Renalytix Reports Financial Results for Second Quarter of Fiscal Year 2024
- Renalytix plc reported revenue growth and operational progress in the fiscal second quarter of 2023.
- KidneyIntelX sales increased, and the test received FDA approval, leading to inclusion in reimbursement schedules.
- Real-world evidence highlights the positive impact of KidneyIntelX on patient care and outcomes.
- Operating cost reductions have been implemented, resulting in a lower cash burn rate for the company.
- Despite a decrease in revenue compared to the previous year, Renalytix plc has taken actions to reduce expenses and maintain revenue-generating activities.
- Revenue decreased compared to the previous year due to lower billable testing volumes and pharmaceutical services revenue.
- The net loss for the quarter was $8.5 million, although an improvement from the previous year.
- Cash and cash equivalents stood at $5.6 million as of December 31, 2023, indicating a relatively low cash position.
Insights
The reported decrease in revenue for Renalytix plc, from $1.2 million in the previous year's quarter to $0.7 million, is a critical concern for investors and analysts. The transition to a commercial billing structure and the reduction in pharmaceutical services revenue are key drivers of this decline. In assessing the financial health of the company, one must scrutinize the sustainability of their revenue streams and the implications of the operating cost reductions. The targeted annualized cash burn rate reduction to under $23 million suggests aggressive cost management, which could be a double-edged sword—improving short-term financial stability at the potential expense of long-term growth and innovation.
Furthermore, the inclusion of KidneyIntelX in the CMS lab fee schedule and the NGS LCD proposal indicates a positive trajectory toward broader reimbursement coverage, which is essential for the company's scalability and market penetration. However, the immediate financial impact is muted by the current revenue figures. Investors should consider the balance between the company's cost-cutting measures and its ability to invest in research and development to maintain competitive advantage.
The clinical impact of KidneyIntelX's artificial intelligence-enabled prognostic testing, as evidenced by the real-world study showing a 61% increase in kidney protective drug prescriptions, is significant for patient care. This improvement in clinical outcomes could drive increased adoption of the test, especially with the recent CMS approval of a $950 reimbursement rate. The test's capacity to aid in early risk assessment and management of kidney disease could lead to a paradigm shift in nephrology practice, emphasizing preventative care over reactive treatment.
However, the operational challenge lies in the translation of clinical efficacy into tangible business growth. The company's ability to capitalize on these clinical benefits and convert them into sustained revenue growth will be pivotal. The medical community's acceptance and the integration of KidintelX into standard care protocols will be key drivers for Renalytix's market success.
From a market perspective, Renalytix operates in the burgeoning field of AI-enabled diagnostics, which is expected to grow significantly as healthcare increasingly incorporates data-driven decision-making. The inclusion of KidneyIntelX on the CMS lab fee schedule and the NGS LCD proposal could serve as a catalyst for market adoption. However, the company's recent operational cost reductions, while beneficial for financial runway, may raise questions about its ability to invest in marketing and sales efforts to capitalize on these opportunities.
Competitor analysis and market trends will be important to monitor, as other companies may also be seeking to establish a foothold in this space. Renalytix's strategic decisions in the upcoming quarters will likely have a profound impact on its market share and investor confidence. The company's focus on maintaining sales capacity amidst cost-cutting measures suggests an awareness of the need to balance financial prudence with market expansion efforts.
LONDON and SALT LAKE CITY, Feb. 15, 2024 (GLOBE NEWSWIRE) -- Renalytix plc (NASDAQ: RNLX) (LSE: RENX) (the “Company”), an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease, today reported financial results for the fiscal second quarter ended December 31, 2023. The Company plans to issue another announcement following today’s report of financial results regarding the date and time of its conference call and webcast to discuss second quarter financial results and other key events.
