Q1 2024 OncoCyte Corp Earnings Call

Brianna: Good afternoon. My name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the OncoCyte First Quarter 2024 Earnings Conference Call. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise.

Good afternoon, My name is brianna and I'll be your conference operator today.

Brianna: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star 1 a second time. I will now turn today's call over to Jeff Ramson, CEO of PCG Advisory. Please go ahead.

uncle site: At this time I would like to welcome everyone to the uncle site first quarter 'twenty 'twenty four earnings conference call.

uncle site: Please note that this call is being recorded.

uncle site: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Speaker Change: If you would like to ask a question. Please press star followed by the number one on your telephone keypad choice.

To withdraw your question. Please press star one a second time.

Jeff ramp: I will now turn todays call over to Jeff ramp then CEO of P. C. G Advisory. Please go ahead.

Jeff ramp: Thank you Briana and thank you to everyone joining us for today's conference call to discuss <unk> first quarter 2024 financial results and recent operating highlights.

Jeff Ramson: Thank you, Brianna, and thank you to everyone for joining us for today's conference call to discuss OncoCyte's first quarter 2024 financial results and recent operating highlights. If you have not seen today's financial results press release, please visit the company's website on the investors page. Before turning the call over to Josh Riggs, OncoCyte's President and CEO, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements regarding future events.

Jeff ramp: If you've not seen today's financial results press release, please visit the company's website on the investors page.

Jeff Ramson: Any statements that are not historical facts are forward-looking statements. We encourage you to review the company's SEC filings, including, without limitation, the company's Forms 10-K and 10-Q, to identify specific risk factors that may cause actual results or events to differ materially from those described in these forward-looking statements. Actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. OncoCyte expressly disclaims any intent or obligation to update these forward-looking statements except as otherwise may be required under applicable law. I'd like to now turn it over to Josh Riggs.

Speaker Change: Before turning the call over to Josh rigs Oncotype, <unk>, President and CEO I'd like to remind you that during this conference call. The company will make projections and forward looking statements regarding future events.

Speaker Change: Statements that are not historical facts are forward looking statements. We encourage you to review the company's SEC filings, including without limitation. The Companys forms 10-K, and 10-Q, which identify specific risk factors that may cause actual results or events to differ materially from those described in these forward looking statements.

Speaker Change: Fuel outcomes and results may differ materially from what is expressed or implied by these forward looking statements.

Speaker Change: That expressly disclaims any intent or obligation to update these forward looking statements, except as otherwise may be required under applicable law.

Speaker Change: I'd like to now turn it over to.

Joshua Riggs: Josh rigs.

Joshua Riggs: Thanks, Jeff and thank you to everyone for joining today.

Joshua Riggs: Thanks, Jeff. And thank you to everyone for joining us today. Building on the strong momentum in 2023, we've kicked off 2024 with impressive strides at OncoCyte. We expect the next 12 to 18 months will be unprecedented for the company as we execute on multiple milestones, driving value creation across all aspects of our business. Today, we're going to talk about the early stages of commercialization, the developing horizon in transplant management, and the potential role that OncoCyte plays, as well as Opportunities for Growth in Oncology.

Joshua Riggs: Building on the strong momentum in 2023, we've kicked off 2024 with impressive strides at Alco site. We expect that the next 12 to 18 months will be unprecedented for the company as we execute on multiple milestones driving value creation across all aspects of our business.

Speaker Change: Today, we're going to talk about the early stages of commercialization there.

The developing horizon in transplant management and the potential bolt oncotype plays.

Speaker Change: And also opportunities for growth in oncology.

Speaker Change: Our partnership with bio Rad laboratories at the game changer.

Joshua Riggs: Our partnership with Bio-Rad Laboratories is a game-changer. Bio-Rad extends our reach and allows us to introduce the Grafdescher RUO product into prominent academic centers while supporting the development of regulated products like Vitagraft kidney IVD. As part of the agreement, Bio-Rad and OncoCyte will co-market the assay in the U.S. and Germany, with OncoCyte acting as the commercial lead there. Outside these countries, Bio-Rad has been granted, you know, exclusive global distribution and commercial rights. We've already felt the advantage of this scale as our funnel continues to grow and more sites become early beta site adopters. At launch, we expect to ship to sites in Asia, the United States, and the EU.

Bio Rad: Bio Rad extends our reach allows us to introduce the Ub grabbed dish or are you a product into a prominent academic centers, while supporting the development of regulated products like Baidu grabbed kidney I E D.

Oncotype: As part of the agreement bio Rad and uncle site will co market the assay in the U S and Germany with Oncotype acting as the commercial lead there.

Oncotype: These countries bio Rad has been granted the exclusive global distribution and commercial rights. We've already felt the advantage of this scale. It's our funnel continues to grow and more sites become early beta site adopters.

Oncotype: At lunch, we expect to ship decides in Asia, the United States and the EU.

Oncotype: Our value proposition and transplant monitoring its simple.

Joshua Riggs: Our value proposition in transplant monitoring is simple. We offer an easy-to-use test, a rapid turnaround time, and attractive economics for ourselves, customers, and BioRack. We continue to be pleased and encouraged by the warm welcome we are getting at transplant research centers around the world. They have long been frustrated by the limited access that they have to transplant rejection monitoring technology and their inability to answer vital additional clinical questions.

