Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 02, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-37648 | |
Entity Registrant Name | Oncocyte Corporation | |
Entity Central Index Key | 0001642380 | |
Entity Tax Identification Number | 27-1041563 | |
Entity Incorporation, State or Country Code | CA | |
Entity Address, Address Line One | 15 Cushing | |
Entity Address, City or Town | Irvine | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92618 | |
City Area Code | (949) | |
Local Phone Number | 409-7600 | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | OCX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 91,581,781 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 46,469 | $ 7,143 |
Accounts receivable | 1,025 | 203 |
Marketable equity securities | 1,062 | 675 |
Prepaid expenses and other current assets | 1,439 | 1,205 |
Total current assets | 49,995 | 9,226 |
NONCURRENT ASSETS | ||
Right-of-use and financing lease assets, net | 2,949 | 3,262 |
Machinery and equipment, net, and construction in progress | 4,396 | 3,262 |
Equity method investment in Razor | 13,417 | |
Goodwill | 24,237 | 9,187 |
Intangible assets, net | 93,712 | 15,009 |
Restricted cash | 1,700 | 1,700 |
Other noncurrent assets | 393 | 356 |
TOTAL ASSETS | 177,382 | 55,419 |
CURRENT LIABILITIES | ||
Accounts payable | 1,088 | 432 |
Accrued compensation | 2,783 | 3,468 |
Accrued expenses and other current liabilities | 1,933 | 2,284 |
Accrued liabilities from acquisition, current | 11,734 | |
Loans payable, current | 1,500 | 2,390 |
Right-of-use and financing lease liabilities, current | 737 | 422 |
Total current liabilities | 19,775 | 8,996 |
NONCURRENT LIABILITIES | ||
Loans payable, net of deferred financing costs, noncurrent | 541 | 1,508 |
Right-of-use and financing lease liabilities, noncurrent | 3,895 | 4,312 |
Contingent consideration liabilities, noncurrent | 50,505 | 7,120 |
TOTAL LIABILITIES | 74,716 | 21,936 |
Commitments and contingencies (Note 10) | ||
SHAREHOLDERS’ EQUITY | ||
Preferred stock, no par value, 5,000 shares authorized; no shares issued and outstanding | ||
Common stock, no par value, 230,000 shares authorized; 90,316 and 69,117 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 240,755 | 157,160 |
Accumulated deficit | (138,089) | (123,677) |
Total shareholders’ equity | 102,666 | 33,483 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 177,382 | $ 55,419 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock no par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
Common stock, no par value | $ 0 | $ 0 |
Common stock, shares authorized | 230,000,000 | 230,000,000 |
Common stock, shares issued | 90,316,308 | 69,116,802 |
Common stock, shares, outstanding | 90,316,308 | 69,116,802 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Net revenue | $ 2,030 | $ 143 | $ 3,154 | $ 158 |
Cost of revenues | 1,350 | 365 | 2,088 | 538 |
Cost of revenues – amortization of acquired intangibles | 1,074 | 1,381 | ||
Gross profit | (394) | (222) | (315) | (380) |
Operating expenses: | ||||
Research and development | 2,537 | 3,225 | 5,898 | 5,385 |
Sales and marketing | 2,673 | 1,562 | 4,927 | 3,052 |
General and administrative | 7,934 | 3,759 | 12,698 | 8,383 |
Change in fair value of contingent consideration | 30 | 1,090 | ||
Total operating expenses | 13,174 | 8,546 | 24,613 | 16,820 |
Loss from operations | (13,568) | (8,768) | (24,928) | (17,200) |
OTHER INCOME (EXPENSES), NET | ||||
Interest expense, net | (49) | (75) | (117) | (97) |
Unrealized gain (loss) on marketable equity securities | 173 | 16 | 386 | (38) |
Pro rata loss from equity method investment in Razor | (301) | (270) | (630) | |
Gain on extinguishment of debt (PPP loan) | 1,141 | 1,141 | ||
Other income, net | 16 | 20 | 18 | 30 |
Total other expenses, net | 1,281 | (340) | 1,158 | (735) |
LOSS BEFORE INCOME TAXES | (12,287) | (9,108) | (23,770) | (17,935) |
Income tax benefit | 1,794 | 9,358 | 1,095 | |
NET LOSS | $ (10,493) | $ (9,108) | $ (14,412) | $ (16,840) |
Net loss per share: basic and diluted | $ (0.12) | $ (0.14) | $ (0.17) | $ (0.26) |
Weighted average shares outstanding: basic and diluted | 89,758 | 65,833 | 85,961 | 63,628 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 124,583 | $ (93,745) | $ 30,838 |
Beginning balance, shares at Dec. 31, 2019 | 57,032 | ||
Net Loss | (16,840) | (16,840) | |
Stock-based compensation | $ 2,298 | 2,298 | |
Stock-based compensation, shares | |||
Shares issued upon vesting of RSU, net of shares retired to pay employees’ taxes | $ (14) | (14) | |
Shares issued upon vesting of RSU, net of shares retired to pay employees' taxes, shares | 13 | ||
Sale of common shares | $ 18,342 | 18,342 | |
Sale of common shares, shares | 8,257 | ||
Issuance of common stock for Insight Genetics acquisition | $ 5,000 | 5,000 | |
Issuance of common stock for Insight Genetics acquisition, shares | 1,916 | ||
Financing costs paid to issue common shares | $ (31) | (31) | |
Financing costs paid to issue common shares, shares | |||
Ending balance, value at Jun. 30, 2020 | $ 150,178 | (110,585) | 39,593 |
Ending balance, shares at Jun. 30, 2020 | 67,218 | ||
Beginning balance, value at Mar. 31, 2020 | $ 138,102 | (101,477) | 36,625 |
Beginning balance, shares at Mar. 31, 2020 | 62,484 | ||
Net Loss | (9,108) | (9,108) | |
Stock-based compensation | $ 1,361 | 1,361 | |
Stock-based compensation, shares | |||
Sale of common shares | $ 10,746 | 10,746 | |
Sale of common shares, shares | 4,734 | ||
Financing costs paid to issue common shares | $ (31) | (31) | |
Financing costs paid to issue common shares, shares | |||
Ending balance, value at Jun. 30, 2020 | $ 150,178 | (110,585) | 39,593 |
Ending balance, shares at Jun. 30, 2020 | 67,218 | ||
Beginning balance, value at Dec. 31, 2020 | $ 157,160 | (123,677) | 33,483 |
Beginning balance, shares at Dec. 31, 2020 | 69,117 | ||
Net Loss | (14,412) | (14,412) | |
Stock-based compensation | $ 3,287 | 3,287 | |
Stock-based compensation, shares | |||
Stock options exercised | $ 1,599 | 1,599 | |
Stock options exercised, shares | 757 | ||
Warrants exercised | $ 823 | 823 | |
Warrants exercised, shares | 255 | ||
Shares issued upon vesting of RSU, net of shares retired to pay employees’ taxes | $ (37) | (37) | |
Shares issued upon vesting of RSU, net of shares retired to pay employees' taxes, shares | 130 | ||
Issuance of common stock to Razor Genomics | $ 5,756 | 5,756 | |
Issuance of common stock to Razor Genomics, shares | 982 | ||
Issuance of common stock for Chronix Biomedical acquisition | $ 3,299 | 3,299 | |
Issuance of common stock to Chronix Biomedical, shares | 648 | ||
Ending balance, value at Jun. 30, 2021 | $ 240,755 | (138,089) | 102,666 |
Ending balance, shares at Jun. 30, 2021 | 90,316 | ||
Sale of common shares, including at-the-market transactions | $ 71,746 | 71,746 | |
Sale of common shares, including at-the-market transactions, shares | 18,427 | ||
Financing costs paid to issue common shares, including at-the-market transactions | $ (2,878) | (2,878) | |
Financing costs paid to issue common shares, including at-the-market transactions, shares | |||
Beginning balance, value at Mar. 31, 2021 | $ 234,224 | (127,596) | 106,628 |
Beginning balance, shares at Mar. 31, 2021 | 88,914 | ||
Net Loss | (10,493) | (10,493) | |
Stock-based compensation | $ 1,997 | 1,997 | |
Stock-based compensation, shares | |||
Stock options exercised | $ 1,251 | 1,251 | |
Stock options exercised, shares | 617 | ||
Warrants exercised | $ 21 | 21 | |
Warrants exercised, shares | 7 | ||
Shares issued upon vesting of RSU, net of shares retired to pay employees’ taxes | $ (37) | (37) | |
Shares issued upon vesting of RSU, net of shares retired to pay employees' taxes, shares | 130 | ||
Issuance of common stock for Chronix Biomedical acquisition | $ 3,299 | 3,299 | |
Issuance of common stock to Chronix Biomedical, shares | 648 | ||
Ending balance, value at Jun. 30, 2021 | $ 240,755 | $ (138,089) | $ 102,666 |
Ending balance, shares at Jun. 30, 2021 | 90,316 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (14,412) | $ (16,840) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 327 | 127 |
Amortization of intangible assets | 1,381 | 37 |
Amortization of right-of-use assets and liabilities | 218 | 301 |
Impairment charge for long-lived assets | 422 | |
Pro rata loss from equity method investment in Razor | 270 | 630 |
Stock-based compensation | 3,286 | 2,298 |
Unrealized (gain) loss on marketable equity securities | (386) | 38 |
Amortization of debt issuance costs | 33 | 57 |
Change in fair value of contingent consideration | 1,090 | |
Deferred income tax benefit | (9,358) | (1,095) |
Gain on extinguishment of debt (PPP loan) | (1,141) | |
Accrued severance from Chronix Biomedical acquisition | 2,452 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (817) | (85) |
Amount due to Lineage and affiliates | (6) | |
Prepaid expenses and other assets | (103) | (779) |
Accounts payable and accrued liabilities | (766) | 1,064 |
Net cash used in operating activities | (17,926) | (13,831) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of Insight Genetics, net of cash acquired | (607) | (6,189) |
Acquisition of Razor Genomics asset, net of cash acquired | (6,648) | |
Acquisition of Chronix Biomedical, net of cash acquired | (4,459) | |
Equity method investment in Razor | (4,000) | |
Construction in progress and purchases of furniture and equipment | (1,452) | (535) |
Net cash used in investing activities | (13,166) | (10,724) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 1,600 | |
Proceeds from sale of common shares | 65,262 | 18,342 |
Financing costs to issue common shares | (2,676) | (31) |
Proceeds from sale of common shares under at-the-market transactions | 6,483 | |
Financing costs for at-the-market sales | (203) | |
Proceeds from exercise of warrants | 823 | |
Common shares received and retired for employee taxes paid | (37) | (14) |
Repayment of loan payable | (750) | (125) |
Repayment of financing lease obligations | (84) | (35) |
Proceeds from PPP loan | 1,141 | |
Net cash provided by financing activities | 70,418 | 19,278 |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 39,326 | (5,277) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING | 8,843 | 23,772 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING | 48,169 | 18,495 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | 70 | 45 |
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES | ||
Common stock issued for acquisition of Razor Genomics asset | 5,756 | |
Deferred tax liability generated from the acquisition of Razor Genomics asset | 7,564 | |
Common stock issued for acquisition of Insight Genetics | 5,000 | |
Common stock issued for acquisition of Chronix Biomedical | 3,299 | |
Deferred tax liability generated from the acquisition of Chronix | 1,794 | |
Initial fair value of contingent consideration at acquisition date | 42,295 | 11,130 |
Assumed liability from Chronix Acquisition | 9,294 | |
Holdback liability | 600 | |
Construction in progress, machinery and equipment purchases included in accounts payable, accrued liabilities and landlord liability | $ 9 | $ 180 |
Organization, Description of th
Organization, Description of the Business and Liquidity | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Description of the Business and Liquidity | 1. Organization, Description of the Business and Liquidity Oncocyte Corporation (“Oncocyte”), incorporated in 2009 in the state of California, is a molecular diagnostics company focused on developing and commercializing proprietary laboratory-developed tests (“LDTs”) to serve unmet medical needs across the cancer care continuum. Oncocyte’s mission is to provide actionable information to physicians and patients at critical decision points to optimize diagnosis and treatment decisions, improve patient outcomes, and reduce overall cost of care. Oncocyte has prioritized lung cancer as its first indication. Lung cancer remains the leading cause of cancer death in the United States, despite the availability of molecular testing and novel therapies to treat patients. Oncocyte’s first product for commercial release is a proprietary treatment stratification test called DetermaRx™ that identifies which patients with early-stage non-small cell lung cancer may benefit from chemotherapy, resulting in a significantly higher, five-year survival rate. Beginning in September 2019 through February 23, 2021, Oncocyte held a 25 10 5.7 Business Combinations Oncocyte completed its acquisition of Insight Genetics, Inc. (“Insight”) on January 31, 2020 (the “Insight Merger Date”) through a merger with a newly incorporated wholly owned subsidiary of Oncocyte (the “Insight Merger”) under the terms of an Agreement and Plan of Merger (the “Insight Merger Agreement”). Prior to the Insight Merger, Insight was a privately held company specializing in the discovery and development of the multi-gene molecular, laboratory-developed diagnostic tests that Oncocyte has branded as DetermaIO™. DetermaIO™ is a proprietary gene expression assay with promising data supporting its potential to help identify patients likely to respond to checkpoint inhibitor drugs. Insight has a CLIA-certified diagnostic laboratory with the capacity to support clinical trials or assay design on certain commercially available analytic platforms that may be used to develop additional diagnostic tests. Insight also performs Pharma Services in its CLIA-certified laboratory for pharmaceutical and biotechnology companies, including testing for biomarker discovery, assay design and development, clinical trial support, and a broad spectrum of biomarker tests. The Insight Merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, which requires, among other things, that the assets and liabilities assumed be recognized at their fair values as of the acquisition date. See Note 3 for a full discussion of the Insight Merger. On April 15, 2021 (the “Chronix Merger Date”), Oncocyte completed its acquisition of Chronix Biomedical, Inc. (“Chronix”) pursuant to an Agreement and Plan of Merger dated February 2, 2021, amended February 23, 2021, and amended and restated as of April 15, 2021 (as amended and restated, the “Chronix Merger Agreement”), by and among Oncocyte, CNI Monitor Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Oncocyte (“Merger Sub”), Chronix, the stockholders party to the Chronix Merger Agreement and a party named as equity holder representative. Pursuant to the Chronix Merger Agreement, Merger Sub merged with and into Chronix, with Chronix surviving as a wholly owned subsidiary of Oncocyte (the “Chronix Merger”). Prior to the Chronix Merger, Chronix was a privately held molecular diagnostics company, developing blood tests for use in cancer treatment and organ transplantation. Through the Chronix Merger, Oncocyte has added to its LDT development pipeline the TheraSure™-CNI Monitor, a patented, blood-based test for immunotherapy monitoring, and TheraSure™ Transplant Monitor, a solid organ transplantation monitoring test. See Note 3 for additional information about the Chronix Merger. Other tests in the development pipeline include DetermaTx™, a test intended to complement DetermaIO™ by assessing the mutational status of a tumor to help identify the appropriate targeted therapy. Oncocyte also plans to initiate the development of DetermaMx™ as a blood-based test to monitor cancer patients for recurrence of their disease. Liquidity Oncocyte has incurred operating losses and negative cash flows since inception and had an accumulated deficit of $ 138.1 million as of June 30, 2021. Oncocyte expects to continue to incur operating losses and negative cash flows for the foreseeable future. Oncocyte did not generate revenues from its operations prior to the first quarter of 2020, and revenues since that period through the date of this Report were not sufficient to cover Oncocyte’s operating expenses. Oncocyte finances its operations primarily through the sale of shares of its common stock. As of June 30, 2021, Oncocyte had $ 46.5 1.1 On April 23, 2020, Oncocyte obtained a U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loan in the principal amount of $ 1,140,930 from Silicon Valley Bank (the “Bank”). The PPP loan bore interest at a rate of 1 % per annum (see Note 12) and was scheduled to mature on April 23, 2022 . During May 2021, the principal amount and accrued interest on the PPP loan was forgiven by the Bank through the SBA under the provisions of the PPP loan program. Although Oncocyte was obligated to make monthly payments of principal and interest on the PPP loan commencing in November 2020, each in such equal amount required to fully amortize the principal amount outstanding by the maturity date, Oncocyte was not billed or charged for any payments for the PPP loan during its loan forgiveness application. The forgiven principal amount of $ 1,140,930 is recognized as gain on extinguishment of debt in the accompanying condensed consolidated statements of operations. On June 11, 2021, Onco c yte entered into an at-the-market sales agreement with BTIG, LLC as sales agent and/or principal (the “Agent”) pursuant to which Oncocyte may sell up to an aggregate of $50,000,000 During July 2021, Oncocyte sold 1,108,650 shares of common stock at an average offering price of $5.63 per share, for gross proceeds of approximately $6.24 million through the ATM Offering (see Note 13). Oncocyte will need to raise additional capital to finance its operations, including the development and commercialization of its cancer diagnostic and other tests, until such time as it is able to generate sufficient revenues from the commercialization of one or more of its LDTs and other tests and performing Pharma Services to cover its operating expenses. Presently, Oncocyte is devoting substantially all of its efforts on initial commercialization efforts for DetermaRx™ and completing development and planning commercialization of DetermaIO™, although DetermaIO™ is currently available for biopharma diagnostic development and research use only as a companion test in immunotherapy drug development to select patients for clinical trials. While Oncocyte plans to primarily market its LDTs in the United States through its own sales force, it is also beginning to make marketing arrangements with distributors in other countries. In order to reduce capital needs and to expedite the commercialization of any new LDTs that may become available for clinical use, Oncocyte may also pursue marketing arrangements with other diagnostic companies through which Oncocyte might receive licensing fees and royalty on sales, or through which it might form a joint venture to market its tests and share in net revenues, in the United States or abroad. In addition to general economic and capital market trends and conditions, Oncocyte’s ability to raise sufficient additional capital to finance its operations from time to time will depend on a number of factors specific to Oncocyte’s operations such as operating revenues and expenses, progress in development of, or in obtaining reimbursement coverage from Medicare for DetermaIO™ and other future LDTs that Oncocyte may develop or acquire. The availability of financing and Oncocyte’s ability to generate revenues from operating activities may be adversely impacted by the ongoing COVID-19 pandemic which could continue to cause deferrals of cancer surgeries that might otherwise have resulted in the utilization of DetermaRx™ and deferrals of drug development clinical trials that might have utilized Oncocyte’s Pharma Services. The COVID-19 pandemic also could continue to depress national and international economies and disrupt capital markets, supply chains, and aspects of Oncocyte’s operations. The extent to which the ongoing COVID-19 pandemic will ultimately impact Oncocyte’s business, results of operations, financial condition, or cash flows is highly uncertain and difficult to predict because it will depend on many factors that are outside Oncocyte’s control. The unavailability or inadequacy of financing or revenues to meet future capital needs could force Oncocyte to modify, curtail, delay, or suspend some or all aspects of planned operations. Sales of additional equity securities could result in the dilution of the interests of its shareholders. Oncocyte cannot assure that adequate financing will be available on favorable terms, if at all. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of presentation The unaudited condensed consolidated interim financial statements presented herein, and discussed below, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. In accordance with those rules and regulations, certain information and footnote disclosures normally included in comprehensive consolidated financial statements have been condensed or omitted. The condensed balance sheets as of December 31, 2020 was derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP. These condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in Oncocyte’s Annual Report on Form 10-K for the year ended December 31, 2020. Principles of consolidation On January 31, 2020, with the consummation of the Insight Merger, Insight became a wholly owned subsidiary of Oncocyte, and on that date Oncocyte began consolidating Insight’s operations and results with Oncocyte’s operations and results (see Note 3). On February 24, 2021, with the acquisition of the remaining equity interests in Razor, Razor became a wholly owned subsidiary of Oncocyte, and on that date Oncocyte began consolidating Razor’s results with Oncocyte’s operations and results (see Note 3). On April 15, 2021, with the acquisition of Chronix, Chronix became a wholly owned subsidiary of Oncocyte, and on that date Oncocyte began consolidating Chronix’s operations and results with Oncocyte’s operations and results (see Note 3). The accompanying condensed consolidated interim financial statements, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of Oncocyte’s financial condition and results of operations. The condensed consolidated results of operations are not necessarily indicative of the results to be expected for any other interim period or for the entire year. All material intercompany accounts and transactions have been eliminated in consolidation. