false 2022 Q2 0001044378 --12-31 2010
P9Y21D P9Y10D P9Y10D 2.32 0.0176 P5Y6M18D 1.61 2.39 0.0241 P6Y10D
P2Y2M12D P1Y8M12D 0001044378 2022-01-01 2022-06-30 xbrli:shares
0001044378 2022-11-10 iso4217:USD 0001044378 2021-12-31 0001044378
2022-06-30 iso4217:USD xbrli:shares 0001044378 2021-04-01
2021-06-30 0001044378 2022-04-01 2022-06-30 0001044378 2021-01-01
2021-06-30 0001044378 us-gaap:CommonStockMember 2021-12-31
0001044378 bioc:SeriesAConvertiblePreferredStockMember 2021-12-31
0001044378 us-gaap:AdditionalPaidInCapitalMember 2021-12-31
0001044378 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-12-31 0001044378 us-gaap:AdditionalPaidInCapitalMember
2022-01-01 2022-03-31 0001044378 2022-01-01 2022-03-31 0001044378
us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001044378
bioc:SeriesAConvertiblePreferredStockMember 2022-01-01 2022-03-31
0001044378 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2022-01-01 2022-03-31 0001044378 us-gaap:CommonStockMember
2022-03-31 0001044378 bioc:SeriesAConvertiblePreferredStockMember
2022-03-31 0001044378 us-gaap:AdditionalPaidInCapitalMember
2022-03-31 0001044378
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31
0001044378 2022-03-31 0001044378
us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30
0001044378 us-gaap:CommonStockMember 2022-04-01 2022-06-30
0001044378 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2022-04-01 2022-06-30 0001044378 us-gaap:CommonStockMember
2022-06-30 0001044378 bioc:SeriesAConvertiblePreferredStockMember
2022-06-30 0001044378 us-gaap:AdditionalPaidInCapitalMember
2022-06-30 0001044378
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30
0001044378 us-gaap:CommonStockMember 2020-12-31 0001044378
bioc:SeriesAConvertiblePreferredStockMember 2020-12-31 0001044378
us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001044378
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31
0001044378 2020-12-31 0001044378
us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31
0001044378 2021-01-01 2021-03-31 0001044378
us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001044378
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01
2021-03-31 0001044378 us-gaap:CommonStockMember 2021-03-31
0001044378 bioc:SeriesAConvertiblePreferredStockMember 2021-03-31
0001044378 us-gaap:AdditionalPaidInCapitalMember 2021-03-31
0001044378 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-03-31 0001044378 2021-03-31 0001044378
us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30
0001044378 us-gaap:CommonStockMember 2021-04-01 2021-06-30
0001044378 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-04-01 2021-06-30 0001044378 us-gaap:CommonStockMember
2021-06-30 0001044378 bioc:SeriesAConvertiblePreferredStockMember
2021-06-30 0001044378 us-gaap:AdditionalPaidInCapitalMember
2021-06-30 0001044378
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30
0001044378 2021-06-30 0001044378
us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30
0001044378 srt:MaximumMember
us-gaap:AccountingStandardsUpdate201409Member
us-gaap:SellingAndMarketingExpenseMember 2022-01-01 2022-06-30
0001044378 us-gaap:HealthCarePatientServiceMember
bioc:NonContractedPayersMember 2021-04-01 2021-06-30 0001044378
us-gaap:HealthCarePatientServiceMember
bioc:NonContractedPayersMember 2022-04-01 2022-06-30 0001044378
us-gaap:HealthCarePatientServiceMember
bioc:NonContractedPayersMember 2021-01-01 2021-06-30 0001044378
us-gaap:HealthCarePatientServiceMember
bioc:NonContractedPayersMember 2022-01-01 2022-06-30 0001044378
us-gaap:HealthCarePatientServiceMember bioc:ContractedPayersMember
2021-04-01 2021-06-30 0001044378
us-gaap:HealthCarePatientServiceMember bioc:ContractedPayersMember
2022-04-01 2022-06-30 0001044378
us-gaap:HealthCarePatientServiceMember bioc:ContractedPayersMember
2021-01-01 2021-06-30 0001044378
us-gaap:HealthCarePatientServiceMember bioc:ContractedPayersMember
2022-01-01 2022-06-30 0001044378
us-gaap:HealthCarePatientServiceMember
bioc:CommercialRevenuesMember 2021-04-01 2021-06-30 0001044378
us-gaap:HealthCarePatientServiceMember
bioc:CommercialRevenuesMember 2022-04-01 2022-06-30 0001044378
us-gaap:HealthCarePatientServiceMember
bioc:CommercialRevenuesMember 2021-01-01 2021-06-30 0001044378
us-gaap:HealthCarePatientServiceMember
bioc:CommercialRevenuesMember 2022-01-01 2022-06-30 0001044378
bioc:DevelopmentServicesMember 2021-04-01 2021-06-30 0001044378
bioc:DevelopmentServicesMember 2022-04-01 2022-06-30 0001044378
bioc:DevelopmentServicesMember 2021-01-01 2021-06-30 0001044378
bioc:DevelopmentServicesMember 2022-01-01 2022-06-30 0001044378
bioc:KitsAndSpecimenCollectionTubesMember 2021-04-01 2021-06-30
0001044378 bioc:KitsAndSpecimenCollectionTubesMember 2021-01-01
2021-06-30 0001044378 bioc:CommercialTestRevenueMember 2022-04-01
2022-06-30 0001044378 bioc:CommercialTestRevenueMember 2022-01-01
2022-06-30 0001044378 bioc:CommercialTestRevenueMember
bioc:RTPCRCoronavirusAidReliefAndEconomicSecurityActNineteenTestingMember
2022-04-01 2022-06-30 0001044378 bioc:CommercialTestRevenueMember
bioc:RTPCRCoronavirusAidReliefAndEconomicSecurityActNineteenTestingMember
2022-01-01 2022-06-30 xbrli:pure 0001044378
us-gaap:CustomerConcentrationRiskMember
bioc:MedicareAndMedicareAdvantageMember
us-gaap:SalesRevenueNetMember
bioc:CoronavirusAidReliefAndEconomicSecurityActMember 2021-04-01
2021-06-30 0001044378 us-gaap:CustomerConcentrationRiskMember
bioc:MedicareAndMedicareAdvantageMember
us-gaap:SalesRevenueNetMember
bioc:CoronavirusAidReliefAndEconomicSecurityActMember 2022-04-01
2022-06-30 0001044378 us-gaap:CustomerConcentrationRiskMember
bioc:MedicareAndMedicareAdvantageMember
us-gaap:SalesRevenueNetMember
bioc:CoronavirusAidReliefAndEconomicSecurityActMember 2021-01-01
2021-06-30 0001044378 us-gaap:CustomerConcentrationRiskMember
bioc:MedicareAndMedicareAdvantageMember