Speaker Change: Offer an easy to use test rapid turnaround time and attractive economics for ourselves.

Speaker Change: <unk> and bio Rad.

Speaker Change: We continue to be pleased and encouraged by the warm welcome we are getting a transplant research centers around the world.

Speaker Change: The long have been frustrated by the limited access that they have to transplant rejection monitoring technology and their inability to answer vital additional clinical questions.

Joshua Riggs: That need opens up a significant market opportunity, including in the United States and Germany, where we have a long history of publishing with top research hospitals. We are excited to support these customers as they bring this technology in-house and continue to push the boundaries of what is possible with this type of transplant rejection monitoring testing, known as donor-derived cell-free DNA testing or BDCFDNA. Our own research is breaking new ground in transplants, and we see an opportunity for OncoCyte's technology to improve transplant rejection management through earlier intervention.

Speaker Change: That need opens up a significant market opportunity.

Speaker Change: Including in the United States, and Germany, where we have a long history of publishing with top research hospitals we.

Speaker Change: We are excited to support these customers as they bring this technology in house and continue to push boundaries of what is possible with this type of transplant rejection monitoring testing just known as donor derived cell free DNA testing or DCF DNA.

Speaker Change: Our own research is breaking new ground in transplant.

Speaker Change: We see an opportunity for Oncotype technology to improve transplant rejection management through earlier intervention.

Joshua Riggs: Currently, within the first five years post-transplantation, approximately 20% of kidney transplant patients will test positive for donor-specific antibodies, or DSAs, which are antibodies that are tied to their donor organs that their immune systems have created. DSA is an important biomarker used to monitor organ health in transplant patients, and those who test positive for DSA face an elevated risk of rejection and the potential loss of their organs.

Speaker Change: Within the first five years post transplantation, approximately 20% of kidney transplant patients will test positive for donor specific antibodies or D. S days, which are antibodies.

Speaker Change: Ladies that they're tied to their donor organs that their immune systems have created DSA as an important biomarker used to monitor Oregon health in transplant patients and those who test positive for DSA face elevated risk rejection and potential loss there Oregon.

Speaker Change: Our recent randomized interventional kidney study demonstrated that our technology can detect antibody immediate rate injection or EMR.

Joshua Riggs: Our recent randomized interventional kidney study demonstrated that our technology can detect antibody-mediated rate ejection, or AMR, or ABMR, as a common and challenging type of organ rejection in DSA-positive patients 10 months before standard of care methods. In this study, patients were divided into two groups, one who used our test and the other who didn't. And the group that used our test had rejection detected much sooner. And while there are no currently approved therapies for AMR, this research in early detection has supported our inclusion in multiple phase two pharma studies that are seeking to address the disease.

Speaker Change: Or a P. M. R S. A common and challenging type of organ rejection and DSA positive patients 10 months before standard of care methods.

Speaker Change: In this study patients were divided into two groups, one who use our tests and the other who didn't and the group that used our tests had protect rejection detected much sooner.

Speaker Change: And while there are no currently approved therapies for Anr that research and early detection has supported our inclusion in multiple phase II pharma studies that are seeking to address the disease.

Joshua Riggs: A successful pharma study would open up new use cases for our test, like therapeutic efficacy and minimal residual disease testing. OncoCyte is now in a position to support both early detection and long-term management of transplant rejection risk.

Speaker Change: A successful apartment study would open up new use cases for our test like therapeutic efficacy in minimum and minimal residual disease testing.

Speaker Change: Uncle site is now in position to support both early detection and long term management of transplant rejection risks.

Speaker Change: And we want to support this type of research across the board.

Joshua Riggs: And we want to support this type of research across the board. I believe that as research centers validate and begin to use the GraftAssure RUO, we are going to see an explosion of research and collaboration in the space that will seek to address needs that are clearly unmet today, things like immunosuppression tapering for liver transplant patients and the early detection of AMR. By partnering with the research community, we expect strong pull-through into academic centers around the world.

Speaker Change: I believe that as research centers validate and begin to use the graft assure our U O. We are going to see an explosion of research and collaboration in this space that will seek to address needs that are clearly unmet today.

Speaker Change: Things like immunosuppression tapering for liver transplant patients.

Speaker Change: And the early detection of EMR.

Speaker Change: By partnering with the research community, we expect strong pull through into academic centers around the world.

Joshua Riggs: Our goal is to become the research tool of choice for the transplant community over the next 12 to 18 months. Working with Bio-Rad and leveraging their expertise in life sciences gives us a great head start with the research community.

Speaker Change: Our goal is to become the research tool of choice for the transplant community over the next 12 to 18 months.

Speaker Change: Working with bio Rad and leveraging their expertise in life Sciences. It gives us a great head start with the research community.

Building this relationship with the research community supports our plans to develop and deliver an FDA regulated kit version of our Biograph assay to the market.

Joshua Riggs: Building this relationship with the research community supports our plans to develop and deliver an FDA-regulated kit version of our Vitagraft assay to the market. To that end, we expect to make an investigational use kit available to support the development of new clinical indications in investigator and pharma-sponsored studies. This specially labeled kit makes working with the FDA much easier coming out of trials. For the past couple of quarters, we've talked about the coming transition in transplant monitoring from centralized labs to local testing. And I don't think this is a controversial point.

