Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day. And welcome to the OncoCyte First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]

is event this note, being recorded. Please now Ms. would like to to over conference the turn I of Advisory. Prince Stephanie PCG Please go ahead, ma’am.

Stephanie Prince

XXXX discuss Thank you, for first operating to us everyone to and quarter highlights. OncoCyte’s Chuck. And today’s thank conference you financial recent results joining call

have release financial If release, not results the on today’s company’s the visit website seen Investor press press you -- please page.

company to to will President and conference would like remind Before statements that events. company’s call projections regarding turning facts CEO, Any are make the forward-looking the the and forward-looking statements Josh Riggs, statements. call not this you over are during future I historical that

We XX-K cause or events encourage including, Forms and filings, XX-Qs, those SEC to differ which actual results materially risk review in you may statements. the from these identify forward-looking company’s that company’s without limitation, described the specific to factors

from these may by to any and update results these Actual by be except law. statements. required differ intent OncoCyte forward-looking implied outcomes is disclaims forward-looking otherwise as expressly materially expressed may or obligation statements, or what

will that, to Josh? Riggs. call the With Josh over turn I

Josh Riggs

And highlights. Stephanie. everyone Thanks, to conference quarter first to discuss our call welcome XXXX our

we progress made our a and lightweight we structure review today’s improving has to will product high and path have pivoting business. scalable to market For cost margin OncoCyte call, faster the been infrastructure.

extra Before we go on our context to little in there, to shift a like I would provide strategy. try

service more substantially While consume business other capital. large to many continue typical They lab and significant have companies the pursuing historically losses are model. also generated diagnostic

long-term. higher sustainable little allow with profit capital, generate us we OncoCyte’s to kitted the scale relatively should are product margins over that revenue commercial while models our

investment costs was and in right-size adverse continue expense. in reining annual million in our pared We operating the down a face consolidated portfolio to and we market eliminating company, $XX product operations, lab As over QX our conditions, critical. company, focusing

capital towards Going spend managing down forward, driving model. to continue will efficient and we a focus on

was us allowed meeting We million that of in was patients. and needs shift continued raise. the That market in to of and strategy at continued the equity and $XX.XX insiders. complete efforts company the These composed coverage topholders a to warrant commitment appreciate to

Now on DetermaIO talked to we was last about RUO our product. portfolio. call a kitted product our On

are that with and of assay are we We announce to first to happy phase completed optimizing for the are now manufacturing. development prepare the

the of continues results is publication best of collected samples recent trial the of to randomized in the II believe DetermaIO colorectal Phase from measure reviewed tumor this DetermaIO microenvironment. the build its metastatic was the evident a applying to class AtezoTRIBE that We clinical in case peer study cancer. in

were in The potentially the Cancer current Clinical responders standard-of-care to biomarkers. showed therapy DetermaIO Research of results utility ICI and than more identifying published in

at the for response Additionally, we presented exploring four the microenvironment potential American the and its Cancer tumor for Annual Research. therapeutic Meeting Association of implications abstracts

Also data blood DetermaCNI, metastatic applying study can to identify tests not therapy. at AACR was pancreatic our results that based presented our cancer exciting to patients indicate responding highlighting tests

don’t believe have which blood-only tumor no to need tissue, since an required. for that access make it alternative for a is DetermaCNI attractive precious monitoring, we is or researchers conserve solution to efficacy typing will upfront

the transplant to on pace Our we is kitted manufacturing and way next through for as pursue their development months. management test VitaGraft of reimbursement. of CMS work three I transplant through version assays The Phase the into continue in is

to is this expected first technology forward and in date here early making half access begin of later labs year, Revenue to available expected looking the are abroad. XXXX. the in an to launch We U.S. our research

carry our revenue strategy opportunities current our is believe and burn growth will revenue reimbursement our into reduce licensing market us Gaining the and and XXXX. test our product We for first optimized -- half partnership generating well of bringing to our attract ensures generate will portfolio external resources essential. were to

this financials. John our to point, call review the to turn Anish like would to over I At

