[10-Q] Oncocyte Corporation Quarterly Earnings Report
Insight Molecular Diagnostics Inc. (f/k/a Oncocyte) reported a noticeable uptick in commercial activity with net revenue of $518,000 for the quarter ended June 30, 2025 versus $104,000 a year earlier, and $2.656 million for the six months versus $280,000. Revenue growth was driven primarily by laboratory services and initial sales of the GraftAssureIQ kitted product.
Results show widening losses: a net loss of $9.742 million in the quarter (six-month loss of $16.413 million), as operating expenses rose to $10.192 million for the quarter, including a $2.804 million charge for the change in fair value of contingent consideration. Liquidity improved materially following a February 2025 registered offering that raised gross proceeds of approximately $29.1 million (net proceeds ~$28.7 million), leaving cash and cash equivalents of $24.3 million and combined cash plus restricted cash of $26.0 million at period end.
Operational and strategic developments include a corporate name and ticker change to IMDX and headquarters relocation to Nashville, an ongoing strategic partnership and investment with Bio-Rad, and a boosted Medicare reimbursement rate of $2,753 per result for GraftAssureCore. Significant noncurrent contingent consideration of $40.933 million and an accumulated deficit of $366.95 million remain on the balance sheet. Management concluded there is no substantial doubt about going concern for at least the next twelve months.
Insight Molecular Diagnostics Inc. (f/k/a Oncocyte) ha riportato un netto aumento dell'attività commerciale con ricavi netti di $518.000 per il trimestre chiuso al 30 giugno 2025, rispetto a $104.000 dell'anno precedente, e $2.656 milioni nei primi sei mesi rispetto a $280.000. La crescita dei ricavi è stata trainata principalmente dai servizi di laboratorio e dalle prime vendite del prodotto confezionato GraftAssureIQ.
I risultati mostrano perdite in ampliamento: un perdita netta di $9.742 milioni nel trimestre (perdita di $16.413 milioni nei sei mesi), con spese operative salite a $10.192 milioni nel trimestre, inclusa una svalutazione di $2.804 milioni relativa alla variazione del fair value delle contingent consideration. La liquidità è migliorata in modo significativo dopo un'offerta registrata a febbraio 2025 che ha raccolto proventi lordi di circa $29,1 milioni (proventi netti ~$28,7 milioni), lasciando $24,3 milioni in contanti e mezzi equivalenti e $26,0 milioni considerando anche la cassa vincolata a fine periodo.
Gli sviluppi operativi e strategici comprendono il cambio di denominazione sociale e ticker in IMDX e il trasferimento della sede a Nashville, una partnership strategica e investimento in corso con Bio-Rad, e un aumento del rimborso Medicare a $2.753 per risultato per GraftAssureCore. Sullo stato patrimoniale permangono una rilevante contingent consideration non corrente di $40.933 milioni e un deficit accumulato di $366.95 milioni. La direzione ha concluso che non sussistono dubbi sostanziali sulla continuità aziendale per almeno i prossimi dodici mesi.
Insight Molecular Diagnostics Inc. (anteriormente Oncocyte) reportó un notable aumento de la actividad comercial con ingresos netos de $518,000 para el trimestre terminado el 30 de junio de 2025 frente a $104,000 un año antes, y $2.656 millones en los seis meses frente a $280,000. El crecimiento de los ingresos se debió principalmente a los servicios de laboratorio y a las primeras ventas del producto en kit GraftAssureIQ.
Los resultados muestran pérdidas crecientes: una pérdida neta de $9.742 millones en el trimestre (pérdida de $16.413 millones en seis meses), con gastos operativos que aumentaron a $10.192 millones en el trimestre, incluida una partida de $2.804 millones por el cambio en el valor razonable de la contingent consideration. La liquidez mejoró significativamente tras una oferta registrada en febrero de 2025 que recaudó ingresos brutos de aproximadamente $29.1 millones (ingresos netos ~$28.7 millones), dejando $24.3 millones en efectivo y equivalentes y $26.0 millones en efectivo más efectivo restringido al cierre del periodo.
Los desarrollos operativos y estratégicos incluyen el cambio de nombre corporativo y ticker a IMDX y la reubicación de la sede a Nashville, una alianza estratégica e inversión en curso con Bio-Rad, y un aumento de la tasa de reembolso de Medicare a $2,753 por resultado para GraftAssureCore. En el balance siguen figurando una contingent consideration no corriente significativa de $40.933 millones y un déficit acumulado de $366.95 millones. La dirección concluyó que no existe una duda sustancial sobre la continuidad de la empresa durante al menos los próximos doce meses.
Insight Molecular Diagnostics Inc. (구 Oncocyte)은 2025년 6월 30일로 끝나는 분기에 상업 활동이 눈에 띄게 증가하여 순매출 $518,000을 기록했으며 전년 동기 $104,000에서 증가했고, 상반기 매출은 전년 $280,000에서 $2.656 million으로 늘었습니다. 매출 증가는 주로 검사실 서비스와 GraftAssureIQ 키트 제품의 초기 판매에 기인합니다.
실적은 손실 확대를 보여줍니다: 분기 순손실은 $9.742 million(상반기 누계 손실 $16.413 million)이며, 영업비용은 분기 동안 $10.192 million로 증가했고 그중 $2.804 million은 우발 지급( contingent consideration )의 공정가치 변동에 따른 비용입니다. 2025년 2월 등록 공모로 약 $29.1 million의 총 수익(순수익 약 $28.7 million)을 확보하면서 유동성은 크게 개선되었고, 기말 현금 및 현금성 자산은 $24.3 million, 현금과 제한 현금 합계는 $26.0 million입니다.
운영 및 전략적 발전으로는 법인명 및 거래코드 IMDX로의 변경과 본사 이전(내슈빌), Bio-Rad과의 전략적 파트너십 및 투자 진행, GraftAssureCore 건에 대한 메디케어 환급액이 결과당 $2,753으로 상향 조정된 점 등이 포함됩니다. 대차대조표에는 여전히 비유동성 우발 지급액 $40.933 million과 누적적자 $366.95 million이 남아 있습니다. 경영진은 향후 최소 12개월 동안 존속 능력에 중대한 의문이 없다고 결론지었습니다.
Insight Molecular Diagnostics Inc. (anciennement Oncocyte) a signalé une nette augmentation de l'activité commerciale avec des revenus nets de $518,000 pour le trimestre clos le 30 juin 2025 contre $104,000 un an plus tôt, et $2.656 millions pour les six mois contre $280,000. La croissance des revenus a été principalement portée par les services de laboratoire et les premières ventes du produit en kit GraftAssureIQ.
Les résultats montrent des pertes en augmentation : une perte nette de $9.742 millions au trimestre (perte sur six mois de $16.413 millions), les charges d'exploitation ayant atteint $10.192 millions pour le trimestre, incluant une charge de $2.804 millions liée à la variation de la juste valeur de la contingent consideration. La liquidité s'est améliorée sensiblement suite à une offre enregistrée en février 2025 qui a levé des produits bruts d'environ $29.1 millions (produits nets ~$28.7 millions), laissant $24.3 millions en trésorerie et équivalents de trésorerie et $26.0 millions en trésorerie plus trésorerie restreinte à la clôture de la période.
Les développements opérationnels et stratégiques incluent le changement de nom et de ticker en IMDX et le déménagement du siège à Nashville, un partenariat stratégique et un investissement en cours avec Bio-Rad, ainsi qu'une hausse du taux de remboursement Medicare à $2,753 par résultat pour GraftAssureCore. Au bilan demeurent une contingent consideration non courante significative de $40.933 millions et un déficit accumulé de $366.95 millions. La direction a conclu qu'il n'existait pas de doute substantiel quant à la continuité d'exploitation pour au moins les douze prochains mois.
Insight Molecular Diagnostics Inc. (ehemals Oncocyte) meldete einen deutlichen Anstieg der kommerziellen Tätigkeit mit Nettoerlösen von $518.000 für das Quartal zum 30. Juni 2025 gegenüber $104.000 im Vorjahr und $2,656 Millionen für die sechs Monate gegenüber $280.000. Das Umsatzwachstum wurde vor allem durch Laborleistungen und die ersten Verkäufe des GraftAssureIQ-Kitprodukts getrieben.
Die Ergebnisse zeigen wachsende Verluste: ein Nettoverlust von $9.742 Millionen im Quartal (Sechsmonatsverlust $16.413 Millionen), da die Betriebsaufwendungen im Quartal auf $10.192 Millionen anstiegen, einschließlich einer Belastung von $2.804 Millionen aufgrund der Veränderung des beizulegenden Zeitwerts der contingent consideration. Die Liquidität verbesserte sich deutlich nach einer im Februar 2025 durchgeführten registrierten Emission, die Bruttoerlöse von rund $29,1 Millionen (Nettobetrag ~$28,7 Millionen) einbrachte und zum Periodenende Barmittel und Zahlungsmitteläquivalente von $24,3 Millionen sowie Barmittel zuzüglich eingeschränkter Barmittel von $26,0 Millionen auswies.
Zu den betrieblichen und strategischen Entwicklungen zählen die Umbenennung und das neue Tickersymbol IMDX sowie die Verlegung des Hauptsitzes nach Nashville, eine laufende strategische Partnerschaft und Investition mit Bio-Rad sowie eine erhöhte Medicare-Erstattung von $2.753 pro Ergebnis für GraftAssureCore. In der Bilanz verbleiben eine wesentliche nicht kurzfristige contingent consideration von $40.933 Millionen und ein aufgelaufener Fehlbetrag von $366.95 Millionen. Das Management kam zu dem Schluss, dass innerhalb der nächsten zwölf Monate keine wesentliche Zweifel an der Fortführungsfähigkeit bestehen.
- Revenue growth to $518,000 in Q2 2025 from $104,000 a year earlier, and $2.656M for the six months versus $280,000
- Successful February 2025 equity financing with gross proceeds of approximately $29.1M (net proceeds ~ $28.7M) that materially strengthened liquidity
- Cash and cash equivalents increased to $24.3M (combined cash and restricted cash $26.0M) at period end
- Medicare reimbursement increased to $2,753 per result for GraftAssureCore in May 2025
- Strategic partnership and investment from Bio-Rad to develop and commercialize RUO and IVD kitted transplant products
- Widening net loss: $9.742M in Q2 2025 versus $4.530M in Q2 2024; six-month loss $16.413M versus $13.659M
- High operating expenses: $10.192M for the quarter driven by R&D, sales & marketing, G&A and a $2.804M change in fair value of contingent consideration
- Large contingent consideration liabilities: noncurrent contingent consideration of $40.933M adds potential future cash obligations and valuation risk
- Significant accumulated deficit of approximately $366.95M as of June 30, 2025
- Customer and vendor concentration: one customer represented ~95% of accounts receivable at June 30, 2025; operational dependence on Bio-Rad for kitted product commercialization
Insights
TL;DR: Revenue momentum and a $28.7M financing improved liquidity, but operating losses and expense volatility are material near-term negatives.
The company delivered clear revenue growth to $518K in Q2 2025 and expanded kitted-product commercialization, which, combined with the February 2025 offering (~$28.7M net), meaningfully strengthened cash to $24.3M. However, Q2 operating expenses of $10.192M and a net loss of $9.742M indicate the business remains in an investment and scale phase. The change in fair value of contingent consideration (a $2.804M charge this quarter and $3.683M YTD) adds earnings volatility. Investors should note the large accumulated deficit (~$367M) and customer concentration in receivables but also the tangible reimbursement and partnership milestones that support revenue paths.
TL;DR: Strategic partnership and Bio-Rad investment support commercialization, while material contingent consideration liabilities introduce future cash/earn-out uncertainty.
iMDx’s collaboration with Bio-Rad and Bio-Rad’s investment (noted in the February offering) strengthen commercialization channels for RUO and future IVD kitted products. The statement that Medicare reimbursement rose to $2,753 per result for GraftAssureCore is a commercial milestone with direct revenue impact. Offsetting these positives, the consolidated balance sheet includes significant contingent consideration: $40.933M noncurrent plus current contingent consideration, and recorded fair value remeasurements that have recently increased expense volatility. These contingent obligations will affect future cash needs depending on revenue realization and milestone achievement.
Insight Molecular Diagnostics Inc. (f/k/a Oncocyte) ha riportato un netto aumento dell'attività commerciale con ricavi netti di $518.000 per il trimestre chiuso al 30 giugno 2025, rispetto a $104.000 dell'anno precedente, e $2.656 milioni nei primi sei mesi rispetto a $280.000. La crescita dei ricavi è stata trainata principalmente dai servizi di laboratorio e dalle prime vendite del prodotto confezionato GraftAssureIQ.
I risultati mostrano perdite in ampliamento: un perdita netta di $9.742 milioni nel trimestre (perdita di $16.413 milioni nei sei mesi), con spese operative salite a $10.192 milioni nel trimestre, inclusa una svalutazione di $2.804 milioni relativa alla variazione del fair value delle contingent consideration. La liquidità è migliorata in modo significativo dopo un'offerta registrata a febbraio 2025 che ha raccolto proventi lordi di circa $29,1 milioni (proventi netti ~$28,7 milioni), lasciando $24,3 milioni in contanti e mezzi equivalenti e $26,0 milioni considerando anche la cassa vincolata a fine periodo.
Gli sviluppi operativi e strategici comprendono il cambio di denominazione sociale e ticker in IMDX e il trasferimento della sede a Nashville, una partnership strategica e investimento in corso con Bio-Rad, e un aumento del rimborso Medicare a $2.753 per risultato per GraftAssureCore. Sullo stato patrimoniale permangono una rilevante contingent consideration non corrente di $40.933 milioni e un deficit accumulato di $366.95 milioni. La direzione ha concluso che non sussistono dubbi sostanziali sulla continuità aziendale per almeno i prossimi dodici mesi.
Insight Molecular Diagnostics Inc. (anteriormente Oncocyte) reportó un notable aumento de la actividad comercial con ingresos netos de $518,000 para el trimestre terminado el 30 de junio de 2025 frente a $104,000 un año antes, y $2.656 millones en los seis meses frente a $280,000. El crecimiento de los ingresos se debió principalmente a los servicios de laboratorio y a las primeras ventas del producto en kit GraftAssureIQ.
Los resultados muestran pérdidas crecientes: una pérdida neta de $9.742 millones en el trimestre (pérdida de $16.413 millones en seis meses), con gastos operativos que aumentaron a $10.192 millones en el trimestre, incluida una partida de $2.804 millones por el cambio en el valor razonable de la contingent consideration. La liquidez mejoró significativamente tras una oferta registrada en febrero de 2025 que recaudó ingresos brutos de aproximadamente $29.1 millones (ingresos netos ~$28.7 millones), dejando $24.3 millones en efectivo y equivalentes y $26.0 millones en efectivo más efectivo restringido al cierre del periodo.
Los desarrollos operativos y estratégicos incluyen el cambio de nombre corporativo y ticker a IMDX y la reubicación de la sede a Nashville, una alianza estratégica e inversión en curso con Bio-Rad, y un aumento de la tasa de reembolso de Medicare a $2,753 por resultado para GraftAssureCore. En el balance siguen figurando una contingent consideration no corriente significativa de $40.933 millones y un déficit acumulado de $366.95 millones. La dirección concluyó que no existe una duda sustancial sobre la continuidad de la empresa durante al menos los próximos doce meses.
Insight Molecular Diagnostics Inc. (구 Oncocyte)은 2025년 6월 30일로 끝나는 분기에 상업 활동이 눈에 띄게 증가하여 순매출 $518,000을 기록했으며 전년 동기 $104,000에서 증가했고, 상반기 매출은 전년 $280,000에서 $2.656 million으로 늘었습니다. 매출 증가는 주로 검사실 서비스와 GraftAssureIQ 키트 제품의 초기 판매에 기인합니다.
실적은 손실 확대를 보여줍니다: 분기 순손실은 $9.742 million(상반기 누계 손실 $16.413 million)이며, 영업비용은 분기 동안 $10.192 million로 증가했고 그중 $2.804 million은 우발 지급( contingent consideration )의 공정가치 변동에 따른 비용입니다. 2025년 2월 등록 공모로 약 $29.1 million의 총 수익(순수익 약 $28.7 million)을 확보하면서 유동성은 크게 개선되었고, 기말 현금 및 현금성 자산은 $24.3 million, 현금과 제한 현금 합계는 $26.0 million입니다.
운영 및 전략적 발전으로는 법인명 및 거래코드 IMDX로의 변경과 본사 이전(내슈빌), Bio-Rad과의 전략적 파트너십 및 투자 진행, GraftAssureCore 건에 대한 메디케어 환급액이 결과당 $2,753으로 상향 조정된 점 등이 포함됩니다. 대차대조표에는 여전히 비유동성 우발 지급액 $40.933 million과 누적적자 $366.95 million이 남아 있습니다. 경영진은 향후 최소 12개월 동안 존속 능력에 중대한 의문이 없다고 결론지었습니다.
Insight Molecular Diagnostics Inc. (anciennement Oncocyte) a signalé une nette augmentation de l'activité commerciale avec des revenus nets de $518,000 pour le trimestre clos le 30 juin 2025 contre $104,000 un an plus tôt, et $2.656 millions pour les six mois contre $280,000. La croissance des revenus a été principalement portée par les services de laboratoire et les premières ventes du produit en kit GraftAssureIQ.
Les résultats montrent des pertes en augmentation : une perte nette de $9.742 millions au trimestre (perte sur six mois de $16.413 millions), les charges d'exploitation ayant atteint $10.192 millions pour le trimestre, incluant une charge de $2.804 millions liée à la variation de la juste valeur de la contingent consideration. La liquidité s'est améliorée sensiblement suite à une offre enregistrée en février 2025 qui a levé des produits bruts d'environ $29.1 millions (produits nets ~$28.7 millions), laissant $24.3 millions en trésorerie et équivalents de trésorerie et $26.0 millions en trésorerie plus trésorerie restreinte à la clôture de la période.
Les développements opérationnels et stratégiques incluent le changement de nom et de ticker en IMDX et le déménagement du siège à Nashville, un partenariat stratégique et un investissement en cours avec Bio-Rad, ainsi qu'une hausse du taux de remboursement Medicare à $2,753 par résultat pour GraftAssureCore. Au bilan demeurent une contingent consideration non courante significative de $40.933 millions et un déficit accumulé de $366.95 millions. La direction a conclu qu'il n'existait pas de doute substantiel quant à la continuité d'exploitation pour au moins les douze prochains mois.
