Business Progress and Recent Accomplishments
Highlighted and Discussed Further on Conference Call
Interpace Diagnostics Group, Inc. (NASDAQ: IDXG) (“Interpace” or
the “Company”) today announced financial results for the full year
and fourth quarter ended December 31, 2018, along with business
progress and recent accomplishments.
Topline highlights include:
- Net Revenue for 2018 was $21.9 million, which increased 38%
over 2017 Net Revenue;
- Net Revenue grew to $5.8 million in the fourth quarter 2018, or
34% over the fourth quarter 2017;
- Cash & Cash Equivalents of $6.1 million as of December 31,
2018; no Long-Term Debt outstanding;
- Raised $6.1 million in net proceeds through an underwritten
public offering in January 2019;
- Now covered by 30 regional Blue Cross Blue Shield (BCBS) plans
for ThyGeNEXT® and ThyraMIR®; and
- Announced further progress developing lead pipeline product,
BarreGEN® for Barrett’s Esophagus
Jack Stover, President and CEO of Interpace
Diagnostics, said, “This past year was a terrific year for
Interpace as our thyroid (endocrine) franchise and our pancreatic
(gastrointestinal) franchise both continued to grow as
anticipated.” Mr. Stover continued, “With our recent completed
public offering, the absorption of most of Rosetta Genomics’
business late in the year and our reduced cash spend, we are
confident in our positioning and trajectory for 2019 and
beyond.”
Full Year and Fourth Quarter 2018 Financial Results and
Performance
- Net Revenue for the year ended 2018 was $21.9 million, an
increase of 38% over the comparable period in 2017. Net Revenue for
the quarter was $5.8 million, an increase of 34% over the fourth
quarter of 2017.
- Gross Profit percentage year-to-date was 53% as compared to 54%
for the prior comparable year-to-date period and Gross Profit
percentage for the quarter was 55%, down from 62% for the fourth
quarter of 2017, principally due to the timing of purchases and
product royalties.
- The 2018 Operating Loss was $(12.1) million as compared to an
Operating Loss of $(6.3) million for the same period of 2017. The
2017 Operating Loss included $5.6 million of non-cash reduction of
expenses related to a change in fair value of contingent
consideration. Operating Loss was $(4.5) million for the quarter
ended December 31, 2018, compared to an Operating Loss of $(3.3)
million for the quarter ended December 31, 2017.
- Net Cash Used in Operating Activities in 2018 was approximately
$(8.7) million as compared to $(15.3) million in 2017, a 43%
improvement. A significant portion of the 2017 net cash used was
related to discontinued operations and transaction costs.
- Our 2018 and 2017 Net Losses were both approximately $(12.2)
million, respectively. The 2017 Net Loss included, as previously
stated, an offset to expenses of $5.6 million related to a non-cash
change in fair value of contingent consideration. Net Loss for the
fourth quarter of 2018 was $(4.0) million, as compared to $(5.0)
million for the fourth quarter of 2017, a 19% improvement.
- Basic and Diluted Net Loss per Common Share was $(0.43) versus
$(0.77) for the comparable years and for the fourth quarter of 2018
was $(0.14) versus $(0.19) for the prior year quarter.
- Adjusted EBITDA (in the attached schedule), which we believe is
a meaningful supplemental disclosure that may be indicative of how
management and our board of directors evaluate company performance,
adjusts Income or Loss from Continuing Operations for non-cash
charges such as depreciation & amortization, stock-based
compensation, interest and taxes, mark to market on warrant
liabilities, loss on extinguishment of debt, and the change in fair
value of contingent consideration. Adjusted EBITDA for the year
ended December 31, 2018 was $(4.7) million as compared to $(7.1)
million for the comparable period of 2017, a 34% improvement. The
improvement in Adjusted EBITDA was principally due to our increased
Revenues and continued cost controls in 2018. Adjusted EBITDA for
the three-month periods ended December 31, 2018 and 2017 was $(1.4)
million and $(1.6) million, respectively.
- Cash and Cash Equivalents were $6.1 million at December 31,
2018; there was no long-term debt outstanding and Stockholders’
Equity amounted to $32.9 million at December 31, 2018.
Additionally, in January 2019 we raised an additional $6.1 million
in net proceeds from a public offering generally with good quality
biotech investors and in November 2018 closed on a $4 million line
of credit facility, which is now available to assist in funding our
working capital needs as well as anticipated lab expansions.