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities, at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates estimates which are subject to significant judgment, including, but not limited to, valuation methods used, assumptions requiring the use of judgment to prepare financial projections, timing of potential commercialization of acquired in-process intangible assets, applicable discount rates, probabilities of the likelihood of multiple outcomes of certain events related to contingent consideration, comparable companies or transactions, determination of fair value of the assets acquired and liabilities assumed including those relating to contingent consideration, revenue recognition, assumptions related to going concern assessments, allocation of direct and indirect expenses, useful lives associated with long-lived intangible assets, key assumptions in operating and financing leases including incremental borrowing rates, loss contingencies, valuation allowances related to deferred income taxes, and assumptions used to value debt and stock-based awards and other equity instruments. Actual results may differ materially from those estimates. Similarly, Oncocyte assessed certain accounting matters that generally require consideration of forecasted financial information. The accounting matters assessed included, but were not limited to, Oncocyte’s equity investments, the carrying value of goodwill, acquired in-process intangible assets and other long-lived assets. Those assessments as well as other estimates referenced above were made in the context of information reasonably available to Oncocyte. While Oncocyte considered known or expected impacts of COVID-19 in making its assessments and estimates, the future impacts of COVID-19 are not presently determinable and could cause actual results to differ materially from Oncocyte’s estimates and assessments. Oncocyte’s future analysis or forecast of COVID-19 impacts could lead to changes in Oncocyte’s future estimates and assessments which could result in material impacts to Oncocyte’s consolidated financial statements in future reporting periods. Business combinations and fair value measurements Oncocyte accounts for business combinations in accordance with ASC 805, which requires the purchase consideration transferred to be measured at fair value on the acquisition date in accordance with ASC 820, Fair Value Measurement ● Level 1 ● Level 2 ● Level 3 When a part of the purchase consideration consists of shares of Oncocyte common stock, Oncocyte calculates the purchase price attributable to those shares, a Level 1 security, by determining the fair value of those shares as of the acquisition date based on prices quoted on the principal national securities exchange on which the shares traded. Oncocyte recognizes estimated fair values of the tangible assets and identifiable intangible assets acquired, including in-process research and development, and liabilities assumed, including any contingent consideration, as of the acquisition date. Goodwill is recognized as any amount of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in excess of the consideration transferred. ASC 805 precludes the recognition of an assembled workforce as an asset, effectively subsuming any assembled workforce value into goodwill. In determining fair value, Oncocyte utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the periods presented, Oncocyte has no financial assets or liabilities recorded at fair value on a recurring basis, except for cash and cash equivalents consisting of money market funds and marketable equity securities of Lineage and AgeX common stock held by Oncocyte described below. These assets are measured at fair value using the period-end quoted market prices as a Level 1 input. Oncocyte also has certain contingent consideration liabilities which are carried at fair value based on Level 3 inputs (see Note 3). The carrying amounts of cash equivalents, prepaid expenses and other current assets, amounts due to Lineage and other affiliates, accounts payable, accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items. The carrying amount of the loan payable to Silicon Valley Bank approximates fair value because the loan bears interest at a floating market rate (see Note 12). Goodwill and intangible assets In accordance with ASC 350, Intangibles – Goodwill and Other Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. Goodwill, similar to IPR&D, is not amortized but is tested for impairment at least annually, or if circumstances indicate its value may no longer be recoverable. Qualitative factors considered in this assessment include industry and market conditions, overall financial performance, and other relevant events and factors affecting Oncocyte’s business. Based on the qualitative assessment, if it is determined that the fair value of goodwill is more likely than not to be less than its carrying amount, the fair value of a reporting unit will be calculated and compared with its carrying amount and an impairment charge will be recognized for the amount that the carrying value exceeds the fair value. Oncocyte continues to operate in one segment and considered to be the sole reporting unit and, therefore, goodwill is tested for impairment at the enterprise level. Oncocyte does not have intangible assets with indefinite useful lives other than goodwill and the acquired IPR&D (see Notes 3 and 4). As of June 30, 2021, there has been no Contingent consideration liabilities Certain of Oncocyte’s asset and business acquisitions involve the potential for future payment of consideration to third-parties and former selling shareholders in amounts determined as a percentage of future net revenues generated, or upon attainment of revenue milestones, from Pharma Services or LDTs, as applicable, or annual minimum royalties to certain licensors, as provided in the applicable agreements. The fair value of such liabilities is determined using unobservable inputs. These inputs include the estimated amount and timing of projected cash flows and the risk-adjusted discount rate used to present value the cash flows (see Notes 3 and 4). These obligations are referred to as contingent consideration. ASC 805 requires that contingent consideration be estimated and recorded at fair value as of the acquisition date as part of the total consideration transferred. Contingent consideration is an obligation of the acquirer to transfer additional assets or equity interests to the selling shareholders in the future if certain future events occur or conditions are met, such as the attainment of product development milestones. Contingent consideration also includes additional future payments to selling shareholders based on achievement of components of earnings, such as “earn-out” provisions or percentage of future revenues, including royalties paid to the selling shareholders based on a percentage of certain revenues generated. The fair value of contingent consideration after the acquisition date is reassessed by Oncocyte as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in the condensed consolidated statements of operations. Changes in key assumptions can materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that Oncocyte records in its condensed consolidated interim financial statements. See Notes 3 and 4 for a full discussion of these liabilities. Investments in capital stock of privately held companies Oncocyte evaluates whether investments held in common stock of other companies require consolidation of the company under, first, the variable interest entity (“VIE”) model, and then under the voting interest model in accordance with accounting guidance for consolidations under Accounting Standards Codification (“ASC”) 810-10. If consolidation of the entity is not required under either the VIE model or the voting interest model, Oncocyte determines whether the equity method of accounting should be applied in accordance with ASC 323, Investments – Equity Method and Joint Ventures Oncocyte initially records equity method investments at fair value on the date of the acquisition with subsequent adjustments to the investment balance based on Oncocyte’s pro rata share of earnings or losses from the investment. As of December 31, 2020, the equity method investment balance of Razor is shown in noncurrent assets on the condensed consolidated balance sheets. Since February 24, 2021, the date of Oncocyte’s acquisition of the remaining interests in Razor, the Razor entity’s financial statements have been consolidated with Oncocyte, and the aggregate carrying value of the preexisting ownership interest and the cost of the additional ownership interest acquired is included in Intangible Assets, net, on the condensed consolidated balance sheets as of June 30, 2021 (see Notes 3 and 4). Restricted cash ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash Impairment of long-lived assets Oncocyte assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. Oncocyte’s long-lived assets consist primarily of intangible assets, right-of-use assets for operating leases, customer relationships, and machinery and equipment. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying value of the asset over its fair value, is recorded. As of June 30, 2021, there has been no impairment of long-lived assets. Revenue recognition Prior to January 1, 2020, Oncocyte generated no revenues. Effective on January 1, 2020, Oncocyte adopted the revenue recognition standard ASC Topic 606, Revenue from Contracts with Customers (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations, and (v) recognizing revenue when, or as, an entity satisfies a performance obligation. DetermaRx™ testing revenue In the first quarter of 2020, Oncocyte commercially launched DetermaRx™ and commenced performing tests on clinical samples through orders received from physicians, hospitals, and other healthcare providers. In determining whether all the revenue recognition criteria (i) through (v) above are met with respect to DetermaRx™ tests, each test result is considered a single performance obligation and is generally considered complete when the test result is delivered or made available to the prescribing physician electronically, and, as such, there are no shipping or handling fees incurred by Oncocyte or billed to customers. Although Oncocyte bills a list price for all tests ordered and completed for all payer types, Oncocyte recognizes realized revenue on a cash basis rather than accrual basis when it cannot conclude that all the revenue recognition criteria have been met. Because DetermaRx™ is a novel test and there are no current reimbursement arrangements with third-party payers other than Medicare, the transaction price represents variable consideration. Application of the constraint for variable consideration is an area that requires significant judgment. For all payers other than Medicare, Oncocyte must consider the novelty of the test, the uncertainty of receiving payment, or being subject to claims for a refund, from payers with whom it does not have a sufficient payment collection history or contractual reimbursement agreements. Accordingly, for those payers, Oncocyte expects to continue to recognize revenue on a cash basis until it has a sufficient history to reliably estimate payment patterns or has contractual reimbursement arrangements, or both, in place. In September 2020, Oncocyte received a final pricing decision for DetermaRx™ from CMS, and with Medicare coverage in effect, Oncocyte commenced recognizing revenue when DetermaRx™ tests are performed for Medicare patients, or when payment was approved by Medicare in the case of certain tests performed prior to September 2020, rather than on a cash basis. During the three months ended March 31, 2021, after accumulating additional history of cash receipts and other factors considered by management for Medicare Advantage covered tests, including the recently published Medicare rate which management believes entitles Oncocyte to get reimbursed for Medicare Advantage covered tests at the Medicare rate, Oncocyte commenced recognizing Medicare Advantage covered tests on an accrual basis, rather than on a cash basis, at the Medicare rate. As of June 30, 2021, Oncocyte had accounts receivable of $ 0.9 million primarily from Medicare and Medicare Advantage covered DetermaRx™ tests (see Note 7). Pharma services revenue Revenues recognized include Pharma Services performed by Oncocyte’s Insight and Chronix subsidiaries for its pharmaceutical customers, including testing for biomarker discovery, assay design and development, clinical trial support, and a broad spectrum of biomarker tests. These Pharma Services are generally performed under individual scope of work (“SOW”) arrangements or license agreements (together with SOW the “Pharma Services Agreements”) with specific deliverables defined by the customer. Pharma Services are performed on a (i) time and materials basis or (ii) per test completed basis. Upon completion of the service to the customer in accordance with a Pharma Services Agreement, Oncocyte has the right to bill the customer for the agreed upon price (either on a per test or per deliverable basis) and recognizes Pharma Service revenue at that time. Insight identifies each sale of its Pharma Service offering as a single performance obligation. Chronix identifies the processing of test samples as a separate performance obligation (considered a series) within license agreements with customers. Completion of the service and satisfaction of the performance obligation is typically evidenced by access to the report or test made available to the customer or any other form or applicable manner of delivery defined in the Pharma Services Agreements. However, for certain SOWs under which work is performed pursuant to the customer’s highly customized specifications, Oncocyte has the enforceable right to bill the customer for work completed, rather than upon completion of the SOW. For those SOWs, Oncocyte recognizes revenue over a period during which the work is performed using a formula that accounts for expended efforts, generally measured in labor hours, as a percentage of total estimated efforts for the completion of the SOW. As performance obligations are satisfied under the Pharma Services Agreements, any amounts earned as revenue and billed to the customer are included in accounts receivable. Any revenues earned but not yet billed to the customer as of the date of Oncocyte’s consolidated financial statements are recorded as contract assets and are included in prepaids and other current assets as of the financial statement date. Amounts recorded in contract assets are reclassified to accounts receivable in Oncocyte’s consolidated financial statements when the customer is invoiced according to the billing schedule in the contract. Oncocyte establishes an allowance for doubtful accounts based on the evaluation of the collectability of its Pharma Services accounts receivables after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial position, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. Oncocyte continuously monitors collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts, if any, based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined to be uncollectible are written off against the allowance for doubtful accounts. As of June 30, 2021, Oncocyte has not recorded any losses or allowance for doubtful accounts on its account receivables from Pharma Services. As of June 30, 2021, Oncocyte had accounts receivable from Pharma Services customers of $ 0.1 million (see Note 7). Licensing revenue Revenues recognized includes licensing revenue derived from agreements with customers for exclusive rights to market Oncocyte’s proprietary testing technology. Under the agreements, Oncocyte grants exclusive rights to certain trademarks and technology of Oncocyte for the purpose of marketing Oncocyte’s tests within a defined geographic territory. A license agreement may specify milestone deliverables or performance obligations, for which Oncocyte recognizes revenue when its licensee confirms the completion of Oncocyte’s performance obligation. A licensing agreement may also include ongoing sales support from the Oncocyte and typically includes non-refundable licensing fees and per-test Pharma Services revenues discussed above, for which Oncocyte treats the licensing of the technology, trademarks, and ongoing support as a single performance obligation satisfied by the passage of time over the term of the agreement. Cost of revenues Cost of revenues generally consists of cost of materials, direct labor including benefits, bonus and stock-based compensation, equipment and infrastructure expenses, clinical sample related costs associated with performing DetermaRx™ tests and Pharma Services, providing deliverables according to our licensing agreements, license fees due to third parties, and amortization of acquired intangible assets such as the Razor asset and customer relationship intangible assets. Infrastructure expenses include depreciation of laboratory equipment, allocated rent costs, leasehold improvements, and allocated information technology costs for operations at Oncocyte’s CLIA laboratories in California and Tennessee. Costs associated with generating the revenues are recorded as the tests or services are performed regardless of whether revenue was recognized. Royalties or revenue share payments for licensed technology calculated as a percentage of revenues generated using the associated technology are recorded as expenses at the time the related revenues are recognized. Research and development expenses Research and development expenses are comprised of costs incurred to develop technology, which include salaries and benefits (including stock-based compensation), laboratory expenses (including reagents and supplies used in research and development laboratory work), infrastructure expenses (including allocated facility occupancy costs), and contract services and other outside costs. Indirect research and development expenses are allocated primarily based on headcount, as applicable, and include rent and utilities, common area maintenance, telecommunications, property taxes, and insurance. Research and development costs are expensed as incurred. Sales and marketing expenses Sales and marketing expenses consist primarily of personnel costs and related benefits, including stock-based compensation, trade show expenses, branding and positioning expenses, and consulting fees. Sales and marketing expenses also include indirect expenses for applicable overhead allocated based on headcount, and include allocated costs for rent and utilities, common area maintenance, telecommunications, property taxes, and insurance. General and administrative expenses General and administrative expenses consist primarily of compensation and related benefits (including stock-based compensation) for executive and corporate personnel, professional and consulting fees, rent and utilities, common area maintenance, telecommunications, property taxes, and insurance. Net loss per common share All common stock equivalents are antidilutive because Oncocyte reported a net loss for all periods presented. Accordingly, the following common stock equivalents were excluded from the computation of diluted net loss per common share of common stock for the periods presented (in thousands): Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share of Common Stock Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Stock options 3,941 7,272 2,856 6,686 Warrants 3,129 3,384 3,129 3,384 Leases Oncocyte accounts for leases in accordance with ASC 842, Leases During 2020, Oncocyte entered into various operating leases and an embedded operating lease in accordance with ASC 842 discussed in Note 10. Oncocyte’s accounting for financing leases (previously referred to as “capital leases”) remained substantially unchanged. Accounting for Lineage and AgeX shares of common stock Oncocyte accounts for the shares of Lineage and AgeX common stock it holds as marketable equity securities in accordance with ASC 320-10-25, Investments – Debt and Equity Securities Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities As of June 30, 2021 and December 31, 2020, Oncocyte held 353,264 and 35,326 shares of common stock of Lineage and AgeX, respectively, as marketable equity securities with a combined fair market value of $ 1.1 million and $ 0.7 million , respectively. Deferred revenue In connection with the purchase price allocation for the Chronix acquisition, Oncocyte estimates the fair value of deferred revenue assumed with its acquisition. The estimated fair value of deferred revenue of $ 738,000 217,000 738,000 Recently adopted accounting pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. Recently issued accounting pronouncements not yet adopted The following accounting standards, which are not yet effective, are presently being evaluated by Oncocyte to determine the impact that it might have on its consolidated financial statements. In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-10, which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Upon the initial recognition of such assets, which will be based on, among other things, historical information, current conditions, and reasonable supportable forecasts. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The update will be effective for Oncocyte in the first quarter of 2023. Early adoption is permitted. Oncocyte is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements and related disclosures. In August 2020, the Financial Accounting Standards Board issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This update simplifies the accounting for convertible debt instruments and amends the accounting for certain contracts and freestanding financial instruments in an entity’s own equity, including warrants and preferred stock. The new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the computation of diluted EPS. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. Oncocyte does not expect a material impact of this guidance on its consolidated financial statements. COVID-19 impact and related risks The ongoing global outbreak of COVID-19, and the various attempts throughout the world to contain it, have created significant volatility, uncertainty and disruption. In response to government directives and guidelines, health care advisories and employee and other concerns, Oncocyte has altered certain aspects of its operations. A number of Oncocyte’s employees have had to work remotely from home and those on site have had to follow Oncocyte’s social distance guidelines, which could impact their productivity. COVID-19 could also disrupt Oncocyte’s operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who cannot effectively work remotely but who elect not to come to work due to the illness affecting others in Oncocyte’s office or laboratory facilities, or due to quarantines. During the COVID-19 pandemic, Oncocyte has not been able, and may continue to not be able, to maintain its preferred level of physician or customer outreach and marketing of its diagnostic testing and Pharma Services, which may have negatively impacted and may continue to negatively impact potential new customers’ interest in those tests and services. Because of COVID-19, travel, visits, and in-person meetings related to Oncocyte’s business have been severely curtailed or canceled and Oncocyte has instead used on-line or virtual meetings to meet with potential customers and others. In addition to operational adjustments, the consequences of the COVID-19 pandemic have led to uncertainties related to Oncocyte’s business growth and ability to forecast the demand for its LDTs and Pharma Services and resulting revenues. Concerns over available hospital, staffing, equipment, and other resources, and the risk of exposure to the virus, have led to delays in early-stage lung cancer surgeries and clinical trials of drugs under development by pharma companies, and the continued deferral of lung cancer surgeries and drug development clinical trials due to resurgence in COVID-19 cases could continue to result in delayed or reduced use of DetermaRx™ and Oncocyte’s Pharma Services. It is possible that impacts of COVID-19 on Oncocyte’s operations or revenues or its access to capital could prevent Oncocyte from complying, or could result in a material noncompliance, with one or more obligations or covenants under material agreements to which Oncocyte is a party, with the result that Oncocyte would be in material breach of the applicable obligation, covenant, or agreement. Any such material breach could cause Oncocyte to incur material financial liabilities or an acceleration of the date for paying a financial obligation to the other party to the applicable agreement, or could cause Oncocyte to lose material contractual rights, such as rights to use leased equipment or laboratory or office space, or rights to use licensed patents or other intellectual property, the use of which is material to Oncocyte’s business. Similarly, it is possible that impacts of COVID-19 on the business, operations, or financial condition of any third party with whom Oncocyte has a contractual relationship could cause the third party to be unable to perform its contractual obligations to Oncocyte, resulting in Oncocyte’s loss of the benefits of a contract that could be material to Oncocyte’s business. The full extent to which the COVID-19 pandemic and the various responses to it might impact Oncocytes’ business, operations and financial results will depend on numerous evolving factors that are not subject to accurate prediction and that are beyond Oncocyte’s control. