the federal and state statutes are closed for purposes of assessing additional income tax in those prior years, the taxing authorities may still make adjustments to the NOL and credit carryforwards used in open years. Therefore, the tax statutes should be considered open as it relates to the NOL and credit carryforwards used in open years. For tax years that remain open to examination, potential examinations may include questioning of the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with the Internal Revenue Code or state tax laws. Oncocyte’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. Oncocyte’s practice is to recognize interest and penalties related to income tax matters in tax expense. As of December 31, 2019 and 2018, Oncocyte has no accrued interest and penalties. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Oncocyte has certain commitments other than those discussed in Note 5. Office Lease Agreement On December 23, 2019, Oncocyte entered into an Office Lease Agreement (the “Irvine Lease”) of a building containing approximately 26,800 square feet of rentable space located at 15 Cushing in Irvine California (the “Premises”) that will serve as Oncocyte’s new principal executive and administrative offices and laboratory facility. Oncocyte completed the relocation of its offices to the Premises in January 2020 and will construct a clinical diagnostic laboratory and a research laboratory at the Premises and then relocate its laboratories to the Premises later in 2020. The Irvine Lease has an initial term of 89 calendar months, plus any fraction of the calendar month in which the “Commencement Date” occurs (the “Term”). The Commencement Date will occur 150 days after December 24, 2019, the date on which Oncocyte took possession of the Premises, which is expected to be on June 1, 2020. Oncocyte has an option to extend the term of the Lease for a period of five years (the “Extended Term”). Oncocyte will pay base monthly rent in the amount of $61,640 during the first 12 months of the Term. Base monthly rent will increase annually, over the base monthly rent then in effect, by 3.5%. If the Term or Extended Term commences or expires on a day other than the first day of a calendar month, the base monthly rent, and expenses and taxes payable by Oncocyte under the Lease as described below, will be prorated for the partial month. Oncocyte will not be obligated to pay base monthly rent during the period of its occupancy of the Premises prior to the Commencement Date and will be entitled to an abatement of 50% of the base monthly rent during the first ten calendar months of the Term. If the Lease is terminated based on the occurrence of an “event of default,” Oncocyte will be obligated to pay the abated rent to the lessor. If Oncocyte exercises its option to extend the Term, the initial base monthly rent during the Extended Term will be the greater of the base monthly rent in effect during the last year of the Term or the prevailing market rate. The prevailing market rate will be determined based on annual rental rates per square foot for comparable space in the area where the Premises are located. If Oncocyte does not agree with the prevailing market rate proposed by the lessor, the rate may be determined through an appraisal process. The base monthly rent during the Extended Term shall be subject to the same annual rent adjustment as applicable for base monthly rent during the Term. In addition to base monthly rent, Oncocyte will pay in monthly installments (a) all costs and expenses, other than certain excluded expenses, incurred by the lessor in each calendar year in connection with operating, maintaining, repairing (including replacements if repairs are not feasible or would not be effective) and managing the Premises and the building in which the Premises are located (“Expenses”), and (b) all real estate taxes and assessments on the Premises and the building in which the Premises are located, all personal property taxes for property that is owned by Landlord and used in connection with the operation, maintenance and repair of the Premises, and costs and fees incurred in connection with seeking reductions in such tax liabilities (“Taxes”). Subject to certain exceptions, Expenses shall not be increased by more than 4% annually on a cumulative, compounded basis. Oncocyte is entitled to an abatement of its obligations to pay Expenses and Taxes while constructing improvements to the Premises constituting “Tenant’s Work” under the Lease prior to the Commencement Date, except that (a) Oncocyte will be obligated to pay 43.7% of Expenses and Taxes during the period prior to the Commencement Date for its use of the second floor of the Premises, which is already built out as office space, and (b) the abatement will end prior to the Commencement Date if Oncocyte completes its “Tenant’s Work” for its laboratory space and opens the ground floor for use. The lessor has agreed to provide Oncocyte with a “Tenant Improvement Allowance” in the amount of $1,340,000 to pay for the plan, design, permitting, and construction of the improvements constituting Tenant’s Work. The lessor shall be entitled to retain 1.5% of the Tenant Improvement Allowance as an administrative fee. Oncocyte has provided the lessor with a security deposit in the amount of $150,000 and a letter of credit in the amount of $1,700,000. The lessor may apply the security deposit, in whole or in part, for the payment of rent and any other amount that Oncocyte is or becomes obligated to pay under the Irvine Lease but fails to pay when due and beyond any cure period. The lessor may draw on the letter of credit from time to time to pay any amount that is unpaid and due, or if the original issuing bank notifies the lessor that the letter of credit will not be renewed or extended for the period required under the Irvine Lease and Oncocyte fails to timely provide a replacement letter of credit, or an event of default under the Irvine Lease occurs and continues beyond the applicable cure period, or if certain insolvency or bankruptcy or insolvency with respect to Oncocyte occur. Oncocyte is required to restore any portion of the security deposit that is applied by the lessor to payments due under the Lease, and Oncocyte is required to restore the amount available under the letter of credit to the required amount if any portion of the letter of credit is drawn by the lessor. Commencing on the 34th month of the Term, (a) the amount of the letter of credit that Oncocyte is required to maintain shall be reduced on a monthly basis, in equal installments, to amortize the required amount to zero at the end of the Term, and (b) Oncocyte will have the right to cancel the letter of credit at any time if it meets certain market capitalization and balance sheet thresholds; provided, in each case, that Oncocyte is not in then default under the Lease beyond any applicable notice and cure period and the lessor has not determined that an event exists that would lead to an event of default. To obtain the letter of credit, Oncocyte has provided the issuing bank with a restricted cash deposit that the bank will hold to cover its obligation to pay any draws on the letter of credit by the lessor. The restricted cash may not be used for any other purpose. The Irvine Lease is an operating lease under ASC 842 included in the tables below. Adoption and application of ASC 842 The tables below provide the amounts recorded in connection with the adoption of ASC 842 as of, and during, the year ended December 31, 2019, for Oncocyte’s operating and financing leases (see Note 2). Under the Laboratory Agreement discussed in Note 5, Oncocyte assumed all of Razor’s Laboratory Agreement payment obligations amounting to $450,000 per year. Although Oncocyte is not a party to any lease agreement with Razor or Encore, under the terms of the Laboratory Agreement, Oncocyte received landlord’s consent for the use of the laboratory at Razor’s Brisbane, California location (the “Brisbane Facility”) under the terms of a sublease to which Encore is the sublessee. The sublease expires on March 31, 2023 (the “Brisbane Lease”). The laboratory fee payments to Encore include both laboratory services and the use of the Brisbane Facility. Under the provisions of the Laboratory Agreement, if Oncocyte terminates the Laboratory Agreement prior to the expiration of the Brisbane Lease, Oncocyte shall assume the costs related to the subletting or early termination of the Brisbane Lease. If the Laboratory Agreement were to be terminated on December 31, 2019, the aggregate payments due to the landlord for early cancellation of the Brisbane Lease would be approximately $450,000 (aggregate payments from December 31, 2019 through March 31, 2023). Oncocyte determined that the Laboratory Agreement contains an embedded operating lease for the Brisbane Facility and Oncocyte allocated the aggregate payments to this lease component for purposes of calculating the net present value of the right-of-use asset and liability as of the inception of the Laboratory Agreement in accordance with ASC 842, as shown in the table below. Financing lease As of December 31, 2019, Oncocyte has one financing lease remaining through September 2021 for certain laboratory equipment with aggregate remaining payments of $141,000 shown in the table below. Operating and Financing leases The following table presents supplemental cash flow information related to operating and financing leases for the year ended December 31, 2019 (in thousands): Cash paid for amounts included in the measurement of financing lease liabilities: Operating cash flows from financing leases $ 35 Financing cash flows from financing leases 454 Right-of-use assets obtained in exchange for right-of-use lease liabilities: Operating leases, including the Irvine Lease $ 2,866 The following table presents supplemental balance sheet information related to operating and financing leases as of December 31, 2019 (in thousands, except lease term and discount rate): Financing Leases Machinery and equipment, gross $ 209 Accumulated depreciation (93 ) Machinery and equipment, net $ 116 Current liabilities $ 71 Noncurrent liabilities 58 Total financing lease liabilities $ 129 Weighted average remaining lease term Operating leases 7.3 years Financing leases 1.8 years Weighted average discount rate Operating leases 11.2 % Financing leases 9.6 % The following table presents future minimum lease commitments as of December 31, 2019 (in thousands): Operating Leases Financing Leases Year Ending December 31, 2020 $ 394 $ 81 2021 879 60 2022 951 - 2023 850 - 2024 839 Thereafter 2,463 - Total minimum lease payments 6,376 141 Less: amounts representing interest (2,279 ) (12 ) Less: Tenant Improvement Allowance, net of administrative fee (1,320 ) (1) - Present value of net minimum lease payments $ 2,777 $ 129 (1) In accordance with ASC 842, a tenant allowance should be included in the measurement of the consideration in the lease agreement at inception and reflected as a reduction to the right-of-use asset and a corresponding reduction to the right-use-liability if the lessee both controls the construction of the tenant improvements and the expects to fully earn all of the tenant allowance. Oncocyte has met both conditions at the inception of the Irvine Lease and has recorded the Tenant Improvement Allowance accordingly. As the cash for the Tenant Improvement Allowance is received from the lessor under the terms of the Irvine Lease, the corresponding right-of-use liability