Cancer Genetics, Inc. (Nasdaq: CGIX), a leader in drug discovery
and preclinical oncology and immuno-oncology services, today
announced financial and operating results for the fourth quarter
and full year ended December 31, 2019.
OPERATIONAL HIGHLIGHTS
● |
Demonstrating growth in revenue and operating margins with
vivoPharm business. Division continues to operate successfully and
efficiently in the US, Europe, and Australia. |
● |
Continuing to evaluate potential strategic options including
collaborations, mergers or acquisitions, or other strategic
transactions. |
FULL YEAR 2019 FINANCIAL
HIGHLIGHTS
● |
Revenue from continuing operations increased by 48%, from $4.9
million in FY 2018 to $7.3 million in FY 2019; |
● |
Gross Profit increased to $3.6 million in FY 2019, from $1.8
million in FY 2018, an increase of 96%, and Gross Margin increased
12.0 percentage points from 37.3% in FY 2018 to 49.3% in FY
2019; |
● |
Completed the divestiture of two operating units (Biopharma and
Clinical Services) for cash and future cash payment streams; |
● |
Received a combined amount of approximately $21 million in cash
during 2H 2019 as the result of the aforementioned divestiture
transactions; |
● |
Settled approximately $20 million of debt and related interest and
fees in 2019; |
● |
Exited 2019 with approximately $4.2 million in cash and restricted
cash. |
FOURTH QUARTER 2019 FINANCIAL
HIGHLIGHTS
● |
Revenue from continuing operations was $1.9 million in Q4 2019,
increasing from $1.7 million in Q4 2018 and decreasing from $2.1
million in the sequential quarter of Q3 2019; |
● |
Gross Profit increased to approximately $0.8 million in Q4 2019,
increasing from $0.7 million in Q4 2018, and decreasing from $1.1
million in the sequential quarter of Q3 2019; |
● |
Gross Margin was 43.4% in Q4 2019 compared to 44.0% in Q4 2018; and
53.6% in the sequential quarter of Q3 2019. |
John A. Roberts, Chief Executive Officer of
Cancer Genetics stated, “During 2019, we transformed the business
significantly by improving our balance sheet and refocusing the
business on assisting pharmaceutical and biotechnology companies in
improving and streamlining their drug discovery and development
processes to help improve the odds of success for new drug
candidates and to speed up the time to market. We feel these
actions enable us to better direct our attention in the area of
drug discovery and novel therapies. We reduced our total
liabilities by approximately $21 million, increased our cash
position by approximately $3.7 million at year-end 2019 compared to
a year earlier, and continue to focus on further improving our
balance sheet and operating metrics. We believe these measures will
support revenue and margin growth.”
Mr. Roberts continued, “The activities of 2019
have enabled us to move forward into 2020 in a clean, efficient,
and unencumbered manner. The reduction of debt, inflow of cash, and
transition toward leaner operations makes Cancer Genetics a nimbler
company.”
“In terms of our ‘going forward path’, our
vivoPharm business unit had a solid year of revenue growth
year-over-year, and experienced numerous new discovery programs
coming from Europe and our existing customer base in the United
States. While we continue with the process of assessing various
strategic options, it is important to note that our vivoPharm
business continues to operate efficiently; therefore, we can afford
to take a thoughtful and methodical approach in regards to a future
transaction,” Mr. Roberts stated.
“In summary, the Company’s management and Board
of Directors are committed to evaluating all potential strategic
opportunities and to pursuing the path most likely to create both
near and longer-term value for Cancer Genetics’ shareholders. We
look forward to keeping shareholders apprised of our progress,” Mr.
Roberts concluded.
The Company filed its Annual Report on Form 10-K
for the year ended December 31, 2019 last Friday with the
Securities and Exchange Commission. The 2019 audited financial
statements contain an explanatory paragraph regarding the Company’s
ability to continue as a going concern in the audit opinion from
its independent registered public accounting firm. See further
discussion in Note 2 to the Company’s consolidated financial
statements included in the Annual Report on Form 10-K. The Company
also disclosed in Item 9 to Form 10-K it had concluded that
internal controls over financial reporting was ineffective for the
year ended December 31, 2019 resulting in the Company reporting
deficiencies that were considered material weaknesses.
FOURTH QUARTER 2019 FINANCIAL
RESULTS
The Company reported total revenue from
continuing operations of $1.9 million for the fourth quarter of
2019 compared to revenue of $1.7 million in the fourth quarter of
2018, an increase of $0.2 million or 12%, partially the result of
the adoption of ASC 606 and the inherent variability in project
start and end times at the individual contract level in our
Discovery Services business unit.
