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SEC Filings

424B5
ONCOCYTE CORP filed this Form 424B5 on 02/07/2019
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RISK FACTORS

 

Investing in our securities involves a high degree of risk and uncertainty. You should carefully consider these risk factors, together with all of the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus, as modified and superseded, before you decide to invest in our securities. The occurrence of any of the following risks could harm our business. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations. You should also refer to the other information contained in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus, including our financial statements and the notes to those statements and the information set forth in the section entitled “Special Note Regarding Forward-Looking Statements.”

 

Risks Related to our Business Operations

 

We have limited capital, marketing, and sales resources and no distribution resources for the commercialization of DetermaVu™.

 

If we are successful in completing the remaining steps of Analytical Validation, CLIA Validation, and Clinical Validation for DetermaVu™, we will need to build our own marketing and sales capability, which will require the investment of significant financial and management resources to recruit, train, and manage a sales force and build-out a health care regulatory compliance program. In the alternative, due to our limited capital resources, we may need to enter into marketing arrangements with other diagnostic companies for DetermaVu™. Under such marketing arrangements we may license marketing rights to one or more other companies or to one or more joint venture companies formed to market DetermaVu™, and we might receive only a royalty on sales of DetermaVu™ or an equity interest in a joint venture company. As a result, our revenues from the sale of DetermaVu™ may be substantially less than the amount of revenues and gross profits that we might receive if we were to market DetermaVu™ ourselves.

 

We may experience delays in conducting the additional validation studies necessary for the commercialization of DetermaVu™, or we may encounter unanticipated results or findings.

 

Having concluded our R&D validation study, our next step prior to commercialization of DetermaVu™ will be to conduct an analytical validation study, and, assuming successful completion, a CLIA validation and clinical validation study thereafter. Clinical validation is the final step prior to commercial launch of a laboratory-developed test, or LDT, and we are targeting completion of a clinical validation during the second half of 2019. If these studies are completed successfully, we plan to commercialize or to arrange for the commercialization of the test as a laboratory-developed test to be run solely in our clinical laboratory in Alameda, CA. Until we perform these studies, we will not know whether we can successfully complete the development of DetermaVu™. We have limited experience conducting analytical and clinical validation and have not yet performed a clinical utility demonstration in our lab. We may not be able to successfully complete this testing for DetermaVu™ or any other test we may develop. While we plan to make DetermaVuTM commercially available in the second half of 2019, there can be no assurance that there will be no delays in the successful completion of the clinical validation study and commercialization of DetermaVu™, due to any number factors some of which may not be within our control. Any delays in the successful completion of the additional validation studies for DetermaVu™ could cause us to incur significant additional costs and delay the completion of development and commercial launch of DetermaVu™. We may encounter unanticipated results or finding in the studies subsequent to our R&D validation study; our earlier test results may not be predictive of future test results with DetermaVu™ or any other future candidate tests. We have performed only limited R&D work for any other test or for any other intended patient population outside of lung cancer, and we have conducted no R&D work outside of cancer. Our immune system interrogation approach and technology may not ultimately have application in any other population, and we may be unable to identify any future candidates and tests for any other cancer or any other disease population.

 

Our testing of DetermaVu™ is conducted in a single, CLIA-certified laboratory. Our operations as a clinical laboratory are subject to oversight by the Centers for Medicare & Medicaid Services, or CMS, under the Clinical Laboratory Improvement Amendments, or CLIA, as well as certain state agencies, and any failure to maintain our CLIA or applicable state permits and licenses may affect our ability to commercialize DetermaVuTM.

 

We are subject to CLIA, a federal law regulating clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. Our clinical laboratory must be certified under CLIA in order for us to perform testing on human specimens. CLIA is intended to ensure the quality and reliability of clinical laboratories in the United States by mandating specific standards in the areas of personnel qualifications, administration, and participation in proficiency testing, patient test management, quality control, quality assurance and inspections. We have a current certificate under CLIA to perform routine chemistry. To renew this certificate, we are subject to survey and inspection every two years. Moreover, CLIA inspectors may make periodic inspections of our clinical laboratory outside of the renewal process.

 

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