8-K: Oncocyte and Bio-Rad Partner for Global Launch of Transplant Assay, Bio-Rad to Make Equity Investment

Oncocyte Corporation and Bio-Rad Laboratories have entered into a collaboration agreement to commercialize Oncocyte's transplant monitoring assays, with Bio-Rad making an equity investment and gaining global distribution rights.

Summary

• Oncocyte Corporation has partnered with Bio-Rad Laboratories to commercialize Oncocyte's GraftAssure transplant monitoring assays.
• The collaboration includes both research use only (RUO) assays and in vitro diagnostic (IVD) kits.
• Bio-Rad will provide its ddPCR instruments and reagents, while Oncocyte will handle sample collection, testing, and manufacturing of the RUO assays.
• The companies will co-market the RUO assays in the US and Germany, with Bio-Rad having exclusive rights outside these territories.
• Bio-Rad has an option to exclusively commercialize the IVD kits globally, which would trigger a further equity investment in Oncocyte.
• The agreement has a 10-year term, subject to standard termination clauses.
• The GraftAssure assay is expected to launch in Q2 2024 to select academic centers and more broadly in the second half of the year.
• The global market for dd-cfDNA testing is estimated to exceed $1 billion, with 3 million testing opportunities.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the strategic partnership with Bio-Rad, the potential for significant market growth, and the equity investment. The risks are acknowledged but do not overshadow the positive aspects.

Positives

• The partnership with Bio-Rad provides Oncocyte with a strong commercialization partner and access to Bio-Rad's ddPCR technology.
• Bio-Rad's equity investment provides Oncocyte with additional capital.
• The agreement provides Oncocyte with co-marketing rights in the US and Germany, while Bio-Rad handles global distribution.
• The potential for a second equity investment upon Bio-Rad exercising its IVD option provides further financial upside.
• The launch of GraftAssure in Q2 2024 represents a near-term revenue opportunity.
• The global market for dd-cfDNA testing is large and growing, offering significant potential for Oncocyte.

Negatives

• Oncocyte will pay Bio-Rad a single-digit royalty on net sales of RUO assays in the co-marketing territories.
• The agreement is subject to standard termination provisions, which could impact the collaboration.
• The second equity investment is contingent on Bio-Rad exercising its option for IVD commercial rights.
• The success of the collaboration depends on the ability of both companies to execute their respective responsibilities.

Risks

• The development and commercialization of diagnostic tests involve inherent risks.
• Clinical trials or regulatory approvals may not be successful.
• There are potential interruptions to supply chains.
• Oncocyte may need to obtain future capital.
• The company needs to maintain intellectual property rights.
• There are risks associated with strategic transactions, such as the failure to realize anticipated benefits.
• There are potential legal, regulatory, or political changes in applicable jurisdictions.
• There is a risk of failure to maintain laboratory accreditation or certification.

Future Outlook

The company expects to launch the GraftAssure product in Q2 2024 to select academic transplant centers in the US and EU and more broadly in the second half of the year. The companies also plan to develop a regulated product for wider distribution and clinical adoption. Bio-Rad has an option for IVD commercial rights at FDA clearance, which could lead to a second equity investment.

Management Comments

• Josh Riggs, Oncocyte's CEO, stated that having the support of the Bio-Rad team in the US and Germany gives them the scale they need to meet the market opportunity.
• Josh Riggs also noted that Bio-Rad's QX600 ddPCR platform and expertise in the life science market make them a natural partner for Oncocyte's transplant technology.

Industry Context

This collaboration aligns with the growing trend of partnerships between diagnostic companies and larger life science firms to expand market reach and accelerate commercialization. The focus on transplant monitoring also reflects the increasing demand for non-invasive diagnostic tools in this area.

Comparison to Industry Standards

• The collaboration between Oncocyte and Bio-Rad is similar to other partnerships in the diagnostics industry where smaller companies leverage the distribution and commercialization capabilities of larger players.
• For example, companies like Exact Sciences have partnered with larger healthcare companies to expand the reach of their diagnostic tests.
• The use of ddPCR technology is also becoming more common in diagnostics, with companies like Quanterix also utilizing similar technologies for their assays.
• The estimated market size of $1 billion for dd-cfDNA testing is consistent with industry reports on the growth of liquid biopsy and non-invasive testing markets.

Stakeholder Impact

• Shareholders will benefit from the partnership with Bio-Rad and the potential for increased revenue and profitability.
• Employees may see new opportunities for growth and development.
• Customers will have access to new and improved diagnostic tests.
• Suppliers may see increased demand for their products and services.
• Creditors may see improved financial stability for Oncocyte.

Next Steps

• Oncocyte will work with Bio-Rad to develop and commercialize the RUO assays.
• The GraftAssure assay is expected to launch in Q2 2024 to select academic centers.
• The companies will develop a plan to market and sell the RUO assays.
• Bio-Rad will evaluate its option for exclusive global commercialization of the IVD kits.
• Oncocyte will manufacture and supply the RUO assays and potentially the IVD kits.

Key Dates

Keywords

Oncocyte, Bio-Rad, GraftAssure, VitaGraft, ddPCR, transplant monitoring, diagnostics, collaboration, equity investment, commercialization