Speaker Change: To that end, we expect to make an investigational use kit available to support the development of new clinical indications and investigator and pharma sponsored studies. This specially labeled kit makes working with the F D a much easier coming.

Speaker Change: Out of trials.

Speaker Change: For the past couple of quarters, you know, we've talked about the coming transition in transplant monitoring from centralized labs to to local testing.

Joshua Riggs: You know, doctors want an answer in a day instead of a week, and cash-strapped hospitals would rather capture revenue than send it out. We've seen it happen in multiple diagnostic markets once regulated kits become available, and expect that this market will be no different. Ultimately, the transplant market will be dominated by regulated kit products used locally, which is why we started down this path over a year ago. And, you know, while incumbent central labs generate hundreds of millions of dollars annually in the transplant market, the market is nowhere near oversaturated, presenting substantial opportunity for growth. Most of that revenue today is derived from a U.S.-focused central lab model, which leaves a big gap in the EU and rest of world markets.

Speaker Change: I don't think this is a controversial point doctors want an answer in a day instead of a week and cash strapped hospitals would rather capture revenue then send it out.

Speaker Change: We've seen it happen in multiple diagnostic markets once regulated kits become available and expect that this market will be no different.

Speaker Change: Ultimately the transplant market will be dominated by regulated kit products used locally which is why we started down this path over a year ago.

Speaker Change: And you know while income in central labs generate hundreds of millions of dollars annually in the transplant market.

Speaker Change: The market is nowhere near over saturated presenting a substantial opportunity for growth.

Speaker Change: Most of that revenue today is derived from the U S focused central lab model that means that big gap in the EU and rest of world markets.

Joshua Riggs: And OncoCyte is actively working to disrupt the market and step into that gap. It's worth keeping in mind that the global transplant market, with over 150,000 transplants annually and a 9.1% growth rate, remains largely unserved or underserved. Improving patient outcomes by increasing the number of successful transplants is an important health priority in many countries. For example, in the U.S., the Center for Medicaid and Medicaid Services, which is known as CMS, recently issued a proposed rule that would increase the incentives for hospitals to provide more kidney transplants and achieve better post-transplant outcomes.

Speaker Change: <unk> is actively working to disrupt disrupt the market and step into that gap, it's worth keeping in mind that the global transplant market with over 150000 transplants annually.

Speaker Change: On a nine 1% growth rate remains largely unserved or underserved.

Speaker Change: Improving patient outcomes by increasing the number of successful transplants isn't important health priority in many many countries for example in the U S. The center for Medicare and Medicaid services, which is known as CMS recently issued a proposed rule, which would increase the incentives for hospitals to provide more kidney transplants.

Speaker Change: [noise] achieve better post transplant outcomes.

Joshua Riggs: This new rule seems likely to drive further adoption of transplant monitoring diagnostic testing. For distributed regulated kits, adoption is about being easy to use, affordable, and quick to generate a result. We'll be working very closely with the clinical team at Bio-Rad to deliver a product that supports the current and emerging needs of the transplant community, one where the demand for a local testing option is growing by the day, in addition to revenue.

Speaker Change: This new rule seems likely to drive further adoption of transplant monitoring diagnostic testing.

Speaker Change: For distributed regulated kits adoption is about being easy to use affordable and quick to generate a result, we'll be working very closely with the clinical team at bio Rad to deliver a product that supports the current and emerging needs of the transplant community, one where the demand for our local testing option is growing by the day.

Speaker Change: In addition to revenue.

Joshua Riggs: We have two key measures of success; publications and site activation. With publications, it's how many posters, papers, and studies are being presented using our technology. These will be the leading indicator of adoption and the development of new utilities.

Speaker Change: We have two key Ms T. Two key measures of success publications and site activation.

Speaker Change: Publications at how many posters papers and studies are being presented using our technology. These will be the leading indicator of adoption in the development of new utilities.

Joshua Riggs: Very little happens in the clinic that hasn't been validated many times over in the research lab. And that is why it's so important to lead with a research product and support the research community early on. We look forward to watching the body of literature expand as access to our affordable, easy-to-use test grows. OncoCyte activation is critical for long-term success in supporting the eventual transition to IVD. This is a very concentrated

Speaker Change: Very little happens in the clinic that Hasnt been validated many times over in the research lab and.

So that's why it's so important to lead with a research product and support the research community early on.

Speaker Change: We look forward to watching the body of literature expand as access to our affordable easy to use test grows.

Speaker Change: Site activation is critical for long term success and supporting the eventual transition to IBD.

Speaker Change: A very concentrated market.

Joshua Riggs: There are only a couple hundred potential transplant sites in the U.S. and E.U. where we plan to launch our regulated product, Phytographed Kidney IVD. With each one we bring up, we are picking up meaningful, long-term recurring revenue and market share. Based on population data, we would expect the average U.S. target transplant center to generate recurring kit revenues in the millions. Most markets do not quickly shift to a new product based on a single advantage unless that advantage is overwhelming.