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | 3. Business Combinations Acquisition of Insight Genetics, Inc. On January 31, 2020 (the “Insight Merger Date”), Oncocyte completed its acquisition of Insight pursuant to the Insight Merger Agreement. Merger Consideration at Closing Under the terms of the Insight Merger Agreement, Oncocyte agreed to pay $ 7 5 0.6 0.2 11.4 6.4 0.6 1.9 5 five In March 2021, in accordance with the Insight Merger Agreement, the Cash Holdback was paid and the Stock Holdback was released from escrow to the selling shareholders. Milestone Payments (Milestone Contingent Consideration) In addition to the Initial Merger Consideration, Oncocyte may also pay contingent consideration of up to $ 6.0 1.5 3.0 1.5 Revenue Share (Royalty Contingent Consideration) As additional consideration for Insight’s shareholders, the Insight Merger Agreement provides for Oncocyte to pay a revenue share of not more than ten percent of net collected revenues for current Insight pharma service offerings over a period of ten years, and a tiered revenue share percentage of net collected revenues through the end of the technology lifecycle if certain new cancer tests are developed and commercialized using Insight technology (“Royalty Contingent Consideration”). Registration Rights Pursuant to the Insight Merger Agreement, Oncocyte filed a registration statement with the SEC to register the resale of the shares of common stock under the Securities Act of 1933, as amended (the “Securities Act”) issued in connection with the Insight Merger, which the SEC declared effective in August 2020. Workforce In connection with the closing of the Insight Merger, Oncocyte did not assume sponsorship of the Insight Equity Incentive Plan. Accordingly, the Insight Equity Incentive Plan and all related stock options to purchase shares of Insight common stock outstanding immediately prior to the Insight Merger were canceled on the Insight Merger Date for no consideration. At the Insight Merger Date, all of Insight’s employees ceased employment with Insight, and Oncocyte offered employment to certain of those former Insight employees, principally in laboratory roles and certain administrative roles (“New Oncocyte Employees”), and granted new equity awards to the New Oncocyte Employees under the Oncocyte 2018 Equity Incentive Plan. All Oncocyte stock option awards granted to the New Oncocyte Employees have vesting terms and conditions consistent with stock options granted to most other Oncocyte employees. Aggregate Merger Consideration and Purchase Price Allocation The calculation of the aggregate merger consideration, consisting of the Initial Merger Consideration, Milestone Contingent Consideration and Royalty Contingent Consideration (the “Aggregate Merger Consideration”) transferred on January 31, 2020, at fair value, is shown in the following table (in thousands, except for share and per share amounts). The Milestone Contingent Consideration and the Royalty Contingent Consideration are collectively referred to as “Contingent Consideration”. Schedule of Fair Value of Aggregate Merger Consideration Cash consideration $ 7,000 (1) Stock consideration Shares of Oncocyte common stock issued on the Merger Date 1,915,692 (2) Closing price per share of Oncocyte common stock on the Merger Date $ 2.61 Market value of Oncocyte common stock issued $ 5,000 Contingent Consideration $ 11,130 (3) Total fair value of consideration transferred on the Merger Date $ 23,130 (1) The cash consideration paid on the Insight Merger Date was $ 6.4 0.6 (2) The 229,885 (3) In accordance with ASC 805, Contingent Consideration, at fair value, is part of the total considered transferred on the Insight Merger Date, as further discussed below. Aggregate Merger Consideration allocation Oncocyte allocated the Aggregate Merger Consideration transferred to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the Insight Merger Date. The fair values of the identifiable intangible assets acquired and the liabilities assumed was determined based on inputs that were unobservable and significant to the overall fair value measurement, which is also based on estimates and assumptions made by management at the time of the Insight Merger. As such, this was classified as Level 3 fair value hierarchy measurements and disclosures in accordance with ASC 820, Fair Value Measurement The following table sets forth the allocation of the Aggregate Merger Consideration transferred to Insight’s tangible and identifiable intangible assets acquired and liabilities assumed on the Insight Merger Date, with the excess recorded as goodwill (in thousands): Schedule of Intangible Assets Acquired and Liabilities Assumed January 31, 2020 Assets acquired: Cash and cash equivalents $ 36 Accounts receivable and other current assets 42 Right-of-use assets, machinery and equipment 585 Long-lived intangible assets - customer relationships 440 Acquired in-process research and development 14,650 Total identifiable assets acquired (a) 15,753 Liabilities assumed: Accounts payable 61 Right-of-use liabilities - operating lease 495 Contingent Consideration transferred 11,130 Long-term deferred income tax liability 1,254 Total identifiable liabilities assumed (b) 12,940 Net assets acquired, excluding goodwill (a) - (b) = (c) 2,813 Total cash and stock consideration transferred (d) 12,000 Goodwill (d) - (c) $ 9,187 The valuation of identifiable intangible assets and applicable estimated useful lives are as follows (in thousands, except for useful life): Schedule of Identifiable Intangible Assets and Estimated Useful Life Estimated Assets Useful Life Fair Value (Years) In process research and development (“IPR&D”) $ 14,650 n/a Customer relationships 440 5 $ 15,090 The following is a discussion of the valuation methods and significant assumptions used to determine the fair value of Insight’s material assets and liabilities in connection with the Insight Merger: Acquired In-Process Research and Development and Deferred Income Tax Liability 14.7 Oncocyte determined the estimated aggregate fair value of DetermaIO™ using the Multi-Period Excess Earnings Method (“MPEEM”) under the income approach. MPEEM calculates the economic benefits by determining the income attributable to an intangible asset after the returns are subtracted for contributory assets such as working capital, assembled workforce, and fixed assets. The resulting after-tax net earnings are discounted at a rate commensurate with the risk inherent in the economic benefit projections of the assets. To calculate fair value of DetermaIO™ under MPEEM, Oncocyte used probability-weighted, projected cash flows discounted at a rate considered appropriate given the significant inherent risks associated with similar assets. Cash flows were calculated based on projections of revenues and expenses related to the asset and were assumed to extend through a multi-year projection period. Revenues from commercialization of DetermaIO™ were based on the estimated market potential for the indications for use which may include tests for the treatment of certain lung cancers and tests for the treatment of certain breast cancers. The expected cash flows from DetermaIO™ were then discounted to present value using a weighted-average cost of capital for companies with profiles substantially similar to that of Oncocyte and the risk inherent in the economic benefit projections of similar assets, which Oncocyte believes represents the rate that market participants would use to value those assets. The discount rate used to value DetermaIO™ was approximately 35 Because the IPR&D (prior to completion or abandonment of the research and development) is considered an indefinite-lived asset for accounting purposes but is not recognized for tax purposes, the fair value of the IPR&D on the acquisition date generated a deferred income tax liability (“DTL”) in accordance with ASC 740, Income Taxes 1.3 Customer relationships 5 Customer relationships generate similar DTLs to IPR&D as Oncocyte records this asset for accounting purposes but not for tax purposes. Accordingly, Oncocyte has offset all the acquired DTLs associated with the customer relationships with available acquired NOLs and included in the amount recorded discussed above (see Note 8). Right-of-use assets and liabilities, machinery and equipment 0.5 0.1 Contingent consideration liabilities – There are three milestones comprising the Milestone Contingent Consideration, collectively referred to as the Milestones, in connection with the Insight Merger which Oncocyte valued and recorded as part of Contingent Consideration as of the Insight Merger Date (see table below), which consist of (i) a payment for clinical trial completion and related data publication (“Milestone 1”), (ii) a payment for an affirmative final local coverage determination from CMS for a specified lung cancer test (“Milestone 2”), and (iii) a payment for achieving specified CMS reimbursement milestones (“Milestone 3”). If achieved, any respective Milestone will be paid at the contractual value shown below, with the payment made either in cash or in shares of Oncocyte common stock as determined by Oncocyte. There can be no assurance that any of the Milestones will be achieved. There are two separate components of the Royalty Contingent Consideration, collectively referred to as the Royalty Payments, in connection with the Insight Merger which Oncocyte valued and recorded as part of Contingent Consideration as of the Insight Merger Date (see table below); Royalty Payments consist of (i) revenue share payments based on a percentage of future sales generated from DetermaIO™ (“Royalty 1”), and (ii) revenue share payments based on percentage of future sales generated from current Insight Pharma Service offerings, as defined in the Insight Merger Agreement (“Royalty 2”). There can be no assurance that any revenues on which the Royalty Payments are based will be generated from DetermaIO™ or Pharma Service offerings. The following table shows the Insight Merger Date contractual payment amounts, as applicable, and the corresponding fair value of each respective Contingent Consideration liability (in thousands): Schedule of Fair Value of Contingent Consideration Liability Fair Contractual Value on the Value Merger Date Milestone 1 $ 1,500 $ 1,340 Milestone 2 3,000 1,830 Milestone 3 (a) 1,500 770 Royalty 1 (b) See(b) 5,980 Royalty 2 (b) See(b) 1,210 Total $ 6,000 $ 11,130 (a) Indicates the maximum payable if the Milestone is achieved. (b) As defined, Royalty Payments are based on a percentage of future revenues of DetermaIO™ and Pharma Services over their respective useful life, accordingly there is no fixed contractual value for the Royalty Contingent Consideration. The fair value of the Milestone Contingent Consideration was determined using a scenario analysis valuation method which incorporates Oncocyte’s assumptions with respect to the likelihood of achievement of the Milestones, credit risk, timing of the Milestone Contingent Consideration payments and a risk-adjusted discount rate to estimate the present value of the expected payments. The discount rate was estimated at approximately 6.6 The fair value of the Royalty Contingent Consideration was determined using a single scenario analysis method to value the Royalty Payments. The single scenario method incorporates Oncocyte’s assumptions with respect to specified future revenues generated from DetermaIO™ and current Insight Pharma Services over their respective useful lives, credit risk, and a risk-adjusted discount rate to estimate the present value of the expected royalty payments. The credit and risk-adjusted discount rate was estimated at approximately 45 The fair value of the Contingent Consideration after the Insight Merger Date is reassessed by Oncocyte as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in Oncocyte’s condensed consolidated statements of operations. As of June 30, 2021, based on Oncocyte’s reassessment of the significant assumptions note above, there was an increase of approximately $ 1.1 The following table reflects the activity for Oncocyte’s Contingent Consideration since the Insight Merger Date, measured at fair value using Level 3 inputs (in thousands): Schedule of Contingent Consideration, Measured at Fair Value Fair Value Balance at December 31, 2020 $ 7,120 Change in estimated fair value 1,090 Balance at June 30, 2021 $ 8,210 Contingent consideration is not deductible for tax purposes, even if paid; therefore, no deferred tax assets related to the Contingent Consideration were recorded. Goodwill – 1.3 million of net deferred tax liabilities recorded principally related to DetermaIO™ and customer relationships discussed above. Goodwill is not amortized but is tested for impairment at least annually, or more frequently if circumstances indicate potential impairment (see Notes 2 and 4). The slight increase to Goodwill as of June 30, 2021 from December 31, 2020 was related to the true up of the final working capital adjustment paid to the selling shareholders in March 2021. Goodwill and identifiable intangible assets are not amortizable or deductible for tax purposes since these assets are not recognized for tax purposes. Asset acquisition of Razor Genomics, Inc. On September 30, 2019, Oncocyte completed the purchase of 1,329,870 0.0001 25 10 Purchase Option The Purchase Agreement and Minority Shareholder Agreements granted Oncocyte the option to acquire the balance of the outstanding shares of Razor common stock from Encore under the Purchase Agreement and from the Minority Shareholders under the Minority Purchase Agreements (the “Option”) for an additional $10 million in cash and Oncocyte common stock valued at $ 5 On January 29, 2021, the principal shareholder of Razor informed Oncocyte that the milestone requiring Oncocyte to purchase the outstanding shares of Razor common stock had been attained under the Purchase Agreement and Minority Shareholder Purchase Agreements. On February 24, 2021, Oncocyte exercised the Option and completed the purchase of all the issued and outstanding shares of common stock of Razor and paid the selling shareholders in total $ 10 982,318 5.7 Development Agreement Under the Development Agreement, Razor reserved as a “Clinical Trial Expense Reserve” $ 4 On February 24, 2021, upon the completion of the outstanding shares of Razor common stock and consolidation of Razor’s accounts, Oncocyte obtained control of approximately $ 3.4 16 Upon completion of enrollment of the full number of patients for the Clinical Trial, Oncocyte will issue to Encore and the Minority Shareholders shares of Oncocyte common stock with an aggregate market value at the date of issue equal to $ 3 If the issuance of shares of common stock having a market value of $ 3 3 If, within a specified time frame, Encore is substantially responsible for obtaining funding to Oncocyte or Razor for the Clinical Trial from any third-party pharmaceutical company, a portion of such additional funding amount will be paid to Encore, subject to a $ 3 Sublicense Agreement Under the Sublicense Agreement, Razor granted to Oncocyte an exclusive worldwide sublicense under certain patent rights applicable to DetermaRx™ in the field of use covered by the applicable license held by Razor for purposes of commercialization and development of DetermaRx™. Pursuant to the Razor Sublicense Agreement, Oncocyte will pay all royalties and all revenue sharing and earnout payments owed by Razor to certain third parties with respect to DetermaRx™ revenues, including the licensor of the patent rights sublicensed to Oncocyte, but those payments will be deducted from gross revenues to determine net revenues for the purpose of paying royalties to the former Razor shareholders. Total royalty and earnout payments to the former Razor shareholders, the licensor, and other third parties will be a low double-digit percentage, and in addition certain milestone payments may become due if cumulative net revenue benchmarks are reached. Royalties and earnout payments will be payable on a quarterly basis. This payment obligation will continue after Oncocyte’s purchase of the Razor common stock from Encore and the Minority Shareholders. Laboratory Agreement Under the Laboratory Agreement, Oncocyte has assumed Razor’s Laboratory Agreement payment obligations of $ 450,000 per year (see Note 10). The Laboratory Agreement gives Oncocyte the right to use Razor’s CLIA laboratory in Brisbane, California. Oncocyte pays Encore a quarterly fee for services related to operating and maintaining the CLIA laboratory, including certain staffing. The Laboratory Agreement will expire on September 29, 2021 , but Oncocyte may extend the term for additional one-year periods, or Oncocyte may terminate the agreement at its option. Oncocyte also has the right to terminate the Laboratory Agreement if there is an event or occurrence that adversely affects, in any material respect, DetermaRx™ or its prospects or its ability to be commercialized, and it remains continuing and uncured. Accounting for the Razor Investment Beginning on the Initial Closing and through February 23, 2021, Oncocyte has accounted for the Razor investment under the equity method of accounting under ASC 323 because prior to the Additional Purchase Payment discussed above Oncocyte exercised significant influence over, but did not control, the Razor entity. Oncocyte did not control Razor because, among other factors, Oncocyte was entitled to designate one person to serve on a three-member board of directors of Razor, with the other two members designated by Encore. Also, any deadlocked decisions by a Steering Committee of Oncocyte and Encore representatives that makes decisions with respect to the Clinical Trial, other than with respect to the Clinical Trial budget, will be resolved by a member designated by Encore. Prior to February 24, 2021, the aggregate Razor acquisition payments of $ 11.245 million incurred during September 2019 and a $ 4 million CMS milestone payment made by Oncocyte during June 2020 under the Development Agreement, were amortized over a 10 -year useful life of DetermaRx™ and were reflected in Oncocyte’s pro rata earnings and losses of the equity method investment in Razor in the condensed consolidated statements of operations. Beginning on February 24, 2021, Razor’s results are included with Oncocyte’s consolidated results, primarily consisting of outside research and development expenses incurred by Razor for the Clinical Trial. The Initial Closing equity method investment in Razor and the Additional Purchase Payment for the remaining interests in Razor are both considered an asset acquisition, rather than a business combination, because, among other factors, Razor had no workforce, no commercial product (Razor had granted all commercial rights to Oncocyte), no revenues, no distribution system and no facilities. Substantially all of the fair value of Razor’s assets at the Initial Closing and on February 24, 2021 was concentrated in Razor’s intangible asset, the DetermaRx™ patent and related know-how, thus satisfying the requirements of the practical screen test to be considered an asset acquisition in accordance with ASU 2017-01 , Business Combinations (Topic 805): Clarifying the Definition of a Business As Razor became a wholly owned subsidiary of Oncocyte on February 24, 2021, the DTA associated with the previous equity method investment was reversed. There is no tax effect of this reversal as the DTA had been fully offset by a valuation allowance (see Note 8). However, upon payment of the Additional Purchase Payment, Oncocyte recorded an additional step-up to fair value for the Razor intangible asset under ASC 805-50 for financial reporting purposes but this “step-up” is not recognized for income tax purposes. As a result, the fair value adjustment of the Razor intangible asset on the acquisition date generated a DTL in accordance with ASC 740. This DTL is computed using the fair value of the intangible assets on the acquisition date multiplied by Oncocyte’s federal and state effective income tax rates, using the simultaneous equations method for asset acquisitions under the guidance provided in ASC 740-10-25-51, which requires that the DTL be recognized as part of the investment of the acquired asset instead of any immediate income tax expense or benefit arising from the recognition of the DTL. Furthermore, ASC 740 allows Oncocyte to treat acquired available deferred tax assets, such as Razor’s NOLs (subject to the annual limitation under Section 382 of the Internal Revenue Code) as available DTAs to offset against the DTLs, as the DTLs are expected to reverse within the NOL carryforward period. Any excess DTAs over those DTLs would be assessed for a valuation allowance in accordance with ASC 740. On February 24, 2021, Oncocyte estimated and recorded a net DTL of $ 7.6 million after offsetting the acquired available NOLs with the intangible asset shown in the table below. See Note 8 for a discussion related to the partial release of Oncocyte’s valuation allowance pertaining to the DTL generated above in accordance with ASC 740. On February 24, 2021, upon Oncocyte’s acquisition of the outstanding common stock of Razor, the Razor intangible asset balance recorded on the acquisition date and included in Intangible Assets was as follows (in thousands): Summary of Acquisition Intangible Assets As of February 24, 2021 Razor intangible asset recorded on the acquisition date: Equity method investment carrying value $ 13,147 Cash paid as Additional Purchase Payment for the Razor asset 10,000 Oncocyte common stock issued ( 982,318 5,756 Less: cash balance received from Razor for Clinical Trial expenses (3,352 ) Deferred tax liability generated from the Razor asset 7,564 Other 169 Total Razor investment asset balance as of February 24, 2021 (a) $ 33,284 (a) This balance will be amortized over the remaining useful life of the Razor asset, approximating 8.5 years, as of the February 24, 2021 acquisition date, with the amortization expense included in “Cost of revenues – amortization of acquired intangibles” on the condensed consolidated statements of operations. Under ASC 805-50, for asset acquisitions, the remaining Clinical Trial Milestone Payment will be recorded only if the consideration is both probable (milestone has been achieved) and estimable in accordance with ASC 450, Contingencies Summarized standalone financial data for Razor from January 1, 2021 through February 23, 2021 The unaudited standalone results of operations for Razor prior to being consolidated with Oncocyte is summarized below (in thousands): Schedule of Condensed Statement of Operations For the period from January 1, 2021 through February 23, 2021 Condensed Statement of Operations (1) (unaudited) Research and development expense $ 125 General and administrative expense - Loss from operations (125 ) Net loss $ (125 ) (1) The condensed standalone statement of operations of Razor is provided for informational purposes only. Razor’s results for the period from January 1, 2021 through February 23, 2021 are not included in Oncocyte’s consolidated results of operations because Razor was not consolidated with Oncocyte’s financial statements but had been accounted for under the equity method of accounting since the September 30, 2019 Initial Closing date, however, Oncocyte’s results included its pro rata losses from Razor. Beginning on February 24, 2021, Razor’s results are included with Oncocyte’s consolidated results, primarily consisting of outside research and development expenses incurred by Razor for the Clinical Trial discussed above. Acquisition of Chronix Biomedical, Inc. On April 15, 2021, the Chronix Merger Date, Oncocyte completed its acquisition of Chronix pursuant the Chronix Merger Agreement. 