The Company made significant progress during the quarter in revenue generation, reimbursement coverage, the publication of real-world evidence and operating cost management, setting the stage for potential future growth. Highlights include:
- During the three months ended December 31, 2023, we recognized
$0.7 million of revenue related to sales of KidneyIntelX, compared to the previous quarter reported revenue of$0.5 million . - KidneyintelX.dkd, the first U.S. Food and Drug Administration (“FDA”), authorized in vitro prognostic test that uses an artificial intelligence-enabled algorithm to aid in assessment of the risk of progressive decline in kidney function, officially included in the lab fee schedule by Centers for Medicare & Medicaid Services (CMS) at
$950 per test. - KidneyIntelX™ and kidneyintelX.dkd included in the proposed Local Coverage Determination (LCD) published by National Government Services (NGS) on February 8, 2024, and on the agenda for the LCD open public meeting on February 29, 2024.
- NGS has resumed consistent payment for tests under individual claims review (ICR), allowing revenue recognition of 318 tests billed to Medicare (including prior period tests). Total billable volume of 734 tests during the second quarter (representing
69% of all tests in the period, including non-billable study tests). - Real-world evidence continues to demonstrate the benefits of KidneyIntelX early risk assessment as published in the Journal of Primary Care and Community Health, in which 12 months of care following KidneyIntelX prognostic testing was associated with clinical actions that led to significant improvement in care and outcomes including a
61% increase in kidney protective drug prescriptions among patients in the high-risk group. - Operating cost reductions commenced during the fiscal second quarter continued with a fiscal third quarter cash burn target approximately
33% less than in the prior quarter and approximately50% less than in the first quarter of fiscal 2024.
Second Quarter 2024 Financial Results
During the three months ended December 31, 2023, we recognized
Operating expenses for the three months ended December 31, 2023 were
Within operating expenses, research and development expenses were
General and administrative expenses were
Net loss was
Cash and cash equivalents totaled
For further information, please contact:
| Renalytix plc | www.renalytix.com |
| James McCullough, CEO | Via Walbrook PR |
| Stifel (Nominated Adviser, Joint Broker) | Tel: 020 7710 7600 |
| Alex Price / Nicholas Moore / Nick Harland / Samira Essebiyea | |
| Investec Bank plc (Joint Broker) | Tel: 020 7597 4000 |
| Gary Clarence / Shalin Bhamra | |
| Walbrook PR Limited | Tel: 020 7933 8780 or renalytix@walbrookpr.com |
| Paul McManus / Alice Woodings | Mob: 07980 541 893 / 07407 804 654 |
| CapComm Partners | |
| Peter DeNardo | Tel: 415-389-6400 or investors@renalytix.com |
About Renalytix
Renalytix (NASDAQ: RNLX) (LSE: RENX) is an in-vitro diagnostics and laboratory services company that is the global founder and leader in the new field of bioprognosis™ for kidney health. The leadership team, with a combined 200+ years of healthcare and in-vitro diagnostic experience, has designed its KidneyIntelX laboratory developed test to enable risk assessment for rapid progressive decline in kidney function in adult patients with T2D and early CKD (stages 1-3). We believe that by understanding how disease will progress, patients and providers can take action early to improve outcomes and reduce overall health system costs. For more information, visit www.renalytix.com.
