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Form 8-K CANCER GENETICS, INC For: Nov 10

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November 10, 2016 7:02 AM EST
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): November 10, 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 November 10, 2016, Cancer Genetics, Inc. (the “Registrant”) issued a press release regarding financial results for the fiscal quarter ended September 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 September 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 November 10, 2016.

Exhibit 99.2 – Slide presentation for Q3 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:    November 10, 2016



-3-

November 10, 2016

cgixearningsrelease11_image1.jpg


Cancer Genetics, Inc. Announces Strong Third Quarter With 68% Year over Year Revenue Growth and Highlights Path to Future Profitability

•
Company reports third quarter revenues of $6.8 Million, an increase of 68% over the third quarter of 2015
•
The revenue growth rate was 58% for the first 9 months of 2016 as compared to 2015
•
Company continues to decrease operating expenses both in sequential quarters and year over year
•
Signed contracts for expected future revenue with pharmaceutical and biotech companies have increased to $49 Million
•
Cancer Genetics will host a conference call Thursday, November 10, 2016 at 8:30 AM Eastern Time (ET) / 5:30 AM Pacific Time (PT)

RUTHERFORD, N.J., Nov 10, 2016 (GLOBE NEWSWIRE) -- Cancer Genetics, Inc. (Nasdaq: CGIX), an emerging leader in enabling precision medicine for oncology through the use of molecular markers and information, announced today financial and operating results for the third quarter ended September 30, 2016 and provided other company and business updates.
Total revenues were $6.8 million in the third quarter of 2016 and included $3.8 million from Biopharma services, $2.7 million from Clinical services, and $0.3 million from Discovery services compared with total revenue of $4.0 million in the third quarter of 2015, an increase of 68 percent. For the first nine months of 2016 revenues were $19.8 million as compared to $12.6 million for the first nine months of 2015, a 58% increase. The company also improved its loss from operations by 28% year over year, from $5.6 million during Q3 of 2015 to $4.0 million during Q3 of 2016.
Panna Sharma, Cancer Genetics CEO and President commented, “During this past quarter we improved all aspects of our business: organic growth, cost of operations, contracts with biotech and pharmaceutical companies, capturing cost and revenue synergies from our Center of Excellence in Solid Tumor Profiling, and advancements in our disease-specific NGS panels for Renal Cancer, Lymphomas, and Multiple Myeloma.”


Financial results and highlights for the quarter ended September 30, 2016 include:
•
Revenues were $6.8 million, a 68% increase over the third quarter of 2015 with Biopharma services contributing $3.8 million, Clinical services contributing $2.7 million, and Discovery services contributing $0.3 million.
•
Gross profit margins improved by $1.4 million or 12% to 34% or $2.3 million as compared to only $0.9 million or 22% during the 3rd quarter of 2015.
•
Organic revenue growth was 19% when excluding tests and services performed at the Solid Tumor Center of Excellence, formerly Response Genetics.
•
Q3 Clinical services test volumes increased by 204% to 7,334 over Q3 of 2015 – driven by an increase in immuno-oncology testing, companion diagnostic testing for PD-L1 and solid tumor profiling.
•
Clinical services revenue also grew in sequential quarters from Q2 to Q3 of 2016 by 6%.
•
Operating expenses continue to decrease, with an improvement of 6% over sequential quarters, from Q2 to Q3 of 2016 or $0.4 million – from $6.7 million to $6.3 million.
•
Operating expenses have decreased 20% over the past 3 quarters, from $7.9 million in Q4 of 2015, after the acquisition of Response Genetics, to $6.3 million in the most recent quarter, as the Company progresses towards being profitable.
•
Total expenses for Q3 were $10.8 million, which includes non cash items of $1.1 million and were down 2% from $11.0 million during Q2 and down 4% from $11.3 million during Q1 of 2016
•
Total cash at the end of the quarter was $10.7 million.
For the third quarter ended September 30, 2016, Cancer Genetics reported a net loss of $3.7 million or $0.23 per diluted share, as compared with a net loss of $5.2 million or $0.56 per diluted share for the Q3 of 2015. Earnings also improved in sequential quarters, from Q2 to Q3 of 2016 from a net loss of $4.0 million to $3.7 million.
Jay Roberts, Cancer Genetics COO and EVP of Finance commented, “We continue to find ways to streamline our processes, lower operating costs and improve our efficiency so that we can effectively deliver state-of-the-art biomarker and genomic information to our customers and collaborators. We are continuing to add to our Biopharma contracts and expect to improve our margin profile from the delivery of these projects by taking concrete and measured steps to integrate teams and technologies.”
Mr. Roberts continued, “Our facility in India continues to grow the customer base for NGS and Discovery services, and our focus is to also use this infrastructure and capability to improve our cost profile for key operational activity in finance, analytics and billing – all functions that require on-demand availability, and can leverage technology enabled processes. This will accelerate our ability to drive higher margins and get to profitability in our core operations.”
During the third quarter of 2016, Cancer Genetics continued to make progress on advancing our portfolio in both liquid biopsy based testing and in aligning resources and capabilities for a launch into