635,000 in Chronix transaction costs, including advisory, legal, accounting, valuation and other professional and consulting fees, which were accounted for as “General and administrative” expenses in the condensed consolidated statement of operations. Merger Consideration at Closing Pursuant to the Chronix Merger Agreement, Oncocyte agreed to deliver closing consideration consisting of approximately (i) 648,000 $1.43 $1.87 $5.09 $4.0 $550,000 Contingent Consideration As additional consideration for holders of certain classes and series of Chronix capital stock, the Chronix Merger Agreement also provides for Oncocyte to pay “Chronix Contingent Consideration” consisting of (i) “Chronix Milestone Payments” of up to $14 15% 75% The Chronix Closing Consideration and Chronix Contingent Consideration include amounts payable to certain directors, officers and employees of Chronix, including officers and employees who are expected to continue to provide services to Chronix following the Chronix Merger. Liabilities Pursuant to the Chronix Merger Agreement, to the extent that Oncocyte or any of its subsidiaries, including Chronix, pays, performs or discharges an amount of liabilities of Chronix in excess of $8.25 $4.6 Deferred Revenue - 3.7 3.5 $738,000 Registration Rights Pursuant to the Chronix Merger Agreement, Oncocyte filed a registration statement with the SEC to register the resale of the shares of common stock under the Securities Act issued in connection with the Chronix Merger, which the SEC declared effective in July 2021. Workforce At the Chronix Merger Date, all of Chronix’s employees ceased employment with Chronix, and Oncocyte offered employment to certain of those former Chronix employees, principally in laboratory roles and certain administrative roles in Germany, and granted new equity awards to them under the Oncocyte 2018 Equity Incentive Plan. All these Oncocyte stock option awards granted have vesting terms and conditions consistent with stock options granted to most other Oncocyte employees. Aggregate Chronix Merger Consideration and Purchase Price Allocation The calculation of the aggregate merger consideration, consisting of the Closing Consideration and Chronix Contingent Consideration (the “Aggregate Chronix Merger Consideration”), at fair value, is shown in the following table (in thousands, except for share and per share amounts). In accordance with ASC 805, the Chronix Contingent Consideration, at fair value, is part of the total considered transferred on the Chronix Merger Date, as further discussed below. Schedule of Fair Value of Aggregate Merger Consideration Cash consideration $ 3,960 Settlement of acquirer/acquiree activity pre-combination, net $ 550 Stock consideration Shares of Oncocyte common stock issued on the Merger Date 647,911 Closing price per share of Oncocyte common stock on the Merger Date $ 5.09 Market value of Oncocyte common stock issued $ 3,298 Contingent Consideration $ 42,295 Total fair value of consideration transferred on the Merger Date $ 50,103 Pursuant to ASC 805, Business Combinations (“ASC 805”), Oncocyte accounted for the Chronix acquisition as a business combination using the acquisition method of accounting. Identifiable assets and liabilities of Chronix, including identifiable intangible assets, were recorded based on their fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. The following table sets forth the allocation of the Aggregate Chronix Merger Consideration transferred to Chronix’s tangible and identifiable intangible assets acquired and liabilities assumed (in thousands): Schedule of Intangible Assets Acquired and Liabilities Assumed April 15, 2021 Assets acquired: Cash and cash equivalents $ 50 Accounts receivable and other current assets 25 Long-term assets 12 Acquired in-process research and development 46,800 Total identifiable assets acquired (a) 46,887 Liabilities assumed: Deferred revenue 738 Assumed liability 9,294 Contingent Consideration transferred 42,295 Long-term deferred income tax liability 1,795 Total identifiable liabilities assumed (b) 54,122 Net assets acquired, excluding goodwill (a) - (b) = (c) (7,235 ) Total cash and stock consideration transferred (d) 7,808 Goodwill (d) - (c) $ 15,043 All tangible assets and liabilities were valued at their respective carrying amounts as management believes that these amounts approximated their acquisition date fair values. The following is a discussion of the valuation methods and significant assumptions used to determine the fair value of Chronix’s material assets and liabilities in connection with the Chronix Merger: Acquired In-Process Research and Development and Deferred Income Tax Liability – The fair value of identifiable 46.8 To calculate fair value of the TheraSure™ test assets under MPEEM, Oncocyte used probability-weighted, projected cash flows discounted at a rate considered appropriate given the significant inherent risks associated with similar assets. Cash flows were calculated based on projections of revenues and expenses related to the asset and were assumed to extend through a multi-year projection period. The discount rate used to value TheraSure™ test assets was approximately 12 Because the IPR&D is considered an indefinite-lived asset for accounting purposes but is not recognized for tax purposes, the fair value of the IPR&D on the acquisition date generated a DTL in accordance with ASC 740, Income Taxes 1.8 Contingent consideration liabilities The fair value of the Milestone Payments was determined using a scenario analysis valuation method which incorporates Oncocyte’s assumptions with respect to the likelihood of achievement of the milestones defined in the Chronix Merger Agreement, credit risk, timing of the Milestone Payments and a risk-adjusted discount rate to estimate the present value of the expected payments. The discount rate was estimated at approximately 8 The fair value of the Royalty Payments was determined using a single scenario analysis method. The single scenario method incorporates Oncocyte’s assumptions with respect to specified future revenues generated from TheraSure™-CNI Monitor, over its estimated useful life, taking into account credit risk and a risk-adjusted discount rate to estimate the present value of the expected Royalty Payments. The credit and risk-adjusted discount rate was estimated at approximately 21 The fair value of the Transplant Sale Payments was determined using a single scenario analysis method. The single scenario method incorporates Oncocyte’s assumptions with respect to specified future licensing revenues generated from TheraSure™-Transplant Monitor, over its estimated useful life, taking into account credit risk and a risk-adjusted discount rate to estimate the present value of the expected Transplant Sale Payments. The credit and risk-adjusted discount rate was estimated at approximately 12% The fair value of the Chronix Contingent Consideration after the Chronix Merger Date is reassessed by Oncocyte as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in Oncocyte’s condensed consolidated statements of operations. As of June 30, 2021, based on Oncocyte’s reassessment of the significant assumptions note above, there was no change to the fair value of the Contingent Consideration. Goodwill $1.8 15 None of the goodwill recognized is expected to be deductible for income tax purposes. Goodwill is not amortized but is tested for impairment at least annually, or more frequently if circumstances indicate potential impairment (see Notes 2 and 4). Goodwill and identifiable intangible assets are not amortizable or deductible for tax purposes since these assets are not recognized for tax purposes. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | 4. Goodwill and Intangible Assets, net At June 30, 2021 and December 31, 2020, goodwill and intangible assets, net, consisted of the following (in thousands): Schedule of Goodwill and Intangible Assets June 30, 2021 December 31, 2020 Goodwill - Insight Merger (1) $ 9,194 $ 9,187 Goodwill - Chronix Merger (1) 15,043 - Total Goodwill 24,237 9,187 Intangible assets: Acquired IPR&D - DetermaIO ™ (2) $ 14,650 $ 14,650 Acquired IPR&D - TheraSure™ (3) 46,800 - Intangible assets subject to amortization: Acquired intangible assets - customer relationship 440 440 Acquired intangible assets - Razor (see Note 3) 33,284 - Total intangible assets 95,174 15,090 Accumulated amortization (4) (1,462 ) (81 ) Intangible assets, net $ 93,712 $ 15,009 (1) Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in the Insight Merger and the Chronix Merger (see Note 3). (2) See Note 3 for information on the Insight Merger. (3) See Note 3 for information on the Chronix Merger. (4) Amortization of intangible assets is included in “Cost of revenues – amortization of acquired intangibles” on the condensed consolidated statements of operations because the intangible assets pertain directly to the revenues generated from the acquired intangibles. |
Shareholders_ Equity
Shareholders’ Equity | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Shareholders’ Equity | 5. Shareholders’ Equity Preferred Stock Oncocyte is authorized to issue 5,000,000 no no Common Stock As of June 30, 2021, Oncocyte has 230,000,000 no 90,316,308 69,116,802 Common Stock Purchase Warrants As of June 30, 2021, Oncocyte had an aggregate of 3,128,669 1.69 5.50 Oncocyte has considered the guidance in ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 6. Stock-Based Compensation Oncocyte had a 2010 Stock Option Plan (the “2010 Plan”) under which 5,200,000 In 2018, under the 2010 Plan, Oncocyte granted certain stock options with exercise prices ranging from $ 2.30 3.15 125,000 During the three and six months ended June 30, 2021, no 215,000 265,000 360,000 466,000 no A summary of Oncocyte’s 2010 Plan activity and related information follows (in thousands except weighted average exercise price): Summary of Stock Option Activity Shares Number Weighted Available of Options Average Options for Grant Outstanding Exercise Price Balance at December 31, 2020 - 1,218 $ 3.55 Options exercised - (159 ) $ 2.26 Options forfeited, canceled and expired - - $ - Balance at June 30, 2021 - 1,059 $ 3.72 Exercisable at June 30, 2021 1,059 $ 3.68 As of June 30, 2021, 21,000,000 A summary of Oncocyte’s 2018 Incentive Plan activity and related information follows (in thousands except weighted average exercise price): Summary of Stock Option Activity Shares Number Number Weighted Available of Options of RSUs Average for Grant Outstanding Outstanding Exercise Price Balance at December 31, 2020 3,346 7,212 201 $ 2.60 RSUs vested - - (136 ) $ n/a RSUs granted (96 ) - 96 $ - Options Increase from Plan Amendment 10,000 - - $ n/a Options granted (4,189 ) 4,189 - $ 5.14 Options exercised - (710 ) - $ 3.00 Options forfeited/cancelled 332 (332 ) - $ 3.49 Balance at June 30, 2021 9,393 10,359 161 $ 3.58 Options exercisable at June 30, 2021 2,935 $ 2.62 Oncocyte recorded stock-based compensation expense in the following categories on the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 (unaudited and in thousands): Summary of Stock-based Compensation Expense Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Cost of revenues $ 74 $ 18 $ 96 $ 22 Research and development 379 413 636 608 Sales and marketing 308 144 541 248 General and administrative 1,235 786 2,013 1,420 Total stock-based compensation expense $ 1,996 $ 1,361 $ 3,286 $ 2,298 The assumptions that were used to calculate the grant date fair value of Oncocyte’s employee and non-employee stock option grants for the six months ended June 30, 2021 and 2020 were as follows (unaudited): Schedule of Assumptions Used to Calculate Fair Value of Stock Options Six Months Ended June 30, 2021 2020 Expected life (in years) 6 6 Risk-free interest rates 0.88 % 1.20 % Volatility 100.67 % 104.52 % Dividend yield - % - % The determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If Oncocyte had made different assumptions, its stock-based compensation expense and net loss for the three and six months ended June 30, 2021 and 2020 may have been significantly different. Oncocyte does not recognize deferred income taxes for incentive stock option compensation expense and records a tax deduction only when a disqualified disposition has occurred. |
Disaggregation of Revenues and
Disaggregation of Revenues and Concentration Risk | 6 Months Ended |
Jun. 30, 2021 | |
Disaggregation Of Revenues And Concentration Risk | |
Disaggregation of Revenues and Concentration Risk | 7. Disaggregation of Revenues and Concentration Risk The following table presents the percentage of consolidated revenues generated by unaffiliated customers that individually represent greater than ten percent of consolidated revenues: Schedule of Consolidated Revenues Generated by Unaffiliated Customers Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Medicare for DetermaRx 21 % - * 23 % - * Medicare Advantage for DetermaRx 12 % - 17 % - Pharma services Company A - * 72 % - * 65 % Pharma services Company C - * 17 % - * 19 % Licensing - Company D 49 % - 32 % - Licensing - Company B 11 % - - - * Less than 10% The following table presents the percentage of consolidated revenues by products or services classes: Schedule of Consolidated Revenues Attributable to Products or Services Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 DetermaRx 32 % 7 % 40 % 7 % Pharma Services 8 % 93 % 22 % 93 % Licensing 60 % - 38 % - Total 100 % 100 % 100 % 100 % The following table presents the percentage of consolidated revenues attributable to geographical locations: Schedule of Percentage of Consolidated Revenues Attributable to Geographical Locations Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 United States 32 % 26 % 43 % 33 % Outside of the United States – Pharma Services 8 % 74 % 19 % 67 % Outside of the United States – Licensing 60 % - 38 % - Total 100 % 100 % 100 % 100 % The following table presents Oncocyte’s total accounts receivable from third-party payers and other customers at June 30, 2021 and December 31, 2021. Schedule of Accounts Receivable from Third Party and Other Customers June 30, 2021 December 31, 2020 Medicare for DetermaRx™ $ 444 $ 91 Medicare Advantage for DetermaRx™ 467 - Pharma Services and other 114 112 Total $ 1,025 $ 203 As of December 31, 2020, our accounts receivable were $ 0.2 3.2 2.2 0.2 The following table presents accounts receivable, as a percentage of total consolidated accounts receivables, from third-party payers and other customers that provided in excess of 10% of Oncocyte’s total accounts receivable. Schedule of Percentage of Total Consolidated Accounts Receivables June 30, 2021 December 31, 2020 Medicare for DetermaRx™ 43 % 45 % Medicare Advantage for DetermaRx™ 46 % - Pharma Services Company A 11 % 35 % |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The provision for income taxes for interim periods is determined using an estimated annual effective tax rate in accordance with ASC 740-270, Income Taxes, Interim Reporting In connection with the Chronix and Razor acquisitions discussed in Note 3, a change in the acquirer’s valuation allowance that stems from the purchase of assets should be recognized as an element of the acquirer’s income tax benefit in the period of the acquisition. Accordingly, for the six months ended June 30, 2021, Oncocyte recorded a $ 9.4 million partial release of its valuation allowance and a corresponding income tax benefit stemming from the estimated DTLs generated by the Razor intangible asset and Chronix IPR&D we acquired. In connection with the Insight Merger discussed in Note 3 and in accordance with ASC 805, a change in the acquirer’s valuation allowance that stems from a business combination should be recognized as an element of the acquirer’s income tax expense or benefit in the period of the acquisition. Accordingly, for the six months ended June 30, 2020, Oncocyte recorded a $ 1.1 million partial release of its valuation allowance and a corresponding income tax benefit stemming from the DTLs generated by the IPR&D and customer relationships intangible assets acquired in the Insight Merger. In connection with the Chronix Merger discussed in Note 3 and in accordance with ASC 805, a change in the acquirer’s valuation allowance that stems from a business combination should be recognized as an element of the acquirer’s income tax expense or benefit in the period of the acquisition. Accordingly, for the three months ended June 30, 2021, Oncocyte recorded a $ 1.8 million partial release of its valuation allowance and a corresponding income tax benefit stemming from the estimated DTLs generated by the IPR&D intangible assets acquired in the Chronix Merger. Oncocyte did not record any provision or benefit for income taxes for the three months ended June 30, 2020, as Oncocyte had a full valuation allowance for the periods presented. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. Other than the partial releases discussed above, Oncocyte established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. |
Right-of-use assets, machinery
Right-of-use assets, machinery and equipment, net, and construction in progress | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Right-of-use assets, machinery and equipment, net, and construction in progress | 9. Right-of-use assets, machinery and equipment, net, and construction in progress As of June 30, 2021 and December 31, 2020, rights-of-use assets, machinery and equipment, net, and construction in progress were as follows (in thousands): Schedule of Right-of-use Assets, Machinery and Equipment, Net, and Construction in Progress June 30, 2021 (unaudited) December 31, 2020 Right-of-use assets (1) $ 3,397 $ 3,397 Machinery and equipment 5,603 2,480 Accumulated depreciation and amortization (1,999 ) (1,440 ) Right-of-use assets, machinery and equipment, net 7,001 4,437 Construction in progress 344 2,087 Right-of-use assets, machinery and equipment, net, and construction in progress $ 7,345 $ 6,524 (1). Oncocyte recorded certain right-of-use assets and liabilities for operating leases in accordance with ASC 842 (see Notes 3 and 10). Depreciation expense amounted to $ 206 67 327 127 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Oncocyte has certain commitments other than discussed in Note 3. Office Lease Agreement On December 23, 2019, Oncocyte entered into an Office Lease Agreement (the “Irvine Lease”) of a building containing approximately 26,800 The Irvine Lease has an initial term of 89 calendar months (the “Term”), which commenced on June 1, 2020 (the “Commencement Date”). Oncocyte has an option to extend the Term for a period of five years (the “Extended Term”). Oncocyte will pay base monthly rent in the amount of $ 61,640 3.5% 50% If Oncocyte exercises its option to extend the Term, the initial base monthly rent during the Extended Term will be the greater of the base monthly rent in effect during the last year of the Term or the prevailing market rate. The prevailing market rate will be determined based on annual rental rates per square foot for comparable space in the area where the Premises are located. If Oncocyte does not agree with the prevailing market rate proposed by the lessor, the rate may be determined through an appraisal process. The base monthly rent during the Extended Term shall be subject to the same annual rent adjustment as applicable for base monthly rent during the Term. In addition to base monthly rent, Oncocyte will pay in monthly installments (a) all costs and expenses, other than certain excluded expenses, incurred by the lessor in each calendar year in connection with operating, maintaining, repairing (including replacements if repairs are not feasible or would not be effective) and managing the Premises and the building in which the Premises are located (“Expenses”), and (b) all real estate taxes and assessments on the Premises and the building in which the Premises are located, all personal property taxes for property that is owned by lessor and used in connection with the operation, maintenance and repair of the Premises, and costs and fees incurred in connection with seeking reductions in such tax liabilities (“Taxes”). Subject to certain exceptions, Expenses shall not be increased by more than 4% Oncocyte was entitled to an abatement of its obligations to pay Expenses and Taxes while constructing improvements to the Premises constituting “Tenant’s Work” under the Irvine Lease prior to the Commencement Date, except that Oncocyte was obligated to pay 43.7% The lessor provided Oncocyte with a “Tenant Improvement Allowance” in the amount of $ 1,340,000 1.5% Oncocyte has provided the lessor with a security deposit in the amount of $ 150,000 and a letter of credit in the amount of $ 1,700,000 . The lessor may apply the security deposit, in whole or in part, for the payment of rent and any other amount that Oncocyte is or becomes obligated to pay under the Irvine Lease but fails to pay when due and beyond any cure period. The lessor may draw on the letter of credit from time to time to pay any amount that is unpaid and due, or if the original issuing bank notifies the lessor that the letter of credit will not be renewed or extended for the period required under the Irvine Lease and Oncocyte fails to timely provide a replacement letter of credit, or an event of default under the Irvine Lease occurs and continues beyond the applicable cure period, or if certain insolvency or bankruptcy or insolvency with respect to Oncocyte occur. Oncocyte is required to restore any portion of the security deposit that is applied by the lessor to payments due under the Irvine Lease, and Oncocyte is required to restore the amount available under the letter of credit to the required amount if any portion of the letter of credit is drawn by the lessor. Commencing on the 34th month of the Term, (a) the amount of the letter of credit that Oncocyte is required to maintain shall be reduced on a monthly basis, in equal installments, to amortize the required amount to zero at the end of the Term, and (b) Oncocyte will have the right to cancel the letter of credit at any time if it meets certain market capitalization and balance sheets thresholds; provided, in each case, that Oncocyte is not in then default under the Irvine Lease beyond any applicable notice and cure period and the lessor has not determined that an event exists that would lead to an event of default. To obtain the letter of credit, Oncocyte has provided the issuing bank with a restricted cash deposit that the bank will hold to cover its obligation to pay any draws on the letter of credit by the lessor. The restricted cash may not be used for any other purpose. Application of leasing standard, ASC 842 The Irvine Lease is an operating lease under ASC 842 included in the tables below. The tables below provide the amounts recorded in connection with the application of ASC 842 as of, and during, the six months ended June 30, 2021, for Oncocyte’s operating and financing leases (see Note 2). Under the Laboratory Agreement discussed in Note 3, Oncocyte assumed all of Razor’s Laboratory Agreement payment obligations amounting to $ 450,000 per year. Although Oncocyte is not a party to any lease agreement with Razor or Encore, under the terms of the Laboratory Agreement, Oncocyte received the landlord’s consent for the use of the laboratory at Razor’s Brisbane, California location (the “Brisbane Facility”) under the terms of a sublease to which Encore is the sublessee. The sublease expires on March 31, 2023 (the “Brisbane Lease”). The laboratory fee payments to Encore include both laboratory services and the use of the Brisbane Facility. Under the provisions of the Laboratory Agreement, if Oncocyte terminates the Laboratory Agreement prior to the expiration of the Brisbane Lease, Oncocyte shall assume the costs related to the subletting or early termination of the Brisbane Lease. If the Laboratory Agreement were to be terminated on June 30, 2021, the aggregate payments due to the landlord for early cancellation of the Brisbane Lease would be approximately $ 262,000 (aggregate payments from July 1, 2021 through March 31, 2023). Oncocyte determined that the Laboratory Agreement contains an embedded operating lease for the Brisbane Facility, and Oncocyte allocated the aggregate payments to this lease component for purposes of calculating the net present value of the right-of-use asset and liability as of the inception of the Laboratory Agreement in accordance with ASC 842, as shown in the table below. Financing lease As of June 30, 2021, Oncocyte has one financing lease remaining through December 2023 for certain laboratory equipment with aggregate remaining payments of $ 331,000 shown in the table below. Oncocyte’s lease obligations are collateralized by the equipment financed under the lease schedule. Operating and Financing leases The following table presents supplemental cash flow information related to operating and financing leases for the six months ended June 30, 2021 and 2020 (in thousands): Schedule of Supplemental Cash Flow Information Related to Operating and Financing Lease 2021 2020 Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of financing lease liabilities: Operating cash flows from operating leases 499 174 Operating cash flows from financing leases 19 5 Financing cash flows from financing leases 84 35 Right-of-use assets obtained in exchange for lease obligations Operating lease, including lease acquired in Insight Genetics business combination - 536 The following table presents supplemental balance sheets information related to operating and financing leases as of June 30, 2021 (in thousands, except lease term and discount rate): Schedule of Supplemental Balance Sheet Information Related to Operating and Financing Leases June 30, 2021 Operating lease Right-of-use assets, net $ 2,683 Right-of-use lease liabilities, current $ 252 Right-of-use lease liabilities, noncurrent 4,092 Total operating lease liabilities $ 4,344 Financing lease Machinery