Speaker Change: There are only a couple of hundred potential transplant sites in the U S and EU, where we plan to launch our regulated product.

Speaker Change: Kidney IBD.

With each one we bring up we are picking up meaningful long term recurring revenue and market share based on population data. We would expect the average U S target transplant centers to generate recurring kit revenues in the millions.

Speaker Change: Yeah.

Speaker Change: Most markets do not quickly shifts to a new product based on a single advantage that advantages overwhelming.

Joshua Riggs: But when there are multiple substantial advantages and the switch is to something that customers normally prefer to do anyway, that switch can be quite rapid. In those cases, the inertia of habit and existing practice patterns and the influence of sales forces is neutralized.

But when there are multiple substantial advantages and the switches to something that customers normally prefer to do anyway that switch can be quite rapid in those cases, the inertia of habit and existing practice patterns and the influence of sales forces.

Speaker Change: Neutralized.

Speaker Change: Now when people talk about transplant monitoring, they're usually talking about single single nucleotide polymorphisms or snip based detection, where youre looking at specific gene targets in the blood.

Joshua Riggs: Now, when people talk about transplant monitoring, they're usually talking about single nucleotide polymorphisms or SNP-based detection, where you're looking at specific gene targets in the blood. It is what the market leaders in transplant monitoring use in their tests via next-generation sequencing, and it's what we use in Droplet Digital PCR, which is a cheaper, quicker, and more widely available technology platform. We believe that SNP-based detection methods will continue to dominate mindshare in the transplant monitoring space.

Speaker Change: It is what the market leaders in transplant monitoring using their tests to be a next generation sequencing and it's what we use in droplet digital PCR, which is a cheaper quicker and more widely available technology platform.

Speaker Change: We believe that SNP based detection methods will continue to dominate mindshare in the transplant monitoring space.

Speaker Change: Competitively it feels like we are in a great position with our turnaround time ease of use and affordability.

Joshua Riggs: Competitively, it feels like we are in a great position with our turnaround time, ease of use, and affordability, and to that add differentiated clinical data and some unique technical capabilities. We're bringing a lot to the transplant community. It's not unreasonable to imagine 30 to 50 centers or more in both the United States and the EU having this as an in-house test, generating recurring revenue above $100 million annually.

Speaker Change: And to that different and add to that differentiated clinical data and some unique technical capabilities and were bringing a lot to the transplant community.

Speaker Change: It's not unreasonable to imagine 30 to 50 centers or more in both the United States and EU heading this as an in house test generating recurring revenue of about $100 million annually.

Speaker Change: When we when we began to kit manufacturing process in 2023, well with our prototype lots coming off the production line at the end of last year.

Joshua Riggs: When we began the kit manufacturing process in 2023, with our prototype lots coming off the production line at the end of last year, you know, with that step behind us, we expect to move rapidly through the final phases of product development, and we will provide updates as we clear key hurdles in the path to FDA clearance. To bolster these efforts and help scale our operations, in April, Bio-Rad joined current and new shareholders in a $15.8 million private placement valued at market.

Speaker Change: With that step behind us, we expect to move rapidly through the final phases of product development and we will provide updates as we clear key hurdles and the path to FDA clearance.

Speaker Change: Ulster These efforts and help scale our operation in April bio Rad joined current and new shareholders and a $15 $8 million private placement valued at market. This.

Joshua Riggs: This investment solidifies OncoCyte's foundation and marks a significant endorsement of our partnership. The FDA's long-awaited final rule for the regulation of lab-developed tests was released in early May. We believe that most of our lab-developed tests meet the currently marketed carve-out in this final rule, but it remains to be seen how this clause will go into effect. This is something akin to, but not quite like, the concept of grandfathering.

Speaker Change: This investment solidifies Oncotype Foundation and marks a significant endorsement of our partnership.

Speaker Change: The Fda's long awaited final rule for the regulation of lab developed tests. Finally was released in early May.

Speaker Change: We believe that most of our lab developed tests meet the currently marketed carve out isn't this final rule, but it remains to be seen how this clause will go into effect. This is something akin to but not quite like the concept of grandfathering.

Joshua Riggs: And the four-plus-year phase-in period for the final rule gives us plenty of time to adjust to any changes that might be needed. It is also unclear what legal challenges and further delays this rule may have to survive as it comes into full effect, and this is an area that we will be watching very closely. That said, we are already fully on the regulated kit pathway for our transplant product and do not expect these rules to meaningfully alter our approach or timeline.

Speaker Change: And the four plus a year phase in period for the final rule gives us plenty of time to adjust to any changes that might be needed. It is also unclear what legal challenges and further delays. This rule may have to survive as it comes into full effect and is it is an area that we will be watching very closely.

Speaker Change: That said, we are already fully on the regulated kit pathway for our transplant products and do not expect these rules to meaningfully alter our approach or timelines.

Joshua Riggs: In fact, these rules may help to shift the focus of our industry towards regulated kits over time. Alongside the positive developments we are making in transplantation, our oncology portfolio continues to make important progress as well. We anticipate journal publications in 2024 involving both Determi-CNI and the Determi-IO that will support our clinical claims and path to coverage and reimbursement. The DETERMA-IO test aids physicians in evaluating where patients are likely to benefit from immunotherapy, while the DETERMA-CNI test tracks patients' responses to cancer therapy.