hereditary cancer testing. The Company’s partnership with Apocell, an MD-Andersen spinout focused on rare cell detection and capture, will provide CGI with unique capabilities to isolate and capture a wide range of cell free DNA and RNA, along with CTCs (circulating tumor cells) and other cell types such as macrophages, T-cells and other immune-related cells.
Additionally, CGI announced a partnership with the Bio Analytical Research Corporation (BARC), a global central laboratory supporting clinical trials and serving large pharmaceutical and biotech companies globally, including in Europe, Africa, China, Australia and the USA. BARC and CGI are expected to jointly market, sell and deliver on contracts that service a market that is increasingly global, and in demand for more validated biomarker and companion strategies that support oncology trials. Together, the two companies will leverage their respective expertise to provide key insights to the oncology drug development and clinical trial process, one that is expected to reach over $5.4 billion in spending on oncology trials that need biomarker and genomic testing support according to a recent industry report by PhRMA.
Mr. Sharma commented, “Partnerships with leaders that are enabling precision medicine in oncology are important for us to broaden our footprint, and develop new capabilities that are needed in the marketplace while maintaining control over direct sales expenses.”
The Company is also now involved in over 27 immuno-oncology trials and projects, many of which are leveraging both the genomic and immune marker testing platforms of the Company. Mr. Sharma commented, “Our unique ability to provide comprehensive immune marker data along with unique genomic content is driving significant growth among our existing biotech and pharmaceutical companies and also with new Biopharma companies. Many of these trials and studies are requiring more technology and more sensitive and accurate methods to stratify and monitor immune response and immune therapy effectiveness in patients and across patient populations. CGI is in a unique position to deliver this data in a collaborative manner to our customers.”
Other corporate highlights for the quarter ended September 30, 2016 include:
•
CGI launched Focus::Renal™, a unique, comprehensive and highly sensitive next generation sequencing (NGS) panel for enabling precision and personalized medicine for renal cancers.
•
Strengthened our position as a leader in myeloid cancer diagnosis and management by receiving New York State approval for Focus::Myeloid™, our NGS panel for diagnosis, risk stratification and therapy selection for myeloid cancers.
•
Presented insights and details on CGI’s technology and platforms for patient stratification and improved diagnosis in immunotherapy trials at the Companion Diagnostics (CDx) Symposium.


•
Increased the number of clinical trials and studies we are supporting in immuno-oncology to over 27.
Mr. Sharma concluded, “Our third quarter was one where we continued to execute across all measures, revenue growth, expense improvement and cross-site integration, as well as partnerships and portfolio development. Our team is highly focused on expanding our market share with both Biopharma and Clinical customers in a highly differentiated manner while continuing to improve our expense structure.”
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
Thursday, November 10, 8:30 AM Eastern Time

Domestic: 877-723-9502
International: 719-325-4747
Conference ID: 3129820
Webcast: http://public.viavid.com/index.php?id=121874

Replays – Available through November 24, 2016
Domestic: 844-512-2921
International: 412-317-6671
Conference ID: 3129820


ABOUT CANCER GENETICS
Cancer Genetics, Inc. is an emerging leader in enabling precision medicine for oncology through the use of molecular markers and information. 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: 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 September 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.