Insight Molecular Diagnostics Inc. (ehemals Oncocyte) meldete einen deutlichen Anstieg der kommerziellen Tätigkeit mit Nettoerlösen von $518.000 für das Quartal zum 30. Juni 2025 gegenüber $104.000 im Vorjahr und $2,656 Millionen für die sechs Monate gegenüber $280.000. Das Umsatzwachstum wurde vor allem durch Laborleistungen und die ersten Verkäufe des GraftAssureIQ-Kitprodukts getrieben.
Die Ergebnisse zeigen wachsende Verluste: ein Nettoverlust von $9.742 Millionen im Quartal (Sechsmonatsverlust $16.413 Millionen), da die Betriebsaufwendungen im Quartal auf $10.192 Millionen anstiegen, einschließlich einer Belastung von $2.804 Millionen aufgrund der Veränderung des beizulegenden Zeitwerts der contingent consideration. Die Liquidität verbesserte sich deutlich nach einer im Februar 2025 durchgeführten registrierten Emission, die Bruttoerlöse von rund $29,1 Millionen (Nettobetrag ~$28,7 Millionen) einbrachte und zum Periodenende Barmittel und Zahlungsmitteläquivalente von $24,3 Millionen sowie Barmittel zuzüglich eingeschränkter Barmittel von $26,0 Millionen auswies.
Zu den betrieblichen und strategischen Entwicklungen zählen die Umbenennung und das neue Tickersymbol IMDX sowie die Verlegung des Hauptsitzes nach Nashville, eine laufende strategische Partnerschaft und Investition mit Bio-Rad sowie eine erhöhte Medicare-Erstattung von $2.753 pro Ergebnis für GraftAssureCore. In der Bilanz verbleiben eine wesentliche nicht kurzfristige contingent consideration von $40.933 Millionen und ein aufgelaufener Fehlbetrag von $366.95 Millionen. Das Management kam zu dem Schluss, dass innerhalb der nächsten zwölf Monate keine wesentliche Zweifel an der Fortführungsfähigkeit bestehen.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to __________
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of incorporation or organization) |
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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The number of shares of issuer's common stock, no par value, outstanding as of August 4, 2025 was
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INSIGHT MOLECULAR DIAGNOSTICS INC.
TABLE OF CONTENTS
For the quarterly period ended June 30, 2025
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
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PART I - FINANCIAL INFORMATION |
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Item 1. Financial Statements |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. Quantitative and Qualitative Disclosures about Market Risk |
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Item 4. Controls and Procedures |
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PART II - OTHER INFORMATION |
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Item 1. Legal Proceedings |
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Item 1A. Risk Factors |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. Defaults Upon Senior Securities |
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Item 4. Mine Safety Disclosures |
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Item 5. Other Information |
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Item 6. Exhibits |
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SIGNATURES |
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Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q (this “Report”) are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements pertaining to future financial and/or operating results, future growth in research, technology, clinical development, and potential opportunities for Insight Molecular Diagnostics Inc., or iMDx (f/k/a Oncocyte Corporation), along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management. Any statements that are not historical fact (including, but not limited to statements that contain words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar expressions or the negative of such terms) should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products, uncertainty in the results of clinical trials or regulatory approvals, need and ability to obtain future capital, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the businesses of iMDx, particularly those mentioned in this Report under Risk Factors and those Risk Factors in Part I, Item 1A. of our most recent Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission (“SEC”). Except as required by law, iMDx undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
The forward-looking statements include, among other things, statements about:
Unless the context otherwise requires, all references to “iMDx,” “we,” “us,” “our,” “the Company” or similar words refer to Insight Molecular Diagnostics Inc., together with our consolidated subsidiaries.
The description or discussion, in this Report, of any contract or agreement is a summary only and is qualified in all respects by reference to the full text of the applicable contract or agreement.
iMDx™, DetermaIO™, DetermaCNI™, GraftAssureCore™, GraftAssureIQ™ and GraftAssureDx™ are trademarks of iMDx, regardless of whether the “TM” symbol accompanies the use of or reference to the applicable trademark in this Report.
We have rebranded our VitaGraft assay (VitaGraft Kidney and VitaGraft Liver), which is our lab developed test, under the name GraftAssureCore. We also rebranded our kitted research-use-only assay, GraftAssure, as “GraftAssureIQ,” and our future kitted clinical assay as “GraftAssureDx.”
2
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INSIGHT MOLECULAR DIAGNOSTICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
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June 30, |
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December 31, |
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(Unaudited) |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for credit losses of $ |
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Inventories |
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Deferred financing costs |
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— |
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Prepaid expenses and other current assets |
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Total current assets |
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NONCURRENT ASSETS |
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Right-of-use and financing lease assets, net |
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Machinery and equipment, net, and construction in progress |
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Intangible assets, net |
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Restricted cash |
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Other noncurrent assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
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CURRENT LIABILITIES |
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Accounts payable |
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$ |
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$ |
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Accrued compensation |
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Accrued royalties |
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Accrued expenses and other current liabilities |
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Right-of-use and financing lease liabilities, current |
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Contingent consideration liabilities, current |
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Total current liabilities |
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NONCURRENT LIABILITIES |
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Right-of-use and financing lease liabilities, noncurrent |
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Contingent consideration liabilities, noncurrent |
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TOTAL LIABILITIES |
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Commitments and contingencies (Note 6) |
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SHAREHOLDERS’ EQUITY (DEFICIT) |
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Preferred stock, |
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— |
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— |
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Common stock, |
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Accumulated other comprehensive income |
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Accumulated deficit |
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( |
) |
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( |
) |
Total shareholders’ equity (deficit) |
|
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( |
) |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
|
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Three Months Ended |
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Six Months Ended |
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||||||||||
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2025 |
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2024 |
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2025 |
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2024 |
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||||
Net revenue |
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$ |
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$ |
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$ |
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$ |
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||||
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Cost of revenues |
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Cost of revenues – amortization of acquired intangibles |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Change in fair value of contingent consideration |
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( |
) |
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Impairment loss on held for sale assets |
|
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— |
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— |
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— |
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Total operating expenses |
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Loss from operations |
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( |
) |
|
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( |
) |
|
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( |
) |
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( |
) |
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||||
Other (expenses) income: |
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||||
Interest expense |
|
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( |
) |
|
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( |
) |
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( |
) |
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( |
) |
Other income, net |
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||||
Total other income, net |
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||||
Loss before income taxes |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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||||
Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
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|
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— |
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||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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||||
Net loss per share (Note 2): |
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||||
Net loss attributable to common stockholders - basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss attributable to common stockholders per share - basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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||||
Weighted average shares outstanding - basic and diluted |
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||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
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2024 |
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|
2025 |
|
|
2024 |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency translation adjustments |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Comprehensive loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
(In thousands)
|
|
Three Months Ended June 30, 2025 |
|
||||||||||||||||||||||||||
|
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Series A Redeemable |
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Common Stock |
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Accumulated |
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Accumulated |
|
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Total |
|
|||||||||||||
|
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Shares |
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Amount |
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Shares |
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|
Amount |
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Income |
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|
Deficit |
|
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Equity |
|
|||||||
Balance at March 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Net Loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
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|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
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||
Vesting of bonus awards |
|
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— |
|
|
|
— |
|
|
|
|
— |
|
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|
|
|
|
— |
|
|
|
— |
|
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||
Shares issued for consultant services |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
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|||
Balance at June 30, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
Three Months Ended June 30, 2024 |
|
||||||||||||||||||||||||||
|
|
Series A Redeemable |
|
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|
Common Stock |
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Accumulated |
|
|
Accumulated |
|
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Total |
|
|||||||||||||
|
|
Shares |
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|
Amount |
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|
Shares |
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|
Amount |
|
|
Income |
|
|
Deficit |
|
|
Equity |
|
|||||||
Balance at March 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
Net Loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
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|
||
Vesting of bonus awards |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
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||
Sale of common shares, net of financing costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
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|||
Shares issued upon vesting of RSUs |
|
|
— |
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|
|
— |
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|
|
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Shares issued for consultant services |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
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|||
Redemption of Series A redeemable convertible preferred stock |
|
|
( |
) |
|
|
( |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Accretion of Series A convertible preferred stock to redemption value |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Balance at June 30, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
(Continued) (In thousands)
|
|
Six Months Ended June 30, 2025 |
|
||||||||||||||||||||||||||
|
|
Series A Redeemable |
|
|
|
Common Stock |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Deficit |
|
|
Equity |
|
|||||||
Balance at December 31, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
Net Loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of bonus awards |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Sale of common shares, net of financing costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Shares issued for consultant services |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balance at June 30, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
Six Months Ended June 30, 2024 |
|
||||||||||||||||||||||||||
|
|
Series A Redeemable |
|
|
|
Common Stock |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Deficit |
|
|
Equity |
|
|||||||
Balance at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of bonus awards |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
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||
Sale of common shares, net of financing costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
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|||
Shares issued upon vesting of RSUs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Shares issued for consultant services |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
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— |
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|
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|||
Redemption of Series A redeemable convertible preferred stock |
|
|
( |
) |
|
|
( |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Accretion of Series A convertible preferred stock to redemption value |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Balance at June 30, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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Six Months Ended |
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2025 |
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2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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|
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Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization expense |
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Amortization of intangible assets |
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Stock-based compensation |
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Equity compensation for bonus awards and consulting services |
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Change in fair value of contingent consideration |
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Impairment loss on held for sale assets |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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|
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|
||
Inventories |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
( |
) |
Operating lease assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
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||
CASH FLOWS FROM INVESTING ACTIVITIES: |
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||
Machinery and equipment purchases, and construction in progress |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
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|
|
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|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Proceeds from sale of common shares |
|
|
|
|
|
|
||
Financing costs to issue common shares |
|
|
( |
) |
|
|
( |
) |
Redemption of Series A redeemable convertible preferred shares |
|
|
|
|
|
( |
) |
|
Repayment of financing lease obligations |
|
|
( |
) |
|
|
( |
) |
Net provided by financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
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|
||
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING |
|
|
|
|
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|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
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||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Machinery and equipment purchases, and construction in progress included in accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
Accretion of Series A convertible preferred stock |
|
$ |
|
|
$ |
|
||
Lease assets obtained in exchange for lease liabilities |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Description of the Business
Insight Molecular Diagnostics Inc. (f/k/a Oncocyte Corporation) (“iMDx,” the “Company,” “we,” “our” or “us”), incorporated in 2009 in California, is a pioneering diagnostics technology company. Our mission is to democratize access to novel molecular diagnostic testing to improve patient outcomes. Our current intellectual property portfolio comprises three general areas: 1) organ transplant, 2) oncology therapy selection, and 3) oncology therapy monitoring. Within these categories, we have developed or are in the process of developing laboratory developed tests (“LDTs”) that can be run at our Nashville, Tennessee laboratory, kitted research-use-only (“RUO”) tests, and kitted clinical tests that can be run by local labs.
In June 2025, we changed our name from “Oncocyte Corporation” to “Insight Molecular Diagnostics Inc.” Our new trading symbol “IMDX” became effective on the Nasdaq Stock Market, LLC (“Nasdaq”) on June 18, 2025. In addition, in June 2025, we moved our headquarters from Irvine, California, to Nashville, Tennessee, home to our Clinical Laboratory Improvements Amendment (“CLIA”) certified lab and a growing hub for healthcare innovation.
Business Risks
Tariff policies and potential countermeasures could increase our costs and disrupt our global supply chain, which could negatively impact the results of our operations as well as our intangible asset valuations and other fair value measurements. In addition, our business could be adversely impacted by other inflationary factors. The Company will continue to monitor these risks. Refer to Item 1A., “Risk Factors” for additional information about the risks that may impact our business.
Liquidity
iMDx has incurred operating losses and negative operating cash flows since inception and had an accumulated deficit of $
iMDx received a positive coverage decision from MolDx for GraftAssureCore (Kidney) in August 2023, and it became commercially available for ordering in January 2024 through our CLIA-certified laboratory in Nashville, Tennessee. GraftAssureCore (Kidney) is now broadly available to transplant professionals upon request. In July 2024, iMDx began to commercialize the technology underlying GraftAssureCore (Kidney) by distributing its sister product, GraftAssureIQ, which is intended to be sold and used for research purposes and is labeled as RUO. iMDx expects to distribute its RUO production through a mix of direct sales, partnering and distribution agreements, and licensing. In December 2024, we confirmed Medicare reimbursement for also monitoring certain high-risk patients, that is, those with newly developed donor-specific antibodies. In May 2025, iMDx received another positive coverage decision, which boosted the reimbursement rate per result to $
In the field of oncology, iMDx is continuing to develop DetermaIO, a test with promising data supporting its potential to help identify patients likely to respond to checkpoint inhibitor drugs. This new class of drugs modulate the immune response and show activity in multiple solid tumor types including non-small cell lung cancer and triple negative breast cancer. A kitted research product format of the underlying technology began proof-of-concept development in 2023. The application of immunotherapy is a global problem, and thus we expect partnering opportunities for each of our products as they reach clinical maturity. We expect to begin commercializing our oncology product line, which includes DetermaIO, over the next 9 months.
On April 5, 2024, the Company entered into a global strategic partnership agreement with Bio-Rad Laboratories, Inc. (“Bio-Rad”) to collaborate in the development and the commercialization of RUO and in vitro diagnostic (“IVD”) kitted transplant products for clinical use. See Note 10, “Collaborative Arrangements” for additional information. On November 8, 2024, the Company and Bio-Rad entered into a memorandum of understanding with respect to such agreement to establish additional activities to be performed by each party pursuant to such agreement.
9
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On February 10, 2025, the Company consummated a registered direct offering and concurrent private placement of its securities to certain accredited investors (the “February 2025 Offering”). The aggregate gross proceeds from the February 2025 Offering were approximately $
In addition to general economic and capital market trends and conditions, iMDx’s ability to raise sufficient additional capital to finance its operations from time to time will depend on a number of factors specific to iMDx’s operations such as operating revenues and expenses, progress in our collaborative arrangement for the development and the commercialization of RUO and IVD kitted transplant products, progress in obtaining regulatory approval to distribute our products for clinical use, and progress in the development of, or in obtaining reimbursement coverage from Medicare for DetermaIO and other future laboratory tests that iMDx may develop or acquire.
The unavailability or inadequacy of financing or revenues to meet future capital needs could force iMDx to modify, curtail, delay, or suspend some or all aspects of planned operations. Sales of additional equity securities could result in the dilution of the interests of iMDx's current stockholders. iMDx cannot assure that adequate long-term financing will be available on favorable terms, if at all.
In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements included in this Report are issued. This evaluation initially does not take into consideration the potential mitigating effect of our plans that have not been fully implemented as of the date the consolidated financial statements included in this Report are issued. When substantial doubt exists under this methodology, we evaluate whether the mitigating effect of our plans sufficiently alleviates substantial doubt about our ability to continue as a going concern. The mitigating effect of our plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that such financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about our ability to continue as a going concern within one year after the date that such financial statements are issued. In performing this analysis, we excluded certain elements of our operating plan that cannot be considered probable.
Although it is difficult to predict the Company’s liquidity requirements, based on the going concern evaluation discussed above, management believes that it will have sufficient cash to meet its projected operating requirements for at least the next twelve months following the issuance of these consolidated financial statements. Accordingly, management has concluded that substantial doubt does not exist about the Company's ability to continue as a going concern for a period of at least one year from the date of issuance of these consolidated financial statements. However, the Company anticipates that it may continue to generate operating losses and negative operating cash flows for the foreseeable future as it continues the development of its various programs and incurs additional costs associated with being a public company.
2. Summary of Significant Accounting Policies
Accounting Principles
The consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”).
Principles of Consolidation and Basis of Presentation
The unaudited condensed consolidated interim financial statements presented herein have been prepared in accordance with GAAP for financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. In accordance with those rules and regulations, certain information and footnote disclosures normally included in comprehensive audited consolidated financial statements may have been condensed or omitted. The consolidated balance sheet as of December 31, 2024 was derived from the audited consolidated financial statements at that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in iMDx’s Annual Report on Form 10-K for the year ended December 31, 2024. The accompanying unaudited condensed consolidated financial statements, in the opinion of management, include all adjustments of a normal recurring nature necessary for a fair presentation of iMDx’s financial condition and results of operations. The consolidated results of operations are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
10
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On January 31, 2020, with the acquisition of Insight Genetics, Inc. (“IGI”) through a merger with a newly incorporated wholly-owned subsidiary of iMDx (the “IGI Merger”) under the terms of an Agreement and Plan of Merger (the “IGI Merger Agreement”), IGI became a wholly-owned subsidiary of iMDx, and on that date iMDx began consolidating IGI’s operations and results with iMDx’s operations and results. See Note 3, “Business Combinations and Contingent Consideration Liabilities – Acquisition of IGI”
On April 15, 2021, with the acquisition of Chronix Biomedical, Inc. (“Chronix”) pursuant to an Agreement and Plan of Merger dated February 2, 2021, amended February 23, 2021, and amended and restated as of April 15, 2021 (as amended and restated, the “Chronix Merger Agreement”), by and among iMDx and CNI Monitor Sub, Inc., a Delaware corporation and wholly-owned subsidiary of iMDx, Chronix became a wholly-owned subsidiary of iMDx (the “Chronix Merger”), and on that date iMDx began consolidating Chronix’s operations and results with iMDx’s operations and results. See Note 3, “Business Combinations and Contingent Consideration Liabilities – Acquisition of Chronix.”
All material intercompany accounts and transactions have been eliminated in consolidation.
Reclassifications
Certain prior period amounts in the notes to consolidated financial statements have been reclassified to conform to the current period presentation. These changes had no impact on the previously reported consolidated financial condition, results of operations or cash flows.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates estimates which are subject to significant judgment, including, but not limited to, valuation methods used, assumptions requiring the use of judgment to prepare financial projections and forecasted financial information, timing of potential commercialization of acquired in-process intangible assets, applicable discount rates, probabilities of the likelihood of multiple outcomes of certain events related to contingent consideration, comparable companies or transactions, determination of fair value of the assets acquired and liabilities assumed (including those relating to contingent consideration), the carrying value of any goodwill and other intangibles and related impairments, assumptions related to going concern assessments, revenue recognition, allowances for credit losses, allocation of direct and indirect expenses, useful lives associated with long-lived intangible and other assets, key assumptions in operating and financing leases including incremental borrowing rates, loss contingencies, valuation allowances related to deferred income taxes, and assumptions used to value stock-based awards and other equity instruments. These assessments are made in the context of information reasonably available to iMDx. Actual results may differ materially from those estimates.
