Cancer Genetics, Inc. (Nasdaq: CGIX), a leader in enabling
precision medicine for immuno-oncology and genomic medicine through
diagnostics, molecular markers and data solutions, today announced
financial and operating results for the first quarter ended March
31, 2019.
RECENT OPERATIONAL HIGHLIGHTS
- Raised total net proceeds of $5.4 million in January through
two common stock offerings of 28.55 million common shares. In
connection with the two capital raises, the Company issued warrants
for 2 million shares.
- Reduced overall combined quarterly cost of revenue and
operating expenses by $2.9 million compared to the first quarter of
2018.
- Revenue for the quarter totaled $6.8 million, a decrease of
10.8% compared to first quarter 2018.
- BioPharma revenue increased during the quarter by 8.4% compared
to the year ago period.
- Strengthened management team with appointment of William Finger
as Executive Vice President of Precision Medicine and Pharma
Services.
- Continued to work with Raymond James & Associates, Inc. to
complete a transaction to enhance shareholder value.
John A. Roberts, Chief Executive Officer of Cancer Genetics
said, “We are pleased with an 8.4% increase in BioPharma revenue
during the quarter which reflects the completion and delivery of
key projects. We also booked approximately $6.4 million of
new BioPharma projects with a book-to-bill ratio of 1.61, compared
to $4.8 million of new signed projects and a book-to-bill ratio of
1.31 in Q1 2018 respectively. It also reflects our strategic
decision to focus on this business as part of our larger
transformation plan. Our efforts to decrease expenses was
highly successful with a decrease of $2.9 million in combined cost
of revenue and operating expenses over a year ago, which reflects
our concerted efforts to reduce costs across all categories.”
“In addition, we continue to work diligently with Raymond James
on a strategic transaction and we’ll keep you informed as
developments occur.”
FIRST QUARTER 2019 FINANCIAL RESULTS
The Company reported total revenue of $6.8 million for the first
quarter of 2019 compared to revenue of $7.7 million in first
quarter of 2018, a decrease of 10.8% or $0.8 million.
BioPharma services revenue totaled $4.0 million in the first
quarter, compared to $3.7 million during the first quarter 2018, an
increase quarter over quarter of 8.4%. BioPharma projects are
dependent on the timing, size and duration of our contracts with
pharmaceutical and biotech companies and clinical research
organizations, and can fluctuate in comparable periods. During the
first quarter we completed and delivered two larger projects offset
by the start-up of multiple smaller contracts. The BioPharma
business had more than 200 clinical studies and trials it is
supporting at the end of Q1 2019. The Company’s
book-to-bill ratio for Q1 2019 was 1.61 on $6.4 million of new
contracts signed in the period.
Clinical Services revenue decreased by approximately $1.0
million in the first quarter of 2019 compared to the same period in
2018, the result of a reduction in the clinical services sales team
and hence, reduced test volume, as the Company shifted focus in its
strategy.
The Company’s Discovery Services contributed $1.5 million in
revenue for the first quarter of 2019 compared to $1.7 million in
2018 due to a decline in revenue from our India subsidiary which
was sold in April 2018. This represents a decrease of approximately
8.8% or $0.15 million.
Gross profit margin was 32.2% or $2.2 million in Q1 2019,
compared to 33.7% or $2.6 million in the same period of 2018, a
decrease of 1.5 percentage points. The lower gross profit is
attributable primarily to lower Clinical Services revenue in the
current period and a slight increase in lab supplies and shipping
costs of $0.2 million, partially offset by an overall reduction of
approximately $0.6 million in fixed cost of revenue.
The Company reduced research and development expenses by 33.3%
or $0.23 million, general and administrative expenses by 37.1%, or
$2.0 million, and sales and marketing by 30% or $0.48 million from
the first quarter of 2018. Costs reductions were consistent with
the consolidation initiatives started in Q1 2018 and continuing
into Q1 2019.
Total operating expenses for the first quarter of 2019 were
approximately $5.1 million which decreased by $2.4 million from
$7.5 million in the first quarter of 2018, an overall improvement
of 32%.