us-gaap:SalesRevenueNetMember
bioc:CoronavirusAidReliefAndEconomicSecurityActMember 2022-01-01
2022-06-30 0001044378 us-gaap:CustomerConcentrationRiskMember
bioc:BlueCrossBlueShieldMember us-gaap:SalesRevenueNetMember
2021-04-01 2021-06-30 0001044378
us-gaap:CustomerConcentrationRiskMember
bioc:BlueCrossBlueShieldMember us-gaap:SalesRevenueNetMember
2022-04-01 2022-06-30 0001044378
us-gaap:CustomerConcentrationRiskMember
bioc:BlueCrossBlueShieldMember us-gaap:SalesRevenueNetMember
2021-01-01 2021-06-30 0001044378
us-gaap:CustomerConcentrationRiskMember
bioc:BlueCrossBlueShieldMember us-gaap:SalesRevenueNetMember
2022-01-01 2022-06-30 0001044378
us-gaap:CustomerConcentrationRiskMember bioc:KaiserPermanenteMember
us-gaap:SalesRevenueNetMember 2021-04-01 2021-06-30 0001044378
us-gaap:CustomerConcentrationRiskMember bioc:KaiserPermanenteMember
us-gaap:SalesRevenueNetMember 2022-04-01 2022-06-30 0001044378
us-gaap:CustomerConcentrationRiskMember bioc:KaiserPermanenteMember
us-gaap:SalesRevenueNetMember 2021-01-01 2021-06-30 0001044378
us-gaap:CustomerConcentrationRiskMember bioc:KaiserPermanenteMember
us-gaap:SalesRevenueNetMember 2022-01-01 2022-06-30 0001044378
us-gaap:CreditConcentrationRiskMember
us-gaap:AccountsReceivableMember
bioc:CoronavirusAidReliefAndEconomicSecurityActMember
bioc:MedicareAndMedicareAdvantageMember 2021-01-01 2021-12-31
0001044378 us-gaap:CreditConcentrationRiskMember
us-gaap:AccountsReceivableMember
bioc:CoronavirusAidReliefAndEconomicSecurityActMember
bioc:MedicareAndMedicareAdvantageMember 2022-01-01 2022-06-30
0001044378 us-gaap:CreditConcentrationRiskMember
us-gaap:AccountsReceivableMember bioc:BlueCrossBlueShieldMember
2021-01-01 2021-12-31 0001044378
us-gaap:CreditConcentrationRiskMember
us-gaap:AccountsReceivableMember bioc:BlueCrossBlueShieldMember
2022-01-01 2022-06-30 0001044378
bioc:FebruaryTwoThousandAndNineteenAndMarchTwoThousandAndNineteenWarrantRepricingAndExchangeTransactionMember
2020-01-01 2020-01-31 0001044378 us-gaap:OverAllotmentOptionMember
us-gaap:WarrantMember 2020-01-01 2020-01-31 0001044378
bioc:FebruaryTwoThousandAndNineteenAndMarchTwoThousandAndNineteenWarrantRepricingAndExchangeTransactionMember
us-gaap:WarrantMember 2020-01-31 0001044378 us-gaap:WarrantMember
2018-01-31 0001044378 us-gaap:WarrantMember 2020-01-31 0001044378
2020-01-01 2020-01-31 0001044378 2021-01-01 2021-12-31 0001044378
srt:MaximumMember bioc:ControlledEquityOfferingSalesAgreementMember
bioc:CantorFitzgeraldAndCoMember 2021-05-11 2021-05-12 0001044378
bioc:ControlledEquityOfferingSalesAgreementMember
bioc:CantorFitzgeraldAndCoMember 2021-05-11 2021-05-12 0001044378
bioc:ControlledEquityOfferingSalesAgreementMember
bioc:CantorFitzgeraldAndCoMember 2021-01-01 2021-12-31 0001044378
bioc:ControlledEquityOfferingSalesAgreementMember
bioc:CantorFitzgeraldAndCoMember 2022-01-01 2022-06-30 0001044378
bioc:ControlledEquityOfferingSalesAgreementMember
bioc:CantorFitzgeraldAndCoMember 2022-04-01 2022-06-30 0001044378
bioc:ControlledEquityOfferingSalesAgreementMember
bioc:CantorFitzgeraldAndCoMember 2021-12-31 0001044378
bioc:ControlledEquityOfferingSalesAgreementMember
bioc:CantorFitzgeraldAndCoMember 2022-06-30 0001044378
srt:MinimumMember 2022-06-30 0001044378 srt:MaximumMember
2022-06-30 0001044378 2022-06-16 2022-06-16 utr:M 0001044378
srt:MinimumMember 2022-01-01 2022-06-30 0001044378
srt:MaximumMember 2022-01-01 2022-06-30 0001044378 2022-06-16
utr:sqft 0001044378 bioc:MesaRimRoadInSanDiegoCaliforniaMember
2020-06-01 0001044378 bioc:MesaRimRoadInSanDiegoCaliforniaMember
2020-06-01 2020-06-01 0001044378
bioc:MesaRimRoadInSanDiegoCaliforniaMember 2022-01-01 2022-06-30
0001044378 bioc:MesaRimRoadInSanDiegoCaliforniaMember 2020-12-31
0001044378 bioc:MesaRimRoadInSanDiegoCaliforniaMember 2021-12-31
0001044378 bioc:TwoThousandThirteenEquityIncentivePlanMember
bioc:NonInducementSharesMember 2022-01-01 2022-06-30 0001044378
bioc:TwoThousandThirteenEquityIncentivePlanMember
bioc:InducementSharesMember 2022-02-14 2022-02-14 0001044378
bioc:TwoThousandThirteenEquityIncentivePlanMember
bioc:InducementSharesMember 2022-03-22 2022-03-22 0001044378
us-gaap:EmployeeStockOptionMember 2021-12-31 0001044378
us-gaap:EmployeeStockOptionMember 2022-06-30 0001044378
us-gaap:EmployeeStockOptionMember us-gaap:CostOfSalesMember
2021-04-01 2021-06-30 0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:CostOfSalesMember 2022-04-01 2022-06-30 0001044378
us-gaap:EmployeeStockOptionMember us-gaap:CostOfSalesMember
2021-01-01 2021-06-30 0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:CostOfSalesMember 2022-01-01 2022-06-30 0001044378
us-gaap:EmployeeStockOptionMember
us-gaap:ResearchAndDevelopmentExpenseMember 2021-04-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:ResearchAndDevelopmentExpenseMember 2022-04-01 2022-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:ResearchAndDevelopmentExpenseMember 2022-01-01 2022-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:GeneralAndAdministrativeExpenseMember 2021-04-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:GeneralAndAdministrativeExpenseMember 2022-04-01 2022-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:SellingAndMarketingExpenseMember 2021-04-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:SellingAndMarketingExpenseMember 2022-04-01 2022-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:SellingAndMarketingExpenseMember 2021-01-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember
us-gaap:SellingAndMarketingExpenseMember 2022-01-01 2022-06-30
0001044378 us-gaap:EmployeeStockOptionMember 2021-04-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember 2022-04-01 2022-06-30
0001044378 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-06-30
0001044378 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-06-30
0001044378 bioc:StockOptionsAndRestrictedStockUnitsMember
