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Response Genetics, Inc. Announces Year-End And Fourth Quarter Financial Results

Excluding cost of revenue, total operating expenses for the fourth quarter were $5.2 million, compared to $4.6 million for the comparable period in 2010. The increase in total operating expenses of $0.6 million was due to an increase in general and administrative expenses of $0.5 million and research and development expenses of $0.2 million, offset by a decrease in sales and marketing expenses of $0.1 million. The increase in general and administrative expenses was due to increases in bad debt expense ( see paragraph below), legal expenses, recruiting costs and IT and business consulting expenses.

During the fourth quarter of 2011, the Company refined its model of estimating an allowance for doubtful accounts using historical collection percentages and a combination of objective and subjective factors. Consequently, the Company increased its bad debt expense for the year ended December 31, 2011 to $1.3 million. Had the Company continued under the specific write-off method, its bad debt expense would have been approximately $0.7 million in 2011.

Cash and cash equivalents at December 31, 2011, were $1.7 million, compared to $4.1 million at December 31, 2010. As previously disclosed, the Company completed a capital raise in February 2012 resulting in gross proceeds of approximately $7.8 million at a 27 percent premium to the then current stock price.

CONFERENCE CALL DETAILS

To access the conference call by phone on March 27 at 10:00 a.m. EDT, dial (800) 537-0745 or (253) 237-1142 for international participants. A telephone replay will be available beginning approximately two hours after the call through April 3 and may be accessed by dialing (855) 859-2056, (404) 537-3406, or (800) 585-8367. The replay passcode is 64520370.

To access the live and archived webcast of the conference call, go to the Investor Relations section of the Company's Web site at http://investor.responsegenetics.com. It is advised that participants connect at least 15 minutes prior to the call to allow for any software downloads that might be necessary.

About Response Genetics, Inc.

Response Genetics Inc. (“RGI”) is a CLIA-certified clinical laboratory focused on the development and sale of molecular diagnostic tests for cancer. RGI’s principal customers include oncologists, pathologists and hospitals. In addition to diagnostic testing services, the Company generates revenue from the sales of its analytical 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 additional 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 continue to provide clinical testing services to the medical community, to continue to expand its sales force, to continue to build its digital pathology initiative, to attract and retain qualified management, to implement operational enhancements, to strengthen marketing capabilities, to expand the suite of ResponseDX products, to continue to provide clinical trial support to pharmaceutical clients, to enter into new collaborations with pharmaceutical clients, to enter into new areas such as companion diagnostics, and to continue to execute on its business strategy and operations, to continue to analyze cancer samples, the potential for using the results of this research to develop diagnostic tests for cancer, the usefulness of genetic information to tailor treatment to patients, 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

 
 

As of December 31, (Unaudited)

2010   2011
 
 
Cash and cash equivalents $ 4,120,074 $ 1,700,295
Accounts receivable, net 4,733,698 4,047,059
Prepaid expenses and other current assets   941,981   991,351
Total current assets 9,795,753 6,738,705
 
Property and equipment, net 805,817 1,067,679
Intangible assets     44,423
Total assets $ 10,601,570 $ 7,850,807
 
 
Accounts payable $ 1,247,151 $ 1,492,526
Accrued expenses and other current liabilities 3,156,367 4,251,262
Deferred revenue 1,618,766
Other liabilities 390,181
Common stock classified outside of stockholders’ equity (deficit) 7,854,682 7,854,682
Total stockholders’ equity (deficit)   (3,275,396 )   (6,137,844 )

Total liabilities, common stock classified outside of stockholders’ equity (deficit) and stockholders’ equity (deficit)

$ 10,601,570 $ 7,850,807
 

Statement Regarding Unaudited Financial Information

The unaudited financial information herein set forth is subject to adjustments and modifications. The audited financial statements and related notes thereto will be included in our annual report on Form 10-K for the year ended December 31, 2011. Adjustments and modifications to the financial statements may be identified during the remaining course of the audit work, which could result in differences from the unaudited financial information included herein.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

   
 

Three Months Ended December 31, (Unaudited)

Twelve Months Ended December 31, (Unaudited)

2010     2011   2010   2011
Net Revenue $ 6,363,203 $ 4,911,943 $ 21,277,415 $ 22,642,728
Operating expenses:
Cost of revenue 3,068,238 3,693,697 10,460,994 11,733,700
Selling and marketing 1,593,346 1,452,998 5,988,746 5,560,637
General and administrative 2,677,633 3,215,268 8,097,122 9,708,347
Research and development   332,081     483,275     1,611,582   1,321,897
Total operating expenses   7,671,298     8,845,238     26,158,444   28,324,581
 
Operating loss (1,308,095 ) (3,933,295 ) (4,881,029 ) (5,681,853 )
Other income (expense):
Interest expense (2,819 ) (9,353 ) (10,758 ) (20,718 )
Interest income 234 1 682 149
Other   221,802         221,802    
 
Loss before income tax provision (1,088,878 ) (3,942,647 ) (4,669,123 ) (5,702,422 )
Income tax provision           1,256    
 
Net loss $ (1,088,878 ) $ (3,942,647 ) $ (4,670,379 ) $ (5,702,422 )
 
Unrealized gain (loss) on foreign currency translation   (4,188 )   (47,624 )   (8,585 )   (73,217 )
 
Comprehensive loss $ (1,093,066 ) $ (3,990,271 ) $ (4,678,964 ) $ (5,775,639 )
 
Net loss per share — basic and diluted $ (0.06 ) $ (0.20 ) $ (0.26 ) $ (0.30 )
 
Weighted-average shares — basic and diluted   18,324,675     19,539,237     17,791,584   19,124,806  
 

Statement Regarding Unaudited Financial Information

The unaudited financial information herein set forth is subject to adjustments and modifications. The audited financial statements and related notes thereto will be included in our annual report on Form 10-K for the year ended December 31, 2011. Adjustments and modifications to the financial statements may be identified during the remaining course of the audit work, which could result in differences from the unaudited financial information included herein.

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