will increase and will be amortized as part of the right-of use asset and liability amortization over the term of the Irvine Lease in accordance with ASC 842. Wistar License Agreement Oncocyte has entered into a License Agreement with The Wistar Institute of Anatomy and Biology (“Wistar”) that entitles Oncocyte to use certain patents, know-how and data belonging to Wistar. Under the License Agreement, Oncocyte has obtained an exclusive, worldwide license under certain patents, and under certain know-how and data (“Technical Information”) belonging to Wistar, for use in the field of molecular diagnostics for lung cancer, including, but not limited to confirmatory, companion and recurrence diagnostics for any type of lung cancer with detection through whole blood, fractionated blood, plasma, serum and/or other biological samples. Oncocyte has the right to grant sublicenses of the licensed patents and Technical Information subject to certain conditions. Oncocyte paid Wistar an initial license fee and will pay Wistar royalties on “net sales” of “licensed products,” as such terms are defined in the License Agreement. The royalty rates will range from 3% to 5% depending upon the amount of cumulative net sales. The amount of royalties payable to Wistar will be reduced by the amount of any royalties that Oncocyte must pay to any third parties on the sale of the licensed products, but subject to a maximum reduction of 50%. The obligation to pay royalties to Wistar will terminate on a licensed product by-licensed product and country-by-country basis until the later of (i) the date a valid claim of a licensed patent covering the licensed product no longer exists, or (ii) the tenth (10th) anniversary of the first commercial sale of the licensed product in each country. Oncocyte will pay Wistar a minimum annual royalty each year, which in each case will be credited against total royalties due during the year in which the minimum royalty is paid. Oncocyte will also be obligated to pay Wistar an annual license maintenance fee in the mid-five figures. Oncocyte will also pay Wistar a portion of any non-royalty sublicensing income that Oncocyte may receive from any sub-licensee. Non-royalty sublicensing income will include any consideration received from a sub-licensee for granting the sublicense, but excluding royalties, the fair market value of any equity or debt securities sold to a sub-licensee, and any payments received from a sub-licensee for any related research conducted by Oncocyte for the sub-licensee. Oncocyte also will pay Wistar (a) milestone payments upon the occurrence of certain milestone events in the development and commercialization of a licensed product, and (b) all past or ongoing costs incurred or to be incurred by Wistar, including government fees and attorneys’ fees, in the course of prosecuting the licensed patents. Oncocyte has agreed to use commercially reasonable diligent efforts, directly or through sub-licensees, to develop and commercialize licensed products. Oncocyte has agreed that it or a sub-licensee will commence commercial sale of a licensed product by a specified date. If sales of a licensed product do not commence by the specified date, Oncocyte may purchase up to three one-year extensions of the deadline by paying Wistar a designated fee for the applicable extension. Oncocyte has agreed to purchase additional extensions. Oncocyte has agreed to indemnify Wistar and its trustees, managers, officers, agents, employees, faculty, affiliated investigators, personnel and staff from and against certain claims and liabilities related to the License Agreement and development, manufacture and sale of licensed products, excluding liabilities that result from or arise out of an indemnified party’s gross negligence or willful misconduct. Wistar has the right to terminate the License Agreement, subject to certain notice and cure periods and force majeure Oncocyte may terminate the License Agreement, with or without cause, upon the passage of a specified period of time after giving Wistar written notice of termination. Litigation – General Oncocyte will be subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, and other matters. When Oncocyte is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, Oncocyte will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, Oncocyte discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. Tax Filings Oncocyte tax filings are subject to audit by taxing authorities in jurisdictions where it conducts business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. Management believes Oncocyte has adequately provided for any ultimate amounts that are likely to result from these audits; however, final assessments, if any, could be significantly different than the amounts recorded in the financial statements. Employment Contracts Oncocyte has entered into employment contracts with certain executive officers. Under the provisions of the contracts, Oncocyte may be required to incur severance obligations for matters relating to changes in control, as defined, and involuntary terminations. Indemnification In the normal course of business, Oncocyte may provide indemnification of varying scope under Oncocyte’s agreements with other companies or consultants, typically Oncocyte’s clinical research organizations, investigators, clinical sites, suppliers and others. Pursuant to these agreements, Oncocyte will generally agree to indemnify, hold harmless, and reimburse the indemnified parties for losses and expenses suffered or incurred by the indemnified parties arising from claims of third parties in connection with the use or testing of Oncocyte’s diagnostic tests. Indemnification provisions could also cover third party infringement claims with respect to patent rights, copyrights, or other intellectual property pertaining to Oncocyte’s diagnostic tests. The term of these indemnification agreements will generally continue in effect after the termination or expiration of the particular research, development, services, or license agreement to which they relate. The Purchase Agreement also contains provisions under which Oncocyte has agreed to indemnify Razor and Encore from losses and expenses resulting from breaches or inaccuracy of Oncocyte’s representations and warranties and breaches or nonfulfillment of Oncocyte’s covenants, agreements, and obligations under the Purchase Agreement. The potential future payments Oncocyte could be required to make under these indemnification agreements will generally not be subject to any specified maximum amounts. Historically, Oncocyte has not been subject to any claims or demands for indemnification. Oncocyte also maintains various liability insurance policies that limit Oncocyte’s financial exposure. As a result, Oncocyte management believes that the fair value of these indemnification agreements is minimal. Accordingly, Oncocyte has not recorded any liabilities for these agreements as of December 31, 2019 and 2018. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events Sales of Common Stock On January 2, 2020, Oncocyte entered into Subscription Agreements with selected investors, including Broadwood and certain funds and accounts managed by Pura Vida Investments LLC, in a registered direct offering of 3,523,776 shares of common stock, no par value, at an offering price of $2.156 per share, for an aggregate purchase price of approximately $7.6 million. Acquisition of Insight Genetics, Inc. On January 31, 2020, Oncocyte completed its acquisition of Insight Genetics, Inc., pursuant to a previously announced Agreement and Plan of Merger, dated as of January 10, 2020 (see Note 1). Merger Consideration at Closing Under the terms of the Merger Agreement, Oncocyte agreed to pay $7 million in cash and $5 million of Oncocyte common stock (the “Merger Consideration”), subject to a holdback for indemnity claims not to exceed ten percent of the total Merger Consideration. On the Merger Date, Oncocyte delivered approximately $11.4 million in Merger Consideration, consisting of $6.4 million in cash, which was net of a $0.6 million cash holdback, and 1.9 million shares of Oncocyte common stock, which includes the stock holdback shares discussed below, valued at $5 million, based on the average closing price of Oncocyte common stock on the NYSE American during the five trading days immediately preceding the date of the Merger Agreement. The parties agreed to holdback $0.6 million in cash (“Cash Holdback”) and approximately 0.2 million shares of Oncocyte common stock (“Stock Holdback”) through December 31, 2020, in the event that Oncocyte has indemnity claims. The Stock Holdback shares are considered to be issued and outstanding shares of Oncocyte common stock as of the Merger Date but were placed in an escrow account and will be released from escrow after the holdback period, less any shares that may be returned to Oncocyte on account of any indemnity claims. Milestone Payments (Contingent Consideration) In addition to the Merger Consideration, Oncocyte may also pay contingent consideration of up to $6.0 million in any combination of cash or shares of Oncocyte common stock if certain milestones are achieved (the “Contingent Consideration”), which consist of (i) a $1.5 million clinical trial completion and data publication milestone, (ii) $3.0 million for an affirmative final local coverage determination from Centers for Medicare and Medicaid Services (“CMS”) for a specified lung cancer test, and (iii) up to $1.5 million for achieving certain CMS reimbursement milestones. Revenue Share (Royalties) (Royalty Contingent Consideration) As additional consideration for Insight’s shareholders, the Merger Agreement provides for Oncocyte to pay a revenue share of not more than ten percent of net collected revenues for current Insight pharma service offerings over a period of ten years, and a tiered revenue share percentage of net collected revenues through the end of the technology lifecycle if certain new cancer tests are developed and commercialized using Insight technology. Registration Rights Pursuant to the Merger Agreement, Oncocyte agreed to file a registration statement with the SEC and to use reasonable efforts to register under the Securities Act the resale of the shares of common stock issued in connection with the Merger within six months following the closing. Workforce In connection with the closing of the Merger, Oncocyte did not assume sponsorship of the Insight Equity Incentive Plan. Accordingly, the Insight Equity Incentive Plan and all related stock options to purchase shares of Insight common stock outstanding immediately prior to the Merger, were canceled on the Merger Date for no consideration. At the Merger Date, all of Insight’s employees ceased employment with Insight and Oncocyte offered employment agreements to certain of those former Insight employees, principally in laboratory roles and certain administrative roles (“New Oncocyte Employees”), including granting of new equity awards under the Oncocyte 2018 Equity Incentive Plan. All Oncocyte stock option awards granted to the New Oncocyte Employees have vesting terms and conditions consistent with stock options granted to most other Oncocyte employees. Stock Option Grants In February 2020, Oncocyte granted stock options to purchase 2.1 million common shares with an exercise price of $2.63 per share to its employees, including to “New Oncocyte Employees”, under the 2018 Incentive Plan. These grants are subject to the customary vesting terms and conditions