2022-06-30 0001044378 us-gaap:WarrantMember 2021-12-31 0001044378
us-gaap:WarrantMember 2022-06-30 0001044378 us-gaap:WarrantMember
2021-01-01 2021-12-31 0001044378 us-gaap:WarrantMember 2022-01-01
2022-06-30 0001044378 bioc:CommonStockWarrantsMember 2021-01-01
2021-06-30 0001044378 bioc:CommonStockWarrantsMember 2022-01-01
2022-06-30 0001044378 us-gaap:RestrictedStockUnitsRSUMember
2021-01-01 2021-06-30 0001044378
us-gaap:ConvertiblePreferredStockMember 2021-01-01 2021-06-30
0001044378 us-gaap:ConvertiblePreferredStockMember 2022-01-01
2022-06-30 0001044378 us-gaap:EmployeeStockOptionMember 2021-01-01
2021-06-30 0001044378 us-gaap:EmployeeStockOptionMember 2022-01-01
2022-06-30 0001044378 us-gaap:SellingAndMarketingExpenseMember
2022-06-01 2022-06-30 0001044378 bioc:AegeaBiotechnologiesIncMember
2020-01-01 2020-12-31 0001044378 bioc:AegeaBiotechnologiesIncMember
2021-01-01 2021-12-31 0001044378 bioc:AegeaBiotechnologiesIncMember
2019-01-01 2019-01-01 0001044378 bioc:AegeaBiotechnologiesIncMember
2022-06-30 0001044378 bioc:AegeaBiotechnologiesIncMember 2021-12-31
0001044378 us-gaap:SubsequentEventMember
bioc:InducementSharesMember 2022-08-31 bioc:Employee 0001044378
us-gaap:SubsequentEventMember bioc:InducementSharesMember
2022-08-30 2022-08-31 0001044378 us-gaap:SubsequentEventMember
us-gaap:ShareBasedCompensationAwardTrancheOneMember 2022-08-30
2022-08-31 0001044378 us-gaap:SubsequentEventMember
us-gaap:ShareBasedCompensationAwardTrancheTwoMember 2022-08-30
2022-08-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
☒
|
QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2022
OR
|
☐
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the transition period from to
.
Commission file number: 001-36284
Biocept, Inc.
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
80-0943522
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
9955 Mesa Rim Road, San Diego, California
(Address of principal executive offices)
92121
(Zip Code)
(858) 320-8200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common Stock, par value $.0001 per share
|
BIOC
|
The Nasdaq Stock Market LLC
|
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
|
Large accelerated filer
|
|
☐
|
|
Accelerated filer
|
|
☐
|
|
|
|
|
|
|
Non-accelerated filer
|
|
☒
|
|
Smaller reporting company
|
|
☒
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
☐
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined by Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
As of November 10, 2022, there were 17,058,770 shares of the
Registrant’s common stock outstanding.
BIOCEPT, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
June 30, 2022
INDEX
2
IMPORTANT NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or Quarterly Report, contains
forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements
included or incorporated by reference in this Quarterly Report
other than statements of historical fact, are forward-looking
statements. You can identify these and other forward-looking
statements by the use of words such as “may,” “will,” “could,”
“anticipate,” “expect,” “intend,” “believe,” “continue,” “plan,”
“estimate,” “potentially,” “predict,” “should” or the negative of
such terms, or other comparable terminology. Forward-looking
statements also include the assumptions underlying or relating to
such statements.
Forward-looking statements may include, but are not limited to,
statements about:
|
|
•
|
the performance of our products,
assays and services;
|
|
|
•
|
the ability of our products,
assays and services to become a key component of the standard of
care for personalized cancer treatment;
|
|
|
•
|
our ability to
generate revenue, grow our business and increase sales of our
products, assays and services;
|
|
|
•
|
our ability to
develop and commercialize new products, diagnostic assays, services
and enhance our current products, assays and services and future
products, assays, and services;
|
|
|
•
|
our plans to launch
a series of cancer diagnostic assays for different predictive
biomarkers;
|
|
|
•
|
our ability to
effectively compete with other products, diagnostic assays, methods
and services that now exist or may hereafter be
developed;
|
|
|
•
|
our ability to
expand our international business and commercialize our products
and assays in other countries;
|
|
|
•
|
market adoption of our products
and assays and our ability to successfully complete clinical
utility studies;
|
|
|
•
|
the potential for CNSide to be
included in NCCN guidelines;
|
|
|
•
|
our ability to
obtain coverage and adequate reimbursement from governmental and
other third-party payers for assays and services;
|
|
|
•
|
our expectations
regarding our material cash requirements, contractual obligations
and commitments and the use of our existing cash;
|
|
|
•
|
our ability to enter
into and leverage agreements with commercialization partners for
the sales, marketing and commercialization of our current products,
assays and services, and our planned future products, assays and
services;
|
|
|
•
|
our ability to
satisfy any applicable United States and international regulatory
requirements with respect to products, assays and
services;
|
|
|
•
|
our ability to
obtain or maintain patents or other appropriate protection for the
intellectual property utilized in our current and planned products,
assays and services;
|
|
|
•
|
potential effects of
the COVID-19 pandemic on our business;
|
|
|
•
|
our estimates
regarding the period of time for which our current capital
resources will be sufficient to fund our continued
operations;
|
|
|
•
|
our expectations and
estimates regarding our future use of cash, expenses and costs and
needs for additional financing; and
|
|
|
•
|
our ability to
maintain a strong internal control environment and remediate
internal control deficiencies.