and equipment $ 537 Accumulated depreciation (270 ) Machinery and equipment, net $ 267 Current liabilities $ 118 Noncurrent liabilities 170 Total financing lease liabilities $ 288 Weighted average remaining lease term Operating lease 5.8 Financing lease 2.4 Weighted average discount rate Operating lease 11.18 % Financing lease 11.43 % Future minimum lease commitments are as follows (in thousands): Schedule of Future Minimum Lease Commitments for Operating and Financing Leases Operating Financing Leases Leases Year Ending December 31, 2021 $ 532 $ 82 2022 1,096 124 2023 1,000 124 2024 890 - 2025 869 - Thereafter 1,594 - Total minimum lease payments $ 5,981 $ 331 Less amounts representing interest (1,636 ) (42 ) Present value of net minimum lease payments $ 4,345 $ 288 Litigation – General Oncocyte will be subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, and other matters. When Oncocyte is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, Oncocyte will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, Oncocyte discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. Tax Filings Oncocyte tax filings are subject to audit by taxing authorities in jurisdictions where it conducts business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. Management believes Oncocyte has adequately provided for any ultimate amounts that are likely to result from these audits; however, final assessments, if any, could be significantly different than the amounts recorded in the condensed consolidated interim financial statements. Employment Contracts Oncocyte has entered into employment and severance benefit contracts with certain executive officers. Under the provisions of the contracts, Oncocyte may be required to incur severance obligations for matters relating to changes in control, as defined, and certain terminations of executives. As of June 30, 2021, Oncocyte accrued approximately $ 0.6 million in remaining severance obligations for certain executive officers, in accordance with the severance benefit provisions of their respective employment and severance benefit agreements, related to Oncocyte’s partial reduction in force plan and salary reduction agreements instituted in September 2020. Indemnification In the normal course of business, Oncocyte may provide indemnification of varying scope under Oncocyte’s agreements with other companies or consultants, typically Oncocyte’s clinical research organizations, investigators, clinical sites, suppliers and others. Pursuant to these agreements, Oncocyte will generally agree to indemnify, hold harmless, and reimburse the indemnified parties for losses and expenses suffered or incurred by the indemnified parties arising from claims of third parties in connection with the use or testing of Oncocyte’s diagnostic tests. Indemnification provisions could also cover third party infringement claims with respect to patent rights, copyrights, or other intellectual property pertaining to Oncocyte’s diagnostic tests. Oncocyte’s office and laboratory facility leases also will generally contain indemnification obligations, including obligations for indemnification of the lessor for environmental law matters and injuries to persons or property of others, arising from Oncocyte’s use or occupancy of the leased property. The term of these indemnification agreements will generally continue in effect after the termination or expiration of the particular research, development, services, lease, or license agreement to which they relate. The Purchase Agreement also contains provisions under which Oncocyte has agreed to indemnify Razor and Encore from losses and expenses resulting from breaches or inaccuracy of Oncocyte’s representations and warranties and breaches or nonfulfillment of Oncocyte’s covenants, agreements, and obligations under the Purchase Agreement. Oncocyte periodically enters into underwriting and securities sales agreements with broker-dealers in connection with the offer and sale of Oncocyte securities. The terms of those underwriting and securities sales agreements include indemnification provisions pursuant to which Oncocyte agrees to indemnify the broker-dealers from certain liabilities, including liabilities arising under the Securities Act, in connection with the offer and sale of Oncocyte securities. The potential future payments Oncocyte could be required to make under these indemnification agreements will generally not be subject to any specified maximum amounts. Historically, Oncocyte has not been subject to any claims or demands for indemnification. Oncocyte also maintains various liability insurance policies that limit Oncocyte’s financial exposure. As a result, Oncocyte management believes that the fair value of these indemnification agreements is minimal. Accordingly, Oncocyte has not recorded any liabilities for these agreements as of June 30, 2021 and December 31, 2020. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. Related Party Transactions Financing Transactions On January 2, 2020, Oncocyte entered into Subscription Agreements with selected investors, including Broadwood Partners, L.P. (“Broadwood”) and certain funds and accounts managed by Pura Vida Investments LLC (“Pura Vida”), in a registered direct offering of 3,523,776 2.156 7.6 5% During April 2020, Oncocyte sold 4,733,700 2.27 10.75 On January 20, 2021, Oncocyte entered into Subscription Agreements with certain institutional investors for a registered direct offering of 7,301,410 no 3.424 25.0 On February 9, 2021, Oncocyte completed an underwritten public offering of 8,947,000 4.50 37.5 600,000 Consulting Services During the three months ended March 31, 2020, Oncocyte incurred consulting fees of $ 0.3 |
Loan Payable to Silicon Valley
Loan Payable to Silicon Valley Bank | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Loan Payable to Silicon Valley Bank | 12. Loan Payable to Silicon Valley Bank On February 21, 2017, Oncocyte entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”) pursuant to which Oncocyte borrowed $ 2.0 Payments of interest only on the principal balance were due monthly from the loan funding date, March 23, 2017, through October 31, 2017, and, beginning on November 1, 2017 67,000 The outstanding principal amount plus accrued interest was due and payable to the Bank at maturity on April 1, 2020 116,000 1.0% Amended Loan Agreement On October 17, 2019, Oncocyte entered into a First Amendment to Loan and Security Agreement (the “Amended Loan Agreement”) with the Bank pursuant to which Oncocyte obtained a new $ 3 million secured credit facility (“Tranche 1”), a portion of which was used to repay the remaining balance of approximately $ 400,000 on outstanding loans from the Bank, plus a final payment of $ 116,000 , under the February 21, 2017 Loan Agreement. The credit line under the Amended Loan Agreement may be increased by an additional $ 2 million (“Tranche 2”) if Oncocyte obtains at least $ 20 million of additional equity capital, as was the case with the original Loan Agreement, and a positive final coverage determination is received from CMS for DetermaRx at a specified minimum price point per test (the “Tranche 2 Milestone”), and Oncocyte is not in default under the Amended Loan Agreement. As of June 30, 2021, Oncocyte had satisfied the Tranche 2 Milestone and was eligible to borrow the $ 2 Payments of interest only on the principal balance were due monthly from the draw date through March 31, 2020, followed by 24 monthly payments of principal and interest, but the Bank has agreed to a deferral of principal payments, as discussed below. The outstanding principal balance of the loan will bear interest at a stated floating annual interest equal to the greater of (a) the prime rate or (b) 5% 3.25% On April 2, 2020, as part of the Bank’s COVID-19 pandemic relief program, Oncocyte and the Bank entered into a Loan Deferral Agreement (“Loan Deferral”) with respect to the Amended Loan Agreement. Under the Loan Deferral Agreement, the Bank agreed to (i) extend the scheduled maturity date of the Amended Loan Agreement from March 31, 2022 to September 30, 2022, and (ii) deferred the principal payments by an additional 6 months whereby payments of interest only on the Bank loan principal balance will be due monthly from May 1, 2020 through October 1, 2020, followed by 23 monthly payments of principal and interest beginning on November 1, 2020, all provided at no additional fees to Oncocyte. Debt – Modifications and Extinguishments At maturity of the loan, Oncocyte will also pay the Bank an additional final payment fee of $ 200,000 34,000 Oncocyte may prepay in full the outstanding principal balance at any time, subject to a prepayment fee equal to 2.0% of the outstanding principal balance if prepaid more than one year but less than two years after October 17, 2019, or 1.0% of the outstanding principal balance if prepaid two years or more after October 17, 2019. Any amounts borrowed and repaid may not be reborrowed. The outstanding principal amount of the loan, with interest accrued, the final payment fee, and the prepayment fee may become due and payable prior to the applicable maturity date if an “Event of Default” as defined in the Amended Loan Agreement occurs. Oncocyte’s obligations under the Amended Loan Agreement are collateralized by substantially all its assets other than intellectual property such as patents and trade secrets that Oncocyte owns. Accordingly, if an Event of Default were to occur and not be cured, the Bank could foreclose on its security interest in the collateral. Oncocyte was in compliance with the Amended Loan Agreement as of the filing date of this Report. Bank Warrants In 2017, in connection with the Loan Agreement, Oncocyte issued common stock purchase warrants to the Bank (the “2017 Bank Warrants”) entitling the Bank to purchase shares of Oncocyte common stock in tranches related to the loan tranches under the Loan Agreement. In conjunction with the availability of the loan, the Bank was issued warrants to purchase 8,247 4.85 7,321 5.46 On October 17, 2019, in conjunction with Tranche 1 becoming available under the Amended Loan Agreement, Oncocyte issued a common stock purchase warrant to the Bank (the “2019 Bank Warrant”) entitling the Bank to purchase 98,574 1.69 0.02% 1 Paycheck Protection Program Loan On April 23, 2020, Oncocyte obtained a PPP loan from the Bank in the principal amount of $ 1,140,930 1% April 23, 2022 1,140,930 11,000 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events July financing During July 2021, Oncocyte sold 1,108,650 $5.63 $6.24 $187,000 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The unaudited condensed consolidated interim financial statements presented herein, and discussed below, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. In accordance with those rules and regulations, certain information and footnote disclosures normally included in comprehensive consolidated financial statements have been condensed or omitted. The condensed balance sheets as of December 31, 2020 was derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP. These condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in Oncocyte’s Annual Report on Form 10-K for the year ended December 31, 2020. |
Principles of consolidation | Principles of consolidation On January 31, 2020, with the consummation of the Insight Merger, Insight became a wholly owned subsidiary of Oncocyte, and on that date Oncocyte began consolidating Insight’s operations and results with Oncocyte’s operations and results (see Note 3). On February 24, 2021, with the acquisition of the remaining equity interests in Razor, Razor became a wholly owned subsidiary of Oncocyte, and on that date Oncocyte began consolidating Razor’s results with Oncocyte’s operations and results (see Note 3). On April 15, 2021, with the acquisition of Chronix, Chronix became a wholly owned subsidiary of Oncocyte, and on that date Oncocyte began consolidating Chronix’s operations and results with Oncocyte’s operations and results (see Note 3). The accompanying condensed consolidated interim financial statements, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of Oncocyte’s financial condition and results of operations. The condensed consolidated results of operations are not necessarily indicative of the results to be expected for any other interim period or for the entire year. All material intercompany accounts and transactions have been eliminated in consolidation. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities, at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates estimates which are subject to significant judgment, including, but not limited to, valuation methods used, assumptions requiring the use of judgment to prepare financial projections, timing of potential commercialization of acquired in-process intangible assets, applicable discount rates, probabilities of the likelihood of multiple outcomes of certain events related to contingent consideration, comparable companies or transactions, determination of fair value of the assets acquired and liabilities assumed including those relating to contingent consideration, revenue recognition, assumptions related to going concern assessments, allocation of direct and indirect expenses, useful lives associated with long-lived intangible assets, key assumptions in operating and financing leases including incremental borrowing rates, loss contingencies, valuation allowances related to deferred income taxes, and assumptions used to value debt and stock-based awards and other equity instruments. Actual results may differ materially from those estimates. Similarly, Oncocyte assessed certain accounting matters that generally require consideration of forecasted financial information. The accounting matters assessed included, but were not limited to, Oncocyte’s equity investments, the carrying value of goodwill, acquired in-process intangible assets and other long-lived assets. Those assessments as well as other estimates referenced above were made in the context of information reasonably available to Oncocyte. While Oncocyte considered known or expected impacts of COVID-19 in making its assessments and estimates, the future impacts of COVID-19 are not presently determinable and could cause actual results to differ materially from Oncocyte’s estimates and assessments. Oncocyte’s future analysis or forecast of COVID-19 impacts could lead to changes in Oncocyte’s future estimates and assessments which could result in material impacts to Oncocyte’s consolidated financial statements in future reporting periods. |
Business combinations and fair value measurements | Business combinations and fair value measurements Oncocyte accounts for business combinations in accordance with ASC 805, which requires the purchase consideration transferred to be measured at fair value on the acquisition date in accordance with ASC 820, Fair Value Measurement ● Level 1 ● Level 2 ● Level 3 When a part of the purchase consideration consists of shares of Oncocyte common stock, Oncocyte calculates the purchase price attributable to those shares, a Level 1 security, by determining the fair value of those shares as of the acquisition date based on prices quoted on the principal national securities exchange on which the shares traded. Oncocyte recognizes estimated fair values of the tangible assets and identifiable intangible assets acquired, including in-process research and development, and liabilities assumed, including any contingent consideration, as of the acquisition date. Goodwill is recognized as any amount of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in excess of the consideration transferred. ASC 805 precludes the recognition of an assembled workforce as an asset, effectively subsuming any assembled workforce value into goodwill. In determining fair value, Oncocyte utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the periods presented, Oncocyte has no financial assets or liabilities recorded at fair value on a recurring basis, except for cash and cash equivalents consisting of money market funds and marketable equity securities of Lineage and AgeX common stock held by Oncocyte described below. These assets are measured at fair value using the period-end quoted market prices as a Level 1 input. Oncocyte also has certain contingent consideration liabilities which are carried at fair value based on Level 3 inputs (see Note 3). The carrying amounts of cash equivalents, prepaid expenses and other current assets, amounts due to Lineage and other affiliates, accounts payable, accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items. The carrying amount of the loan payable to Silicon Valley Bank approximates fair value because the loan bears interest at a floating market rate (see Note 12). |
Goodwill and intangible assets | Goodwill and intangible assets In accordance with ASC 350, Intangibles – Goodwill and Other Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. Goodwill, similar to IPR&D, is not amortized but is tested for impairment at least annually, or if circumstances indicate its value may no longer be recoverable. Qualitative factors considered in this assessment include industry and market conditions, overall financial performance, and other relevant events and factors affecting Oncocyte’s business. Based on the qualitative assessment, if it is determined that the fair value of goodwill is more likely than not to be less than its carrying amount, the fair value of a reporting unit will be calculated and compared with its carrying amount and an impairment charge will be recognized for the amount that the carrying value exceeds the fair value. Oncocyte continues to operate in one segment and considered to be the sole reporting unit and, therefore, goodwill is tested for impairment at the enterprise level. Oncocyte does not have intangible assets with indefinite useful lives other than goodwill and the acquired IPR&D (see Notes 3 and 4). As of June 30, 2021, there has been no |
Contingent consideration liabilities | Contingent consideration liabilities Certain of Oncocyte’s asset and business acquisitions involve the potential for future payment of consideration to third-parties and former selling shareholders in amounts determined as a percentage of future net revenues generated, or upon attainment of revenue milestones, from Pharma Services or LDTs, as applicable, or annual minimum royalties to certain licensors, as provided in the applicable agreements. The fair value of such liabilities is determined using unobservable inputs. These inputs include the estimated amount and timing of projected cash flows and the risk-adjusted discount rate used to present value the cash flows (see Notes 3 and 4). These obligations are referred to as contingent consideration. ASC 805 requires that contingent consideration be estimated and recorded at fair value as of the acquisition date as part of the total consideration transferred. Contingent consideration is an obligation of the acquirer to transfer additional assets or equity interests to the selling shareholders in the future if certain future events occur or conditions are met, such as the attainment of product development milestones. Contingent consideration also includes additional future payments to selling shareholders based on achievement of components of earnings, such as “earn-out” provisions or percentage of future revenues, including royalties paid to the selling shareholders based on a percentage of certain revenues generated. The fair value of contingent consideration after the acquisition date is reassessed by Oncocyte as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in the condensed consolidated statements of operations. Changes in key assumptions can materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that Oncocyte records in its condensed consolidated interim financial statements. See Notes 3 and 4 for a full discussion of these liabilities. |
Investments in capital stock of privately held companies | Investments in capital stock of privately held companies Oncocyte evaluates whether investments held in common stock of other companies require consolidation of the company under, first, the variable interest entity (“VIE”) model, and then under the voting interest model in accordance with accounting guidance for consolidations under Accounting Standards Codification (“ASC”) 810-10. If consolidation of the entity is not required under either the VIE model or the voting interest model, Oncocyte determines whether the equity method of accounting should be applied in accordance with ASC 323, Investments – Equity Method and Joint Ventures Oncocyte initially records equity method investments at fair value on the date of the acquisition with subsequent adjustments to the investment balance based on Oncocyte’s pro rata share of earnings or losses from the investment. As of December 31, 2020, the equity method investment balance of Razor is shown in noncurrent assets on the condensed consolidated balance sheets. Since February 24, 2021, the date of Oncocyte’s acquisition of the remaining interests in Razor, the Razor entity’s financial statements have been consolidated with Oncocyte, and the aggregate carrying value of the preexisting ownership interest and the cost of the additional ownership interest acquired is included in Intangible Assets, net, on the condensed consolidated balance sheets as of June 30, 2021 (see Notes 3 and 4). |
Restricted cash | Restricted cash ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash |
Impairment of long-lived assets | Impairment of long-lived assets Oncocyte assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. Oncocyte’s long-lived assets consist primarily of intangible assets, right-of-use assets for operating leases, customer relationships, and machinery and equipment. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying value of the asset over its fair value, is recorded. As of June 30, 2021, there has been no impairment of long-lived assets. |
