UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 12, 2019
EXAGEN INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-39049 | 20-0434866 | ||||||||||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
1261 Liberty Way, Suite C
Vista, CA 92081
(Address of principal executive offices) (Zip Code)
(760) 560-1501
(Registrant’s telephone number, include area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||||
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $0.001 per share | XGN | The Nasdaq Global Market | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 12, 2019, Exagen Inc. (the “Company”) reported its financial results for the three and nine months ended September 30, 2019. A copy of the press release issued by the Company is furnished as Exhibit 99.1 to this report.
The information furnished with Item 2.02 of this report, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filings under the Exchange Act or under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
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 hereunto duly authorized.
| EXAGEN INC. | ||||||||||||||||||||
| Date: November 12, 2019 | By: | /s/ Fortunato Ron Rocca | ||||||||||||||||||
| Fortunato Ron Rocca | ||||||||||||||||||||
| President and Chief Executive Officer | ||||||||||||||||||||
Exagen Inc. Reports Third Quarter 2019 Results
AVISE® Testing Revenue Drives 27% Revenue Growth
November 12, 2019
SAN DIEGO, CA – Exagen Inc. (Nasdaq: XGN), an organization dedicated to transforming the care continuum for patients suffering from debilitating and chronic autoimmune diseases by enabling timely differential diagnosis and optimizing therapeutic intervention, today reported financial results for the quarter ended September 30, 2019.
Recent Highlights:
•Experienced record demand, including a 29% increase of flagship AVISE® CTD volume, including AVISE® Lupus, to 27,159 tests.
•Grew the number of ordering healthcare providers by 29% to 1,591, compared to the third quarter of 2018, with 98% healthcare provider adopter retention.
•Generated total revenue of $10.4 million for the third quarter of 2019, representing 27% growth over the third quarter of 2018.
•Successfully completed initial public offering in September, selling 4.14 million shares of stock with aggregate gross proceeds to the company of $58.0 million.
•Advanced strategic integrated testing and therapeutics strategy (Dx/Rx) through co-promotion agreement with Janssen Biotech for SIMPONI®.
•Further expanded the salesforce to 55 representatives to execute Dx/Rx strategy.
“The Exagen team took an important step in the quarter by completing our initial public offering, which will help enable the company’s continued growth. The company continues to execute at a high level, delivering another record quarter of testing volumes, increasing the number of ordering healthcare providers, and benefiting patients suffering from chronic autoimmune diseases. This continued traction resulted in revenue growth of 27%. Our results are indicative of our momentum and we believe we are well-positioned for continued growth in 2019 and beyond,” said Ron Rocca, Exagen President and Chief Executive Officer. “The Company’s Dx/Rx strategy is gaining momentum, with SIMPONI® delivering incremental revenue in the quarter. Our recently expanded sales force positions Exagen to execute on the significant opportunity in front of the company.”
Third Quarter 2019 Financial Results
Revenue for the three months ended September 30, 2019 was $10.4 million, compared with $8.2 million in the third quarter of 2018. Testing revenues increased to $10.0 million, or a 23% increase compared to the third quarter of 2018, driven by record testing volumes in AVISE® CTD, including AVISE® Lupus. Revenue from our co-promotion efforts contributed to $0.4 million in the third quarter of 2019.
Gross margins improved to 54% in the third quarter of 2019 compared to 53% in the third quarter of 2018, driven by higher testing volumes.
Operating expenses increased to $12.6 million in the third quarter of 2019, compared with $9.4 million in the third quarter of 2018, due primarily to an increase in selling, general, and administrative expenses associated with the salesforce expansion.
For the third quarter of 2019, net loss was $3.1 million compared to a net loss of $1.8 million in the third quarter of 2018.
Cash and cash equivalents were approximately $77.8 million as of September 30, 2019.
2019 Guidance
For the full year 2019, Exagen expects revenue to be in the range of $40 million to $41 million.
