Full Press Release Details
Announces Definitive Agreement to Acquire Chronix Biomedical, Inc.
includes proprietary IP and technology for blood-based immune therapy monitoring and for transplant rejection testing
patented copy number index (CNI) therapy monitoring test developed by Chronix complements Oncocyte's proprietary DetermaIO
test for immunotherapy treatment selection and may significantly expand the market opportunity for the Company
Calif., February 2, 2021 -- Oncocyte Corporation (NYSE American: OCX), a molecular diagnostics company with a mission to provide
actionable answers at critical decision points across the cancer care continuum, today announced that it has entered into an agreement
to acquire, through a subsidiary, Chronix Biomedical, a privately held molecular diagnostics company developing blood tests for
use in cancer treatment and organ transplants. Under the agreement, which supersedes the previous collaboration agreement between
the companies announced in October 2020, Oncocyte will acquire the intellectual property (IP) and technology for Chronix's
TheraSure -CNI Monitor, a patented, blood-based test for immune-therapy monitoring, as well as the IP for Chronix's
organ transplant technology. Further, Chronix's development and business team will become part of the Oncocyte R&D Team
and will maintain lab operations in Germany to support the continued development and commercial launch of the monitoring tests.
The EU-based team will also lead Oncocyte's commercial efforts with DetermaRx and DetermaIO in Germany and
other EU member countries upon closing of the transaction.
modifies the normal genome of cells by accumulating mutations and variation in the number of copies of genes in the genome. The
proprietary CNI test developed by Chronix quantitatively measures the amount of that copy number variation (CNV) present in blood
that has been shed by dying tumor cells. Monitoring the change in CNI over time for patients on therapy allows a physician to
monitor response or progression and adjust treatment accordingly. Oncocyte intends to accelerate further development of the CNI
test, which is already supported by peer-reviewed publications, as the Company prepares to launch the test for research use and
pharma trials in the second half of 2021. The initial focus will be on clinical studies in lung cancer and other solid tumor types
treated by immunotherapy. The Company believes the addition of the CNI test will enable it to enter into blood-based immune-therapy
monitoring, which has an estimated Total Available Market of over $3 billion in the United States alone.
worked very closely with Chronix over the past few months we gained greater insight into, and performed more analysis of, the
overall potential of Chronix's IP," said Ron Andrews, Chief Executive Officer and President of Oncocyte. "After
our evaluation, we believe that acquiring Chronix, whose technology includes 12 granted U.S. and EU patents across seven patent
families, provides us with a strong patent portfolio that can serve as the basis for our blood-based therapy monitoring and recurrence
monitoring programs, and ultimately create significant value for Oncocyte. The acquisition also establishes a footprint in the
EU for our Company and access to an incredibly talented team with years of development experience in blood-based testing for cancer
therapy and transplant rejection. We anticipate the first application of the CNI test to be for immune-therapy monitoring, which
will add another component to our capabilities in the immunotherapy setting, providing a comprehensive solution when used along
with DetermaIO immunotherapy response prediction. While we expect DetermaIO to play an incredibly important part in the
immunotherapy diagnostic story, monitoring resistance to checkpoint inhibitors through the CNI test would fill a tremendous unmet
need. With between 40%-60% of patients failing to see a sustained respond to immune checkpoint inhibitors, we estimate that by
2025, more than $60 billion a year could be misspent on treatments that may never benefit patients. Identifying these patients
early may enable oncologists to make a timely change in therapy management, potentially improve patient outcomes, and provide
significant savings in unnecessary health care costs. We look forward to integrating and working with the Chronix team to extend
the patent estate which we believe will establish Oncocyte as a leader in the emerging targeted and immune therapy monitoring
market. We expect this acquisition to create a strong competitive advantage in the market that will be beneficial to the medical
community, payors and patients, as well as to our shareholders."
study published on the Chronix CNI test in Clinical Cancer Research, "Tumor Cell-Free DNA Copy Number Instability
Predicts Therapeutic Response to Immunotherapy", showed 92% predictive value for disease progression prior to cycle two
of therapy (at 6 weeks) and close to 100% prediction prior to cycle three (9 weeks), including timely identification of hyper-progression
which affects as much as 20% of lung cancer patients on immunotherapy. This data is indicative of the utility of Chronix's
patented CNI test as a blood-based test to identify tumor resistance to therapy significantly earlier than imaging alone and may
serve an important role in assisting physicians treating cancer patients with knowledge that could lead to better patient outcomes.
Ekkehard Schuetz, CEO and Chief Medical Officer of Chronix said, "One of the key benefits of the TheraSure-CNI Monitor test
is that it does not require tissue upfront. Obtaining biopsy tissue for testing can be very challenging in certain tumor types,
particularly in lung cancer with 15-30% of patients not having enough tissue to complete molecular testing. Our publications demonstrate
that detection of changes in CNV load is remarkably accurate in detecting disease progression on therapy. It is suitable for monitoring
patients being treated with chemotherapy, targeted therapy or immunotherapy. With DetermaIO and the CNI Monitoring test, the combined
company will provide a comprehensive solution that addresses two of the biggest challenges in the field of immune therapy: determining
those who will best respond early in the patient management cycle, and monitoring for failure to respond and development of resistance.