Segment Reporting
In accordance with ASC 280, Segment Reporting, iMDx’s management views its operations as one reportable segment that includes the research, development and commercialization of diagnostic tests, including molecular diagnostic testing products and services. See Note 11 for additional information.
Fair Value Measurements, Business Combinations and Contingent Consideration Liabilities
iMDx accounts for business combinations in accordance with ASC 805, which requires the purchase consideration transferred to be measured at fair value on the acquisition date in accordance with ASC 820, Fair Value Measurement. ASC 820 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and expands on required disclosures about fair value measurement. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. ASC 820 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
11
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
When a part of the purchase consideration consists of shares of iMDx common stock, iMDx calculates the purchase price attributable to those shares, a Level 1 security, by determining the fair value of those shares as of the acquisition date based on prices quoted on the principal national securities exchange on which the shares traded. iMDx recognizes estimated fair values of the tangible assets and identifiable intangible assets acquired, including in-process research and development (“IPR&D”), and liabilities assumed, including any contingent consideration, as of the acquisition date. Goodwill is recognized as any amount of excess consideration transferred over the fair value of the tangible and identifiable intangible assets acquired net of the liabilities assumed. ASC 805 precludes the recognition of an assembled workforce as an asset, effectively subsuming any assembled workforce value into goodwill.
In determining fair value, iMDx utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. As of June 30, 2025 and December 31, 2024, iMDx had no financial assets recorded at fair value on a recurring basis, except for money market funds. These assets are reported as cash equivalents and are measured at fair value using the period-end quoted market prices as a Level 1 input.
The carrying amounts of cash and cash equivalents, restricted cash, net accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items.
In accordance with GAAP, from time to time, iMDx measures certain assets at fair value on a nonrecurring basis. iMDx reviews the carrying value of intangibles, including IPR&D (see Note 5), and other long-lived assets for indications of impairment at least annually. Refer to related discussions of impairments below.
Contingent Consideration Liabilities
Certain of iMDx’s asset and business acquisitions involve the potential for future payment of consideration to third-parties and former selling shareholders in amounts determined as a percentage of future net revenues generated, or upon attainment of revenue milestones, from laboratory services or tests, as applicable, or annual minimum royalties to certain licensors, as provided in the applicable agreements. The fair value of such liabilities is determined using unobservable inputs. These inputs include the estimated amount and timing of projected cash flows and the risk-adjusted discount rate used to present value the cash flows. These obligations are referred to as contingent consideration, which are carried at fair value based on Level 3 inputs on a recurring basis.
ASC 805 requires that contingent consideration be estimated and recorded at fair value as of the acquisition date as part of the total consideration transferred. Contingent consideration is an obligation of the acquirer to transfer additional assets or equity interests to the selling shareholders in the future if certain future events occur or conditions are met, such as the attainment of product development milestones. Contingent consideration also includes additional future payments to selling shareholders based on achievement of components of earnings, such as “earn-out” provisions or percentage of future revenues, including royalties paid to the selling shareholders based on a percentage of certain revenues generated.
The fair value of contingent consideration after the acquisition date is reassessed by iMDx as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in the consolidated statements of operations. Changes in key assumptions can materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that iMDx records in its consolidated financial statements. See Note 3 for a full discussion of these liabilities and additional Level 3 fair value disclosures.
12
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Cash, Cash Equivalents and Restricted Cash
iMDx considers all highly liquid securities with original maturities of three months or less when purchased to be cash equivalents. For the periods presented, iMDx’s cash equivalents are comprised of investments in AAA rated money market funds that invest in first-tier only securities, which primarily include domestic commercial paper and securities issued or guaranteed by the U.S. government or its agencies. Restricted cash balances, as reported on the consolidated balance sheets, relate to a bank letter of credit required under an office lease arrangement, refer to Note 6 for additional information.
For cashflow reporting purposes, the Company combines the reported balance sheet amounts from cash and cash equivalents with restricted cash (noncurrent). Accordingly, as of June 30, 2025 and 2024, the aggregate amount of such ending balances were $
Investments in Privately Held Companies
iMDx evaluates whether investments held in common stock of other companies require consolidation of the company under, first, the variable interest entity (“VIE”) model, and then under the voting interest model in accordance with accounting guidance for consolidations under ASC 810-10. If consolidation of the entity is not required under either the VIE model or the voting interest model, iMDx determines whether the equity method of accounting should be applied in accordance with ASC 323, Investments – Equity Method and Joint Ventures. The equity method applies to investments in common stock or in-substance common stock if iMDx exercises significant influence over, but does not control, the entity, where significant influence is typically represented by ownership of 20% or more, but less than majority ownership, of the voting interests of a company. iMDx initially records equity method investments at fair value on the date of the acquisition with subsequent adjustments to the investment balance based on iMDx’s pro rata share of earnings or losses from the investment.
iMDx’s first product for commercial release was a proprietary treatment stratification test called DetermaRx that identifies which patients with early-stage non-small cell lung cancer may benefit from chemotherapy, resulting in a significantly higher, five-year survival rate. Beginning in September 2019 through February 23, 2021, iMDx held a
Inventories
Inventories include raw materials, work-in-process and finished goods and are valued at the lower of cost or net realizable value. In September 2024, the Company began to capitalize certain RUO inventory costs in connection with its collaboration arrangement with Bio-Rad to develop and commercialize its GraftAssureIQ RUO kitted tests and eventual IVD kitted transplant testing products. See Note 10, “Collaborative Arrangements” for additional information. As of June 30, 2025, inventories were comprised of raw materials of $
13
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Assets Held for Sale
In accordance with ASC subtopic 360-10, Property, Plant, and Equipment, assets and liabilities are classified as held for sale when all of the following criteria for a plan of sale have been met: (1) management, having the authority to approve the action, commits to a plan to sell the assets; (2) the assets are available for immediate sale, in their present condition, subject only to terms that are usual and customary for sales of such assets; (3) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (4) the sale of the assets is probable and is expected to be completed within one year; (5) the assets are being actively marketed for a price that is reasonable in relation to their current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn. When all of these criteria have been met, the assets and liabilities are classified as held for sale in the consolidated balance sheet. Assets classified as held for sale are reported at the lower of their carrying value or fair value less costs to sell. Depreciation and amortization of assets ceases upon designation as held for sale.
Historically, the Company has entered into agreements to sell certain laboratory equipment. As a result, the Company classified the equipment as held for sale current assets in the consolidated balance sheet, when all the criteria of ASC 360-10 had been met. As such, laboratory equipment was written down to its fair value, less cost to sell, the remainder of which was $
Property and Equipment
Machinery and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, generally over a period of
Construction in progress, comprised primarily of leasehold improvements under construction, is not depreciated until the underlying asset is placed into service.
Intangible Assets
In accordance with ASC 350, Intangibles – Goodwill and Other, IPR&D projects acquired in a business combination that are not complete as of the acquisition date are capitalized and accounted for as indefinite-lived intangible assets until completion or abandonment of the related research and development efforts. Upon successful completion of the project, the capitalized amount is amortized over its estimated useful life. If a project is abandoned, all remaining capitalized amounts are written off immediately. iMDx considers various factors and risks for potential impairment of IPR&D assets, including the current legal and regulatory environment and the competitive landscape. Adverse clinical trial results, significant delays or inability to obtain local coverage determination (“LCD”) from the Centers for Medicare and Medicaid Services (“CMS”) for Medicare reimbursement for a diagnostic test, the inability to bring a diagnostic test to market and the introduction or advancement of competitors’ diagnostic tests could result in partial or full impairment of the related intangible assets. Consequently, the eventual realized value of the IPR&D project may vary from its fair value at the date of acquisition, and IPR&D impairment charges may occur in future periods. During the period between completion or abandonment, the IPR&D assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if iMDx becomes aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts.
iMDx does not have intangible assets with indefinite useful lives other than the acquired IPR&D discussed in Note 5, which as of June 30, 2025, has been partially impaired.
14
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In accordance with ASC 350, we review and evaluate our intangible assets for impairment whenever events or changes in circumstances indicate that we may not recover their net book value. When applicable, we test for impairment on an annual basis in the fourth quarter of each year, and between annual tests, if indicators of potential impairment exist, using a fair-value approach. We typically use an income method to estimate the fair value of these assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates). Estimates utilized in the projected cash flows include consideration of macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion, Company business plans, the underlying product or technology life cycles, economic barriers to entry, and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.
When applicable, goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. Goodwill, similar to IPR&D, is not amortized but is tested for impairment at least annually, or if circumstances indicate that it is more-likely-than-not that the carrying value of the associated reporting unit exceeds its fair value. Qualitative factors considered in this assessment include industry and market conditions, overall financial performance, and other relevant events and factors affecting iMDx’s business. Based on the qualitative assessment, if it is determined that the fair value of goodwill is more-likely-than-not to be less than its carrying amount, the fair value of a reporting unit will be calculated and compared with its carrying amount and an impairment charge will be recognized for the amount that the carrying value exceeds the fair value. iMDx continues to operate in one segment (see Note 11) and is considered to be the sole reporting unit and, therefore, goodwill will be tested for impairment at the enterprise level, when applicable.
Long-Lived Intangible Assets
Long-lived intangible assets subject to amortization are stated at acquired cost, less accumulated amortization. iMDx amortizes intangible assets not considered to have an indefinite useful life using the straight-line method over their estimated period of benefit, which generally ranges from
Impairment of Long-Lived Assets
iMDx’s long-lived assets consist primarily of right-of-use assets for operating and financing leases, machinery and equipment, and finite-lived intangible assets. If events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying value of the asset over its fair value, is recorded.
Leases
iMDx accounts for leases in accordance with ASC 842, Leases. iMDx determines if an arrangement is a lease at inception. Leases are classified as either financing or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. iMDx accounts for the lease and non-lease components as a single lease component. iMDx recognizes right-of-use (“ROU”) assets and lease liabilities for leases with terms greater than twelve months in the consolidated balance sheets. ROU assets represent the right to use an underlying asset during the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most leases do not provide an implicit rate, iMDx uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. iMDx uses the implicit rate when it is readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that iMDx will exercise that option. Operating lease expense and financing lease amortization expense are recognized on a straight-line basis over the lease term. Operating leases include ROU office lease assets and related ROU lease liabilities, current and long-term, in the consolidated balance sheets. Financing leases include machinery and equipment and related financing lease liabilities, current and long-term, in the consolidated balance sheets (see “Property and Equipment” above for more information). iMDx discloses the amortization of operating lease ROU assets and the related repayments of ROU lease obligations as a net amount in the consolidated statements of cash flows. iMDx has entered into various operating and financing leases in accordance with ASC 842 as further discussed in Note 6.
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accounting for Warrants
iMDx determines the accounting classification of warrants it issues, as either liability or equity classified, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate iMDx to settle the warrants or the underlying shares by paying cash or other assets, or for warrants that must or may require settlement by issuing a variable number of shares. If warrants do not meet liability classification under ASC 480, iMDx assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. This liability classification guidance also applies to financial instruments that may require cash or other form of settlement for transactions outside of the company’s control and, in which the form of consideration to the warrant holder may not be the same as to all other shareholders in connection with the transaction. However, if a transaction is not within the company’s control but the holder of the financial instrument can solely receive the same type or form of consideration as is being offered to all the shareholders in the transaction, then equity classification of the financial instrument is not precluded, if all other applicable equity classification criteria are met.
After all relevant assessments, iMDx concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the consolidated statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date. Based on the above guidance and, among other factors, the fact that our warrants cannot be cash settled under any circumstance but require share settlement, all of our outstanding warrants meet the equity classification criteria and have been classified as equity. Refer to Note 7 for details about our outstanding warrants.
Revenue Recognition
Pursuant to ASC 606, Revenue from Contracts with Customers, revenues are recognized when control of goods or services is transferred to customers, in an amount that reflects the consideration iMDx expects to be entitled to in exchange for those goods or services. ASC 606 provides for a five-step model that includes:
iMDx determines transaction prices based on the amount of consideration we expect to receive for transferring the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both. The Company considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The following table presents consolidated revenues by type:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Laboratory Services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Laboratory Developed Test Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Kitted Products |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
16
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Laboratory Services
Revenues recognized include Laboratory Services performed by iMDx for life sciences customers, including testing for biomarker discovery, assay design and development, clinical trial support, and a broad spectrum of biomarker tests. These Laboratory Services are generally performed under individual scope of work (“SOW”) arrangements or license agreements (together with SOW the “Laboratory Services Agreements”) with specific deliverables defined by the customer. Laboratory Services are performed on a (i) time and materials basis or (ii) per test completed basis. Upon completion of the service to the customer in accordance with a Laboratory Services Agreement, iMDx has the right to bill the customer for the agreed upon price (either on a per test or per deliverable basis) and recognizes Laboratory Service revenue at that time. Depending on the Laboratory Services Agreement, iMDx may identify each service of its Laboratory Services offering as a single performance obligation. Offerings include services such as recurring fees for project management, fees for storage and handling, pass through expenses for shipping or calibration, training, proficiency, reproducibility tests, etc. For other Laboratory Services Agreements, iMDx may identify the processing of test samples as a separate performance obligation (considered a series) within license agreements with customers.
Completion of the service and satisfaction of the performance obligation is typically evidenced by acknowledgment of completed services, and access to the report or test made available to the customer or any other form or applicable manner of delivery defined in the Laboratory Services Agreements. However, for certain SOWs under which work is performed pursuant to the customer’s highly customized specifications, iMDx has the enforceable right to bill the customer for work completed, rather than upon completion of the SOW. For those SOWs, iMDx recognizes revenue over a period during which the work is performed using a formula that accounts for expended efforts, generally measured in labor hours, as a percentage of total estimated efforts for the completion of the SOW. As performance obligations are satisfied under the Laboratory Services Agreements, any amounts earned as revenue and billed to the customer are included in accounts receivable. Any revenues earned but not yet billed to the customer as of the date of iMDx’s consolidated financial statements are recorded as contract assets and are included in other current assets as of the financial statement date. Amounts recorded in contract assets are reclassified to accounts receivable in iMDx’s consolidated balance sheets when the customer is invoiced according to the billing schedule in the contract.
As of June 30, 2025 and December 31, 2024, iMDx had gross accounts receivable from Laboratory Services customers of $
Allowance for Credit Losses
iMDx establishes an allowance for credit losses based on the evaluation of the collectability of its Laboratory Services accounts receivables after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial condition, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. iMDx continuously monitors collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts, if any, based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined to be uncollectible are written off against the credit loss reserve accounts. As of June 30, 2025 and December 31, 2024, iMDx had an allowance for credit losses of $
17
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Laboratory Developed Test Services
Prior to the Razor Sale Transaction (see “Investments in Privately Held Companies” above), iMDx generated revenue from performing DetermaRx tests on clinical samples through orders received from physicians, hospitals, and other healthcare providers. In determining whether all the revenue recognition criteria in (i) through (v) above was met with respect to DetermaRx tests, each test result was considered a single performance obligation and was generally considered complete when the test result was delivered or made available to the prescribing physician electronically, and, as such, there were no shipping or handling fees incurred by iMDx or billed to customers. Although iMDx billed a list price for all tests ordered and completed for all payer types, iMDx considered constraints on the variable consideration when it recognized revenue for DetermaRx. Because DetermaRx was a novel test and there were no current reimbursement arrangements with third-party payers other than Medicare, the transaction price represented variable consideration. Application of the constraint for variable consideration was an area that required significant judgment. For all payers other than Medicare, iMDx needed to consider the novelty of the test, the uncertainty of receiving payment, or being subject to claims for a refund, from payers with whom it did not have a sufficient payment collection history or contractual reimbursement agreements. Accordingly, for those payers, iMDx recognized revenue upon payment because it had insufficient history to reliably estimate payment patterns. The remaining Medicare and Medicare Advantage accounts receivable net balance was written-off in the first quarter of 2023. Laboratory Developed Test Services revenue recorded during the six months ended June 30, 2024 was the result of payments received.
Kitted Products
Revenues recognized include our GraftAssureIQ RUO kitted tests, which are clearly labeled and intended for research purposes. GraftAssureIQ is a transplant monitoring assay to measure the donor-derived cell-free DNA molecular biomarker. As of June 30, 2025, iMDx had gross accounts receivable from one Kitted Products customer of $
Licensing
Revenues that may be recognized include licensing revenue derived from agreements with customers for exclusive rights to market iMDx’s proprietary testing technology. Under the agreements, iMDx grants exclusive rights to certain trademarks and technology of iMDx for the purpose of marketing iMDx’s tests within a defined geographic territory. A license agreement may specify milestone deliverables or performance obligations, for which iMDx recognizes revenue when its licensee confirms the completion of iMDx’s performance obligation. A licensing agreement may also include ongoing sales support from iMDx and typically includes non-refundable licensing fees and per-test Laboratory Services revenues discussed above, for which iMDx treats the licensing of the technology, trademarks, and ongoing support as a single performance obligation satisfied by the passage of time over the term of the agreement.
Disaggregation of Revenues and Concentrations of Credit Risk
The following table presents the percentage of consolidated revenues by type:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Laboratory Services |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Laboratory Developed Test Services |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Kitted Products |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Total |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
18
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the percentage of consolidated revenues generated by unaffiliated customers, based on the respective periods presented, that individually represented greater than ten percent of consolidated revenues:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Company A |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Company B |
|
* |
|
|
|
% |
|
* |
|
|
|
% |
||||
Company C |
|
* |
|
|
|
% |
|
* |
|
|
|
% |
||||
Company D |
|
* |
|
|
|
% |
|
* |
|
|
* |
|
||||
* Less than 10%
The following table presents the percentage of consolidated revenues attributable to geographical locations, based on country of domicile:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
United States |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Outside of the United States |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Total |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Refer to Note 11, “Segment Reporting” for additional information about geographical revenues and long-lived tangible assets.
Financial instruments that potentially subject the Company to concentrations of credit risk are cash and cash equivalents and accounts receivable. The Company places its cash equivalents primarily in highly rated money market funds. Cash and cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents.