in accordance with the 2018 Incentive Plan. ATM Agreement On March 20, 2020, Oncocyte entered into an |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Prior to February 17, 2017, Lineage consolidated the results of Oncocyte into Lineage’s consolidated results based on Lineage’s ability to control Oncocyte’s operating and financial decisions and policies through its then majority ownership of Oncocyte common stock. Beginning on February 17, 2017, Lineage’s percentage ownership of the outstanding Oncocyte common stock declined below 50%, resulting in a loss of “control” of Oncocyte under GAAP and, as a result, Lineage deconsolidated Oncocyte’s financial statements from Lineage’s consolidated financial statements. As a result of this deconsolidation, Oncocyte is no longer considered a subsidiary of Lineage under GAAP with effect from February 17, 2017. As of December 31, 2019, because Lineage’s ownership interest in Oncocyte decreased to below 20%, Lineage no longer exercises significant influence over the operations and management of Oncocyte. As of the date of this Report, Lineage’s ownership interest in Oncocyte is below 10%. However, Oncocyte may still be considered an affiliate of Lineage. Through the year ended December 31, 2019, to the extent Oncocyte did not have its own employees or human resources for its operations, Lineage or Lineage subsidiaries provided certain employees for administrative or operational services, as necessary, for the benefit of Oncocyte (see Note 4). Accordingly, Lineage allocated expenses such as salaries and payroll related expenses incurred and paid on behalf of Oncocyte based on the amount of time that particular employees devoted to Oncocyte affairs. Other expenses such as legal, accounting, human resources, marketing, travel, and entertainment expenses were allocated to Oncocyte to the extent that those expenses were incurred by or on behalf of Oncocyte. Lineage also allocated certain overhead expenses such as facilities rent and utilities, property taxes, insurance, internet and telephone expenses based on a percentage determined by management. These allocations have been made based upon activity-based allocation drivers such as time spent, percentage of square feet of office or laboratory space used, and percentage of personnel devoted to Oncocyte’s operations or management. Management has evaluated the appropriateness of the percentage allocations on a periodic basis and believes that this basis for allocation is reasonable. |
Use of Estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates estimates which are subject to significant judgment, including those related to the going concern assessments of Oncocyte financial statements, allocation of direct and indirect expenses, useful lives associated with long-lived intangible assets, equipment and furniture, key assumptions in operating and financing leases, including incremental borrowing rates, loss contingencies, valuation allowances related to deferred income taxes, and assumptions used to value stock-based awards, debt or other equity instruments. Actual results could differ materially from those estimates. |
Going Concern Assessment | Going concern assessment In accordance with FASB’s standard on going concern, Accounting Standard Update, or ASU No. 2014-15, Oncocyte assesses going concern uncertainty in its financial statements to determine if it has sufficient cash, cash equivalents and working capital on hand, including marketable equity securities, and any available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued, which is referred to as the “look-forward period” as defined by ASU No. 2014-15. As part of this assessment, based on conditions that are known and reasonably knowable to Oncocyte, it will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, Oncocyte makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent Oncocyte deems probable those implementations can be achieved and it has the proper authority to execute them within the look-forward period in accordance with ASU No. 2014-15. |
Fair Value Measurements | Fair value measurements Oncocyte accounts for fair value measurements in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements ● Level 1 ● Level 2 ● Level 3 In determining fair value, Oncocyte utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the periods presented, Oncocyte has no financial assets or liabilities recorded at fair value on a recurring basis, except for cash and cash equivalents consisting of money market funds and marketable equity securities of Lineage and AgeX common stock held by Oncocyte described below. These assets are measured at fair value using the period-end quoted market prices as a Level 1 input. The carrying amounts of cash equivalents, prepaid expenses and other current assets, amounts due to Lineage and other affiliates, accounts payable, accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items. The carrying amount of the Loan Payable to Silicon Valley Bank approximates fair value because the loan bears interest at a floating market rate (see Note 6). |
Cash and Cash Equivalents | Cash and cash equivalents Cash equivalents typically consist of money market fund investments for capital preservation Financial instruments that potentially subject Oncocyte to credit risk consist principally of cash and cash equivalents. Oncocyte maintains cash and cash equivalent balances at financial institutions in excess of amounts insured by United States government agencies. Oncocyte places its cash and cash equivalents with high credit quality financial institutions. |
Restricted Cash | Restricted cash Oncocyte classifies cash that has contractual or legal restrictions imposed by third parties as restricted cash, which is restricted as to withdrawal or use except for the specified purpose under a contract. Oncocyte includes the restricted cash consistent with the nature of the underlying contract and classifies it as part of current assets if the restricted cash will be released in the next twelve months from the balance sheet date, or in deposits and other noncurrent assets if it will be restricted for longer than twelve months from the balance sheet date. Oncocyte adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet dates that comprise the total of the same such amounts shown in the statements of cash flows in accordance with ASU 2016-18 (in thousands): December 31, 2019 December 31, 2018 Cash and cash equivalents $ 22,072 $ 8,034 Restricted cash included in deposits and other noncurrent assets (see Note 10) 1,700 - Total cash, cash equivalents, and restricted cash as shown in the statements of cash flows $ 23,772 $ 8,034 |
Investments in Common Stock of Privately Held Companies | Investments in common stock of privately held companies Oncocyte evaluates whether investments held in common stock of other companies require consolidation of the company under, first, the variable interest entity (“VIE”) model, and then under the voting interest model in accordance with accounting guidance for consolidations under Accounting Standards Codification (“ASC”) 810-10. If consolidation of the entity is not required under either the VIE model or the voting interest model, Oncocyte determines whether the equity method of accounting should be applied in accordance with ASC 323, Investments – Equity Method and Joint Ventures Oncocyte initially records equity method investments at fair value on the date of the acquisition with subsequent adjustments to the investment balance based on Oncocyte’s share of earnings or losses from the investment. The equity method investment balance is shown in noncurrent assets on the consolidated balance sheets. Oncocyte reviews investments accounted for under the equity method for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be fully recoverable. If a determination is made that an “other-than-temporary” impairment exists, Oncocyte writes down its investment to fair value. On September 30, 2019, Oncocyte acquired a 25% ownership interest in Razor accounted for under the equity method of accounting as further discussed in Note 5. |
Accounting for Lineage and Agex Shares of Common Stock | Accounting for Lineage and AgeX shares of common stock Oncocyte accounts for the Lineage shares it holds, including the AgeX shares of common stock received as a dividend-in-kind on November 28, 2018, as marketable equity securities in accordance with ASC 320-10-25, Investments – Debt and Equity Securities Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities On November 28, 2018, distributed shares of AgeX common stock owned by to holders of common shares, on a pro rata basis, in the ratio of one share of AgeX common stock for every ten common shares owned. As a shareholder of common stock, Oncocyte received 35,326 shares of AgeX common stock as its pro rata share and recorded a $96,000 dividend in other income and expenses for the year ended December 31, 2018. For the year ended December 31, 2018, Oncocyte recorded an unrealized loss of $427,000, included in other income and expenses, net, due to the decrease in fair market value of the shares from January 1, 2018 to December 31, 2018, and the decrease in the fair market value of the AgeX shares from November 28, 2018 to December 31, 2018. As of December 31, 2019, Oncocyte held 353,264 and 35,326 shares of common stock of |
Machinery and Equipment | Machinery and equipment Machinery and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally over a period of 3 to 10 years. For equipment purchased under financing leases, Oncocyte depreciates the equipment based on the shorter of the useful life of the equipment or the term of the lease, ranging from 3 to 5 years, depending on the nature and classification of the financing lease. Maintenance and repairs are expensed as incurred whereas significant renewals and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is reflected in Oncocyte’s results of operations. |
Impairment of Long-lived Assets | Impairment of long-lived assets Oncocyte assesses the impairment of long-lived assets, which consist primarily of long-lived intangible assets, machinery and equipment, whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. As part of Oncocyte’s impairment assessment of its intangible assets, Oncocyte determined that certain intangible assets, for therapeutic uses that Oncocyte no longer plans to develop or commercialize, were impaired as of June 30, 2018 and, accordingly, Oncocyte recorded a noncash charge of $625,000 representing the net book value of those assets as of that date, and included that charge in research and development expenses for the year ended December 31, 2018. |
Accounting for Warrants | Accounting for warrants Oncocyte determines the accounting classification of warrants it issues, as either liability or equity classified, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock |
Income Taxes | Income taxes Oncocyte has filed a standalone U.S. federal income tax return since its inception. For California purposes, Oncocyte activity for 2016 and for the period from January 1, 2017 through February 16, 2017, the date immediately before Lineage owned less than 50% of Oncocyte outstanding common stock, was included in Lineage’s California combined tax return. For periods beginning on February 17, 2017 and thereafter, Oncocyte filed or will file a standalone California income tax return. The provision for state income taxes has been determined as if Oncocyte had filed separate tax returns for the periods presented. Accordingly, the effective tax rate of Oncocyte in future years could vary from its historical effective tax rates depending on the future legal structure of Oncocyte and related tax elections. The historical deferred tax assets, including the operating losses and credit carryforwards generated by Oncocyte, will remain with Oncocyte. Oncocyte accounts for income taxes in accordance with ASC 740, Income Taxes The guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not sustainable upon examination by taxing authorities. Oncocyte will recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2019 and 2018. Oncocyte is not aware of any uncertain tax positions that could result in significant additional payments, accruals, or other material deviation for the years ended December 31, 2019 and 2018. Oncocyte is currently unaware of any tax issues under review. On December 22, 2017, the United States enacted major federal tax reform legislation, Public Law No. 115-97, commonly referred to as the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”), which enacted a broad range of changes to the Internal Revenue Code. Changes to taxes on corporations impacted by the 2017 Tax Act include, but are not limited to, lowering the U.S. federal tax rates to a 21% flat tax rate, eliminating the corporate alternative minimum tax (“AMT”), imposing additional limitations on the deductibility of interest and net operating losses, allowing any net operating loss (“NOLs”) generated in tax years ending after December 31, 2017 to be carried forward indefinitely and generally repealing carrybacks, reducing the maximum deduction for NOL carryforwards arising in tax years beginning after 2017 to a percentage of the taxpayer’s taxable income, and allowing for additional expensing of certain capital expenditures. (see Note 9). |
Research and Development Expenses | Research and development expenses Research and development expenses include both direct expenses incurred by Oncocyte and indirect overhead costs incurred by Lineage and allocated to Oncocyte under the Shared Facilities Agreement as expenses that benefited or supported Oncocyte’s research and development functions. The Shared Facilities Agreement was terminated as of December 31, 2019 (see Note 4). Direct research and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation, consulting fees, and obligations incurred to suppliers. Indirect research and development expenses allocated by Lineage to Oncocyte under the Shared Facilities Agreement (see Note 4), were primarily based on headcount or space occupied, as applicable, and include laboratory supplies, laboratory expenses, rent and utilities, common area maintenance, telecommunications, property taxes and insurance. Research and development costs are expensed as incurred. |
General and Administrative Expenses | General and administrative expenses General and administrative expenses include both direct expenses incurred by Oncocyte and indirect overhead costs incurred by Lineage and allocated to Oncocyte under the Shared Facilities Agreement as expenses that benefited or supported Oncocyte’s general and administrative functions (see Note 4). Direct general and administrative expenses consist primarily of compensation and related benefits, including stock-based compensation, for executive and corporate personnel, and professional and consulting fees. Indirect general and administrative expenses allocated by Lineage to Oncocyte under the Shared Facilities Agreement (see Note 4) were primarily based on headcount or space occupied, as applicable, and include costs for financial reporting and compliance, rent and utilities, common area maintenance, telecommunications, property taxes and insurance. |
Sales and Marketing Expenses | Sales and marketing expenses Sales and marketing expenses consist primarily of personnel costs and related benefits, including stock-based compensation, trade show expenses, branding and positioning expenses, and consulting fees. Indirect sales and marketing expenses allocated by Lineage, were primarily based on Oncocyte’s headcount or space occupied, as applicable, and include costs for rent and utilities, common area maintenance, telecommunications, property taxes and insurance, incurred by Lineage and allocated to Oncocyte under the Shared Facilities Agreement . |
Stock-based Compensation | Stock-based compensation Oncocyte recognizes compensation expense related to employee option grants and restricted stock grants, if any, in accordance with FASB ASC 718, Compensation – Stock Compensation All excess tax benefits and tax deficiencies from stock-based compensation awards accounted for under ASC 718 are recognized as income tax benefit or expense, respectively, in the statements of operations. An excess income tax benefit arises when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting purposes and, a tax deficiency arises when the compensation cost exceeds the tax deduction. Because Oncocyte has a full valuation allowance for all periods presented (see Note 9), there was no impact to Oncocyte statements of operations for any excess tax benefits or deficiencies, as any excess benefit or deficiency would be offset by the change in the valuation allowance. Forfeitures are accounted for as they occur. Oncocyte estimates the fair value of employee stock-based payment awards on the grant-date and recognizes the resulting fair value over the requisite service period. For stock-based awards that vest only upon the attainment of one or more performance goals set by Oncocyte at the time of the grant (sometimes referred to as milestone vesting), compensation cost is recognized if and when Oncocyte determines that it is probable that the performance condition or conditions will be, or have been, achieved. Oncocyte uses the Black-Scholes option pricing model for estimating the fair value of options granted under Oncocyte’s equity plans. The fair value of each restricted stock grant, if any, is determined based on the value of the common stock granted or sold. Oncocyte has elected to treat stock-based payment awards with graded vesting schedules and time-based service conditions as a single award and recognizes stock-based compensation on a straight-line basis over the requisite service period. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting The Black-Scholes option pricing model requires Oncocyte to make certain assumptions including the expected option term, the expected volatility, the risk-free interest rate and the dividend yield (see Note 8). The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. Oncocyte estimates the expected term of options granted based on its own experience and, in part, based on upon the “simplified method” provided under Staff Accounting Bulletin, Topic 14 |
Net Loss Per Common Share | Net loss per common share Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share reflects the weighted-average number of shares of common stock outstanding plus the potential effect of dilutive securities or contracts which are exercisable to common stock, such as stock options and warrants (using the treasury stock method) and shares issuable in future periods, except in cases where the effect would be anti-dilutive. Because Oncocyte reported net losses for all periods presented, all potentially dilutive common stock is antidilutive for those periods. The following common stock equivalents were excluded from the computation of diluted net loss per common share of common stock for the years ended December 31, 2019 and 2018 because including them would have been antidilutive (in thousands): Year Ended December 31, 2019 2018 Stock options 1,589 3,578 Warrants 3,384 4,035 |
Segments | Segments Oncocyte’s executive management team, as a group, represents the entity’s chief operating decision makers. To date, Oncocyte’s executive management team has viewed Oncocyte’s operations as one segment that includes the research and development of diagnostic tests for the detection of cancer. As a result, the financial information disclosed materially represents all of the financial information related to Oncocyte’s sole operating segment. |
Recently Adopted Accounting Pronouncements | Recently adopted accounting pronouncements In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. On January 1, 2019, Oncocyte adopted Accounting Standards Update 2016-02, Leases Codification Improvements to Topic 842, Leases, Leases (Topic 842): Targeted improvements, Upon adoption of ASC 842 and based on the available practical expedients under that standard, Oncocyte did not reassess any expired or existing contracts, reassess the lease classification for any expired or existing leases and reassess initial direct costs for exiting leases. Oncocyte also elected not to capitalize leases that have terms of twelve months or less. The adoption of ASC 842 did not have a material impact to Oncocyte’s financial statements because Oncocyte did not have any significant operating leases at the time of adoption. During the year ended December 31, 2019, Oncocyte entered into various operating leases and an embedded operating lease in accordance with ASC 842 discussed in Notes 5 and 10. Oncocyte’s accounting for financing leases (previously referred to as “capital leases”) remained substantially unchanged. Financing leases are included in machinery and equipment, and in financing lease liabilities, current and noncurrent, in Oncocyte’s balance sheets (see Note 10). |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently issued accounting pronouncements not yet adopted The following accounting standard, which is not yet effective, is presently being evaluated by Oncocyte to determine the impact that it might have on its financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet dates that comprise the total of the same such amounts shown in the statements of cash flows in accordance with ASU 2016-18 (in thousands): December 31, 2019 December 31, 2018 Cash and cash equivalents $ 22,072 $ 8,034 Restricted cash included in deposits and other noncurrent assets (see Note 10) 1,700 - Total cash, cash equivalents, and restricted cash as shown in the statements of cash flows $ 23,772 $ 8,034 |
Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share of Common Stock | The following common stock equivalents were excluded from the computation of diluted net loss per common share of common stock for the years ended December 31, 2019 and 2018 because including them would have been antidilutive (in thousands): Year Ended December 31, 2019 2018 Stock options 1,589 3,578 Warrants 3,384 4,035 |
Selected Balance Sheet Compon_2
Selected Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | As of December 31, 2019 and 2018, prepaid expenses and other current assets were comprised of the following (in thousands): 2019 2018 Prepaid insurance $ 80 $ 102 Prepaid vendors, deposits and service agreements 389 - Other 36 78 Total prepaid expenses and other current assets $ 505 $ 180 |
Schedule of Deposits and Other Noncurrent Assets | As of December 31, 2019 and 2018, deposits and other noncurrent assets were comprised of the following (in thousands): 2019 2018 Restricted cash and security deposit for the Irvine Lease (Note 10) $ 1,850 $ - Long-term prepaid maintenance contracts 268 262 Other 93 - Total deposits and other noncurrent assets $ 2,211 $ 262 |