Forward-Looking Statements
Statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Examples of these forward-looking statements include statements concerning: the commercial prospects of KidneyIntelX, including whether KidneyIntelX will be successfully adopted by physicians and distributed and marketed, the rate of testing with KidneyIntelX in health care systems, expectations and timing of announcement of real-world testing evidence, the potential for KidneyIntelX to be approved for additional indications, the Company’s expectations regarding the timing and outcome of regulatory and reimbursement decisions, the ability of KidneyIntelX to curtail costs of chronic and end-stage kidney disease, optimize care delivery and improve patient outcomes, the Company’s expectations and guidance related to partnerships, testing volumes and revenue for future periods, the Company’s expectations regarding the Company’s ability to obtain and maintain intellectual property protection for its diagnostic products and the Company’s ability to operate its business without infringing on the intellectual property rights of others, and the forecast of the Company’s cash runway and the implementation and potential for additional financing activities and cost-saving initiatives. Words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “seeks,” and similar expressions are intended to identify forward-looking statements. The Company may not actually achieve the plans and objectives disclosed in the forward-looking statements, and you should not place undue reliance on the Company’s forward-looking statements. Any forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. These risks and uncertainties include, among others: that KidneyIntelX is based on novel artificial intelligence technologies that are rapidly evolving and potential acceptance, utility and clinical practice remains uncertain; the Company has only recently commercially launched KidneyIntelX; and risks relating to the impact on the Company’s business of the COVID-19 pandemic or similar public health crises. These and other risks are described more fully in the Company’s filings with the Securities and Exchange Commission (SEC), including the “Risk Factors” section of its annual report on Form 10-K filed with the SEC on September 28, 2023, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 filed with the SEC on November 14, 2023 and other filings the Company makes with the SEC from time to time. All information in this press release is as of the date of the release, and the Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
RENALYTIX PLC
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||
| (in thousands, except share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | $ | 709 | $ | 1,192 | $ | 1,168 | $ | 2,161 | ||||||||
| Cost of revenue | 480 | 711 | 982 | 1,407 | ||||||||||||
| Gross profit | 229 | 481 | 186 | 754 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 3,225 | 3,326 | 6,012 | 7,083 | ||||||||||||
| General and administrative | 5,339 | 6,810 | 11,398 | 15,060 | ||||||||||||
| Impairment loss on property and equipment | 306 | — | 306 | — | ||||||||||||
| Performance of contract liability to affiliate | — | (7 | ) | — | (19 | ) | ||||||||||
| Total operating expenses | 8,870 | 10,129 | 17,716 | 22,124 | ||||||||||||
| Loss from operations | (8,641 | ) | (9,648 | ) | (17,530 | ) | (21,370 | ) | ||||||||
| Equity in net losses of affiliate | — | — | — | (9 | ) | |||||||||||
| Foreign currency (loss) gain, net | (89 | ) | (108 | ) | 200 | 699 | ||||||||||
| Fair value adjustment to VericiDx investment | 202 | (345 | ) | (245 | ) | (1,199 | ) | |||||||||
| Fair value adjustment to convertible notes | (114 | ) | (440 | ) | (1,321 | ) | (730 | ) | ||||||||
| Other income, net | 161 | 97 | 261 | 211 | ||||||||||||
| Net loss before income taxes | (8,481 | ) | (10,444 | ) | (18,635 | ) | (22,398 | ) | ||||||||
| Income tax (expense) benefit | (4 | ) | — | (4 | ) | 1 | ||||||||||
| Net loss | (8,485 | ) | (10,444 | ) | (18,639 | ) | (22,397 | ) | ||||||||
| Net loss per ordinary share—basic | $ | (0.09 | ) | $ | (0.14 | ) | $ | (0.19 | ) | $ | (0.30 | ) | ||||
| Net loss per ordinary share—diluted | $ | (0.09 | ) | $ | (0.14 | ) | $ | (0.19 | ) | $ | (0.30 | ) | ||||
| Weighted average ordinary shares—basic | 97,268,051 | 74,891,844 | 96,017,946 | 74,848,278 | ||||||||||||
| Weighted average ordinary shares—diluted | 97,268,051 | 74,891,844 | 96,017,946 | 74,848,278 | ||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Changes in the fair value of the convertible notes | — | (920 | ) | 75 | (523 | ) | ||||||||||