One customer individually represented approximately
The Company had accounts payable to two vendors that represented approximately
The Company has a concentration in the volume of business transacted with Bio-Rad, its global strategic partner. In 2024, the Company entered into an agreement with Bio-Rad to collaborate in the development and the commercialization of RUO and IVD kitted transplant products using Bio-Rad’s ddPCR instruments and reagents, pursuant to which it is dependent on Bio-Rad with respect to many of its ongoing operations and future target performance. See Note 9, “Related Party Transactions – Bio-Rad Transactions” and Note 10, “Collaborative Arrangements” for additional information.
Cost of Revenues
Cost of revenues generally consists of cost of materials, direct labor including benefits, bonus and stock-based compensation, equipment and infrastructure expenses, clinical sample related costs associated with performing Laboratory Services and Laboratory Developed Test Services, providing deliverables according to our licensing agreements, license fees due to third-parties, and amortization of acquired intangible assets such as the customer relationship intangible assets (see Note 5). Infrastructure expenses include depreciation of laboratory equipment, allocated rent costs, leasehold improvements, and allocated information technology costs for operations at iMDx’s CLIA-certified laboratory in Tennessee. Costs associated with generating the revenues are recorded as the tests or services are performed regardless of whether revenue was recognized. Royalties or revenue share payments for licensed technology calculated as a percentage of revenues generated using the associated technology are recorded as expenses at the time the related revenues are recognized.
19
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Research and Development Expenses
Research and development expenses are comprised of costs incurred to develop technology, which include salaries and benefits, stock-based compensation, laboratory expenses (including reagents and supplies used in research and development laboratory work), infrastructure expenses (including depreciation expense and allocated facility occupancy costs), and contract services and other outside costs. Indirect research and development expenses are allocated primarily based on headcount, as applicable, and include rent and utilities, common area maintenance, telecommunications, property taxes and insurance. Research and development costs are expensed as incurred. Certain research and development expenses are attributed to our global strategic collaboration arrangement with Bio-Rad for commercializing our kitted test products. See Note 10, “Collaborative Arrangements” for additional information.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of personnel costs and related benefits, including stock-based compensation, trade show expenses, branding and positioning expenses, and consulting fees. Sales and marketing expenses also include indirect expenses for applicable overhead allocated based on headcount, and include allocated costs for rent and utilities, common area maintenance, depreciation expense, telecommunications, property taxes and insurance. During the three months ended June 30, 2025 and 2024, iMDx’s total advertising expenses were $
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and related benefits (including stock-based compensation) for executive and corporate personnel, professional and consulting fees, rent and utilities, common area maintenance, depreciation expense, telecommunications, property taxes and insurance. Certain general and administrative expenses are attributed to our global strategic collaboration arrangement with Bio-Rad for commercializing our kitted test products. See Note 10, “Collaborative Arrangements” for additional information.
Stock-Based Compensation
iMDx recognizes compensation expense related to employee, Board of Director and other non-employee option grants and restricted stock grants in accordance with ASC 718, Compensation – Stock Compensation.
iMDx estimates the fair value of stock-based payment awards on the grant date and recognizes the resulting fair value over the requisite service period, which is generally a three or
The Black-Scholes option pricing model requires iMDx to make certain assumptions including the expected option term, the expected volatility, the risk-free interest rate and the dividend yield. The expected term of employee stock options represents the weighted average period that the stock options are expected to remain outstanding. iMDx estimates the expected term of options granted based on its own experience. iMDx estimates the expected volatility using its own stock price volatility for a period equal to the expected term of the options. The risk-free interest rate assumption is based upon observed interest rates on the United States government securities appropriate for the expected term of iMDx’s stock options. The dividend yield assumption is based on iMDx’s history and expectation of dividend payouts. iMDx has never declared or paid any cash dividends on its common stock, and iMDx does not anticipate paying any cash dividends in the foreseeable future.
20
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
All excess tax benefits and tax deficiencies from stock-based compensation awards accounted for under ASC 718 are recognized as income tax benefit or expense, respectively, in the consolidated statements of operations. An excess income tax benefit arises when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting purposes and, a tax deficiency arises when the compensation cost exceeds the tax deduction. Because iMDx has a full valuation allowance for all periods presented (see “Income Taxes” below), there was no impact to iMDx's consolidated statements of operations for any excess tax benefits or deficiencies, as any excess benefit or deficiency would be offset by the change in the valuation allowance.
Retirement Plan
iMDx has an employee savings and retirement plan under Section 401(k) of the Internal Revenue Code. The plan is a defined contribution plan in which eligible employees may elect to have a percentage of their compensation contributed to the plan, subject to certain guidelines issued by the Internal Revenue Service. During the three months ended June 30, 2025 and 2024, iMDx’s total contributions to the plan were $
Collaborative Arrangements
The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements, which includes determining whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. To the extent that the arrangement falls within the scope of ASC 808, the Company assesses whether the payments between the Company and its collaboration partner fall within the scope of other accounting literature. If the Company concludes that payments from the collaboration partner to the Company would represent consideration from a customer, the Company accounts for those payments within the scope of ASC 606. However, if the Company concludes that its collaboration partner is not a customer for certain activities and associated payments, the Company presents such payments as a reduction of the related expense, based on where the Company presents the underlying expense. See Note 10, “Collaborative Arrangements” for additional information.
Income Taxes
iMDx and its subsidiaries will file a consolidated U.S. federal income tax return and combined California state return for the year ending December 31, 2025. iMDx accounts for income taxes in accordance with ASC 740, Income Taxes, which prescribes the use of the asset and liability method, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect. The provision for income taxes for interim periods is determined using an estimated annual effective tax rate in accordance with ASC 740-270, Income Taxes, Interim Reporting. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, if any, and changes in or the interpretation of tax laws in jurisdictions where iMDx conducts business.
iMDx did not record any provision or benefit for income taxes for the three and six months ended June 30, 2025 and 2024, as iMDx had a full valuation allowance for the periods presented.
Valuation allowances are established when necessary to reduce deferred tax assets when it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. iMDx’s judgments regarding future taxable income may change over time due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If iMDx’s assumptions and consequently its estimates change in the future, the valuation allowance may be increased or decreased, which may have a material impact on iMDx’s consolidated statements of operations. iMDx established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from its net operating loss carry-forwards and other deferred tax assets.
The guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not sustainable upon examination by taxing authorities. iMDx will recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense.
21
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 4, 2025, the U.S. enacted H.R. 1, “A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14,” commonly referred to as the One Big Beautiful Bill. Changes in tax laws may affect recorded deferred tax assets and deferred tax liabilities and iMDx’s effective tax rate in the future. iMDx continues to evaluate the impacts the new legislation will have on the consolidated financial statements. As a result of the enactment of H.R. 1, iMDx anticipates an impact to the deferred tax asset related to the full expensing of domestic research and experimental expenditures in 2025. iMDx does not believe this change had an impact on its consolidated financial statements for the periods ended June 30, 2025.
Net Loss Per Common Share
Basic loss per share is computed by dividing the net loss applicable to common stockholders after deducting cumulative unpaid dividends and accretion of the preferred stock, when applicable, by the weighted average number of shares of common stock outstanding during the period. The weighted average shares outstanding - basic in the following table includes the effects of pre-funded warrants that were issued in April 2024 and February 2025 (refer to Note 7, “Common Stock Purchase Warrants” for additional information). Diluted loss per share is computed by dividing the net loss applicable to common stockholders after deducting cumulative unpaid dividends and accretion of the preferred stock, when applicable, by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method or the if-converted method, or the two-class method for participating securities, whichever is more dilutive. Potential common shares are excluded from the computation if their effect is antidilutive.
For the three and six months ended June 30, 2025 and 2024, all common stock equivalents are antidilutive because iMDx reported a net loss. The following table presents the calculation of basic and diluted loss per share of common stock:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands, except per share data) |
|
|||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Accretion of Series A redeemable convertible preferred stock |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net loss attributable to common stockholders - basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding - basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to common stockholders per share - basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive potential common shares excluded from the computation of diluted net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
22
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Recent Accounting Pronouncements
Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to address investor requests for more transparency about income tax information by requiring improvements to income tax disclosures, including, (i) consistent categories and greater disaggregation of information in the rate reconciliation, and (ii) income taxes paid disaggregated by jurisdiction. Additional amendments in this Update improve the effectiveness and comparability of disclosures by, (i) adding disclosures of pretax income (or loss) and income tax expense (or benefit), and (ii) removing disclosures that no longer are considered cost beneficial or relevant. The amendments in this Update should be applied prospectively (retrospective application is permitted) and are effective for annual periods beginning after December 15, 2024. Management is currently evaluating the impact that the amendments in this Update will have on the Company’s financial statement disclosures. The adoption of this new standard will not have an impact on the Company’s consolidated balance sheets and consolidated statements of operations, comprehensive loss, shareholders' equity (deficit) and cash flows.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to address investor requests for more detailed information about certain types of reported costs and expenses. The amendments in this Update require disclosure, in the notes to financial statements, at each interim and annual reporting period an entity: 1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, and (d) intangible asset amortization included in each expense caption presented on the face of the income statement within continuing operations; 2) include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; 3) disclose a qualitative description of the amounts remaining that are not separately disaggregated quantitatively; and 4) disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in this Update should be applied either prospectively or retrospectively, and are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027,with early adoption permitted. Management is currently evaluating the impact that the amendments in this Update will have on the Company’s financial statement disclosures. The adoption of this new standard will not have an impact on the Company’s consolidated balance sheets and consolidated statements of operations, comprehensive loss, shareholders' equity (deficit) and cash flows.
3. Business Combinations and Contingent Consideration Liabilities
Acquisition of IGI
On January 31, 2020 (the “IGI Merger Date”), iMDx completed its acquisition of IGI pursuant to the IGI Merger Agreement. iMDx determined there are two types of contingent consideration in connection with the IGI Merger, the Milestone Contingent Consideration and the Royalty Contingent Consideration discussed below.
There were three milestones comprising the Milestone Contingent Consideration, in connection with the IGI Merger which iMDx valued and recorded as part of the contingent consideration as of the IGI Merger Date (see table below), which consisted of (i) a payment for clinical trial completion and related data publication (“Milestone 1”), (ii) a payment for an affirmative final LCD from CMS for a specified lung cancer test (“Milestone 2”), and (iii) a payment for achieving specified CMS reimbursement milestones (“Milestone 3”). If achieved, any respective Milestone will be paid at the contractual value shown below, with the payment made either in cash or in shares of iMDx's common stock as determined by iMDx. There can be no assurance that any of the Milestones will be achieved.
The following table shows the IGI Merger Date contractual payment amounts, as applicable, and the corresponding fair value of each respective contingent consideration liability:
|
|
Contractual |
|
|
Fair Value on the |
|
||
|
|
(In thousands) |
|
|||||
Milestone 1 |
|
$ |
|
|
$ |
|
||
Milestone 2 |
|
|
|
|
|
|
||
Milestone 3 (a) |
|
|
|
|
|
|
||
Royalty 1 (b) |
|
See(b) |
|
|
|
|
||
Royalty 2 (b) |
|
See(b) |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The fair value of the contingent consideration after the IGI Merger Date is reassessed by iMDx as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in iMDx’s consolidated statements of operations. Since December 2023, Milestone 1 and Royalty 2 (Laboratory Services) are not expected to be paid and are excluded from the current fair value. During 2025, based on iMDx’s reassessment of significant assumptions, there was a decrease of approximately $
iMDx uses a discounted cash flow valuation technique to determine the fair value of its Level 3 contingent consideration liabilities.
The following tables reflect the activity for the IGI contingent consideration measured at fair value using Level 3 inputs:
|
|
Fair Value |
|
|
|
|
(In thousands) |
|
|
Balance at December 31, 2023 |
|
$ |
|
|
Change in estimated fair value |
|
|
( |
) |
Balance at June 30, 2024 |
|
$ |
|
|
|
|
|
|
|
Balance at December 31, 2024 |
|
$ |
|
|
Change in estimated fair value |
|
|
( |
) |
Balance at June 30, 2025 |
|
$ |
|
|
Acquisition of Chronix
On April 15, 2021 (the “Chronix Merger Date”), iMDx completed its acquisition of Chronix pursuant to the Chronix Merger Agreement. As additional consideration for holders of certain classes and series of Chronix capital stock, the Chronix Merger Agreement required iMDx to pay certain contingent consideration. On February 8, 2023, the Company and the equity holder representative named in the Chronix Merger Agreement entered into Amendment No. 1 to the Chronix Merger Agreement, pursuant to which the parties agreed that (i) Chronix’s equity holders will be paid earnout consideration of
The fair value of the Chronix contingent consideration after the Chronix Merger Date is reassessed by iMDx as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in iMDx’s consolidated statements of operations. During 2025, based on iMDx’s reassessment of significant assumptions, there was an increase of approximately $
iMDx uses a discounted cash flow valuation technique to determine the fair value of its Level 3 contingent consideration liabilities.
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables reflect the activity for the Chronix contingent consideration measured at fair value using Level 3 inputs:
|
|
Fair Value |
|
|
|
|
(In thousands) |
|
|
Balance at December 31, 2023 |
|
$ |
|
|
Change in estimated fair value |
|
|
|
|
Balance at June 30, 2024 |
|
$ |
|
|
|
|
|
|
|
Balance at December 31, 2024 |
|
$ |
|
|
Change in estimated fair value |
|
|
|
|
Balance at June 30, 2025 |
|
$ |
|
|
As of June 30, 2025 and 2024, the total Chronix contingent consideration fair values, as presented in the tables above, include $
4. Property and Equipment, Net
Right-of-use and financing lease assets, net, machinery and equipment, net, and construction in progress were as follows:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
(In thousands) |
|
|||||
Right-of-use and financing lease assets |
|
$ |
|
|
$ |
|
||
Machinery, equipment and leasehold improvements |
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Right-of-use and financing lease assets and machinery and equipment, net |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Property and equipment depreciation and amortization expense amounted to $
5. Intangible Assets, Net
As part of the IGI and Chronix acquisitions completed on January 31, 2020 and April 15, 2021, respectively, the Company acquired IPR&D and customer relationships (see Note 3). The original IPR&D balances were reassessed using the multi-period excess earnings method (“MPEEM”) approach and the Company recorded an impairment of approximately $
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The MPEEM valuation approach is a discounted cash flow valuation technique and was used to determine the Level 3 fair values of the IPR&D.
Intangible assets, net, consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
(In thousands) |
|
|||||
Intangible assets: |
|
|
|
|
|
|
||
Acquired IPR&D - DetermaIO (1) |
|
$ |
|
|
$ |
|
||
Acquired IPR&D - DetermaCNI (2) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Intangible assets subject to amortization: |
|
|
|
|
|
|
||
Acquired intangible assets - customer relationship |
|
|
|
|
|
|
||
Total intangible assets |
|
|
|
|
|
|
||
Accumulated amortization - customer relationship (3) |
|
|
( |
) |
|
|
( |
) |
Intangible assets, net |
|
$ |
|
|
$ |
|
||
Intangible asset amortization expense amounted to
6. Commitments and Contingencies
Office and Facilities Leases
Irvine Office Lease
On December 23, 2019, iMDx and Cushing Ventures, LLC (“Landlord”) entered into an Office Lease Agreement (the “Irvine Lease”) of a building containing approximately
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Effective as of January 2, 2025, iMDx, Landlord and Subtenant (as defined below under the caption "Irvine Office Sublease") entered into an amendment to the Irvine Lease, dated December 26, 2024 (the “Amendment”). Pursuant to the terms of the Amendment, among other things: (a) iMDx and Subtenant agreed that all rights to extend the Term of the Irvine Lease for a period of
In addition to base monthly rent, iMDx agreed to pay in monthly installments (a) all costs and expenses, other than certain excluded expenses, incurred by the lessor in each calendar year in connection with operating, maintaining, repairing (including replacements if repairs are not feasible or would not be effective) and managing the Premises and the building in which the Premises are located (“Expenses”), and (b) all real estate taxes and assessments on the Premises and the building in which the Premises are located, all personal property taxes for property that is owned by lessor and used in connection with the operation, maintenance and repair of the Premises, and costs and fees incurred in connection with seeking reductions in such tax liabilities (“Taxes”). Subject to certain exceptions, Expenses shall not be increased by more than
iMDx was entitled to an abatement of its obligations to pay Expenses and Taxes while constructing improvements to the Premises constituting “Tenant’s Work” under the Irvine Lease prior to the Commencement Date, except that iMDx was obligated to pay
iMDx has provided the lessor with a security deposit in the amount of $
To obtain the letter of credit, iMDx has provided the issuing bank with a restricted cash deposit that the bank will hold to cover its obligation to pay any draws on the letter of credit by the lessor. The restricted cash may not be used for any other purpose. Corresponding to the Letter of Credit Amount, iMDx has reflected $
Irvine Office Sublease
On August 8, 2023, iMDx and Induce Biologics USA, Inc. (“Subtenant”) entered into a Sublease Agreement (the “Sublease Agreement”), which subsequently became effective as of September 14, 2023, upon the execution and delivery by the Company, Subtenant, and Landlord, of that certain Landlord’s Consent to Sublease dated September 12, 2023 (the “Consent Agreement”), under which Landlord consented to the Sublease Agreement, on the terms and subject to the conditions set forth therein. The Sublease Agreement is subject and subordinate to the Irvine Lease.
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Under the Sublease Agreement, the Company agreed to initially sublet to Subtenant a portion of the Premises consisting of approximately
Following the Sublease Commencement Date, Subtenant is responsible for the payment of Additional Rent, including Expenses and Taxes (as each such term is defined in the Irvine Lease), provided that, with respect to the Initial Period, Subtenant was responsible for only
The Sublease Agreement contains customary provisions with respect to, among other things, Subtenant’s obligation to comply with the Irvine Lease and applicable laws, the payment of utilities and similar services utilized by Subtenant with respect its use of the Premises, the indemnification of the Company by Subtenant, and the right of the Company to terminate the Sublease Agreement in its entirety and retake the Premises if Subtenant fails to remedy certain defaults of its obligations under the Sublease Agreement within specified time periods.
Nashville Office and Facilities Leases
iMDx operates a CLIA-certified laboratory and office space located at 2 International Plaza, Nashville, Tennessee, under three lease arrangements with MPC Holdings, LLC. Since June 2025, iMDx's Nashville location also serves as our principal executive and administrative offices.
In January 2024, iMDx renewed its existing leases with MPC Holdings, LLC and added a new lease agreement to expand our Nashville office space. With the new lease, iMDx maintains an aggregate of
The office and facilities leases discussed above are operating leases under ASC 842 and are included in the tables below. The tables below provide the amounts recorded in connection with the application of ASC 842 for iMDx’s operating and financing leases (see Note 2, “Leases” for additional policy information).
