Full Press Release Details
Announces Successful GraftAssureTM Beta Launch and Q2 2024 Results
in kidney transplant assay represents approximately 25% of US transplant volume
lays out land and expand strategy in transplant
Calif., August 8, 2024 (GLOBE NEWSWIRE) - Oncocyte Corp. (Nasdaq: OCX), a diagnostics technology company, today published its second
quarter 2024 results and the following letter to shareholders.
are thrilled to report that we have successfully launched GraftAssureTM, which is our research-use-only assay that can detect
early evidence of graft organ damage in a patient's blood.
July 11, 2024, our GraftAssure assay was run at a major metropolitan transplant center and research university in the northeast United
States, representing the first time our test had been run outside of an Oncocyte lab. Days later, a lab at a leading transplant center
in Southeast Asia began running the test.
we believe this milestone is just the beginning, it's an important proof point in an 18-month journey. To recap, in January 2023,
we decided to double down on commercializing our transplant test IP, primarily by making a kitted test that relies upon a biomarker,
donor-derived cell-free DNA (dd-cfDNA). Our first prototypes of GraftAssure came off the manufacturing line in December. Four months
later, in April 2024, we welcomed Bio-Rad Laboratories (NYSE:BIO) as an investor and strategic partner, supporting the GraftAssure global
in June 2024, we began shipping to our launch customers. We shipped to two continents in our first week - representing major transplant
centers and research universities in the U.S. and Southeast Asia. As of today, we have signed up several centers in the U.S, Europe and
are also pleased with the momentum we are seeing coming out of the American Transplant Congress in Philadelphia in June. That conference
was especially meaningful for Oncocyte this year because it coincided with the New England Journal of Medicine's publication of
favorable data regarding our centralized lab product VitaGraft Kidney1. That clinical product uses the same background IP
as our GraftAssure kitted test.
are pleased to report that our US sales funnel of confirmed interest in our transplant assay is made up of transplant centers that
represent approximately 25% of US transplant volumes2. We also are seeing significant interest in Germany, as well as in
other European countries, and in Asia and the Middle East. The level of interest and enthusiasm in the market is exceeding our
Drs. Ekke Schuetz and Julia Beck, inventors of the technology, are among the authors of the study. VitaGraft Kidney
was used to monitor graft injury in a phase 2 double-blind, placebo-controlled study (NCT05021484) of the investigational
drug felzartamab, a fully human CD38 monoclonal antibody, for antibody-mediated rejection (AMR), a leading cause of kidney allograft
The centers in our U.S. funnel who have confirmed interest in GraftAssure represent more than 11,000 transplants per year, which
is about 24% of 46,000 annual transplants conducted, according to the United Network for Organ Sharing. (Source: https://unos.org/about/fast-facts/#:~:text=In%202023%3A,continuing%20annual%20record%2Dsetting%20trend)
a reminder, under our partnership, Bio-Rad and Oncocyte are co-marketing GraftAssure inside the US and Germany, with Oncocyte acting
as commercial lead. Bio-Rad is acting as commercial lead outside the US and Germany, and correspondingly has been granted exclusive distribution
and commercial rights in those countries.
growing our sales pipeline, momentum also continues through our industry relationships and partnerships. For example, in the second quarter,
we signed an agreement with a European biotechnology company to be the provider of dd-cfDNA testing for a Phase II clinical trial for
a therapeutic in antibody mediated rejection.
partnerships with the pharmaceutical industry are strategically important. First, the partnerships highlight and validate the robustness
of our technology and our partnership approach to the market. These trials also advance and expand the body of science using our diagnostic
technology to develop the potential for new clinical applications for our diagnostic tools.
the expansion of clinical utility increases the opportunity for future long-term recurring revenue. When we participate in a clinical
trial, we perform the services at our clinical (CLIA) laboratory, receiving a nominal amount of revenue to cover the cost of performing
the test. While these clinical trials are limited in short-term revenue generation, they lay the foundation for future revenue expansion
dd-cfDNA test that we run at our CLIA laboratory on behalf of customers is VitaGraft Kidney. As a reminder, VitaGraft received Medicare
reimbursement in 2023. We are increasing the throughput for VitaGraft in our CLIA lab by establishing higher automation with simple scaling
options. This increased capacity supports ongoing clinical trials using our tests and the data generation required by our IVD program,
which we discuss further below.