Schedule of Accrued Expenses and Other Current Liabilities | As of December 31, 2019 and 2018, accrued expenses and other current liabilities were comprised of the following (in thousands): 2019 2018 Accrued compensation $ 1,287 $ 1,303 Accrued vendors and other expenses 1,323 806 Accrued expenses and other current liabilities $ 2,610 $ 2,109 |
Schedule of Right of Use Assets, Machinery and Equipment, Net | At December 31, 2019 and 2018, rights-of-use assets, machinery and equipment, net, were comprised of the following (in thousands): 2019 2018 Machinery and equipment $ 1,215 $ 1,562 Right-of-use assets for operating leases (1) 2,856 - Accumulated depreciation and amortization (343 ) (948 ) Right-of-use assets, machinery and equipment, net $ 3,728 $ 614 (1) Oncocyte recorded certain right-of-use assets and liabilities in accordance with ASC 842 (see Notes 5 and 10). |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of Aggregate Use of Fees Charged | In the aggregate, Lineage charged Use Fees to Oncocyte as follows (in thousands): Year Ended December 31, 2019 2018 Research and development $ 696 $ 882 General and administrative 438 375 Sales and marketing 108 310 Total use fees $ 1,242 $ 1,567 |
Equity Method Investment in R_2
Equity Method Investment in Razor Genomics, Inc. (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Condensed Balance Sheet Information | The following table summarizes Razor’s standalone selected balance sheet information as of December 31, 2019 (in thousands): Condensed Balance Sheet information (1) 2019 Current assets $ 4,000 Noncurrent assets - $ 4,000 Current liabilities $ - Noncurrent liabilities - Stockholders’ equity 4,000 $ 4,000 (1) |
Loan Payable to Silicon Valle_2
Loan Payable to Silicon Valley Bank (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Future Cash Payments of Loan Payable | As of December 31, 2019, principal and interest payments due on the loan payable in each of the next three years are as follows (in thousands): Year Ending December 31, Loan Payments 2020 $ 1,258 2021 1,561 2022 578 Total payments of principal and interest 3,397 Less: amounts representing interest (197 ) Total payments of principal before deferred financing costs 3,200 Less: deferred financing costs (170 ) Total loan payable, net of deferred financing costs $ 3,030 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schdule of Stock Options Outstanding, Vested and Exercisable | Additional information regarding Oncocyte’s outstanding stock options and vested and exercisable stock options is summarized below: As of December 31, 2019 Options Outstanding Exercise Prices Number of Shares (in thousands) Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $1.34 - $1.98 801 8.36 $ 1.82 $2.01 - $2.80 3,647 8.42 2.32 $3.06 - $5.95 2,831 8.03 3.98 $1.34 - $5.95 7,279 8.26 $ 2.91 |
Summary of Stock-based Compensation Expense | Oncocyte recorded stock-based compensation expense in the following categories on the accompanying statements of operations for the years ended December 31, 2019 and 2018 (in thousands): 2019 2018 Research and development $ 612 $ 50 General and administrative 2,272 1,154 Sales and marketing 111 275 Total stock-based compensation expense $ 2,995 $ 1,479 |
Schedule of Assumptions Used to Calculate Fair Value of Stock Options | 2019 2018 Expected life (in years) 6.03 5.65 Risk-free interest rates 2.05 % 2.85 % Volatility 79.02 % 75.51 % Dividend yield - % - % |
2010 Plan Activity [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Stock Option Activity | A summary of Oncocyte equity awards activity under the 2010 Plan and related information follows (in thousands except weighted average exercise price): Options Shares Available for Grant Number of Options Outstanding Weighted Average Exercise Price Balance at January 1, 2018 1,384 3,390 $ 3.25 Options granted (1,446 ) 1,446 2.39 Options exercised - (20 ) 2.84 Options forfeited, cancelled or expired 138 (645 ) 3.96 Termination of the 2010 Plan (76 ) - - Balance at December 31, 2018 - 4,171 $ 2.92 Options exercised - (575 ) 1.64 Options forfeited, cancelled or expired - (405 ) 3.43 Balance at December 31, 2019 - 3,191 $ 3.08 Exercisable at December 31, 2019 2,206 $ 3.20 |
2018 Incentive Plan Activity [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Stock Option Activity | A summary of 2018 Incentive Plan activity and related information follows (in thousands except weighted average exercise price): Options Shares Available for Grant Number of Options and RSUs Outstanding Weighted Average Exercise Price Balance at January 1, 2018 - - $ - Approval of 2018 Incentive Plan 5,000 - - Options granted (411 ) 411 2.21 Options exercised - - - Options forfeited, cancelled or expired 50 (50 ) 1.95 Balance at December 31, 2018 4,639 361 2.21 Option pool increase 6,000 - - Options granted (4,089 ) 4,089 2.87 RSUs granted (170 ) 85 n/a Options exercised - - - Options forfeited and cancelled 362 (362 ) 3.42 Balance at December 31, 2019 6,742 4,173 $ 2.77 Exercisable at December 31, 2019 396 $ 2.70 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Deferred Tax Assets and Liabilities | The primary components of the deferred tax assets and liabilities at December 31, 2019 and 2018 were as follows (in thousands): 2019 2018 Deferred tax assets/(liabilities): Net operating loss carryforwards and capital loss carryforwards $ 19,391 $ 15,204 Research and development credit carryforwards 2,190 2,444 Marketable equity securities 394 393 Patents and fixed assets 949 523 Stock-based and other compensation 1,166 1,326 Equity method investment in Razor 81 - Right-of-use liability 764 - Right-of-use asset (749 ) - Total 24,186 19,890 Valuation allowance (24,186 ) (19,890 ) Net deferred tax asset $ - $ - |
Schedule of Income Tax Reconciliation | Income taxes differed from the amounts computed by applying the applicable U.S. federal income tax rates indicated to pretax losses from operations as a result of the following: 2019 2018 Computed tax benefit at federal statutory rate 21 % 21 % Permanent differences (2 )% - % State tax benefit 2 % 10 % Research and development credits (2 )% 1 % Other - % (1 )% Adjust basis for available-for-sale-securities - % - % Change in valuation allowance (19 )% (31 )% - % - % |
Schedule of Unrecognized Tax Benefit | A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows (in thousands): December 31, 2019 2018 (in thousands) Balance at the beginning of the year $ - $ - Additions based on tax positions related to current year 1,301 - Adjustments based on tax positions related to prior years 1,587 - Balance at end of year $ 2,888 $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Supplemental Cash Flow Information Related to Operating and Financing Lease | The following table presents supplemental cash flow information related to operating and financing leases for the year ended December 31, 2019 (in thousands): Cash paid for amounts included in the measurement of financing lease liabilities: Operating cash flows from financing leases $ 35 Financing cash flows from financing leases 454 Right-of-use assets obtained in exchange for right-of-use lease liabilities: Operating leases, including the Irvine Lease $ 2,866 |
Schedule of Supplemental Balance Sheet Information Related to Operating and Financing Leases | The following table presents supplemental balance sheet information related to operating and financing leases as of December 31, 2019 (in thousands, except lease term and discount rate): Financing Leases Machinery and equipment, gross $ 209 Accumulated depreciation (93 ) Machinery and equipment, net $ 116 Current liabilities $ 71 Noncurrent liabilities 58 Total financing lease liabilities $ 129 Weighted average remaining lease term Operating leases 7.3 years Financing leases 1.8 years Weighted average discount rate Operating leases 11.2 % Financing leases 9.6 % |
Schedule of Future Minimum Lease Commitments for Operating and Financing Leases | The following table presents future minimum lease commitments as of December 31, 2019 (in thousands): Operating Leases Financing Leases Year Ending December 31, 2020 $ 394 $ 81 2021 879 60 2022 951 - 2023 850 - 2024 839 Thereafter 2,463 - Total minimum lease payments 6,376 141 Less: amounts representing interest (2,279 ) (12 ) Less: Tenant Improvement Allowance, net of administrative fee (1,320 ) (1) - Present value of net minimum lease payments $ 2,777 $ 129 (1) In accordance with ASC 842, a tenant allowance should be included in the measurement of the consideration in the lease agreement at inception and reflected as a reduction to the right-of-use asset and a corresponding reduction to the right-use-liability if the lessee both controls the construction of the tenant improvements and the expects to fully earn all of the tenant allowance. Oncocyte has met both conditions at the inception of the Irvine Lease and has recorded the Tenant Improvement Allowance accordingly. As the cash for the Tenant Improvement Allowance is received from the lessor under the terms of the Irvine Lease, the corresponding right-of-use liability will increase and will be amortized as part of the right-of use asset and liability amortization over the term of the Irvine Lease in accordance with ASC 842. |
Organization, Description of _2
Organization, Description of the Business and Liquidity (Details Narrative) - USD ($) $ in Thousands | Mar. 20, 2020 | Nov. 13, 2019 | Jan. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Schedule of Equity Method Investments [Line Items] | ||||||
Accumulated deficit | $ (93,745) | $ (71,319) | ||||
Cash and cash equivalents | 22,072 | 8,034 | ||||
Marketable equity securities | $ 379 | $ 428 | ||||
Stock Purchase Agreements [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Number of shares sold | 5,058,824 | |||||
Proceeds from offering | $ 8,600 | |||||
Subsequent Event [Member] | Stock Purchase Agreements [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Number of shares sold | 3,523,776 | |||||
Proceeds from offering | $ 7,600 | |||||
Razor Genomics, Inc. [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity ownership percentage | 25.00% | 25.00% | ||||
Piper Sandler & Co [Member] | Subsequent Event [Member] | Equity Distribution Agreement [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Proceeds from offering | $ 25,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | Nov. 28, 2018shares | Dec. 31, 2019USD ($)ft²shares | Dec. 31, 2018USD ($) | Sep. 30, 2019 | Feb. 17, 2017 |
Subsidiary, Sale of Stock [Line Items] | |||||
Equity method investment, description | The equity method applies to investments in common stock or in-substance common stock if Oncocyte exercises significant influence over, but does not control, the entity, typically represented by ownership of 20% or more of the voting interests of a company. | ||||
Cash and cash equivalents balances | $ 22,072 | $ 8,034 | |||
Unrealized loss on marketable equity securities | (49) | (427) | |||
Marketable equity securities, fair market value | 379 | 428 | |||
Intangible assets noncash charge | 625 | ||||
Payment of interest and penalties | |||||
Income tax rate | 21.00% | 21.00% | |||
Number of operating segment | ft² | 1 | ||||
Lease term description | Oncocyte continues to use (i) 75% or greater to determine whether the lease term is a major part of the remaining economic life of the underlying asset and (ii) 90% or greater to determine whether the present value of the sum of lease payments is substantially of the fair value of the underlying asset. | ||||
Razor Genomics, Inc. [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Equity ownership percentage | 25.00% | 25.00% | |||
