The Next Steps For OncoCyte After Better-Than-Expected Data

Shares of OncoCyte Corp OCX were highly volatile Monday and Tuesday in reaction to the company presenting positive lung cancer blood test data to the American Thoracic Society.

Keay Nakae of Chardan maintains a Buy rating on OncoCyte's stock with a price target raised from $5.50 to $7.50, as the company's lung cancer diagnostic test came in better than expected.

According to the analyst, the study evaluated 299 samples across 29 different sites in the U.S. The results were an "Area Under the Curve (AUC) of 0.92 with a sensitivity of 95 percent, and specificity of 73 percent."

"The importance of this study is that it independently, using a different set of patient samples, evaluated in a different lab, using different equipment, replicates the results achieved in a similar study previously conducted by its collaborator, The Wistar Institute, to assess the performance of the test in the early detection of lung cancer," Nakae wrote.

What's Next?

Nakae noted that OncoCyte submitted an application to the State of California for CLIA certification on March 20 of this year, and the process is straightforward. The company expects to receive the CLIA certification within the next few months and will then conduct a small CLIA lab validation study to verify that tests using the full assay system generates the same performance.

The company will then conduct a larger clinical validation with the intent of simulating what will happen once the test is launched commercially and can also ensure consistent results.

Finally, the analyst noted that over the next 18 months, OncoCyte could achieve multiple milestones that could serve as positive catalysts for the stock with the ultimate goal being a commercial launch of its breast cancer test in the bottom half of 2018.

At time of publication, shares were down 17.01 percent at $6.10.

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