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

 
September 30,
2016
 
December 31,
2015
ASSETS
 
 
 
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$
10,716

 
$
19,459

Accounts receivable, net of allowance for doubtful accounts
13,679

 
6,621

Other current assets
2,185

 
2,118

Total current assets
26,580

 
28,198

FIXED ASSETS, net of accumulated depreciation
4,912

 
6,069

OTHER ASSETS
 
 
 
Restricted cash
300

 
300

Patents and other intangible assets, net of accumulated amortization
1,594

 
1,727

Investment in joint venture
296

 
341

Goodwill
12,029

 
12,029

Other
112

 
220

Total other assets
14,331

 
14,617

Total Assets
$
45,823

 
$
48,884

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES
 
 
 
Accounts payable and accrued expenses
$
8,341

 
$
7,579

Obligations under capital leases, current portion
69

 
122

Deferred revenue
210

 
831

Bank term note, current portion
2,000

 
1,333

Total current liabilities
10,620

 
9,865

Obligations under capital leases
228

 
276

Deferred rent payable and other
299

 
315

Warrant liability
2,814

 
17

Deferred revenue, long-term
864

 
752

Bank term note
3,151

 
4,642

Total Liabilities
17,976

 
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, 18,870 and 13,652 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
2

 
1

Additional paid-in capital
139,023

 
131,167

Accumulated (deficit)
(111,178
)
 
(98,151
)
Total Stockholders’ Equity
27,847

 
33,017

Total Liabilities and Stockholders’ Equity
$
45,823

 
$
48,884






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

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenue
$
6,750

 
$
4,001

 
$
19,819

 
$
12,556

Cost of revenues
4,444

 
3,103

 
12,832

 
9,342

Gross profit
2,306

 
898

 
6,987

 
3,214

Operating expenses:
 
 
 
 
 
 
 
Research and development
1,594

 
1,802

 
4,806

 
4,335

General and administrative
3,701

 
3,487

 
11,677

 
9,536

Sales and marketing
1,054

 
1,243

 
3,731

 
3,543

Total operating expenses
6,349

 
6,532

 
20,214

 
17,414

Loss from operations
(4,043
)
 
(5,634
)
 
(13,227
)
 
(14,200
)
Other income (expense):
 
 
 
 
 
 
 
Interest expense
(111
)
 
(112
)
 
(344
)
 
(227
)
Interest income
4

 
5

 
21

 
30

Change in fair value of acquisition note payable
18

 
315

 
119

 
(91
)
Change in fair value of warrant liability
712

 
214

 
729

 
18

Other expense
(325
)
 
—

 
(325
)
 
—

Total other (expense)
298

 
422

 
200

 
(270
)
Net (loss)
$
(3,745
)
 
$
(5,212
)
 
$
(13,027
)
 
$
(14,470
)
Basic Net (Loss) Per Share
$
(0.23
)
 
$
(0.54
)
 
$
(0.88
)
 
$
(1.49
)
Diluted Net (Loss) Per Share
$
(0.23
)
 
$
(0.56
)
 
$
(0.88
)
 
$
(1.49
)
Basic Weighted-Average Shares Outstanding
16,519

 
9,726

 
14,868

 
9,715

Diluted Weighted-Average Shares Outstanding
16,519

 
9,728

 
14,868

 
9,716







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

 
Nine Months Ended September 30,
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net (loss)
$
(13,027
)
 
$
(14,470
)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
 
 
 
Depreciation
1,502

 
971

Amortization
260

 
26

Provision for bad debts
8

 
213

Stock-based compensation
1,538

 
2,178

Change in fair value of acquisition note payable
(119
)
 
91

Change in fair value of Gentris contingent consideration
—

 
(162
)
Change in fair value of warrant liability
(729
)
 
(18
)
Amortization of debt issuance costs
9

 
5

Loss in equity method investment
45

 
748

Changes in:
 
 
 
Accounts receivable
(7,066
)
 
(349
)
Other current assets
(67
)
 
(368
)
Other non-current assets
(9
)
 
(86
)
Accounts payable, accrued expenses and deferred revenue
372

 
1,330

Deferred rent payable and other
(16
)
 
