RUTHERFORD, N.J., June 24, 2020 (GLOBE NEWSWIRE) -- Cancer Genetics, Inc. (the “Company”) (Nasdaq: CGIX), a leader in drug discovery and preclinical oncology and immuno-oncology services, today announced financial and operating results for the quarter ended March 31, 2020.

RECENT STRATEGIC AND OPERATIONAL HIGHLIGHTS

  • Continued focus on cost reduction and cash preservation initiatives.
  • Increased attention on drug discovery and preclinical services.
  • Consistent revenue from Discovery Services in the comparable Q1 quarters of 2020 and 2019.
  • Successful and efficient operation of Discovery Services in the US, Europe, and Australia.
  • Meaningful progress made with evaluating potential strategic options including collaborations, mergers or acquisitions, or other collaborative transactions. Further announcements expected to be made later in 2020.

John A. Roberts, Chief Executive Officer of Cancer Genetics stated, “In Q1 2020, our Discovery Services business unit remained stable, and believe it will continue to experience year-over-year revenue growth in 2020, consistent with prior years. Our operating costs associated with the disposition of certain business assets in 2019 and the related financial statement audit for 2019 were greater than expected in Q1 2020. While we anticipate that certain expenses related to these events will continue in Q2 2020, given the one-time occurrence of these transactions, we expect operating costs to be significantly reduced in the second half of 2020.”

“Efforts have accelerated to identify strategic and collaboration partners so that we can execute our plans to further enhance value for our shareholders. We intend to transform the business significantly by continuing to improve our balance sheet and refocusing the business on precision and translational medicine. We feel these actions will move our business into the emerging area of drug discovery and novel therapies. As previously reported, various strategic options are being evaluated. We are pleased to report that our vivoPharm business continues to operate efficiently, allowing us to take a thoughtful and methodical approach in regards to a future transaction,” Mr. Roberts stated.

“In summary, the Company’s management and Board of Directors are committed to evaluating all potential strategic opportunities and to pursuing the path most likely to create both near and longer-term value for Cancer Genetics’ shareholders. We look forward to keeping shareholders apprised of our progress,” Mr. Roberts concluded.

The Company filed its quarterly report for Q1 2020 on Form 10-Q today with the Securities and Exchange Commission.

FIRST QUARTER 2020 FINANCIAL RESULTS

The Company reported total revenue from continuing operations of $1.4 million for the first quarter of 2020 compared to revenue of $1.8 million in the first quarter of 2019 (which included $0.3 million from an IP license arrangement unrelated to the Discovery Services business unit), a decrease of approximately $0.4 million or 21.7%.

Gross profit decreased to $0.6 million or 42.9% in the first quarter of 2020, compared to $0.8 million or 45.0% in the first quarter of 2019. While the overall gross margin decreased by 2.1 percentage points primarily as a result of the high margin revenue recorded from the IP license transaction, the Discovery Services business unit gross margin increased from $0.5 million or 34.2% in the first quarter of 2019 to $0.6 million or 42.9% in the first quarter of 2020 principally due to a reduction in outsourcing costs offset by a slight seasonal effect on revenue. The remaining costs are relatively consistent in the comparable periods for the Discovery Services business unit.

Total operating expenses for the first quarter of 2020 were approximately $1.9 million, a decrease of 4.7% compared to $2.0 million during the first quarter of 2019. The decrease in total operating expenses was partially due to decreased corporate costs, partially offset by higher sales and marketing spend in the Discovery Services business unit compared to the first quarter of 2019.

Net loss from continuing operations was $1.2 million or $0.56 per share for the first quarter of 2020, compared to a net loss of $1.7 million or $1.06 per share for the first quarter of 2019.

Cash and cash equivalents totaled approximately $3.9 million as of March 31, 2020, including restricted cash.

ABOUT CANCER GENETICS

Through its vivoPharm subsidiary, the Cancer Genetics offers proprietary preclinical test systems supporting clinical diagnostic offerings at early stages, valued by the pharmaceutical industry, biotechnology companies and academic research centers. The Company is focused on precision and translational medicine to drive drug discovery and novel therapies. vivoPharm specializes in conducting studies tailored to guide drug development, starting from compound libraries and ending with a comprehensive set of in vitro and in vivo data and reports, as needed for Investigational New Drug filings. vivoPharm operates in The Association for Assessment and Accreditation of Laboratory Animal Care International (AAALAC) accredited and GLP compliant audited facilities. For more information, please visit www.cancergenetics.com.

