Form 8-K CANCER GENETICS, INC For: Aug 09

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August 10, 2016 6:05 AM EDT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 9, 2016

CANCER GENETICS, INC.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
 
 
Delaware  
 001-35817 
   04-3462475
 
 
(State or Other
(Commission
 (IRS Employer
 
 
   Jurisdiction of
    File Number)
 Identification No.)
 
 
  Incorporation)
 
 
 
 
 
 
 
 
201 Route 17 North 2nd Floor, Rutherford, New Jersey 07070
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code (201) 528-9200

____________________________________________________________
(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





.

Item 2.02. Results of Operations and Financial Condition.

On August 9, 2016, Cancer Genetics, Inc. (the “Registrant”) issued a press release regarding financial results for the fiscal quarter ended June 30, 2016 and posted a slide presentation to its website, which it may refer to during its conference call to discuss the results. A copy of the press release and slide presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, hereto and are incorporated by reference herein.

Forward-Looking Statements

This report, including Exhibit 99.1 and Exhibit 99.2 furnished herewith, contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate” and similar words, and the opposites of such words, although some forward-looking statements are expressed differently. Forward-looking statements involve known and unknown risks and uncertainties that exist in the Registrant’s operations and business environment, which may be beyond the Registrant’s control, and which may cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. For example, forward-looking statements include, without limitation: statements regarding prospects for additional customers; market forecasts; projections of earnings, revenues, synergies, accretion or other financial information; and plans, strategies and objectives of management for future operations. The risks and uncertainties referred to above include, but are not limited to, risks detailed from time to time in the Registrant’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2015, Quarterly Report on Form 10-Q for the period ended June 30, 2016 and other reports filed with the SEC. These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrant. Forward-looking statements represent the judgment of management of the Registrant regarding future events. Although the Registrant believes that the expectations reflected in such forward-looking statements are reasonable at the time that they are made, the Registrant can give no assurance that such expectations will prove to be correct. Unless otherwise required by applicable law, the Registrant assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.

Item 7.01 Regulation FD.

The slide presentation referred to in Item 2.02 above is attached hereto as Exhibit 99.2 and incorporated herein by reference.

The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K (including Exhibit 99.1 and Exhibit 99.2) attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


-2-

Item 9.01. Financial Statements and Exhibits.

(d)    Exhibits

As described above, the following exhibits are furnished as part of this report:

Exhibit 99.1 – Press release, dated August 9, 2016.

Exhibit 99.2 – Slide presentation for Q2 2016 earnings call.
    





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



CANCER GENETICS, INC.


By: /s/ Edward J. Sitar        
Name: Edward J. Sitar
Title: Chief Financial Officer

    
Date:    August 9, 2016



-3-

CANCER GENETICS, INC. REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS AND PROVIDES COMPANY UPDATES
 
•
Company Reports Quarterly Revenues of $7 million, an increase of 67% over the Second Quarter of 2015
•
The Company’s Organic Growth Rate was 27% over Q1 and 18% over the Second Quarter of 2015, not including revenues from the acquisition closed in Q4 of 2015.
•
Cancer Genetics Continues to Increase Expected Future Revenue from Biopharma Contracts to over $47 Million
•
Cancer Genetics to Host Conference Call Wednesday, August 10, 2016, at 8:30 AM Eastern Time (ET)/5:30 AM Pacific
 
RUTHERFORD, N.J., August 9, 2016 Cancer Genetics, Inc. (Nasdaq: CGIX), an emerging leader in molecular and biomarker-based cancer diagnostics, announced today financial and operating results for the second quarter ended June 30, 2016 and provided other company and business updates.
 
Total revenues were $7.0 million in the second quarter of 2016 and included $4.2 million from Biopharma services and $2.5 million from Clinical services, compared with total revenue of $4.2 million in the second quarter of 2015, an increase of 67 percent.
 
Panna Sharma, Cancer Genetics CEO and President commented, “Our growth and performance during the second quarter was strong and our impact on the oncology community continued to accelerate as a result of our biopharma contracts and our emphasis on providing disease-focused, and clinically actionable genomic as well as immune-marker data and testing capabilities. This along with our innovative portfolio and global infrastructure is truly unique to CGI and a cornerstone of our future growth.”

