Oncocyte Corp., a diagnostics technology company, plans to use $29.1 million in new funds to drive development and commercialization efforts of its transplant assay.
The company’s five largest shareholders, including Bay Area-based Bio-Rad Laboratories Inc., this month bought $29.1 million of common shares in a registered direct offering priced at $2.05 per share.
“We’re going to make it easier for transplant doctors to manage their patients’ care,” Chief Executive Joshua Riggs said in a statement. “Securing the necessary funding to complete our FDA (In-Vitro Diagnostic) clearance program gets us closer to making that a reality.”
Broadwood Partners L.P., one of Oncocyte’s largest investors, also increased its stake in the company, according to a Feb. 10 filing.
Broadwood acquired 5.2 million additional shares in the company at an average price of $2.05 per share, amounting to an investment of $10.6 million.
Following this purchase, Broadwood now owns 11.6 million shares, or approximately 40.2% of the company.
Shares in Oncocyte (Nasdaq: OCX) rose 7.6% to $2.56 and a $73.2 million market cap at press time.
Focusing on $1B Transplant Market
Oncocyte’s tests can’t be used in clinical settings until they obtain IVD approval from the FDA and the equivalent in the European Union.
The company, which last month hired a part-time consulting chief medical officer, said that it’s working with both regulatory bodies to get approval.
“Early feedback from our beta sites is that we’ve built technology that is fast, reliable and easy to use,” Riggs said. “Following FDA clearance, we expect rapid adoption for clinical use at transplant centers across the U.S.”
Six hospitals and clinics have expressed interest in supporting Oncocyte’s FDA submission process, according to Riggs.
Oncocyte’s near-term strategy is to focus on the biggest issue facing the global $1 billion transplantation market – the body’s potential to reject a donor organ.
Its tests do so by detecting early evidence of graft organ damage in the blood by assessing a known biomarker called donor-derived cell-free DNA.
Oncocyte currently has four tests in its pipeline. One of its commercialized tests, VitaGraft Kidney, is said to detect signs of kidney transplant rejection up to 11 months faster than standard protocols.
Oncocyte is also making progress on its secondary strategic market, oncology.
It’s developing DetermaIO, a gene expression test that aims to predict the likelihood of patients responding to immunotherapies.
Results from a Phase 2 clinical trial, published last October in peer-reviewed journal Clinical Cancer Research, validated DetermaIO’s ability to identify which breast cancer patients were most likely to benefit from neoadjuvant atezolizumab therapy.
Oncocyte said that it expects to commercialize an oncology product line, which will include DetermaIO, “over the next 18 months.”
BioTime Spinoff
Irvine-based Oncocyte initially focused on making assays for lung cancer.
It moved from the Bay Area city of Alameda to Orange County in 2020.
Oncocyte went public in 2016 when it was spun off from another biotechnology company, BioTime Inc., which is now known as Lineage Cell Therapeutics (NYSE: LCTX).
Oncocyte’s first product was DetermaDX, a noninvasive liquid biopsy test aimed at detecting small masses of tissue in the lungs.
The company in 2020 announced it would cease work on DetermaDx because it was not meeting clinical endpoint requirements, causing shares to tumble 52% in the days following the announcement.
Oncocyte has faced more issues as of late.
In 2023, the company underwent a restructuring that resulted in laying off about 40% of its staff. Last year, the firm reported having an estimate of 57 employees at its Irvine office.
Previous CEO Ronnie Andrews stepped down and was replaced by Riggs as part of the restructuring.
Last month, the company appointed Dr. Paul Billings as the company’s consulting chief medical officer.
