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OncoCyte Q3 Net Loss Swells, Lung Cancer Dx Launch Delayed

NEW YORK (GenomeWeb) – OncoCyte reported after the close of the market on Tuesday that its third quarter net loss more than doubled amid higher operating expenses.

The company also disclosed a delay in the planned commercial launch of its first product, the liquid biopsy lung cancer diagnostic DetermaVu, due to technical issues during a clinical validation study.

For the three-month period ended Sept. 30, OncoCyte's net loss grew to $6.9 million, or $.22 per share, from a year-ago loss of $2.6 million, or $.10 per share. Analysts had, on average, expected the company to report a loss per share of $.13.

R&D spending in the quarter rose to $1.8 million from $1.4 million, primarily as a result of increased salaries and compensation-related expenses, DetermaVu development expenses, and stock-based compensation expenses. Third quarter SG&A costs climbed to $5.0 million from $1.2 million in the same period last year, in part due to $3.0 million in shareholder noncash expense for the issuance of warrants to certain investors to exercise warrants.

OncoCyte posted no Q3 revenues. It also said that it now expects to launch DetermaVu sometime in 2018, compared with previous guidance of a late 2017 market introduction. According to the company, the delay is due to "inconsistent analytic results" observed during the final clinical validation of the test in which approximately 300 blinded prospectively collected samples are being assayed.

OncoCyte said it believes the issue was caused by "a variance in a recently received lot of consumables used in the processing system that analyzes blood samples for the genetic markers that indicate whether lung nodules found in patients are benign or suspicious." As a result, the firm has halted the validation study as it awaits new lots of consumables. OncoCyte said that it will resume the study once it has confirmed that the new consumables will allow the analytic devices to generate data with the consistency and precision required for DetermaVu.

The company added that earlier studies of DetermaVu used different lots of consumables and therefore were not impacted by the problem.

"We remain confident in the positive results reported to date and believe that the clinical use of DetermaVu can make an important contribution to the management of lung cancer nodules and help to improve therapeutic outcomes for lung cancer patients," OncoCyte President and CEO William Annett said in a statement.

At the end of the third quarter, OncoCyte had cash and cash equivalents totaling $11 million.

During early Wednesday morning trading on the New York Stock Exchange, shares of OncoCyte were down $.066 at $5.834.