Financing Leases
iMDx had various financing leases for certain laboratory and other equipment, as shown in the tables below. iMDx’s lease obligations are collateralized by the equipment financed under the lease schedules.
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Operating and Financing Leases
The following table presents supplemental balance sheet information related to operating and financing leases:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
(In thousands) |
|
|||||
Operating leases |
|
|
|
|
|
|
||
Right-of-use assets, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Right-of-use lease liabilities, current |
|
$ |
|
|
$ |
|
||
Right-of-use lease liabilities, noncurrent |
|
|
|
|
|
|
||
Total operating lease liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Financing leases |
|
|
|
|
|
|
||
Machinery and equipment |
|
$ |
|
|
$ |
|
||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Machinery and equipment, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Current liabilities |
|
$ |
|
|
$ |
|
||
Noncurrent liabilities |
|
|
|
|
|
|
||
Total financing lease liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Weighted average remaining lease term: |
|
|
|
|
|
|
||
Operating lease |
|
|
|
|
||||
Financing lease |
|
|
|
|
||||
|
|
|
|
|
|
|
||
Weighted average discount rate: |
|
|
|
|
|
|
||
Operating lease |
|
|
% |
|
|
% |
||
Financing lease |
|
|
% |
|
|
% |
||
Future minimum lease commitments are as follows:
|
|
Operating |
|
|
Financing |
|
||
|
|
Leases |
|
|
Leases |
|
||
|
|
(In thousands) |
|
|||||
Year Ending December 31, |
|
|
|
|
|
|
||
2025 |
|
$ |
|
|
$ |
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
Total minimum lease payments |
|
|
|
|
|
|
||
Less amounts representing interest |
|
|
( |
) |
|
|
( |
) |
Present value of net minimum lease payments |
|
$ |
|
|
$ |
|
||
29
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents supplemental cash flow information related to operating and financing leases:
|
|
Six Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(In thousands) |
|
|||||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from financing leases |
|
$ |
|
|
$ |
|
||
Financing cash flows from financing leases |
|
$ |
|
|
$ |
|
||
The Company incurred total operating lease cost, including short-term lease expense, of $
Financing lease amortization expense amounted to $
Litigation – General
iMDx may be subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, and other matters. When iMDx is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, iMDx will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, iMDx discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material.
On March 3, 2025, the Company received a letter claiming that a recent study regarding the Company's DetermaIO immuno-oncology assay for breast cancer had triggered the Company’s first milestone payment obligation under the January 10, 2020 Agreement and Plan of Merger between the Company, IGI, and certain other parties. The Company strongly disputes the position taken in the letter, believes the arguments to be ill-founded, and intends to vigorously defend its own position. More information regarding the milestone payments related to the IGI acquisition may be found in Note 3, “Business Combinations and Contingent Consideration Liabilities – Acquisition of IGI.”
Tax Filings
iMDx tax filings are subject to audit by taxing authorities in jurisdictions where it conducts business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. Management believes iMDx has adequately provided for any ultimate amounts that are likely to result from these audits; however, final assessments, if any, could be significantly different than the amounts recorded in the consolidated financial statements. See Note 2, “Income Taxes” for additional information.
Employment Contracts
iMDx has entered into employment and severance benefit contracts with certain executive officers. Under the provisions of the contracts, iMDx may be required to incur severance obligations for matters relating to changes in control, as defined in the respective contracts, and certain terminations of executives. As of June 30, 2025 and December 31, 2024, iMDx accrued approximately $
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Indemnification
In the normal course of business, iMDx may provide indemnification of varying scope under iMDx’s agreements with other companies or consultants, typically iMDx’s clinical research organizations, investigators, clinical sites, suppliers and others. Pursuant to these agreements, iMDx will generally agree to indemnify, hold harmless, and reimburse the indemnified parties for losses and expenses suffered or incurred by the indemnified parties arising from claims of third parties in connection with the use or testing of iMDx’s diagnostic tests. Indemnification provisions could also cover third party infringement claims with respect to patent rights, copyrights, or other intellectual property pertaining to iMDx’s diagnostic tests. iMDx’s office and laboratory facility leases also will generally contain indemnification obligations, including obligations for indemnification of the lessor for environmental law matters and injuries to persons or property of others, arising from iMDx’s use or occupancy of the leased property. The term of these indemnification agreements will generally continue in effect after the termination or expiration of the particular research, development, services, lease, or license agreement to which they relate. The Razor Stock Purchase Agreement (see Note 2, “Investments in Privately Held Companies”) also contains provisions under which iMDx has agreed to indemnify Razor and Encore Clinical, Inc., a former stockholder of Razor, from losses and expenses resulting from breaches or inaccuracy of iMDx’s representations and warranties and breaches or nonfulfillment of iMDx’s covenants, agreements, and obligations under the Razor Stock Purchase Agreement. iMDx periodically enters into underwriting and securities sales agreements with broker-dealers in connection with the offer and sale of iMDx securities. The terms of those underwriting and securities sales agreements include indemnification provisions pursuant to which iMDx agrees to indemnify the broker-dealers from certain liabilities, including liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the offer and sale of iMDx securities.
The potential future payments iMDx could be required to make under these indemnification agreements will generally not be subject to any specified maximum amounts. Historically, iMDx has not been subject to any claims or demands for indemnification. iMDx also maintains various liability insurance policies that limit iMDx’s financial exposure. As a result, iMDx management believes that the fair value of these indemnification agreements is minimal. Accordingly, iMDx has not recorded any liabilities for these agreements as of June 30, 2025 and December 31, 2024.
7. Series A Redeemable Convertible Preferred Stock and Shareholders’ Equity
Series A Redeemable Convertible Preferred Stock
On April 13, 2022, the Company entered into a Securities Purchase Agreement with institutional accredited investors (the “Investors”) in a registered direct offering of
In the event of the Company’s liquidation, dissolution, or winding up, holders of Series A Preferred Stock would have received a payment equal to the stated value of the Series A Preferred Stock plus accrued but unpaid dividends and any other amounts that may have become payable on the Series A Preferred Stock. Shares of Series A Preferred Stock were entitled to receive cumulative dividends at a rate per share (as a percentage of stated value) of
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Shares of Series A Preferred Stock generally had no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series A Preferred Stock would be required to amend any provision of our certificate of incorporation that would have had a materially adverse effect on the rights of the holders of the Series A Preferred Stock. Additionally, as long as any shares of Series A Preferred Stock remained outstanding, unless the holders of at least
The Company was required to redeem, for cash, the shares of Series A Preferred Stock on the earlier to occur of (1) April 8, 2024, (2) the commencement of certain a voluntary or involuntary bankruptcy, receivership, or similar proceedings against the Company or its assets, (3) a Change of Control Transaction (as defined) and (4) at the election and upon notice of
On April 5, 2023, the Company redeemed
The issuance and sale of the Series A Preferred Stock was completed pursuant to the Company’s effective “shelf” registration statement on Form S-3 (Registration No. 333-256650), filed with the SEC on May 28, 2021 and declared effective by the SEC on June 8, 2021, and an accompanying prospectus dated June 8, 2021 as supplemented by a prospectus supplement dated April 13, 2022.
Preferred Stock
As of June 30, 2025 and December 31, 2024, iMDx had
Common Stock
As of June 30, 2025 and December 31, 2024, iMDx had
April 2024 Offering
On April 15, 2024, the Company consummated a private placement of its securities to certain accredited investors for the issuance and sale of
A holder of the pre-funded warrants may not exercise any portion of such holder’s pre-funded warrants to the extent that the holder, together with its affiliates, would beneficially own more than
32
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The gross proceeds to the Company from the April 2024 Offering were approximately $
August 2024 Offering
On August 9, 2024, the Company entered into a sales agreement with a sales agent, pursuant to which the Company could offer and sell from time to time up to an aggregate of $
Sales of the Placement Shares were made in sales deemed to be "at-the-market offerings” as defined in Rule 415 promulgated under the Securities Act. The sales agent used commercially reasonable efforts to sell, on the Company’s behalf, all of the Placement Shares requested to be sold by the Company, consistent with its normal trading and sales practices, the terms of the sales agreement, and applicable law and regulations. The Company could also sell Placement Shares to the sales agent as principal in negotiated transactions. The Company had no obligation to sell any Placement Shares, and could at any time suspend offers under the sales agreement or terminate the sales agreement. The sales agreement would terminate, and offer and sale of the Placement Shares pursuant to the sales agreement would cease, upon the earlier of (a) the issuance and sale of all of the Placement Shares subject to the sales agreement or (b) the termination of the sales agreement by the sales agent or the Company pursuant to the terms thereof. The sales agreement contained customary representations, warranties and agreements by the Company, as well as indemnification obligations of the Company for certain liabilities under the Securities Act. On February 6, 2025, the Company provided notice of its intention to terminate the sales agreement. As a result, on February 8, 2025, the sales agreement terminated in accordance with its terms.
Under the terms of the sales agreement, the Company paid the sales agent a commission equal to
The Placement Shares were registered under the Securities Act pursuant to the registration statement on Form S-3 (File No. 333-281159) filed with the SEC on August 1, 2024 and declared effective by the SEC on August 7, 2024, the base prospectus contained within the registration statement, and a prospectus supplement dated August 9, 2024.
October 2024 Offering
On October 4, 2024, the Company consummated a private placement of its securities to certain accredited investors for the issuance and sale of
The gross proceeds to the Company from the October 2024 Offering were approximately $
33
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INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 2025 Offering
On February 10, 2025, the Company consummated a private placement of its securities to certain accredited investors for the issuance and sale of
A holder of the pre-funded warrants may not exercise any portion of such holder’s pre-funded warrants to the extent that the holder, together with its affiliates, would beneficially own more than
Further, on February 10, 2025, the Company consummated a registered direct offering of its securities to certain investors for the issuance and sale of
The registered shares of common stock were offered by the Company pursuant to its shelf registration statement on Form S-3 (File No. 333-281159), which was filed with the SEC on August 1, 2024, and declared effective by the SEC on August 7, 2024, including the base prospectus contained therein, and a related prospectus supplement, dated February 7, 2025, filed with the SEC on February 10, 2025.
The aggregate gross proceeds from the February 2025 Offering were approximately $
Unregistered Restricted Stock Issuance
During the three and six months ended June 30, 2024, the Company issued
Common Stock Purchase Warrants
As of June 30, 2025 and December 31, 2024, iMDx had common stock purchase warrants issued and outstanding of
In connection with the April 2024 Offering, the Company issued pre-funded warrants to purchase
34
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Bank Warrants
In connection with a loan that matured in September 2022 from Silicon Valley Bank (the “Bank”), in February 2017, iMDx issued common stock purchase warrants to the Bank (the “2017 Bank Warrants”). The Bank was issued warrants to purchase
8. Stock-Based Compensation
Equity Incentive Plan
In August 2018, iMDx shareholders approved an Equity Incentive Plan to replace the 2010 Stock Option Plan (the “2010 Plan”) and in October 2024, iMDx shareholders approved an amendment and restatement of such Equity Incentive Plan (as amended and restated, the “2018 Incentive Plan”). The 2018 Incentive Plan will expire on
As of June 30, 2025,
Plan Activity
A summary of iMDx’s 2010 Plan and 2018 Incentive Plan activity and related information follows:
|
|
Options |
|
|
Nonvested RSUs |
|
||||||||||||||||
|
|
Number |
|
|
Weighted |
|
|
Weighted |
|
Aggregate |
|
|
Number |
|
|
Weighted |
|
|||||
|
|
(In thousands, except weighted average amounts) |
|
|||||||||||||||||||
Balance at December 31, 2024 |
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Awards granted |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
Options exercised |
|
|
— |
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
n/a |
|
|
n/a |
|
||
RSUs vested |
|
n/a |
|
|
n/a |
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
||||
Options forfeited/expired |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
n/a |
|
|
n/a |
|
||||
RSUs forfeited |
|
n/a |
|
|
n/a |
|
|
|
|
|
|
|
|
— |
|
|
$ |
— |
|
|||
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Options vested and expected to vest at June 30, 2025 |
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
||||||
Options exercisable at June 30, 2025 |
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
||||||
Stock-based compensation expense for the period |
|
$ |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|||||
Unrecognized stock-based compensation expense |
|
$ |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|||||
Weighted average remaining recognition period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
35
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Option Awards
During the six months ended June 30, 2025, the Company granted
|
|
Six Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Expected life |
|
|
|
|
||||
Risk-free interest rates |
|
|
% |
|
|
% |
||
Volatility |
|
|
% |
|
|
% |
||
Dividend yield |
|
|
% |
|
|
% |
||
In October 2024, the Company awarded a
In August 2023, the Company awarded
RSU Awards
The weighted average grant date fair value of RSUs granted during the six months ended June 30, 2025 was $
During the three months ended June 30, 2025, the Company issued
36
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In October 2024, the Company awarded
Stock-Based Compensation Expense
iMDx recorded stock-based compensation expense in the following categories on the accompanying consolidated statements of operations:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Cost of revenues |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total unrecognized stock-based compensation expense as of June 30, 2025 was $
Other Information
The determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If iMDx had made different assumptions, its stock-based compensation expense and results for the periods presented may have been significantly different. Refer to Note 2, “Stock-Based Compensation” for additional information.
iMDx does not recognize deferred income taxes for incentive stock option compensation expense and records a tax deduction only when a disqualified disposition has occurred.
9. Related Party Transactions
Financing Transactions
On April 13, 2022, iMDx entered into the Securities Purchase Agreement with the Investors, including Broadwood Partners, L.P. (“Broadwood”), for the Series A Preferred Stock offering. Broadwood had a direct material interest in the Series A Preferred Stock offering and agreed to purchase
37
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Further, on April 13, 2022, iMDx entered into an underwriting agreement pursuant to which the Company agreed to issue and sell certain shares of common stock and warrants to purchase common stock (“April 2022 Warrants”). The April 2022 Warrants have an exercise price of $
On April 3, 2023, iMDx entered into a securities purchase agreement with certain investors, including Broadwood, Pura Vida and entities affiliated with AWM, and certain individuals, including iMDx's Chairman, Andrew Arno, and certain of their affiliated parties, which provided for the sale and issuance by the Company of an aggregate of
On April 15, 2024, iMDx consummated a private placement of its securities to certain investors, including Broadwood, entities affiliated with AWM, Bio-Rad, and certain individuals, including iMDx's Chairman, Andrew Arno, for the issuance and sale of
On October 4, 2024, iMDx consummated the October 2024 Offering involving certain investors, including Broadwood, Bio-Rad, entities affiliated with AWM, Unterberg Legacy Capital, LLC (“Unterberg”) and certain affiliated parties, Patrick W. Smith, and certain other individuals, including iMDx's Chief Financial Officer, Andrea James, and Chief Science Officer, Ekkehard Schütz. The gross proceeds from the October 2024 Offering were approximately $
On February 10, 2025, iMDx consummated the February 2025 Offering involving certain investors, including Broadwood, Bio-Rad, entities affiliated with AWM, Unterberg and certain affiliated parties, Patrick W. Smith, and certain other individuals, including iMDx's Chief Financial Officer, Andrea James, and Chief Science Officer, Ekkehard Schütz. The gross proceeds from the February 2025 Offering were approximately $
38
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Bio-Rad Transactions
During the six months ended June 30, 2025, the Company purchased $
During the six months ended June 30, 2024, the Company purchased
As of June 30, 2025 and December 31, 2024, the Company had accounts payable due to Bio-Rad of $
On April 5, 2024, the Company entered into an agreement with Bio-Rad to collaborate in the development and the commercialization of RUO and IVD kitted transplant products (the “Collaboration Agreement”). Under the Collaboration Agreement, Bio-Rad agreed to purchase shares of our common stock equal to
10. Collaborative Arrangement
On April 5, 2024, the Company entered into the Collaboration Agreement with Bio-Rad to collaborate in the development and the commercialization of RUO and IVD kitted transplant products using Bio-Rad’s ddPCR instruments and reagents. The Collaboration Agreement has a term of
The Collaboration Agreement provides that through the oversight of a joint steering committee comprised of representatives from both parties, the parties will collaborate on the development of (i) the Company’s series of GraftAssureIQ™ Transplant Monitoring Assays to measure and test the concentration of donor-derived cell-free DNA for RUO (the “RUO Assays”); and (ii) the Company’s GraftAssureDx™ Transplant Monitoring Assays that have received regulatory approval as an in vitro diagnostic device (the “IVD Kits”) for use on one or more Bio-Rad ddPCR instruments. Pursuant to the Collaboration Agreement, and toward the development of the RUO Assays and the IVD Kits, the Company will collect and screen samples, conduct feasibility testing and stability studies, and perform analytical validation, among other things; and Bio-Rad will supply its ddPCR instruments and platforms as well as manufacture and supply all consumables.
Prior to the commercial launch of the RUO Assays, under the Collaboration Agreement, the parties will develop a plan to market and sell the RUO Assays. The Company will be responsible for the manufacture and supply of all RUO Assays, and Bio-Rad will supply to the Company Bio-Rad’s ddPCR instruments and reagents for use in commercializing the RUO Assays, which products will be purchased by the Company exclusively from Bio-Rad. The Company and Bio-Rad will be jointly responsible for co-promoting and co-marketing the RUO Assays within the United States and Germany (the “Territory”). The Company has the exclusive right to sell the RUO Assays in the Territory exclusively with the use of Bio-Rad ddPCR instruments and reagents. Bio-Rad will be responsible for promoting and marketing, and has the exclusive right to sell, the RUO Assays outside the Territory. For the sales of the RUO Assays in the Territory, the Company will pay to Bio-Rad a single digit royalty payment based on net sales. The Company will manufacture and supply the RUO Assays to Bio-Rad for resale outside the Territory.
39
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Additionally, the Collaboration Agreement provides Bio-Rad a 90-day exclusive negotiating period, post regulatory clearance, for the right to exclusively promote, market and sell IVD Kits worldwide subject to certain conditions. If and when such option is exercised, Bio-Rad will purchase additional shares of the Company’s common stock, no par value per share, at the then-current market price per share, up to a specified maximum aggregate purchase price, and the Company will manufacture and supply IVD Kits exclusively for Bio-Rad. See Note 9, “Related Party Transactions – Financing Transactions” for additional information.