Anish John

thanks call. for Hi, everybody, joining and our

seen our decline that XXXX. all in the year-over-year begin has saying we operating optimize largely significant formal This efforts Before review reduce and operating of spend a across management’s to definitively start categories our financials, of like expense successful to QX overall the OncoCyte portfolio expenses. I’d of reflects by

of the our revenues that, $X.X for year-over-year. of preliminary million, representing approximately With consolidated XX% quarter first XXXX decrease a were

the March the revenue XXXX. continuing related operations XX, $X.X three DetermaRx pharma for revenue, ended was to services Excluding million months

revenues approximately million, DetermaRx services primarily customers. performed of our testing first diagnostic and from and for pharma cost for services Cost $X.X were we tests the the quarter of

year-over-year Research product and focused ended laboratory development months $X.X the decreased XXXX. three the spend decrease XX to due primarily expense March million, CLIA XX% expenses in and to development from million $X.X in

and $X.X administrative to directly not related expense to XXXX. and XX% General year-over-year or to management’s million million, activities commercial reflecting decreased XXXX throughout from spending control into $X.X efforts development product

year-over-year during to XX% decreased to attributable quarter of due development expense of $X.X and first Genomics decrease product the marketing DetermaRx mainly million, the of in commercialization XXXX. the sale efforts Razor and $X.X million and from to Sales

to I’d GAAP adjusted Now Non-GAAP operating same million as and like to for non-GAAP loss $X.X the as loss a first $X.X the as change of quarter was first our the turn to decrease the $X.X quarter analysis. in million, of reported $X.X XXXX. period compared quarter income of a a first for was million XXXX. compared $XX.X operating of million, GAAP million, to for

for quarter income $X quarter, GAAP share, first the or the net reported we of a a a XXXX. compared to or of first per million of as net $X.XX $XX.X loss million For $X.XX share

non-GAAP our We within and release. losses have included earnings tables these financial GAAP in provided the reconciliation operating a between

of balance out Turning the sheet.

of activities had for the exit $XX.X we Razor expenses a cash equivalents and represents non-recurring cash in XXXX, million. million securities and versus XX, marketable March cash, year XXXX of QX the XX% and $X.X As prior related operating reduction Net used includes of business. was to

guidance cash million that you $X average in we guided average quarterly in back the burn million levels now and operating the in to back revising below XXXX quarterly quarterly the of improvement $X to burn half continued XXXX anticipate in of half We our previously. burn versus are

that I to XX, been during significant Lastly, It’s position I of privilege particularly CFO of the June last serve my this of a will period over XXXX. be quarters. OncoCyte transition, wanted from OncoCyte to resigning effective few share

taken I and From in but these our on needed patients. optimize burn an to organization, bring key we operational deliver efforts portfolio commitment to and our on our finance perspective, have confident market products steps a put had successfully our that position the difficult the rate. shareholders am reduce best to right-size of us our to behalf product

positioned and realize key milestones ahead serving our the and of thank shareholders are the to privilege a we CFO. here of know Directors to take colleagues value want as I OncoCyte’s Board for our OncoCyte, I my at to well moment

That concludes for my your the questions. review of to Operator our return call and I financial the will highlights

Operator

first question come And Matson with the Needham. Instructions] ahead. [Operator will Mike Please go from

Joseph Conway

Josh. Hey, Hey, Anish.

Josh Riggs

Hi.

Joseph Conway

Just wanted to for way. is -- on by oh, this Joseph Mike, sorry, the

Josh Riggs

Hi, Joe.

Anish John

Hi, Joe.

Joseph Conway

Hey.

kind to as obviously VitaGraft for up. maybe update expect in lined to Maybe an calendar the but get are just you shoes well reimbursement on DetermaIO the drop? a maybe. milestone the these We product and decision of what to first expecting in So the wanted RUO like future, have you guys

decision if revenue? contribute the materially to timeline whether or you first maybe could to frame maybe a bit, little it So to reimbursement be, first

Josh Riggs

would say months of I the about reimbursement process. in DetermaIO ahead the six are Yeah. products transplant

So of be to shoes would that be MolDX. of our from unique sort the a expectation is they a drop. would view product first of point IO the

more little time a So bit going review it. with to they take are as they that

quarter Any think, those announce yeah, that we So, MolDX hoping it’s aligned are I with kind one things. get we now, able to of we and are of reimbursement.