Net loss was $4.6 million or $0.9 per share for the first
quarter of 2019, compared to a net loss of $4.5 million or $0.16
per share in the first quarter of 2018.
Unrestricted cash and cash equivalents as of March 31, 2019
totaled $0.7, compared to $0.2 million as of December 31, 2018.
ABOUT CANCER GENETICS
Cancer Genetics, Inc. is a leader in enabling precision medicine
for immuno-oncology and genomic medicine through diagnostics,
molecular markers and data solutions. CGI operates across a global
footprint with locations in the US, Australia and China. We have
established strong clinical research collaborations with major
cancer centers such as Memorial Sloan Kettering, The Cleveland
Clinic, Mayo Clinic, Keck School of Medicine at USC and the
National Cancer Institute.
The Company offers a comprehensive range of laboratory services
that provide critical genomic and biomarker information. Its
state-of-the-art reference labs are CLIA-certified and
CAP-accredited in the US and have licensure from several states
including New York State.
For more information, please visit or follow CGI
at:
Internet: www.cancergenetics.com
Twitter: @Cancer_Genetics
Facebook: www.facebook.com/CancerGenetics
Forward Looking Statements:
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements pertaining to Cancer Genetics
Inc.’s expectations regarding future financial and/or operating
results and potential for our tests and services, and future
revenues or growth in this press release constitute forward-looking
statements.
Any statements that are not historical fact
(including, but not limited to, statements that contain words such
as “will,” “believes,” “plans,” “anticipates,” “expects,”
“estimates”) should also be considered to be forward-looking
statements. Forward-looking statements involve risks and
uncertainties, including, without limitation, risks inherent in the
development and/or commercialization of potential products, risks
of cancellation of customer contracts or discontinuance of trials,
risks that anticipated benefits from consolidation efforts and/or
acquisitions will not be realized, uncertainty in the results of
clinical trials or regulatory approvals, need and ability to obtain
future capital, need to extend forbearance agreements with senior
lenders and extend the maturity of the Company’s asset-based line
of credit, uncertainties with respect to evaluating strategic
options, maintenance of intellectual property rights and other
risks discussed in the Cancer Genetics, Inc. Form 10-K for the year
ended December 31, 2018 and the Form 10-Q for the period ended
March 31, 2019, along with other filings with the Securities and
Exchange Commission. These forward-looking statements speak only as
of the date hereof. Cancer Genetics, Inc. disclaims any obligation
to update these forward-looking statements.
INVESTOR CONTACTS:
Carol Ruth/Janhavi Mohite The Ruth GroupTel:
646-536-7004/7026Email: cruth@theruthgroup.com /
jmohite@theruthgroup.com
Media:Kirsten ThomasThe Ruth GroupTel:
508-280-6592Email: kthomas@theruthgroup.com
Cancer Genetics, Inc. and
SubsidiariesConsolidated Balance Sheets
(Unaudited)(in thousands, except par
value)
|
March 31, 2019 |
|
December 31, 2018 |
ASSETS |
|
|
|
CURRENT ASSETS |
|
|
|
Cash and cash equivalents |
$ |
697 |
|
|
$ |
161 |
|
Accounts receivable, net of allowance for doubtful accounts of
$3,462 |
7,292 |
|
|
7,038 |
|
Other current assets |
2,344 |
|
|
2,148 |
|
Total current assets |
10,333 |
|
|
9,347 |
|