On November 8, 2024, iMDx and Bio-Rad entered into a binding Memorandum of Understanding (the “Memorandum”) in connection with the Collaboration Agreement. The Memorandum establishes additional activities (described below) to be performed by iMDx and Bio-Rad prior to the commercial launch of the RUO Assays specifically related to pilot study sites outside the Territory (the “Pilot Sites”).
Pursuant to the Memorandum, iMDx (i) will setup commercialization of Pilot Sites to use the RUO Assays, (ii) may sell RUO Assays to Pilot Sites, (iii) will train and support the Pilot Sites on the use of the RUO Assays, and (iv) if iMDx receives any net sales from the sale of the RUO Assays to the Pilot Sites, then iMDx shall pay to Bio-Rad a royalty payment based on a percentage of such net sales under the terms and conditions of the Collaboration Agreement. In addition, pursuant to the Memorandum, Bio-Rad will evaluate commercialization efforts for the RUO Assays, which will include (i) supporting installation and training for Pilot Sites, and (ii) evaluating distribution of the RUO Assays to Pilot Sites. In May 2025, the Company sold its first RUO Assays to a Pilot Site (see Note 2, “Revenue Recognition – Kitted Products” for additional information).
For the six months ended June 30, 2025, the income statement amounts attributable to Bio-Rad transactions arising from the Collaboration Agreement, included research and development expenses, sales and marketing expenses, general and administrative expenses, and interest expense, and in the aggregate have not been significant. See Note 9, “Related Party Transactions – Bio-Rad Transactions” for additional information. Beginning in September 2024, the Company has capitalized certain inventory costs (see Note 2, “Inventories” for additional information).
11. Segment Reporting
The Company operates and reports its results in
Adjusted income or loss from operations is the measure of segment profit or loss that the CODM uses in assessing segment performance and deciding how to allocate resources. Adjusted income or loss from operations is used to monitor budget versus actual results and for long range planning. Segment loss from operations in the table below includes revenues, cost of revenues, research and development, and other significant operating expenses directly attributable to our reportable segment. Such operating expenses exclude depreciation and amortization expenses, stock-based compensation, the change in fair value of contingent consideration, and impairments. As an early-stage company with limited revenue, management believes this measure of profit or loss is helpful in assessing our ongoing performance, providing insight into the Company’s core operating costs and performance by excluding certain noncash items that may obscure the underlying trends in the business. The reconciling items and significant segment expense categories and amounts, as included in the table below, are based on the Company’s internal general ledger reporting system that is used in preparing our consolidated financial statements and are included in determining the measure of segment profit or loss that is used by the CODM.
The measure of segment assets is reported on the consolidated balance sheets as total assets. Total segment expenditures for additions to long-lived assets is reported on the consolidated statements of cash flows as a component of cash used in investing activities.
40
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company's single reportable segment profit or loss information is as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Laboratory Services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Laboratory Developed Test Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Kitted Products |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Personnel-related expenses and board fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional fees, legal, and outside services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Facilities and insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Laboratory supplies and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketing and advertising |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Travel and entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment loss from operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Reconciliation of segment profit and loss: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Change in fair value of contingent consideration |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Impairment loss on held for sale assets |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The Company's revenues and long-lived tangible assets by geographic area are presented below. Revenues are based on the customer country of domicile. Assets are based on the location of held assets.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Revenues by geographic area: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia-Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
41
Table of Contents
INSIGHT MOLECULAR DIAGNOSTICS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
June 30, |
|
|
December 31, |
|
||
|
|
(In thousands) |
|
|||||
Long-lived tangible assets by geographic area: |
|
|
|
|
|
|
||
United States |
|
$ |
|
|
$ |
|
||
Europe |
|
|
|
|
|
|
||
United Kingdom |
|
|
|
|
|
|
||
Asia-Pacific |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
12. Subsequent Events
Management has evaluated subsequent events or transactions occurring through the date the consolidated financial statements were issued and determined that no events or transactions are required to be disclosed herein.
42
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our consolidated financial statements for the three and six months ended June 30, 2025 and 2024 included elsewhere in this Report, and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations. These historical consolidated financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing, particularly under Risk Factors in this Report and those Risk Factors in Part I, Item 1A. of our most recent Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”
Overview
Insight Molecular Diagnostics Inc., or iMDx, is a pioneering diagnostics technology company. Our mission is to democratize access to novel molecular diagnostic testing to improve patient outcomes.
We do this primarily by developing molecular diagnostic test kits that empower our customers to run their own tests to participate in the patient-care value chain, which is counter-positioned with the central laboratory model. Our decentralized approach also puts testing in the hands of researchers to enable more studies, which inspires innovation, which we believe, can improve standards of care while also creating demand for more testing. We develop tests that measure both established biomarkers as well as pioneer the adoption of new and more effective biomarkers.
We believe that combining innovative science with a simple, but disruptive, business model can create enormous value. This model is designed to empower doctors to reduce uncertainty to make better decisions to save lives as well as enable researchers to measure biomarkers to inspire innovation.
Our customer institutions are hospitals, transplant centers, and labs. The decision to deploy our tests on behalf of patients or research studies supports front line doctors, including surgeons, nephrologists and oncologists, as well as researchers, pathologists, lab directors, medical directors, department heads, lab managers, and chief medical officers.
Our operating premise is that democratizing access to testing to foster scientific innovation and better treatments ultimately reduces the cost of care, while expanding access and improving outcomes.
At the heart, we are a science-driven organization that champions scientific integrity and inquiry. We employ world-renowned scientists who generate intellectual property in our strategic target markets. We have built and acquired an intellectual property portfolio that we believe will enable us to gain share in well-established clinical and research markets.
Our current intellectual property portfolio comprises three general areas: 1) organ transplant, 2) oncology therapy selection and 3) oncology therapy monitoring. Within these categories, we have developed or are in the process of developing LDTs that can be run at our Nashville, Tennessee laboratory, kitted RUO tests, and kitted clinical tests that can be run by local labs.
Our primary near-term strategic market is organ transplant. Our molecular diagnostic tests are designed to help the industry to better address one of the leading challenges in the transplantation market – which is the body’s potential to reject the donor organ. We do this by detecting early evidence of graft organ damage in the blood through assessing a known biomarker known as donor-derived cell-free DNA. GraftAssureCore (Kidney), for example, can find donor kidney damage up to 11 months sooner than other protocols. GraftAssureCore is analytically and clinically validated in three major solid organ transplant types (kidney, liver and heart) by peer reviewed international publications. We received a positive coverage decision from MolDx for GraftAssureCore (Kidney) in August 2023, and it became commercially available for ordering in January 2024 through our CLIA-certified laboratory in Nashville, Tennessee. GraftAssureCore (Kidney) is now broadly available to transplant professionals upon request. In December 2024, we confirmed Medicare reimbursement for also monitoring certain high-risk patients, that is, those with newly developed donor-specific antibodies. In May 2025, we received another positive coverage decision, which boosted the reimbursement rate per result to $2,753 for GraftAssureCore.
43
Table of Contents
In July 2024, we began to commercialize the technology underlying GraftAssureCore (Kidney) by distributing its sister product, GraftAssureIQ, which is intended to be sold and used for research purposes and is labeled as RUO. We expect to distribute our RUO production through a mix of direct sales, partnering and distribution agreements, and licensing. We have entered into a global strategic partnership agreement with Bio-Rad to collaborate in the development and the commercialization of RUO and IVD kitted transplant products for clinical use (see Note 10, “Collaborative Arrangements,” to our consolidated financial statements included elsewhere in this Report for additional information). In May 2025, we sold our first GraftAssureIQ kits to a research laboratory customer (see Note 2, “Revenue Recognition – Kitted Products” to our consolidated financial statements included elsewhere in this Report for additional information).
Under strict regulatory rules, our kitted tests may not be used in a clinical treatment setting until they have attained marketing authorization from the Food and Drug Administration (“FDA”) in the U.S. and In Vitro Diagnostic Medical Devices Regulation approval in the European Union. As such, we are working with these regulatory bodies to attain such clearance and approval, as applicable, supporting future distribution and higher sales of our products for clinical use. We have started a clinical trial in conjunction with our IVD submission in 2025, supporting our transplant products.
We also have a services lab, certified under the CLIA and accredited by the College of American Pathologists, in Nashville, Tennessee, and a research and development lab in Göttingen, Germany. Our innovation centers in Nashville and Germany employ world-renowned research scientists who, we believe, are leaders in their fields.
Our secondary strategic market is in the field of oncology – namely through diagnostic tests that can measure and predict which patients will best respond to certain types of therapies, as well as provide efficacy monitoring for therapies. For example, we are continuing to develop DetermaIO, a test with promising data supporting its potential to help identify patients likely to respond to checkpoint inhibitor drugs. This new class of drugs modulate the immune response and show activity in multiple solid tumor types including non-small cell lung cancer and triple negative breast cancer. A kitted research product format of the underlying technology began proof-of-concept development in 2023. The application of immunotherapy is a global problem, and thus we expect partnering opportunities for each of our products as they reach clinical maturity. We expect to begin commercializing our oncology product line, which includes DetermaIO, over the next 9 months.
The inherent uncertainties of developing and commercializing new diagnostic tests for medical use make it impossible to predict the amount of time and expense that will be required to complete the development and commercialization of those tests. There is no assurance that we will be successful in developing new technology or diagnostic tests, nor that any technology or diagnostic tests that we may develop will be proven safe and effective in diagnosis of cancer in humans or will be successfully commercialized. We expect that our operating expenses will continue to increase if we successfully complete the development of DetermaIO and commercialize this test.
We also perform other assay development and clinical testing services for life sciences and biotechnology companies through our Laboratory Services operations.
We believe that the experience of our team with diverse technologies through our Laboratory Services activities, strong scientific integrity regarding evidence generation and innovation mentality, alongside our flexibility in operations and regulatory strategy, will drive our success, differentiate us from our competition, and are foundational to our future. We are focusing on executing the technology priorities discussed herein, which have evolved to reflect our operations and strategic vision.
Recent Developments
February 2025 Offering
On February 10, 2025, we consummated a private placement of our securities to certain accredited investors for the issuance and sale of 7,536,706 shares of our common stock and pre-funded warrants to purchase 3,069,926 shares of our common stock, with an exercise price of $0.0001 per share. The purchase price for one common share was $2.05, and the purchase price for one pre-funded warrant was $2.05. Further, on February 10, 2025, we consummated a registered direct offering of our securities to certain investors for the issuance and sale of 3,609,755 shares of our common stock, priced at-the-market under the rules of the Nasdaq. The purchase price for one common share was $2.05. The aggregate gross proceeds from the February 2025 Offering were approximately $29.1 million. After deducting offering expenses of $487,000, the resulting net proceeds were approximately $28.7 million. See Note 7, “Common Stock – February 2025 Offering,” to our consolidated financial statements included elsewhere in this Report for additional information.
44
Table of Contents
Renaming and Relocation of Principal Executive Office
In June 2025, we changed our name from “Oncocyte Corporation” to “Insight Molecular Diagnostics Inc.” Our new trading symbol “IMDX” became effective on the Nasdaq on June 18, 2025. In addition, in June 2025, we moved our headquarters from Irvine, California, to Nashville, Tennessee, home to our CLIA certified lab and a growing hub for healthcare innovation. On June 13, 2025, we amended and restated our Second Amended and Restated Bylaws solely to reflect the name change.
Results of Operations
Summary Results of Operations
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||||||
|
|
(In thousands, except percentage change values) |
|
|||||||||||||||||||||||||||||
Net revenue |
|
$ |
518 |
|
|
$ |
104 |
|
|
$ |
414 |
|
|
|
398 |
% |
|
$ |
2,656 |
|
|
$ |
280 |
|
|
$ |
2,376 |
|
|
|
849 |
% |
Cost of revenues |
|
|
168 |
|
|
|
32 |
|
|
|
136 |
|
|
|
425 |
% |
|
|
974 |
|
|
|
141 |
|
|
|
833 |
|
|
|
591 |
% |
Cost of revenues – amortization of acquired intangibles |
|
|
— |
|
|
|
22 |
|
|
|
(22 |
) |
|
|
(100 |
)% |
|
|
7 |
|
|
|
44 |
|
|
|
(37 |
) |
|
|
(84 |
)% |
Research and development |
|
|
3,281 |
|
|
|
2,453 |
|
|
|
828 |
|
|
|
34 |
% |
|
|
6,205 |
|
|
|
4,765 |
|
|
|
1,440 |
|
|
|
30 |
% |
Sales and marketing |
|
|
1,460 |
|
|
|
853 |
|
|
|
607 |
|
|
|
71 |
% |
|
|
2,666 |
|
|
|
1,699 |
|
|
|
967 |
|
|
|
57 |
% |
General and administrative |
|
|
2,647 |
|
|
|
2,407 |
|
|
|
240 |
|
|
|
10 |
% |
|
|
5,762 |
|
|
|
5,080 |
|
|
|
682 |
|
|
|
13 |
% |
Change in fair value of contingent consideration |
|
|
2,804 |
|
|
|
(1,031 |
) |
|
|
3,835 |
|
|
|
(372 |
)% |
|
|
3,683 |
|
|
|
2,281 |
|
|
|
1,402 |
|
|
|
61 |
% |
Impairment loss on held for sale assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
169 |
|
|
|
(169 |
) |
|
|
(100 |
)% |
Loss from operations |
|
|
(9,842 |
) |
|
|
(4,632 |
) |
|
|
(5,210 |
) |
|
|
112 |
% |
|
|
(16,641 |
) |
|
|
(13,899 |
) |
|
|
(2,742 |
) |
|
|
20 |
% |
Total other income, net |
|
|
100 |
|
|
|
102 |
|
|
|
(2 |
) |
|
|
(2 |
)% |
|
|
228 |
|
|
|
240 |
|
|
|
(12 |
) |
|
|
(5 |
)% |
Loss before income taxes |
|
|
(9,742 |
) |
|
|
(4,530 |
) |
|
|
(5,212 |
) |
|
|
115 |
% |
|
|
(16,413 |
) |
|
|
(13,659 |
) |
|
|
(2,754 |
) |
|
|
20 |
% |
Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
$ |
(9,742 |
) |
|
$ |
(4,530 |
) |
|
$ |
(5,212 |
) |
|
|
115 |
% |
|
$ |
(16,413 |
) |
|
$ |
(13,659 |
) |
|
$ |
(2,754 |
) |
|
|
20 |
% |
Results of Operations – Three Months Ended June 30, 2025 Compared with the Three Months Ended June 30, 2024
Total net revenue increased to $518,000 for the three months ended June 30, 2025, compared to $104,000 in the comparable prior period primarily from Laboratory Services as further discussed below. Future Laboratory Services revenue is expected to be impacted as a result of our shift in strategic focus on commercializing our transplant kitted tests, and deploying our sales personnel toward signing new research laboratory customers.
Net loss was $9.7 million for the three months ended June 30, 2025, compared to $4.5 million for the comparable prior period. Net loss increased by $5.2 million primarily due to the change in fair value of contingent consideration and increases in operating expenses, which were partially offset by increased Laboratory Services revenue. Further details related to the increased net loss are as follows:
45
Table of Contents
Results of Operations – Six Months Ended June 30, 2025 Compared with the Six Months Ended June 30, 2024
Total net revenue increased to $2.7 million for the six months ended June 30, 2025, compared to $280,000 in the comparable prior period primarily from Laboratory Services as further discussed below. Future Laboratory Services revenue is expected to be impacted as a result of our shift in strategic focus on commercializing our transplant kitted tests, and deploying our sales personnel toward signing new research laboratory customers.
Net loss was $16.4 million for the six months ended June 30, 2025, compared to $13.7 million for the comparable prior period. Net loss increased by $2.8 million primarily due to increases in operating expenses and the change in fair value of contingent consideration, which were partially offset by increased Laboratory Services revenue. Further details related to the increased net loss are as follows:
46
Table of Contents
Revenues
The following table shows our revenues by type:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||||||
|
|
(In thousands, except percentage change values) |
|
|||||||||||||||||||||||||||||
Laboratory Services |
|
$ |
494 |
|
|
$ |
104 |
|
|
$ |
390 |
|
|
|
375 |
% |
|
$ |
2,632 |
|
|
$ |
258 |
|
|
$ |
2,374 |
|
|
|
920 |
% |
Laboratory Developed Test Services |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
|
|
(22 |
) |
|
|
(100 |
)% |
Kitted Products |
|
|
24 |
|
|
|
— |
|
|
|
24 |
|
|
|
100 |
% |
|
|
24 |
|
|
|
— |
|
|
|
24 |
|
|
|
100 |
% |
Total |
|
$ |
518 |
|
|
$ |
104 |
|
|
$ |
414 |
|
|
|
398 |
% |
|
$ |
2,656 |
|
|
$ |
280 |
|
|
$ |
2,376 |
|
|
|
849 |
% |
Laboratory Services are generally performed on a time and materials basis. Upon our completion of the service to the customer in accordance with the contract, we have the right to bill the customer for the agreed upon price (either on a per test or per deliverable basis) and recognize the Laboratory Services revenue at that time, on an accrual basis. Laboratory Services revenues are generated under discrete agreements for particular customer projects that generally expire with the completion or termination of the customer’s project. Accordingly, different customers may account for greater or lesser portions of Laboratory Services during different accounting periods, and Laboratory Services revenues may exhibit a larger variance from accounting period to accounting period than other revenues. Refer to Note 2, “Revenue Recognition – Laboratory Services” and “Disaggregation of Revenues and Concentrations of Credit Risk,” to our consolidated financial statements included elsewhere in this Report for additional information.
Laboratory Developed Test Services generally related to payments received from sales prior to the Razor Sale Transaction (see Note 2, “Investments in Privately Held Companies,” to our consolidated financial statements included elsewhere in this Report). We generated revenue from performing DetermaRx tests on clinical samples through orders received from physicians, hospitals, and other healthcare providers. For all payers other than Medicare, we needed to consider the novelty of the test, the uncertainty of receiving payment, or being subject to claims for a refund, from payers with whom it does not have a sufficient payment collection history or contractual reimbursement agreements. Accordingly, for those payers, we recognized revenue upon payment. See Note 2, “Revenue Recognition – Laboratory Developed Test Services,” to our consolidated financial statements included elsewhere in this Report for additional information.
Kitted Products include our GraftAssureIQ RUO kitted tests sold to research laboratory customers, which are clearly labeled and intended for research purposes. GraftAssureIQ is a transplant monitoring assay to measure the donor-derived cell-free DNA molecular biomarker. Refer to Note 2, “Revenue Recognition – Kitted Products,” to our consolidated financial statements included elsewhere in this Report for additional information.