Land & Expand Strategy
believe that we are at an inflection point in commercializing our molecular diagnostic tests that can detect early evidence of graft
organ damage in the blood. Bringing research centers up online with our GraftAssure assay is a key part of our land-and-expand strategy
to drive commercial adoption of our tests and capture market share in an estimated $1 billion total addressable market.
our strategy is to land major transplant centers and research universities with our research-use-only product. Doing so establishes
our technology and increases its potential utility by enabling researchers to explore potential applications of dd-cfDNA. Then, once
we have achieved FDA (Food and Drug Administration) clearance for our test kits to be used to make clinical decisions - that is,
approved as an in-vitro diagnostic (IVD) - we believe that these institutions will begin using our tests to manage their patient
populations, while continuing to use our GraftAssure test kit to perform research. Importantly, our GraftAssure research product may
not be used to support clinical treatment decisions.
believe that we can execute upon this strategy with a limited sales force deployed in key territories due to the favorable customer concentration
of our industry. For example, fewer than 100 academic and research centers in the US account for about 80% of transplant volumes. And
rest-of-world markets are similarly concentrated at high-end academic institutions. Bio-Rad's global infrastructure puts those
centers well within reach, allowing for high-touch sales and service at the local level. Partnering into this commercial channel allows
Oncocyte to keep our infrastructure costs low while we focus on scaling in manufacturing and developing new use cases. As a result, we
believe we have the potential to be more profitable than many larger, better-known diagnostic companies.
are seeing early indications of remarkable product-market fit and we are pleased with the market response to our assay. We believe that
GraftAssure's appeal is due to workflows that are easy and user-friendly3 and that market enthusiasm will translate
to adoption of the IVD product once it is available. We discuss the IVD clearance process in more detail below.
initial beta customers sought to deploy our RUO assay as soon as we could ship it to them - which we find compelling in light of
the fact that bringing our RUO assay up and running is a major undertaking for a transplant center's research lab, requiring significant
investment of time and resources. It requires performing instrument validation, running an analytical validation study, and training
laboratory employees.
support the lab's validation process, we ship non-revenue test kits and send a team to support the lab in getting the test up and
running, including troubleshooting any initial issues. The first lab to be up and running was able to complete the process in about two
weeks, with some initial support from the Oncocyte team until they could run with the assay.
teams ensure the pre-existing equipment is calibrated to support the test and that the customer laboratory teams are trained to run it
effectively. Once we've confirmed that the instrument and assay are performing as intended, the labs begin running their first
research samples and preparing to launch new studies. Most of the customers in our funnel come to us with studies in mind that they've
wanted to do for a long time and are excited that they'll get a chance to move forward on their own.
some of these centers are eager to support the development of our IVD product. Whether collecting samples or producing data, the clinical
researchers are excited to work with us on this process. Our openly collaborative approach is winning hearts and minds across the industry.
We take our commitments and responsibility to the research community very seriously - they use our tests to advance the body of
science in transplant medicine, which may save many lives over time.
aim to have more than 20 transplant centers running GraftAssure tests through the end of 2025, including 15 in the US. We estimate that
each center represents an eventual annual high-margin revenue stream of several hundred thousand dollars to $2 million, depending on
the size of the center.
following illustration shows a projected quarterly revenue path for one typical beta customer. The illustration shows the customer entering
2028 contributing $400,000 in quarterly revenue, or $1.6 million in annual run rate revenue. Importantly, this revenue path assumes our
best-case timeline4 for FDA clearance of the IVD product for clinical use in late 2025 and a MolDX5 reimbursement
decision attached to the IVD product in early 2026.