Conference Call
A conference call to discuss third quarter 2019 financial results is scheduled for today November 12th, 2019 at 4:30 PM Eastern Time (1:30PM Pacific Time). Interested parties may access the conference call by dialing (877) 407-3982 (U.S.) or (201) 493-6780 (international). Media and individuals will be in a listen-only mode. Participants are asked to dial in a few minutes prior to the call to register for the event. A replay of the conference call will be available until Tuesday, November 19, 2019 at 11:59 PM Eastern Time (8:59 PM Pacific Time). Interested parties may access the replay of the conference call by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (international) using passcode 13695740.
About Exagen
Exagen is dedicated to transforming the care continuum for patients suffering from debilitating and chronic autoimmune diseases by enabling timely differential diagnosis and optimizing therapeutic intervention. Exagen has developed and is commercializing a portfolio of innovative testing products under its AVISE® brand, several of which are based on our proprietary Cell-Bound Complement Activation Products, or CB-CAPs, technology. CB-CAPs assess the activation of the complement system, a biological pathway that is widely implicated across many autoimmune and autoimmune-related diseases, including systemic lupus erythematosus, or SLE. Exagen’s goal is to enable rheumatologists to improve care for patients through the differential diagnosis, prognosis and monitoring of complex autoimmune and autoimmune-related diseases, including SLE and rheumatoid arthritis, or RA. Exagen’s model of integrating testing products and therapeutics positions Exagen to offer targeted solutions to rheumatologists and, ultimately, better serve patients. For more information, please visit www.Exagen.com
Forward Looking Statements
Exagen cautions you that statements contained in this press release regarding matters that are not historical facts are forward-looking statements. These statements are based on the company’s current beliefs and expectations. Such forward-looking statements include, but are not limited to, statements regarding: the company’s belief it is positioned for continued growth in 2019 and beyond, including
potential future momentum in the Dx/Rx strategy; and full year 2019 guidance. The inclusion of forward-looking statements should not be regarded as a representation by Exagen that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in Exagen’s business, including, without limitation: the company’s commercial success depends upon attaining and maintaining significant market acceptance of its testing products and promoted therapeutics among rheumatologists, patients, third-party payers and others in the medical community; the company’s ability to successfully execute on its Dx/Rx strategy, including its promotion efforts for SIMPONI®; the company’s dependence on third parties for reagents, equipment and other materials used in its testing products; third-party payers not providing coverage and adequate reimbursement for the company’s testing products or promoted therapeutics; the company’s ability to obtain and maintain intellectual property protection for its testing products; regulatory developments affecting the company’s business; the company may not achieve its guidance for 2019; and other risks described in the company’s prior press releases and the Company’s filings with the Securities and Exchange Commission (SEC), including under the heading “Risk Factors” in the Company’s Registration Statement on Form S-1 and any subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and Exagen undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
CONTACTS:
Investors
Westwicke Partners
Mike Cavanaugh
Mike.Cavanaugh@westwicke.com
646.677.1838
Company
Exagen Inc.
Kamal Adawi
kadawi@exagen.com
760.477.5514
Exagen Inc.