Revenue recognition | Revenue recognition Prior to January 1, 2020, Oncocyte generated no revenues. Effective on January 1, 2020, Oncocyte adopted the revenue recognition standard ASC Topic 606, Revenue from Contracts with Customers (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations, and (v) recognizing revenue when, or as, an entity satisfies a performance obligation. DetermaRx™ testing revenue In the first quarter of 2020, Oncocyte commercially launched DetermaRx™ and commenced performing tests on clinical samples through orders received from physicians, hospitals, and other healthcare providers. In determining whether all the revenue recognition criteria (i) through (v) above are met with respect to DetermaRx™ tests, each test result is considered a single performance obligation and is generally considered complete when the test result is delivered or made available to the prescribing physician electronically, and, as such, there are no shipping or handling fees incurred by Oncocyte or billed to customers. Although Oncocyte bills a list price for all tests ordered and completed for all payer types, Oncocyte recognizes realized revenue on a cash basis rather than accrual basis when it cannot conclude that all the revenue recognition criteria have been met. Because DetermaRx™ is a novel test and there are no current reimbursement arrangements with third-party payers other than Medicare, the transaction price represents variable consideration. Application of the constraint for variable consideration is an area that requires significant judgment. For all payers other than Medicare, Oncocyte must consider the novelty of the test, the uncertainty of receiving payment, or being subject to claims for a refund, from payers with whom it does not have a sufficient payment collection history or contractual reimbursement agreements. Accordingly, for those payers, Oncocyte expects to continue to recognize revenue on a cash basis until it has a sufficient history to reliably estimate payment patterns or has contractual reimbursement arrangements, or both, in place. In September 2020, Oncocyte received a final pricing decision for DetermaRx™ from CMS, and with Medicare coverage in effect, Oncocyte commenced recognizing revenue when DetermaRx™ tests are performed for Medicare patients, or when payment was approved by Medicare in the case of certain tests performed prior to September 2020, rather than on a cash basis. During the three months ended March 31, 2021, after accumulating additional history of cash receipts and other factors considered by management for Medicare Advantage covered tests, including the recently published Medicare rate which management believes entitles Oncocyte to get reimbursed for Medicare Advantage covered tests at the Medicare rate, Oncocyte commenced recognizing Medicare Advantage covered tests on an accrual basis, rather than on a cash basis, at the Medicare rate. As of June 30, 2021, Oncocyte had accounts receivable of $ 0.9 million primarily from Medicare and Medicare Advantage covered DetermaRx™ tests (see Note 7). Pharma services revenue Revenues recognized include Pharma Services performed by Oncocyte’s Insight and Chronix subsidiaries for its pharmaceutical customers, including testing for biomarker discovery, assay design and development, clinical trial support, and a broad spectrum of biomarker tests. These Pharma Services are generally performed under individual scope of work (“SOW”) arrangements or license agreements (together with SOW the “Pharma Services Agreements”) with specific deliverables defined by the customer. Pharma Services are performed on a (i) time and materials basis or (ii) per test completed basis. Upon completion of the service to the customer in accordance with a Pharma Services Agreement, Oncocyte has the right to bill the customer for the agreed upon price (either on a per test or per deliverable basis) and recognizes Pharma Service revenue at that time. Insight identifies each sale of its Pharma Service offering as a single performance obligation. Chronix identifies the processing of test samples as a separate performance obligation (considered a series) within license agreements with customers. Completion of the service and satisfaction of the performance obligation is typically evidenced by access to the report or test made available to the customer or any other form or applicable manner of delivery defined in the Pharma Services Agreements. However, for certain SOWs under which work is performed pursuant to the customer’s highly customized specifications, Oncocyte has the enforceable right to bill the customer for work completed, rather than upon completion of the SOW. For those SOWs, Oncocyte recognizes revenue over a period during which the work is performed using a formula that accounts for expended efforts, generally measured in labor hours, as a percentage of total estimated efforts for the completion of the SOW. As performance obligations are satisfied under the Pharma Services Agreements, any amounts earned as revenue and billed to the customer are included in accounts receivable. Any revenues earned but not yet billed to the customer as of the date of Oncocyte’s consolidated financial statements are recorded as contract assets and are included in prepaids and other current assets as of the financial statement date. Amounts recorded in contract assets are reclassified to accounts receivable in Oncocyte’s consolidated financial statements when the customer is invoiced according to the billing schedule in the contract. Oncocyte establishes an allowance for doubtful accounts based on the evaluation of the collectability of its Pharma Services accounts receivables after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial position, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. Oncocyte continuously monitors collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts, if any, based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined to be uncollectible are written off against the allowance for doubtful accounts. As of June 30, 2021, Oncocyte has not recorded any losses or allowance for doubtful accounts on its account receivables from Pharma Services. As of June 30, 2021, Oncocyte had accounts receivable from Pharma Services customers of $ 0.1 million (see Note 7). Licensing revenue Revenues recognized includes licensing revenue derived from agreements with customers for exclusive rights to market Oncocyte’s proprietary testing technology. Under the agreements, Oncocyte grants exclusive rights to certain trademarks and technology of Oncocyte for the purpose of marketing Oncocyte’s tests within a defined geographic territory. A license agreement may specify milestone deliverables or performance obligations, for which Oncocyte recognizes revenue when its licensee confirms the completion of Oncocyte’s performance obligation. A licensing agreement may also include ongoing sales support from the Oncocyte and typically includes non-refundable licensing fees and per-test Pharma Services revenues discussed above, for which Oncocyte treats the licensing of the technology, trademarks, and ongoing support as a single performance obligation satisfied by the passage of time over the term of the agreement. |
Cost of revenues | Cost of revenues Cost of revenues generally consists of cost of materials, direct labor including benefits, bonus and stock-based compensation, equipment and infrastructure expenses, clinical sample related costs associated with performing DetermaRx™ tests and Pharma Services, providing deliverables according to our licensing agreements, license fees due to third parties, and amortization of acquired intangible assets such as the Razor asset and customer relationship intangible assets. Infrastructure expenses include depreciation of laboratory equipment, allocated rent costs, leasehold improvements, and allocated information technology costs for operations at Oncocyte’s CLIA laboratories in California and Tennessee. Costs associated with generating the revenues are recorded as the tests or services are performed regardless of whether revenue was recognized. Royalties or revenue share payments for licensed technology calculated as a percentage of revenues generated using the associated technology are recorded as expenses at the time the related revenues are recognized. |
Research and development expenses | Research and development expenses Research and development expenses are comprised of costs incurred to develop technology, which include salaries and benefits (including stock-based compensation), laboratory expenses (including reagents and supplies used in research and development laboratory work), infrastructure expenses (including allocated facility occupancy costs), and contract services and other outside costs. Indirect research and development expenses are allocated primarily based on headcount, as applicable, and include rent and utilities, common area maintenance, telecommunications, property taxes, and insurance. Research and development costs are expensed as incurred. Sales and marketing expenses Sales and marketing expenses consist primarily of personnel costs and related benefits, including stock-based compensation, trade show expenses, branding and positioning expenses, and consulting fees. Sales and marketing expenses also include indirect expenses for applicable overhead allocated based on headcount, and include allocated costs for rent and utilities, common area maintenance, telecommunications, property taxes, and insurance. |
General and administrative expenses | General and administrative expenses General and administrative expenses consist primarily of compensation and related benefits (including stock-based compensation) for executive and corporate personnel, professional and consulting fees, rent and utilities, common area maintenance, telecommunications, property taxes, and insurance. |
Net loss per common share | Net loss per common share All common stock equivalents are antidilutive because Oncocyte reported a net loss for all periods presented. Accordingly, the following common stock equivalents were excluded from the computation of diluted net loss per common share of common stock for the periods presented (in thousands): Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share of Common Stock Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Stock options 3,941 7,272 2,856 6,686 Warrants 3,129 3,384 3,129 3,384 |
Leases | Leases Oncocyte accounts for leases in accordance with ASC 842, Leases During 2020, Oncocyte entered into various operating leases and an embedded operating lease in accordance with ASC 842 discussed in Note 10. Oncocyte’s accounting for financing leases (previously referred to as “capital leases”) remained substantially unchanged. |
Accounting for Lineage and AgeX shares of common stock | Accounting for Lineage and AgeX shares of common stock Oncocyte accounts for the shares of Lineage and AgeX common stock it holds as marketable equity securities in accordance with ASC 320-10-25, Investments – Debt and Equity Securities Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities As of June 30, 2021 and December 31, 2020, Oncocyte held 353,264 and 35,326 shares of common stock of Lineage and AgeX, respectively, as marketable equity securities with a combined fair market value of $ 1.1 million and $ 0.7 million , respectively. Deferred revenue In connection with the purchase price allocation for the Chronix acquisition, Oncocyte estimates the fair value of deferred revenue assumed with its acquisition. The estimated fair value of deferred revenue of $ 738,000 217,000 738,000 |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. |
Recently issued accounting pronouncements not yet adopted | Recently issued accounting pronouncements not yet adopted The following accounting standards, which are not yet effective, are presently being evaluated by Oncocyte to determine the impact that it might have on its consolidated financial statements. In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-10, which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Upon the initial recognition of such assets, which will be based on, among other things, historical information, current conditions, and reasonable supportable forecasts. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The update will be effective for Oncocyte in the first quarter of 2023. Early adoption is permitted. Oncocyte is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements and related disclosures. In August 2020, the Financial Accounting Standards Board issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This update simplifies the accounting for convertible debt instruments and amends the accounting for certain contracts and freestanding financial instruments in an entity’s own equity, including warrants and preferred stock. The new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the computation of diluted EPS. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. Oncocyte does not expect a material impact of this guidance on its consolidated financial statements. |
COVID-19 impact and related risks | COVID-19 impact and related risks The ongoing global outbreak of COVID-19, and the various attempts throughout the world to contain it, have created significant volatility, uncertainty and disruption. In response to government directives and guidelines, health care advisories and employee and other concerns, Oncocyte has altered certain aspects of its operations. A number of Oncocyte’s employees have had to work remotely from home and those on site have had to follow Oncocyte’s social distance guidelines, which could impact their productivity. COVID-19 could also disrupt Oncocyte’s operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who cannot effectively work remotely but who elect not to come to work due to the illness affecting others in Oncocyte’s office or laboratory facilities, or due to quarantines. During the COVID-19 pandemic, Oncocyte has not been able, and may continue to not be able, to maintain its preferred level of physician or customer outreach and marketing of its diagnostic testing and Pharma Services, which may have negatively impacted and may continue to negatively impact potential new customers’ interest in those tests and services. Because of COVID-19, travel, visits, and in-person meetings related to Oncocyte’s business have been severely curtailed or canceled and Oncocyte has instead used on-line or virtual meetings to meet with potential customers and others. In addition to operational adjustments, the consequences of the COVID-19 pandemic have led to uncertainties related to Oncocyte’s business growth and ability to forecast the demand for its LDTs and Pharma Services and resulting revenues. Concerns over available hospital, staffing, equipment, and other resources, and the risk of exposure to the virus, have led to delays in early-stage lung cancer surgeries and clinical trials of drugs under development by pharma companies, and the continued deferral of lung cancer surgeries and drug development clinical trials due to resurgence in COVID-19 cases could continue to result in delayed or reduced use of DetermaRx™ and Oncocyte’s Pharma Services. It is possible that impacts of COVID-19 on Oncocyte’s operations or revenues or its access to capital could prevent Oncocyte from complying, or could result in a material noncompliance, with one or more obligations or covenants under material agreements to which Oncocyte is a party, with the result that Oncocyte would be in material breach of the applicable obligation, covenant, or agreement. Any such material breach could cause Oncocyte to incur material financial liabilities or an acceleration of the date for paying a financial obligation to the other party to the applicable agreement, or could cause Oncocyte to lose material contractual rights, such as rights to use leased equipment or laboratory or office space, or rights to use licensed patents or other intellectual property, the use of which is material to Oncocyte’s business. Similarly, it is possible that impacts of COVID-19 on the business, operations, or financial condition of any third party with whom Oncocyte has a contractual relationship could cause the third party to be unable to perform its contractual obligations to Oncocyte, resulting in Oncocyte’s loss of the benefits of a contract that could be material to Oncocyte’s business. The full extent to which the COVID-19 pandemic and the various responses to it might impact Oncocytes’ business, operations and financial results will depend on numerous evolving factors that are not subject to accurate prediction and that are beyond Oncocyte’s control. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share of Common Stock | Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share of Common Stock Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Stock options 3,941 7,272 2,856 6,686 Warrants 3,129 3,384 3,129 3,384 |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Business Acquisition [Line Items] | |
Schedule of Identifiable Intangible Assets and Estimated Useful Life | The valuation of identifiable intangible assets and applicable estimated useful lives are as follows (in thousands, except for useful life): Schedule of Identifiable Intangible Assets and Estimated Useful Life Estimated Assets Useful Life Fair Value (Years) In process research and development (“IPR&D”) $ 14,650 n/a Customer relationships 440 5 $ 15,090 |
Schedule of Fair Value of Contingent Consideration Liability | The following table shows the Insight Merger Date contractual payment amounts, as applicable, and the corresponding fair value of each respective Contingent Consideration liability (in thousands): Schedule of Fair Value of Contingent Consideration Liability Fair Contractual Value on the Value Merger Date Milestone 1 $ 1,500 $ 1,340 Milestone 2 3,000 1,830 Milestone 3 (a) 1,500 770 Royalty 1 (b) See(b) 5,980 Royalty 2 (b) See(b) 1,210 Total $ 6,000 $ 11,130 (a) Indicates the maximum payable if the Milestone is achieved. (b) As defined, Royalty Payments are based on a percentage of future revenues of DetermaIO™ and Pharma Services over their respective useful life, accordingly there is no fixed contractual value for the Royalty Contingent Consideration. |
Schedule of Contingent Consideration, Measured at Fair Value | The following table reflects the activity for Oncocyte’s Contingent Consideration since the Insight Merger Date, measured at fair value using Level 3 inputs (in thousands): Schedule of Contingent Consideration, Measured at Fair Value Fair Value Balance at December 31, 2020 $ 7,120 Change in estimated fair value 1,090 Balance at June 30, 2021 $ 8,210 |
Summary of Acquisition Intangible Assets | On February 24, 2021, upon Oncocyte’s acquisition of the outstanding common stock of Razor, the Razor intangible asset balance recorded on the acquisition date and included in Intangible Assets was as follows (in thousands): Summary of Acquisition Intangible Assets As of February 24, 2021 Razor intangible asset recorded on the acquisition date: Equity method investment carrying value $ 13,147 Cash paid as Additional Purchase Payment for the Razor asset 10,000 Oncocyte common stock issued ( 982,318 5,756 Less: cash balance received from Razor for Clinical Trial expenses (3,352 ) Deferred tax liability generated from the Razor asset 7,564 Other 169 Total Razor investment asset balance as of February 24, 2021 (a) $ 33,284 (a) This balance will be amortized over the remaining useful life of the Razor asset, approximating 8.5 years, as of the February 24, 2021 acquisition date, with the amortization expense included in “Cost of revenues – amortization of acquired intangibles” on the condensed consolidated statements of operations. |
Schedule of Condensed Statement of Operations | The unaudited standalone results of operations for Razor prior to being consolidated with Oncocyte is summarized below (in thousands): Schedule of Condensed Statement of Operations For the period from January 1, 2021 through February 23, 2021 Condensed Statement of Operations (1) (unaudited) Research and development expense $ 125 General and administrative expense - Loss from operations (125 ) Net loss $ (125 ) (1) The condensed standalone statement of operations of Razor is provided for informational purposes only. Razor’s results for the period from January 1, 2021 through February 23, 2021 are not included in Oncocyte’s consolidated results of operations because Razor was not consolidated with Oncocyte’s financial statements but had been accounted for under the equity method of accounting since the September 30, 2019 Initial Closing date, however, Oncocyte’s results included its pro rata losses from Razor. Beginning on February 24, 2021, Razor’s results are included with Oncocyte’s consolidated results, primarily consisting of outside research and development expenses incurred by Razor for the Clinical Trial discussed above. |
Insight Merger Agreements [Member] | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of Aggregate Merger Consideration | Schedule of Fair Value of Aggregate Merger Consideration Cash consideration $ 7,000 (1) Stock consideration Shares of Oncocyte common stock issued on the Merger Date 1,915,692 (2) Closing price per share of Oncocyte common stock on the Merger Date $ 2.61 Market value of Oncocyte common stock issued $ 5,000 Contingent Consideration $ 11,130 (3) Total fair value of consideration transferred on the Merger Date $ 23,130 (1) The cash consideration paid on the Insight Merger Date was $ 6.4 0.6 (2) The 229,885 (3) In accordance with ASC 805, Contingent Consideration, at fair value, is part of the total considered transferred on the Insight Merger Date, as further discussed below. |
Schedule of Intangible Assets Acquired and Liabilities Assumed | The following table sets forth the allocation of the Aggregate Merger Consideration transferred to Insight’s tangible and identifiable intangible assets acquired and liabilities assumed on the Insight Merger Date, with the excess recorded as goodwill (in thousands): Schedule of Intangible Assets Acquired and Liabilities Assumed January 31, 2020 Assets acquired: Cash and cash equivalents $ 36 Accounts receivable and other current assets 42 Right-of-use assets, machinery and equipment 585 Long-lived intangible assets - customer relationships 440 Acquired in-process research and development 14,650 Total identifiable assets acquired (a) 15,753 Liabilities assumed: Accounts payable 61 Right-of-use liabilities - operating lease 495 Contingent Consideration transferred 11,130 Long-term deferred income tax liability 1,254 Total identifiable liabilities assumed (b) 12,940 Net assets acquired, excluding goodwill (a) - (b) = (c) 2,813 Total cash and stock consideration transferred (d) 12,000 Goodwill (d) - (c) $ 9,187 |
Chronix Biomedical, Inc [Member] | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of Aggregate Merger Consideration | Schedule of Fair Value of Aggregate Merger Consideration Cash consideration $ 3,960 Settlement of acquirer/acquiree activity pre-combination, net $ 550 Stock consideration Shares of Oncocyte common stock issued on the Merger Date 647,911 Closing price per share of Oncocyte common stock on the Merger Date $ 5.09 Market value of Oncocyte common stock issued $ 3,298 Contingent Consideration $ 42,295 Total fair value of consideration transferred on the Merger Date $ 50,103 |
Schedule of Intangible Assets Acquired and Liabilities Assumed | Schedule of Intangible Assets Acquired and Liabilities Assumed April 15, 2021 Assets acquired: Cash and cash equivalents $ 50 Accounts receivable and other current assets 25 Long-term assets 12 Acquired in-process research and development 46,800 Total identifiable assets acquired (a) 46,887 Liabilities assumed: Deferred revenue 738 Assumed liability 9,294 Contingent Consideration transferred 42,295 Long-term deferred income tax liability 1,795 Total identifiable liabilities assumed (b) 54,122 Net assets acquired, excluding goodwill (a) - (b) = (c) (7,235 ) Total cash and stock consideration transferred (d) 7,808 Goodwill (d) - (c) $ 15,043 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill and Intangible Assets | At June 30, 2021 and December 31, 2020, goodwill and intangible assets, net, consisted of the following (in thousands): Schedule of Goodwill and Intangible Assets June 30, 2021 December 31, 2020 Goodwill - Insight Merger (1) $ 9,194 $ 9,187 Goodwill - Chronix Merger (1) 15,043 - Total Goodwill 24,237 9,187 Intangible assets: Acquired IPR&D - DetermaIO ™ (2) $ 14,650 $ 14,650 Acquired IPR&D - TheraSure™ (3) 46,800 - Intangible assets subject to amortization: Acquired intangible assets - customer relationship 440 440 Acquired intangible assets - Razor (see Note 3) 33,284 - Total intangible assets 95,174 15,090 Accumulated amortization (4) (1,462 ) (81 ) Intangible assets, net $ 93,712 $ 15,009 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Stock-based Compensation Expense | Oncocyte recorded stock-based compensation expense in the following categories on the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 (unaudited and in thousands): Summary of Stock-based Compensation Expense Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Cost of revenues $ 74 $ 18 $ 96 $ 22 Research and development 379 413 636 608 Sales and marketing 308 144 541 248 General and administrative 1,235 786 2,013 1,420 Total stock-based compensation expense $ 1,996 $ 1,361 $ 3,286 $ 2,298 |
Schedule of Assumptions Used to Calculate Fair Value of Stock Options | The assumptions that were used to calculate the grant date fair value of Oncocyte’s employee and non-employee stock option grants for the six months ended June 30, 2021 and 2020 were as follows (unaudited): Schedule of Assumptions Used to Calculate Fair Value of Stock Options Six Months Ended June 30, 2021 2020 Expected life (in years) 6 6 Risk-free interest rates 0.88 % 1.20 % Volatility 100.67 % 104.52 % Dividend yield - % - % |
2010 Stock Option Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Stock Option Activity | A summary of Oncocyte’s 2010 Plan activity and related information follows (in thousands except weighted average exercise price): Summary of Stock Option Activity Shares Number Weighted Available of Options Average Options for Grant Outstanding Exercise Price Balance at December 31, 2020 - 1,218 $ 3.55 Options exercised - (159 ) $ 2.26 Options forfeited, canceled and expired - - $ - Balance at June 30, 2021 - 1,059 $ 3.72 Exercisable at June 30, 2021 1,059 $ 3.68 |
