Renalytix Reports Financial Results for Second Quarter of Fiscal Year 2024
Renalytix plc reported financial results for the fiscal second quarter ended December 31, 2023, showcasing revenue growth, reimbursement coverage, and cost management improvements. KidneyIntelX saw increased sales and FDA approval, with real-world evidence supporting its efficacy. Operating cost reductions were significant, leading to a reduced cash burn rate. Despite a decrease in revenue compared to the previous year, the company has taken steps to lower expenses and preserve revenue generating activities.
Positive
Renalytix plc reported revenue growth and operational progress in the fiscal second quarter of 2023.
KidneyIntelX sales increased, and the test received FDA approval, leading to inclusion in reimbursement schedules.
Real-world evidence highlights the positive impact of KidneyIntelX on patient care and outcomes.
Operating cost reductions have been implemented, resulting in a lower cash burn rate for the company.
Despite a decrease in revenue compared to the previous year, Renalytix plc has taken actions to reduce expenses and maintain revenue-generating activities.
Negative
Revenue decreased compared to the previous year due to lower billable testing volumes and pharmaceutical services revenue.
The net loss for the quarter was $8.5 million, although an improvement from the previous year.
Cash and cash equivalents stood at $5.6 million as of December 31, 2023, indicating a relatively low cash position.
The reported decrease in revenue for Renalytix plc, from $1.2 million in the previous year's quarter to $0.7 million, is a critical concern for investors and analysts. The transition to a commercial billing structure and the reduction in pharmaceutical services revenue are key drivers of this decline. In assessing the financial health of the company, one must scrutinize the sustainability of their revenue streams and the implications of the operating cost reductions. The targeted annualized cash burn rate reduction to under $23 million suggests aggressive cost management, which could be a double-edged sword—improving short-term financial stability at the potential expense of long-term growth and innovation.
Furthermore, the inclusion of KidneyIntelX in the CMS lab fee schedule and the NGS LCD proposal indicates a positive trajectory toward broader reimbursement coverage, which is essential for the company's scalability and market penetration. However, the immediate financial impact is muted by the current revenue figures. Investors should consider the balance between the company's cost-cutting measures and its ability to invest in research and development to maintain competitive advantage.
The clinical impact of KidneyIntelX's artificial intelligence-enabled prognostic testing, as evidenced by the real-world study showing a 61% increase in kidney protective drug prescriptions, is significant for patient care. This improvement in clinical outcomes could drive increased adoption of the test, especially with the recent CMS approval of a $950 reimbursement rate. The test's capacity to aid in early risk assessment and management of kidney disease could lead to a paradigm shift in nephrology practice, emphasizing preventative care over reactive treatment.
However, the operational challenge lies in the translation of clinical efficacy into tangible business growth. The company's ability to capitalize on these clinical benefits and convert them into sustained revenue growth will be pivotal. The medical community's acceptance and the integration of KidintelX into standard care protocols will be key drivers for Renalytix's market success.
From a market perspective, Renalytix operates in the burgeoning field of AI-enabled diagnostics, which is expected to grow significantly as healthcare increasingly incorporates data-driven decision-making. The inclusion of KidneyIntelX on the CMS lab fee schedule and the NGS LCD proposal could serve as a catalyst for market adoption. However, the company's recent operational cost reductions, while beneficial for financial runway, may raise questions about its ability to invest in marketing and sales efforts to capitalize on these opportunities.
Competitor analysis and market trends will be important to monitor, as other companies may also be seeking to establish a foothold in this space. Renalytix's strategic decisions in the upcoming quarters will likely have a profound impact on its market share and investor confidence. The company's focus on maintaining sales capacity amidst cost-cutting measures suggests an awareness of the need to balance financial prudence with market expansion efforts.
02/15/2024 - 07:00 AM
LONDON and SALT LAKE CITY, Feb. 15, 2024 (GLOBE NEWSWIRE) -- Renalytix plc (NASDAQ: RNLX) (LSE: RENX) (the “Company”), an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease, today reported financial results for the fiscal second quarter ended December 31, 2023. The Company plans to issue another announcement following today’s report of financial results regarding the date and time of its conference call and webcast to discuss second quarter financial results and other key events.