Speaker Change: In fact, these rules may help to shift the focus of our industry towards regulated kits overtime.

Speaker Change: Alongside the positive developments, we are making in transplant, our oncology portfolio continues to make important progress as well.

Speaker Change: We anticipate journal publications in 2024 involving both determined C&I ended determine Io that will support our clinical claims and path to coverage and reimbursement.

Speaker Change: Our determined I O test AIDS physicians in evaluating with patients are likely to benefit from immunotherapy, while our determined C&I test tracks patients responses to cure cancer therapies.

Joshua Riggs: With the U.S. markets for these diagnostics valued at $2 billion and $4 billion, respectively, we see significant partnership opportunities as these products continue their development. We expect to follow a commercial path similar to the one we are developing in transplant rejection monitoring, by which a partnership leads the way into a large market opportunity. Our excitement about our strong growth outlook is deeply rooted in fulfilling our core mission at OncoCyte, democratizing the Diagnostic Testing Market.

Speaker Change: With the U S markets for these diagnostics valued at 2 billion and 4 billion, respectively. We see significant partnership opportunities as these products continue their development we.

Speaker Change: We expect to follow a commercial path similar to the one we are developing and transplant rejection monitoring.

Speaker Change: By which a partnership leads the way into a large market opportunity.

Speaker Change: Our excitement about our strong growth outlook is deeply rooted in fulfilling our core mission at AGA site.

Speaker Change: <unk> the diagnostic testing market.

Joshua Riggs: We are dedicated to ensuring that everyone, regardless of location or circumstances, has access to fast and reliable testing. This commitment drives our development of user-friendly, rapid diagnostic solutions aimed at leveling the playing field in healthcare and enhancing patient outcomes globally. Looking forward, as the demand for local testing options is on the rise, our innovative solutions, strategic alliances, and targeted commercial strategies position us strongly to seize these opportunities. We're enthusiastic about what lies ahead and remain dedicated to delivering value to our shareholders, customers, and the broader health care community.

Speaker Change: We are dedicated to ensuring that everyone regardless of location or circumstances has access to fast and reliable testing. This commitment drives our development of user friendly rapid diagnostic solutions aimed at leveling the playing field in health care and enhancing patient outcomes globally.

Speaker Change: Looking forward as the demand for local testing options is on the rise our innovative solutions strategic alliances and targeted commercial strategies position us strongly to seize these opportunities.

Speaker Change: Louisiana stick about what lies ahead and remain dedicated to delivering value to our shareholders customers and the broader health care community.

Speaker Change: Let's shift over to the financials.

Speaker Change: In the first quarter of 2024, although our net revenue saw a decline it does not reflect the momentum. We are building an early commercial efforts for the kitted products, we increased our research and development expenses by 2% compared to the same period. In 2023. This increase is a testament to our commitment to innovation and our focus in <unk>.

Joshua Riggs: In the first quarter of 2024, although our net revenue saw a decline, it does not reflect the momentum we are building in early commercial efforts for the kitted products. We increased our research and development expenses by 2% compared to the same period in 2023. This increase is a testament to our commitment to innovation and our focus on developing kitted products. Additionally, our sales and marketing expenses rose by 22%, largely driven by our intensified efforts in sales and commercialization activities.

Speaker Change: <unk> product.

Speaker Change: Additionally, our sales and marketing expenses rose by 22% largely driven by our intensified efforts in sales and commercialization activities on the flip side, our general administrative expenses decreased by 22%, primarily because of reductions in stock based compensation and personnel costs, reflecting our ongoing initiatives to streamline <unk>.

Joshua Riggs: On the flip side, our general administrative expenses decreased by 22%, primarily because of reductions in stock-based compensation and personnel costs, reflecting our ongoing initiatives to streamline operations and enhance financial efficiency. Our key operational metrics clearly demonstrate our dedication to efficiency and growth while continuing to invest in our future. Our net revenue for the quarter stood at $176,000, a 41% decrease from the same period in 2023, predominantly due to our strategic investments in product development and commercialization.

Speaker Change: Operations and enhance financial efficiency.

Speaker Change: Our key operational metrics, clearly demonstrate our dedication to efficiency and growth while continuing to invest in our future. Our net revenue for the quarter stood at 176000% to 41% decrease from the same period in 2023 predominantly due to our strategic investments in product development commercialization. We are confident these investments.

Speaker Change: Drive long term growth and increased shareholder value.

Joshua Riggs: We are confident these investments will drive long-term growth and increase shareholder value. On to our cash at hand. Do we continue to benefit from the cost reductions we undertook in 2023? Cash reserves declined $3.9 million in the quarter, leaving $5.6 million on the balance sheet.

Speaker Change: Onto our cash it head.

Speaker Change: Q1 continued to benefit from the cost reductions we undertook in 2023 cash reserves declined $3 9 million in the quarter, leaving $5 6 million on the balance sheet.

Joshua Riggs: This is a 60% improvement in cash earned year over year. As mentioned earlier, our equity financing added $15.8 million in cash to our balance sheet in April. Gap net loss from continuing operations for the first quarter was $9.1 million or $1.13 per share as compared to net income of $6 million or $0.82 per share for the first quarter of 2023. Non-GAAP operating loss as adjusted for the first quarter was $5 million, an increase of $100,000 compared to the same period in 2023.