FIXED ASSETS, net of accumulated
depreciation |
3,821 |
|
|
4,056 |
|
OTHER ASSETS |
|
|
|
Operating lease right-of-use assets |
2,422 |
|
|
— |
|
Restricted cash |
350 |
|
|
350 |
|
Patents and other intangible assets, net of accumulated
amortization |
3,917 |
|
|
4,004 |
|
Investment in joint venture |
92 |
|
|
92 |
|
Goodwill |
17,257 |
|
|
17,257 |
|
Other |
300 |
|
|
300 |
|
Total other assets |
24,338 |
|
|
22,003 |
|
Total Assets |
$ |
38,492 |
|
|
$ |
35,406 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
CURRENT LIABILITIES |
|
|
|
Accounts payable and accrued expenses |
$ |
11,561 |
|
|
$ |
13,067 |
|
Operating lease liabilities |
1,086 |
|
|
— |
|
Obligations under finance leases, current portion |
321 |
|
|
330 |
|
Deferred revenue |
2,604 |
|
|
2,173 |
|
Line of credit |
2,414 |
|
|
2,621 |
|
Term note |
6,000 |
|
|
6,000 |
|
Convertible note, net |
2,778 |
|
|
2,481 |
|
Advance from NovellusDx, Ltd., net |
1,500 |
|
|
535 |
|
Other derivatives |
55 |
|
|
86 |
|
Total current liabilities |
28,319 |
|
|
27,293 |
|
Obligations under finance
leases |
294 |
|
|
379 |
|
Operating lease liabilities,
non-current |
1,542 |
|
|
— |
|
Deferred rent payable and
other |
— |
|
|
305 |
|
Warrant liability |
255 |
|
|
248 |
|
Deferred revenue, long-term |
403 |
|
|
379 |
|
Total Liabilities |
30,813 |
|
|
28,604 |
|
STOCKHOLDERS’ EQUITY |
|
|
|
Preferred stock, authorized 9,764 shares, $0.0001 par value, none
issued |
— |
|
|
— |
|
Common stock, authorized 100,000 shares, $0.0001 par value, 56,276
and 27,726 shares issued and outstanding at March 31, 2019 and
December 31, 2018, respectively |
6 |
|
|
3 |
|
Additional paid-in capital |
170,022 |
|
|
164,455 |
|
Accumulated other comprehensive income (loss) |
(16 |
) |
|
60 |
|
Accumulated (deficit) |
(162,333 |
) |
|
(157,716 |
) |
Total Stockholders’ Equity |
7,679 |
|
|
6,802 |
|
Total Liabilities and
Stockholders’ Equity |
$ |
38,492 |
|
|
$ |
35,406 |
|
|
|
|
|
|
|
|
|
See Notes to Unaudited Consolidated Financial Statements.
Cancer Genetics, Inc. and
Subsidiaries Consolidated Statements of
Operations and Other Comprehensive Loss
(Unaudited) (in thousands, except per share
amounts)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Revenue |
$ |
6,839 |
|
|
$ |
7,667 |
|
Cost of
revenues |
4,637 |
|
|
5,082 |
|
Gross profit |
2,202 |
|
|
2,585 |
|
Operating expenses: |
|
|
|
Research and development |
454 |
|
|
681 |
|
General and administrative |
3,309 |
|
|
5,260 |
|
Sales and marketing |
1,108 |
|
|
1,591 |
|
Merger costs |
249 |
|
|
— |
|
Total operating expenses |
5,120 |
|
|
7,532 |
|
Loss from operations |
(2,918 |
) |
|
(4,947 |
) |
Other income (expense): |
|
|
|
Interest expense |
(1,725 |
) |
|
(239 |
) |
Interest income |
2 |
|
|
21 |
|
Change in fair value of acquisition note payable |
— |
|
|
17 |
|
Change in fair value of other derivatives |
31 |
|
|
— |
|
Change in fair value of warrant liability |
(7 |
) |
|
692 |
|
Total other income (expense) |
(1,699 |
) |
|
491 |
|
Net (loss) |
$ |
(4,617 |
) |
|
$ |
(4,456 |
) |
Basic and diluted net (loss) per
share |
$ |
(0.09 |
) |
|
$ |
(0.16 |
) |
Basic and diluted
weighted-average shares outstanding |
48,933 |
|
|
27,049 |
|
|
|
|
|
Net (loss) |
$ |
(4,617 |
) |
|
$ |
(4,456 |
) |
Foreign currency translation (loss) |
(76 |
) |
|
(20 |
) |
Comprehensive (loss) |
$ |
(4,693 |
) |
|
$ |
(4,476 |
) |
|
|
|
|
|
|
|
|
See Notes to Unaudited Consolidated Financial Statements.
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