Joseph Conway

is feedback those the you programs? maybe know an maybe and EAP? rates, seven VitaGraft. EAP you just the on talk on sites ongoing those? at color VitaGraft both But about IO both could so, could been What’s Great. you IO confirm those Okay. of yeah, guess the have I from for And or How but maybe reorder that. if and I some around large

Josh Riggs

Yeah.

us to ask I questions our access institutions large wonderful sort oncology we the of multiple claim, of I networks. think it stick can a tool collaborative a without us think -- open-ended academic allows for pressure and with to and having is at early researchers specifically -- we the learning program

really are going product. exploring that of identifying DetermaIO respond we immunotherapy they are to towards new the are with utility its And and the they patients questions in nature -- sort move able and IRBs reliable find ask to that of and to we and

around I there. grow site think interest program enrollment continues there’s the and been DetermaIO in robust So to that

with an management, of lot a up opened same call for need ones new that to to has questions technology today we the early the last in to they on about there researchers the transplant talked -- alongside these test, unanswered questions community are having to and several patient program, there access the day-to-day it giving in access transplant the And management. that interest answer the ask

Joseph Conway

Okay.

Great. Okay. Maybe just one more very DetermaIO. you on much. Thank

it’s we have the traditional the to you TMB. as in reimbursement maybe been to while get assume seems closer and test I so maybe methods PD-LX about or six from So But away or outperform any decision. months EAP what potential that talking program,

those have We improved the accuracy that assays. obviously with combining seen has

methods? test So way other use test kind to marketing Thanks. look in to this that you currently the expect sense will with that you in the or diagnostic are of to combine

Josh Riggs

really No. question. It’s insightful a

done have amazing job away. their I attracting going imagine think are utility. go that to the today claims ever of improving an don’t and they that exist biomarkers CDX I

the point complicated I environment. think DetermaIO will be used clinical really and of clinical that context decision in

Joseph Conway

Okay. Great. Thank very you much.

Operator

Please Mason Carrico next from with go question Stephens. come The ahead. will

Mason Carrico

there? you provide the incremental overall or Hey, early around from the for DetermaIO guys. give color you potential those Maybe any interest can demand, just product could color conversations some customers

Josh Riggs

I clinical multiple PD-LX we that I to best non-small add trying I on. expressers that is a are and than think in greater Yeah. where decision indications XX% setting lung on is our a not published provide data alongside chemo, chemo This unique add o cancer. we do would in in cell I other make population information say you the

to adjuvant cancer value test the non-small they therapy. also been going that on then study, SWOG can say doctors do are a going to would It’s of over who’s the where actually the to patients seeing breast, I interest cell looking degree of rely having we identify well and to at anti-PD-LX triple-negative or pembrolizumab But in where Keytruda. respond there’s -- a are high in XXX lung

Mason Carrico

could the kind you have and key that Got think that baked the risks could are this. you shorten on do could into the it. runway? cash thinking then budget current about the you And potentially your color as view some items arise us But of just could help helpful. are and That’s what key about that provided runway what cash

Josh Riggs

Yeah.

going wasn’t first revenue have cash the the down year. next think I of brought that start we until primarily to the runway with expectation half

see burn flows kind And be ourselves -- I development see point this think or so as stage the should we relatively and predictable. cash we at in cash of so a I mean, that I into lumpiness -- that there, guess, there’s that. would there I this unknown always nothing of But at can foresee Anish? there’s unknowns the sort point but out

Anish John

of result we very operating saying see so mean, as -- a result of I at think, And coming expenses of an point. of the No. were to Josh are which in I’d confirm risks organically and efforts XXXX, sort I of are is obviously, rhythm two these or off direct we these savings an where in a operationally this terms predictable are get what organically, seeing starting

Mason Carrico

Thanks. it. That’s helpful. Got me. for it That’s

Josh Riggs

Thank you.

Anish John

Thank you.

