Oncocyte Corp (OCX)·Q3 2024 Earnings Summary

Executive Summary

• OCX remains effectively pre-revenue as it seeds the market with its RUO GraftAssure kit; Q3 revenue was $0.115M, gross profit $0.050M, and GAAP loss from operations $(13.5)M, driven by a $7.1M non-cash increase in contingent consideration; non-GAAP loss from operations was $(5.6)M .
• Commercial traction advanced: signed centers now represent ~2% of 2023 U.S. transplant volumes and ~9% of German transplant volumes; management reiterated it is on track to have >20 centers running GraftAssure by end of 2025 .
• Regulatory path progressing: FDA Q-submission filed with a meeting scheduled for early December; validation expected to begin in early 2025; initial IVD will target kidney under a Class II pathway (clearance, not approval) .
• Balance sheet: Q3-end cash, cash equivalents and restricted cash were ~$5.1M; OCX raised $10.2M gross ($9.4M net) via an October private placement (includes Bio-Rad participation), extending runway to execute on clinical and commercial milestones .
• Near-term catalysts: FDA Q-sub feedback/meeting in December, continued site signings and RUO utilization, and ongoing partnering activity; medium-term catalyst is 510(k)/De Novo clearance targeted for late 2025 (best-case from prior quarter) with potential MolDX coverage thereafter .

What Went Well and What Went Wrong

• What Went Well

  • Demonstrable commercial momentum: hospitals representing ~2% of U.S. and ~9% of Germany transplant volumes have signed to use GraftAssure RUO; early customers span U.S., Germany, Switzerland, Austria, and the U.K. .
  • Regulatory progress: Q-submission filed and FDA meeting set for early December; multiple hospitals expressed interest in supporting clinical and reproducibility studies for IVD clearance .
  • Strategic positioning and clinical validation: management reinforced the value proposition of digital PCR (faster TAT, no batching cost penalty) vs. NGS; oncology program (DetermaIO) published peer-reviewed data in Clinical Cancer Research supporting predictive value in TNBC, bolstering partnering dialogue .

• What Went Wrong

  • P&L pressure from non-cash items: Operating expenses jumped to $13.6M due largely to a $7.1M non-cash increase in contingent consideration (lower discount rate and progress toward revenue) .
  • Revenue remains de minimis: Q3 revenue was $0.115M, derived from pharma services; OCX reiterates it is “pre-revenue” in transplant testing until IVD clearance .
  • Sequential OpEx ex non-cash rose ~13% as OCX invested in IVD software, regulatory consulting, and commercialization (commissions, instrument leases at pilot sites, travel), increasing cash burn importance ahead of validation and clearance .

Financial Results

Notes:

• Q3 revenue is from pharma services; OCX remains “pre-revenue” in transplant until IVD clearance .
• Operating cash used: $(5.551)M in Q3 (better than $6.0M budget) .
• October private placement: $10.2M gross, ~$9.4M net proceeds post-Q3 close .

Actual vs. S&P Global Consensus (Q3 2024)

S&P Global consensus estimates for OCX were unavailable via our data connection at this time.

KPIs and Operating Metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Milestone after milestone, promise after promise, we continue to deliver… We believe we are on track to meet or exceed our site placement goal of having 20 sites signed by the end of next year… We believe each of these sites can eventually average about $1 million per year in high-margin recurring clinical test kit revenue.” — CEO Joshua Riggs .
• “We’ve engaged with the FDA and we’ll have our first meeting with them in early December to go through our validation plan… We believe we will find an efficient path to success.” — CEO Joshua Riggs .
• “Last month, we raised $10.2 million in gross proceeds in a private placement… at the market with no discount… That capital also provides runway for us to continue actively pursuing additional strategic partners.” — CFO Andrea James .
• “We are pleased to report that our FDA pre-submission remains on track… a meeting is scheduled for early December… a critical step in gaining confidence in the validation process that we expect to begin in early 2025.” — Shareholder letter (Q3 8-K) .

Q&A Highlights

• Role of Bio-Rad: Bio-Rad is actively opening doors in the U.S. and especially Germany, providing credibility and scale at conferences (e.g., ASHI); reps co-sell alongside OCX .
• Workflow adoption: Most molecular labs are PCR-trained; onboarding takes ~1–2 weeks with OCX support; early sites generate data quickly with manageable nuances on the Bio-Rad platform .
• Use cases and demand drivers: For IVD (VitaGraft+), same-day TAT enables “for-cause” testing; transplant centers are economically incentivized to bring testing in-house post-clearance .
• Inbound interest and clinical leadership: Pediatric and adult centers outside the U.S. have reached out due to prolonged send-out TAT; OCX is advancing AMR detection and anti-CD38 monitoring evidence (e.g., felzartamab, daratumumab) .
• FDA study design and scope: Class II device; kidney first; biopsy-matched blood draw study to demonstrate detection of graft damage; broader organ submissions could follow .
• NGS vs dPCR: NGS constrained by batching and ≥24–30 hour TAT; dPCR allows single-sample runs with ~same-day TAT and cost profile, better serving urgent clinical decisions .

Estimates Context

• We attempted to retrieve S&P Global consensus for revenue and EPS for Q3 2024, but consensus estimates for OCX were unavailable via our connection at this time. Accordingly, we cannot assess beats/misses vs. Wall Street for this quarter.
• Implication: With no consensus baseline, near-term estimate revisions will likely focus on operating expense cadence, validation timing, and RUO-to-IVD conversion pace rather than top-line changes (given de minimis revenue) .

Key Takeaways for Investors

• OCX is executing its land-and-expand strategy: moving from interest (~25% U.S. funnel) to signed RUO adoption (~2% U.S., ~9% Germany volume coverage) while advancing the regulatory pathway; this de-risks the path to meaningful revenue post-IVD clearance .
• The regulatory trajectory remains on plan: Q-sub filed; FDA meeting in early December; validation expected to kick off early 2025; initial focus on kidney under a Class II clearance path .
• The dPCR value proposition (fast TAT, no batching penalty) vs NGS is resonating with centers, supporting adoption and likely driving in-house testing post-clearance, a key driver for the $1M/site annual kit revenue thesis .
• P&L volatility is currently dominated by non-cash contingent consideration remeasurement; non-GAAP operating loss better reflects core burn as OCX invests in IVD and commercialization .
• Liquidity improved post-quarter with ~$9.4M net proceeds; runway appears sufficient to reach near-term milestones, though additional capital could be needed ahead of clearance and scale-up .
• Near-term trading catalysts include the December FDA meeting outcome, incremental site signings, and additional clinical/partnering updates; medium-term thesis centers on 2025 clearance timing and the pace of in-house adoption at top transplant centers .

Supporting Documents:

• Q3 2024 8-K and shareholder letter .
• Q3 2024 earnings call transcript .
• Q2 2024 8-K shareholder letter and financials .
• Q1 2024 8-K financials .
• Related press release on center signings and Q-sub (Oct 2, 2024) .