Recent Business Highlights
Our most important business progress for 2018 and 2019
year-to-date includes the following:
- Announced further expansion of our thyroid business by offering
tests under three distinct platforms;
- Entered into an agreement with University of Maryland medical
system providing them access to our molecular tests;
- Added 30 new BCBS plans to cover our thyroid assays as well as
CIGNA now covering ThyraMIR®(in addition to its previously approved
policy to cover ThyGeNEXT®);
- Announced new insurance BCBS coverage by the Federal Employee
Health Benefit Program of 5.3 million covered lives to utilize our
thyroid assays;
- Announced at the American Thyroid Association (ATA) release of
interim results of our registry data study supporting the use of
ThyGeNEXT® and ThyraMIR®;
- Received approval from Piedmont General Hospital, Georgia’s
largest healthcare system, to cover PancraGEN® and,
- Completed the conversion of Rosetta Genomics’ business, which
utilized slides to assess the potential progression of
indeterminate thyroid biopsies, to our commercial team. Also
acquired the majority of Rosetta’s lab equipment as we expanded our
own clinical labs.
Product and Pipeline Progress
Our product development and pipeline progress is principally
focused in the following areas:
- We expanded our PancraGEN® assay beyond just pancreatic
cysts to include both biliary strictures and solid pancreatic
lesions;
- As mentioned in the previous quarter, we successfully launched
ThyGeNEXT®, our proprietary new expanded mutational panel for
indeterminate thyroid nodules, at the American Association of
Clinical Endocrinologists (AACE) Annual Meeting;
- BarreGEN®is our major pipeline product focus. Our Clinical
Evaluation Program (CEP) continues to build as we gather additional
data and results of sophisticated users:
- Dr. Tina Narick and Jim Camuti of Interpace have been selected
to head the further development and clinical activities related to
BarreGEN®in order to accelerate this process;
- We launched our first Key Opinion Leader (KOL) group of
prominent physicians to assist us in positioning BarreGEN®for the
marketplace;
- We announced that a Notice of Allowance was issued by the U.S.
Patent and Trademark office supporting BarreGEN®;
- We are working on our second clinical validity study to support
the ability of BarreGEN® to identify patients at risk of
progression to esophageal cancer years prior to any visible signs
of cancer.
- We are in discussions with the Centers for Medicare &
Medicaid Services about coverage of BarreGEN®;
- We are also continuing to discuss with potential partners the
opportunity to co-develop as well as potentially co-market
BarreGEN®; and
- In 2019 we announced the first independent publication in BMI
Open Gastroenterology demonstrating clinical utility of
BarreGEN®.
We are also focused on the following business strategies:
- Offering and potentially partnering our data and capabilities
in bioinformatics for opportunities to utilize our database of over
50,000 patient samples; and
- Continuing to expand our product offerings both in and outside
of the U.S. either through acquisitions or licensing by leveraging
our highly experienced commercial team.
Conference Call
Interpace will hold a conference call on Tuesday, March 19,
2019, at 4:30 p.m. ET to discuss financial and operational results
for the year and fourth quarter ended December 31, 2018, and answer
questions. Details are as follow:
|
Date and Time: Tuesday, March 19, 2019, at 4:30
p.m. ET |
|
Dial-in Number (Domestic): (877) 407 – 0312 |
|
Dial-in Number (International): +1 (201) 389 –
0899 |
|
Confirmation Number: 136 88 229 |
|
Webcast Access:
https://webcasts.eqs.com/interpacedia20190319 |
The webcast replay will be available on the Company’s website
approximately two hours following completion of the call and
archived on the Company’s website for 90 days.
About Interpace Diagnostics Group
Interpace is a fully integrated commercial and
bioinformatics company that provides clinically useful molecular
diagnostic tests and pathology services for evaluating risk of
cancer by leveraging the latest technology in personalized medicine
for improved patient diagnosis and management. The Company
currently has four commercialized molecular tests and one test in a
clinical evaluation process (CEP); PancraGEN® for the
diagnosis and prognosis of pancreatic cancer from pancreatic cysts;
ThyGeNEXT® for the diagnosis of thyroid cancer from thyroid
nodules utilizing a next generation sequencing assay;
ThyraMIR® for the diagnosis of thyroid cancer from thyroid
nodules utilizing a proprietary gene expression assay; and
RespriDx™ that differentiates lung cancer of primary vs. metastatic
origin. BarreGEN® for Barrett's Esophagus, is currently being
“soft launched” with key opinion leaders as we continue to gather
data on this assay that will assist us in seeking favorable
reimbursement as well as important clinical information. Barrett's
Esophagus is a rapidly growing diagnosis that affects over three
million people in the US and over time can progress to esophageal
cancer. The Company’s data base includes data from over 50,000
patients who have been tested using the Company’s current products,
including over 25,000 molecular tests for thyroid nodules.
