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Response Genetics, Inc. Reports Second Quarter Financial Results And Operational Update

Stocks in this article: RGDX

Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2011, were $3.3 million, compared to $4.1 million at December 31, 2010. During the second quarter, cash was used to fund existing operations and sales growth. As a result of increases in revenues, accounts receivable balances grew from $4.7 million at December 31, 2010 to $6.4 million at June 30, 2011.

Second Quarter Corporate Development Highlights

Company Announces Search for CEO – On July 22, 2011, Kathleen Danenberg stepped down from the position of CEO and was appointed by the Board of Directors to serve as Founder and Executive Scientific and Technology Officer of the Company to focus her attention on the Company’s scientific research and development activities. Denise McNairn, Vice President, General Counsel and Secretary, will serve as the Company’s CEO on an interim basis, while the Company searches for a permanent successor to Ms. Danenberg.

To facilitate the search for a new CEO, the Board has engaged CTPartners, a leading executive search firm, to assist in identifying qualified candidates.

New ResponseDX™ Test Panel Launched – In June 2011, Response Genetics announced the nation-wide availability of its newest test panel, ResponseDX: Melanoma™, a proprietary, PCR-based diagnostic test that quantitatively analyzes mutations in the BRAF gene – a key component in cell signaling and growth. Such information can help physicians make treatment decisions for patients with this aggressive form of skin cancer.

Presentation at ASCO – The Company presented five abstracts at the 2011 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, IL. Data highlighted clinical results in non-small cell lung cancer (NSCLC) and esophageal cancer and novel approaches to improve cancer care . All studies presented used technology developed by Response Genetics to isolate RNA from formalin-fixed, paraffin-embedded (FFPE) archived tissue for quantitative RT-PCR analysis of gene expression.

Improved Capital Position The Company agreed to sell 1,175,512 shares of its common stock, at a price of $1.99 per share in a registered direct public offering to certain institutional investors. Net proceeds of approximately $2.2 million were received from the sale, after deducting estimated offering expenses. The closing of the offering took place on May 6, 2011. In addition, the Company has secured a $3 million line of credit with Silicon Valley Bank.

Second Quarter Gross Margin and Revenue per Case – Gross margin for the second quarter of 2011 was 58.2 percent compared to 54.4 percent for the first quarter of 2011. For the second quarter of 2011, the average revenue per case was $1,350 compared to $1,380 in the first quarter of 2011. Gross margin is defined as revenues less cost of revenues.

About Response Genetics, Inc.

Response Genetics Inc. (“RGI”) is focused on the development and sale of molecular diagnostic tests for cancer. RGI’s technologies enable extraction and analysis of genetic information from genes derived from tumor samples stored as formalin-fixed and paraffin-embedded specimens. In addition to diagnostic testing services, the Company generates revenue from the sales of its proprietary analytical pharmacogenomic testing services of clinical trial specimens to the pharmaceutical industry. RGI was founded in 1999, and its principal headquarters are located in Los Angeles, California. For more information, please visit www.responsegenetics.com.

Forward-Looking Statement Notice

Except for the historical information contained herein, this press release and the statements of representatives of RGI related thereto contain or may contain, among other things, certain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect to the Company’s plans, objectives, projections, expectations and intentions, such as the ability of the Company to successfully announce its second quarter 2011 financial statements and to continue to execute on its business strategy and operations, ths, and other statements identified by words such as “projects,” “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans” or similar expressions.

These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties, including those detailed in the Company’s filings with the Securities and Exchange Commission. Actual results, including, without limitation, actual sales results, if any, or the application of funds, may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company’s control). The Company undertakes no obligation to publicly update forward-looking statements, whether because of new information, future events or otherwise, except as required by law.

 

RESPONSE GENETICS, INC.

           

CONSOLIDATED BALANCE SHEETS

 

December 31,

2010

June 30,

2011

(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 4,120,074 $ 3,321,937
Accounts receivable 4,733,698 6,386,586
Prepaid expenses and other current assets   941,981   567,686
Total current assets 9,795,753 10,276,209
Property and equipment, net   805,817   1,307,513
Total assets $ 10,601,570   $ 11,583,722
 
LIABILITIES, COMMON STOCK CLASSIFED OUTSIDE OF STOCKHOLDERS’ EQUITY (DEFICIT) AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 1,247,151 $ 1,699,448
Accrued expenses 1,075,636 419,818
Accrued royalties 809,694 516,357
Accrued payroll and related liabilities 1,271,037 1,208,836
Deferred revenue   1,518,696   828,645
Total current liabilities 5,922,214 4,673,104
 
Deferred revenue, net of current portion   100,070   32,006
Total liabilities 6,022,284 4,705,110
 
Commitments and contingencies
 
Common stock classified outside of stockholders’ equity (deficit) 7,854,682 7,854,682
 
Stockholders’ equity (deficit)
Common stock, $0.01 par value; 50,000,000 shares authorized; 15,297,183 and 18,693,368 shares issued and outstanding at December 31, 2010 and June 30, 2011, respectively 122,942 134,327
Additional paid-in capital 40,612,785 43,283,397
Accumulated deficit (43,817,163 ) (44,161,397 )
Accumulated other comprehensive loss   (193,960 )   (232,397 )
Total stockholders’ equity (deficit)   (3,275,396)   (976,070 )
Total liabilities and stockholders’ equity (deficit) $ 10,601,570 $ 11,583,722
 

RESPONSE GENETICS, INC.

               

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 
Three Months

Ended June 30,

Six Months

Ended June 30

2010     2011 2010     2011
Net Revenue $ 5,642,655 $ 6,702,561 $ 9,339,563 $ 12,630,136
Operating expenses:
Cost of revenue 2,520,255 2,800,904 4,654,063 5,501,826
Selling and marketing 1,422,788 1,417,460 2,771,705 2,856,586
General and administrative 1,735,579 2,347,217 3,467,100 4,224,562
Research and development   388,046   221,546   960,230   385,888
Total operating expenses   6,066,668   6,787,127   11,853,098   12,968,862
Operating loss (424,013 ) (84,566 ) (2,513,535 ) (338,726
Other income (expense):
Interest expense (1,190 ) (2,792 ) (5,057 ) (5,575 )
Interest income   165   14   264   66
Loss before provision for income taxes (425,038 ) (87,344 ) (2,518,328 ) (344,235 )
Provision for income taxes       1,256    
Net loss $ (425,038 ) $ (87,344 ) $ (2,519,584 ) $ (344,235 )
 
Unrealized gain (loss) on foreign currency translation   (1,021 )   (15,313 )   (13,442 )   (15,313 )
 
Total comprehensive loss $ (426,059 ) $ (102,657 ) $ (2,533,026 ) $ (359,548 )
Net loss per share — basic and diluted $ (0.02 ) $ (0.00 ) $ (0.15 ) $ (0.02 )
Weighted-average shares — basic and diluted   18,302,532   18,699,898   17,256,471   18,699,898




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