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OncoCyte Downgraded to Neutral by Piper Sandler on Unsuccessful Results for Lung Cancer Test

NEW YORK ─ Piper Sandler on Tuesday downgraded OncoCyte to Neutral from Overweight and reduced its share-price target to $1.50 from $7.50 due to unsuccessful results of a clinical validation study for the molecular diagnostics firm's DetermaDx liquid biopsy test for lung cancer.

OncoCyte said on Monday that DetermaDx's performance did not meet the predetermined endpoints for the study and that it will cease further investment in DetermaDx and focus on two more advanced commercial tests, DetermaRx and DetermaIO.

"We had one main criteria for the launch of our test in designing our clinical validation study: statistically significant improvement over and above the clinical factors being utilized by physicians today to help with the diagnosis of intermediate-risk nodules, particularly in the 0.8-2.2 cm nodule size range," OncoCyte CEO Ron Andrews said in a statement. "Unfortunately, DetermaDx did not achieve that endpoint in clinical validation."

"We are disappointed in the clinical failure of DetermaDx," Piper Sandler analyst Steven Mah said in a research note on Tuesday. "OncoCyte has transitioned to commercialization with DetermaRx and is awaiting a final [local area determination] from Noridian," a Medicare Administrative Contractor.

DetermaRx is a lung cancer stratification test, and DetermaIO is a research-use-only gene expression test to identify immune checkpoint inhibitor responders. The DetermaDx liquid-biopsy test had been under development to use an immune system interrogation approach to clarify whether patients’ lung nodules are benign.

In early Wednesday morning trade on the New York Stock Exchange, shares of OncoCyte were down more than 7 percent at $1.77.