Release Date: April 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OncoCyte Corp has successfully reduced its average burn rate from $11 million to $3.91 million compared to the same period a year ago.
- The company has developed GraftAssure, an easy-to-use manufactured product, with the first prototypes exceeding quality and performance expectations.
- OncoCyte Corp announced a partnership with Bio-Rad, which includes a $15.8 million private placement offering to support development and commercial efforts.
- The company has achieved reimbursement for VitaGraft Kidney and is pursuing claims expansion based on promising clinical study results.
- OncoCyte Corp has seen a 58% improvement in cash burn year over year, with Q4 benefiting from cost reductions implemented earlier in the year.
Negative Points
- The company's consolidated revenues for the fourth quarter of 2023 were relatively low at approximately $314,000.
- Cost of revenues for the fourth quarter were higher than the revenues, at approximately $431,000.
- Research and development expenses increased by 85% year over year, indicating a significant increase in investment towards product development.
- GAAP net loss from continuing operations was $16 million, or $1.99 per share, compared to a net loss of $12 million, or $2.8 per share, for the fourth quarter of 2002.
- There are no minimum volume commitments in the agreement with Bio-Rad, which could imply uncertainty in revenue projections from this partnership.
Q & A Highlights
Q: Can you tell us what Bio-Rad's installed base is in the US and over the US, for the machines that can run this test?
A: They don't publicly disclose their installed base.
Q: How is the commercial strategy with Bio-Rad going to work going forward?
A: OncoCyte will add about five headcount for commercial efforts, with Bio-Rad marketing the product and OncoCyte closing the accounts. Outside the US and Germany, Bio-Rad has full commercial and distribution rights.
Q: Are there any minimum volume commitments in the agreement with Bio-Rad?
A: There are not.
Q: Will OncoCyte continue to offer the transplant tests in the US as a lab-developed test or will it fully transition to being kitted?
A: OncoCyte will maintain its service lab in Nashville for clinical development and to engage with MolDX for claims expansion. They plan to bridge clinical claims from the lab-developed test to the kitted product in the future.
Q: What should we expect for pricing on the kits once you fully transition to a cleared version of the product?
A: Pricing is usually capped at about 50% of the reimbursed value for the test. The exact price will be set once the national price for the kit is established.
Q: Will OncoCyte be sharing a portion of the kit pricing with Bio-Rad?
A: Yes, that's correct.
Q: Can you provide more detail on the commercial strategy with Bio-Rad?
A: OncoCyte expects to add incremental headcount for the commercial team and will focus on site activation and building an installed base of early adopters.
Q: What are the revenue expectations going forward and the cash burn outlook?
A: Revenue from the RUO product is expected to start in Q4, with incremental growth thereafter. The company is committed to maintaining a low cash burn, aiming to keep it below $5 million per quarter on average.
Q: How will the mechanics of the agreement with Bio-Rad work for international markets that are not Germany?
A: It is a manufacturing and supply agreement. Bio-Rad will be OncoCyte's customer, and the revenue will hit OncoCyte's top line with a normal COGS-type calculation.
Q: Will there be two revenue streams in the United States, one for the lab version of the test and another for the RUO shipped revenue?
A: Yes, both will show up on the top line, one as services and the other as products.
Q: Can you give any color on the operating expense mix, particularly with the incremental sales and marketing spend?
A: About five headcount will be added to the sales and marketing team, which will slightly increase the burn rate, but the company will try to maintain it below $5 million per quarter.