Maximum [Member] | Machinery and Equipment [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Estimated useful life of plant and equipment | 10 years | ||||
Maximum [Member] | Equipment [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Lease term | 5 years | ||||
Minimum [Member] | Machinery and Equipment [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Estimated useful life of plant and equipment | 3 years | ||||
Minimum [Member] | Equipment [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Lease term | 3 years | ||||
Lineage Cell Therapeutics, Inc [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Equity ownership percentage | 50.00% | ||||
Equity method investment, description | As of the date of this Report, Lineage's ownership interest in Oncocyte is below 10%. | ||||
Number of shares purchased | shares | 35,326 | ||||
Common stock dividend | $ 96 | ||||
Shares held as available-for-sale securities, shares | shares | 353,264 | ||||
Marketable equity securities, fair market value | $ 379 | ||||
Lineage Cell Therapeutics, Inc [Member] | Maximum [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Equity ownership percentage | 20.00% | ||||
AgeX Therapeutics, Inc [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares held as available-for-sale securities, shares | shares | 35,326 | ||||
Marketable equity securities, fair market value | $ 379 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 22,072 | $ 8,034 | |
Restricted cash included in deposits and other noncurrent assets (see Note 10) | 1,700 | ||
Total cash, cash equivalents, and restricted cash as shown in the statements of cash flows | $ 23,772 | $ 8,034 | $ 7,600 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share of Common Stock (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 1,589,000 | 3,578,000 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 3,384,000 | 4,035,000 |
Selected Balance Sheet Compon_3
Selected Balance Sheet Components (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Depreciation expense | $ 344 | $ 438 |
Write off in depreciated machinery and equipment | 900 | |
Laboratory Equipment [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Financing leases | $ 209 |
Selected Balance Sheet Compon_4
Selected Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Prepaid insurance | $ 80 | $ 102 |
Prepaid vendors, deposits and service agreements | 389 | |
Other | 36 | 78 |
Total prepaid expenses and other current assets | $ 505 | $ 180 |
Selected Balance Sheet Compon_5
Selected Balance Sheet Components - Schedule of Deposits and Other Noncurrent Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Restricted cash and security deposit for the Irvine Lease (Note 10) | $ 1,850 | |
Long-term prepaid maintenance contracts | 268 | 262 |
Other | 93 | |
Total deposits and other noncurrent assets | $ 2,211 | $ 262 |
Selected Balance Sheet Compon_6
Selected Balance Sheet Components - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Accrued compensation | $ 1,287 | $ 1,303 |
Accrued vendors and other expenses | 1,323 | 806 |
Total accrued expenses and other current liabilities | $ 2,610 | $ 2,109 |
Selected Balance Sheet Compon_7
Selected Balance Sheet Components - Schedule of Right of Use Assets, Machinery and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |||
Machinery and equipment | $ 1,215 | $ 1,562 | |
Right-of-use assets for operating leases | [1] | 2,856 | |
Accumulated depreciation and amortization | (343) | (948) | |
Right-of-use assets, machinery and equipment, net | $ 3,728 | $ 614 | |
[1] | Oncocyte recorded certain right-of-use assets and liabilities in accordance with ASC 842 (see Notes 5 and 10). |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Nov. 13, 2019 | Nov. 28, 2018 | Jul. 31, 2018 | Mar. 28, 2018 | Mar. 31, 2019 | Feb. 28, 2019 | May 31, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 17, 2017 |
Related Party Transaction [Line Items] | |||||||||||
Lease payment | $ 35 | ||||||||||
Liquidated damages owed | $ 300 | ||||||||||
Broadwood Partners, L.P [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of shares purchased | 1,176,471 | ||||||||||
Broadwood Partners, L.P. and George Karfunkel [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Equity ownership percentage | 5.00% | ||||||||||
Ronald Andrews [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Consulting fees | $ 400 | ||||||||||
Common Stock [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Number of shares purchased | 15,793,000 | 9,192,000 | |||||||||
July 2018 Offering [Member] | Common Stock and Warrants [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Proceeds from sale of equity | $ 3,300 | ||||||||||
Sale of equity | 1,256,118 | ||||||||||
shares issued, price per share | $ 2.86 | ||||||||||
Number of common shares available in each separable unit | 1 | ||||||||||
Number of warrants to purchase stock in each separable unit | 1 | ||||||||||
Securities Purchase Agreement [Member] | Private Placement [Member] | Common Stock [Member] | Two Accredited Investors [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Sale of equity | 7,936,508 | ||||||||||
shares issued, price per share | $ 1.26 | ||||||||||
Proceeds from issuance of private placement | $ 10,000 | $ 2,000 | $ 8,000 | ||||||||
Stock Purchase Agreements [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Sale of equity | 5,058,824 | ||||||||||
Proceeds from offering | $ 8,600 | ||||||||||
Current Liabilities [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Allocated use fees payable | $ 2,100 | ||||||||||
Lineage Cell Therapeutics, Inc [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Markup rate on allocated costs | 5.00% | ||||||||||
Term of payment | 30 days | ||||||||||
Interest rate charged on unpaid and overdue invoices | 15.00% | ||||||||||
Equity ownership percentage | 50.00% | ||||||||||
Number of shares purchased | 35,326 | ||||||||||
Lineage Cell Therapeutics, Inc [Member] | Shared Facilities Agreement [Member] | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Lease payment | $ 2,100 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Aggregate Use of Fees Charged (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | ||
Research and development | $ 6,794 | $ 6,514 |
General and administrative | 13,281 | 7,007 |
Sales and marketing | 2,164 | 1,681 |
Lineage Cell Therapeutics, Inc [Member] | ||
Related Party Transaction [Line Items] | ||
Research and development | 696 | 882 |
General and administrative | 438 | 375 |
Sales and marketing | 108 | 310 |
Total Use Fees | $ 1,242 | $ 1,567 |
Equity Method Investment in R_3
Equity Method Investment in Razor Genomics, Inc. (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock value | $ 124,583 | $ 74,742 | |
Equity method investment in Razor | 10,964 | ||
Shares issued, value | 48,850 | $ 13,592 | |
Purchase Agreement [Member] | |||
Common stock value | 5,000 | ||
Development Agreement [Member] | |||
Clinical trial expense reserve amount | 4,000 | ||
Development Agreement [Member] | Maximum [Member] | |||
Estimated clinical trial expense | 12,000 | ||
Laboratory Agreement [Member] | |||
Payment obligation amount | $ 450 | ||
Lease expiration period | Mar. 31, 2023 | ||
Razor Genomics, Inc. [Member] | |||
Equity ownership percentage | 25.00% | 25.00% | |
Stock purchase price | $ 10,000 | $ 10,000 | |
Equity method investment in Razor | 11,245 | ||
Preliminary coverage milestone payment | 1,000 | ||
Transaction expenses | $ 245 | ||
Estimated useful life of Razor assay | P10Y | ||
Razor Genomics, Inc. [Member] | Preferred Stock [Member] | |||
Equity method investment in Razor | $ 10,000 | ||
Razor Genomics, Inc. [Member] | Purchase Agreement [Member] | |||
Stock purchase price | $ 10,000 | ||
Razor Genomics, Inc. [Member] | Series A Convertible Preferred Stock [Member] | |||
Number of shares purchased | 1,329,870 | ||
Preferred stock, par value | $ 0.0001 | ||
Encore Clinical, Inc. [Member] | Development Agreement [Member] | |||
Equity method investment, description | If the issuance of shares of Oncocyte common stock having a market value of $5 million would require Oncocyte to issue a number of shares that, when combined with any shares issuable under the Development Agreement discussed below, would exceed 19.99% of the issued and outstanding shares of Oncocyte common stock or the outstanding voting power of its shares as of the date of the Purchase Agreement, Oncocyte may deliver a number of shares of common stock that would not exceed that combined 19.99% limit and an amount of cash necessary to bring the combined value of cash and shares to $5 million. | ||
Milestone payment | $ 1,000 | ||
Equity method investment in Razor | $ 4,000 | ||
Encore Clinical, Inc. [Member] | Development Agreement [Member] | Minority Shareholders [Member] | |||
Equity method investment, description | If the issuance of shares of our common stock having a market value of $3 million would require us to issue a number of shares that, when combined with any shares we issued under the Purchase Agreement and the Minority Shareholder Purchase Agreements, would exceed 19.99% of the issued and outstanding shares of Oncocyte common stock or the outstanding voting power of its shares as of the date of the Purchase Agreement, Oncocyte may deliver a number of shares of our common stock that would not exceed that combined 19.99% limit and an amount of cash necessary to bring the combined value of cash and shares to $3 million. | ||
Milestone payment description | In the event Razor receives the final positive coverage decision from CMS/MolDx for reimbursement of patient costs of DetermaRx™ within 12 months after the Initial Closing, Oncocyte will pay Encore $4 million ("CMS Final Milestone Payment"). | ||
Shares issued, value | $ 3,000 | ||
Additional funding amount | $ 3,000 |
Equity Method Investment in R_4
Equity Method Investment in Razor Genomics, Inc. - Schedule of Condensed Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current assets | $ 22,956 | $ 8,642 | ||
Total assets | 39,859 | 9,518 | ||
Current liabilities | 4,440 | 5,561 | ||
Stockholders’ equity | 30,838 | 3,423 | $ 4,403 | |
Total liabilities and shareholders' equity | 39,859 | $ 9,518 | ||
Razor Genomics, Inc. [Member] | ||||
Current assets | [1] | 4,000 | ||
Noncurrent assets | [1] | |||
Total assets | [1] | 4,000 | ||
Current liabilities | [1] | |||
Noncurrent liabilities | [1] | |||
Stockholders’ equity | [1] | 4,000 | ||
Total liabilities and shareholders' equity | [1] | $ 4,000 | ||
[1] | The condensed balance sheet information of Razor as of December 31, 2019 is provided for informational purposes only. Razor is not included in Oncocytes balance sheet as of December 31, 2019 because Razor is accounted for under the equity method of accounting and not consolidated with Oncocytes financial statements for any period presented. |
Loan Payable to Silicon Valle_3
Loan Payable to Silicon Valley Bank (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 17, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 23, 2017 | Feb. 21, 2017 |
Debt Instrument [Line Items] | |||||
Amortization of deferred financing costs | $ 59 | $ 77 | |||
Deferred financing costs | 170 | ||||
Loss on extinguishment of debt | $ (153) | ||||
Amended Loan Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maturity date | Mar. 31, 2022 | ||||
Deferred financing costs | $ 170,000 | ||||