Speaker Change: This is a 60% improvement in cash burn year over year.

Speaker Change: As mentioned earlier, our equity financing added $15 8 million in cash to our balance sheet in April.

Speaker Change: GAAP net loss from continuing operations for the first quarter was $9 1 million or one point or $1 13 per share as compared to net income of $6 million or 82 per share for the first quarter of 2023.

Speaker Change: non-GAAP operating loss as adjusted for the first quarter was $5 million, an increase of 100000 compared to the same period in 2023.

Joshua Riggs: We have provided a reconciliation between our GAAP and non-GAAP operating losses in the financial tables included with our earnings release, which is available on our website at OncoCyte.com. We have reflected the operations of RAISER as discontinued operations, or the DETERMA RX product, for all periods presented in our financial statement. In closing remarks, you know, as we move forward in 2024 and beyond, we're doubling down on our commitment to invest in key focus areas, especially developing kitted versions of the assays like Biotigraft, DetermiIO, and CNI. OncoCyte anticipates several key catalysts in 2024.

Speaker Change: We have provided a reconciliation between our GAAP and non-GAAP operating losses in the financial tables included with our earnings release, which is available at our website at Oncotype Dot com we.

Speaker Change: We have reflected the operations of razor as discontinued operations for the determine Rx product for all periods presented in our financial statements.

Speaker Change: In closing remarks as well.

Speaker Change: We move forward in 2024 and beyond.

Speaker Change: We're doubling down on our commitment to invest in key focus areas, especially.

Speaker Change: Especially in developing kitted versions of the assays like by the graph the term of I O in C&I.

Speaker Change: Oncotype anticipate several key catalysts in 2024. These include the global launch of brackish or are you owe the reimbursement of the next generation of our by the graphs kidney lab develop test publication of data supporting new claims for Vida graphs, kidney and publication of data to support coverage and reimbursement for determine I O and determined.

Joshua Riggs: These include the global launch of Graf Deschereau RUO, the reimbursement of the next generation of our VitaGraft Kidney Lab-Developed Test, publication of data supporting new claims for VitaGraft Kidney, and publication of data to support coverage and reimbursement for Determi-IO and Determi-CNI. Additionally, we expect to make significant progress on VitaGraft Kidney IVD, aiming for FDA clearance by the end of Q4 20 OncoCyte is now at the starting line of its most exciting growth phase to date.

Speaker Change: Right.

Speaker Change: Additionally, we expect to make significant progress on Biograph kidney IBD aiming for FDA clearance by the end of Q4 2025.

Speaker Change: <unk> is now at the starting line of its most exciting growth phase to date by delivering our advanced tools to researchers around the world from leading institutions in the U S EU and Asia to everyday labs needing straightforward rapid results with fast turnaround times, we're carving out new pathways for research and patient care, we foresee a boost in sales marketing.

Joshua Riggs: By delivering our advanced tools to researchers around the world, from leading institutions in the US, EU, and Asia, to everyday labs needing straightforward, rapid results with fast turnaround times, we're carving out new pathways for research and patient care. We foresee a boost in sales, marketing, and commercialization activities with our expanding role in the transplant sector alongside our ongoing efforts in oncology. Financially, our disciplined approach is clear, as shown by our modest cash burn of $3.9 million in the first quarter.

Speaker Change: And commercialization activities with our expanding role in the transplant sector alongside our ongoing efforts in oncology.

Speaker Change: Financially our disciplined approach is clear shown by our modest cash burn of $3 9 million in the first quarter.

Joshua Riggs: And our capital-light business model should enable us to keep our burn low as we commercialize our tests and build revenue on the way to profitability. Coupled with our strategic moves and the $15.8 million boost from our recent private placement, we're well positioned for sustained growth and innovation. As we begin our product launch, we also plan to interact more frequently with the investment community over the next few months. If you're an institutional investor or a long-term-oriented investor of any type, then please contact us if you'd like to schedule a meeting.

Speaker Change: And our capital light business model should enable us to keep our burn low as we commercialize our tests and build revenue on the way to profitability coupled.

Speaker Change: Coupled with our strategic moves and the $15 $8 million boost from our recent private placement, we're well positioned for sustained growth and innovation.

Speaker Change: As we begin our product launch we also plan to interact more frequently with the investment community over the next few months, if you're an institutional investor or a long term oriented industrial being tightened. Please contact us if you'd like to schedule a meeting I plan to meet with investors and a number of U S cities over the next few months and in the Meanwhile, Please take take the time to look at.

Joshua Riggs: I plan to meet with investors in a number of U.S. cities over the next few months. And, meanwhile, please take the time to look at the investor relations sections of the OncoCyte website at oncocyte.com. On it, you can find our most recent slide deck and a range of other information about our company and business opportunities. We extend our heartfelt thanks to our team, shareholders, and partners for their unwavering belief in our vision and their continued support on this transformative journey. Your trust fuels our commitment to democratize patient care through innovative diagnostics. I'll turn the call back over to you for the Q&A portion.

