Response Genetics, Inc. Reports First Quarter 2010 Financial Results

LOS ANGELES--(BUSINESS WIRE)-- Response Genetics Inc. (Nasdaq:RGDX), a company focused on the development and sale of molecular diagnostic tests for cancer, today announced its consolidated financial results for the three months ended March 31, 2010.

“Since March of 2008, when we first started selling ResponseDX™ genetic tests, we have analyzed tumors from approximately 8,000 patients. We are proud that we are having a meaningful impact on the lives of such a large number of people affected by cancer,” said Kathleen Danenberg, Response Genetics president and CEO.

First Quarter Corporate Development Highlights

  • ResponseDX™ Test Sales Continue to Ramp – Sales of ResponseDX™ genetic tests continue to show strong growth quarter over quarter. For the first quarter of 2010, the total number of tests ordered increased by 24 percent to 2,023, compared to 1,634 for the last quarter of 2009. After record revenue of $1.7 million in the fourth quarter of 2009 from Response DX™ test sales, the Company maintained momentum in the first quarter of 2010 and posted the same revenue amount. The Company continues to record revenues primarily on a cash basis from certain insurance providers until collection patterns are better determined. Cash associated with the majority of the tests processed during the first quarter of 2010 is expected to be collected in the second quarter of 2010.
  • Agreement with GlaxoSmithKline – In March 2010, Response Genetics signed a non-exclusive license with GlaxoSmithKline LLC (GSK). Under the terms of the agreement, GSK gains certain rights to Response Genetics’ proprietary PCR analysis technology and diagnostic expertise to assess BRAF gene mutations in human tumor samples. Payments will be made to Response Genetics upon achievement of agreed-to milestones.

First Quarter 2010 Results

Total revenue increased by 140 percent to $ 3.7 million for the first quarter ended March 31, 2010, compared to $1.5 million for the same period last year. The increase was primarily due to increase in ResponseDX™ revenues. Revenue from our ResponseDX™ genetic tests increased by 554 percent to $1.72 million for the first quarter, compared to $263 thousand for the same period in 2009. Our pharmaceutical client revenue increased 17 percent to $1.4 million, compared to $1.2 million in the first quarter of 2009.

Cost of revenue for the first quarter ended March 31, 2010 was $2.1 million, compared with $1.3 million for the same period ended 2009. Research and development expenses were $ 0.6 million for the first quarter of 2010, compared with $0.6 million for the same period in the prior year. General and administrative expenses were $1.7 million for the first quarter, compared with $1.7 million for the same period in 2009. Total operating expenses for the first quarter were $5.8 million, compared with $4.8 million for the same period last year. The primary reasons for the increase in total operating expenses are an increase in Cost of revenue corresponding to the increase in revenue and to costs related to the continued expansion of the sales force.

Response Genetics’ net loss for the first quarter ended March 31, 2010 was $2.1 million or a loss of $0.13 per share, compared with a net loss of $3.3 million, or a loss of $0.30 per share, for the same period last year.

Cash and Cash Equivalents

Cash and cash equivalents at March 31, 2010, were $9.1 million, compared to $7.1 million at December 31, 2009. As previously announced, on March 5, 2010 Response Genetics completed a private placement of approximately 3 million newly issued common shares at a per-share price of $1.31. The Company received net proceeds of $3,879,403 million from this private placement.

About Response Genetics, Inc.

Response Genetics, Inc. (“RGI”) (the “Company”) (Nasdaq: RGDX) 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, RGI generates revenue from the sales of its proprietary analytical pharmacogenomic testing services of clinical trial specimens to the pharmaceutical industry. The Company 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 analyze cancer samples, the ability to maintain sales of ResponseDX, our expected revenue growth and earnings in 2010, the ability of the Company to obtain payments from licensing its technology, 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, the ability of the Company to expand its ResponseDXtests, 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,

2009

March 31,

2010

(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 7,058,365 $ 9,091,246
Accounts receivable, net 1,982,951 2,486,132
Prepaid expenses and other current assets   418,289   456,662
Total current assets 9,459,605 12,034,040
Property and equipment, net 1,253,714 1,265,486
Other assets   79,655   84,655
Total assets $ 10,792,974 $ 13,384,181

LIABILITIES, COMMON STOCK CLASSIFIED OUTSIDE OF STOCKHOLDERS’ EQUITY (DEFICIT) AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Accounts payable $ 729,100 $ 1,006,142
Accrued expenses 503,612 738,686
Accrued royalties 455,995 578,196
Accrued payroll and related liabilities 468,774 878,858
Deferred revenue   2,596,066   2,547,457
Total current liabilities 4,753,547 5,749,339
 
Deferred revenue, net of current portion   1,414,928   1,118,760
Total liabilities 6,168,475 6,868,099
 

Commitments and contingencies (Note 6)

 
Common stock classified outside of stockholders’ equity (deficit) (Note 15) 3,975,279 7,854,682
 
Stockholders’ equity (deficit)
Common stock, $0.01 par value; 50,000,000 shares authorized; 15,297,183 and 18,302,532 shares issued and outstanding at December 31, 2009 and March 31, 2010, respectively 122,393 122,393
Additional paid-in capital 39,858,986 39,978,132
Accumulated deficit (39,146,784 ) (41,241,329 )
Accumulated other comprehensive loss   (185,375 )   (197,796 )
Total stockholders’ equity (deficit)   649,220   (1,338,600)
Total liabilities and stockholders’ equity (deficit) $ 10,792,974 $ 13,384,181
 

RESPONSE GENETICS, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 
 
  Three Months

Ended March 31,

2009   2010
Net Revenue $ 1,537,226 $ 3,696,908
Operating expenses:
Cost of revenue 1,274,764 2,133,808
Selling and marketing 730,239 1,415,871
General and administrative 1,749,611 1,659,308
UK expenses 503,980 3,405
Research and development   554,238   572,184
Total operating expenses   4,812,832   5,784,576
Operating loss (3,275,606 ) (2,087,668 )
Other income (expense):
Interest expense (3,427 ) (3,866 )
Interest income 16,705 99
Other   -   (1,854 )
Loss before provision for income taxes (3,262,328) (2,093,289)
Provision for income taxes   - 1,256
Net loss $ (3,262,328 ) $ (2,094,545 )
 
Unrealized loss on foreign currency translation (22,126 ) (12,421 )
 
Total comprehensive loss $ (3,284,454 ) $ (2,106,966 )
Net loss per share — basic and diluted $ (0.30 ) $ (0.13 )
Weighted-average shares — basic and diluted   10,905,943   16,198,788



CONTACT:

Investor Relations:
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Peter Rahmer, 646-378-2973
or
Media Relations:
Fleishman-Hillard
Barry Sudbeck, 415-318-4261

KEYWORDS:   United States  North America  California

INDUSTRY KEYWORDS:   Health  Biotechnology  Genetics  Oncology

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