Renalytix Reports Financial Results for Third Quarter of Fiscal Year 2024

2024-05-15

LONDON and NEW YORK, May 15, 2024 (GLOBE NEWSWIRE) -- Renalytix plc (NASDAQ: RNLX) (LSE: RENX), an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease to drive improved patient outcomes and advance value-based care, today reported financial results for the fiscal third quarter ended March 31, 2024. The Company made continued progress towards commercial adoption with inclusion of KidneyIntelX in clinical guidelines, issuance of a Medicare coverage draft, performance of new direct to physician sales force, April launch of U.S. Food and Drug Administration (“FDA”) De Novo authorized kidneyintelX.dkd, and release of new real-world outcomes evidence. Optimization of shareholder value continues with year over year significant expense reductions, completion of equity financing, and the initiation of a strategic sale process. Highlights include: KidneyIntelX included as only biomarker test for prognostic risk assessment in landmark update of international clinical practice guidelines ( ) Medicare Local Coverage Determination draft issued for FDA-authorized kidneyintelX.dkd by Medicare contractor National Government Services (NGS) with final issuance expected in the near term Formal launch of the FDA-authorized kidneyintelX.dkd in April 2024 Customer experience improvements implemented including simplified physician order requisition, increased patient access to national blood draw network, revamped marketing and education materials New primary care sales force completed its first quarter of operations with a 33% quarter over quarter increase in independent primary care physician test order volume during the three months ended March 31, 2024 Appointed Howard Doran to president concurrent with organizational changes to focus to accelerating sales and marketing of FDA-authorized kidneyintelX.dkd test Formal strategic sale process initiated with multiple potential acquirers now in discussions Completed common stock equity financings raising aggregate gross proceeds of $13.5 million (including post-period activity) Continued operating expense reduction with 50% year-over-year reduction in head count and approximately 40% total lower operating costs With FDA and clinical guidelines achieved, process initiated for potential ex-U.S. partners to improve non-dilutive company cash position and expand incremental sales opportunities U.S. government added the FDA-authorized kidneyintelX.dkd to 10-year Government-wide Acquisition Contract (GWAC) at a price of $950 per reportable result. The contract covers tests provided by any government healthcare facility Total volume of 806 tests during the quarter, of which 82% were billable Third Quarter 2024 Financial Results During the three months ended March 31, 2024, the Company recognized $0.5 million of revenue, compared to $0.7 million for the three months ended March 31, 2023. Cost of revenue for the three months ended March 31, 2024 and 2023, was $0.6 million. Operating expenses for the three months ended March 31, 2024 were $6.5 million, compared to $11.0 million during the prior year period. Operating cash burn in the fiscal third quarter was $4.9 million, nearly 40% lower than the fiscal second quarter and a 50% reduction from the year ago period. Within operating expenses, research and development expenses were $2.2 million for the three months ended March 31, 2024, decreasing by $1.7 million from $3.9 million for the three months ended March 31, 2023. The decrease was attributable to a $1.3 million decrease related to external R&D projects and studies with Mount Sinai, Wake Forest and Joslin, a decrease of $0.3 million in compensation and related benefits, and a $0.1 million decrease in other operating expenses. General and administrative expenses were $3.9 million for the three months ended March 31, 2024, decreasing by $3.2 million from $7.1 million for the three months ended March 31, 2023. The decrease was driven by even further cost cutting measures, which resulted in a $2.6 million decrease in compensation and related benefits, a $0.3 million decrease in other operating expenses, and a $0.3 million decrease in insurance costs. Net loss was $7.7 million for the three months ended March 31, 2024, compared with $12.1 million for the prior year period. Cash and cash equivalents totaled $4.7 million as of March 31, 2024. The Company will host a corresponding conference call and live webcast today to discuss the financial results and key topics including business strategy, partnerships and