QX600 Droplet Digital PCR (ddPCR) System - which is its new six color instrument - allows us to create a simple workflow
for the lab technician, delivering a result in four to eight hours, compared with 30 hours for competitors that are using NGS
technology. Further, testing a single sample is an affordable option, given that the batch size - in contrast to NGS -
does not alter the price per result.
revenue build is purposely limited in scope to the current clinical utility established for VitaGraft Kidney. Incremental revenue
opportunities could come from additional claims, such as additional tissue types like heart and lung, anti-CD38 drug monitoring, and
high-risk patient monitoring. Notably, our best-case FDA clearance timeline should not be confused with our best-case revenue
is a program that identifies and establishes coverage and U.S. government reimbursement for molecular diagnostic tests.
| Continued roll-out of research product: We will continue to bring transplant center customers up online running our GraftAssure assay throughout 2024 and 2025. | ||
| Impact of legislation: We believe our timing is serendipitous as the Increasing Organ Transplant Access Model, by the Centers for Medicare and Medicaid Services, rolls out on January 1, 2025. Transplant surgeons have told us that they expect that this legislation will lead to more marginal organs being transplanted into patients and potentially higher rates of adverse events, which could increase demand for dd-cfDNA testing. As a reminder, our IVD strategy aims to empower transplant centers to perform dd-cfDNA tests in-house and submit for reimbursement for their own labs. | ||
| Q-Sub submission: The Q-Sub process is a formal procedure in which a company submits a validation plan to the FDA for review and receives their feedback. We hope to receive feedback from the FDA by the end of 2024. We need this feedback to move forward with confidence into our clinical validation processes prior to submitting for FDA IVD clearance next year. | ||
| FDA IVD-clearance process: Medical devices are classified into three categories based on their risk - our tests are considered Class II devices, meaning that they are considered to have a moderate level of risk 6 to the patient. We will submit under the 510(k) De Novo Classification process, which is premarket submission made to the FDA for a new "device," or in our case, test. We are aiming to achieve FDA clearance in late 2025, which is our best-case timeline. Below are some of the data points that give us confidence going into this process. |
example of a Class I, or low risk, device, would be a bandage and an example of a Class III, or high risk, device would be an
implantable device like a cardiac pacemaker.
| The successful launch of GraftAssure, and the resulting engagement that we are having with the community, supports our IVD product development efforts. Many of the sites that are in our funnel have expressed interest in collecting samples and potentially being a reproducibility site to support our ultimate submission to the FDA. | ||
| We have found recent dialogue with the FDA to be constructive. We look forward to more interactions throughout the year in the formal Q-Sub process described above. | ||
| Key members of our team have deep FDA regulated product experience. 7 | ||
| We have deep technical and clinical expertise in transplant, with a greater-than-ten-year track record of developing innovative technology and publishing novel data. It's a history that compares favorably to any other player in the transplant rejection diagnostics space. |
| Patents granted in both the US and EU support the technical innovation core to the IVD development process, protecting our market opportunity. | ||
| MolDX 8 cited our publications twice when it established the LCD (Local Coverage Determination) for Medicare and Medicaid reimbursement coverage for cell free DNA testing. | ||
| In the New England Journal of Medicine publication referenced above, we are the first company to have published randomized interventional data showing the efficacy of a transplant rejection diagnostic test along with antibody mediated rejection (AMR) therapy. | ||
| We are also the only company to have randomized interventional clinical trial data using dd-cfDNA to detect AMR in de novo DSA+ (donor-specific antibody positive) kidney patients, finding AMR 10 months sooner 9 than other monitoring protocols. |
preparation for the next several years of sustained, rapid growth, we welcomed Andrea James as Chief Financial Officer in June. She has
a proven track record of guiding financial strategy through multiple phases of growth, raising and stewarding capital, and building relationships