NeoGenomics Stock

NeoGenomics, Inc. (NeoGenomics) provides a wide range of oncology diagnostic testing and consultative services, including technical laboratory services and professional interpretation of laboratory test results by licensed physicians who specialize in pathology and oncology.

The company operates a network of cancer-focused testing laboratories in the United States and the United Kingdom.

As of December 31, 2023, the company operated College of American Pathologists (‘CAP’) accredited and Clinical Laboratory Improvement Amendments of 1988 (‘CLIA’) certified laboratories in Fort Myers, Florida; Aliso Viejo and San Diego, California; Research Triangle Park, North Carolina; and Houston, Texas; and a CAP accredited full-service, sample-processing laboratory in Cambridge, United Kingdom. The company also has several, small, non-processing laboratory locations across the United States for providing analysis services. The company offers the following types of testing services:

Cytogenetics (‘karyotype analysis’) – the study of normal and abnormal chromosomes and their relationship to disease. Cytogenetics involves analyzing the chromosome structure to identify changes from patterns seen in normal chromosomes. Cytogenetic studies are often performed to provide diagnostic, prognostic and occasionally predictive information for patients with hematological malignancies.

Fluorescence In-Situ Hybridization (‘FISH’) – a molecular cytogenetic technique that focuses on detecting and localizing the presence or absence of specific DNA sequences and genes on chromosomes. The technique uses fluorescent probes that bind to only those parts of the chromosome with which they show a high degree of sequence similarity. Fluorescence microscopy is used to visualize the fluorescent probes bound to the chromosomes. FISH can be used to help identify numerous types of gene alterations, including amplifications, deletions, and translocations.

Flow Cytometry – a technique utilized to measure the characteristics of cell populations. Typically performed on liquid samples, such as peripheral blood and bone marrow aspirate, it may also be performed on solid tissue samples, such as lymph nodes following additional processing steps. Cells are labeled with selective fluorescent antibodies and analyzed as they flow in a fluid stream through a beam of light. The properties measured in these antibodies include the relative size, relative granularity or internal complexity, and relative fluorescence intensity. These fluorescent antibodies bind to specific cellular antigens and are used to identify abnormal and/or malignant cell populations. Flow cytometry is typically utilized in diagnosing a wide variety of hematopoietic and lymphoid neoplasms. Flow cytometry is also used to monitor patients during the course of therapy to identify extremely low levels of residual malignant cells, known as minimal residual disease (‘MRD’) monitoring.

Immunohistochemistry (‘IHC’) and Digital Imaging – the process of localizing cellular proteins in tissue sections and relies on the principle of antigen-antibody binding. IHC is widely used in the diagnosis of abnormal cells, such as those found in cancer. Specific surface membrane, cytoplasmic, or nuclear markers may be identified. IHC is also widely used to understand the distribution and localization of differentially expressed proteins. Digital imaging allows clients to visualize scanned slides and also perform quantitative analysis for certain stains. Scanned slides are received online in real time and can be previewed often a full day before the glass slides can be shipped back to clients.

Molecular testing – a rapidly growing field which includes a broad range of laboratory techniques utilized in cancer testing. Most molecular techniques rely on the analysis of DNA and/or RNA, as well as the structure and function of genes at the molecular level. Common molecular testing technologies include: DNA fragment length analysis; polymerase chain reaction (‘PCR’) analysis; reverse transcriptase polymerase chain reaction (‘RT-PCR’) analysis, real-time (or quantitative) polymerase chain reaction (‘qPCR’) analysis; bi-directional Sanger sequencing analysis; and next-generation sequencing (‘NGS’) analysis.

Morphologic analysis – the process of analyzing cells under the microscope by a pathologist, usually for the purpose of diagnosis. Morphologic analysis may be performed on a wide variety of samples, such as peripheral blood, bone marrow, lymph nodes, and other sites, such as lung, breast, etc. The services provided at NeoGenomics may include primary diagnosis, in which a sample is received for processing and the company’s pathologists provide the initial diagnosis; or may include secondary consultations, in which slides and/or tissue blocks are received from an outside institution for second opinion. In the latter setting, the expert pathologists at NeoGenomics assist the company’s client pathologists on their most difficult and complex cases.

The company offers a comprehensive suite of technical and professional interpretation services to meet the needs of clients who are not credentialed and/or trained in interpreting various testing modalities and who require NeoGenomics' pathology specialists to interpret their testing results. In the company’s global service offerings, the company’s lab performs the technical component of testing and its MDs and PhDs provide the professional component of testing by interpreting the results of those tests. The company’s professional staff is also available for post-test consultative services. Clients using the company’s global service offering rely on the expertise of the company’s medical team to give them the answers they need in a timely manner to help inform their diagnoses and treatment decisions.