For more information, please visit or follow CGI at:

Internet: www.cancergenetics.com

Twitter: @Cancer_Genetics

Forward Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to Cancer Genetics Inc.’s expectations regarding future financial and/or operating results, and potential for our services, future revenues or growth, or the potential for future strategic transactions in this press release constitute forward-looking statements.

Any statements that are not historical fact (including, but not limited to, statements that contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,” “estimates”) should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in our attempts to adapt to the global coronavirus pandemic, achieve profitability and increase sales of our pre-clinical services, maintain our existing customer base and avoid cancellation of customer contracts or discontinuance of trials, raise capital to meet our liquidity needs, properly evaluate strategic options, and other risks discussed in the Cancer Genetics, Inc. Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarter ended March 31, 2020, along with other filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Cancer Genetics, Inc. disclaims any obligation to update these forward-looking statements.

Investor Contacts:
Jennifer K. Zimmons. Ph.D.
Investor Relations
Zimmons International Communications, Inc.
Email: jzimmons@zimmonsic.com
Phone: +1.917.214.3514

Cancer Genetics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except par value)

  March 31, 2020  December 31, 2019 
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents $3,593  $3,880 
Restricted cash  350   350 
Accounts receivable  848   696 
Earn-Out from siParadigm, current portion  772   747 
Excess Consideration Note  888   888 
Other current assets  415   546 
Current assets of discontinuing operations     71 
Total current assets  6,866   7,178 
FIXED ASSETS, net of accumulated depreciation  506   558 
OTHER ASSETS        
Operating lease right-of-use assets  76   94 
Earn-Out from siParadigm, less current portion  201   356 
Patents and other intangible assets, net of accumulated amortization  2,816   2,895 
Investment in joint venture  92   92 
Goodwill  3,090   3,090 
Other  635   641 
Total other assets  6,910   7,168 
Total Assets $14,282  $14,904 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable and accrued expenses $2,146  $2,072 
Obligations under operating leases, current portion  153   193 
Obligations under finance leases, current portion  66   68 
Deferred revenue  1,118   1,217 
Note payable, net  1,313   1,277 
Advance from NovellusDx, Ltd., net  200   350 
Advance from siParadigm, current portion  573   566 
Due to Interpace Biosciences, Inc.  1,200    
Current liabilities of discontinuing operations  861   1,229 
Total current liabilities  7,630   6,972 
Obligations under operating leases, less current portion  21   10 
Obligation under finance leases, less current portion  81   107 
Advance from siParadigm, less current portion  119   252 
Warrant liability  51   178 
Total Liabilities  7,902   7,519 
STOCKHOLDERS’ EQUITY        
Preferred stock, authorized 9,764 shares, $0.0001 par value, none issued      
Common stock, authorized 100,000 shares, $0.0001 par value, 2,107 and 2,104 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively      
Additional paid-in capital  171,853   171,783 
Accumulated other comprehensive income  130   26 
Accumulated deficit  (165,603)  (164,424)
Total Stockholders’ Equity  6,380   7,385 
Total Liabilities and Stockholders’ Equity $14,282  $14,904 

See Notes to Unaudited Condensed Consolidated Financial Statements.

Cancer Genetics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) (Unaudited)
(in thousands, except per share amounts)

  Three Months Ended March 31, 
  2020  2019 
Revenue $1,426  $1,822 
Cost of revenues  814   1,002 
Gross profit  612   820 
Operating expenses:        
General and administrative  1,533   1,782 
Sales and marketing  341   185 
Total operating expenses  1,874   1,967 
Loss from operations  (1,262)  (1,147)
Other income (expense):        
Interest expense  (78)  (615)
Interest income  4   2 
Change in fair value of acquisition note payable  4    
Change in fair value of other derivatives     31 
Change in fair value of warrant liability  127   (7)
Change in fair value of siParadigm Earn-Out  24    
Total other income (expense)  81   (589)
Loss before income taxes  (1,181)  (1,736)
Income tax expense  6    
Loss from continuing operations  (1,187)  (1,736)
Income (loss) from discontinuing operations  8   (2,881)
Net loss  (1,179)  (4,617)
Foreign currency translation gain (loss)  104   (76)
Comprehensive loss $(1,075) $(4,693)
         
Basic and diluted net loss per share from continuing operations $(0.56) $(1.06)
Basic and diluted net loss per share from discontinuing operations     (1.77)
Basic and diluted net loss per share $(0.56) $(2.83)
         
Basic and diluted weighted-average shares outstanding  2,106   1,631 

See Notes to Unaudited Condensed Consolidated Financial Statements.