2018 Plan Activity [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Stock Option Activity | A summary of Oncocyte’s 2018 Incentive Plan activity and related information follows (in thousands except weighted average exercise price): Summary of Stock Option Activity Shares Number Number Weighted Available of Options of RSUs Average for Grant Outstanding Outstanding Exercise Price Balance at December 31, 2020 3,346 7,212 201 $ 2.60 RSUs vested - - (136 ) $ n/a RSUs granted (96 ) - 96 $ - Options Increase from Plan Amendment 10,000 - - $ n/a Options granted (4,189 ) 4,189 - $ 5.14 Options exercised - (710 ) - $ 3.00 Options forfeited/cancelled 332 (332 ) - $ 3.49 Balance at June 30, 2021 9,393 10,359 161 $ 3.58 Options exercisable at June 30, 2021 2,935 $ 2.62 |
Disaggregation of Revenues an_2
Disaggregation of Revenues and Concentration Risk (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Disaggregation Of Revenues And Concentration Risk | |
Schedule of Consolidated Revenues Generated by Unaffiliated Customers | The following table presents the percentage of consolidated revenues generated by unaffiliated customers that individually represent greater than ten percent of consolidated revenues: Schedule of Consolidated Revenues Generated by Unaffiliated Customers Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Medicare for DetermaRx 21 % - * 23 % - * Medicare Advantage for DetermaRx 12 % - 17 % - Pharma services Company A - * 72 % - * 65 % Pharma services Company C - * 17 % - * 19 % Licensing - Company D 49 % - 32 % - Licensing - Company B 11 % - - - * Less than 10% |
Schedule of Consolidated Revenues Attributable to Products or Services | The following table presents the percentage of consolidated revenues by products or services classes: Schedule of Consolidated Revenues Attributable to Products or Services Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 DetermaRx 32 % 7 % 40 % 7 % Pharma Services 8 % 93 % 22 % 93 % Licensing 60 % - 38 % - Total 100 % 100 % 100 % 100 % |
Schedule of Percentage of Consolidated Revenues Attributable to Geographical Locations | The following table presents the percentage of consolidated revenues attributable to geographical locations: Schedule of Percentage of Consolidated Revenues Attributable to Geographical Locations Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 United States 32 % 26 % 43 % 33 % Outside of the United States – Pharma Services 8 % 74 % 19 % 67 % Outside of the United States – Licensing 60 % - 38 % - Total 100 % 100 % 100 % 100 % |
Schedule of Accounts Receivable from Third Party and Other Customers | The following table presents Oncocyte’s total accounts receivable from third-party payers and other customers at June 30, 2021 and December 31, 2021. Schedule of Accounts Receivable from Third Party and Other Customers June 30, 2021 December 31, 2020 Medicare for DetermaRx™ $ 444 $ 91 Medicare Advantage for DetermaRx™ 467 - Pharma Services and other 114 112 Total $ 1,025 $ 203 |
Schedule of Percentage of Total Consolidated Accounts Receivables | The following table presents accounts receivable, as a percentage of total consolidated accounts receivables, from third-party payers and other customers that provided in excess of 10% of Oncocyte’s total accounts receivable. Schedule of Percentage of Total Consolidated Accounts Receivables June 30, 2021 December 31, 2020 Medicare for DetermaRx™ 43 % 45 % Medicare Advantage for DetermaRx™ 46 % - Pharma Services Company A 11 % 35 % |
Right-of-use assets, machiner_2
Right-of-use assets, machinery and equipment, net, and construction in progress (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Right-of-use Assets, Machinery and Equipment, Net, and Construction in Progress | As of June 30, 2021 and December 31, 2020, rights-of-use assets, machinery and equipment, net, and construction in progress were as follows (in thousands): Schedule of Right-of-use Assets, Machinery and Equipment, Net, and Construction in Progress June 30, 2021 (unaudited) December 31, 2020 Right-of-use assets (1) $ 3,397 $ 3,397 Machinery and equipment 5,603 2,480 Accumulated depreciation and amortization (1,999 ) (1,440 ) Right-of-use assets, machinery and equipment, net 7,001 4,437 Construction in progress 344 2,087 Right-of-use assets, machinery and equipment, net, and construction in progress $ 7,345 $ 6,524 (1). Oncocyte recorded certain right-of-use assets and liabilities for operating leases in accordance with ASC 842 (see Notes 3 and 10). |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Supplemental Cash Flow Information Related to Operating and Financing Lease | The following table presents supplemental cash flow information related to operating and financing leases for the six months ended June 30, 2021 and 2020 (in thousands): Schedule of Supplemental Cash Flow Information Related to Operating and Financing Lease 2021 2020 Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of financing lease liabilities: Operating cash flows from operating leases 499 174 Operating cash flows from financing leases 19 5 Financing cash flows from financing leases 84 35 Right-of-use assets obtained in exchange for lease obligations Operating lease, including lease acquired in Insight Genetics business combination - 536 |
Schedule of Supplemental Balance Sheet Information Related to Operating and Financing Leases | The following table presents supplemental balance sheets information related to operating and financing leases as of June 30, 2021 (in thousands, except lease term and discount rate): Schedule of Supplemental Balance Sheet Information Related to Operating and Financing Leases June 30, 2021 Operating lease Right-of-use assets, net $ 2,683 Right-of-use lease liabilities, current $ 252 Right-of-use lease liabilities, noncurrent 4,092 Total operating lease liabilities $ 4,344 Financing lease Machinery and equipment $ 537 Accumulated depreciation (270 ) Machinery and equipment, net $ 267 Current liabilities $ 118 Noncurrent liabilities 170 Total financing lease liabilities $ 288 Weighted average remaining lease term Operating lease 5.8 Financing lease 2.4 Weighted average discount rate Operating lease 11.18 % Financing lease 11.43 % |
Schedule of Future Minimum Lease Commitments for Operating and Financing Leases | Future minimum lease commitments are as follows (in thousands): Schedule of Future Minimum Lease Commitments for Operating and Financing Leases Operating Financing Leases Leases Year Ending December 31, 2021 $ 532 $ 82 2022 1,096 124 2023 1,000 124 2024 890 - 2025 869 - Thereafter 1,594 - Total minimum lease payments $ 5,981 $ 331 Less amounts representing interest (1,636 ) (42 ) Present value of net minimum lease payments $ 4,345 $ 288 |
Organization, Description of _2
Organization, Description of the Business and Liquidity (Details Narrative) - USD ($) | Jun. 11, 2021 | Feb. 24, 2021 | Apr. 23, 2020 | Jul. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Sep. 30, 2019 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Shares issued during the period, value | $ 10,746,000 | $ 18,342,000 | ||||||||
Retained Earnings (Accumulated Deficit) | $ 138,089,000 | $ 138,089,000 | $ 123,677,000 | |||||||
Cash and cash equivalents | 46,469,000 | 46,469,000 | 7,143,000 | |||||||
Marketable equity securities | 1,062,000 | 1,062,000 | $ 675,000 | |||||||
Proceeds from Issuance of Long-term Debt | 1,141,000 | |||||||||
Gain (Loss) on Extinguishment of Debt | $ 1,141,000 | $ 1,141,000 | ||||||||
PPP [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.00% | |||||||||
Debt Instrument, Maturity Date | Apr. 23, 2022 | |||||||||
Razor Genomics, Inc. [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Equity ownership percentage | 25.00% | 25.00% | 25.00% | |||||||
Cash paid to purchase shares of common stock | $ 10,000,000 | |||||||||
Shares issued during the period, value | $ 5,700,000 | |||||||||
Silicon Valley Bank [Member] | PPP [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Proceeds from Issuance of Long-term Debt | $ 1,140,930 | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.00% | |||||||||
Debt Instrument, Maturity Date | Apr. 23, 2022 | |||||||||
Gain (Loss) on Extinguishment of Debt | $ 1,140,930 | |||||||||
B T I G L L C [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Sale of Stock, Number of Shares Issued in Transaction | 1,108,650 | |||||||||
Sale of Stock, Price Per Share | $ 5.63 | |||||||||
Proceeds from Issuance Initial Public Offering | $ 6,240,000 | |||||||||
B T I G L L C [Member] | At The Market Sales Agreement [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Fair value of common stock sold | $ 50,000,000 |
Common Stock Equivalents Exclud
Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share of Common Stock (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 3,941 | 7,272 | 2,856 | 6,686 |
Warrant [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 3,129 | 3,384 | 3,129 | 3,384 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Apr. 15, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||||||
Impairment charge on goodwill and intangible asset | $ 0 | |||||
Equity Securities, FV-NI, Current | $ 1,062,000 | 1,062,000 | $ 675,000 | |||
Deferred revenue | 200,000 | 200,000 | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 2,030,000 | $ 143,000 | $ 3,154,000 | $ 158,000 | ||
Chronix Acquisition [Member] | ||||||
Product Information [Line Items] | ||||||
Deferred revenue | $ 738,000 | |||||
Lineage and AgeX [Member] | ||||||
Product Information [Line Items] | ||||||
Common Stock, Shares Held as Available for Sale Securities | 353,264 | 353,264 | 35,326 | |||
Equity Securities, FV-NI, Current | $ 1,100,000 | $ 1,100,000 | $ 700,000 | |||
Pharma Services [Member] | ||||||
Product Information [Line Items] | ||||||
Accounts Receivable, Sale | 100,000 | |||||
Medicare for DetermaRx and Medicare Advantage for DetermaRx [Member] | ||||||
Product Information [Line Items] | ||||||
Accounts Receivable, Sale | $ 900,000 | |||||
License [Member] | Chronix Acquisition [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 217,000 |
Schedule of Fair Value of Aggre
Schedule of Fair Value of Aggregate Merger Consideration (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 15, 2021 | Jan. 31, 2020 | |
Insight Merger Agreements [Member] | |||
Business Acquisition [Line Items] | |||
Cash consideration | [1] | $ 7,000 | |
Shares of Oncocyte common stock issued on the Merger Date | [2] | 1,915,692 | |
Closing price per share of Oncocyte common stock on the Merger Date | $ 2.61 | ||
Market value of Oncocyte common stock issued | $ 5,000 | ||
Contingent Consideration | [3] | 11,130 | |
Total fair value of consideration transferred on the Merger Date | $ 23,130 | ||
Chronix Biomedical, Inc [Member] | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 3,960 | ||
Shares of Oncocyte common stock issued on the Merger Date | 647,911 | ||
Closing price per share of Oncocyte common stock on the Merger Date | $ 5.09 | ||
Market value of Oncocyte common stock issued | $ 3,298 | ||
Contingent Consideration | 42,295 | ||
Total fair value of consideration transferred on the Merger Date | 50,103 | ||
Settlement of Acquirer/Acquiree Activity Pre-Combination, net | $ 550 | ||
[1] | The cash consideration paid on the Insight Merger Date was $ 6.4 0.6 | ||
[2] | The 229,885 | ||
[3] | In accordance with ASC 805, Contingent Consideration, at fair value, is part of the total considered transferred on the Insight Merger Date, as further discussed below. |
Schedule of Fair Value of Agg_2
Schedule of Fair Value of Aggregate Merger Consideration (Details) (Parenthetical) $ in Millions | 1 Months Ended |
Jan. 31, 2020USD ($)shares | |
Business Acquisition [Line Items] | |
Cash consideration paid | $ 6.4 |
Cash Holdback [Member] | |
Business Acquisition [Line Items] | |
Cash consideration paid | $ 0.6 |
Stock Holdback [Member] | |
Business Acquisition [Line Items] | |
Number of common stock, shares issued | shares | 229,885 |
Schedule of Intangible Assets A
Schedule of Intangible Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Apr. 15, 2021 | Dec. 31, 2020 | Jan. 31, 2020 |
Business Combination and Asset Acquisition [Abstract] | ||||
Cash and cash equivalents | $ 50 | $ 36 | ||
Accounts receivable and other current assets | 25 | 42 | ||
Right-of-use assets, machinery and equipment | 585 | |||
Long-lived intangible assets - customer relationships | 440 | |||
Acquired in-process research and development | 46,800 | 14,650 | ||
Total identifiable assets acquired (a) | 46,887 | 15,753 | ||
Accounts payable | 61 | |||
Right-of-use liabilities - operating lease | 495 | |||
Contingent Consideration transferred | 42,295 | 11,130 | ||
Long-term deferred income tax liability | 1,795 | 1,254 | ||
Total identifiable liabilities assumed (b) | 54,122 | 12,940 | ||
Net assets acquired, excluding goodwill (a) - (b) = (c) | (7,235) | 2,813 | ||
Total cash and stock consideration transferred (d) | 7,808 | 12,000 | ||
Goodwill (d) - (c) | $ 24,237 | 15,043 | $ 9,187 | $ 9,187 |
Long-term assets | 12 | |||
Deferred revenue | 738 | |||
Assumed liability | $ 9,294 |
Schedule of Identifiable Intang
Schedule of Identifiable Intangible Assets and Estimated Useful Life (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Estimated Asset Fair Value | $ 15,090 |
In Process Research and Development [Member] | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Estimated Asset Fair Value | 14,650 |
Customer Relationships [Member] | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Estimated Asset Fair Value | $ 440 |
Customer Relationships [Member] | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Schedule of Fair Value of Conti
Schedule of Fair Value of Contingent Consideration Liability (Details) $ in Thousands | Dec. 31, 2020USD ($) | |
Business Acquisition [Line Items] | ||
Contractual Value | $ 6,000 | |
Fair Value on the Merger Date | 11,130 | |
Milestone 1 [Member] | ||
Business Acquisition [Line Items] | ||
Contractual Value | 1,500 | |
Fair Value on the Merger Date | 1,340 | |
Milestone 2 [Member] | ||
Business Acquisition [Line Items] | ||
Contractual Value | 3,000 | |
Fair Value on the Merger Date | 1,830 | |
Milestone 3 [Member] | ||
Business Acquisition [Line Items] | ||
Contractual Value | 1,500 | [1] |
Fair Value on the Merger Date | 770 | [1] |
Royalty 1 [Member] | ||
Business Acquisition [Line Items] | ||
Fair Value on the Merger Date | 5,980 | [2] |
Royalty 2 [Member] | ||
Business Acquisition [Line Items] | ||
Fair Value on the Merger Date | $ 1,210 | [2] |
[1] | Indicates the maximum payable if the Milestone is achieved. | |
[2] | As defined, Royalty Payments are based on a percentage of future revenues of DetermaIO™ and Pharma Services over their respective useful life, accordingly there is no fixed contractual value for the Royalty Contingent Consideration. |
Schedule of Contingent Consider
Schedule of Contingent Consideration, Measured at Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Beginning balance | $ 11,130 | |||
Change in estimated fair value | $ 30 | 1,090 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Beginning balance | 7,120 | |||
Change in estimated fair value | 1,090 | |||
Ending balance | $ 8,210 | $ 8,210 |
Summary of Acquisition Intangib
Summary of Acquisition Intangible Assets (Details) - USD ($) $ in Thousands | Feb. 24, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2019 | |
Entity Listings [Line Items] | |||||
Equity method investment carrying value | $ 13,417 | ||||
Oncocyte common stock issued (982,318 shares issued at market value) as Additional Purchase Payment | 240,755 | 157,160 | |||
Total intangible assets | 95,174 | 15,090 | |||
Razor Genomics, Inc. [Member] | |||||
Entity Listings [Line Items] | |||||
Equity method investment carrying value | $ 13,147 | $ 11,245 | |||
Cash paid as Additional Purchase Payment for the Razor asset | 10,000 | ||||
Oncocyte common stock issued (982,318 shares issued at market value) as Additional Purchase Payment | 5,756 | ||||
Less: cash balance received from Razor for Clinical Trial expenses | (3,352) | ||||
Deferred tax liability generated from the Razor asset (Note 12) | 7,564 | ||||
Other | 169 | ||||
Total intangible assets | $ 33,284 | [1] | $ 33,284 | ||
[custom:RemainingUsefulLifeOfAsset] | 8 years 6 months | ||||
[1] | This balance will be amortized over the remaining useful life of the Razor asset, approximating 8.5 years, as of the February 24, 2021 acquisition date, with the amortization expense included in “Cost of revenues – amortization of acquired intangibles” on the condensed consolidated statements of operations. |
Summary of Acquisition Intang_2
Summary of Acquisition Intangible Assets (Details) (Parenthetical) | Feb. 24, 2021shares |
Razor Genomics, Inc. [Member] | |
Entity Listings [Line Items] | |
Stock issued during the period | 982,318 |
Schedule of Condensed Statement
Schedule of Condensed Statement of Operations (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 23, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | ||
Entity Listings [Line Items] | ||||||
Research and development expense | $ 2,537 | $ 3,225 | $ 5,898 | $ 5,385 | ||
General and administrative expense | 7,934 | 3,759 | 12,698 | 8,383 | ||
Loss from operations | (13,568) | (8,768) | (24,928) | (17,200) | ||
Net loss | $ (10,493) | $ (9,108) | $ (14,412) | $ (16,840) | ||
Razor Genomics, Inc. [Member] | ||||||
Entity Listings [Line Items] | ||||||
Research and development expense | [1] | $ 125 | ||||
General and administrative expense | [1] | |||||
Loss from operations | [1] | (125) | ||||
Net loss | [1] | $ (125) | ||||
[1] | The condensed standalone statement of operations of Razor is provided for informational purposes only. Razor’s results for the period from January 1, 2021 through February 23, 2021 are not included in Oncocyte’s consolidated results of operations because Razor was not consolidated with Oncocyte’s financial statements but had been accounted for under the equity method of accounting since the September 30, 2019 Initial Closing date, however, Oncocyte’s results included its pro rata losses from Razor. Beginning on February 24, 2021, Razor’s results are included with Oncocyte’s consolidated results, primarily consisting of outside research and development expenses incurred by Razor for the Clinical Trial discussed above. |
Business Combinations (Details
Business Combinations (Details Narrative) $ / shares in Units, € in Millions | Apr. 15, 2021USD ($)$ / shares | Apr. 15, 2021USD ($)$ / sharesshares | Feb. 24, 2021USD ($)shares | Jun. 30, 2020USD ($) | Jan. 31, 2020USD ($)Daysshares | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Apr. 15, 2021EUR (€) | Mar. 31, 2021USD ($) | Feb. 02, 2021USD ($) | Dec. 31, 2020USD ($) | |||
Business Acquisition [Line Items] | ||||||||||||||||
Sale of common shares | $ 10,746,000 | $ 18,342,000 | ||||||||||||||
Operating lease, right use of asset | [1] | $ 3,397,000 | $ 3,397,000 | |||||||||||||
Fair value of contingent consideration | 1,100,000 | |||||||||||||||
Common stock value | 240,755,000 | 157,160,000 | ||||||||||||||
Equity Method Investments | 13,417,000 | |||||||||||||||
Business combination assumed liabilities | $ (7,235,000) | $ (7,235,000) | $ 2,813,000 | |||||||||||||
Amount of liabilities | 74,716,000 | 21,936,000 | ||||||||||||||
Deferred Revenue | 200,000 | |||||||||||||||
Goodwill | $ 15,043,000 | $ 15,043,000 | 9,187,000 | $ 24,237,000 | 9,187,000 | |||||||||||
Razor Genomics, Inc. [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Sale of common shares | $ 5,700,000 | |||||||||||||||
Stock issued during the period | shares | 982,318 | |||||||||||||||
Deferred tax liability | $ 7,564,000 | |||||||||||||||
Equity ownership percentage | 25.00% | 25.00% | ||||||||||||||
Stock purchase price | $ 10,000,000 | |||||||||||||||
Common stock value | 5,756,000 | |||||||||||||||
Cash paid to purchase shares of common stock | 10,000,000 | |||||||||||||||
Equity Method Investments | 13,147,000 | $ 11,245,000 | ||||||||||||||
Razor Genomics, Inc. [Member] | Series A Convertible Preferred Stock [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Number of shares purchased | shares | 1,329,870 | |||||||||||||||
Preferred stock, par value | $ / shares | $ 0.0001 | |||||||||||||||
Milestone Contingent Consideration [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Payments for milestones | $ 6,000,000 | |||||||||||||||
Discount rate | 8.00% | 8.00% | 6.60% | 8.00% | ||||||||||||
Credit and risk-adjusted discount rate | 21.00% | 45.00% | ||||||||||||||
Cash Holdback [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Cash | $ 600,000 | 6,400,000 | ||||||||||||||
Sale of common shares | $ 600,000 | |||||||||||||||
Stock Holdback [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Stock issued during the period | shares | 229,885 | |||||||||||||||
Stock Holdback One [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Stock issued during the period | shares | 1,900,000 | |||||||||||||||
Clinical Trial and Data Publication Milestone [Member] | Milestone Contingent Consideration [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Payments for milestones | $ 1,500,000 | |||||||||||||||
CMS Specified Lung Cancer [Member] | Milestone Contingent Consideration [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Payments for milestones | 3,000,000 | |||||||||||||||
CMS Reimbursement Milestones [Member] | Milestone Contingent Consideration [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Payments for milestones | 1,500,000 | |||||||||||||||
Chronix Biomedical, Inc [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Fair value of intangible asset | $ 46,800,000 | $ 46,800,000 | ||||||||||||||
Discount rate | 12.00% | 12.00% | 12.00% | |||||||||||||
Deferred tax liability | 1,800,000 | |||||||||||||||
Transaction costs | $ 635,000,000,000 | $ 635,000,000,000 | ||||||||||||||
Goodwill | 15,000,000 | 15,000,000 | $ 15,043,000 | [2] | [2] | |||||||||||
Insight Merger Agreements [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Cash | 7,000,000 | |||||||||||||||
Sale of common shares | 5,000,000 | |||||||||||||||
Merger consideration | 11,400,000 | |||||||||||||||
Common stock delivered average value | 5,000,000 | |||||||||||||||
Fair value of intangible asset | $ 14,700,000 | |||||||||||||||
Discount rate | 35.00% | |||||||||||||||
Finite-Lived Intangible Assets, Remaining Amortization Period | 5 years | |||||||||||||||
Operating lease, right of use liability | $ 500,000 | |||||||||||||||
Operating lease, right use of asset | $ 100,000 | |||||||||||||||
Merger Agreements [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Trading days | Days | 5 | |||||||||||||||
Acquisition of offsetting | 1,800,000 | $ 1,300,000 | ||||||||||||||
Deferred tax liability | $ 1,300,000 | |||||||||||||||
Purchase Agreement [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Common stock value | $ 5,000 | |||||||||||||||
Development Agreement [Member] | Maximum [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Estimated clinical trial expense | 16,000,000 | |||||||||||||||
Development Agreement [Member] | Razor Genomics, Inc. [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Clinical trial expense reserve amount | $ 3,400,000 | 4,000,000 | ||||||||||||||
Development Agreement [Member] | Razor Genomics, Inc. [Member] | CMS Final [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Milestone payment. | $ 4,000,000 | |||||||||||||||
Development Agreement [Member] | Razor Genomics, Inc. [Member] | CMS Final [Member] | Determa Rx [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Property, Plant and Equipment, Estimated Useful Lives | 10 | |||||||||||||||
Development Agreement [Member] | Encore Clinical, Inc. [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Research and Development Arrangement, Contract to Perform for Others, Costs Incurred, Gross | 3,000,000 | |||||||||||||||
Development Agreement [Member] | Encore Clinical, Inc. [Member] | Minority Shareholders [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Sale of common shares | $ 3,000,000 | |||||||||||||||
Equity method investment, description | If the issuance of shares of common stock having a market value of $ | |||||||||||||||
Laboratory Agreement [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Payment obligation amount. | $ 450,000 | |||||||||||||||
Lease Expiration Date | Sep. 29, 2021 | |||||||||||||||
Chronix Merger Agreement [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Sale of common shares | $ 1,430,000 | |||||||||||||||
Stock issued during the period | shares | 648,000 | |||||||||||||||
Merger consideration | 4,000,000 | $ 4,000,000 | ||||||||||||||
