Cancer Genetics, Inc. (Nasdaq: CGIX), a leader in enabling
precision medicine for immuno-oncology and genomic medicine through
molecular markers and diagnostics, today announced financial and
operating results for the second quarter ended June 30, 2018 as
well as an update on its strategic direction and key organizational
initiatives.
John A. Roberts, Chief Executive Officer of Cancer Genetics
said, “During the second quarter of 2018, we made significant
advances in reorienting the company and are continuing to take the
necessary steps to increase the efficiency of our overall business
portfolio and accelerate our path to profitability.
“We are making good progress in consolidating the operations of
our West Coast molecular profiling laboratory and moving these
capabilities to our facilities in New Jersey and North Carolina. We
believe that the consolidation of the Los Angeles facility will
reduce our operating expenses, making a positive contribution
towards our cost structure consistent with our growth and
transformation strategy for 2018 and beyond.”
Mr. Roberts added, “To supplement our efforts aimed at growing
our biopharma business, we strengthened our management team with
the appointment of Michael McCartney as the company’s Chief
Commercial Officer. Michael will be responsible for overseeing our
commercial strategy and leading the Company’s business development
initiatives. To that end, I am particularly pleased with the recent
developments in our biopharma channel strategy with an increased
velocity of project work with our channel partner firms.
We have a solid, collaborative foundation stemming from
previous partnership agreements signed in 2016, and have recently
begun expanding the scope of our work with these partners.”
Mr. Roberts concluded, “On the financial front, we recently
completed a convertible note financing and raised $2.5 million to
support the execution of our 2018 transformation and strategic plan
to reorganize our business and position the company for future
growth. Further, our engagement with Raymond James as a financial
advisor in evaluating strategic options continues to progress, as
we have been engaged in discussions regarding several potential
transactions and hope to make an announcement concerning these
developments in the near future. Overall, we are committed to
executing on our growth strategy and remain focused on making CGI a
premier company in the precision oncology arena.”
SECOND QUARTER 2018 AND RECENT OPERATIONAL
HIGHLIGHTS
- Strengthened leadership team with appointment of Michael
McCartney as Chief Commercial Officer.
- Completed sale of wholly-owned subsidiary BioServe
Biotechnologies (India) Private Limited to REPROCELL for $1.9
million in April 2018.
- Raised $2.5 million through a convertible note financing in
July 2018.
- Progressed the consolidation of the West Coast molecular
profiling laboratory and relocation of most of these activities to
New Jersey and North Carolina laboratories, as part of 2018
transformation strategy. The consolidation of this facility is
currently expected to be complete by the end of the third quarter,
and reduce operating expenses by over $4 million annually once
completed.
SECOND QUARTER 2018 FINANCIAL RESULTS
The Company reported total revenue of $7.0 million for the
second quarter of 2018 compared to revenue of $6.6 million in
second quarter of 2017, an increase of 7% or $0.4million.
Biopharma services revenue totaled $3.6 million in the second
quarter, compared to $3.3 million during the second quarter 2017.
Biopharma projects are dependent on the timing, size and duration
of our contracts with pharmaceutical and biotech companies and
clinical research organizations, and can fluctuate in comparable
periods. The Company increased the number of clinical studies and
trials it is supporting to 342, up from 170 in Q2 2017. The
Company’s booking-to-billing ratio for Q2 2018 was 2.5.
Clinical Services revenue decreased by approximately $1 million
in the second quarter of 2018 compared to the same period in 2017,
from $3.1 million to $2.1 million.
The Company’s Discovery Services contributed $1.3 million in
revenue for the second quarter of 2018 driven by our acquisition of
vivoPharm in August of 2017. This represents an increase of
approximately $1.0 million as compared to $0.3 million in revenue
for the second quarter of 2017.
Gross profit margin was 31% or $2.2 million in Q2 2018, compared
to 39% or $2.6 million in the second quarter 2017.
Total operating expenses for the second quarter of 2018 were
approximately $7.4 million, an increase of 30% compared to $5.7
million during the second quarter of 2017, principally due to
restructuring costs of $0.7 million, an increase in our
professional fees of $0.5 million related to recent financing and
M&A activities, an increase in our bad debt expense of $0.2
million, and an increase in our selling expenses of $0.1
million.