Unaudited Condensed Statements of Operations
(in thousands, except share and per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
| Revenue | $ | 10,439 | $ | 8,223 | $ | 30,173 | $ | 22,799 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Costs of revenue (excluding amortization of purchased technology) | 4,783 | 3,852 | 14,217 | 11,376 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 7,306 | 4,932 | 20,787 | 14,419 | ||||||||||||||||||||||
| Research and development expenses | 507 | 525 | 1,610 | 1,592 | ||||||||||||||||||||||
| Amortization of intangible assets | — | 47 | — | 141 | ||||||||||||||||||||||
| Total operating expenses | 12,596 | 9,356 | 36,614 | 27,528 | ||||||||||||||||||||||
| Loss from operations | (2,157) | (1,133) | (6,441) | (4,729) | ||||||||||||||||||||||
| Interest expense | (909) | (704) | (2,720) | (2,098) | ||||||||||||||||||||||
| Change in fair value of financial instruments | (200) | 55 | 267 | 55 | ||||||||||||||||||||||
| Other income, net | 125 | 26 | 264 | 77 | ||||||||||||||||||||||
| Net loss | (3,141) | (1,756) | (8,630) | (6,695) | ||||||||||||||||||||||
| Accretion of redeemable convertible preferred stock | (338) | (2,768) | (4,640) | (6,462) | ||||||||||||||||||||||
| Deemed dividend recorded in connection with financing transactions | (13,601) | — | (13,601) | (1,152) | ||||||||||||||||||||||
| Net loss attributable to common stockholders | $ | (17,080) | $ | (4,524) | $ | (26,871) | $ | (14,309) | ||||||||||||||||||
| Net loss per share, basic and diluted | $ | (11.29) | $ | (71.80) | $ | (48.70) | $ | (227.11) | ||||||||||||||||||
| Weighted-average number of shares used to compute net loss per share, basic and diluted | 1,513,189 | 63,005 | 551,730 | 63,005 | ||||||||||||||||||||||
Exagen Inc.
Condensed Balance Sheets
(in thousands, except share and per share data)
| September 30, 2019 | December 31, 2018 | ||||||||||||||||
| (Unaudited) | (As Revised) | ||||||||||||||||
| Assets | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 77,828 | $ | 13,164 | |||||||||||||
| Accounts receivable, net | 6,238 | 5,952 | |||||||||||||||
| Prepaid expenses and other current assets | 1,686 | 2,196 | |||||||||||||||
| Total current assets | 85,752 | 21,312 | |||||||||||||||
| Property and equipment, net | 1,314 | 1,566 | |||||||||||||||
| Goodwill | 5,506 | 5,506 | |||||||||||||||
| Other assets | 172 | 503 | |||||||||||||||
| Total assets | $ | 92,744 | $ | 28,887 | |||||||||||||
| Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable | $ | 1,213 | $ | 1,279 | |||||||||||||
| Accrued liabilities | 6,449 | 3,923 | |||||||||||||||
| Proceeds received prior to issuance of Series G redeemable convertible preferred stock | — | 3,750 | |||||||||||||||
| Total current liabilities | 7,662 | 8,952 | |||||||||||||||
| Borrowings-non-current portion, net of discounts and debt issuance costs | 25,677 | 24,617 | |||||||||||||||
| Redeemable convertible preferred stock warrant liabilities | — | 1,503 | |||||||||||||||
| Deferred tax liabilities | 245 | 245 | |||||||||||||||
| Other non-current liabilities | 510 | 304 | |||||||||||||||
| Total liabilities | 34,094 | 35,621 | |||||||||||||||
| Commitments and contingencies | |||||||||||||||||
| Redeemable convertible preferred stock, $0.001 par value; 750,300,000 shares authorized; none and 532,606,084 shares issued and outstanding at September 30, 2019 (unaudited) and December 31, 2018, respectively; liquidation preference of $0 and $163,316 at September 31, 2019 (unaudited) and December 31, 2018, respectively | — | 105,232 | |||||||||||||||
| Stockholders' equity (deficit): | |||||||||||||||||
| Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued or outstanding at September 30, 2019; no shares authorized, issued or outstanding at December 31, 2018 | — | — | |||||||||||||||
Common stock, $0.001 par value; 200,000,000 and 1,470,000,000 shares authorized at September 30, 2019 (unaudited) and December 31, 2018, respectively; 12,559,492 and 63,005 shares issued and outstanding at September 30, 2019 (unaudited) and December 31, 2018, respectively | 13 | — | |||||||||||||||
Additional paid-in capital | 219,831 | 40,598 | |||||||||||||||
| Accumulated deficit | (161,194) | (152,564) | |||||||||||||||
| Total stockholders' equity (deficit) | 58,650 | (111,966) | |||||||||||||||
| Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) | $ | 92,744 | $ | 28,887 | |||||||||||||