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With the end of the era of capital flooding, oncology precision medicine companies that rely on equity financing may realize that their cash in hand is very tight
.
Today, they all face the same situation: open source and throttling
.
However, "open source" is a big challenge
for most enterprises.
After all, due to many factors such as the immaturity of the market, the great challenge of commercialization, and the overly "involution", it is not realistic
for enterprises to rely on the tumor precision medicine business to increase revenue and profits.
In contrast, "throttling" may be a better option
.
On December 16, OncoCyte, a precision medicine company in the United States, made this decision - cutting 40%
of its workforce.
Notably, employees who "graduated" included President and COO Gisela Paulsen and Chief Scientific Officer Douglas Ross
.
Earlier, OncoCyte's CEO, Ronnie Andrews, had also "graduated
.
" At this point, most of the company's core executive team has been dismissed
.
At the same time, OncoCyte also announced the transfer
of a 70% stake in its core subsidiary, Razor Genomics.
No way, for the struggling Biotech, ensuring that it survives is the most important thing
at present.
/ 01 /
/ 01 /Had to make a tough decision
Had to make a tough decisionFor OncoCyte, getting some of its employees to "graduate" and "sell" its core product was a difficult decision
to make.
As of September 30, 2022, OncoCyte had only $32.
05 million in monetary cash on its books.
At the level of spending over the past three quarters, OncoCyte has been unable to sustain itself for long
.
According to the third quarterly report, OncoCyte's operating cash flow in the first nine months was a net outflow of $35.
92 million
.
OncoCyte has two options in front of it: open source and throttling
.
Open source is no small
challenge.
Currently, the company's only commercial product is DetermaRx, an early-stage lung cancer molecular diagnostic that helps doctors determine whether chemotherapy
is needed after a lobectomy.
The product has two functions: first, it makes low-risk people do not need to undergo chemotherapy torture and avoid unnecessary physical and mental burden; The second is to reduce the "missed diagnosis" of high-risk groups and improve the survival of
patients.
But the seemingly powerful function failed to become OncoCyte's revenue-generating artifact
.
DetermaRx sales nearly doubled year-over-year in the third quarter and generated only $950,000 in revenue
.
DetermaRx was the company's main source of revenue, accounting for 93%
of third-quarter revenue.
The meager numbers mean that DetermaRx will struggle to generate substantial profits in the short term, supporting the company to go further
.
In this context, there are not many options that the company can make, only one way
to "throttle".
On December 16, OncoCyte finally made a difficult decision
.
/ 02 /
/ 02 /The expected ending
The expected endingIn a way, it wouldn't come as a surprise
that OncoCyte has come this far.
Although the company expanded its pipeline, the strategy did not "work" for the time being, resulting in the company relying on the commercialization
of DetermaRx.
The problem is that DetermaRx is just a niche product
.
According to OncoCyte's estimates, there are only about 40,000 lung cancer patients in the United States, corresponding to a market size of only $140 million
.
At the same time, there are no significant barriers to
entry in this market.
Established genetic testing companies can easily leverage existing liquid biopsy platforms to develop new products to enter this market
.
In August, Guardant Health announced the launch of the same type of testing product, directly competing
with OncoCyte.
The niche market, coupled with the beginning of fierce competition, OncoCyte's living space is bound to be compressed
.
Without getting rid of DetermaRx's dependency, OncoCyte is bound to reach a "dead end.
"
However, the company's weak commercialization ability accelerated this process
.
For OncoCyte, more clinical investment and more business strategies are needed to influence more key opinion leaders (American medical and professional associations) to build deep partnerships
.
This requires extremely strong financial support and resource reserves
.
For any next-generation molecular diagnostics company, accomplishing these actions is a challenge
.
OncoCyte was challenged
.
In the past two years, despite being included in Medicare and having no "direct competitors," OncoCyte has not been able to go further and include DetermaRx in commercial insurance and recommendation guidelines, which is the root cause of
the product's slow rollout.
Now, with funds running out, OncoCyte has to face a "dire situation
".
/ 03 /
/ 03 /A microcosm of the entire industry
A microcosm of the entire industryWhat happened to OncoCyte may be a challenge
for some companies in the industry.
Take the domestic oncology precision medicine industry, most of the players' cash flow is under pressure
.
For example, as of the end of the third quarter, Big Brother Burnstone Medical had a cash balance of 1 billion yuan
.
Corresponding to the operating cash flow expenditure of nearly 400 million yuan in the first three quarters, the days when Burnstone Medical's cash burns wantonly are extremely limited, not to mention other small and medium-sized players
.
"Open source and throttling" is something that most enterprises need to face, but for these enterprises, "open source" is also not easy
.
The most mature companion diagnostics market has become increasingly red
.
This can be glimpsed through the patient-side income performance of Burning Stone Medicine
.
As shown in the figure above, through the month-on-month data, even without the impact of the epidemic, the growth rate of Burnstone Medical's companion diagnostic business has actually slowed down
.
The leading companies in the industry are still like this, and the situation of other small and medium-sized players can be
imagined.
In this context, finding "new increments" will become the choice
of most enterprises.
At present, most companies in the precision medicine industry are focusing on three areas: MRD, early screening and pharmaceutical services
.
But even so, many companies will still face the situation
of OncoCyte.
On the one hand, the domestic market in these areas is still in the "initial stage"
.
The implication is that the market may still need to be nurtured to grow, and capacity is limited
at this stage.
On the other hand, there are too many players
in the limited market.
Whether it is MRD, or single cancer species, pan-cancer early screening products, the entrants are like carp
across the river.
Due to comprehensive factors, the players who can support themselves through "open source" will only be a very small number
after all.
More companies may have to find ways
to "throttle".
This also means that "OncoCyte" or "OncoCyte"
will also appear in China.
Of course, the challenges will not last
.
As more and more companies continue to prove themselves through the business level, they will eventually lead the entire industry out of the winter
.
