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Circling Back On OncoCyte Stock

Mar. 04, 2021 3:50 PM ETOncoCyte Corporation (OCX)11 Comments


  • Today, we circle back on OncoCyte for the first time in over a year.
  • This small cancer diagnostic firm is in the early stages of its commercialization efforts and just made a small, strategic "bolt-on" acquisition.
  • We update our investment theme on OncoCyte in the paragraphs that follow.
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It has been just over a year since we did a piece on small diagnostic company OncoCyte (NASDAQ:OCX). We recommended the name for a small "watch item" position when they sold right at $2.50 a share.

The company has seen some positive analyst action on its shares so far in 2021 and posted some minor news this morning. Given that, it seems a good time to circle back on Oncocyte and update its investment case. A full analysis follows below.

Company Overview:

OncoCyte is a small diagnostic concern based in Southern California. The company is focused on the development and commercialization of proprietary laboratory-developed tests for the detection of cancer. The shares currently trade right at $4.00 a share and sport an approximate market capitalization of $400 million.

Early-Stage Lung Cancer can be Deadly

Source: December Company Presentation

The company aims to be a leader in early detection cancer tests. The company just launched DetermaRx in mid-2020 after garnering approval. OncoCyte received their final pricing from CMS in the third quarter, allowing the company to bill and collect Medicare revenues.

Clinical Papers

Source: December Company Presentation

DetermaRx is a treatment stratification test to identify patients with stage I and IIA non-squamous NSCLC who may benefit from adjuvant chemotherapy. Rollout was just happening in the third quarter and the company only posted $600,000 worth of revenues during the quarter.

Outperforms NCCN Criteria

Source: December Company Presentation

The company also is finalizing development of DetermaIO which should hit the market soon. This product is described on the company's website as "a 27-target multivariate gene expression test performed on FFPE biopsy specimens that measures the presence of subtypes of infiltrating inflammatory cells, and the presence or absence of a differentiated stromal microenvironment."

Addresses Important Unmet Need

Source: December Company Presentation

Management also stressed on its third quarter press release that it wanted to use its experience and facilities

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This article was written by

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We are a team of analysts led by Bret Jensen, Chief Investment Strategist at Simplified Asset Management.

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Analyst’s Disclosure: I am/we are long OCX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have small 'watch item' position in OCX.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

**Gross** margins at 2.43% and their revenue growth is all in the past IMO. I think these guys are toast
@The Insiders Forum
Do you possibly have any additional new perspective on Oncocyte at this time?
Blood tests are a high margin business.
So why do they want to get more into the business of providing biopharma Services....that's a LOW MARGIN business.

Only thing I can come up with is they don't have confidence that their HIGH MARGIN blood tests are going to pan out.

Your thoughts please?
@alphatraz ...and now their revenues went from $2M to $1M qoq

I think these guys have lost their mojo.

Even if they level back up to $2M/quarter, that's a 8M annual run rate...with surprisingly low margins...for a 200M market cap. And they've already demonstrated that they can't do any real science for themselves; they have to buy it from others, so...I think it's a hard PASS.
@alphatraz ...and now gross margins are up to a whopping 38% and they are still burning cash
20200325 : no revenues
20200512 : $16K
20200729 : $0.14M
20201112 : $0.56M
20210316 : $0.5M
20210517 : $1.12M
20210810 : $2.0M

NOTE: The CEO bought at $4.79 this past March
@alphatraz ...they are now at $2.02 so hey kids that's proof positive that it's not always safe to blindly follow insider purchases.
@Bret Jensen so now in addition to lung and breast cancer, their tests are shown to be predictive in bladder cancer; definitely good news.
Fair and balanced article. Though it missed the very important collaboration between OCX and the Chinese BNR Burning Rock. A revisit and an update will be appreciated, especially when reviewing BNR's market possibilities in China and the Orient. Thank you.
Surprised you didn't mention the Rx distribution agreement in China. Huge market for OXC.
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