(59
)
Net cash (used in) operating activities
(17,299
)
 
(9,950
)
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Purchase of fixed assets
(345
)
 
(440
)
Decrease in restricted cash
—

 
6,000

Patent costs
(127
)
 
(109
)
Deposit for acquisition of Response Genetics
—

 
(880
)
Net cash provided by (used in) investing activities
(472
)
 
4,571

CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Principal payments on capital lease obligations
(101
)
 
(44
)
Payments for deferred equity offering costs
—

 
(237
)
Proceeds from option exercises
—

 
23

Proceeds from offerings of common stock with derivative warrants, net of certain offering costs
9,962

 
34

Principal payments on bank term note
(833
)
 
—

Payment of debt issuance costs
—

 
(33
)
Net cash provided by (used in) financing activities
9,028

 
(257
)
Net (decrease) in cash and cash equivalents
(8,743
)
 
(5,636
)
CASH AND CASH EQUIVALENTS
 
 
 
Beginning
19,459

 
25,554

Ending
$
10,716

 
$
19,918

SUPPLEMENTAL CASH FLOW DISCLOSURE
 
 
 
Cash paid for interest
$
250

 
$
158




Q3 2016 EARNINGS CALL Nov 10, 2016

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Forward-Looking Statements 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 September 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. P.2

 
EVERYTHING WE DO IS FOCUSED ON 1 KEY IDEA… …DELIVER INNOVATION & PATIENT VALUE BY PROVIDING THE MOST COMPREHENSIVE CAPABILITIES IN PRECISION MEDICINE FOR ONCOLOGY DIAGNOSTICS.

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 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 18 RESEARCH COLLABORATIONS WITH LEADING INSTITUTIONS Unique, Proprietary Portfolio of Genomic Tests & Panels 14 COMMERCIALLY LAUNCHED TESTS 49 US PATENTS AND 95 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 Key Trends in Oncology from Bench to Bedside (1) In signed contracts & potential revenue P.4

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call 3rd Quarter 2016 Revenue Highlights 68% REVENUE GROWTHFROM Q3 2015 Q3 TOTAL REVENUE GREW FROM $4.0M TO 2015 2016 $1.5 $4.0 $6.8 $0 $4 $7 3-Year CAGR 65% Q 3 2 0 1 4 Q3 2 0 1 5 Q 3 2 0 1 6 P.5 M M M N u m ber s in $ m illion s Year-over-year 3rd Quarter Revenue Growth

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Revenues By Category BIOPHARMA SERVICES CLINICAL SERVICES DISCOVERY SERVICES 65% 29% 6% Q3 2015 $4.0 Mn  204% increase in clinical test volume over Q3 2015 due to enhanced portfolio in both immuno-oncology testing and our solid tumor center of excellence  Driven by support for translational research and bioinformatics by research organizations  Launched 11 Immuno-Oncology clinical trials and studies focused on Solid Tumor and Blood Cancers $3.8 Mn $2.7 Mn $0.3 Mn 56% 40% 4% Q3 2016 $6.8 Mn P.6

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Q3 2016 Financial Highlights  Revenues were $6.8 million, a 68% increase over Q3 2015 revenues of $4.0 million Q2 2016, with Biopharma services contributing $3.8 million, Clinical services contributing $2.7 million and discovery services contributing $0.3 million.  Organic revenue growth was 19% when excluding tests and services performed at the Solid Tumor Center of Excellence, formerly Response Genetics, Inc.  Q3 2016 Clinical services test volumes increased by 204% to 7,334 over Q3 2015, driven by an increase in immuno-oncology testing, companion diagnostic testing for PD-L1 and solid tumor profiling. P.7

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Q3 2016 Financial Highlights, continued  Gross profit margins improved by $1.4 million or 12%, to $2.3 million or 34% as compared to only $0.9 million or 22% during the 3rd quarter of 2015.  Operating expenses continue to decrease, with an improvement of 6% over sequential quarters, from Q2 to Q3 of 2016, or $0.4 million, from $6.7 million to $6.3 million.  Operating expenses have decreased 20% over the past 3 quarters, as the Company progresses towards being profitable.  Total expenses for Q3 2016 were $10.8 million, which includes non-cash items of $1.1 million and were down 2% from $11.0 million during Q2 and down 5% from $11.3 million during Q1 of 2016.  Total cash at the end of the quarter was $10.7 million. P.8