The Company made significant progress during the quarter in revenue generation, reimbursement coverage, the publication of real-world evidence and operating cost management, setting the stage for potential future growth. Highlights include:
During the three months ended December 31, 2023, we recognized $0.7 million of revenue related to sales of KidneyIntelX, compared to the previous quarter reported revenue of $0.5 million . KidneyintelX.dkd, the first U.S. Food and Drug Administration (“FDA”), authorized in vitro prognostic test that uses an artificial intelligence-enabled algorithm to aid in assessment of the risk of progressive decline in kidney function, officially included in the lab fee schedule by Centers for Medicare & Medicaid Services (CMS) at $950 per test. KidneyIntelX™ and kidneyintelX.dkd included in the proposed Local Coverage Determination (LCD) published by National Government Services (NGS) on February 8, 2024, and on the agenda for the LCD open public meeting on February 29, 2024. NGS has resumed consistent payment for tests under individual claims review (ICR), allowing revenue recognition of 318 tests billed to Medicare (including prior period tests). Total billable volume of 734 tests during the second quarter (representing 69% of all tests in the period, including non-billable study tests). Real-world evidence continues to demonstrate the benefits of KidneyIntelX early risk assessment as published in the Journal of Primary Care and Community Health , in which 12 months of care following KidneyIntelX prognostic testing was associated with clinical actions that led to significant improvement in care and outcomes including a 61% increase in kidney protective drug prescriptions among patients in the high-risk group. Operating cost reductions commenced during the fiscal second quarter continued with a fiscal third quarter cash burn target approximately 33% less than in the prior quarter and approximately 50% less than in the first quarter of fiscal 2024. Second Quarter 2024 Financial Results
During the three months ended December 31, 2023, we recognized $0.7 million of revenue related to sales of KidneyIntelX. During the three months ended December 31, 2022, we recognized $1.0 million revenue related to sales of KidneyIntelX and $0.2 million of revenue of pharmaceutical services revenue related to services performed for AstraZeneca. The $0.5 million decrease in revenue was primarily driven by a $0.3 million decrease in KidneyIntelX billable testing volumes due to the transition to a commercial billing structure under our arrangement with Mount Sinai and a decrease of $0.2 million of pharmaceutical services revenue.
Operating expenses for the three months ended December 31, 2023 were $8.9 million , compared to $10.1 million for the three months ended December 31, 2022. We have taken significant actions to lower annual expenditures with a targeted annualized cash burn rate of under $23 million within our fiscal third quarter of 2024 (down from $37 million in the 2023 fiscal year), while preserving revenue generating activity.
Within operating expenses, research and development expenses were $3.2 million for the three months ended December 31, 2023, which decreased by $0.1 million from $3.3 million for the three months ended December 31, 2022. The decrease was attributable to a $1.2 million decrease in compensation and related benefits, offset by a $1.1 million increase related to external R&D projects and studies with Mount Sinai, Wake Forest and Joslin.
General and administrative expenses were $5.3 million for the three months ended December 31, 2023, decreasing by $1.5 million from $6.8 million for the three months ended December 31, 2022. The decrease was driven by even further cost cutting measures, which resulted in a $1.7 million decrease in compensation and related benefits, including share-based payments, due to decreased headcount, and a $0.5 million decrease in other operating expenses, offset by a $0.5 million increase in legal fees and a $0.2 million increase in consulting and professional fees. We have implemented a plan to further reduce payroll expense and total general and administrative expenses while preserving our sales capacity.
Net loss was $8.5 million for the three months ended December 31, 2023, compared to a net loss of $10.4 million for the three months ended December 31, 2022.
Cash and cash equivalents totaled $5.6 million as of December 31, 2023.