Cost of Revenues
Cost of revenues generally consists of cost of materials, direct labor including payroll, payroll taxes, bonus, benefit and stock-based compensation, equipment and infrastructure expenses, clinical sample costs associated with performing Laboratory Services, and amortization of acquired intangible assets. Infrastructure expenses include depreciation of laboratory equipment, allocated rent costs and leasehold improvements. Cost of revenues for Laboratory Services varies depending on the nature, timing, and scope of customer projects.
47
Table of Contents
Research and Development Expenses
A summary of the main drivers of the change in research and development expenses is as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||||||
|
|
(In thousands, except percentage change values) |
|
|||||||||||||||||||||||||||||
Personnel-related expenses |
|
$ |
1,139 |
|
|
$ |
1,197 |
|
|
$ |
(58 |
) |
|
|
(5 |
)% |
|
$ |
2,162 |
|
|
$ |
2,382 |
|
|
$ |
(220 |
) |
|
|
(9 |
)% |
Depreciation and amortization |
|
|
324 |
|
|
|
235 |
|
|
|
89 |
|
|
|
38 |
% |
|
|
608 |
|
|
|
472 |
|
|
|
136 |
|
|
|
29 |
% |
Stock-based compensation |
|
|
173 |
|
|
|
202 |
|
|
|
(29 |
) |
|
|
(14 |
)% |
|
|
368 |
|
|
|
409 |
|
|
|
(41 |
) |
|
|
(10 |
)% |
Laboratory supplies and expenses |
|
|
557 |
|
|
|
555 |
|
|
|
2 |
|
|
|
0 |
% |
|
|
1,013 |
|
|
|
802 |
|
|
|
211 |
|
|
|
26 |
% |
Facilities and insurance |
|
|
685 |
|
|
|
194 |
|
|
|
491 |
|
|
|
253 |
% |
|
|
1,345 |
|
|
|
380 |
|
|
|
965 |
|
|
|
254 |
% |
Professional fees, legal, and outside services |
|
|
368 |
|
|
|
35 |
|
|
|
333 |
|
|
|
951 |
% |
|
|
575 |
|
|
|
269 |
|
|
|
306 |
|
|
|
114 |
% |
Travel and entertainment |
|
|
24 |
|
|
|
26 |
|
|
|
(2 |
) |
|
|
(8 |
)% |
|
|
41 |
|
|
|
33 |
|
|
|
8 |
|
|
|
24 |
% |
Severance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
83 |
|
|
|
— |
|
|
|
83 |
|
|
|
100 |
% |
Other |
|
|
4 |
|
|
|
7 |
|
|
|
(3 |
) |
|
|
(43 |
)% |
|
|
(2 |
) |
|
|
16 |
|
|
|
(18 |
) |
|
|
(113 |
)% |
Clinical trials |
|
|
7 |
|
|
|
2 |
|
|
|
5 |
|
|
|
250 |
% |
|
|
12 |
|
|
|
2 |
|
|
|
10 |
|
|
|
500 |
% |
Total |
|
$ |
3,281 |
|
|
$ |
2,453 |
|
|
$ |
828 |
|
|
|
34 |
% |
|
$ |
6,205 |
|
|
$ |
4,765 |
|
|
$ |
1,440 |
|
|
|
30 |
% |
% of Net Revenue |
|
|
633 |
% |
|
|
2359 |
% |
|
|
|
|
|
(1725 |
)% |
|
|
234 |
% |
|
|
1702 |
% |
|
|
|
|
|
(1468 |
)% |
||
We expect to continue to incur a significant amount of research and development expenses for the foreseeable future. We will continue development of GraftAssureCore, GraftAssureIQ, GraftAssureDx, DetermaIO and DetermaCNI. Our future research and development efforts and expenses will also depend on the amount of capital that we are able to raise to finance those activities and whether we acquire rights to any new diagnostic tests. A portion of our costs for leasing and operating our CLIA-certified laboratory in Tennessee, and in Germany with Chronix, will also be included in research and development expenses to the extent allocated to the development of our diagnostic tests.
We intend to pursue a clinical trial in conjunction with our IVD submission in 2025, supporting our transplant products. We also may commence clinical trials of DetermaIO if we develop that diagnostic test to the point where we determine that its use as a clinical diagnostic appears to be feasible.
Sales and Marketing Expenses
A summary of the main drivers of the change in sales and marketing expenses is as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||||||
|
|
(In thousands, except percentage change values) |
|
|||||||||||||||||||||||||||||
Personnel-related expenses |
|
$ |
770 |
|
|
$ |
600 |
|
|
$ |
170 |
|
|
|
28 |
% |
|
$ |
1,534 |
|
|
$ |
1,215 |
|
|
$ |
319 |
|
|
|
26 |
% |
Depreciation and amortization |
|
|
145 |
|
|
|
1 |
|
|
|
144 |
|
|
|
100 |
% |
|
|
255 |
|
|
|
1 |
|
|
|
254 |
|
|
|
100 |
% |
Stock-based compensation |
|
|
42 |
|
|
|
41 |
|
|
|
1 |
|
|
|
2 |
% |
|
|
80 |
|
|
|
83 |
|
|
|
(3 |
) |
|
|
(4 |
)% |
Facilities and insurance |
|
|
82 |
|
|
|
17 |
|
|
|
65 |
|
|
|
382 |
% |
|
|
109 |
|
|
|
49 |
|
|
|
60 |
|
|
|
122 |
% |
Professional fees, legal, and outside services |
|
|
49 |
|
|
|
48 |
|
|
|
1 |
|
|
|
2 |
% |
|
|
77 |
|
|
|
121 |
|
|
|
(44 |
) |
|
|
(36 |
)% |
Marketing and advertising |
|
|
159 |
|
|
|
44 |
|
|
|
115 |
|
|
|
261 |
% |
|
|
224 |
|
|
|
82 |
|
|
|
142 |
|
|
|
173 |
% |
Travel and entertainment |
|
|
168 |
|
|
|
100 |
|
|
|
68 |
|
|
|
68 |
% |
|
|
284 |
|
|
|
142 |
|
|
|
142 |
|
|
|
100 |
% |
Other |
|
|
45 |
|
|
|
2 |
|
|
|
43 |
|
|
|
2150 |
% |
|
|
103 |
|
|
|
6 |
|
|
|
97 |
|
|
|
1617 |
% |
Total |
|
$ |
1,460 |
|
|
$ |
853 |
|
|
$ |
607 |
|
|
|
71 |
% |
|
$ |
2,666 |
|
|
$ |
1,699 |
|
|
$ |
967 |
|
|
|
57 |
% |
% of Net Revenue |
|
|
282 |
% |
|
|
820 |
% |
|
|
|
|
|
(538 |
)% |
|
|
100 |
% |
|
|
607 |
% |
|
|
|
|
|
(506 |
)% |
||
48
Table of Contents
We expect to continue to incur sales and marketing expenses during the foreseeable future as we complete product development and begin commercialization efforts for DetermaIO as a clinical test. Sales and marketing expenses will also increase as we continue to commercialize GraftAssureIQ and if we successfully develop and begin commercializing GraftAssureCore, GraftAssureDx and DetermaCNI, or if we acquire and commercialize other diagnostic tests. Our commercialization efforts and expenses will also depend on the amount of capital that we are able to raise to finance commercialization of our tests. Our future expenditures on sales and marketing will also depend on the amount of revenue that those efforts are likely to generate. Because physicians are more likely to prescribe a test for their patients if the cost is covered by Medicare or health insurance, demand for our diagnostic and other tests and our expenditures on sales and marketing are likely to increase if our diagnostic or other tests qualify for reimbursement by Medicare or private health insurance companies.
General and Administrative Expenses
A summary of the main drivers of the change in general and administrative expenses is as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||||||
|
|
(In thousands, except percentage change values) |
|
|||||||||||||||||||||||||||||
Personnel-related expenses and board fees |
|
$ |
1,227 |
|
|
$ |
901 |
|
|
$ |
326 |
|
|
|
36 |
% |
|
$ |
2,468 |
|
|
$ |
1,917 |
|
|
$ |
551 |
|
|
|
29 |
% |
Depreciation and amortization |
|
|
70 |
|
|
|
51 |
|
|
|
19 |
|
|
|
37 |
% |
|
|
140 |
|
|
|
110 |
|
|
|
30 |
|
|
|
27 |
% |
Stock-based compensation |
|
|
289 |
|
|
|
147 |
|
|
|
142 |
|
|
|
97 |
% |
|
|
529 |
|
|
|
314 |
|
|
|
215 |
|
|
|
68 |
% |
Facilities and insurance |
|
|
328 |
|
|
|
350 |
|
|
|
(22 |
) |
|
|
(6 |
)% |
|
|
745 |
|
|
|
825 |
|
|
|
(80 |
) |
|
|
(10 |
)% |
Professional fees, legal, and outside services |
|
|
657 |
|
|
|
880 |
|
|
|
(223 |
) |
|
|
(25 |
)% |
|
|
1,702 |
|
|
|
1,738 |
|
|
|
(36 |
) |
|
|
(2 |
)% |
Travel and entertainment |
|
|
67 |
|
|
|
49 |
|
|
|
18 |
|
|
|
37 |
% |
|
|
129 |
|
|
|
71 |
|
|
|
58 |
|
|
|
82 |
% |
Other |
|
|
9 |
|
|
|
29 |
|
|
|
(20 |
) |
|
|
(69 |
)% |
|
|
49 |
|
|
|
105 |
|
|
|
(56 |
) |
|
|
(53 |
)% |
Total |
|
$ |
2,647 |
|
|
$ |
2,407 |
|
|
$ |
240 |
|
|
|
10 |
% |
|
$ |
5,762 |
|
|
$ |
5,080 |
|
|
$ |
682 |
|
|
|
13 |
% |
% of Net Revenue |
|
|
511 |
% |
|
|
2314 |
% |
|
|
|
|
|
(1803 |
)% |
|
|
217 |
% |
|
|
1814 |
% |
|
|
|
|
|
(1597 |
)% |
||
Change in Fair Value of Contingent Consideration
We will pay contingent consideration if various payment milestones are triggered under the merger agreements through which we acquired IGI and Chronix. See Note 3 to our consolidated financial statements included elsewhere in this Report. Changes in the fair value of the contingent consideration will be based on our reassessment of the key assumptions underlying the determination of this liability as changes in circumstances and conditions occur from the IGI and Chronix acquisition dates to the reporting periods being presented, with the subsequent changes in fair value recorded as part of our consolidated results from operations for such periods.
Other Income and Expenses
Other income and expenses are primarily comprised of interest income and expense. Interest income is earned from money market funds we hold for capital preservation. Interest expense was incurred from our financing lease obligations (see Note 6 to our consolidated financial statements included elsewhere in this Report) and insurance financing activity.
Income Taxes
We did not record any provision or benefit for income taxes for the three and six months ended June 30, 2025 and 2024, as we had a full valuation allowance for the periods presented. See Note 2 to our consolidated financial statements included elsewhere in this Report.
A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from our net operating loss carry-forwards and other deferred tax assets.
49
Table of Contents
Inflation
Although historically not significant to our results of operations, financial condition and cash flows, we may experience inflationary pressures, primarily in personnel costs, with certain laboratory supplies, from inventory costs related to certain raw materials, and with essential vendors, including audit fees and regulatory consultants. The extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long elevated inflation levels persist and the extent to which the rate of inflation were to increase, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, the purchasing power of our cash and cash equivalents may be diminished, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which we operate, our payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows. Refer to Note 1, “Business Risks,” to our consolidated financial statements included elsewhere in this Report for additional information about the risks that may impact our business.
Liquidity and Capital Resources
Our foreseeable material cash requirements as of June 30, 2025, are recognized as liabilities or generally are otherwise described in Note 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report. Our cash requirements are generally derived from our operating and investing activities including expenditures for working capital, human capital, equipment purchases, business development, investments in intellectual property, and business combinations. Our office lease obligations (net of sublease payments) and financing lease obligations, and contingent consideration obligations are further described in Note 6 and Note 3, respectively, to our consolidated financial statements included elsewhere in this Report. Historically, we have not entered into any off-balance sheet arrangements. As of June 30, 2025 and December 31, 2024, we had unrecognized tax benefits totaling $1.1 million (see Note 2, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report).
Since formation, we have financed our operations primarily through the sale of our common stock, preferred stock and common stock warrants (see Note 7 to our consolidated financial statements included elsewhere in this Report). We have incurred operating losses and negative operating cash flows since inception and had an accumulated deficit of $367.0 million as of June 30, 2025. At June 30, 2025, we had $24.3 million of cash and cash equivalents. Management anticipates that we may continue to incur operating losses and negative operating cash flows for the near future. Although it is difficult to predict our liquidity requirements, based on the going concern evaluation discussed in Note 1 to our consolidated financial statements included elsewhere in this Report, management believes that it will have sufficient cash to meet its projected operating requirements for at least the next twelve months following the issuance of these consolidated financial statements.
On February 10, 2025, we consummated the February 2025 Offering. The aggregate gross proceeds from the February 2025 Offering were approximately $29.1 million. After deducting offering expenses payable of $487,000, the resulting net proceeds were approximately $28.7 million. See Note 7, “Common Stock – February 2025 Offering,” to our consolidated financial statements included elsewhere in this Report for additional information.
Our remaining restricted cash balance in the amount of $1.7 million as of June 30, 2025 relates to a bank letter of credit required under our Irvine office lease. Commencing on July 1, 2025 and continuing on the first day of each calendar month thereafter, the letter of credit will be reduced by an amount equal to $60,714.29 on each such date, until the letter of credit is fully reduced, after which the letter of credit arrangement will terminate and iMDx will have no further obligation to maintain or deliver the letter of credit. See Note 6, “Office and Facilities Leases – Irvine Office Lease,” to our consolidated financial statements included elsewhere in this Report for additional information.
We expect that our general operating expenses will be commensurate with the market opportunity as we continue to manage our available cash. Although we intend to market our diagnostic tests in the United States through our own sales force, we are also making marketing arrangements with distributors in other countries. We are also exploring a range of other commercialization options in order to enter overseas markets and to reduce our capital needs and expenditures, and the risks associated with the timelines and uncertainty for attaining the Medicare reimbursement approvals that will be essential for the successful commercialization of additional diagnostic tests. Those alternative arrangements could include marketing arrangements with other diagnostic companies through which we might receive a licensing fee and royalty on sales, or through which we might form a joint venture to market one or more tests and share in net revenues, in the United States or abroad.
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On April 5, 2024, we entered into a global strategic partnership agreement with Bio-Rad to collaborate in the development and the commercialization of RUO and IVD kitted transplant products using Bio-Rad’s ddPCR instruments and reagents, pursuant to which we are dependent on Bio-Rad with respect to many of our ongoing operations and future target performance. On November 8, 2024, iMDx and Bio-Rad entered into a memorandum of understanding with respect to such agreement to establish additional activities to be performed by each party pursuant to such agreement. We continue to have a concentration in the volume of business transacted with Bio-Rad. For more information regarding our transactions and business with Bio-Rad, see Note 9, “Related Party Transactions – Bio-Rad Transactions” and Note 10, “Collaborative Arrangements,” to our consolidated financial statements included elsewhere in this Report.
In addition to sales and marketing expenses, we will incur expenses from leasing and improving our offices and laboratory facilities in Nashville, Tennessee and Göttingen, Germany. In January 2024, we expanded our Nashville facility by adding one new office lease and renewing and extending our existing leases. During 2024, we added five financing leases for laboratory equipment and we purchased two laboratory machines to be used in our operations. In 2025, we have added one financing lease for laboratory equipment and we purchased four laboratory machines to be used in our operations. See Note 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report for additional leasing information.
We may need to meet significant cash payment or stock obligations to former IGI and Chronix shareholders in connection with our acquisition of those companies, as disclosed in Note 3 to the consolidated financial statements included elsewhere in this Report. To meet the future cash payment obligations, we may have to utilize cash on hand that would otherwise be available to us for other business and operational purposes, which could cause us to delay or reduce activities in the development and commercialization of our tests.
We will need to continue to raise additional capital to finance our operations, including the development and commercialization of our diagnostic tests, and making payments that may become due under our obligations to former Chronix shareholders and former IGI shareholders, until such time as we are able to generate sufficient revenues to cover our operating expenses. Delays in our collaborative arrangement for the development and the commercialization of RUO and IVD kitted transplant products, or delays in obtaining regulatory approval to distribute our products for clinical use, or delays in the development of, or in obtaining reimbursement coverage from Medicare for DetermaIO and other future laboratory tests that we may develop or acquire, could prevent us from raising sufficient additional capital to finance the completion of development and commercial launch of those tests. Investors may be reluctant to provide us with capital until our tests are approved for reimbursement by Medicare or reimbursement by private healthcare insurers or healthcare providers, or until we begin generating significant amounts of revenue from selling and performing those tests.
The unavailability or inadequacy of financing or revenues to meet future capital needs could force us to modify, curtail, delay, or suspend some or all aspects of our planned operations. Sales of additional equity securities could result in the dilution of the interests of our shareholders. We cannot assure that adequate long-term financing will be available on favorable terms, if at all.
See Note 1 and Note 7 to our consolidated financial statements included elsewhere in this Report for additional information about our liquidity discussion and equity offerings, respectively.
Cash Flow from Operating Activities
During the six months ended June 30, 2025, our total research and development expenses were $6.2 million, our sales and marketing expenses were $2.7 million, and our general and administrative expenses were $5.8 million. We also incurred $981,000 in total cost of revenues, including $7,000 for amortization of intangible assets. Net loss for the period was $16.4 million, and our net cash used in operating activities amounted to $12.1 million. Our cash used in operating activities during 2025 did not include the following noncash items: $1.1 million in depreciation and amortization expenses, $977,000 in stock-based compensation, $88,000 in other equity compensation expenses, and a $3.7 million loss from the change in fair value of contingent consideration. Net changes in operating assets and liabilities for the period were $1.5 million as an additional use of cash.
During the six months ended June 30, 2024, our total research and development expenses were $4.8 million, our sales and marketing expenses were $1.7 million, and our general and administrative expenses were $5.1 million. We also incurred $185,000 in total cost of revenues, including $44,000 for amortization of intangible expenses. Net loss for the period was $13.7 million, and our net cash used in operating activities amounted to $9.8 million. Our cash used in operating activities during 2024 did not include the following noncash items: $661,000 in depreciation and amortization expenses, $804,000 in stock-based compensation, $96,000 in other equity compensation expenses, $2.3 million loss from the change in fair value of contingent consideration, and a $169,000 impairment loss on held for sale assets. Net changes in operating assets and liabilities for the period were $160,000 as an additional use of cash.