|
3
Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors,
including those set forth in this report under the “Management’s
Discussion and Analysis” and “Risk Factors” headings, which include
but are not limited to the following factors:
|
|
•
|
we may be unable to
increase sales of our current products, assays and services or
successfully develop and commercialize other products, assays and
services;
|
|
|
•
|
we may be unable to
execute our sales and marketing strategy for our products and
diagnostic assays and may be unable to gain acceptance in the
market and generate sufficient revenue;
|
|
|
•
|
we may be unable to
develop products, assays and services to keep pace with rapid
advances in technology, medicine and science;
|
|
|
•
|
our current
products, assays and services and our planned future products,
assays and services may not continue to perform as
expected;
|
|
|
•
|
our sole laboratory
facility may become damaged or inoperable, or we may be required to
vacate the facility;
|
|
|
•
|
the impact of the
COVID-19 pandemic on our business;
|
|
|
•
|
the decline of our
RT-PCR COVID-19 testing business revenues;
|
|
|
•
|
we may be unable to
compete successfully with our competitors and increase or sustain
our revenues;
|
|
|
•
|
medical oncologists,
neuro-oncologists, surgical oncologists, urologists,
pulmonologists, pathologists and other physicians may decide not to
order our current or planned future assays, and laboratory supply
distributors and their customers may decide not to order our
current or planned future products;
|
|
|
•
|
we may be unable to
identify collaborators willing to work with us to conduct clinical
utility studies, or the results of those studies may not
demonstrate that an assay provides clinically meaningful
information and value;
|
|
|
•
|
we may lose key
members of our executive management team;
|
|
|
•
|
we may be unable to
retain and recruit personnel with the requisite technical
skills;
|
|
|
•
|
we may fail to
continue to attract, hire and retain a sufficient number of
qualified sales professionals;
|
|
|
•
|
we may experience
delays in transmitting claims to payers;
|
|
|
•
|
we may encounter
manufacturing delays;
|
|
|
•
|
we may become
exposed to business, regulatory, political, operational, financial
and economic risks associated with doing business outside of the
United States;
|
|
|
•
|
general economic and
business conditions may have a negative impact on our
business;
|
|
|
•
|
our business may be
effected by healthcare policy changes;
|
|
|
•
|
hospitals or other
clients may not pay our invoices or third-party payers may not
provide coverage and reimbursement or may breach, rescind or modify
their contracts or reimbursement policies or delay
payments;
|
|
|
•
|
our products and
assays may not receive favorable treatment, clearance or marketing
authorization from the U.S. Food and Drug Administration, or
FDA;
|
|
|
•
|
the FDA may begin
requiring approval or clearance for our current products and assays
and our planned future products and assays;
|
4
|
|
•
|
we may become required to conduct
additional clinical studies or trials before continuing to offer
assays that we have developed or may develop as laboratory developed
tests;
|
|
|
•
|
we may be unable to
obtain and maintain effective patent and proprietary rights for our
products and services;
|
|
|
•
|
we may be unable to
protect our intellectual property throughout the world;
and
|
|
|
•
|
we may fail to
maintain proper and effective internal control over financial
reporting.
|
Moreover, we operate in an evolving environment. New risk factors
and uncertainties emerge from time to time, and it is not possible
for us to predict all risk factors and uncertainties, nor can we
assess the impact of all factors on our business or the extent to
which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any
forward-looking statements. Readers are cautioned not to place
undue reliance on forward-looking statements. The forward-looking
statements speak only as of the date on which they are made, and we
undertake no obligation to update such statements to reflect events
that occur or circumstances that exist after the date on which they
are made except as required by law. Readers should, however, review
the factors and risks we describe in the reports we file from time
to time with the SEC. In addition, statements that “we believe” and
similar statements reflect our beliefs and opinions on the relevant
subject. These statements are based upon information available to
us as of the date the statement is made, and while we believe such
information forms a reasonable basis for such statements, such
information may be limited or incomplete, and our statements should
not be read to indicate that we have conducted an exhaustive
inquiry into, or review of, all potentially available relevant
information. These statements are inherently uncertain, and you are
cautioned not to unduly rely upon these statements.
5
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
|
Biocept, Inc.
|
|
|
Condensed Balance Sheets
|
|
|
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
2021
|
|
|
2022
|
|
|
Assets
|
|
|
|
|
|
(unaudited)
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
28,864
|
|
|
$
|
22,928
|
|
|
Accounts receivable
|
|
|
13,786
|
|
|
|
17,376
|
|
|
Inventories, net
|
|
|
2,651
|
|
|
|
2,249
|
|
|
Prepaid expenses and other current assets
|
|
|
391
|
|
|
|
1,225
|
|
|
Total current assets
|
|
|
45,692
|
|
|
|
43,778
|
|
|
Fixed assets, net
|
|
|
2,401
|
|
|
|
2,699
|
|
|
Lease right-of-use assets - operating
|
|
|
9,026
|
|
|
|
8,758
|
|
|
Lease right-of-use assets - finance
|
|
|
2,842
|
|
|
|
2,411
|
|
|
Other non-current assets
|
|
|
456
|
|
|
|
496
|
|
|
Total assets
|
|
$
|
60,417
|
|
|
$
|
58,142
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,246
|
|
|
$
|
4,830
|
|
|
Accrued liabilities
|
|
|
3,018
|
|
|
|
2,737
|
|
|
Current portion of lease liabilities - operating
|
|
|
426
|
|
|
|
469
|
|
|
Current portion of lease liabilities - finance
|
|
|
1,083
|
|
|
|
1,053
|
|
|
Supplier financing
|
|
|
-
|
|
|
|
524
|
|
|
Total current liabilities
|
|
|
11,773
|
|
|
|
9,613
|
|
|
Non-current portion of lease liabilities - operating
|
|
|
9,736
|
|
|
|
9,462
|
|
|
Non-current portion of lease liabilities - finance
|
|
|
1,428
|
|
|
|
957
|
|
|
Payor liability
|
|
|
-
|
|
|
|
5,654
|
|
|
Total liabilities
|
|
|
22,937
|
|
|
|
25,686
|
|
|
Commitments and contingencies (see Note 10)
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 5,000,000 shares authorized;
2,106 shares issued and outstanding at December 31, 2021 and
June 30, 2022, respectively.
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.0001 par value, 150,000,000 shares authorized;
16,849,805 shares and 16,922,868 shares issued and outstanding at
December 31, 2021 and June 30, 2022, respectively.
|
|
|
2
|
|
|
|
2
|
|
|
Additional paid-in capital
|
|
|
303,829
|
|
|
|
306,825
|
|
|
Accumulated deficit
|
|
|
(266,351
|
)
|
|
|
(274,371
|
)
|
|
Total shareholders’ equity
|
|
|
37,480
|
|
|
|
32,456
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
60,417
|
|
|
$
|
58,142
|
|
The accompanying notes are an integral part of these unaudited
condensed financial statements.