Other key financial results and highlights for the quarter ended June 30, 2016 include:

▪
Revenues were $7.0 million, a 67% increase over the second quarter of 2015 and a 15% sequential increase over Q1 2016 revenues of $6.1 million;
▪
Revenue from Biopharma Services was $4.2 million, a 58% increase over the second quarter of 2015 and a 26% sequential increase over Q1 2016 revenues of $3.3 million;
▪
Revenue from Clinical Services was $2.5 million, a 103% increase over Q2 2015 and a 4% sequential increase over Q1 2016.
▪
Revenue from Discovery Services was $0.2 million, compared to $0.3 million over the same period of 2015 and essentially flat over Q1 2016.
▪
Gross profit margins improved to 39% a significant improvement from 26% in Q2 2015 and a sequential increase from 32% during Q1 2016.
▪
The Company’s organic growth rate was 18% over Q2 2015 and 27% over Q1 2016
▪
Q2 2016 Clinical Services test volume increased 8% to 7,153 over 6,608 during Q1 2016
▪
Signed contracts for expected future revenue with biotech and pharmaceutical companies increased to over $47 million, a sequential increase of over $6 million from Q1 2016
▪
Total expenses for the quarter were $11.0 million, a reduction of 2.2% from $11.3 million during Q1 2016 largely driven by streamlining workflow across sites and reductions in staff.
▪
Total cash at the end of the quarter was $10.6 million.

For the second quarter ended June 30, 2016, Cancer Genetics reported a net loss of $4.0 million or $0.28 per diluted share, as compared with a net loss of $5.0 million or $0.51 per diluted share during the same period of 2015, and $5.3 million or $0.39 per diluted share for the first quarter of 2016. This is an improvement in net income of 20% year over year and 23% during sequential quarters.


1

Panna Sharma continued, “Our growth areas of immuno-oncology and biopharma partnerships continue to advance our market-share. This is clearly reflected in our Biopharma Services revenue, which comprised 60% of the revenue for the quarter. Additionally, our portfolio of unique and disease-targeted next-generation sequencing (NGS) panels, immune markers, and cell-free DNA capabilities is advancing quickly. Our unmatched and industry-leading portfolio is helping CGI secure collaborations with leading institutions, and revenue-generating relationships with biotech and pharma companies that are working on targeted therapeutics, immuno-oncology targets and companion diagnostics, all of which are leading precursors for future growth and revenue for CGI.”

During the second quarter of 2016, Cancer Genetics also made significant advancements in the development of cell-free or liquid biopsy based genomic tests. The Company expects to launch focused, multi-gene, liquid biopsy tests for lung cancer and renal cancer in the upcoming quarters. Cancer Genetics is also currently involved in a three-way collaboration with Huntsman Cancer Institute at University of Utah and Pfizer in the validation of the Company’s multi-gene signature for determination of renal cancer sub-types that can aid in patient management as well as therapy selection in renal cancer. Additionally, the Company is developing a focused multi-gene assay that can aid in comprehensive diagnosis, monitoring, and therapy selection, including the identification of resistance mutations for non-small cell lung cancer (NSCLC).

Recent Corporate Highlights:

•
Launched a proprietary comprehensive next-generation sequencing (NGS) panel FOCUS::Lymphoma(TM) with CLIA validation to apply in both clinical care and in trials being
•
Biopharmaceutical company, H3 Biomedicine Inc. (H3), a leading company in cancer genomics based drug discovery, selected CGI to provide clinical biomarker services for H3’s lead oncology
•
CGI and Sayre Therapeutics entered into a distribution agreement to commercialize the FDA-cleared Tissue of Origin test throughout India and South Asia
•
The Company announced the offering of multiple FDA-approved PD-L1 tests, including those by DAKO and VENTANA for lung cancer and urothelial cancer, respectively
•
CGI announced results at ASCO with HTG, Keck School of Medicine at USC, and Japan Clinical Cancer Research Organization of using immune-related genes to identify sub-types of patients associated with clinical outcome in metastatic colorectal cancer
•
CGI’s poster highlighting the actionable, clinical value of the FDA-cleared Tissue of Origin test was accepted for presentation at USCAP
•
During Q2 of 2016 CGI brought the total number of immuno-oncology trials that it is providing testing and validation services for to 20, which is up significantly from 12 during the first quarter of 2016
•
Added healthcare industry-veteran John "Jay" Roberts as COO and EVP of Finance

“CGI has a unique platform of capabilities, content and people that are focused on delivering innovation in precision medicine and oncology,” said Jay Roberts, EVP of Finance and COO at Cancer Genetics. “The next phase of our growth will be highly focused on margin expansion and further refining the integration across our sites. This dual focus on innovation and execution will create a durable leader in precision medicine and differentiate us in the marketplace."

