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BTIG Initiates Coverage of Oncocyte With Buy Rating

NEW YORK –BTIG said Monday that it has initiated coverage of diagnostics firm Oncocyte with a Buy rating and a price target of $5 per share.

Oncocyte's product offerings include DetermaRx, a tissue-based gene expression test intended to inform therapeutic decisions in early-stage lung cancer, and the currently research-use-only DetermaIO, which assesses the tumor microenvironment to predict immunotherapy response.

Both assays were launched via Oncocyte's acquisitions of other companies. DetermaRx was previously a holding of Razor Genomics and DetermaIO was developed by Insight Genetics.

In a note to investors, BTIG analyst Mark Massaro estimated that these tests address a combined initial $7 billion market opportunity. Beyond that he added, "we expect [Oncocyte] to launch tests to additional cancer indications and across the cancer continuum of care … which we believe can expand [this] to roughly $25 billion."

Launched as a laboratory-developed test in February, DetermaRx is currently reimbursed by Medicare, and Massaro wrote that BTIG expects private insurers to follow suit next year. DetermaIO is currently for research use only but Oncocyte intends to make it clinically available by the second half of 2021.

Massaro also highlighted a recently announced licensing and collaboration agreement between Oncocyte and Chronix Biomedical, under which OncoCyte plans to launch and market Chronix's blood-based copy number instability test, TheraSure CNI, as a tool for monitoring a cancer's response or resistance to treatment.

BTIG forecasts Oncocyte's FY2020 revenues to be $1.39 million and 2021 revenues to be almost $7.2 million.

In early morning trading on the Nasdaq, the company's shares were up 4.5 percent at $1.87.