6
|
Biocept, Inc.
|
|
|
Condensed Statements of Operations
|
|
|
(In thousands, except shares and per share data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30,
|
|
|
For the Six Months Ended June 30,
|
|
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
Net revenues
|
|
$
|
12,047
|
|
|
$
|
10,611
|
|
|
$
|
29,803
|
|
|
$
|
30,555
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
7,462
|
|
|
|
8,023
|
|
|
|
16,468
|
|
|
|
18,358
|
|
|
Research and development expenses
|
|
|
1,137
|
|
|
|
1,729
|
|
|
|
2,179
|
|
|
|
3,579
|
|
|
General and administrative expenses
|
|
|
3,251
|
|
|
|
4,300
|
|
|
|
6,371
|
|
|
|
11,106
|
|
|
Sales and marketing expenses
|
|
|
1,945
|
|
|
|
1,656
|
|
|
|
3,868
|
|
|
|
5,316
|
|
|
Total costs and expenses
|
|
|
13,795
|
|
|
|
15,708
|
|
|
|
28,886
|
|
|
|
38,359
|
|
|
(Loss) income from operations
|
|
|
(1,748
|
)
|
|
|
(5,097
|
)
|
|
|
917
|
|
|
|
(7,804
|
)
|
|
Other (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(80
|
)
|
|
|
(155
|
)
|
|
|
(145
|
)
|
|
|
(217
|
)
|
|
Total other (expense):
|
|
|
(80
|
)
|
|
|
(155
|
)
|
|
|
(145
|
)
|
|
|
(217
|
)
|
|
(Loss) income before income taxes
|
|
|
(1,828
|
)
|
|
|
(5,252
|
)
|
|
|
772
|
|
|
|
(8,021
|
)
|
|
Income
tax expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net (loss) income and comprehensive (loss) income
|
|
|
(1,828
|
)
|
|
|
(5,252
|
)
|
|
|
772
|
|
|
|
(8,021
|
)
|
|
Net (loss) income attributable to common shareholders
|
|
$
|
(1,828
|
)
|
|
$
|
(5,252
|
)
|
|
$
|
772
|
|
|
$
|
(8,021
|
)
|
|
Weighted-average shares outstanding used in computing net (loss)
income per share attributable to common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,462,329
|
|
|
|
16,906,314
|
|
|
|
13,431,340
|
|
|
|
16,876,841
|
|
|
Diluted
|
|
|
13,462,329
|
|
|
|
16,906,314
|
|
|
|
13,646,789
|
|
|
|
16,876,841
|
|
|
Net (loss) income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.14
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
0.06
|
|
|
$
|
(0.48
|
)
|
|
Diluted
|
|
$
|
(0.14
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
0.06
|
|
|
$
|
(0.48
|
)
|
The accompanying notes are an integral part of these unaudited
condensed financial statements.
7
|
Biocept, Inc.
|
|
|
Condensed Statements of Stockholder's Equity
|
|
|
(In thousands, except for shares)
|
|
|
(Unaudited)
|
|
|
|
|
Common Stock
|
|
|
Series A
Convertible
Preferred Stock
|
|
|
Additional
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-in Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance at December 31, 2021
|
|
|
16,849,805
|
|
|
$
|
2
|
|
|
|
2,106
|
|
|
$
|
—
|
|
|
$
|
303,829
|
|
|
$
|
(266,351
|
)
|
|
$
|
37,480
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,317
|
|
|
|
—
|
|
|
|
2,317
|
|
|
Shares issued upon conversion of preferred stock
|
|
|
356
|
|
|
|
—
|
|
|
|
(16
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,768
|
)
|
|
|
(2,768
|
)
|
|
Balance at March 31, 2022
|
|
|
16,850,161
|
|
|
$
|
2
|
|
|
|
2,090
|
|
|
$
|
—
|
|
|
$
|
306,146
|
|
|
$
|
(269,119
|
)
|
|
$
|
37,029
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
585
|
|
|
|
—
|
|
|
|
585
|
|
|
Shares issued for ATM transaction, net of issuance costs
|
|
|
72,707
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
94
|
|
|
|
—
|
|
|
|
94
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,252
|
)
|
|
|
(5,252
|
)
|
|
Balance at June 30, 2022
|
|
|
16,922,868
|
|
|
$
|
2
|
|
|
|
2,090
|
|
|
$
|
—
|
|
|
$
|
306,825
|
|
|
$
|
(274,371
|
)
|
|
$
|
32,456
|
|
|
|
|
Common Stock
|
|
|
Series A
Convertible
Preferred Stock
|
|
|
Additional
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-in Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance at December 31, 2020
|
|
|
13,397,041
|
|
|
$
|
1
|
|
|
|
2,111
|
|
|
$
|
—
|
|
|
$
|
287,218
|
|
|
$
|
(263,527
|
)
|
|
$
|
23,692
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
460
|
|
|
|
—
|
|
|
|
460
|
|
|
Shares issued upon exercise of common stock warrants
|
|
|
5,304
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19
|
|
|
|
—
|
|
|
|
19
|
|
|
Shares issued upon conversion of preferred stock
|
|
|
23
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Shares issued upon exercise of options
|
|
|
194
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,599
|
|
|
|
2,599
|
|
|
Balance at March 31, 2021
|
|
|
13,402,562
|
|
|
$
|
1
|
|
|
|
2,111
|
|
|
$
|
—
|
|
|
$
|
287,698
|
|
|
$
|
(260,928
|
)
|
|
$
|
26,771
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
494
|
|
|
|
—
|
|
|
|
494
|
|
|
Shares issued for ATM transaction, net of
issuance costs
|
|
|
908,044
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,914
|
|
|
|
—
|
|
|
|
3,914
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,828
|
)
|
|
|
(1,828
|
)
|
|
Balance at June 30, 2021
|
|
|
14,310,606
|
|
|
$
|
1
|
|
|
|
2,111
|
|
|
$
|
—
|
|
|
$
|
292,106
|
|
|
$
|
(262,756
|
)
|
|
$
|
29,351
|
|
The accompanying notes are an integral part of these unaudited
condensed financial statements.
8
|
Biocept, Inc.
|
|
|
Condensed Statements of Cash Flows
|
|
|
(in thousands)
|
|
|
(Unaudited)
|
|
|
|
|
For the Six Months Ended June 30,
|
|
|
|
|
2021
|
|
|
2022
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
772
|
|
|
$
|
(8,021
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
711
|
|
|
|
810
|
|
|
Noncash operating lease expense
|
|
|
721
|
|
|
|
268
|
|
|
Stock-based compensation
|
|
|
954
|
|
|
|
2,902
|
|
|
Loss on disposal of fixed assets
|
|
|
5
|
|
|
|
—
|
|
|
Increase (decrease) in cash resulting from changes in:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
1,549
|
|
|
|
(3,589
|
)
|
|
Inventory
|
|
|
(1,087
|
)
|
|
|
402
|
|
|
Prepaid expenses and other current assets
|
|
|
1,876
|
|
|
|
6
|
|
|
Other non-current assets
|
|
|
(13
|
)
|
|
|
(41
|
)
|
|
Accounts payable
|
|
|
(1,922
|
)
|
|
|
(2,852
|
)
|
|
Accrued liabilities
|
|
|
(755
|
)
|
|
|
(281
|
)
|
|
Operating lease liability
|
|
|
-
|
|
|
|
(230
|
)
|
|
Payor liability
|
|
|
-
|
|
|
|
5,654
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
2,811
|
|
|
|
(4,972
|
)
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
Purchases of fixed assets
|
|
|
(832
|
)
|
|
|
(315
|
)
|
|
Net
cash used in investing activities
|
|
|
(832
|
)
|
|
|
(315
|
)
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common stock
|
|
|
3,914
|
|
|
|
94
|
|
|
Proceeds from exercise of common stock warrants
|
|
|
18
|
|
|
|
—
|
|
|
Proceeds from exercise of stock options
|
|
|
1
|
|
|
|
—
|
|
|
Payments on finance leases
|
|
|
(624
|
)
|
|
|
(501
|
)
|
|
Payments on supplier financing
|
|
|
(205
|
)
|
|
|
(242
|
)
|
|
Net
cash provided by (used in) financing activities
|
|
|
3,104
|
|
|
|
(649
|
)
|
|
Net increase (decrease) in Cash
|
|
|
5,083
|
|
|
|
(5,936
|
)
|
|
Cash at Beginning of Period
|
|
|
14,368
|
|
|
|
28,864
|
|
|
Cash at End of Period
|
|
|
19,451
|
|
|
|
22,928
|
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
145
|
|
|
$
|
217
|
|
|
|
|
For the Six Months Ended June 30,
|
|
|
Non-cash Investing and Financing Activities
|
|
2021
|
|
|
2022
|
|
|
Financed insurance premiums
|
|
$
|
622
|
|
|
$
|
672
|
|
|
Fixed assets purchased through financed lease obligations
|
|
$
|
894
|
|
|
$
|
-
|
|
|
Fixed assets within accounts payable
|
|
$
|
88
|
|
|
$
|
361
|
|
The accompanying notes are an integral part of these unaudited
condensed financial statements.
