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Cancer Genetics Posts 42 Percent Increase in Q3 Revenues

NEW YORK (GenomeWeb News) – Cancer Genetics said after the close of the market on Wednesday that revenues in its third quarter rose 42 percent year over year.

The cancer diagnostics firm reported revenues of $1.7 million for the three months ended Sept. 30, compared to $1.2 million in the year-ago period. Test volume in the recently completed quarter rose 71 percent year over year to 2,920 from 1,704.

On a conference call following the release of Cancer Genetics' financial results, CFO Elizabeth Czerepak said that the average revenue per test in the recently completed quarter was $531, down from $551 a year ago.

She added that the company expects "slight variances" in the revenue per test figures from quarter to quarter as its revenue and customer mixes "continue to evolve."

The company posted a net loss of $3.1 million, or $.61 per share, in the quarter, compared to a profit of $311,588 a year ago. On a per share basis, Cancer Genetics said it had a net loss of $2.23 in the year-ago period.

In an e-mail to GenomeWeb Daily News, the company said that accounting rules "dictate that the non-cash income — resulting from [a] derivative warrant liability — must be removed from net income when calculating diluted EPS. Without this non-cash income, the company would have been in a net loss position" of $3.0 million.

Czerepak said on the call that the net loss in Q3 2013 resulted primarily from a $4.4 million increase in the fair value of warrant liability, partially offset by a $1 million increase in the firm's interest expense.

Its R&D expenses were down 14 percent year over year to $433,525 from $501,431, while SG&A costs were up 13 percent to $1.7 million from $1.5 million.

The firm finished the quarter with $9.9 million in cash and cash equivalents.

In August, it raised $14.2 million in net proceeds in a public offering. It also moved to the Nasdaq from the OTC QB. Last month, the company raised $42.2 million in net proceeds from a public offering, Czerepak said.

On the call, Cancer Genetics CEO Panna Sharma outlined the firm's growth strategy, which includes building out a national sales force. Also, the firm plans to expand its SelectOne program in which the company partners with biotechnology and pharmaceutical firms.

"We are in an ideal position to partner to help drive the changes that are needed by the biopharma community in their clinical trial programs and to help them in the development of potential companion markers and in developing their theranostic programs," he said.

Cancer Genetics continues to have discussions with payors, insurers, and cost management organizations to demonstrate the effectiveness of its tests, both in their ability to genomically assess complex cancers and their ability to reduce the cost of care. The company, Sharma said, is launching several health economic tests focused on leukemia, renal, cervical, and lymphoma cancer.

Additionally, the firm will continue to grow its partnership with the Mayo Clinic. In the spring, the two organizations launched a joint venture called OncoSpire to develop and commercialize diagnostic tests that leverage next-generation sequencing.

Lastly, it will continue investments into its existing product portfolio. The firm has launched five proprietary tests, and will make investments through studies and trials, while also refining the algorithms, Sharma said.

He added that during the current quarter, Cancer Genetics plans to launch in the US its cervical cancer test through its own CLIA laboratory and several lab partners. The test was launched earlier outside the US.