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Path Towards Profitability: Key Trends 3.0 4.0 5.0 6.0 7.0 8.0 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Last 5 Quarters - Revenue and Operating Expenses* Revenue Operating Expenses 4.0 5.5 6.1 7.0 6.8 6.5 7.9 7.2 6.7 6.3 * Amounts in $ millions Post Response Acquisition  Revenues were $6.8 million, a 68% increase over Q3 2015 revenues of $4.0 million.  Q3 2016 Operating Expenses were 3% lower than the standalone expenses in Q3 2015 prior to the Company’s acquisition of Response Genetics, Inc. in October 2015.  Response Genetics, Inc. has been fully integrated into the Company’s operations.  Continued optimization of labor costs across the enterprise, positively impacting cost of revenue and G&A expenses through process improvement initiatives and leveraging India operations.  Negotiating improved purchasing terms for supplies, reagents and service providers. Pre-Response Acquisition P.9

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Q3 2016 Financial Highlights: Expenses and Cost Control  Continued optimization of headcount after the acquisition of Response Genetics, Inc. with a reduction of 50 full time employee equivalents since Q4 2015.  Headcount reduction resulted in a decrease in annualized salary expenses of $3.2 million.  The Company continues functional consolidation of roles and realignment of its sales and laboratory operations.  Continuing to support and emphasize a collaborative corporate culture, thru strong employee engagement and a focus on cross-site projects and activities. 128 191 168 156 141 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 P.10 Full Time Employees and Equivalents (US) Response Acquisition

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Q3 2016 Corporate Highlights  Launched a proprietary comprehensive NGS panel for kidney cancer, FOCUS::Renal™ with CLIA validation to apply in both clinical care and trials by biotech and pharmaceutical companies.  FOCUS::Myeloid™ NGS panel for improved diagnosis, risk stratification and therapy selection in myeloid cancers received New York State Approval for clinical testing.  Announced the acceptance of a presentation at the Companion Diagnostics Symposium highlighting patient stratification and diagnosis for immunotherapy trials.  Presentation at College of American Pathologists Meeting 2016 on Tissue of Origin.  Three poster presentations at Association for Molecular Pathology Annual Meeting. P.11

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Q3 2016 Collaboration / Partnership Highlights  Personalized medicine company, ApoCell, Inc., partnered with CGI to collaborate on transforming cancer profiling and therapy selection leveraging ApoCell’s proprietary, high-performance liquid biopsy platform for rare cell capture and detection.  CGI and BARC Global Central Laboratory entered into a collaboration to offer comprehensive clinical trial and companion diagnostic solutions for the oncology industry.  Finalizing plans to extend M3P for patient management under CLIA, a targeted NGS panel for patient stratification and drug development in multiple myeloma through OncoSpire Genomics, the Company’s joint venture with Mayo Clinic. P.12

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 2016 Earnings Call Summary Statement of Operations Income Statement Item ($ in Thousands) Q3 2015 Q2 2016 Q3 2016 Revenue $4,001 $7,000 $6,750 Gross Profit 898 2,716 2,306 Gross Margin (%) 22% 39% 34% Research & Development (R&D) 1,802 1,680 1,594 Sales & Marketing (S&M) 1,243 1,379 1,054 General & Administrative (G&A) 3,487 3,658 3,701 Operating Profit (Loss) (5,634) (4,001) (4,043) Net Income (Loss) (5,212) (4,028) (3,745) Balance Sheet Information ($ in Thousands) Actual 09/30/16 Cash $10,716 Stockholders’ Equity 27,847 P.13

 
Cancer Genetics, Inc. | NASDAQ: CGIX | Q3 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 ANALYSIS CELL-FREE CTCS AND EXOSOME • Mayo Clinic Oncospire Genomics joint venture targeting hematological cancers • Columbia University Genomic signatures for myelodysplastic syndromes and AML • Huntsman Cancer Center & University of Paris 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 Immuno-Oncology Panel via Flow 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 P.14

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

 

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