9
BIOCEPT, INC.
NOTES TO CONDENSED FINANCIAL
STATEMENTS
(Unaudited)
1. The Company, Business Activities and Basis of Presentation
The Company and Business Activities
The Company was founded in California in May 1997 and is a
molecular oncology diagnostics company that develops and
commercializes proprietary clinical diagnostic laboratory assays
designed to identify rare tumor cells and cell-free tumor DNA from
blood and cerebrospinal fluid, or CSF. The identification of tumor
cells and cell-free tumor DNA in CSF has become the Company’s
principal development focus following its early commercial
expansion into CSF in 2020.
The Company operates a clinical laboratory that is CLIA-certified
(under the Clinical Laboratory Improvement Amendment of 1988) and
CAP-accredited (by the College of American Pathologists) and
manufactures proprietary microfluidic channels for cell enrichment
and extraction, as well as certain reagents that are used to
perform the Company’s diagnostic assays in a facility located in
San Diego, California. CLIA certification and CAP accreditation are
required before any clinical laboratory may perform testing on
human specimens for the purpose of obtaining information for the
diagnosis, prevention, treatment of disease, or assessment of
health. The assays the Company offers are classified as laboratory
developed tests (LDTs) under the CLIA regulations.
In July 2013, the Company effected a reincorporation to Delaware by
merging itself with and into Biocept, Inc., a Delaware corporation,
which had been formed to be and was a wholly owned subsidiary of
the Company since July 23, 2013.
In January 2020, the Company adapted and validated its proprietary
blood-based liquid biopsy technology for commercial and clinical
research use in CSF to identify tumor cells that have metastasized
to the central nervous system, or CNS, in patients with advanced
lung cancer or breast cancer. CNSide has been designed to improve
the clinical management of patients with suspected metastatic
cancer involving the CNS by enabling the quantitative analysis and
molecular characterization of tumor cells and cell-free tumor DNA
and RNA in the CSF. Since then, we have worked extensively
with leading neuro-oncologists and other cancer experts to further
define and characterize the use of this unique assay.
In June 2020, we launched a COVID-19 diagnostic (assay manufactured
by Thermo-Fisher) which broadened our assay menu to meet the
community testing needs due to the emergence of COVID-19.
Basis of Presentation
The accompanying unaudited condensed financial statements and notes
are prepared in accordance with accounting principles generally
accepted in the United States of America, or GAAP, and on the basis
that the Company will continue as a going concern (see Note 2). The
accompanying unaudited condensed financial statements and notes do
not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
The unaudited condensed financial statements included in this Form
10-Q have been prepared in accordance with the U.S. Securities and
Exchange Commission, or SEC, instructions for Quarterly Reports on
Form 10-Q. Accordingly, the condensed financial statements are
unaudited and do not contain all the information required by GAAP
to be included in a full set of financial statements. The balance
sheet at December 31, 2021 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by GAAP for a complete set of
financial statements. The audited financial statements for the year
ended December 31, 2021, filed with the SEC with our Annual
Report on Form 10-K on April 5, 2022 include a summary of our
significant accounting policies and should be read in conjunction
with this Form 10-Q. In the opinion of management, all material
adjustments necessary to present fairly the results of operations
for such periods have been included in this Form 10-Q. All such
adjustments are of a normal recurring nature. The results of
operations for interim periods are not necessarily indicative of
the results of operations for the entire year.
Reclassification
The Company reclassified the change in inventory reserve for the
six months ended June 30, 2021 of approximately $60,000 within the
condensed statement of cash flows to conform to the current year
presentation. The change in inventory reserve is now included in
the increase (decrease) in cash resulting from changes in inventory
within the cash flows from operating activities. This
reclassification had no effect on previously reported cash flows
from operating activities in the unaudited condensed statement of
cash flows.
10
Significant Accounting Policies
During the three and six months ended June 30, 2022, there
were no changes to our significant accounting policies as described
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021.
Revenue Recognition and Accounts Receivable
The Company's commercial revenues are generated from diagnostic
services provided to patient’s physicians and billed to third-party
insurance payers such as managed care organizations, Medicare and
Medicaid and patients for any deductibles, coinsurance or
copayments that may be due. The Company recognizes revenue in
accordance with ASC 606, Revenue from Contracts with Customers, or
ASC 606, which requires that an entity recognize revenue when it
transfers promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled to in exchange for those goods or services.
Contracts
For its commercial revenues, while the Company markets directly to
physicians and other healthcare providers, the Company provides
services that benefit the patient. Patients do not typically enter
into direct agreements with the Company; however, a patient’s
insurance coverage requirements would dictate whether or not any
portion of the cost of the tests would be patient responsibility.
Accordingly, the Company establishes contracts with commercial
insurers in accordance with customary business practices, as
follows:
|
|
•
|
Approval of a contract is established
via the order and accession, which are submitted by the patient’s
physician.
|
|
|
•
|
The Company is obligated to perform
its diagnostic services upon receipt of a sample from a physician,
and the patient and/or applicable payer are obligated to reimburse
the Company for services rendered based on the patient’s insurance
benefits.
|
|
|
•
|
Payment terms are a function of a
patient’s existing insurance benefits, including the impact of
coverage decisions with the Centers for Medicare & Medicaid
Services, or CMS, and applicable reimbursement contracts
established between the Company and payers, unless the patient is a
self-pay patient, whereby the Company bills the patient directly
after the services are provided.
|
|
|
•
|
Once the Company delivers a patient’s
assay result to the ordering physician, the contract with a patient
has commercial substance, as the Company is legally able to collect
payment and bill an insurer and/or patient, regardless of payer
contract status or patient insurance benefit status.
|
|
|
•
|
Consideration associated with
commercial revenues is considered variable and constrained until
fully adjudicated, with net revenues recorded to the extent that it
is probable that a significant reversal will not occur.
|
The Company’s development services revenues are supported by
contractual agreements and generated from assay development
services provided to entities, such as pharma or biotech
organizations, as well as certain other diagnostic services
provided to physicians, and revenues are recognized upon delivery
of the performance obligations in the contract.