Gross profit increased to $0.8 million or 43.4%
in the fourth quarter of 2019, compared to $0.7 million or 44.0% in
the fourth quarter of 2018. The gross margin percentage remains
consistent in the comparable periods, as the Discovery Services
cost structure is mostly fixed, thereby allowing the Company an
opportunity to gain from its operating leverage.
Total operating expenses for the fourth quarter
of 2019 were approximately $0.9 million, a decrease of
approximately 66% compared to $2.5 million during the fourth
quarter of 2018. The decrease in total operating expenses is
primarily the result of the Company incurring costs in Q4 2018
related to a particular corporate transaction.
Net loss was $0.2 million or $0.14 per share for
the fourth quarter of 2019, compared to a net loss of $3.8 million
or $4.08 per share for the fourth quarter of 2018.
FULL YEAR 2019 FINANCIAL
RESULTS
Revenues for full year 2019 were $7.3 million as
compared to $4.9 million for full year 2018, a 48% increase. The
Company reported gross margin for the twelve months ended December
31, 2019 of 49.3% compared to 37.3% in the same period last year,
an improvement of 12 percentage points. Total operating expenses
decreased approximately $0.2 million to approximately $9.3 million
for full year 2019. Basic and diluted net loss was $6.7 million or
$3.48 per share, compared to basic and diluted net loss of $20.4
million or $22.39 per share for 2018.
Cash and cash equivalents totaled approximately
$4.2 million as of December 31, 2019.
ABOUT CANCER GENETICS
Through its vivoPharm subsidiary, the Company
offers proprietary preclinical test systems supporting clinical
diagnostic offerings at early stages, valued by the pharmaceutical
industry, biotechnology companies and academic research centers.
The Company is focused on precision and translational medicine to
drive drug discovery and novel therapies. vivoPharm specializes in
conducting studies tailored to guide drug development, starting
from compound libraries and ending with a comprehensive set of in
vitro and in vivo data and reports, as needed for Investigational
New Drug filings. vivoPharm operates in The Association for
Assessment and Accreditation of Laboratory Animal Care
International (AAALAC) accredited and GLP compliant audited
facilities.
For more information, please visit or
follow CGI at:
Internet:
www.cancergenetics.com
Twitter: @Cancer_Genetics
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 our
attempts to adapt to the global coronavirus pandemic, achieve
profitability by increasing sales of our pre-clinical services,,
maintain our existing customer base and avoid cancellation of
customer contracts or discontinuance of trials, raise capital to
meet our liquidity needs, properly evaluate strategic options, ,
and other risks discussed in the Cancer Genetics, Inc. Form 10-K
for the year ended December 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:Jennifer K.
Zimmons. Ph.D.Investor RelationsZimmons International
Communications, Inc.Email: jzimmons@zimmonsic.comPhone:
+1.917.214.3514
CANCER GENETICS, INC. AND SUBSIDIARIES
Consolidated Balance
Sheets(in thousands, except par
value)
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,880 |
|
|
$ |
161 |
|
Restricted cash |
|
|
350 |
|
|
|
— |
|
Accounts receivable |
|
|
696 |
|
|
|
777 |
|
Earn-Out from siParadigm, current portion |
|
|
747 |
|
|
|
— |
|
Excess Consideration Note |
|
|
888 |
|
|
|
— |
|
Other current assets |
|
|
546 |
|
|
|
267 |
|
Current assets of discontinuing operations |
|
|
71 |
|
|
|
23,250 |
|
Total current assets |
|
|
7,178 |
|
|
|
24,455 |
|
FIXED ASSETS, net of
accumulated depreciation |
|
|
558 |
|
|
|
558 |
|
OTHER ASSETS |
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
|
94 |
|
|
|
— |
|
Restricted cash |
|
|
— |
|
|
|
350 |
|
Earn-Out from siParadigm, less current portion |
|
|
356 |
|
|
|
— |
|
Patents and other intangible assets, net of accumulated
amortization |
|
|
2,895 |
|
|
|
3,349 |
|
Investment in joint venture |
|
|
92 |
|
|
|
92 |
|
Goodwill |
|
|
3,090 |
|
|
|
5,963 |
|
Other |
|
|
641 |
|
|
|
639 |
|
Total other assets |
|
|
7,168 |
|
|
|
10,393 |
|