Line of credit, description | Oncocyte may prepay in full the outstanding principal balance at any time, subject to a prepayment fee equal to 3.0% of the outstanding principal balance if prepaid within one year after October 17, 2019, 2.0% of the outstanding principal balance if prepaid more than one year but less than two years after October 17, 2019, or 1.0% of the outstanding principal balance if prepaid two years or more after October 17, 2019. Any amounts borrowed and repaid may not be reborrowed. | ||||
Prime rate plus variable spread per annum | 4.75% | ||||
Interest rate description | Payments of interest only on the principal balance will be due monthly from the draw date through March 31, 2020 followed by 24 monthly payments of principal and interest, provided, however, that if the Tranche 2 Milestone is achieved the interest only payment period will be extended through September 30, 2020 followed by 18 equal monthly payments of principal plus interest. The outstanding principal balance of the loan will bear interest at a stated floating annual interest equal to (a) the greater of 0.75% above the prime rate or 4.25% for Tranche 1 loans, or (b) the greater of the prime rate or 5% per annum for Tranche 2 loans. | ||||
Loss on extinguishment of debt | $ 153 | ||||
Amended Loan Agreement [Member] | Bank Warrant [Member] | |||||
Debt Instrument [Line Items] | |||||
Warrants to purchase, shares | 98,574 | ||||
Warrant exercise price, per share | $ 1.69 | ||||
Debt instrument, final payment | $ 200 | ||||
Amended Loan Agreement [Member] | Tranche One [Member] | |||||
Debt Instrument [Line Items] | |||||
Secured credit facility | 3,000 | ||||
Repayment of remaining balance | 400 | ||||
Debt instrument, final payment | 116 | ||||
Amended Loan Agreement [Member] | Tranche Two [Member] | |||||
Debt Instrument [Line Items] | |||||
Secured credit facility | 2,000 | ||||
Additional equity capital | $ 20,000 | ||||
Line of credit, description | The credit line under the Amended Loan Agreement may be increased by an additional $2 million ("Tranche 2") if Oncocyte obtains at least $20 million of additional equity capital, as was the case with the original Loan Agreement, and a positive final coverage determination is received from the Centers for Medicate and Medicaid Services for the Razor assay at a specified minimum price point per test (the "Tranche 2 Milestone"), and Oncocyte is not in default under the Amended Loan Agreement. | ||||
Interest rate | 5.00% | ||||
Amended Loan Agreement [Member] | Tranche Two [Member] | Bank Warrant [Member] | |||||
Debt Instrument [Line Items] | |||||
Warrant exercise price, per share | $ 0.02 | ||||
Diluted equity outstanding | $ 1,000 | ||||
Warrants [Member] | |||||
Debt Instrument [Line Items] | |||||
Warrants to purchase, shares | 7,321 | 8,247 | |||
Warrant exercise price, per share | $ 5.46 | $ 4.85 | |||
Deferred financing costs | 62 | ||||
Aggregate deferred financing costs | $ 196 | ||||
Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Warrant exercise price, per share | $ 1.69 | ||||
Loan and Security Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Amount borrowed | $ 2,000 | ||||
Periodic payment term | Payments of interest only on the principal balance were due monthly from the draw date through October 31, 2017, and, beginning on November 1, 2017 | ||||
Periodic payments of principal and interest | $ 67 | ||||
Debt instrument, maturity date | Apr. 1, 2020 | ||||
Amortization of deferred financing costs | $ 116 | ||||
Prepayment fee if prepaid two years or more | 1.00% | ||||
Interest rate on obligations due to bank | 5.00% | ||||
Loan and Security Agreement [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Minimum legal judgments or legal actions amount triggering loan default | $ 50 |
Loan Payable to Silicon Valle_4
Loan Payable to Silicon Valley Bank - Schedule of Future Cash Payments of Loan Payable (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 1,258 |
2021 | 1,561 |
2022 | 578 |
Total payments of principal and interest | 3,397 |
Less: amounts representing interest | (197) |
Total payments of principal before deferred financing costs | 3,200 |
Less: deferred financing costs | (170) |
Total loan payable, net of deferred financing costs | $ 3,030 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock par value | ||
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, shares authorized | 85,000,000 | 85,000,000 |
Common stock par value | ||
Common stock, shares issued | 57,032,000 | 40,664,000 |
Common stock, shares outstanding | 57,032,000 | 40,664,000 |
Common stock purchase warrants, shares issued | 3,383,913 | |
Common stock purchase warrants, shares outstanding | 3,383,913 | |
Warrant expiry date | Mar. 23, 2027 | |
Exercise of stock options | $ 943 | $ 58 |
Common Stock [Member] | ||
Exercise of stock options, shares | 575,000 | 20,000 |
Exercise of stock options | $ 943 | $ 58 |
Minimum [Member] | ||
Common stock purchase warrants, exercise price | $ 1.69 | |
Maximum [Member] | ||
Common stock purchase warrants, exercise price | $ 5.50 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock option weighted-average period | 8 years 3 months 4 days | ||
Stock options description | The price at which Restricted Stock may be issued or sold will be not less than 100% of fair market value. | ||
Exercise prices ranging, lower limit | $ 1.34 | ||
Exercise prices ranging, upper limit | $ 5.95 | ||
Performance-based options outstanding | 7,279,000 | ||
Unrecognized compensation expense | $ 6,500 | $ 2,700 | |
Unrecognized compensation expense recognized over a weighted-average period | 2 years 7 months 6 days | 3 years 3 months 19 days | |
Fair value option exercise price per share | $ 2.01 | $ 1.46 | |
Stock Appreciation Rights (SARs) [Member] | |||
Number of option granted during the period | 1,000,000 | ||
Stock option weighted-average period | 10 years | ||
Restricted Stock Units (RSUs) [Member] | |||
Number of option granted during the period | 500,000 | ||
2010 Stock Option Plan [Member] | |||
Common stock, shares authorized | 5,200,000 | ||
2010 Stock Option Plan [Member] | Employees and Consultants [Member] | |||
Exercise prices ranging, lower limit | 2.30 | ||
Exercise prices ranging, upper limit | $ 3.15 | ||
2018 Incentive Plan Activity [Member] | |||
Number of common stock reserved for future issuance | 11,000,000 | ||
Number of option granted during the period | 4,089,000 | 411,000 | |
Stock options description | The exercise price of stock options granted under the 2018 Incentive Plan must be equal to the fair market of Oncocyte common stock on the date the option is granted. In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes of Oncocyte stock, the exercise price of any incentive stock option must be at least 110% of the fair market value of the common stock on the grant date, and the term of the option may be no longer than five years. | ||
Fair market value of common stock percentage | 110.00% | ||
Option vested | |||
Performance-based options outstanding | 4,173,000 | 361,000 | |
Fair value option exercise price per share | $ 2.87 | $ 2.21 | |
2018 Incentive Plan Activity [Member] | Maximum [Member] | |||
Stock options exercisable | $ 100 | ||
Performance-Based Options [Member] | |||
Option vested | 47,500 | ||
Share based compensation expenses | $ 101 | ||
Performance-Based Options [Member] | Employees [Member] | |||
Performance-based options outstanding | 802,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of options outstanding, end of period | 7,279,000 | |
Weighted average exercise price, option granted | $ 2.01 | $ 1.46 |
Weighted average exercise price, outstanding end of period | $ 2.91 | |
2010 Plan Activity [Member] | ||
Shares available for grant options, beginning of period | 1,384,000 | |
Shares available for grant options granted | (1,446,000) | |
Shares available for grant options exercised | ||
Shares available for grant options forfeited canceled and expired | 138,000 | |
Shares available for grant options, termination of the 2010 plan | (76,000) | |
Shares available for grant outstanding, end of period | ||
Number of options outstanding, beginning of period | 4,171,000 | 3,390,000 |
Number of options outstanding, option granted | 1,446,000 | |
Number of options outstanding, options exercised | (575,000) | (20,000) |
Number of options outstanding, options forfeited and canceled | (405,000) | (645,000) |
Number of options outstanding, termination of the 2010 plan | ||
Number of options outstanding, end of period | 3,191,000 | 4,171,000 |
Number of options outstanding, exercisable, end of period | 2,206,000 | |
Weighted average exercise price, options outstanding, beginning of period | $ 2.92 | $ 3.25 |
Weighted average exercise price, option granted | 2.39 | |
Weighted average exercise price, options exercised | 1.64 | 2.84 |
Weighted average exercise price, options forfeited, canceled and expired | 3.43 | 3.96 |
Weighted average exercise price, options termination of the 2010 plan | ||
Weighted average exercise price, outstanding end of period | 3.08 | $ 2.92 |
Weighted average exercise price, exercisable, end of period | $ 3.20 | |
2018 Incentive Plan Activity [Member] | ||
Shares available for grant options, beginning of period | 4,639,000 | |
Shares available for grant outstanding, approval of 2018 incentive plan | 5,000,000 | |
Shares available for grant option pool increase | 6,000,000 | |
Shares available for grant options granted | (4,089,000) | (411,000) |
Shares available for grant options RSUs granted | (170,000) | |
Shares available for grant options exercised | ||
Shares available for grant options forfeited canceled and expired | 362,000 | 50,000 |
Shares available for grant outstanding, end of period | 6,742,000 | 4,639,000 |
Number of options outstanding, beginning of period | 361,000 | |
Number of options outstanding, approval of 2018 incentive plan | ||
Number of options outstanding, option pool increase | ||
Number of options outstanding, option granted | 4,089,000 | 411,000 |
Number of options outstanding, option rsus granted | 85,000 | |
Number of options outstanding, options exercised | ||
Number of options outstanding, options forfeited and canceled | (362,000) | (50,000) |
Number of options outstanding, end of period | 4,173,000 | 361,000 |
Number of options outstanding, exercisable, end of period | 396,000 | |
Weighted average exercise price, options outstanding, beginning of period | $ 2.21 | |
Weighted average exercise price, approval of 2018 incentive plan | ||
Weighted average exercise price, option pool increase | ||
Weighted average exercise price, option granted | 2.87 | 2.21 |
Weighted average exercise price, options exercised | ||
Weighted average exercise price, options forfeited, canceled and expired | 3.42 | 1.95 |
Weighted average exercise price, outstanding end of period | 2.77 | $ 2.21 |
Weighted average exercise price, exercisable, end of period | $ 2.70 |
Stock-Based Compensation - Schd
Stock-Based Compensation - Schdule of Stock Options Outstanding, Vested and Exercisable (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Options Outstanding, Weighted-Average Exercise Price, Minimum | $ 1.34 |
Options Outstanding, Weighted-Average Exercise Price, Maximum | $ 5.95 |
Options Outstanding, Number of Shares | shares | 7,279,000 |
Options Outstanding, Weighted-Average Remaining Contractual Life (Years) | 8 years 3 months 4 days |
Options Outstanding, Weighted-Average Exercise Price, | $ 2.91 |
Exercise Price Range One [Member] | |
Options Outstanding, Weighted-Average Exercise Price, Minimum | 1.34 |
Options Outstanding, Weighted-Average Exercise Price, Maximum | $ 1.98 |
