Response Genetics, Inc. Reports First Quarter 2009 Financial Results and Encouraging ResponseDX™ Sales Ramp

Business Wire, May 14, 2009

LOS ANGELES -- Response Genetics Inc. (Nasdaq:RGDX), a company focused on the development and sale of molecular diagnostic tests for cancer, today announced its consolidated financial results for the three months ended March 31, 2009.

“Orders for our ResponseDX: Lung™ and ResponseDX: Colon™ genetic tests have been encouraging, with a current run rate of more than 800 tests per quarter, an approximate 60 percent increase over the previous quarter,” said Kathleen Danenberg, Response Genetics president and CEO. “Our goal is to personalize cancer care, and now with our expanded ResponseDX™ test panels, we can better help physicians make more informed decisions regarding the most widely prescribed cancer therapies. We look forward to increasing our market as genetic diagnostic testing becomes a greater part of routine treatment decisions.”

First Quarter Corporate Development Highlights

• NCCN Guidelines Describe Genes In ResponseDX™ Test Panels – The National Comprehensive Cancer Network (NCCN) describe ERCC1, RRM1, EGFR and KRAS genes as predictive and prognostic biomarkers for the treatment of non-small cell lung cancer (NSCLC).1 The ResponseDX: Lung™ genetic test panel is believed to be the only test that assesses all of these genes and has been validated by prospective clinical trials.2,3
• Encouraging First Quarter Sales Ramp of ResponseDX™ Tests – More than 500 ResponseDX™ genetic tests were ordered and processed in the first quarter of this year, with a reorder rate greater than 90 percent. As a result of the time lag between orders processed and revenue recorded, approximately $263,000 of partial revenue was realized during this period. Based on accepted accounting principles, revenue is recorded on a cash basis from certain insurance providers until collection patterns are better determined.
• Successfully Launched National Sales Strategy to Meet Demand for ResponseDX™ Tests – Response Genetics in January tripled the size of its sales force to meet higher demand. The company’s proprietary ResponseDX: Lung™ and ResponseDX: Colon™ genetic test panels are now available in all major oncology markets.
• Laboratory Consolidation Results in $2.0 Million Annualized Savings – In February 2009, Response Genetics announced it was closing its United Kingdom facility and consolidating operations at its CLIA-certified laboratory in Los Angeles. This consolidation was substantially complete in April 2009.
• Expanded ResponseDX™ Test Panels – In April 2009, Response Genetics expanded its ResponseDX: Lung™ genetic test panel to include thymidylate synthase (TS), a gene associated with sensitivity to pemetrexed, a drug commonly used to treat NSCLC. The company’s ResponseDX: Colon™ genetic test panel was also expanded to include EGF receptor (EGFR) gene expression to provide additional sensitivity to the widely used chemotherapy combination irinotecan, fluorouracil and folinic acid (FOLFIRI). With the expansion of our panels, ResponseDX™ tests may further help physicians improve outcomes and reduce risk to their patients.

First Quarter 2009 Results

Total revenue decreased by 19 percent to $1.5 million for the first quarter ended March 31, 2009, compared to $1.9 million for the same period last year. As previously announced, this decrease was primarily due to a delay in the receipt of clinical samples from one of our major pharmaceutical clients, which the Company anticipates receiving in 2009 through 2010. This decrease was partially offset by revenue recognized for our ResponseDX™ genetic tests of approximately $263,000.

Cost of revenue for the first quarter ended 2009 was $1.2 million, compared with $0.9 million for the same period ended 2008. Research and development expenses were $0.6 million for the first quarter of 2009, compared with $0.6 million for the same period in the prior year. General and administrative expenses were $1.7 million for the first quarter ended 2009, compared with $1.7 million for the same period in 2008. Total operating expenses for the first quarter of 2009 were $4.3 million, excluding costs related to the operation of the Company’s United Kingdom lab, compared with $3.3 million for the same period last year. The primary reasons for the increase in total operating expenses are costs related to the launch of the Company’s ResponseDX tests and its sales force expansion, which totaled $0.8 million for the first quarter and third party sample processing costs totaling $0.3 million which did not exist in the first quarter of 2008. Costs related to the operation of the United Kingdom lab for the first quarter were $0.5 million of operating costs, of which $0.2 related to redundancy costs incurred for the closure of our United Kingdom lab.