For further information, please contact:
Renalytix plc www.renalytix.com 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 www.renalytix.com
Forward-Looking Statements
RENALYTIX PLC Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
For the Three Months Ended December 31, For the Six Months Ended December 31, (in thousands, except share data) 2023 2022 2023 2022 Revenue $ 709 $ 1,192 $ 1,168 $ 2,161 Cost of revenue 480 711 982 1,407 Gross profit 229 481 186 754 Operating expenses: Research and development 3,225 3,326 6,012 7,083 General and administrative 5,339 6,810 11,398 15,060 Impairment loss on property and equipment 306 — 306 — Performance of contract liability to affiliate — (7 ) — (19 ) Total operating expenses 8,870 10,129 17,716 22,124 Loss from operations (8,641 ) (9,648 ) (17,530 ) (21,370 ) Equity in net losses of affiliate — — — (9 ) Foreign currency (loss) gain, net (89 ) (108 ) 200 699 Fair value adjustment to VericiDx investment 202 (345 ) (245 ) (1,199 ) Fair value adjustment to convertible notes (114 ) (440 ) (1,321 ) (730 ) Other income, net 161 97 261 211 Net loss before income taxes (8,481 ) (10,444 ) (18,635 ) (22,398 ) Income tax (expense) benefit (4 ) — (4 ) 1 Net loss (8,485 ) (10,444 ) (18,639 ) (22,397 ) Net loss per ordinary share—basic $ (0.09 ) $ (0.14 ) $ (0.19 ) $ (0.30 ) Net loss per ordinary share—diluted $ (0.09 ) $ (0.14 ) $ (0.19 ) $ (0.30 ) Weighted average ordinary shares—basic 97,268,051 74,891,844 96,017,946 74,848,278 Weighted average ordinary shares—diluted 97,268,051 74,891,844 96,017,946 74,848,278 Other comprehensive income (loss): Changes in the fair value of the convertible notes — (920 ) 75 (523 ) Foreign exchange translation adjustment (401 ) 588 (359 ) (499 ) Comprehensive loss (8,886 ) (10,776 ) (18,923 ) (23,419 )
RENALYTIX PLC CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share and per share data) December 31, 2023 June 30, 2023 Assets Current assets: Cash and cash equivalents $ 5,619 $ 24,682 Accounts receivable 1,370 776 Prepaid expenses and other current assets 1,261 1,424 Total current assets 8,250 26,882 Property and equipment, net 576 1,027 Right of Use Asset 102 159 Investment in VericiDx 1,220 1,460 Other Assets 1,128 1,101 Total assets $ 11,276 $ 30,629 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 2,109 $ 1,485 Accounts payable – related party 707 1,451 Accrued expenses and other current liabilities 4,259 6,644 Accrued expenses – related party 3,673 1,963 Current lease liability 111 130 Convertible notes-current 3,063 4,463 Total current liabilities 13,922 16,136 Convertible notes-noncurrent 5,310 7,485 Noncurrent lease liability — 41 Total liabilities 19,232 23,662 Commitments and contingencies (Note 10) Shareholders’ equity: Ordinary shares, £0.00 25 par value per share: 107,189,897 shares authorized; 99,930,156 and 93,781,478 shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively 305 286 Additional paid-in capital 190,437 186,456 Accumulated other comprehensive loss (1,734 ) (1,450 ) Accumulated deficit (196,964 ) (178,325 ) Total shareholders’ (deficit) equity (7,956 ) 6,967 Total liabilities and shareholders’ (deficit) equity $ 11,276 $ 30,629
RENALYTIX PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended December 31, (in thousands) 2023 2022 Cash flows from operating activities: Net loss $ (18,639 ) $ (22,397 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 235 258 Impairment of property and equipment 306 — Stock-based compensation 909 1,584 Equity in losses of affiliate — 9 Reduction of Kantaro liability — (55 ) Fair value adjustment to VericiDx investment 245 1,199 Unrealized foreign exchange gain — 271 Realized foreign exchange gain (163 ) — Fair value adjustment to convertible debt, net interest paid 1,059 730 Non cash lease expense 57 52 Changes in operating assets and liabilities: Accounts receivable (594 ) 81 Prepaid expenses and other current assets 45 494 Receivable from affiliates — (22 ) Accounts payable 618 2,773 Accounts payable – related party (744 ) (1,083 ) Accrued expenses and other current liabilities (2,465 ) 1,367 Accrued expenses – related party 1,708 (566 ) Deferred revenue — (46 ) Net cash used in operating activities (17,423 ) (15,351 ) Cash flows from investing activities: Payment for long term deferred expense — (64 ) Net cash used in investing activities — (64 ) Cash flows from financing activities: Payment of convertible notes principal (1,660 ) (1,648 ) Payment of issuance costs (5 ) — Proceeds from purchase of ordinary shares under employee share purchase plan 93 116 Net cash used in financing activities (1,572 ) (1,532 ) Effect of exchange rate changes on cash (68 ) (570 ) Net decrease in cash and cash equivalents (19,063 ) (17,517 ) Cash and cash equivalents, beginning of period 24,682 41,333 Cash and cash equivalents, end of period $ 5,619 $ 23,816 Supplemental noncash investing and financing activities: Cash paid for interest on convertible debt $ 249 $ —
Renalytix plc reported $0.7 million in revenue related to sales of KidneyIntelX during the three months ended December 31, 2023.
Renalytix plc made progress in revenue generation, reimbursement coverage, real-world evidence publication, and operating cost management.
KidneyIntelX is the first FDA-authorized in vitro prognostic test, aiding in assessing the risk of progressive decline in kidney function.
Renalytix plc targets a cash burn rate of under $23 million in the fiscal third quarter of 2024, significantly lower than in previous periods.
The net loss for Renalytix plc was $8.5 million for the three months ended December 31, 2023.
Renalytix plc had cash and cash equivalents totaling $5.6 million as of December 31, 2023.