Business combination assumed liabilities | $ 1,870,000 | $ 1,870,000 | ||||||||||||||
Closing price per share | $ / shares | $ 5.09 | $ 5.09 | ||||||||||||||
Business combination settlement net | $ 550,000 | $ 550,000 | ||||||||||||||
Merger Agreement [Member] | Chronix Biomedical, Inc [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Amount of liabilities | 4,600,000 | $ 4,600,000 | $ 8,250,000 | |||||||||||||
Value added tax term of contract | 3 years 6 months | |||||||||||||||
Merger Agreement [Member] | Chronix Biomedical, Inc [Member] | German Customer [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Upfront payment received | € | € 3.7 | |||||||||||||||
Deferred Revenue | 738,000 | $ 738,000 | ||||||||||||||
Merger Agreement [Member] | Chronix Biomedical, Inc [Member] | Maximum [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Business combination consideration transferred | $ 14,000 | |||||||||||||||
Earnout percentage on collections for sales | 15.00% | |||||||||||||||
Earnout percentage on collections for sale or license | 75.00% | |||||||||||||||
Merger Agreement [Member] | Chronix Biomedical, Inc [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Discount rate | 12.00% | 12.00% | 12.00% | |||||||||||||
[1] | Oncocyte recorded certain right-of-use assets and liabilities for operating leases in accordance with ASC 842 (see Notes 3 and 10). | |||||||||||||||
[2] | Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in the Insight Merger and the Chronix Merger (see Note 3). |
Schedule of Goodwill and Intang
Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2021 | Dec. 31, 2020 | Apr. 15, 2021 | Feb. 24, 2021 | [4] | Jan. 31, 2020 | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||||||
Goodwill | $ 24,237 | $ 9,187 | $ 15,043 | $ 9,187 | |||||
Acquired intangible assets - customer relationship | 440 | 440 | |||||||
Total intangible assets | 95,174 | 15,090 | |||||||
Accumulated amortization | [1] | (1,462) | (81) | ||||||
Intangible assets, net | 93,712 | 15,009 | |||||||
DetermaIO [Member] | |||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||||||
Intangible assets acquired IPR&D | [2] | 14,650 | 14,650 | ||||||
TheraSure [Member] | |||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||||||
Intangible assets acquired IPR&D | [3] | 46,800 | |||||||
Razor Genomics, Inc. [Member] | |||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||||||
Total intangible assets | 33,284 | $ 33,284 | |||||||
Insight Merger Agreements [Member] | |||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||||||
Goodwill | [5] | 9,194 | 9,187 | ||||||
Chronix Biomedical, Inc [Member] | |||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||||||
Goodwill | $ 15,043 | [5] | [5] | $ 15,000 | |||||
[1] | Amortization of intangible assets is included in “Cost of revenues – amortization of acquired intangibles” on the condensed consolidated statements of operations because the intangible assets pertain directly to the revenues generated from the acquired intangibles. | ||||||||
[2] | See Note 3 for information on the Insight Merger. | ||||||||
[3] | See Note 3 for information on the Chronix Merger. | ||||||||
[4] | This balance will be amortized over the remaining useful life of the Razor asset, approximating 8.5 years, as of the February 24, 2021 acquisition date, with the amortization expense included in “Cost of revenues – amortization of acquired intangibles” on the condensed consolidated statements of operations. | ||||||||
[5] | Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in the Insight Merger and the Chronix Merger (see Note 3). |
Shareholders_ Equity (Details N
Shareholders’ Equity (Details Narrative) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock par value | $ 0 | $ 0 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 230,000,000 | 230,000,000 |
Common stock par value | $ 0 | $ 0 |
Common stock, shares issued | 90,316,308 | 69,116,802 |
Common stock, shares outstanding | 90,316,308 | 69,116,802 |
Common stock purchase warrants, shares issued | 3,128,669 | |
Common stock purchase warrants, shares outstanding | 3,128,669 | |
Minimum [Member] | ||
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||
Common stock purchase warrants, exercise price | $ 1.69 | |
Maximum [Member] | ||
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Line Items] | ||
Common stock purchase warrants, exercise price | $ 5.50 |
Summary of Stock Option Activit
Summary of Stock Option Activity (Details) | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
2010 Stock Option Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for grant options, beginning of period | |
Number of options outstanding, beginning of period | 1,218,000 |
Weighted average exercise price, options outstanding, beginning of period | $ / shares | $ 3.55 |
Shares available for grant options exercised | |
Number of options outstanding, options exercised | (159,000) |
Weighted average exercise price, options exercised | $ / shares | $ 2.26 |
Shares available for grant options forfeited, cancelled and expired | |
Number of options outstanding, options forfeited, cancelled and expired | |
Weighted average exercise price, options forfeited, cancelled and expired | $ / shares | |
Shares available for grant outstanding, end of period | |
Number of options outstanding, end of period | 1,059,000 |
Weighted average exercise price, outstanding end of period | $ / shares | $ 3.72 |
Number of options outstanding, exercisable, end of period | 1,059,000 |
Weighted average exercise price, exercisable, end of period | $ / shares | $ 3.68 |
Number of options outstanding, options forfeited, cancelled and expired | |
2018 Plan Activity [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for grant options, beginning of period | 3,346,000 |
Number of options outstanding, beginning of period | 7,212,000 |
Weighted average exercise price, options outstanding, beginning of period | $ / shares | $ 2.60 |
Shares available for grant options exercised | |
Number of options outstanding, options exercised | (710,000) |
Weighted average exercise price, options exercised | $ / shares | $ 3 |
Shares available for grant options forfeited, cancelled and expired | 332,000 |
Number of options outstanding, options forfeited, cancelled and expired | 332,000 |
Weighted average exercise price, options forfeited, cancelled and expired | $ / shares | $ 3.49 |
Shares available for grant outstanding, end of period | 9,393,000 |
Number of options outstanding, end of period | 10,359,000 |
Weighted average exercise price, outstanding end of period | $ / shares | $ 3.58 |
Number of options outstanding, exercisable, end of period | 2,935,000 |
Weighted average exercise price, exercisable, end of period | $ / shares | $ 2.62 |
Number of RSUs Outstanding, beginning of period | 201,000 |
Shares available for grant options RSUs vested | |
Number of options outstanding, option RSUs vested | |
Number of RSUs Outstanding, option RSUs vested | (136,000) |
Shares available for grant options RSUs granted | (96,000) |
Number of options outstanding, option RSUs granted | |
Number of RSUs Outstanding, option RSUs granted | 96,000 |
Weighted average exercise price, option RSUs granted | $ / shares | |
Shares available for options increase from plan amendment | 10,000,000 |
Number of options outstanding, options increase from plan amendment | |
Number of RSUs Outstanding, options increase from plan amendment | |
Shares available for grant options granted | (4,189,000) |
Number of options outstanding, option granted | 4,189,000 |
Number of RSUs Outstanding, option granted | |
Weighted average exercise price, option granted | $ / shares | $ 5.14 |
Number of RSUs Outstanding, options exercised | |
Number of options outstanding, options forfeited, cancelled and expired | (332,000) |
Number of RSUs Outstanding, options forfeited, canceled and expired | |
Number of RSUs Outstanding, end of period | 161,000 |
Summary of Stock-based Compensa
Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1,996 | $ 1,361 | $ 3,286 | $ 2,298 |
Share-based Payment Arrangement, Option [Member] | Cost of Revenues [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 74 | 18 | 96 | 22 |
Share-based Payment Arrangement, Option [Member] | Research and Development Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 379 | 413 | 636 | 608 |
Share-based Payment Arrangement, Option [Member] | Selling and Marketing Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 308 | 144 | 541 | 248 |
Share-based Payment Arrangement, Option [Member] | Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1,235 | $ 786 | $ 2,013 | $ 1,420 |
Schedule of Assumptions Used to
Schedule of Assumptions Used to Calculate Fair Value of Stock Options (Details) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Expected life (in years) | 6 years | 6 years |
Risk-free interest rates | 0.88% | 1.20% |
Volatility | 100.67% | 104.52% |
Dividend yield |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
May 31, 2018 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2018 | Dec. 31, 2020 | |
2010 Stock Option Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock, shares authorized | 5,200,000 | ||||||
2010 Stock Option Plan [Member] | Employees and Consultants [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercise prices ranging, lower limit | $ 2.30 | ||||||
Exercise prices ranging, upper limit | $ 3.15 | ||||||
Performance-Based Options [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share based compensation expenses | $ 0 | $ 360,000 | $ 0 | $ 466,000 | |||
Option vested | 215,000 | 265,000 | |||||
Performance-based options outstanding | 0 | 0 | |||||
Performance-Based Options [Member] | DetermaDx [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of option granted during the period | 125,000 | ||||||
2018 Plan Activity [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of option granted during the period | 4,189,000 | ||||||
Option vested | |||||||
Performance-based options outstanding | 10,359,000 | 10,359,000 | 7,212,000 | ||||
Number of common stock reserved for future issuance | 21,000,000 | 21,000,000 |
Schedule of Consolidated Revenu
Schedule of Consolidated Revenues Generated by Unaffiliated Customers (Details) - Revenue Benchmark [Member] - Product Concentration Risk [Member] | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |||||
Ceded Credit Risk [Line Items] | ||||||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% | ||||
Medicare For Determa Rx [Member] | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Concentration risk, percentage | 21.00% | [1] | 23.00% | [1] | ||||
Medicare Advantage for DetermaRx [Member] | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Concentration risk, percentage | 12.00% | 17.00% | ||||||
Pharma Services Company A [Member] | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Concentration risk, percentage | [1] | 72.00% | [1] | 65.00% | ||||
Pharma Services Company C [Member] | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Concentration risk, percentage | [1] | 17.00% | [1] | 19.00% | ||||
License Company D [Member] | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Concentration risk, percentage | 49.00% | 32.00% | ||||||
License Company B [Member] | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Concentration risk, percentage | 11.00% | |||||||
[1] | Less than 10% |
Schedule of Consolidated Reve_2
Schedule of Consolidated Revenues Attributable to Products or Services (Details) - Revenue Benchmark [Member] - Product Concentration Risk [Member] | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Determa Rx [Member] | ||||
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 32.00% | 7.00% | 40.00% | 7.00% |
Pharma Services [Member] | ||||
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 8.00% | 93.00% | 22.00% | 93.00% |
License [Member] | ||||
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 60.00% | 38.00% |
Schedule of Percentage of Conso
Schedule of Percentage of Consolidated Revenues Attributable to Geographical Locations (Details) - Revenue Benchmark [Member] - Geographic Concentration Risk [Member] | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
UNITED STATES | ||||
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 32.00% | 26.00% | 43.00% | 33.00% |
Outside United States - Pharma Services [Member] | ||||
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 8.00% | 74.00% | 19.00% | 67.00% |
Outside United States - Licensing [Member] | ||||
Ceded Credit Risk [Line Items] | ||||
Concentration risk, percentage | 60.00% | 38.00% |
Schedule of Accounts Receivable
Schedule of Accounts Receivable from Third Party and Other Customers (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Policyholder Account Balance [Line Items] | ||
Total | $ 1,025 | $ 203 |
Medicare For Determa Rx [Member] | ||
Policyholder Account Balance [Line Items] | ||
Total | 444 | 91 |
Medicare Advantage for DetermaRx [Member] | ||
Policyholder Account Balance [Line Items] | ||
Total | 467 | |
Pharma Services Company A [Member] | ||
Policyholder Account Balance [Line Items] | ||
Total | $ 114 | $ 112 |
Schedule of Percentage of Total
Schedule of Percentage of Total Consolidated Accounts Receivables (Details) - Accounts Receivable [Member] - Customer Concentration Risk [Member] | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Medicare For Determa Rx [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration risk, percentage | 43.00% | 45.00% |
Medicare Advantage for DetermaRx [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration risk, percentage | 46.00% | |
Pharma Services Company A [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration risk, percentage | 11.00% | 35.00% |
Disaggregation of Revenues an_3
Disaggregation of Revenues and Concentration Risk (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Disaggregation Of Revenues And Concentration Risk | ||
Accounts receivable | $ 1,025 | $ 203 |
Increase in accounts receivables | 3,200 | |
Offset of cash collected | 2,200 | |
Deferred revenue | $ 200 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Razor Genomics, Inc. [Member] | |||
Entity Listings [Line Items] | |||
Partial release of valuation allownces | $ 1.8 | $ 9.4 | $ 1.1 |
Schedule of Right-of-use Assets
Schedule of Right-of-use Assets, Machinery and Equipment, Net, and Construction in Progress (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Right-of-use assets | [1] | $ 3,397 | $ 3,397 |
Machinery and equipment | 5,603 | 2,480 | |
Accumulated depreciation and amortization | (1,999) | (1,440) | |
Right-of-use assets, machinery and equipment, net | 7,001 | 4,437 | |
Construction in progress | 344 | 2,087 | |
Right-of-use assets, machinery and equipment, net, and construction in progress | $ 7,345 | $ 6,524 | |
[1] | Oncocyte recorded certain right-of-use assets and liabilities for operating leases in accordance with ASC 842 (see Notes 3 and 10). |
Right-of-use assets, machiner_3
Right-of-use assets, machinery and equipment, net, and construction in progress (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 206 | $ 67 | $ 327 | $ 127 |
Schedule of Supplemental Cash F
Schedule of Supplemental Cash Flow Information Related to Operating and Financing Lease (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 499 | $ 174 |
Operating cash flows from financing leases | 19 | 5 |
Financing cash flows from financing leases | 84 | 35 |
Operating lease, including lease acquired in Insight Genetics business combination | $ 536 |
Schedule of Supplemental Balanc
Schedule of Supplemental Balance Sheet Information Related to Operating and Financing Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | |
Lessor, Lease, Description [Line Items] | |||
Right-of-use assets, net | [1] | $ 3,397 | $ 3,397 |
Machinery and equipment, net | 2,949 | $ 3,262 | |
Operating and Financing Leases [Member] | |||
Lessor, Lease, Description [Line Items] | |||
Right-of-use assets, net | 2,683 | ||
Right-of-use lease liabilities, current | 252 | ||
Right-of-use lease liabilities, noncurrent | 4,092 | ||
Total operating lease liabilities | 4,344 | ||
Machinery and equipment | 537 | ||
Accumulated depreciation | (270) | ||
Machinery and equipment, net | 267 | ||
Current liabilities | 118 | ||
Noncurrent liabilities | 170 | ||
Total financing lease liabilities | $ 288 | ||
Weighted average remaining lease term, Operating leases | 5 years 9 months 18 days | ||
Weighted average remaining lease term, Financing leases | 2 years 4 months 24 days | ||
Weighted average discount rate, Operating leases | 11.18% | ||
Weighted average discount rate, Financing leases | 11.43% | ||
[1] | Oncocyte recorded certain right-of-use assets and liabilities for operating leases in accordance with ASC 842 (see Notes 3 and 10). |
Schedule of Future Minimum Leas
Schedule of Future Minimum Lease Commitments for Operating and Financing Leases (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Operating Lease [Member] | |
2021 | $ 532 |
2022 | 1,096 |
2023 | 1,000 |
2024 | 890 |
2025 | 869 |
Thereafter | 1,594 |
Total minimum lease payments | 5,981 |
Less amounts representing interest | (1,636) |
Present value of net minimum lease payments | 4,345 |
Financing Lease [Member] | |
2021 | 82 |
2022 | 124 |
2023 | 124 |
2024 | |
2025 | |
Thereafter | |
Total minimum lease payments | 331 |
Less amounts representing interest | (42) |
Present value of net minimum lease payments | $ 288 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Dec. 23, 2019USD ($)ft² | Jun. 30, 2021USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
[custom:PaymentsDueToTheLandLordForEarlyCancellation] | $ 262,000 | |
Severance Costs | 600,000 | |
Laboratory Equipment [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Payment obligation amount. | 331,000 | |
Office Lease Agreement [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Area of land | ft² | 26,800 | |
Payments for rent | $ 61,640 | |
Payments of tenant improvement allowance | $ 1,340,000 | |
Percentage of administrative fee paid on original cost of equipment | 1.50% | |
Security Deposit | $ 150,000 | |
Line of Credit, Current | $ 1,700,000 | |
Office Lease Agreement [Member] | Landlord [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Interest rate on lease agreement | 4.00% | |
Office Lease Agreement [Member] | Monthly Rent [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Interest rate on lease agreement | 3.50% | |
Obligated to pay expenses and taxes percentage | 43.70% | |
Office Lease Agreement [Member] | First Ten Calendar [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Interest rate on lease agreement | 50.00% | |
Laboratory Agreement [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Payment obligation amount. | $ 450,000 | |
Lease Expiration Date | Sep. 29, 2021 | |
Razor's Laboratory Agreement [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Lease Expiration Date | Mar. 31, 2023 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Feb. 09, 2021 | Jan. 20, 2021 | Jan. 02, 2020 | Apr. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2021 | Dec. 31, 2020 |
Entity Listings [Line Items] | |||||||||
Sale of common shares value | $ 10,746 | $ 18,342 | |||||||
Common stock, par value | $ 0 | $ 0 | |||||||
Offering [Member] | |||||||||
Entity Listings [Line Items] | |||||||||
Number of common stock, shares issued | 8,947,000 | ||||||||
Proceeds from offering | $ 37,500 | ||||||||
Share price per share | $ 4.50 | ||||||||
Ronald Andrews [Member] | |||||||||
Entity Listings [Line Items] | |||||||||
Consulting fees | $ 300 | ||||||||
Subscription Agreements [Member] | Institutional Investors [Member] | |||||||||
Entity Listings [Line Items] | |||||||||
Number of common stock, shares issued | 7,301,410 | ||||||||
Sale of common shares value | $ 25,000 | ||||||||
Common stock, par value | $ 0 | ||||||||
Share price per share | $ 3.424 | ||||||||
Pura Vida Investments LLC [Member] | |||||||||
Entity Listings [Line Items] | |||||||||
Number of common stock, shares issued | 3,523,776 | 4,733,700 | |||||||
Shares issued, price per share | $ 2.156 | $ 2.27 | |||||||
Proceeds from offering | $ 7,600 | ||||||||
Minimum beneficial ownership percentage | 5.00% | ||||||||
Sale of common shares value | $ 10,750 | ||||||||
Broadwood Capital, LP [Member] | Offering [Member] | |||||||||
Entity Listings [Line Items] | |||||||||
Number of common stock, shares issued | 600,000 |
Loan Payable to Silicon Valle_2
Loan Payable to Silicon Valley Bank (Details Narrative) - USD ($) | Apr. 23, 2020 | Apr. 02, 2020 | Oct. 17, 2019 | Feb. 21, 2017 | Jun. 30, 2021 | Jun. 30, 2020 | Oct. 17, 2021 | Mar. 23, 2017 |
Short-term Debt [Line Items] | ||||||||
Amortization of deferred financing costs | $ 33,000 | $ 57,000 | ||||||
Interest rate | 3.25% | |||||||
Warrant [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Warrants to purchase, shares | 8,247 | 7,321 | ||||||
Warrant exercise price, per share | $ 4.85 | $ 5.46 | ||||||
Amended Loan Agreement [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of credit, description | Oncocyte may prepay in full the outstanding principal balance at any time, subject to a prepayment fee equal to 2.0% of the outstanding principal balance if prepaid more than one year but less than two years after October 17, 2019, or 1.0% of the outstanding principal balance if prepaid two years or more after October 17, 2019. Any amounts borrowed and repaid may not be reborrowed. | |||||||
Amended Loan Agreement [Member] | Bank Warrant [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Debt instrument, final payment | $ 200,000 | |||||||
Unamortized deferred financing cost | $ 34,000 | |||||||
Warrants to purchase, shares | 98,574 | |||||||
Warrant exercise price, per share | $ 1.69 | |||||||
Amended Loan Agreement [Member] | Share-based Payment Arrangement, Tranche One [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit, Current | $ 3,000,000 | |||||||
Repayments of Lines of Credit | 400,000 | |||||||
Debt instrument, final payment | 116,000 | |||||||
Amended Loan Agreement [Member] | Share-based Payment Arrangement, Tranche Two [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit, Current | $ 2,000,000 | 2,000,000 | ||||||
Line of credit, description | The credit line under the Amended Loan Agreement may be increased by an additional $ | |||||||
Additional Paid in Capital | $ 20,000,000 | |||||||
Interest rate | 5.00% | |||||||
Amended Loan Agreement [Member] | Share-based Payment Arrangement, Tranche Two [Member] | Bank Warrant [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Percentage for warrant exercise price, per share | 0.02% | |||||||
Diluted equity outstanding | $ 1,000,000 | |||||||
Loan Deferral Agreement [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Debt instrument, maturity date description | Under the Loan Deferral Agreement, the Bank agreed to (i) extend the scheduled maturity date of the Amended Loan Agreement from March 31, 2022 to September 30, 2022, and (ii) deferred the principal payments by an additional 6 months whereby payments of interest only on the Bank loan principal balance will be due monthly from May 1, 2020 through October 1, 2020, followed by 23 monthly payments of principal and interest beginning on November 1, 2020, all provided at no additional fees to Oncocyte. | |||||||
Loan and Security Agreement [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Amount borrowed | $ 2,000,000 | |||||||
Periodic payment term | Payments of interest only on the principal balance were due monthly from the loan funding date, March 23, 2017, through October 31, 2017, and, beginning on November 1, 2017 | |||||||
Periodic payments of principal and interest | $ 67,000 | |||||||
Debt instrument, maturity date | Apr. 1, 2020 | |||||||
Amortization of deferred financing costs | $ 116,000 | |||||||
Prepayment fee if prepaid two years or more | 1.00% | |||||||
PPP [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Amount borrowed | $ 1,140,930 | |||||||
Debt instrument, maturity date | Apr. 23, 2022 | |||||||
Debt instrument, interest rate | 1.00% | |||||||
Interest expense | $ 11,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - A T M Offering Agreement [Member] | 1 Months Ended |
Jul. 31, 2021USD ($)$ / sharesshares | |
Subsequent Event [Line Items] | |
Number of common stock sold | shares | 1,108,650 |
Share, price per share | $ / shares | $ 5.63 |
Proceeds from sale of stock | $ 6,240,000 |
Commission fees | $ 187,000 |