Speaker Change: The Investor Relations section of Yonkers like website at Oncotype Dot com on it you can find our most recent slide deck and a range of other information about our company and business opportunities, we extend our heartfelt thanks to our team shareholders and partners for their unwavering belief in our vision and their continued support on this transformative journey your trust fuels our commit.

Speaker Change: To democratize patient care through innovative diagnostics I'll turn the call back over or.

Speaker Change: For the Q&A portion.

Speaker Change: Thank you we will now begin the question and answer session.

Brianna: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. To withdraw your question, simply press star 1 again. Our first question comes from Mike Matson on Needham. Please go ahead.

Speaker Change: Do you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Speaker Change: To withdraw your question simply press Star one again.

Speaker Change: Our first question comes from Mike Matson with Needham. Please go ahead.

Michael Stephen Matson: Yeah, thanks. So, just in terms of, you know, Graftasher, for Research Use Only, could we start to see any meaningful sales of that this year, or is there really going to be more in 2025?

Michael Stephen Matson: Yeah. Thanks, So just in terms of graft assure researches only is that should we start to see any meaningful sales of that this year or is there really going to be more than 25.

Speaker Change: Yeah. Thanks, I think we will start shipping those first customers here in Q2.

Joshua Riggs: Yeah, thanks. I think, you know, we'll start shipping those first customers here in Q2. It's going to take them a little while to validate since this is an RUO product, but we'll expect to see kind of like the first revenues from those sites, probably middle late Q4, and then then build into 2025.

Speaker Change: It's going to take them a little while to validate since this isn't our UO product.

Speaker Change: We'll expect to see kind of like the first revenues from those sites, probably middle late Q4, and then building into 2025.

Speaker Change: Okay got it.

Michael Stephen Matson: And then just your sales and marketing was up, I think you said 22%, so is that going to continue to go up as you move to commercialize GraftAssure or, you know, or should we expect that to sort of level off from here?

Speaker Change: And then just the yourselves and marketing was up I think you said, 22%. So is that going to continue to go up as you.

Speaker Change: Move to commercialize grab Fisher.

Speaker Change: Or is that should we expect that to sort of level off from here.

Speaker Change: Yeah, I think when we talk you know a couple of weeks back you know, we we said we were going to add a couple of head count there I think that's still our commitment that we want to put on.

Joshua Riggs: Yeah, I think when we talked, you know, a couple of weeks ago, we said that we were going to add a couple of headcounts there. I think that's still our commitment that we want to put on, you know, a handful of people here in the US and maybe a person or two in Europe to kind of support product launch and the validation activities that are going to be going on. So the site activation. So we'll pick up a little bit here. And then it'll level off in the latter part of Q4. [inaudible]

Speaker Change: A handful of folks here in the U S and you know maybe a person or two in Europe to support product launch and the the validation activities that are going be going onto the site activation.

We will pick up a little bit there and then it will level off in the latter part of Q4.

Michael Stephen Matson: Okay, I got it. Thank you.

Speaker Change: Okay got it thank you.

Speaker Change: Mhm.

Speaker Change: Our next question comes from Nathan <unk> with Stephens. Please go ahead.

Brianna: Our next question comes from Mason Carrico with Stevens. Please go ahead.

Speaker Change: Hey, Josh.

Mason Owen Carrico: Hey, Josh. So in your discussion with transplant centers, I'm just curious what you're hearing in terms of clinicians' willingness to switch away from the current transplant offerings that are on the market and fairly well utilized. I guess once there's a kilted option, how do you think about that transition playing out? Do you think it's on a clinician by clinician basis, or could it be more top-down from the transplant center itself?

Nathan: So your discussion with transplant centers I'm, just curious what youre hearing in terms of.

Clinicians willingness to switch away from.

Nathan: The current transplant offerings that are on the market and fairly well utilized I guess, what's theres a kitted option I guess, how do you think about that transition playing out do you think it's on a clinician by clinician basis or can it be more top down from the transplant center itself.

Nathan: Yeah, I mean, so I can I got they've got two two rounds of experienced this share here I guess, just so we have kind of the interaction that we're having on the on the lab service side.

Joshua Riggs: Yeah, I mean, so I can, I've got two realms of experience to share here, I guess. So we have kind of the interaction that we're having on the lab service side. And, you know, I think what we've learned in the past year, year and a half of interacting with the transplant community is that, you know, if you've seen one transplant center, you've seen one, and even within centers, you have kind of split use of tests, you know, some doctors prefer one test, some doctors prefer another test.

Nathan: And I think what we've learned in the past year year, and a half of interacting with the transplant community is that.

Nathan: You know if you've seen one transplant center, you've seen one and even within centers you have.

Nathan: Kind of split you see now some docs prefer one test some docs prefer another test and we haven't seen any kind of like heavy handed organizational mandates that say you have to use this test or you have to use that test maybe in a few rare circumstances and I would say that.

Joshua Riggs: And we haven't seen any kind of heavy-handed organizational mandates that say you have to use this test, or you have to use that test, maybe in a few rare circumstances. And I would say that as the industry builds trust in the assay, you'll start to see more of a shift, but I wouldn't expect it to be kind of, you know, day one, that there's gonna be kind of a flip of the switch, and all the testing is going to go. But I do expect that the motivations to do testing in house are going to remain relatively constant, which is, you know, there is no way to get a sent out test answer in one day.