Interpace has been designated by the 2018 edition of CIO
Applications as one of the top 10 companies for providing
bioinformatics solutions. Interpace’s mission is to provide
personalized medicine through molecular diagnostics, innovation and
data to advance patient care based on rigorous science. For more
information, please visit Interpace’s website at
www.interpacediagnostics.com.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, Section 21E of the Securities Exchange Act of 1934 and the
Private Securities Litigation Reform Act of 1995, relating to the
Company’s future financial and operating performance. The Company
has attempted to identify forward looking statements by terminology
including “believes,” “estimates,” “anticipates,” “expects,”
“plans,” “projects,” “intends,” “potential,” “may,” “could,”
“might,” “will,” “should,” “approximately” or other words that
convey uncertainty of future events or outcomes to identify these
forward-looking statements. These statements are based on current
expectations, assumptions and uncertainties involving judgments
about, among other things, future economic, competitive and market
conditions and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are
beyond the Company’s control. These statements also involve known
and unknown risks, uncertainties and other factors that may cause
the Company’s actual results to be materially different from those
expressed or implied by any forward-looking statement. Known and
unknown risks, uncertainties and other factors include, but are not
limited to, the Company’s history of losses, the Company’s ability
to adequately finance the business, the market’s acceptance
of its molecular diagnostic tests, its ability to retain or secure
reimbursement, its ability to secure additional business and
generate higher profit margins through sales of its molecular
diagnostic tests, in-licensing or other means, projections of
future revenues, growth, gross profit and anticipated internal rate
of return on investments and its ability to maintain its NASDAQ
listing. Additionally, all forward-looking statements are subject
to the “Risk Factors” detailed from time to time in the Company’s
most recent Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and other SEC filings.. Because of these and other risks,
uncertainties and assumptions, undue reliance should not be placed
on these forward-looking statements. In addition, these statements
speak only as of the date of this press release and, except as may
be required by law, the Company undertakes no obligation to revise
or update publicly any forward-looking statements for any
reason.
CONTACTS:
Investor Relations - Edison GroupJoseph
Green(646) 653-7030jgreen@edisongroup.com
Non-GAAP Financial Measures
In addition to the United States generally
accepted accounting principles, or GAAP, results provided
throughout this press release, Interpace has provided certain
non-GAAP financial measures to help evaluate the results of its
performance. We believe that these non-GAAP financial measures,
when presented in conjunction with comparable GAAP financial
measures, are useful to both management and investors in analyzing
the Company’s ongoing business and operating performance. We
believe that providing the non-GAAP information to investors, in
addition to the GAAP presentation, allows investors to view the
Company’s financial results in the way that management views
financial results.
In this document, we discuss Adjusted EBITDA, a
non-GAAP financial measure. Adjusted EBITDA is a metric used by
management to measure cash flow of the ongoing business. Adjusted
EBITDA is defined as income or loss from continuing operations,
plus depreciation and amortization, non-cash stock based
compensation, interest and taxes, mark to market on warrant
liability, and other non-cash expenses including loss on
extinguishment of debt, and change in fair value of contingent
consideration. The table below includes a reconciliation of this
non-GAAP financial measure to the most directly comparable GAAP
financial measure.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share
data)
|
|
Three Months Ended |
|
|
|
|
|
|
December 31, |
|
|
Years Ended |
|
|
|
(Unaudited) |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net |
|
$ |
5,834 |
|
|
$ |
4,370 |
|
|
$ |
21,896 |
|
|
$ |
15,897 |
|
Cost of revenue |
|
|
2,607 |
|
|
|
1,639 |
|
|
|
10,197 |
|
|
|
7,358 |
|
Gross
Profit |
|
|
3,227 |
|
|
|
2,731 |
|
|
|
11,699 |
|
|
|
8,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
2,286 |
|
|
|
2,060 |
|
|
|
8,421 |
|
|
|
6,567 |