Cancer Genetics, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(in thousands)

  Three Months Ended March 31, 2020 
  Common Stock  Additional Paid-in  Accumulated Other Comprehensive   Accumulated     
  Shares  Amount  Capital  Income  Deficit  Total 
Balance, January 1, 2020  2,104  $  $171,783  $26  $(164,424) $7,385 
Stock based compensation—employees        58         58 
Issuance of common stock—VenturEast settlement  3      12         12 
Unrealized gain on foreign currency translation           104      104 
Net loss              (1,179)  (1,179)
Balance, March 31, 2020  2,107  $  $171,853  $130  $(165,603) $6,380 


  Three Months Ended March 31, 2019 
  Common Stock  Additional Paid-in  Accumulated Other Comprehensive   Accumulated     
  Shares  Amount   Capital  Income (Loss)  Deficit  Total 
Balance, January 1, 2019  924  $  $164,458  $60  $(157,716) $6,802 
Stock based compensation—employees        158         158 
Issuance of common stock - 2019 Offerings, net  952      5,412         5,412 
Unrealized loss on foreign currency translation           (76)     (76)
Net loss              (4,617)  (4,617)
Balance, March 31, 2019  1,876  $  $170,028  $(16) $(162,333) $7,679 

See Notes to Unaudited Condensed Consolidated Financial Statements.

Cancer Genetics, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

  Three Months Ended March 31, 
  2020  2019 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net loss $(1,179) $(4,617)
Loss (income) from discontinuing operations  (8)  2,881 
Net loss from continuing operations  (1,187)  (1,736)
         
Adjustments to reconcile net loss to net cash used in operating activities, continuing operations:        
Depreciation  52   14 
Amortization  79   82 
Stock-based compensation  58   119 
Change in fair value of warrant liability, acquisition note payable and other derivatives  (131)  (24)
Amortization of operating lease right-of-use assets  10   49 
Change in fair value of siParadigm Earn-Out  (24)   
Amortization of discount on debt and debt issuance costs  36   467 
Interest added to Convertible Note     89 
Changes in:        
Accounts receivable  (183)  (103)
Other current assets  110   77 
Other non-current assets  (4)  (1)
Accounts payable, accrued expenses and deferred revenue  130   (109)
Due to Interpace Biosciences, Inc.  1,200    
Obligations under operating leases  (21)  (60)
Net cash provided by (used in) operating activities, continuing operations  125   (1,136)
Net cash used in operating activities, discontinuing operations  (289)  (3,328)
Net cash used in operating activities  (164)  (4,464)
CASH FLOWS FROM INVESTING ACTIVITIES        
Purchase of fixed assets     (19)
Net cash provided by (used in) investing activities, continuing operations     (19)
Net cash provided by (used in) investing activities, discontinuing operations  28   (13)
Net cash provided by (used in) investing activities  28   (32)
CASH FLOWS FROM FINANCING ACTIVITIES        
Principal payments on obligations under finance leases  (13)  (10)
Proceeds from offerings of common stock, net of certain offering costs     5,412 
Payments on Advance from NovellusDx, Ltd.  (150)   
Net cash provided by (used in) financing activities, continuing operations  (163)  5,402 
Net cash used in financing activities, discontinuing operations     (291)
Net cash provided by (used in) financing activities  (163)  5,111 
Effect of foreign exchange rates on cash and cash equivalents and restricted cash  12   (79)
Net increase (decrease) in cash and cash equivalents and restricted cash  (287)  536 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH        
Beginning  4,230   511 
Ending $3,943  $1,047 
         
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:        
Cash and cash equivalents $3,593  $697 
Restricted cash  350   350 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH $3,943  $1,047 
         
SUPPLEMENTAL CASH FLOW DISCLOSURE        
Cash paid for interest $7  $304 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES        
Common stock issued in VentureEast settlement $12  $ 

See Notes to Unaudited Condensed Consolidated Financial Statements.