Nathan: As the industry builds trust in the assay, you'll start to see a more of a shift but I wouldn't expect it to be kind of.

Nathan: Day, one and that there should be kind of a flip of the switch and all the testing is going to go but I do expect that the the motivations to do testing in house are going to remain relatively constant.

Nathan: Which as you know there is no way to get a send out tests answer in one day.

Joshua Riggs: And that's going to have a lot of power once a regulated product is on the market, and, you know, presuming that it's reimbursed, it's really hard to imagine that those centers would want to forego that revenue. So I think those are powerful motivators to switch once there's a regulated product out there. I don't know if I've answered your question, Mason, and I don't know if that gets you where you're trying to go. No, that wasn't helpful.

Nathan: And that's going to that's going to have a lot of power once a regulated product is on market.

Nathan: And you know presuming that it's reimbursed it's really hard.

Nathan: Imagine that those centers would want to forego that revenue.

Nathan: So I think those are going to be powerful motivators to switch once theres a regulated product out there.

Nathan: I don't know if I've answered your question it sounds that that gets you where you're trying to go no.

Mason Owen Carrico: Yeah, that was helpful. And then in terms of the conversations you're having with potential beta sites that you'll begin shipping to, I mean, where are you seeing the most interest? Is there some commonality among the centers that are set to be those beta sites and those who aren't? I mean, were these through established relationships or any color on how those opportunities kind of presented themselves? Sure. I mean, you know, I think the way we structured the agreement with Bio-Rad carving out Germany probably gives you some hints there.

Speaker Change: No that was helpful. Yeah that was helpful. And then in terms of the conversations you're having with potential beta sites that youll begin shipping too I mean, where are you seeing the most interest is there some commonality among the centers that are set to be those data site and those who arent I mean were these through established relationships or any color on.

Speaker Change: And how those opportunities presented themselves.

Speaker Change: Sure I mean, you know I think the the way we structured the agreement with bio Rad with carving out Germany, probably gives you.

Joshua Riggs: I mean, we've been publishing with those guys, a lot of those research institutions for the past, you know, seven to eight years. So those are, those are really deep relationships. And, you know, we would expect that that's really fertile ground for, you know, for these product launches. In the US and Asia, I mean, there's been a lot of word of mouth, really, that's driving this. I think the community is fairly well-networked. It's small, right?

Some hint there I mean, we've been publishing with those guys a lot of those research institutions for the past seven eight years. So those are those are really deep relationships and we would expect that that's really fertile ground for you know for these these product launches.

Speaker Change: In the U S and Asia I mean, it's been.

Speaker Change: It's been a lot of word of mouth really that's that's that's driving this I think the community is fairly well networked. It's small right I mean, there's only a certain number of centers that do transplants in any volume.

Joshua Riggs: I mean, there's only a certain number of centers that do transplants in any volume, and I would say the centers that are reaching out to us are very capable. They're research-focused. They have questions that they've been wanting to ask for a long time. But their research interests haven't really lined up with the commercial interests, you know, of the incumbents. And so they're excited to get their hands on the technology and, you know, be able to answer the questions that have been bugging them for a very long time.

Speaker Change: And I would say.

Speaker Change: The centers that are reaching out to us are very.

Speaker Change: Capable they're there they're research focus they ask questions that they've been wanting to ask for a long time.

Speaker Change: But there their research interests haven't really lined up with the commercial interests you know of the other incumbents and so they're they're excited to get their hands on.

The technology and be able to answer the questions that have been bugging that for a very long time.

Speaker Change: Got it and then the last one here from me you touched on it in a previous question but.

Mason Owen Carrico: Got it. And then the last one here for me, you touched on it in a previous question, but in terms of the commercial hires, how are those progressing? How do you think about the cadence of those reps, you know, being hired, being trained up, and getting out there?

Speaker Change: In terms of the.

Speaker Change: The commercial hires.

Speaker Change: How are those progressing how do you think about the cadence of.

Speaker Change: Of those reps.

Speaker Change: Being hired being trained up and getting out there.

Joshua Riggs: Yeah, I mean, we've been preparing those JDs, and so we'll get those posted by the end of the quarter. We'll expect to be bringing those folk on in Q3. And so they'll get trained up, and they'll be training alongside the Bio-Rad team. And then that way, once we get into Q4, we've got a really strong team on the field.

Speaker Change: Yeah, I mean, we've you know we've been preparing those J D has and so we'll get those posted by the by the end of the quarter, we will expect to be bringing those folk on in Q3.

Speaker Change: And so they'll get trained up be training alongside the bio Rad team and then that way.

Speaker Change: Once we get into Q4, we've got a we've got a really strong team on the field.

Speaker Change: Perfect Alright appreciate it.

Mason Owen Carrico: Perfect. I'd appreciate it.

Speaker Change: Thank you.

Speaker Change: This will conclude our question and answer session and with that we will conclude today's conference call. Thank you all for your participation you may now disconnect.

Brianna: This will conclude our question and answer session. And with that, we will conclude today's conference call. Thank you all for your participation, and you may now disconnect.

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