|
Research and
development |
|
|
596 |
|
|
|
259 |
|
|
|
2,124 |
|
|
|
1,461 |
|
General and
administrative |
|
|
2,518 |
|
|
|
2,723 |
|
|
|
8,499 |
|
|
|
9,153 |
|
Amortization
expense |
|
|
813 |
|
|
|
813 |
|
|
|
3,252 |
|
|
|
3,253 |
|
Change in fair value of
contingent consideration |
|
|
1,522 |
|
|
|
174 |
|
|
|
1,522 |
|
|
|
(5,602 |
) |
Total
operating expenses |
|
|
7,735 |
|
|
|
6,029 |
|
|
|
23,818 |
|
|
|
14,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss |
|
|
(4,508 |
) |
|
|
(3,298 |
) |
|
|
(12,119 |
) |
|
|
(6,293 |
) |
Interest expense |
|
|
(83 |
) |
|
|
- |
|
|
|
(331 |
) |
|
|
(433 |
) |
Loss on extinguishment
of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,278 |
) |
Other expense, net |
|
|
405 |
|
|
|
(1,713 |
) |
|
|
263 |
|
|
|
(2,128 |
) |
Loss from
continuing operations before tax |
|
|
(4,186 |
) |
|
|
(5,011 |
) |
|
|
(12,187 |
) |
|
|
(13,132 |
) |
(Benefit) provision for
income taxes |
|
|
(3 |
) |
|
|
(55 |
) |
|
|
18 |
|
|
|
(395 |
) |
Loss from
continuing operations |
|
|
(4,183 |
) |
|
|
(4,956 |
) |
|
|
(12,205 |
) |
|
|
(12,737 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations, net of tax |
|
$ |
146 |
|
|
$ |
(51 |
) |
|
$ |
16 |
|
|
$ |
521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(4,037 |
) |
|
$ |
(5,007 |
) |
|
$ |
(12,189 |
) |
|
$ |
(12,216 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per
share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From
continuing operations |
|
$ |
(0.15 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.81 |
) |
From
discontinued operations |
|
|
0.01 |
|
|
|
(0.01 |
) |
|
|
0.00 |
|
|
|
0.03 |
|
Net loss per basic
share of common stock |
|
$ |
(0.14 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.77 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income
per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From
continuing operations |
|
$ |
(0.15 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.81 |
) |
From
discontinued operations |
|
|
0.01 |
|
|
|
(0.01 |
) |
|
|
0.00 |
|
|
|
0.03 |
|
Net loss per diluted
share of common stock |
|
$ |
(0.14 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.77 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares and common share equivalents outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
28,608 |
|
|
|
26,874 |
|
|
|
28,155 |
|
|
|
15,766 |
|
Diluted |
|
|
28,608 |
|
|
|
26,874 |
|
|
|
28,155 |
|
|
|
15,766 |
|
Selected Balance Sheet
Data($ in thousands)
|
|
December 31, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
Cash
and cash equivalents |
|
$ |
6,068 |
|
|
$ |
15,199 |
|
|
|
|
|
|
|
|
|
|
Total current
assets |
|
|
17,721 |
|
|
|
19,808 |
|
Total current
liabilities |
|
|
8,492 |
|
|
|
8,091 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
48,442 |
|
|
|
53,598 |
|
Total liabilities |
|
|
15,504 |
|
|
|
13,729 |
|
Total stockholders
equity |
|
|
32,938 |
|
|
|
39,869 |
|
Selected Cash Flow
Data($ in thousands)
|
|
For the Years Ended |
|
|
|
December 31, |
|
|
|
|
|
|
2018 |
|
|
2017 |
|
Net
loss |
|
$ |
(12,189 |
) |
|
$ |
(12,216 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in
operations |
|
$ |
(8,673 |
) |
|
$ |
(15,263 |
) |
Net cash used in
investing activities |
|
|
(449 |
) |
|
|
(29 |
) |
Net cash (used in)
provided by financing activities |
|
|
(9 |
) |
|
|
29,889 |
|
Change in cash and cash
equivalents |
|
|
(9,131 |
) |
|
|
14,597 |
|
Cash and equivalents,
Beginning |
|
|
15,199 |
|
|
|
602 |
|
Cash and equivalents,
Ending |
|
$ |
6,068 |
|
|
$ |
15,199 |
|
Reconciliation of Adjusted EBITDA
(Unaudited)($ in thousands)
|
|
Quarters Ended |
|
|
Years Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Loss
from continuing operations |
|
$ |
(4,183 |
) |
|
$ |
(4,956 |
) |
|
$ |
(12,205 |
) |
|
$ |
(12,737 |
) |
Depreciation and
amortization |
|
|
884 |
|
|
|
876 |
|
|
|
3,464 |
|
|
|
3,690 |
|
Stock-based
compensation |
|
|
706 |
|
|
|
583 |
|
|
|
2,270 |
|
|
|
1,060 |
|
Taxes |
|
|
(3 |
) |
|
|
(55 |
) |
|
|
18 |
|
|
|
(395 |
) |
Interest expense |
|
|
83 |
|
|
|
- |
|
|
|
331 |
|
|
|
433 |
|
Mark to market on
warrant liability |
|
|
(372 |
) |
|
|
(260 |
) |
|
|
(112 |
) |
|
|
141 |
|
Loss on extinguishment
of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,278 |
|
Warrant expense |
|
|
- |
|
|
|
2,016 |
|
|
|
- |
|
|
|
2,016 |
|
Change in fair value of
contingent consideration |
|
|
1,522 |
|
|
|
174 |
|
|
|
1,522 |
|
|
|
(5,602 |
) |
Adjusted EBITDA |
|
$ |
(1,363 |
) |
|
$ |
(1,622 |
) |
|
$ |
(4,712 |
) |
|
$ |
(7,116 |
) |
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