| Foreign exchange translation adjustment | (401 | ) | 588 | (359 | ) | (499 | ) | |||||||||
| Comprehensive loss | (8,886 | ) | (10,776 | ) | (18,923 | ) | (23,419 | ) | ||||||||
RENALYTIX PLC
CONSOLIDATED BALANCE SHEETS (Unaudited)
| (in thousands, except share and per share data) | December 31, 2023 | June 30, 2023 | ||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 5,619 | $ | 24,682 | ||||||
| Accounts receivable | 1,370 | 776 | ||||||||
| Prepaid expenses and other current assets | 1,261 | 1,424 | ||||||||
| Total current assets | 8,250 | 26,882 | ||||||||
| Property and equipment, net | 576 | 1,027 | ||||||||
| Right of Use Asset | 102 | 159 | ||||||||
| Investment in VericiDx | 1,220 | 1,460 | ||||||||
| Other Assets | 1,128 | 1,101 | ||||||||
| Total assets | $ | 11,276 | $ | 30,629 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 2,109 | $ | 1,485 | ||||||
| Accounts payable – related party | 707 | 1,451 | ||||||||
| Accrued expenses and other current liabilities | 4,259 | 6,644 | ||||||||
| Accrued expenses – related party | 3,673 | 1,963 | ||||||||
| Current lease liability | 111 | 130 | ||||||||
| Convertible notes-current | 3,063 | 4,463 | ||||||||
| Total current liabilities | 13,922 | 16,136 | ||||||||
| Convertible notes-noncurrent | 5,310 | 7,485 | ||||||||
| Noncurrent lease liability | — | 41 | ||||||||
| Total liabilities | 19,232 | 23,662 | ||||||||
| Commitments and contingencies (Note 10) | ||||||||||
| Shareholders’ equity: | ||||||||||
| Ordinary shares, | 305 | 286 | ||||||||
| Additional paid-in capital | 190,437 | 186,456 | ||||||||
| Accumulated other comprehensive loss | (1,734 | ) | (1,450 | ) | ||||||
| Accumulated deficit | (196,964 | ) | (178,325 | ) | ||||||
| Total shareholders’ (deficit) equity | (7,956 | ) | 6,967 | |||||||
| Total liabilities and shareholders’ (deficit) equity | $ | 11,276 | $ | 30,629 | ||||||
RENALYTIX PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| For the Six Months Ended December 31, | ||||||||
| (in thousands) | 2023 | 2022 | ||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (18,639 | ) | $ | (22,397 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | 235 | 258 | ||||||
| Impairment of property and equipment | 306 | — | ||||||
| Stock-based compensation | 909 | 1,584 | ||||||
| Equity in losses of affiliate | — | 9 | ||||||
| Reduction of Kantaro liability | — | (55 | ) | |||||
| Fair value adjustment to VericiDx investment | 245 | 1,199 | ||||||
| Unrealized foreign exchange gain | — | 271 | ||||||
| Realized foreign exchange gain | (163 | ) | — | |||||
| Fair value adjustment to convertible debt, net interest paid | 1,059 | 730 | ||||||
| Non cash lease expense | 57 | 52 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (594 | ) | 81 | |||||
| Prepaid expenses and other current assets | 45 | 494 | ||||||
| Receivable from affiliates | — | (22 | ) | |||||
| Accounts payable | 618 | 2,773 | ||||||
| Accounts payable – related party | (744 | ) | (1,083 | ) | ||||
| Accrued expenses and other current liabilities | (2,465 | ) | 1,367 | |||||
| Accrued expenses – related party | 1,708 | (566 | ) | |||||
| Deferred revenue | — | (46 | ) | |||||
| Net cash used in operating activities | (17,423 | ) | (15,351 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Payment for long term deferred expense | — | (64 | ) | |||||
| Net cash used in investing activities | — | (64 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Payment of convertible notes principal | (1,660 | ) | (1,648 | ) | ||||
| Payment of issuance costs | (5 | ) | — | |||||
| Proceeds from purchase of ordinary shares under employee share purchase plan | 93 | 116 | ||||||
| Net cash used in financing activities | (1,572 | ) | (1,532 | ) | ||||
| Effect of exchange rate changes on cash | (68 | ) | (570 | ) | ||||
| Net decrease in cash and cash equivalents | (19,063 | ) | (17,517 | ) | ||||
| Cash and cash equivalents, beginning of period | 24,682 | 41,333 | ||||||
| Cash and cash equivalents, end of period | $ | 5,619 | $ | 23,816 | ||||
| Supplemental noncash investing and financing activities: | ||||||||
| Cash paid for interest on convertible debt | $ | 249 | $ | — | ||||
FAQ
What were the revenue highlights for Renalytix plc in the fiscal second quarter of 2023?
What significant progress did Renalytix plc make during the quarter?
What is the FDA status of KidneyIntelX?
What is the cash burn target for Renalytix plc in the fiscal third quarter of 2024?
What was the net loss for Renalytix plc in the fiscal second quarter of 2023?
What was the cash and cash equivalents position of Renalytix plc as of December 31, 2023?