Options Outstanding, Number of Shares | shares | 801,000 |
Options Outstanding, Weighted-Average Remaining Contractual Life (Years) | 8 years 4 months 9 days |
Options Outstanding, Weighted-Average Exercise Price, | $ 1.82 |
Exercise Price Range Two [Member] | |
Options Outstanding, Weighted-Average Exercise Price, Minimum | 2.01 |
Options Outstanding, Weighted-Average Exercise Price, Maximum | $ 2.80 |
Options Outstanding, Number of Shares | shares | 3,647,000 |
Options Outstanding, Weighted-Average Remaining Contractual Life (Years) | 8 years 5 months 1 day |
Options Outstanding, Weighted-Average Exercise Price, | $ 2.32 |
Exercise Price Range Three [Member] | |
Options Outstanding, Weighted-Average Exercise Price, Minimum | 3.06 |
Options Outstanding, Weighted-Average Exercise Price, Maximum | $ 5.95 |
Options Outstanding, Number of Shares | shares | 2,831,000 |
Options Outstanding, Weighted-Average Remaining Contractual Life (Years) | 8 years 11 days |
Options Outstanding, Weighted-Average Exercise Price, | $ 3.98 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total stock-based compensation expense | $ 2,995 | $ 1,479 |
Stock Option Plan [Member] | Research and Development [Member] | ||
Total stock-based compensation expense | 612 | 50 |
Stock Option Plan [Member] | General and Administrative [Member] | ||
Total stock-based compensation expense | 2,272 | 1,154 |
Stock Option Plan [Member] | Sales and Marketing [Member] | ||
Total stock-based compensation expense | $ 111 | $ 275 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Assumptions Used to Calculate Fair Value of Stock Options (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Expected life (in years) | 6 years 11 days | 5 years 7 months 24 days |
Risk-free interest rates | 2.05% | 2.85% |
Volatility | 79.02% | 75.51% |
Dividend yield | 0.00% | 0.00% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Provision for income taxes | |||
Net operating loss carryforwards | 19,391 | 15,204 | |
Research and development credit carryforwards | 2,190 | 2,444 | |
Change in valuation allowance | 4,300 | $ 4,800 | |
Income tax other description | The amount of taxable income that can be offset by NOL carryforwards after a change in control (generally greater than 50% change in ownership within a three-year period) of a loss corporation. | ||
Uncertain tax benefits | 2,888 | ||
Accrued interest and penalties | |||
Federal [Member] | |||
Net operating loss carryforwards | $ 79,700 | ||
Net operating loss expiration period description | between 2030 and 2037 | ||
State [Member] | |||
Net operating loss carryforwards | $ 52,100 | ||
Net operating loss expiration period description | between 2029 and 2037 | ||
Federal and State [Member] | |||
Net operating loss carryforwards | $ 700 | ||
Net operating loss expiration period description | between 2020 and 2023 | ||
Research and development credit carryforwards | $ 1,400 | ||
Credit carryforward expiration term | between 2030 and 2039 | ||
Federal and State [Member] | Research and Development [Member] | |||
Research and development credit carryforwards | $ 1,500 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards and capital loss carryforwards | $ 19,391 | $ 15,204 |
Research and development credit carryforwards | 2,190 | 2,444 |
Marketable equity securities | 394 | 393 |
Patents and fixed assets | 949 | 523 |
Stock-based and other compensation | 1,166 | 1,326 |
Equity method investment in Razor | 81 | |
Right-of-use liability | 764 | |
Right-of-use asset | (749) | |
Total | 24,186 | 19,890 |
Valuation Allowance | (24,186) | (19,890) |
Net deferred tax asset (liability) |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Computed tax benefit at federal statutory rate | 21.00% | 21.00% |
Permanent differences | (2.00%) | 0.00% |
State tax benefit | 2.00% | 10.00% |
Research and development credits | (2.00%) | 1.00% |
Other | 0.00% | (1.00%) |
Adjust basis for available-for-sale-securities | 0.00% | 0.00% |
Change in valuation allowance | (19.00%) | (31.00%) |
Income tax benefit percentage | 0.00% | 0.00% |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Balance at the beginning of the year | ||
Additions based on tax positions related to current year | 1,301 | |
Adjustments based on tax positions related to prior years | 1,587 | |
Balance at end of year | $ 2,888 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Dec. 23, 2019USD ($)ft² | Dec. 31, 2019USD ($) | Mar. 31, 2023USD ($) |
Other Commitments [Line Items] | |||
Lease payments | $ 35,000 | ||
Laboratory Equipment [Member] | |||
Other Commitments [Line Items] | |||
Lease payments | 141,000 | ||
Subsequent Event [Member] | |||
Other Commitments [Line Items] | |||
Lease payments | $ 450,000 | ||
Office Lease Agreement [Member] | |||
Other Commitments [Line Items] | |||
Area of land | ft² | 26,800 | ||
Payments for rent | $ 61,640 | ||
Expenses and taxes description | Oncocyte is entitled to an abatement of its obligations to pay Expenses and Taxes while constructing improvements to the Premises constituting "Tenant's Work" under the Lease prior to the Commencement Date, except that (a) Oncocyte will be obligated to pay 43.7% of Expenses and Taxes during the period prior to the Commencement Date for its use of the second floor of the Premises, which is already built out as office space, and (b) the abatement will end prior to the Commencement Date if Oncocyte completes its "Tenant's Work" for its laboratory space and opens the ground floor for use. | ||
Payments of tenant improvement allowance | $ 1,340,000 | ||
Percentage of administrative fee paid on original cost of equipment | 1.50% | ||
Security deposit | $ 150,000 | ||
Line of credit | $ 1,700,000 | ||
Office Lease Agreement [Member] | Landlord [Member] | |||
Other Commitments [Line Items] | |||
Interest rate on lease agreement | 4.00% | ||
Office Lease Agreement [Member] | Monthly Rent [Member] | |||
Other Commitments [Line Items] | |||
Interest rate on lease agreement | 3.50% | ||
Office Lease Agreement [Member] | First Ten Calendar [Member] | |||
Other Commitments [Line Items] | |||
Interest rate on lease agreement | 50.00% | ||
Laboratory Agreement [Member] | |||
Other Commitments [Line Items] | |||
Payment obligation amount | $ 450,000 | ||
Lease expiration period | Mar. 31, 2023 | ||
License Agreement [Member] | |||
Other Commitments [Line Items] | |||
Royalty expenses description | The royalty rates will range from 3% to 5% depending upon the amount of cumulative net sales. The amount of royalties payable to Wistar will be reduced by the amount of any royalties that Oncocyte must pay to any third parties on the sale of the licensed products, but subject to a maximum reduction of 50%. The obligation to pay royalties to Wistar will terminate on a licensed product by-licensed product and country-by-country basis until the later of (i) the date a valid claim of a licensed patent covering the licensed product no longer exists, or (ii) the tenth (10th) anniversary of the first commercial sale of the licensed product in each country. |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Supplemental Cash Flow Information Related to Operating and Financing Lease (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flows from financing leases | $ 35 | |
Financing cash flows from financing leases | 454 | $ 381 |
Operating leases, including the Irvine Lease | $ 2,866 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Supplemental Balance Sheet Information Related to Operating and Financing Leases (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Financing leases, Machinery and equipment, gross | $ 209 |
Financing leases, Accumulated depreciation | (93) |
Financing leases, Machinery and equipment, net | 116 |
Current liabilities | 71 |
Noncurrent liabilities | 58 |
Total financing lease liabilities | $ 129 |
Weighted average remaining lease term, Operating lease | 7 years 3 months 19 days |
Weighted average remaining lease term, Financing leases | 1 year 9 months 18 days |
Weighted average discount rate, Operating lease | 11.20% |
Weighted average discount rate, Financing leases | 9.60% |
Commitments and Contingencies_4
Commitments and Contingencies - Schedule of Future Minimum Lease Commitments for Operating and Financing Leases (Details) $ in Thousands | Dec. 31, 2019USD ($) | |
Other Commitments [Line Items] | ||
Present value of net minimum lease payments | $ 129 | |
Operating Lease [Member] | ||
Other Commitments [Line Items] | ||
2020 | 394 | |
2021 | 879 | |
2022 | 951 | |
2023 | 850 | |
2024 | 839 | |
Thereafter | 2,463 | |
Total minimum lease payments | 6,376 | |
Less amounts representing interest | (2,279) | [1] |
Less: Tenant Improvement Allowance, net of administrative fee | (1,320) | |
Present value of net minimum lease payments | 2,777 | |
Financing Lease [Member] | ||
Other Commitments [Line Items] | ||
2020 | 81 | |
2021 | 60 | |
2022 | ||
2024 | ||
Thereafter | ||
Total minimum lease payments | 141 | |
Less amounts representing interest | (12) | |
Less: Tenant Improvement Allowance, net of administrative fee | ||
Present value of net minimum lease payments | $ 129 | |
[1] | In accordance with ASC 842, a tenant allowance should be included in the measurement of the consideration in the lease agreement at inception and reflected as a reduction to the right-of-use asset and a corresponding reduction to the right-use-liability if the lessee both controls the construction of the tenant improvements and the expects to fully earn all of the tenant allowance. Oncocyte has met both conditions at the inception of the Irvine Lease and has recorded the Tenant Improvement Allowance accordingly. As the cash for the Tenant Improvement Allowance is received from the lessor under the terms of the Irvine Lease, the corresponding right-of-use liability will increase and will be amortized as part of the right-of use asset and liability amortization over the term of the Irvine Lease in accordance with ASC 842. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2020 | Mar. 20, 2020 | Feb. 29, 2020 | Jan. 31, 2020 | Jan. 10, 2020 | Jan. 02, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Common stock, par value | ||||||||
Stock issued during the period, value | $ 48,850 | $ 13,592 | ||||||
Common Stock [Member] | ||||||||
Number of shares purchased | 15,793,000 | 9,192,000 | ||||||
Stock issued during the period, value | $ 48,850 | $ 13,592 | ||||||
Subsequent Event [Member] | ||||||||
Number of shares purchased | 2,100,000 | |||||||
Share price | $ 2.63 | |||||||
Subsequent Event [Member] | Subscription Agreements [Member] | ||||||||
Number of shares purchased | 3,523,776 | |||||||
Common stock, par value | ||||||||
Share price | $ 2.156 | |||||||
Stock issued during the period, value | $ 7,600 | |||||||
Subsequent Event [Member] | Merger Agreements [Member] | ||||||||
Number of shares purchased | 200 | 1,900 | ||||||
Cash | $ 7,000 | $ 6,400 | ||||||
Interest rate | 10.00% | |||||||
Consideration transfered | 11,400 | |||||||
Net cash holdback | $ 600 | 600 | ||||||
Stock holdback | $ 5,000 | |||||||
Payments of milestone | $ 1,500 | |||||||
Debt instrument, final payment | 3,000 | |||||||
Subsequent Event [Member] | Merger Agreements [Member] | Maximum [Member] | ||||||||
Cash | 6,000 | |||||||
Repayment of remaining balance | 1,500 | |||||||
Subsequent Event [Member] | Merger Agreements [Member] | Common Stock [Member] | ||||||||
Cash | $ 5,000 | |||||||
Subsequent Event [Member] | ATM Agreements [Member] | ||||||||
Number of shares purchased | 25,000 |