The company’s Molecular and NGS Clinical Services segment test menus provide clients with the ability to order single gene molecular tests, targeted NeoTYPE panels that include the relevant actionable genes for a particular cancer type, as well as comprehensive NGS panels. The company’s Advanced Diagnostics segment offers a full range of sequencing testing, including whole exome and whole genome sequencing.

The company’s sales team for the Clinical Services segment is organized into nine regions in the United States – Northeast, Northwest, the Mid-Atlantic, South, Southeast, North Central, West, Great Lakes, and South Central.

Segments

The company’s Clinical Services customers include community-based pathology and oncology practices, hospital pathology labs, reference labs, and academic centers. The company’s Advanced Diagnostics customers include pharmaceutical companies to whom the company provides testing and other services to support their research studies and clinical trials.

Clinical Services segment

The company’s Clinical Services revenue consists of the following four revenue streams: Clinical cancer testing; Interpretation and consultative services; Molecular and NGS testing; and Comprehensive technical and professional services offering.

The cancer testing services the company offers to community-based pathologists and oncologists are designed to be a natural extension of, and complementary to, the services that they perform within their own practices. The company’s relationship as a non-competitive partner to community-based pathology practices, hospital pathology labs, reference labs, and academic centers can empower them to expand their breadth of testing to provide a menu of services that could match or exceed the level of service found in any center of excellence around the world. Community-based pathology practices and hospital pathology labs may order certain testing services on a technical component only (‘TC’ or ‘tech-only’) basis, which allows them to participate in the diagnostic process by performing the professional component (‘PC’) interpretation services without having to hire laboratory technologists or purchase the sophisticated equipment needed to perform the technical component of the tests. The company also supports its pathology clients with interpretation and consultative services using the company’s own specialized team of pathologists for difficult or complex cases and the company provides overflow interpretation services when requested by clients.

In addition, the company directly serves oncology, dermatology and other clinician practices that prefer to have a direct relationship with a laboratory for cancer-related genetic testing services. The company typically serves these types of clients with a comprehensive service offering where the company performs both the technical and professional components of the tests ordered. In certain instances, larger clinician practices have begun to internalize pathology interpretation services, and the company’s tech-only service offering allows these larger clinician practices to also participate in the diagnostic process by performing the PC interpretation services on TC testing performed by the company.

The company is a leading provider of Heme Molecular and NGS testing and one of the key providers of solid tumor NGS testing solutions. These tests are interpreted by NeoGenomics’ team of molecular experts and are often ordered in conjunction with other testing modalities. NGS panels are one of the company’s fastest growing testing areas, and clients can often receive a significant amount of biomarker information from very limited samples. These comprehensive panels can allow for faster treatment decisions for patients as compared to a series of single-gene molecular tests being ordered sequentially. The company has a broad molecular testing menu, and the company’s targeted NeoTYPE panels include genes relevant to a particular cancer type. These tests are complemented by IHC and FISH tests, as necessary.

In addition, the company offers molecular-only NGS-targeted and comprehensive panels which combine DNA and RNA into a single work stream in order to report a full spectrum of genomic alterations, including mutations, fusions, copy number variations, and splicing mutations, as well as tumor mutation burden (TMB) and microsatellite instability (MSI) for solid tumor cases. This comprehensive molecular test menu allows the company’s clients to obtain most of their molecular oncology testing needs satisfied by the company’s laboratory. This is attractive to the company’s clients as patient samples do not need to be split and then managed across several laboratories. The acquisition of Inivata in June of 2021 provided the company with oncology liquid biopsy technology capabilities. InVisionFirst-Lung is a highly sensitive, targeted plasma-based assay for patients with non-small cell lung cancer, and RaDaR is a liquid biopsy assay designed to detect residual disease and recurrence in plasma samples from patients with solid tumor malignancies. The company expects its molecular laboratory and NGS capabilities to be a key growth driver in the coming years.

Advanced Diagnostics segment

In the second quarter of 2023, the Advanced Diagnostics segment was rebranded as the Advanced Diagnostics segment.

The company’s Advanced Diagnostics revenue consists of the following three revenue streams: Clinical trials and research; Validation laboratory services; and Informatics.

The company’s Advanced Diagnostics segment supports pharmaceutical firms in their drug development programs by supporting various clinical trials and research. This portion of the company’s business often involves working with the pharmaceutical firms (‘sponsors’) on study design, as well as performing the required testing. The company’s medical team often advises the sponsor and works closely with them as specimens are received from the enrolled sites. The company also works on developing tests that will be used as part of a companion diagnostic to determine patients’ responses to a particular drug. As studies unfold, the company’s clinical trials team reports the data and often provides key analysis and insights back to the sponsors.

