OncoCyte : Fourth Quarter and Full Year 2020 Earnings Conference Call

OncoCyte Corporation

Fourth Quarter and Full Year 2020 Earnings Conference Call

March 16, 2021

OncoCyte Corporation - Fourth Quarter and Full Year 2020 Earnings Conference Call, March 16, 2021

C O R P O R A T E P A R T I C I P A N T S

Robert Yedid, LifeSci Advisors

Ronald Andrews, Chief Executive Officer, President & Director

Mitchell Levine, Chief Financial Officer

Padma Sundar, Chief Commercial Officer

Douglas Ross, M.D., Chief Science Officer

C O N F E R E N C E C A L L P A R T I C I P A N T S

Michael Matson, Needham & Company

Mark Massaro, BTIG

Stephen Mah, Piper Sandler & Co.

Thomas Flaten, Lake Street Capital Markets

Bruce Jackson, The Benchmark Company

Paul Knight, KeyBanc Capital Markets

P R E S E N T A T I O N

Operator

Greetings, and welcome to the OncoCyte Corporation Fourth Quarter and Full Year 2020 Earnings Conference Call.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Bob Yedid.

Thank you, sir. You may begin.

Robert Yedid

Great. Thank you, Victor.

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OncoCyte Corporation - Fourth Quarter and Full Year 2020 Earnings Conference Call, March 16, 2021

Thank you, everyone, for joining us for today's conference call to discuss OncoCyte's fourth quarter and full year 2020 financial results and recent operating highlights. If you have not seen today's financial results press release, please visit the Company's website page on the Investors section.

Before turning the call over to Ronnie Andrews, OncoCyte's President and Chief Executive Officer, I would like to remind you that during this conference call, the Company will make projections and forward-looking statements regarding future events. Any statements that are not historical facts are forward-looking statements. We encourage you to review the Company's SEC filings, without limitation, the Company's forms 10-K and 10-Qs, which identify specific risk factors that may cause actual results or events to differ materially from those described in these forward-looking statements.

These factors may include, without limitation, risks inherent in development and/or commercialization of potential diagnostic tests, uncertainty in the results of clinical trials or regulatory approvals, the capacity of OncoCyte's third-party blood sample analytic system to provide consistent and precise analytic results on a commercial scale, the need to obtain third-party reimbursement for patients' use of any diagnostic test the Company commercializes, the need and ability to obtain future capital, the maintenance of IP rights, and uncertainties associated with the COVID-19 pandemic and its possible effects on our operations. Therefore, actual results and results may differ materially from what is expressed or implied by these forward-looking statements. OncoCyte expressly disclaims any intent or obligations to update these forward-looking statements, except as otherwise may be required under applicable law.

With that, I'd like to now turn the call over to CEO Ronnie Andrews. Ronnie?

Ronald Andrews

Hi. Thanks, Bob, and welcome, everyone, to our conference call to discuss our fourth quarter and full year 2020 financial results and, of course, our operating highlights. Joining today are Mitch Levine, our Chief Financial Officer; Dr. Doug Ross, our Chief Science Officer; and Padma Sundar, our Chief Commercial Officer. As always, we'll be available at the end for your questions.

Over the past year, we've made great strides in advancing our mission to create a one-stop lab of comprehensive molecular diagnostic offerings that answer critical unanswered questions for physicians and patients for the management of solid tumors. We transformed from the OncoCyte of 18 months ago, a single asset development stage company, to a commercial stage revenue-generating business, advancing tests that optimize cancer treatment decisions to improve patient outcomes and reduce the overall cost of care.

We accomplished a great deal in the last year, strategically identifying and acquiring a portfolio of compelling tests, integrating these assets, completing clinical development, and ultimately launching two proprietary tests for critical decisions that previously lacked precision diagnostics. Through these efforts, we've emerged as leaders in early-stage lung cancer management, efficiently growing revenues with a concentrated sales effort in key markets, bolstered by virtual programs that reach health care providers across the U.S. despite the global pandemic.

There's more to come in 2021, with important content for treatment response and for recurrence monitoring. So together, this means we're well on our way to becoming a one-stop shop, or in our world, a one-stop lab for oncologists and surgeons treating lung cancer patients.

While I'll spend most of the time talking about our progress across each of our tests, I'd like to dive a little deeper into our plan to become a single source of proprietary biomarker testing to inform patient treatment and monitor response to therapy, as well as provide related standard of care oncology testing to drive incremental revenue at very attractive margins.

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OncoCyte Corporation - Fourth Quarter and Full Year 2020 Earnings Conference Call, March 16, 2021

For those of you newer to our story, our four current products and services that make up our growth engines are, first, DetermaRx, the first and only commercially available predictive test for informing chemotherapy decisions in early-stage lung cancer and is now reimbursed by Medicare, and experiencing solid quarter- over-quarter volume and revenue growth.

Our second test is DetermaIO, our proprietary test for predicting response and identifying incremental responders to first generation immune checkpoint inhibitor drugs, also known as ICIs. DetermaIO is currently available for use in clinical research and pharma trials, and we're on track for our clinical launch in Q4 of 2021.

Third, we now have TheraSure CNI Monitor test for immunotherapy response monitoring, which we plan to soon rebrand as DetermaCNI. This recent product addition represents our first move into the massive opportunity that is emerging to monitor cancer patients for treatment efficacy in real time.

Finally, our pharma services offering from our CAP-accredited CLIA lab in Nashville provide a comprehensive menu of test development and validation services for pharma and for diagnostic companies.

Before we share the highlights of each growth engine, let me take a moment to explain why being a one- stop shop is so important.