Total
Assets |
|
$ |
14,904 |
|
|
$ |
35,406 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
2,072 |
|
|
$ |
4,598 |
|
Obligations under operating leases, current portion |
|
|
193 |
|
|
|
— |
|
Obligations under finance leases, current portion |
|
|
68 |
|
|
|
45 |
|
Deferred revenue |
|
|
1,217 |
|
|
|
1,214 |
|
Convertible note, net |
|
|
— |
|
|
|
2,481 |
|
Note payable, net |
|
|
1,277 |
|
|
|
— |
|
Advance from NovellusDx, Ltd., net |
|
|
350 |
|
|
|
535 |
|
Advance from siParadigm, current portion |
|
|
566 |
|
|
|
— |
|
Other derivatives |
|
|
— |
|
|
|
86 |
|
Current liabilities of discontinuing operations |
|
|
1,229 |
|
|
|
19,189 |
|
Total current liabilities |
|
|
6,972 |
|
|
|
28,148 |
|
Obligations under operating
leases, less current portion |
|
|
10 |
|
|
|
— |
|
Obligations under finance
leases, less current portion |
|
|
107 |
|
|
|
54 |
|
Advance from siParadigm, less
current portion |
|
|
252 |
|
|
|
— |
|
Deferred rent payable and
other |
|
|
— |
|
|
|
154 |
|
Warrant liability |
|
|
178 |
|
|
|
248 |
|
Total
Liabilities |
|
|
7,519 |
|
|
|
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, 2,104
and 924 shares issued and outstanding as of December 31, 2019 and
2018, respectively |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
171,783 |
|
|
|
164,458 |
|
Accumulated other comprehensive income |
|
|
26 |
|
|
|
60 |
|
Accumulated deficit |
|
|
(164,424 |
) |
|
|
(157,716 |
) |
Total Stockholders’
Equity |
|
|
7,385 |
|
|
|
6,802 |
|
Total Liabilities and
Stockholders’ Equity |
|
$ |
14,904 |
|
|
$ |
35,406 |
|
See Notes to Consolidated Financial Statements.
CANCER GENETICS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
and Other Comprehensive Loss(in thousands, except
per share amounts)
|
|
Years Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
Revenue |
|
$ |
7,305 |
|
|
$ |
4,932 |
|
Cost of
revenues |
|
|
3,701 |
|
|
|
3,090 |
|
Gross profit |
|
|
3,604 |
|
|
|
1,842 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
— |
|
|
|
154 |
|
General and administrative |
|
|
5,171 |
|
|
|
6,716 |
|
Sales and marketing |
|
|
1,146 |
|
|
|
1,197 |
|
Impairment of goodwill |
|
|
2,873 |
|
|
|
— |
|
Merger costs |
|
|
117 |
|
|
|
1,464 |
|
Total operating expenses |
|
|
9,307 |
|
|
|
9,531 |
|
Loss from continuing operations |
|
|
(5,703 |
) |
|
|
(7,689 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,437 |
) |
|
|
(319 |
) |
Interest income |
|
|
108 |
|
|
|
21 |
|
Change in fair value of acquisition note payable |
|
|
4 |
|
|
|
136 |
|
Change in fair value of other derivatives |
|
|
86 |
|
|
|
(86 |
) |
Change in fair value of warrant liability |
|
|
70 |
|
|
|
3,732 |
|
Change in fair value of siParadigm Earn-Out |
|
|
(935 |
) |
|
|
— |
|
Change in fair value of Excess Consideration Note |
|
|
93 |
|
|
|
— |
|
Gain on troubled debt restructuring |
|
|
258 |
|
|
|
— |
|
Other income |
|
|
59 |
|
|
|
— |
|
Total other income (expense) |
|
|
(1,694 |
) |
|
|
3,484 |
|
Loss before income taxes |
|
|
(7,397 |
) |
|
|
(4,205 |
) |
Income tax benefit |
|
|
512 |
|
|
|
— |
|
Loss from continuing operations |
|
|
(6,885 |
) |
|
|
(4,205 |
) |
Income (loss) from discontinuing operations (including gain
on disposal of businesses of $8,370 during the year ended December
31, 2019 and loss on disposal of business of $78 during the year
ended December 31, 2018) |
|
|
177 |
|
|
|
(16,168 |
) |
Net loss |
|
|
(6,708 |
) |
|
|
(20,373 |
) |
Foreign currency translation
loss |
|
|
(34 |
) |
|
|
(9 |
) |
Comprehensive loss |
|
$ |
(6,742 |
) |
|
$ |
(20,382 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share from continuing operations |
|
$ |
(3.57 |
) |
|
$ |
(4.62 |
) |
Basic and diluted net income
(loss) per share from discontinuing operations |
|
|
0.09 |
|
|
|
(17.77 |
) |
Basic and diluted net loss per
share |
|
$ |
(3.48 |
) |
|
$ |
(22.39 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted-average shares outstanding |
|
|
1,928 |
|
|
|
910 |
|
See Notes to Consolidated Financial
Statements.
Cancer Genetics (NASDAQ:CGIX)
Historical Stock Chart
From Jul 2024 to Aug 2024
Cancer Genetics (NASDAQ:CGIX)
Historical Stock Chart
From Aug 2023 to Aug 2024