CGI will also be providing slides with an overview of the results and discussion points; they will be available at http://ir.cancergenetics.com/presentations.
 
Conference Call & Webcast
Wednesday, August 10, 8:30 AM Eastern Time 
Domestic:                                888-516-2441
International:                           719-457-2089
Conference ID:                        7149112

2

Webcast:                                https://public.viavid.com/index.php?id=120688
  
Replays – Available through August 24, 2016
Domestic:                                877-870-5176
International:                           858-384-5517
Conference ID:                        7149112

ABOUT CANCER GENETICS
Cancer Genetics Inc. is a leader in enabling precision medicine in oncology from bench to bedside through the use of oncology biomarkers and molecular testing. CGI is developing a global footprint with locations in the US, India and China. We have established strong clinical research collaborations with major cancer centers such as Memorial Sloan Kettering, The Cleveland Clinic, Mayo Clinic, Keck School of Medicine at USC and the National Cancer Institute.

The Company offers a comprehensive range of laboratory services that provide critical genomic and biomarker information. Its state-of-the-art reference labs are CLIA-certified and CAP-accredited in the US and have licensure from several states including New York State.

For more information, please visit or follow CGI at:

Internet: http://www.cancergenetics.com
Twitter: @Cancer_Genetics
Facebook: www.facebook.com/CancerGenetics

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 tests and services, and future revenues or growth 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 the development and/or commercialization of potential products, risks of cancellation of customer contracts or discontinuance of trials, risks that anticipated benefits from acquisitions will not be realized, uncertainty in the results of clinical trials or regulatory approvals, need and ability to obtain future capital, maintenance of intellectual property rights and other risks discussed in the Cancer Genetics, Inc. Form 10-K for the year ended December 31, 2015 and the Form 10-Q for the Quarter ended June 30, 2016 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.

Contact:
Panna Sharma
Cancer Genetics, Inc.
201-528-9200




3

Cancer Genetics, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(in thousands, except par value)
 
June 30,
2016
 
December 31,
2015
ASSETS
 
 
 
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$
10,552

 
$
19,459

Accounts receivable, net of allowance for doubtful accounts
11,944

 
6,621

Other current assets
1,970

 
2,118

Total current assets
24,466

 
28,198

FIXED ASSETS, net of accumulated depreciation
5,372

 
6,069

OTHER ASSETS
 
 
 
Restricted cash
300

 
300

Patents and other intangible assets, net of accumulated amortization
1,639

 
1,727

Investment in joint venture
314

 
341

Goodwill
12,029

 
12,029

Other
115

 
220

Total other assets
14,397

 
14,617

Total Assets
$
44,235

 
$
48,884

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES
 
 
 
Accounts payable and accrued expenses
$
7,632

 
$
7,579

Obligations under capital leases, current portion
72

 
122

Deferred revenue
423

 
831

Bank term note, current portion
2,000

 
1,333

Total current liabilities
10,127

 
9,865

Obligations under capital leases
242

 
276

Deferred rent payable and other
306

 
315

Warrant liability
—

 
17

Deferred revenue, long-term
753

 
752

Bank term note
3,648

 
4,642

Total Liabilities
15,076

 
15,867

STOCKHOLDERS’ EQUITY
 
 
 
Preferred stock, authorized 9,764 shares, $0.0001 par value, none issued
—

 
—

Common stock, authorized 100,000 shares, $0.0001 par value, 16,120 and 13,652 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively
2

 
1

Additional paid-in capital
136,590

 
131,167

Accumulated (deficit)
(107,433
)
 
(98,151
)
Total Stockholders’ Equity
29,159

 
33,017

Total Liabilities and Stockholders’ Equity
$
44,235

 
$
48,884




Cancer Genetics, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenue
$
7,001

 
$
4,185

 
$
13,069

 
$
8,555

Cost of revenues
4,285

 
3,097

 
8,388

 
6,239

Gross profit
2,716

 
1,088

 
4,681

 
2,316

Operating expenses:
 
 
 
 
 
 
 
