- Since launching DetermaRx™ , we have identified over 500 patients as having a “high risk” of recurrence of their lung cancer. Without action, nearly half of these patients are likely to lose their life within five years. Instead, the patients classified as high-risk are indicated to receive chemotherapy, boosting their odds of survival to over 90%.
- We feel the best measurement of adoption growth for DetermaRx is the number of physicians being trained to use the test, which we call onboarding, as well as the adoption by community cancer-treatment centers and hospital systems. When we no longer have the headwinds caused by Covid 19, these physicians and hospitals will be responsible for ordering DetermaRx for their patients. Growth in physicians trained and hospital adoption should drive test adoption and revenue growth.
- DetermaRx’s clinical results are attracting a rapidly growing base of prescribing physicians. In the third quarter, the pool of onboarded prescribing physicians increased by 22% from Q2, and 150% year over year, to a total of 367 physicians. Similarly, onboarded hospital and account sites increased 24% from Q2 and increased 225% year over year, to a total of 218 sites.
Hi everyone.
Our consolidated revenues for the third quarter of 2021 were approximately $1 million, representing 77% growth year-over-year. Combined, revenues for the first three quarters of 2021 are $4.1 million, which represents a 480% increase year-over-year.
Progress with DetermaRx™ remains solid, with 289 samples for the third quarter, a modest increase over Q2 despite the substantial slowdown in early-stage cancer surgeries caused by the Delta Variant. Since launching DetermaRx, we have identified over 500 patients as having a “high risk” of recurrence of their lung cancer. Without action, nearly half of these patients are likely to lose their life within five years. Instead, the patients classified as high-risk patients are indicated to receive chemotherapy, boosting their odds of survival to over 90%.
I would like to make an important point here. We feel the best measurement of adoption growth for DetermaRx is the number of physicians being trained to use the test, which we call onboarding, as well as the adoption by community cancer treatment centers and hospital systems. When we no longer have the headwinds caused by Covid 19, these physicians and hospitals will be responsible for ordering DetermaRx for their patients. Growth in physicians trained and hospital adoption should drive test adoption and revenue growth. DetermaRx’s clinical results are attracting a rapidly growing base of prescribing physicians. In the third quarter, the pool of onboarded prescribing physicians increased by 22% from Q2, and 150% year over year. Similarly, onboarded hospital and account sites increased 24% from Q2 and increased 225% year over year. Again, our key performance metrics of onboarding of physicians as well as adding new hospitals and community treatment locations are the best measure of DetermaRx’s adoption by physicians that will generate higher sample growth and greater revenues, so it’s worth keeping an eye on those.
Third-quarter revenues associated with DetermaRx were $402,000, a 93% increase year over year and a modest decrease from Q2, attributable to the Pandemic headwinds in July and August. Particularly in the South and Southeast regions of the U.S. that were hard hit by COVID-19, as well as California, which was in lock-down, we saw a significant drop in early-stage lung cancer surgeries and related testing. According to a CNN report, surgeries were down 38%. The Pandemic headwind was strongest in the months of July and August. We did, however, see a solid rebound in samples ordered beginning in September, and this strengthening continued through October. We received $260,000 in licensing revenues in Q3 from licensing of our proprietary molecular tests to third parties in Europe and China.
Our Pharma Services business also made a modest contribution of about $282,000, a decrease of 19% year over year and an increase of 68% quarter over quarter. As we have discussed previously, revenues in Pharma Services are lumpy as we depend on sample volumes from biopharma clinical trials, and because of the ongoing Covid challenges, we received fewer samples from our Pharma partners for testing. We expect a rebound in samples in Q4 as clinical trials resume. As I mentioned in our second quarter call, we signed a major Services Agreement with a large molecular platform company in June and have spent the last couple of months investing in and installing instruments in our Nashville lab facility. We believe increasing our work for diagnostic companies should drive a rising and more predictable level of Services revenue.
Turning to the balance sheet, as of September 30, 2021, we had cash, cash equivalents, and marketable securities of $44.3 million. In July, two institutional investors increased their position in Oncocyte by acquiring 1.1 million shares via our ATM at an average price of $5.63 per share, providing a total of $6.2 million to Oncocyte. We use the ATM strategically in response to investor demand, not simply offering stock into the market, and this was a perfect example of the ATM in action. Additionally, we collaborated with a long-term investor to exercise, for cash, warrants issued in a 2016 offering. Oncocyte received $1.8 million in non-dilutive capital when the legacy warrants were exercised.
With that being said, we are in a solid financial position and are well-funded to fuel our engines of long-term revenue growth:
- DetermaIO™, our immune-therapy response predictor, which we JUST launched via our early access program. DetermaIO and DetermaRx together will establish us as the most differentiated precision diagnostic company for cancer treatment selection
- DetermaCNI™, our blood-based treatment-monitoring assay that we expect to launch Research-Use Only in the first quarter of 2022, which completes our oncology menu and offers a complete solution for treatment selection and response-monitoring for patients throughout their journey
- DetermaRx™, our reimbursed lung cancer recurrence predictor
- And TheraSure transplant assay for the early detection of transplant rejection that we expect to launch in the first half of 2022.
Cash used in operations for the quarter was $10.0 million for normal operating burn, plus approximately $1,300,000 in non-recurring acquisition, legal, and business development-related payments made in the quarter. Excluding non-recurring items, we expect our base operating cash burn to remain stable. We will continue to invest in our diagnostic tests to create or gain market share; to solidify proof of concept through studies and registries, and strengthen collaborations with strategic partners.
Non-GAAP operating loss, as adjusted, for the third quarter of 2021 was $9.3 million, an increase of $3.3 million as compared to the same period in 2020. GAAP operating loss, as reported, for the third quarter of 2021 was $13.6 million, an increase of $7.4 million from the third quarter of 2020. We have provided a reconciliation between GAAP and non-GAAP operating losses in the financial tables included with our earnings release, which we believe is helpful in understanding our ongoing operations.
Cost of revenues for the current quarter was approximately $1.9 million, including $990 thousand in non-cash amortization expenses from our Razor asset acquired in February. Cost of revenues also includes testing services we perform for our pharma customers. It is important to note that as we ramp our testing volumes, we expect to see an improvement in our Gross Margins in future quarters for the DetermaRx test.
Research and Development expenses for the third quarter 2021 were $3.1 million as compared to $2.6 million for the same period in 2020. General and Administrative expenses for the third quarter of 2021 were $5.5 million, as compared to $5.0 million for the same period in 2020, due primarily to increases in personnel and related expenses. Sales and Marketing expenses for the third quarter of 2021 were $2.9 million, as compared to $1.6 million for the same period in 2020, primarily attributable to ramp up in sales and marketing activities for our continued commercialization efforts of DetermaRx and Determa IO. For the third quarter of 2021, we reported a net loss of $13.8 million, or 15 cents per share, as compared to $6.8 million, or 10 cents per share for the third quarter of 2020.
We have a good history of making timely, thoughtful strategic investments in clinical studies and additional sales and marketing initiatives which have helped us begin to build commercial momentum in 2021. We aim to extend that momentum by growing the sales of DetermaRx. In November we began the U.S. commercial launch of DetermaIO and soon we also expect to launch DetermaTx™ and DetermaCNI. We will also invest thoughtfully behind the planned launch of TheraSure transplant test for transplant rejection monitoring by the end of the first quarter of 2022.
That concludes my remarks concerning our financial highlights.