regulatory and reimbursement processes, at 8:30 a.m. EDT / 1:30 p.m. BST. Conference Call Details: To participate in the live conference call via telephone, please register here. Upon registering, a dial-in number and unique PIN will be provided in order for interested parties to join the conference call. Webcast Registration link: For further information, please contact: Renalytix plc James McCullough, CEO Via Walbrook PR Stifel (Nominated Adviser, Joint Broker) Tel: 020 7710 7600 Alex Price / Nicholas Moore / Nick Harland / Samira Essebiyea Investec Bank plc (Joint Broker) Tel: 020 7597 4000 Gary Clarence / Shalin Bhamra Walbrook PR Limited Tel: 020 7933 8780 or renalytix@walbrookpr.com Paul McManus / Alice Woodings Mob: 07980 541 893 / 07407 804 654 CapComm Partners Peter DeNardo Tel: 415-389-6400 or investors@renalytix.com About Renalytix Renalytix (NASDAQ: RNLX) (LSE: RENX) is an artificial intelligence enabled in-vitro diagnostics and laboratory services company that is the global founder and leader in the field of bioprognosis™ for kidney health. In late 2023, our kidneyintelX.dkd test was recognized as the first and only FDA-authorized prognostic test to enable early-stage CKD (stages 1-3b) risk assessment for progressive decline in kidney function in T2D patients. By understanding how disease will progress, patients and clinicians can take action earlier to improve outcomes and reduce overall health system costs. For more information, visit . Forward-Looking Statements Statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Examples of these forward-looking statements include statements concerning: the commercial prospects of KidneyIntelX, including whether KidneyIntelX will be successfully adopted by physicians and distributed and marketed, the rate of testing with KidneyIntelX in health care systems, expectations and timing of announcement of real-world testing evidence, the potential for KidneyIntelX to be approved for additional indications, the Company’s expectations regarding the timing and outcome of regulatory and reimbursement decisions, the ability of KidneyIntelX to curtail costs of chronic and end-stage kidney disease, optimize care delivery and improve patient outcomes, the Company’s expectations and guidance related to partnerships, testing volumes and revenue for future periods, the Company’s expectations regarding the Company’s ability to obtain and maintain intellectual property protection for its diagnostic products and the Company’s ability to operate its business without infringing on the intellectual property rights of others, and the forecast of the Company’s cash runway and the implementation and potential for additional financing activities and cost-saving initiatives. Words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “seeks,” and similar expressions are intended to identify forward-looking statements. The Company may not actually achieve the plans and objectives disclosed in the forward-looking statements, and you should not place undue reliance on the Company’s forward-looking statements. Any forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. These risks and uncertainties include, among others: that KidneyIntelX is based on novel artificial intelligence technologies that are rapidly evolving and potential acceptance, utility and clinical practice remains uncertain; the Company has only recently commercially launched KidneyIntelX; and risks relating to the impact on the Company’s business of the COVID-19 pandemic or similar public health crises. These and other risks are described more fully in the Company’s filings with the Securities and Exchange Commission (SEC), including the “Risk Factors” section of its annual report on Form 10-K filed with the SEC on September 28, 2023, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 filed with the SEC on November 14, 2023, the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2024 filed with the SEC on February 14, 2024 and other filings the Company makes with the SEC from time to time. All information in this press release is as of the date of the release, and the Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. RENALYTIX PLC Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the Three Months Ended March 31, For the Nine Months Ended March 31, (in thousands, except share data) 2024 2023 2024 2023 Revenue $ 535 $ 724 $ 1,703 $ 2,885 Cost of revenue 601 603 1,583 2,010 Gross profit (loss) (66 ) 121 120 875 Operating expenses: Research and development 2,216 3,943 8,228 11,026 General and administrative 3,854 