Performance Obligations
A performance obligation is a promise in a contract to transfer a
distinct good or service, or a bundle of goods or services, to the
customer. For its commercial and development services
revenues, the Company’s contracts have a single performance
obligation, which is satisfied upon rendering of services, which
culminates in the delivery of a patient’s assay result(s) to the
ordering physician or entity. The duration of time between
accession receipt and delivery of a valid assay result to the
ordering physician or entity is typically less than two weeks, and
for our RT-PCR COVID-19 testing, typically 48 hours or less.
Accordingly, the Company elected the practical expedient and
therefore, does not disclose the value of unsatisfied performance
obligations.
Transaction Price
The transaction price is the amount of consideration that the
Company expects to collect in exchange for transferring promised
goods or services to a customer, excluding amounts collected on
behalf of third parties, such as sales taxes. The consideration
expected from a contract with a customer may include fixed amounts,
variable amounts, or both. The Company’s gross commercial revenues
billed, and corresponding gross accounts receivable, subject to
price concessions to arrive at reported net revenues, which relate
to differences between amounts billed and corresponding amounts
estimated to be subsequently collected and is deemed to be variable
although the variability is not explicitly stated in any contract.
Rather, the variability is due to several factors, such as the
payment history or lack thereof for third-party payers,
reimbursement rate changes for contracted and non-contracted
payers, any patient co-payments, deductibles or compliance
incentives, the existence of secondary payers and claim
denials. The Company estimates
the amount of variable consideration using the most likely
amount approach to estimating variable consideration for
third-party payers, including direct patient bills, whereby the
estimated reimbursement for services is established by payment
histories on CPT codes for each payer, or similar payer types. When
no payment history is available, the value of the account is
estimated at Medicare rates, with additional other
11
payer-specific reserves taken as appropriate. Collection periods
for billings on commercial revenues range from less than 30 days to
several months, depending on the contracted or non-contracted
nature of the payer, among other variables. The estimates of
amounts that will ultimately be realized from commercial diagnostic
services for non-contracted payers require significant judgment by
management.
The Company limits the amount of variable consideration included in
the transaction price to the unconstrained portion of such
consideration. Revenue is recognized up to the amount of variable
consideration that is not subject to a significant reversal until
additional information is obtained or the uncertainty associated
with the additional payments or refunds is subsequently
resolved. Differences between original estimates and
subsequent revisions, including final settlements, represent
changes in the estimate of implicit price concessions and are
included in the period in which such revisions are made. The
Company monitors its estimates of transaction price to depict
conditions that exist at each reporting date. If the Company
subsequently determines that it will collect more consideration
than it originally estimated for a contract with a customer, it
will account for the change as an increase in the estimate of the
transaction price in the period identified as an increase to
revenue. Similarly, if the Company subsequently determines
that the amount it expects to collect from a customer is less than
it originally estimated, it will generally account for the change
as a decrease in the estimate of the transaction price as a
decrease to revenue. Further, although
the Company believes that its estimate for implicit price
concessions is appropriate, it is possible that the Company will
experience an impact on cash collections as a result of the impact
of the COVID-19 pandemic.
Allocate Transaction Price
For the Company’s commercial revenues, the entire transaction price
is allocated to the single performance obligation contained in a
contract with a customer. For the Company’s development services
revenues, the contracted transaction price is allocated to each
single performance obligation contained in a contract with a
customer as performed.
Point-in-time Recognition
The Company’s single performance obligation is satisfied at a point
in time, and that point in time is defined as the date a patient’s
successful assay result is delivered to the patient’s ordering
physician or entity. The Company considers this date to be the time
at which the patient obtains control of the promised diagnostic
assay service.
Contract Balances
The timing of revenue recognition, billings and cash collections
results in accounts receivable recorded in the Company’s condensed
balance sheets. Generally, billing occurs subsequent to
delivery of a patient’s test result to the ordering physician or
entity, resulting in an account receivable.
Practical Expedients
The Company does not adjust the transaction price for the effects
of a significant financing component, as at contract inception, the
Company expects the collection cycle to be one year or less.
The Company expenses sales commissions when incurred because the
amortization period is one year or less, which are recorded within
sales and marketing expenses.
The Company incurs certain other costs that are incurred regardless
of whether a contract is obtained. Such costs are primarily related
to legal services and patient communications. These costs are
expensed as incurred and recorded within general and administrative
expenses.
12
Disaggregation of Revenue and Concentration of Risk
The composition of the Company’s net revenues recognized during the
three and six months ended June 30, 2022, disaggregated by
source and nature, are as follows (in thousands):
|
|
|
For the Three Months Ended June 30,
|
|
|
For the Six Months Ended June 30,
|
|
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
Net revenues from non-contracted payers
|
|
$
|
5,059
|
|
|
$
|
9,085
|
|
|
$
|
16,400
|
|
|
$
|
21,729
|
|
|
Net revenues from contracted payers*
|
|
|
6,920
|
|
|
|
1,434
|
|
|
|
13,234
|
|
|
|
8,697
|
|
|
Net commercial revenues
|
|
|
11,979
|
|
|
|
10,519
|
|
|
|
29,634
|
|
|
|
30,426
|
|
|
Development services revenues
|
|
|
33
|
|
|
|
92
|
|
|
|
73
|
|
|
|
129
|
|
|
Kits and Specimen Collection Tubes (SCTs)
|
|
|
35
|
|
|
|
—
|
|
|
|
96
|
|
|
|
—
|
|
|
Total net revenues
|
|
$
|
12,047
|
|
|
$
|
10,611
|
|
|
$
|
29,803
|
|
|
$
|
30,555
|
|
*Includes Medicare, Medicare Advantage and CARES Act as
reimbursement amounts are fixed.
Revenues for the three and six months ended June 30, 2022
included $10.6 million and $30.6 million, respectively, in
commercial test revenues, including $9.8 million and $28.4 million
of revenues attributable to RT-PCR COVID-19 testing. At
June 30, 2022, unbilled accounts receivable totaled
approximately $3.8 million.
Concentrations of credit risk with respect to revenues are
primarily limited to geographies to which the Company provides a
significant volume of its services, and to specific third-party
payers of the Company’s services such as Medicare, insurance
companies, and other third-party payers. The Company’s client base
consists of many geographically dispersed clients diversified
across various customer types.