Research and development
1,680

 
1,256

 
3,212

 
2,533

General and administrative
3,658

 
3,062

 
7,976

 
6,049

Sales and marketing
1,379

 
1,184

 
2,677

 
2,300

Total operating expenses
6,717

 
5,502

 
13,865

 
10,882

Loss from operations
(4,001
)
 
(4,414
)
 
(9,184
)
 
(8,566
)
Other income (expense):
 
 
 
 
 
 
 
Interest expense
(107
)
 
(82
)
 
(233
)
 
(115
)
Interest income
13

 
13

 
17

 
25

Change in fair value of acquisition note payable
67

 
(316
)
 
101

 
(406
)
Change in fair value of warrant liability
—

 
(181
)
 
17

 
(196
)
Total other (expense)
(27
)
 
(566
)
 
(98
)
 
(692
)
Net (loss)
$
(4,028
)
 
$
(4,980
)
 
$
(9,282
)
 
$
(9,258
)
Basic and Diluted Net (Loss) Per Share
$
(0.28
)
 
$
(0.51
)
 
$
(0.66
)
 
$
(0.95
)
Basic and Diluted Weighted-Average Shares Outstanding
14,538

 
9,715

 
14,042

 
9,709




Cancer Genetics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
Six Months Ended June 30,
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net (loss)
$
(9,282
)
 
$
(9,258
)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
 
 
 
Depreciation
1,016

 
680

Amortization
174

 
17

Provision for bad debts
—

 
216

Stock-based compensation
1,024

 
1,454

Change in fair value of acquisition note payable
(101
)
 
406

Change in fair value of Gentris contingent consideration
—

 
(162
)
Change in fair value of warrant liability
(17
)
 
196

Amortization of debt issuance costs
6

 
2

Loss in equity method investment
27

 
405

Changes in:
 
 
 
Accounts receivable
(5,323
)
 
(910
)
Other current assets
148

 
(457
)
Other non-current assets
(12
)
 
(73
)
Accounts payable, accrued expenses and deferred revenue
(253
)
 
162

Deferred rent payable and other
(9
)
 
(38
)
Net cash (used in) operating activities
(12,602
)
 
(7,360
)
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Purchase of fixed assets
(319
)
 
(257
)
Decrease in restricted cash
—

 
6,000

Patent costs
(86
)
 
(68
)
Net cash provided by (used in) investing activities
(405
)
 
5,675

CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Principal payments on capital lease obligations
(84
)
 
(29
)
Payments for deferred equity offering costs
—

 
(86
)
Proceeds from option exercises
—

 
23

Proceeds from offering of common stock, net of offering costs
4,517

 
—

Principal payments on bank term note
(333
)
 
—

Payment of debt issuance costs
—

 
(33
)
Net cash provided by (used in) financing activities
4,100

 
(125
)
Net (decrease) in cash and cash equivalents
(8,907
)
 
(1,810
)
CASH AND CASH EQUIVALENTS
 
 
 
Beginning
19,459

 
25,554

Ending
$
10,552

 
$
23,744

SUPPLEMENTAL CASH FLOW DISCLOSURE
 
 
 
Cash paid for interest
$
202

 
$
72



August 10, 2016 Q2 2016 Earnings Call Nasdaq (CGIX) THE ONCOLOGY DIAGNOSTICS PARTNER FROM BENCH TO BEDSIDE

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Forward-Looking Statements 2 These slides may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, future growth in research, technology, clinical development and potential opportunities for Cancer Genetics, Inc. products and services, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management 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 the development and/or commercialization of potential products, risks of cancellation of customer contracts or discontinuance of trials, risks that anticipated benefits from acquisitions will not be realized, uncertainty in the results of clinical trials or regulatory approvals, need and ability to obtain future capital, maintenance of intellectual property rights and other risks discussed in the Cancer Genetics, Inc. Forms 10-K for the year ended December 31, 2015 and 10-Q for the quarter ended June 30, 2016 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.