Net loss was $3.6 million or $0.13 per share for the second
quarter of 2018, compared to a net loss of $2.8 million or $0.16
per share for the second quarter of 2017.
Cash and cash equivalents as of June 30, 2018 totaled $1.6
million, compared to $4.0 million as of March 31, 2018. In July
2018, the Company closed a convertible note financing generating
net proceeds of approximately $2.5 million.
As announced previously, the Company engaged Raymond James &
Associates, Inc. as a financial advisor to assist with evaluating
options for the Company’s strategic direction. These options may
include raising additional capital, the acquisition of another
company and / or complementary assets, the sale of the Company, or
another type of strategic partnership.
CONFERENCE CALL & WEBCAST |
Tuesday,
August 14, 2018, 8:30 a.m. Eastern Time |
Domestic: |
800-289-0438 |
International: |
323-794-2423 |
Conference ID: |
1766530 |
Webcast: |
http://public.viavid.com/index.php?id=130945 |
|
|
Replay –
Available through August 28, 2018 |
Domestic: |
844-512-2921 |
International: |
412-317-6671 |
Conference
ID: |
1766530 |
ABOUT CANCER GENETICS
Cancer Genetics, Inc. is a leader in enabling precision medicine
in oncology from bench to bedside through the use of oncology
biomarkers and molecular testing. CGI is developing a global
footprint with locations in the US, Australia and China. We have
established strong clinical research collaborations with major
cancer centers such as Memorial Sloan Kettering, The Cleveland
Clinic, Mayo Clinic, Keck School of Medicine at USC and the
National Cancer Institute.
The Company offers a comprehensive range of laboratory services
that provide critical genomic and biomarker information. Its
state-of-the-art reference labs are CLIA-certified and
CAP-accredited in the US and have licensure from several states
including New York State.
For more information, please visit or follow CGI
at:
Internet: www.cancergenetics.com
Twitter: @Cancer_Genetics
Facebook: www.facebook.com/CancerGenetics
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 the
development and/or commercialization of potential products, risks
of cancellation of customer contracts or discontinuance of trials,
risks that anticipated benefits from consolidation efforts and/or
acquisitions will not be realized, uncertainty in the results of
clinical trials or regulatory approvals, need and ability to obtain
future capital, uncertainties with respect to evaluating strategic
options, maintenance of intellectual property rights and other
risks discussed in the Cancer Genetics, Inc. Form 10-K for the year
ended December 31, 2017 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:
Lee Roth The Ruth GroupTel: 646-536-7012 Email:
lroth@theruthgroup.com
Media:Kirsten ThomasThe Ruth GroupTel:
508-280-6592Email: kthomas@theruthgroup.com
Cancer Genetics, Inc. and
Subsidiaries |
Consolidated Balance Sheets
(Unaudited) |
(in thousands, except par value) |
|
|
June 30, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
CURRENT ASSETS |
|
|
|
Cash and
cash equivalents |
$ |
1,601 |
|
|
$ |
9,541 |
|
Accounts
receivable, net of allowance for doubtful accounts of 2018 $7,401;
2017 $6,539 |
9,357 |
|
|
10,958 |
|
Other
current assets |
3,245 |
|
|
2,707 |
|
Total current assets |
14,203 |
|
|
23,206 |
|
FIXED ASSETS, net of
accumulated depreciation |
4,742 |
|
|
5,550 |
|
OTHER ASSETS |
|
|
|
Restricted cash |
350 |
|
|
350 |
|
Patents
and other intangible assets, net of accumulated amortization |
4,276 |
|
|
4,478 |
|
Investment in joint venture |
243 |
|
|
246 |
|
Goodwill |
