NEW YORK – NeoGenomics revealed new details on Tuesday about its efforts to push forward in the liquid biopsy market despite recent legal challenges.
In a conference call to discuss the company's first quarter financial results, CEO Chris Smith said that NeoGenomics has been "vigorously" defending its Radar technology for minimal residual disease detection after a preliminary injunction order against it in December by the US District Court for the Middle District of North Carolina in a patent infringement lawsuit brought by its competitor Natera.
The injunction bars the "making, using, selling, or offering for sale in the US" of Radar tests, though the company was allowed to continue to offer the assay for existing patients and for clinical trials, research studies, and projects already in process.
Smith said that a hearing to appeal the preliminary injunction was held on March 29 in the Federal Circuit Court and that NeoGenomics is now awaiting the decision. Meanwhile, the North Carolina district court case is in discovery, and the jury trial is scheduled for March 2025.
"We have also filed [inter partes review] petitions with the US Patent and Trademark Office, seeking to determine that Natera's two patents at issue are unpatentable in the view of prior art," he added during the call.
Ali Olivo, the company's general counsel and executive VP of business development, said that decisions on appeals to preliminary injunctions typically take one to four months, depending on various factors, including the judges hearing the case and whether it is precedential in nature.
She added that in addition to these litigation efforts, the company has two other paths forward for maintaining a place in the MRD detection market. One is through internal innovation to adapt a new version of Radar, another the possibility of bringing in new technology either through licensing or an acquisition.
"All of these pathways are viable, and we're evaluating all of them," Olivo said.
NeoGenomics has additional plans in the liquid biopsy space, as well as more generally in next-generation sequencing for solid tumors.
Smith said that the firm's NGS testing revenue is approaching 30 percent of its total clinical revenue, which was $134.5 million in the first quarter of this year, up 17 percent from $114.9 million in the year-ago quarter. Clinical test volume was up 5 percent year over year, and the company's average revenue per clinical test rose 11 percent to $447.
In contrast, its advanced diagnostics revenue dropped 3 percent in Q1 to $21.7 million from $22.4 million in Q1 2023.
The company's total first quarter revenues grew 14 percent year over year to $156.2 million from $137.2 million in Q1 2023, beating analysts' average estimate of $149.9 million.
NeoGenomics Chief Commercial Officer Warren Stone added that the company's current market share in solid tumor testing is still in the single digits but is being buoyed significantly by the growth in NGS.
NeoGenomics hopes that its planned launch of a comprehensive genomic profiling (CGP) tissue panel and a new liquid biopsy CGP test will help it catch up to competitors, Smith said.
The company believes the new tissue CGP test will be one of the largest available while providing what Smith called "industry-leading turnaround times."
Both new tests will be subject to the US Food and Drug Administration's newly finalized rule on the regulation of laboratory-developed tests. Smith said the enforcement discretion is favorable overall to its existing broad test menu, as the rule spares tests marketed before May 6, 2024, from oversight.
NeoGenomics has been preparing for the regulation changes, though, and is well positioned to comply moving forward, he said, despite anticipating higher costs.
NeoGenomics spent $7.6 million on R&D during the quarter, up slightly from $7.4 million a year ago. Its SG&A costs were $86.0 million, up about 11 percent from $77.8 million.
The company reported a net loss for the quarter of $27 million, or $.21 per share, compared to a loss of $31 million, or $.25 per share, in the same period last year. Adjusted loss per share was $.02, better than the loss of $.05 per share predicted on average by analysts.
NeoGenomics ended the quarter with $331.9 million in cash and cash equivalents, and with marketable securities totaling $52.9 million.
The company also reaffirmed its full-year revenue guidance of $650 million to $660 million, which would represent year-over-year growth of 10 percent to 12 percent, and its guidance for a net loss of $66 million to $72 million in 2024.
In afternoon trading on the Nasdaq, shares of NeoGenomics were down about 8 percent at $14.07.