The Company's third-party payers that represent more than 10% of
total net revenues in any period presented during the three and six
months ended June 30, 2021 and 2022 were as follows:
|
|
|
For the Three Months Ended June 30,
|
|
|
For the Six Months Ended June 30,
|
|
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
Medicare and Medicare Advantage/CARES Act
|
|
57%
|
|
|
12%
|
|
|
44%
|
|
|
32%
|
|
|
Blue Cross Blue Shield
|
|
25%
|
|
|
17%
|
|
|
28%
|
|
|
16%
|
|
|
Kaiser Permanente
|
|
0%
|
|
|
23%
|
|
|
0%
|
|
|
17%
|
|
The Company's third-party payers that represent more than 10% of
total accounts receivable at December 31, 2021 and
June 30, 2022 were as follows:
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
2021
|
|
|
2022
|
|
|
Medicare and Medicare Advantage/CARES Act
|
|
31%
|
|
|
8%
|
|
|
Blue Cross Blue Shield
|
|
19%
|
|
|
12%
|
|
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments- Credit Losses,
which requires the measurement of expected credit losses for
financial instruments carried at amortized cost, such as accounts
receivable, held at the reporting date based on historical
experience, current conditions and reasonable forecasts. The main
objective of this standard is to provide financial statement users
with more decision-useful information about the expected credit
losses on financial instruments and other commitments to extend
credit held by a reporting entity at each reporting period. In
November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326,
Financial Instruments- Credit Losses, which included an
amendment of the effective date. The standard is effective for the
Company for annual reporting periods beginning after December 15,
2022. The Company does not expect the adoption of this standard to
have a significant impact on its financial statements.
In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs,
to enhance the transparency of supplier finance programs. The main
objective of this standard requires a buyer in a supplier finance
program to disclose sufficient information about the program to
allow a user of financial statements to understand the program’s
nature, activity during the period, changes from
13
period to period, and potential magnitude.
The standard is effective for the Company for annual reporting
periods beginning after December 15, 2022, including interim
periods within those fiscal years. The Company is currently
evaluating
the expected impact the adoption of this standard
will have
on its financial statements.
2. Liquidity
As of June 30, 2022, cash totaled $22.9 million and the
Company had an accumulated deficit of $274.4 million. For the six
months ended June 30, 2022, the Company incurred a net loss
of $8.0 million.
The Company has historically funded its operations primarily
through sales of its equity securities. For the year ended December
31, 2021, revenue from the Company’s COVID-19 testing business
provided an increased level of cash flow. During the quarter ended
June 30, 2022, net revenues were approximately $10.6 million
compared with approximately $12.0 million for the same period in
the prior year.
During 2021 and the three and six months ended June 30, 2022, the
Company incurred operating losses. The Company had net cash
provided by operations for the year ended December 31, 2021, and
net cash used to fund operations for the three and six months ended
June 30, 2022. The Company does not anticipate it will be
profitable until it has commercial expansion of its proprietary
clinical diagnostic laboratory assays designed to identify rare
tumor cells from cerebrospinal fluid, trademarked as CNSide.
Accordingly, management performed the review required for going
concern accounting and does not believe the Company presently has
sufficient liquidity to continue to operate for the next twelve
months after the filing of this Quarterly report on Form 10-Q.
Management intends to continue its efforts to contain costs and to
raise additional capital until it ultimately generates sufficient
cash to support operations from commercial sales.
3. Sales of Equity Securities
As part of a warrant repricing and exchange transaction, in January
2020, the Company issued an aggregate of 692,725 new warrants in
exchange for the exercise of certain warrants issued by the Company
in February 2019 and March 2019 for an aggregate of 692,725 shares
of common stock and received net proceeds of approximately $2.3
million. As a result of the warrant repricing, the exercise price
of warrants to purchase an aggregate of 89,657 shares of common
stock issued by the Company in January 2018 was adjusted from $4.05
to $3.495 per share. In January 2020, the Company issued 192,750
shares of common stock pursuant to the partial exercise of the
underwriters’ overallotment option from the Company’s December 2019
public offering. The net proceeds to the Company from the
overallotment closing was approximately $700,000. The warrants issued in connection with the warrant
repricing and exchange transaction were considered inducement
warrants and are classified in equity. In addition, the
modification expense associated with the change in fair value due
to the repricing of February and March 2019 warrants is recorded as
inducement expense, which was approximately $191,000. The fair
value of the warrants issued was approximately $1.9 million. The
fair value of the inducement warrants and warrant modification of
$2.1 million was expensed as warrant inducement expense during the
year ended December 31, 2021.
On May 12, 2021, the Company entered into a Controlled Equity
OfferingSM Sales
Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.
(the “Sales Agent”), under which the Company may issue and sell
from time to time up to $25,000,000 of its common stock through or
to the Sales Agent, as sales agent or principal. The issuance and
sale of these shares under the Sales Agreement, if any, is subject
to the continued effectiveness of the Company’s shelf registration
statement on Form S-3, filed with the SEC on April 24, 2020. Our
shelf registration statement on Form S-3 will be unavailable upon
our filing of our Annual Report on Form 10-K for the year ending
December 31, 2022 and we will not be able to file a new Form S-3
until, at the earliest, September 1, 2023. Sales of the Company’s
common stock, under the Sales Agreement are made at market prices
by any method that is deemed to be an “at the market offering” as
defined in Rule 415(a)(4) under the Securities Act of 1933, as
amended. Each time the Company wishes to issue and sell common
stock under the Sales Agreement, it notifies the Sales Agent of the
number of shares to be issued, the dates on which such sales are
anticipated to be made and any minimum price below which sales may
not be made. Once the Company has so instructed the Sales Agent,
unless the Sales Agent declines to accept the terms of the notice,
the Sales Agent has agreed to use its commercially reasonable
efforts consistent with its normal trading and sales practices to
sell such shares up to the amount specified on such terms.
The obligations of the Sales Agent under the Sales Agreement to
sell the Company’s common stock are subject to a number of
conditions that the Company must meet. The offering of common stock
pursuant to the Sales Agreement will terminate upon the earlier of
(1) the sale of all common stock subject to the Sales Agreement and
(2) termination of the Sales Agreement as permitted therein. The
Sales Agreement may be terminated by either party at any time upon
ten days’ prior notice. The Sales Agent is entitled to compensation
from the Company at a fixed commission rate equal to 3.0% of the
gross sales price per share of any common stock sold under the
Sales Agreement.
During 2021, the Company received net proceeds of $14.1 million
from the sale of our common stock and issued 3,428,680 shares of
our common stock at a weighted average purchase price of $4.31
pursuant to the Sales Agreement. During the three and six months
ended June 30, 2022, we received net proceeds of approximately
$94,000 from the sale of our common stock and issued 72,707
shares
14