7,095 15,252 22,155 Impairment loss on property, equipment and other long-lived assets 417 — 723 — Performance of contract liability to affiliate — — — (19 ) Total operating expenses 6,487 11,038 24,203 33,162 Loss from operations (6,553 ) (10,917 ) (24,083 ) (32,287 ) Equity in net losses of affiliate — — — (9 ) Foreign currency gain (loss), net 15 (461 ) 215 238 Fair value adjustment to VericiDx investment 40 129 (205 ) (1,070 ) Fair value adjustment to convertible notes (1,196 ) (1,168 ) (2,517 ) (1,898 ) Other (expense) income, net (49 ) 310 212 521 Net loss before income taxes (7,743 ) (12,107 ) (26,378 ) (34,505 ) Income tax (expense) benefit — 1 (4 ) 2 Net loss $ (7,743 ) $ (12,106 ) $ (26,382 ) $ (34,503 ) Net loss per ordinary share—basic $ (0.08 ) $ (0.14 ) $ (0.27 ) $ (0.44 ) Net loss per ordinary share—diluted $ (0.08 ) $ (0.14 ) $ (0.27 ) $ (0.44 ) Weighted average ordinary shares—basic 97,654,961 85,560,783 98,184,650 78,366,984 Weighted average ordinary shares—diluted 97,654,961 85,560,783 98,184,650 78,366,984 Other comprehensive income (loss): Changes in the fair value of the convertible notes $ 155 $ 593 $ 230 $ 70 Foreign exchange translation adjustment 21 505 (338 ) 6 Comprehensive loss $ (7,567 ) $ (11,008 ) $ (26,490 ) $ (34,427 ) RENALYTIX PLC CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share data) March 31, 2024 June 30, 2023 Assets Current assets: Cash and cash equivalents $ 4,704 $ 24,682 Accounts receivable 554 776 Prepaid expenses and other current assets 1,082 1,424 Total current assets 6,340 26,882 Property and equipment, net 230 1,027 Right of Use Asset — 159 Investment in VericiDx 1,060 1,460 Other Assets 1,139 1,101 Total assets $ 8,769 $ 30,629 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 2,101 $ 1,485 Accounts payable – related party 3,027 1,451 Accrued expenses and other current liabilities 4,273 6,644 Accrued expenses – related party 1,060 1,963 Current lease liability 78 130 Convertible notes-current 4,449 4,463 Total current liabilities 14,988 16,136 Convertible notes-noncurrent 4,892 7,485 Noncurrent lease liability — 41 Total liabilities 19,880 23,662 Commitments and contingencies (Note 10) Shareholders’ equity: Ordinary shares, £0.0025 par value per share: 128,042,743 shares authorized; 119,916,187 and 93,781,478 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively 368 286 Additional paid-in capital 194,786 186,456 Accumulated other comprehensive loss (1,558 ) (1,450 ) Accumulated deficit (204,707 ) (178,325 ) Total shareholders’ (deficit) equity (11,111 ) 6,967 Total liabilities and shareholders’ (deficit) equity $ 8,769 $ 30,629 RENALYTIX PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended March 31, (in thousands) 2024 2023 Cash flows from operating activities: Net loss $ (26,382 ) $ (34,503 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 304 388 Impairment loss on property, equipment and other long-lived assets 723 — Stock-based compensation 1,291 2,358 Equity in losses of affiliate — 9 Reduction of Kantaro liability — (55 ) Fair value adjustment to VericiDx investment 205 1,070 Unrealized foreign exchange loss — 327 Realized loss on sale of ordinary shares in VericiDx 94 — Realized foreign exchange gain (144 ) — Fair value adjustment to convertible debt, net interest paid 2,255 1,898 Non cash lease expense 67 78 Changes in operating assets and liabilities: Accounts receivable 222 154 Prepaid expenses and other current assets 310 (77 ) Accounts payable 617 358 Accounts payable – related party 1,576 370 Accrued expenses and other current liabilities (2,519 ) 2,704 Accrued expenses – related party (904 ) (485 ) Deferred revenue — (46 ) Net cash used in operating activities (22,285 ) (25,452 ) Cash flows from investing activities: Purchase of equipment (3 ) — Payment for long term deferred expense — (59 ) Net cash used in investing activities (3 ) (59 ) Cash flows from financing activities: Payment of convertible notes principal (1,660 ) (3,262 ) Proceeds from issuance of ordinary shares in Private Placement 5,072 20,296 Payment of offering costs (1,044 ) (666 ) Proceeds from purchase of ordinary shares under employee share purchase plan 93 116 Net cash provided by financing activities 2,461 16,484 Effect of exchange rate changes on cash (151 ) 721 Net decrease in cash and cash equivalents (19,978 ) (8,306 ) Cash and cash equivalents, beginning of period 24,682 41,333 Cash and cash equivalents, end of period $ 4,704 $ 33,027 Supplemental noncash investing and financing activities: Cash paid for interest on convertible debt $ 249 $ —