Operator

The will ahead. come with next go BTIG. Mark question from Massaro Please

Vidyun Bais

guys. Thanks taking for is the for questions. on Hey, Vidyun Mark. This

So volumes space reporting organ are few across all broad-based transplant on in types. our other a companies pressures

the us updated space, just about liver what on a there you seeing? indication, I give thinking is wanted underpenetrated I can but about you how get Thanks. you your sense just are a So think to relatively views are

Josh Riggs

Yeah.

and billable, what’s version that not up reason the for so can again. begin on create why also of indications I the the topline in the for clip open product, an the think probably, the But clarification line CMS to it you RUO the top speaks on industry. new technology think recent I grow billable, you to what’s want

Vidyun Bais

might guess And potential hear just we then Thanks. you progressing the I to those are there? can expect timing on partnership, Okay. when update how share conversations and an Understood. any Thanks. kitting on

Josh Riggs

and to Yeah. also we are mean, ongoing. say, were We conversations are talking distribution to manufacturers I’d I partners. talking those

think have that us is will the imperative market QX, look product a and the a by of the what will I end like. for think get on lot to into commercial of I we strategy have clarity year as on we

Vidyun Bais

you are just facilitate step the one cash to of me, products? just Thanks. burn, on kitted Okay. rep about investments Perfect. last or thinking And one maybe other down for commercialization just help how in expansion

Josh Riggs

question. Good No.

primary here OncoCyte partnership committed are and commercialization a distribution. I mode or maintaining think we at will our through of capital-light be to infrastructure

Vidyun Bais

Thanks for the Okay. Awesome. me. That’s questions. taking it for

Josh Riggs

Vidyun. Thanks,

Operator

question Westenberg go next The with will David come Please Piper. ahead. from

Tyler Anderson

for This taking everyone. Tyler my David. is question. Hi, Thank on for you

customers as just discussions and them So any presales? into early if the you describe have have feedback what gotten kind that zooming of to IO, you as well access been for can from talking you had have you

Josh Riggs

love I because a Yeah. in really our question, got EAP. have the good we mix

So there’s very the are based and broad Southeast then of well that kind the there’s the academic of known of oncologists in networks institutions. kind

they is test and that those for different patients. we in lot environments. use think a getting I help say, the their reliable of would demand So a the of clinical experiences of can test I manage are utility feedback And to from strong sort the generally,

Tyler Anderson

what as like that? distribution have as any going expect going suppressed looked volume do for or going route And And expense, sales if and the increase to then into in is quite ramp-up cadence see marketing QX, far considering some that manufacturing any time? is remain like to are in insight you you a forward Okay. QX you on to

Josh Riggs

as I really this to significant XXXX wouldn’t us ramp I But and manufacturing. expect into anything year to costs this it’s even of then would remain suppressed. tough as point, far manufacturing expect ahead just getting at up, project

in to think that able we future what be I looks will update calls. like

Tyler Anderson

guys. you, Thank Perfect.

Josh Riggs

you. Thank

Operator

Please Company. ahead. Jackson Our from Instructions] Bruce Benchmark will come The go [Operator with question next

Bruce Jackson

specificity thank you and reimbursement. my to for the little morning for questions. just the more wanted get I taking around a timelines Good

roughly be VitaGraft would So third potentially? quarter

Josh Riggs

-- we them work hopeful could and I are on do. for the now at distance year are end I in I road in that Yeah. with we would going the don’t words put mean have with want for we working we more striking to but that’s us. mouth, have MolDX’s mean of but so a we been them, to

Bruce Jackson

is then And know that, after roughly don’t DetermaIO we months to would do? going Okay. MolDX potentially, what six be because again, exactly

Josh Riggs

Exactly.

have You got that right.

Bruce Jackson

Perfect. Okay. development? then terms in on update DetermaCNI the any And of

Josh Riggs

there’s and publication it’s where you was case other. to is in for the the unique DetermaCNI, cancer, that really AACR use not decisions a one first-line flip at pancreatic where when working, two Only therapy

a not warning the that demonstrated beneficial the management the so having And therapy is an is working. and good potentially early of early patient system when serving not that patients notification therapy in we is for we are

development encouraging So on be that’s in year. going we additional I think are a for us update then able clinical very the in very we will problematic cancer do to and that to later

Bruce Jackson

Okay. much. very you Thank Great.

Josh Riggs

you. Thank

Anish John

you. Thank

Operator

as for This call today’s question-and-answer you today. session, concludes our well attending our Thank conference for presentation. as

You may now disconnect.

OncoCyte (OCX) 11 May 232023 Q1 Earnings call transcript