 
EVERYTHING WE DO AT CGI IS FOCUSED ON ONE KEY IDEA… …DELIVER INNOVATION & PATIENT VALUE BY PROVIDING THE MOST COMPREHENSIVE CAPABILITIES IN ONCOLOGY DIAGNOSTICS & PRECISION MEDICINE

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Large, Global Market Opportunities $458B GLOBAL ONCOLOGY SPEND BY 2030 Global Footprint Created by Highly Strategic M&A 3 TRANSFORMATIVE ACQUISITIONS IN 2014 & 2015 Strong & Growing Partnerships with Leading BioPharma CONTRACTS WITH 8 of 10 TOP BIOPHARMA +650% INC. WITH BIOPHARMA(1) CUSTOMERS 2012-2015 Innovation Engine & Expertise Driven By Key Collaborations 15 RESEARCH COLLABORATIONS WITH LEADING INSTITUTIONS Unique, Proprietary Portfolio of Genomic Tests & Panels 11 COMMERCIALLY LAUNCHED TESTS 49 US PATENTS AND 100+ FOREIGN PATENTS Diversified & High Growth Revenue Streams 77% Revenue Growth 2014-2015 | 43% 4-YEAR CAGR World-Class Management Team 100+ CUMULATIVE YEARS OF EXPERIENCE Investor Highlights: Cancer Genetics Addresses the Trends in Oncology from Bench to Bedside (1) In signed contracts & potential revenue 4

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call 2nd Quarter 2016 Revenue Highlights 67% REVENUE GROWTHFROM Q2 2015 Q2 TOTAL REVENUE GREW FROM $4.2M TO 2015 2016 $1.5 $4.2 $7.0 $0 $4 $7 3-Year CAGR 67.1% Q 2 201 4 Q 2 201 5 Q 2 201 6 5

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Revenues By Category 6 BIOPHARMA SERVICES CLINICAL SERVICES DISCOVERY SERVICES 64% 30% 6% Q2 2015 $4.2 Mn  206% increase in clinical test volume over Q2 2015 due to enhanced portfolio in both immuno-oncology testing and our solid tumor center of excellence  Driven by support for pre-clinical and translational initiatives by research organizations  Launched 11 Immuno-Oncology clinical trials and studies focused on Solid Tumor and Blood Cancers  Over 50 new projects closed $4.2 Mn $2.5 Mn $0.2 Mn 60% 36% 4% Q2 2016 $7.0 Mn

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Q2 2016 Revenue Trends & Drivers 7  Negotiated and executed over 50 new contracts and project extensions for biopharma testing throughout CGI.  $6+ million in biopharma contracts closed during Q1 2016; contracts will deliver future revenue during 2016-18.  Total Q2 2016 clinical services test count reached over 7,100 tests, an increase of more than 200% over Q2 2015 and an 8% increase over Q1 2016.  CGI brought its total number of immuno-oncology trials for testing and validation services to 20, which is up significantly from 12 during Q1 2016. 3 12 20 Q 4 2 0 1 5 Q 1 2 0 1 6 Q 2 2 0 1 6 # of Immuno-Oncology Trials 37 41 47 Q 4 2 0 1 5 Q 1 2 0 1 6 Q 2 2 0 1 6 Biopharma Signed Contracts (Expected Revenue $ in Millions) $ $ $

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Q2 2016 Corporate Highlights 8  Launched a proprietary comprehensive next-generation sequencing panel FOCUS::Lymphoma™ with CLIA validation to apply in both clinical care and trials by biotech and pharmaceutical companies.  FOCUS::CLL™ became the first New York State-Approved NGS panel targeting diagnosis and prognosis in chronic lymphocytic leukemia.  Announced offering of multiple FDA-approved PD-L1 tests, including those by Dako and Ventana for lung cancer and urothelial cancer, respectively.  Announced the acceptance of a poster at USCAP highlighting the actionable, clinical value of the FDA-cleared Tissue of Origin test.  Added healthcare industry-veteran John “Jay” Roberts as COO and EVP of Finance

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Q2 2016 Collaboration Highlights 9  Biopharmaceutical company, H3 Biomedicine Inc. (H3), selected CGI to provide clinical biomarker services for H3’s lead oncology drug candidate H3B-8800, an anticancer therapeutic agent being developed for the potential treatment of select hematologic (blood based) cancers.  CGI and Sayre Therapeutics entered into a distribution agreement to commercialize CGI’s FDA-cleared Tissue of Origin test throughout India and South Asia.  Announced results at ASCO with HTG, Keck School of Medicine at USC and Japan Clinical Cancer Research Organization of using immune- related genes to identify subtypes of patients associated with clinical outcome in metastatic colon cancer.