The company’s Advanced Diagnostics segment provides comprehensive testing services in the support of the company’s pharmaceutical clients’ oncology programs from discovery to commercialization. In biomarker discovery, the company’s intention is to help its customers discover the right content. The company helps its customers develop a biomarker hypothesis by recommending an optimal platform for molecular screening and backing its discovery tools with the informatics to capture meaningful data. In other pre-clinical and non-clinical work, the company can use its platforms to characterize markers of interest. Moving from discovery to development, the company seeks to help its customers refine their biomarker strategy and, if applicable, develop a companion diagnostic pathway using the optimal technology for large-scale clinical trial testing.

Whether serving as the single contract research organization or partnering with one, the company’s Advanced Diagnostics team provides significant technical expertise, working closely with the company’s customers to support each stage of clinical trial development. Each trial the company supports comes with rapid turnaround time, dedicated project management and quality assurance oversight. The company has experience in supporting submissions to the Federal Drug Administration (‘FDA’) for companion diagnostics. The company’s Advanced Diagnostics strategy is focused on helping to bring more effective oncology treatments to market through providing world-class laboratory services in oncology to key pharmaceutical companies in the industry.

The company is well positioned to service sponsors across the full continuum of the drug development process. The company’s Advanced Diagnostics team can work with these sponsors during the basic research and development phase as compounds come out of translational research departments, as well as work with clients from Phase I, Phase II and Phase III clinical trials as the sponsors work to demonstrate the efficacy of their drugs. The laboratory biomarker tests that are developed during this process may become companion diagnostic (‘CDx’) tests that will be used on patients to determine if they could respond to a certain therapy. The company is able to offer these CDx tests to the market immediately after FDA approval as part of the company’s Day 1 readiness program. This ability helps to speed the commercialization of a drug and can enable sponsors to reach patients through the company’s broad distribution channel in the Clinical Services segment.

The company is committed to connecting patients with life-altering therapies and trials. In carrying out these commitments, the company intend to provide transparency and choice to patients regarding the handling and use of their data through the company’s Notice of Privacy Practices; and has invested in leading technologies to secure the data the company maintains. The company is continuing to develop and broaden its informatics and data-related tools to leverage the company’s unique market position and oncology expertise to help the company’s stakeholders solve real-world problems, such as identifying patients for clinical trials or providing clinical decision support tools for physicians and providers.

Markets

The medical testing laboratory market can be broken down into the following three primary markets: Clinical Pathology testing; Anatomic Pathology testing; and Genetic and Molecular testing.

Clinical Pathology testing covers high volume, automated, lower complexity tests on easily procured specimens, such as blood and urine.

Anatomic Pathology testing involves evaluation of tissue, as in surgical pathology, or cells as in cytopathology. The most widely performed Anatomic Pathology procedures include the preparation and interpretation of pap smears, skin biopsies, and tissue biopsies.

Genetic and molecular testing typically involves analyzing chromosomes, genes, proteins, and/or DNA/RNA sequences for abnormalities. Genetic and molecular testing requires highly specialized equipment and credentialed individuals (typically MD or PhD level) to certify results and typically yields the highest reimbursement levels of the three market segments.

NeoGenomics operates primarily in the Genetic and Molecular testing market and the Anatomic Pathology market.

Intellectual Property

Issued U.S. patents and their international counterparts in the company’s patent portfolio that relate to various aspects of its technology and products are expected to expire between 2025 and 2036.

To protect the company’s brand and identity, the ‘NeoGenomics’, ‘Genoptix’, ‘Clarient’, ‘Inivata’, and ‘Trapelo’ company names and certain logos have been trademarked with the United States Patent and Trademark Office.

2024 Focus Areas

The company is committed to sustainable growth while transforming cancer care for patients and providers. The company’s focus for 2024 is to sustain a purpose driven culture that maintains excellence in service and performance while growing through innovation.

Seasonality

The majority of the company’s clinical testing volume is dependent on patients being treated by hematology/oncology professionals and other healthcare providers. The volume of the company’s testing services generally declines modestly during the summer vacation season, year-end holiday periods and other major holidays, particularly when those holidays fall during the middle of the week. In addition, the volume of the company’s testing tends to decline due to extreme adverse weather conditions, such as excessively hot or cold spells, heavy snow, hurricanes or tornadoes in certain regions, consequently reducing revenues and cash flows in any affected period.

In the company’s Advanced Diagnostics segment, the company enters into both short-term and long-term contracts, ranging from one month to several years. While the volume of this testing is not as directly affected by seasonality as described above, the testing volume does vary based on the terms of the contract. Many of the company’s long-term contracts contain specific performance obligations where the testing is performed on a specific schedule.