We had the great privilege of working closely with the Oncocyte team over the past few months and believe that together we have
the opportunity to build upon the patent estate and further our footprint in therapy monitoring and cancer recurrence monitoring."
Mr. Andrews stated, "Gaining the Chronix technology moves us closer to our goal of establishing Oncocyte as the go-to'
choice for oncologists treating patients with immune therapy and for biopharma companies who need to select the appropriate patients
for immunotherapy clinical trials. By offering the combination of DetermaIO and the CNI test, we will become the only company
with diagnostic tests that can identify patients for immunotherapy treatment and then also be able to monitor the patients'
responses to those treatments in real time, before tumor resistance can be seen in imaging, two integral components of patient
management. Our next step is to conduct a definitive prospective study that will allow us to bring the CNI test to market, first
in Germany and the EU, and eventually in the US once reimbursement is achieved. Once launched, we expect to drive significant
market share advantage among oncologists in the US and EU."
the Proposed Merger and Principal Transaction Terms
closing, Oncocyte will deliver closing consideration of $2.675 million in cash and $1.5 million of Oncocyte common stock (or approximately
295,000 shares) and will assume liabilities not to exceed $5.5 million. The agreement also provides for Oncocyte to pay a revenue
share on the net collected revenues for certain tests and services for specific periods, and to pay a combination of cash or Oncocyte
common stock of up to $14 million if certain milestones are achieved. The closing of the merger is subject to a number of conditions,
including approval of the transaction by Chronix shareholders, and is expected to be completed by April 30, 2021. Oncocyte intends
to deliver shares that may be sold following the closing pursuant to an effective Registration Statement. Additional information
regarding the terms of the transaction will be provided in the Company's Current Report on Form 8-K expected to be filed
with the Securities and Exchange Commission on or about February 5, 2021.
Oncocyte Corporation
is a molecular diagnostics company whose mission is to provide actionable answers at critical decision points across the cancer
care continuum. The Company, through its proprietary tests and pharmaceutical services business, aims to help save lives and improve
outcomes by accelerating and optimizing the diagnosis and treatment of cancer. The Company's tests and services present
multiple opportunities to advance cancer care while also driving revenue growth for the Company. Oncocyte recently launched DetermaRx ,
a test that identifies early-stage lung cancer patients who are at high risk for cancer recurrence post-resection and predicts
benefit from adjuvant chemotherapy. Oncocyte has also launched DetermaIO , a gene expression test that assesses the tumor
microenvironment to predict response to immunotherapies, as a research use only tool for pharmaceutical and academic clinical
trials. To complement DetermaIO, the company anticipates launching DetermaTx , a test to assess mutational status of a tumor
to help identify the appropriate targeted therapy, in the second half of 2021. The Company also continues with the development
of DetermaMx as the company seeks to expand into the blood-based monitoring market. Oncocyte's pharmaceutical services
provide pharmaceutical companies who are developing new cancer treatments a full suite of molecular testing services to support
the drug development process.
DetermaIO, DetermaMx and DetermaTx are trademarks of Oncocyte Corporation.
Biomedical, Inc. is a privately held, U.S.-based molecular diagnostics company developing blood tests for use in cancer treatment
and organ transplantation. Chronix's TheraSure CNI Monitor for cancer uses proprietary algorithms to derive a copy
number instability (CNI) score from the sequencing of circulating cell-free tumor DNA (cfDNA), which can be used in the prognosis,
diagnosis and monitoring of therapeutic response to cancer. Chronix TheraSure Transplant Monitor quantifies the amount
of graft derived cell-free DNA in organ recipients to detect early rejection of organ transplants and better assess the transplant
health. Chronix Biomedical has operations in the U.S. & Germany, and the commercial launch of their products began in the
EU in 2018. TheraSure is a trademark of Chronix Biomedical Inc.
Forward Looking Statements
cautions you that this press release contains forward-looking statements concerning, but not limited to, the proposed acquisition
of Chronix Biomedical and the effects of the merger, which has not yet closed. Any statements that are not historical fact (including,
but not limited to statements that contain words such as "will," "believes," "plans," "anticipates,"
"expects," "estimates," "may," and similar expressions) are forward-looking statements. Factors
that could cause or contribute to changes in the forward-looking statements include, but are not limited to (i) failure to realize
the anticipated benefits of the acquisition, (ii) unexpected expenditures or assumed liabilities that may be incurred as a result
of the acquisition, (iii) unanticipated difficulties in conforming business practices, including accounting policies, procedures,