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Cash Flow from Investing Activities
During the six months ended June 30, 2025, net cash used in investing activities was $656,000 from cash paid for construction in progress and purchases of machinery and equipment.
During the six months ended June 30, 2024, net cash used in investing activities was $215,000 from cash paid for construction in progress and purchases of machinery and equipment.
Cash Flow from Financing Activities
During the six months ended June 30, 2025, net cash provided by financing activities was $28.4 million from $28.7 million of net cash proceeds from the February 2025 Offering, partially offset by repayments of financing lease obligations of $212,000.
During the six months ended June 30, 2024, net cash provided by financing activities was $9.8 million from $15.3 million of net cash proceeds from the sale of shares of common stock, partially offset by the redemption of our remaining Series A Preferred Stock of $5.4 million and repayments of financing lease obligations of $33,000.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity with GAAP. In preparing these financial statements, we make assumptions, judgments and estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly.
We believe that of the significant accounting policies discussed in Note 2 to our consolidated financial statements included elsewhere in this Report, the following accounting policies involve a significant level of estimation uncertainty and require our most difficult, subjective or complex assumptions, judgments and estimates:
Going Concern Assessment
We assess going concern uncertainty in our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital, including available loans or lines of credit, if any, to operate for a period of at least one year from the date our consolidated financial statements are issued (the “look-forward period”). As part of this assessment, based on conditions that are known and reasonably knowable to us, we consider various scenarios, forecasts, projections and estimates, including stress tests, and we make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and our ability to delay or curtail those expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, we make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent we deem probable those implementations can be achieved and we have the proper authority to execute them within the look-forward period. For additional information, refer to Note 1 to our consolidated financial statements included elsewhere in this Report.
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Contingent Consideration Liabilities
Contingent consideration is estimated and recorded at fair value as of the acquisition date as part of the total consideration transferred. Contingent consideration is an obligation of the acquirer to transfer additional assets or equity interests to the selling shareholders in the future if certain future events occur or conditions are met, such as the attainment of product development milestones. Contingent consideration also includes additional future payments to selling shareholders based on achievement of components of earnings, such as “earn-out” provisions or percentage of future revenues, including royalties paid to the selling shareholders based on a percentage of certain revenues generated.
The fair value of milestone-based contingent consideration was determined using a scenario analysis valuation method which incorporates our assumptions with respect to the likelihood of achievement of the milestones, as defined in the merger agreements, credit risk, timing of the contingent consideration payments and a risk-adjusted discount rate to estimate the present value of the expected payments, all of which require significant management judgment and assumptions. Since the contingent consideration payments are based on nonfinancial, binary events, management believes the use of the scenario analysis method is appropriate.
The fair value of royalty or revenue share-based contingent consideration was determined using a single scenario analysis method to value those payments. The single scenario method incorporates our assumptions with respect to specified future revenues generated over their respective useful lives, credit risk, and a risk-adjusted discount rate to estimate the present value of the expected royalty payments, all of which require significant management judgment and assumptions. Since the royalty-based contingent consideration payments are based on future revenues and linear payouts, management believes the use of the single scenario method is appropriate.
The fair value of contingent consideration after the acquisition date is reassessed by us as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in our consolidated statements of operations. Changes in key assumptions can materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that we record in our consolidated financial statements. During the six months ended June 30, 2025 and 2024, we recorded losses of $3.7 million and $2.3 million, respectively, related to the fair value of contingent consideration. As of June 30, 2025 and December 31, 2024, total contingent consideration liabilities were $41.6 million and $37.9 million, respectively. For additional information, refer to Note 3 to our consolidated financial statements included elsewhere in this Report.
Intangible Assets
We consider various factors and risks for potential impairment of IPR&D intangible assets, including the current legal and regulatory environment and the competitive landscape. Adverse clinical trial results, significant delays or inability to obtain LCD from the Centers for Medicare and Medicaid Services for Medicare reimbursement for a diagnostic test, the inability to bring a diagnostic test to market and the introduction or advancement of competitors’ diagnostic tests could result in partial or full impairment of the related intangible assets. Consequently, the eventual realized value of the IPR&D project may vary from its fair value at the date of acquisition, and IPR&D impairment charges may occur in future periods. During the period between completion or abandonment, the IPR&D assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts.
During the fourth quarter of 2024, the IPR&D balances were reassessed using the MPEEM approach and the results of the valuations noted that the carrying values of certain oncology related IPR&D intangible assets were greater than the fair market values. We recorded a total impairment of $41.9 million during the year ended December 31, 2024. We have recorded no such impairments during 2025. For additional information, refer to Note 5 to our consolidated financial statements included elsewhere in this Report.
Impairment of Long-Lived Assets
We assess the impairment of long-lived assets, which consists primarily of right-of-use assets, machinery and equipment, and finite-lived intangible assets, whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. When such events or changes in circumstances are present, we estimate the future cash flows expected to result from the use of the asset (or asset group) and its eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying amount, we recognize an impairment based on the fair value of such assets. During the six months ended June 30, 2024, we recognized an impairment loss on held for sale assets of $169,000 million. We have recorded no such impairments during 2025. For additional information, refer to Note 2, “Assets Held for Sale,” to our consolidated financial statements included elsewhere in this Report.
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Revenue Recognition and Allowance for Credit Losses
Laboratory Services
Laboratory Services are generally performed under individual SOW arrangements or license agreements (together with SOW the “Laboratory Services Agreements”) with specific deliverables defined by the customer. Laboratory Services are performed on a (i) time and materials basis or (ii) per test completed basis. Upon completion of the service to the customer in accordance with a Laboratory Services Agreement, we have the right to bill the customer for the agreed upon price (either on a per test or per deliverable basis) and recognize Laboratory Service revenue at that time. Depending on the Laboratory Services Agreement, we may identify each sale of our Laboratory Services offering as a single performance obligation, or we may identify the processing of test samples as a separate performance obligation (considered a series) within license agreements with customers. Completion of the service and satisfaction of the performance obligation is typically evidenced by access to the report or test made available to the customer or any other form or applicable manner of delivery defined in the Laboratory Services Agreements. However, for certain SOWs under which work is performed pursuant to the customer’s highly customized specifications, we have the enforceable right to bill the customer for work completed, rather than upon completion of the SOW. For those SOWs, we recognize revenue over a period during which the work is performed using a formula that accounts for expended efforts, generally measured in labor hours, as a percentage of total estimated efforts for the completion of the SOW. As performance obligations are satisfied under the Laboratory Services Agreements, any amounts earned as revenue and billed to the customer are included in accounts receivable.
We establish an allowance for credit losses based on the evaluation of the collectability of its Laboratory Services accounts receivables after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial condition, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience. We continuously monitor collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts, if any, based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined to be uncollectible are written off against the credit loss reserve accounts. As of June 30, 2025 and December 31, 2024, we had an allowance for credit losses of $5,000 and $16,000, respectively, related to Laboratory Services.
Stock-Based Compensation
We recognize compensation expense related to share-based payment awards made to employees, board directors and other non-employees based on estimated fair values. We estimate the fair value of stock-based payment awards on the grant date and recognize the resulting fair value over the requisite service period on a straight-line basis. For stock-based awards that vest only upon the attainment of one or more performance goals, compensation cost is recognized if and when we determine that it is probable that the performance condition or conditions will be, or have been, achieved. For grants with market-based and time-based vesting conditions, the fair value is estimated using the Monte Carlo simulation model, which includes the estimated period to achievement of the performance and market conditions, which are subject to the achievement of the market-based goals established by us and continued employment. We utilize the Black-Scholes option pricing model for determining the fair value of standard time-based stock options. Our determination of fair value of share-based payment awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. We estimate the expected volatility using our own stock price volatility for a period equal to the expected term of the options. The expected term of options granted is based on our own experience. The risk-free rate is based on the U.S. Treasury rates in effect during the corresponding period of grant. Key inputs and assumptions may change as we continue to develop our Company estimates, experience and key inputs including our expected term, and stock price volatility based on the trading history of our stock in the public market. Changes in these subjective assumptions can materially affect the estimated value of equity grants and the stock-based compensation that we record in our consolidated financial statements. During the six months ended June 30, 2025 and 2024, we recognized total stock-based compensation of $977,000 and $804,000, respectively. For additional information, refer to Note 8 to our consolidated financial statements included elsewhere in this Report.
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Income Taxes
We account for income taxes in accordance with Accounting Standards Codification 740, Income Taxes, which prescribes the use of the asset and liability method, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect. The provision for income taxes for interim periods is determined using an estimated annual effective tax rate in accordance with ASC 740-270, Income Taxes, Interim Reporting. Valuation allowances are established when necessary to reduce deferred tax assets when it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. Our judgments regarding future taxable income may change over time due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If our assumptions and consequently our estimates change in the future, the valuation allowance may be increased or decreased, which may have a material impact on our statements of operations.
The guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not sustainable upon examination by taxing authorities. We will recognize accrued interest and penalties, if any, related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of the financial statement periods presented herein. We account for uncertain tax positions by assessing all material positions taken in any assessment or challenge by relevant taxing authorities. We are currently unaware of any tax issues under review. For additional information, refer to Note 2, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Under SEC rules and regulations, as a smaller reporting company, we are not required to provide the information required by this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
It is management’s responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our management, including our principal executive officer and principal financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. Following this review and evaluation, the principal executive officer and principal financial officer determined that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during the quarterly period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in routine litigation incidental to the conduct of our business. We are not presently involved in any material pending litigation or proceedings. See Note 6, “Commitments and Contingencies – Litigation – General,” to our consolidated financial statements included elsewhere in this Report for additional information.
Item 1A. Risk Factors.
Our business, financial condition, results of operations and future growth prospects are subject to various risks, including those described in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 24, 2025, which we encourage you to review. Other than as noted below, there have been no material changes from the risk factors disclosed in our most recent Annual Report on Form 10-K.
We will need to obtain FDA and other regulatory approvals for any IVDs that we may develop, or for any currently marketed products the FDA determines are IVDs instead of LDTs, in order to market those IVD tests.
If we decide to develop IVDs, we will need to obtain regulatory clearance or approval to market each IVD test. Additionally, while we believe our tests qualify as LDTs, if the FDA determines otherwise, our products will likely need to be withdrawn from the market until receiving pre-market authorization, such as 510(k) clearance or a Premarket Approval, before re-entering the market. This means that:
In addition, the ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Further, the recent presidential election and congressional seat turnover may result in increased regulatory and economic uncertainty, including the spending priorities of the new U.S. presidential administration and Congress and what challenges budget reductions will present for us and our industry generally. For example, on January 20, 2025, President Trump announced an executive order establishing the “Department of Government Efficiency” to reform federal government processes and reduce expenditures. Changes in federal policy by the executive branch and regulatory agencies may occur over time through the new presidential administration’s and/or Congress’s policy and personnel changes, which could lead to changes involving our industry. However, the nature and timing of such potential changes remain highly uncertain. At this time, it is unclear whether and how any future changes or uncertainty surrounding future changes will adversely affect our business, but material adverse effects are possible.
Our ability to commercialize our products is dependent on our ability to increase our tests reimbursed by Medicare, and the loss of, or a significant reduction in, reimbursement from Medicare or the CMS would have a material adverse impact on our business.
Our primary near-term strategic market is organ transplant. We received a positive coverage decision from MolDx for GraftAssureCore (Kidney) in August of 2023, and it became commercially available for ordering in January 2024.
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In December 2024, we confirmed Medicare reimbursement for also monitoring certain high-risk patients, that is, those with newly developed donor-specific antibodies. However, we may not be able to maintain or increase our tests reimbursed by Medicare for a variety of reasons, including changes in reimbursement practices, general policy shifts, or reductions in reimbursement amounts. We cannot predict whether Medicare reimbursements will continue at the same payment amount or with the same breadth of coverage in the future, if at all.
For diagnostics tests, Medicare or CMS reimbursement approval is critical. CMS relies on a network of Medicare Administrative Contractors (“MACs”) to make a LCD approving a test for reimbursement. The MolDx Program was developed by Palmetto GBA (the previous MAC for California) to identify and establish coverage and reimbursement for molecular diagnostics tests. The program has developed guidelines for the level of evidence of efficacy required to be obtained through clinical trials. Palmetto, which contracted with CMS to administer the MolDx, issues LCDs that affect coverage, coding, and billing of many molecular tests and the current MAC for California, Noridian Healthcare Solutions, LLC, has adopted the coverage policies from Palmetto. MACs also serve as the primary operational contact between the Medicare Fee-For-Service program, for paying Medicare claims, and approximately 1.5 million health care providers enrolled in the program. Delays in obtaining MAC approval, or any changes made related to any favorable LCDs, could have a material adverse impact on our business.
The MolDx Program was developed by Palmetto GBA (the previous MAC for California) to identify and establish coverage and reimbursement for molecular diagnostics tests. The program has developed guidelines for the level of evidence of efficacy required to be obtained through clinical trials. Palmetto, which contracted with CMS to administer the MolDx, issues LCDs that affect coverage, coding, and billing of many molecular tests and the current MAC for California, Noridian Healthcare Solutions, LLC, has adopted the coverage policies from Palmetto. MACs also serve as the primary operational contact between the Medicare Fee-For-Service program, for paying Medicare claims, and approximately 1.5 million health care providers enrolled in the program. Delays in obtaining MAC approval, or any changes made related to any favorable LCDs, could have a material adverse impact on our business.
On July 17, 2025, several MolDx MACs published a new “MolDX: Molecular Testing for Solid Organ Allograft Rejection” draft LCD (L38671), that, if adopted, would revise the existing foundational LCD, “MolDX: Molecular Testing for Solid Organ Allograft Rejection” (L38568 and L38629). In the draft LCD, surveillance use is explicitly contemplated and MolDx proposes capping the number of surveillance tests for kidney in year-one at four and subsequent years at two per year, and year-one tests for heart and lung would be capped at 12 tests per year. The comment period will run from July 17, 2025 through August 31, 2025 and an open meeting will be held August 25, 2025.
If future reimbursement price levels are less than the current price, our revenues and our ability to achieve profitability could be impaired, and the market price of our common stock could decline. We may also not be able to maintain or increase the portion of our tests reimbursed by Medicare for a variety of other reasons, including changes in reimbursement practices and general policy shifts.
We cannot predict whether Noridian or any future MAC will continue to provide reimbursement for GraftAssureCore (Kidney) at the same payment amount or with the same breadth of coverage in the future, if at all. Additional changes in the MAC processing Medicare claims for GraftAssureCore (Kidney) could impact the coverage or payment amount for our tests and our ability to obtain Medicare coverage for any products we may launch in the future.
Any decision by CMS or its local contractors to reduce or deny coverage for our tests would have a significant adverse effect on our revenue and results of operations and ability to operate and raise capital. Any such decision could also cause affected clinicians treating Medicare-covered patients to reduce or discontinue the use of our tests.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
On April 24, 2025, we issued to PCG Advisory, Inc. 10,620 shares of our common stock (the “PCG Shares”). On April 24, 2025, May 27, 2025, June 24, 2025 and July 24, 2025, we granted 2,360 shares, 2,462 shares, 2,319 shares and 2,703 shares, respectively, to LifeSci Advisors, LLC (the “LifeSci Shares”). The PCG Shares and the LifeSci Shares were issued without registration under the Securities Act in reliance on the exemption from registration under Section 4(a)(2).
Repurchases
None.
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
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Item 6. Exhibits.
Exhibit Numbers |
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Exhibit Description |
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3.1 |
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Certificate of Ownership, as filed with the Secretary of State of the State of California on June 13, 2025 (incorporated by reference to Insight Molecular Diagnostics Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 17, 2025) |
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3.2 |
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Third Amended and Restated Bylaws of Insight Molecular Diagnostics Inc.(incorporated by reference to Insight Molecular Diagnostics Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 17, 2025) |
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4.1 |
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Form of Pre-Funded Warrant (Incorporated by reference to Insight Molecular Diagnostics Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 10, 2025) |
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10.1 |
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Amendment to and Waiver of Right to Extend Original Lease, dated as of December 26, 2024, effective as of January 2, 2025, by and among Insight Molecular Diagnostics Inc., Induce Biologics USA, Inc. and Cushing Ventures, LLC (Incorporated by reference to Insight Molecular Diagnostics Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 8, 2025) |
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10.2+ |
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Securities Purchase Agreement, dated February 7, 2025, by and among the Company and the investors signatory thereto (Incorporated by reference to Insight Molecular Diagnostics Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 10, 2025) |
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10.3+ |
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Securities Purchase Agreement, dated February 7, 2025, by and among the Company and the investors signatory thereto (Incorporated by reference to Insight Molecular Diagnostics Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 10, 2025) |
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31.1* |
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Certification of the Principal Executive Officer of Insight Molecular Diagnostics Inc. pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Rule 302 of the Sarbanes-Oxley Act of 2002 |
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31.2* |
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Certification of the Principal Financial Officer of Insight Molecular Diagnostics Inc. pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Rule 302 of the Sarbanes-Oxley Act of 2002 |
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32.1** |
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Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
** The certifications attached as Exhibit 32.1 that accompany this Report are not deemed filed with the SEC and are not to be incorporated by reference into any filing of iMDx under the Securities Act, or the Exchange Act, whether made before or after the date of this Report, regardless of any general incorporation language contained in any filing.
+ Schedules have been omitted from this filing pursuant to Item 601(b) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon its request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished. Certain portions of this exhibit (indicated by “[***]”) have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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INSIGHT MOLECULAR DIAGNOSTICS INC. |
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Date: August 11, 2025 |
/s/ Joshua Riggs |
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Joshua Riggs |
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President and Chief Executive Officer (Principal Executive Officer) |
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Date: August 11, 2025 |
/s/ Andrea James |
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Andrea James |
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Chief Financial Officer (Principal Financial Officer) |
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FAQ
What were Oncocyte/Insight Molecular Diagnostics (OCX) revenues for Q2 2025?
How much cash did the company have after the February 2025 offering?
What was the company’s net loss in Q2 2025 and for the six-month period?
What material partnerships or commercial milestones were disclosed?
Are there significant contingent liabilities on the balance sheet?