17,257 |
|
|
17,992 |
|
Other |
300 |
|
|
399 |
|
Total other assets |
22,426 |
|
|
23,465 |
|
Total Assets |
$ |
41,371 |
|
|
$ |
52,221 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
CURRENT
LIABILITIES |
|
|
|
Accounts
payable and accrued expenses |
$ |
9,778 |
|
|
$ |
8,715 |
|
Obligations under capital leases, current portion |
322 |
|
|
272 |
|
Deferred
revenue |
2,004 |
|
|
516 |
|
Line of
credit |
3,438 |
|
|
4,137 |
|
Term
note, current portion |
6,000 |
|
|
6,000 |
|
Total current liabilities |
21,542 |
|
|
19,640 |
|
Obligations under
capital leases |
564 |
|
|
624 |
|
Deferred rent payable
and other |
304 |
|
|
360 |
|
Warrant liability |
1,134 |
|
|
4,403 |
|
Deferred revenue,
long-term |
547 |
|
|
429 |
|
Total Liabilities |
24,091 |
|
|
25,456 |
|
STOCKHOLDERS’
EQUITY |
|
|
|
Preferred
stock, authorized 9,764 shares, $0.0001 par value, none issued |
— |
|
|
— |
|
Common
stock, authorized 100,000 shares, $0.0001 par value, 27,726 and
27,754 shares issued and outstanding at June 30, 2018 and
December 31, 2017, respectively |
3 |
|
|
3 |
|
Additional paid-in capital |
162,575 |
|
|
161,527 |
|
Accumulated other comprehensive income |
134 |
|
|
69 |
|
Accumulated (deficit) |
(145,432 |
) |
|
(134,834 |
) |
Total Stockholders’
Equity |
17,280 |
|
|
26,765 |
|
Total Liabilities and
Stockholders’ Equity |
$ |
41,371 |
|
|
$ |
52,221 |
|
Cancer Genetics, Inc. and
Subsidiaries |
Consolidated Statements of Operations and
Other Comprehensive Loss (Unaudited) |
(in thousands, except per share
amounts) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenue |
$ |
7,036 |
|
|
$ |
6,604 |
|
|
$ |
14,703 |
|
|
$ |
13,570 |
|
Cost of
revenues |
4,853 |
|
|
4,034 |
|
|
9,935 |
|
|
8,243 |
|
Gross profit |
2,183 |
|
|
2,570 |
|
|
4,768 |
|
|
5,327 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
673 |
|
|
989 |
|
|
1,354 |
|
|
2,099 |
|
General
and administrative |
5,419 |
|
|
3,529 |
|
|
10,679 |
|
|
7,006 |
|
Sales and
marketing |
1,341 |
|
|
1,165 |
|
|
2,932 |
|
|
2,136 |
|
Total operating expenses |
7,433 |
|
|
5,683 |
|
|
14,965 |
|
|
11,241 |
|
Loss from operations |
(5,250 |
) |
|
(3,113 |
) |
|
(10,197 |
) |
|
(5,914 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
Interest
expense |
(577 |
) |
|
(253 |
) |
|
(816 |
) |
|
(447 |
) |
Interest
income |
(1 |
) |
|
10 |
|
|
20 |
|
|
27 |
|
Change in
fair value of acquisition note payable |
64 |
|
|
13 |
|
|
81 |
|
|
(219 |
) |
Change in
fair value of warrant liability |
2,154 |
|
|
577 |
|
|
2,846 |
|
|
(6,717 |
) |
Other
income (expense) |
(23 |
) |
|
— |
|
|
(23 |
) |
|
(46 |
) |
Total other income (expense) |
1,617 |
|
|
347 |
|
|
2,108 |
|
|
(7,402 |
) |
Loss before income taxes |
(3,633 |
) |
|
(2,766 |
) |
|
(8,089 |
) |
|
(13,316 |
) |
Income tax
(benefit) |
— |
|
|
— |
|
|
— |
|
|
(970 |
) |
Net (loss) |
$ |
(3,633 |
) |
|
$ |
(2,766 |
) |
|
$ |
(8,089 |
) |
|
$ |
(12,346 |
) |
Basic net (loss) per
share |
$ |
(0.13 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.64 |
) |
Diluted net (loss) per
share |
$ |
(0.13 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.64 |
) |
Basic weighted-average
shares outstanding |
27,049 |
|
|
19,697 |
|
|
27,049 |
|
|
19,301 |
|
Diluted
weighted-average shares outstanding |
27,049 |
|
|
20,663 |
|
|
27,049 |
|
|
19,301 |
|
|
|
|
|
|
|
|
|
Net (loss) |
(3,633 |
) |
|
(2,766 |
) |
|
(8,089 |
) |
|
(12,346 |
) |
Foreign currency
translation gain |
85 |
|
|
— |
|
|
65 |
|
|
— |
|
Comprehensive
(loss) |
(3,548 |
) |
|
(2,766 |
) |
|
(8,024 |
) |
|
(12,346 |
) |
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