Competition

The company’s competitors within the broader genomics profiling space include laboratory companies, such as Quest Diagnostics, Laboratory Corporation of America, and Bio-Reference Laboratories.

The company also faces increased competition from laboratories that are more specialized and focused on particular areas, such as liquid biopsies or large tissue based molecular panels, such as Guardant Health, Inc., Natera, Inc., Exact Sciences Corp, Caris Life Science, Tempus Labs, Inc. and Myriad Genetics, Inc.

Clients

The company markets its services to pathologists, oncologists, other clinicians, hospitals, pharmaceutical companies, academic centers and other clinical laboratories throughout the United States and the United Kingdom.

Government Regulation

All of the company’s domestic laboratories are certified in accordance with the Clinical Laboratory Improvement Amendments of 1988 (CLIA). The company’s laboratory in Cambridge, United Kingdom is accredited by CAP and actively participates in CAP’s proficiency testing programs for all tests offered by the company.

The company is subject to the federal Anti-Kickback Statute (‘AKS’), which is a criminal felony statute, as well as similar state statutes and regulations, which prohibits the knowing and willful offer, payment, solicitation, or receipt of any form of remuneration in return for referring, ordering, leasing, purchasing, or arranging for or recommending the ordering, purchasing, or leasing of items or services payable by Medicare, Medicaid, or any other federally funded healthcare program.

The company is also subject to international laws and regulations, including the U.S. Foreign Corrupt Practices Act (‘FCPA’) and the U.K. Bribery Act, relating to corrupt and illegal payments to, and contracting practices with regard to, government officials and others.

The company endeavors to structure its financial relationships in compliance with the Stark Law and with similar state physician self-referral laws, and performs routine audits in furtherance of this compliance.

For purposes of transportation, some biological materials and laboratory supplies are classified as hazardous materials and are subject to regulation by one or more of the following agencies: the U.S. Department of Transportation, the U.S. Public Health Service, the U.S. Postal Service, the Office of Foreign Assets Control, and the International Air Transport Association. Other countries where the company conducts business have similar laws and regulations concerning the environment and human health and safety with which the company must also comply.

The Health Insurance Portability and Accountability Act of 1996 (‘HIPAA’) contains provisions that protect individually identifiable health information from unauthorized use or disclosure by covered entities and their business associates. The Office for Civil Rights of HHS (‘OCR’), the agency responsible for enforcing HIPAA, has published regulations to address the privacy (the ‘Privacy Rule’) and security (the ‘Security Rule’) of protected health information (‘PHI’) and notification of breaches of PHI (the ‘Breach Notification Rule,’ and, collectively, the ‘HIPAA Rules’). The company acts as a covered entity under HIPAA and has adopted policies and procedures designed to comply with HIPAA, including the HIPAA Rules. Many of the health care facilities and providers that refer specimens to the company is also bound by HIPAA.

Further, the company is subject to certain comprehensive state laws governing the processing of personal information. In particular, the California Consumer Privacy Act (‘CCPA’) took effect on January 1, 2020, and imposed privacy compliance obligations with regard to the personal information of California residents. This legislation created significant new requirements for identifying, managing, securing, tracking, producing, and deleting consumer personal information and granted new rights to California residents, including the right to opt out of their data being sold to a third party by the company.

Due to the company’s international expansion, the company is subject to a variety of international laws which serve to protect the personal data of individuals who are located in those countries. These laws include the European Union’s General Data Protection Regulation (‘GDPR’), the United Kingdom GDPR, and similar privacy laws in other jurisdictions.

Trademarks

The ‘NeoGenomics’, ‘Genoptix’, ‘Clarient’, ‘Inivata’, and ‘Trapelo’ company names and certain logos have been trademarked with the United States Patent and Trademark Office. The company has trademarked or have applications pending for the brand names NEO COMPREHENSIVE, NEO EXPAND, NEOLINK, NEOLAB, NEOACCESS, NEOTYPE, NEOSITE, CHART, COMPASS, FLEXREPORT, HEMEFISH, MULTIOMYX, NEOVUE, NEOLYTX, NEOACCELERATE, NEOENGAGE, NEOPIXEL, NEONUCLEUS, NEOSEEK, NEOEXPLORE, NEOUNIVERSITY, PATHSITE, QUICKPATH, TAM-SEQ, ETAM-SEQ, INVISION, INVISIONSEQ, INVISIONFIRST, INVISIONSCAN, RADAR, and NEORADAR. The company also has trademarked or has pending trademarks for the marketing slogans ‘SERVING PATIENTS, SAVING LIVES’, ‘PUTTING THE CAN IN CANCER’, ‘TAKING CANCER PERSONALLY’, and ‘UNIVERSAL FUSION EXPRESSION’.

History

NeoGenomics, Inc. was founded in 2001.