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Our Three Pillars of Innovation I. UNIQUE CONTENT VIA PARTNERSHIPS & COLLABORATIONS II. IMMUNO-ONCOLOGY CAPABILITIES THAT ARE INDUSTRY LEADING III. LIQUID BIOPSY HIGH SENSITIVITY CELL-FREE ANALYSIS • Mayo Clinic Oncospire Genomics joint venture targeting hematological cancers • Columbia University Genomic signatures for myelodysplastic syndromes and AML • Huntsman Cancer Center Patient response to kidney cancer frontline therapies • HTG Collaboration Expression of genes implicated in patient immune responses to tumors • Dako / Ventana CDx Dako 22C3 and Ventana SP263 CDx test for KEYTRUDA® • Unique Immunophentotyping Panel Commercialization of Comprehensive IO Panel via FLOW Cytometry • Portfolio Updates Anticipated launch of focused, multi-gene liquid biopsy tests for lung and renal cancer in upcoming quarters • Omcomine™Lung cfDNA Assay Detection levels down to 0.1% with 90% sensitivity and >98% specificity for point mutations and indels using only a single blood sample 10

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call Summary Statement of Operations 11 Income Statement Item ($ in Thousands) Q2 2015 Q1 2016 Q2 2016 Revenue $4,185 $6,068 $7,000 Gross Profit 1,088 1,965 2,716 Gross Margin (%) 26% 32% 39% Research & Development (R&D) 1,256 1,532 1,680 Sales & Marketing (S&M) 1,184 1,298 1,379 General & Administrative (G&A) 3,062 4,318 3,658 Operating Profit (Loss) (4,414) (5,183) (4,001) Net Income (Loss) (4,980) (5,254) (4,028) Balance Sheet Information ($ in Thousands) Actual 06/30/16 Cash $10,552 Stockholders’ Equity 29,159

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call 12  Revenues were $7.0 million, a 67% increase over Q2 2015 revenues of $4.2 million, and 15% sequential growth over Q1 2016.  Revenue from Biopharma Services grew 26% and Clinical Services increased by 4% sequentially over Q1 2016.  Gross profit margins improved to 39% an improvement from 26% in Q2 2015 and a sequential increase from 32% during Q1 2016.  Total cash was $10.6 million. Q2 2016 Financial Highlights: Revenue $4.0 $5.5 $6.1 $7.0 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Trailing 12-Month Revenue Growth ($ in Millions)

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q2 2016 Earnings Call 13  Expenses for the quarter were $11.0 million, a 2.2% improvement over Q1 2016 expenses of $11.3 million.  COGS was $4.3 million, a modest 4% increase over Q1 2016 while revenue grew 15%.  G&A expenses were $3.7 million, a 15% improvement over Q1 2016.  S&M expenses were $1.4 million.  R&D expenses were $1.7 million, a 10% increase over Q1 2016 as a result of developing the immuno-oncology offering and validation of the new NGS panels.  One-time costs during Q2, including severance-related items, were ~$400 K.  Operating loss for Q2 2016 was $4.0 million, and net loss was $4.03 million, a sequential improvement of $1.2 or ~23% over operating and net losses in Q1 2016. Q2 2016 Financial Highlights: Expenses $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 Q2 2015 Q1 2016 Q2 2016 Operating Loss Net Loss Operating Loss and Net Loss

 
THE ONCOLOGY DIAGNOSTICS PARTNER FROM BENCH TO BEDSIDE WWW.CGIX.COM WWW.CANCERGENETICS.COM CGI Headquarters 201 Route 17 North Rutherford, NJ 07070 Phone: +1 201-528-9200 Fax: +1 201-528-9235 RUTHERFORD, NJ Research Triangle Park 133 Southcenter Court Morrisville, NC 27569 Phone: +1 919-465-0100 Fax: +1 919-465-0554 RALEIGH, NC LOS ANGELES, CA 1640 Marengo Street Fourth Floor Los Angeles, CA 90033 Phone: +1 323-224-3900 Fax: +1 323-224-3096 #3-1-135/1A CNR Complex Mallapur Main Road, R.R. Dst. Hyderabad – 500 076, Telangana Toll-free: +91 040-2717-8178 Fax: +91 040-2717-8176 HYDERABAD, INDIA 781 Cai Lun Road, Room 803 Shanghai 201203 P.R. China Toll-free: +91 040-2717-8178 Fax: +91 040-2717-8176 SHANGHAI, CHINA

 

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