Cancer Genetics Announces Strong Third Quarter With Growth Across All Categories

Cancer Genetics Announces Strong Third Quarter With Growth Across All Categories

Cancer Genetics, Inc. CGIX, +11.33% an emerging leader in DNA-based cancer diagnostics, announced today financial and operating results for the third quarter ended September 30, 2014.

Third quarter revenue of $3.22 million – overall revenue growth of ~90% over the same quarter of 2013, including 159% revenue growth in Biopharma Services and 44% revenue growth in Clinical Services.

Revenue grew 110% sequentially over the second quarter of 2014.

Signed contracts with biopharma customers increased 33% to over $24 million with significant increases from additional trials in hematological cancers.

Closed acquisitions of BioServe Biotechnologies in Hyderabad, India and Gentris in Raleigh, North Carolina during the third quarter; demonstrating rapid progress on integration and capturing sales synergies.

The company closed the quarter with cash and cash equivalents of $37.0 million with $30.7 million in unrestricted cash.

Achieved major commercial milestones for the DNA-based cervical cancer test FHACT® including: patent issuance by the US Patent Office, obtaining the CE mark to sell FHACT® as an In-Vitro-Diagnostic for HPV-associated cervical cancer in the European Union.

Advanced the validation and clinical utility of the proprietary genomic panel for diffuse large B-cell lymphoma (DLBCL) through collaborations with Beth Israel Deaconess Medical Center and Keck School of Medicine at USC on over 280 patients.

Multiple presentations and papers were accepted for the 56th Annual American Society of Hematology (ASH) Meeting in December on genomic panels for DLBCL and Multiple Myeloma.

Conference call today, Monday, November 10th at 8:30am Eastern / 5:30am Pacific.

"The company has significantly advanced its footprint in providing state-of-the-art genomic testing for cancer by continuing to execute growth in the clinical market and expanding our capabilities through the acquisitions of Gentris and BioServe Biotechnologies India. We have been focused on integrating our new sites in North Carolina and Hyderabad, India this past quarter so that we can immediately capture customer synergies and expand our service offering," said Panna Sharma, President and CEO of Cancer Genetics. "As our business impacts more patients, informs the outcomes of more trials, and aids in new discoveries in oncology, we are quickly becoming the partner to help personalize the treatment of cancer from bench to bedside."

Cancer Genetics reported total revenue of $3.22 million in the third quarter of 2014, compared to $1.71 million in the same quarter last year, and $1.51 million in the second quarter of 2014. Revenue growth was driven by strong growth in clinical testing volumes and the close of two acquisitions during the third quarter.

Year over year revenue from Biopharma Services, which provide testing for biotech and pharmaceutical customers, grew 159%. Growth in this area was due in part to new business garnered from the company's acquisitions and from the commencement of clinical trials which had previously been delayed. The acquisitions broaden the company's access to additional global pharmaceutical and biotech companies.

Revenue from the company's Clinical Services, which provide oncology testing for clinicians, cancer centers, and hospitals, grew 44%. The growth in Clinical Services was driven by a 44% increase in the test count, including the number of proprietary panels for B-cell cancers being ordered. Average reimbursement per test also improved by 4% to $484 year over year, and 8% over the prior quarter of 2014.

"This past quarter places our company in an ideal position to continue our growth from the revenue synergies derived from the acquisitions, the launch of additional tests and services, and the investments we have made in sales and marketing," added Sharma. "We are seeing extraordinary interest among community oncologists and pathologists for targeted genomic information that has been validated with leading research institutions to improve diagnosis, as well as guide and monitor patient treatment. The pace at which new combination protocols and new molecular therapeutics are being adopted is driving improved and more informed cancer care. CGI is uniquely positioned as a partner in this era of precision medicine."

"Our work with biotech and pharmaceutical partners continues to grow significantly as evidenced by the growth in our new contracts, bringing our signed contracts to over $24 million. This demand is largely driven by our offering in hematological cancers and our ability to serve clients across multiple geographies," continued Mr. Sharma. "This unique ability to deliver clinically relevant genomic content and biomarker data in the US, India, and China is something that no other oncology-focused genomic company can match. As the need for improved genomic profiling, patient stratification, and therapeutic response monitoring during oncology-focused clinical trials continues to grow, our value proposition grows for biotech and pharmaceutical companies."

Financial Highlights

Third Quarter Ended September 30, 2014 – Year to Year Comparison

Revenues increased ~90% to $3.2 million

Clinical services revenue increased 44%

BioPharma revenue grew 159%

Operating expenses were $5.6 million compared to $2.2 million in 2013

Operating expenses during this period include $1 million in non-cash, stock based compensation and one-time expenses related to our M&A activity

Net loss in the third quarter was $4.8 million, or ($0.51) per diluted share

Adjusted net loss was $3.8 million, or ($0.41) per diluted share

Adjusted net loss, which is a non-GAAP measure, excludes the effect of non-cash employee stock based compensation and one-time expenses related to our M&A activity

Nine Month Period Ended September 30, 2014 vs. 2013 – Year to Year Comparison

Revenues increased 30% to $6.2 million

BioPharma revenue grew $900 thousand

Clinical services test volume increased 30% to 6,740

Operating expenses were $14.1 million, compared with $6.9 million in 2013

Operating expenses during this period include $2.3 million in non-cash, stock based compensation and one-time expenses related to our M&A activity

Net loss for the nine-month period ending September 30, 2014 was $11.5 million or ($1.25) per diluted share

Adjusted net loss was $9.1 million, or ($1.01) per diluted share

Adjusted net loss, which is a non-GAAP measure, excludes the effect of non-cash employee stock based compensation and one-time expenses related to our M&A activity

Cash and cash equivalents totaled $37 million with $30.7 million unrestricted at September 30, 2014

Conference Call & Webcast Details

Reconciliation of Non-GAAP financial measures to GAAP

Cancer Genetics reports net loss without stock based compensation and expenses related to M&A activity, which is a non-GAAP measure. The reconciliation to GAAP is as follows:

Non-GAAP net loss for the third quarter of 2014 excludes the effect of stock based compensation and expenses related to our M&A activity of $1 million in 2014 and $117,000 in 2013. This results in a Non-GAAP loss of $3.8 million, or ($0.41) per diluted share in the third quarter of 2014, compared with a non-GAAP net loss of $2.9 million, or ($0.58) per diluted share, for the third quarter of 2013. The comparable GAAP numbers are a net loss in the third quarter of $4.8 million, or ($.51) per diluted share compared to a loss of $3.1 million or ($0.61) per diluted share in the third quarter of 2013.

Non-GAAP net loss for the nine-month period excludes the effect of employee stock based compensation and expenses related to our M&A activity of $2.3 million in 2014 and $407,000 in 2013. This results in a Non-GAAP loss of $9.1 million, or ($1.01) per diluted share, compared with a non-GAAP net loss of $9.4 million, or ($3.90) per diluted share, for the nine-month period ending September 30, 2013. The comparable GAAP numbers are a net loss for the nine-month period ending September 30, 2014 of $11.5 million or ($1.25) per diluted share, compared with a loss of $9.9 million or ($4.02) per diluted share in the comparable period in 2013.