Since DetermaRx, DetermaIO and eventually, DetermaCNI are all proprietary tests that will only be offered by OncoCyte, we're in a very strong position to become the preferred lab for clinicians who need answers to the important treatment decisions that only OncoCyte can answer. Once a hospital is onboarded as an OncoCyte customer, we can then create a same-store sell opportunity and offer more traditional tests like the targeted therapy panel we'll ultimately brand as DetermaDx.

For some context, physicians treating patients diagnosed with cancer need rapid biomarker testing to inform treatment selection, such as targeted therapy, immune therapy and chemotherapy. By combining a differentiated test like the DetermaIO to inform the use of immune therapy with standard of care genomic tests for things like EGFR ALK ROS-1, we will be able to offer oncologists best-in-class testing and deliver comprehensive information to make a treatment decision.

This one-stop shop strategy offers practical advantages. One, currently, the testing needs of physicians managing cancer are usually only able to be met by several specialty labs. What this means is the provider must split the sample and send it to several different labs. Not only does this consume a large amount of sparse patient biopsy sample, but it can take up to three weeks to deliver critical results that doctors need to drive important treatment decisions.

By consolidating all the required tests, we facilitate more judicious use of precious patient biopsy samples and also expedite delivery of results to the ordering position within only 10 days, a time frame that our customer base continues to highlight as a target for optimizing therapy decisions.

Now diving into our highlights for DetermaRx, the first and only predictive tests for the identification of patients with stage 1 to 2 non-squamous cancer who are high-risk for recurrence following surgery.

It's been a big year for Rx. We launched the test in February as an early access program with six reps and have made continued progress since. We announced the final Medicare coverage determination which secured national Medicare payment for DetermaRx effective August 2020. This is significant as Medicare patients account for approximately 70% of eligible patients nationwide. On top of that, we received centers for Medicare and Medicaid Services, or CMS, high-value pricing.

In addition to Medicare coverage, we recently announced an agreement with Multiplan network to expand patient access to DetermaRx to approximately 60 million more covered lives at a negotiated price in line with our CMS pricing. Many of these patients have insurance with companies like United Healthcare. Multiplan's role, much like lab benefit managers in pharma, is to negotiate a payment for diagnostic and 3

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OncoCyte Corporation - Fourth Quarter and Full Year 2020 Earnings Conference Call, March 16, 2021

other services with companies like OncoCyte. This represents our first major payer contract outside of Medicare.

We've now reached over 3,000 health professionals to date. By year-end, we had onboarded 87 hospitals and have broad adoption at very prestigious national comprehensive cancer centers as well as National Cancer Institute hospital sites. Most recently, we added Virginia Cancer Specialist, which is part of the U.S. oncology network, a network of 900 physicians treating over 1 million patients annually. Virginia Cancer Specialist includes Dr. Alex Spira, a renowned medical oncologist, and Dr. Sandeep Khandhar, thoracic surgeon, to our growing list of top physician users.

We continue to grow test revenue and volume quarter-over-quarter despite a well-established seasonal pattern of fewer oncology surgeries in the fourth quarter each year. Moreover, this seasonality this year was exaggerated by the pandemic as certain oncologists chose to defer inpatient lung cancer surgeries that we need to trigger the use of DetermaRx.

Despite all those headwinds though, our commercial team still delivered an impressive 36% quarter-over- quarter sample volume and a 58% quarter-over-quarter revenue growth, which reflects the carryover from claims we had in Q3. We also recently completed the expansion of our sales team to a total of 10, which now gives us coverage of over 75% of the surgeons performing early-stage lung cancer surgeries. When you add that to our improving macro environment and combine it with our continued Q4 momentum, you can understand why we have confidence in our ability to achieve our 2021 annual goals for samples and revenue for DetermaRx.

Also in December, we were excited to announce our strategic agreement with Burning Rock to distribute DetermaRx in China. Our agreement with Burning Rock Biotech, a $3.5 billion market cap NASDAQ-listed company, aligns OncoCyte with one of China's fastest-growing molecular labs focused on cancer therapy selection, and provides entry into the world's largest early-stage lung cancer market that is approximately six times the size of the U.S. market, doing over 250,000 surgical resections for lung cancer each year. In short, our progress with Rx over a short period of time has been tremendous.

Now moving along to continued care, let's transition to DetermaIO, our proprietary gene expression profile test that we believe will propel us to a leadership position in the approximately $3 billion immune therapy decision market.

Our test is the only precision diagnostic test on the market today that evaluates the entire immune micro- environment in biopsies or surgical specimens from cancer patients in order to identify patients likely to respond to immune checkpoint inhibitors. Our test delivers a comprehensive picture of the immune micro- environment by combining the so-called hot signal derived from inflammatory cells in the tumor and cold signal coming from the wound response along with the use of a proprietary algorithm that scores each patient result.

In addition to the DetermaIO being an excellent predictor of response to checkpoint inhibitors, we also believe that the cold signal may identify key biologic signals targeted by second-generation target therapeutics that are now in clinical trials. As a result, DetermaIO may be an ideal biomarker to inform therapeutic strategies that combine checkpoint inhibitors with these emerging next-generation therapies.

The opportunity with DetermaIO is significant, with more than 750,000 patients eligible annually for immune therapy in the U.S. alone; depending on reimbursement levels, that translates to a $2.5 billion to $3 billion market opportunity. In addition, worldwide, there are currently nearly 5,000 ongoing clinical trials evaluating these drugs. That represents another large opportunity to help pharma companies identify patients for their trials. Of course, this market is expected to continue to grow substantially as the reach of immunotherapy expands to new indication in earlier stages of cancer.

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ViaVid has made considerable efforts to provide an accurate transcription. There may be material errors, omissions, or inaccuracies in the reporting of the substance of the conference call. This transcript is being made available for information purposes only.

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